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In November 1998, Sandy Weill fired his protege Jamie Dimon as president of Citigroup, the largest financial company in America. Dimon was 42. Weill had been his mentor since business school, almost a second father. 10 years later, Citigroup was on government life support. And Dimon, now running J.P.
Morgan, opened the bidding for Bear Stearns at $2 a share for a firm whose shares had sold for $170 the year before. The firing wasn't the disaster in his story, it was the thing that made the rest possible. To understand why, you have to go back to a kid who couldn't get into the college he wanted.
Dimon didn't arrive at finance, he was born inside it. In 1921, his grandfather stepped off a boat in New York with nothing and built himself first into a banker and then into a stockbroker. His son, Theodore Dimon, took the same road further and became wealthy doing it. So, by the time Jamie was born, the family had already run the experiment twice and proved it worked.
The house he grew up in was, by his own account, a strict one about conduct. His parents were moralists in the plain sense. You did the right thing, you did only the right thing, and you treated everybody the same whether they could do something for you or not. His mother was one of the early feminists in her circle, reading the books and arguing the positions before it was comfortable to do either.
Everything else was easy. Private schools, summers in the Colorado mountains, the kind of childhood other kids would have traded theirs for without thinking about it. He never pretended otherwise, either, and that matters later because a man who knows exactly how much he was handed tends to be unsentimental about what he's owed.
It wasn't enough for him, not close. From very early on, Dimon had a specific number in his head, and the number was more than his father and his grandfather had made. Not a vague ambition to do well, a measurable one with two men he loved sitting on the other side of it. He also worked out early that finance was the only field where that kind of money was available fast, and that the entry ticket was a great school.
That's an unusual piece of reasoning for a teenager. Most ambitious kids pick a destination. He picked an industry, identified the gate, and went at the gate. Then his dream school turned him down. Brown said no. He had graduated fourth in his class and still couldn't get where he wanted. So, he went to Tufts instead, and privately he took it as an insult.
Not to Tufts, to the admissions process that had mismeasured him. Freshman year, he applied to transfer to Princeton. Princeton said no, too. That is two Ivy League rejections before the age of 20 delivered to somebody who had grown up assuming the door opened when he pushed it. The interesting thing is what he did with it.
He didn't lower the target. He decided that if the best school wouldn't have him, he'd prove the point by becoming the single best student at the school that would. He was, by everyone's description, supremely confident and occasionally insufferable about it. But, the plan worked exactly as designed.
In 1978, he graduated summa laude, and Harvard Business School took him. And that finally settled something internally. The rejections had put a question over his own estimate of himself, and Harvard answered it. At Harvard, he stopped bothering to blend in entirely. He didn't live on campus like everybody else.
Classmates wore suits, he wore jeans and a leather jacket. In a room full of Republicans, he was the lone Democrat and a loud one. He graduated a Baker Scholar, a distinction reserved for the top 5% of the class. Which is the point where a Harvard finance student's life becomes very simple. Investment banks came to him.
Multiple offers, serious money, the standard escalator to exactly the fortune he'd been aiming at since childhood. He turned all of them down. Instead, he took a job paying roughly a third of what those banks offered, working for a friend of his father's. The pitch had been almost insultingly honest.
"I can't match their money, but come work here and you'll see from the inside how a big company actually operates." The man making that offer was Sandy Weill. Weill had grown up in Bensonhurst in Brooklyn, and he had decided young that he was not going to get rich on a salary. Salaries are capped. He was going to get rich by building companies and buying them with other people's money.
And over a long career, he reshaped some of the most recognizable names on Wall Street doing it. Primerica and Salomon Brothers and Citibank among them. In 1981, he sold his brokerage firm Shearson to American Express for $900 million, and 2 years later became president of American Express. The connection to the Dimon family was already there.
Jamie's father had been a broker at Shearson, and Jamie had worked a summer there as a student. So, Weill knew the family and liked what he saw in the kid. He brought him on as his personal assistant. Dimon has talked since about what that mentorship did for him, and there's a general truth buried in it.
Timing accounts for most breaks, but the thing that changes a young person permanently is an older person they respect having visible confidence in them. It's borrowed self-belief until you generate your own. What drew him to Weill specifically wasn't polish. Weill had obvious flaws and didn't hide them, and he was completely unpretentious.
What Dimon wanted was to build something, and Weill had built something stitched together out of acquisitions from an unremarkable starting point. Dimon figured investment banking would still be there if it didn't work out. The word people used about Weill in that era was conqueror. Dimon saw a man early in the campaign and decided to learn the campaign.
