The Jamie Dimon Interview

David, we completely blew it. We went into Jamie Dimon's office, had our little meet and greet. We did not ask about the dual pistols. Yeah, from the dual Alexander Hamilton and Aaron Burr, which J.P. Morgan owns and keeps in their headquarters. And we blew it. We didn't ask to see them. We'll just have to come back. When they finish the new building, I'm sure they will be in the executive floor. We can go get a viewing of the piece of American history.

All right. Speaking of American history, let's do it. Let's do it. Welcome to the summer 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert. I'm David Rosenthal. And we are your hosts. Today's episode is the story of a rising star on Wall Street in the 1980s who worked with his mentor to merge and acquire their way to the top of the financial world in the 90s, who then got fired unexpectedly by that same mentor who cast about deciding what to do next and then in 2000 accepted a job turning around a poorly run Midwestern bank.

Then over the next 25 years, he would orchestrate one of the most remarkable runs in banking history and really all of corporate history. This is the story of Jamie Dimon and how he created the modern financial behemoth, JPMorgan Chase out of the beleaguered component parts of Bank One, JPMorgan Chase, Bear Stearns, Washington Mutual, and First Republic. Jamie is now the longest serving CEO of any major Wall Street bank and is viewed as kind of the great stabilizer of the American financial system, especially during the 2008 financial crisis.

He now sits atop the largest bank in the US with an over $800 billion market cap, which is more than twice their nearest competitor. They are the only bank within spitting distance of these sort of big trillion dollar tech companies that we've covered here on Acquired. And to really put a finer point on the dominance, they are the most valuable company east of the Mississippi in the United States and the only company east of the Mississippi worth more than half a trillion dollars.

Incredible. So the question, of course, is how did he do it? I mean, banks fail. Financial firms often have spectacular blowups and large organizations, period, financial or not, can often get so bloated that they slow down to a crawl. So what did Jamie Dimon do differently? Well, today's episode, we have Jamie with us, himself, to tell the story. We recorded this live in front of 6,000 Acquired fans at Radio City Music Hall in New York City.

So you'll notice it's a different format than our usual episode. We're always trying to figure out what version of Acquired works live with an audience, and this is our latest iteration. The Radio City Show also had a second act, a late-night talk show, where we had conversations with the CEO of the New York Times, Meredith Cobit-Levian, and the chairman of IAC, Barry Diller, plus some cameos from around the Acquired cinematic universe. And we cannot wait to share all of that with you at a later date.

Well, if you want to know every time an episode drops, check out our email list, acquired.fm slash email. Come join the Slack and talk about this with us afterwards, acquired.fm slash Slack. If you want more Acquired between each monthly episode, check out ACQ2, our interview show, where we talk with founders and CEOs building businesses in areas we've covered on the show. So with that, this show is not investment advice. Dave and I may have investments in the companies we discuss, and this show is for informational and entertainment purposes only.

On to our conversation with Jamie Dimon. Well, this feels appropriate. You guys dressed up for me. You dressed up for us too. Thank you. Last year, we had you on the video board at Chase, and you were looking very summery there. You look great tonight. Yes. Well, we know you're a big history buff, and we consider ourselves historians above all else. So what we'd like to do here tonight is walk through the 20-year story with you of sort of how you turned JPMorgan Chase from a bank among many to the most systemically important financial institution in the world.

Are you game? Sound good? Sounds great. Thank you. We want to start in 1998. You and your mentor, Sandy Weil, have just spent the past 13 years building the modern financial institution conglomerate, really the blueprint for what JPMorgan Chase is today. Except it's not JPMorgan. It's Citigroup. And everybody on Wall Street in the entire world expects that you are going to be named CEO of Citigroup in short order. This is 1998. 1998. This is not what happens.

Instead, you get fired. And you have to restart your whole career, everything, your whole life from scratch. Sorry to start here, by the way. But before we get into what you do next, what was the model that you and Sandy built at Citigroup? Okay. First of all, I am thrilled to be here. I want to congratulate these guys for building the acquired. It's a great intelligent addition to what we need to learn in society. And so I would say it wasn't quite the model because if you look at what we did at Commercial Credit, Primeric, which then Travelers and Merge, we were a financial conglomerate.

We bought lots of companies and lots of different businesses. We fixed them up. We turned around. We made money. And then we merged it with Citibank, which obviously was a huge bank. And my view is we should skinny it down and kind of shed the parts that aren't that important to the rest of the company and keep the things that strategically belong together together. It was one of my small disagreements with Sandy about the future of the company.

But it was big. It was making a lot of money. It was quite successful at the time. And then I got fired. So how are you feeling in that moment? When I got fired? Yeah, that moment. Well, you know, my wife is here and I was hosting 100 people, recruiting kids in my apartment in New York City, same apartment I have now. And they called me. We had an imaginary Sunday at 4 p.m. that night. And Sandy and John Reed called me up and said, can you come a little early?

We've got a bunch of stuff to talk about. I was the president, chief operating officer. I drove up. I said, I can't. They said, well, it's really important. So I drove up there and I sat down in the room with Sandy and John and they said they want to make a few changes. And there are three of them. And they said, one, we want to make this person in charge of that. I said, okay, well, that didn't make sense to me.

The second one, they wanted to make someone in charge of the Global Investment Bank, which I was running. I thought it was another stupid decision. And the third is they said, we want you to resign. And I said, okay. Because, you know, at that moment, I knew it was all arranged. The boards had voted. The press release was written. The management team was coming up. So I waited, you know, for the management team to come up.

I wished them the best. I said, you guys have a chance to build one of the great companies. They all thanked me. Sandy said, you want to do the press with me? I said, yeah, but I'll do it from home. So I went home, went to see my kids. They were like, one of my daughters here too. They were like 12, 14, 12, and 10. And I walk in the front door and I tell them, you know, I was fired.

And the youngest one says, Daddy, do we have to sleep on the streets? I said, no, no, we're okay. And the middle one who was always obsessed with college for some reason, can I still go to college? I said, yeah. And the one who was here who was the oldest one said, great, since you don't need it, can I have your cell phone? And then that night, about 50 people came over. All the same people I just met, all the management team, bringing whiskey, and it was like, have your own wake.

