WHEN: Today, Monday, August 1st
WHERE: CNBC's "Power Lunch"
Following is the unofficial transcript of a CNBC EXCLUSIVE interview with JPMorgan Chase Chairman and CEO Jamie Dimon and CNBC's Wilfred Frost on "Power Lunch" (M-F, 1PM-3PM ET) today, Monday, August 1st. Following are links to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000539494, http://video.cnbc.com/gallery/?video=3000539495, http://video.cnbc.com/gallery/?video=3000539496 and http://video.cnbc.com/gallery/?video=3000539500.
All references must be sourced to CNBC.
WILFRED FROST: AND A VERY GOOD AFTERNOON TO ALL OUR VIEWERS ON THE EAST COAST FROM IRVINE, CALIFORNIA. BUT A VERY GOOD MORNING TO MY GUEST. HE'S THE CEO AND CHAIRMAN OF JPMORGAN, JAMIE DIMON. GREAT TO BE WITH YOU, JAMIE.
JAMIE DIMON: PLEASURE TO BE HERE. THANK YOU.
FROST: NOW OF COURSE YOU'RE ON YOUR BUS TOUR, YOUR ANNUAL BUS TOUR, THIS YEAR IT'S IN CALIFORNIA AND YOU GET TO GO AND SEE EMPLOYEES, VISIT BRANCHES AT SOURCE. WHAT'S THAT FOR? IS IT A BIT OF A MORALE BOOSTER OR DO YOU LEARN MORE THAN THAT?
DIMON: WE'VE BEEN DOING ROAD TRIPS LIKE THIS FOREVER. THE BUS WAS A NEW IDEA, KIND OF GO OFF THE BEATEN PATH A LITTLE BIT, VISIT OPERATING CENTERS AND SEE DIFFERENT TYPES OF CUSTOMERS. WE'VE DONE IT IN THE MIDWEST, WE'VE DONE IT IN DETROIT, WE'VE DONE IT IN FLORIDA, WE'VE DONE IT IN TEXAS, WHERE THEY ALWAYS SAY TEXAS IS WHAT AMERICA USED TO BE, AND THIS IS THE SECOND ONE IN CALIFORNIA – AND IT'S EXACTLY LIKE YOU SAID, SEE CUSTOMERS, EMPLOYEES, ALL TYPES OF CUSTOMERS. YOU WERE AT AN EVENT LAST NIGHT. THEY'RE ENTREPRENEURS, HIGH-TECH, SMALL-TECH, BIG COMPANIES.
FROST: YOU ALSO INVITE YOUR EMPLOYEES ON TO THE BUS WITH YOU.
DIMON: YEAH.
FROST: YOU GIVE THEM IMMUNITY AND THEY CAN TELL YOU ANYTHING THAT THEY WANT. I'M INTERESTED TO SEE HOW THAT GOES BECAUSE I'D BE TERRIFIED DOING THE SAME THING WITH MY OWN CEO. ARE THEY SCARED A LITTLE BIT OF YOU OR DO THEY OPEN UP?
DIMON: THEY TOTALLY OPEN UP. WE SAY WE GIVE THEM A BEER AND IMMUNITY AND WE ASK THEM WHAT CAN WE DO BETTER. IT'S AN AMAZING THING. IF YOU ASK YOUR EMPLOYEES – THIS IS TRUE FOR ANY BUSINESS OUT THERE – WHAT CAN YOU DO BETTER, THEY'LL GIVE YOU A WHOLE LONG LIST. ON THE FIRST BUS TRIP WE HAD 1,000 THINGS AND WE MAKE IT FUN FOR THEM. WE'RE JUST TRYING TO DO A BETTER JOB FOR OUR CUSTOMERS, OUR EMPLOYEES. AND JUST NOW I JUST GOT A COUPLE IDEAS. LIKE WE DON'T HAVE MANDARIN WEBSITES YET. YOU KNOW, IT'S A LITTLE THING, BUT IT'S A BIG THING FOR PEOPLE WHO SPEAK MANDARIN.
FROST: A LITTLE THING BUT A COMPLICATED THING TO TRANSLATE. WE'RE HERE IN CALIFORNIA AS WELL. YOU'RE GROWING FAST IN CALIFORNIA OR CHASE IS GROWING FAST IN CALIFORNIA, ALBEIT FROM A SMALL BASE. DOES IT ANNOY YOU THAT YOU'RE NOT NUMBER ONE HERE? AND CAN YOU CATCH WELLS FARGO? THEY'RE A LONG WAY AHEAD.
