This strategy employs less organization and functionality than playground children returning to class with muddy shoes and trying to tell the teacher that they did not go outside during recess.
Jamie Dimon and JPMorgan Chase gave everyone a free public relations lesson last week when it called a snap press conference to explain to analysts that the firm's London investment office racked up some $2 billion in losses. A full five days before JP Morgan's annual shareholder meeting, Dimon pro-actively announced the losses and admitted that they were likely to grow. (Perhaps to as much as $3 billion.) Dimon took responsibility for the losses, which he characterized as "egregious." This unforced and unleaked admission of guilt before he was publicly forced to acknowledge it was not just the right thing to do but it was also a savvy, calculated public relations move that played to the heart of Americans' love for compunction. In turn, it also became a way to stop the firm's reputational hemorrhaging before it really got started.
The $2 billion loss has become a tool for regulators to push for more stringently designed parameters in the so-called "Volcker Rule," the Dodd-Frank provision that restricts banks from proprietary trading (trading with the firm's own money). News of the loss has made countless headlines despite the fact that JPMorgan still has $127 billion in equity and is still profitable and well-managed; how much worse would it have been if JPMorgan went to the same old public relations playbook?
It would have been a disaster, not just for JPMorgan but for the whole financial services industry. The American people, and their regulators, have short memories filled with images of robber-barons and white-collar gamblers. After all, who can forget the months of populist anger last year against anything and everything Wall Street, thanks to the Occupy movement? The JPMorgan losses has reignited some fury directed at big banks but it is about as misplaced as it can be as the only people who have a right to be angry at the situation are JPMorgan's shareholders. Who, it should be noted, are not nearly as incensed about the loss as the media and regulatory windbags who keep talking about it. It is not like JPMorgan is looking for a bailout, after all.
Undoubtedly this is a black eye for Dimon, considered by many to be the best managerial mind on Wall Street. Surely the kind of ego required to succeed in Dimon's world cannot make a public mea culpa an easy thing. But if he can take responsibility for the managerial malfeasance anyone can.
To be fair, JPMorgan has run some plays out of the old public relations playbook. Some heads have to roll, of course, such as the rogue London trader nicknamed the "London Whale" because of the large bets he made. Joining him will be Ina R. Drew, the bank's Chief Investment Officer. They both will act as JPMorgan's staffing penance to the world, and to be fair, both probably deserve to go. But it was Dimon who has accepted full responsibility. It would behoove the corporate world, which seems to have perfected the aforementioned blunder-ridden PR strategy, to realize the potential that accompanies America's love for contrition and act on it. That goes double for the insurance industry..
