Customer Reviews

Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase

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1 star:		(4)

 

 

Duff McDonald's book covers a fascinating historical moment - the 2008-2009 Wall Street debacle - by profiling a pivotal character in the thick of it, Jamie Dimon, CEO of JPMorgan Chase. Having spent extensive time with Dimon, McDonald combines his reporting with published sources, Dimon's own writings and statements, and interviews with his associates, employees or relatives. McDonald covers Dimon's youth, business school education and evolving career. Dimon was a nonconformist in business school and politics, an astute lieutenant of his mentor Sandy Weill, and a pivotal figure in the financial crisis. Notably, he preserved JPMorgan Chase, bought Bear Stearns and helped lead the market back to stability. Readers interested in a critical take on Dimon may find the book too flattering, but if you want to see how the financial wars looked from the CEO's chair, getAbstract recommends this intriguing perspective.

This is a terrific book, beautifully written, and highly useful. If you want to really understand the banking business, and the people that make it work, this is the book to read. And it's not just for Wall Street insiders. And it's not a vanity piece for a banker on top of his game. This book has specific relevance to anyone who pays taxes in this country or has a bank account. McDonald had unprecedented access to Dimon and and he nailed it. Great book. Loved it.

There will be obvious bias in this review. I have been with the bank for over 12 years. Having met Jamie on a couple of occasions, his attention to detail blows my mind. Years ago, I was invited to participate in a focus group soon after Jamie took over as CEO of B1. We were at a conference room on the executive floor throwing around some ideas, "best practices". A day before, we had some system issues. During our meeting, Jamie walked in and briefly listened in on our meeting. He asked the group about the system issue and whether or not it was causing any customer service quality issues. He cared. I was fortunate to meet him on a couple of more occasions. Each time, I walked away more inspired. He has that effect on people. His drive and determination is infectious. You just want to sit there, listen to him; then, go back and try even harder. As a top executive, he never seems to look down or turn his back on the junior soldiers in the company. He cares. He listens. He motivates and inspires.

It's a good feeling working for a company where what I do everyday for our clients (despite being just 1 out of over 200,000) actually matters. No one here is insignificant. And every detail, every employee, matters. And that's a healthy culture for any business to have. I am proud to be part of this great company; proud of our leader and our management team's diligent handling of our bank's financial affairs; proud to have been able to help our clients during a very difficult period for our country.

Duff's account of Jamie's career is a must read for any aspiring manager/leader. From his detailed account of Jamie's early career to the more recent events, this book is an easy, addictive read. It's hard to put it down. Great job researching the stories, issues and conducting interviews. In the aftermath of this complex system meltdown, it is refreshing to read a book in which complex financial issues can be easily understood by anyone. Strongly recommended.

Wouldn't it be wonderful to read a book about Jamie Dimon, CEO of J.P. Morgan Chase, and obtain an increased understanding of banking, the 2008 crash, and how Dimon has successfully managed banks? Unfortunately, it won't happen easily via "Last Man Standing." The book fails to take a management emphasis, rarely defines terms and concepts, and is basically a chronology of Dimon's life. Nonetheless, some good can be derived from its reading.

Dimon, without question, is highly talented. However, his career received two initial major boosts. The first was working for several Harvard Business School professors in finance prior to beginning his Harvard Business School (HBS) experience. This provided him with early high-level exposure to the area and undoubtedly enriched his education experience as well. The second was joining forces with Sandy Weill in 1982 upon graduating from Harvard (Baker Scholar - top 5%), and having the opportunity to participate in top-level analyses and decision-making with many a 'mover and shaker.' (Dimon's alternative was more remunerative, but much lower level positions in investment banking.)

Weill had recently been pushed out of American Express, so Dimon was taking a bit of a gamble joining up with Weill. Fortunately, it wasn't too long before Control Data asked for help with its newly acquired Commercial Credit unit - lender to those with relatively low household incomes. Weill was appointed CEO in 1986, a leveraged buy-out soon followed, assuring a rich options opportunity for both himself and Dimon. Other steps included a 10% staff cut, selling off the car leasing and accounts-receivable insurance businesses (too much risk), and cutting executive perks (magazine subscriptions, country club memberships, flowers). Return on equity jumped from 4% to 18%. McDonald also lets readers know that Dimon was seen as abrasive and arrogant, as well as an incredible fact-digger and student of corporate financials. (If your child's report card says "Doesn't work well with others," don't worry.)

