The Man Who Could Salvage Wall Street

New book sets Jamie Dimon of JPMorgan Chase apart from the Wall Street gamblers who ruined the economy.

By SHARE

Are all bankers evil? Maybe not. Over the past year, it's become fashionable to trash Wall Street for unbridled greed and the rapacious use of billions in taxpayer bailout funds. Much of the outrage is justified, since Wall Street firms like Bear Stearns, Lehman Brothers, Merrill Lynch, and Citigroup stoked the flames that nearly torched the entire economy. But there's been rough justice for a few of those firms, now either defunct or de facto wards of the state.

[See 10 gaffes by doomed CEOs.]

Other firms have filled the void, becoming even more prominent. One of them is JPMorgan Chase, whose chief executive, Jamie Dimon, has largely escaped the pitchforks aimed at his fellow Wall Street CEOs. Over the course of the financial crisis, JPMorgan Chase remained profitable, a pillar of relative stability in the midst of an earthquake. The bank absorbed the failed Bear Stearns and Washington Mutual, while accepting $25 billion in bailout money that it paid back with interest once the government allowed it to. Through it all, Dimon consulted frequently with officials in Washington, and news reports have even depicted him as President Barack Obama's favorite banker. A new biography of Dimon, Last Man Standing by Duff McDonald, describes Dimon as a diligent and trustworthy executive who has risen above the swill of Wall Street. I spoke recently with McDonald about the man some think will be the next treasury secretary. Excerpts:

Jamie Dimon is clearly a survivor. Is he that smart or just lucky? Of course there's luck in any career, but wasn't it Seneca who said, "Luck is when preparation meets opportunity"? Jamie is the guy who was ready to take advantage of opportunities when they happened. So I don't really think it's luck at all. Jamie has proved that preparation is all there is on Wall Street.

How do you think of Dimon today? He's the most prominent banker in America, and if there is such a thing as a financial philosopher, Jamie's it. His letter to shareholders in the 2008 JPMorgan Chase annual report was a tour de force of explicatory brilliance. He explained what happened.

[See the best and worst bailouts of the past two years.]

Was it Dimon talking? Or corporatespeak? It was totally Jamie talking. He explained the risk exposures, which were mostly mortgages. Where we went wrong, ways the system can be improved. He explained: Is JPMorgan caught up in this? Yes. But he's aware of the exposure. This is a guy who wrote the letter while still in the midst of the crisis, since he began writing it at the end of 2008.

How is Dimon different from other Wall Street CEOs? I was talking to Warren Buffett about Jamie, and he said, "Banking's not that difficult. You just need to be a banker, and Jamie's a banker." All these other guys weren't being bankers, they were being gamblers. There's a great line from Andrew Ross Sorkin's new book, Too Big to Fail. At some point during the crisis last year, an executive from Morgan Stanley gets a call from Jamie and goes to talk to John Mack [Morgan Stanley CEO]. He says that he just got a call from Jamie Dimon, who asked if he can do anything to help. The executive says, "Jamie is always hanging around the hoop. You know Jamie's saying, 'Let's make friends with these guys before I eat them.' " His entire career he's played it conservatively so he can pounce on opportunity. All these other guys were gamblers. Bear Stearns. Lehman. That's fine, but Dimon was the guy standing around the hoop waiting for the ball.

How do you see the new Wall Street firmament? Goldman Sachs is clearly still a betting house, and that's fine. I understand the debate over taxpayer dollars going to these firms, and that will go on for a long time. But Goldman is clearly the best at what it does. Morgan Stanley is a betting house, and then you have Citigroup and Bank of America, which are just kind of screwed up. The bank of the moment is JPMorgan Chase. Other than Goldman, JPMorgan Chase and Jamie Dimon are the kings of Wall Street. On investment banking they go toe-to-toe with Goldman.

[See how CEOs are conflicted over healthcare reform and the environment.]

Was the Bear Stearns takeover in March of 2008 a good deal? The Federal Reserve bore a lot of the risk for that deal. Jamie Dimon will tell you he felt a patriotic imperative in doing what he did. He was asked to take over a $400 billion balance sheet from a firm that everybody knew was the dodgiest on Wall Street. In 48 hours. It turned out to be a big loser. They've already booked substantial losses. The assets they backed, they've lost a ton of money on. They got a decent commodities business and a prime brokerage business, but they lost money. Buying Bear Stearns was not a good deal in and of itself. But it worked out beautifully because it made them the bank of last resort. That helps you get customers. No one's leaving Chase, the retail bank. And JPMorgan's institutional business boomed at the end of 2008.

What's Jamie Dimon like? He's a fun person with a sense of humor. He's a CEO, so he's somewhat unapproachable, but he's a nice guy. I've never met a man who has less doubt about who he is. He has a sense of conviction and no second thoughts. He's also a total family man. He has three daughters who love him and a wonderful wife. They have a house in upstate New York and a nice apartment on Park Avenue. He spends time with his family and doesn't do the really obvious things, like golf. He just works all the time. The wonderful thing about the Dimons is they don't seek publicity.

Is he humble? No. He's proud. He knows what he's accomplished. He's well aware of his own capabilities and his achievements. The difference is, he's not resting on his laurels. He thinks. He's diligent.

[See 5 myths about the economic "recovery."]

Does he have a future in public office? I don't think Jamie Dimon would ever run for office. He wouldn't put his family in that position or deal with the attendant issues. But would he accept an appointment? Don't be surprised if he does. When Obama got elected, there were rumors that Dimon would end up in Washington. I asked him why he didn't shoot down the rumors. He said, "Isn't it kind of presumptuous to turn down a job you haven't been offered?" But if he were offered the position of treasury secretary, it's almost a slam-dunk he would take it. It's the only thing he has left to do—public service. He told me that his one regret is never having done any public service, and he'd like to.

He's a Democrat? He's a Democrat.

Why? Because he comes from a free-thinking family. His father played violin in their living room during social events when he was growing up. The family talked about a lot of things beyond just the day-to-day. He was exposed to different ideas.

What have been the toughest moments in his career? Being fired in 1998 by Sandy Weill [Dimon's former mentor and CEO of Citigroup at the time]. He's still hurt.

What did he learn from that? He learned how not to be Sandy. How not to fire your most valuable person in a fit of pique.

Could Jamie Dimon be more than a CEO? Could he be a transformative figure? He could be. There's a deep sense of integrity that guides his decision making. The guy is motivated. He absolutely wanted to be rich, and he is rich. Paired with that is a deep sense of doing the right thing. Despite what populist anger seems to be suggesting these days, these are not inconsistent beliefs in America.

TAGS:
Wall Street
JPMorgan Chase
banking
  • Rick Newman

    Rick Newman is the author of Rebounders: How Winners Pivot From Setback to Success and the co-author of two other books. Follow him on Twitter or e-mail him at rnewman@usnews.com.

You Might Also Like