In Full Stride as Others Fall
Saturday, September 27, 2008
NEW YORK, Sept. 26 -- Jamie Dimon steered his bank away from the bad mortgage bets and risky financing methods that have damaged much of his competition. But the J.P. Morgan Chase chief executive finds himself playing a major role in the credit crisis anyway.
From a dashing rescue of Bear Stearns in March to this week's winning bid in an emergency auction of savings and loan Washington Mutual, Dimon has helped federal officials avoid potential messes stemming from the turmoil in the financial markets.
"It's very fortunate that he's in the position to appear as a white knight, but make no mistake: J.P. Morgan and Jamie Dimon are in this thing to make money for their shareholders," said Tom Kersting, a banking analyst at Edward Jones.
J.P. Morgan shares jumped 11 percent to $48.24 on Friday as investors applauded Dimon's $1.9 billion acquisition of Washington Mutual's banking operations.
Dimon has been instrumental in turning J.P. Morgan into a banking giant. He came to the firm from Bank One, itself the product of mergers, after it was bought by J.P. Morgan in 2004. With the latest acquisition, he now heads a U.S. banking empire of 5,400 locations in 23 states whose only peer is Bank of America.
The son and grandson of stockbrokers who for many years worked alongside former Citigroup chairman Sanford Weill, Dimon has never shared the appetite for risk and disdain for plain-vanilla lending that have defined much of Wall Street in recent years.
"Jamie has always been focused on deposits and on creating what he calls a 'fortress balance sheet,' which among other things means carrying a stable supply of cash that doesn't run out the door at the first sign of crisis," said former J.P. Morgan investment banker David Stowell, now a professor at Northwestern University's Kellogg School of Management.
That fortress mentality has raised Dimon's already considerable profile as competitors, investors and federal officials scramble to unfreeze credit markets and restore faith in the American banking system.
Dimon, 52, said that he and his top lieutenants don't consider themselves "go-to guys" for the federal government.
Although he conceded to showing some degree of flexibility when he was asked by top regulators to buy Bear Stearns and stave off the fallout from a failure of a major securities firm, he suggested that anyone in his position would have responded similarly.
"We went out of our way to accommodate what we thought could have been a devastating situation," Dimon told reporters Friday on a conference call. "Personally, I think that should be the attitude of everybody."
Earlier this month, J.P. Morgan joined Goldman Sachs in trying to arrange a $75 billion loan for ailing insurance giant American International Group, also at the government's behest. But the firms could not raise the financing in the two-day time frame that AIG needed to meet its obligations, and the government stepped in with a loan.