WHEN: TODAY, FRIDAY, NOVEMBER 9TH AT 4PM ET
WHERE: CNBC'S "CLOSING BELL WITH MARIA BARTIROMO"
Following is the transcript of a CNBC EXCLUSIVE interview with JPMorgan Chase Chairman & CEO Jamie Dimon today at 4PM ET on CNBC's "Closing Bell with Maria Bartiromo." Following are links to videos of the interview: http://video.cnbc.com/gallery/?video=3000128464&play=1, http://video.cnbc.com/gallery/?video=3000128478&play=1 and http://video.cnbc.com/gallery/?video=3000128468&play=1
All references must be sourced to CNBC.
BARTIROMO: JOINING US RIGHT NOW IN A CNBC EXCLUSIVE TO TALK ABOUT THAT AND A LOT MORE JAMIE DIMON CHAIRMAN & CEO OF JPMORGAN CHASE. THANKS FOR JOINING US.
DIMON: GREAT TO BE HERE.
BARTIROMO: BIG WEEK. OBVIOUSLY, THE ELECTION. THE PRESIDENT GETTING RE-ELECTED. GIVE US YOUR SENSE IN TERMS OF WHAT THE IMPACT OF FOUR MORE YEARS OF PRESIDENT OBAMA WILL BE ON BUSINESS AND ON JPMORGAN.
DIMON: WELL, I THINK THE FIRST THING IS THE FOUNDATION OF BUSINESS IS ACTUALLY PRETTY STRONG. COMPANIES ARE IN VERY GOOD SHAPE. A LOT OF CASH. MIDDLE MARKET COMPANIES SMALL BUSINESS IF YOU LOOK AT THE NUMBERS, HOUSING LOOKS LIKE IT'S TURNING. HOUSEHOLD FORMATION IS GOING UP. CONSUMERS ARE STILL SPENDING. SO BUSINESS ITSELF LOOKS PRETTY GOOD. SO I THINK THE AMERICAN ECONOMY, TO ME THE MOST IMPORTANT THING IS WE SOLVE THE SORT-RUN FISCAL CLIFF AND THE LONGER RUN FISCAL ISSUES. I PERSONALLY THINK IF WE DO THAT, THE ECONOMY CAN BOOM. I HOPE THAT PRESIDENT OBAMA, YOU KNOW, WORKS ON THAT. AND I THINK HE HAS BEEN WORKING ON THAT.
BARTIROMO: AND YOU'VE BEEN TRAVELING A LOT. I KNOW TECHNOLOGY HAS BEEN IMPORTANT AS WELL. THAT'S WHERE YOU'RE SEEING A LOT OF VIBRANCY I WANT TO GET TO THAT IN A MOMENT. YOU MENTIONED THE FISCAL CLIFF. LET'S STAY THERE FOR A MOMENT. WHAT ARE THE IMPLICATIONS OF GOING OVER THE FISCAL CLIFF. YOU'VE BEEN VERY VOCAL ON THIS SUBJECT. YOU CREATED A TASK FORCE. YOU'VE TAKE AN LEAD IN TERMS OF FIX THE DEBT. WHAT ARE THE IMPLICATIONS OF GOING OFF THAT FISCAL CLIFF? AND NOT GETTING ANYTHING DONE BY YEAR END
DIMON: LET'S SEPARATE THE TWO. JPMORGAN IS ONE OF A HUNDRED OR TWO HUNDRED COMPANIES GETTING INVOLVED IN FIX THE DEBT. IT'S REALLY EVERYBODY NON-PARTISAN TRYING TO MAKE SURE WE DO IT. THERE'S THE LONG RUN. SO FIX THE DEBT IS A PERMANENT THING MORE LIKE A SIMPSON-BOWLES SOLUTION. WE NEED A SOLUTION. BUSINESS GENERALLY HAS BEEN SUPPORTIVE OF A SOLUTION THAT FIXES THE PROBLEM. WE ARE NOT RELIGIOUS ABOUT ALL OF THE ISSUES ABOUT TAXES AND SPENDING WE JUST WANT A RATIONAL, THOUGHTFUL SOLUTION. THE IMMEDIATE ONE IS THIS CLIFF, WHICH IS DECEMBER 31st, MIDNIGHT, $600 BILLION CAN COME OUT OF THE ECONOMY. A STATIC ANALYSIS, WHICH SAYS THE ECONOMY DROPPED BY 3 OR 4%. UNFORTUNATELY THE WORLD ISN'T STATIC. WHAT MAY HAPPEN IS THAT BEFORE DECEMBER 31st, YOU MIGHT SEE THE EFFECTS. ALSO, IT MIGHT BE WORSE THAN 300%. BECAUSE AS PEOPLE REACT AND TRY TO PROTECT THEMSELVES FROM A POSSIBLE IMPENDING RECESSION.
BARTIROMO: THAT'S WHAT EVERYONE IS SAYING. CEOS ARE SAYING WHY WOULD I MOVE IF I DON'T KNOW WHAT MY TAX RATES ARE GOING TO BE? I DON'T IF THE $600 BILLION IN SPENDING CUTS IS GOING TO HAPPEN SO I'LL JUST SIT ON CASH AND WAIT FOR SOME CLARITY.
DIMON: RIGHT. THAT'S WHY I THINK IT'S INCUMBENT UPON US TO FIX IT AS SOON AS WE CAN. THE SHORT RUN ISSUE. THEN GET, YOU KNOW, TO THE HARDER WORK FIXING THE LONGER TERM ISSUE.
BARTIROMO: CLEARLY DODD FRANK VOLKER ISSUES THEY DON'T GO AWAY NOW UNDER PRESIDENT OBAMA. THE QUESTION IS DO THEY GET WORSE IF WE DO IN FACT SEE ELIZABETH WARREN ON THE SENATE BANKING COMMITTEE WHAT'S YOUR TAKE?
