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| Jamie Dimon's charm offensive may rub struggling customers the wrong way | Jamie Dimon's charm offensive may rub struggling customers the wrong way |
| (3 months later) | |
| Can you buy better karma? JP Morgan wants to give it a shot with a money-backed charm offensive of late – including a $100m package of support to the City of Detroit and a pledge of $20m over the next five years to help military veterans and their families. | Can you buy better karma? JP Morgan wants to give it a shot with a money-backed charm offensive of late – including a $100m package of support to the City of Detroit and a pledge of $20m over the next five years to help military veterans and their families. |
| The residents of Detroit and those military families may not want to look a philanthropic gift horse in the mouth, and understandably so. But is JP Morgan just doing public relations? Perish the thought – says JP Morgan. | The residents of Detroit and those military families may not want to look a philanthropic gift horse in the mouth, and understandably so. But is JP Morgan just doing public relations? Perish the thought – says JP Morgan. |
| "The cynic would be wrong," CEO Jamie Dimon told the Today Show's Matt Lauerabout anyone who would see the Detroit investment as merely good PR for his bank. "We invest and develop communities around the world. And we've been doing this since our heritage started 200 years ago. So that's what banks do." | |
| It is unlikely that Dimon's sense of largesse will challenge that of Pope Francis. | It is unlikely that Dimon's sense of largesse will challenge that of Pope Francis. |
| The company insists that the recent outpouring is not just a feel-good ploy, but a smart investment for a bank that counts among its customers 1.2m people and tens of thousands of businesses in Southeast Michigan. Insiders say Dimon urged his management team eight months ago to poll Detroit's community leaders and local non-profits and ask what they wanted. The result was a series of grants – $40m of which will go to community development financial institutions that will choose what parts of Detroit's rebuilding to invest in. | |
| In their defense, it is true that the bank has put money into struggling states and cities before, including a $10.5bn no-collateral loan to California when the state hit the skids in 2009. JP Morgan called that loan part of its "social mission", though, as the Wall Street Journal noted, the bank also did big business with the state. | In their defense, it is true that the bank has put money into struggling states and cities before, including a $10.5bn no-collateral loan to California when the state hit the skids in 2009. JP Morgan called that loan part of its "social mission", though, as the Wall Street Journal noted, the bank also did big business with the state. |
| Still, that same cynic to which Dimon referred might note that banks also do a lot of other things besides community reinvestment – things that might be all too fresh in the minds of the beleaguered consumers who are either struggling with foreclosures or unable to even quality for a loan or mortgage. They might think that, in general, the banking sector has been unhelpful to those struggling to dig out from the mortgage crisis. | |
| And, that's why – as much as JP Morgan would like people to focus on the donations instead of the intentions behind them – there is certainly a strong streak of self-interest at work. (JP Morgan owns a minimal amount of Detroit's debt, so the payoff wouldn't be just financial.) | And, that's why – as much as JP Morgan would like people to focus on the donations instead of the intentions behind them – there is certainly a strong streak of self-interest at work. (JP Morgan owns a minimal amount of Detroit's debt, so the payoff wouldn't be just financial.) |
| In short, JP Morgan is a bank that is trying to prove it can do right because it knows it did wrong. JP Morgan has taken a beating financially from a series of embarrassing settlements costing $20bn – on everything from mortgages to credit cards to Bernie Madoff – and it's had a few terrible years for its image (and its stock price). | In short, JP Morgan is a bank that is trying to prove it can do right because it knows it did wrong. JP Morgan has taken a beating financially from a series of embarrassing settlements costing $20bn – on everything from mortgages to credit cards to Bernie Madoff – and it's had a few terrible years for its image (and its stock price). |
