Full Interview — JPMorgan Chase CEO shares advice on what Feds should do to curb inflation, help eco

[00:00:00] Speaker 1: Jimmy Dimon, the chairman and CEO of JPMorgan Chase, is with us at the Ohio State House. Thank you so much for being here today. Happy to be here. Tell us a little bit about your annual shareholder letter. You mentioned many topics that are still relevant right now. U.S. economy recovering after the pandemic, but then inflation and the war on Ukraine have kind of slowed it down. Has your mind changed on that? [00:00:24] Jimmy Dimon: Not exactly. First of all, it fills me back in Ohio and Columbus again where you have 17,000, 18,000 people. It's really one of the great centers of JPMorgan Chase. But right now the economy is quite strong. And consumers have a lot of money. They've paid off a lot of debt. Businesses are strong. Things are going quite well. And they will for a while. That's going to be met by two countervailing forces. One is interest rates going up and quantitative tightening. And the second is the effect of Ukraine. And those are pretty powerful forces. We simply don't know what that means for a year from now. So, you know, we're quite cautious about it. We're hoping those things set out well. But you can't be sure of that. [00:01:02] Speaker 1: You also talked about the Federal Reserve raising interest rates. You were a fan of that. You said a couple months ago that they should be aggressive. It seems like they are being aggressive. Is this as aggressive as you think it should be or do you think it should be more? [00:01:14] Jimmy Dimon: So, I think, you know, first of all, I applaud what everyone did to pull this country out of 15% unemployment and to have the COVID and the vaccine and stuff like that. But clearly at this point, you know, we need to raise rates. Inflation is 8%. It may come down a little bit. But wages aren't going to come down that quickly. House prices aren't going to come down that quickly. Commodity prices, fuel, gas, wheat, corn are not going to come down that quickly. And they have to meet that to try to slow the economy down just enough. You know, the so-called soft landing. When they slow it down, inflation starts coming down. And I think they're going to have to be pretty aggressive at this point. And I also think, by the way, the more they do now, the easier it will be later. So, I wouldn't wait too long because then, you know, of course, inflation can kind of run away a little bit and then it will be even harder. [00:01:55] Speaker 1: And you mentioned that JPMorgan Chase is ready for fluctuations in the market and volatility. Can you explain that? [00:02:01] Jimmy Dimon: Yeah. So, we've always run JPMorgan Chase with a fortress balance sheet. Meaning, we want to serve a client like we do in Columbus, day in and day out, good weather, bad weather. So, we have a fortress balance sheet, fortress earnings, risk controls, regulatory systems, stuff like that. So, we're always prepared for that. All things being equal, rising rates help us. But rising rates don't help us if we have stagflation. In that case, we have a benefit from rising rates with a negative of low growth, higher charge-offs, etc. So, we're prepared for that. We're not hoping for it. We're just prepared. Because what I really want to do is, through bad times, like we did in the great financial crisis, like we did during COVID, that we can serve our client through thick or thin. And that is the main purpose, to have a fortress balance sheet. [00:02:42] Speaker 1: You mentioned inflation. Some of it is from sanctions against Russia with the war on Ukraine. You're calling for, you know, more sanctions. You said the U.S. kind of reverted back to Cold War strategies. What do you think the U.S. needs to do overseas to kind of shore it up for our economy? [00:03:02] Jimmy Dimon: Yeah. So, I think the war is kind of different. So, the economy is one thing. The war is far more serious. Our hearts go out to the Ukrainians who are suffering terribly. The sanctions work, and they're a tool in the tool chest. They're not a tank. They're not weapons. They're not airplanes. And we think they've probably reduced the Russian GDP by 10%, and the next round could easily do another 10%. I think what we need to be worried about, and I call a Marshall Plan for Energy, is because of this, commodity prices, so I'm talking about oil, gas, certain neon, certain wheat, and a whole bunch of other commodities, they could fluctuate and they could go dramatically up if there's a disruption in these supply chains. Global energy is kind of precarious. You look at pipelines and cyber, and you saw the cyber attack here on a pipeline. So, I think we have to be prepared to get more oil and gas to Europe to keep the alliance together and to do it quickly. And so, that's what we're worried about. That does not mean we have to stop green goals. We should still approve these projects, but this is war, and oil and gas is needed now, this winter, in Europe for allies. And I think we better be very clear. The other thing I think people should keep in mind, if oil and gas prices go very high because we fail to do that, people are going to turn off oil and gas, not going to buy it, too expensive, particularly poor in nations, and they're going to do more coal. It will be far dirtier. So, we have to be very thoughtful about this, the short run, the long-term supply of energy, but mostly we've got to help Ukraine. And I think the governments determine sanctions, not J.P. Morgan. So, we just simply help them execute whatever they want. But I do think it's a good tool in the toolbox to