Washington: Jamie Dimon, the head of JPMorgan Chase & Co., on Monday will hold a meeting of his board here in the US capital for the first time, with a special guest scheduled to appear: the White House chief of staff, Rahm Emanuel.
That marks something of a coup for Dimon, who, amid the disgrace of his industry, has emerged as US President Barack Obama’s favourite banker, and, in turn, the envy of his Wall Street rivals. It also reflects a good return on what Dimon has dubbed his company’s “seventh line of business”—government relations.
Persuasive tactics: JPMorgan chief Jamie Dimon and his company enjoy a prominence in Washington’s lobbying world. Joshua Roberts / Bloomberg
The business of better influencing Washington, begun in late 2007, was jump-started just as the financial crisis hit and the capital displaced New York as the nation’s money centre. Then Obama’s election brought to power Chicago Democrats well-known to Dimon from his recent years running a bank there, who include Emanuel.
A long-time acquaintance of Dimon, Emanuel agreed to appear after treasury secretary Timothy F. Geithner declined out of concern that he would appear too cozy with a company that has numerous business issues before the department, an administration official said.
“It’s a very nice thing for the board to have happen,” said the chief of a major financial company. “But you’d have to have a lot of influence to pull it off.”
Dimon and his company enjoy a prominence in the city’s lobbying world that parallels their recent rise on Wall Street; JPMorgan went into the crisis stronger than most rivals and last week reported robust quarterly gains that confirmed its place at the top of the heap.
With the crisis, Dimon, a longtime Democratic donor, has become even more politically engaged, in the process becoming perhaps the most credible voice of a discredited industry. Other one-time giants such as Citigroup Inc. and Bank of America Corp. find themselves muted as wards of the state.
Dimon, JPMorgan’s chairman and chief executive, comes to Washington about twice a month, compared with maybe twice a year in the past. He requires senior managers to commute as well. In recent months, he has met with officials including Geithner; the White House economic adviser, Lawrence H. Summers; and lawmakers of both parties.
He phones or emails Emanuel at whim. Each week, his staff gives him the names of half a dozen public officials to call. While Dimon has been quick to criticize the administration, JPMorgan has chosen its fights carefully, viewing his activism as a good investment, particularly as the government considers a potentially historic rewrite of the rules that govern the industry.
Obama has singled out Dimon for praise more than once. Yet some Democrats in his administration and in the US Congress say Dimon can be too outspoken, and deaf to the anti-bank politics of the country. When he complained in a March speech about Washington’s vilification of Wall Street, at least 40 House Democrats shot off a protest letter.
“That was nonsense,” said Barney Frank, Republican US House representative for Massachusetts, who chairs the House banking committee.
Yet Dimon helped persuade Frank and the Congress to ease the terms so JPMorgan could repay $25 billion (Rs12,1750 crore) in bailout money from the Troubled Asset Relief Program, or TARP. He did so after complaining publicly and privately that JPMorgan only reluctantly took the money last year from the Bush administration to avoid stigmatizing more needy banks, and now was being hit with new limits—on hiring skilled foreigners, executive pay and more.
“He had a good point,” Frank said.
JPMorgan and the industry lost when a pro-consumer credit card Bill became law. But it beat back a proposal to allow bankruptcy judges to make individuals’ home mortgages more affordable.
Meanwhile, the company’s reputation could be tarnished by high-profile investigations into the crisis. Among them, JPMorgan is under scrutiny from the justice department and the Securities and Exchange Commission for possible antitrust and securities law violations, including derivatives deals with local governments that felt duped.
Another Obama associate is on JPMorgan’s payroll. Dimon hired Bill Daley, a former commerce secretary and Chicago powerbroker, in 2004 as vice-chairman and head of Midwest (the Midwestern US) operations. Since 2007, Daley has run global government relations.
It was at that time that Dimon assessed his own performance for his board and gave himself a “D” for effort in Washington. He subsequently revamped the firm’s government affairs office, mindful of Democrats’ ascendance: They had won control of the Congress and were favoured to seize the White House in 2008.
Rick Lazio, a Republican former congressman from New York, was replaced as head of global government relations with a wired Democrat: Peter L. Scher, a former top official in the Senate, the commerce department and the trade representative’s office.
Despite his Chicago connections, Dimon said he did not know Obama well while he was there.
He met the future president during Obama’s 2004 Senate run, at a living room discussion with about 10 pro-business Democrats, and sent his campaign $2,000, the maximum.
Now that Obama is in the White House, Dimon has been prominent when the president wants to talk to big business.
During one such meeting in late March, as Citigroup chairman Richard Parsons was trying to explain banks and lending, the president interrupted with a quip: “All right, I’ll talk to Jamie.”
©2009/The New York Times