It was before dawn on Monday when federal regulators informed JPMorgan Chase & Co. management that it had beaten three smaller rivals in bids to buy the bankrupt First Republic Bank.
By the time the sun rose, Jamie Dimon, the longtime chief executive of JPMorgan, was an industry savior and had secured yet another government-brokered deal to help his behemoth grow even bigger. As a planner, the light was once again shed.
First Republic was the third financial institution Dimon agreed to buy in a federally-backed deal after acquiring Bear Stearns and Washington Mutual during the 2008 financial crisis. All three deals helped defuse the panic, but they also benefited JP Morgan, the world’s largest with $3.7 trillion in assets and 14% of all U.S. deposits. It boasts an unparalleled influence in the economic zone of
JP Morgan’s agreement to buy First Republic is expected to add $500 million to the bank’s profits this year and give it access to a steady stream of wealthy clients.
But has the deal, which took place at a time when politicians from both parties are increasingly wary of corporate power, grown so large that banks like JP Morgan stifle competition and threaten the financial system? It may raise more questions as to whether.
“The sale of First Republic Bank to the nation’s largest bank will only exacerbate the banking system’s ‘too big to fail’ problem,” said Senator Elizabeth Warren of Massachusetts.
The deal adds to Mr. Dimon’s legacy. It became easy to compare him to the man for whom his bank was named. Back in 1907, John Pierpont Morgan Sr. locked his Wall Street buddies in his study and refused to let them out until they agreed to join him in bailing out the panic-stricken financial system. is famous for
Since then, no single corporate leader has dominated the U.S. financial system more, financial historians say.
Kenneth W. Mack, a professor of law and history at Harvard University, said: “There’s always been a question of who can be convinced that they have the resources or the cultural authority to stop cracking down on banks. Given JP Morgan’s reputation for risk aversion and Dimon’s long history as a bank chief, “it stands to reason that he is someone federal officials continue to rely on to come to their rescue.”
Dimon became CEO in 2006, less than two years after JPMorgan bought his Chicago bank. After the merger, JP Morgan got bigger. With assets he exceeded $1.1 trillion and held about 10% of the country’s deposits. I was on my way to becoming an industry powerhouse.
Mr. Dimon matured in the industry as a protégé of Sanford Weil, a passionate chairman of Citigroup whose mission was to build the world’s largest financial supermarket. In the late 1990s, Mr. Weill’s ravenous appetite for growth prompted Washington to tear down the walls that had surrounded the banking industry since the Great Depression and prevented private lenders from marketing a wide range of financial services.
Dimon had run JP Morgan for just two years when the 2008 financial crisis hit, which provided him with a unique opportunity to reinvent JP Morgan and himself as an industry hero.
With the entire global banking industry on the brink, Dimon became one of a handful of executives, along with those who run Bank of America and Wells Fargo, who sought to make themselves saviors. .
Bank of America swallowed up Merrill Lynch and Countrywide. Wells Fargo got Wachovia. Mr. Dimon has: Bear Stearns, then Washington Mutual. Within a few years, there was a big difference between Mr. Dimon and his rivals. First was Bank of America, then Wells Fargo.
Dimon is now Wall Street’s longest-serving CEO
JP Morgan continued to grow. in recent years, pounced Dozens of Small Businesses: Student Financial Aid Companies, many Even a restaurant review site that owns the software company Zagat.
The growing size of banks like JP Morgan has troubled some pundits, including senior Biden administration officials. A handful of banks hold dominant positions in many parts of the country, locking out community lenders and limiting customers’ access to banking services.
Yet even when JP Morgan has been hit with occasional scandals, the turmoil in the 2012 “London Whale” deal, when banks lost more than $6 billion, was by far the most serious. reversed. When regulators moved to punish banks for misconduct by acquired companies during the financial crisis, Dimon told federal officials that buying weakened financial institutions would benefit banks and the country. claimed. Industry observers were surprised by Dimon’s adamant refusal to apologize.
Somewhere along the way, Mr. Dimon began filling in the missing pieces of his public profile. That is the role of the politician whose power and prestige transcend a single institution.
That was how the world viewed JP Morgan a century ago. He was more than the richest man in the world. According to David K. Thomson, associate professor of history at Sacred Heart University, he was also a banker with the clearest sense that his own interests were closely intertwined with those of Wall Street in Washington. Morgan therefore understood that there was a strong incentive to resolve the industry crisis as much as possible.
Mr. Dimon sets out to show the world that he too is more than a knowledgeable and ridiculously wealthy banker.
Dimon co-founded an 11-company initiative to employ 100,000 veterans by 2020 after JP Morgan was found to have illegally seized the homes of active service members in 2011. I pledged to In 2013, partly due to a Wall Street bank prank, JP Morgan promised to help reverse the city’s fortunes, and Dimon personally got involved in the task.
He began speaking out on a wide range of policy issues, from education to immigration, in letters to shareholders each spring. He became chairman of the Business Roundtable and worked to strengthen the group’s influence over legislators. He publicly defended the concept of “stakeholder capitalism”. This is the idea that doing the right thing by shareholders also includes better treatment of communities, workers and customers.
During the Obama administration, Dimon was touted as a candidate for public office.Billionaire investor Warren Buffett was suggested In 2012, President Barack Obama appointed Dimon as Secretary of the Treasury. In 2016, following rumors that President-elect Donald J. Trump might cast him for the position, Dimon Said He let Trump’s transition team know he wasn’t interested. New York Post columnist his name came up After the election of President Biden, again in 2020, Dimon claimed “I never craved a job,” he said.
But all this story, along with his longevity as chief executive and JPMorgan’s reputation for stability, should not surprise Treasury Secretary Janet Yellen to call on Dimon to support the First Republic. There was no.
It wasn’t clear in 2008 if Jamie Dimon would be that person. What happened after 2008 made him that person,” Mack said.
Buffett said in an email to The New York Times on Monday.