DIMON: I HAD A FINE RELATIONSHIP WITH ELIZABETH WARREN. I CALLED HER UP TO CONGRATULATE HER FOR WINNING THE ELECTION. SO WHEN SHE WAS AT THE CFPB WE WORKED TOGETHER WELL. WE ARE GOING TO MEET ALL THE RULES, ALL THE REQUIREMENTS IN THE SPIRIT IN THE LETTER OF THE LAW. THE MOST IMPORTANT THING TO ME IS WHILE DOING THAT, WE CAN SERVE THE CORPORATIONS WE HAVE HERE. CONSUMERS, BUSINESSES. FOR THE MOST PART, THOSE THINGS MAY CHANGE PRICING, SOME RETURNS, AND SOME BUSINESSES. I THINK WE CAN MEET THEM ALL. THE ONLY ONE THAT ACTUALLY US WHERE WE WANT TO BE CAUTIOUS IS WHERE JPMORGAN ISN'T ALLOWED TO FREELY COMPETE ON THE SAME BASIS THE SAME TERMS AS A DEUTSCH BANK OR CHINESE BANK. THAT'S ALL EVERYTHING ELSE WE THINK WE CAN ADJUST TO.
BARTIROMO: WELL THAT MAKES A LOT OF SENSE. WELL IF YOU WERE TO SEE PROPRIETARY TRADING GO AWAY YOU'RE NOT SEEING YOUR COMPETITORS UNDER THE SAME RESTRICTIONS.
DIMON: THAT'S CORRECT. IT'S REALLY THE RESTRICTIONS IN THE UNITED STATES AND IT'S WHETHER THE UNITED STATES APPLIES THOSE LAWS TO US OVERSEAS. BUT THEY CAN'T APPLY THEM TO ANOTHER BANK. AND IF THOSE LAWS TIE OUR HANDS TOO MUCH, THAT WOULD BE AN ISSUE FOR JPMORGAN. I DON'T THINK IT'S GOING TO HAPPEN. BUT THEY HAVEN'T ALL BEEN RESOLVED. REMEMBER THERE ARE A LOT OF LAW WE HAVEN'T EVEN SEEN YET WE ARE STILL WAITING TO SEE THE FINAL RULES AND REGULATIONS.
BARTIROMO: IT CERTAINLY HAS TAKEN A WHILE TO GET THESE THINGS IMPLEMENTED. I GUESS THE VOLCKER RULE IS VERY HARD TO DEFINE.
DIMON: YES.
BARTIROMO: THAT'S ONE OF THE ISSUES THERE.
DIMON: IT SHOULD HAVE BEEN WRITTEN MUCH MORE SPECIFICALLY AND NOT SO WIDE OPEN. YOU CAN SEE PEOPLE STRUGGLING TO COME UP WITH IT. I THINK THERE ARE WAYS TO DO IT. WE'VE OFFERED THE REGULATORS, HERE ARE WAYS WE CAN APPLY THE LAW, APPLY IT FAIRLY, PROTECT COMPANIES, AND MUCH SIMPLER THAN HAVING 180 RULES. MORE LIKE SIX OR SEVEN TYPES OF RULES. WE ALREADY FIXED THE MAJOR PART. MORE CAPITAL, MORE LIQUIDITY, MORE TRANSPARENCY THAT'S ALREADY BEING FIXED.
BARTIROMO: LET ME ASK YOU ABOUT YOUR CAPITAL. BECAUSE WE DID GET NEWS YESTERDAY THE FEDERAL RESERVE APPROVING YOUR $3 BILLION BUYBACK PLANS FOR THE FIRST QUARTER OF '13. HOW SHOULD INVESTORS BE READING INTO THIS? GIVEN THE FACT THAT THE REQUIRED RESUBMISSION UNDER THE ANNUAL STRESS TEST REVIEW THE NO OBJECTION FROM THE FED HAPPENED SOONER THAN PEOPLE EXPECTED. THAT WAS A POSITIVE. BUT HOW SHOULD INVESTORS READ INTO THE IMPLICATIONS? DO YOU ENVISION CHANGING YOUR CAPITAL REQUESTS? IN JANUARY?
DIMON: THIS IS JUST FOR THE FIRST QUARTER, THE $3 BILLION. WE HAVE TO APPLY AGAIN SOMETIME IN JANUARY FOR THE 12 MONTHS STARTING MARCH 31st. WE'VE SHOWN OUR SHAREHOLDERS WE HAVE HUGE AMOUNTS OF CAPITAL, CAPITAL FLOW, CASH FLOW. EVEN IF WE BUY BACK $20 BILLION OF STOCK OR SO IN 2013 AND 2014, WE WOULD BE AT 10.5% BASEL THREE. WE'VE GOT A HUGE AMOUNT OF CAPITAL. WE HAVE TO LOOK AT THE NEW RULES. WE'LL APPLY AGAIN. I WOULD ASSUME WE HAVE THE ABILITY TO BOTH RAISE THE DIVIDEND IF THE BOARD SEES FIT AND TO BUY BACK A LOT OF STOCK. THE EXACT NUMBER WE HAVE TO WAIT FOR UNTIL WE SEE THE FINAL ACTUAL RULES.
