Dimon in the Rough

Never in recent memory has one chief executive done so much to help stem an international financial meltdown. While the markets are still reeling in the week after Bear Stearns announced it was on the brink of bankruptcy because of a perilous cash squeeze, things could have been much, much worse if Jamie Dimon had not stepped forward.

The JP Morgan chief executive made sure very little daylight dawned between news of Bears’ collapse and news that Morgan would be bailing out the troubled investment bank at the request of the Federal Reserve and the Treasury Department. We hope other CEO’s are taking notes. With the markets on edge, now is the time for leadership and taking responsibility, not running scared, circling the wagons or making excuses.

Mr. Dimon showed incredible insight and resourcefulness at lightning speed. He did both the right thing—he stepped in and helped stem the economy’s slide—and the savvy thing: JP Morgan is getting Bear Stearns’ human capital; its client list; its expertise in the prime brokerage business; and its $1 billion Madison Avenue tower, all for the stunningly low price $270 million, or $2 a share.

But anyone who watches Wall Street knows Mr. Dimon did not swoop in out of egotism or purely to make a buck. As The New York Times noted, Bear Stearns’ balance sheet is “packed with financial land mines.” While the Fed will do what it can to prevent Morgan from getting unduly hammered by Bears’ massive trading obligations, Mr. Dimon and his colleagues have some white-knuckle days ahead of them. That he willingly assumed this risk shows true character and a concern for the health of the economy beyond the interests of his own firm. It’s been a long time since the label “financial statesman” fit so well.

Mr. Dimon’s moment in the sun did not come about by chance: From the instant he took the reins at Morgan in 2005, he began preparing for the possibility of tough times, by aggressively cutting costs and updating technologies. Unlike many of its peers, Morgan escaped with barely a scratch from the subprime mortgage crisis. All of which left the bank strong enough to make the only serious offer for Bear Sterns.

A kid from Bayside, Queens, who was famously tossed overboard at Citigroup by his mentor Sandy Weill, Jamie Dimon has emerged as the city’s leading corporate citizen. He demonstrates the leadership that this city needs if it is to continue to be a global financial capital. New York has continually shown its capacity to absorb shocks, from the decline of the stock market on Black Monday in 1987 and the recession of the early 1990’s to the terrorist attacks of Sept 11. Each rebound was driven by individuals, not institutions.

The next several weeks may very well separate those CEO’s who deserve the title from those who are flukes. Dimon in the Rough