Valuetainment - July 17, 2023


Jamie Dimon： The Most Powerful Man In America Who’s Not a President


Episode Stats

Length

17 minutes

Words per Minute

208.96164

Word Count

3,566

Sentence Count

275

Misogynist Sentences

1


Summary


Transcript

00:00:00.000 Whether you love or hate Jamie Dimon, you gotta know what this guy came up from.
00:00:02.720 By the way, this guy was an assistant, a personal assistant, in 1982 for American Express,
00:00:07.420 working for Sandy Wild, where Sandy eventually...
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00:00:25.100 ...becoming the CEO of Citi.
00:00:26.780 This guy's an assistant, regular guy, working for another guy.
00:00:30.700 Eventually, whatever he touches turns to gold.
00:00:32.940 Later on, he gets fired by Sandy Wild.
00:00:35.260 And today, CEO of a company that processes, ready, $10 trillion a day
00:00:42.220 in 170 currencies in 120 countries and named.
00:00:48.780 JPMorgan Chase is the most systemically important bank in the world by G20.
00:00:55.460 When we learn about this man's come up, what he's done, you're finally going to realize
00:01:00.880 why so many people behind closed doors want to see this guy run for office.
00:01:05.960 So some people wonder, well, you know, is Jamie rich?
00:01:08.200 How rich is Jamie?
00:01:09.040 Well, let me just tell you, when it comes down to Jamie, do you know what he believes in a lot?
00:01:12.360 Art.
00:01:12.860 Do you know how big his personal art collection is?
00:01:16.080 Take a wild guess.
00:01:17.200 $10 million?
00:01:17.740 $50 million?
00:01:18.600 $100 million?
00:01:19.600 $200 million?
00:01:20.460 Come on, Pat.
00:01:21.660 $900 million.
00:01:23.460 Here's a look into his $900 million personal art collection, which has a hidden staircase,
00:01:29.960 fake bookcases, and a secret vault.
00:01:32.640 And you know why?
00:01:33.340 Because this guy understands investments and alternative assets.
00:01:36.380 And that's why today's sponsor is Masterworks.
00:01:38.020 For some of you guys that are watching this, Pat, did I count by $900 million worth of art?
00:01:42.100 I got real doors.
00:01:43.000 I don't have fake doors or fake bookcases.
00:01:45.040 I understand.
00:01:45.860 But Masterworks makes it easy for you to invest in a $10 million piece of art and just buy a piece
00:01:50.900 of it, whether it's Banksy, Warhol, Picasso, it doesn't matter.
00:01:53.980 That's what they do.
00:01:54.820 They have nearly 750,000 users to date.
00:01:57.680 When you think about contemporary art versus select assets during high inflation periods
00:02:02.660 above 3%, here's what it looks like.
00:02:04.600 Gold does roughly 0.2%.
00:02:06.160 S&P does 3.8%.
00:02:07.800 REITs to 5%.
00:02:09.080 Emergent market equities, 12.6%.
00:02:11.240 But contemporary art, 23.2% during high inflation.
00:02:16.840 You want to learn more?
00:02:17.880 Click on the link below to learn more about Masterworks.
00:02:21.160 If you get value out of this video, give it a thumbs up and subscribe to the channel.
00:02:23.780 But before we go into how he became the CEO of the largest bank in the world, the most important
00:02:27.780 bank in the world, how does this story really begin?
00:02:30.260 This goes all the way back to his grandfather when he immigrated in 1921 and started a successful
00:02:35.340 career as a banker.
00:02:36.900 His father was also a wealthy stockbroker, would make Diamond look at balance sheets and
00:02:41.980 earnings of a company, then determine what the stock price should be based on, the financials.
00:02:46.160 Let's just say he's got the right genetics so far.
00:02:48.440 And then also, it's fair to say that his family was upper class during his childhood, but Diamond
00:02:51.980 was very ambitious and wanted to make his own fortune.
00:02:54.200 He was rejected by his dream college, Brown.
00:02:57.360 Then he attended Tufts instead, which, by the way, is still a great school, but he was
00:03:00.760 very angry about the fact that Brown said no to him.
