To Wall Street, Jamie Dimon looks like the Teflon C.E.O.
Despite mounting legal problems at JPMorgan Chase, including a tentative $13 billion settlement which is expected to end several federal and state investigations into questionable mortgage practices, Mr. Dimon appears solidly ensconced atop the nation’s largest bank. On Sunday, several JPMorgan executives said, as they have for months, that the bank’s board remains firmly behind Mr. Dimon, who is both chairman and chief executive.
“The board has not flinched in their support for him,†said a person close to JPMorgan. Only last week, the head of the board audit committee, Laban P. Jackson Jr., publicly endorsed him at a conference. Mr. Dimon’s role in negotiating the new settlement, costly as it is, has only cemented the board’s support, the executives said.
To many ordinary Americans, such confidence might seem bewildering. After all, more than a half dozen Wall Street chiefs, including Charles O. Prince III at Citigroup and Kenneth D. Lewis at Bank of America, were ousted by the financial crisis.
The difference is that JPMorgan’s legal travails have not truly threatened the bank financially, the executive said. While other C.E.O.’s stumbled during the crisis, Mr. Dimon never did, emerging more powerful as his bank went on to report record profits. So far this year, even as its legal troubles have worsened, the bank’s share price has gained roughly 23 percent.
By the logic of Wall Street, putting the bank’s legal problems aside is seen as a victory for Mr. Dimon, even though those problems arose on his watch. The share price rose recently on news that JPMorgan would set aside $23 billion for its legal headaches.
Still, the latest developments have sent a chill through the bank, which, to some on Wall Street, at times seems to be driven by Mr. Dimon’s cult of personality. Whether he could maintain his grip on the bank should JPMorgan face criminal charges is uncertain, though such charges are unlikely. The Justice Department, while agreeing to settle civil claims, has refused to agree to a so-called nonprosecution agreement for its criminal investigation.
And even within JPMorgan questions have begun to emerge on whether Mr. Dimon would survive another shareholder referendum on his twin roles of chairman and chief. While he won handily last time, with nearly 70 percent of the vote, some question whether he could win again, especially if problems at the bank mushroom.
At the board level, Mr. Dimon continues to enjoy almost universal support, executives said. While directors are concerned over apparent breakdowns in compliance and controls that led to the multibillion-dollar “London whale†trading fiasco and other woes, for now they have not pinned blame on Mr. Dimon. And, at a meeting in September, in which the board discussed a series of problems, directors reiterated their support for Mr. Dimon’s approach with the government, according to people briefed on the meeting.
More compelling, these people say, is Mr. Dimon’s record for delivering where it counts: at the bottom line. This month, the bank reported its first quarterly loss ever under Mr. Dimon. Other than that misstep, it has thrived under his stewardship, producing three years of consecutive quarterly profits.
Of course, Mr. Dimon’s support among board members could be eroded, depending on how a spate of government investigations plays out. Federal authorities, for example, are currently investigating JPMorgan’s hiring practices in China. Separately, prosecutors and the F.B.I. in Manhattan are examining whether the bank failed to alert authorities to suspicions about Bernard L. Madoff‘s Ponzi scheme, acording to people briefed on the matter.
Mr. Dimon has a reputation as a charismatic, numbers-oriented executive, and in the past he has taken a relatively hard line on Washington’s attempts to strengthen regulation of Wall Street. But in recent weeks, in discussions with the Justice Department, he struck a more conciliatory tone, according to people briefed on the negotiations.
To further repair strained ties with regulators, Mr. Dimon and Mr. Jackson traveled to Washington earlier this month to meet with top officials from the Office of the Comptroller of the Currency, according to people briefed on the gathering. At the meeting, JPMorgan executives spoke with the regulators about issues related to the bank’s controls against money-laundering, after failures that threatened to allow tainted money to move through the bank’s vast network.
In his dealings with regulators, Mr. Dimon has opted for a gentler approach, refraining from the kind of brash pronouncements that have rankled government authorities in the past, including his vocal criticism of some efforts to write rules under the Dodd-Frank regulatory overhaul. He is more cautious, the people said, before making bold statements.
Among board members, people close to the bank said, there are a swirl of questions about why a bank with JPMorgan’s sophistication and scale would have such flawed risk and compliance controls. There is a percolating feeling among some directors, the people said, that the bank should have increased its risk operations and management sooner.
JPMorgan, according to these people, is now planning to spend roughly $4 billion and assign an extra 5,000 employees to help repair its risk and compliance operations. JPMorgan has also rejiggered its compliance reporting structure. Cynthia Armine, who came from Citigroup in 2011 and now heads compliance, will report directly to Matthew E. Zames, the chief operating officer.
