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Dimon vows to clean up

Friday, July 13, 2012 - 02:20

Jul 13 - JPMorgan posts 4.4 billion dollars of losses from the trading scandal as the bank and CEO Jamie Dimon, a former Wall Street wonderkid, try to put the focus on profit. Jill Bennett reports.

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JPMorgan Chase tries to clean up the mess after losing $5.8 billion in 2012 from disastrous trading bets that gave the bank and CEO Jamie Dimon a big black eye. The largest U.S. bank still managed to earn nearly $5 billion in overall profit in the latest quarter but revealed traders might have tried to conceal losses earlier in the year. The bank says the unit responsible for the trading losses will be making conservative investments going forward. But that may come at a cost. Associate Finance Professor James Angel, Georgetown University: SOUNDBITE: JAMES ANGEL, ASSOCIATE FINANCE PROFESSOR, GEORGETOWN UNIVERSITY (ENGLISH) SAYING: "We may see more volatility in their earnings going forward if their future hedging or rather if they abstain from hedging in reasonable ways that would reduce their volatility." There are also concerns over supervision in other units of the bank. SOUNDBITE: JAMES ANGEL, ASSOCIATE FINANCE PROFESSOR, GEORGETOWN UNIVERSITY (ENGLISH) SAYING: "There's always the cockroach theory that when you see a problem in one area you have to ask yourself where are the other cockroaches. So the bank is saying all of the right things in terms of they have admitted the problem, they are making changes, they've made personnel changes they are making systems changes. So they say they are doing all of the right things time will tell if they really are." CEO Dimon, once the Golden Boy of Wall Street, respected for maintaining profits during the financial crisis, addressed the issues head-on in a meeting with analysts and shareholders Friday. AUDIO: JAMIE DIMON, CEO, JPMORGAN CHASE (ENGLISH) SAYING: "If we do find out more we will do the right thing as we always try to do." Part of the bank's crisis management includes pledging to take back two years worth of stock and option bonuses from the executives linked to bad trades. Some analysts expect the shakedown to hit the corner office. Nancy Bush, NAB Research: SOUNDBITE: NANCY BUSH, BANK ANALYST, NAB RESEARCH (ENGLISH) SAYING: "I think it will be very interesting to see what happens to Jamie's compensation. They did address that. They said the board will look at Jamie's compensation. I'd be very very surprised if he does not take a sizable hit to his compensation this year." SOUNDBITE: JAMES ANGEL, ASSOCIATE FINANCE PROFESSOR, GEORGETOWN UNIVERSITY (ENGLISH) SAYING: "I think his halo has been tarnished. Time will tell what it does to his reputation." It may take several earnings reports before investors can see through the headlines to know whether JPMorgan's trading scandal truly is behind it. Jill Bennett, Reuters

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Dimon vows to clean up

Friday, July 13, 2012 - 02:20