As CEO, president and chairman of JPMorgan Chase & Co., the $2 trillion multinational banking and financial services holding company, Jamie Dimon is arguably the world's most prominent banker.
Dimon, 57, is in Oklahoma City this week, visiting with Chase employees, clients and local policymakers. He also wanted to take note of the $1.2 million that his company, employees and customers contributed to Oklahoma's relief efforts after the deadly spring tornadoes.
Dimon's road trip also took him to two other Midwest states, where he planned to spread a message of optimism.
“I get to travel the world; I get to see everything and when I come back to the United States, it always reminds me how good we have it,” he said. “I wish the message got out more: Best military; best universities, best businesses — being large or small; best technology from factory floor to Steve Jobs; widest, deepest, most transparent markets the world has ever seen. And that's not Wall Street, but investors, individuals, corporations, private equity, venture capital and public and private capital markets; a great rule of law, a great work ethic, very low corruption. This country has it all.”
Chase is the largest bank in America, and the fourth-largest deposit-holder in Oklahoma. Chase was one of the nation's few huge financial institutions that weathered the economic crisis without tottering or crumbling, and Dimon earned plaudits for his leadership.
However, Chase and Dimon last year were forced to disclose an embarrassing $6 billion loss by an overseas derivatives trader. In response, the company cut Dimon's annual pay in half, from $23 million to $11.5 million.
Earlier this year, Chase agreed to pay $410 million to federal regulators after the firm's electricity traders used a variety of deceptive tactics to gouge ratepayers.
The increasing concentration of assets among the nation's largest banks in the wake of the economic crisis has raised alarm among some, including native Oklahoman Elizabeth Warren, the U.S. senator representing Massachusetts. Warren, backed by Sen. John McCain among others, has called for a 21st-century version of the Glass-Steagall Act, which would force banks to spin off their investment banking operations.
Dimon, during a brief telephone interview with The Oklahoman, weighed in on such regulation and other matters. This is an edited version of that conversation.
Q: I wanted to ask you your feelings about native Oklahoman Elizabeth Warren and her push for a new Glass-Steagall law?
A: I have a very good relationship with Elizabeth. It doesn't mean we have to agree on everything.
Our issues have nothing to do with Glass-Steagall in America. And a lot of the rest of the world didn't have Glass-Steagall and didn't have problems, like Canada, Australia, Japan, etc. So obviously we all have a huge vested interest in having a really strong financial system and a strong regulatory system. How you do it, you can have long debates on the right way to do it — there's not necessarily just one right way to do it. Maybe several. But there are so many things being passed. At one point, we've got to take a deep breath and get one of them done. Finish it. Dodd-Frank accomplishes most of what people want to accomplish.
Q: Some argue that your bank is simply too big, and shouldn't be engaging in some kinds of investment with implicit and explicit support of government protections.
A: It's a fiction when people come up with a number that banks are subsidized. They are not. If you look at the analytics that people come up with, we borrow money in the marketplace every day. We pay the same that a single-A industrial company would pay. What kind of subsidy is that? That means the real money buyers are demanding a premium — a rich premium — to do our debt. If we had the implicit support of the government, we would be trading like Fannie Mae debt, which has the implicit support and they trade at 10 to 20 basis points over Treasuries.
We're a big money center bank. We borrow money around the world; we lend money around the world. They confuse the numbers when they talk about the average costs of deposits. Our average, if you actually go down to a branch, look at what we pay at our branch and what the competitor pays across the street, they're the same and very competitive. There's no subsidy of one versus the other. It's a fiction.
And the thing about size, size really relates to do you bring good things to your clients? Do your clients come to you because you give them some things better, faster, quicker, bundled the way they like, etc. If you didn't, you'd lose business. The proof is in the pudding. We win business because we do certain things really well and clients like us. No client — zero — has to come and do business with us. We do business with certain companies in 20 different countries. You cannot be a global bank for huge companies like Caterpillar and Exxon and think you'll be small. It's not possible. I do not understand. You must be very thoughtful when you talk about ‘just too big.'
Obviously, being big has some negatives too. It's not all positives. The positives are huge kinds of scale, the ability to do things in 40 countries. But, yeah, it's creates some complexities, sometimes creates some negatives. But that's true for airplanes, it's true for cars, it's true for pharmaceuticals. In fact, it's true for friggin' progress. OK? I just don't understand why someone says in this area, it's too big, but not in that area. Cars crash, planes crash, pharmas are misused. Does that mean we should give up on all those things and cut them way down in size so we don't have that kind of complexity? People should be really careful what they mean, they should put logic around this one — not just statements.
Q: So you don't think as long as you're growing organically you can really get too big?
A: No. You're always trying to simplify it and you're always trying to do it. But remember if you look at the size of the large banks versus the economy and versus the large companies we bank, they still pretty much parallel.
We did a $20 billion bridge loan for AT&T over a weekend. Do you want the Chinese banks to be doing that in 10 years? Because that's what will happen. If you think that somehow the need for global banks will go away, they won't. It will just be filled by other people. Obviously, if you're good, you earn good returns, you win clients, you have fewer mistakes — not no mistakes. That's another fiction that somehow you're not going to make a mistake somewhere.
Q: Chase does so many things besides traditional banking, is that still the most important business of your company?
A: We're pretty traditional bankers, I think. You say that. What are you referring to?
Q: All kinds of other investing, more than just taking in deposits and making loans.
A: People have this view that somehow taking in deposits and making loans is traditional banking. The average bank makes loans of all various types, very complex loans — revolver loans, receivables, inventory, real estate — and all different types of deposits — customers, savings accounts, checking accounts, business accounts. The average bank usually does some kind of private-client stuff like asset management, private client, middle-market lending, small-business lending. We do all those things.
The only thing we do which is — and we're big — that most of the regional banks don't do is what I'm going to call global banking general. We move money around the world. We raise capital around the world. We raise huge sums of money for big companies on Wall Street. So that's the unique thing we have that others don't. We'll do business with a company like General Motors in 20 countries. We'll do a $5 billion loan for General Motors in four currencies. Those are different things, but honestly, it's just banking for big companies. They just do it differently.