On the Reputational Capital of a Business Leader on a Societal Stage

Is it better that companies be publicly or privately held? Such a question is of such magnitude that glossy, simplistic answers should be eschewed. This is not to say that the answer is situational in nature. Rather, it is more likely that each comes with pluses and minuses from the perspective of an economic system as a whole. As business “leaders” give their advice, it is important to keep in mind whether any personal or institutional conflicts of interest exist and thus could warp the space itself of the advice. Yes, I am intimating Einstein’s theory of general relativity here. Rather than provide an answer without having studied the matter sufficiently, I will provide a way to look at the advice given by Jamie Dimon, CEO of JPMorgan Chase.

The full essay is at "Reputational Capital of a Business Leader."

Jamie Dimon Wins Stockholder Vote: Exploiting Conflicts of Interest Undercuts Fairness

Chairman of JPMorgan since 2006 and CEO a year longer, Jamie Dimon faced down a daunting stockholder vote on May 21, 2013 on whether he should be allowed to retain both roles. Despite the bank’s $6.2 billion trading loss, deeply flawed risk-management oversight, and “credibility issues” with regulators, only about 32% of the votes cast were in favor of the nonbinding resolution that the chair and CEO jobs be separated. Interestingly, not only does the chair/CEO duality have an inherent conflict of interest because part of what a board (including its chair) does is hold management (including the CE) accountable, the means by which the pro-duality side campaigned also included conflicts of interest. I cannot help but wonder whether Jamie Dimon, his immediate subordinates, the bank’s board directors and even the stockholders who altogether voted a supermajority of shares in support of Dimon’s two roles were negligent ethically in failing to even recognize the institutional conflicts of interest involving Dimon and the board. To the extent that recognition existed, permitting the conflicts to exist and in some cases knowingly exploiting more than one at a time are even more squalid than merely being oblivious to them. To the extent that structural conflicts of interest were enabled through the campaign and in the election results, JPMorgan Chase can be likened to a house of cards. This does not bode well for the financial system and broader economy to the extent that the largest American bank holds systemic risk (i.e., “too big to fail”). I look at the campaigning first, as doing so will lead us directly to the main conflict of interest that is at issue here.

 Jamie Dimon, CEO and Chair of JPMorgan Chase.  The duality of roles can benefit him both personally and institutionally. NYT

The full essay is at "JPMorgan: An Unethical Monstrosity?" and at
Institutional Conflicts of Interest, both available in print and as an ebook at Amazon.

JPMorgan Management Evades Stockholders

After the $6 billion trading loss at JP Morgan, the U.S. Senate Permanent Subcommittee on Investigations issued a report raising the prospect of wider problems than that of a rogue lower-level trader. Specifically, the report suggests that executives at the bank “ignored warning signs and failed to alert investors about changes to its method for detecting risk,” according to the New York Times.  That is, the bank had not been publically disclosing its risky trading, thereby misleading stockholders and regulators. Banks such as JP Morgan had been urging regulators to weaken the Volcker Rule in the Dodd-Frank Act of 2010 to allow banks to continue to engage in some risky proprietary trades.

The full essay is at "JPMorgan: An Unethical Monstrosity?"

Jamie Dimon of JPMorganChase Exploits an Institutional Conflict of Interest

U.S. Treasury Secretary, Tim Geithner, said on July 18, 2011 that he was not concerned about dire warnings from Jamie Dimon, CEO of JP Morgan Chase, a bank that was too big to fail and thus evinced systemic risk. Jamie Dimon, CEO of JPMorgan Chase, said the government regulations may have been suffocating the economic recovery. While it was nice of Jamie Dimon to be so civic-minded as to want to protect the recovery, his real objective was likely to increase his bank’s profitability through relaxed financial regulations in the U.S. If so, his ulterior motive was not in line with the economy overall, much less with society and the common good.

The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.