GO
Loading...

UPDATE 1-JPMorgan's Dimon upbeat about U.S. budget deal, economy

Wednesday, 11 Dec 2013 | 1:23 PM ET

* Dimon says U.S. economic growth can top 3 pct in 2014

* Settling government allegations was best, despite cost

* Bank's risk management, regulatory compliance costs up

Dec 11 (Reuters) - JPMorgan Chase & Co CEO Jamie Dimon said on Wednesday he was thankful congressional leaders had reached a budget deal and was "less worried" about the impact of an eventual scaling back of the Federal Reserve's market-friendly stimulus measures.

The agreement on the federal budget was good for business confidence, Dimon said at an investor conference in New York, adding he would send thank-you notes to congressional leaders.

"This budget deal is a big deal...because we don't have to go through that crisis again," Dimon said, referring to a stalemate earlier this year that threatened a government debt default.

Business demand for loans should rise to more normal levels as confidence rises, and demand for investment banking services in 2014 would be stronger than many people expect, he said. Higher interest rates that would come with a Fed tapering of its $85 billion a month in bond purchases would be good for the bank, he said.

"The U.S. economy can easily grow at 3 percent-plus next year," he said.

Touching on a wide range of topics, Dimon described public attention to investigations of the bank by regulators and law enforcers as "really, really painful."

JPMorgan, the biggest U.S. bank by assets, recently reached a $13 billion settlement of a range of government claims over bad mortgage securities and struck another deal with regulators to pay about $1 billion for its "London Whale" derivatives trading debacle.

BETTER TO SETTLE THAN FIGHT

Dimon said some shareholders had privately urged him to fight the allegations in court, but said settling the investigations was the better of the bank's two bad choices.

Fighting the allegations might not have saved the company any money in the end and could have taken two to five years during which bank employees would have had to endure questioning and the company would have been subject to relentless news stories.

"You may have paid a premium to settle, but we thought it was the far better thing to do," Dimon said.

Still, Dimon said the bank had been "forced" in the $13 billion settlement to give up some indemnification claims against a receivership operated by the Federal Deposit Insurance Corporation for some assets and liabilities left from the failure of lender Washington Mutual, which JPMorgan bought from the FDIC during the financial crisis.

"If you are going to buy a bank from the FDIC, you have to say what are those indemnities worth if later on the government can tell you you have to give them up," Dimon said.

The bank's annual cost of risk management and regulatory compliance has gone up by $2 billion, Dimon said, which is double the increase JPMorgan had expected earlier this year.

The company is offsetting the increase with cost-saving measures in other areas so that total expenses, excluding litigation costs, in 2014 will be lower than in 2013, he said. The bank has said expenses, aside from lawsuits, this year will total $59.5 billion to $60 billion.

JPMorgan was sanctioned in January by regulators for weaknesses in risk and compliance controls, as well as short-comings in anti-money laundering processes.

  Price   Change %Change
JPM
---