Obviously Jamie Dimon won this head-to-head PR battle, as he’s still standing and still has a job. But let's review what happened.
In May, JPMorgan was reeling when it wound up with a colossal trading loss, not the tempest in a teapot that its CEO Jamie Dimon originally described. It turned out to be a hurricane, and we’re still not sure of its size. The loss could be anywhere from $3 billion to $9 billion. Perhaps, larger. No one knows for sure, as it depends on the exit and the day you ask. Nonetheless, Dimon stepped up and admitted mistakes. Heads rolled. Dimon's head bowed.
Recently, Barclay's acknowledged that its traders manipulated Libor in order to benefit the firm. Its CEO Bob Diamond's stance was to say that the firms’ traders involved were wrong and that he wasn't going to leave the Barclays. The next day, he left the firm saying, "The focus of intensity was my leadership. It was better for me to step down." Note, he did not say that he took any responsibility for the actions of those under his watch.
Dimon owned up to the mistakes of individuals and his team, as well as his own shortcomings. While Diamond deflected, saying that it was the traders’ fault. You know what? CEOs are responsible for what happens under their leadership. Not dissimilar to a middle manager being responsible for their individual team members. The standard is higher for the CEO because the pay is a bit more and the responsibility much greater, thus there is more accountability. You can't take all of the credit and none of the blame, especially in such a public display.
Here’s what Dimon said in front of the US Senate: “We made a mistake. I am absolutely responsible. The buck stops with me.” Simple, clean and honest. People liked and respected him for it.
In contrast, Diamond pointed fingers at everyone else while answering to the British Parliament. He shifted some blame onto the Bank of England’s Paul Tucker. He denied having knowledge of the traders’ actions. He pointed to the faults of Libor itself. He also voiced his frustration that other banks were not suffering from the same negative spotlight. Not a single one of his many fingers was pointed at himself. The reviews of this performance were not positive.
The difference here is in understanding the gravity of a situation and anticipating stakeholder reaction to both the issue and the response. JPM expected their story to have legs and consistently appeared to be well prepared. In contrast, Diamond added fuel to his own firing (I mean, resignation) by being cocky and assuming that the story would just go away. According to a WSJ story last week, he believed this story would last one news cycle.
Having read a newspaper or two, I have never seen a $400 million+ settlement just vanish after one news cycle. I have often been criticized for being too cynical. However, being a cynic opens the mind to potential risks of a bad story, expectations of the worst possible scenario, followed by the preparation for said scenario. It certainly is not a pretty or easy road to travel, but in the long run, it is the safest route.