BARTIROMO: I WANT TO FOLLOW UP ON THAT. IN TERMS OF THE REGULATORY ENVIRONMENT, THIS SO-CALLED SIFI SYSTEMICALLY IMPORTANT FINANCIAL INSTITUTIONS, TOO BIG TO FAIL BASICALLY. YOU ARE PART OF ONE OF THOSE. THE FED CAME OUT WITH NEW CAPITAL BUFFERS. JPMORGAN AND CITIGROUP SEEM TO BE -- THEY ARE AT THE TOP OF THE LIST IN TERMS OF THE BUFFERS, THE AMOUNT OF CAPITAL THAT YOU ARE SUPPOSED TO HOLD. YOU HAVE TO HOLD A 2.5% BUFFER WHILE MOST OTHER BANKS HAVE A 1.5% BUFFER. EVERY TIME WE TALK ABOUT JPMORGAN, PEOPLE SAY THE FORTRESS BALANCE SHEET. YOU'RE THE STRONGEST BANK OUT THERE. WHY IS IT YOU HAVE TO HAVE A 2.5% BUFFER WHEN EVERYONE ELSE HAS A 1.5% BUFFER?
DIMON: ANYWHERE FROM 0 TO 2.5. BANKS ARE ALL DIFFERENT LEVELS.
BARTIROMO: RIGHT BANK OF AMERICA IS 1.5% SO
DIMON: I BELIEVE IN CAPITAL. I BELIEVE IN LIQUIDITY. I THINK OUR BALANCE SHEET IS A FORTRESS BALANCE SHEET RIGHT NOW. I NEVER SAID WE ACTUALLY NEED THE CAPITAL. REGULATORS AND POLITICIANS DEEMED THAT HAS TO BE NECESSARY. IT IS WHAT IT IS AT THIS POINT. THE WAY IT GETS CALCULATED IS A PECULIAR CALCULATION. IF YOU DIG IN THE CALCULATION, I DON'T AGREE WITH THE WAY THEY DO THAT EITHER. IT ACTUALLY PENALIZES SUCCESSFUL COMPANIES. IT PENALIZES ALL CROSS BORDER BUSINESS IT PENALIZES TRADE FINANCE. IT PENALIZES CONSERVATIVE INVESTING. I JUST THINK THAT CALCULATION SHOULD BE MODIFIED. MAYBE WHEN IT GETS MODIFIED, YOU KNOW, JPMORGAN WON'T NEED THAT MUCH MORE CAPITAL.
BARTIROMO: INVESTORS WANT TO KNOW. BECAUSE THIS HAS A DIRECT RESULT ON RETURN. WILL YOU HOLD 9.5% OF YOUR CAPITAL AS TIER ONE CAPITAL BY THE END OF 2013? WHAT DOES THAT DO TO RETURNS?
DIMON: WE HAVE 8.5 TODAY. WE THINK JUST DOING A FEW ADDITIONAL THINGS WE'D BE AT 9.5 TODAY. FULLY PHASED IN. REMEMBER THESE THINGS AREN'T PHASED IN FOR SIX YEARS OR SO. SO WE ALREADY HAVE THAT LEVEL. WE'RE GOING HIT 9.5 AT ONE POINT NEXT YEAR. WE'LL HAVE HUGE CAPITAL GENERATION OVER THAT. INVESTOR DAY WHICH WE DO IN FEBRUARY, WE'RE GOING TO TELL OUR INVESTORS WE'RE GOING TO REALLOCATE CAPITAL, BUY LINE OF BUSINESS. WE'RE GOING TO REALLOCATE THE LIQUIDITY BUFFER. WE ARE GOING TO DO IT ALMOST BY CLIENT IT WILL AFFECT OUR RETURNS AND RETURN TARGETS. I STILL THINK WE CAN EARN A GOOD RETURN. WE'LL JUST HAVE TO MAKE A LOT OF ADJUSTMENTS TWEAK A LOT OF DIALS TO MAKE SURE WE CAN EARN A GOOD RETURN.
BARTIROMO: I GUESS I'M TRYING TO FIGURE OUT, IS THE FED BEING, YOU KNOW, STRICTER? IS THE FED BEING, YOU KNOW, MORE AGGRESSIVE HERE? BECAUSE YOU KNOW, WHAT SHOULD WE EXPECT IN TERMS OF YOUR CAPITAL STRATEGY GIVEN THE CURRENT ECONOMIC BACKDROP? WE KNOW WE HAVE AN ANEMIC BACKDROP 2% OR SO, ONGOING REGULATORY SCRUTINY AMONG REGULATORS, ONGOING ELEVATED LEGACY MORTGAGE RELATED COSTS. THAT'S REALLY WHAT INVESTORS WANT ANSWERED.
DIMON: WE SUPPORT A LOT OF THESE CHANGES, NOT ALL OF THEM. WE HAVE A GREAT COMPANY. BUSINESS IS GROWING. WE'RE MAKING MORTGAGES. MIDDLE MARKET LOANS ARE UP TEN STRAIGHT QUARTERS. SMALL BUSINESS LOANS ARE AT A RECORD. TRADE FINANCE IS UP. WE'RE DOING FINE. ALL THIS STUFF IS JUST CAPITAL LIQUIDITY REQUIREMENTS. AND THEY'RE GLOBAL. REMEMBER THIS ISN'T JUST THE FED IT IS BASEL 3. BASEL 3 IS A LOT OF NATIONS CAME TOGETHER AND SAID WE WANT TO HAVE COMMON RULES. AND BY THE WAY, THEY SHOULD BE APPLY APPLIED FAIRLY. THERE'S A COLLEGE A SUPERVISOR WHO IS GOING TO LOOK AT THE APPLICATION TO MAKE SURE IT'S NOT BAD FOR ONE COUNTRY OR BANK AND GOOD FOR ANOTHER COUNTRY OR BANK. WE'RE GOING TO ADJUST TO THEM ALL. WHATEVER THEY ARE WE ARE GOING TO ADJUST TO THEM. LIFE WILL BE OKAY. IF WE GOT TO MAKE MODIFICATIONS TO OUR BUSINESS, WE'LL DO THAT TOO. AGAIN, I LOOK AT THE CLIENTS. WE'RE DOING A LOT OF CORPORATE BUSINESS. WE'RE DOING A LOT OF SMALL BUSINESS, A LOT OF MIDDLE MARKET. WE'RE DOING A LOT OF INVESTING. WE'LL BE FINE. WE'LL FIGURE OUT A WAY TO GET A GOOD RETURN FOR OUR SHAREHOLDERS.
