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Jamie Dimon to shareholders: It's wrong to assume big firms inherently are risky

Jamie Dimon, chief executive of J.P. Morgan Chase & Co., sent out a 36-page letter to shareholders of the mega-bank on Wednesday night, and sounded a little feisty in parts. To read the entire letter, click here (pdf).

Here are some highlights:

  • "Sometimes leaders should be supported and paid even when a unit does poorly. If a company’s largest, and perhaps most important, business unit is under enormous stress and strain, unlikely to earn money regardless of who is running it, a manager might ask his best leader to take on the job. This may be the toughest job in the company, one that will take years to work through before the ship has been righted."

  • "The premise that all banks would have failed had it not been for the government’s actions is incorrect. This premise is behind much of the anger toward banks and some of the policy recommendations that are meant to punish banks. We should acknowledge that the worst
    offenders among financial companies no longer are in existence."

  • "I do wish it would have been possible to distinguish between the healthy and unhealthy banks in a way that didn’t damage the success of the program – so as not to create a situation where the public was left with the impression that all banks were bailed out. Last, I do regret having used the FDIC guarantee because we didn’t need it, and it just added to the argument that all banks had been bailed out and fueled the anger directed toward banks."

  • "It is wrong to assume that big firms inherently are risky. Banks shouldn’t be big for the sake of being big, but scale can create value for shareholders and for consumers who are beneficiaries of better products that are delivered more quickly and less expensively."

  • "In the current political environment, size in the business community has been demonized, but the fact is that some businesses require size in order to make necessary investments, take extraordinary risks and provide vital support globally."

    Follow me on Twitter at @theticker

  • By Frank Ahrens  |  April 1, 2010; 6:09 PM ET
    Categories:  Congress , The Ticker , Wall Street  | Tags: JP Morgan Chase, Jamie Dimon, compensation, regulation  
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    Comments

    If you eliminate competitive conditions managing ability does not matter. You guys can all get paid well to not compete and mismanage your firms because you are big and command lots of capital that does not need to work. They wonder why the shares get dumped. Hold fast to things that last.

    Can we speed it up tycoon?
    I love runaway acceleration!

    Posted by: tossnokia | April 2, 2010 10:54 AM | Report abuse

    When these financial fraudsters get paid tens of millions when things are going right, because they obviously have engineered them, and get paid tens of milions when things are going wrong because their expertise is needed to fix things, they develop an infallibility complex, and a superiority complex.

    Jamie Dimon seems to be suffering from a misunderstanding that because JPMorgan didn't need direct TARP money, as head of JPM, he must be some kind of a wizard. So does Lloyd Blankety-Blank of Goldman-Sachs; neither acknowledging or conceding the fact that but for the Federal government rescuing the entire financial "industry", they would have sunk, along with Lehman which did, and AIG which was on the brink of.

    Recently I am seeing Television commercials by Merrill Lynch, asking to manage your money. This bloated company which couldn't handle its own finances, which had to be rescued by Paulson browbeating Bank of America to buy it, now wants to manage the retirement money of regular people. The gall of it all!

    To borrow a phrase from the bard, First Kill All the Financiers.

    Posted by: ashrink | April 2, 2010 12:56 PM | Report abuse

    Withdrawal of fortunes and making of new ones. Pretty basic instinct stuff. Once a large gain has been set going, it keeps on for a time by momentum and keeps rolling up thru an automatic process. As it rolls up, so does the public benefit which is to justify it. The problem is how to spend all the money you are going to make, which is a better problem than how to justify all that money you were going to lose. Do more shopping I guess and your guess is as good as mine. Buy a silver mine and don't ever worry about where the flatware is coming from and start a holding company. Economic problems have outgrown government capacity for solving them. The only solution is to make more of what comes and less of what goes and how it goes depends on how it comes. Faster is better, so step on it.

    Posted by: tossnokia | April 5, 2010 8:14 PM | Report abuse

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