Top banks, hit hard by rate-rigging scandals and unsupervised play by junior-level traders, are burnishing their images by reestablishing that integrity is indeed a virtue and, if you don’t agree, Junior Staff Member, please seek employment elsewhere.
Barclays’ new CEO, Antony Jenkins, says “bonuses and performance will be assessed against a new "Purpose and Values" blueprint, reports Reuters’ Steve Slater, that has five key values: respect, integrity, service, excellence and stewardship.
"I have no doubt that the overwhelming majority of you ... will enthusiastically support this move,” Jenkins writes in a memo sent to 140,000 staff members today. “But there might be some who don't feel they can fully buy in to an approach which so squarely links performance to the upholding of our values. My message to those people is simple: Barclays is not the place for you. The rules have changed.”
In full-page newspaper ads last July, Barclays made a public apology for its role in the London interbank offered rate (Libor) rate-rigging scandal.
The former head of UBS bank last week blamed “mercenaries” for its role in the Libor scandal, Reuter’s Slater and Katharina Bart reported.
"In these pockets where we had these problems it wasn't probably a bad culture, but it was a lack of culture," Marcel Rohner told a British parliamentary panel. "When you grow a business too quickly you hire people from many different places and some of them ... you really have to qualify as mercenaries,” he said.
Over at JP Morgan, meanwhile, the board decided to cut CEO Jamie Dimon’s compensation for 2012 in half in what a front page New York Times story by Jessica Silver-Greenberg calls the delivery of a “stark message.” But that message is not as much to Dimon, it appears, as it is “to regulators and worried investors that it was a strong watchdog over the nation’s largest bank, according to several people with knowledge of the matter.”
Morgan, meanwhile, released the report of an internal investigation of the London Whale incident that resulted in a more than $6 billion loss that “describes traders making overly optimistic estimates of their losses but stops short of outright fraud,” according to another story in the New York Times written by Ben Protess and Peter Eavis. In it, they write, “the bank confessed, in painstaking detail, to widespread ‘failures.’”
Releasing the report drew praise from several unnamed people in the federal government “as an ‘important step’ for corporate governance” but Protess and Eavis point out that regulators would eventually have been forced to turn over the internal document to the congressional Permanent Subcommittee on Investigations anyway. It “decided to release the report on its own terms” instead.
Dimon last week publicly accused some of his senior managers of acting “like children” in handling the aftermath of the bad derivatives bet, Bloomberg’s Dakin Campbell and Dawn Kopecki reported. “Instead of helping, they were running around with their head chopped off, ‘what does this mean for me personally, how’s my reputation?’”
Dimon told employees that the public backlash would be “really, really bad” for months, they write. “They are going to attack me, they are going to attack the company. I’m off my high-holy horse,” Dimon, 56, said he told his public relations and investor relations staff. “It is what it is, don’t worry about it.”
When asked for his reaction to the board’s action on his compensation yesterday, which “cuts his reign as king of Wall Street CEO compensation” as the Wall Street Journal’s Dan Fitzpatrick reports in a story carrying the hed “Dimon Takes A ‘Whale’ Of A Pay Cut,” Dimon zipped it up.
“I respect their decision,” he reporters. And “when asked for his gut reaction to the pay cut, he said, “Nope, you're not going to get it.’”
That won’t stop others from having their say, of course. In a commentary in the Los Angeles Times, Paul Whitefield compares Dimon’s compensation cut to an attempt by the Oxnard School District Board of Trustees to revoke the pay of an eighth-grade science teacher it fired in April after it was discovered that she’d made some pornographic films before she was hired.
“What’s more pornographic?” he asks: “getting $11.5 million a year to run a bank, or getting fired from a five-figure job trying to teach hormone-addled kids algebra because you once used your assets to pay the rent?”
The fact that JPMorgan posted record 2012 net income of $21.3 billion might have something to do with the fact that, even if you take the bait, the answer has no bearing on reality.