WHEN: TODAY, WEDNESDAY, JANUARY 23RD
WHERE: CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"
Following is the unofficial transcript of a CNBC interview with JPMorgan Chase Chairman & CEO Jamie Dimon today on CNBC's "Closing Bell with Maria Bartiromo." Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?play=1&video=3000143167 and http://video.cnbc.com/gallery/?play=1&video=3000143166.
All references must be sourced to CNBC.
MARIA BARTIROMO: Thanks so much, Bill. I'm here with Jamie Dimon. Chairman and CEO of JPMorgan Chase talking about the sector and business today. Jamie, it's nice to see you, as always.
JAMIE DIMON: It's a pleasure to be here.
MARIA BARTIROMO: Thank you so much for joining us. So let me ask you-- news last week that you took a pay cut as a result of-- the London Whale trading loss. Would you say now that this issue is officially behind you or are there still ramifications around the London Whale deal?
JAMIE DIMON: Well, first I didn't take it, I was given one.
MARIA BARTIROMO: You were given a pay cut.
JAMIE DIMON: Which I think is appropriate. And the board had a very tough decision to make to balance the good of the company. We did have a record year-- and the bad. You know, we had one terrible-- mistake in the year. And so-- look, we've fixed the problem from a financial risk for the most part.
We've disclosed both the company report and a completely independent board report with independent outside advisors and council, et cetera. You know, the regulators of course will have their reviews to do. So there'll be more ongoing things from that. But, you know, we mostly got the problem behind. We've cleaned up CIO and we you know we've changed procedures to make sure we manage the company properly going forward.
MARIA BARTIROMO: So what kind of changes might we expect going forward in terms of changing the bank, restructuring how the governance is done?
JAMIE DIMON: You know, look, I've very proud of JPMorgan. You know, we-- last year I think had 1.8 trillion of capital or credit for consumers or businesses. We had a problem. You know, we-- we've fully acknowledged it. We've undressed ourselves in the public.
The rest of the bank is pretty well-controlled and pretty well-managed. And, you know, it's the same bank that went through '07, '08, '09, 2010, 2011. And for the most part did fine. And-- but whenever a company makes a mistake you should analyze it and try to be better for it and make sure you apply best practices across the company. So most of the mistake was in CIO. There're a couple things we learned that we're applying across the company.
MARIA BARTIROMO: What kind of safeguards can you share with us that you are applying?
JAMIE DIMON: Well, I-- look, we pretty much have belts and suspenders about anything we do risky. So we made sure that was true. This was-- a gap in our fortress wall. And then the one that-- the one that's got to across all company is model, model governance, how models are run. We use models extensively. We just make sure they're always used properly for the right-- and in the right way. But-- we shouldn't get model obsessed. If you start to run your business on models you're going to get in trouble to.
MARIA BARTIROMO: It was pretty extraordinary that even with the trading loss, you actually-- came out-- as the most profitable bank. You had a blockbuster fourth quarter. Take us behind the quarter, what drove the results?
JAMIE DIMON: Yeah. So remember, the results for a year or quarter aren't anything you did in that quarter. I mean, we've been building systems, hiring bankers, opening branches. We, you know, we added small business bankers in California, in Florida. We added corporate bankers overseas in India, in China. We're opening Sri Lanka this week.
We added more banking powers in Nigeria. Those things have been going on and the technology f-- for last five or six years. That's what drives it. You know …businesses ups and downs. So, you know, we're affected by the environment. But for the most part that's what drives it, doing more business with customers all the time and, you know, in a way that's good for customers.
MARIA BARTIROMO: Interesting that you talk about Sri Lanka and all these other places all around the world. Is it-- should we believe that perhaps the growth in terms of the business comes outside of the United States--
JAMIE DIMON: No.
MARIA BARTIROMO: --in the coming-- quarters? Where's the opportunity outside--
JAMIE DIMON: No, we-- look--
MARIA BARTIROMO: --the U.S.?
JAMIE DIMON: --every business we have can grow. Obviously some businesses in the U.S. will be able grower s-- slower. So if you said emerging markets, well, of course they're going to grow faster in the emerging markets. And, you know, global trade is going to grow faster than other markets.
So-- but we've made huge investments overseas in global core bank, you know, investment banking-- et cetera. We've also-- in the United States, small business, private client, opening retail branches, serving customers here. We expect them all to do a good job.
Asset management, we have more product, more services, more private bankers. We've added more private bankers Asia than we've added in the United States. But obviously, you know, investable, high-net worth clients are going to grow faster in Asia than they are in the United States. So, you know, we ch-- we follow those trends and we invest-- hopefully we invest ahead of them.