BARTIROMO: GIVEN WHERE WE ARE IN THIS CONVERSATION ON TAXES, IS A BUYBACK MORE IN YOUR INTEREST THAN A DIVIDEND INCREASE?
DIMON: IT ALL RELATES TO THE STOCK PRICE. WE'VE ALWAYS SAID -- WE MADE IT CLEAR WE THINK BUYING OUR STOCK BACK AT TANGIBLE BOOK VALUE IS A BARGAIN BUT NOT A GREAT HIGH PRICES. THE BOARD WILL HAVE TO DECIDE WHAT THEY THINK IS BETTER FOR SHAREHOLDERS, MORE DIVIDENDS OR THE ABILITY TO BUY BACK MORE STOCK WHEN YOU CAN.
BARTIROMO: ALL RIGHT. WE'RE GOING TO TAKE A SHORT BREAK. WHEN WE COME BACK, I WANT TO ASK YOU ABOUT HOUSING. THE LAST TIME WE TALKED YOU SAID WE WERE AT A BOTTOM AND THEN I WANT TO ASK YOU ABOUT HEAD COUNT. A LOT OF LAYOFFS GOING ON. I WANT TO KNOW IF YOU THINK MORE ARE COMING. WE'LL BE RIGHT BACK. MORE WITH JAMIE DIMON AFTER THIS SHORT BREAK.
BARTIROMO: WELCOME BACK TO OUR SPECIAL COVERAGE FROM THE JPMORGAN TECHNOLOGY CEO CONFERENCE. ONCE AGAIN, OUR SPECIAL GUEST JPMORGAN CHAIRMAN AND CEO JAMIE DIMON. JAMIE, YOU HAVE RAISED THE POTENTIAL LOSS ABOVE EXISTING ACCRUALS ABOUT $700 MILLION TO $6 BILLION FROM $5.3 BILLION LAST QUARTER. I GUESS AT THE END OF THE DAY, LITIGATION IS THE NEW NORMAL IN YOUR BUSINESS, CERTAINLY FOR THE LARGE BANKS. CAN YOU CHARACTERIZE FOR US WHAT YOU WOULD EXPECT? HOW STEEP, GIVEN THE ELECTION, THE PERCEIVED POLITICAL UNDERTONES, HOW SIGNIFICANT WILL ONGOING LITIGATION BE, AND HOW SHOULD INVESTORS THINK ABOUT THIS AS AN INFLECTION POINT?
DIMON: WE HAVE BOOKED MORE THAN $10 BILLION IN LITIGATION RESERVES IN THE LAST 18 MONTHS TO TWO YEARS I FORGOT THE EXACT NUMBER. THAT NUMBER IS JUST AN ESTIMATE OF HOW MUCH MORE IS UNDER THE RANGE OF POSSIBILITY. I WOULDN'T GIVE IT TOO MUCH CREDENCE. IT LITERALLY IT'S A VERY ROUGH ESTIMATE OF POTENTIAL LITIGATION. I THINK LITIGATION COSTS HAVE BECOME A BIG DEAL FOR ALL BUSINESS. IT'S TOO MUCH. BUSINESSES ARE BEARING SO MUCH COST WE HAVE TO BRING IT DOWN, BANKS IN PARTICULAR. SOME OF THESE THINGS WILL EVENTUALLY GO AWAY FOR BANKS. WHEN ALL THE MORTGAGE STUFF IS GONE WE WON'T BE BOOKING ALL THOSE LEGAL RESERVES ANYMORE SO HOPEFULLY WE'RE RESERVED PROPERLY AND THEY'LL COME DOWN OVER TIME.
BARTIROMO: I GUESS OVER THE LAST FOUR YEARS, THE PRESIDENT HAS HAD A REAL ANTAGONISTIC RELATIONSHIP WITH BUSINESS. IS THERE A WAY TO WORK TOGETHER, COLLABORATION BETWEEN BUSINESS AND THE POLITICAL STORY? YOU SAID IT YOURSELF AT THE TOP OF THIS INTERVIEW, BUSINESS IS DOING WELL. ALL WE NEED TO DO IS UNLOCK THAT.
DIMON: YEAH. I JUST CAME BACK FROM A TWO-WEEK TRIP TO ASIA, A WEEK IN SILICON VALLEY TO MEET WITH ENTREPRENEURS AND LARGER COMPANIES AND SOCIAL MEDIA AND DIGITAL. ASIA HAS GREAT GROWTH OPPORTUNITIES. THIS IS THE GREATEST ECONOMIC ENGINE EVER BUILT. YOU GO AROUND HERE, THE INNOVATION, THE GROWTH, THE WORK ETHIC, THE CAPABILITY, THE ABILITY TO SPEND CAPITAL EXPENDITURES. AMERICA IS STILL THE BEST THERE IS. SO TO ME, THIS IS THE GREATEST ENGINE. IT'S GROWING SLOWLY. IT'S WAITING TO BE IGNITED. I PERSONALLY THINK I HAVE ENORMOUS RESPECT FOR THE PRESIDENT. I JUST THINK THAT BUSINESS AND GOVERNMENT COLLABORATING HAS A MUCH BETTER CHANCE AT IGNITING THAT ENGINE THAN THIS ANTAGONISTIC BEHAVIOR. A VERY SENIOR OFFICIAL ASKED ME AT ONE POINT IF PRESIDENT OBAMA IS RE-ELECTED CAN IT BE FIXED? OF COURSE. MOST CEOs I KNOW I WANT TO WORK WITH GOVERNMENT. THEY ARE GOING TO WORK WITH THE PRESIDENT OF THE UNITED STATES THEY WANT TO MAKE THINGS WORK. THEY WANT TO CREATE JOBS, OPPORTUNITY FOR EVERYBODY. HOPEFULLY THAT NEED WILL GO BACK AND IT'LL TAKE EVERYONE A LITTLE BIT TO SAY, LET'S JUST START COLLABORATING. LET'S GET OUR HANDS TOGETHER. LET'S GET THIS COUNTRY WORKING AGAIN AND STOP FIGHTING EACH OTHER ALL THE TIME. THAT'S NOT GOING TO GET US ANYWHERE.
