James Dimon, Chairman and CEO, JPMorgan Chase & Co.

[Music] so as i said earlier we're very honored today to have the chairman and ceo of jp morgan jamie dimon uh unless you've been living under a rock you probably know about his background a bit but i will give it to you uh in brief form jamie is a native of new york uh he went to college at tufts graduated summa laude then worked as a management consultant for in a management consulting firm in the boston area then went to harvard business school and graduated as a baker scholar which means you're the top five percent of your class uh jamie had worked as a summer associate at goldman sachs chose not to go back to goldman and decided to work with a man who had been a friend of his father's and that man was sandy weil he went to work with him at when sandy was at american express and when sandy left american express jamie chose to go with him and they began to build a financial conglomerate that started with purchasing of commercial credit corporation in baltimore dc baltimore maryland and then uh they ultimately bought a number of other companies primerica and travelers and then of course they had a famous merger with uh with city and jamie became the president of city uh about a year and a half two years later jamie was as he would admit be fired by his former mentor uh sandy weil jamie went out into the private sector and looked at other things um i told him at the time the highest calling of mankind was private equity he should join a private equity firm and my firm but uh he chose not to do so he has tried to hire me a couple of times right um unsuccessfully every time uh and then jamie uh was uh uh given the job of being the ceo of bank one in chicago he moved to chicago and then later there was a merger between uh jp morgan and bank one jamie came back to new york as the president of jpmorgan chase and a few years later about a year and a half later he became the chairman and ceo since he's been the chairman and ceo the company has done quite well their market value is up 73 percent since he's been the chairman and ceo the stock is up 66 percent the net income is up 159 and uh today the company has a market cap of 240 billion dollars and has about 240 000 employees so jamie is uh widely recognized around the world for the job he's done in steering jp morgan through lots of uh challenges that the banking community has had and uh we're very pleased today that he's here he was uh he spoke here a number of years ago before i was the president of uh this club and uh we're glad that he's returned so jamie um if tomorrow uh janet yellen called you up and said you know i've got a federal open market committee meeting next week and i don't know whether i should increase interest rates or keep them the same or or what should i do what might you advise her thank you david it was a pleasure to be here by the way and um to be back again and visit washington again and uh so look the u.s economy is actually doing okay it's been chugging along with two percent unemployment's down to four point nine percent inflation is ticking up a little bit household formation is going up uh the markets are completely wide open asset prices are up you know i my own personal view and she does not call me for advice by the way but you know 25 basis points is a drop in the bucket uh you know we don't we always we say to you all there's 25 base points go really slow don't worry about it let's just raise rates so whether it raises and i i think you don't want to be behind the eight ball in this one and you know the fed has to maintain credibility and i think it's time to raise rights you know normal normality is a good thing not a bad thing a straight an economy that's going to be going on like this for seven years is a good thing not a bad thing uh so to me the return to normal is a good thing and you know the rate itself you know gets much more psychological attention than the actual economic effect of raising rates so you would say raising in september or december doesn't make that much difference you would yeah i mean i go sooner rather than later but you know i'll leave the exact timing up to them and they've made it clear that they're going to raise rates and they kind of see the white of their eyes when they see it kind of strong enough and so i let them look at all the factors and decide what the right time is so okay so i think we've made some news but the markets are probably going to move now so um well let's suppose there's you know in a few months we're gonna have a president i should remind the folks in this room you know right now we kind of tell you what's gonna happen we we forecast it going forward you get to look at the dots of what all the fed governors think you know paul volcker raised rates in between meetings on a sunday night 200 basis points and you know so there are other ways to to do this you don't have to be so tell you everything that's going to happen you cannot make that which is uncertain certain and we should stop trying to do that okay so let's suppose the next president united states were to call you and say jamie you are a leader in the financial service community um i'd like your advice what would you advise the next president to do to get the economy growing at a better clip yeah so there are serious issues the country has and i do think that the next president if they focus on the issues and they're not republican or democrat they're not left or right they're the issues that we kind of talk about we know about so immigration i won't spend a lot of time on schumer mccain already had a fabulous bill which should be passed tpp would be positive for gdp it would be positive for wages it'd be positive for the average american it has negatives which have to be recognized with this trade assistance so i'm a big believer get the trade deal done but acknowledge it actually hurt some people and give income assistance redevelopment relocation retraining so those hurt by it could be made better inner city school education is a disgrace we should be ringing an alarm bell over 50 percent of the kids in inner city schools do not graduate and even those who do not necessarily qualify to have a job and schools and those who create jobs should work together to make sure that that certificate whether it's high school vocational or community college or college ends up in a job not just that we have more tax reform we are driving uh american capital and american businesses overseas every day this