The business model Weill and Dimon adopted was that of running the business conservatively, building fortress balance sheets (high-quality capital - common and preferred stock, conservative accounting and loss reserves) to make acquisitions during downturns when assets were cheap. Aim to make the firm either more distinctive (eg. provide customers with a more comprehensive accounting statement), or the low-cost producer - aka Porter's HBS strategic advice. They went on to buy Primerica (Gerry Tsai's over-leveraged American Can, plus acquisitions), then Drexel Burnham, Barclay's American/Financial, and ultimately Traveler's Insurance. (The latter was caught between real estate defaults in its investments and annuity investors wanting their returns.)

Weill eventually became jealous over the publicity and attention afforded Dimon (New Yorkers had seen this movie before when Mayor Giuliani pushed the highly successful Police Chief Bratton out for the same reason), was outraged that Dimon denied Weill's daughter a promotion (McDonald says Dimon was correct in doing so; regardless, probably not a good career move by Dimon), and shortly after Weill acquired Citibank, Dimon is pushed out in 2000. (How Weill got the laws changed and the Federal Reserve to go along is a whole other, 'dark,' topic.)

After about a year, Banc One, 4th-largest bank in the U.S. was having problems with its most recent merger involving a Chicago-based bank. Banc One had been built up by buying competitors with the promise they'd be allowed to keep on doing what they had been doing. The result was more willing sellers, and a failure to take advantage of scale or synergies. Another problem was top-level political infighting between the two banks over who would remain. A third problem was First USA - a credit card unit bought for $8 billion in 1997 that was losing 16% of customers/year due to rate hikes and poor service.

Dimon resolved the infighting problem within a year - all but one of the thirteen executive committee members were replaced (seven came from Citibank), he reduced the combined board from 22 to 13 and put his own allies on it. New hires from Citibank were given a one-year contract at 2/3 their prior salary, for a smaller job at a worse-off company. (Weill complained, Dimon told him to look at his own operation to see why they were leaving.)

Another early focus was on standardizing computer systems (seven deposit systems, five loan systems- these were combined), improved financial controls (Dimon believed the bank had taken on excessive risk, and also wrote-off $15 billion in bad assets from 2000-2003), and revised reporting structures. Neither grand strategy nor acquisitions were on the agenda - Dimon wanted to first get a solidly executing base. Cash was conserved by cutting the dividend in half, freeing up $1 billion/year, despite objections from some shareholders. Twelve thousand were laid off, and accountability improved by establishing P&L reports for each branch. Management motivation was intensified by switching from the historic 5-12% raises for all, to 100% for the top 10%, 50% for the next 10%, 30% for the following 50%, and nothing for the lagging 30%. Hours were extended to match competitors. Consultants, especially those working on implementation, were cut to a minimum (anything over $100,000 required Dimon's approval - he believed managers should do their own work), executive coaches and perks were eliminated, and options were restructured to expire in six years rather than ten.

Another major initiative was Dimon's canceling the bank's large IT outsourcing deal - he saw this area as a core competency. Finally, some lines of business were exited - eg. auto leasing (Dimon disliked involvement with rapidly depreciating investments, especially mobile homes).

Meanwhile, back in New York City, the head of J.P. Morgan Chase was concerned about succession, and decided to solve that problem (and a few others) by acquiring Banc One and Jamie Dimon. A 14% stock premium was paid, Dimon pocketed $44 million on the shares he bought when moving to Banc One, and a new #2 bank ($1.1 trillion in assets, vs. Citigroup's $1.3 trillion) came into being.