00:03:03.240 Then Diamond applies to get transferred to Princeton, gets rejected again.
00:03:06.900 He eventually ends up graduating at the top of his class at Tufts and got accepted into
00:03:10.740 Harvard Business School.
00:03:11.680 And at Harvard, he ends up graduating in the top 5% of his class.
00:03:15.500 So you know how sometimes a lot of these big companies are like, we got to recruit that
00:03:17.820 kid coming out of Harvard.
00:03:18.800 He was number one in his class.
00:03:20.160 That guy was number one in Tufts.
00:03:21.420 That guy was number one in Brown.
00:03:23.000 He's one of those guys that everybody wants to recruit.
00:03:25.120 So rather than taking any of these offers, he decides to work for a family friend named Sandy
00:03:30.860 Weil for a third of what everybody else offered him to make.
00:03:35.060 Meaning, if others paid him $200,000 a year, Sandy could only pay him $70,000.
00:03:40.100 And he said, no problem, I will work for you.
00:03:41.980 So this is when the duo, Sandy and Diamond, go on nearly a 20-year run together.
00:03:47.120 And here's how it gets started.
00:03:48.280 Weil ends up selling his company to American Express for $900 million and gets hired as
00:03:52.580 the president and hires Jamie Diamond as his personal assistant at American Express.
00:03:57.600 Weil quit after a disagreement with the company's board and Diamond followed him out of loyalty.
00:04:01.980 Even though Weil said, you don't want to do this.
00:04:03.440 You just started a family.
00:04:04.320 Kind of stay here.
00:04:05.140 Why go is going to be probably risky for you.
00:04:07.280 So why don't you stick around here?
00:04:08.220 And Diamond's like, no, no, no.
00:04:09.460 I'm following your lead.
00:04:10.640 So once Weil knew he couldn't stop Diamond from following him, he says, look, let's start
00:04:14.180 something here together.
00:04:15.200 They ended up finding commercial credit company, CCC, which gave credit to low-income households
00:04:19.980 while instructed Diamond to analyze CCC.
00:04:22.800 Diamond eventually ends up finding hidden value in the company.
00:04:24.900 CCC had a low return on equity, 4%, while competitors had 15% return on equity.
00:04:30.380 Diamond realized that CCC has a lot of assets that could be sold and caused to be cut.
00:04:35.280 Consider the company he could turn around.
00:04:37.460 This next part is pretty interesting.
00:04:38.880 They end up reaching out to Warren Buffett for some money, and Warren Buffett says, I'm
00:04:41.860 not interested.
00:04:42.620 After Warren Buffett said no, they said, look, we're going to use our own money.
00:04:45.620 They end up using a significant portion of their own money to buy 10% of CCC and raise
00:04:50.480 $850 million from IPO.
00:04:52.440 They sold enough of the company to obtain an investment-grade credit rating, and Weil made
00:04:57.060 Diamond, the CFO, and he laid out 10% of CCC's employees on the first day, 18% ROE, return
00:05:05.160 on equity.
00:05:05.680 After one year of running the company, this caused the credit rating to increase.
00:05:09.640 Eventually, when 1987 crash occurred, CCC had a healthier balance sheet than most competitors,
00:05:15.920 so they began purchasing distressed companies.
00:05:17.880 One of the distressed companies they bought was Primera, and then eventually, all of these
00:05:21.540 companies together in 1998 turned into Citigroup, at the time, the biggest financial company
00:05:27.560 in America.
00:05:28.480 So while this is taking place, Jamie Dimon's aspirations was to eventually be the CEO of
00:05:32.140 Citigroup.
00:05:32.720 He doesn't become CEO.
00:05:33.920 He does become the president, but Jamie, in the back of his mind, is like, when am I going
00:05:37.460 to get my chance to be the CEO?
00:05:38.840 At the same time, something very interesting happened.
00:05:41.420 When Sandy's daughter gets hired to work in Diamond's division, and Diamond had a major