inversion problem is also making it advantageous believe it or not for foreign companies to buy american companies for foreign companies to invest here more than for american companies by american companies for american companies from best year so it's a little more complicated now i also agree that you're not going to have corporate tax from that individual and i would propose something like a greatly expanded earning earned income tax credit you read a lot about infrastructure the democrats are right we need more infrastructure like you're talking about 150 billion dollars more a year which is almost a drop in the bucket and i'm talking about transportation tunnels bridges roads airports the dem the republicans are right when they're afraid of just raising taxes to do more government spending you know and they just hear that great sucking sound to washington bridges to nowhere more crony capitalism this is a perfect place to get the people the room ask the republicans how can we do this in a way that you would approve it that you know we're building bridges we actually need i believe the president took care of all those things and i guess they're not democrat or republican the economy would be booming i don't believe this argument that secular stagnation is permanent savings gluts we be booming we're not booming because of all of the issues that we've self-created uh you know and that have slowed down growth and it's time to for them to do something and by the way wages growth will fix wage inequality and studies show that cutting corporate taxes will help wage any uh wage equality make it better so we should be very thoughtful about policy that we get it right and not just over politicize we we really damage ourselves and do that suppose the next president upon hearing this from you said you know that's those are pretty good ideas would you like to be my secretary of treasury what would you say i'd say i guess david rubinstein but uh um i don't think anybody i don't think i really don't believe you're gonna have in this environment a anyone's wall street i'm talking about banks because i do think you might have money managers that are who can possibly get that job it's just too hard to get through congress they're better off getting someone but they really should get someone qualified they really should get someone hugely qualified to help grow the american economy and negotiate with overseas and and understand the critical role that business also plays in all of this so you come to washington from time to time to meet regulators and legislators and how uh what kind of experience is that for you i uh you know first of all i think it's important that business get involved in washington so i'm not a person who says you never go there you know policy is set here there are a lot of people here who really do care about making it a better country and if you don't get involved that means you'll be set by other people so it's necessary obviously the regulatory environment for banks has been not just for us i mean i travel the united states of america and when i go to people you know groups like this in any city i mean i get an earful about regulations completely unrelated to banks so i do think there's a serious issue about you know diminishing a little bit the regulatory uh burden on just being put in the economy and uh but you know i come down i do the best i can it's my job you know to deal with regulators and politicians and policy issues i also think when you come down as a business person the interest of the country should be put before the interest of your industry or your company and so businesses are constantly coming down and asking for you know that one little thing that helps them you know like i i hear these horror stories you know just do what's right for the damn country your business is going to be fine and in fact your business will be better off with the country strong you know so business has to be a little careful to be it's it's too self-serving and you know that does not appeal to the american public it doesn't help politicians get things done and that's what i'm saying in earning them tax credit you know taxing your carrying interest a little bit those would be good things for america we should do that and help them at the lower end with education income assistance all those things we need but have corporate tax reform well that's the interviews over there you can afford it david okay so um jamie um let me ask you uh on the economy uh you get data from all over the world that jpmorgan gets uh would you say right now the u.s economy is in reasonable shape you fear a recession we haven't had one in seven years and we usually have them every seven years yeah and i i understand that i don't think there's an automatic ruler because it's seven years we have one of nine i i don't buy that when we look at the economy i always look where are the potholes so we did see potholes in 07 and 08 and leverage and mortgage there are no real potholes there okay 15 million more people are working wages are going up household formation went from a million a half a year to 500 thousands back to a million two homes are in short supply and not all markets a lot of markets in america house prices almost back to where they are stock price is much higher than where they are we still add three million americans roughly not quite one percent a year okay which means since the great recession we've added 15 million people we need to build more homes uh people are spending their money uh markets are wide open companies are flush with cash there's no immediate pothole and you know you can see some you can but they're not systemic you know auto loans might be a little bit of stretch student lending there's too much uh bad student lending but they're not going to sink the american economy they're just going to slow it down or something like that i should point out that in america because you hear the politics of today about you know all the serious problems we have and we have them and i don't think that you know democrats should degrade some of the angers coming out of the republican side about you know the failures we've had as a as a government and vice versa by the way but but i give the other way around america has the best hand ever dealt of any country on this planet today ever okay and americans don't fully appreciate what i'm about to say we have peaceful wonderful neighbors in canada and mexico we've got the biggest military barriers ever built called