The Monday after a long working weekend, Jamie Dimon looked a little tired. His collar was unbuttoned, his tie loosened, and he was slouching slightly in his office chair. The week before, he had turned 52 years old—a bunch of balloons was still tethered in the corner of his office—and his hair was whiter than most recent photos show. But he was far from worn out. Dimon, the chairman and CEO of JPMorgan Chase, had just won the biggest game of his life.
Sunday, March 16, 2008, will go down in history one way or another. Depending on how things develop from here, it might be considered the day Dimon helped save Wall Street. While he certainly wouldn’t put it that way, his shocking triumph that evening—an agreement, brokered by Ben Bernanke, the Federal Reserve chairman, to take over Bear Stearns, a Wall Street institution, for the pretty-much-laughable price of $2 a share—may have in the process helped avert a financial panic the likes of which hasn’t been seen since 1929. Or maybe Dimon will have to settle for the trophy for best deal ever, spending just $260.5 million for a company whose last reported net worth was $11.7 billion and whose lavish Madison Avenue headquarters alone is estimated to be worth more than $1 billion.
“We had one and a half days to do this deal, which includes uncertainties we don’t even know about,” said Dimon, in a voice that still contains traces of his Queens upbringing. “So it wasn’t a typical valuation. Two dollars a share is a reflection of the extra risk JPMorgan Chase was taking on in the middle of the night to do something that otherwise might not have gotten done. We had to build in a margin for error, where if we were wrong, we weren’t risking the whole company.”
I asked if there were moments during the weekend when the deal was nearly derailed. “Absolutely,” he replied. “It had its ups and downs, but there was a general feeling that this would be better for everybody.”
It may well be. It was certainly better for Dimon, from whom much had been expected. In many respects, this deal feels like the fulfillment of a prophecy.
Dimon’s creation myth is familiar to everyone on Wall Street. He was 26 years old, just out of Harvard Business School, when he signed on with the banking titan Sandy Weill at American Express. The Amex experience was Weill’s one big blunder; he clashed with the blue-blood culture and was ousted. Virtually by themselves, he and Dimon started over from the bottom, commandeering a third-tier Baltimore lending outfit called Commercial Credit. From there, like banking marauders, they pulled off an audacious string of acquisitions that culminated in the takeover of Citicorp. For a decade and a half, side by side, they built an empire, the world’s first financial supermarket.
But all was not right in the kingdom. Twenty-three years younger than Weill, Dimon was the natural heir to the throne, but as the final pieces of Citigroup came together, the partnership disintegrated. Dimon was cast out, left to wander in the wilderness. Eventually, he would return to slay the father figure (metaphorically speaking) and reclaim the role once ordained to him, as the undisputed king of the land.
Contrast: As you ride up the escalator to the second floor of JPMorgan Chase’s headquarters at 270 Park Avenue, you can actually see the backside of the Bear Stearns building, on Vanderbilt Avenue, which as of last Monday afternoon was full of a bunch of shell-shocked bankers still trying to process what had happened to them. Many were staring out their windows, almost, it seemed, toward JPMorgan itself, as if searching for signs of their fate.
Dimon is no stranger to takeovers, hostile and otherwise, or the jagged ups and downs of life on Wall Street. His father, a second-generation Greek-American, was a broker who worked for Weill and did well enough to move the family from Queens to Park Avenue when Dimon was in junior high. There were three Dimon boys: Jamie; his fraternal twin, Ted; and Peter. Jamie studied economics and biology at Tufts, and after Harvard Business School his father arranged for an interview with Weill.
Weill and Dimon became like father and son, a complementary team, emotional and combative at times but deeply loyal to one another. Weill was the deal-maker; Dimon was the numbers guy who could make the firms fit. The process was simple: Weill borrowed huge amounts of money to acquire companies, then they went into the shop and started cutting costs like mad to pay down the debt. Inevitably, that meant job losses and acrimony. The work required resolve and discipline but also brains, because you couldn’t hurt the business in the process of all that cutting. You needed every last penny of the revenues.