JPMorgan Chase & Co. (NYSE: JPM) Chief Executive Jamie Dimon is the new king of Wall Street whose power rivals his company's namesake John Pierpont Morgan.Over the past year, Dimon managed to steer JPMorgan away from the subprime credit crisis while managing to keep his company's stock from cratering like his competitors'. First, he absorbed Bear Stearns after it went out of business. Now, Dimon has managed to pick up Washington Mutual Inc. (NYSE: WM) -- the good parts of it anyway -- for $1.9 billion. The deal is accretive in 2009.
Dimon is proving to be Wall Street's shrewdest manager. He did not get to be so successful by being a teddy bear. Indeed, reports abound about his abrasive personality. But unlike other Wall Street CEOs, Dimon knows his job is to work for the shareholders. Dimon's zeal for cost-cutting knows no bounds. He got rid of expensive technology outsourcing contracts, figuring the company could do the work cheaper itself.
Dimon is playing a similar role in today's financial crisis that Morgan did in the early 20th century. Morgan, who among other things helped create General Electric Co. (NYSE: GE), organized the rescue of the financial system in the Panic of 1907. The panic occurred following a failed attempt to corner the copper market. Remember that there was no Federal Reserve in existence so Morgan's success in lining up a financial lifeline is all that more remarkable.
Much like Morgan, there appears to be no limits to Dimon's power. By acquiring WaMu, Dimon is getting 2,300 branches in markets such as California, where the company is eager to expand. CNBC's Charlie Gasparino reported that WaMU executives were on a flight when their bank was seized. It goes to show you that the company did not know what it was doing right until the end.
"This is a fabulous franchise," Dimon told Bloomberg News. "We think we got this at a price that protects us, where if we were wrong, it still protects us."
Morgan would have been proud.
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