GO
Loading...

CNBC EXCLUSIVE: CNBC TRANSCRIPT: CNBC’S MARIA BARTIROMO SITS DOWN WITH FORMER JPMORGAN CHASE CHAIRMAN & CEO WILLIAM HARRISON TODAY

WHEN: TODAY, WEDNESDAY, SEPTEMBER 5TH

WHERE: CNBC’S “CLOSING BELL WITH MARIA BARTIROMO

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with Former JPMorgan Chase Chairman & CEO William Harrison today on CNBC’s “Closing Bell with Maria Bartiromo.” Following is a link to the video of the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000114054&play=1.

All references must be sourced to CNBC.

BARTIROMO: WELCOME BACK, YOU HEARD THE CALLS TO BREAK UP THE BIG BANKS, AND IT'S BEEN A HOT TOPIC SINCE THE ARCHITECT OF THE FINANCIAL SUPERMARKETS FORMER CITIGROUP CHAIRMAN & CEO SANDY WEILL SAID THIS ON "SQUAWK BOX" BACK IN JULY. TAKE A LISTEN.

SANDY WEILL: I THINK WHAT WE SHOULD PROBABLY DO IS GO AND SPLIT UP INVESTMENT BANKING FROM BANKING. HAVE BANKS BE DEPOSIT TAKERS, HAVE BANKS MAKE COMMERCIAL LOANS AND REAL ESTATE LOANS. HAVE BANKS DO SOMETHING THAT’S NOT GOING TO RISK THE TAXPAYER DOLLARS, THAT'S NOT GOING TO BE TOO BIG TO FAIL.

BARTIROMO: MY NEXT GUEST BEGS TO DIFFER, HE IS WILLIAM HARRISON, THE FORMER HEAD OF JPMORGAN CHASE AND THE MAN BEHIND THE JPMORGAN AND CHASE MERGER BACK IN 2000 HE WAS THE CHAIRMAN & CEO. HE JOINS ME NOW EXCLUSIVELY. BILL, NICE TO SEE YOU

HARRISON: THANK YOU. NICE TO BE BACK HERE MARIA

BARTIROMO: YOU DISAGREE WITH SANDY WEILL ON THIS TOPIC, YES?

HARRISON: I DO DISAGREE

BARTIROMO: WHY

HARRISON: I THINK THAT IT WOULD BE A HORRIBLE IDEA TO BREAK UP THE BANKS. THERE WAS A REASON WHY ALL THE BANKS BECAME LARGE, AND THAT WAS SCALE AND EFFICIENCY, ECONOMIES OF SCALE THAT DROVE IT. IT WASN'T AN UNNATURAL ACT. THE RESULT OF THAT, IN MY OPINION, HAS BEEN A LOT OF EFFICIENCY THAT BENEFITS THE CLIENTS AND OUR CUSTOMERS BOTH IN THE UNITED STATES AND AROUND THE WORLD. THERE WAS A RECENT STUDY OUT QUICKLY ON THIS BY THE CLEARING HOUSE ASSOCIATION. THE FIRST TIME I HAVE SEEN THIS BECAUSE PEOPLE TALK ABOUT THE ECONOMIES OF THESE MERGES THAT TAKES THE TOP 26 BANKS IN THE UNITED STATES, 50 BILLION AND UP IN ASSETS AND BASICALLY SAYS THAT AFTER A LOT OF STUDY AND RESEARCH THEY DID, THE BENEFIT IS ABOUT $50 TO $110 BILLION A YEAR JUST FROM THESE EFFICIENCIES. SO THAT’S ONE BIG REASON ITWAS NATURAL FOR IT ALL TO HAPPEN. SECONDLY FROM A PUBLIC POLICY PERSPECTIVE, WE HAVE TO REMEMBER THAT WE AS A COUNTRY ARE TRYING TO COMPETE EFFECTIVELY IN A GLOBALIZING WORLD. WE HAVE GREAT COMPANIES IN THIS COUNTRY THE GREATEST IN THE WORLD. WE HAVE THE BEST BANKS IN THE WORLD AND OUR BANKS HAVE CERTAINLY HAD AN IMPACT ON CREATING THE BIGGEST DEEPEST CAPITAL MARKET IN THE WORLD AND IN HISTORY WHICH HAS IMPACTED OUR ECONOMIC STANDING IN THE WORLD WE CREATE HUGE JOBS FROM THIS WE ARE SERVING OUR CUSTOMERS AND CLIENTS WELL SO WHY WOULD YOU WANT TO BREAK ALL OF THAT UP, IT MAKES NO SENSE FROM A PUBLIC POLICY PERSPECTIVE.