hopefully bring this to a war to a conclusion. [00:04:39] Speaker 1: So, a family, a consumer, sees this. What do you kind of recommend during these volatile times for them when, you know, gas prices here, $449 in Ohio? What's your recommendation, especially since you said it's going to take some time for, you know, the Fed's plan to roll out? Yeah. [00:04:58] Jimmy Dimon: So, I give you more of a longer-term strategy, which is I think we need to do things to make jobs in the lower end pay more. So, you know, I'd be in favor of doing, like, raising minimum wages, changing the earned income tax credit. And I think if oil and gas prices go that up, we have to do something about that because, as you know, the lower-income individuals suffer much more than that. So, we need to be very thoughtful. What we shouldn't do is constrain the delivery of oil and gas. That will make prices go up even more. High prices will get more into the market. So, it's important we not make, you know, silly decisions here to make really thoughtful decisions. [00:05:31] Speaker 1: You mentioned low-income households, and you need to help them out, too. I know JPMorgan Chase has been kind of reversing some of their underwriting with loans to make it more equitable for everyone, especially people of color. Could you tell me about that? [00:05:48] Jimmy Dimon: Yeah, so we've gone out of our way, you know, after COVID. We started way before all this, but COVID, the murder of George Floyd, you know, a lot of people said, we have to do more to help the black community, to help the lower-income community. So, we've announced enormous programs, $30 billion for racial equity. But think of mortgages for minority families, and how we can go about making them more attractive and more available, including using, like, data and AI to do what I call reverse discrimination. Like, you may not know, but rent payments are not included in credit score. But if you've been paying rent for 20 years, you're probably getting very good credit. So, we're looking, we're putting more loan officers in black neighborhoods and things like that. $12 billion of affordable housing. A lot of stuff on work skills. So, there's a whole list, which you should get laid, of all the work skills that we're doing here to get kids in high schools and community college with skills like coding, program management, cyber. So, when they get out, they've got good-paying jobs. And so, we're all in on that kind of thing. And there are a whole bunch of other programs, too, that I think can make a big difference. [00:06:47] Speaker 1: And you said countries like Germany, and I think it was Sweden, are doing a good job at this? [00:06:55] Jimmy Dimon: Switzerland and Germany have these apprenticeship programs. They have the same numbers as we do. 30% of the kids go to college, 70% go to apprenticeship programs. But think of it as they get certified skills. And they can go back to college, but they work in 10th grade, 11th grade, and 12th grade. When they get out, they have a job making $60,000 a year. If they want, they move up. It's almost like engineering. They can start in plumbing, and they can become massive plumbing engineer type things, or electrical, or something like that. Unemployment rates among younger people, like 17 to 25 in Switzerland and Germany, 3%. If you go across the border to France, it's something like 20%. And what I'd like to point out is that good policy works. It's hard. You've got to really roll up your sleeves and get it done. It's got to take place locally. I mean, you can't just come into Columbus and impose things in Columbus. You have people here who need certain types of jobs. Virtually everyone needs automotive, and everyone needs cyber and data, but not everyone needs construction or advanced manufacturing. And here, by the way, you're going to need a lot of all of it because of Intel moving in, which I always think is a fabulous American. You know, let's go build those great semiconductors. What about people with criminal records? Yeah. Listen, we've always been the nation of a second chance. Believe it or not, there's something like 70 million people with criminal records. Some are misdemeanors. But very often, a company, if you have anything, they won't even talk to you, and it's not right. So I'm not talking about hard and violent criminals, but to give people a second chance, and we're doing it here. We've done it all around the country, and this year we've hired something like 2,500 former felons, and they want to work hard. They don't want to go back to jail, and when they get out of jail sometimes, they can't get a car. They can't get a driver's license. They owe back fees. They can't get housing. It's not right. So to give people a second chance is the best thing for society and for them. And most of the people who hire ex-felons will tell you, loyal, hardworking, never want to go back. And a lot of the families, they just want to do whatever other Americans want to do, and a lot of them committed some stupid crime when they were a kid. [00:09:01] Speaker 1: Let's talk about large corporations for a second. Do you think large corporations should be taking stances on major policies, such as potential Supreme Court decisions on abortion rights, so to speak, and even gender and sexuality being taught in the classroom? There are some major corporations that have come out publicly on this. So what are your thoughts on that? [00:09:23] Jimmy Dimon: Like, you have to be very careful on this one. So we support proper voting rights totally. But when you talk about the voting laws that a state passes, there's