JPMorgan Chase's Dimon survives pay, chairmanship votes (+video)
JPMorgan Chase shareholders voted Tuesday at the bank's annual meeting to keep CEO Jamie Dimon in his role as chairman of the board, in addition to his pay package.
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Dimon got something of a vote of confidence from President Barack Obama, who appeared on ABC's "The View" for an episode airing Tuesday. Obama used the appearance to press for tighter regulation of Wall Street.Skip to next paragraph
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"JPMorgan is one of the best-managed banks there is," the president said. "Jamie Dimon, the head of it, is one of the smartest bankers we got, and they still lost $2 billion and counting."
Obama has reason to tread carefully on the JPMorgan trading debacle. Four years ago, when he captivated Wall Street during his first presidential run, JPMorgan employees were among his most ardent financial backers.
People who said they worked for JPMorgan Chase gave more than $800,000 to Obama in 2008, compared with $340,000 for his Republican opponent, Sen. John McCain.
Obama is struggling with Wall Street's resentment this year. His campaign has received barely more than $75,000 in donations from JPMorgan employees, while Mitt Romney has attracted more than $370,000.
Obama said the bank was "making bets" in the market for the complex financial instruments known as derivatives. Dimon has said the bank was hedging against financial risk.
A part of the 2010 financial overhaul legislation known as the Volcker rule is designed to prevent banks from placing bets for their own profit, a practice known as proprietary trading.
The idea is to protect depositors' money, which is insured by the government. If a bank's losses wiped out those deposits, the government would be on the hook.
Former Federal Reserve Chairman Paul Volcker, for whom the rule was named, wanted speculative trading by investment banks to be separated from the deposit-taking and lending business of traditional commercial banks.
Dimon and critics of the industry have disagreed over whether JPMorgan's trading would have violated that rule.
In Washington, Treasury Secretary Timothy Geithner said JPMorgan's trading loss strengthens the case for tougher rules on financial institutions, as regulators continue writing rules from the 2010 law.
Geithner said that the Federal Reserve, the Securities and Exchange Commission and the Obama administration are "going to take a very careful look" at the JPMorgan incident as they implement the rules.
"I'm very confident that we're going to be able to make sure those come out as tough and effective as they need to be," Geithner said. "And I think this episode helps make the case, frankly."
At the annual meeting for the investment bank Morgan Stanley, which took place Tuesday in upstate New York, CEO James Gorman appeared to allude to the JPMorgan trading loss when he said: "Events of the last few days remind us that risk levels remain high in the global markets."
He noted twice that Morgan Stanley has jettisoned or is in the process of dumping all of its businesses that do proprietary trading, or trading for the bank's own profit.
Gorman also said, unprompted, that the bank maintains the right to take back pay from executives who act improperly. Gorman was confronted by shouting protesters who said the loss at JPMorgan was proof that banks are out of touch with their customers.
On Monday, Ina Drew, JPMorgan's chief investment officer and one of the highest-ranking women on Wall Street, left the bank. Drew oversaw the trading group responsible for the $2 billion loss.