One of the sacred tenets of good corporate governance is separating the roles of Chairman of the Board and Chief Executive Officer. This provides a critical oversight function with respect to the activities of the CEO. Exhibit one supporting this concept is perhaps JP Morgan CEO Jamie Dimon’s role in the current multi billion dollar scandal regarding trading losses in its risk management unit.
Meanwhile over at Intel the current Chairman of the Board is former Chief Financial Officer Andy Bryant. The CEO is Paul Otellini. Otellini can run the business as he wishes yet he is accountable to the board and specifically Bryant.
At JP Morgan, Jamie Dimon, in a spectacle of abject arrogance, assumes both roles and is accountable to no one. Even more remarkable is that JP Morgan, as one of the nation’s largest FDIC insured institutions, is putting taxpayers at risk by this breach of good governance. It is noteworthy that JP Morgan could well have gone under in the recent crisis if the FDIC had not allowed it to assume Washington Mutual’s large deposit base while only assuming minimal liability with respect to its loan portfolio.
Parish & Company has been a leading advocate of sound corporate governance for more than 15 years.