the atlantic and the pacific we have all the food water and energy we will ever need okay we have the best military on the planet and we will for as long as we have the best economy and if you're a liberal listen closely to me in that one okay because the chinese would love to have our economy we have the best universities on the planet they're great ones elsewhere but these are the best we still educate uh you know most of most of the kids who start businesses around the world we have a rule of law which is exceptional if you don't believe me and we talk about britain brazil russia india venezuela argentina china india believe me it's not quite there we have a magnificent work ethic we have innovation from the core of our bones you can ask anyone in this room what can you do to be more productive ask your assistants factory floors we do it it's not just the steve jobs it's this broad death with the wise and deepest financial markets the world's ever seen okay and if you i just made a list of these things and maybe i missed something it's extraordinary it's extraordinary and we have it today yes we have problems but you know when i hear people down if you travel around the world i mean get an airplane travel around the world and go to all these other countries and tell me what you think go to europe you want to talk about bed you know tough regulations and bad politics you know so we have it all and we just need to fix the you know we've been shooting ourselves in the foot in my opinion we've been doing a pretty good job shooting ourselves in the foot you would never consider running for office would you i would love to be president united states of america okay and until until donald trump got to rio's i said you'll never have a rich businessman who's never been in politics be president and uh so i i clearly was wrong about that it's just it's just too hard you know i mean i think that most people you have to be senator governor run for years be part of a party it's why michael bloomberg would be eminently qualified didn't do it's why a lot of you probably done it and so uh i just think it's too hard and too late i would love to see the next president do the right things and you know aiden is supported by everyone here i also think by the way this collaboration what you hear today is this constant you know you know get the experts out of the room we've heard that before we need policy thoughtful people we need analytics we need it done right we need to do it together 145 million people work in america 125 million work for private enterprise okay the government can't fix all these things itself and they act like government's the only solution i remind them of the post office veteran affairs the department of motor vehicles matter of fact the only thing they do really well is the united states military and so collaboration works and you go if you buy if you go around the country it works in all these cities all these states you know it's here for some reason we just get bogged down and it's just maybe just too complicated for mankind now you mentioned europe a moment ago in regulations uh you were quoted before the brexit vote as saying that maybe you would have to move people out of london uh have you have any new things so i think what happened with brexit is kind of we expected i mean we never said it would be a disaster brexit is a vote for the unknown that we thought would have a would reduce the gdp of the uk it's going to so forget little data that comes out it's pretty much going through a foreign direct investment people opening factories construction it's not it's not a disaster it's good we think a half a percent to one percent that'll reduce the gdp of europe a little bit not a disaster 0.3 that's one thing we know and the second is now we have this this mountain of uncertainty and it isn't going to go away because you're going to be reading for the next year or two years about all the complexity and we don't know the outcome so i usually look at you know the best case worst case which i won't go through here the best case it looks a lot like today and it's fine i get it only 10 percent they're not going to get away with that because the eurozone is kind of angry and they want to keep the eurozone together and they're saying you're not going to have free free access to our markets without free movement of people that's exactly why people in britain voted against it for for brexit and they well i wasn't for it there was logic for it their logic goes why tether yourself to sclerotic europe you know where brussels is passing rules that affect british citizens and that was true so maybe the eurozone will look at this occasion say let's fix the problems for everybody all 27 nations not just for britain and then britain negotiates some favorable deal what worries me the most about brexit is that it caused the eurozone itself to unravel okay so you have elections in uh you have a referendum coming up in italy which is important you have elections next year in france and germany so you don't even know who the leadership is you have the same kind of populism uh surfacing over there that you have over here they may have referenced the netherlands it's it's tough and if you see the eurozone unravel that has potential catastrophic issues associated with it i know it may be just a big recession it could be worse than that you know what that continent's been through for hundreds of years and you know to me keeping the union together would it be a better outcome you know if they don't that's we'll deal with that too but a better outcome is they have a stronger union not a weaker union jamie let's talk about your background a moment now do you get upset if people say to you you're a financial service executive you live in new york and they think you're jewish but you're not jewish right i'm greek and uh and where's ted i saw ted somewhere over here but proud to be greek and when you know i got a letter and when i became uh uh chairman ceo of jp morgan it was it said rock of jp morgan rockefeller diamond only in america and that's true by the way so you know you wouldn't have a greek first gen second generation greek american runner-up jp morgan chase and uh but i did marry a good jewish girl from bethesda so um you started out your your father was a stockbroker and um you started out with some background in this area but did you ever consider going into banking was that always what you wanted to do when you went to harvard business school no i i