Jamie Dimon: The Man Who Could Save Wall Street 21 comments
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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 (LEHMQ.PK), Merrill Lynch, and Citigroup (C) 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.
Other firms have filled the void, becoming even more prominent. One of them is JPMorgan Chase (JPM), 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.
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 (BAC), which are just kind of screwed up. The bank of the moment is JPMorgan Chase. Other than Goldman (GS), JPMorgan Chase and Jamie Dimon are the kings of Wall Street. On investment banking they go toe-to-toe with Goldman.
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.
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.
Disclosure: No positions.
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For easy reference, there is a link to it in a SA article I published, which is entitled, “A Letter to Jamie Dimon”, and which reproduces the response I logged in the comment section beneath the Op-Ed itself, along with a dozen or so equally outrageous comments filled with sarcasm and disbelief.
...blah, blah, blah...
The only heroes in America are the people who go to work everyday and punch the clock and take care of their kids. Bankers and politicians and their ilk are leeches.
We haven't had nearly enough hangings with all this theft, corruption, and tyranny running rampant over the average citizen. We need a good revolt and some blood to put the fear of God back in our leaders.
On Oct 10 04:43 AM ebworthen wrote:
> All the king's horses and all the kings men...
>
> ...blah, blah, blah...
>
> The only heroes in America are the people who go to work everyday
> and punch the clock and take care of their kids. Bankers and politicians
> and their ilk are leeches.
>
> We haven't had nearly enough hangings with all this theft, corruption,
> and tyranny running rampant over the average citizen. We need a
> good revolt and some blood to put the fear of God back in our leaders.
My profession has permitted me to work directly for 3 CEOs (one of which has a personal fortune of over $2B.) I usually live in with the CEOs at their expense. Currently I am employed by a man who has one of the oldest speciality brokerage houses on WS; started by his father at the turn of the last century. I have seen the inner workings close up and personal through this whole crisis and here is my take on part of it.
The advice my employer was given by his father who was one of the giants on the Street from the 20s-60s. "The market is just one big Ponzi scheme. We have a good thing going here, do not change anything when you take over. Do not get too greedy and try to expand your share and just let the money flow in. The individual investors have no idea what the rules of the game are so they are here to be fleeced." (Obvious a paraphrase of what my boss heard from his Dad decades ago, but it stuck with him). Insider trading is the norm along with all sorts of other nefarious methods of separating the investing public from their cash.
what does this have to do with Dimon you ask? Just watch the small snipet from Bill Moyers last night. J. Dimon is made from the same ilk as my employer and his father. Wall Street runs Washington for the benefit of their shareholders (which they happen to be among the largest). Their job is to protect their wealth and they use any means to do so, incld. lying, bribery, fraud, etc; whatever it takes not to upset the apple cart.
The smartest on WS knew the collapse was coming, heck, even I could see it coming 3 years out and thanks to P. Krugman, my portfolio was prepared. I now understand the rules of the game much better than I did even 2 years ago and I invest accordingly. Hence, my portfolio has seen 100%+ appreciation since the March lows.
My point is I guess; the American people have been robbed and stolen blind by WS and Jaime Dimon is one of the winners. They eliminated much of their competition, pushed their bad bets and heavy losses on the American taxpayer once again and now it is back to business as usual. Until we break the back of the WS grip on Washington, the average investor has as much chance as he does in Vegas. For me, now I am investing like those who know the rules and keep them secret from the rest of us. There are cracks in the WS facade and the truth is starting to be shown in those dark corners that the CEOs do not want you to see.
The guy is an American banking icon. Since he left Citigroup (which he helped build to be #1 in the world) he has helped take JP Morgan above his old company and into a powerhouse today. I think it's safe to say JP Morgan is either the best, or second best bank in the WORLD today. Them or Goldman being #1.
His fortress balance sheet approach to banking should be universally adopted. They may have had exposure to toxic derivatives, but as per a percent of the company, they handled their risk perfectly. That's why JPM is dominating banking today.
