‘Too Big to Fail’ Banks Thriving a Few Years After Financial Crisis

Nearly eight years after the onset of the financial crisis, its unintended consequences continue to startle and amaze.

For instance, who would have thought that many of the big European banks – among them Barclays, Credit Suisse, Deutsche Bank and UBS – would have new chief executives, two of whom are American, and be more or less in retreat from the global investment banking business?

Who would have thought that the big banks would pay nearly $200 billion in fines and other considerations to various branches of federal and state governments and that not a single top Wall Street executive would be held responsible for perpetrating the wrongdoing represented by those huge fines?

(The lone related exception is Kareem Serageldin, a former senior trader at Credit Suisse who inflated the value of his trading positions to receive a bigger bonus; he will be released from federal prison in March.)

And who would have thought that nearly a decade after the start of the crisis some of those big banks, in particular JPMorgan Chase and Wells Fargo, would have year after year of record, or near-record, profits?

These days, the “too big to fail” banks have less competition than ever, they get their raw material — cash from depositors — nearly free and they have never had more ways to make vast amounts of money.

In other words, despite the endless complaining about how difficult Washington has made things for bankers, we have entered a new Golden Age of Wall Street, where competition is minimal, profits will continue to be high (as long as the economy continues its rebound) and regulation, while present as never before, can be “managed” as just another cost of doing business.

No wonder the chief executives of JPMorgan Chase, Goldman Sachs, Morgan Stanley and Bank of America are in no hurry to give up their posts, much to the frustration of their direct reports. It’s another surprising consequence of the worst financial crisis since the Great Depression: Wall Street chiefs who stick around.

Jamie Dimon, 59, has been chief executive of JPMorgan Chase for 10 years. He’s not going anywhere, as he has made abundantly clear. He seems reinvigorated after surviving throat cancer last year; his bank just reported its highest net income ever in 2015, of $24.4 billion. He also has seen the departure of a steady stream of potential successors to lead other institutions – among them, William Winters to Standard Chartered, Jes Staley to Barclays, Charles W. Scharf to Visa and Frank Bisignano to First Data.

There’s little doubt the JPMorgan Chase bench is deep, but at the moment, there is no obvious Dimon lieutenant with Mr. Dimon’s stature, and it’s reasonable to think he prefers it that way.

At Goldman Sachs, the leadership dynamic is slightly different. Like Mr. Dimon, Lloyd C. Blankfein, 61, has been chairman and chief executive a long time, since June 2006, when his predecessor, Henry M. Paulson Jr., left the company to become George W. Bush’s Treasury secretary. Mr. Blankfein steered Goldman through the worst of the financial crisis in impressive fashion — including years of record profits, since diminished — while also overcoming a tsunami of awful publicity.

In September 2015, Mr. Blankfein announced that he had a “highly curable” form of lymphoma and, according to Gary D. Cohn, the Goldman president and chief operating officer who has been thrust into the role of Prince Charles for nearly a decade, Mr. Blankfein is “in the office every day” and “engaged.” The days he is not in the office, “he’s on the phone all day long,” Mr. Cohn said.

Mr. Cohn has said his relationship with Mr. Blankfein has never been better, even though many have wondered how long he will wait for his chance to run Goldman. A few weeks ago, The New York Post reported that Mr. Blankfein, who has declined recent requests for interviews, made a rare appearance at the annual Goldman alumni event, where he seemed to be his “old jovial self” and reportedly said he intended to be running Goldman for “a long time to come.”

At Morgan Stanley, 2016 ushered in an old-fashioned power play. James P. Gorman, 57, the bank’s chief executive for the last six years, conveyed to employees his intention to stay put for at least another five. He also announced that he was appointing Colm Kelleher the company’s sole president. (Mr. Kelleher, a year older than Mr. Gorman, is unlikely to succeed him if Mr. Gorman sticks around for the full five years.)

Mr. Gorman’s decision led to the somewhat surprising departure of Gregory J. Fleming, 52, who ran Morgan Stanley’s wealth and asset management businesses. Many observers figured that Mr. Fleming would one day run Morgan Stanley, given its shift toward the more predictable earnings stream generated by managing customers’ wealth. But as The New York Times reported, the company seems to be struggling to find its strategic direction. In any event, Mr. Gorman is not going anywhere soon, and the succession picture at Morgan Stanley has become a cloudy one for the post-Gorman era.

What is increasingly clear is that we have come to yet another fork in the road on Wall Street. Under new leadership, the big European banks are desperately looking for ways to make money outside of the capital-intensive businesses of trading and investment banking. The big American banks, however, will continue to rule the roost in investment banking, free of material competition in any business that requires capital, and, for the time being, without any meaningful change in leadership at the top.

Given that the 2008 financial crisis started because Wall Street banks packaged shoddy mortgages on a withering number of American homes and then sold them as securities around the globe, this is a particularly surprising and unexpected outcome.