MARIA BARTIROMO: For a long time we've been talking about China. But can you get a fair shake in China? I mean, most of the time you're just talking about a joint venture, right?
JAMIE DIMON: Yeah. You know, China is a very complex place. And I think it's in all of our interest that China grow peaceful, up rise and et cetera. So we're there-- we're there in a big way. We have a bunch of joint ventures, you know, in brokers, in trust, in-- asset management. It's not our preferred way of doing business.
I-- actually don't think it's that good a way of doing business. I think it -creates a whole another level of governance and control issues. But, you know, we have to play in every country we're in under rules of that country. And we really have no choice. And we want to abide by those laws. And those things may change overtime. Remember, WTO, when China entered-- I've forgotten how long ago it was now-- they were supposed to reform some of those things. So when those change, we can change our position there too. But we do quite a business in China and we're happy there.
MARIA BARTIROMO: What about Southeast Asia? Give us the other hot spots of the emerging markets that you find opportunistic for JPMorgan.
JAMIE DIMON: You know, I don't think it's mystical. You know, it's Brazil, Russia, India and China which-- the bricks. But, you know, I-- and they're all different so I don't like to treat them the same. But it's Indonesia, Turkey-- Mexico. Mexico's doing great.
You know, we've opened Columbia five years ago. We're going to do $150 million worth of business there. And remember, when we opened in Columbia-- the Republic of Columbia, you know, we're doing business in Columbia with Columbian companies. Wall Street and Columbian companies around the world and taking companies from around the world into Columbia. We bank the Republic of Columbia. We do their b-- if you want to learn about the Columbia economy or bonds call us up. We can sell you the bonds, we can give you some research. And so that's what we do. We expand our network overtime to serve more of our clients.
MARIA BARTIROMO: In order to Latin America, where is the opportunity? I've been hearing a lot recently about Mexico. What can you tell us in terms of-- that region?
JAMIE DIMON: There's a look at Mexico, good fiscal policy, low debt to GDP. It's growing. It's going to benefit by America growing and manufacturing coming back both to Mexico and-- the United States. I think they're getting ahead of their drug problem which is also our problem in the United States.
And-- so I think Mexico's very good. Chile's very good. Brazil will turn. You know, Brazil's got huge natural resources. Better and better institutions. So-- and remember we-- invest for long run. We're playing the long ball.
We don't look at, you know, what's going to happen next quarter. I don't care what happens to an economy next quarter. I care-- five, ten years out. And that's-- and our investments are long term. People, capital, systems, hooking up to exchanges. So d-- none of these things are done because we think it's going to be good next year. They're done because we think it's going to be for a long period.
MARIA BARTIROMO: Let me ask you about the U.S. I--we saw that mortgage originations were up huge-- for you in the quarter. You've been talking a lot in the last couple of years now about housing really showing some true improvements and having bottomed. Where are we in that? What are you expecting in the next couple of years in terms of housing?
JAMIE DIMON: Yup. So housing is totally bottomed. And is-- it's getting better. You know, and you show today the report that homes for sales come so far down that they're in short supply in certain markets. And they're all leading indicators. We had three million Americans a year.
It's cheaper to buy than to rent. All time affordability 'cause prices are low and mortgage rates are, like, 3.5%. And-- but it's not going to be an absence for a strong economy. You know, I really think at this point it'll be the economy will drive housing.
We still have two tight mortgage markets because of appraisals, litigation and stuff. And that'll loosen. The CFPB just came out with some good mortgage rules. But here it is, five years of the crisis, we still don't know the skin and the game rules are, the QRM rules, the Q-- all these mortgage rules. When they're in place I think it'll be easier to get a mortgage. It's still harder to get one than it should be.
MARIA BARTIROMO: Okay so we still don't have the clarity in terms of the regulatory environment.
JAMIE DIMON: No we just started. And I applaud what the CFPB came out with 'cause that's the core. What's a qualified mortgage? And I think they-- seems to me they did a pretty good job.
MARIA BARTIROMO: What are you expecting elsewhere in terms of the regulatory environment? I mean, the-- we're all wondering how Dodd Frank plays out. We're all wondering how the Volcker rule plays out. What if the Volcker rule materializes and, in fact, it forces a separation from proprietary trading and plain vanilla deposit taking? How are you going to respond?
JAMIE DIMON: Well, that's not the vocal rule. That's-- the Volcker rule is about--
MARIA BARTIROMO: Proprietary trading versus--
JAMIE DIMON: I'm always doing proprietary trading. M-- so it's really the parameters…making. I always remind the public we have the widest, deepest, most transparent, best capital markets in the whole world. So no-- I'm not opposed to the intent of the Volcker rule.