00:05:47.300 disagreement with Weil, while Vanguard launched the first low-cost index fund, Jamie wanted
00:05:53.220 to use the same strategy and eventually wins the argument.
00:05:56.200 Weil's daughter was responsible for the low-cost index fund division, and it was massively underperforming
00:06:01.380 compared to the competition.
00:06:03.380 Jamie scrutinized her and ultimately refused to promote her.
00:06:06.500 So while all this stuff is taking place, and Jamie's on track, and all of a sudden, boom,
00:06:10.740 November 1998, he decides not to promote.
00:06:13.640 Sandy says, you're fired.
00:06:15.620 And by the way, Jamie wasn't expecting this.
00:06:18.420 Jamie thought for sure he was going to be the CEO.
00:06:19.840 Matter of fact, both of them were asked this question afterwards.
00:06:22.860 Jamie Dimon says, this impacted my net worth, but not self-worth.
00:06:27.700 And Sandy Weil said, I fired Jamie Dimon because he wanted to be CEO.
00:06:32.260 The problem was in 1999, he wanted to be the CEO, and I didn't want to retire.
00:06:37.020 I regret that he came to that.
00:06:38.780 I don't know what else could have been done except for him to be more patient.
00:06:42.540 So both of them give their own point of view, but at the end of the day, he was fired.
00:06:46.440 So imagine, you're the guy coming up.
00:06:48.260 You're the superstar.
00:06:48.980 Now you don't have a job.
00:06:49.720 What do you do next?
00:06:50.640 But the market knows.
00:06:52.080 This is a superstar.
00:06:54.180 This guy's not going to have a hard time finding a job, and he found a job very quickly.
00:06:57.620 Jamie gets hired as the CEO of a struggling bank one, and here's what he does.
00:07:02.400 You're one.
00:07:02.920 Ready?
00:07:03.540 He fires not 10 people, not 100 people, not 1,000 people, not 10,000 people.
00:07:09.640 He fires 12,000 people year one.
00:07:12.700 Can you imagine?
00:07:13.460 Hey, guys, Sandy, yo, fire Jamie.
00:07:16.200 We're getting the best guy to be the CEO of a bank one.
00:07:18.480 This is awesome.
00:07:20.060 Guess what?
00:07:20.680 You're fired.
00:07:21.560 12,000 people get fired, and he cuts executive compensation.
00:07:25.520 He took away company cars, 401k matching, executive bonuses, gifts, financial planning, started
00:07:31.780 selling underperforming parts of the business, took $4.4 billion in write-downs and loan loss
00:07:38.360 provisions.
00:07:39.300 Bank one posted a yearly loss of $500 million in 2000.
00:07:44.760 But guess what happened next?
00:07:45.800 The company stock starts going up because Wall Street liked what Jamie Dimon was doing.
00:07:51.000 And Dimon prioritized a fortress balance sheet more than anything else.
00:07:54.780 This was kind of his philosophy.
00:07:56.420 Lots of cash, good collateral, treasuries and gold, assets with real value, healthy amount
00:08:01.640 of leverage, ready to buy things cheap.
00:08:04.100 Bank one, just a year later, post-profits, ready?
00:08:07.860 Rate of $2.6 billion.
00:08:10.540 So obviously, the market is saying, oh my God, look at this guy.
00:08:12.860 At first, we thought he was crazy.
00:08:13.880 What are you doing?
00:08:14.300 Firing all these people.
00:08:15.540 Executive people are leaving, and he's the worst guy to work for.
00:08:17.940 You never want to work for a guy like this.
00:08:19.900 And then all of a sudden, the market says, damn, this guy kind of knows what he's doing.
00:08:23.420 At the same time, Chase is struggling because they had the scandal with Enron, and they're
00:08:28.380 kind of trying to figure out a way to figure this thing out and clean it up.
00:08:31.020 JP Morgan merges with Bank One in 2004 because it wants Diamond as a CEO.
00:08:36.120 Can you imagine, we'll merge with you.
00:08:38.800 The main reason we're doing it, Beyond Closer, is not telling anybody, we kind of want that
00:08:41.600 guy to run the whole company.
00:08:42.660 After the merger, JP Morgan is the second largest bank with Citigroup at first.
