All the giants of the buyout world were in attendance in 2005, when JPMorgan Chase ( JPM - Get Report) Vice Chairman James Bainbridge Lee Jr. threw a party to celebrate 30 years at the institution he joined when it was Chemical Bank. The deal frenzy that would end in tears when credit dried up in 2007 was in full swing and Lee, a larger-than-life investment banker who many say "invented" the syndicated loan market, was squarely in the middle of it. JPMorgan Chairman and CEO Jamie Dimon scanned the room containing the likes of private equity giants Henry Kravis and Steve Schwarzman, before making a brief speech. "Jimmy Lee has probably lent a trillion dollars to the people in this room," he said, adding after a beat, "and almost all of it has been paid back." The line got big laughs, and it was true enough at the time. These days, however, it would appear to be a different story. Most of the big loans are worth far less than when JPMorgan made them, which combined with Lee's outsized personality, would seem to make him an easy scapegoat for much of what went wrong during the M&A boom. There is no doubt Lee is still viewed by many executives in high places -- particularly among the private equity set -- as the man who holds the keys to JPMorgan's vault. While neither Lee nor JPMorgan spokesmen wanted to comment for this story, a litany of big names like The Blackstone Group's ( BX - Get Report) Schwarzman, News Corp ( NWSA - Get Report) Chairman and CEO Rupert Murdoch and former General Electric ( GE - Get Report) chief Jack Welch readily returned TheStreet.com's calls to give Lee a full-throated endorsement.
Both friends and foes are quick to point out Lee's overarching drive to win -- no matter what the arena. But with the Democrats running Congress, the White House and, many might say, Wall Street itself, Lee faces a landscape entirely different from any point during his long career. The new political ruling class is unlikely to warm easily to a man who was one of the top fundraisers for Republican John McCain's 2008 White House run.
One sign of what Lee faces came earlier this year, amid a high-stakes showdown between Chrysler bondholders and the Obama administration. As the automaker teetered on the brink of bankruptcy, Lee initially demanded JPMorgan and Chrysler's lenders be paid "not a penny less" than the $6.9 billion they were owed, according to The Wall Street Journal. They ended up settling for $2 billion, as Lee "butted heads" with Steven Rattner, Obama's chief auto industry adviser, the paper reported. Lee whiffed on another important, albeit extremely difficult, assignment last year when government officials asked him to try to raise private money for American International Group ( AIG - Get Report) ahead of its bailout in September. Also last September, when a Fortune magazine cover story praised Jamie Dimon and his "Swat Team," for helping him weather the credit crisis, The Wall Street Journal noted Lee was not among the more than a dozen executives pictured, calling it, "perhaps the most conspicuous absence this week after that of North Korea's Dear Leader." "Perhaps Mr. Lee's friends could dub him Jim Jong Il," the paper quipped. One of Lee's private equity admirers says he raised an eyebrow at Lee's absence from the Fortune article, though he says Lee's skills as a client guy are clearly more valuable in a bull market. Lee has had to step aside somewhat as risk managers, Democratic power brokers and the like take an increasing share of the spotlight at JPMorgan, the source says. Lee scored a recent victory, however, when JPMorgan, Bank of America ( BAC - Get Report) and private equity firm J.C. Flowers & Co. backed out of a deal to buy Sallie Mae ( SLM) in 2007, early in the credit crisis. The student lender sued those firms over their refusal to pay a $900 million breakup fee, but Lee convinced Sallie to drop the lawsuit in exchange for helping it refinance about $30 billion in debt, according to Dealmaker magazine.