BARTIROMO: WELL I THINK THIS IS A REALLY IMPORTANT POINT THAT YOU BRING UP THE GLOBAL STORY. BECAUSE IF US BANKS ARE SMALLER BANKS THEY'RE OBVIOUSLY NOT GOING TO COMPETE WITH THE INTERNATIONAL BANKS AND THE DEUTSCHE BANKS, THE CREDIT SUISSES OF THE WORLD WHO WILL BE THESE LARGE INSTITUTIONS. BUT LET ME GET YOUR TAKE ON WHAT'S GOING ON IN TERMS OF THE MASSES. TIME AND TIME AGAIN WE HEAR THIS ARGUMENT THAT DEPOSITORS DO NOT WANT THEIR MONEY USED TO TAKE RISK. AND THESE BANKS ARE TOO COMPLEX TO MANAGE. FROM YOUR OP-ED YOU SAID THEY ARE NOT TOO COMPLEX TO MANAGE. SO TALK TO US. WHY DO PEOPLE THINK THEN THAT THE DEPOSIT MONEY IS BEING USED TO TAKE ON HUGE RISK WHEN THE DEPOSITORS DON'T KNOW WHAT THAT RISK IS.

HARRSON: WELL LET’S LOOK AT IT FROM THE PERSPECTIVE IF YOU REALLY DID BELIEVE THAT ARGUMENT, AND BROKE UP THE BANKS INTO WHAT THEY USED TO LOOK LIKE, YOU WOULD STILL HAVE BANKS THAT USED TO LOOK LIKE CHEMICAL BANK OR S AND L'S BACK IN THE 80’S AND 90’S THAT WERE DEPOSIT GUARANTEE. THESE BANKS TOOK ON A LOT OF RISK, WE ALL DID.SO I WOULD ARGUE THAT YOU HAVE NOT ELIMINATED THE PROBLEM BY DOING ANY OF THIS. THE TAXPAYER THROUGH THE FDIC INDIRECTLY IS STILL ON THE HOOK IF SOMETHING GOES WRONG, AND I'M NOT SURE THAT'S THAT IS A SOLUTION. I THINK THERE ARE A LOT BETTER SOLUTIONS TO GETTING AT THIS CAUSE I DON’T THINK THAT SOLVES THE PROBLEM.

BARTIROMO: SO WHAT HAPPENS THEN IF SOMETHING GOES WRONG AND A BANK NEEDS A BAILOUT WHICH OF COURSE WE ALL LIVED THROUGH?

HARRISON: WELL THE BIG BANKS TALKED ABOUT IT AND THEY HAVE NOT COME UP WITH A FINAL PLAN AS I UNDERSTAND IT, A WAY TO RESOLVE THROUGH A BANKRUPTCY TYPE PROCESS AN ORDERLY LIQUIDATION OR PROCESS TO COME OUT OF THERE STRAITS AND DEVELOP SOMETHING THAT IS A REAL BANK AGAIN. SO I THINK THERE IS A WAY TO DO THAT, BUT I THINK THE MAIN THING IS THAT WE HAVE TO BE CAREFUL TO OVERREACT TO THIS ANGER THAT’S BEEN DIRECTED TOWARDS THE BANKS, AND THINK THAT THE BANKS CAUSED 100% OF THIS PROBLEM. THEY DIDN'T, THEY WERE PART OF IT, BUT THEY DIDN’T. AND WE HAVE TO BE THOUGHTFUL ABOUT WHAT IS THE BEST WAY TO LEARN FROM THE CRISIS IN 2008 AND MAKE THINGS BETTER.