00:08:46.280 Now remember, Citigroup was where he's, you know what I'm saying, Sandy and Daughter
00:08:49.960 and all that other stuff.
00:08:50.820 So there's a point to prove right there as well.
00:08:52.600 When Diamond took control of JP Morgan, he cut costs, reshaped incentive structure, started
00:08:57.340 building his fortress balance sheet, immediately offloaded the toxic subprime loans, and meanwhile
00:09:02.080 Citigroup, complete opposite end, they're sitting there saying, hey man, this kind
00:09:05.960 of subprime stuff is very profitable, man, we're making a lot of money here.
00:09:08.820 This is great.
00:09:09.760 This is looking so good.
00:09:11.020 Until 2008, when the market hits, Jamie knew this was coming, and it was going to be bad,
00:09:17.540 and he didn't want JP Morgan Chase to have exposure to the moment he took over.
00:09:23.720 Citigroup ends up losing, you ready?
00:09:26.260 $18.72 billion in 2008.
00:09:29.680 The company's CEO, Charles Prince, was forced to resign November 2008.
00:09:35.020 Chase had the smallest loss of all banks in 2008, with only $1.2 billion.
00:09:41.360 Once again, $1.2 compared to $18.72.
00:09:44.720 That's a big difference.
00:09:46.100 So at the same time, when you think about 2008, a lot of these companies are going out
00:09:48.840 of business, Bear Stearns being one of them.
00:09:50.720 But Bear Stearns, you know, most companies can't afford to buy this company.
00:09:53.320 So what happens?
00:09:53.860 The government quickly identified that JP Morgan was the only bank capable of absorbing Bear
00:10:00.840 Stearns, okay?
00:10:02.160 The Treasury Secretary, Hank Paulson, begged Diamond to buy Bear Stearns.
00:10:07.180 Diamond offered to buy for $2 a share.
00:10:10.920 One year prior, the stock was $170.
00:10:14.980 Think about this.
00:10:15.860 Let's negotiate.
00:10:16.940 Look, Jamie, a year ago, this thing was $100.
00:10:19.620 We'll give it to you for a deal.
00:10:21.100 You know, maybe $40, maybe $30.
00:10:22.980 How about $2?
00:10:24.320 $2?
00:10:25.300 Yes.
00:10:25.880 I'm the only guy that can do it.
00:10:26.940 You don't have another option.
00:10:28.400 Shit.
00:10:29.020 He's right.
00:10:29.780 They eventually end up buying the company.
00:10:32.000 Government sweetened the deal with a $30 billion to reduce Diamond's risk exposure.
00:10:36.640 Diamond never acted like it was a luxury and said he did it for the financial system, but
00:10:41.160 Wall Street viewed it as a great deal for the bank because it helped JP Morgan expand
00:10:45.460 into areas like investment banking and prime brokerage dealing.
00:10:49.200 Now, a few other deals that he did.
00:10:50.260 In 2008, Wamu was the bank, like I was with Wamu back in the days.
00:10:53.460 It was the largest bank failure in U.S. history.
00:10:55.940 JP Morgan buys this company.
00:10:57.860 Just in 2004, it's valued at $330 billion.
00:11:01.140 JP Morgan buys it for $1.9 billion, pennies on a dollar.
00:11:05.280 2015, they buy Instamed.
00:11:07.720 2016, they buy WePay.
00:11:09.460 2023, first Republic Bank failure resulted in acquisition by JP Morgan.
00:11:14.700 Bargain price from the FDIC, second largest bank failure in U.S. history.
00:11:19.240 So let me get this straight.
00:11:20.220 The largest, he buys.
00:11:22.060 The second largest, he buys because he's got this fortress of cash available to him to
00:11:29.480 make these types of decisions when everything is cheap.
00:11:32.340 Now, there's obviously a lot of different takeaways from this.
00:11:34.340 There's a good, bad, and the ugly.
00:11:35.520 How could you build up this guy?
00:11:37.840 Haven't you seen the story about, you know, him being linked with, you know, Epstein and
00:11:41.480 JP Morgan Bank involved with what they did?
00:11:43.200 How about the fact that during the time of him being the CEO of the company, they paid
00:11:47.740 nearly $35 billion in fines.
00:11:51.600 How can we recognize somebody like this that they've had to pay these types of fines?
