JP Morgan reaction: pay clawbacks Nothing like a silverback falling out of a tree to set off the surrounding monkeys. And much screeching has followed the $2bn "hedging" loss announced by JPMorgan last week. Arguments that the incident helps the case for the Volcker rule are legitimate. But the demands for a wider use of clawbacks, and the noise about banks being Too Big to Manage, should both cease. The former lacks consistency. The latter is simply ape-brained. Take clawbacks. Conceptually, the idea is a very good one. Clawbacks help correct a temporal and informational mismatch between the realisation of a company's profits and its remuneration policy. Last year we thought you made $1m for our firm so we paid you $100k. Turns out you only made $800k so we're taking back some of your original award. Sorry about that. And of course it makes as much sense to apply this to regular losses as to fraud, for which regulators first insisted on clawbacks. The problem is only that such a policy is not consistent. What if a worker is paid a bonus for project that generated a certain return, only for that return to be revised higher in subsequent years? If clawbacks are employed, so should patforwards. Indeed, some consultancies do this already, for example paying the partner who originally brought in a client a slice of subsequent revenues - even into retirement. Perhaps Mr Dimon deserves an extra bonus if Bear Stearns and Washington Mutual prove to add far more value to shareholders than first calculated. Meanwhile, accusing a bank with 250,000 workers of being too big to manage is inconsistent and naive. Any organisation employing more than a handful of people is hard to manage. Hence the need for rules, incentives and culture-building. Mr Dimon can only try to reduce the threats JPMorgan faces in the financial jungle. He cannot control everything.