For those keeping score at home, there is at least one PR disaster that will almost certainly make the list of 2012’s worst—Susan G. Komen
There are also several more in the running: Pink slime
, Walmart bribery
, Goldman Sachs resignation letter
, Homeless Hotspots at SXSW
Thanks to JPMorgan Chase’s $2 billion trading loss, we might have another shoo-in. Despite CEO’s Jamie Dimon’s textbook apology tour
, the media continues to beat up the company—most recently, calling for Dimon’s resignation
—and on Tuesday the FBI launched an investigation
. Bad news, especially for JPMorgan investors.
This crisis, unlike others that flare up throughout the year, will continue to haunt JPMorgan and its CEO, due to (at least) three reasons:
1. The company already has a terrible reputation among the public.
Recently, PR Daily
compared the 10 most profitable companies with their Reputation Quotient
, and it produced some good news/bad news for JPMorgan: The company is the sixth most-profitable, but one of the most despised.
Peter Himler, principle of Flatiron Communications
, said the companies investing in their reputations would see results in the long-run, particularly when crisis strikes because they’re banking goodwill—or (to use a word Himler didn’t) karma.
That theory played out mere weeks after the PR Daily
analysis. JPMorgan disclosed the $2 billion trading loss and apologized profusely—and did it well, according to some experts—assuring investors that the bank could absorb the loss.
But the stock price sunk, which means the real losers from this mistake are the investors.
2. Its CEO was placed on a pedestal of crisis management.
There’s that old saying that when we fall, we fall hard. In that case, Dimon is nursing his wounds. The Wall Street CEO, lauded as the “King of Risk Management
,” was held up as the risk-averse foil to the Bear Sterns and Lehman Brothers of the world.
When the media and industry peers bestow such a title, the holder of the title had better watch his or her back—and Dimon didn’t. In April, when The Wall Street Journal
called attention to the risky trades that would ultimately burn the company, Dimon dismissed the allegations.
Such hubris has come to back to burn him. WSJ
said Dimon was handed a slice of “humble pie
,” while The Daily Beast
clangs the resignation bell. The notion that Dimon would step down is highly unlikely considering JPMorgan investors this week reelected Dimon chairman and CEO
. He gets a sweet $26 million pay package as a result. Not bad.
3. The public (still) hates big banks and doesn’t care much for executives.
The American people still harbor resentment toward the big banks.
According to the 2012 Edelman Trust Barometer
, the two industries that the public trusts the least
are banking and financial services. That remains unchanged from the 2011 Trust Barometer. The Harris Interactive Reputation Quotient found that among the 10 U.S. companies with the worst reputations
, five of them are banks.
But the hits keep coming for JPMorgan Chase. Its CEO has led the apology tour, yet this year’s Trust Barometer shows that business executives are among the least credible spokespeople for an organization. A mere 38 percent of those polled by Edelman said they would consider information from a CEO credible. (Last year it was 50 percent).
The only person with less credibility than an executive is a government official—many of who are using the enormous loss as a way to tout stricter regulation
, something Dimon has opposed.
Looks like we’re about to see what happens when two of the least credible people in America go head to head. You can almost hear people changing the channel.