The appointment of Charlie Scharf as CEO of Wells Fargo is not only a crucial turning point for the troubled bank in San Francisco. It also represents further consolidation of the most powerful professional network in the global economy: the executive diaspora of JPMorgan Chase.
Former JPMorgan executives now manage banks with assets totaling $ 4.7tn. Add yourself to JPMorgan, where Jamie Dimon is in his 14th year as CEO, and the sum reaches $ 7.4tn.
In the United Kingdom, Barclays is run by Jes Staley, who previously ran both JPMorgan & # 39; s Management and Investment Banking Division, and Standard Chartered is led by Bill Winters, who also led JPMorgan Investment Bank. In the US, in addition to Wells, PNC Financial, the eighth largest bank in the country, is run by Bill Demchak, who runs JPMorgan & # 39; s structured finance and credit operations.
Mr. Scharf's JPMorgan career culminated with his leadership in the Retail Banking Division from 2004 to 201[ads1]2, before becoming CEO of Visa and then BNY Mellon.
The Dimon network does not stop in the banking industry. Frank Bisignano, former chief executive of JPMorgan, is chief executive of First Data, the payment company that was sold to rival Fiserv for $ 22 billion in January. Matt Zames, another former operations manager, is president of private equity firm Cerberus. Ryan McInerney, now President of Visa, once ran Consumer Banking at JPMorgan.
Investors and analysts give much of the credit for Mr. Dimon's own leadership skills. "The skills he teaches, the qualities he looks for, if I was [Wells’ chair] Betsy Duke or the head of another search committee, I would look straight at JPMorgan," said Tom Brown, a longtime banking investor and commentator. "The highest praise I can give someone is that they make complicated problems simple, and Jamie and Charlie [Scharf] are so much that way."
Probably the credentials of any JPMorgan alum burned out by the outstanding performance of JPMorgan shares, which have almost tripled in the last 10 years, far outweigh any other major US banks. The bank did not undergo the death experiences that cramped so many rivals during the financial crisis.
"JPMorgan being JPMorgan definitely helps," said Jeffrey Harte, analyst Sandler O'Neill. "Leaders could focus on running their business during the crisis when others were in survival mode." He cites strategic consistency and emphasis on accountability in both good times and bad as hallmarks of the Dimon regime.
Several industry insiders note that JPMorgan & # 39; s Size of Influence is not without precedent, pointing out how Citigroup executives in the 1980s and 1990s played important roles at other institutions. One of these was Dimon himself. The list also includes Richard Kovacevich, who continued to lead Wells Fargo.
Not everyone thinks that the enthusiasm for leaders who have worked under Mr Dimon is perfectly benign. “Every time we have a hero, we develop cultures around it – look at Silicon Valley and Steve Jobs, and everyone who walks around in black turtlenecks. There is definitely too much emphasis on the persona and not enough on leadership behavior, says Lindred Greer, faculty director at the Sanger Leadership Center at the University of Michigan.
Dave Ellison, who runs a portfolio of financial stocks in Hennessy Midler believes that the banking world has become too cozy. “These boards are a money club – they all know each other. . . I was hoping that Wells Fargo would take a chance on someone new, someone outside the box who would shake things up. "
A world with very low prices and increasing technological competition requires banks to think in new ways," Ellison said. "But here's another case where they bring in somebody else who is at the club, instead of taking a chance on someone new."