And the access was extraordinary. Every other MBA in his graduating class was starting at the bottom of some hierarchy, running models nobody would read. Dimon was inside the room where the decisions happened, negotiating deals worth hundreds of millions on Weill's behalf. By 28, he believed he had already arrived.
He had about a year left before it all came apart. The 1980s were built for men like Weill. Reagan's administration made corporate America the priority, cut taxes, and made borrowing cheap and easy. That combination produces one thing above all others, which is mergers and acquisitions, and the decade turned into a permanent auction.
Working directly for the president of American Express, Dimon's career accelerated past anything his classmates were doing. Weill's ambition was to run American Express outright. Dimon understood the arithmetic of that perfectly. If he helped his mentor get the top job, the company eventually becomes his, too.
But, ambition that visible makes you a target inside a big institution. American Express owned an insurer called Fireman's Fund. Weill wanted to sell it to Warren Buffett, and he and Dimon worked the deal relentlessly to get it to the finish line. At the last stage, the board killed it. Weill understood he had been outmaneuvered, and he quit in 1985 rather than stay somewhere he'd lost.
He told Dimon to stay put. Dimon had a young family and a career that was going beautifully, and there was no reason to burn it. Weill's own account is straightforward about the exit. He left over a difference in management style, without knowing what came next, and he could afford to because the stock had tripled during his four years there.
The 29-year-old Dimon quit anyway. Weill tried to talk him out of it. His argument was blunt. You were voted most likely to succeed in your class. Why on earth are you attaching yourself to an older guy who doesn't have to work another day in his life? American Express wanted Dimon to stay. There was a clear path for him there without Weill in the building.
It was a genuinely reckless bet. It also turned out to be the best financial decision Dimon ever made. But, standing there in 1985, the two of them had no company, no title, and no plan. Weill was 52, and in the eyes of Wall Street, that made him finished. No major firm wanted him as an executive. A man who'd built and sold a brokerage for $900 million couldn't get hired.
Every one of those firms would spend the next decade regretting it. Locked out of the establishment, the two of them went hunting somewhere else entirely. The strategy was simple and old. Take over a small company, then use it as the platform to take over progressively larger ones. The platform they found was not glamorous.
Commercial Credit was a consumer lender in Baltimore, making high-interest short-term loans to working and lower-income borrowers. Its customers were the people who shopped at Walmart, borrowing small amounts at punishing rates because nobody else would lend to them at all. It was functionally a step above a loan shark.
Its parent company was Control Data, a maker of computer disk drives, which is one of those acquisitions that makes no sense on the day it's signed and less sense every year after. By 1985, Control Data was in trouble and wanted cash. Will sent Diamond to take the company apart on paper, and Diamond came back with a number that should have ended the conversation.
Commercial Credit was earning a 4% return on equity. Comparable firms were earning 15. But Diamond had been reading it differently from the start. The company was stuffed with assets that could be sold and costs that could be cut, and that gap between 4 and 15 wasn't a verdict. It was the opportunity.
They went to Warren Buffett for the money. Buffett passed. He'd moved on from buying broken cheap businesses by then because Charlie Munger had convinced him that quality companies beat turnarounds. Buffett's own explanation is characteristically unsentimental. It didn't scale, it was grubby and unpleasant, and involved firing people, which nobody sane wants to do.
So, the financing collapsed and the comeback looked finished before it started. There were only three ways to buy that company. One, find a rich co-investor. That was Buffett, and Buffett was gone. Two, a leveraged buyout. Borrow most of the purchase price, put in a little equity, own it all. The problem is you own it carrying an enormous debt load from day one, and if anything goes wrong, you're bankrupt.
Three, take it public. Sell most of the ownership to investors and use their money. The catch is you have to persuade thousands of strangers that a 4% return loan shark in Baltimore is a good idea. Diamond's pitch was that it wasn't a bad company. It was an undervalued one with somebody arriving who knew how to fix it.
Investors weren't being asked to believe in consumer lending. They were being asked to believe in the buyers. Will backed that pitch with most of his personal fortune buying 10%. 80% went to the public, and Diamond, barely into his 30s, put in every dollar he had, 425,000. The offering raised 850 million, and both of them were in profit the day it closed.
Will made him chief financial officer and handed him a large block of stock options, which is what loyalty was worth in that relationship. The money raised did something else critical, too. It bought the company an investment-grade credit rating, which is the thing a finance company cannot operate without.