BARTIROMO: WHAT IS THE BEST WAY TO LEARN? YESTERDAY WE HAD SOMEONE ON THE PROGRAM WHO SAID ALL OF THE TERRIBLE THINGS ABOUT AMERICA LAY AT THE FEET OF THE BANKS AND I GOT A LITTLE OUTRAGED BY IT.

HARRISON: I SAW THAT

BARTIROMO: AND AFTERWARDS BECAUSE I GOT A LITTLE OUTRAGED BY IT I GOT ALL OF THIS MAIL FROM VIEWERS SAYING NO NO NO HE WAS RIGHT, OTHERS SAYING HE WAS WRONG, SO THIS IS GOING TO TAKE A LONG TIME TO GET THE REPUTATION OF THE INDUSTRY BACK.

HARRISON: WELL LOOK CAUSE I FEEL STRONGLY ABOUT THIS.THE BANKS CERTAINLY HAVE THEIR SHARE OF RESPONSIBILITY, BUT THEN YOU HAVE TO LOOK AT GOVERNMENT POLICY THROUGH, ESPECIALLY FANNY MAE AND FREDDIE MAC. YOU HAVE TO LOOK AT THE REGULATORS, WHERE WERE THEY. LOOK AT RATING AGENCIES AND THEN YOU LOOKS AT THE BORROWERS I MEAN BORROWERS WERE ABUSING THE SYSTEM. THERE WAS A LOT OF PEOPLE, INSTITUTIONS INVOLVED IN THE CRISIS AND CAUSING IT, AND IT'S NOT GOOD FOR THE BANKS TO BE BLAMED 100%. NOT THAT IT IS FAIR OR UNFAIR IT IS THAT YOU CAN GET A A BAD OUTCOME IN TERMS OF HOW YOU FIX IT.

BARTIROMO: TELL ME HOW YOU CAN MANAGE A COMPLEX INSTITUTION THAT IS SERVING TWO MASTERS. THE INDIVIDUAL, THE DEPOSITOR AS WELL AS THE INSTUTION OUT THERE YOU'VE DONE IT.

HARRISON: YEAH, FIRST OF ALL, I THINK THIS NOTION THAT THESE BIG BANKS ARE TOO BIG TO MANAGE, TOO COMPLEX, IS NOT RIGHT. WE LIVE IN A COMPLEX WORLD, AND WE JUST NEED TO MANAGE THINGS BETTER WHEN THEY GO WRONG. MY ANALOGY WOULD BE WITH TECHNOLOGY. TECHNOLOGY IS VERY COMPLEX AS A INDIVIDUAL AND A USER OF IT, OR A BUSINESS MANAGER, IT IS COMPLEX. WE’RE NOT TALKING ABOUT ROLLING BACK TECHNOLOGY TO THE DARK AGES AND WE SHOULDN’T BE TALKING ABOUT ROLLING BACK A BANKING INDUSTRY THAT IS VERY EFFICIENT THE BEST IN THE WORLD TODAY TO SOMETHING THAT WAS NOT 15 YEARS AGO. SO THIS COMPLEXITY ARGUMENT I DON'T BUY. SURE BIG BANKS ARE COMPLEX, BUT IF YOU LOOK AT THE FINANCIAL INSTITUTIONS THAT HAVE FAILED, THEY HAVE BEEN TEND TO BE MORE MONOLINE -- YOU TAKE COUNTRY WIDE OR INDYMAC OR WAMU, THESE WERE MORE MONOLINE COMPANIES THEY WEREN'T NEARLY AS COMPLEX BY ANY STRETCH OF THE IMAGINATION AS JPMORGAN CHASE AND YET THOSE ARE THE ONES THAT HAVE FAIL MORE READILY. SO NOT A HIGH CORRELATION BETWEEN COMPLEXITY AND FAILURE THAT I HAVE SEEN

BARTIROMO: WHAT ABOUT JPMORGAN. I GUESS AFTER THAT LONDON WHALES STORY, AND THE LOSSES FROM THAT BAD TRADE, IT WAS ALMOST LIKE SEE, I TOLD YOU SO -- WHAT WAS YOUR TAKE ON THAT?

