Jamie Dimon's Annual Letter

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Jamie Dimon's Annual Letter

JPMorgan Chase Chairman and CEO Jamie Dimon released his annual letter to shareholders this week.

  • He addresses how banking turmoil and geopolitical events are impacting the global economy, and how JPMorgan Chase supports customers and clients in both good and challenging times.

"We help people and institutions finance and achieve their aspirations, lifting up individuals, homeowners, small businesses, larger corporations, schools, hospitals, cities and countries in all regions of the world."

1. A nine-pronged plan for the banking system


America has the world's strongest, most dynamic financial system, with a robust rule of law and investor protections, but it suffers from inefficiencies and contradictory policies. How we respond to current market volatility is crucial:

  • "It is extremely important that we avoid knee-jerk, whack-a-mole or politically motivated responses that often result in achieving the opposite of what people intended. Now is the time to deeply think through and coordinate complex regulations," says Jamie.

Jamie lists nine goals for the banking sector to keep America's system at the forefront. We need:

  1. Stronger regional, midsized and community banks, which are essential to the American economic system.

  2. Large banks for the critical role they play managing financial complexities globally and in the U.S.

  3. An environment where a bank can fail without causing panic and financial harm.

  4. Proper transparency and strong regulations.

  5. Market-makers to have the ability to effectively intermediate, particularly in difficult markets.

  6. Banks that support their clients in tough times.

  7. Thoughtful and forward looking regulations — particularly stress testing.

  8. Decisions about what should stay in the regulatory system and what shouldn't.

  9. Banks that are seen as attractive investments.

"We are champions of banking's essential role in a community — its potential for bringing people together, for enabling companies and individuals to attain their goals, and for being a source of strength in difficult times," Jamie says.

  • "The debate should not always be about more or less regulation but about what mix of regulations will keep America's banking system the best in the world."

2. How we see the coming economic risks and opportunities

Storm over the New Mexican prairie.

The economy is still strong, but Jamie sees storm clouds ahead rising from massive fiscal spending, higher interest rates and geopolitical tensions, including the war in Ukraine.

  • Consumers have $1.2 trillion more in "excess cash" than they did before the pandemic, unemployment is low, wages are going up, and assets have been appreciating for 10 years, putting consumers in better shape than they were in during the great financial crisis.

  • But while the fiscal stimulus is still surging through the system, we expect consumers will have spent the bulk of their remaining excess savings by early next year.

  • And the Fed's quantitative tightening as it grapples with inflation is changing the direction and speed of money. Banks have to compete for money more than they did in the era of quantitative easing.

The war in Ukraine, already into its second year, has caused devastating casualties and damage along with global energy and food shortages.

  • The shortages are disproportionately affecting millions of Ukrainian refugees along with those living in poverty and could lead to large migrations of people, heightening geopolitical tensions.

The risks are real, but so are the opportunities. Jamie says, "When one talks about risk for too long, it begins to cloud your judgement."

  • Still, "the positives are huge, for however it plays out, it is likely that 20 years from now, America's GDP will be more than twice the size it is today, and hundreds of millions of people around the world will have been lifted out of poverty."

3. Adopting a global economic strategy to manage future economic risks

Supreme Court steps

Just as we need a military strategy to deal with security risks, we need a global economic strategy to deal with economic risks. Jamie identifies four pillars to pursue:

1) A U.S. growth strategy: We have the power to accelerate GDP growth with sensible policies that make it easier to do things like start a small business.

  • Case in point: Today, opening a business requires multiple licenses and mountains of red tape — ask any small business owner. Ending excessive regulation is a sensible way to kickstart economic growth.

  • Fast fact: Between 2000 and 2022, real U.S. GDP grew at an average rate of only 2% a year. Had we grown at 3% instead, last year's GDP per person would have been $15,000 higher.

2) Industrial policy: Government policies can and should incentivize American innovation, both to safeguard our national security and to counter competition from overseas.

  • We need to prioritize investment in research and development, infrastructure, and workforce training — critical elements of a strong and innovative economy.

3) Income inequality: Reducing inequality is key to driving growth and repairing the frayed American dream — and we can start with two simple policies:

  • Providing students graduating from high school and community college and others with work skills that will lead to better paying jobs.

  • Providing more income to lower-paid workers to help rebuild underserved communities, including an expansion of the Earned Income Tax Credit.

4) Global economic growth: America must take the lead on devising a comprehensive economic strategy that keeps western alliances together while appealing to developing nations.

  • This strategy would tighten bonds, strengthen our alliances and maximize our economic resources.

  • We need more active diplomacy and more dynamic communication around the principles that motivate the Western world — life, liberty, the pursuit of happiness and the idea that all people are created equal.

"By driving inclusive economic growth, we can help create a brighter future for all, no matter where people live or the circumstances they're born into," says Jamie.

4. Ohio: an example of how we're making an impact

Columbus, Ohio

When we do business in a community, we do more than open branches. We serve as an engine of the economy and champion of opportunity.

Ohio — where we've been doing business for more than 200 years — is just one example of our ability to drive local economic growth. Here are some examples of our local impact:

  • Served nearly 150 government, healthcare and higher education and nonprofit clients, like the University Hospital Health System Inc.

  • Provided over $20 billion in credit and capital over the last five years for local financial institutions such as banks, insurance companies, asset managers and securities firms.

  • Helped more than 160,000 small businesses grow through access to capital and networks in 2022 alone.

  • Operated 225 branches and provided more than 4 million savings, checking and credit card accounts.

As one of the state's largest private employers, we're proud to employ more than 20,000 Ohioans, including more than 2,000 veterans and 500 people with a criminal background who deserve a second chance.

"We help people and institutions finance and achieve their aspirations, lifting up individuals, homeowners, small businesses, larger corporations, schools, hospitals, cities and countries in all regions of the world."

Closing thought from Jamie:

  • "We sincerely hope that all the citizens and countries of the world return to normal after the pandemic, see an end to the ongoing war in Ukraine, and see a renaissance of a world on the path to peace and democracy."

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