In Defense of Jamie Dimon

Jamie Dimon is easy to dislike. He's gruff, cocky and lost $2 billion recently. 

If that weren't enough, he's a banker.

None of that justifies the public flogging Dimon has received since announcing his trading loss last Thursday. Political agendas and score-settling do.

First, take a look at Dimon's alleged sin: losing money through a bet on credit derivatives. Pundits will probably never agree whether the trade was a hedge permissible under Dodd-Frank's Volcker Rule, or a bid to turn a profit (a reported federal criminal probe aside, losing money wasn't illegal as of press time).

Strip the question down to the bare math and it's hardly worth asking. The $2 billion loss equals 10.5% of the $19 billion the bank made last year and 1.6% of its remaining $127 billion in shareholders' equity. One message the cool-headed could take away: Even when just about everything possible apparently went very wrong, JPMorgan's risk management worked.

Another reason Dimon has taken so much flak is his mouth. The trades in question "were flawed, complex, poorly executed, poorly designed, and poorly monitored," the CEO said during a conference call May 10. "These were egregious mistakes, self-inflicted. This not how we want to run a business."

The press had a field day with such unvarnished admissions of fault from a big-bank CEO. Dimon's detractors should ask themselves: Would it have been better for him to have gone in front of the cameras and mics and talked in PR double-speak? "We are conducting a thorough investigation involving all relevant parties, will leave no stone unturned and intend to provide a full accounting of events as soon as it's available…"

Another piling-on point is that—horror of horrors—Dimon had previously lobbied for the right to continue conducting the very sorts of trades that might have gotten JPMorgan into its loss-making position. Remember, during the financial crisis Dimon's bank was among the rescuers—not the rescued. He accepted Troubled Asset Relief Program funds grudgingly, only because the government pressured him to. He rescued what was left of Bear Stearns and Washington Mutual. Given that track record, there's no reason to expect Dimon to roll over and accept a law as complex and flawed as Dodd-Frank without a fight.

Flawed how? Debit card interchange fees didn't cause the financial crisis, but they're part of Dodd-Frank. Fannie Mae and Freddie Mac were most definitely part-and-parcel of the housing collapse, but Congress left them out of the law. The Volcker Rule itself includes a craven political carve-out—the rule seeks to forbid banks from speculating, unless it's in U.S. Treasurys. The feds don't want to eat the same dog food as everyone else by limiting liquidity for the national debt.

The public and press mostly don't get it. Washington definitely doesn't. As for JPMorgan Chase's shareholders, 91.5% of them just approved Dimon's pay package. He's making money for them, just like he's paid to do.

Neil Weinberg is the editor in chief of American Banker. The views expressed are his own.