DIMON: THE IMPORTANT THING IS WE BOUGHT WAMU. I THINK WHEN WE BOUGHT WAMU, YOU HAD 600 BRANCHES, VIRTUALLY NO SMALL BUSINESS AND NO MIDDLE MARKET. AND NOW WE HAVE 7 MILLION CONSUMER CUSTOMERS IN CALIFORNIA, 700,000 BUSINESSES WHICH IS LIKE 400,000 SMALL BUSINESS, A HUGE PRIVATE BANK, A VERY GOOD INVESTMENT BANK. AND SO WE'RE DOING GREAT IN CALIFORNIA. WE LOVE THE STATE. THE STATE'S BEEN VERY, VERY GOOD TO US. AND SO WE'RE GOING TO GO AND EXPAND. YOU SAW THE ENTHUSIASM LAST NIGHT FOR JPMORGAN CHASE, ALL THE THINGS WE CAN DO. ON THE BUS I WAS JUST WITH ONE OF THE LADIES WHO'S BEEN HERE FOR TWO YEARS, SHE'S AN IMMIGRANT FROM CHINA. SHE BROUGHT HER PARENTS HERE. SHE'S AMONG OUR TOP PERSONAL BANKERS LIKE IN A RETAIL BRANCH. AND IF YOU SAW HER, YOU'D BE AMAZED AT WHAT THIS COUNTRY STILL OFFERS TO PEOPLE IN TERMS OF OPPORTUNITY. AND THAT ALL THREE OF THEM PRETTY MUCH STARTED AT A TELLER AND SO NOW THERE'S A MIDDLE MARKET MANAGER, ONE OF OUR BEST BRANCH MANAGERS IN THE COUNTRY. IT'S UNBELIEVABLE STUFF.
FROST: AND SO THE CONSUMER PART OF THE BUSINESS GROWING FAST IN CALIFORNIA. IT'S GROWING VERY FAST ACROSS THE BOARD. WE SAW THAT IN THE RECENT Q-2 EARNINGS FOR JPMORGAN. AND IT'S HIGHLIGHTED AS WELL FROM SOME OF THE OTHER BANKS. HOWEVER, IF WE LOOK AT THE GDP NUMBER LAST WEEK, THERE WAS A CLEAR LACK OF INVESTMENT FROM BUSINESSES. WHAT DOES THAT TELL YOU ABOUT THE FUNDAMENTAL STRENGTH OF THE U.S. ECONOMY RIGHT NOW? IS IT LATE CYCLE?
DIMON: I THINK -- I DON'T BELIEVE THAT. WHAT WE SEE IS A STRONG CONSUMER, ASSET PRICES ARE UP, 13 MILLION MORE PEOPLE WORKING, WAGES ARE GOING UP, HOUSEHOLD SPENDING IS UP. A LOT OF BUSINESS CAPITAL EXPENDITURES IS WHEN T HEY SEE THEIR ORDER BOOKS GROW AND THEY NEED TO BUILD A NEW PLAN. SO IT IS A LITTLE DISAPPOINTING, BUT THEY HAVE THE MONEY, THEY HAVE THE WHEREWITHAL, WHILE PROFITS ARE DOWN, THERE'S HUGE CAPABILITY, MARKETS ARE WIDE OPEN. I WOULDN'T OVERREACT TO SHORT-TERM DATA. I'M NOT EVEN SURE THE GDP DATA IS ACTUALLY THAT ACCURATE ANYMORE. SO WHAT WE SEE IS MORE HOUSEHOLD FORMATION, MORE PEOPLE BUYING HOMES, MORE PEOPLE WITH JOBS,.THOSE THINGS ARE ALL GOOD THINGS AND HOPEFULLY WILL KEEP THE ECONOMY GROWING, YOU KNOW, I WISH IT WAS GROWING FASTER, BUT GROWING AROUND 2%.
FROST: OIL PRICE FALLING BELOW 40. IS THAT A SHORT-TERM DATA POINT YOU'RE NOT BOTHERED ABOUT, OR IS IT WORRYING?
DIMON: IT MAKES NO DIFFERENCE TO ME. WE LOOK AT -- WE BUILD FOR THE LONG RUN. WE'RE IN CALIFORNIA FOREVER. WE'RE IN 100 COUNTRIES. WE'RE GOING TO BE THERE FOREVER. WOBBLES IN PRICES TO ME ARE NOT A REASON THAT WE WOULD DO SOMETHING DIFFERENT. OBVIOUSLY WE HAVE CUSTOMERS IN THE OIL BUSINESS. IT AFFECTS THEM AND THEY PROBABLY WOULD LIKE TO SEE A MORE STABLE OIL PRICE, BUT I WOULDN'T OVERREACT TO SHORT-TERM PRICING.
FROST: WHAT ABOUT THE YIELD CURVE? BECAUSE AS YOU KNOW ALL TOO WELL IT'S VERY LOW. IT'S VERY FLAT. DOES THAT SUGGEST THAT THERE ARE CONCERNS AHEAD FOR THE U.S. ECONOMY? AND IF PEOPLE'S EXPECTATIONS SUDDENLY SHIFT TO BEING INFLATIONARY, COULD IT MOVE VERY QUICKLY? I MEAN, IS THE BOND MARKET SOMEWHAT OF A BUBBLE AT THE MOMENT?
DIMON: LOOK, I'M NOT A BUYER OF TEN-YEAR BONDS. I WOULD BE A LITTLE WORRIED ABOUT DRASTIC ACTIONS IN THE TEN-YEAR BOND. THE MORE IMPORTANT THING, AND THE FED TALKS ABOUT IT IS ARE WE -- IF WE HAVE PROPER GROWTH IN THE UNITED STATES, IT WILL START TO NORMALIZE INTEREST RATES. SO THINK OF THE SHORT END, AND YOU KNOW, 25 BASIS POINTS DOESN'T MATTER THAT MUCH, BUT THE FACT IS IF WE START TO NORMALIZE, I PERSONALLY THINK IT'S A GOOD THING. AND IF THAT HAPPENS, MY VIEW IS YOU START TO SEE THE TEN-YEAR GO UP TO A MORE NORMAL PRICE. WE DON'T LOOK AT TODAY'S PRICES IN NORMAL PRICE. IT'S A VERY LOW PRICE FOR A WHOLE BUNCH OF DIFFERENT REASONS WE WON'T GET INTO RIGHT NOW.
