Morning:
6°c
When the White House wants to understand Wall Street, it turns to Jamie Dimon, the chief executive of JPMorgan Chase. Dimon has called government relations his firm's "seventh line of business". But the risks, as well as benefits, of that approach are becoming dangerously apparent.
On Monday, President Obama's chief of staff, Rahm Emanuel, cancelled plans to address the JPMorgan board in Washington. His last-minute decision came after increased scrutiny of the bank's influence.
Last week, JPMorgan announced quarterly profits of $2.7 billion, second only to those at Goldman Sachs. Like Goldman, JPMorgan has benefited immensely from the winnowing-out of rivals such as Lehman and Bear Stearns, and the availability of cheap credit from the government since last autumn.
Also like Goldman, JPMorgan under Dimon has aggressively fought its corner in Washington. It has opposed increased regulation of derivatives trading and new rules governing consumer credit, areas where the current crisis was incubated.
Dimon is a powerful personality, blunt and charming. He made his name helping to build Citigroup into a financial colossus. After he was fired, he went to Chicago to run BankOne, which he merged with JPMorgan in 2004. While in Chicago, he got to know Obama and his circle.
He already had a reputation as a tough financial manager, who keeps costs low and the balance sheet healthy. His approach ensured that JPMorgan emerged strongly from the financial crisis.
But now Dimon is seen as the champion of Wall Street in the battle against Main Street, a politically ugly role.
The White House is loath to be seen as any bank chief's puppet. But President Obama and his team seem increasingly that: the government arm of JPMorgan. Expect them to keep Dimon at greater length from now on.
Robert Nardelli's recent CV may be one of the least impressive in corporate America. In 2001, he was passed over for the top job at General Electric. So he went to run Home Depot, a home improvement chain. He was forced out of there in a row over his stratospheric pay.
Then he went to Chrysler, which he led into bankruptcy. Now Cerberus, the private-equity firm that used to own Chrysler, has hired him, calling him "one of the world's best operating executives and a proven leader."