Dimon then basically repeats the actions he had learned and taken previously. Perks went out - including the 15 corporate gyms, golden parachutes, deferred compensation, first-class air travel, chiefs of staff at any level, and 401(k) matching. Executive health insurance premiums were increased. Twelve thousand lost their jobs, and 80% of unallocated corporate expenses were pushed down to lower levels of responsibility. The bank's $5 billion IT outsourcing contract with IBM was canceled, and staff were given six weeks to decide on what the new single computer system would consist of. (Dimon promised to do it for them if the decisions weren't made by then.) The bank exited the business of providing loans for mobile homes, reduced exposure to sub-prime loans, SIVs, and derivatives because the risk premiums were not great enough. Dimon reasserted that borrowing short-term to finance long-term assets is a fundamental commandment that cannot be violated. And Dimon also found time to review the compensation of each of the top 500 managers, along with a committee.

The year 2007 ended with J.P. Morgan Chase leveraged at 12.7X, vs. 19.2 at Citigroup, and 33.5 for Bear, Stearns. 2008, however, would not be a good year for Bear, Stearns. It began the year paying 2.3% for credit insurance (2X that of Morgan, and 4X Deutsche Bank). This rose to 6.26% by March 10. Bear eventually asked for help - telling Morgan it needed between $4 - 20 billion. (This spread made it obvious to Morgan personnel that Bear leaders didn't know what they were talking about.) Eventually, J.P. Morgan Chase acquired Bear for $10/share (the price would have been $2 except for a major error by the outside attorney's used by Chase), and 10,000 of Bear's 14,000 employees left or were laid off. Market share was not emphasized by Dimon; building reserves and reducing risk (eg. returning to 80% loan-to-value standards, exiting business originated by loan brokers - formerly 30% of their home loans originated this way, and continuing to stay away from ARMs) was. (Unfortunately, this section of "Last Man Standing" was especially verbose and vague. The good news is that Dimon's "Letter to Stockholders" helps, and is included herein.)

The year 2008 brought the largest S&L failure in history - Washington Mutual. J.P. Morgan acquired its banking subsidiaries (including 2,200 branches) for $1.9 billion from the FDIC. (The FDIC and J.P. Morgan were subsequently sued for $13 billion by those believing the sale was a 'fire-sale' price. Chase is now the largest credit-card issuer in the nation, but only earns 5% on equity - hardly rapacious as many would claim. (Was 21% in 2007.) It now is raising credit-card lending standards and increasing loan reserves - anticipating greater losses due to unemployment, and no profits at all in the coming year. In each of its businesses, Chase ranks in the top three of that industry (aka Welch's mandate to G.E. - insure scale economies and focus on growth); however, Dimon insists market share is not the goal. Thirteen million square feet of excess real estate has been shed 2003 - 2007.

TARP money was accepted - not because Chase needed it, but to preserve unanimity and avoid other banks trying to avoid accepting it because it would signal weakness to the financial markets. Chase has reduced it dividend. Dimon also points out that 'this is not your grandfather's economy' - traditional banks now provide only 20% of lending in the economy; right after WWII it was 60%. Substitutes include money-market and bond funds, etc.

Bottom Line: "Last Man Standing" has too much fluff and unexplained material. However, careful reading, combined with reference to Dimon's 'Management Letters' make this a valuable endeavor.

I first picked up this book, intending to only read a section dealing with a company I formerly worked for. After 20 minutes, I was fascinated, and decided to read the entire book. It offers an interesting biography on the most prominent banker in the country. I liked the overview of the financial collapse of 2008. The day to day activities of JPMorgan during the fall of Bear Stearns was very informative. It was refreshing to read an account of this time written without condemning all participants. I believe it will take a few more years before we can fully and accurately assess credit and blame for what has happened.
I only gave the book 3 star, because I felt it was written in a more favorable light than was deserved. It read more like hagiography than biography. The book is worth reading.

