They called him a hero. The most esteemed banker of his time. The captain who could steer the ship while others foundered. The handsome, charismatic CEO of JP Morgan Chase, he of the silver hair and golden tongue, beloved by presidents and praised by pundits.
Now the truth is out, and Wall Street's golden boy, Jamie Dimon, has fallen to earth with a thud.
Why did it take so long? Why did the American media treat him with kid gloves? In a populist moment, how did he manage to escape the scorn heaped on his colleagues?
To understand this, you have to follow the yellow brick road all the way back to the beginning, back to when the gold-plated American Dream was forged in the smithy of the Puritan soul.
Thou Shalt Have Riches
Australians have an old joke about their country's founding elements: Sure, we got the criminals, but America got the Puritans, which is much worse.
The folks who arrived on our shores from Europe four centuries ago brought with them some peculiar notions. The Puritans believed in the Calvinist "Doctrine of the Elect," a depressing divine plan whereby God pre-selected those destined for heaven and damned everybody else to hell. You could never know who was on the A-list and who was in for a fiery eternity. At least that's what old John Calvin had taught.
But mere mortals could never be content with so mysterious a system, so they became obsessed with finding out who was elect. Material possessions, they concluded, must be a sign. Didn't people who worked hard and kept up their prayers often amass more stuff than others? Hard work was godly, and since it often resulted in riches, they must be godly, too. Wealthiness was next to godliness.
In an essay on The Great Gatsby, America's great literary ode to our distinguishing love of wealth, John A. Pidgeon notes that the striving for money became a means of salvation. Take the Puritan reverence of riches, add in equal parts transcendentalism and rugged individualism, and you've got the American Dream in all its shining glory: If you work hard, if you believe fervently enough, you can make yourself a fortune. You, too, can join the ranks of the elect.
Man on the Make
Jamie Dimon saw his destiny as a little boy. His background, while not exactly humble, was relatively obscure. According to Duff McDonald, author of Last Man Standing: The Ascent of Jamie Dimon and JP Morgan Chase, Jamie's grandfather, Panos Papademetriou, changed his name to "Dimon" when he arrived in America from Greece because he fancied it had a French ring to it. America was the land of reinvention, and Grandpa Dimon was smart and plucky enough to pull it off: He started out as a busboy and ended as a stockbroker, the same job that gave Jamie's father a comfortable income. Still, little Jamie was an outsider among Knickerbocker descendents who breathed the rarified air in the New York of his childhood.
But Jamie was going to subdue that world and earn the money that would buy prestige. According to McDonald, even as a small tyke he felt a precocious need to "keep up appearances" and refused to appear in pajamas if his parents had guests. At the age of nine, he announced to his father that he was going to make a fortune when he grew up. A family photograph shows a 21-year-old Jamie poring over the pages of J. Paul Getty's How to Be Rich, essays written for Playboy.
Of course, like the protagonist of any good story, the boy with a sense of destiny would have to pass through a series of trials in order to reach his goal of joining the ranks of the elect. And so Jamie did.
The young seeker of fortune was rejected by Brown University, but he got into Tufts and from there, Harvard Business School. Right after graduation, Jamie got an early career break in 1982 when Sandy Weill, who had once employed his father, gave him a job. Jamie could hardly have found a better mentor in the ruthless art of getting rich. Weill had taken advantage of the deregulatory fever of the 1980s and set about consolidating various financial services into what became one ginormous monstrosity of a firm, Citigroup, where he presided as a kind of feudal lord. He amassed a sizable personal fortune in the process and even claimed that his business achievement, later found to be built on dubious practices, was all for the good of society. For a while, Jamie Dimon was the favorite of the portly, cigar-chomping mogul. But later, Weill grew jealous of Dimon's rising star and banished him from the kingdom in 1998.
The resilient Dimon was not to be undone. He even benefitted from an air of martyrdom that Weill's reputation as an egomaniac conferred upon the booted protege. He dusted himself off and became the CEO of BankOne in 2000, where he did quite well, and then moved to JPMorgan Chase in 2004, where he became CEO in 2006. At JPM, Dimon was widely perceived as a smart and cautious leader, shrewdly avoiding many of the fancy financial engineering tricks that were all the rage on Wall Street. Dimon, in contrast, proclaimed his obsession with what he called the "fortress balance sheet." He would not let his reckless competitors deter him from methodical efforts to add to credit reserves and to carefully expand market share in various businesses.
Dimon was different, they said. He was celebrated for poring over his bank's raw data instead of just trusting his traders. Rather than dive into the mortgage game, Dimon would proceed cautiously and warn his shareholders of trouble ahead. When the financial crisis hit in 2008, JPMorgan Chase did not come out unscathed. Sure, there were some crap loans, faulty mortgages and unpaid credit cards. But compared to other banks, Dimon's firm was thought by many to be on solid financial footing. More than once, Federal Reserve regulators turned to JPMorgan Chase and Dimon for help with various rescue efforts.
