JPM's Dimon Was Paulson's Go-To Guy On Street: Book

NY Post ^ | August 02, 2009 | Mark DeCambre

[CutePuppy]

Days after Lehman Brothers' stunning collapse last Sept. 15, then-Treasury Secretary Hank Paulson placed an urgent call to JPMorgan Chase CEO Jamie Dimon and asked the banking veteran to buy rival Morgan Stanley to save it from suffering a similar fate, according to an upcoming book.

Dimon, who had come to be seen as the banker of last resort after acquiring Bear Stearns in a government-sponsored takeover the previous March, had misgivings on such a move, though, and passed on the opportunity.

The reason, according to the book, was that it would be too difficult to integrate the two similarly structured businesses and that there would need to be massive job cuts, something Dimon was not keen on undertaking.

Rumors of a proposed JPMorgan Chase-Morgan Stanley hook-up have bounced around Wall Street since last fall, but Dimon's tale of the Paulson call is the first time it has been backed up.

"The government was desperately seeking to stave off what could have been a wipeout of Wall Street," writes Duff McDonald in "Last Man Standing," the story of Dimon's rise, fall and rebirth on Wall Street. "And here was Paulson, offering Dimon Morgan Stanley for absolutely nothing."

McDonald's book is slated for October publication from Simon & Schuster.

According to the book, the government and other Wall Street officials also turned to Dimon's firm, which had managed to better navigate the tumult of the past two years, to help bail out Lehman Brothers and Merrill Lynch -- offers Dimon also took a pass on.

.....

McDonald's tale illustrates how far Dimon has come in his career, from working in the shadow of Weill to becoming the go-to guy for Uncle Sam.

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[CutePuppy]

Should be a fascinating book. Dimon is one of the best managers on the Street. Sandy Weill was an idiot to let him go, for purely nepotistic reasons (Weill's daughter, Jessica Bibliowicz, wanted a promotion). Citi has been incredibly mismanaged ever since. Dimon merged several banks on the way to creating top bank in the nation.

On September 14 2008, Dimon has helped Fed and Treasury to offload failing WaMu, Ken Lewis of BofA helped by acquiring Merrill Lynch, but no one took Lehman, which declared bankruptcy next day, and tanked the market... again. Morgan Stanley survived by converting from investment to commercial bank to be eligible for newly available loans under TARP funds, shortly thereafter.

[BGHater]

‘”The government was desperately seeking to stave off what could have been a wipeout of Wall Street,”’

Gov’t, You gotta have your priorities.

[CutePuppy]

The phrase is by book's author. The more proper term would be "collapse of the financial system".

[Ernest_at_the_Beach]

No wonder that Paulson and Bernanke got uptight about Lewis backing out of the Merrill deal!

[CutePuppy]

Lewis had to make a play to placate BofA shareholders who were (justly) unhappy with Merrill Lynch purchase, particularly so soon after Countrywide purchase that was made under similar circumstances - Feds wanted to avoid what would be Countrywide’s extremely messy bankruptcy for failing housing and stock markets.

It was also after the election, when everyone in financial industry was worried that new Treasury may be less accommodating to “fat cats,” and Lewis wanted to have some assurances that the informal loan facilities and terms (Fed backstops) would not change with the new regime. Bernanke and Paulson were obliged to and did play along. Shareholders were made to understand that Lewis was “forced” to stick with the deal.