knew more what i didn't want to do you know i didn't want to be a lawyer i didn't want to be a doctor and i didn't want i want to be part of building something and you know obviously i grew up around you know stock brokers and and wall street and stuff like that my dad who passed away recently uh gave me you shall try this one day get an annual report rip out the part that has the price in it analyze it and say we pay for the stock and you'll be immediately humbled immediately do it a couple of times and uh so i was always in the financial world but you know to me just building something and and so i went to business school and stuff i didn't have to go to the financial world but i was fascinated everything you read the paper matters they're they're global uh you get involved in so many policy issues so it was just a fun place to build but i would have had just as much fun building something else but normally if somebody's a baker scholar harvard business school they can pick almost any job they want you could have gone to goldman sachs which is a great firm you chose to go work for sandy while why did you do that sandy uh he had a small broker brokers really assaulted america's press at the time and uh you know he i found him kind of down to earth he had offered me to go to shearson their investment bank i said no i had offers from goldman sachs morgan stanley and lehman uh i said you know i'd learn a lot more of these other plays than cheers and they eventually called me up kind of liked me i was a baker scholar which is important to him and uh i said you know why don't you just come and be my assistant you'll learn a lot i don't know what's going to happen and so america's press you know you know he lasted there about three more years uh so um but you did learn a lot so when he left he was uh he left i left with him i was offered a bunch of jobs to stay and stuff like that but he said we're going to find something and build something great and he was hoping we tried to take over bank america you may vaguely remember that and he also they might be offered the ceo role at merrill lynch but none of these things came his way and so we took over this little company called commercial credit up in baltimore here my one of my babies was born in sinai hospital and uh uh i moved down here and we took this little company it had a consumer finance thing like seven other little companies including like a leasing company in israel a small international bank that made loans which all went bankrupt called less developed country loans a property casualty company a small life insurance company and that company is the same company became city and over those 12 years we bought uh so these names will recognize primerica smith barney shearson uh solomon brothers etna property casually travis life traveled this property casually and it was a conglomerate they they didn't we did a good job running them we did a great job for shareholders and merged with city and uh uh and so it was a hell of a run and then he fired me but and [Music] so what well when he did that a year later i called him up and said you know i called him he didn't call me just so you know i said saying it's time to break bread and we met at the four seasons restaurant and i i want to do it private he said no we'll be in the four seasons restaurants on the front page of the ft diamond wild have lunch with with civil war and cheshire i'm thinking this this is this is like um anyway he was a little nervous and i said say we're not going to spend time in the past all i want to say is you did the wrong thing for the company i made a lot of mistakes too and here's some of the mistakes i made after i gave him the mistakes i made he said thank you for sharing that with me we had a very nice lunch it's not quite clear he did the wrong thing for the company and uh life goes on so um you then sat you were in a small office i recall it was it at the uh secrets building so you had a you rented a small office here after i got fired you mean right after you were fired you had a small office there i came before i was fired i mean this shows you how stupid corporate america gets when you have you know the the company had been set up that we had co-chairman and co-ceo john reed and sandy weil i was going to be the president and run the global corporate investment bank and other jobs it because of turmoil among management deals are very tough that we had try heads of the global corporate bank co-heads of asset management co-heads of consumer and all the staff units risk finance and technology report to me instead all the staffing has reported jointly to sandy and john when they did that i said to him you guys are crazy this will destroy the company the second you do this people will be building trenches and stockpiling ammunition but and by the time you two guys figure it out a lot of good people have left the company not realizing i'd be the first casualty by the way uh but they they were so and they come to say what works for me it works for me and i kept saying it doesn't matter if it works for you it matters if it works for the clients and the employees it works for me and you know so when you hear ceos say it works for me you know you should question their intelligence a little bit about because it's not the way you should look at business it's what works for the client ultimately well when you first were thinking of the merger um it must have been fairly audacious for you and sandy to think that you could get john reed the merge would you were you nervous that he would say no or you no you know it was sandy has some good points and some bad points but one of his good points is pretty relentless he went to see john i think at a hotel in dc and laid out a very basic plan john immediately was intrigued more more because it fills out the serving institutions for city they struggled for years to do some of the investment banking stuff we were doing but he particularly liked how many customers we all touched in financial services i think it was 100 million or something like that and uh um you know one of the mistakes that was made is i think the company should have focused on kind of what jp morgan does today and it eventually did it but it did it under duress spinning off the life of companies paying off property casually getting rid of truck leasing all these other ancillary businesses that really didn't belong there whereas you know today what jb we're going to say is not a conglomerate okay everything we do