September 18, 2018 / 6:44 PM / a month ago

Breakingviews - Gary Cohn too quick to vote for President Dimon

NEW YORK (Reuters Breakingviews) - Jamie Dimon has already received his first vote for president of the United States – though it might be a bit premature. Former White House economic adviser Gary Cohn told Breakingviews on Monday that the JPMorgan chief would be “phenomenal” in the White House, adding that running the country is like heading a complex, global firm. Cohn was himself the chief operating officer at Goldman Sachs, so he ought to know. 

Former Director of the U.S. National Economic Council Gary Cohn speaks at a Reuters Newsmaker event in New York City, U.S., September 17, 2018. REUTERS/Jeenah Moon

One way in which running JPMorgan is good training for being commander in chief is that it’s a high-profile and high-pressure job. The U.S. government has a budget of about $4.1 trillion and about 2.1 million employees, but JPMorgan is also a colossus. It has a $2.5 trillion balance sheet, operates in more than 60 countries and has about 252,000 employees.

Dimon would find one thing immediately very different: Congress. The body has 535 members, each focused on re-election and the needs of their constituents. As long as JPMorgan is running fairly well, the board and shareholders give Dimon latitude. President Donald Trump has had a tougher time, pushing through tax reforms but failing to build a southern border wall or stop a probe into Russian election meddling.

Nor would Dimon be able to use pay as creatively as he does now. Civil servants are categorized under 15 different job grades and each grade has 10 pay steps. It normally takes about 18 years to go from step 1 to step 10. The top annual salary in the White House in 2017 was $179,700, where Dimon and his fellow top-five executives all get eight-figure compensation packages.

The metrics for presidential success aren’t as clear cut as return on equity either. Trump’s approval rating has hovered around 40 percent for months despite various ups and downs of rising trade tensions and falling unemployment. At JPMorgan, Dimon has a clear goal of 17 percent for return on tangible common equity, and the path to get there is reasonably clear. 

Cohn’s endorsement might in any case be worth taking with a pinch of salt, because the White House in which he worked is so unusual. Trump’s tenure has been characterized by stop-start decision-making, leaks and high-level departures. Sure, it ought to be like running a highly complex global company – but right now it’s anything but.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


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