And there's one really tall guy who came in, a very good friend of mine, and he looks, and my daughter looks up and says, who are you? He says, I used, I work for your daddy. And she says, not anymore, you don't. And that was it. I was okay. You know, I was like, I tell people, you're my net worth, not my self worth that was involved. And for anyone who doesn't sort of already know Jamie's story, you were the rising star.

I mean, you were, the city was the biggest bank. You were the heir apparent. I mean, this is, this was like unfathomable. And for you to take it this gracefully, you know, it says a lot. So, you're sort of wandering in the woods as I, best I can kind of reconstruct it for about 18 months. Is that right? Figuring out what's next? Yeah. I, you know, it took me a while to exit and sign agreements and get out.

They were kind of mean. But, and then I set up in office and it was late. We went for a nice long vacation and stuff like that. When I got back in September, so that was six months later, I went to my, I started going to work. I had nothing to do, but I went from, you know, to nine to five and started calling people and thinking about what I'm going to do. It was in the Seagram's building, so I go for lunch downstairs every day.

At the Four Seasons. At the Four Seasons. And I explored everything. Started my own merchant bank. I could have retired, just teaching, just investing, but I was 42. And you, you took a call about running Amazon, right? Say it again? You took a call about running Amazon, didn't you? I went to, I loved, I went to visit Jeff Bezos, who was looking for a president at the time. He and I hit it off. We've been friends ever since.

He's an exceptional human being, but it was like a bridge too far, even though that movie just came out when Sally met Harry. I was thinking, my God, I'll never wear a suit again. I'm going to live in a houseboat. Yeah, yeah. This would be really great. What an ultimate universe we'd be living in. It would have been an ultimate universe, but I'm still good friends with Jeff, so I got at least one good thing out of it.

And then I got serious, you know, and I was offered jobs to run, you know, other big global investment banks. Hank Greenberger ran AIG, called me up and said, you should come join us. I was thinking, I'm going to go from Sandy Wilde to you. I mean, I have to have my head examined to do something like that. And I didn't know the AIG story. And then, yeah, well, that happened years later too. And then, I got a phone call from a head hunter about Bank One.

And I was also, you guys, a lot of you probably know Ken Langone and Bernie Marcus and Arthur Blank ran Home Depot. I loved them. But at my first dinner with them, I went to see the Atlanta. I said, I have to make a confession. Until you guys called, I had never been in a Home Depot. We were actually wondering, David and I were debating. We were talking about them. You're a lifelong New Yorker. My friend made me go up there and get some equipment and plants and stuff like that.

But I love their culture, their attitude. They wanted me to do it. Ken Langone says, I still should have gotten you. I wasn't going to pay you enough. Of course, it had nothing to do with anything like that. And I had Bank One. But Bank One was my habitat. I was used to financial companies, services, banking. It wasn't quite global. It was a little global at the time. And it was a troubled bank. And I decided that life is where you make it.

It was hard in my family. We had to move, I think, for anyone who's going to move kids that, I think they were 14, 12, it's hard. Some context on Bank One for folks who are not familiar. It's not in New York. It's a large bank, but it's a troubled bank. It's based in Chicago. And when you say large, David, it's a $30 billion market cap bank. Citigroup, where you just had been before, was a $200 billion bank.

It was $21 billion at the time because it had, you have the right numbers, but it did a split. And so if you look back, it was more like $20 billion or something like that. Yeah. And Citigroup was $200. But I didn't worry about that. It was like, you know, in life you make things what they are. I don't like complaining about over-spilled milk. You know, you just put on your pants, you get going, you see what you can make out of it.

But it sounds like you had opportunities to stay in New York to run bigger, more glamorous things. This one, I was going to run the company. The other ones would have been some investment banks. I didn't really trust some of the people who were talking to me about that. And there's a whole bunch of other stuff that I explored. I took phone calls, some small companies, some big companies. There's a couple of subprime mortgage companies who called me.

And I was like, absolutely not. We'll get to that. We'll get to that. And so I just thought this was a chance, you know, and, you know, if the family's willing to move, and we got a nice, took us a while, we had to live in a rental for a while, but we got a nice brownstone. And, you know, we end up loving Chicago. Chicago is a wonderful city in a lot of different ways. you know, like I said, it is what you make it.

You know, and I put half my money in the stock at the time. I tied my, I was going to be the captain of the ship. I was going to go down with the ship. You know, I made it clear to everyone I was here permanently, and it'll be what it is. And so I got to work, like literally the next day. Did we do the math right, that right before you joined Bank One, you bought $60 million of stock?

I did. I mean, I've never heard of someone taking a CEO job and saying, I'm going to invest half my net worth in this company now. Yeah. And I thought it might be overvalued a little bit because there was, people thought it might be sold or something like that, but I didn't care about that. You know, if you work at a company and the new CEO comes in, he's from out of town, and you're going to have a lot of shareholders, and I knew a lot of the shareholders, I was going to know a lot of the shareholders, I wanted them to know I was in 100%.

Lock, stock, and barrel. There was no question, I would never sell that stock, and I'm going to go down with the ship or go up with the ship. And they also, you guys making decisions that I thought were right for the long-term health of the company, not for a short-term type of thing. So what did you find when you got there? Day one on the job, you start investigating. Is it better or worse the same than you thought?

You know, there had been an analyst called Mike Mayo who had done a report. I remember one of the great lines of the report, even Hercules couldn't fix it. It had been an amalgamation of Bank One, First Chicago, National Bank of Detroit, they'd never put the companies together. So they had multiple statement systems, processing systems, payment systems, you know, SAP systems. They had different brands. You know, service was coming down, we were losing accounts, they were closing branches.

It was a mess. But, you know, it was all of it, systems, people, ops. But again, I just, you know, I just, I met the management team. It's hard. You know, I walked in, I met six of the directors. I, there were 21 directors. 11 hated the other 10. Yeah, I mean, wait, wait, wait, wait. There were 21 board members. 21 board members from the multiple acquisitions. They were tribal. They ended up hating each other. I knew that when I went in because I knew one people and, you know, I spoke to a lot of people and did research in the bank.

But again, in life, you get handed these things and it's not perfect. You know, even today, people want to be handed something perfect. It's not perfect. And I was, so I met six directors. I walked in when I got offered the job. I shook all their hands. I told them I'm going to do the best I do. I'm going to tell the truth. The whole truth, the truth, the good, the bad, the ugly. We're not going to bullshit.