I really enjoyed this book. It was both well-written and full of personal applications. Personally, I was glad it didn't recite in gory detail all of the discussions surrounding the financial bloodbath in fall of '08. I think there are plenty of books out there right now for that.
What I enjoyed was the up-close description of 1) Dimon's leadership style, and 2) how he thinks about businesses. In those respects, the gems in here were too many to count. On the career/leadership side, the take-homes were plentiful. For example: Dimon's willingness to voice dissent, his decision to eschew the typical investment banking path for a riskier position with better training potential, and his ability to be a good father and husband during a demanding career (here, so many other business leaders fail spectacularly--see The Snowball on Warren Buffet for an example).
The insights about how to think about businesses were also abundant. Dimon's concept of a fortress balance sheet is something that will stick with me for a long time. I also admired his relentless attention to detail, and his insistence that acquisitions and new product launches are meaningless without successful integration and implementation.
This book set out to lionize Dimon, and it did that. A good "friendly" biography should challenge the reader to aim a little higher and work a little harder. This book had that effect on me, and for that reason I recommend it.

Duff McDonald's new book is titled, Last Man Standing: The Ascent of Jamie Dimon and JPMorgan Chase. This is an engaging and readable story of a talented and intriguing personality whose leadership of a major financial institution seems to have beaten all competitors. Dimon comes across in Last Man Standing as a hard worker, who digs into details deeply enough to gain insight and understanding. Rarely one to suffer fools gladly, his blunt communication style leaves little doubt about the meaning behind his messages. As a leader he's strongly supportive of those talented people who work with him, and wants to be questioned and challenged in making key decisions. McDonald calls close attention to the impact of people decisions, especially the cost of the decision of Sandy Weill to fire Dimon. Throughout Last Man Standing, I came away with the perspective that Dimon respects others, and prefers honesty over anything else. While bordering at times on hagiography, Last Man Standing conveys the impact that one leader can have on a large organization, and how sticking to principles can lead to long term success. Every time I started to think he is too good to be true, an example of his success made me think he is really quite good at what he does. On top of his business success, Dimon places high priority on his family life, and that aspect of his life comes across in the book as normal and functional. When I finished the book, I thought of Jamie Dimon as the Winston Churchill of banking. Any reader with an interest in finance or leadership will find much to enjoy about Last Man Standing.

Rating: Four-star (Highly Recommended)

I enjoy the study of economics, markets and big business. Last Man Standing cleverly covers all of these topics within the outline of a biography, making it a very interesting read. Last Man Standing is a captivating biography of Jamie Dimon, with emphasis on his experiences with Sandy Weill, Bank One and JP Morgan Chase. The Bear Sterns and WaMu takeovers are also covered.

For perspective, I reviewed the Amazon book reviews for this book. Two of the reviewers had actually worked with Dimon and describe him as inspiring with drive, determination and great attention to detail. This is the same Jamie Dimon described in the book!

I appreciate the effort McDonald put into this insightful book. And I thank him for not including minutia detail; his level of detail is enough to tell the story in a fast and captivating pace.

Last Man Standing is a great read and I recommend it to anyone.

Robert F. McLaughlin AIA, NCARB

Although I doubt it will win any awards, the book was an interesting and easy to read synopsis of where Jamie Dimon came from and the major events shaping the 'banking' crisis. Lots of things likely not included but that's to be expected. The whole relationship with Sandy Weill was quite an interesting tale.

Duff McDonald has written a book length paean to Jamie Dimon with a few "negatives" lightly treated, e.g., his abrupt manner in sometimes dealing with associates. The story presents Dimon's early life in a 15 page opening chapter. Then before we know it, Dimon is out of Harvard Business School and looking for a job to start off Chapter 2. Perhaps it is appropriate to do so since the title refers to him as the sole survivor of a major bank after the financial meltdown of 2008+. Others including Charles Prince at Citibank, Ken Lewis of Bank of America, John Thain at Merrill Lynch, Richard Fuld at Lehman Bros. have all walked the plank at their respective organizations.

