As Jamie Dimon stakes his reputation, are more banks about to fall?
Influential: Dimon with his wife Judith Kent at a gala dinner at the White House
He is the undisputed ‘King of Wall Street’. As the head of JP Morgan, America’s largest bank, Jamie Dimon has conquered everything for him for nearly two decades.
Hailed as the savior of the financial system, his final “white knight” act came on Monday — appropriately, May 1 — when he bailed out First Republic, the stricken mortgage lender to the wealthy and the second-biggest bank failure in the U.S. history .
To the surprise of many, Dimon suggested that the immediate crisis — which has already claimed the heads of Silicon Valley Bank and Signature in the US and Credit Suisse in Europe — was over.
His comments may make him a hostage to fortune, but few would bet against Dimon, whose modus operandi is to buy distressed assets cheaply.
During the last financial crisis, 15 years ago, he took investment firm Bear Stearns and lender Washington Mutual – the largest American bank failure ever – for a song.
This time, competition rules should have banned JP Morgan from buying First Republic.
But Dimon, the consummate dealmaker, managed to get a waiver from officials desperate to avoid another hookup on taxpayers, as they did during the 2008 financial crisis.
He then chided critics who were concerned that JP Morgan would become too big and powerful.
“You need big successful banks,” he told reporters. “Anyone who thinks it would be good for the United States of America not to have that should call me directly.
“There are only a limited number of banks that have been sidelined in this way,” he added. “There may be another smaller one, but this pretty much fixes them all.”
Such is Dimon’s power and influence that even those words were enough to cause a sharp drop in the stock price of another regional lender, PacWest, which was on the verge of collapse over the weekend.
A native New Yorker and the son of a stockbroker, Dimon honed his banking skills at American Express in the early 1980s as an assistant to the president and his mentor, Sandy Weill.
They teamed up at Citigroup and built it into a financial powerhouse through a series of deals, but the pair eventually fell apart and — in a bitter power struggle that became the stuff of banking folklore — Weill fired Dimon.
“The problem was he wanted to be CEO in 1999 and I didn’t retire,” Weill later told The New York Times.
Dimon, 67, has spoken of the “pain” of his surprise layoff, but “it was my net worth, not my self-worth” that was most affected, he said. But he wasn’t long out of a job—or out of his own pocket.
He then became the boss of the loss-making Bank One in Chicago and soon turned it around. In 2004 it was bought by JP Morgan Chase and a year later Dimon was named CEO of the combined company.
JP Morgan was one of the few banks to thrive during the last financial crisis, but not everything Dimon has touched since then has turned to gold.
In 2013, he had to apologize for a ‘appalling mistake’ in allowing a JP Morgan trader dubbed the ‘London Whale’ to lose £5bn on blind financial bets.
Two years ago, JP Morgan’s plans to fund a breakaway from the European superleague received a red card from angry football fans. Later this month, Dimon will testify under oath how much he knew about a controversial decision to keep Jeffrey Epstein as a client of JP Morgan after being convicted of child trafficking in 2008.
Dimon has said that “in hindsight is a fantastic gift,” and he firmly denies being involved in any review of Epstein’s account.
Today, Dimon enjoys all the trappings of a billionaire banker. Reportedly worth £1.4 billion – thanks to years of bumper bonuses and a large stake in JP Morgan himself – he owns luxury mansions outside New York City and along Chicago’s Gold Coast, where he lives with his wife of 40 years, Judith Kent.
Former colleagues describe him as “exceptional” and “narcissistic” in equal measure. “He’s very good at cutting costs, except his own,” said a former insider, noting Dimon’s penchant for flying across the country in private jets.
Perhaps Dimon’s most prized asset is his network, which he has diligently built and cultivated over the years.
He is a regular visitor to the annual Davos powerbrokers’ shindig in the Swiss Alps.
The New York Times described him as President Barack Obama’s favorite banker and he allegedly ran a hotline with President Joe Biden during the latest banking turmoil.
Lavish: Dimon lives with his family in a luxurious mansion in upstate New York
He famously claimed in 2018 “I could beat Trump” because “I’m just as tough as him and smarter than him.” In true Trump style, the then president hit back, saying Dimon was a “nervous mess.”
But despite – or perhaps because of – that ding-dong, Dimon’s political ambitions seem limited. Dimon has also had health problems. He was diagnosed with curable throat cancer while undergoing heart surgery three years ago.
That in turn led to speculation about who would succeed him at JP Morgan. The question seemed answered a year later when Dimon was awarded another piece of stock options so that he could “continue to run the company for a considerable number of years to come.”
Dimon now wants everyone to “take a deep breath” after the drama of the past few months. But he remains cautious about the prospect of rate hikes – as again last week – for fears that a commercial real estate crisis and a deep recession could cause more US banks to fail.
“That’s a completely different matter,” Dimon warned last week.
With up to 200 US banks at risk if depositors withdraw even half of their uninsured deposits, one thing is certain. If more banking dominoes fall, expect the King of Wall Street to be ready to try and pick up a few more at low prices.
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