FROST: AND IF WE THINK MORE BROADLY ABOUT THE STOCK MARKET ITSELF, WE'VE HIT RECORD ALL-TIME HIGHS, BUT IF YOU LOOK ON ALMOST ANY TIMEFRAME SINCE THE FINANCIAL CRISIS, TEN YEARS, FIVE YEARS, THIS YEAR, BANKS HAVE BEEN LEFT BEHIND YET LOAN GROWTH IS GOOD, YOU'RE POSITIVE ON THE ECONOMY. IS THIS A ONCE IN A LIFETIME BUYING OPPORTUNITY FOR BANK STOCKS IN THE UNITED STATES?
DIMON: LOOK, THE AMERICAN BANKING SYSTEM'S IN GREAT SHAPE. TONS OF CAPITAL. TONS OF LIQUIDITY. THEY'RE STARTING TO EXPAND AGAIN. AND A HEALTHY FINANCIAL MARKET IS KIND OF PART OF THE SPINNING WHEEL THAT MAKES THE COUNTRY GROW. THERE'S STILL LEGAL AND REGULATORY PRESSURE ON BANKS, AND BANK STOCKS MAY NOT DO GREAT, UNTIL THAT LIFTS OVER TIME. BUT I THINK IT WILL BE GOOD FOR EVERYONE IF IT HAPPENS, BUT I DON'T COUNT ON THAT. WHAT WE TRY TO DO IS BUILD THE COMPANY, SERVE THE CLIENTS. YOU CAN SEE BEHIND ME, RIGHT NOW YOU MAY NOT KNOW THIS, WE HAVE 100,000 PEOPLE, SCREENS AROUND THE WORLD, PHILIPPINES, HONG KONG, LONDON, CHINA, ALL AROUND THE UNITED STATES WHO ARE WATCHING THIS AND I WANT THEM TO KNOW HOW DAMN PROUD I AM OF THEM BECAUSE THEY DO A GREAT JOB SERVING THEIR CLIENTS EVERY SINGLE DAY. AND OUR CLIENTS ARE HAPPY. THAT'S WHAT I WORRY ABOUT. BUILD THE COMPANY TODAY AND THE STOCK PRICE WILL TAKE CARE OF ITSELF TOMORROW.
FROST: NOW IF WE THINK ABOUT ONE OF THE BIG THEMES IN Q-1 AND Q-2 FOR BANKS THIS YEAR, IT'S BEEN COST-CUTTING. AND YOU'VE DONE VERY WELL IN THAT AND DID IT WELL IN THE LAST SET OF EARNINGS AGAIN. I'M NOT SO INTERESTED TO HEAR ABOUT COST-CUTTING PLANS IF YOU CAN SAVE AN EXTRA BILLION HERE OR THERE OVER THE NEXT YEAR OR TWO. WHAT ABOUT IN FIVE YEARS' TIME? COULD JPMORGAN BE OPERATING ON 30% LESS COST?
DIMON: NO. SO I'VE ALWAYS SEPARATED WASTE-CUTTING, GETTING RID OF BAD STUFF FROM GOOD EXPENSES LIKE BUILDING SYSTEMS, TECHNOLOGY, MOBILE APPLICATIONS. WE DON'T COST-CUT JUST TO COST-CUT. IF WE CAN FIND A GOOD PLACE TO OPEN A BRANCH, WE'LL OPEN A BRANCH. IF WE CAN FIND A NEW GOOD APPLICATION TO SERVE YOU, A TRADER, SELLING IT AROUND THE WORLD, WE BUILD IT. I'M NOT INTERESTED IN SAYING THE COST HAS TO BE $56 BILLION DOWN TO 55. IF WE FIND GOOD MARKET OPPORTUNITIES, WE'RE GOING TO SPEND THE MONEY. AND SO WE LOOK AT IT AS A FULL BUSINESS. WE'VE ALWAYS BEEN FINDING WAYS, USUALLY TECHNOLOGY AND AUTOMATION TO REDUCE COSTS. BUT MEANWHILE YOU ALWAYS FIND WAYS TO INVEST IT TOO. SO TO ME IT'S AN ONGOING, IT WILL NEVER STOP, I CALL THAT CAPITALISM. THAT IS THE WAY OF BUSINESS.
FROST: LET'S TALK A LITTLE BIT ABOUT THE POLITICAL SITUATION. WE'RE COMING TO THE END OF THE OBAMA ADMINISTRATION. ON ECONOMICS ITSELF ALONE, RATE HIS PERFORMANCE OUT OF TEN FOR US?
