According to Dimon, CEO of the biggest U.S. lender, the economic storm clouds are just as ominous as they were a year ago. With the recent collapse of Silicon Valley Bank and UBS’s bailout of Credit Suisse, banking is again under strain.
In a lengthy annual address covering everything from JPMorgan’s profitability to geopolitics and regulation, Dimon warned that “the present crisis is not yet finished, and even when it is behind us, there will be ramifications from it for years to come.”
He minimized parallels to the 2008 financial catastrophe. “This current banking crisis includes significantly fewer financial participants and fewer concerns to be handled,” Dimon said, contrasting the 2008 meltdown, which struck giant banks, mortgage lenders, and insurers with worldwide linkages.
Dimon said that the market now sees a higher likelihood of a recession. Although this crisis is minor compared to 2008, its resolution is still uncertain. Many investors are worried, and banks and other lenders will inevitably become more cautious due to the market turmoil.
But, Dimon said, it’s not apparent whether the interruptions would impact consumer spending, which drives the U.S. economy.
When Dimon became CEO of JPMorgan in 2006, the bank quickly expanded its holdings to include the failing investment firm Bear Stearns and the most significant savings and loan in American history, Washington Mutual.
Any policies enacted in reaction to the recent instability should be “thoughtful,” according to Dimon’s letter, and should include more specific guidelines for dealing with insolvent institutions.
Dimon also turned his sites toward nonbank financial organizations, which have emerged as rivals to banks in the mortgage, credit card, and market-making industries.
He questioned whether or not “nonbank credit-providing institutions” could help customers in need. “In my opinion, not very many of them could.”