We're going to try to build a great company. I'm going to need your help. And, and then they, they said, they left. So now I'm on the executive floor. I don't even know where to go. You know, and so I kind of knocked on someone's door, the head of HR. I said, I do need an office and I really need an assistant. And they were going to give me the chairman's office in the corner. I said, no, no, I want to be like right in the middle so I can see people and I stick my head out.

And then I went to meet the management team. I went to this, they put them all in this conference room, nice white plush carpets. I walked in with a cup of coffee and they said, Jamie, we don't drink coffee in here for obvious reasons. So I looked at them, I looked at coffee, I looked at them, I said, you do now. Then I just started meeting with them all and the systems were terrible, the company's losing money.

I didn't know all the businesses really well so the credit card company had collapsed. That's probably the business I knew the least. But again, it didn't, that didn't matter to me. I was going to try to fix it. It had some good assets and things like that so I rolled up my sleeves and went to work. All right, listeners, now is a great time to talk about a new partner of ours here on Acquired, Lagora, the agentic operating system that is redefining how the world's best legal teams work.

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When we were chatting a couple weeks ago and preparing for this, we asked you in the context of J.P. Morgan, like what are the critical things in your mind that has made J.P. Morgan what it is today? And the first thing you said was risk and was risk and the culture around risk and the way you treat risk. And a fundamental understanding by management of risk. Yeah. When you got to Bank One, I think this is where you first started putting into practice the culture around risk.

What was the risk culture at Bank One and how did you change it? Yeah, I, you know, I've always been very risk conscious. And risk conscious does not mean getting rid of risk. It means properly pricing it and understanding the potential outcomes. And so when I got there, you know, I just started meeting people and going through. I quickly realized that Bank One had more U.S. corporate credit risk than Citibank did. And they, the way they accounted for it was unbelievably aggressive.

And, you know, so they had less capital, less reserves, less this. They, they were calling these things profitable that were basically losing money. And, you know, loans in a lot of business, you got to be very careful about the credit business. And once I found out that, I kind of panicked a little bit. And I went through every single loan in the books. I marked them all down, put up more reserves, told the board about it, and then wanted to earn more revenues per dollar of risk.

So, for example, in the middle market business, we had, for every loan NII, we had like 80 cents and 20 cents. Net interest income for the non-banking. Net interest income from the loan and 20 cents of other revenue like payments. By the time we merged with J.P. Morgan, we had 40 NII from the loan and 60% NIR from other type of things like payments. And one, you're being paid for the risk and one, you're being paid little for the risk.

And I always stress tested and I showed the board that if we have a recession and we're about to have one, how much money we'd lose in credit. So I hired a woman called Linda Baman who said, okay, if you're gonna, if you're gonna let me do credit, you're gonna let me sell loans. I said, yes. Are you gonna let me hedge loans? Yes. Can I do 10 billion? I said, yes. She said, okay, I'll join.

And we probably reduced the balance sheet by 50 billion because, and then we did have a recession, but we were kind of okay by then with one big bad one, which is United, which went bankrupt. And we basically owned it for a small period of time. There seems to be kind of a fundamental Jamie Dimonism, which is don't blow up. I mean, a lot of other people have gotten decent at pricing risk, but everyone else seems to be willing to get closer to the line than you.

Where did you sort of develop this don't blow up at all costs? Yeah, so there's, you know, around risk, there's always this ecosystem. You've always heard it. Everyone's doing it. Everyone's okay. This is gonna work. This time is different. And, you know, history tells you, teaches you a lot. And I always say, you're free to do it. My dad was a stockbroker. And so I bought my first stock when I was 14. In 1972, the stock market hit 1,000.

It hit 1,000 in 1968. I was already helping a little bit with stuff. By 1974, it was down 45%. All the limousines in Wall Street were gone. Restaurants were being closed. You know, markets move violently. And then, you know, we had kind of a recovery. In 1980, you had a recession. 82, you had a recession. In 82, it was lower than it had been in 1968. And it hit 800. And then, in 87, the market was down 25% in one day.

In 1990, all these banks, JP Morgan, Citi, Chase, Chemical, were all taken to their knees by real estate losses. And they were all worth about a billion dollars. I remember, I think Citi was 3 billion at the time, and the other ones were about a billion dollars. And then, you had the 97, also real estate related thing. You had the 2000 internet bubble. You know, and then you had the great financial crisis. And I could, if you go through history, there's tons of these things.

Andrew Rorsch Sorkin is in here and I just read his book. He's nice enough to send it to me in 1929. And man, history does rhyme. Too much leverage. Too much risk. Everyone thinks it's going to be great. No one thinks it's going to go down a lot. You know, and that stock market went down 20% one year, 30% next year, 20% next year. At one point, it was down 90%. You know, shit happens. It seems like your philosophy is that the worst thing will happen.

So just plan for it. Don't say, oh, we're good as long as this crazy, insane, you know, four sigma event doesn't happen. You're like, no, that will happen and happens often. Yeah. So when I got, when I look at it, I always ask, like, when I do stress testing at risk for high yield, the worst, I remember getting to JP Morgan and going through the risk books and their stress test was that high yield would move 40%, the credit spread.

That's good. And at the time, it was at 400 or whatever it was. That means 560. Okay? And I said, no, our stress test is going to be worst ever. Worst ever was 17%. And they said, that'll never happen again. The market's more sophisticated. Well, in 08, it hit 20% and you couldn't have sold a bond. There was no market. So, you know, those things do happen. And the point isn't that you're trying to guess them.

The point is you, you can handle them so you can continue to build your business. And so I always look at what I call the fat tails and manage that we can handle all the fat tails and not the stress test the Fed gives us, but all the fat tails. Markets down 50%. Interest rates up to 8%. Credit spreads back to worst ever. Of course, your results will be worse, but you're there. And the thing about financial services, leverage kills you.

Aggressive accounting can kill you, which a lot of companies do do. And, you know, the goal should be, and also confidence. If you lose money as a financial company, I always knew this too, people, the headlines are, you know, people read that and if they're relying on putting their money with you, they look at that different. So I- They lose trust. They lose trust. And that's what's caused, you've seen runs on banks and you saw some recently because people run, take their money out.

There's a thing that you just said, which is that you might do worse, but you're there. There's sort of this trade-off that you make where you're less profitable in the short term, but at least you stick around. If you look back at the companies that you've run, Big One, JP Morgan Chase, is that true in the good years that you've actually been less profitable than those who are kind of risk-on? Yeah, a little bit. He's saying that, you know, if you look at the history of banks from up until 2007, a lot of banks were earning 30% equity.

