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Shareholders back JPMorgan chief

Tuesday, May 15, 2012 - 02:19

May 15 - JPMorgan CEO admits losses were ''self-inflicted'' as shareholders vote against plan to split his role into two, separate positions. Sasha Salama reports.

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SOUNDBITE: DENISE DIAZ, JOBS WITH JUSTICE (ENGLISH), SAYING: "Who's got the power? We're the power." Against a backdrop of investor protests, the heat was on at JP Morgan Chase's annual meeting in Tampa, Florida. Shareholders had their first chance to call for accountability after the bank revealed at least $2 billion in losses from trades that were supposed to protect it from risk. At least one shareholder lays the blame squarely on Chairman and CEO, Jamie Dimon. SOUNDBITE: PETER SKILLERN, SHAREHOLDER JP MORGAN (ENGLISH) SAYING: "So who oversees that unit? Jamie. Who oversees Jamie? Jamie. That's the problem. He's his own boss". Dimon admitted that JP Morgan's losses were "self-inflicted" and will result in many changes in policies and procedures. The FBI is now investigating the losses. As are the Securities and Exchange Commission and the Federal Reserve. Former FDIC Chairman, Sheila Bair. SOUNDBITE: SHEILA BAIR, FORMER FDIC CHAIRMAN AND SENIOR ADVISER TO PEW CHARITABLE TRUSTS (ENGLISH) SAYING: "Clearly, there was a risk management breakdown here." REPORTER BRIDGE, SASHA SALAMA, REUTERS REPORTER (ENGLISH) SAYING: "The trades stemmed from Value at Risk models which try to predict future losses in any given portfolio. Many of these so-called "VaR" models failed to predict the devastating bank losses in the 2008 financial crisis. JP Morgan's latest revelations may highlight how VaR models can still hinder, as well as help, risk management." SOUNDBITE: SHEILA BAIR, FORMER FDIC CHAIRMAN AND SENIOR ADVISER TO PEW CHARITABLE TRUSTS (ENGLISH) SAYING: "I don't think VaR models are reliable. They certainly shouldn't be used to set regulatory capital. Plus it gives bank management skewed incentives. So you have incentives to have a model that shows low risk so you can lower your regulatory capital which is all the wrong incentives." Besides questions about VaR models, there also are questions about whether any bank this big can be managed by just one person. SOUNDBITE: SHEILA BAIR, FORMER FDIC CHAIRMAN AND SENIOR ADVISER TO PEW CHARITABLE TRUSTS (ENGLISH) SAYING: "I think Jamie Dimon is a good manager. He's made good decisions for his bank as well. This is a serious misstep. But, you know, can anybody really manage, much less regulate institutions of this size and complexity." Bair says no. But, at least for now, JP Morgan shareholders are not pushing the point. They voted against a proposal to split Dimon's roles of Chairman and CEO into two, separate positions. Sasha Salama, Reuters.

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Shareholders back JPMorgan chief

Tuesday, May 15, 2012 - 02:19