And Lee's hard work has enabled him to keep ringing the cash register for JPMorgan even in a relatively quiet time for deals. For example, he helped lead a deal where JPMorgan helped finance DirecTV Group ( DTV) parent Liberty Media's $530 million investment in Sirius XM Radio ( SIRI) to keep it out of bankruptcy court. He is also part of a JPMorgan effort to win the financing mandate for General Motors' emergence from bankruptcy. And if the equity markets stay healthy, private equity clients will undoubtedly look to him to help take their portfolio companies public. Lee's fans are not restricted to the private equity realm, however. News Corp.'s Murdoch says he consults regularly with Lee, and gives him a great deal of credit for helping him buy Dow Jones in 2007 -- a deal many believed was impossible, because the Bancroft family that had owned the company for 105 years was thought to be totally opposed to the idea. "He knew it was something I'd given a thought but he actually made the contacts and got things together," Murdoch told TheStreet.com. "Without him it wouldn't have happened or would have happened much later." JPMorgan watchers say it is hard to imagine Lee, whose office is next to Dimon's, going anywhere else. One year, after Lee organized the firm's annual CEO schmoozing event in Deer Valley, Utah, he received a thank you note from Dimon's wife and hung it on a wall in his office. Not that Lee hasn't had his chances to go elsewhere. Schwartzman, Blackstone's chairman and CEO, almost hired him away six years ago. "That was a missed opportunity, but it worked out fine for him," Schwarzman told TheStreet.com. "We were quite close at that time to a deal. But he's been extremely loyal to JPMorgan over the years." Lee's popularity among private equity clients is no doubt linked to his role as a gatekeeper. "The most important thing about Jimmy is he can deliver," says Glenn Hutchins, co-founder of Silver Lake, a $16 billion private equity giant. "At JPMorgan they run a very transparent process. You know when they're going to make the commitment and when they do commit, Jimmy stands by the commitment. So you can do business with him in a very efficient, predictable and reliable way."
Bankers regularly make promises to clients that run afoul of their credit committees, but former GE Chairman and CEO Jack Welch believes Lee is especially adept at navigating this territory. "He knows how much running space he's got," says Welch, who calls Lee, "the most incredible client person that anybody ever had." In addition to his dedication to his clients, Lee also has great technical skills, according to Chris Flowers, the longtime Goldman Sachs ( GS - Get Report) banker who is now head of financial services-focused private equity firm J.C. Flowers & Co. "He knows all the products really well," Flowers says. Lee also knows how to get fees on those products, earning him the nickname, "Jimmy Fee." One corporate executive told TheStreet.com that he wanted a lower fee from JPMorgan and went to Lee citing the views of two more junior bankers that it should be reduced. Lee responded that he didn't care what the junior bankers thought any more than he cared what his two secretaries or his driver thought, as he was the vice chairman of JPMorgan. Lee's success has made him accustomed to getting his way, a trait that extends beyond his business dealings to things like his own golf score, according to several sources. His liberal scorekeeping apparently led to an interesting game with New York Mayor Michael Bloomberg, who has a reputation for scrupulous adherence to the rules, according to one private equity executive. "We have nothing to add," said a spokesman for the mayor who was asked to confirm this report.
One private equity executive who describes himself as having a lot of respect for Lee and says he has played golf with him declined to comment about Lee's scorekeeping. When pressed, he finally added, "Look -- he's a competitive guy and he likes to win." Maybe it is this unassailable optimism that gives Lee the will to hang around for the next cycle, when he can once again bring in huge fees, even as many younger bankers are calling it quits. Certainly, big-name clients like Josh Harris, a partner at Apollo Management hope he's sticking around. Harris describes Lee emailing him after a disagreement emerged the night before Apollo was to sign a $3.4 billion deal with GE to buy its silicon and quartz business in 2006. " I think he called me 1 a.m., 1:30 a.m., 2 a.m., 2:30 a.m., 3 a.m., 3:30 a.m. -- literally," says Harris, who eventually unplugged his phones and woke to about 15 email messages from Lee. "He is willing to throw his body to a different extent against getting a problem resolved in a deal," Harris says. "There aren't very many people like that, who are also of his stature and kind of success and wealth. Usually when you're at that level you don't do that." But private equity, Lee's bread and butter, is likely to be an increasingly less prominent focus at JPMorgan, according to Doug Braunstein, JPMorgan's head of America's Investment Banking. In an interview last week on CNBC, Braunstein presented the private equity boom as a highly unusual period that was unlikely to repeat itself any time soon. He said private equity firms accounted for nearly a third of M&A activity in 2006-2007, a sharp increase from the 5% to 10% of the market they have represented in normal times. "Financial sponsors will be an important component of the market, but it really will be
strategic acquisitions that drive the market, which is what they've done for 17 of the last 20 years," Braunstein said on CNBC. What that means for Lee remains to be seen.