The question is let's make sure when we finish we have the widest, deepest, most transparent capital markets in the world. And so market making we serve 20,000 customers, we give them great prices, capital, advice, execution. They come to us because we give them a good price. Just like Walmart gives you a good price. And we serve and we do a lot of it. You know, and that's-- a good thing. It keeps the cost of issuance and the cost of buying cheap. Who does it give it cheap for? Retirees, pensions, municipalities, corporations. Those are good things.
So it's just-- the-- how the rule gets written, we want to make sure it keeps the American capital markets the widest, deepest and best in the world. All the other rules-- there's a lot coming. You know, and again, we support a lot of regulation. We don't agree with every piece. Matter of fact, I don't think you could find five people who agree with all 10,000 rules coming down.
We want to get them done, we want to move on. They are what they are. You know, we're-- we'll-- hopefully this year most of them will be done and we'll go forward and we'll still be serving our clients in equity capital markets, debt capital markets, mortgages, retail banking, asset management and maybe prices and products will change and we'll adjust to the world, whatever that is.
MARIA BARTIROMO: But are you going to have to serve clients in two separate entities? Are you going to have to split off investment banking--
JAMIE DIMON: That's--
MARIA BARTIROMO: --and plain vanilla is what I'm getting at.
JAMIE DIMON: --it-- whatever it is, it is what it is. And we'll probably be okay. I mean, I don't know. You know, not-- that isn't where the current rules are going. And-- but-- in some parts it is, and we can adjust to that. But the important part there, by the way, is that globally everyone's got their own rules.
So I do think it's important that, you know, what the U.K. does and what Germany does and what Singapore does and China's-- they all should relate a little bit. Otherwise we're going to have a real mismatch of legal entities and subsidiaries and-- but I think the regulators are working on that. I think they understand the global issue about having kind of have common-- doesn't have to be exactly the same. Just common-- so people know what's going to happen in problems and issues, et cetera.
MARIA BARTIROMO: What about the federal reserve and the CCAR coming up? What are you expecting in terms of paying out-- higher dividend, in terms of buybacks? What can shareholders expect?
JAMIE DIMON: Yeah, so-- like, I want to repeat what I said-- 'cause we have to be FD compliant-- at an…when we started the dividend a couple years ago we said, "You should expect constant increases." So you can assume that we think that way. And we can't tell you about the b-- stock buyback only it's going to be l-- I will always say it's going to be less than it was last time.
JAMIE DIMON: This year our goal--
MARIA BARTIROMO: Because the stock has moved up.
JAMIE DIMON: --no, it's not just that. We're going to meet our 9.5%...Basel thing this year. We're going to meet the liquidity requirements whatever they are this year. Whatever they are we're going to meet them this year. We're going to be in this, you know, by 2019 type thing.
MARIA BARTIROMO: You're already feeling confidence in terms of capital and liquidity--
JAMIE DIMON: We'll do whatever it takes to do it. I mean, I will-- we will now do whatever it takes to do it.
MARIA BARTIROMO: In terms of the federal reserve and this low interest environment, how do you offset this difficulty in terms of-- making money in such a low-rate environment?
JAMIE DIMON: One of the funny things-- here I keep on hearing that-- that the banks have benefited of a low-rate environment. They're subsidized because of low-rate environment which isn't true. You're more right. It hurts us more than help-- than helps us.
So we've told the world, it squeezes our net income by about $500 million a year. There'll be a revere side to that, rates will go up one day and we'll get that back. So we-- we're investing the business as if it were a normal environment. We know right now our margins are lower. It's just like if you were running a pizza shop and the cost of mozzarella was higher, you wouldn't stop selling pizzas 'cause your margin was low. You know one day the cost of mozzarella may come down again. So, you know, we try to be long term there and think it through.
MARIA BARTIROMO: Isn't there a boarder issue though here? In the last couple of decades your industry has been facing a whole wave of positives, deregulation, globalization, haven't things changed going forward? You're facing much higher regulation, a lot of economies looking inward. It seems like a structural change has occurred--
JAMIE DIMON: Yeah, I could point out a lot of those-- quote-- positives didn't end up to be positive. A lot of companies went bankrupt, they didn't survive. There were some survivors. Yeah, we're going to have a lot more regulation. That's life. We've always regulated. The-- you know, and I always fight for good relegation. Not just more or less.
And it will change. Some business models-- I think different companies have different approaches. It'll change products and price. I think the cost of your credit will go up a little bit. I'm not saying it's a catastrophe. But it's just-- things will change and people will adjust to new environment. And hopefully all said and being done, the system will be stronger 'cause that was the point of it all to get the system stronger.