BARTIROMO: YOU MADE A LOT OF CHANGES. YOU REVAMPED YOUR CIO OFFICE. YOUR INVESTMENT BANK YOU REVAMPED PUTTING TWO CO-OPERATING CHIEFS IN CHARGE. PEOPLE ARE WONDERING, IS IT ENOUGH WHAT YOU DID? IN OTHER WORDS, HOW PUNITIVE WILL REGULATORS COME DOWN ON YOU? WHAT KIND OF SANCTIONS OR FEES, ANYTHING ON THE HORIZON THAT WE SHOULD EXPECT FROM THE INVESTMENT COMMUNITY?
DIMON: LOOK, WE'VE SHOWN ON THE 10K ALL THESE POSSIBILITY LAWSUITS. READ IT AT YOUR LEISURE. I FOCUS ON THE OTHER SIDE WE PUT TOGETHER OUR CORPORATE TSS BUSINESSES BECAUSE WE SERVE LIKE 10,000 MAJOR CORPORATIONS AND GOVERNMENTS AROUND THE WORLD. WE LEND $1 TRILLION TO PEOPLE. WE ARE IN THE BANKING BUSINESS. WE RAISE CAPITAL FOR THEM. WE LEND MONEY TO THEM. SMALL BUSINESS LOANS ARE AT AN ALL TIME RECORD MIDDLE MARKET LOANS THAT'S WHAT WE FOCUS ON. YES, WE HAVE THIS RESIDUAL PROBLEMS FROM THE PAST. WE'RE NOT PERFECT. WE'LL ALWAYS MAKE MISTAKES. I'VE NEVER SEEN A BUSINESS THAT DOESN'T MAKE MISTAKES. FOR BUSINESS IT'S HOW DO YOU RECOGNIZE IT. DO YOU FIX IT DO YOU GET BETTER. NOT DO YOU HAVE THEM OR NOT YOU ARE GOING TO HAVE THEM.
BARTIROMO: ALL RIGHT. LET'S TALK ABOUT LENDING THEN. WHAT ARE YOU SEEING OUT THERE? FROM YOUR VANTAGE POINT IN TERMS OF MORTGAGES, IN TERMS OF LENDING, THE CREDIT?
DIMON: THE LARGE CORPORATE WORLD IS WIDE OPEN. CREDIT IS READILY AVAILABLE. THE HIGH YIELD MARK IS OPEN. THE IPO MARKET IS GETTING BETTER. OBVIOUSLY, IPO MARKET IS VERY IMPORTANT FOR START-UP COMPANIES AND VENTURE CAPITAL HOPEFULLY THEY HAVE EXIT PLANS MIDDLE MARKET, TEN STRAIGHT QUARTERS OF GROWTH. I'M TALKING ABOUT GROWTH OF 12 TO 15%. SMALL BUSINESS, ALL-TIME RECORD NOW. CREDIT CARD SPEND IS UP 12% FOR US. I THINK THE INDUSTRY IS UP. AUTO LENDING IS UP. MORTGAGES ARE STILL TOO TIGHT. I CALL THAT FLAT. MY GUESS IS IT'LL OPEN UP MORE, PARTICULARLY IF SOME OF THESE REGS ARE FINALIZED.
BARTIROMO: WHAT ABOUT HOUSING? LAST TIME WE SPOKE I GUESS A YEAR AGO OR EVEN MORE THAN THAT, YOU SAID THAT HOUSING HAS BOTTOMED. YOU STILL STAND BY THAT?
DIMON: YEAH, BECAUSE EVERY SINGLE THING ABOUT HOUSING IS FLASHING GREEN. THERE'S NOT ONE THING FLASHING RED. WE'RE CREATING 3 MILLION MORE AMERICANS EVERY YEAR. HOUSEHOLD FORMATION IS GOING UP. HOMES FOR SALE IS NOW SIX MONTHS SUPPLY, NOT 12 MONTH. THE SHADOW INVENTORY, WHICH IS STILL HIGH, BUT HAS BEEN COMING DOWN. BANKS ARE BETTER AT SHORT SALES. ALL TIME AFFORDABILITY OF HOMES AND MORTGAGES. HOME PRICES IN THE WORST MARKETS ARE NOW UP. PHOENIX IS UP 20, 30%.
BARTIROMO: THAT WAS ONE OF THE HARDEST HIT.
DIMON: LAS VEGAS IS UP. MIAMI IS UP. SACRAMENTO IS UP. IT IS NOT GOING TO BE IN ABSENCE OF A STRONG ECONOMY THE ECONOMY WILL DRIVE HOUSING. IF WE GET THE ECONOMY GOING, HOUSING CLEARLY TURNS. IF HOUSING GOES BACK TO NORMAL BUILDING, 1.3 MILLION UNITS A YEAR OR 1.4, WHICH MOST ECONOMISTS SAY WE'RE GOING TO HAVE TO DO SOON. REMEMBER, WE'VE ADDED 15 MILLION AMERICANS IN THE LAST FIVE YEARS OR SO. THAT'S GOING IT ADD 2 MILLION JOBS RIGHT THERE. SO HOUSING COULD BECOME THE THING THAT STARTS DRIVING, HELP DRIVE THE ECONOMY IF WE GET THIS ECONOMY GOING.