Dimon was named to Time magazine's World's 100 most influential people in 2006 and 2008, and he was there again in 2009 and 2011. Some thought Obama would name him Treasury secretary. That didn't happen, but the president lavished praise upon Dimon: "You know, keep in mind, though there are a lot of banks that are actually pretty well managed, JPMorgan being a good example," said Obama. "Jamie Dimon, the CEO there, I don't think should be punished for doing a pretty good job managing an enormous portfolio."
Dimon looked like a winner. He painted himself a patriot who was there to help his country in times of crisis. In a Daily Beast interview, Duff McDonald gushed that "he's emerged with a mix of traits rarely seen -- a master of detail and operations, but also an inspiring and charismatic leader who definitely elicits a level of loyalty among subordinates that I'm not sure I've ever seen before."
In 2010, the NYT proclaimed him "America's Least-Hated Banker." He could even fly his private jet down to the White House and not "catch any flack." Whoo-hoo!
In early 2012, in the wake of Occupy Wall Street, Dimon professed to understand America's pain, though he was quick to point out that he himself had nothing to do with it: "TARP led to a lot of this anger... People said, 'Well, you got bailed out and you would have failed.' It's not true in our case, but I can understand why people are upset about that."
Dimon was one of the country's highest-paid bank CEOs, with a fat package of $23 million, and nobody really seemed to mind. JPM was the largest and most profitable U.S. bank. Life was good. Dimon's three daughters were among "Wall Street's Hottest Offspring," including Laura, a Barnard student who called in the fall of 2007 to ask, "Dad, what's a financial crisis?"
How the Mighty Have Fallen
Fast-forward to summer 2012, when it seemed that the Great Gatsby ran into Moby Dick while taking his yacht for a spin. A nasty, behemoth of a trading fuck-up dubbed the "London Whale" sent billions of dollars up in smoke when a hedging strategy -- at least that's what the bank claimed -- went wrong. At first, Dimon pooh-poohed the disaster as a "tempest in a teapot." Then he tried to spin it as an isolated risk management problem that had been fully addressed.
Criminal investigators weren't buying it, and they began to probe into the bank's activities. By January 2013, Dimon's pay was cut by more than half, down to $11.5 million. Even so, the bank's board of directors praised Dimon for "forcefully responding" to the trading loss.
But praise was getting harder to come by. Around the time the pay cut was announced, Forbes magazine, hardly known for its distrust of bankers, published an article summing up the feeling about Dimon that had begun to circulate in Switzerland at the big annual convention of economic honchos held in January: "Davos: How Jamie Dimon and JPMorgan Chase Endanger the Public Safety."
Then came the Big Reveal. Last Thursday, a 300-page Senate report delving into the details of the $6.2 billion London Whale loss pointed the finger of blame directly at Jamie Dimon. An email containing the words "I approve" made it clear that the guy known for micromanagement and checking out data knew exactly what was going on at JPM. He had specifically told his people to take on riskier business and he approved new ways of hiding it.
The New York Times is no longer singing Dimon's praises. Gretchen Morgenson and others have been filling the business pages for the last two weeks with tales of Dimon's follies and the reckless behavior of JPM. Morgenson had two words when she read the Senate report: "Be afraid." For all the Dodd-Franking and the tough talk of reining in big banks, JPM, she concluded, is a ticking time-bomb rife with stupid risk-taking, bad management and a penchant for misleading investors and the public.
In the blogosphere, some put it more plainly. David Dayen, writing for Naked Capitalism, covered a report written by Joshua Rosner, an Graham-Fisher and Co. analyst (and Morgenson's co-author on the book Reckless Endangerment). The title of Dayen's piece told the tale: "New Report Exposes JPMorgan Chase as Mostly a Criminal Enterprise." Dayen, a veteran reporter of dastardly Wall Street deeds, was aghast at the list of frauds and malfeasance covered in Rosner's report, including everything from illegal flood insurance claims to auto-finance rip-offs to shifting trading losses to customer accounts. (If you can stomach it, read the full report here.)
The rise and fall of Jamie Dimon is more than simply another tawdry tale of Wall Street. It is a reflection, and a criticism, of the American experience -- our beliefs, our desires, and our attitude toward the wealthy. Dimon's story is about the tarnishing of the American Dream. It reveals the sham of romanticizing riches and the folly of our need to believe in the goodness of those who possess wealth.
In The Great Gatsby, narrator Nick Carraway feels sorry for Jay Gatsby's demise, and pleads that he's a cut above the money-grubbing crowd he hangs out with.
Maybe Jamie Dimon was a cut above his fellow bankers. Given the looks of that crowd, that's pretty lousy praise. Or maybe he wasn't. Maybe he's just a run-of-the-mill hustler, no better than the rest of them. He pretended to be in control of a too-big-to-manage bank and when things went awry -- which they always do -- he tried to fake his way out of trouble. This Golden Boy just got away with it longer than some.
Cross-posted from AlterNet.