MARIA BARTIROMO: Does the system get stronger after more attacks? I mean, here we are looking at, you know, an environment where the population, the populous is still attacking the banks, you know, even the president's inauguration speech the other night, it just felt like it's going to be a continued pressure on the financial services industry.
JAMIE DIMON: And so when you say the populous, I did see the CNBC run-- this kind of very anti-bank two-minute segment whatever it was. And-- so you are the populous. You know, you're just driving it--you know, people can't help themselves.
MARIA BARTIROMO: Well-- I would--
JAMIE DIMON: let me finish--
MARIA BARTIROMO: --like to believe we're reflecting--
JAMIE DIMON: my job--
MARIA BARTIROMO: --what people are talking about.
JAMIE DIMON: --that's not-- that's not logic or intelligence or getting smarter. That is just joining the mob. Okay, we need to find our problems, collaboration, analy-- that's what's going to get us there. My job-- look, I don't particularly like, you know, banks being attacked all the time.
My job is to serve my clients. Our clients include 30 million American customers, 30,000 middle market companies, 10,000… around the world, 20,000 investors, five million-- retail investors. And we want to do a great job for them. That's my job. I will die doing that job. And, you know, if the press is terrible then, you know, you just have to deal with it.
MARIA BARTIROMO: You think the press is terrible?
JAMIE DIMON: No. If it is, you have to deal with it.
MARIA BARTIROMO: What about President Obama--
JAMIE DIMON: I look, I my
MARIA BARTIROMO: --what kind of a four--
JAMIE DIMON: --my attitude about the president is we need more facts, analysis and collaboration. It is not going to fix our system to scapegoat and finger point.
MARIA BARTIROMO: But will you--
JAMIE DIMON: And that--
MARIA BARTIROMO: --get it?
JAMIE DIMON: --I think so. I think the
MARIA BARTIROMO: How?
JAMIE DIMON: --I think people get exhausted eventually of just, you know, scapegoating and finger pointing.
MARIA BARTIROMO: Uh-huh (AFFIRM). I--
JAMIE DIMON: And it's not helping our economy grow. And if you want jobs let's fix the problems. That-- that will create jobs. Good policy will help create jobs.
MARIA BARTIROMO: what policies will create jobs? That's what we're all trying to figure out. How do you create jobs?
JAMIE DIMON: Look, I think I've been very consistent that-- that if we had done the sims—the grand bargain-- it doesn't have to be exactly the one that anyone wants. Just-- that showed that America can make decisions, it set a more effective tax system, a reduced tax uncertainty going forward and I think we could have had-- have a booming environment.
Now I may be wrong. That's my own personal belief. If we have a grand bargain, America would take off. I think it's very important for America to get strong because the rest of the world needs us to. You know, 'cause Europe still has its issues and it will for a couple of years. So I-- I think it's important that America kind of take the lead here. And I'm hoping our Congress and our president-- that's what they do.
MARIA BARTIROMO: Are you--
JAMIE DIMON: And if they don't, JPMorgan will deal with it. It's not personal. It's about-- I want jobs.
MARIA BARTIROMO: --are you expecting a fight around the debt ceiling? Do you think we'll have a disruption around this-- you know, inability to compromise?
JAMIE DIMON: I know nothing more than you other what I read in the paper today. And it seems like they're already starting to compromise by pushing it out, asking for a budget and doing a whole bunch of things which I think all seem rational to me. And a compromise, by the way. So I applaud them.
MARIA BARTIROMO: What does your gut tell you about all this money moving into stocks recently? We've had a fantastic ye-- early-- 2013. Do you think this is sustainable?
JAMIE DIMON: Yeah, the economy growth is sustainable. And I still think you can buy American companies at pretty good prices. These are some of the world class companies. And r-- you know, and that's not just American companies. They're European and Japanese and Chinese companies. But you're still buying at fairly good prices. And the alternatives aren't that good. So, yeah, I'm comfortable owning stocks right now.
MARIA BARTIROMO: And are you seeing that kind of comfort on the part of investors? I mean, the private bank, the wealth management? I mean, what are you seeing in terms of the sentiment?
JAMIE DIMON: I think yes but not, you know, it's not-- you and I have seen real bull markets. It's not kind of, like, you know, everything's gung-ho. There's still a lot of suspicion and caution, et cetera, which is not a bad thing, by the way.
MARIA BARTIROMO: Jamie, well, good to have you on the program.
JAMIE DIMON: Yeah, thank you.
MARIA BARTIROMO: Thank you so much. Jamie Dimon joining us. Bill, I'll send it back to you.
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