HARRISON: IT WAS DISAPPOINTING TO ALL OF US THAT WE HAD THAT KIND OF LOSS, BUT I THINK THE IMPORTANT THING IS TO PUT IT IN PERSPECTIVE AND THE MARKET DIDN'T DO THAT VERY WELL. AND I THINK A LOT OF PEOPLE OVERREACTED TO IT. THE FACT OF THE MATTER IS JPMORGAN CAME THROUGH THE FINANCIAL CRISIS AS WE ALL KNOW WITHOUT MAKING A SIGNIFICANT MISTAKE. IT'S EXTRAORDINARY THAT JAMIE AND TEAM WERE ABLE TO MANAGE IT THAT WAY

BARTIROMO: AND THEY DIDN'T NEED BAILOUT FUNDS.

HARRISON: THEY DIDN'T NEED BAILOUT FUNDS SO THEY MADE A MISTAKE. WE ALL MAKE MISTAKES, AND ONE OF THE ADVANTAGES AGAIN OF SIZE, SCALE, AND CAPITAL, IS THAT YOU CAN MAKE A MISTAKE AND STILL MANAGE RIGHT THROUGH IT WHICH THEY HAVE DONE IN A VERYNICE WAY. AND IT WAS UNFORTUNATE FOR A WHOLE LOT OF REASONS THAT IT HAPPENED, BUT WE MAKE MISTAKES. YOU DON'T WANT A COMPANY THAT CAN'T MAKE MISTAKES. YOU DON'T WANT TO HAVE YOUR EMPLOYEES FEELING LIKE YOU CAN'T MAKE A MISTAKE. YOU DON’T WANT A HUGE MISTAKE THIS WAS A MANAGEABLE MISTAKE IT SEEMS TO ME.

BARTIROMO: HOW IS JAMIE DIMON DOING RUNNING JPMORGAN FROM YOUR STANDPOINT TODAY?

HARRISON: HE IS DOING A GREAT JOB. I HAVE BEEN RETIRED FOR SIX YEARS. LIFE IS GOOD AND I GOT A GOOD BALANCE IN IT. ONE OF THE THINGS CLEARLY AFTER SPENDING 40 YEARS AT A FIRM, AND SIX YEARS AS THE CEO YOU LOOK BACK ON SAY, HOW IS THE FIRM I LEFT DOING? I COULD NOT BE MORE PROUD OF WHAT THE FIRM HAS ACCOMPLISHED AND THE LEADERSHIP POSITIONS THEY NOW HAVE AND THE LEADERSHIP THAT JAMIE IS PROVIDING. I FEEL GREAT ABOUT THAT. THAT'S NOT NECESSARILY THE CASE ALWAYS.

BARTIROMO: AND YET YOU HAVE THIS POPULIST OUT THERE WHO POINTS FINGERS TO THE BANKING SECTOR. THE OCCUPY WALL STREET IS OUT THERE ONCE AGAIN IN FORCE. WHAT DO YOU WANT TO SAY TO THOSE FOLKS THAT PERHAPS MAY NOT UNDERSTAND THE SITUATION THE WAY YOU DO.

HARRISON: IT'S A TOUGH ONE. BECAUSE I THINK THE PUBLIC HAS BEEN CONVINCED THAT THE BANKS WERE THE 100% CAUSE OF THE PROBLEM.AND --

BARTIROMO: WHY IS THAT?

HARRISON: YOU KNOW, IT'S -- I DON'T THINK OUR PRESENT ADMINISTRATION HAS BEEN VERY HELPFUL ON THAT SUBJECT I THINK THAT OTHER ELEMENTS OF COMMUNICATION HAVE NOT BEEN PARTICULARLY CONSTRUCTIVE. SO I THINK IT IS JUST GOING TO TAKE TIME. IT IS UNFORTUNATE BUT IT IS WHAT IT IS. IT IS GOING TO TAKE TIME AND PERFORMANCE AND DOING WHAT YOU KNOW IS THE RIGHT THING AND PRODUCING RESULTS WILL ULTIMATELY PREVAIL AND GET US BACK ON TRACK.