Most of them went bankrupt. We never did that much. Okay, but in 08 and 09, we were fine and they weren't. And so, but you want to build a real strong company with real margins, real clients, conservative accounting where you're not relying on leverage. And it's very easy to use leverage to jack up returns in any business, you know, but in banking, it could be particularly dangerous. So it seems like a core part, if not the entirety of this distilled into your operating strategy is the fortress balance sheet.

Yeah. When did you first hear about the fortress balance sheet? I've been talking, I go way back to Primerica. I used to talk about that. You're going to be able to survive the tough times. Early 90s? Probably the 1990s. And like I said, I grew up my father and I went through those market things. I remember how hard it was on people on Wall Street. But the fortress balance sheet is that you run a company serving clients well.

You have good margins, good liquidity, good capital. I'm as conservative an accountant as you can find. I don't upfront profits when I can spread them over time. And accounting, you know, of course, accountants hate it when I say this. You can drive a truck through accounting rules. And accounting itself, you know, that certain things are considered expenses, but they're good. They're an investment for the future, but they're called an expense. And then revenues, if I make bad loans, they are bad revenues.

They will kill you. But for a while, they look pretty good. So it's all those things, margins, clients, you know, in the banking business, the character, the clients you have will reflect on your bank. So the first thing is who are you doing business with? How are you doing business? And, you know, and also making sure your compensation plans aren't paying people for stuff which is stupid or unethical. And, you know, and you always have to review these things to make sure you have them right because they change all the time.

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So you can get $1,000 off Vanta at vanta.com slash acquired. That's V-A-N-T-A dot com slash acquired for $1,000 off, and just tell them that Ben and David sent you. All right, David, catch us up to the merger. So you run Bank One for four years from Chicago, and then in 2004, you merge with JPMorgan Chase in what is termed at the time a merger of equals. I think JPMorgan Chase referred to it as that. Bank One shareholders get 42% of the combined company.

I mean, I think people don't realize how much of JPMorgan Chase is Bank One today. That's why it's a little irritating to me when they say, you've been running it since I was running JPMorgan. I was running 40% of the company for the whole time. And when I got to Bank One, and I'm not working around the clock, I already knew that a logical, strategic merger might be JPMorgan. I know all these companies, and that's the other thing about Fortress Balance Sheet is you also have real strategies that survive the test of time, and you're not flipping and flopping.

And then I'm sitting there, and then of course the tape comes, JPMorgan Chase to merge. So we're worth like $25 billion. They're now worth like $80 billion or $90 or whatever the number was. I'm like, well there goes that dream. But four years later, our stock was up to, you know, doubled or something like that. There's actually come in, and it was in the target range, and I had been meeting with Bill Harrison, the current chairman of JPMorgan at the time.

We were talking about it. We both knew it made business sense. They were kind of looking for a CEO. So we had been talking probably for a year and a half before that. They're looking for a CEO. So did they give Bank One shareholders 42% because they were looking for a CEO? There were two lawsuits. Okay. So we got the premium. They got the name and the location. And I effectively had kind of control from day one because inside the merge agreement, and this is almost unheard of, when we get the premium, is that to not have me become CEO 18 months later, 75% of the board would have to vote me out.

Right. The default was you were going to become CEO. And the board was eight Bank One people and eight JPMorgan people. And I knew a lot of the JPMorgan board members, too, who respected me. And Bill Harrison and I were very close, but that was the agreement. They got sued for paying too much to buy me. I got sued for not taking enough. You get sued. You can't win at these. I think every shareholder is probably happy to be.

But it worked out. Yeah. All right. 2006. Before we get to 2006, when you were going through that process, and even maybe the couple years before you and Bill were talking, you're starting to think about JPMorgan as a partner. I'm curious, did the brand, did the name JPMorgan factor into your thinking at all? Did you view that as an asset? I mean, JPMorgan brand is a Tiffany name. I didn't value it in the deal. And what I looked at, I had given my board, I think the first thing is run your company well.

And people thought I was going to start doing deals immediately. I was like, no, we suck. We haven't earned the right to run someone else's company yet. When we're running a good company, we can merge with somebody. But the first thing I looked at was business logic. And that every business, we had a consumer business, they had a consumer business, we had a credit card business, they were both terrible. They had a credit card business, they had a big investment bank, we had a big U.S.

corporate bank that needed some of those investment bank users. We both had a wealth management business. I knew we could save a lot of cost saves. So the business logic would be impeccable. Then there's the ability to execute. Like, can you actually get it done? Because you've all seen a lot of deals where they fall apart. They don't have management, they don't consolidate the systems, they have infighting, it kind of happened at Citi, and so you don't effectuate.

And then there's the price. So I knew we had a Tiffany brand, but it didn't value because if everything else didn't work out, I don't think it would have mattered that much. Interesting. All right, so I'm going to fast forward just a couple of years. It's 2006. You're officially chairman and CEO of the combined JPMorgan Chase. And 2006 on Wall Street is like, go, go, go, go, baby. It's like, you know, 1980s all over again. It was.

I think you had the same incentives as everyone else, but you behaved very differently. Am I missing something? Did you have the same incentives? Yeah, you pulled JPMorgan back hard on the risk side in 2006. I did. So there were cracks out there in 2006. You may remember the quants. There started to be a quant problem in 2006. We definitely saw subprime get in bed. And that's, I pulled back on subprime. I wish I had done more because if you look at what I did, you say, okay, well, you saved half the money, but you would have saved more.

You still had some losses. Yeah, but we also had, I'm going to say, less, maybe a third of the leverage of the big investment banks and a lot more liquidity. So in 2006, I started to stockpile liquidity and, you know, looking at the situation, I was quite worried. The leverage, if you, you may not remember this, but the leverage, because of accounting rules in Basel 3, Basel 1, investment banks, particularly the banks, the big investment banks, went from 12 times leverage to 35 times leverage.

And, and it was go-go. So for every $1 I'm putting in, you know, bridge loans, the whole thing. Like, in 07, the bridge book of Wall Street was $450 billion. Today, it's $40 billion. JP Warren can handle the whole $40 billion today, though we're not the $40 billion today. And they were much more leverage deals. And a lot of them fell apart, collapsed, and, and then, of course, and that was before you had the collapse in the mortgage markets, which really took down a lot of these banks.