00:11:55.460 These are real numbers, by the way, and they're valid points.
00:11:57.220 But here's what I want you to think about here.
00:11:59.120 His leadership style.
00:12:00.360 Let's take the best, and then I'll tell you why some people want this guy to run for office.
00:12:03.700 Number one, there's something that he was famous for saying.
00:12:05.920 He said, if there's a problem you tell me about, it's our problem.
00:12:09.820 If there's a problem you don't tell me about, it's your problem.
00:12:12.980 Believe me, you don't want to have a problem, which means if something's not working, talk
00:12:18.000 about it with me and let's process it.
00:12:19.680 If you don't bring it up to me, you best fix it or else you're fired.
00:12:23.380 That's my interpretation of how he runs the company.
00:12:26.340 Number two, involved in all aspects of the business from top to bottom, using highly efficient
00:12:30.780 meetings with agendas, an action pointer to be addressed, always carry it around a sheet
00:12:35.460 of paper with the topic needed to be addressed, encourages transparency and direct feedback
00:12:39.820 from all employees, wants constant feedback from the people who directly deal with the
00:12:43.860 customers, and number one business philosophy was maintain the Fortress balance sheet.
00:12:48.980 His friends say that he doesn't do much aside from run the business.
00:12:52.580 This guy is maniacal about running a company.
00:12:55.580 So now, he gives a speech.
00:12:57.260 I'm going to play it for you.
00:12:58.520 I want you to watch it and tell me what you think about this.
00:13:00.540 Here's Jamie Dimon.
00:13:01.200 The other way around, America has the best hand ever dealt of any country on this planet
00:13:05.680 today, ever.
00:13:07.800 Okay?
00:13:08.120 And Americans don't fully appreciate what I'm about to say.
00:13:11.480 We have peaceful, wonderful neighbors in Canada and Mexico.
00:13:15.480 We've got the biggest military barriers ever built called the Atlantic and the Pacific.
00:13:20.260 We have all the food, water, and energy we will ever need.
00:13:24.620 Okay?
00:13:24.820 We have the best military on the planet, and we will for as long as we have the best economy.
00:13:29.820 And if you're a liberal, listen closely to me in that one, okay?
00:13:33.140 Because the Chinese would love to have our economy.
00:13:35.120 We have the best universities on the planet.
00:13:36.860 There are great ones elsewhere, but these are the best.
00:13:38.520 We still educate, you know, most of the kids who start businesses around the world.
00:13:43.460 We have a rule of law, which is exceptional.
00:13:46.180 If you don't believe me, and we talk about Britain, Brazil, Russia, India, Venezuela, Argentina,
00:13:50.720 China, India.
00:13:52.220 Believe me, it's not quite there.
00:13:53.620 We have a magnificent work ethic.
00:13:55.540 We have innovation from the core of our bones.
00:13:57.980 You can ask anyone in this room, what can you do to be more productive?
00:14:00.980 Ask your assistants, factory floors, we do it.
00:14:03.420 It's not just this deep job.
00:14:04.700 It's this broad death.
00:14:05.540 We're the widest and deepest financial markets the world's ever seen.
00:14:09.760 Okay?
00:14:10.020 And if you, I just made a list of these things, and maybe I missed something.
00:14:13.160 It's extraordinary.
00:14:15.280 It's extraordinary.
00:14:17.100 And we have it today.
00:14:18.360 Yes, we have problems.
00:14:19.580 But, you know, when I hear people down, if you travel around the world, I mean, get an airplane,
00:14:23.720 travel around the world, and go to all these other countries, and tell me what you think.
00:14:26.340 So, look, whether you like him or not, you know, you hear a message like that of somebody
00:14:30.420 talking about how much they love America.
00:14:31.800 I respect it.
00:14:32.560 But when I see Putin selling Russia, I respect the fact that someone's got that kind of pride