BARTIROMO: HOW DO YOU SEE THE ECONOMY OVERALL IN TERMS OF BEING ON TRACK. I KNOW YOU’VE GOT A GOOD WINDOW INTO THINGS FROM THE BOARDS YOU SIT ON AND AS WELL AS A FUND – TELL ME HOW YOU SEE THINGS RIGHT NOW IN TERMS OF THE FISCAL CLIFF, THE UNEMPLOYMENT STORY, UNCERTAINTY AROUND THE ELECTION, HOW ARE YOU NAVIGATING THINGS.

HARRISON: WELL AS AN INVESTOR I WOULD BE VERY CAUTIOUS I KNOW THERE ARE A LOT OF BULLS OUT THERE TODAY, BUT I JUST THINK UNTIL THE ELECTION IS RESOLVED AND UNTIL THE FISCAL CLIFF ISSUE IS RESOLVED SOMEHOW, IN A THOUGHTFUL WAY, AND EUROPE GETS MORE A LITTLE MORE CLARITY ON IT I KNOW THAT IS LONGTERM BUT IT STILL NEEDS A LITTLE MORE CLARITY, WE HAVE A VERY UNSETTLED MARKET. I THINK IT WILL CONTINUE TO BOUNCE UP AND DOWN.

BARTIROMO: IS IT FAIR TO SAY THAT EUROPE IS PROBABLY THE BIGGEST RED FLAG OUT THERE RIGHT NOW FOR THE GLOBAL ECONOMY?

HARRISON: I THINK THAT'S TRUE, ALTHOUGH I THINK THE STRUCTURAL DEFICITS OF THE UNITED STATES, AS MY GOOD FRIEND BOWLES AND SIMPSON TALK ABOUT ALL THE TIME ARE REALLY CRITICAL TO DEAL WITH. IT COULD CAUSE A HICCUP AT ANY TIME. AND IT IS NOT ON THE TABLE TODAY BUT IT COULD CAUSE A HICCUP AND WE NEED TO DEAL WITH THAT. HOPEFULLY THE NEXT ADMINISTRATION WILL DEAL WITH THAT. BECAUSE WE HAVE TO.

BARITROMO: WHICH IS WHY ROMNEY AND RYAN PUT THAT ISSUE FRONT AND CENTER AND THAT IS PART OF THE CONVERSATION RIGHT NOW WHERE AS WE WERE NOT TALKING ABOUT THESE ISSUES BEFORE THAT. HOW DO YOU THINK THE ELECTION WILL PLAYS OUT. REAL DEBATE GOING ON RIGHT NOW. OBVIOUSLY THE DNC LAST NIGHT A LOT OF EUPHORIA AROUND IT. WHAT’S YOUR TAKE

HARRISON: RIGHT WELL I THINK FIRST OF ALL IT IS THE MOST IMPORTANT ELECTION OF MY LIFETIME.BECAUSE IT REALLY IS CREATING A CHOICE FOR THE AMERICAN PEOPLE BETWEEN AN ECONOMIC SYSTEM THAT’S MORE ENGAGED BY THE GOVERNMENT, AND MORE INVOLVED WITH THE GOVERNMENT, VERSUS THE REPUBLICAN SIDE WHICH IS GOING TO BE LESS GOVERNMENT AND MORE FREE MARKET. SO, IT'S A CHOICE. I THINK THE CANDIDATE THAT CAN MAKE THE BEST ARGUMENT AS TO WHY THEY'RE MODEL OR APPROACH IS GOING TO CREATE BETTER ECONOMIC GROWTH WILL WIN THE ELECTION, AND WE'LL SEE. I THINK IT WILL BE VERY CLOSE.

BARTIROMO: AND IT HAS BEEN VERY CLOSE IN THE POLLS, AND OF COURSE IT'S NOT JUST ABOUT GROWTH, BUT ALSO ABOUT JOBS. SO WE HAVE A JOBS REPORT COMING OUT ON FRIDAY, BUSINESSES, I DON'T KNOW WHAT YOU'RE HEARING FROM FOLKS OUT THERE AND BUSINESSES OUT THERE THAT YOU’RE DEALING WITH, BUT THEY'RE UNWILLING TO ADD NEW HEADS TO THE PAYROLL, WHAT'S STOPPING THEM?

