The recent history of Jamie Dimon, by Matt Levine October 13, 2012 at 9:47 am

The more I read of Matt Levine, the more I like the guy’s style. Here’s a summary of Jamie Dimon’s recent career Levine penned yesterday:

  • Oversees huge opaque credit hedge position designed to optimize regulatory capital treatment.
  • Tweaks VaR model for that position to be all wrong, understating risk and thus probably overstating capital ratios.
  • Adjusts that position in dubious, risk-increasing ways, driven by capital treatment.
  • Loses a zillion dollars.
  • Trivializes that zillion-dollar loss.
  • Announces a material weakness in internal controls regarding, y’know, that.
  • Is all better.
  • Tweaks VaR model again to show less risk.
  • Gets on pugnacious earnings call in which he says he will ask regulators for additional stock buybacks in next year’s stress tests.
  • Brushes aside a question from a UBS analyst to the effect of “do you think your material weakness in internal controls will impact your ability to do buybacks?”
  • Says “our capital levels will be higher than you think because we will tweak our internal models to get them there.”

From which we conclude first that Levine is funny, smart, and not afraid to talk truth to Dimon; and second that the FED’s model approvals group is going to have a lot of fun with applications from JPM for model ‘enhancements’ in the next few quarters. It is good to have some light shone in that particular corner for once*.


*Yes, that was a really weak link for a picture that has nothing to do with the rest of the post. So sue me.

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