JPMorgan Chase CEO Jamie Dimon opined in a letter to his shareholders that the COVID-19 crisis will trigger a “bad recession combined with some type of financial stress similar to that seen in the 2008 global financial crisis” , and assured that even in an “extremely adverse scenario” will strive to meet the needs of its customers.
Dimon, 64, recently recovered from coronary surgery, explained in the letter released Monday that the largest bank in the United States is not “immune” to the impact of the coronavirus pandemic – which has its epicenter in the country with almost 338,000 contagions – but ruled out asking for “regulatory relief” from the Donald Trump government after practically a decade of “records” in its financial results.
“Stopping stock buybacks was a prudent move; we don’t know what the future holds, but at the very least we assume it will include a bad recession combined with some type of financial stress similar to that seen in the 2008 global financial crisis.” Our bank cannot be immune to the effects of this type of stress, “he said.
PROFITABILITY IN ADVERSITY
JPMorgan Chase had pretax earnings of $ 48 billion in 2019 that “will allow it to absorb the loss of revenue and high costs that inevitably follow a crisis,” Dimon said, and for the whole of 2020 he estimates the bank will be “profitable. in all quarters “or” even better than that “if the forecasts of the Federal Reserve are fulfilled, which contemplates a peak of unemployment of 10% in the US and a stock market drop of 50%.
Even in an “extremely adverse scenario” that sees a 35% contraction in US GDP in the second quarter of 2020, the company would still manage to end the year with strong liquidity and capital of about $ 170 billion.
“It is also important to say that both in our main scenario for the 2020 results and in our extremely adverse scenario, we will lend an additional 150,000 million to meet the needs of our clients,” said the also president of the financial group, who reiterated that “resources Capital and liquidity are very solid in both models “and invited to take advantage of their support programs.
However, Dimon noted that the firm is preparing to protect itself from a “risk of litigation” in the future and explained that “as we approach the extremely adverse scenario, current regulatory restrictions will limit the additional actions we can take to help to customers, despite the extraordinary amount of capital and liquidity that we would be able to deploy. “
“Saying that we will not ask for regulatory aid does not mean that the government should not change some rules and regulations. For example, some rules may prevent healthy, well-capitalized banks from lending freely in times of stress – This can hurt customers as they deepen the crisis. Quitting high-quality available liquidity in times of need is a lost opportunity forever, “he remarked.
Dimon applauded the drastic measures taken by the US Treasury Department and the Federal Reserve to try to mitigate the economic impact of the COVID-19 crisis, especially those of the central bank, “which have already dramatically reduced financial stress on the system” , but criticized that the country “was not adequately prepared for this pandemic.”
The coronavirus pandemic, said the banker, is “an example of poor planning and management that has harmed” the United States, and a reflection of this is school dropout, “the increasingly expensive healthcare system,” the “plague” of obesity, excessive bureaucracy that “paralyzes” small businesses, or “inefficiency” at the state and federal levels, “he listed.
“We have failed in proper immigration policies, our social safety nets are poorly designed, and payrolls for lower-income Americans have been effectively declining,” added Dimon, who concluded: “My most fervent hope is that the US will roll up its sleeves and begin to attack these problems. “