HARRISON: NO QUESTION WELL IT’S UNCERTAINLY OF WHAT'S GOING ON AND THE POLITICAL ENVIRONMENT AS MUCH AS ANYTHING ELSE. YOU HAVE CHINA THAT IS SLOWED DOWN A LITTLE BIT,YOU’VE GOT THE EUROPE PROBLEM BUT IN THE UNITED STATES, I THINK YOU COULD ARGUE, IF YOU GOT CLARITY ON WHAT’S THE NEW TAX POLICY GOING TO BE, DEAL WITH SOME OFTHE FISCAL CLIFF ISSUES INCLUDING DEALING WITH THE STRUCTURAL DEFICIT IN A WAY THAT'S MANAGEABLE LONG TERM, ALL OF THOSE WOULD BE HUGE FOR THE MARKETS AND THE ECONOMY I BELIEVE, AND I THINK A LOT OF PEOPLE BELIEVE THAT.

BARTIROMO: LET ME END WHERE I BEGAN, AND THAT WAS THE POSSIBLE BREAKUP OF THE BIG BANKS. IF WE WERE TO SEE SMALLER BANKS IN THE UNITED STATES WHAT WOULD THAT MEAN FOR THE U.S. MARKET SHARE VERSUS INTERNATIONAL COUNTER PARTS. DO YOU REALLY THINK THAT MULTINATIONAL COMPANIES WILL GO TO THE UBS'S OF THE WORLD AND AVOID U.S. BANKS.

HARRISON: IF YOU BROKE UP THE BANKS ON THIS TOO BIG TO FAIL NOTION, SO THAT EVERYBODY IS SMALL YOU'RE TALKING ABOUT REALLY SMALL BANKS, IT MAKES NO SENSE SO YOU WOULD HAVE 20,000 BANKS, FINANCIAL INSTITUTIONS ALL VERY TINY, AND YES THE ANSWER IS BIG COMPANIES IN THIS COUNTRY AND A LOT OF OTHERS WOULD GO TO PROVIDERS THAT CAN DO MORE FOR THEM. I DON'T THINK THERE IS ANY QUESTION ABOUT IT, SO IT WOULD BE A BAD OUTCOME FOR THE COUNTRY FROM A PUBLIC POLICY PERSPECTIVE WITHOUT QUESTION.

BARTIROMO: BECAUSE THOSE COMPANIES ARE LOOKING FOR COMPLEX LENDING PROGRAMS – WHICH PERHAPS THE SMALLER BANKS WOULD NOT BE ABLE TO

HARRISON: ABSOLUTELY NOT. I MEAN COMPANIES DO LIKE, VERY MUCH -- I WAS A CLIENT GUY, THEY DO LIKE VERY MUCH THE IDEA OF GOING INTO A LARGE UNIVERSAL BANK THAT IS GOOD AT EVERYTHING.SIZE IS NOT THE DETERMINENT IT IS SIZE AND LEADERSHIP POSITIONS IF YOU HAVE THE LEADERSHIP POSITION AND SCALE, CLIENTS LOVE TO DEAL WITH YOU BECAUSE YOU CAN HELP THEM IN EVERY ASPECT SO IT'S MORE CONVENIENT, CHEAPER, THEY LIKE IT A LOT.

BARTIROMO: BILL, GOOD TO HAVE YOU ON THE PROGRAM.

HARRISON: THANK YOU, VERY NICE TO BE HERE.

About CNBC:

With CNBC in the U.S., CNBC in Asia Pacific, CNBC in Europe, Middle East and Africa, CNBC World and CNBC HD+, CNBC is the recognized world leader in business news providing real-time financial market coverage and business information to more than 395 million homes worldwide, including more than 100 million households in the United States and Canada. CNBC also provides daily business updates to 400 million households across China. The network's 16 live hours a day of business programming in North America (weekdays from 4:00 a.m. - 8:00 p.m. ET) is produced at CNBC's global headquarters in Englewood Cliffs, N.J., and includes reports from CNBC News bureaus worldwide. CNBC.com and CNBC Mobile Web (mobile.cnbc.com) offer real-time stock quotes, charts, analysis and video.

Members of the media can receive more information about CNBC and its programming on the NBC Universal Media Village Web site at http://www.nbcumv.com/mediavillage/networks/cnbc/