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Hail to the Chief

Hail to the ChiefCEO of JP Morgan Chase, Jamie Dimon (A'78) makes headlines for his role in what is being deemed one of the most historic transactions on Wall Street.

Medford/Somerville, Mass. [03.20.08] Overnight, Tufts graduate Jamie Dimon became the talk of Wall Street as his company JP Morgan Chase swooped in and bought out a devastated Bear Stearns.

The 85-year-old Bears Stearns was struggling on the brink of bankruptcy in the wake of the sub-prime mortgage crisis. On Sunday, March 16, Dimon's company finalized a deal to purchase Bear Stearns for the shockingly low price of $2 per share. A week before the sale, shares were going for $70.

The New York Times described the deal as a "major coup" for Dimon, who was said to have spent the past few years working on cost cutting measures and improving technology all while preparing for an "economic downturn."

"For JP Morgan, one of the few major banks to emerge relatively unscathed from the sub-prime crisis, the deal provides a major entry to prime brokerage, which provides financing to hedge funds," The Times continued. "While that business has been lucrative in recent years, it has slowed as the financial markets have slumped."

As a result of the deal, The New York Times and USA Today hailed Dimon as the next J. Pierpont Morgan, the namesake of his company, who in 1907 pulled off a similar bailout move to prevent a market failure, according to The New York Times and USA Today.

Calling the buyout the "biggest financial drama" of Dimon's age, The Times wrote that his spot at Morgan's desk is "fitting" for someone who "has suddenly become the most talked about - and arguably the most powerful - banker in the world today."

In an interview with USA Today, Dimon said he was "embarrassed" at the thought of being compared to Morgan. "I wouldn't even remotely put myself in that category."

Dimon became the CEO of JP Morgan Chase in January of 2006 and just five months later was named one of the top 100 men and women to transform the world, according to TIME. In 2000, Dimon engineered the turnaround of Chicago-based Bank One, which later merged with JP Morgan Chase.

While he worked with his bankers on the deal for Bear Stearns, Dimon told USA Today he fully knew what was at stake with this deal.

"It would have been a disaster if there was a Bear Stearns bankruptcy," Dimon said. "That was in the back of our minds. Believe me, I know how important the financial system is, and a failure of Bear Stearns would have been something that would have been too hard to comprehend."

As most of Wall Street held their breath, Dimon told The New York Times that Bear Stearns demise turned out better than expected.

"You are on an emotional roller coaster on any deal, but much more so on this one," Dimon said. "For all the drama [on Sunday], it could have been much worse."

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