DIMON: LOOK, HE HAD INHERITED A TERRIBLE THING. SO I THINK THE AMERICAN GOVERNMENT BEFORE PRESIDENT BUSH, PRESIDENT OBAMA, PAULSON, GEITHNER, BERNANKE, I THINK THEY DID A LOT TO STABILIZE IT. I WISH WE'D BEEN GROWING A LOT FASTER SINCE THEN. IT'S BEEN MODERATE. WHAT I WOULD WORRY ABOUT MORE IS THE NEXT PRESIDENT, WHOEVER IT IS, FOCUSES ON THE RIGHT THINGS. I THINK WE CAN GO TO 4%. OK AND THOSE RIGHT THINGS ARE PROPER IMMIGRATION REFORM, PROPER INFRASTRUCTURE SPENDING. DEMOCRATS SAY SPEND A LOT OF MONEY, I KIND OF AGREE WITH THAT. REPUBLICANS SAY IT SHOULDN'T BE BRIDGES TO NOWHERE AND BIG PORK BARREL, I AGREE WITH THAT TOO. SO PROPER INFRASTRUCTURE SPENDING ON ROADS, BRIDGES, TUNNELS, HOSPITALS, SCHOOLS, AIRPORTS WOULD BE GREAT FOR THE UNITED STATES. YOU KNOW, WE NEED CORPORATE TAX REFORM. I WOULD ALSO EXPAND THINGS LIKE THE EARNED INCOME TAX CREDIT TO HELP THE LOWER PAY. SO I THINK THERE ARE A LOT OF WAYS, EDUCATION, THAT WE CAN MAKE THIS COUNTRY BOOM. AND I THINK THAT'S WHAT WE SHOULD BE FOCUSING ON AND NOT JUST POINTING FINGERS AT EACH OTHER AND GETTING MAD ALL THE TIME.
FROST: YOU MENTIONED IMMIGRATION REFORM. SO, IS THERE AN IMMIGRATION PROBLEM IN THE UNITED STATES AT THE MOMENT?
DIMON: CHUCK SCHUMER AND JOHN McCAIN HAD A BILL, WHICH I BELIEVE PASSED THE SENATE, THAT DEALT WITH PROPER SECURITY AT THE BORDER, PROPER PATHWAY TO LEGALIZING UNDOCUMENTED CITIZEN – IMMIGRANTS WHO, BY THE WAY, MOST OF THEM HAVE JOBS, MOST OF THEM ARE DOING FINE AND IT'S AT THE BACK OF THE – IT WOULD TAKE LIKE 13 TO 15 YEARS. AND THOSE ARE ALLOWING ALL THESE KIDS WHO COME FROM AROUND THE WORLD WHO GET ADVANCED DEGREES HERE, YOU KNOW, AT OUR BEST UNIVERSITIES IN THE WORLD – SCIENCE, TECHNOLOGY – AND WE SEND THEM HOME. LET THEM STAY AND LET THEM BUILD COMPANIES. A LOT OF THESE COMPANIES WERE BUILT BY IMMIGRANTS. THREE OF MY GRANDPARENTS WERE BORN OVERSEAS. I WAS JUST ON WITH PEOPLE ON THE BUS – ALMOST ALL OF THEIR PARENTS WERE ALL BORN OVERSEAS AND THEY'RE FABULOUS AMERICANS.
FROST: WE TALK ABOUT THE CANDIDATES AND, YOU KNOW, DONALD TRUMP AND HILLARY CLINTON, THEY'RE MILES APART ON CERTAIN ISSUES. BUT THERE'S ONE AREA THAT THEY SEEM TO BE UNITING ON AND THAT'S PRETTY TOUGH RHETORIC AGAINST THE BANKS, INCLUDING BOTH HAVE MENTIONED THEY MIGHT BRING BACK GLASS-STEAGALL. DOES THAT CONCERN YOU?
DIMON: OK, I'M NOT GOING TO GET INTO – GLASS-STEAGALL HAD NOTHING TO DO WITH THE CRISIS AND EVEN ALL OF THEM ACKNOWLEDGE THAT. SO, IT'S KIND OF INNOCUOUS FOR THE PAST. I ASSUME THAT REGULATORS AND POLITICAL LEADERS WANT US TO DO WHAT WE'RE DOING EVERY DAY. LEND TO LARGE CORPORATIONS, LEND TO SMALL BUSINESSES, LEND TO INDIVIDUALS, MOVE THEIR MONEY SAFELY, BUILD CYBER SECURITY. AND WE DO IT IN 150 COUNTRIES AROUND THE WORLD. WE BANK WITH COUNTRIES – WE BANK CALIFORNIA FOR GOD'S SAKE, WE HELPED THEM IN THE MIDDLE OF THE CRISIS. WE BANK 700,000 BUSINESSES HERE. ISN'T THAT OUR JOB? SO AND WE'RE DOING IT QUITE WELL. SO I THINK WE SHOULD FOCUS ON THAT. I KNOW THERE'S DELAYING AROUND BANKS, AND THERE'S NOTHING I CAN DO ABOUT THE PAST OTHER THAN – YOU KNOW, LOOK BEHIND ME AND LOOK AT WHAT THESE PEOPLE DO. THEY SERVE 7 MILLION CONSUMERS EVERY DAY AND THEY DO A GREAT JOB AT IT. I WANT TO THANK YOU ALL PERSONALLY. I WISH I COULD COME SEE EVERY ONE OF YOU EVERY YEAR. I KNOW I CAN'T, BUT IF I COULD, I WOULD.
