Jamie Dimon: America is Undergoing a Mild Recovery

FOX Business Network spoke exclusively with JPMorgan (NYSE:JPM) CEO Jamie Dimon from the JPMorgan’s New York headquarters about the health of the company, financial regulation, and the United States economy. Dimon said he hopes to continue to run JPMorgan for “three, five years or more.” Dimon said he “was in favor of the Financial Services Oversight Committee” because prior to the establishment of that organization there has been “no one person in charge.” Dimon went on to say that “Financial Oversight Committee wasn’t given enough teeth” and he is in favor of regulation because if  “you want a recovery in the global economy, the regulatory policy and government policy have to work together.”

On how long he plans to run JPMorgan:
“Hopefully many years. I serve at the pleasure of the board who can fire me tomorrow, but my intent would be to be here for three, five years or more.”

On what he plans to do after JPMorgan:

“I’ve been running big companies for a long time. I’m not going to run another big company. So it will probably be a bunch of stuff between teaching and investing and doing deals with friends and getting involved in maybe some boards.”

On who is spearheading the financial regulatory overhaul:

“There’s been no one in charge. There’s no one person in charge. One of the regulations I was in favor of is the Financial Services Oversight Committee, because one of the problems that we had is that we didn’t have one place, so we’ve got a lot of things unregulated or improperly regulated; gaps in the system. But the Financial Oversight Committee wasn’t given enough teeth. So here I’m complaining that that particular role should be given more teeth, not less teeth. Put someone in charge and say, no, we’re not going to do A, B and C, because that’s bad for the system. We have 10 or 20 major regulators now. A lot of these regulations, all they’re looking at is what protects their own entity. They’re not looking across the whole system anymore.”

On his criticism of government regulation:

“I haven’t been that critical on regulation. I have agreed with a lot of it. If you want a recovery in the global economy, the regulatory policy and government policy have to work together. A lot of my comments about Basel III and Dodd Frank are not because they are going to damage JPMorgan, it’s because they are not rational policy, they are not coordinated, making things so complex it’s worse for the system. It will cause unintended consequences down the road. What I worry about is someone is going to write the book 20 years from now about all the things we did during the crisis to make it worse, not better.”

On why Treasury Secretary Timothy Geithner did not consider his opposition to regulation:

“I don’t know. Tim knows exactly what I think. But if you speak to a lot of people, they don’t necessarily disagree. There are people putting their favorite pet peeve in there that it just became very convoluted. Hopefully, some of this will be fixed. And again, I’m saying, JPMorgan will be fine. I think this action could hurt medium sized and smaller banks more, which I’m not in favor of.”

On his prediction for the GDP growth in 2012:
“It could be 3 or 4 [percent].”

On the validity of the Volcker Rule:
“Proprietary trading  had very little to do with the financial crisis or the root cause, yet the Volcker Rule, if you interpret it, you can’t even make markets for your clients. Part of the Volcker Rule I agreed with, which is no prop trading. But market making is an essential function. And the public should recognize that we have the widest, the deepest, the most transparent capital markets in the world.  And part of that is because we have enormous market making. If the rules were written as they originally came out; I suspect they’ll be changed, it would really make it hard to be a market maker in the United States.”

On his statement that some of the global regulations are “un-American”:
“Some of the rules in Basel III are directly aimed at just American banks. They don’t have those kind of assets overseas. So that’s number one. Number two, how they do risk rate assets, it’s quite clear that in certain parts of the world, they’re much more aggressive in that. So that is clearly against American banks. Some of the things that were done weren’t done by European regulators, they were done by us.  We can — we don’t — we can’t use preferred stock. That was taken out of the rules here for capital.  They can use preferred stock overseas, which is a cheap form of capital. Volcker, when that was originally done, I remember Paul Volcker saying everyone is going to do it. Well, you know what? The rest of the world said no way. So that applies just to us. American companies, wherever they do business, have to do it under different requirements than overseas. Then that business will simply move to Deutsche Bank.”

On the overall health of the United States economy:
“I think America has a mild recovery, but it is broad-based and it could be strengthening as we speak. Once household formation goes up, which I think will follow jobs, we’re going to have to start building more homes. We go back to building 1.3 million a year, which our economists think we’re going to have to start building soon.  It could be six months, nine months, 12 months, 18 months. That alone adds two or three million jobs. So that is what I would call the beginning of a self-sustaining recovery. More jobs, more incomes, more jobs, more homes, more people employed, more kids moving out of their parents’ homes.”

On President Obama:

“It’s fair to say that he entered probably one of the most complex economies ever. And for a while, I think people did a very good job. I’m not going to talk about President Obama. I think for the last 18 months, between Congress, Democrats, Republicans, regulators, overseas regulators, it hasn’t been coordinated in a way that’s going to lead to recovery. Now, you can blame that on the president.  You can blame it on the Democrats. You can blame it on the Republicans. I personally don’t care. This has got nothing to do with Democrats and Republicans to me. I believe there are policy solutions and we don’t have all the people in the room working on what those solutions are. What we have is a lot of people just yelling at each other.”