00:14:36.640 in their own country.
00:14:37.580 I don't like the fact that a lot of Americans want to bash America.
00:14:40.280 Finally, we got some leaders that are saying great things about their own country, and they're
00:14:43.460 proud.
00:14:44.060 You want to hear more of that.
00:14:45.120 So, I like that part.
00:14:45.880 In regards to you being uncomfortable with some of the business dealings or whatever,
00:14:50.400 he's done $38 billion in fines.
00:14:52.140 Totally get it.
00:14:52.680 You can talk about that as a bank.
00:14:54.300 When you're around for as long as this guy's been around, and the bank is as big as it is,
00:14:57.960 it's going to have some weird customers.
00:14:59.940 2013, they cut ties with Epstein.
00:15:01.800 You can read more about it and say, I don't like this.
00:15:03.700 This is the reason why I would never want a guy like this to run.
00:15:06.260 What you can respect about a guy like this is a few things.
00:15:09.240 One, he chose the right person to run with for 16 years, and he became that person's
00:15:14.900 number one flag carrier, Sandy Wilde.
00:15:17.840 You got to give him credit for running with that guy, being loyal, and look what happened
00:15:21.220 to his career.
00:15:22.280 Sandy won.
00:15:23.160 He won.
00:15:23.900 He loved the fact that he's running with somebody that's super hungry.
00:15:26.740 Sandy loved the fact that he's got a guy that's willing to go out there and do the
00:15:29.440 work.
00:15:29.940 What a great partnership.
00:15:30.960 Obviously, sometimes you bring a daughter in, you don't want to promote.
00:15:33.880 That can be kind of technical and sensitive.
00:15:37.020 It is what it is.
00:15:37.700 That's one part.
00:15:38.240 That lasts a long time, has a philosophy, stays clear to it, is about cash, calculated
00:15:44.460 risk.
00:15:45.260 There's a lot of things to be said about this, and his story is a story that somebody right
00:15:49.660 now working at whatever position you're at right now, if you have the ambition, you're
00:15:53.200 working behind closed doors to improve yourself, eventually one day you can do something big
00:15:56.960 where people will say, I never thought he would be there.
00:15:59.920 I never thought you would be at a position like this, because no matter how much people
00:16:03.780 laugh at you, only one person knows how determined you are about your vision.
00:16:07.580 And that's you.
00:16:08.900 So there's a reason why guys like Ackman, Bill Ackman, and all these other guys saying,
00:16:14.720 it's a shame this guy's not running.
00:16:16.180 So obviously, there's a lot of other bills out there that want to see a guy like this
00:16:19.080 run.
00:16:19.400 You know, one thing about Jamie, he's always very diplomatic in the way he answers.
00:16:22.800 I've spent some time with, you know, Goldman Sachs folks, similar.
00:16:26.120 Or he'll say stuff like, hey, Jamie, are you a Republican or a Democrat?
00:16:29.580 Well, listen, you know, I'm a Democrat in my heart, but I'm a Republican in my brain.
00:16:33.780 It's kind of like gives those types of answers like, oh, should I get upset at him or not?
00:16:37.500 Because he knows he's got Democratic clients and Republican.
00:16:39.780 But eventually, if this guy decides to run, he's got to choose one party to be a part of.
00:16:43.380 We're going to see what's going to happen.
00:16:44.480 What a story to go from an assistant to all of a sudden you're running the biggest bank in
00:16:48.640 the world.
00:16:48.920 You got to give him credit for that part of it.
00:16:50.560 If you got value out of this video, I got another one I want you to watch on generational
00:16:53.540 wealth.
00:16:54.000 What a story on Vanderbilt's, Rothschild, Medici family, what these guys did with their money.
00:16:59.340 What did they do right and what did they do wrong?
00:17:01.080 If you've never seen it, click here to watch it.
00:17:02.760 Take care, everybody.
00:17:03.480 Bye-bye, bye-bye.