The next part of the story deals with Dimon's relationship and mentoring by Sanford Weill, whom he joins as an assistant at American Express. When Jim Robinson American Express CEO ejected Weill, Dimon accompanied him as they settled into a New York office looking for something to do...that is a deal. Dimon became the long hours, number cruncher. Eventually they targeted and won Baltimore based Commercial Credit. Continuing as the numbers man to Weill's deal making, McDonald takes us step by step through the deals and negotiations to the grand deal of the Travellers-Citigroup merger. McDonald makes a bit of diversion to give us insight into Weill's character. Weill called President Clinton to inform him of the merger which violated the Glass-Steagall act. Weill's intent was to get that law repealed. Although the law had weakened some in recent years, Weill takes credit for the final demise. This insight into Weill's ego driven Machivellian business practice helps us understand the final split when Weill fires Dimon in favor of Charles Prince. Throughout their association, Dimon's personal style was direct and he often argued the facts in the face of Weill's grand vision. Dimon believed he wasn't receiving credit, although he was very well compensated, for creating Weill's deals. Another insight is that even Dimon's Harvard MBA educated wife critized Weill for failure to credit Dimon. After extensive press praise of Dimon, Weill's firing of him is no surprise...except to Dimon.

Dimon treated his 16 months of unemployment as a sabatical spent with family, friends, and traveling. When he did return he was hired by Banc One which was an amalgam of regional banks put together through 130 mergers over 20 years and with its business operations poorly integrated. Dimon was hired in early 2000, and the succeeding years showed he was a good operations manager...not just a deal maker. His success led to Wm. Harrison of J. P. Morgan Chase to seek out Dimon for a merger. Harrison's incentive was as much for Dimon the executive as for the complementary strengths of the two banks. The deal included the understanding that Dimon would suceed Harrison upon his retirement at the end of 2005. Dimon would then ascend as CEO of the combined bank.

In accomplishing his ascent, Dimon had assembled a loyal and skilled team of executives, people he had worked with at Travellers and talented execs he met at Banc One. Much of his success he ascribes to his team. Dimon has a knack for listening to and questioning executives who disagree with him. This is a particulary strong attribute.

EVALUATION
I had a much lower opinion of Dimon when I finished than when I started. I had been attracted by the fact that McDonald writes extensively about the financial meltdown and the judgements made by Dimon that avoided the fate of other major banks. Afterall, J.P. Morgan bankers had pioneered the use of derivatives and SIVs as a way to reduce reserve requirements. Gillian Tett tells that story in her book Fool's Gold. The real hero for Chase is Bill Winters who persuaded Dimon to unload a structured investment vehicle(siv) that Dimon had failed to notice on the balance sheet. Following that J. P. Morgan withdrew as other banks were ratcheting up their involvement in these investments. When the crash came, the other banks got caught with inventory while J. P. Morgan had none. Consequently, J. P. Morgan Chase didnot need a bailout. Instead, Dimon and J.P. Morgan Chase became the go-to to save the likes of Bear Stearns and Washington Mutual. For this Dimon received all the credit for his management, credit that ironically should have gone to Bill Winters.

However, he fails to judge Dimon in the context of the greater societial catastrophe of the 2008 financial meltdown. The merger of Travellers and Citibank violated the federal Glass-Steagall Act. Dimon believed he played the biggest role in completing the merger. Dimon saw nothing wrong with Weill's personal call to President Bill Clinton pushing the repeal of Glass-Steagall in lieu of complying with the law. In an interview in the book Weill takes credit for the repeal. Both Dimon and his Harvard MBA wife were more upset at Dimon's subsequent firing by Weill than with Weill's manipulation of federal law. Clinton's Treasurey Secretary Robert Rubin pushed Clinton to support the repeal and then took a job as Co-chairman of Citigroup. When the meltdown came, Rubin pushed Treasury officials for bailout funds to AIG which were then used to payoff an 8 figure Citigroup loan.

Dimon himself was not adverse to the derivatives game, since the bank did purchase credit fault swaps, so called insurance(read "bets") that sivs would fail. To this day we periodically hear of Dimon's vocalized inability to understand why US bankers are in disrepute for the state of the US economy. J.P. Morgan Chase was "patient one" in the spread of the disease known as derivatives. To Dimon's fortune, Chase found the "greater fool" in other financial institutions before the bubble burst.