| Its once-tall image has been limping from a number of missteps: allegedly robo-signing credit-card judgements against consumers; overaggressively foreclosing on military veterans; accepting a settlement indicating two banks that it acquired sold bad mortgages during the crisis; allegedly failing to spot Bernie Madoff's fraud; and, most of all, having an initially aloof response to a major trading scandal – the London Whale incident – which cost the bank about $6bn. The London Whale scandal would have broken the back of any other bank – and it led to a series of hits to JP Morgan CEO Jamie Dimon, including Congressional hearings, a major investigation by the Senate, and persistent (now fading) calls to take away his chairmanship of the bank. The scandal was, by any measure, a close call: the fact that the bank had enough money to withstand that potential disaster was more a matter of luck than smarts. | Its once-tall image has been limping from a number of missteps: allegedly robo-signing credit-card judgements against consumers; overaggressively foreclosing on military veterans; accepting a settlement indicating two banks that it acquired sold bad mortgages during the crisis; allegedly failing to spot Bernie Madoff's fraud; and, most of all, having an initially aloof response to a major trading scandal – the London Whale incident – which cost the bank about $6bn. The London Whale scandal would have broken the back of any other bank – and it led to a series of hits to JP Morgan CEO Jamie Dimon, including Congressional hearings, a major investigation by the Senate, and persistent (now fading) calls to take away his chairmanship of the bank. The scandal was, by any measure, a close call: the fact that the bank had enough money to withstand that potential disaster was more a matter of luck than smarts. |
| And, perhaps the worst outcome from Dimon's perspective, the major shareholder proxy firm Glass-Lewis suggested JP Morgan take away his title of chairman in 2013 and replaced the board of directors that supported him. Dimon's standing at the bank and among bankers is not something he seems to take lightly; after coming through the fire of a fight with his mentor at Citigroup, Sandy Weill, Dimon has something to prove – perhaps for the rest of his career. He recently promised shareholders that he plans to stay at JP Morgan for five more years. | And, perhaps the worst outcome from Dimon's perspective, the major shareholder proxy firm Glass-Lewis suggested JP Morgan take away his title of chairman in 2013 and replaced the board of directors that supported him. Dimon's standing at the bank and among bankers is not something he seems to take lightly; after coming through the fire of a fight with his mentor at Citigroup, Sandy Weill, Dimon has something to prove – perhaps for the rest of his career. He recently promised shareholders that he plans to stay at JP Morgan for five more years. |
| But that kind of staying power depends, in part, on JP Morgan's stock price. A bank chief is only as secure as his happiest shareholder. Over the past six months, JP Morgan's stock, currently around $54, has been falling too close to its 52-week low of around $50 a share. That provides a financial imperative to turn the bank's image around. | But that kind of staying power depends, in part, on JP Morgan's stock price. A bank chief is only as secure as his happiest shareholder. Over the past six months, JP Morgan's stock, currently around $54, has been falling too close to its 52-week low of around $50 a share. That provides a financial imperative to turn the bank's image around. |
| So is JP Morgan righting its wrongs? It's too soon to tell. As Detroit rebuilds, it's impossible to make the case that community investment is a bad thing, as Cumberland Advisors portfolio manager Frank Mousseau (an expert on Detroit) told me. "Is it self-serving to invest more money in it? Sure," Mousseau conceded. "Does that make it a bad thing? No." | So is JP Morgan righting its wrongs? It's too soon to tell. As Detroit rebuilds, it's impossible to make the case that community investment is a bad thing, as Cumberland Advisors portfolio manager Frank Mousseau (an expert on Detroit) told me. "Is it self-serving to invest more money in it? Sure," Mousseau conceded. "Does that make it a bad thing? No." |
| What is clear, though, is that the bank has a lot more work to do to burnish image. Helping Detroit and veterans is a good first step. But it can't just be about looks. JP Morgan has to prove that it's doing business in a way that it can be proud of. That has nothing to do with karma, everything to do with fixing the past rather than trying to write over it. | What is clear, though, is that the bank has a lot more work to do to burnish image. Helping Detroit and veterans is a good first step. But it can't just be about looks. JP Morgan has to prove that it's doing business in a way that it can be proud of. That has nothing to do with karma, everything to do with fixing the past rather than trying to write over it. |