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JP Morgan’s Winters Identifies Problem, But Offers No Solutions

Posted by Larry Doyle on September 28, 2009 11:17 AM |

Who on Wall Street is willing to break camp and call for real change in the industry that crippled our global economy?

Strong managers and real leaders not only identify problems before they develop, but they define and implement solutions as well. No one individual or institution led us into the current economic mess and no one individual or institution will lead us out. That said, if leaders in finance want to regain a degree of credibility and respect, they can not expect to be accorded those benefits by merely identifying problems in global finance. They must also provide answers and policies which cut across the entire global economic landscape and serve the interests of all. I have yet to see this type of leadership from anybody on Wall Street or any other center of global finance.

Identifying a problem without proffering a solution is nothing short of pandering. I witness exactly that in reading the London Evening Standard’s, JP Morgan’s London Head Slams ‘Greed’ of Bankers:

Bill Winters

One of the most senior investment bankers in London has weighed in on the controversy over pay in the industry, attacking City and Wall Street employees as “greedy” and “inept”.

Bill Winters, the co-chief executive of JPMorgan’s investment banking arm, laid the blame for the financial crisis squarely on the shoulders of his fellow bankers.

“The crisis is about the collapse of the integrated wholesale banking system. The primary culprit was a wholesale banking market where borrowing was made to the wrong people at the wrong price,” he told a debate hosted by the Investment Management Association.

Winters, an American who is seen as being close to JPMorgan boss Jamie Dimon, is regarded as a likely future leader of the Wall Street bank.

He said the banking crisis was caused by “greedy bankers, investors and borrowers” and “inept risk managers who relied on the rating agencies”.

Having worked with Bill at JP Morgan, I respect him while admitting that our paths crossed to only a limited degree. That said, his comments here are nothing more than a ‘tremendous grasp of the obvious.’  Bill, what about the solutions?

Where are you and JP Morgan CEO Jamie Dimon in terms of the following:

1. Total transparency in the derivatives business achieved via the utilization of TRACE

2. Compensation practices which promote full correlation between long term risks and rewards (banker compensation)

3. Total transparency for Wall Street regulatory bodies, primarily FINRA

4. Fair and equitable credit card rates and practices

5. Supporting a fiduciary standard for financial brokers

6. Support for accounting practices which offer a full and honest look into banks’ books and records

7. Legislative changes for the ratings process

Without support for these initiatives, the very culture of greed which Mr. Winters would appear to be calling into question will perpetuate.

In fact, with all due respect, his lack of speaking out at this conference or at another forum on these topics can only lead me to believe his remarks are largely disingenuous.

LD

Related Sense on Cents Commentary

For JP Morgan’s Winters’ The Ledge Got Very Narrow and The Elbows Razor Sharp’ (September 29, 2009)

  • Bobby

    This guy is a genuine banker-wanker….how can he make such a statement about excess bonus when himself and his bank is
    deeply involved in this crisis….he opted to mention
    that he received a $5.4 million pay pack ($4.9 million
    bonus +0.5 million pay) in 2007.

    Did you know that between 2002-2008, he made well over
    $25 million in pay and bonuses, with stock options worth
    another $54 million at today’s prices…

    So to whom is he giving a lesson?

    Figures from Bloomberg

    Bob

  • fiscalliberal

    From Bloomberg:JPMorgan’s Winters to Leave; Staley Will Run Investment Bank

    Am interested in your comment

  • Larry Doyle

    Fiscal….An individual who was on the Executive Committee at Bear Stearns once told me, “Larry, when you get to this level of a Wall Street firm, the ‘ledge gets very narrow’ and the ‘elbows get razor sharp.’

    I have not spoken with any former colleagues to get any inside skinny on developments on Winters’ departure, but I am going to guess that he ran headlong into Steve Black, who runs JP Morgan’s investment bank in North America. Black has had a longstanding relationship with Jamie Dimon from their days together at Smith Barney back in the early 90s.

    With this announcement of Winters departure, I can only guess that he used his statement about banker compensation as a bit of a ‘screw you’ to Black and others. I think he could have been more direct and forceful if he specifically targeted JPM’s derivatives business as needing transparency.

    Add it all up, and Winters’ statement and departure are most likely a lot more ‘politics’ and ‘knife throwing or javelin catching’ than anything else. Those games get played all the time on Wall Street.

    • fiscalliberal

      I would guess that Winters has some long term options (golden handcuffs) yet and will not rock the boat on the derivatives.

      How ever when he does come public on derivatives, I will definitely listen as he was in on the ground floor and probably managed them better than the others did at Bear, Lehman and AIG






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