Last Man Standing by Duff McDonald

Author:Duff McDonald
Language: eng
Format: epub
Publisher: Simon & Schuster
Published: 2009-10-06T00:00:00+00:00

His first move was to expand the company’s profit centers from five to six—the investment bank, retail financial services, credit cards, commercial banking, treasury and security services, and asset management. The first three were the largest in terms of revenue and profits, but the last two had demonstrably superior returns on equity.

The merger actually was a good fit, as there had been little overlap among the two companies’ business lines. In the first quarter of 2004, for example, JPMorgan Chase earned 57 percent of its net income from its investment bank and 22 percent from retail banking and credit cards, whereas 59 percent of Bank One’s earnings came from retail banking and credit cards, 31 percent from corporate loans, and 10 percent from asset management.

In strong markets, the combined company hoped to see a disproportionate share of earnings come from investment banking and trading. When the market was choppy, the retail and commercial banking divisions might provide stability. And the treasury and asset management divisions were money machines requiring very little capital.

Specific roles took several months to be determined, but Dimon’s core posse from Bank One remained with the merged company—Mike Cavanagh, Jay Mandelbaum, Heidi Miller, Charlie Scharf, and his adviser Bill Campbell. Whereas Cavanagh, Miller, and Scharf went on to carve out well-defined roles as CFO, head of treasury services, and head of retail, respectively, Campbell became a part-time adviser. Dimon’s Praetorian guard stayed largely intact.

Dimon swears he doesn’t use consultants unless they are absolutely necessary, but he continues to use the services of Andrea Redmond, the recruiter who helped get him in the door at Bank One. (What better endorsement of an executive recruiter than the one who finds you for the job?) Redmond introduced one of the more recent additions to the company’s operating committee, its credit card chief, Gordon Smith, to Dimon in 2007. (Smith had been a high-level executive at American Express.)

Mandelbaum found himself with the most amorphous job, head of strategy and business development. Heritage JPMorgan Chase’s head of asset management, Jes Staley, had been concerned that Mandelbaum—having run asset management at Smith Barney—would be gunning for his job but the mild-mannered Mandelbaum instead settled into a role as one of Dimon’s most trusted sounding boards. The other was the firm’s general counsel, Joan Guggenheimer, the woman Dimon had long ago elevated over Weill’s daughter Jessica Bibliowicz. Both stood out for their ability to tell Dimon when he was wrong. “Whenever I have really complicated stuff, I give it to Jay,” Dimon has said.

(“Jamie is either in agreement with you or he’s going at you,” says one JPMorgan Chase executive. “With one exception. He will sit down and reason for hours with Jay. If something is really going wrong, you watch, the person who is behind him is Jay Mandelbaum.”)

When Dimon rolled into JPMorgan Chase, his reputation was largely unchanged from that he’d had before decamping for Chicago: a cost-cutter and systems integrator; a man who got excited by finding ways to collapse 10 different credit card processing technologies into just two or three.

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