At the end of Jim Cramer’s Mad Money show on CNBC, he weighed in on the JP Morgan $2 billion “hedged” trading loss. Cramer said talk his cheap and Dimon should take some action, put some money where is mouth is, as in give up his bonus.
In his “No Huddle Offense” segment, Cramer sounded off on the JPMorgan Chase (JPM_) bad-trade debacle, as his charitable trust, Action Alerts PLUS, is in the unfortunate position of holding shares of the ill-fated investment bank.
Cramer said he can’t blame CEO Jamie Dimon, but it’s his job to be more skeptical. He admitted that his trust had no business owning an international bank given the risks involved. “I don’t want an apology,” said Cramer, “I want action,” adding that someone must pay for their actions. He suggested Dimon give up his bonus as a gesture of good will toward shareholders. (The Street)
While this would be a nice gesture, it wouldn’t really make that much of an impact on a trading loss that could exceed $2 billion. In past years, Jamie Dimon has received restricted stock and stock options valued at $17 million. That doesn’t mean much in light of the billions lost.
Plus, JP Morgan has now lost its standing as the best bank in the world – the bank with the so called fortress balance sheet. It’s become just another hated bank that you can’t trust. It’s credit rating has been downgraded. Analysts left and right are lowering their price targets.
Perhaps Jamie Dimon and the rest of his executive team should agree to give up their bonuses collectively, that might be a bit more meaningful. Still though, this bad trade has done irreparable damage to the once loved bank.
Who’s going to feel safe owning shares of JP Morgan going forward? You’ll always be worried that some trade might go bad and you’ll wake up and see the stock down nearly 10%.