Dimon Dilemma

Chatter weighing JPMorgan CEO’s future as possible U.S. Treasury Secretary does not sit well alongside fresh allegations of Epstein case.

Photo credit: Steve Jurvetson/Flickr

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Yes, we put out a story last week chronicling how JPMorgan Chase’s chief executive Jamie Dimon achieved borderline action hero status as he raced the clock alongside U.S. Treasury Secretary Janet Yellen to shore up the foundering U.S. banking system.

This was meant (mostly) in jest, and I feel the need to point out that I should not need to point this out. Hyperbole, people.

Nonetheless, talk that Dimon may be asked by President Biden as early as this year to possibly succeed Yellen is getting a tiny bit louder, and is seen by some as a fitting retirement lap to his nearly two-decade-long reign as Wall Street’s top banker. 

After Dimon gamely pitched in to help co-lead last month’s rescue operation, resulting in 11 banks joining forces to stabilize the financial system (a herculean effort that The New York Times breathlessly called the “Jamie and Janet show”), it does not strain the imagination to think he might be an appealing candidate for the job.

Yet Dimon’s hero halo is looking a little tarnished by fresh allegations that high-ranking executives at JPMorgan knew about – and made light of – the behavior of late child predator, convicted sex criminal, and financier Jeffrey Epstein, a client of the bank.

An amended complaint filed in New York by lawyers for the U.S. Virgin Islands this week alleges that Epstein’s predatory behavior toward minors was “widely known” and that JPMorgan “senior executives joked about Epstein’s interest in young girls.” 

The email containing the remarks, which was redacted, was sent in 2008 to Mary Erdoes, who still runs the bank’s asset and wealth management division where Epstein was a client. JPMorgan has not commented on the filing, but has vigorously defended Erdoes as acting “with the highest levels of integrity and professionalism.” 

The year the email was sent to Erdoes, 2008, was the same year Epstein plead guilty to soliciting underage sex and sentenced to 18 months in prison.

Erdoes has been subjected to questioning under oath in pre-trial proceedings and Dimon is expected to be deposed in May. JPMorgan is facing lawsuits  regarding its relationship with Epstein from both the U.S. Virgin Islands and an alleged Epstein victim going by the name of Jane Doe. Pre-trial proceedings are under way and a trial is planned for October.

The U.S. Virgin Islands also highlighted an internal correspondence at JPMorgan referring to a “Dimon review” of the bank’s relationship with Epstein, but the bank has claimed it does not have any record of it.

The headlines from the Epstein proceedings, coupled with talk of Dimon ascending to Treasury Secretary may not go on for much longer, though, as Dimon has made it clear more than once (including to Trump, when his name was floated years ago) that he does not want the job, full stop.

In 2020, when asked again about his interest in the post under Biden, Dimon dismissed the notion about as expressly as one can. 

“I love what I do, and I have never coveted the job. Ever. And some people do, and I applaud that. I love my country, so I will help anyone who has that job,” Dimon said. “I want to do this job, that’s what I want to do. If I ever get a call to help, I always take those calls and try to offer my help to whoever’s secretary of Treasury, and any president, by the way.”

While succession planning for Yellen may have to wait for another day, the Epstein case could affect who succeeds Dimon if the proceedings go poorly for the bank. In particular, Erdoes, who had to deal with Epstein directly and eventually jettisoned him as a client, has long been considered one of the top candidates to step into Dimon’s shoes.

*Power Corridor is the newest publication from The Daily Upside. Delivered twice weekly, Lead Editor Leah McGrath Goodman gives readers a unique view into the interplay between Wall Street and Washington. Sign up for free here.*