usually 100 things in there. And you might sit here and say, well, I support 50, but not the other 50. Same with some of these bills for gender in schools, and same for some of these other things. So you have to be very careful when you say support. We support an LGBT community 100%. That doesn't mean that every law that someone passes, we agree with every piece of it. And so I don't think corporate America should become a weapon for either the left or the right and adopt those things. We still can have our principles, and there are times you should fight for those principles. But I read those laws very carefully. We have, and, you know, every one of these things you probably would agree with some, and now with the others. Why should we become a weapon for somebody else? [00:10:06] Speaker 1: What does that mean for, you know, some of the branches you have in most states? And, you know, some of those states have those laws. [00:10:12] Jimmy Dimon: Yeah, so we'll, when we have something to say, we'll say it. And obviously the first thing I always worry about is our employees. And so that will be something we think through, how we want to respond to that. And we may respond to that separately from commenting on the law. You know, the Supreme Court of the land is the Supreme Court of the land. And I, that's not my point there, but I can take care of my employees. [00:10:33] Speaker 1: Do you think generally laws like this, either on the state or federal level, you know, prevent businesses from coming to Ohio? [00:10:41] Jimmy Dimon: Yeah, I think you'd be very careful that the Supreme Court is talking about whether something's constitutional or not. It's not saying whether it's allowed or not. And so that's why you'd be very careful to get that. I think it's possible that some states will pass laws that, you know, certain people want to work there, and certain companies will want to go there. On the other hand, it may attract certain other people. You know, it's America. It's a democracy. Again, you have to be quite careful. And I have a little respect for, I think we shall have a little respect for all sides of these arguments sometimes. [00:11:08] Speaker 1: So I hear J.P. Morgan Chase is building a new building in Manhattan. Yeah. What does that mean for the employees here? [00:11:18] Jimmy Dimon: It doesn't mean anything for the employees here. So if you look at Manhattan, first of all, it's kind of funny. So Polaris over here is one of the biggest, you know, two-story, three-story buildings. I think it has 7,000 or something like that, people there, 2 million square feet. This building in New York is 2.5 million square feet, but straight up. So instead of taking all that land and stuff like that, it'll have about 14,000 employees. But our headcount in New York generally has been going down. Our headcount here has generally been going up. And so this is just a great place to work. We've got tech centers here. We've got marketing people. We've got mortgage folks. We've got credit card folks. We do a lot of great stuff here that you wouldn't want to do in New York. So they're not competitors. They're just different. [00:11:57] Speaker 1: And I did hear that you have a Morgan Health, too. Is that launching out of here, the Columbus location? [00:12:05] Jimmy Dimon: Yes. It's Morgan Health. So we have, we spend $2 billion in health for our 450,000 as employees and their families. And, you know, the fact is we want better outcomes. So Morgan Health, the goal is to give you better health, better outcomes, hopefully at a cheaper price, more transparency. And we use the word accountability. So affordable, accountable care would be here. We're working with Columbus, Ohio physicians to get primary care to a lot of our people who don't have it. And we have this really strong belief that if you have a primary care physician who helps you navigate kind of the minefield of care, you'll have better care, better health, better outcomes, and it'll probably be cheaper. And there are a lot of less we learn in this. So Morgan Health is kind of innovating and helping our people who do all these benefit programs think about innovative programs, telemedicine. We're doing a similar thing with Kaiser Permanente. We're looking at racial health. There are a lot of issues about how, you know, what the racial outcomes are and why, you know, for the health of people. So, yeah, we're pretty excited about Morgan Health. And I think that program starts very soon. And what can people expect from that? Better medicine. You know, if you work for us, you know, you're going to have telemedicine. You're going to be able to go somewhere, get navigation, get the help you need when you need it, have a primary care physician. And, you know, remember, what is it they say, you know, cut twice and measure twice and cut once? Yep. If I can stop you from getting sick, high blood pressure, diabetes, it could be wellness programs, exercise, where if I catch it early, you'll live longer. You know, and all those things, that's what we want. And those things also happen to be cheaper. So, you know, we should all be striving for that. You know, America has some of the best health in the world in terms of doctors, physician, pharma, some of the worst outcomes. Too many people die in childbirth. We have too much diabetes, too much obesity, too much high blood pressure, undiagnosed. And high blood pressure is a major killer, undiagnosed. So, you know, this is going to be a major effort. And I'm really hoping this kind of Columbus sets the tone for this. Mr. Diamond, thanks for your time today. Clay, thank you. I enjoyed it.