JPMorgan Chase CEO Jamie Dimon is calling for a broader commitment to American ideals as his bank grapples with geopolitical uncertainty, a faltering economy and the revolutionary impact of artificial intelligence.
Dimon, in his annual letter to shareholders, Published on MondayCalled the country’s 250th anniversary “the perfect time to rededicate ourselves to freedom, liberty and opportunity – the values that have made this our great nation.”
Dimon said, “The challenges we all face are significant. The list is long but at the top are the ongoing terrible war and violence in Ukraine, the ongoing war in Iran and broader hostilities in the Middle East, terrorist activity and rising geopolitical tensions, particularly with China.” “Even in difficult times, we are confident that America will do what it has always done – focus on the values that have defined our single nation and maintained our leadership of the free world.”
Dimon, the longtime leader of the world’s largest bank by market cap, is one of the most outspoken among American corporate leaders. Their annual letter offers not only a record of their company’s performance, but also a comprehensive view on the global situation.
In Monday’s letter, Dimon cited headwinds including global conflict, persistent inflation, private market turmoil and what he called “bad bank regulations.”
Dimon said that while the regulations implemented after the 2008 financial crisis “achieved some good things… they also created a fragmented, slow-moving system with expensive, overlapping and excessive rules and regulations – some of which left the financial system vulnerable and reduced productive lending.”
He specifically cited the negative consequences of capital and liquidity requirements, the current creation of the Federal Reserve’s stress test, and a “badly handled” process at the Federal Deposit Insurance Corporation.
Dimon also said JPMorgan’s reaction to the Basel 3 endgame and revised proposals for a global systemically important bank, or GSIB, surcharge issued by U.S. regulators last month was “mixed.”
“While it is good to see that the recent proposals for the Basel 3 endgame (B3E) and the GSIB have attempted to reduce the increase in required capital from the 2023 proposals, there are still some aspects that are clearly redundant,” Dimon said.
The CEO said that with a total proposed surcharge of about 5%, the bank “would be required to hold 50% more capital in the majority of loans it makes to U.S. consumers and businesses compared to a large non-GSIB bank for the same set of loans.”
“Frankly, it’s not right and it’s un-American,” he said.
on trade and geopolitics
Dimon identified geopolitical tensions as the primary risk facing his bank, namely the wars in Ukraine and Iran and their effects on commodities and global markets – considering the wars an “area of uncertainty”.
“The outcome of current geopolitical events could be a defining factor in the shape of the future global economic order,” he said. “Then, it can’t be.”
He also cited the “restructuring of economic relations in the world” brought about by US trade policy. us President Donald Trump has made tariffs a signature policy of his second term in office, imposing higher tariffs on dozens of trading partners and import categories.
“The trade fight is clearly not over, and it is to be expected that many countries are analyzing how and with whom they should create trade arrangements,” Dimon said. “While some of this is necessary for national security and resilience, which are paramount, it is difficult to know what the long-term impacts will be.”
on private markets
Dimon also recently spoke Turbulence in private markets as fears over loans to software companies lead to massive redemption requests in private credit funds.
Dimon said, “Overall, private loans do not have much transparency or rigorous appraisal ‘marks’ on their loans – making it more likely that people will sell if they think the environment will deteriorate – even if the actual losses barely change.”
The executive said the actual damage is already greater than it should be relative to the environment.
“However, it is to be expected that at some point insurance regulators will insist on more stringent ratings or markdowns, leading to greater capital demand,” he said.
on AI
Dimon reiterated Monday that the pace of AI adoption is unlike any technology that has come before it. He said that although its implementation would be “transformational”, it remains to be seen how the AI revolution will unfold.
Dimon said, “Overall, investing in AI is not a speculative bubble; rather, it will yield significant returns. However, at this time, we cannot predict the ultimate winners and losers in AI-related industries.”
“We won’t bury our heads in the sand. We will deploy AI, like all technology, to do better for our customers (and employees),” he wrote.
JPMorgan has been at the forefront of Wall Street firms introducing AI into every level of its business. Last year, JPMorgan’s chief analytics officer Derek Waldron Gave CNBC an early demonstration of how it is using agentic AI to speed up work and improve outcomes for customers and shareholders.
In February, Dimon said AI was reshaping JPMorgan’s workforce and that the bank had “huge redeployment plans” for employees.
“We focused on some ‘known and predictable’ and some ‘known unknown’ events,” he said. “But large technological changes like AI always also have second- and third-order effects that can have profound effects on society. … We must also monitor such change.”
— CNBC’s Leslie Pickler and Ritika Shah contributed to this report.