FROST: YOU TALKED ABOUT LENDING, NOW THAT'S YOUR JOB, TO KEEP LENDING. HAVE YOU EVER LENT TO DONALD TRUMP OR ANY OF HIS BUSINESSES?
DIMON: I'M NOT GOING TO – I CAN'T SPEAK ABOUT INDIVIDUALS WHEN IT COMES TO SOMETHING LIKE THAT.
FROST: OKAY. FAIR ENOUGH. LET'S MOVE ON IN TERMS OF WHAT SHOULD BE ON THE TOP OF THE AGENDA. YOU TALKED A LITTLE BIT ABOUT TAX REFORM. WE'VE ALSO HEARD BOTH SIDES OF THE POLITICAL DEBATE TALK A LITTLE BIT ABOUT ANTI-FREE TRADE RHETORIC. AND THIS IS SOMETHING THAT'S VERY CLOSE TO MY HEART HAVING JUST SEEN THE SAME ISSUES COME UP IN THE UNITED KINGDOM. IN YOUR OPINION, WOULD IT BE A MISTAKE FOR THE NEXT PRESIDENT TO RESTRICT FREE TRADE?
DIMON: YES. BUT YOU KNOW, LOOK, I THINK THERE ARE LEGITIMATE ISSUES AROUND WHAT WE CALL FAIR TRADE. SO, YOU KNOW, PROPER PROTECTION OF WORKERS, PROPER PROTECTION OF THE ENVIRONMENT, NONTRADE, NONTARIFFED TYPE BARRIERS. SO WHEN I LISTEN TO A LOT OF POLITICAL LEADERS SPEAK, THEY TALK ABOUT MAKING FAIRER, I UNDERSTAND THAT. BUT, YOU KNOW, CHINA IS GOING TO TRADE WITH THE WORLD WHETHER WE LIKE IT OR NOT. EITHER WE'RE GOING TO SET THE TERMS OF THAT TRADE OR THEY'RE GOING TO SET IT. SO TRADE AND TECHNOLOGY HAVE BEEN GENERALLY WONDERFUL THINGS FOR THE WORLD. I DO UNDERSTAND THAT EVERY NOW AND THEN THEY CAUSE PAIN AND SUFFERING IN A VERY SPECIFIC PLACE. YOU KNOW, WHAT WE NEED AND I THINK IT'S IN THE BILL BY THE WAY IS BETTER TRADE ASSISTANCE. SO IF PEOPLE ARE HURT BY SOMETHING LIKE TRADE, WE SHOULD HAVE RELOCATION, RE-EDUCATION, INCOME ASSISTANCE, ALL THOSE THINGS WHICH HELP THE PEOPLE GET HURT BY IT, BUT THE GENERAL – YOU STILL GET HUGE BROAD BENEFIT.
FROST: WITH THAT IN MIND, DO YOU THINK THE DECISION THAT THE BRITISH PEOPLE RECENTLY TOOK TO VOTE FOR A BREXIT, WAS THAT A STEP BACKWARDS?
DIMON: YOU KNOW, IT'S HARD TO SAY BECAUSE IF YOU SPEAK TO THE BRITISH PEOPLE, YOU KNOW BETTER THAN ME, SOME WANTED – THEY VOTED FOR BREXIT BECAUSE THEY WANTED TO KIND OF PUT UP A WALL. BUT A LOT OF THEM IMMEDIATELY CAME TO THE UNITED STATES AND WENT AROUND THE WORLD AND SAID NO, THIS IS SO BRITAINS CAN BE OPEN SEASON FREE TRADE AND NOT CONSTRAINED. SO YOU CAN ACTUALLY ARGUE EITHER POINT. AND WE JUST DON'T KNOW HOW IT'S GOING TO TURN OUT BECAUSE THERE ARE MANY PARTIES INVOLVED. SO THAT TO ME IS THE UNCERTAINTY AROUND IT AND WE HAVE TO WAIT AND SEE.
FROST: WHEN YOU DID YOUR PRE-BREXIT VOTE CONTINGENCY PLANNING, DID YOU EVER EXPECT THAT IN THE INSTANCE OF AN EXIT VOTE AS WE HAD, THAT MARKETS WOULD HAVE SHRUGGED IT OFF SO EASILY? I MEAN, OTHER THAN SOME UK CENTERIC ASSETS, WE'VE MOVED ON AND WE'RE HITTING NEW HIGHS.
DIMON: YEAH, BECAUSE WE ALWAYS KNEW THE EFFECT OF BREXIT WASN'T REALLY WHAT THE MARKETS MIGHT DO IN THE SHORT RUN. IT'S LIKE, WHAT IS THE ULTIMATE OUTCOME? AND WE SIMPLY DON'T KNOW. AND WE'RE PROBABLY NOT GOING TO KNOW FOR YEARS. SO THAT UNCERTAINTY WILL HAVE AN EFFECT AND YOU'RE GOING TO READ EVERYDAY ABOUT DIFFERENT PEOPLE SAYING, YOU KNOW, YOU'RE NOT GOING TO HAVE TRADE WITH THE EU WITHOUT IMMIGRATION OR FREE MOVING OF PEOPLE AROUND. SO, LOOK, WE HAVE TO BE PREPARED FOR WHATEVER THE OUTCOMES ARE. AND SINCE WE DON'T KNOW, WE'LL WORK ON IT. I DON'T THINK IT'S GOING TO HAPPEN TOMORROW, SO WE'LL LOOK AT IT. IT'S NOT UP TO JPMORGAN CHASE. BECAUSE I READ EVERY NOW AND THEN PEOPLE THAT SAY JPMORGAN IS THREATENING – WE'RE NOT THREATENING ANYTHING. WHATEVER THE LAWS OF THE LAND ARE, WE HAVE TO FOLLOW. THAT MAY REQUIRE US TO DO THINGS DIFFERENTLY THAN WE DO TODAY.