helps each other basically if you're a consumer you walk in the front door we have financial products if you're middle market small business corporate we serve your financial needs around the world that's what we do you know we set up as business units but they're not unrelated and so uh the city just got too big and too sprawling so when you were fired and you were looking for something to do you had a lot of jobs i think you were offered the ceo of home depot or things like that i was offered home depot and i a couple of big international investment banks not to run the parent company run the investment bank hank greenberg who ran aig said why don't you come over here and i could all i can think of myself is to go from sandy well to hank greenberg i mean you'd have to have your head checked uh a bunch of private equity folks jeff bezos jay carney's here called me up and i went he was looking for a president i love the guy and we've been friends ever since i was thinking i would never have to wear a suit again i'm going to get one of those houseboats in seattle and uh uh and i loved what he did it just it just was beyond you know i spent my whole life in financial services so i tell you it's a little bit like playing tennis your whole life and then going to play golf so you know i love the guys at home depot i went down to have dinner with bernie marcus and arthur blank and ken langone i said to him i have to confess to you guys until you called me up i had never been in a home depot the only reason i went is because the guy who worked for me said jamie you gotta go to one before you go to that dinner and they didn't care they said we want you the person we're not interested in what you know we we're looking for the heart the mind the spirit we're not interested in what you know about merchants and stuff like that so uh a couple of the other internet companies a lot of is on money oh you make a billion dollars type of thing and uh um so i bank when i figured this is my chance you know how many major financial companies are the 30 how many change the ceo in a three or four or five year period four or five how many those are going to go outside one and of course it's probably a troubled one so i said this is my commercial credit it'll be will we make it and i put a lot of my money into it not because i thought this doc was cheap because i thought that you know what you you know i'm the cat i don't i look at business like i wear the damn jersey i'm not a hired gun okay i'm gonna bleed for the company and give it everything i got and hand it off to someone else so i don't like people working a company act like they talk about like it's a third party it's not a third party to me this is what i do i remember jimmy lee or deceased partner wonderful guy said to me one point i could do one more big thing i said like what he said you know like general motors or aig i said are you crazy like i this is it when i'm done with this i'm not doing another big thing and so i love what i do and this is the company i'm going to build until i can't well when you went to bank one you moved to chicago and i know one really big private equity guy who at one point they i used to every now they see david walking in my building you know sometimes he's come to see me but when he's not i say who are you who are you here recruiting but one of those times it was me for a lot more than they pay me a jp morgan chase just so you know you talk about compensation so uh but i don't do i don't do what i do for compensation so so when you went to bank one though did you ever expect you'd move back to new york or you thought you were you're going to chicago and that was your career oh i did i had no idea i love chicago by the way i love it it's a great city and uh uh i really didn't know those are great there's a cartoon of me sitting at an airport and the person saying to me mr diamond there are no scheduled flights to new york and uh and in chicago when i go to chicago they didn't believe i was gonna are you moving here are your kids going to school here i said yes i'm here i'm really here i'm staying here and i tell them to chicago that if i die if i stay my whole life and die in chicago and they ship my ashes back to new york they would say we told you you know he uh so um so no i i didn't know i thought you know i remember the banking industry was consolidating it's still kind of consolidating so i knew that if i did a good job i'd be probably be part of that but i didn't know whether i'd be an acquirer building up a bigger regional bank or being acquired but remember that's not up to me it's also up to a board of directors uh so to me the thing is make the company as good as you can and it actually creates all the up opportunities you have so you ultimately did the deal with jp morgan you came back you became the ceo uh and chairman and ceo and let's talk about the great recession and the financial crisis that came about um your bank was in pretty good financial shape uh you were called down to washington dc by hank paulsen he says i want to give you 50 billion dollars you didn't really need it why did you take it you know uh it was 25 but 25. you know jp morgan didn't need uh government help okay and you know one of the things that happened this crisis that has destroyed banks is that all these banks were bailed out they were not all built some were you can still be very angry with banks for helping screw up the system which they did not all equally but they and they were the only culprits or you know i think all you know if i came to washington i'd say well let's all sit down one day like i do in the company let's actually analyze the facts and take blame for words do including fannie mae freddie mac i go through mortgage rules tons of it wasn't just banks and so but most of us were trying to help to the extent we could and so we brought bear stearns to request united states government they obviously were trying to figure out what to do with tarp so they remember they already passed the tarp bill ostensibly to buy bed assets but they called us down and i i think it was like columbus day and hank said you got to come down he said i'm not coming i said you got to come down i said hank i've been working six hours six seven days a week for the last six months i am taking this weekend off he said it's really important everyone else is coming so we we go down we're i think we're in the cash room or a lot there's nine of us lined up alphabetical uh i think it was alphabet he's by