How Jamie Dimon Got JP Morgan Chase Out Of Subprime

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Everyone now knows that Jamie Dimon is the king of Wall Street. Girls at hedge funds have crushes on him. He's been on the cover of New York magazine, towering over the city. They're calling him "King James."
For the most part, the ascendency of Dimon has been due to the fact that JP Morgan successfully avoided falling into the chasm of subprime mortgages into which so many of his fellow chief executives drove their banks and brokerages. Fortune's has a long profile that describes Dimon's management style, and precisely how he pulled JP Morgan back from the subprime brink.
Dimon favors boisterous meetings that delve into detailed analysis of his bank's business. Fortune's Shawn Tully reports that people describe these variously as "Italian family dinners" and "the Roman forum." There not a lot of kow-towing to the big man, apparently. Ideas are debated vigorously and sometimes Dimon backs down. He wanted to get JP Morgan to go "open source" with the financial products it sold, selling clients on products developed by competitors. But one of his lieutenants eventually talked him out of it, convincing Dimon that JP Morgan's homegrown products were performing as well as anyone else's.
The subprime call--literally, a call to the head of structured products who was on vacation--came from Dimon after a meeting discussing the performance of the retail bank. In October 2006, the mortgage servicing business was reporting that late payments on subprime mortgages were rising at an alarming rate. Dimon and his team concluded that quality control had slipped at the originator level and decided to slash its holdings of subprime debt. It was this leap from the granular details to the bigger picture that enabled JP Morgan to make the right call on subprime while so many others were still rushing headlong into what was one of the hottest businesses on Wall Street.
We can't help but wonder if there are, in the Dimon and subprime story, the seeds of an even greater story defending the efficacy of the mega-bank. After all, it was the fact from a retail business that tipped Dimon off to a strategic change at the investment level. A smaller brokerage or investment bank would not have had access to this data. Maybe its not the model of mega-banks that's broken, after all.
Jamie Dimon's swat team [Fortune]

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