FROST: NOW, THERE HAS BEEN NO IMMEDIATE CONTAGION FROM BREXIT ACROSS THE REST OF EUROPE, BUT VARIOUS SCENARIOS THAT YOU'VE LOOKED AT, LONGER TERM, FIVE YEARS IN ADVANCE, ARE THERE ANY SCENARIOS WHERE YOU CONSIDER THE BREAKDOWN OF THE EUROZONE?
DIMON: YOU KNOW, UNFORTUNATELY THAT COULD BE ONE OF THE FAT TAIL OUTCOMES OF A BREXIT. BECAUSE WHEN YOU GO TO EUROPE, AND I WAS IN ITALY RECENTLY, NETHERLANDS IS GOING TO HAVE A VOTE, ITALY HAS A VERY IMPORTANT REFERENDUM, GERMANY'S GOING TO HAVE A VOTE, YOU HAVE NEW LEADERSHIP IN BRITAIN, THOSE THINGS JUST CAUSE A LOT OF UNCERTAINTY ABOUT WHAT DO PEOPLE WANT. NETHERLANDS THEY ARE TALKING ABOUT HAVING A REFERENDUM LIKE BREXIT. AND YOU DON'T KNOW HOW IT IS GOING TO FALL OUT. AND SO, THAT TO ME IS ONE OF THOSE THINGS OUT THERE THAT COULD POSSIBLY HAPPEN. IT MAY TAKE MORE THAN FIVE YEARS, BUT IT MAY VERY WELL HAPPEN.
FROST: I WANT TO ASK IF THIS IS AN OPPORTUNITY FOR YOU. ON YOUR INVESTOR CALL, THE CFO MARIANNE LAKE SPECIFICALLY REFERRING TO BREXIT SAID, "WE'RE NOT GOING TO BE AT A COMPETITIVE DISADVANTAGE, IF ANYTHING, WE FEEL LIKE WE'RE IN A POSITION OF STRENGTH." SO THIS UNCERTAINTY IN EUROPE, IS IT AN OPPORTUNITY FOR JPMORGAN TO TAKE MARKET SHARE?
DIMON: WELL, I THINK WHAT SHE WAS REFERRING TO IS THAT THAT WHATEVER THE COMPETITIVE SITUATION IS, IT WILL BE EQUAL FOR EVERYONE. THAT WE'RE IN A PRETTY GOOD POSITION. AND WE'LL HAVE TO JUST ADAPT TO THE NEW RULES. IT'S UNLIKELY THE NEW RULES WILL HURT US MORE THAN OTHER PEOPLE, IS WHAT SHE REALLY MEANT. THE NEW RULES MAY VERY WELL BE HARD FOR US. IT CAUSES MORE MONEY AND CAUSE MORE UNCERTAINTY WITH OUR CLIENTS, BUT WE WANT TO BE THERE SERVING THE CLIENTS REGARDLESS OF HOW IT ALL COMES OUT. SO LIKE I SAID, WE'RE JUST GOING TO HAVE TO MOLD OURSELVES TO WHAT THE POLITICAL LEADERS OF EUROPE AND THE UK COME UP WITH. AND SO, IT IS A ONE-SIDED THING. IT'S NOT UP, AT ALL, TO JPMORGAN.
FROST: SPECIFICALLY, THE BANKING –
DIMON: IF YOU ASK US WHAT WE WANTED, WHAT WE WANT IS TO KEEP OUR JOBS IN LONDON AND BE ABLE TO PASSPORT FINANCIAL SERVICES TO THE EU LIKE TODAY. AND FOR THE AVERAGE PERSON OUT THERE, WHAT THAT REALLY MEANS IS THAT WE CAN BANK A GERMAN COMPANY IN GERMANY USING PEOPLE, RESEARCH, SALES, TRAIN OUT OF LONDON. IF THOSE RULES CHANGE, AND THEY COULD, THEN WE HAVE TO CHANGE WHERE WE ARE AND HOW WE FUNCTION.
FROST: HOW MUCH OF A HIT TO YOUR COSTS WOULD IT HAVE TO BE FOR YOU TO ACTUALLY GO THROUGH THAT UPHEAVAL OF MOVING PEOPLE ABROAD?
DIMON: IT IS WHAT IT IS. SO I CAN COME UP WITH A SCENARIO THAT IS GOING TO COST US A LOT MORE MONEY, BUT IT'S WHAT WE'RE TOLD TO DO. IT IS NOT WHAT I WANT TO DO. IT IS WHAT WE ARE SIMPLY TOLD TO DO BY THE GOVERNMENTS OF THE EU.