name of my company and hank is there and geithner and bernanke and sheila bear and a bunch of others and they said we've been thinking hard and we've come up with a plan that we think can help save america and this would take capital off the table as being an issue for banks if the nine of you take it we think we get hundreds of other banks to take it and it'll be a major stepping stone to to turn this thing around uh and you know we and we calculated you know you're just 25 billion years of 10 billion it was cheap capital by the way six percent preferred stock though we had to give the government equity warrants which they made a lot of money on uh um and he said you know i know you have to talk to your boards a couple people said i'll take it i said you don't have to talk to your board so i called my board explained it to maul i told him it was bad for j to be honest that it was this was an asymmetric thing it was going to save some companies hurt others okay so you could argue is bad for jp morgan and good for other people but i said it's good for the united states of america they've thought it through uh uh you know we didn't have enough time to actually think all the ramifications i had no idea it would be the great scarlet letter on on the back of banks for probably for another generation um and then we made another stupid mistake so we took it you know it's hard not to and you think you're you're doing so most of those people are very patriotic as are most of you and uh then we walked out of the building by then the press had found out that you know the cnbc and bloomberg were there taking pictures and reports asking questions and every one of us because we're asked by hank paulson don't tell the press we'll make a formal announcement an hour walk by the press kind of waved them off and the headline i think in the washington post one of the headlines was not only were they bailed out they showed no gratitude and just in hindsight i think someone should have stopped and said we can't tell you were discussed there but we can you can be rest assured that every bank here is going to do everything he can to help you know fix the americans something like that that just showed a little more graciousness or something and so what so what happened one time you decided to help the government the government called you and said could you buy bear stearns it's in trouble you bought it and then the government sued you later yeah how did that feel not good you know you listen you do get smart as you get older you know governments when you do a contract with an individual or a handshake or anything like that it's between you and an individual governments don't have that that's this is true globally by the way they they can change what they said they can change their treaties they can change their taxes they can change their and i i made a mistake you know i i told my shells and because i write post-mortems every now and then i made a mistake i should have thought through and i talked to my board so i wasn't i didn't make it alone but you know that that bear stearns was in deep trouble you know we bailed it out uh uh for we had a huge risk and exposure to us uh and that they couldn't come after us late i came after us on mortgage issues which of course people were very upset about and they want to show punishment and they did a little bit the same thing in women so uh so i know the thing like a bearish journey won't happen again not just us it won't happen again ever because it would happen with bearish terms no no no bank is going to bail out another institution if it thinks it's subject to additional liabilities and you can't leave them behind if you're buying the stock and even in wamu you think you can leave it behind because you did they said it doesn't matter this is what you're going to pay it didn't matter what my contract said with walmart so you think the country is better off for having dodd-frank now or or not yeah look the banking system is far the banking system is in enormous strength so just to give you some really quick numbers okay jp morgan in the nine we do the stress test i'm very much in favor stress test and they make it severe not just severe in terms of you know assuming 12 percent assume housing prices go down 40 but severe that assumes you make a lot of mistakes in the process so our stress test has us losing over nine quarter period the fed feds 55 billion dollars i think we make money during the nine quarter period in the real world and in the real stress of lehman the real stress a real stress environment we made about 20 billion pre-tax in ensuing nine quarters because really bad still did okay it wasn't you know great for shareholders but it wasn't losing money and j.p morgan has 500 billion of capital today that capital is enough to bear the stress losses of all 31 cifi banks all of them the whole banking system america's recovered it's it's not earning great money yet i think it is also important for safety and soundness but it's recovered it's an unbelievable shape i was with the banker out here a community banker telling me that he's got tons of loans he's not making them because the regulators don't want to do any more real estate so you know the system is completely recovered part of that's dodd-frank you know dodd-frank in reality is thousands of things i don't know anyone who agrees with anything dodd-frank barney frank and i agreed that some of the things were put in there after the fact should have been put in so no i don't agree with all of it but it is what it is unfortunately because dodd-frank well volkl was one of them was added kind of an after-the-fact thing which is in my opinion completely unnecessary but it is what it is i have to deal with it and and that's the law of the land and it's being interpreted the other thing dodd-frank does it really gives it's not a legislation that says x it basically says make the system better do what you have to do to do it so the regulators have a huge amount of authority to interpret some of these rules and um so the system's better don frank is partially responsible but dodd-frank you know was passed 100 democrats zero percent republicans and you know none of us can possibly say you can't make things a little bit better so you know one day people rational people should it probably won't happen in the next four years but rashford would sit down and say what parts work what parts didn't work which part should be changed mark carney says that in england you know here