Dimon more crucial than ever to JPMorgan, the bank he's run for 17 years

The cocktails flowed as guests arrived that evening at what was once the lavish library of J. Pierpont Morgan, the greatest banker of his time.
 

It was there, beyond the elegant façade worthy of the Medici, that Jamie Dimon — Morgan’s figurative heir and, arguably, the greatest banker of his time — began dropping a few f-bombs.

The occasion that June night was a get-together of former executives of JPMorgan Chase & Co., a normally light affair of how-are-yous and drinks in the library’s glass-walled atrium. But Dimon was being Dimon, the CEO-philosopher, bluntly dispensing opinions.

He lit into former President Donald Trump, unleashing obscenities as he discussed the Jan. 6 insurrection, attendees later recalled. And he wasn’t much softer on the rest of Washington, where he lambasted what he saw as decades of incompetent policies.

Some guests, no strangers to his swagger, were surprised by the ferocity of his performance.

But then, Dimon can pretty much say whatever he wants at this point. At 66, having lorded over the $3.8 trillion JPMorgan for 17 years, he’s at the zenith of his clout in finance and politics. He's built a firm that's Main Street's biggest lender and Wall Street's top trader. Its $48 billion in profit in 2021 was the highest in the annals of American banking. That year, the board gave Dimon — who’s both chairman and CEO — an incentive package worth more than $50 million to stay until at least 2026.

Since then, it’s become all the more obvious that this stretch of his tenure won’t be a mere victory lap. As Dimon heads deeper into what is traditionally retirement age, he still has significant challenges to wrestle.

Over the course of 2022, investors have taken umbrage with his heavy spending on technology projects. They rejected the firm’s compensation practices. They took a hit as the bank stopped repurchasing its shares due to higher capital requirements. The stock itself is down 17% this year — only slightly worse than the S&P 500 Financials Index but terrible for JPMorgan, putting it on track for its biggest annual drop since 2011.

Meanwhile, Dimon keeps brushing off the big question: Who will lead the House of Dimon after Dimon?

When his aorta ripped in early 2020, JPMorgan leaned on its two co-presidents to temporarily share the CEO’s responsibilities. One of them, Gordon Smith, later retired, leaving the other, Daniel Pinto, there in case of emergency. People close to Pinto, who turns 60 this week, say he isn’t eager to become CEO and even predict he may retire before or at the same time as Dimon.

Jennifer Piepszak, 52, and Marianne Lake, 53, who co-lead JPMorgan’s consumer and community banking operations, are widely seen as the other top contenders. Both previously served as chief financial officer but probably need more experience overseeing JPMorgan’s investment bank before rising to the top of the firm.

Over the years, almost a dozen people seen as viable CEO candidates have ended up leaving. Indeed Lake already interviewed to run Wells Fargo & Co. when it was seeking a CEO in 2019, according to people familiar with that search.

Once Dimon is done being CEO, the board has said, the company may keep him on as chairman.

In short, the answer to most of the firm’s challenges remains: More Dimon.

The scene at the Morgan Library wasn’t an aberration. Colleagues, rivals and other observers say that the CEO known for blunt assessments and market prescience has seemed particularly negative about the world this year, showing that his would-be victory lap may cut through tough times.

He has repeatedly jolted markets by publicly calling out storm clouds over the economic landscape that he’s said could become a “hurricane.” In October, he said a US recession will probably arrive by mid-2023. A downturn could be “mild to hard,” he added this month.

Some close to JPMorgan say he’s sounding and acting a lot like he did before the financial crisis. Back then, he was bullish on his bank but bearish about cracks in the landscape. In a letter to shareholders in early 2007, he complained about “industry excesses and mismanagement” in subprime home loans and said the ultimate impact could get “ugly.” It did.

This year he’s calling out the threat that geopolitical turmoil, rising prices and central bank countermeasures might spin into a superstorm.