FROST: HOW DIFFICULT MORE BROADLY –
DIMON: AND WE DON'T KNOW HOW MUCH DUPLICATE COSTS ARE GOING TO CREATE. IT WILL CREATE ONE-TIME COSTS AND IT WILL PROBABLY CREATE A LOT OF DUPLICATE COSTS. REMEMBER THOSE – AND THOSE DUPLICATE COSTS, AND I HATE TO SAY THIS, WILL EVENTUALLY BE BUILT BY THE CUSTOMERS IN EUROPE. IF YOU BUILD A SYSTEM WHERE YOUR COSTS ARE MUCH HIGHER, PEOPLE HAVE TO BUILD IT INTO HOW THEY PRICE THEIR PRODUCTS AND SERVICES.
FROST: WE JUST HAD THE STRESS TEST RESULTS FOR EUROPEAN BANKS LAST FRIDAY. HOW DIFFICULT IS THE SITUATION THERE? I MEAN, DO YOU LOOK AT THE EUROPEAN BANK SITUATION AND THINK, OH, AT LEAST WE'RE NOT TOO HEAVILY IN THERE? I MEAN, DEUTSCHE BANK AND THE ITALIAN BANKS, THEY'RE REALLY STRUGGLING.
DIMON: I MEAN, THE WAY YOU SHOULD LOOK AT THAT IS THAT THEY DID THE STRESS TEST AND MOST OF THE BANKS DID FINE. AND I THINK IT'S TIME IN EUROPE, IF I WAS THE EUROPEAN REGULATORS AND EUROPEAN GOVERNMENTS, I WOULD LET THEIR BANKS DO THEIR JOB. YOU KNOW, CONTINUE TO POUND ON THEM AND HAVE CHANGE THE RULES AND REQUIREMENTS YOU KNOW FIVE YEARS OUT, SIX YEARS OUT, IS NOT GOOD FOR THE PEOPLE OF THOSE COUNTRIES BECAUSE YOU'RE DESTABILIZING A FINANCIAL SYSTEM. THEY'RE INCLUDING A BUNCH OF BANKS THAT NEED TO BE RECAPITALIZED A LITTLE BIT. IN OUR VIEW, AND AS YOU KNOW JPMORGAN – BECAUSE WE'VE BEEN PUBLIC – IS LEADING A CONSORTIUM TO HELP MONTE DEI PASCHI – AND IF WE COULD PULL SOMETHING LIKE THAT OFF, THAT WOULD BE GREAT FOR ITALY.
FROST: YEAH. LET'S MOVE ON AND TALK A LITTLE BIT ABOUT YOURSELF IF WE MAY, JAMIE. YOU'VE HAD AN OUTSTANDING CAREER ALREADY. BUT YOU'VE HAD SOME TOUGH ISSUES IN YOUR PERSONAL LIFE OVER THE LAST COUPLE OF YEARS. DOES THAT MAKE YOU REASSESS HOW IMPORTANT WORK IS? I MEAN, WHAT STILL KEEPS YOU COMING BACK TO DO THE JOB EVERY SINGLE DAY?
DIMON: I IMAGINE I WOKE UP TOMORROW – AND I LOVE MY CHILDREN, I SPEND A LOT OF TIME WITH THEM – IF I COULD HAVE A BARBELL LIFE, FAMILY AND JOB. I LOVE THE JOB, I LOVE THE PEOPLE AT THIS COMPANY. I LOVE WHAT I DO. I'D MISS THE CAMARADERIE, I'D MISS THE FIGHTING FOR SOMETHING, I'D MISS MEETING OUR EMPLOYEES IN ALL PARTS OF THE WORLD. AND NOT GETTING TO DEAL WITH PRESIDENTS AND PRIME MINISTERS AND EMPLOYEES FROM TELLERS ON UP. AND I LOVE IT. AND I THINK THAT JPMORGAN MAKES IT A BETTER WORLD. EVERY SINGLE DAY IN 2,000 CAREERS AROUND THE WORLD, TRYING TO DO OUR JOB WELL. RESPONSIBLE LENDING, OPENING BRANCHES, SERVING SMALL BUSINESSES AND SO I WOULD MISS IT TERRIBLY.
FROST: BUT YOU WOULDN'T MISS HAVING TO DO LIVE CNBC INTERVIEWS. THAT WASN'T IN YOUR LIST THERE. JUST TO DIVE A LITTLE DEEPER IF I MAY. IT'S BEEN A CRAZY FEW MONTHS, BREXIT, STRESS TEST, WE'VE TOUCHED ON ALL OF THOSE THINGS. AT THE SAME TIME, YOU HAD THE AWFUL EVENTUALITY OF LOSING BOTH OF YOUR PARENTS. AND SADLY, YOU KNOW, I'VE BEEN THROUGH A SIMILAR PERSONAL HIT IN RECENT YEARS, AND THAT WOULD HAVE TOTALLY FLOORED ME. AND I WONDER, ARE YOU COPING? HOW ARE YOU COPING? ARE YOU GETTING THROUGH IT? AND ARE YOU ALL RIGHT?
