How JPMorgan won
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What is the main topic discussed in this episode?
Pushkin. Last week, JPMorgan Chase made more than a billion dollars. It did the same thing the week before that and the week before that and the week before that. It is hard to think of any company that towers over its industry the way that JPMorgan towers over American banking. Today on the show, what is J.P. Morgan's special sauce and how long will it last? This is Unhedged. The Markets and Finance Podcast from the Financial Times and Pushkin. I am Rob Armstrong coming to you from Unhedged World Headquarters in beautiful New York City.
How big is JPMorgan today and what businesses make up its empire?
And I'm joined today by Josh Franklin, the FT's U.S. Banking Editor. Welcome, Josh. Hi, Rob. So let's just talk about what this bank is. I'll start with two statistics that stick out for me. About $2 trillion in deposits. I think I have that right. Interest-bearing deposits here, over $2 trillion in deposits. Total assets, $5 trillion, just to give a scale of how big this thing is. What else would you add to the description, Josh?
No, it's an institution that's bigger than most countries. And if you think of what the modern day J.P. Morgan is, it's basically three businesses. You've got the Chase side of the business, which is kind of, it's like the coal room in terms of just like churning along this profit engine. And that's kind of the retail deposits, you know, the chase branches. You've got the JP Morgan investment bank and trading business, which is kind of the glitzier kind of brand enhancing side of the business that, you know, works on the SpaceX IPO and has Ken Griffin and Millennium and Citadel as clients. Yeah.
And if the retail business is the engine room that just kind of churns along, you know, lends higher than it borrows and just makes money steadily, I guess the Wall Street business, when it's good, it's really good, right? It has these immense peaks and it has some valleys. But when it's jamming like it's jamming right now, it is just a profit now.
No, when we're in this mode of animal spirits, there's a lot of money to be made. And it really gives you this nice upside. We'll see how long it lasts for. But right now, people are making hay while the sun shines. And then the kind of smaller business is the asset and wealth management business that they have, which is about 20% of profits. And that's kind of this money management business. business that, you know, doesn't move the needle every quarter, but it's also another kind of growth industry that, you know, JP Morgan wants to be a part of.
So it's- And JP Morgan wants to be at the middle of that wave. Yeah. And it seems like they are.
Yeah. No, exactly. And the funny thing is on the asset and wealth side of business, for almost any other company, the money that it puts up every quarter would be a standout performer size-wise. But in JP Morgan, because it is so big, it almost gets obscured a little bit by these two other huge businesses.
So let's go back now and talk about how did we get here? Yeah. It wasn't always the case that J.P. Morgan was the most dominant bank in the United States and possibly the world. How did we get here?
So the key protagonist of the story is Jamie Dimon, who's the CEO, I'm sure a person who's familiar to a lot of listeners. He takes over J.P. Morgan in the start of 2006. And at that time, we call these guys forever CEOs for a reason. They stick around for a long time. When he took over, there were actually a few bigger banks than J.P. Morgan. You had Bank of America and Citigroup, and Diamond had previously worked at Citigroup under his mentor, Sandy Weil, were both bigger than J.P. Morgan.
But of course, 2006 is a momentous year. Because the next year is 2007. Yes.
And we all know what happens then. Yes. Then there's the early signs of this brewing financial crisis that comes to a head in 2008. And J.P. Morgan really maneuvers that. Better than anyone else. Jamie Dimon manages to sidestep the worst of the mortgage crisis for JP Morgan, and then not only emerges in decent financial health, but also takes advantage of the crisis to opportunistically buy a couple of companies.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:06–0:49
2
How big is JPMorgan today and what businesses make up its empire?
0:49–6:09
3
What are the three core divisions of J.P. Morgan and how do they contribute to profits?
6:09–14:56
4
How did Jamie Dimon steer J.P. Morgan through the 2007–2008 crisis?
14:56–18:37