Last Man Standing

The Ascent of Jamie Dimon and JPMorgan Chase

Duff McDonald

• Publisher: Simon & Schuster
• Year: 2009
• ISBN:
  9781439109717
• Topic: Business
• Subtopic: Business General
• Index: Business

In the midst of the most disastrous economic climate of Wall Street's history, one executive has weathered the storm more deftly than any other: Jamie Dimon, chairman and CEO of JPMorgan Chase. In 2008, while Dimon's competitors watched their companies crumble, JPMorgan not only survived, it made an astonishing $5 billion profit. Dimon's continued triumph in the face of an industry-wide meltdown has made him a paragon of finance. In Last Man Standing, award-winning journalist Duff McDonald provides an unprecedented and deeply personal look at the extraordinary figure behind JPMorgan's success. Using countless hours of interviews with Dimon and his full circle of friends, family, and colleagues, this definitive biography is by far the most comprehensive portrait of the man known as the Savior of Wall Street. Now, in an updated prologue, McDonald offers insight into the future of Wall Street and how Dimon will overcome the challenge of aggressive new regulation from Washington—and how he plans to continue to thrive as the world's preeminent banker.

1. BANKING IN THE BLOOD

Jamie Dimon is a banker by blood. His paternal grandfather, Panos Papademetriou, was a Greek from Smyrna who worked in banking before leaving Greece during its war with Turkey. He arrived in New York in 1921, by way of France and Canada, settling in Manhattan and promptly shortening his last name to Dimon. The mischievous immigrant later offered his son two stories about the changing of his name. In the first, he sought work as a busboy but found that no one would hire Greeks. “Dimon” sounded French—and Papademetriou was fluent in French—so he changed it to get a job. In the second version, he fell in love with a French girl and chose the name for amorous purposes. Either way, he clearly felt he would do better with an American-sounding French name than with a Greek one.

Panos didn’t last long as a busboy—family lore has it that he was fired, and he subsequently found work at the recently opened branch of the Bank of Athens, a subsidiary of the National Bank of Greece. After working his way up to vice president in charge of loans, he left the bank in 1949 to become a stockbroker at Shearson Hammill.

Panos’s son Theodore became a stockbroker, too, joining his father at Shearson Hammill in 1953, a year after his marriage to Themis Annastasia Kalos, also the child of Greek immigrants. The brokerage, founded at the turn of the twentieth century, had a national presence as well as a reputable investment banking operation. Shortly thereafter, Theodore and his wife moved to East Williston, Long Island. Just 25 miles from New York City, the village was enjoying a burst in population growth as Americans embraced the postwar suburban ideal.

Their first son, Peter, was born in 1954. Fraternal twins soon followed—Jamie and Ted Jr.—on March 13, 1956. Ted Sr., who commuted to Shearson Hammill’s offices on 44th Street and Fifth Avenue in his gray Convertible Dodge, soon grew tired of the commute, and persuaded his wife to move back to New York. The family of five settled in a rental apartment in Jackson Heights, Queens, where young Jamie attended PS 69 from kindergarten through the fifth grade.

Jamie was a precocious child. His mother remembers him looking at her “as if he was an adult” as early as the age of two. He also felt a need to keep up appearances. Even as a youngster, he refused to come out of his bedroom in his pajamas if his parents had guests. He was also extremely active, prone to leaping across the room rather than walking. Fluent with numbers from a young age—he remembered phone numbers as a small child—Dimon launched his first business at the age of six, attempting to sell greeting cards. The effort failed, but there was no doubt about his enterprising nature.

In this, he took after his grandfather, Panos. An elegant and intellectual man, Panos spoke several languages, and he dabbled in psychoanalysis while dissecting balance sheets. Young Jamie’s father was also an early influence, particularly in his choice of profession. Dimon later said that he learned a great deal about the brokerage industry “across the kitchen table.”

For a child from a comfortable background, Jamie exhibited an unusually early desire to be financially successful. At the age of nine, he announced to his father that he was going to make a fortune when he grew up. Whether his parents took him seriously or not, Dimon never wavered from that goal. The family photo collection includes a picture of him at the age of 21 studying J. Paul Getty’s How to Be Rich, a collection of columns he’d written for Playboy on the subject.

He was, in most other ways, a typical boy, getting into the occasional scrape. Dimon and his twin brother Teddy were in a kids’ “gang” they called Lightning Squad, and they battled older boys (including their own brother) in the courtyard of their apartment building.

(Dimon’s relationship with his parents has always been close. When he threatened to run away from home at the age of five, his mother replied by asking him where he would go. “To the woods,” he said. She asked him what he would eat: “Wild berries and flowers.” What would he drink? “Water from a lake.” Where would he sleep? “I’ll make a bed from twigs and leaves.” Finally, she asked, where would he go for love? After thinking for a minute, he said, “I’ll come home.” In the end, Dimon decided not to run away.)

