Jamie Dimon's War With Himself: Collateral Damage
NEW YORK (
) --
JPMorgan Chase
(JPM) - Get Report
successfully downplayed its announcement of a successor to CEO
Tuesday, but a Dimon departure may come far sooner than many realize.
Richard Bove, analyst at Rochdale Securities, believes Dimon will be gone within the next two to three years.
"I honestly believe he's ready to move on. I think he has Henry Paulson-type visions," Bove says, alluding to the former
Goldman Sachs
(GS) - Get Report
chief who became Treasury Secretary under President George W. Bush.
Adding credibility to Bove's prediction were some rather inscrutable comments by
Dimon at the Clinton Global Initiative
Conference last week.
"I think it would be a very bad long-term policy error to have banks that are too big to fail. By that I don't mean make the banks smaller. We are large because we have a reason to be large, but you don't mind if a company fails. You mind if a company fails and it destroys your economic life," he said.
So we shouldn't have banks that are too big to fail but we shouldn't make banks smaller? JPMorgan is large because it has a reason to be large?
Perhaps the comment simply was not Dimon's most eloquent moment. But perhaps one can read more between the lines: Maybe Jamie Dimon is at war with himself. As a well-known Democrat, he may believe giant banks are a big problem, which could explain why he uttered the first sentence. But then, remembering he also happens to be the head of a big bank, maybe he backpedaled.
That interpretation does not seem so far-fetched when one considers that, just a few days later, he anointed his potential successor in Jes Staley.
Not surprisingly, JPMorgan spokesman Joseph Evangelisti sees no inconsistency in Dimon's remarks.
"Jamie thinks banks should be allowed to fail, but that there should be a system or mechanism in place that limits the impact on taxpayers and the financial system," Evangelisti said. "The FDIC was allowed to go into WaMu, put it in receivership, and transfer ownership in an orderly way that did not hurt taxpayers or the financial system. No regulator had similar authority for companies like Lehman or
AIG
(AIG) - Get Report
."
Life would be easier for Evangelisti if that's what Dimon had said. But it's not what he said.
Rochdale's Bove says if the market knew Dimon would be gone in two years, JPMorgan's stock would be lower, reflecting uncertainty over whether a successor can continue to lead the bank as successfully as Dimon has done.
Bove has other concerns. He believes loan losses will be higher than expected in the third and fourth quarters, and that JPMorgan, more than any other bank, is likely to be hurt by a range proposed regulatory reforms, which take on everything from derivatives to capital to consumer protection. Nonetheless, he continues to rate JPMorgan a "buy," while acknowledging some anxiety about his call, because he believes JPMorgan's intermediate-term earnings prospects are very strong.
Maybe so, but I wouldn't be surprised to see some noise in the stock over the next several days as the market begins to digest some of these issues.
--
Written by Dan Freed in New York
.