DIMON: NO, I'M ALL RIGHT. MY PARENTS HAVE BEEN ILL FOR A WHILE, SO YOU HAVE SOME TIME TO GET PREPARED. AND YOU'RE MENTIONING SOMETHING THAT THIS IS THE FIRST PROBABLY CNBC INTERVIEW I'M DOING THAT MY MOTHER'S NOT WATCHING. AND SHE WOULD ALWAYS CALL ME OR SEND ME A NOTE AFTERWARDS. SHE WAS PROUD OF ME AND WHAT WE DID AND STUFF LIKE THAT. SO YOU MISS YOUR PARENTS, YOUR LIFE HAS CHANGED AND EVERY EVENT, AS YOU KNOW BETTER THAN ME, EVERY EVENT THAT COMES UP IS KIND OF A NEW FEELING THAT SOMEONE WHO IS NOT THERE USED TO BE THERE. BUT MY FAMILY IS VERY TIGHT. WE WERE ALL THERE RIGHT TO THE END. IT WAS AS NICE AS IT COULD HAVE POSSIBLY BEEN.
FROST: IT'S GREAT TO SEE YOU DOING SO WELL, JAMIE. MY FINAL QUESTION, WE FOCUS EVERY DAY ON THE WEEKLY DATA POINTS, JOBS NUMBERS, THE QUARTERLY EARNINGS. LONG-TERM THOUGH HOW IS THE U.S. ECONOMY?
DIMON: GREAT POINT. SO HERE'S THE MOST IMPORTANT THING. SO WE DON'T LIKE BET ON STOCKS GOING UP OR DOWN, OR BONDS – EVEN OUR TRADING BOOKS WE DON'T DO THAT. WE ARE THERE STEADFAST LONG TERM. SO WHEN I JUST GOT BACK FROM ITALY, WE HAD OUR 75th ANNIVERSARY THERE, JPMORGAN HIMSELF ACTUALLY DIED THERE. WE WERE IN ITALY, GERMANY, SPAIN, IRELAND, PORTUGAL, RIGHT THROUGH THE CRISIS. WE HAD ARGENTINA FOR THE LAST 12 YEARS RIGHT THROUGH THE CRISIS. WE NEVER WAIVED, WE NEVER LEFT. IN FACT, IN ITALY, WE ADDED MORE CREDIT. IN THE MIDDLE OF THE CRISIS, IT WASN'T JUST JPMORGAN, ALL THESE BANKS OUT THERE ROLLED OVER LOANS. SO HERE'S THE IMPORTANT LONG-TERM THEME. AND I'M GOING TO TALK ABOUT THE UNITED STATES PATRIOTICALLY FOR A SECOND. WE HAVE THE BEST MILITARY ON THE PLANET, THE BEST MILITARY BARRIERS EVER BUILT CALLED THE ATLANTIC AND THE PACIFIC. VERY PEACEFUL AND FRIENDLY NEIGHBORS CALLED MEXICO AND CANADA. SOME OF THE BEST UNIVERSITIES ON THE PLANET, SOME OF THE BEST BUSINESSES ON THE PLANET, GREAT WORK ETHIC, GREAT RULE OF LAW – OTHER THAN HOW IT OFTEN APPLIES TO BANKS – THE WISE AND DEEPEST FINANCIAL MARKETS THAT THE WORLD'S EVER SEEN. YOU DON'T GET THAT IN BRAZIL, RUSSIA, INDIA, CHINA. I'M NOT MAKING FUN OF THEM. WE HAVE ALL THE FOOD, WATER AND ENERGY WE SHOULD NEED. AGAIN, YOU DON'T GET THAT. AND I'M SAYING THIS OUT OF RESPECT FOR CHINA. THEY DON'T HAVE ENOUGH FOOD, WATER AND ENERGY. THEY HAVE 500 MILLION PEOPLE LIVING IN POVERTY AND THEY HAVE A LOT OF VERY TOUGH NEIGHBORS IN THE NEIGHBORHOOD. SO YOU KNOW, WE – AMERICA SHOULD LOOK AT WHAT WE DO VERY WELL. OUR FUTURE IS GOING TO BE UNBELIEVABLE. BUT IT'S NOT A DIVINE RIGHT. WE DON'T HAVE A DIVINE RIGHT TO SUCCESS. SO I AGREE WITH A LOT OF POLITICIANS OUT THERE WHEN THEY SAY WE'VE GOT SERIOUS ISSUES. WE DO. IMMIGRATION, INFRASTRUCTURE, INCOME INEQUALITY IS ONE OF THEM, YOU KNOW, WHICH IS WHY WE RECENTLY ARE CHANGING OUR WAGE RATES AT JPMORGAN. SO LET'S GET TOGETHER, COLLABORATE AND FIX THE PROBLEMS SO THAT BEAUTIFUL FUTURE WE HAVE IS THE ONE WE ACCOMPLISHED.
FROST: JAMIE, IT'S BEEN A PLEASURE TALKING TO YOU.
DIMON: HEY WILFRED, THANK YOU. APPRECIATE IT.
FROST: THANK YOU VERY MUCH FOR YOUR TIME. THE CHAIRMAN AND CEO OF JPMORGAN JAMIE DIMON, FROM IRVINE, CALIFORNIA. FOR NOW, I'LL SEND IT BACK TO HEADQUARTERS, BRIAN.
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