But you did have the same incentives, and you had the same access to information that a lot of these other folks did, but you didn't blow up. What explains this? Because usually, behavior follows incentives. Yeah. Well, first of all, if you work for me, I would tell you, I don't care what the incentive is, don't do the wrong thing. And, and don't do the wrong thing to the client. If you treat yourself, if you're the client, how would you want to be treated?

And I, I had gotten rid of, I mentioned that one risk thing, there were multiple risk things like that. They were being paid to take the risk. So you can sell. You were telling us about the auto loan business. Yeah, but they'd be being paid. But the second I put in all these new risk controls, all of a sudden, you weren't making money by taking that leverage. Because I was looking at how much capital could actually be deployed if things get bad.

And so I was looking at earnings through the cycle. And then, but very importantly, all of these investment banks were doing side deals, private deals, three-year deals, five-year deals. I got rid of almost all of them. This is for comp with senior bankers. So today at JPMorgan Chase, there are no, you know, we do do things, but, and I know some of my partners in the room here, but we all know about it. There are no winks, there are no nods, there are no side deals, there's almost no one paid on a particular thing.

Because if you're paid on a particular thing, you can do the wrong thing. And meanwhile, you're not helping the company, you know, manage this risk or something like that. So we change the incentive programs. And I'm quite conscious about incentive programs that they don't create mis, you know, misbehavior. But it's also very important, if you're in a company and you say the incentive program is doing that, you should tell the company, this incentive plan is not incenting the right behavior versus the customer.

And a lot of it was leverage. So if you look at the leverage in some of these securitization books and mortgage books, if you have 30 times leverage and you're getting 20% of the profits, you'll go to 40 times leverage. It's just going to, it's literally going to add, you know, 25% to your bonus. And so I got rid of the profit pool of 20% and the leverage. So yeah. And I lost some people too in the meantime.

It's funny, yeah, you know, JP Morgan as part of the system had the same incentives, but you changed the incentives for the team within the company. Okay. All right, we got to go to 2008. March. March 13th? 2008. Thursday, 2008. Yeah. It's Thursday night. You get a call from Bear Stearns' CEO. The stock closed that day at $57 a share. It was like $150 a couple months before. Three days later, God, I remember it like yesterday.

I was working on Park Avenue on Wall Street. I remember that night, $2 a share, you're buying Bear Stearns. Tell us the story. So I was at Avra on 47th Street with my parents and my parents' favorite restaurant. My whole family was there. It happened to be my birthday. I don't normally get emergency phones. Happy birthday. Yeah. And Alan Schwartz, who was the current CEO, we'd seen their stock go down. I knew they had some real problems because we saw their hedge funds and some of the things that were taking place there.

And he said, Jamie, I need $30 billion tonight before Asia opens. Which I said, I don't know how to get $30 billion for you. And have you called Paulson or have you called Tim Geithner? So we all called. I called up the management team. I went back in. I probably had a bite and said goodbye. I went back to the office. Probably had 100 people come in that day, that night. They all got dressed. They went back to work.

It's an emergency. We now rang all the bells for emergency. Bear Stearns went bankrupt. Spoke to the Fed about, let's just get them to the weekend. We had one day and we needed a Saturday and Sunday and we concocted this loan. So we couldn't lend the $30 billion. And the Fed technically couldn't lend the $30 billion, but the Fed can lend to us technically and I can technically use the collateral of Bear Stearns so that, so we got the literally one day loan.

And then the next day I had, we had thousands of people come in due diligence and we went through every loan, every asset, every balance sheet, all the derivatives, all the lawsuits, all the HR policies, like real due diligence in a two or three day period and bought the company at that night $2 a share. Hank Paulson was saying, why are you paying anything for it? I said, well I do have to get shareholder votes. Right, because you need Bear shareholders to approve the deal.

It was a public deal and the worst part of it is I was going to get the lawsuit from the Bear holders and I knew that. That you didn't pay enough for that. But we couldn't let it go bankrupt. It wasn't like an industrial car you can buy in bankruptcy. It would have been gone and the crisis would have just unfolded. Okay, two questions. One, what would have happened if it went down? Two, afterwards did you think it was over?

No. So we already had, so that was March. You know, what happened with Lehman was an uncontrolled failure. There was money locked up everywhere. People panicked. They started pulling money up everything. That would have happened with Bear. So it did stop that and I would have thought that it gave other people other time to clean up their act. So literally six months later I would have thought some of these other firms were much, had more liquidity, more capital, and were a little bit more prepared for what might be happening.

We already had the stress in the system was, you saw it already. It was going to mount. It wasn't going to go away. There were tremendous losses coming. So we bought it and, you know, probably did help. In hindsight, it didn't stop, you know, it didn't stop the crisis from unfolding. We bought it and then like a couple, like a week later we changed to $10 a share. It had been at $120. And the way to think of it is it was $300 billion of assets and a $12 billion tangible book value.

We wrote off the whole tangible book value when we bought the company to pay, we had to liquidate the loans, we had to hedge stuff, we had severance costs, lawsuit costs, and we basically used all that. So we paid $1 billion for a company that had been worth $20 billion recently. The building we're in now was worth $1 billion on the balance sheet for zero. And we got, the fact, we got some very good people and we got some good businesses but it was an extremely painful process.

I've seen estimates that in the fullness of time after really dealing with unwinding all the stuff there, it cost you $15 to $20 billion. So it cost you $20 anyway. It was the $12 billion we wrote off. That didn't cost us. We didn't really pay for it. And then the government sued us on the mortgages which I was quite offended by. And I really was. Take this problem and then we'll sue you. This is the government.

When you, you know, whatever government you did a deal with, that's not the government down the road decides, I don't care. We're going to come after you anyway. So while we kind of saved the system a lot, we bailed a lot of people out, they made us pay $5 billion on the bad mortgages that Bear Stunz had done. And that's what made me make the statement I wouldn't do it again. I wouldn't, put it this way, I don't know how to say this, I wouldn't really trust the government again.

Okay? Okay? Okay. Would, um, I gotta, I gotta ask a follow-up question to that. Um, is that a structural thing? Just the way that we're set up with a new administration every four years? Yeah, they, they don't feel obligated to what the prior administration did. And, you know, contract, even some contracts were violated in this thing, which I won't go through. Uh, literally contract. I mean, it would have been tortious interference that had been company to company.