BARTIROMO: ISN'T THE INDUSTRY STILL WORKING THROUGH A LOT OF ASSETS? ISN'T THE INDUSTRY STILL LOOKING AT THE HOUSING RECOVERY LARGELY A FUNCTION OF REFINANCING? HOW DO YOU GET NEW PRIVATE MONEY GOING INTO THE MORTGAGE MARKET?
DIMON: SO WE ARE – ALL THE PEOPLE WHO DO MORTGAGE ARE DOING A LOT OF PURCHASE MORTGAGES AND RE-FI. BUT THE FACT IS I FORGOT THE NUMBER 4.5 MILLION HOMES ARE BEING SOLD A YEAR. MORTGAGE IS STILL A LITTLE TIGHT. I THINK ONE OF THE THINGS THAT WOULD BE REALLY GOOD, THE REGULATORS, LEGISLATORS, AND BUSINESSES FIX AS SOON AS WE CAN, WHAT ARE THE NEW RULES AROUND MORTGAGES? IT IS TOO IT TIGHT. APPRAISALS ARE TOO TIGHT. INCOME APPRAISALS ARE TOO TIGHT. UNDERWRITING IS TOO TIGHT. WE DON'T KNOW THE NEW RULES ON CAPITAL REQUIREMENTS. IF WE GET THAT FINALIZED, I THINK MORTGAGE WILL GET LOOSER AND IT WILL HELP HOUSING NOT HURT IT.
BARTIROMO: OKAY. CERTAINLY WE ARE SEEING THAT IN THE NUMBERS LITTLE BY LITTLE. IN TERMS OF EUROPE, IT FEELS LIKE WE WERE FOCUSED, THE MARKETS WERE SO FOCUSED ON THE ELECTION FOR THE LAST SEVERAL WEEKS. NOW THE LAST COUPLE OF DAYS, WE SEE EUROPE BECOMING AN ISSUE AGAIN. WHAT'S YOUR TAKE? I KNOW YOU CAN'T DO IN TEN MINUTES.
DIMON: IT'S GOING TO BE ROLLER COASTER. THERE'S NO AH-HA MOMENT. THERE'S NO QUICK FIX. THEY'VE GOT TO DO THREE THINGS. NUMBER ONE, THEY HAVE TO MAKE SOVEREIGN DEBT GOOD. YOU CAN'T HAVE NATIONS SURVIVE WHEN THEIR SOVEREIGN DEBT IS NOT MADE GOOD. THE ECB MADE THIS BIG STATEMENT ABOUT BUYING UNLIMITED AMOUNTS THAT COMES CLOSE TO DOING THAT. NUMBER TWO, YOU HAVE TO STOP THE POTENTIAL OF A BANK RUN, PARTICULARLY IN ITALY AND SPAIN. THE PROBLEM WITH THE GREEK EXIT ISN'T THE GREEK EXIT. IT'S THAT IT CAN CAUSE A RUN OF THE BANKS IN ITALY AND SPAIN. THEY'RE GETTING THAT FIXED BY HAVING TO CALL THE BANKING UNION, FDIC. THREE, THEY HAVE TO REWRITE THE TREATY THAT GOVERNS THE FISCAL AFFAIRS BETWEEN THE NATIONS. IT HAS TO BE MORE FLEXIBILITY, COMMON ACCOUNTING, MORE COMMON SOCIAL POLICIES. IT HAS TO BE CARROTS AND STICKS SO PEOPLE CAN'T BORROW TOO MUCH MONEY AT THE EXPENSE OF THEIR NEIGHBORS. IF THEY DO ALL THOSE THINGS, AND THERE'S A HUGE INCENTIVE TO DO IT. IF THEY DON'T DO IT, YOU CAN ARGUE WHAT HAPPENED 12 YEARS AGO WHEN THEY SEAT UP THE EURO. IF THEY DON'T DO IT, THEY CAN HAVE A BAD OUTCOME IN EUROPE. THEY'RE WORKING ON IT. I SAY IN EUROPE THEY HAVE THE WILL. IT'S HARD TO FIGURE OUT THE WAY. THE UNITED STATES, WE KNOW THE WAY. IT'S SOMETHING AROUND LIKE A SIMPSON-BOWLES. WE NEED THE WILL.
BARTIROMO: THAT'S A GREAT ANALOGY. THAT'S REALLY SMART. I GUESS WE COULD SEPARATE IT, BUT CAN WE REALLY SEPARATE IT? IS EUROPE GOING TO BE AMERICA'S PROBLEM AS WELL?
DIMON: IT IS TODAY. IT'S A MILD RECESSION THERE. IT MIGHT BE GETTING A LITTLE BIT WORSE, BUT IT'S A MILD RECESSION. YOU COULD SAY IT'S DOING BETTER THAN YOU WOULD HAVE THOUGHT CONSIDERING ALL THE PROBLEMS THEY HAVE. IT'S PARTIALLY AMERICA'S PROBLEM. JUST LIKE AMERICA WAS PARTIALLY THEIR PROBLEM WHEN WE HAD A BIG DOWNTURN I KNOW THE AMERICAN OFFICIALS ARE TRYING TO HELP THEM GET OVER THIS.
BARTIROMO: IN TERMS OF HEAD COUNT REDUCTIONS ON WALL STREET, WE CONTINUE TO HEAR THE LARGE INVESTMENT BANKS CUT HEADS. HOW DO YOU FEEL ABOUT JPMORGAN'S HEAD COUNTS ENTERING 2013, CONSIDERING WEAK TRADING VOLUMES, LOW INTEREST RATES, WHICH OF COURSE WE KNOW ARE GOING TO BE WITH US UNTIL AT LEAST THE END OF 2015. ARE YOU GOING TO LAY OFF WORKERS?
