Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System from Crisis — and Themselves

by Andrew Ross Sorkin

Now, with JP Morgan leapfrogging to the very top of the banking business, Dimon was being regarded as something akin to the reincarnation of John Pierpont Morgan, the nineteenth-century financier who helped ease the Panic of 1907.

Dimon, the New York Times said, “has suddenly become the most talked about—and arguably the most powerful—banker in the world today.” For the Wall Street Journal

“quickly becoming Wall Street’s banker of last resort.” Barron’s opted for a simpl...

Robert S. Bennett—Dimon considered his first chance to testify in front of Congress to be a signal honor. The night before the hearing, he called his parents to make sure they would watch it on TV.

Jamie Dimon’s success is not an enormous surprise, as he is a third-generation banker.

Turkey, changed his name from Papademet...

Jamie’s father, Theodore—who met his mother, Themis, playing spin-the-bottle when they were twelve years old—was also a ...

One day, when Jamie was nine years old, his father asked his sons what they wanted to be when they grew up. Peter, the eldest, said he hoped to become a doctor. Ted, Jamie’s twin, said he didn’t know. But Jamie knew and announced self-assuredly, “I want to be rich.”

Browning School

Jamie studied psychology and economics at Tufts University; later, at Harvard Business School, he developed a reputation—as much for ...

Midway through Dimon stood up and interrupted him with, “I think you’re wrong!” As the startled professor looked on, Dimon walked to the front of the class and wrote the solution to the supply problem on the blackboard. Dimon was right, the professor sheepishly acknowledged.

the portly, cigar-chomping, serial deal maker named Sandy Weill. Jamie’s family had become close to the Weills in the mid-1970s, after Sandy’s brokerage firm acquired Shearson Hammill, where Dimon’s father was a top broker. While at Tufts, Dimon had even written a paper on the Hayden Stone takeover of Shearson, which his mother showed to Weill, who was impressed with its analysis.

After graduating from Harvard Business School, Dimon received offers from Goldman Sachs, Morgan Stanley, and Lehman Brothers.

Weill invited Dimon to his Upper East Side apartment and made his own offer: a position as his assistant at American Express, where Weill was now a top executive after having sold Shearson for nearly $1 billion.

Although he once boasted that “the Jews are going to take over American Express!” Weill still found himself thwarted by the WASP hierarchy, unable to cut deals on his

he quit as president of American Express in 1985;

Then, in the wake of Weill’s failed takeover of Bank of America, two executives at Commercial Credit, a subprime lender based in Baltimore, pitched him and Dimon on buying the company from its parent. Weill put up $6 million of his money to do the deal (Dimon invested $425,000), and the company was spun off, with Weill in charge.

became the cornerstone of a new financial empire, one that Weill and Dimon built through more than one hundred acquisitions.

In 1988 the pair got their return ticket to Wall Street with the $1.65 billion acquisition of Primerica, the parent of the brokerage firm Smith Barney. A $1.2 billion purchase of Shearson from American Express followed in 1993.

By 1996, after a $4 billion deal for Travelers, the company needed someone to run the combined asset-management operations. Weill was quietly pushing Dimon to promote his daughter,

But Weill was furious, and the relationship between him and Dimon would never be repaired, with tensions flaring with increasing frequency as the company continued its rapid expansion.

1997, and Weill made Deryck Maughan, a Briton who had helped steer Salomon Brothers through a Treasury bond scandal, the co-chief executive of Salomon Smith Barney, along with Dimon. This new power-sharing arrangement, although logical, greatly displeased Dimon.

A more injurious slight came after the $83 billion merger with Citicorp, the deal that rewrote the rules of the U.S. financial system as the last Depression-era barriers between commercial and investment banking—passed as the Glass-Steagall Act of 1933—were removed by a bill introduced by Republ...

Steve Black, one of Dimon’s closest allies at Smith Barney, approached the Maughans and offered to dance with Maughan’s wife,

But Deryck Maughan did not reciprocate, leaving Black’s wife standing alone on the dance floor. A furious Black stomped off to confront Maughan.

