JPMorgan chief financial officer Jeremy Barnum is known to love a good debate, and is rarely at a loss for words.
(BLOOMBERG) – The curriculum vitae isn’t quite what you would expect for someone who’s about to handle the finances of the mighty JPMorgan Chase. Long before Mr Jeremy Barnum was promoted to chief financial officer (CFO), he was fired over a trading mishap – by JPMorgan. He later parted ways with hedge fund BlueMountain Capital Management over another market blunder.
But then began his second act. JPMorgan lured him back in 2007 with a vague mandate to help with its credit-trading operations – shifting from free-wheeling, big-money-wagering roles to the nuts and bolts of the operation. Soon after, Mr Daniel Pinto, now chief executive Jamie Dimon’s top lieutenant, took a liking to Mr Barnum, helping his ascent.
Lots of people bounce back, but Mr Barnum’s rise to CFO of the banking giant is an unlikely Wall Street tale. He helped pioneer credit derivatives, got tossed out of trading roles at sell-side and buy-side firms, refocused on tackling risks and won benefactors in JPMorgan’s top rungs.
“Most people on Wall Street have some form of career setback in their life, and recovering from it is what makes them better in their job,” said JPMorgan’s head of global markets Troy Rohrbaugh.
Parts of Mr Barnum’s resume read like those of many others in Wall Street’s corridors of power: Born in New York, attended the elite Groton boarding school in Massachusetts, then Harvard.
But before going to Groton, Mr Barnum, 48, spent his youth in a bohemian neighbourhood of Barcelona with his pianist mother, picking up Spanish and Catalan, and listening to a spectrum of economic debate that included anarcho-syndicalism.
“You get to know him a little bit and he’s just different than all the other Groton and Harvard people,” said Mr Gus Christensen, a former banker who left Wall Street for politics. They’ve been friends since joining the bank together in 1994, when Mr Barnum, armed with a chemistry degree, showed up in a second-hand Brooks Brothers suit.
Mr Christensen and others noted that Mr Barnum’s time overseas had left him talking differently from his peers. “He speaks like a movie actor in the 1930s – he has a little bit of a lockjaw. It’s not a way of speaking in English that I had heard from anyone else in my generation.”
After a half-decade on desks handling foreign exchange options and emerging markets derivatives, Mr Barnum landed in 1999 on the credit derivatives team, where he could put his prowess with maths and structuring to work. That placed him at the nexus of rapid change in the market – and within JPMorgan itself.
The firm was pioneering credit default swaps, contracts that work like insurance to reimburse investors if a borrower fails to pay up. It was also in the midst of mergers and acquisitions that would culminate in 2004 with its combination with Mr Dimon’s Bank One Corp.
That year, JPMorgan’s results in fixed income faltered. When Mr Barnum’s team lost a bundle, his name was added to a list of dismissals as the bank set out to restructure the unit. He sent his co-workers a tongue-in-cheek farewell e-mail recommending that they closely study the career of Josef Stalin’s henchman Lavrentiy Beria and get really good at PowerPoint.
Mr Barnum was soon snapped up by BlueMountain, which named him head of its London office in 2005. The next year, the fund took a bath on wrong-way credit bets linked to Liberty Global’s Cablecom, prompting another ouster for him. In a statement at the time, a senior BlueMountain executive said his exit was “mutually agreed”.
Then came the uncanny turnaround. JPMorgan gave him a second chance and a new mission: Instead of making wagers himself, he would use his trading experience and the lessons he learnt to help oversee businesses, spot risks and head off trouble. In 2007, he rejoined JPMorgan, right as two of Bear Stearns’ hedge funds were blowing up.
By 2010, he was indispensable to his bosses and on the rise, having helped the firm dodge bullets from the financial crisis. Two years later, he became CFO of the global markets division, and the following year was elevated to finance chief of the entire corporate and investment bank.
He also helped clean up one of Mr Dimon’s biggest headaches – the so-called London Whale trading scandal, in which a group that was supposed to oversee the bank’s excess cash lost billions on botched credit default swap bets. JPMorgan’s antagonist in the debacle happened to be BlueMountain, Mr Barnum’s former employer. The lender ended up relying on the hedge fund to help resolve the positions and put the issue to rest.
Mr Pinto, who oversees the firm’s investment bank, was named to become the sole president and chief operating officer at the end of the year. And, in the same announcement, Mr Dimon elevated Mr Barnum to CFO.
Some are keen to see how Mr Barnum interacts with analysts and investors. He’s known to love a good debate, and is rarely at a loss for words.
“He’s the kind of guy, you would be sitting at a dinner table and talking about Russian politics in 1913, and he would still know more about it than you,” said Mr Shahraab Ahmad, who worked for him during his first stint at JPMorgan.Internet Explorer Channel Network