The JP Morgan chief executive reveals his thoughts on Brexit, Trump and the future of Wall Street

The risk of the UK leaving the European Union was always a worry for Jamie Dimon. And now that Brexit is set to happen, the chairman and chief executive of JP Morgan Chase is concerned about more than just his business.

“A major fear to me about Brexit is that it causes the EU to fail down the road,” Dimon said in a recent interview at JP Morgan’s Victoria Embankment offices in London.

He proclaimed a “love” for London, but provided no reassurance that JP Morgan wouldn’t move business from the City to the continent after Brexit takes effect.

“I wish we could keep it all here [in London],” said Dimon, who wore a pair of cufflinks made from British coins. “I think it’s very good for Europe.”

In the run-up to the June referendum, Dimon spoke publicly in favour of the UK remaining in the EU. At that time, he warned that JP Morgan may have to move thousands of jobs out of the country in the event of a vote to leave. The bank, which has its European headquarters in Canary Wharf, employs 16,000 people in the UK.

In a wide-ranging interview, Dimon also pleaded for unity in the US in the wake of Donald Trump’s presidential election victory. He echoed a memo he sent to JP Morgan employees after the election results, in which he said it was “more important than ever to bind the wounds of our nation”.

Dimon is likely to play a significant role in what comes next. After Trump’s election, rumours started to circulate that Dimon had been asked to become Treasury Secretary, a role that was ultimately filled by another well-known Wall Street name, ex-Goldman Sachs banker Steve Mnuchin.

Instead, Dimon has joined 15 other business leaders who will meet with the president regularly as members of his strategic and policy forum, led by forum chairman and Blackstone co-founder Stephen Schwarzman.

In a statement announcing the forum, Trump said his picks, who also include BlackRock chief executive Larry Fink and former General Electric boss Jack Welch, “know what it takes to create jobs and drive economic growth”, adding that his goal was “drawing on private sector expertise and cutting the government red tape that is holding back our businesses from hiring, innovating and expanding”.

What follows is an edited version of Dimon’s interview with FN.

What do you expect from Trump and what is Wall Street looking to him for?

He seems to like to get things done, which could be good news for US economic policy. His cabinet posts for economic positions are people who want to get things done and prioritise growth. I joined his economic advisory team and just signed up to lead the Business Roundtable in DC. I think there is an opportunity to collaborate here, if we work across parties thoughtfully.

People are talking about comments he’s made about deregulation. Does that sound promising to you, a rethink of the regulatory burden placed on firms?

When you have a huge amount of regulations done, like a Dodd-Frank, when you’re talking about hundreds and thousands of pages of regulations, requirements, it has always been normal in America to open up some legislation like that and recalibrate it. I don’t think we should get rid of Dodd-Frank.

Look, we need regulation, that’s a given. But if you travel around America, there’s no question over-regulation is stymieing business. It’s hard to prove, and business people always complain about over-regulation, so it usually gets discredited. But I guarantee you, it’s true that over-regulation has been holding back growth, and big data will prove it one day.

In your memo to staff you linked the election result and recent events in Europe and talked about people’s frustrations. What do you see there?

I think there are a lot of different things. Some people think the government has not been helping them. Some people think that immigration has been hurting them. Some people think that trade has hurt them. Some people are not against trade but think more should be done to help the people that trade hurt. Some small businesses will talk about their regulatory environment. Big businesses will talk about the attack on business by big government. I think it’s a whole wide range of things.

On that list I would add income inequality, job opportunity, living wage-type issues. I think those are completely legitimate issues that society should look at and do something about in an open way. I think there are things that could fix it. Yelling and screaming about it isn’t going to fix it. Looking at the facts and real collaboration will fix it.

You’ve spoken passionately about the role of the European Union, before and after the Brexit referendum. What’s your take now? How do you sense that history will view this?

A major fear to me about Brexit is that it causes the EU to fail down the road. That’s my biggest fear now. The British people have a complete right to decide what they want to do, as do all the people in Europe, and JP Morgan will be able to adapt to whatever the UK and the EU decide. But there was a good reason for the European Union, for peace and for the economic prosperity from the common market. Those are still two good reasons. I completely understand the frustration that it got bogged down with bureaucracy, and folks here in the UK would talk about it being anti-democratic with people making decisions in Brussels who weren’t elected that affected Britain. And the common market isn’t everything, I completely understand that. Hopefully, rational heads will make it in a way that’s good for everybody.

What’s your feeling at the moment as to what it could mean for London as a financial centre?

I don’t know yet. We’re just not going to know until the negotiations take place. My goal is that whatever it is, I want to be able to serve clients the next day. So we just want to make sure we’re prepared to serve the client the next day. And then we’ll simply have to follow the new laws.

I wish we could keep it all here [in London]. I think it’s very good for Europe. I think the efficiencies of the financial markets here accrue to Europe, too, because they get all those efficiencies embedded in how products are priced.

You said before that an estimate of how many jobs you might need to move from the UK was about 4,000. Is that still a fair guess, notwithstanding all the uncertainties?

In some scenarios, it’s possible. We’ve been planning for a range of outcomes because it’s still as uncertain as a couple months ago. What we know now is that this will be a slow process, and all the staff moves would not happen at once but over a period of years. If there is not a clear transitional period decided early in the process, where passporting rules still apply for a few years after negotiations, then we’d likely have to accelerate our timetable in complying with new rules.