Then, they went to work. They laid off 10% of the staff on the first day. Within a year, the company was producing 100 million in profit at an 18% return on equity, which is the 4% figure turned inside out. The rating agencies upgraded them, which let Will borrow another 100 million against the business.
Now they had cash, credit, and a platform. Now, they could finally start doing deals. And the stock immediately fell 50%. The date was October 19, 1987. Traders stood on the floor with their hands in their pockets watching numbers they didn't believe. There's a useful observation about panics that applies as well to 1873 as to 2008.
The necessary ingredient isn't debt or fraud or leverage, it's surprise. Nobody expects it. That's what makes it a crisis rather than a correction. If the market had priced the possibility, the fall wouldn't be vertical. The drop is the market repricing something it had assumed couldn't happen. While most of the market spent that winter trying to survive, Weill and Diamond saw the opposite.
They believed in survival of the fittest, and having just rebuilt their balance sheet, they were measurably fitter than the people around them. So, they bought their own shares back at the panic price. Then, they started buying other companies at prices that reflected everyone else's terror instead of the assets involved.
Over the following decade, they became the most prolific acquirers in American finance. And they did the thing that small companies almost never do, which is swallow something considerably bigger than themselves, the Insurance Group of America, with Diamond as the architect of the deal. By the end of the century, the little Baltimore lender had grown into the largest financial conglomerate in the country, Citigroup.
On the merger date, Sandy Weill and John Reed stood as chairman and co-chief executives, greeting customers at the Citibank branch on Park Avenue. Weill was now the most powerful man on Wall Street. Diamond was president of Citigroup, running its investment funds. One chair away. And Diamond assumed, reasonably, that the chair was a matter of time.
Weill was already planning for the possibility that it wouldn't be. The 1990s were a boom decade. The federal government ran a surplus for the first time in memory, and Clinton, a Democrat, cut taxes on capital gains and real estate. Weill used his political weight to push for something bigger, the Financial Services Modernization Act, which tore down the wall between commercial banking and insurance.
It's difficult to overstate what that unlocked. For most of the 20th century, those businesses had been deliberately kept apart on the reasoning that a bank holding the public's deposits shouldn't also be running insurance and securities risk. The act removed that reasoning. It legalized the mega bank, and Weill had built the prototype before the law existed.
He rewarded Diamond with the presidency of Citigroup. For Diamond, a title one level below the thing he wanted was closer to an insult than a gift. He wanted the chair. He assumed it was owed. Weill had read his protege accurately, and what he saw worried him. Diamond was brilliant, and he was relentless, and he was also blunt to the point of cruelty, and had a serious temper.
Those are survivable traits in a deputy. They are exposures in a chief executive. So, Weill built himself an alternative. He brought his daughter, Jessica Bibliowicz, into the company and placed her inside Diamond's division. Jessica and Jamie had been friends since childhood. Diamond started by promoting her to run the mutual fund business.
Then he made a call that was correct and expensive. Watching low-fee competitors like Vanguard take market share, he concluded that traditional high-cost mutual funds were a dying product. And he told Jessica to reorganize her business around cheap funds. While objected, Diamond won the argument. A year later, when promotions came around, Diamond declined to give her one on the grounds that the results weren't good enough.
In 1996, her division brought in 288 million in net assets. Merrill Lynch brought in 3.1 billion. In Diamond's defense, he had preached one rule his entire career: Treat the clerk and the chief executive identically. He did not carve out an exception for the boss's daughter. Sandy Weill saw a man freezing out his child, and the conclusion he drew from it was the one that ended everything.
If Diamond couldn't manage a relationship with a colleague, the reasoning went, how was he ever going to manage a company of that size? In November 1998, Citigroup announced a restructuring and a management shakeup, and the stock traded actively on the news. Buried inside the announcement was the resignation of the president.
It wasn't a resignation. He walked into a room and was fired. Diamond's own summary is that he worked for a while for 14 years and didn't get along with him for the last five, and kept assuming it would improve. It didn't. He drove home. He called his wife Judy first and told her he wasn't joking because he made jokes about this kind of thing, and he needed her to know this one was real.
His three daughters were young. The youngest asked him whether the family was going to have to sleep in the street. He told her no. The line he's repeated since is the one worth keeping. Citigroup was his net worth, not his self-worth. He could lose the first without touching the second, and that distinction is the reason he was able to get up.
Will, years later, was honest about his own part. Dimon was doing well. He thought he was ready to run the company, and he probably was. The problem was that Weill wasn't ready to stop. Once that was true, the two of them stopped cooperating, and a business cannot be run that way. So, the second most powerful man in American finance was, at 42, unemployed.