It’s no wonder that his shareholders seem restive. Concerns about JPMorgan’s spending on tech and other investments have weighed on the stock this year, at one point tipping it into the biggest daily drop since 2020. Dimon has been plowing billions of dollars into efforts to make the bank more digital — buying everything from an online wealth manager to a payments firm to a restaurant guide to a timberland investor. He’s even building a new Manhattan headquarters. The spree and inflation have nudged expected expenses for this year up about 9% to $77 billion — more than the gross domestic products of most countries.

Dimon has refused to back off, but he did decide it was time to confront critics of his vision. He announced an investor day, JPMorgan’s first since before the Covid-19 pandemic. Colleagues urged him to set it for autumn, but Dimon wanted to quickly quell any doubts about the bank’s direction and pushed for May. It proved wise. A few days before he was supposed to go on stage, shareholders voted against the firm’s executive compensation practices, a non-binding rebuke.

With five hours of presentations by JPMorgan’s top brass, Dimon managed to turn things around — at least for a bit. Shares jumped the most in 1 1/2 years as executives spelled out plans behind the elevated spending, including when investments would pay off. Analysts lauded the level of detail and the fact that, unlike many rivals, his firm’s revenue growth puts it in position to support the spending that will keep it dominant.

“He makes tough calls, seemingly fearlessly,” said Sandy Warner, the bank’s former chairman. “But there are things that he’s going to have to deal with, and he acknowledges it all.”

JPMorgan’s shares have more than tripled since Dimon took over at the end of 2005. Among top competitors, only Goldman Sachs Group Inc. comes close, more than doubling. Bank of America Corp. and Citigroup Inc., the nation’s second- and third-largest lenders, are both down.

He’s not only cemented his role as head of JPMorgan, but as the face of the industry, which comes through every time Wall Street’s leaders are summoned to appear before Congress. Executives atop competing firms privately concede that they’re happy to let him respond first to the barrage of questions.

One rival bank CEO said it seems like many lawmakers are scared of him. Some soften their tone when turning to Dimon, soliciting his advice on the economy, regulation or even education. When others seek confrontation, Dimon fires back. A former senior regulator described him as the “Larry Bird of banking” — he talks trash but can back it up.

“That would be the road to hell for America,” Dimon told Representative Rashida Tlaib in September when the progressive Democrat asked if JPMorgan has a policy against funding new oil and gas projects.

Dimon earned his Wall Street cred by building JPMorgan and steering it through the financial crisis, rescuing two firms — Bear Stearns and Washington Mutual. He has repeatedly said JPMorgan neither wanted nor needed a bailout but agreed to tap into the Treasury Department’s emergency support to remove the stigma for other firms. Most other big banks, meanwhile, not only needed the cash but kicked out their leaders.

The Closer
 

Dimon has picked up another role over the course of his tenure, serving as its ultimate closer. When famed JPMorgan dealmaker Jimmy Lee passed away in 2015, the firm could have tried to anoint someone else to take over his role clinching deals with clients. Dimon loves doing it.

Rival bankers groan when they hear JPMorgan is wheeling out its CEO. One recalled learning that the client he had been wooing for an initial public offering had just taken a phone call that began with the words “Hi, I’m Jamie Dimon,” and wondered how he could compete.

Dimon now spends more than half his time on the road, according to people close to him. In November alone, that included meeting with some 100 clients across Latin America, visiting branches in Texas and jetting off to Paris to accept an award from French President Emmanuel Macron.

Back in Manhattan, he’s been leading the push for Wall Streeters to return to the city’s towers full time, disappointing throngs who came to prefer the work-anywhere lifestyle. As the pandemic stretched into its second year, he joined a Zoom call with a new crop of managing directors. Participants recalled that one from Europe asked Dimon what he learned about himself during lockdowns.

“Nothing,” Dimon quipped, before amending his answer. “I like meeting people so get back to the office.”

For JPMorgan’s employees, that will someday mean the bank’s 60-story headquarters taking shape over Park Avenue — a building that some executives in Wall Street’s upper echelons joke will inevitably be named after Dimon.