June 1, 2020 09:17 PM RSS

JPMorgan Chase & Co. Warns ‘Bad Recession’ Mirroring Financial Meltdown in 2008

  • Wall Street Rebel | James DiGeorgia
  • 04/06/2020 4:54 PM
JPMorgan Chase & Co. Warns ‘Bad Recession’ Mirroring Financial Meltdown in 2008

Jamie Dimon, the chief executive officer of JPMorgan Chase & Co., wrote in his annual letter to shareholders... “At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008…Our bank cannot be immune to the effects of this kind of stress.”


While the Dow Jones and other major indexes soared over 5% today, Jamie Dimon released a 23-page letter, his shortest annual letter to shareholders since 2008, which came less than a week after Dimon told staff he’d returned to work after undergoing emergency heart surgery. As a result of his health scare, it was his first public comment about the coronavirus since February 25, 2020.  On that date, the coronavirus pandemic seemed a distant threat, with fewer than 60 cases in the U.S.

Dimon now remains the only CEO of a major U.S. bank to remain in charge who worked through the 2008 financial crisis. Dimon acknowledged that JPMorgan’s earnings would be “down meaningfully” this year, but insisted his bank is “unlikely” to cut its dividend. He described the cutting of dividends would only result from “extreme prudence,” adding that JPMorgan will give more details on the impact when it reports first-quarter earnings later this month.

Dimon, 64 in his letter to shareholders, outlined initiatives his bank is taking to support employees, businesses and the community, but refrained from offering his opinions about public policy that have so often been included in previous messages.

Dimon reports that 180,000, or about 70%, of the firm’s employees, are working from home, and the bank is giving payments of $1,000 to those whose jobs don’t afford them to work from home remotely.

JPMorgan, according to Dimon, has been waiving fees for some loans, allowing customers to defer payments on mortgages and auto loans, and removing minimum payment requirements on credit cards. It’s also extended $950 million in new loans to small businesses over the past 60 days and is planning to lend an additional $150 billion to clients across the world.

Dimon suggested in his letter to shareholders that after the crisis…

 “We should use the opportunity to closely review the economic response and determine whether any additional regulatory changes are warranted to improve our financial and economic system…There will be a time and place for that -- but not now.”

Dimon has been more pessimistic about prospects for the economy than other industry leaders as the scale of the crisis was first becoming clear. For example, a month ago, as stock markets were beginning to slide, former Goldman Sachs Group Inc. CEO Lloyd Blankfein said via a tweet to “expect quick recovery when health threat recedes.” Blankfein said the economy “will avoid systemic damage” that takes years to work through.

Dimon stated in his annual letter that JPMorgan has been working closely with the government during the crisis and “will not request any regulatory relief” for itself. However, Dimon suggested that regulators should change capital and liquidity requirements to help more capital flow through the system…

“Some rules can improperly prevent healthy, well-capitalized banks from lending freely in times of stress…This can hurt customers as the crisis deepens. Leaving high-quality, available liquidity undeployed in times of need is an opportunity forever lost.”

Dimon commended the recent actions by the U.S. Department of Treasury and the Federal Reserve, which he asserted helped mitigate the economic impact of the virus.

  JPMorgan Chase CEO Jamie Dimon assumes there will be a 'bad recession,' in letter to shareholders - Yahoo Finance

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