May 19, 2011

Jamie Dimon, JPMorgan Chase CEO, visits Fisher

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JPMorgan Chase CEO Jamie Dimon slideshow preview with play button
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JPMorgan Chase CEO Jamie Dimon slideshow preview with play button

Minutes after landing at a Columbus airport, Jamie Dimon's, JPMorgan Chase Chairman of the Board and CEO, first stop on his two-day visit to the city was Fisher College of Business. Dimon, named one of Time magazine’s 100 most influential people in the world for 2011, spoke to MBA students on May 16. He spent a majority of the hour answering students’ questions on leadership success, the financial industry and the global economy.

In his introductory remarks, Dimon gave an overview of Chase’s philosophies on conducting business, philanthropy and as an employer.
Describing his philosophy on company stakeholders, he said: “I never had a conflict between employees and community, companies and shareholders. I think they’re all the same thing, I think it’s an artificial break when people. Don’t ask me which one is important, they are all important. They pretty much go hand-in-hand.”

On employees, Dimon said. “I don’t think you get good employees if you don’t treat them with respect.”

On the economy and government policy, he said: “I don’t think you should destroy the economy in the name of morality. If we don’t have a healthy vibrant economy, we’re in trouble. But don’t believe what you hear about the decline of America. When I sat in business school in 1982, I heard endlessly about Japan.  Japan was taking over the world; they had better technology; they worked harder. That turned out to be dead wrong. But we can’t have policies that drive out capital, drive out industry and you’re going to drive out brains.

Student questions:

Q: “In the shareholders letter, you said international growth in consumer and retail banking was an option and not necessity, what are the factors that would change that?

A: “Let me compare investment banking with retail banking. Investment banking became a global business. If we didn’t succeed globally, we would have lost in the U.S. It wasn’t what we wanted, it was the state of the economy at the time. People were raising money internationally; investors were saying if I’m going to buy GM, I might as well look at Volvo. The business went global, the equity went global, the research went global. If you didn’t go global, you would have lost. That was strategic necessity.

Retail is the opposite. You don’t have to have a bank oversees, you can use your bank account, credit card and debit cards overseas. We don’t have to go global. It’s not a strategic imperative. My sense is that we will do it eventually.”

Q. What are the repercussions if the U.S. goes into default?
A: “What happens the day the United States fails to make a payment, the estimated date is Oct. 22. That could potentially be catastrophic. Because once a default is made, it has what I’m calling a snowballing effect. If you look at securities books, repo books, how companies have to book treasury securities, money market funds, it would be far worst than Lehman (Bros.). Not even close. If it is one day, two days and they reversed it on the third day, you might be able to reverse some of that. But it would have this full effect that would shock you. It would run through the system in ways you couldn’t even imagine.

Q. In the fall of 2008, we all got to witness history, but you got to live it and shape it first hand. Can you talk a little bit about that experience, sitting at the table with (then United States Treasury Secretary Henry) Paulson and other CEOs”?  

A: “First, the crisis actually happened in the summer of ’07. Subprime was something like 10 percent of all mortgages, so subprime was already having a real tough time. By March of ’08, Bear-Stearns failed, we ended up buying Bear-Stearns. I would still put them in the category of a normal catastrophe. If you read financial history, we have problems every five, seven to 10 years in the United States.  You have to be prepared for that. You will have bad markets, there will be failures, things will happen that you didn’t predict. To be completely surprised by that is to be foolish.

"When Bear-Stearns went down, I thought it was a pretty good warning for people to get their act together. But the markets had gotten bad, things were getting worse. So six months after that, I got a call from Hank Paulson saying Jamie, you have to come down to this meeting down at the Fed on Friday night. The meeting was 6 o'clock. I had a dinner at my house at 7 o'clock. I was going to meet my daughter’s fiancé's parents for the first time. They weren't engaged yet, but we thought it was a pretty important thing. I said Hank, I can't come. He said, 'Jamie, you have to come. Everyone is going to be there.'

"So I get down there. There must (have been) 17 of us around the table.... Hank Paulson came in, (Timothy) Geithner was there; (Christopher) Cox was there from the SEC, and other people sitting in the back. He (Paulson) said, ‘Lehman may not make it to the weekend. They are going to have to declare bankruptcy Sunday night. We want you all to come up with something to save Lehman.’

"It was how much could we all put in the pot to save Lehman, it was that type of thing. I won’t go into detail, but we worked on it. But I thought it was almost impossible. There were stories that Lehman might be sold. I thought that was virtually impossible. Because, it was too late, they were too big. It was twice the size of Bear, and twice as troubled for a whole bunch of different reasons.

"I literally was the only one who got up at 7  and said, I got to go. I left.

"I got home; it was 8 o'clock. I'm never that late. I made myself a big martini. I was still in my suit. I put on a Hawaiian shirt. I told them what I could, but I told them on Monday they will know why I was late."