Is JPMorgan Too Big to Manage?
JPMorgan’s surprising $2 billion trading loss begs a post-financial-crisis question: Are America’s biggest banks simply too big to manage?
Washington policymakers have largely focused on whether banks are “too big to fail” or whether they are so huge and interconnected that their failure would threaten the greater financial system as when Lehman Brothers collapsed in 2008.
But JPMorgan Chief Executive Jamie Dimon’s seeming failure to gauge the riskiness of the trades at the heart of the loss is shifting the debate to “too big to manage”.
“In hindsight the new strategy was flawed, complex, poorly reviewed, poorly executed, and poorly monitored,” Dimon said during a conference call late on Thursday about the trades designed to hedge the company’s overall credit exposure.
The loss, which Dimon said could grow by another $1 billion, does not appear to pose a threat to JPMorgan’s overall financial stability.