No one questions Jamie Dimon’s passion. As Chief Executive of JPMorgan Chase (NYSE: JPM), he resides at the top of US finance, able to navigate his firm through the financial crisis relatively unscathed, while picking up strong business opportunities at fire sale prices in the process. Nonetheless, the public vitriol directed at the banking sector spills over onto his firm as well, even if unwarranted.
Since the financial crisis, the Federal Reserve has maintained an easy money policy, keeping interest rates low in an effort to spur an economic rebound. Dimon commented today that the ongoing easy money and low interest rate environment could pose a new financial risk, but “it’s lower now.” Many companies have plenty of cash on their balance sheet and banks and companies are generally less leveraged.
Speaking as a panelist at the World Economic Forum in Davos, Dimon added that the threat of higher interest rates wasn’t worrying either. “The Federal Reserve isn’t going to withdraw [liquidity] overnight.” Overcapacity remains and there are no signs of wage pressures, he said, which are the kind of inflationary factors that the Fed considers when raising interest rates.
Dimon’s single moment of visible frustration during the panel came during a question on anger against banks being ‘bailed out. Dimon sternly replied that “it’s not fair to lump all banks together.” The TARP program was forced on some banks, and not all of them needed it, he said. A number of banks helped stabilize things, noting that his bank bought the failed Bear Stearns. The idea that all banks would have failed without government intervention isn’t right, he said defensively. He went on to say “I don’t lump all media together….There’s good and there’s bad. There’s irresponsible and ignorant and there’s really smart media. Well, not all bankers are the same. I just think this constant refrain [of] ‘bankers, bankers, bankers,’ – it’s just a really unproductive and unfair way of treating people…People should just stop doing that.”
Dimon is ultimately right, though the general public won’t care much. Sorkin’s “Too Big To Fail” clearly shows Hank Paulson and the Treasury Department mandating that all the banks accept bailout funds in an effort to stabilize the system, and avoiding the negative connotation at this point is basically impossible. He can truly triumph now by being the first to return to dividend issuance, which he alluded to just a few months ago and has investors anxious.