But they basically, you know, since you operate under their laws, you know, they can basically take you down. So you, you know, I went to see Eric Holder trying to settle all his mortgage stuff, which we settled. I brought my lead director. He expected me to come and be pounding my chest. And, uh, and I went in and said, Eric, I am here to surrender. I cannot fight and I cannot win against the federal government. You know that a criminal indictment can sink my company.

I will not do that to my company or my country. I'm here to surrender. Before I surrender, I want you to know the circumstances by which we bought Wamu and Bear Stearns because 80% of what they're asking for related to Bear Stearns and Wamu, not JPMorgan Chase. And I went through the whole thing. You know, uh, he said, thank you. Uh, I'll take in consideration, but they never gave me the accounting, so I don't know what they did.

Uh, and so it is what it is. It was quite painful. Uh, but I've got to move on. We'll move on from this. We won't keep you. Well, we'll move on from the specifics. David's like, actually, I do have one more thing. Um, whether you would have done it again wouldn't have, you know, very clear, it was not a great deal on paper for JPMorgan. But, as we look at it now, the reputational value that JPM, the reputation of JPMorgan now is unlike any other in the industry.

Part of why you're worth $800 billion is that reputation. Yeah. A lot of what created that reputation was that weekend. Yeah. I, you know, if you're, yes, I know I say I wouldn't trust the government if the government called me up, they did, they did it again. If they called me again and said, we need your help to save our country, well, of course I'm gonna, I'm a patriot that way. I just, I would just try to come up with some ways to avoid the punishment by the next president.

I would come up with something. You need, you know what, you need like, uh, the version of the merger agreement with JP Morgan Chase where it's like a 75% of Congress needs to vote not to sue you. The default is you're not gonna get sued. All right, listeners, now is a great time to thank our longtime friend of the show, ServiceNow. If you are running a large enterprise, AI agents are likely spread across every team and deploying them is, uh, no longer the hard part.

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So Bear Stearns happens six months later, you get another phone call. WAMU is going under. You do buy WAMU. Contrary to everything we're talking about with Bearer, WAMU is actually a great acquisition, right? Yeah. So this is a lesson about acquisitions. It's very hard. Remember, we bought WAMU a week after Lehman went bankrupt. And most boards wouldn't have touched that at all. Because the whole system feels like it could. The whole system was in trouble. But WAMU put us in California, parts of Nevada, Arizona, not Arizona, Georgia, Florida, which we weren't in.

So think of these really healthy states. And they had, you know, 2,300 branches. They were, and they had huge mortgage problems. But we had looked at it over and over and over. So we knew their mortgage books called. And we wrote off, we bought it for, this was all before. We bought it for a $30 billion discount to tangible book value. Because they had debt. And we left the debt behind. And so, and that $30 billion was approximately what the Moore's loss was going to be.

So we bought the company, think of if we bought a company clean, we wrote off all that stuff, the books were clean, and then we did something unheard of too. The next day, or two days later, I went in the market and raised $11 billion of equity, which I didn't really need. But again, this is my conservatism. I was like, you know what? This could get even worse. And I don't want to be short capital liquidity.

So we, you know, we raised that to make sure our balance sheet was just as strong as it was after WAMU than it was before WAMU. And you already had the reputation to pull this off, right? I'm imagining in the worst month of the financial crisis, who can go out and raise $11 billion of equity? Yeah. It was, yeah. People trust you. But yeah, we knew a lot of the shareholders and you earn your trust over time with shareholders and, you know, we explained, we gave them a quick little presentation over the, you know, yeah, and a lot of them stepped up and said, this is great.

And they also know we can execute it because behind the bare sterns, people forget the work is the next day you got 50,000 people consolidating, you know, 5,000 applications, branches, compensation programs, you know, settlement programs, you know, payment systems, it's a lot of work. But we obviously have the capability to do that and we have the capability to do WAMU. I think we finished the WAMU consolidations in nine months, all of them. So that within nine months that we're all in the same systems, which allows you to start doing a better job in customer service and things like that.

So this fortress balance sheet strategy and raising this equity capital and, you know, having additional margin of safety and conservative accounting, in retrospect, it seems like the obvious right strategy for running a large financial institution. Why wasn't everyone else copying it? Have people changed and does everyone else run their banks like this now? I think people, the people are more conservative today. I think regulators are more conservative today. But again, I go back to people get involved in aggressive accounting.

They don't look at stressing their own bank in a real way. You know, you saw people take too much interest rate risk, too much credit exposure, too much optionality risk or sometimes it's new products. So if you look at the financial services, very often it's the new products that blow up. It takes a while. They haven't been through a cycle and you had that with equities way back in 1929. You had it with options. You had it with equity derivatives.

You had it with mortgages. You had it with Ginny. Even Ginny Mays at one point blew up even though they're government guaranteed. You had it with Quant and with LTA. It happened with Quant. It happened with leveraged lending. And then people then become more rational how they run these balance sheets and how they think through the risk. So I have to ask you, is this private credit today? Say it again? Is this private credit today? I don't really think so.

I don't think it's $2 trillion. It's grown rapidly. That's an issue. But what happens, the other thing about Mark is there's some very good actors in it who know what they're doing. Customers like the product. So I always say, well, the customers like it. But there are also people who don't know what they're doing. And it's grown rapidly. So there may be something in there that would become a problem one day. I don't think it's systemic.

So that $2 trillion, the mortgage market when the time it blew up was, I'm going to say, $9 trillion. And a trillion dollars was lost. This is, you know, and it was... A trillion dollars was also more than a trillion dollars back then. Yeah, a lot of these private credits are not leveraged like that. It doesn't mean there won't be problems, but it's slightly different. But you look at the whole system, there are other things out there that are leveraged that can cause problems.

Of course, people take secret leverage in a way you don't necessarily see it. What are some of these in your mind that are potentially problematic today? Well, look, I look at... When you look at asset price data, rather high. Now, I'm not saying that's bad, but if today PEs were 15 as opposed to 23, I'd say that's a lot less risk, a lot less to fall, and you have some upside. I would say at 23, there's not a lot of upside, and there's a long way to fall.

And that's true with credit spread. So... And we look at... We stress test everything. We do, like, 100 stress tests a week, you know, and to make sure we can handle a wide variety of things. And then the other thing, and the biggest risk to me is cyber. I mean, I think this cyber stuff is... You know, we're very good at it. We work with all the government agencies. They would say the chamber was up. We spend $800 million a year or something on it.

