56 BriefingJPMorgan Chase The EconomistMarch 14th 2020
2 blems with subprime mortgages were re-
vealed. As a result jpmbegan to reduce its
exposure across all its businesses, 18
months before most other banks did.
While they were struggling to stay afloat,
jpm was in a position to snap up Bear
Stearns and WaMu for a song.
Despite navigating the crisis relatively
unscathed, the bank has paid heavily for
mishaps. Mortgage-related fines have cost
it tens of billions of dollars—the most ex-
pensive being a $13bn bill for misleading
investors over toxic securitised loans. jpm
also had to cough up $2.6bn to settle allega-
tions that it turned a blind eye to Bernie
Madoff’s giant Ponzi scheme.
One blow-up in the post-crisis years
made it appear that even Mr Dimon was in-
capable of running a bank as large as jpm
had become. In 2012 it lost $6bn as a result
of outsized derivatives trades by an em-
ployee known as the “London Whale”.
Shareholders proposed a motion to sepa-
rate the job of chief executive from chair-
man (though it was defeated). Politicians,
pundits and analysts alike accused jpmof
being both too big to fail and too big to
manage. It has also faced criticism for re-
maining wedded to dirty industries. It is a
big financier of fossil fuels—though in Feb-
ruary it announced a partial pullback.
Throughout, however, Mr Dimon has
stuck to his overarching strategy, and the
economies of scale have paid off. This is
clear not only from the firm’s financial re-
sults but also from the behaviour of its ri-
vals. Goldman Sachs, whose executives
once scoffed at prosaic banking businesses
like taking deposits, now seek to emulate
jpm’s type of full-service bank. When asked
whether he feels a sense of vindication, Mr
Dimon simply replies: “I always believed
that scale mattered.”
What, then, is there left for the boss to
do? Health permitting, he could of course
find plenty of reasons to stay put. In the
past three weeks alone, the bank’s share
price has fallen by a third, as the covid-19
epidemic has shaken financial markets.
The ship will need steadying.
In the longer term there is also a techwar to win. With fintech firms continuing
to sprout, and tech giants like Amazon and
Google busily experimenting in financial
services, digital disruption is set to upend
banking over the next decade or so. Some
financial experts expect it to have the same
impact on the industry as electricity did on
manufacturing in the 1890s. Mr Dimon is
alive to the threat. He has long endorsed
enormous investment in technology. Last
year jpmspent $11.5bn, more than any other
American bank, on improving its systems.
Meanwhile, Mr Dimon may see scope
for further expansion. Rumours have cir-
culated that jpmis preparing to launch a
British digital bank later this year, as a pos-
sible step towards taking the retail bank
global. He might want to do a few more
deals. At the bank’s investor day on Febru-
ary 25th he hinted that a fintech acquisi-
tion might look tempting.
It must, indeed, be hard to say goodbye.
The decision is especially tricky for a boss
who is so widely lauded, and famously
dedicated to the job. Mr Dimon once insist-
ed on keeping an appointment with The
Economistdespite feeling woozy after un-
dergoing an intrusive medical procedureearlier that day.
One of the most critical roles of a ceois
to groom a successor and then to recognise
when the time has come to pass the baton.
Mr Dimon’s health problems will focus in-
vestors’ minds on this question. He has,
however, long been accused of pushing out
heirs apparent. “Jamie Dimon has only one
succession plan,” quips one European bank
boss, “If he sees a successor, he kills them.”
The bank denies this and says those who
left were not on the board’s list.
Plenty of putative successors have left
during the Dimon era, including lieuten-
ants who followed him from Citigroup, like
Charlie Scharf and Mike Cavanagh (see
chart 4). A jpmdiaspora now run banks
with $5trn-worth of assets. And Mr Dimon
continues to keep the net of potential heirs
wide open. At least six names are common-
ly mentioned: along with Messrs Smith
and Pinto, Marianne Lake, who runs con-
sumer lending; Doug Petno, head of the
commercial bank; Jennifer Piepszak, the
chief financial officer;and Mary Erdoes,
head of wealth and asset management.
Having had two serious health scares,
Mr Dimon may now be reflecting more se-
riously on how change at the top can rein-
vigorate the lower rungs. Jack Welch, a
longtime boss of ge, who died on March 1st,
once said that when he finally decided to
leave the firm it was not because he wanted
to, but “for everyone else”.
Were Mr Dimon to bow out now, his
place in the pantheon of banking greats
would be assured. His star has long since
eclipsed Mr Weill’s. In interviews since the
financial crisis his former mentor has ad-
mitted that one of his bitterest regrets was
letting Mr Dimon go. Mr Weill lingered too
long at Citi. It is hard to imagine any share-
holder cheering Mr Dimon’s departure
when it comes. But he must be careful to
avoid making the same mistake.^7Dimon’sformergeezers
PossiblesuccessorstoJamieDimon,bydateofdeparturefromJPMorganChase
CurrentjobandageSource:BloombergJamieDimon
becomesCEO
ofJPMorganChase4090807062005 10 11 12 13 14 15 16 17 18 19 20Bill Winters
CEO, Standard
Chartered, 58Charlie Scharf
CEO, Wells Fargo
54Frank Bisignano
CEO, First Data
60Jes Staley
CEO, Barclays
63Michael Cavanagh
CFO, Comcast
54Matt Zames
President, Cerberus
Capital Management, 49The tech challenge