Jamie Dimon wasn’t buying any more of Mark Franklin’s Russia story. Leaning into Franklin, the Salomon Smith Barney co-CEO held his hand up in the air, with his thumb and forefinger nearly touching. “By our next meeting,” he ordered, “I want our Russia exposure down to this.” Franklin, a relatively inexperienced trader, had loaded the arbitrage group with hundreds of millions of dollars of Russian bonds. An undying proponent of the country, he believed it “too big to fail.” And it was not just “too big”, the Russians had nuclear weapons, so the West would have to bail them out. The argument, I guess, was that they would either blow everybody up or sell their nuclear arsenal on eBay. Of course, the facts were otherwise.

The rule of law was absent in Russia; conducting ordinary business could be life-threatening. Even the most rudimentary analysis showed that the Russians were spending money and not taking any in. The country had become politically unstable, a kleptocracy with rampant corruption, so everyone knew that it was only a matter of time before Russia would default—everyone except Franklin and the arbitrage group. Dimon had pushed for months to get positions down, but got little cooperation. Finally, toward the ends of June 1998, after listening to Franklin’s justification for the umpteenth time, Dimon simply presented a decree during the risk management meeting. I was the one who ultimately had to track the arb group’s positions. He swiveled toward me, held his measured hand in the line of sight between his eyes and mine, and repeated: “Down to this.”

Everyone at Salomon wanted to hate Dimon for interjecting himself into culture, but over time he won widespread respect, even admiration. The fact is that he could have done almost everyone’s job better than they could. His dogged pressure to get out of the Russia position would have earned him a Salomon Trader of the Year award in an earlier era. On August 17 Russia simultaneously devalued its currency, defaulted on most of its domestic government debt, and declared a moratorium on the payment of principal to foreigners. There was a run on its banks, a precipitous fall in the exchange rate, and an acceleration of inflation that boded ill for future Russian economic reform. From that point in early June when Dimon issued his decree until the Russia crisis hit in late August, our gross trading inventory of Russian debt dropped from nearly $3 billion to a tenth of that amount and our Russian ruble exposure was cut by 80%.