JPMorgan boss dismisses analyst's claims, says banks can cope with mounting presssures
JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, disputing Meredith Whitney's description of U.S. lenders as “zombie banks,” said the firms can navigate low interest rates and other revenue pressures.
“I love Meredith and all that, but honestly most of that stuff is hogwash,” Dimon told CNBC when asked about the analyst's comments to the broadcaster earlier today. “All businesses have things that change all the time -- interest rates, commodities prices, cost of wages, demand, supply -- and you have to manage around that.”
JPMorgan, the second-biggest U.S. bank, was the most profitable among the nation's largest lenders in 2010 with a record $17.4 billion in earnings. The firm reported its highest half-year profit ever at almost $11 billion as of June 30, even as it labored under bad mortgages and rising litigation costs.
“The large banks which dominate most of the lending in the United States are effectively zombie banks,” Whitney had told CNBC, according to its website. “You've got an expense structure that just doesn't match the revenue structure.”
The KBW Bank Index of 24 companies fell 14 percent this month through yesterday amid concern that the U.S. economy is weakening and that firms may face losses linked to the European sovereign-debt crisis. The index fell 4.4 percent to 37.83 at 2:06 p.m. in New York, outpacing a 2 percent decline in the broader Standard & Poor's 500 Index.
Shot in the Foot
Dimon, touring his California branch network in a bus, said the recent volatility hasn't shaken his optimism about the U.S. economy, which was unnecessarily set back by a prolonged political debate over raising the government's debt ceiling. S&P's subsequent downgrade of the nation's credit rating wasn't “that material a thing,” and most executives don't rely on those grades to make decisions, he said.
Still, “we shot ourselves in the foot,” he said. “The debt ceiling thing kind of demoralized the American public.”
The underlying economy and financial system remain strong, with mortgage, credit and other markets open and healthy, Dimon said. JPMorgan's stock price, which extended this year's 16 percent slide to $35.61 today from about $40 a share when he became CEO at the start of 2006, will be higher in five years, he predicted.
“The strength of the system is going to blow your socks off when it comes out of this malaise,” he said. “The fundamental strength of the nation is still there. We're just stuck.”
Dimon also dismissed speculation that he's a candidate for U.S. Treasury secretary if and when Timothy F. Geithner steps down, saying he would never be interested in that job.
“If you know me at all, and you all do a little bit, I'm not suited to politics,” Dimon said. “So you guys should stop asking that question. I know it, and you know it.”
--Bloomberg News--