In 1967, when the twins were 11 years old, their parents gave the suburbs another shot, moving to a modest two-story house in the village of Larchmont, just north of New York City. Dimon’s mother remembers asking him at bedtime a few nights after moving how he liked his new bedroom. “I don’t know the shadows in the room yet,” he replied. “But it’ll be OK.”

Dimon spent sixth grade at Larchmont’s Murray Avenue School before his parents moved the family back into the city, this time to a four-bedroom co-op at 1050 Park Avenue. (Although he has accomplished much, Dimon’s is not a Horatio Alger tale. He has spent the majority of his life within the same five blocks on Park Avenue, home of New York’s upper class.) Ted Dimon, who eschewed borrowing money his whole life, paid cash for the apartment.

• • •

Themis Dimon wanted her sons to continue in school together—she was the kind of mother who dressed all the boys in the same outfits—and in April 1968, she applied for them to attend Browning, a private all-boys’ school with 189 students in a pair of converted town houses on East 62nd Street that had been founded by John Browning, a close friend of John D. Rockefeller. (Rockefeller’s son, John D. Jr., attended from 1889 to 1893.)

The Dimon boys were accepted, and they all completed their high school years at Browning. Dimon was in the school choir for a time, but quit in favor of sports. He played varsity soccer, basketball, and baseball. Browning was a small school, and its basketball court was also its auditorium; Dimon once broke his front teeth on the stage while lunging for a ball. (One nickname in high school was Mad Dog.) The starting center fielder on the school’s baseball team, he hit over .500 during his junior year, though he never loved the sport. “My arm was always hurting and I found it kind of boring,” he recalls. He also preferred to see his girlfriend after school rather than go to baseball practice.

Two years into their time at Browning, Dimon and his brother Ted Jr. met a friend to whom they have remained close ever since. Jeremy Paul had moved into Manhattan from Connecticut. Often a dinner guest at the Dimon house, Paul remembers Ted Dimon Sr. coming across more as an intellectual than a stockbroker. A student of philosophy and a writer of poetry, the elder Dimon was also a trained violinist, and played in a string quartet in the family living room during social events. Themis, too, had an intellectual bent. The year the twins went off to college, she took classes at the New School, and ultimately got her master’s degree in psychology from Columbia. “Dinner at their house was really fun,” Paul recalls. “It wasn’t just, ‘Pass the potatoes.’ Whatever the topic was that day, it was taken very seriously.”

In a family of outspoken individuals, Teddy had even more of a mouth than his brothers. He wasn’t afraid to provoke other teenagers, either, in part because he could always count on Jamie to come to his aid. Perhaps as a result, Jamie can be fiercely protective of those close to him. Throughout his career, he has been characterized as having an aggressive personality, and he will not deny that. But he is no bully. He hates bullies.

The Dimons, who lived at 86th and Park, walked down Park Avenue to school each day, picking up Paul on 77th Street. Already punctual to a fault as a teenager, Jamie Dimon insisted that the only time Paul was late was when it was raining, just to force the Dimons to wait in the rain.

Dimon had an almost idyllic childhood. Summers were spent mountain climbing in Colorado or taking French immersion at the Université de Poitiers in La Rochelle. Confident, good-looking, and athletic, Jamie was also something of a heartthrob. “In senior year, he majored in his girlfriend,” recalls one friend. When he graduated, her photo graced his personal pages in his yearbook, along with those of his parents, his brothers, and his beloved sheltie, Chippy. When it came to relationships, Jamie Dimon was that guy—the one to whom women were attracted, but who always seemed to have a girlfriend.

Though not the best student, Dimon never ranked below sixth in his class at Browning. History tended to be his favorite subject, but his best marks were in math, where he demonstrated an intuitive grasp of the subject. In Dimon’s final year at Browning, his calculus teacher suffered a heart attack. Her replacement didn’t know calculus, and the six boys taking advanced placement calculus were told that if they wanted to continue, they would have to teach the subject to themselves. Three of the students decided to throw in the towel, but Dimon and the remaining two—one of whom was Jeremy Paul—spent a challenging year of self-instruction. “As far as working experiences go, that was pretty intense,” recalls Paul. “Each day we’d go into the classroom and there was no teacher, just us. And we’d sit there, trying to work our way through the problems.”

Dimon also demonstrated an early capacity for ethical leadership, exemplified by an episode in an American history course. One day, the only African-American student in the class had been acting out and was told by the teacher to leave the room. Once the door closed behind him, the teacher turned toward the class and muttered, “Six hundred thousand died to free the slaves, and this is the gratitude we get.” Dimon stood up, grabbed his things, and walked out the door. “He blasted me for not going with him,” recalls Paul. “And he was right.”

