Dimon Vows to Fix JPMorgan’s Compliance Problems

As the price tag swells for JPMorgan Chase’s multibillion-dollar trading loss, Jamie Dimon, the bank’s chief executive, offered an unvarnished message to employees on Tuesday.

JPMorgan, which is poised to pay roughly $800 million to a host of government agencies, is working to “face our issues, roll our sleeves, and fix” the compliance and control problems throughout the bank, Mr. Dimon said in a companywide memo on Tuesday.

The brewing regulatory problems and the ensuing fallout were on display on Monday when JPMorgan agreed to settle investigations from government agencies in Washington and London into the bank’s $6 billion blunder by traders in London. As part of the settlement, it will make a sweeping admission of wrongdoing.

The settlements, according to people briefed on the matter, will help the bank resolve investigations by the Securities and Exchange Commission, the Federal Reserve and the Office of the Comptroller of the Currency, which are focused on a breakdown in controls at the bank that allowed the trading losses to occur. The resolution extends across the Atlantic, too; JPMorgan will pay fines to wrap up the Financial Conduct Authority’s investigation into the soured trades.

Even as JPMorgan, the nation’s largest bank, works to close a painful chapter in its history that included Congressional hearings, the departure of senior executives and criminal charges against the traders at the heart of the losses, the bank has more work to do and should brace for more regulatory challenges, Mr. Dimon cautioned.

As he works to shore up lax controls and root out lingering problems, Mr. Dimon explained how “we are aggressively tackling these challenges.” Mr. Dimon explained the contours of that strategy in his memo, including how the bank “deployed massive new resources and refocused critical managerial time” on the effort.

A critical component of that effort, Mr. Dimon said, is refocusing the bank on core areas and exiting those units like student-loan origination and most of the physical commodities sales and trading business.

JPMorgan has ratcheted up its spending on controls, Mr. Dimon noted, increasing the “total spend on controls” to roughly $1 billion this year. Spending on technology that helps bolster controls has increased by 27 percent since 2011, Mr. Dimon said.

To proactively thwart any regulatory missteps, Mr. Dimon said the firm is “conducting an in-depth review” of its foreign correspondent banking business â€" an area that could pose regulatory headaches going forward.

Also critical to JPMorgan’s redoubled efforts, Mr. Dimon said, is a “more open and transparent relationship with regulators.” Within Washington, JPMorgan developed a reputation as something of a bully. As the bank works to mend its frayed relationships with regulators, Mr. Dimon said he personally meets with bank examiners from the comptroller’s office and the Fed.

Despite the cautiously optimistic tone from Mr. Dimon, JPMorgan is contending with a range of regulatory and legal problems. Some investigations into the trading losses are plodding forward. For example, the Commodity Futures Trading Commission, a regulator that oversees the market in which the losses occurred, has resisted signing on to the broader settlement, opting instead to strike out on its own, the people briefed on the matter said. Meanwhile, federal prosecutors and the F.B.I. in Manhattan are also still investigating the losses.

Aside from the trading losses, JPMorgan faces inquiries from at least seven federal agencies and two European countries. Those inquiries have a vast scope, from the bank’s hiring practices in China to mortgage loans sold to investors during the depths of the financial crisis.

JPMorgan is also on the brink of paying an $80 million fine to the comptroller’s office and the Consumer Financial Protection Bureau to resolve an investigation into its credit card practices. In his memo, Mr. Dimon noted that JPMorgan no longer sells identity theft and credit insurance to its credit-card customersâ€"two products that regulators seized upon as problematic.

The memo, combining notes of contrition with vows to improve, echoed his letter to shareholders, which apologized for letting “our regulators down” and pledged to “do all the work necessary to complete the needed improvements.”

Together the efforts, Mr. Dimon said in the Tuesday memo, “represent an unprecedented” initiative for JPMorgan and one that ensures the bank will “get this right.”