As smart as Dimon is, and I say that sincerely, I would guess that he will try to build more solid commercial banking, and gradually move away from derivatives, as the economic situation is just too fragile at this point to have a huge exposure, as JPM still does.
Maybe he's the "best house in a bad neighborhood" but I think Dimon is head and shoulders above his peers, most of whom are really corrupt and would peddle their offspring if it helped their bottom line or added to the bonus pool.
On Oct 09 10:45 PM forge98 wrote:
> The comment on being a democrat doesn't make sense. There is a hint
> that only dems are diverse in their thinking. Nonsense. He's an opportunist,
> good for him. I am very dubious of JPM. I simply don't buy the story.
hexun.com/jie112358
On Oct 09 03:20 PM Gary A wrote:
> I thought JPM led the nation in the amount of toxic derivatives it
> has. So, what exactly makes this guy a great banker again?
hexun.com/jie112358
"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."
Yes, yes...It is quite obvious to me now. He could not be an Independent or one of those awful, Neanderthal Republicans because he comes from a free-thinking family, and they exposed him to different ideas. He was educated, therefore he must be a Democrat. And we all know that Republicans come from dull-witted, inbred families who stumble around in the darkness of ignorance.
I am confident the author has written a very objective piece of.......literature.
JPM is criminal organization far as i'm concerned
On Oct 10 01:09 PM grizzly92 wrote:
> I have been coming to SA for a couple of years now and I look for
> ideas. I really do not have time for discussion(I leave that to
> all you professionals out there with all this time on your hands)on
> this board, but I feel I have to add my .02 here.
>
> My profession has permitted me to work directly for 3 CEOs (one of
> which has a personal fortune of over $2B.) I usually live in with
> the CEOs at their expense. Currently I am employed by a man who
> has one of the oldest speciality brokerage houses on WS; started
> by his father at the turn of the last century. I have seen the inner
> workings close up and personal through this whole crisis and here
> is my take on part of it.
>
> The advice my employer was given by his father who was one of the
> giants on the Street from the 20s-60s. "The market is just one big
> Ponzi scheme. We have a good thing going here, do not change anything
> when you take over. Do not get too greedy and try to expand your
> share and just let the money flow in. The individual investors have
> no idea what the rules of the game are so they are here to be fleeced."
> (Obvious a paraphrase of what my boss heard from his Dad decades
> ago, but it stuck with him). Insider trading is the norm along with
> all sorts of other nefarious methods of separating the investing
> public from their cash.
>
> what does this have to do with Dimon you ask? Just watch the small
> snipet from Bill Moyers last night. J. Dimon is made from the same
> ilk as my employer and his father. Wall Street runs Washington for
> the benefit of their shareholders (which they happen to be among
> the largest). Their job is to protect their wealth and they use
> any means to do so, incld. lying, bribery, fraud, etc; whatever it
> takes not to upset the apple cart.
>
> The smartest on WS knew the collapse was coming, heck, even I could
> see it coming 3 years out and thanks to P. Krugman, my portfolio
> was prepared. I now understand the rules of the game much better
> than I did even 2 years ago and I invest accordingly. Hence, my
> portfolio has seen 100%+ appreciation since the March lows.
>
> My point is I guess; the American people have been robbed and stolen
> blind by WS and Jaime Dimon is one of the winners. They eliminated
> much of their competition, pushed their bad bets and heavy losses
> on the American taxpayer once again and now it is back to business
> as usual. Until we break the back of the WS grip on Washington,
> the average investor has as much chance as he does in Vegas. For
> me, now I am investing like those who know the rules and keep them
> secret from the rest of us. There are cracks in the WS facade and
> the truth is starting to be shown in those dark corners that the
> CEOs do not want you to see.
Aquire congress
Aquire presidents
Undermine regulation
And after all is done start re-writing history so the people you just robbed (tax payers) are fooled into believing that you just saved the country.
Have anyone noticed the recent PR attack by all these CEOs?