David Plunkert
JPMorgan Chase
Location: New York
Industry: Banking
Annual Sales: $64.5 billion
It’s a testament to the times that CEO Jamie Dimon has become a towering figure in finance. As rivals were leading the charge into esoteric mortgage-backed products, he shied away. Instead of steering JPMorgan Chase (JPM) into new realms of risk and reward, Dimon beefed up reserves and told staff to pay for their own newspaper subscriptions.
But the conservative banker has had greatness thrust upon him. By shunning the deals that sent others crashing, he helped JPMorgan emerge as the king of banking. Even as its own fortunes suffer amid the turmoil, regulators trust it. Politicians cite the bank as a model of the kind of management needed to save Wall Street from future bouts of greed. And some rivals have looked to it for survival.
In March, as Bear Stearns was set to implode under the weight of its bad bets, Dimon came forward to pick up the pieces. While Federal Reserve Chairman Ben Bernanke helped broker the deal, Dimon says “it was our capital, our reputation, the work of our people that got the thing done.” Six months later regulators helped JPMorgan pick up collapsed mortgage lender Washington Mutual in one of the largest bankruptcies ever.
Other banks have absorbed troubled institutions, too, but none has proved as essential as JPMorgan. Buying Bear Stearns stabilized a jittery market. The bank’s balance sheet showed that some segments of Wall Street still valued prudence. Dimon couldn’t stave off the global turmoil, but Burnham Financial Industries fund manager Anton V. Schutz argues that JPMorgan’s absence would have made things worse. “These deals saved us all a lot of problems,” he says.
D.C. Clout
How Dimon ultimately will choose to leverage his company’s newfound dominance is unclear. With a $330 billion mortgage and home-equity loan portfolio, he is on the front lines of the housing crisis. JPMorgan was early in offering assistance to homeowners to stave off foreclosure and went beyond federal guidelines to modify loans. Dimon is also becoming more of an industry voice in Washington. “It’s an endorsement of the way he’s handled the crisis and managed risk,” says Brad Ziff, head of the hedge fund advisory practice at Oliver Wyman.
While Dimon says JPMorgan faces “a lot of issues” along with the rest of the sector, he’s acutely aware of his moment in history. But his first priority is to get back to boosting reserves. This time, others want to follow his lead.
