EthicsBite™

Jamie Dimon, CEO and Chairman of JPMorgan Chase, may be facing three whales instead of two.

For much of 2012, Mr. Dimon was a financial media star. While other big banks were embroiled with the fall-out of the mortgage loan / CDO disaster, Jamie was heralded as the one banker who focused closely on risk management and had managed risk successfully.

Then came the first Whale. The so-called London Whale was at the trading desk inside the bank’s Chief Investment Office, the very office whose responsibility it was to manage the risk of the bank’s investments. The trading loss incurred by that one trader ended up a bit north of $6 Billion-with-a-B dollars.

Now Jamie is facing a second Whale as the CEO is negotiating a $13 Billion-with-a-B settlement with the US government related to mortgage fraud. Reports out this past week have indicated that Mr. Dimon personally negotiated this deal with the Attorney General and was attempting to get a settlement that closed the door on any criminal investigation of the bank. The fact that he eventually elected to pay such a high price in the settlement while not obtaining release from potential criminal charges is significant.

Mr. Dimon is an accomplished CEO and experienced risk manager. The reported settlement would lead one to surmise that Mr. Dimon believed there was a measurable risk that failure to settle would lead to even greater cost, greater than $13 Billion. The continued attempt to close the door on criminal investigations by the US government may be more than just an attempt to close the case so the bank can move on.

My bet is that there is one more whale of size. Stay tuned.