He was never afraid to challenge authority. Michael Ingrisani, Dimon’s high school English teacher, continually came up against Dimon’s assertiveness, which was usually punctuated by a demand to Ingrisani: “Prove it.” Browning had a policy, for example, that if a student scored above 90 percent during the term, he was not required to take the final exam. In Dimon’s senior year, he had earned 89 percent in English, but he tried on numerous occasions to concoct an argument for why he, too, should be exempt from the final.

“Wow,” Ingrisani thought, after one of Dimon’s pleading sessions. “He’s negotiating. He’s practicing. And he knows he has nothing to lose by trying.”

• • •

Despite having been a smart, popular student, Dimon has mixed recollections of his high school years. He was a little too rambunctious, and his outspokenness grated on some teachers; he had a vague sense that a number of the more traditional among them didn’t really like him. As a result, he was later told, his college recommendation letter conveyed reservations to admissions officers. That was indeed the case. After praising Dimon’s “keen, analytical mind” and “self-motivation and seriousness of purpose” in the letter, Clair Smith, the assistant headmaster at Browning, added a loaded compliment: “His lack of manners, due to habits of making quick judgments and contradicting others, has been greatly improved.” Reversing course once more, Smith finished on an up note: “He will be successful.”

Despite graduating fourth in his class, Dimon was not accepted by the college of his choice: Brown University. He went to his second choice, Tufts, where he majored in psychology and economics. The latter proved to be his passion. After writing a paper on Milton Friedman’s Capitalism and Freedom, he was encouraged by his professor to send the paper to Friedman himself. The economist responded with an eight-page letter, critiquing Dimon’s critique. “He said something along the lines of, ‘Son, I really appreciate you sending this to me. While I agree with some of your points, you’re wrong about a, b, c, and d, and there’s some faulty logic here and there,’” recalls Dimon. “I was blown away by it. Partly as a result of that, I always try to reply when someone sends something to me. I can’t write an eight-page critique, but I try.”

It was another economics paper, though, that set the trajectory of the young man’s life. During his sophomore year, he wrote an analysis of the 1974 merger of Hayden Stone and Shearson Hammill in which he explored the savings one could achieve by combining an efficient company (Hayden Stone) with an inefficient one (Shearson Hammill). He knew of the transaction through his family, as his father was still working for Shearson Hammill at the time of the deal. Hayden Stone was the acquisition vehicle of one Sandy Weill, in the midst of what was the first of his two empire-building campaigns.

By this time, Jamie Dimon had actually met Sandy Weill; his parents had become close to the garrulous financier and his wife, Joan. Ted Dimon Sr., as impetuous as his son, had written Weill a memo at the time of the merger, laying out his demands if he were to stick around under the Weill regime. When the elder Dimon called Weill to ask what he thought of the memo, Weill said that he had no thoughts at all, that he’d thrown it out. He proposed that the two men get together for a drink at the private, exclusive Harmonie Club—a Jewish preserve—instead. When they met, Weill asked Dimon to repeat his “demands.” “I want this …,” began Dimon. “Yes,” replied Weill. “And I want that …,” continued Dimon. “No,” replied Weill. And so on.

Overall, Dimon Sr. liked what he heard. This was a man who offered no bullshit, who genuinely seemed to understand the broker’s concerns. He said he would allow Weill to “continue to process his trades.” Translation: there might be a company name on his business card, but Ted Dimon Sr. reported to no one. He ran his own business. (Later in his career, when Jamie had become his father’s superior, the son would confirm that Dimon Sr. still considered himself a free agent, that “he would never say I was his boss.”)

Before long, the Weills and Dimons were spending significant amounts of time together. They spent a few weekends together in East Hampton, and the Dimons joined the Weills at one or two seder dinners. The glue of the relationship was the wives, who had lunch between classes at the New School—Joan Weill was also taking courses in 1975—and through their friendship, Dimon and his siblings came to know Weill’s children, Marc and Jessica. (Friends in their teens, the three crossed paths again while working for Weill in the 1990s.)

Excited that her son had chosen a thesis topic that touched on both her family and her friends, Themis asked him if she could show the paper to Weill. “I have never seen the merger from this point of view,” Weill told her after reading it. He sent Dimon a note that read, “Terrific paper. Can I show it to people here?” The forthright student seized his opportunity. “Absolutely,” he replied. “Can I have a summer job?” Weill hired Jamie Dimon to work with the budgeting team in the company’s consumer business that summer.

