JPMorgan's Dimon: Mortgage Woes Still Hit Earnings

Last year was a good one for JPMorgan Chaseearnings but it would've been even better had the bank not been hit with mortgage-related losses, CEO Jamie Dimon told investors in his annual letter, released Wednesday

Jamie Dimon
Jamie Dimon

"Your company earned a record $19 billion in 2011, up 9 percent from the record earnings of $17.4 billion in 2010," the JPMorgan executive wrote.

But it would've been better "had it not been for the high costs and losses in mortgage and mortgage-related issues. While these losses are increasingly less severe, they will still persist at elevated levels for a while longer."

However, he expects the bank's earnings to grow over time and said opportunities "over the next 20 years will be equal — or maybe even surpass— those of last 20 years."

Dimon also noted continued hostility toward the banking industry.

"In addition to the ongoing global economic uncertainty, other traumatic events — such as the earthquake and tsunami in Japan, the debt ceiling fiasco in the United States, revolutions in the Middle East and the European debt crisis — have impeded recovery. In the face of these tragic events and unfortunate setbacks, the frustration with — and hostility toward — our industry continues," Dimon wrote.

Regulation is another problem, with the cost of meeting new requirements and implementing regulations expected to cost the bank $3 billion and require 3,000 people to "be devoted full time to the effort."

"There are so many new rules that they inevitably create more opportunities to build unnecessary bureaucracy with the company," he wrote. "It is incumbent upon us to make sure that we do it right – for the regulators, our clients and our own efficient internal functioning."

JPMorgan has "consistently supported higher capital standards" and more liquidity in the system, he said. But as a result of Dodd-Frank, "we now have multiple regulatory agencies with overlapping rules and oversight responsibilities."

"No one has considered the cumulative effect of all these changes taking place all at once," he said of overlapping, "unworkable" regulation from a number of agencies.

He concluded that the "need for honest dialogue and collaboration goes way beyond the financial system. We need it in fiscal reform, health policy, energy policy, immigration, education and infrastructure. If we don’t start working together, we won’t get it right. It is critical that we get it right to ensure America has the best possible future."