Business

The power of JPJamie

Lenin had his and so did Stalin. Mao, too.

And even rock groups like The Beatles and The Stones had — and often continue to have long after they are gone — what historians call a “cult of personality.”

James Dimon, the leader of the JPMorgan Chase nation, also has a cult following. Jamie, as even fawning journalists call him, is the rock star of the banking industry.

When someone needs a quote on the financial industry, they can count on Jamie. When CNBC is feeling a little blue (which doesn’t happen often) and needs someone to perk up the station’s mood, Jamie — with his All-American looks and his handy nickname — comes to the rescue.

And when names are thrown about as to whom will be the next Treasury Secretary, Dimon’s is always included. That idea quickly gets shot down, however, because Jamie, after all, is too important to be monopolized by Washington.

Why is Dimon so highly regarded? And how does he keep his lofty status even though his bank has been involved in a number of highly publicized missteps, including the so-called “whale trade” in London last year that Dimon initially pooh-pooh as “a complete tempest in a teapot?”

The “whale trade,” as it turned out, would have needed quite a large teapot.

Jamie had misspoken. And then he had to uncharacteristically grovel before Wall Street analysts, the media and — most important — Congress and admit that the teapot actually held $6.2 billion in losses.

Oops, Jamie had to ’fess. It really wasn’t as he originally said: a hedge put on by JPMorgan against other trades — or, in layman’s terms, a kind of insurance that is commonplace on Wall Street and that no regulator would hold against Jamie.

This wasn’t the only screw-up under Dimon’s watch.

A research firm named Graham Fisher estimates that Dimon’s company (which ought to be known as JPJamie, because he’s that important) has had $16 billion in litigation expenses in the past four years.

And since 2009, Graham Fisher said in a March report, the bank has paid more than $8.5 billion in settlements for the various regulatory and legal problems … These settlement costs … represent almost 12 percent of the net income generated between 2009-12.

Despite all this, Jamie easily survived a scare last week when shareholders voted not to strip him of the company’s chairman title. Jamie, it seems, didn’t want to be just a plain old chief executive.

Jamie apparently didn’t want someone peering down on him from the chairman’s seat.

Jamie, the rumor mill roared, was even threatening to quit JPJamie if shareholders voted to split Jamie’s two jobs.

Analysts say that one secret to Jamie’s triumph over the shareholder proposal is the fact that his company’s stock has rallied about 20 percent this year — more than 60 percent over the past 12 months.

There’s no better insurance policy for a CEO than a prosperous stock, even if JPJamie is just one of many boats being helped by the rising tide of a bubbling stock market caused by Federal Reserve altruism.

JPJamie’s book value is still well below where it was prior to the financial crisis. But shareholders aren’t likely to screw around — or ask too many questions — when their equity is floating.

That’s why Jamie did even better in this year’s shareholder vote than in last year’s.

There’s also the “too big to fail” thing going for Jamie. Mess with JPJamie and you are not only messing with the well-being of the USA but also inviting a failure of the entire banking system. (“Systemic failure” is the catchphrase for debacle.)

By extension, if you mess with Jamie, you mess with JPJamie. The guy is, in other words, a freakin’ national treasure.

Joshua Rosner, who wrote the Graham Fisher report, might see things a little differently.

And he thinks JPJamie gets a pass because of its lofty status.

“In our reviews we could not find another ‘systemically important’ domestic bank that has recently been subject to as many public, non-mortgage related, regulatory actions or consent orders,” Rosner wrote.

Wait a minute, fella! You are defiling a national treasure!

Rosner sums up his position by saying that investors may not be paying enough attention to things that are happening off JPJamie’s balance sheet.

Aw! Jamie and his friends in Washington won’t let anything bad happen to this bank. Rosner and his kind are just creating one of those tempest things. It couldn’t possibly end up as a banking equivalent of one of those Oklahoma twisters.

Could it?