Dimon is the new John Pierpont Morgan but the coming men are the wonk and the axeman

For 16 years, Jamie Dimon and Sandy Weill were the ultimate Wall Street power team, starting with a tiny finance company called Consumer Credit and building it through aggressive acquisition into Citigroup, the largest bank in the world.

For 16 years, Jamie Dimon and Sandy Weill were the ultimate Wall Street power team, starting with a tiny finance company called Consumer Credit and building it through aggressive acquisition into Citigroup, the largest bank in the world. But after Citigroup’s creation in 1998, the couple split, acrimoniously: Weill fired Dimon in a move which was to have far-reaching consequences. Dimon was at that point not only the co-architect but also the heir apparent of Citigroup; with his departure, it was left to Weill to articulate and implement his vision of an all-encompassing financial supermarket. But it turned out that neither he nor his successors were up to the task: Citi’s stock, which closed at $34 a share on the day the merger was announced, is now, a decade later, $10 lower than that, and the bank is generally considered too big to manage.

Dimon is a talented executive, but even he would probably have been chewed up by the sheer impossibility of running a company with as many bickering parts as Citigroup. And that’s assuming that he would have taken over from Weill if he hadn’t been fired, which is far from obvious. When Weill stepped down as chief executive, Citigroup was so mired in scandal that Wall Street might not have been impressed by the elevation of his longtime right-hand man.

Thus did Jamie Dimon dodge a bullet. Banished from Citigroup, he resurfaced as chief executive of a troubled Midwestern lender, Bank One, which he eventually sold to JPMorgan Chase for an astonishing $58 billion. (By contrast, when Dimon and Weill bought Citicorp in the transaction which created Citigroup, they paid just $36.4 billion.) And this time, quite according to plan, he became chief executive. Dimon’s JPMorgan Chase is now worth more than Citigroup, but that’s a feat which probably owes more to managerial incompetence at Citi than it does to Dimon’s expertise.

It is in a different manner that Dimon has eclipsed his former mentor, Weill: in a time when bankers are considered to be greedy over-reachers who have ended up devastating the entire financial system, Dimon has positioned himself as the good guy, the man who largely sidestepped the subprime crisis, refused to play games with off-balance-sheet financing vehicles, and — most importantly of all — the person who stepped up over the course of a sleepless weekend in March and promised to honour all of Bear Stearns’s contracts, thereby averting global financial disaster.

More articles from: Felix Salmon | this section

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