Would Barack Obama Approve of This Superbank's CEO?
In Monday's presidential debate, which addressed American foreign policy, President Obama had this to say about his experience leading the country:
"Here's one thing I've learned as commander in chief. You've got to be clear ... about where you stand and what you mean."
Politics aside, this off-the-cuff remark cuts to the quick of one of the most important aspects of leadership not only in government, but also in the running of a public company: clear communications.
A good leader must communicate his or her thoughts, concerns, and direction of the organization to employees and shareholders, and sometimes even to the public. No one's perfect at this, but some people are considerably better than others. A few are exemplary. In my observation, one of those exemplary communicators is JPMorgan Chase (NYS: JPM) CEO Jamie Dimon.
A banker of a different color
Dimon isn't your typical Wall Street executive. Many of the Street's top dogs got to where they are with careers that began in the big brokerages, in flashy positions like equity trading or bond sales:
John Mack, former CEO of Morgan Stanley (NYS: MS) , worked at several Wall Street firms before starting at Morgan in 1972, where he worked for nearly 30 years.
Lloyd Blankfein, Goldman Sachs' (NYS: GS) current CEO, got his first job on Wall Street at Goldman in 1982, working a commodities sales desk.
John Thain was president and chief operating officer at Goldman Sachs before becoming CEO of Merrill Lynch from 2007 to 2009. [Merrill was bought by Bank of America (NYS: BAC) in the throes of the financial crash, when it looked like it would be the next investment bank to follow Lehman into bankruptcy.]
Dimon, a native of Queens, earned his MBA from Harvard in 1982. And while he had offers to join both Goldman Sachs and Morgan Stanley, he turned them down for the chance to work for Sandy Weill: then an up-and-comer at American Express, but the man who would eventually be best known for the merger-mania that ended up creating America's superbanks.
"Weill was a highly controversial figure on Wall Street and something of an outsider," Gillian Tett writes in her excellent tale of the financial crisis, Fool's Gold. "But he was also forceful, entrepreneurial, and ambitious, qualities Dimon admired." So Dimon jumped the Wall Street ship and joined forces with Weill. Together they created Citigroup (NYS: C) .
The audacity of sneakers
When Dimon finally arrived at JPMorgan Chase as CEO in 2004, since he wasn't a product of Wall Street, he didn't act like one. That was a good thing. He saw banking as a business -- almost like a shopkeeper would, as Gillian Tett notes -- and didn't revere the swashbuckling, investment-banking end of things anymore than he did the less-glamorous retail end. He even had the audacity to wear sneakers to the office on Saturdays, a sacrilege in the eyes of some on the heritage JPMorgan team.
This earthiness would serve him well when he had to face one of JPMorgan Chase's greatest challenges: the London Whale trading debacle.
I am CEO, hear me roar
In the spring of 2012, unofficial reports began to filter out of the London derivatives markets that there was a player from JPMorgan who had placed a single bet so big it was moving the market. Dimon initially brushed off the rumors, unaware that the mystery trader -- dubbed the London Whale by the markets -- was Bruno Iksil, an employee in the bank's London office.
But when he found out who the London Whale was, and that the outsize bet did exist (about $100 billion), Dimon immediately came clean. His mea culpa was intense, and genuine. Suddenly, Dimon was all over the news, explaining how his bank had made an "egregious" mistake, caused by "sloppiness and bad judgment." I saw him on at least two network news shows and came away completely impressed.
Dimon also unhesitatingly testified before Congress on the matter. Again, he never made excuses, and promised to get to the bottom of things, a promise he kept: eventually accepting the resignation of Ina Drew, one of his most trusted lieutenants and the person in charge of JPMorgan's chief investment office, where Iksil worked. And the reorganization is still under way.
JPMorgan took a $5.8 billion profit hit from the trading error, and Dimon has kept shareholders apprised of the bank's progress in cleaning up the mess at every step along the way.
I'm Barack Obama, and I approve this CEO
At no time was JPMorgan in danger of insolvency from the London Whale incident. As such, it was nobody's business but the bank's. Yes, Dimon would have had a lot of explaining to do to his employees and to shareholders, but he owed nothing to Congress, nor to the public at large. But his bold mea culpa -- getting out in front of a snowballing situation before anyone could even begin to complain about the CEO's visibility on the matter -- served his entire audience well, which in turn served the bank well.
In light of Dimon's command performance in the Tale of the London Whale, in my opinion, he's definitely a CEO our current commander in chief would approve of. Thanks for reading and for thinking. While you're here, check out our new in-depth report on Bank of America. I can't promise you thundering declarations -- a la Jamie Dimon -- but I can promise you a concise detailing B of A's prospects, along with three reasons to buy and three reasons to sell. Just click here to immediate access.
The article Would Barack Obama Approve of This Superbank's CEO? originally appeared on Fool.com.
Fool contributor John Grgurich owns no shares of any of the companies mentioned in this column. Follow John's dispatches from the bleeding edge of capitalism on Twitter @TMFGrgurich. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Citigroup. Motley Fool newsletter services have recommended buying shares of Goldman Sachs. The Motley Fool has a delightful disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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