Trust me, I'm a Banker

What Dimon is saying, is that the loss of one or two hundred million, whether through fraud, incompetence or negligence, is trivial for an entity that size; it merely makes the annual profit 5 billion, instead of 5.1 billion. In that context, splitting up the banks is Not A Good Idea, since an identical loss, for an entitiy whose annual profit is only one or two hundred million, would be an exit call.

By and large we, the general public, couldn't care less about that kind of loss, since it doesn't directly affect us. What does directly affect us is the kind of thing recently reported, where some anti-social oaf from Halifax ripped off real people's accounts by raiding ATM's. When you access your account, and find it empty, it's a personal attack and, I think, that kind of thing will impact on a bank's image (such as it is) a thousand times more seriously, than the news that yet another corrupt banker has run off to South America with the tea money.

Fix it, guys...

Halifax is not going to tell a customer "your money is gone, one of our oafs stole it". What the Halifax worker did (allegedly) was steal from a bank. It's the bank's loss, and will come off the P&L. The difference here is one of scale: he handled paper currency and the sum involved wouldn't break my calculator.

When talk turns to trillions (as it does with Jamie Dimon) it's difficult to understand. But banks do have a responsibility to communicate in a way that doesn't involve being completely exasperated at the inability of ordinary people to get it that  a loss of 5 billion is simply a run of the mill business mistake (a la Dimon). "That Kristal and hooker evening was simply a 0.5 bp adjustment to our third quarter earnings" won't win anyone any friends.