We educate people on it. We just do... But it is... You're talking about grids and communications companies and water and even part of the military establishment. The protections are not what you need if we ever get any kind of war where cyber's involved. And China is very good at it. And so is Russia. But Russia is mostly criminal, which is slightly different. All right. I'm going to pull us back to the story. We're going to fast forward to 2023.

We're not really equipped to talk about, yeah, Russia. It's not what we do on acquired. But... Silicon Valley Bank and First Republic both fail. You're there again. Did you see it coming? What lessons did you learn from how 2008 went that you could apply in 2023? Obviously, you bought First Republic. Yeah. So Silicon Valley Bank... Both Silicon Valley Bank did some very good stuff. But they both had something unique that we didn't know at the time.

I'm going to call them concentrated deposits. Not uninsured because people are misstating that concentrated. And so a lot of venture capital. What happened with Silicon Valley Bank and kind of First Republic is some of these large venture capital companies, call them there hundreds of them, maybe a thousand, told their constituent clients that they invested in who all banked to Silicon Valley and First Republic, the banks aren't safe, get out. And they all removed their deposits. And Silicon Valley Bank, I think they had 200 billion in deposits, 200 billion, 100 billion in one day.

And that caused the problem. But they also had other problems. They didn't have proper liquidity. They didn't have their collateral posted to Fed. And they had taken too much interest rate exposure. And the interest rate exposure was hidden by accounting. It was called held to maturity where you don't have to mark even treasuries to market. And I always hated held to maturity because, but it gives you better regulatory returns and stuff like that. But when that held to maturity, the tangent, if you said, what's the tangible book value of one of these banks?

And you said it was 100. Well, all of a sudden, it was 50 if you just marked that one thing to market. And there's, now here, now you're into judgment land. At what point, if you saw a bank where just that one mark had the tangible book value dropped to 40 or 30 cents to the dollar, would you panic? I would have said, that's too much risk. And, you know, the regulators helped us because they said rates are going to stay low forever.

So these banks bought a lot of 3% mortgages. And when, you know, 3% mortgages, when rates went up to 5%, you know, worth 60 cents on the dollar or 50 cents. And that was it. And so both those had, they took too much history exposure, known to management, and it was known to the regulators. And, you know, and fixable. So, you know, we knew about, a little bit about Silicon Valley Bank. We were trying to compete in that area, so we learned a lot afterwards about how to do a better job for that ecosystem of venture capital.

We have a whole campus in Palo Alto now. We've hired 500 innovation bankers. We cover venture capital companies. We're not as good as they are yet. We're going to get there because we're organized slightly differently. And we knew First Republic. We were watching it. I had called Janet Yellen that I said, that company's in trouble and one or two others. If you want to, we'll take a look. We could probably buy it and eliminate the problem.

They waited a little bit too long. It was kind of a little melting ice cube. But you can imagine, the day we bought it, you never heard about it again. We hedged all their exposures in a couple of days. And, you know, we merged everything in. We wrote everything down. But we did get some good stuff from them. We actually got some good people. You know, the normal thing in acquisition is they're terrible. Get rid of them or they failed.

But we also looked at what they did, how they dealt with clients. Some of the big clients here, they did a great job with high net worth clients. Single point of contact, you know, concierge services. So now if you go down Madison Avenue, you see things called J.P. Morgan Financial Center. That's your first J.P. Morgan branded consumer effort, right? Because it's kind of based on that. When you walk in there, we know your small business. We know your mortgage.

We know your consumer banking. We can get you travel. We can do a whole bunch of different stuff. So very high level services. I think we have 20 of them now. But I'd love it. And if it works, you know, in 20 years, we'll have 300. And so these things are opportunities. And I hope it works. You know, you don't always know they're going to work for a fact. But so far, so good. All right, listeners.

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All right, so we're effectively caught up to today, and if we're trying to, now we've got the whole story, we've got a lot of context. Obviously, that didn't go into every detail, but if we're now trying to answer, yes, if we're now trying to answer the question, how did you separate from the pack? Why did you become a completely different animal than your whole competitive set? What are the things in your mind that led to this success?

Well, I mean, I don't know totally. First of all, because we skipped over strategy a little bit, and this is an important for you all that we have, what we do is the same thing that a community bank does other than investment bank, global investment banking. Okay, so if you walk into a small community bank, they know your business account, they know your consumer account, and they usually have a trust company. They used to call it trust, but they'd manage your private affairs, they'd set up a trust for you, and they'd do stuff like that, and their CRM is up here.

They don't need a Salesforce CRM because they know everyone in town, and they didn't do big-time global investment banking, but the strategy, those businesses fit together, they feed each other, and so does investment banking. A lot of our middle market clients use investment banking products. A lot of our consumer clients use some FX, so all of our businesses feed each other. There's no extraneous. We got rid of everything that didn't fit a strategy, and then you start building client businesses and client services, Fortress balance sheet, Fortress accounting, all those various things, and, you know, and I've always talked about...

So it's holding a portfolio of things that actually feed each other. They actually fit, whereas, you know, Citi had consumer finance, that didn't fit, life insurance, that didn't fit, property cash, that didn't... They eventually got rid of them all. Sandy just wanted to do more of them. You know, he bought American General, which did truck leasing, for God's sake. I mean, and once you get involved in these things, it's hard for people to understand the risk in each one of these businesses, but all of ours fit.

I don't like hobbies. I don't like things. You know, and we've made plenty of mistakes because you have to try and test things, and then you're always investing for the future. That investment is always people, branches, and technology, and that's true whether they're investment banking people or consumer bank people or opening consumer branches or I think Doug Penner is here and Troy Rohrback who run the Global Investment Bank, but they've opened, you know, commercial banking branches all over Europe, and I think you're telling me, it's going great, you know, and it's feeding all other parts of the company, so just sticking to your knitting, constantly investing, you know, not overreacting to the market.