DIMON: I DON'T THINK WE'RE GOING LAY OFF. YOU'RE GOING TO HAVE -- WE'RE A BIG COMPANY. SOME BUSINESSES ARE GOING TO COME DOWN. THAT'S UNAVOIDABLE. NEW SYSTEMS GO IN PLACE. WE ENHANCE PRODUCTIVITY. WE'VE ALWAYS TRIED TO DO A VERY GOOD JOB MANAGING OUR EXPENSES. SO EVEN IF YOU SEE HEAD COUNT COME DOWN, I HOPE IT'S NOT BECAUSE OF LAYOFFS. BUT LIKE I SAID, WE SEE ENORMOUS OPPORTUNITIES IN ASIA, THE UNITED STATES, MIDDLE MARKET, SMALL BUSINESS, CONSUMERS, ONLINE BANKING, DIGITAL BANKING. SO WE ARE ALSO INVESTING IN ALL OF THESE THINGS. PRIVATE CLIENT, WE'VE OPENED 1,000 OFFICES THIS YEAR. WE'RE GOING TO OPEN MORE BECAUSE IT IS SO SUCCESSFUL. SO TO ME, WE'RE ALWAYS INVESTING IN THOSE THINGS TOO. THAT'S THE FUTURE. GROWING OUR BUSINESSES AND OBVIOUSLY, TRY TO RUN AN EFFICIENT SHOP. I THINK WHAT YOU'VE SEEN IN A LOT OF INVESTMENT BANKING IS PEOPLE TRYING TO FIGURE OUT WHAT PARTS OF IT CAN THEY AFFORD, WHAT ARE THE CAP REQUIREMENTS, TRY AND EARN AN ADEQUATE RETURN. AND ALL THE BUSINESSES ARE – ALL THE COMPANIES ARE NOT IN EXACTLY THE SAME POSITION. THEY HAVE STRUCTURAL ISSUES. THEY'RE IN DIFFERENT PARTS OF THE WORLD. YOU KNOW, WE HAVE A GREAT FIXED-INCOME BUSINESS. WE HAVE HUGE FLOWS. BUT THOSE FLOWS COME LIKE 80% OF FOREIGN EXCHANGE IS ELECTRONIC. YOU KNOW, AND IT IS JUST RUNNING THROUGH OUR PIPES AS PEOPLE MOVE MONEY THROUGH CUSTODY AND THROUGH JUST CORPORATE ACCOUNTS. YOU KNOW, THERE ARE CHECKING ACCOUNTS FOR CORPORATIONS AROUND THE WORLD.
BARTIROMO: YOU KNOW, I WANT TO GET BACK TO THAT COMMENT YOU MADE ABOUT ELECTRONIC. BECAUSE I THOUGHT THE MARKETS WERE ELECTRONIC TOO. AND THEN WE HAD THIS TWO-DAY SHUTDOWN. BUT I'M GOING TO GET TO HURRICANE SANDY IN A MOMENT. WHAT'S YOUR TAKE ON WHAT WENT ON AT CITIGROUP? VIKRAM PANDIT BEING PUSHED OUT LIKE THAT. AND THEN, YOU KNOW, IT IS ALL LIKE IT'S MICHAEL O'NEILL'S WAY OR THE HIGHWAY. I KNOW THIS WAS A LIFETIME AGO THAT YOU WORKED THERE, BUT IS IT THE BOARD THAT KEEPS MESSING UP? WHAT'S GOING ON?
DIMON: MARIA, I HAVE NO INSIGHTS. AND IF I DID, I WOULDN'T SHARE THEM.
BARTIROMO: ARE YOU SURE?
DIMON: I DID CALL VIKRAM UP AND WISH HIM THE BEST AND MICHAEL CORBAT.
BARTIROMO: YOU'VE GOT ALL THESE TECHNOLOGY CEOs AND SOCIAL MEDIA NEW TECHNOLOGY CEOs MEETING TOGETHER IN THIS CONFERENCE. WHY IS THIS SECTOR SO IMPORTANT TO YOU? IS THAT WHERE THE VIBRANCY IN BUSINESS IS TODAY?
DIMON: SURE. WELL IT IS ONE OF THEM. REMEMBER, WE'RE STILL DOING BASIC BANKING LIKE LOANS. WE HAVE 12 MILLION MOBILE ACCOUNTS NOW. PEOPLE ARE MOVING MONEY. YOU CAN TAKE PICTURES OF CHECKS AND HAVE THEM DEPOSITED. YOU CAN USE QUICK PAY TO MOVE MONEY TO YOUR FRIENDS, AND DEBIT OR CREDIT CARD ACCOUNT, YOUR CHECKING ACCOUNT . THESE SERVICES ARE GOING TO GROW VERY RAPIDLY. SO I'VE SPENT ALMOST A WEEK HERE MEETING THESE FOLKS AND MAKING SURE WE UNDERSTAND AND THAT WE'RE GEARED UP FOR IT.BUT ONLINE BANKING, ONLINE MOVING OF MONEY. I JUST SAID ELECTRONIC EXCHANGES. THAT'S BEEN HAPPENING MY WHOLE LIFE. THIS IS JUST ANOTHER HUGE WAVE OF THINGS TO MAKE IT EASIER AND BETTER FOR CUSTOMERS. WE HAVE TO DO IT. SO WE WILL BE INVESTING, YOU KNOW, HUGE AMOUNTS OF OUR TIME AND MONEY IN MAKING SURE WE SERVE CUSTOMERS PROPERLY IN THE MOBILE AND DIGITAL WORLD.
BARTIROMO: I HAD AN AH-HA MOMENT COMING HERE BECAUSE I USED MY iPHONE TO CHECK IN AT THE SECURITY LINE AT THE AIRPORT. WHICH I THOUGHT WAS SO GREAT. DO YOU THINK THAT IS WHERE WE ARE GOING TO SEE MUCH OF THE IPOs IN 2013? WHAT DOES THE PIPELINE LOOK LIKE?
