JPMorgan's Dimon says US banking turmoil not over, sees long
repercussions
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[April 04, 2023] By
Tatiana Bautzer
NEW YORK (Reuters) -The U.S. banking crisis is ongoing and will have
effects for years to come, JPMorgan Chase & Co CEO Jamie Dimon wrote in
a letter to shareholders on Tuesday.
"The current crisis is not yet over, and even when it is behind us,
there will be repercussions from it for years to come," Dimon wrote in a
43-page annual message covering a range of topics from JPMorgan's
performance to geopolitics and regulation.
Storm clouds are still threatening the economy as they did a year ago,
said Dimon, the chief executive of the largest U.S. lender. And the
banking system is under renewed stress after the failure of Silicon
Valley Bank and Credit Suisse's rescue by UBS last month.
"The market's odds of a recession have increased," Dimon wrote. "And
while this is nothing like 2008, it is not clear when this current
crisis will end. It has provoked lots of jitters in the market and will
clearly cause some tightening of financial conditions as banks and other
lenders become more conservative."
Even so, it is unclear whether the disruptions will slow the consumer
spending that drives the U.S. economy, Dimon wrote.
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The risks that led to the current crisis were "hiding in plain sight,"
Dimon wrote, citing the interest rate exposure and level of uninsured
deposits at Silicon Valley Bank.
But he downplayed similarities to the global financial crisis. While the
2008 crash hit large banks, mortgage lenders and insurers with global
interconnections, "this current banking crisis involves far fewer
financial players and fewer issues that need to be resolved," Dimon
said.
After taking the helm of JPMorgan in 2006, Dimon presided over the
bank's crisis-era acquisitions of troubled investment bank Bear Stearns
and Washington Mutual, the savings and loan whose failure was the
largest in U.S. history.
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![](../images/040423PIX/busine71.jpg)
Jamie Dimon, chairman of the board and
chief executive officer of JPMorgan Chase & Co., gestures as he
speaks during an interview with Reuters in Miami, Florida, U.S.,
February 8, 2023. REUTERS/Marco Bello/File Photo
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As the current crisis unfolded, Dimon again played a central role,
helping to arrange a $30 billion lifeline for First Republic Bank
from 11 large lenders.
JPMorgan, Bank of America Corp, Citigroup and Wells Fargo & Co
committed $5 billion each, followed by Morgan Stanley and Goldman
Sachs, with $2.5 billion apiece.
Any new regulations in response to the latest turmoil should be
"thoughtful," including clearer rules for dealing with failed banks,
Dimon wrote. "Erratic stress test capital requirements and constant
uncertainty around future regulations damage the banking system
without making it safer."
JPMorgan's shares have fallen almost 3% this year, in contrast with
a 13% decline in an S&P index of broader bank stocks.
The company, alongside other lending giants Bank of America and
Citigroup, were flooded with deposits after the collapse of Silicon
Valley Bank in March, sources familiar with the situation said at
the time.
Dimon also took aim at nonbank financial firms, which have become
increasingly competitive with banks in providing mortgages, credit
cards and market-making.
"Would nonbank credit-providing institutions be able to provide
credit when their clients need them the most?" he asked. "I
personally doubt that many of them could."
(Reporting by Tatiana Bautzer; Editing by Lananh Nguyen, Leslie
Adler and Chizu Nomiyama)
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