On a Friday morning in early November, JP Morgan Chase’s Vice Chairman James Bainbridge Lee Jr. received a phone call from his Executive Committee colleague Marc Shapiro, also a vice chairman at the bank. The Enron crisis was building, the stock was plunging and JP Morgan Chase, as main lender to the company for the past 15 years, had hundreds of millions at stake.
“Jimmy, I think Ken Lay has a problem,” Mr. Shapiro reportedly said. “And I think he could really use your help.”
Jimmy Lee, the maestro of the syndicated loan market, Wall Street’s most famous corporate bailout artist, prepared to go to work. This was the good stuff, just like the old days at Chemical Bank in the early 1990’s, when he ladled out billions in loans to companies in desperate need of cash: General Motors, Kmart, Westinghouse, IBM, Mr. Lee had bailed them all out. You are done , he would respond to the importunate pleadings of one broke C.E.O. after another, raking in rivers of fees in the process.
Now Ken Lay was asking for his help. Enron was indeed a disaster. The quicker the business collapsed, the more capital it consumed, and the more it consumed, the more it needed to borrow. It had become a confidence game. And the only way for the company to survive was for it to cut a deal with the banks, who along with many others were on the hook to Enron for billions of dollars.
But with the company facing bankruptcy, such a feat would not be easy. Before the crisis had become a front-page topic, Enron had drawn down on a $3 billion credit facility. Now it needed more cash. Which is where Mr. Lee and his team came in. Ken Lay and company would get their cash, but there would be some strings attached: The company would have to find a strategic partner.
By Nov. 10, Mr. Lee had put together a package. Enron would get a billion dollars in new loans ($400 million from Chase and $600 million from Citigroup), all of which would be secured by two gas pipelines. Lehman Brothers had brought in Dynegy as the strategic partner, and Chevron would provide $1.5 billion in additional cash.
On Nov. 23, Enron issued a press release, trumpeting the new loans and heralding them and the merger as the first steps to be taken to restore the shine to its battered name. “We will work with Enron and its other primary lenders to develop a plan to strengthen Enron’s financial position up to and through its merger with Dynegy,” Mr. Lee said in the press release.
Mr. Lee was wary, though. This deal had the potential to be one of the great stinkers of all time; why attach his name to a losing cause? He had purposely kept out of the limelight for the past year; putting his name on the release would be a calculated risk. But he did it anyway, though his counterpart at Citigroup, Salomon Smith Barney chief executive Michael Carpenter, declined to follow suit. (A spokesman for Citigroup said their C.E.O.’s are not typically quoted in client press releases.)
Once the merger was formalized, Mr. Lee was ready to cobble together another one of his formidable loan syndicates and lend Enron/Dynegy another $10 billion, say those familiar with the matter. In fact, sources say, a meeting with the many Enron creditors had been set for the Wednesday after Thanksgiving.
Mr. Lee, according to those close to the deal, had already laid the groundwork, putting in a number of calls to chief credit officers at various banks. It was a pitch he had used many times before: You’ve got two choices: either we are in this together, or we are not, and if we are not, well it’s suicide. . . We are with you Jimmy, we are ready to stand tall.
But it was too late. The alleged trickery and deceit of Enron’s accounting was becoming clearer by the day, and Dynegy’s Chuck Watson retracted his offer, scuttling the deal and precipitating Enron’s bitter end game.
Enron was a lost cause. Not even Mr. Lee’s good name could turn it around. But, for Mr. Lee, it was a rare moment back in the spotlight, back at the center of the game.
Since assuming his new role as vice chairman at JP Morgan Chase and foregoing his leadership of Chase’s investment banking division, Mr. Lee has been largely absent, and unusually silent. Companies everywhere were going bankrupt; C.E.O.’s were desperate for cash, and where was he, one of the Street’s great dispensers of capital?
Then Enron came along. And though Mr. Lee no longer runs the Chase syndicate desk, making way for a new, younger generation of bankers, it marked for him a bit of a comeback.
Friends of Mr. Lee don’t entirely agree with the characterization. They say he has been more than active behind the scenes, raising $4.5 billion for Lucent in February and recently working with leveraged buy out pro Teddy Forstmann on a restructuring of his beaten down McleodUSA. He has also been busy with Jack Welch, an advisor to JP Morgan Chase, in setting up a leadership institute at the bank.
And he’s still got the attention of the big guys.
“Jimmy is a relationship man” said Kohlberg Kravis Roberts & Co.’s Henry Kravis. “In fact I’m having breakfast with him in a few days. Most relationship bankers are like concierges. Jimmy comes up with solutions: He is a full-fledged investment banker.”
Mr. Lee declined to be interviewed.
But given Mr. Lee’s history, all this was relatively small. Then came Enron. Closer to the big game he usually goes after, it also brought him the kind of fees to which he had become accustomed. At the same time, it sent out a message to all those rival bankers who snickered that Mr. Lee had been kicked upstairs.
Jimmy Lee was back.
“When people need creative financing in less than ideal circumstances, he is the guy you turn to,” said Lucent chief executive Henry Schacht.