He didn't take a soft landing. What Dimon needed was another commercial credit, a broken company nobody else wanted. Cheap enough that fixing it would produce an enormous return, and big enough to be used as a launching pad afterward. In 1999, one arrived. Bank One was a financial conglomerate in Chicago, and it was a mess.
Its credit card was rated the worst in the industry, earned through poor service and hidden fees. Its chief executive, John McCoy, had acquired the nickname Fly by McCoy for the lavish travel he did while earnings deteriorated. The board fired him and went looking for a wartime replacement, which is a different job from a peacetime chief executive, and requires a different kind of person.
There was only one name on the list. Dimon didn't just take the job. He put over $50 million of his own money into the stock, which was effectively everything he had. That wasn't theater. It's a principle he states plainly. Nobody should be able to put other people at risk without carrying the same harm themselves.
If your client loses money, you should be losing it alongside them. Skin in the game. And then he found out how bad it actually was. By his own later comparison, Bank One was far harder than JP Morgan would ever be. Not close. The company was failing, the stock was down, and the executives openly hated each other.
Fixing it required doing things nobody in the building was willing to do. Over 12 months, he sold off underperforming businesses, cut executive pay, and eliminated 12,000 jobs. He also went after the perks, and he did it in a specific order. Cars, clubs, supplemental executive retirement plans, 401k matching, matching gift programs, financial planning, gone.
He stood in front of rooms of executives and made the argument directly. These are entitlements. We are about to lay off people who need their jobs. You're fine, and they are not. We are collectively responsible for the state of this company, and you should be proud to cut your own benefits first. Then he took the losses all at once.
4.4 billion in write-downs and loan loss provisions in 2000, which pushed Bank One to a $511 million annual loss. A loss that size normally destroys a stock. The stock went up. Wall Street had finally found somebody willing to tell the truth about the balance sheet and absorb the damage in one year, rather than hide it across five.
That was always the objective. Dimon calls it a fortress balance sheet, and his definition is worth being precise about, because everyone claims one. A real fortress means assets that genuinely carry the value you say they do, not the value you've persuaded yourself of, and leverage that isn't extraordinary.
Fulfill that, and you can absorb a shock instead of being destroyed by one. The other thing that turnaround bought him was time. Executives who cut deep and early get one bad year of headlines. Executives who bleed slowly get five, and usually get replaced somewhere in the middle of them. A year later, Bank One posted 2.6 billion in profit.
He had pulled a company back from collapse by force of will, but profit was never the goal on its own. Cash and a clean balance sheet are ammunition, and Diamond was stockpiling for a hunt. The timing looked awful. Between late 1999 and 2000, the Federal Reserve raised rates six times trying to cool an overheating economy without breaking it.
The dot-com bubble burst anyway, and the Nasdaq lost half its value. Then the September 11th attacks took the broader market down with it. Nothing properly recovered until the fourth quarter 2003. Across those three years, the S&P 500 struggled to reach double-digit returns. Bank One returned 59%, roughly three times the market in the worst market in the generation.
By 2003, it was one of a small handful of American banks that were genuinely thriving, and Diamond had built a very particular public reputation in the process. Not a visionary, a cutthroat. The man you bring in when the company might die, who will do whatever the situation requires. Which happened to be exactly what one very old Wall Street institution was shopping for.
J.P. Morgan was founded by J. Pierpont Morgan, who came out of a banking family himself, and was never going to be anything other than what he became. People who dealt with him described a steely, determined, extremely intelligent man whose defining quality was simply that he would take charge of any room he entered and did.
By 2003, a century of transformation later, the firm had gone quiet. The Enron collapse had been expensive. When the rescue deal with Dynegy fell apart and Enron went down, JP Morgan was left with a $135 million in fines and a badly damaged public image. Chief Executive William Harrison was at retirement age and he understood the problem precisely.
To turn the firm around, it needed somebody with the founder's temperament. There's a detail about that firm worth knowing here because it says something about how it thinks. JP Morgan is one of the oldest institutional collectors of blue-chip contemporary art in the world, a tradition the bank began back in 1959.
The bank still holds more than $900 million of it across 30,000 works. Institutions that buy art on that scale are institutions that expect to exist in 100 years. Bank One and JP Morgan were both looking for deals. The business logic was clean because Bank One's branch network was exactly what JP Morgan's consumer business lacked.
But the real asset being acquired was Dimon. And here's where Dimon's luck finally turned because William Harrison was nothing like Sandy Weill. He wasn't hungry for power and he wasn't threatened by a successor. He said plainly upfront that Dimon would take the Chief Executive's job once the merger was done.
