The WSJ today reports that JP Morgan is having to spend billions to satisfy its numerous regulators:
J.P. Morgan Chase, facing a host of regulatory and legal woes, plans to spend an additional $4 billion and commit 5,000 extra employees this year to clean up its risk and compliance problems, according to people close to the bank. ...
The planned moves, previously undisclosed, come as the nation's biggest bank by assets faces scrutiny from U.S. regulators on areas ranging from trading oversight to mortgage-bond sales to overseas-hiring practices. ...
In April top examiners from the Office of the Comptroller of the Currency and the Federal Reserve told Mr. Dimon and his board that they had lost trust in management, said people familiar with the meeting.
At the same time, of course, the Journal also reports that:
While it has been the worst of regulatory times, it has been the best of times for profits as the bank posted record profits last year. This week, its investment bank was a lead underwriter in the $49 billion bond issue for Verizon Communications Inc., the largest corporate-debt issue in history, and advised Nokia Corp. on a recent $7 billion sale to Microsoft Corp.
How is that such a profitable bank can be the target of so much regulatory ire? Is Morgan really that badly run?
I don't think so. I think Morgan is paying the price for CEO Jamie Dimon having the courage to tell Washington that regulation is the problem, not the solution. As Kevin Hall reported back in 2012, for example:
Jamie Dimon, America’s most celebrated banker, heaped criticism on regulators and politicians during a high-profile visit to the nation’s capital Wednesday, warning that overregulation is inhibiting business and that political stalemates threaten the economy. ...
Morgan is paying the price for its boss having spoken truth to power. Offended regulators are pursuing a vindictive campaign of revenge, solely out of spite. It's an appalling example of government overreach.