DIMON: WELL, YOU'RE GOING TO WALK INTO A STORE OR BRANCH, AND IT'S GOING TO BRING UP YOUR I.D., IT IS GOING TO IMMEDIATELY KNOW WHO YOU ARE AND IF IT'S A STARBUCKS, THEY'RE GOING TO AUTOMATICALLY GET YOUR COFFEE FOR YOU. YOU WON'T EVEN HAVE TO PAY. IT WILL JUST AUTOMATICALLY GO TO YOUR ACCOUNT. RECEIPTS , YOU WON'T HAVE TO WORRY ABOUT IT. ALL THESE THINGS ARE COMING. I DON'T KNOW THE EXACT PAY. THE IPO MARKET OBVIOUSLY HAS SLOWED DOWN A LITTLE BIT. I ALWAYS LOOK AT IT AS THE TIP OF THE SPEAR. IT FILTERS BACK INTO THE EQUITY MARKETS. VENTURE CAPITALISTS NEED THE IPO MARKET TO HAVE EXITS TO RETURN MONEY TO THEIR INVESTORS, ETCETERA . IT'LL COME BACK. IT WILL COME BACK. MY WHOLE LIFE HAS HAD ITS OWN KIND OF CYCLE. IT WILL COME BACK. THERE IS A LARGE PIPELINE OF THINGS WAITING. THERE ARE A LOT OF COMPANIES WHO ARE NOT TECHNOLOGY COMPANIES ARE ALSO WAITING TO GO. AND I THINK THIS NEW RULE, THE JOB ACT DID HELP BECAUSE I DO THINK SOME OF THOSE PRIOR REGULATIONS HURT SMALL IPOs. SO I THINK IT'S VERY IMPORTANT. WE ALWAYS LOOK AT UNINTENDED CONSEQUENCES OF LAWS. THAT ACT WILL PROBABLY HELP SOME OF THESE COMPANIES GO PUBLIC.
BARTIROMO: WELL THAT'S A REAL POSITIVE ISN'T IT. OKAY. YOU SAID EVERYTHING IS ELECTRONIC. I WAS UNDER THE IMPRESSION THE MARKETS WERE ELECTRONIC. IF WE HAVE A STORM, WE DON'T HAVE TO SHUT THE WHOLE MARKET GLOBALLY DOWN. BUT IT SEEMS LIKE THAT'S WHAT WE DID WITH HURRICANE SANDY. I KNOW YOUR PEOPLE AT JPMORGAN HAD THEIR OWN STRUGGLES. I WANT TO ASK YOU ABOUT THE STRUGGLES, HOW EVERYBODY IS. BUT FIRST, WERE YOU COMFORTABLE WITH SHUTTING DOWN THE MARKETS FOR TWO DAYS LIKE THAT?
DIMON: FIRST I WANT TO SAY BECAUSE THERE ARE STILL A LOT OF PEOPLE STRUGGLING IN NEW JERSEY AND NEW YORK. OUR HEARTS GO OUT TO THEM. WE'RE DOING EVERYTHING WE CAN TO HELP. WE GAVE $5 MILLION TO I THINK IT WAS THE RED CROSS. WE'RE GOING TO DO AN ADDITIONAL $5 BILLION OF INCREMENTAL LENDING OF SMALL BUSINESS , THE MIDDLE MARKET, ON TOP OF WHAT WE ALREADY DO. WE'VE HELPED MILLIONS OF DOLLARS FOR OUR OWN EMPLOYEES, AND OUR OWN EMPLOYEES JUST DID A GREAT JOB. THROUGH A TERRIBLE THING TO GET TO WORK – OUR BANK WAS OPEN ON MONDAY AND TUESDAY.
BARTIROMO: I SPOKE TO SOMEBODY IN YOUR COMPANY WHO SAID I'M ON THE TRADING DESK RIGHT NOW.
DIMON: WE MOVE TRILLIONS OF DOLLARS AROUND THE WORLD. THE STOCK EXCHANGE WAS CLOSED. AND THE BOND MARKETS. AND THAT WAS THE DECISION THEY MADE FOR THEIR REASON THEY MADE. YOU CAN ARGUE ONE DAY OR TWO DAYS. THEY WERE IN THE MIDDLE OF THE STORM. HAD THEY BEEN SOMEWHERE ELSE, I DON'T THINK THAT WOULD HAVE QUITE BEEN THE ISSUE. SO, A LOT OF MARKETS ARE UP AND RUNNING. LIKE I SAID, A LOT OF BANKS WERE UP AND RUNNING.
BARTIROMO: I KNOW YOU'VE DONE A LOT FOR THE VICTIMS. YOU JUST MENTIONED WHAT YOU'VE BEEN DOING IN TERMS OF SENDING MONEY THERE. SO IN OTHER WORDS, IT HAD TO BE. WE HAD TO SHUT DOWN THE MARKETS. AND EVEN THOUGH A LOT OF IT IS ELECTRONIC.
DIMON: I HAVE NOT BEEN TOLD THE DETAILS ABOUT WHY THEY DID THAT. FROM THE NEW YORK STOCK EXCHANGE WAS RIGHT IN THE MIDDLE OF THE STORM. SO EVEN PEOPLE GETTING TO WORK COULD HAVE BEEN AN ISSUE. SO YOU KNOW, YOU CAN LOOK AT IT IN MULTIPLE WAYS. TO ME, THE FIRST THING IS THE SAFETY AND SOUNDNESS OF THE PEOPLE. THEN YOU WORRY ABOUT THE MACHINES AND THE MARKETS.
BARTIROMO: JAMIE, GOOD TO HAVE YOU ON THE PROGRAM.
DIMON: GREAT TO BE HERE. THANK YOU.
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