Joining his parents at the Weill house on weekends, the young Dimon peppered Weill with questions about why the company was doing one thing or another. When Weill once bragged to the younger man that all its branches were profitable, Dimon told him he was wrong. “No, they’re not,” Dimon said. “Four of them are losing money.” Though somewhat taken aback by the young man’s cockiness, Weill liked him a lot and encouraged him to keep asking questions. He figured Dimon’s aggressive temperament would soften with age.

Dimon didn’t much enjoy Tufts, at first. In addition, too many students didn’t take school seriously enough for him. He considered it “camp without counselors.” During his freshman year, he applied to transfer to Princeton, but was turned down. Eventually, he made close friends at Tufts, and grew to love the place. His classmate Laurie Maglathlin (née Chabot) recalls that Dimon didn’t seem to have to study much—he was one of those irritating people who do really well without trying too hard.

Dimon excelled academically and graduated summa cum laude in 1978. A class photo shows a confident man, blithely unaware how silly he might look years later with his shaggy 1970s hairdo. Dimon applied to Harvard Business School and was admitted, but then he delayed entering, deciding he’d rather work for a bit first. Applying to about 15 companies—including consulting giants like McKinsey and the Boston Consulting Group—he received just a single job offer, from a small outfit in Boston called Management Advisory and Consulting that had been found by professors from Harvard Business School. He spent the next two years there.

He remained as headstrong as he’d been all his life. When one partner demanded he work all weekend and deliver a finished project by 9:00 A.M. Monday, Dimon dutifully did as he was asked. Come Monday morning, however, the partner didn’t even show up to see the results. Dimon’s first instinct was to quit. Instead, he confronted the partner, who said he’d just wanted to make sure that the project was finished promptly. “But you ruined my weekend,” Dimon replied. “And because of that, I will never work on another project for you again.” When colleagues told him that he wasn’t allowed to make such unilateral decisions, Dimon was defiant. “Yes, I can,” he said. “And they can fire me if they want to.” (They didn’t.) In another instance, he refused to work on a project for a cigarette maker.

“I saw some things while I was there that were just astounding,” Dimon recalls. “I remember one client’s CFO being just downright dishonest. I also thought the bureaucracy of many places was over-the-top. The BS that happens at so many companies—I was blown away by it. I didn’t want to be a consultant, but I learned a lot there, including the idea of fundamental research. I had no idea that if you were working for a fishing rod company, you could go to the library and look at 24 fishing magazines. And that there were fishing mailing lists and that kind of thing. It opened my eyes to all of that.”

• • •

Among his brothers, Jamie was alone in pursuing business. Freed by their upper-middle-class upbringing to do exactly as they pleased, both Ted and Peter chose intellectual pursuits. Peter got a PhD in physics from the University of Chicago, and Ted Jr. became an educator and an expert in a mind-body discipline known as the Alexander technique. But Jamie never lost sight of his original goal: “success.”

The year that Jamie entered Harvard Business School (HBS), 1980, Wall Street was a wreck, and corporate America was stumbling after the cursed late-1970s period of stagflation. “Not many people were going into finance at the time,” recalls the HBS professor Jay O. Light. “In that sense, it was a special class, people who were truly interested in finance, and not just following the crowd.”

Dimon stood apart even among that group—which included the future hedge fund managers Seth Klarman and Steven Mandel; the future chairman and CEO of G.E., Jeffrey Immelt; and the future president of Comcast, Stephen Burke. Within weeks of arriving at school, Dimon showed his fearlessness. Discussing a case study about the financial operations of a cranberry co-op, he challenged a professor. Case studies, the bread and butter of education at HBS, involved a group approach to solving issues in highly complex business situations—usually taken from real life—for companies and their managers. “Imagine 80 or 90 people, most of them feeling insecure, that they were an admissions mistake of some sort,” recalls Burke. “And Jamie raises his hand and says, ‘You’ve made a mistake.’ Everyone froze. We all thought he was committing suicide. But Jamie walked up to the board and changed a few things, and the next thing you know, the teacher said, ‘Oh my God, you’re right.’ It was a confidence with no fear.”

Jay Light noticed the same thing that Mike Ingrisani had at Browning—Dimon had a powerful independent streak, and often a different grasp of what a manager’s priorities should be in case studies. He bore down on fundamental issues such as expense strategy and risk management. One day, in a class discussion of various fixed income investments, Light challenged Dimon on the concept of investing in a long-term zero coupon bond that nevertheless had a 15 percent yield-to-maturity. (In other words, although the bond offered no annual interest payments, it was selling at a price that would offer a 15 percent annualized return at maturity.) Dimon launched a bomb into the middle of class: “If you don’t see the merits of investing in a 15 percent zero coupon bond, Professor Light, then you probably shouldn’t be teaching this class.”

James “Longo” Long, who had come to Harvard after a stint at Hewlett-Packard in Calif...