Dimon’s disaster a black mark for survivor of financial crisis

file/Pablo Martinez Monsivais/ap Goldman Sachs CEO Lloyd Blankfein (from left), JPMorgan CEO Jamie Dimon, Morgan Stanley Chairman John Mack and Bank of America CEO Brian Moynihan testify Jan. 13, 2010, on Capitol Hill before the Financial Crisis Inquiry Commission.

NEW YORK — The reputation that Jamie Dimon honed for decades on Wall Street has been severely damaged in a matter of days.

In the 1980s and ’90s, he was the protege of banking industry legend Sanford Weill. In the early 2000s, he took over Bank One, an institution few believed was fixable, and restored it to profit. And in 2008 and 2009, at JPMorgan Chase, he built a fortress strong enough to stay profitable during the financial crisis.

His zeal for cost-cutting and perceived mastery of risk did more than keep JPMorgan strong enough to bail out two failing competitors, Bear Stearns and Washington Mutual. It gave him a kind of street cred during the post-crisis years, when he lashed out at regulators who sought to rein in banks, and Occupy Wall Street protesters who raged against them.

Now all that is on the line. Dimon had to face stock analysts and reporters on Thursday and confess to a “flawed, complex, poorly reviewed, poorly executed and poorly monitored” trading strategy that lost a surprise $2 billion.

Making the black eye worse for Dimon, the loss came in derivatives trading, the complex financial maneuvering that — on a much greater scale — led to large losses and dissolved banks during the financial crisis.

Dimon “staked so much of his reputation on creating this perception of being the ultimate, infallible risk manager,” said Simon Johnson, a former chief economist of the International Monetary Fund who is now a professor at MIT. “And along comes this huge mistake.”

Dimon, 56, grew up in the Queens borough of New York City, the grandson of a Greek immigrant. His father was a stockbroker who worked for many years at Merrill Lynch.

After college and business school, Dimon turned down an offer from the venerable investment bank Goldman Sachs. Weill had been Dimon’s father’s boss at a previous job and recruited the younger Dimon to American Express.

Weill became Dimon’s mentor. When Weill left American Express in 1986, Dimon followed him to Commercial Credit Co., a sleepy finance firm that catered to middle-class clients.

Weill went on to buy a host of companies, including Smith Barney and Travelers, and Dimon led some of those divisions. The empire-building culminated when Travelers merged with Citicorp to form Citigroup in 1998, the largest U.S. bank at that time.

Dimon was the heir apparent but had started to clash with Weill. Weill was insecure about Dimon’s growing assertiveness, and Dimon often showed his temper in meetings. Weill fired Dimon in 1998.

Dimon spent time reading biographies of statesmen and took up boxing lessons to let off steam. In 2000, he became CEO of Bank One, a Chicago bank that was losing money. By 2003, he had turned the bank around, and in 2004 it merged with JPMorgan Chase. Dimon became CEO of JPMorgan in 2006. By that time, Dimon had lived through several industry crises, including the savings and loan meltdown of the late 1980s, a Russian debt default in 1998 and the dot-com stock bust of the early 2000s.

Dimon was not the man responsible for any of those, as he is for the $2 billion error.