Jamie Dimon was searching for a metaphor.
As he sat in a conference room down the hall from Senator Charles Schumer’s office watching the morning’s proceedings on C-SPAN, he strategized with his communications chief and trusted confidant, Joseph Evangelisti. How could he best account for the low price he had paid for Bear without looking as if he had been given a gift, courtesy of taxpayers?
“The average person has to understand that we took a huge risk,” Evangelisti instructed him as they reviewed various approaches. “We’ve got to explain it in plain English.”
Unlike Steel, Dimon had not engaged in any Murder Board role playing in his own Park Avenue office. Instead, he chose to do some last-minute preparation in the conference room, which had been lent to him by a Senate staffer so he wouldn’t have to wait in the gallery.
Dimon came up with a simple, clear line that he thought explained the acquisition of Bear Stearns succinctly: “Buying a house is not the same as buying a house on fire.” That would do it; everyone would understand that.
The message he sought to convey was straightforward: Although Fed and Treasury officials may have deserved scrutiny for their actions, he hadn’t done anything out of the ordinary. It wasn’t his job to protect the interests of the U.S. taxpayer, only those of his shareholders. If anything, he was a little concerned that the Bear deal presented more problems for them than it was worth.
Despite his public show of humility, Dimon was well aware of what a coup the deal had been for him. From the perspective of the financial media, at least, the Bear acquisition was viewed as a home run. They had always had a bit of an obsession with him and tended to paint him as a glorified penny pincher, an executive who would cancel the office’s newspaper subscriptions to cut costs—not a real financial visionary. Now, with JP Morgan leapfrogging to the very top of the banking business, Dimon was being regarded as something akin to the reincarnation of John Pierpont Morgan, the nineteenth-century financier who helped ease the Panic of 1907.
Dimon, the New York Times said, “has suddenly become the most talked about—and arguably the most powerful—banker in the world today.” For the Wall Street Journal he was “quickly becoming Wall Street’s banker of last resort.” Barron’s opted for a simple “All hail Jamie Dimon!”
With all the adulation he had been receiving, Dimon had become almost giddy at the prospect of speaking at today’s hearing. While most CEOs dread being hauled in front of Congress—Alan D. Schwartz of Bear Stearns had spent days reviewing his testimony with his high-powered Washington lawyer, Robert S. Bennett—Dimon considered his first chance to testify in front of Congress to be a signal honor.
The night before the hearing, he called his parents to make sure they would watch it on TV.
Jamie Dimon’s success is not an enormous surprise, as he is a third-generation banker. His grandfather had immigrated to New York from Smyrna, Turkey, changed his name from Papademetriou to Dimon, and found work as a stockbroker, which at the time was hardly considered a glamorous job. Jamie’s father, Theodore—who met his mother, Themis, playing spin-the-bottle when they were twelve years old—was also a broker, and a very successful one. Theodore had done so well that he was able to move his family from Queens to an apartment on Park Avenue, where he raised Jamie and his brothers, Peter and Ted. One day, when Jamie was nine years old, his father asked his sons what they wanted to be when they grew up. Peter, the eldest, said he hoped to become a doctor. Ted, Jamie’s twin, said he didn’t know. But Jamie knew and announced self-assuredly, “I want to be rich.”
After attending the Browning School on Manhattan’s Upper East Side, Jamie studied psychology and economics at Tufts University; later, at Harvard Business School, he developed a reputation—as much for his arrogance as for his intelligence. Just a few weeks into the fall semester of his first year there, the professor in an introductory class on operations was going through a case study on supply chain management at a cranberry cooperative. Midway through Dimon stood up and interrupted him with, “I think you’re wrong!” As the startled professor looked on, Dimon walked to the front of the class and wrote the solution to the supply problem on the blackboard. Dimon was right, the professor sheepishly acknowledged.
After a summer working at Goldman Sachs, Dimon sought career advice from the portly, cigar-chomping, serial deal maker named Sandy Weill. Jamie’s family had become close to the Weills in the mid-1970s, after Sandy’s brokerage firm acquired Shearson Hammill, where Dimon’s father was a top broker. While at Tufts, Dimon had even written a paper on the Hayden Stone takeover of Shearson, which his mother showed to Weill, who was impressed with its analysis.
“Can I show it to people here?” Weill asked Dimon.
“Absolutely,” Dimon replied. “Can I have a summer job?” Weill was happy to oblige.
After graduating from Harvard Business School, Dimon received offers from Goldman Sachs, Morgan Stanley, and Lehman Brothers. Weill invited Dimon to his Upper East Side apartment and made his own offer: a position as his assistant at American Express, where Weill was now a top executive after having sold Shearson for nearly $1 billion. “I won’t pay you as much,” Weill told the twenty-five-year-old, “but you’re going to learn a lot and we’re going to have a lot of fun.” Dimon was sold.
Weill and Dimon’s tenure at the company turned out to be brief. Although he once boasted that “the Jews are going to take over American Express!” Weill still found himself thwarted by the WASP hierarchy, unable to cut deals on his own. Increasingly frozen out by his colleagues and the board, he quit as president of American Express in 1985; Dimon, whose talents had been noticed by CEO James Robinson, was asked to stay. Dimon was at a point in his life where many in the same position might have opted for security; his wife had just given birth to their first child. But he decided to stick with Weill, even though Weill hadn’t yet settled on his next project and had taken space in a small office. As the months wore on and Dimon found himself watching Weill sleep off his martini lunches on their office couch, he wondered if he had made a bad bet. Weill couldn’t seem to get anything off the ground, and Dimon had asked himself whether his mentor had played his last hand.
Then, in the wake of Weill’s failed takeover of Bank of America, two executives at Commercial Credit, a subprime lender based in Baltimore, pitched him and Dimon on buying the company from its parent. Weill put up $6 million of his money to do the deal (Dimon invested $425,000), and the company was spun off, with Weill in charge. Dimon set himself up as the operations man, obsessively cutting costs. A lean-and-mean Commercial Credit became the cornerstone of a new financial empire, one that Weill and Dimon built through more than one hundred acquisitions. In 1988 the pair got their return ticket to Wall Street with the $1.65 billion acquisition of Primerica, the parent of the brokerage firm Smith Barney. A $1.2 billion purchase of Shearson from American Express followed in 1993.
Dimon’s reputation rose alongside Weill’s. They were a team: Weill, the strategist and deal maker; Dimon, more than twenty years his junior, the numbers cruncher and operations whiz. They had moved beyond mentor and protégé to something more like a long-married combative couple. In the Midtown Manhattan offices of Primerica, the chairman and the chief financial officer would argue ferociously, their voices booming down the corridors. In meetings Dimon would roll his eyes whenever he thought Sandy had said something foolish.