I would like to share this article from the Harvard Business Review. you can find the original article here (https://hbr.org/2018/07/managers-dont-have-all-the-answers)
“Managers Don’t Have All the Answers”
Dimon has been at the helm of JPMorgan Chase, the biggest bank in the United States, for more than 12 years. A straight-talking guy from Queens (albeit a billionaire with an MBA from Harvard Business School), he has led the bank on a steady path of growth, having weathered both the 2008 financial crisis and the “London Whale” trading scandal. Dimon calls that latter episode “the stupidest and most embarrassing situation I have ever been a part of.”
In this edited conversation with HBR’s editor in chief Adi Ignatius, Dimon talks about the public’s view of Wall Street, post-recession regulations, the risk of cyberattacks, globalism, inequity, and the rebuilding of U.S. cities. JPMorgan has a plan to invest $150 million in Detroit by 2019 to help launch small businesses, retrain workers, and revive the property market. It has announced similar investments in underserved areas of Chicago ($40 million) and Washington, DC ($10 million).
“It’s good to help society,” Dimon says. “Our customers love it; our employees love it.”
The New York Times once referred to Jamie Dimon as “America’s least-hated banker.” For a Wall Street titan, that’s about as good as it gets.
Dimon has been at the helm of JPMorgan Chase for more than 12 years. At 62, boyish and sometimes blunt, he remains true to his roots as a straight-talking guy from Queens (albeit one who has an MBA from Harvard Business School, runs the biggest bank in the United States, and is a billionaire).
JPMorgan weathered the 2008 financial crisis better than most. It was perhaps the healthiest of America’s big banks but felt compelled to join others in taking billions of dollars in a government bailout—a plan meant to avoid singling out banks with truly dire problems. To this day it irritates Dimon that his bank was lumped in with the ones that got themselves in deep financial trouble.
He suffered a reputational hit of his own in 2012, when a trader in JPMorgan’s UK office—nicknamed the “London Whale”—made a series of derivative transactions that mushroomed into $6.2 billion in losses. In a letter to shareholders Dimon called the episode “the stupidest and most embarrassing situation I have ever been a part of.”
Nevertheless, Dimon has led JPMorgan on a steady path of growth. Under his watch the bank acquired and successfully integrated two once-troubled institutions: Bear Stearns and Washington Mutual. And it has continued to expand nearly every aspect of its business. Its 2016 profit of $24.7 billion (on revenue of $95.7 billion) is reportedly the largest ever for a U.S. bank.
Dimon has evolved as a leader as well, most notably since his recovery from throat cancer four years ago. He is more outspoken on political and social issues, well beyond those pertaining to financial regulation. And he is the lead cheerleader for JPMorgan’s deep engagement in helping to rebuild the economically troubled city of Detroit.
Dimon met with HBR to talk about social responsibility, CEO activism, and the secret to great leadership. Here’s an edited version of the conversation.
HBR: The public’s view of Wall Street is still pretty negative. Do you see it as part of your role to try to improve that?
Dimon: It’s hard to change that perception, because banks are different from normal businesses. If you walk into Walmart and have cash, they’ll sell you something. But banks have to turn people down. We won’t make the loan. Or we’ll give you the loan but tell you that to meet your covenants, you need to practically sell your firstborn. Everyone has a horror story. We just have to do our job, serve our clients well, and let that be our reputation.
Does this negativity carry a cost?
Yes, it matters. Part of that negative perception was well earned during the financial crisis. Not all banks were responsible for the failures and for the downturn in the economy, but we all got painted with the same brush: “They’re all fat cats. They all got bailed out.” It will take a generation for the industry to rebuild its reputation.
A far greater concentration of assets is now in just a few U.S. banks’ hands. Is that OK?
Yes, I think it is. People have to be rational about this. The banking industry is far less concentrated in the United States than in many other countries: Japan, France, the UK. If you’re global and diversified, you have to be large. It’s hard to compete if you don’t have economies of scale.
Does that mean “too big to fail” is a meaningless concept?
You don’t want banks that are too big to fail—if the result of failure is that the people have to pay for it or the economy goes down. But a company should be allowed to fail in a way that is safe for the economy and that doesn’t require taxpayers to pay the price.
Have the laws enacted since the financial crisis helped with that risk?
The new capital-equity regulations are good. Today Lehman Brothers [which collapsed during the 2008 crisis] would be required to have three times as much equity and four times as much liquidity—and if it were in trouble, it probably wouldn’t fail. If a bank does fail, regulators now have a mechanism for unwinding things in an orderly way. Plus, any money lost will be charged back to the banks, not to the American people.
Are you happy in general with the amount of regulation in place these days?
Just to be clear, no big bank wants to throw out Dodd-Frank and rewrite everything. And some of the regulations are actually good: stress-testing, living wills, capital-liquidity requirements, transparency. But other aspects were overdone and not coordinated. If we can change those things—through calibration and eliminating duplication—we’ll have a safer system that’s in a better position to finance growth.
JPMorgan Chase Under Jamie Dimon