Mike Cavanagh, who was long considered to be CEO Jamie Dimon's successor at JPMorgan, is leaving the bank for a more lightly-regulated position at the Carlyle Group, a private equity house. Cavanagh, who was the co-head of investment banking at JPMorgan, had a front row seat for Dimon's dealings with Attorney General Eric Holder last year. He will make more money and be under much less government scrutiny at Carlyle, The New York Times notes.
Cavanagh's unexpected departure makes something of a trend — he is the third JPMorgan investment banking head to, ahem, bail for a less-scrutinized position in the private sector. And Cavanagh is looking at a significant raise at Carlyle. He made about $17 million at JPMorgan, but Carlyle's top three executives shared $750 million last year. More importantly, he probably won't have Holder knocking on his door.
According to The New York Times, Cavanagh probably had doubts about staying with the bank after its "London Whale" trading loss disaster in 2012. Then, in 2013, Dimon agreed to pay over $13 billion in fines and settlements for the bank's role in the 2008 financial crisis. Dimon's salary was cut to $11.5 million in 2012, but he managed to pull in $20 million at the end of 2013.
Cavanagh was previously considered to be a "lifer" at the bank, and Dimon was allegedly surprised when he came to him with his resignation this past weekend. In a memo to colleagues, Dimon wrote, "This is a regrettable loss for our company as Mike has been a part of the fabric of our organization for the last 14 years."
Cavanagh called the decision "wrenching." Banking analyst Mike Mayo tells the Times, "When it comes to private equity, the grass is both figuratively and literally greener. It is a sign of the times."
This article is from the archive of our partner The Wire.