You know, markets are like accordions, and then sometimes, you know, if you're strong when others aren't, you have a chance to buy things you want to buy, and then always look at the world from the point of the consumer. What do you want? How do you want it? How do you want to get it? Can we provide it to you in a way that makes sense for us too? You know, not going for the last dollar and nothing like that, and so, and building teams of people, you know, our people are curious and smart, they have heart, they have soul, they give a damn about, you know, the guards in the company and the receptionists, and, you know, it's not just about

the big time bankers and people pounding their chest, you know, we don't try not to put up with that, and we have big time bankers, they are exceptional, you know, and, but the company, you know, serves the clients, and we have, and I think the clients know that. When you really dig in to start analyzing JP Morgan's financials, you kind of see this one thing that jumps right out at you, which is the efficiency ratio. For every dollar that you make compared to your competitors, you get to keep 15 cents more of that dollar as profit.

It's not hard to see how that compounds and how that allows reinvestments, and why is your efficiency ratio so much better than competitors? It's, it is literally continuously investing and gaining business at the margin and not stopping and not stop starting, and, you know, the thing is, the thing about margins too is that we have that margin while investing a lot. It's much easier to have that margin and just, you know, we can cut billions of dollars of marketing out tomorrow.

We can stop opening branches and save a billion dollars next year. We can do a lot of things. Your margins will go up, your growth will go down, your long-term margins will probably get worse. So we kind of look right through the cycle and we look at the actual economics that we do, not the accounting of what we do. And, you know, we have, you know, we've built it over time. You know, we have great people and great products and there's some secret sauce I'm not going to tell you about.

We do Investor Day and we tell everyone everything and I'm sitting there watching my, I never do presentations. I'm watching them do the presentations. I'm saying, oh God, we're just giving away too many secrets here. but, so there's secrets as to why the efficiency ratio is so good. Well, you know, I saw Howard Schultz here before, you know, and, I'm not supposed to say that, but, it's okay. It's okay. No, but, we're glad you invited your friends.

Look what he built over the years. You know, the consistency, the curiosity, the heart, the, you know, branch by branch products. It's just always doing that, knowing you're going to make mistakes, but building the culture that just kind of plows through that and you all know, I, I do use sports. Sports is a great analogy. If you have a sport team with a bunch of real jerks on it, are they going to be a great team?

Almost never. You know, if, if the team members aren't giving it their, their best every day during practice, you look at Tom Brady, every day at practice, he worked hard. You know, if people are not giving their best, you're going to have a great team. And it's not that different in business. The difference in business, you can BS about it all the time. You can make up stories. But in sports, you see it, you know, on the playing field.

Do they have the team? They play together. They don't even have to be friends. They have to practice, know their teams. And so, I do think companies have that. It's like a sauce that works. And you've seen it at lots of different companies, you know, not just JPMorgan Chase. Yeah. So, all right, we've got one last question for you. If you look back to 2008, which was a long time ago now. To 2001? To 2008, which was a long time ago now.

All of the other leaders that were involved in that era have long since retired. I mean, I think many folks within JPMorgan Chase have long since retired since then. It seems like you're working as hard as ever. Yeah. And in it as much as ever. Why are you still here? What keeps you going? Yeah. So, I want to thank my wife who's here too who suffered through all this with me all these years and probably couldn't have done it.

Couldn't have done it without her. I don't know. Look, I don't know. But I do believe my grandparents, all Greek immigrants. There we go. My grandparents, all Greek immigrants who didn't finish high school. But there's a Greek ethic. And you don't even realize you're learning from your parents, you know, from the ground up. And Judy's parents, my wife's parents were the same, which is, you know, have a purpose. You know, it could be art, it could be science, it could be military, it could be business, it could be, it could be just being a great parent, a great teacher, you know, but have a purpose and then do the best you can.

You know, give it your all. Don't like be one of those people who's complaining all the time. You know, you give it your best and then treat everyone properly. Everyone. You know, like if I, including like if there's a bully beating up on someone, you had to stand up for the someone. You were not allowed to allow a bully to do it. So how you treat people, what you do. And so in my hierarchy of life, the most important thing is my family.

Still is. The second thing is my country because I think this country is the indispensable nation that brought freedom of speech, freedom of religion, freedom of enterprise. which we have to teach everywhere we go about how important it is because I don't think people fully understand it sometimes. And then my purpose, because, you know, my family doesn't want me home every day and this is my contribution through this company. I can help cities, states, schools, companies, employees.

And I get the biggest kick out of that. And so that's what I do. And as long as I have the energy, I'm going to do it. I can't imagine. I don't play golf. You know, my daughter, one of my daughters said, Dad, you need some hobbies. And I said, I do. We, hanging out with you, family travel, barbecuing, wine. We now like whiskeys. And I love, I love history. I think history is the greatest teacher of all time.

Hiking. I can't play tennis anymore because my back, but those are my hobbies. I don't buy fancy cars and stuff like that, but this gives me purpose in life beyond family and beyond country. Plus, I think this helps the country. You know, I get to do a lot of things for our country that I just think are quite meaningful from this job. And so when I'm done with this, I don't know how to teach and write.

I may write a book like Andrew R. Sorkin did. I'll do something, but I got to do something. I'm not going to twiddle my thumbs and smell the flowers. There are a lot of people who have floated your name for political or policy roles over the years. It is hard. There is only one job that could possibly impact the country in a bigger scale than you're currently doing. Do you agree? Right now, yeah. Well, that's probably a great place to be.

Jamie, thank you so much for joining us. David, Ben. These guys are great, by the way, so thank you. Well, that is it for our conversation with Jamie Dimon listeners. Thank you so much to all 6,000 of you who came to watch in person. It was so cool. So cool. As always, a huge thank you to Arvin Navaratnam at Worldly Partners for his excellent write-up on the Jamie Dimon years of J.P. Morgan, which is linked in the show notes.

If you like this episode, go check out other recent episodes, like the start of our Google series, which is off to a screamin' start. Our Rolex episode, which is another one of our biggest ever, and then our interviews, Steve Ballmer, Mark Zuckerberg, Howard Schultz. If you're new to the show, I think all of those are great places to start. After this episode, if you are still looking for more and you're like, I've already listened to all of those other episodes, we have a second show for you, ACQ2.

The most recent is an episode with Jesse Cole, the founder and the CEO, founder and owner. Owner, yeah. Yeah, he wears a lot of hats, all of them are yellow, at the Savannah Bananas. For something completely different. Yes. And if you want to talk about this with the Acquired community, come join the Slack, acquired.fm slash Slack. And with that, listeners, we'll see you next time. We'll see you next time. Who got the truth? Is it you?

Is it you? Is it you? Who got the truth now? Is it you?