Dimon attempted to intervene, tracking down Maughan as he was about to leave the ballroom. “I want to ask you a simple question. Either you intended to snub Blackie’s wife or you didn’t. Which is it?” Maughan said nothing and turned to walk away. Incensed, Dimon grabbed him and spun him around, popping a button off his jacket in the process.

When Weill learned of the incident, he judged it inappropriate. A week later, he and his co-CEO, John Reed, summoned Dimon to the corporate compound in Armonk, New York, where they asked him to resign.

Dimon knew little else outside of banking, and he waited for an opportunity in his field, finally accepting the top job at Bank One, a second-tier, hodgepodge operation based in Chicago.

It was the launchpad he had been looking for, and he set out to streamline its operations and repair its balance sheet, to the point where he could engineer a deal with JP Morgan in 2004 that would put him in line to succeed William Harrison as CEO.

JP M...

By 2008 JP Morgan Chase was being hailed as just about everything that Citigroup—the bank Dimon helped build—was not.

nature, understood the intricacies of virtually every aspect of banking (unlike many of his CEO peers) and also reduced risk; profits were literally squeezed out of each part of the company.

Dimon showed himself to be infinitely more prudent than his competitors. The bank used less leverage to boost returns and didn’t engage in anywhere near the same amount of off-balance-sheet gimmickry.

So while other banks began to stumble severely after the market for subprime mortgages imploded, JP Mo...

“I don’t know if there are going to be opportunities. In my experience, it’s been environments like this that do create them, but they don’t necessarily create them right away.”

On Thursday, March 13, Dimon, his wife, and their three daughters were celebrating his fifty-second birthday

Within minutes, Alan Schwartz, the CEO of Bear Stearns, called back and told him the firm had run out of cash and needed help. “How much?” a startled Dimon asked, trying to remain calm. “It could be as much as $30 billion.”

Dimon whistled faintly in the night air—that was too much, far too much. Still, he offered to help Schwartz out, if he could. He immediately hung up and called Geithner.

The following day, Friday, March 14, the Federal Reserve funneled a loan through JP Morgan to Bear Stearns that would end its immediate liquidity concerns and give the firm twenty-eight days to work out a long-term deal for itself.

they urged Dimon to do a takeover.

After a team of three hundred people from JP Morgan installed themselves in Bear’s office, they brought their findings to Dimon and his executives.

He told Geithner that JP Morgan was going to pull out; the problems with Bear’s balance sheet ran so deep as to be practically unknowable. Geithner, however, would not accept his withdrawal and pressed him for terms that would make the deal palatable. They finally arrived at an agreement for a $30 billion loan against Bear’s...

These final negotiations, not surprisingly, were of intense interest to the Senate Banking Committee. Had JP Morgan, realizing the leverage it had, driven an excessively hard b...

nor defensive as he described the events leading up to the Bear deal. “This wasn’t a negotiating posture,” he stated calmly. “It was the plain truth.” In Dimon’s telling, the truth of the matter was clear—he and Geithner were the good guys who had saved the day, and against considerable odds. “One thing I can say with confidence,” he told the committee members. “If the private and public parties before you today had not acted in a

remarkable collaboration to prevent the fall of Bear Stearns, we would all be facing a far more dire set of challenges.”

Of all the members of the Banking Committee, Bunning, with his strong free-markets bias, was the most critical—and perhaps the most prescient. “I am very troubled by the failure of Bear Stearns,” he said, “and I do not like the idea of the Fed getting involved in a bailout of that company. . . . That is socialism, at least that’s what I was taught. “And what’s going to happen,” he added ominously, “if a Merrill or a Lehman or someone like that is next?”

On the oppressively humid evening of Friday, April 11, 2008, Dick Fuld strode up the steps of the Treasury Building,

G7 summit

International Monetary Fund and the World Bank.

Jean-Claude Trichet, president of the European Central Bank.