there's kind of a knee jerk we're not touching it and you know and if i interviewed all of you i'd have tons of stories how dodd frank is hurting you you got to remember a lot of regulations not we may be fine you may pay the price or they're affecting you indirectly which i didn't fully understand when some of these things were passed so i'm not in favor of throwing it out and starting from ground zero and a lot of good work was done and there were a lot of flaws that needed to be fixed so today uh you would say that the banks are in pretty good shape in our country what about the banks in europe or in china are you worried about the banks there the banks uh in europe are way behind america by i'm i'm saying of a sympathy to them just like when i'm talking about you know our peaceful neighbors in the pacific i remind people china doesn't have food water energy it's neighbors in north korea philippines japan pakistan india russia indonesia tough part of the world folks and you know that changes people's mindset when it comes to you know managing your country etc and uh so europe is behind us they have they still haven't fixed their capital their profitability uh uh it's much more important to the financial system in europe than this here it said the 80 percent of the financial system there here it's like 20 or 30 percent uh but i think if i was running the european government if i if you were a dictator i would i would lay off them at this point let them do their jobs i mean pounding them eight years later is in my opinion is causing europe to grow a lot slower and otherwise grow because these banks are unwinding constantly uh loans and issues and credit so i i think i i don't want to see them hurt anymore i would like to see them get strong and in a healthy economy if they need to add capital liquidity do it then uh and in china you know the four big banks by several of them earn twice as much as we do now so i tell american politicians i'm not saying it lightly that is my competition too they some of them earn 40 billion dollars a year they may very well have problems in their loan books but they're ambitious icbc bank is now in 60 countries if you go back 30 or 40 years ago it was in one chinese companies are going abroad which i think is very smart i think the chinese are quite smart dealing with their situation their banks are banking abroad they want their banks to be winners they want to have the jp morgan chase of the next one and and i don't want them to have it i think we should have it you know and they could buy us one day so you know we got to be very careful when we talk about american business what we want for american business and how important it is for the success of america and not just us but i put you know a lot of these companies the same boat you know ge and caterpillar and we got to compete and we got to compete some very large tough competitors so globally you've been now running a bank for ceo bank one and jp morgan for about 16 years so what's the greatest pleasure of doing this running a bank you know i i get i mean maybe two things okay i get to travel around the world you know i've been out of 60 countries for us meet presidents and prime ministers and great companies and clients and you know we bank countries we bank their sovereign wealth funds we bank their business and i think we do great stuff for them we help them grow we help them expand we educate them about uh what they can do to grow their economies we do it city by city you know we do a huge amount of philanthropic work or where it's not money but it's our brain power peter shear runs greater washington is doing some of the stuff here which some of you may know about and i'm proud of that we're making it a better world yes of course like most people make some mistakes and sometimes they're doozies the second is i'm just so damn proud of our people i think j.p morgan chase is chock full of just fabulous people give a damn about their clients their communities you know it's not all about profit and stuff like that and just makes me you know proud so i leave here i'm just so damn proud of what the people here did and uh and that's it you know i mean what else did you do this is my way this is my contribution to making it a better world is running a good shape in morgan chase i tell people if i don't do a good job at jpmorgan chase i heard the opportunities for our people i heard the opportunities for the 2000 hamlets we do business in we can't be philanthropic we can't heal people grow and if i do a good job you can do all those things you know i'm not a i'm not an artist i'm not a tennis player i'm not a musician i'm not a politician this is my contribution okay one of your contributions has been in detroit in other urban areas you you start a program to kind of revitalize some of these areas was that important to you personally yeah so when we detroit is a special example okay i mean most american cities had a renaissance almost all of them including some in terrible shape pittsburgh cincinnati cleveland but not detroit population two thousand to seven hundred thousand uh uh if you've been there you know blight seventy thousand abandoned homes where the i think the next largest city was like chicago with five thousand abandoned homes now ben and holmes you know what what what we saw and we're the biggest bank there let's keep that in mind so we got to do that job well biggest consumer middle market we bank all the major companies there we bank them globally so we bank you know gm and four we bank them in 50 countries we don't bank them just the united states or america and but we saw a republican governor and a democratic mayor say things like we want to turn around the city we need jobs we need the lights on we need police we need sanitation we need businesses we need affordable housing and we saw that we said we're in we're in full because they're talking about what people actually need not this democratic republican so that and and they they were doing it together so peter now that by peter did all this work not me i asked peter when i saw this uh uh you know by part of it came out of me talking eric holder in one of these settlements and i said you know we could be using this money wisely like in detroit his ears perked up and said yeah you should be doing more in detroit so if you take less for me there'll be more for detroit um peter said a team of 50 people up we didn't go up just throwing money at it we met with the mayor civic groups the governor