Is James Dimon the Banker of the Year?

"In what is by far the largest bank failure in U.S. history, federal regulators seized Washington Mutual Inc. and struck a deal to sell the bulk of its operations to J.P. Morgan Chase & Co." report Robin Sidel David Enrich and Dan Fitzpatrick in the Wall Street Journal this morning (9/26).

James Dimon, J.P. Morgan's chairman and chief executive, has proven the power of holding back and managing your hand carefully. Build your capital when times are good and run a large universal bank like the commercial bankers are in charge. Then pounce when you can acquire franchises cheaply that augment your strategy. That has proven to be the winning end game strategy.

The Journal notes his building a "fortress balance sheet:"

"Since taking the reins of J.P. Morgan nearly three years ago, Mr. Dimon has transformed the bank. Much of those efforts came during a period of prosperity for the banking industry, giving him time to upend the bank's culture and computer systems. Along the way, he has emphasized the need to create a 'fortress balance sheet' that can withstand a weak economy."

So much for the strategy of growth at any cost and fatten yourself on fees. Dimon's power house has bought the fattened calf's dessicated bones.

J.P. Morgan paid a steep price for a rather shaky bank which found itself subject to an old fashioned run: It contributed $1.8 billion to the FDIC fund and plans to take a $31 billion write off. It now plans to raise another $8 billion in capital. Why? J.P. Morgan bank emerges as the #1 bank in the U.S. It takes over a large network of mortgage banking and acquires a big retail footprint in two huge markets it has long coveted: Florida (New York South) and California.

Glass Steagal and McFadden are dead, long live J.P. Morgan!

That rumble you hear is Senator Glass rolling over in his grave!