JP Morgan (NYSE:JPM) beat off the governance rebels and upheld the olde order. Jamie Dimon will get to keep his job as CEO and Chairman. After some heavy lobbying, arm twisting and God only knows what kind of IOU’s are now out there Jamie Dimon stays in.
I’m not sure the right side won but it is one share one vote which means the big institutions rule. OK so Jamie Dimon’s skills at infighting have triumphed for the present. Business and risk à la Jamie Dimon continue.
Here’s the rub. Financial Institutions are highly leveraged and accident prone at times. No one on JP Morgans Board has significant banking or derivatives/trading experience. They can listen to all the presentations and still not fathom the crux of the matter. They have to trust.
The Board has to trust that nothing will go wrong for a long time. (Long time is defined by how much longer Jamie Dimon wants to stay on) Things do go wrong at financial institutions. London whale debacles have happened to almost every institution in one way or another. The next time something big goes wrong the market will have another crisis of confidence. Everything will boil to the surface. Everything will get second guessed. Large institutional investors will loss heart and come back with a vengeance.
So investing in JP Morgan in addition to the normal risks one would expect from a large financial institution is now like walking with a large jar of nitroglycerine. One false step and it all blows. It blows if you trip. It blows if someone bumps into you. Investing is a blood sport and more than a bump can and will occur.
George Gutowski writes from a caveat emptor perspective.