On his access to President Obama and whether his relationship with the president has “cooled off” at all:

“First of all, whoever was in the White House, a Republican or a Democrat, I would work with them, take their calls and try to help. There has been no cooling on my part, maybe on his part, but you would have to ask them that. Number two is we’d like to be part of the solutions, if we’re asked. I don’t believe there’s been a lot of collaboration. One of my complaints has been I think people should cooperate more, Democrats, Republicans and practitioners. That would be a beneficial thing. I don’t blame that on just the president. I look at the whole picture. It takes two to compromise.”

On the Occupy Wall Street movement:
“There are parts I agree with and there are parts I don’t. It is fair for the average American to say that the major institutions of America let me down.  That’s true.  And it is fair, generically, to say, well, that’s predominantly Wall Street and Washington. I think once you go beyond that and say all politicians, all banks, all bankers, that’s terrible. I don’t accept that. I know I’ll never win this argument. But it’s just not accurate. It’s become a less equitable society. I don’t think that’s a good thing. It’s becoming more equitable now because, you know, the income of the top 1 percent is coming down dramatically but I think we should have a conversation, what do you mean by how you’re going to fix that? So we look for solutions. We’ve hired a lot of people. We’re lending to small businesses, we’re lending mortgages, we’re lending to corporations. That’s what we’re trying to do to fix the problem. So I understand the generic arguments, but to me, I prefer to look for real solutions. I’ve disagreed right from the beginning that blanket blame of all banks, we’re all bad guys or whatever.  I don’t like that.  I think that’s just a form of discrimination that should be stopped.  It doesn’t lead to productive conversation. Not everyone was equally bad. Not everyone was, in fact, bad. I think it denigrates America.”

On whether JPMorgan is one of Mitt Romney’s largest campaign contributors:
“Not JPMorgan. JPMorgan employees. I was not at a Romney fundraiser. I had a cup of coffee with Mitt Romney. I would have a cup of coffee with any candidate. That’s what I do. And someone wrote that was a fundraiser. I was not. We think it’s OK for our people to be involved in the political process.”

On whether he will publically endorse someone for president:

“I don’t. I’m on the New York Fed Board.  I’m not allowed to endorse or fundraise. I’ve been a Democrat my whole life and now you see I’m barley a Democrat, because I think the left side of the party is really destructive. But I think the right side of the Republicans are equally destructive. So I’m more in the middle. I haven’t decided who I’m going to vote for.”

On whether the fact that shares of JPMorgan fell 22 percent this year worries him:
“Surprisingly, not really. It kind of hurts a little bit to work this hard for so long and the stock has gone down and not up. On the other hand, we did have record earnings. But if you build a company, serve clients, open branches, hire banker assistants, people marketing, earn a fair profit, do great stuff for the communities you’re in, the stock will eventually reflect that. So we keep our eye on the ball and we build the company.”

On whether he would leave JPMorgan next year if the stock price is $160:
“No. I would not leave or not leave because of the stock price.”

On whether he would ever like to be Treasury Secretary:
“Unlikely. I don’t think I’m suited for it.”

On executive pay:
“It’s about the same as last year.”

On whether executive pay remaining the same is enough to “appease people”:
“I don’t think the job of JPMorgan is to appease anybody. I’m not in the appeasement business. We should do the right thing for the right reason. When we did badly, my pay was zero. When we do better, the pay goes up. The pay is set by the board. It’s not set by me.  We’ve had very good policies here. Remember, JPMorgan never lost money. It didn’t need TARP. It made $7 billion in the worst of all years. It never lost money in a quarter. We were asked to take TARP because it was in the interests of the United States of America. We were asked by the secretary of Treasury. I think he was right.”

On how taking TARP money gave the company “a black mark” but helped the country as a whole:
“I didn’t anticipate that. I think Hank Paulson, with Tim Geithner and Ben Bernanke, saved the system. And I think they took some very bold and dramatic action that they had the guts and brains to take at the precise point in time. It was a tsunami of stuff. And they realized that they had to stop it from sinking. And, you know, Warren Buffet called it Pearl Harbor and they took the action. It had unintended consequences but I didn’t realize that one of them would be complete vilification of all banks and complete vilification of all the people that took TARP. I do think it helped stave off a far worse situation. I think we have to end this too big to fail.  We need bankruptcy for big companies. We need bankruptcy that you, the taxpayer, are absolutely convicted that you will never pay and that company could be dismembered.”

On whether Dodd-Frank has done enough to end “too big to fail”:
“No. I think it could be ended with some of the requirements in Dodd-Frank. The rules still have to be written a little bit. And we need to make sure that people understand how resolution takes place and bankruptcy and unwinding these firms. A lot of the regulators, not me, are saying we are not sure that we have a proper way to do the detailed dismembering of the firm in a way that it doesn’t damage anybody.”

On the universal banking model and whether he would agree they are “not lending like they used to lend” as a result:
“No, we’re not. Our small business loans are 50 percent this year and back to where it was three years ago. Fifty. Little market lending is up 18 percent, one of the biggest increases I’ve ever seen. I think community banks are wonderful. Regional banks are wonderful.  But we do things that they can’t.  So they do some things we can’t.  So in our side of the business, huge economies of scale. And the public doesn’t know this, either, by the way. We have the least consolidated banking system in the world. The problems had nothing to do with the size of banks relative to the economy.”

On Bank of America:

“I want Bank of America to become healthy and grow and do a great job for this country and the world.  That’s what I want.  It doesn’t help us at all if you see anyone struggling.  And I think they’ve done a lot of work to get there, by the way.”