we wouldn't have done if they weren't you know if they weren't collaborating we said what do you need to accelerate the process so we helped them identify with like a phone geolocate all 70 000 abandoned homes there's a million dollar piece of software we did with local firm we now we're helping them get rid of the homes have development plans for some of the area we have a black black entrepreneur fund we helped i've been to a couple of housing where they built affordable housing uh we're building an m1 infrastructure which is really needed between downtown and midtown between wayne state university and the city which you know that you tends to create a whole life and they're turning they're actually not just south by those there are tons of people doing it but it is an example i do have a competitor city who always advertises they i say they spend more money advertising they did in detroit you know we put we put 100 million dollars up there and we don't advertise and um and we're doing our sharing it's been a great thing peter runs the is the chairman of greater dc so he's looking at maryland baltimore virginia dc and it's a lot of same issues what can you do to do better how can you collaborate across things what infrastructure needs schools make the best of the schools and so these things actually work people working together and hopefully it'll be an example of people collaborating and making it a better society for everybody one of your uh concerns i assume is cyber security and you operate gigantic credit card business how do you protect everybody's information are you worried about that yeah cyber security is a unbelievable big deal okay and and it's it's it's you gotta if government's involved none too fast i mean we gotta do more and we gotta do it quicker so you know we have hundreds of thousands of attacks every day and jp weren't in great shape defense going into great shape bank's quite good at it uh but the thing the lesson for most people is it's not about you know just putting the the block that people can't get in you gotta have all these other we call internal hygiene internal control to stop people from they're going to get in okay so even triple authentication we know your name we know your face we know your passcode and we know your fingerprint okay if someone walks up to the street he says give me your ipad put your fingerprint in and give me your passcode you're going to give it to them they're in your systems okay and i want people to give it to them so what you got to do is limit what people have access to inside the company what happens is i'm sure it happens inside carlisle where people move around they keep their entitlements so if they're getting diamonds they're not just getting the ones i needed it should be need to know only bases we monitor everything people do we're like a mini police state we know what you do when you do it how you do it where you do it what your normal patterns are we monitor some of our clients activities uh you saw a recent the fed had money go out of the fed if you try to send money if you're you're are you for your bank we're constantly monitoring everything you do if you try to send money where you've never sent it decides there's something at a time you've never sent it we stop it and we're calling you back so we are i call them tripwires and kill switches everywhere we fire people every week for doing wrong things when it comes to cyber uh we spend 600 million dollars a year my guess is it'll be a billion dollars a year in a couple years we've got three major cyber centers around the world we include physical security so we know when you enter buildings when you leave them and kind of use big data to track all that it is a really big deal so we are very protected but remember you have airplanes grids you know some things which are completely unprotected and you know the united states military has capabilities far beyond anyone but also our laws restrict how some of the stuff gets used the nsa the cia the military etc so we're all working together but not fast enough not hard enough not coordinated enough it's a big deal someone is going to get hurt and um and if you if you haven't i don't normally like to do consultants have some have some there's some people really good at coming to look what you do and think of so i was with the guy who runs payroll you know hr i was going through this thing he was nodding very good you know cyber it's the sec people it's the security people i looked and said you don't think i'm talking about you do you said no this is systems this is security this is what's going to do with me i said hey you have the medical records you have the payroll records you should go back every one you should go back when you have your management team how can people get in what happens they get in what can they do to damage us because you saw what happened to sony it was emails you know the health records could be destroy someone's life so it's a big deal and it's at every level government management now we you know cyber's on the list of things we try to review jamie i assume your shareholders would be happy for you to stay forever but do you have any plans about how long you might stay in this position you know i'm 60. uh i love what i do and i still have the energy to do it it does does take a lot of energy health is good my health is good thank you and uh um so i'm gonna you know as long as the board's happy with me i always say five years i'll be 65. uh and i do think there's a time when the right person is ready that i should leave you know maybe i'll maybe the board asked me to be chairman for a year or two or something like that and i i'll have an afterlife like you i'm never going to stop working i'll go into board i'll teach i'll i'll maybe do something to help the government somewhere i mean i'll do i'll be fully engaged in business and stuff like that but uh and also try to make it a better country and my wife is deeply involved and philanthropic to help she does inner city schools in the south bronx try to get those kids jobs jobs jobs jobs and and she's doing a great job at that so i'll probably help her a little bit things like that jamie you've done a great job for the country and jp morgan thank you very much thank you folks enjoyed it very much

Channel: The Economic Club of Washington, D.C.

Views: 234,380

Keywords: James Dimon, JPMorgan Chase & Co., David M. Rubenstein

Id: AFFNWoJ2LOM

Length: 46min 30sec (2790 seconds)

Published: Mon Sep 12 2016