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"Hands up if you know someone whos a
Jamie Dimon, chief executive officer of JPMorgan Chase &
Co., stood unsmiling before a class of 300 new analysts in a
conference room at the Madison Avenue headquarters of the
firms investment banking division. The analysts stared
back in silence, seemingly confused. It was September 13, 2011.
Markets were beginning to stabilize after a volatile summer
that had seen Europes debt crisis spread to Italy and
Spain and the U.S. lose its triple-A credit rating. Occupy Wall
Street, the messy affair that would take root in lower
Manhattans Zuccotti Park, was still four days away.
You know a bullshitter, Dimon continued.
Someone who cheats on their tax forms, who gets dinner
delivered to the office when they dont need to be there.
We all know one. First one, then two, then a small forest
of arms was raised in agreement. Yes, the analysts
including myself, then a new JPMorgan recruit all knew a
bullshitter. Right, Dimon continued. Now
hands up if youre a bullshitter yourself! More
silence. No hands went up. Dimon, prowling at the front of the
auditorium, did not approve. There are probably a couple
of you in here who are bullshitters. If youre a
bullshitter, you should leave now. We dont want
A year later the swagger that Dimon put on display that
morning had all but disappeared. Complex derivatives trades
made in early 2012 by JPMorgans chief investment office,
supposedly to hedge risk, had racked up losses of more than
$6 billion. Two of the traders involved have since been
charged with wire fraud and conspiracy to falsify books.
Despite haranguing his trainee analysts on the evils of
deception, Dimon had apparently been blind to such behavior
within his own firm.
The reason the London Whale story was so compelling
was that here was an institution that was supposed to be the
best-operated bank on Wall Street, says Phil Angelides,
who chaired the U.S.s Financial Crisis Inquiry Commission
from 2009 to 2011. But it turned out that even the
best-managed institution on the Street couldnt monitor or
control its own exposures or even adhere to its own internal
risk parameters. Excessive risk-taking was one of the key
accelerators of the cocktail of deregulation, lax underwriting
and leverage that led to the financial crisis. But risk remains
a persistent feature of the postcrisis world. And as Jamie
Dimon can no doubt attest, it is an exceptionally difficult
beast to control.