I guarantee you, it’s true that over-regulation has been holding back growth, and big data will prove it one day.


Are you satisfied with the clarity you’re getting from UK government?

We’re satisfied that they’re trying to be as clear and transparent as they can, but it’s a complex negotiation. It’s not up to one side. It’s not even up to two sides. It’s up to 28 sides. You saw that with Wallonia and the Canadian free trade [deal]. Those kinds of things make it unclear as everyone’s going to have their opinion about it.

We’re close to 10 years on from the start of the financial crisis. What personal lessons did you take from that time?

I was very, very cautious. If you read all the stuff I wrote before the crisis, I was always very cautious that you can have a crisis, you need to be prepared for a crisis, a crisis often comes from a place you don’t expect, it often has secondary and tertiary effects you don’t expect. The protection from that is you run a very good company, you have functioning risk committees, you have constant conversation, you have plenty of capital and liquidity to deal with it.

I’ll never take money from the government again. That hurt. We didn’t need it and it’s been bad. I wouldn’t buy a company at the request of the government, either, like Bear Stearns. We did that to help and we’ve been severely punished since then.

You’ve said before that revisiting that situation, you wouldn’t do it again.

I wouldn’t do it again. I made a mistake. We got a lot of good people from Bear Stearns but we got a lot of headache from the government too.

What did you learn from your experience with the London Whale trades? Could it happen again?

I wrote a lot about lessons learned in my 2012 letter to shareholders. Since then we’ve spent billions of dollars to strengthen our control efforts. We should learn from our mistakes, but know that people will always make them. That’s human nature. Strive to make the missteps small and infrequent. In 2017, I’ll stress one important lesson I wrote about then – even in tough times, don’t lose sight of what’s important for a business, serving your clients.

What are the biggest challenges you face today in running a bank in low-interest-rate markets? What’s the toughest task?

It’s not low-interest[-rate] markets. That, to me, is the cost of cheese if you make pizza. And I think it’s much tougher here because you have negative rates.

Normally, in my job, I would talk about credit risk and market-making and operational… But the biggest issues, things that can cause damage or help, are policy. How we do public policy. Dealing with this wage inequality issue, that’s hurting the economies. And if we don’t have good policy, we’re not going to have good growth. We need to have growth policies as opposed to policies which are making growth worse.

Trying to navigate that around the world and trying to play a helpful part in that is what’s important. There are ideas, there are people, there are situations – we do things philanthropically, we do things with work skills initiatives, we do a lot of studies. We want to help communities. That’s always been part of what JP Morgan Chase does, and it’s probably even more important today to try to be involved in an intelligent way.

Fintech continues to be a hot topic. Is there a threat to banks here that is real or is that overblown? Are there more opportunities? What impact can younger, disruptive companies have on what you’re doing?

I’ve always been a believer that we should use technology to do a better job for our clients. Better, faster, cheaper. You can move money around the world on an iPad. You can do FX on here [motions to phone]. You can look at your bills, do bill pay. You weren’t able to do that 15 years ago, and the clients love it.

On the investment banking side, in electronic trading, five years ago you had to call up to do an interest-rate swap. Now you can go to a screen, push a few buttons and it’s done – straight through processing. And the cost of that has come down dramatically. The error rate is lower, it’s cheaper for the customer, they can customise things the way they want them. We have to do that. I’m not afraid of that.

Is real disruption possible? Yes it is, so we’re not being complacent about that. If you ask where I focus the most, it would be in the payment systems. We move trillions of dollars around the world every day at a very cheap price, and I want us to stay on top in that business.

The 2017 outlook – what are your hopes for the year ahead?

My biggest set of hopes is that we have good, rational, thoughtful policy decisions made that are conducive to growth and help societies. That would be the biggest hope I have. We want to play any role we can play to do that. That is the biggest hope I have. It’s not about whether interest rates go up or markets or any of that stuff. I would like to see a society where people are more satisfied, we create more jobs, more high-paying jobs. All those things that people are complaining about are important to fix.

The issue with policy is that so often it has the adverse consequence. There was a city where they had too many rats and someone said, “for every rat you kill I’ll pay you. But you have to prove you killed a rat by showing me a rat tail.” Sounds good, right?


You know what happened?

Go on.

People started growing rats. I’m being serious. I can go on and on about policies that were meant to do this, but they don’t accomplish what you want. They accomplish the opposite of what you want. And so people have to really think through in sequence how these are going to work and then if they don’t work, change them.

Looking further ahead – 10, 20, 30 years – what will the bank of the future look like?

Corporate customers are still going to need equity, M&A and debt. They’re still going to need FX and derivatives to manage their exposures. Far more of the delivery will be mobile, online, the cost will come down, a lot of trades will be automated. There will be more people who are technologists more than they are a trader or a salesman.

On the consumer side it’s the same thing – they’re still going to need debt, debit card, credit card, home loans, things like that. More and more will be straight through processing, the cost will come down.

The branch side has started shrinking and there will be fewer people in it… You could argue that one day branches will be really small. That’s possible. Or that they’ll move – you don’t need to have a ground-floor location. You’ve seen that with stock brokers. They used to be on the ground, they moved to the second floor.

As long as you’re giving the client what they want and using technology to do it, they’ll still be there. There may be some things that are completely different. Is it possible there’ll be something the client still needs and we’re not doing it at all? It’s possible.

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