CEO Jamie Dimon followed the playbook perfectly, Cramer said, in dealing with the fiasco by facing up to the $5.8 billion in losses, containing them, fixing the checks and balances, getting rid of the bankers who erred and recovering bonuses based on faulty numbers.
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“Given the facts and the clean-up and the results, the only judgment that matters right now is whether the stock is a buy or a sell, and given the set of facts we heard today, the stock’s gotten too cheap versus the fundamentals, so the answer is pretty darned clear — JPMs a ‘buy,’” he said.
Cramer said that one of the factors that mattered to investors was whether the company was correct to assess that its business was solid and that it was improving.
“Turns out it was better than that, with June being an exceptionally profitable month in a really terrific streak of business,” he said.
Also, there needed to be an explanation as to why a bank executive as well-regarded as Dimon didn’t catch the warning signs.
“Today, with the restatement of the first quarter on top of the earnings for the second quarter, Dimon left the impression perhaps that the numbers he was looking at from the London office that generated the loss may not have been submitted in good faith,” he said. “In other words, he didn’t take his eye off the ball, and he definitely understood what was shown to him but what was shown to him may not have been all that honest.”
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Cramer said he actually found comfort in that. A trusted executive providing a skewed picture would be tough to catch.
“I think that’s what might have happened here and that Dimon’s statements about the disastrous trade being no more than a tempest in a teapot, were based on perhaps false data that nobody, not even Dimon, could hope to spot,” he said. “That’s a forgivable offense, in my opinion.”
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