JPMorgan's Dimon defends pay for hard jobs

JPMorgan Chase & Co. Chairman and Chief Executive Officer Jamie Dimon speaks at the 50th annual Investment Company Institute (ICI) general membership meeting in Washington May 8, 2008.

NEW YORK (Reuters) - JPMorgan Chase & Co (JPM.N) Chief Executive Jamie Dimon, weighing in on the firestorm over bonuses paid by banks who got taxpayer bailouts, defended paying staff for tough jobs.

Many executives, including Dimon, whose bank has taken $25 billion from the U.S. government's Troubled Asset Relief Program (TARP), have said they will not seek a bonus for 2008 after the credit crisis that began more than a year ago spiraled into a global recession.

"Are banks to blame? Well, of course," said Dimon, but he warned against just blaming banks and bankers for the crisis, noting that other players in financial markets, including U.S. consumers, had borrowed more than they held in assets.

Dimon told delegates at a conference that if there is a tough job to do at a company, a manager wants to know he can persuade his best person to do that job.

Referring to the theoretical tough job as "Vietnam," Dimon said he would want to support the person handling the role and be able to recognize that they have a difficult job.

The issue of TARP recipient banks providing bonuses to executives has irritated many key members of the Democratically-controlled Congress.

House Financial Services Committee Chairman Barney Frank said that while he thought lawmakers were unable to completely ban such bonuses, legislation instead might address it.

The Massachusetts Democrat told reporters in Washington on Tuesday that a consensus was forming to hand the Federal Reserve the power to regulate systemic risk.

"As part of the systemic risk regulation you have to include executive compensation because executive compensation ... gives incentives to take excessive risk," said Frank.

Dimon said any investigation into executive pay should take different situations into account, rather than tarring all bankers with the same brush.

Dimon also noted that JPMorgan, along with other banks, paid most of its compensation to executives in stock and these executives have already seen their net worth plummet as the banks' share prices have fallen.

The KBW Bank index .BKX fell more than 50 percent in 2008, while JPMorgan's shares slid 27 percent.

Dimon in December joined a raft of bank executives including Citigroup Inc's Chief Executive Vikram Pandit and Morgan Stanley's Chief Executive John Mack in saying that he will not seek a bonus for 2008.

And executives at banks that received funds under the TARP agreed to follow rules limiting executive pay.

Shares in JPMorgan are down 20 percent so far this year and were down 5.2 percent to $23.90 in early Tuesday afternoon trading from Monday's close.

(Reporting by Elinor Comlay in New York and John Poirier in Washington; Editing by Tim Dobbyn)