In this post, I am not going to be discussing the nutty programs that were likely used to end up with a $2 billion (and counting) trading loss at JPMorgan Chase, and I am not going to be discussing the insane Federal Reserve/FDIC backed banking structure in the United States, but merely looking at things from the perspective of JPMorgan and Jamie Dimon.
Bottom line: Dimon did not play this off as the big swinging dick that financial reporters have viewed him as. He played it like a chump who was taking advice from a "crisis pr advisor" that, ultimately, could result in Dimon losing is job (Somewhere Sandy Weill is walking around with a knowing smile.)
Here's how I think Dimon played it wrong.
In the first quarter of 2012, JPMorgan Chase had net income of $5.4 billion. Thus, a hit of $2 billion is not likely to result in even a loss for a quarter.
It really isn't a life or death situation for JPMorgan, but Dimon is playing it as it is, which is putting media focus on the losses.
Consider, Dimon called a special press conference at an odd hour (5:00PM ET) to announce the loss. This only is going to get the attention of reporters, as indeed it did. The twitter feed I follow suddenly lit up with comments about the news of the press conference. Then once the press conference started, Dimon started apologizing to everyone in the world, including the Bank America president because he hadn't told the BA prez about the losses during a recent dinner (WTF?).
In other words, Dimon was making the loss into a big deal. He was feeding the press gallery. It almost strikes of Dimon trying to create his own Shakespearean drama.
How should have he handled it?
First, no special drama press conferences. Play it like a big swinging dick. You announce what you have to in regular required SEC filings (and accompanying press releases). When reporters discover the loss, you then react to their queries, rather than dramatizing the losses before queries. And, you respond with a shrug and say something like this:
"Yes, we suffered losses in one of our trading units. We are an aggressive bank and that is going to happen on occasion. That said, JPMorgan Chase is a huge bank and the losses, while lowering earnings in the quarter, has not prevented JPM from being a multi-billion dollar extremely profitable bank in the quarter.
"Naturally, we don't like losses, so we are reviewing our trading programs to see what can be done to eliminate these kinds of losses in the future."
No major drama about we made dumb mistakes etc. You play it like JPM is a big boy and has things under control. By dramatizing the losses as a big event, Dimon has magnified by an exponential number the amount of focus on the loss, (which is really only equally to roughly 10% of JPM annual earnings). The drama is what is doing the damage here and it may cost Dimon his job.