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Jamie Dimon (pg.2)

By Shawn Tully, editor at large
Last Updated: September 2, 2008: 4:08 PM EDT

Dimon has also strengthened his inner circle by hiring outside stars, like general counsel Steve Cutler, former chief of enforcement for the Securities and Exchange Commission; the head of credit cards, Gordon Smith, 50, an American Express veteran who brings marketing flair to a bank dominated by numbers-obsessed finance types; and Barry Zubrow, 55, formerly a top-ranking executive at Goldman Sachs, who came out of retirement to head risk management. At Goldman, Zubrow pushed the trading desks to share more information on their positions so that the firm could hedge its overall exposure, a policy that created one of the best risk management systems on Wall Street.

In late 2005 Dimon lured one of Citi's top talents, Frank Bisignano, 49, to head the $7 billion technology group, as well as the rest of J.P. Morgan's back-office operations. At Citi, Bisignano led the cash management operation. Why did he give up running a business that earned $1 billion a year to head a staff department, albeit a giant one? "I'd rather play second base on a championship team than shortstop on a team that doesn't make it to the World Series," he says.

These players take their cue from the outspoken - frequently outrageous - coach. The group is generally loud and unsubtle. At the monthly all-day operating-committee meeting of the top 15 executives, the atmosphere is variously described by the participants as "Italian family dinners" or "the Roman forum - all that's missing is the togas." Dimon will throw out a comment like "Who had that dumb idea?" and be greeted with a chorus of "That was your dumb idea, Jamie!" "At my first meeting, I was shocked," says Bill Daley, 60, the head of corporate responsibility and a former Secretary of Commerce. "People were challenging Jamie, debating him, telling him he was wrong. It was like nothing I'd seen in a Bill Clinton cabinet meeting, or anything I'd ever seen in business."


The sessions are held in a 48th-floor conference room with spectacular views of midtown Manhattan and often end with dinners and fine wines. Dimon stakes out strong positions - but he's no dictator. He will also listen, and surprisingly, he'll even change fervently held opinions when a team member presents an argument that's sufficiently convincing - witness his reversal on the octagon.

Dimon was also persuaded to change course on the question of "open architecture" in the private bank. At Smith Barney, Dimon pioneered open architecture - which means brokers sell not just the firm's funds but offerings from outside companies like Fidelity. That stance put him in conflict with Weill's daughter Jessica Bibliowicz, who ran the mutual funds group. The battle over open architecture was one of the most heated Dimon had with Weill, adding to the tensions that culminated in his firing from Citi.

At first Dimon wanted J.P. Morgan to switch to the open model, even though a company makes more money on its own products. But Jes Staley stubbornly protested. "When Jamie came, he ended America's biggest outsourcing deal with IBM because he considered tech a core competency," says Staley. "I made the same argument with investing: It was our core competency and should be at the center of everything we do, so we should concentrate on our exclusive products." Dimon and Staley battled over the idea for a year until Staley won over the boss, chiefly by showing that J.P. Morgan's investment offerings held their own against those of competitors. "He understands the details completely, he loves to debate and disagree, yet he'll let you do it." Staley adds a caveat: "As long as you know what's in Appendix 3 of your report as well as he does."

And reports are a key element of Dimon's system. Once a month Dimon holds meetings that can last from three hours to a full day with the management of each of the six operating businesses. The discussions center around extraordinarily detailed, inch-thick booklets called executive management reports, or EMRs. The first six monthly EMRs for the credit card division this year totaled 1,000 pages. Among the data: the cost of acquiring credit card customers for each type of card that Chase issues - including its own and such branded ones as Continental Airlines, AARP, and Disney - plus tables showing how much customers spent using each card in two dozen different categories, from supermarkets to tolls to sporting goods.

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