But, in the case of Enron, didn’t he come out a loser? Said leveraged-buyout lawyer Richard Beattie of Simpson, Thacher & Bartlett: “He did all that he could to save Enron.”
Last week, at a leadership conference in midtown, striding back and forth across the stage, Phil Donahue-style, the 49-year-old Mr. Lee, well under 6 feet, seemed much the smaller man than his suspender-snapping, deal maker image. His thinning gray hair was cut short, and he was attired in the most conservative of blue bespoke suits. A chunky gold ring glimmered as he waved his hands under the lights.
“At the time I’d been running our business in Australia,” Mr. Lee said, relating to a new audience that moment when he had stopped being a Wall Street drone and instead started his ascension in the syndicated loan business. ‘I didn’t like my job or my boss. I knew, too, that there was this guy Bill Harrison at the bank who was an up-and-comer. One August morning in 1982, I just walked into his office and said, ‘My name is Jimmy Lee. You don’t know me, I don’t know you very well, but I don’t like my job or my boss and I want to work for you.'”
The story is revealing in a number of ways, as it speaks to Mr. Lee’s notorious infighting skills and his ability to cultivate those mightier than he.
Mr. Lee’s idea was simple: By turning Chemical’s lending relationships into investment banking relationships, Mr. Lee figured the bank could increase market share on the loan side, while reaping the higher margin business on the deal side. It was a gambit that demanded the bold, I’m-going-to-rip-your-face-off attitude of the dealmaker as opposed to the milquetoast sensibility of the relationship banker.
Soon after he was appointed managing director at the bank in 1988, he began wearing the famous dollar-sign suspender. For his 40th birthday, he bought himself a Shelby Cobra; he grew his hair long, letting it flair, Michael Douglas-like, over his ears and touching it up with a bit of gel.
And then there was the trail of bosses he left in his wake, although his ultimate boss, Mr. Harrison-now J. P. Morgan Chase’s C. E. O.-has always been a fixture in his life. Indeed the joke has always been that the shortest job on Wall Street is being Jimmy Lee’s boss. Mr. Lee just hated to lose. If it meant having to be a bastard every now and then to get there, so be it.
“Jimmy once said to me, ‘It’s not about money, it’s all about power,'” said one former colleague.
Mr. Lee’s business was shooting the competition’s lights out. Chase’s gains in M.&A. and high-yield loans were making the bulge bracket firms nervous enough that they started poaching his staff. Jimmy Lee and Chase’s balance sheet were a formidable combo, though some clients were not always sure where one began and the other ended.
“Jimmy saw the wisdom of what we were trying to do, and he tried to help us,” said Mr. Forstmann of a recent deal that Mr. Lee and JP Morgan Chase worked on with him. “He didn’t do anything wrong. Can I truthfully say that he himself got it done? No. But I can truthfully say that the bank was a significant part of getting it done, and he was a significant part of the bank.”
In April 2000, he graced the cover of Forbes magazine, suspenders and all, in an article that dubbed him the new Michael Milken. Mr. Lee was horrified, as was his boss, Mr. Harrison: Yes, he knew he was good at what he did and yes, he was willing to put himself out there to promote the bank and its business, but Michael Milken was an indicted criminal, after all.
However, some Chemical hands remember that the bank’s syndication desk on the fourth floor of 270 Park Avenue, before the Chase merger, was shaped in the form of an X, a la Mr. Milken’s in his Beverly Hills office. A J.P. Morgan spokeswoman responds that this was not the case.
All the same, he seemed to be turning into a cartoon figure, a Gordon Gekko caricature of an investment banker. It just wasn’t him, he complained to friends. So he began his retreat. The heavy lifting was done, Chase sat atop all the loan tables, there was no need for any more P.R.
A few months later, Chase announced its acquisition of Geoff Boisi’s Beacon group, and Mr. Harrison put Mr. Boisi in charge of investment banking at Chase while Mr. Lee announced his intent to spend more time with his family. Soon after followed the JP Morgan merger, and Mr. Boisi, together with Mr. Layton, took charge.
“I think it would be fun to run a bank one day,” he said to an American Banker reporter back in 1992. But those that know Mr. Lee insist that today he has no such interest. He stays above the drudgery of bonus cycles and other administrative burdens, he gets to watch his son play hockey. And last year he was paid more than $30 million in cash and stock to stay put.
Others counter that the leopard does not so easily change his spots. Said one former colleague, “Someone at Chase once said, Jimmy is like a crocodile: He sits there with his eyes just a bit above the water saying, oh yeah, come just a little bit closer .”
Now, however, Mr. Lee seems a different man-more comfortable in his own clothes. Gone are the suspenders, replaced by a yellow sweater vest that seems more in the spirit of Mister Rogers than Jimmy Lee.
The flash and dazzle are still there: He loves chumming around with Jack Welch, he sits on the board of DreamWorks, and over the past seven years or so he has been the only banker invited to Herb Allen’s media mogul fest in Sun Valley . But, he told the audience at the leadership conference, the restless striving has stopped.
“I’ve learned something about myself,” he said. “Leadership is an acquired skill. I’ve realized a that it is not about the guy with the most clubs in the bag. It’s not how good your slapshot is-it’s all about determination, hard work, and believing in yourself.”