JPMorgan Chase’s (NYSE:JPM) Jamie Dimon will keep his title as both chairman and chief executive of the bank as shareholders voted against a plan to strip the executive of his chairman titles and appoint an independent board.
The executive has come under fire in the wake of the bank’s reported $2.3 billion loss, resulting from a risky bet the bank made to hedge possible losses on its loan portfolios.
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The meeting, which took place in Tampa, Fla., and lasted less than an hour, began with Dimon addressing the much-publicized losses, in prepared remarks that he delivered hurriedly to open the meeting. He called the mistakes “self-inflicted,” admitting the strategy was “poorly conceived, poorly vetted and poorly executed.”
“What this hedge morphed into violates our own principles of managing risk,” Dimon said at the meeting.
Following the prepared remarks, shareholders were able to address Dimon directly, and introduce proposals, including one that would strip Dimon of his responsibilities as chairman. Lisa Lindsley, capital strategist for the American Federation of State, County and Municipal Employees (AFSCME), introduced the proposal in favor of the appointment of an independent chairman, which failed to pass, but received roughly 40% of the vote.
“Jamie Dimon should not be both the chief executive officer and running the board of directors that’s charged with monitoring executives.” Lindsley said, in an interview with FOX Business following the meeting. “I think he’s good and he should remain as CEO, he just shouldn’t be his own boss. He shouldn’t be the chair of the board.”
Lindsley said the proposal was just the first step, indicating she plans to continue a dialogue with the company on the issue.
Dimon also took heat for the company’s loan servicing practices, when multiple shareholders requested more action from the bank to work with borrowers on loan modifications.
“If Chase can afford to take a $2 billion loss on derivatives, why can’t we take more losses on loan modifications by reducing principle balances,” Laura Johns, a former housing counselor and member of Organize Now, a progressive, community-based Florida organization, said in a meeting.
In an interview with FOX Business following the meeting, Johns said she appreciated Dimon’s willingness to admit the bank’s mistakes and attempt to fix the problem by more carefully managing risk, but she argued the bank wasn’t fixing its mistakes with regard to the housing market.
“The fix is really reducing people’s principle. They bought these loans at a drastic discount. You know that $2 billion loss he said nobody suffered? Well, homeowners are suffering every day,” Johns said.
The proposal for an examination of loan servicing practices was defeated, receiving only 4% of the vote.
Other proposals called for Dimon’s resignation from the board of the New York Federal Reserve, a position he defended as “more like an advisory position.”
Still, questions remain about what will result from the $2 billion trading loss, announced last Thursday. The FBI’s New York field office confirmed on Tuesday that it will open an investigation into JPMorgan Chase, and the Department of Justice has opened an inquiry of its own. The Securities and Exchange Commission announced its investigation last week.
Those kinds of investigations are routine, but nevertheless the matter has renewed calls for stricter regulation and more aggressive risk-management. Banking analyst Dick Bove of Rochdale Securities said a reduction in the amount of risk the bank takes is one thing he hopes doesn’t happen.
“I still think these companies should be able to take as much risk as they choose to take,” Bove said, in an interview with FOX Business correspondent Adam Shapiro, prior to the shareholder meeting. “In fact, I’d be really disappointed if JPMorgan reduced its ability to take risk, because I want them to make money.”