DAVID GREENE, HOST:
The head of JPMorgan Chase, Jamie Dimon, has gotten an invitation to testify in front of the Senate Banking Committee about his bank's recent trading loss of at least $2 billion.
STEVE INSKEEP, HOST:
Dimon is very much the public face of his firm. In a Wall Street culture where banks are defined as much by the executives who run them is by the assets they hold. So, what kind of culture led to the multibillion dollar losses at JPMorgan Chase?
GREENE: To find out more, we reached William Cohan. He's a columnist for Bloomberg. Before he was an award-winning journalist though, he was a banker, a managing director at JPMorgan. And he joined us on the line from Nepal where he's on vacation.
Good morning, William, and thanks so much for joining us from so far away.
WILLIAM COHAN: Well, it's good afternoon here, but thank you for having me. It's a pleasure.
GREENE: Well, let's talk about your former employer, JPMorgan. Has any of what we've seen recently surprised you?
COHAN: Well, I think what's really surprised me the most is the fact that it frankly happened at all, because don't forget JPMorgan Chase and its CEO Jamie Dimon were sort of the kings of the swagger - that whatever swagger remained left on Wall Street, they were the kings of it. Don't forget that JPMorgan Chase was asked by the government to buy Bear Stearns when it was on the verge of bankruptcy, it was asked to buy Washington Mutual when it was in bankruptcy, so it was generally perceived to be our strongest financial institution, number one. And Jamie Dimon, the CEO, constantly was boasting of their fortress balance sheet. And so what was surprising me is that this big bank, which had come out of the crisis so well, is now seen it's normal, it's susceptible to huge losses, unanticipated losses, just like every other firm.
GREENE: When Bloomberg first reported some of the potential losses back in early April with these big trades that were going on, Jamie Dimon dismissed it as a tempest in a teapot. He came around, you know, a month later and acknowledges a lot of failures. What grade would you give him in terms of handling the PR?
COHAN: Well, this is one of those rare times during the crisis where a journalist at Bloomberg, and then at The Wall Street Journal - actually, I was doing a great service for all of us, in pointing out the big risk that the so-called London whale was taking and his chief investment officer at JPMorgan Chase. And then for Jamie Dimon to come out and pooh-pooh it and say it's a tempest in a teapot, frankly, he loses a lot of credibility. But as far as the handling, itself, of the conference call last week, when he came out and, you know, basically fell on his sword. And then he said look, we deserve the criticism we're getting. You know, I would give him a very high grade for the performance during that conference call and a very low grade for pooh- poohing it a month earlier.
GREENE: Well, interesting, that I mean there was this dramatic change. He goes from, you know, pooh-poohing it, as you say, to falling on his sword. Just before he fell on his sword, days before as I understand it, he, Jamie Dimon called you. It was about two weeks ago. What did he say and what did you tell him?
COHAN: Well it's funny. I had written a Bloomberg column about the leadership back among Wall Street. And I heard that he didn't like it, and I was assuming that he was calling up to criticize me for that. It turned out that he was sort of calling me up, totally out of the blue, just to sort of talk about the marketplace, what was happening, and frankly, just I think to, I don't know that butter me up is the right word or to, you know, lay some groundwork for a carpet bombing that he knew was coming to him with a member of the media. But I must say, even though I had met Jamie Dimon before and find much to admire about him, this call out of the blue struck me as quite odd until frankly, you know, you have to weeks later this all happens and I'm sure, you know, that I speak often about Wall Street and was hoping to perhaps show himself as a regular guy when you cut all through it.
GREENE: He was already sort of doing work to control the damage before that conference call when he fell on his sword.
COHAN: Yes. He was doing damage control, even though I was not aware that there was any damage that needed to be controlled until two weeks later.
GREENE: William Cohan, thanks so much for talking to us.
COHAN: Thank you.
GREENE: William Cohan's most recent book is, "Money and Power: How Goldman Sachs Came to Rule the World." And he was kind enough to speak to us from vacation in Nepal. Transcript provided by NPR, Copyright NPR.