Jamie Dimon Testy After Regulatory And Legal Fines Weigh On Earnings

JPMorgan Chase & Co. (NYSE:JPM) Chase reported an earnings miss Wednesday due in large part to large fines and associated legal costs as the bank’s Chairman and CEO Jamie Dimon said “banks are under assault” and “we have five or six regulators coming at us on every issue.”

Dimon engaged in a testy conference call with analysts where he was repeatedly asked about a company breakup, a Hot Topic, Inc. (NASDAQ:HOTT) since rival Goldman Sachs Group Inc (NYSE:GS) suggested several days ago the math works.

Erika Najarian, an analyst from Bank of America Merrill Lynch, was the first to address the elephant in the room, asking the “B” breakup question using polite and diplomatic language.  “Perhaps you could remind us of how you’re thinking about the benefits of keeping the franchise consolidated for the shareholders versus some of the conversation that investors are having today about breaking up or shrinking the bank?”

Jamie Dimon takes on Goldman Sachs

Dimon first responded by addressing the author of the report, an analyst at Goldman Sachs, disputing the fact “investors” are behind the breakup concept. “Some people (Goldman Sachs) wrote about it as a possibility because of excess capital and it’s true; you have to hold more capital, all things being equal, it will reduce your returns. But even the people who wrote about that talk about the superior franchises, the benefits of synergies,” Dimon said, stressing over and over the bank is too complex to break apart. (Breaking up JPMorgan has been previously discussed in hedge fund circles, but the courage to put pen to paper in an investment letter has yet to have been found, at least to my knowledge.)

Dimon successfully skirted many issues Najarian raised, even those of complexity being a negative. So next up to bat was Chris Kotowski of Oppenheimer Holdings Inc. (NYSE:OPY) & Co, who took a second swing. The result was mostly the same, with Dimon’s saying breaking up JPMorgan was like “unscrambling the egg.” But analysts clearly wanted to hear more about what a large omelet divided up into smaller, more manageable breakfast plates might look.