There has been a great deal of absurd, and often malicious comment about disparity of income and wealth in American society and in the West generally. It is a legitimate question of whether the head of a company should earn 500 times as much as the most junior employee, and of why such wealth is concentrated in so few hands, although the wealthy do, as a group, pay their share and more of income taxes, contrary to a lot of political myth-making.
And there has been much comment, some of it very unfair, about individual financiers and industrialists. Nothing is easier in difficult economic times than to scapegoat the financially successful, especially if they live conspicuously well and are frequently publicized. There is no doubt that Jamie Dimon has had a successful career boot-strapping himself up through mergers and job-changes from bank to bank until he personifies the folkloric legacy of two of the greatest names in the history of Western finance as chief executive of J.P. Morgan Chase.
J. Pierpont Morgan was the founder of modern merchant and investment banking and exercised an influence over the financial communities of London and New York that probably exceeded any such status held by anyone since Julius Caesar’s wealthy friend Crassus, (who owned the Roman fire department, and went around igniting fires and extorting for the services of the firefighters). Mr. Morgan famously advised President Theodore Roosevelt to “have your man meet my man” and they would work out any problems.
Morgan’s influence steadied nerves in the Panic of 1906, when the Dow-Jones Industrial Average descended to eight, which is now at 16,000. He controlled the White Star Line, which owned the great ocean liner Titanic, but the disaster that befell that ship was never linked to Morgan.
Salmon P. Chase was the leader of the new Republican Party in Ohio, ran third to Abraham Lincoln and William H. Seward at the Republican presidential nominating convention in 1860, and served with distinction as secretary of the Treasury in Lincoln’s administration during the Civil War, until Lincoln elevated him to be chief justice of the United States.
Jamie Dimon is not as prominent as Morgan or Chase but has been the leading American lending banker for the last decade, and brought his bank through the 2008 crisis with comparative distinction. Yet there is something incongruous and something irritating about his ostentatious groupie’s adulation of President Obama, illustrated by a full, Dimon family three-day attendance at the first Obama inauguration, followed by a sequence of official policies Dimon and his fellow bankers disapproved, and by $20 billion in fines and legal charges assessed against J.P. Morgan Chase because of Dimon’s aggressive management, some of it to please the U.S. Treasury.
And there is also an annoying aspect to his quick salarial rebound from his own management errors and those of some of his senior officers which led to over six billion in losses in a series of trading fiascos. His directors held Dimon responsible for that debacle, and he took almost a 50 per cent pay-cut last year, but almost all of it was restored this year, to give him a pay packet of $20 million for the year. The orchestration of the performing directors and the inevitable and ubiquitous Warren Buffett warbling to shareholders and the financial press that Dimon would be a bargain at twice the price may be true, but it is so contrived and sanctimonious, it is still annoying.
It is not, however, sufficiently irritating to push a reasonable person into the camp of Mr. Dimon’s vocal critics, some of the institutional investors and unions, who carp and whine at a less bald pretext than a drop of the hat, and masquerade as shareholding democrats with the savings of others. They have been demanding that Dimon separate his position as CEO from being chairman, and abandon the latter post. This is a red herring.
Jamie Dimon got where he is by merit and there is nothing to be gained in inflicting such window-dressing restrictions to his position. If he retains the confidence of competent and responsible directors to run the bank, nibbling and chiselling at his position will not accomplish anything and minimal attention should be paid to the posturers and meddlers among institutional investors, who almost never have enough executive aptitude or judgment to run a two-car funeral.
As for the unions, they are a medieval retardation of the American economy and one of the more egregious of the Obama administration’s many failings is that it effectively handed the automobile industry which the United Auto Workers, admittedly with the full complicity of incompetent management, drove into insolvency, to the unions, over the financial corpse of the bondholders and shareholders. (I had been a shareholder of General Motors since I was eight years old and I did not even get a notice that my three shares were now worthless and had been cancelled.)
While I am recounting personal grievances, an account of our company that was in perfectly good order was abruptly cancelled and the loan called on Dimon’s instructions when he was head of Bank One in Chicago in 2001. It had nothing to do with the quality of the loan, only that he decided to discontinue that kind of loan (a form of swap); we had no difficulty replacing Bank One and the loan was paid in full on schedule the following year. Dimon’s abruptness could be taken as dynamic execution by some, but in a service industry, it was just hip-shooting of a gratuitously rude kind. He was a shoulders-and-elbows self-promoter for some time after he should have outgrown such affectations.
Having got that off my chest, I would defend Dimon against his critics now, but if he wants a pay-raise, he should not organize a political campaign and enlist an old hoofer like Buffett, who is now a self-proclaimed expert on more subjects than Mark Twain. We all make mistakes and in a big bank they can be costly; the ranks of those with buyer’s remorse over Obama are deep.
But there is a quality about Dimon that appears to be clinging to his earlier fluffed-up reputation as a miracle worker. He’s not an impresario or a politician; could he act more like a meat and potatoes banker? The country needs them. It doesn’t need prima donnas trying to do a star turn over a 74 per cent pay increase after presiding so recently over a $26 billion bloodbath for his shareholders.