Dozens of books have chronicled the debacles, disasters, villains, and losers that made the Panic of 2008 so expensive and compelling. Winners have been few and far between, and heroes even scarcer. But journalist Duff McDonald believes he's found a winner—and possibly a hero—in Jamie Dimon, the CEO of JPMorgan Chase. In Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase, McDonald, a veteran magazine journalist and contributing editor to New York, traces the life and career of the prickly, tough executive who has emerged as the nation's most prominent banker, and describes how he steered the bank through the crisis.
Would you describe Jamie Dimon and JPMorgan Chase as both a winner and a hero of the crisis?
Absolutely. If you take the position that Wall Street is a zero-sum game at the end of the day, someone wins business, someone loses it—JPMorgan has absolutely gained market share across the majority of its businesses. Personally, Dimon's profile has certainly improved and risen to greater heights than it's been at before. A hero? The Bear Stearns acquisition in March of '08, even though it wasn't the end of the crisis, had heroic qualities to it. JPMorgan agreed, despite reservations, to step in and take over the assets of a foundering firm. He's emerged with a mix of traits rarely seen—a master of detail and operations, but also an inspiring and charismatic leader who definitely elicits a level of loyalty among subordinates that I'm not sure I've ever seen before.
Dimon's not a flamboyant personality. What's important for readers to know about his background?
He's the grandson of Greek immigrants. His grandfather was a broker, his father was a broker. His isn't a Horatio Alger tale or anything. Jamie grew up on Park Avenue; he went to Browning, which is a private boys' school just off Park Avenue. He went to Tufts and then Harvard Business School, and, as readers of the business press are certainly aware, hooked up with Sandy Weill.
There's this 10- to 15-year period where Weill parlays Commercial Credit, after a series of mergers, into Citigroup. Dimon was there almost every step of the way. What was his role?
When Sandy put his team together in Baltimore at Commercial Credit in the 1980s, he hired a bunch of veterans, including a number of folks who were high-ranking people at Citigroup, at Merrill Lynch, at American Express, and Jamie was only a few years out of Harvard. They called him "the kid," and yet despite that he had an equal, if not a more prominent, voice among the group by virtue of his work, his thoughtfulness, his intelligence and focus on the task at hand. From the beginning he was Sandy's right-hand man, but in a more profound sense than sidekick.
Until they have this famous falling-out in 1998 after the merger with Citigroup.
Travelers, which was the name of their firm at that point, engineered a merger with Citigroup, and that resulted in all sorts of Machiavellian maneuvers—who's on the board, who's not, who's running which department, who's not. A lot of stress had been building in the relationship between Dimon and Weill. And a series of events happens in a fairly quick period of time that results in Weill firing Dimon almost immediately as soon as the merger was consummated.
Dimon then does what is unthinkable to a lot of people on Wall Street: he leaves New York for a regional banking job.
He took several months to decide on his next move, and decided that what he loved was working for big banks, and that was where his strengths were. So he became CEO of Bank One in Chicago, which, while small relative to Citigroup, was still one of the nation's largest banks. He went out there in 2000 and entered on a turnaround strategy, and within four years had sold the company to JPMorgan.
To what degree was JPMorgan Chase really acquiring Jamie Dimon rather than Bank One?
Bill Harrison, who was the CEO of JPMorgan Chase at the time, is quite candid about the fact that while Bank One's retail-banking assets definitely were an addition to their portfolio and their footprint, Jamie was the motivating factor in the deal. The media accounts of his return were almost a sigh of relief: "Ahh, he's back."
What accounts for JPMorgan Chase's ability to avoid the things that pretty much destroyed Lehman and Bear Stearns and nearly destroyed Morgan Stanley?
You go back to what Jamie's strengths are: attention to detail, a focus on every single detail, and an ability to synthesize that. The CEO of a firm this large can't possibly get involved in operations at a real granular level. The job is to look at the big picture and to connect those dots. They chased market share in a number of businesses—in leveraged loans to big private-equity borrowers, and in consumer businesses such as credit cards and mortgages. But Dimon and his team saw weakness in the subprime market, it appears, before most of their competitors.
In March 2008, when Bear Stearns was failing, JPMorgan Chase decides to step in and help with the substantial assist from the Federal Reserve. How should we think about that transaction?
The Fed and the Treasury secretary were asking Dimon and JPMorgan to take over a $400 billion balance sheet in about 48 hours. People familiar with the notion of due diligence, which means getting to know what you're buying, have to understand that it's a pipe dream to think you can understand $400 billion worth of anything in 48 hours. What Dimon and his team said was they weren't going to do it without help, and the Fed agreed to front the first $30 billion of losses. In retrospect, could the Fed have driven a harder bargain? Who knows? I tried to get as close as I could to those rooms, but I obviously wasn't in them. JPMorgan, which was known for its conservatism, was in a position of strength because of its conservatism and was being asked to use that position of strength to purchase a company that was in trouble for displaying the opposite traits.
The more consequential deal for the long-term future of JPMorgan Chase, you write, came in September 2008.
Absolutely. In September, when the entire financial system looked to be seizing up—as opposed to just Bear Stearns—Washington Mutual, due to its own subprime exposures, was seized by the FDIC and its assets were purchased out of receivership by JPMorgan. It changed what was a relatively regional retail-banking presence—Chase was big in New York and Texas, and in Chicago—and gave them substantial presence in both Florida and California.
While JPMorgan Chase escaped a lot of the damage, it relied on many of the same types of support that unhealthy banks used. Was Dimon at all conflicted about this?
He says that the government asked him to take the TARP money, so he did. He's repeated on a number of occasions that they didn't need it, they didn't want it, but they took it because they were asked to. The same goes with federal loan guarantees on debt issuance. He's well aware that there is a sense of anger and frustration out there about taxpayer money being used to keep afloat large banks and private firms that pay their people a lot of money. He's sensitive to the compensation debate and the public money subsidizing private profits. On the other hand, he's also unapologetically a banker and a businessman who says he's doing the job that he was asked to do.
Dimon is in his early 50s. We know he is probably a Democrat and is relatively close to Obama. Does he have any interest in doing anything besides being CEO of JPMorgan Chase for the next 10 years?
I don't want to script his career for him, but he has an interest in public service. I think the most obvious opportunity there is Treasury secretary, for reasons of experience and connections. I wouldn't be surprised, nor would pretty much anyone else who knows him, that if he got that call he would take it. There was a lot of talk when Obama was just elected as to whether he'd make that call to Dimon, but Dimon himself was under no illusion that it would come because of all the anger toward Wall Street in the country at the time. I actually asked him why he didn't shoot down the rumors at the time, and he looked sort of shocked and he said, "It's kind of presumptuous to turn down a job you haven't even been offered." If there's a next step, it's not going to be running another company. You can almost be sure of that.