Upon discovering the massive trading blunder now rocking his company, Jamie Dimon grew queasy and pushed JPMorgan Chase (NYSE:JPM) into disaster mode, including setting up a war room and sending out a financial SWAT team, according to a published report.
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The behind-the-scenes account shows how concerned execs at the No. 1 U.S. bank by assets were about the failed hedging strategy, which it disclosed last week has led to more than $2 billion in losses in just weeks.
"The big lesson I learned: Don't get complacent despite a successful track record," Dimon told The Wall Street Journal. "No one or no unit can get a free pass."
According to the Journal, Dimon lashed out on April 30 at colleagues who handed him summaries and analyses of the losses by the bank’s chief investment office. Throwing down the papers, he yelled, “I want to see the positions!...Now! I want to see everything!”
Ina Drew, the chief of the CIO, was eventually ousted last week in the wake of the disclosure.
JPMorgan relied on the CIO to hedge its massive exposures, but the office expanded in recent years into essentially massive directional bets. Tellingly, last year risk-control caps were removed that had required traders to exit position when losses exceeded $20 million, however Dimon wasn’t aware of those changes, the Journal reported.
According to the paper, in an April 9 operating-committee meeting, Dimon questioned Drew about a Journal story breaking the CIO’s massive positions, but she told the group the trades would work out, saying: “We can ride this out.”
Those reassurances led to Dimon’s infamous statement to investors on an April 13 earnings call that concerns about the CIO trades were a “complete tempest in a teapot.”
Despite those comments, the CIO’s books were registering losses at the end of April and into early May of about $200 million a day, a source who had a direct conversation with Dimon told FOX Business’s Charles Gasparino.
Dimon delayed disclosing the losses in a scheduled quarterly filing on April 27 because he didn’t have a full understanding of the impact of the trades, the Journal said.
After growing frustrated with daily summaries of the losses, Dimon demanded to see specific positions on April 30, which led him to grow queasy, the Journal reported.
Dimon, who was leaving sleep over the matter, set up a war room on the 48th floor of JPMorgan’s Park Avenue headquarters in Manhattan that was led by risk chief John Hogan, the paper said.
The following week JPMorgan also staged a mock conference call with investors for Dimon, quizzing him on the losses. Senior execs came in on Mother’s Day to help set up a SWAT team gathering documents to respond to a slew of probes into the losses.
The disaster has helped wipe out more than $25 billion of JPMorgan’s market cap so far. Shares of the big bank slid 0.45% to $33.78 Friday morning, leaving them up less than 2% on the year.