The two banks merged. A year of consolidation later, Jamie Dimon became Chief Executive of JP Morgan Chase, the second largest bank in America. Second at that moment to Citigroup. He went to work on J.P. Morgan the way he'd worked on Bank One. Costs down, incentive structures rebuilt, and above all, the balance sheet fortified.
That alone wasn't going to be enough because Wall Street grades on one number, and the number is profit. To pass Citigroup, he needed to out-earn Citigroup. The problem was the market itself. It was becoming irrational, and Citigroup was out in front of the housing boom, taking the most risk, and booking the most profit for it.
Chuck Prince, running Citi, said the famous thing about how they had to keep dancing as long as the music was playing. Plenty of people have pointed out since that the music had already stopped when he said it. Dimon's answer was to do nothing, which is the hardest move in the business. He could see where the ascent ended.
Prince would run Citigroup into the ground, and the job was to be solvent and liquid on the day that happened. So, while everyone else was loading up, Dimon was steadily cutting J.P. Morgan's exposure to subprime mortgages and building capital. That is a genuinely painful position to hold. Every quarter you sit it out, a competitor posts better numbers than you do, and your own board starts asking why you're being left behind.
In 2007, the housing market turned, and 5 years after clawing out of the dot-com bust, the American economy fell into something much worse. The first to go was Bear Stearns. A year before it failed, Bear Stearns had posted record profits, and the engine was subprime securitization, the machinery that connected trillions of dollars of American mortgages to investors on the other side of the world.
The theory was that derivatives eliminated the risk. They didn't. They moved it and they concealed it, which feels identical right up until the moment it doesn't. With Bear about to collapse, the government went looking for a bank healthy enough to absorb it. There was really only one candidate because there was only one large bank that had been cutting subprime exposure for years instead of adding it.
Dimon's description of his own position is flat. They had more capital and more liquidity than anyone. The chance of a run on JP Morgan was essentially zero. They never lost money in a quarter through the entire crisis. That's the fortress doing the only job it was ever built for. The government at that stage still didn't grasp the scale of what was happening and the Republican administration had no appetite for anything resembling nationalizing a bank.
Dimon has always been insistent that this was not a bailout in either direction. The government provided some financing and talked about it afterward as though they had carried the deal, but the structure left them taking virtually no risk. JP Morgan did it because Hank Paulson asked and because if Bear went down uncontrolled, it could have taken the global system with it.
That didn't make him generous about price. His opening offer was $2 a share. Bear Stearns, 85 years old, one of the most admired firms in the country, had traded at $170 a share the previous year. $2 was too brutal to hold. To keep Bear's shareholders from blocking it, the final price came in at 10.
Financially, the deal never really paid. Bear's book turned out to carry more damage than anyone had time to measure in a weekend, but it did something worth more than the money. It certified J.P. Morgan as the one institution on Wall Street solid enough to catch a falling bank, and it put Jamie Dimon at the top of American finance.
By the end of 2008, he was one of the few left upright. Frightened money goes to the safest available container, and J.P. Morgan had become that container. It functioned almost as a bank of last resort. Its money management business took in $200 billion in 2008 alone. Commercial banking income rose 27% in a year when the rest of the country was in recession.
Citigroup went the other direction. After Weil retired, he had left the company to Chuck Prince, and the mortgage-backed securities City was holding made it one of the first giants in serious trouble in 2007. The board removed Prince immediately and installed Vikram Pandit. It was far too late. The damage had already been taken.
Weil watched all of it from retirement, and he has said out loud what it cost him. Asked whether he wished Dimon had been there instead of Prince, he didn't hesitate. No question. He wished he'd been there himself. Firing Jamie Dimon was the worst decision of his career, and it is also the decision that created the man who eventually eclipsed him.
Their relationship reads like a father and a son who fell out permanently, and there's every reason to think Weil is quietly proud of what the son built. By 2020, Dimon was the only chief executive left on Wall Street who had run a major bank through 2008 and was still running one. The thing people who work with him keep returning to isn't the deal making.
It's that he's predictable in the specific way that matters. He holds a short list of values. He applies them to everyone including himself and what you see is what you get. His own version of it is unvarnished. Don't pander to the nonsense people tell you. Get up, do the best work you can, tell the truth and fight every single day.
He talks about putting the jersey on at JP Morgan each morning and when you make a mistake, say so out loud. For a man who was fired from the top of Wall Street, that last one may be the most expensive lesson he ever learned.
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