Jamie Dimon is hoping for a new age of glasnost at JPMorgan Chase, if insiders at the bank are to be believed. With JP Morgan having paid more than $22 billion in fines in the past year, including roughly $2.6 billion in penalties related to its role in Bernie Madoff’s Ponzi scheme this week, the CEO is apparently leaning on both senior and junior staff to report problems and concerns throughout the bank sooner rather than later, sources say.
“Senior staffers have always been attentive and I think the idea is to have the lowest level employees as attentive,” said one insider. “We want to make sure that things no longer get stuck in the drains.”
The move comes as a part of an effort to mend JP Morgan’s tattered relationship with a gauntlet of foreign and domestic regulators, including the US Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Federal Reserve, the Treasury Department, and the UK’s Financial Services Authority.
Dimon already said last month that the bank will be doubling to roughly $2 billion its budget for compliance, to beef up controls at the bank. JPMorgan also added some 3,000 employees last year as it expanded its compliance and controls group.
“I don’t think people realize how much [the bank has] been talking with regulators,” said one source.
But is it merely a matter of getting things unstuck from the drains? Dimon has argued that the failure of escalating problems up the food chain led to the $6 billion “London whale” trading scandal. However, in doling out JPMorgan’s punishment on Jan. 7, US Attorney Preet Bharara suggested that what stopped the bank alerting regulators when warning signs went off about Madoff wasn’t just poor communication but self interest. “The bank connected the dots when it mattered to its own profit but was not so diligent when it came to its legal obligations,” Bharara said.