Even by Dimon’s standards, the letter published on Wednesday is long-winded at 50 pages. He nevertheless outperforms peers on both content and readability. There’s an honest assessment on JPMorgan’s sluggish diversity drive and an unexpected nod to the efforts of on-site medical staffers.
The dominant theme is defending the scale of an institution with $2.4 trillion of assets. Dimon is blatant in some areas, as when he notes that JPMorgan holds enough capital to absorb not just the losses theFederal Reserve stress tests ascribed to his bank in last year’s stress test, but the entire $222 billion at the top 31 banks. There’s also a whole section entitled “Does the United States really need big banks?”
Dimon asserts there’s now “virtually no chance of a domino effect” between big banks if one gets into trouble, as they lend very little to each other. While true, it also sounds too much like fighting the last battle. Other risks, including the increasing similarity of assets they hold, go unaddressed.
Often, however, the message is more subtle. On burgeoning financial technology, for example, Dimon says funding for non-banks is likely to dry up in a crisis. In other words, beware the shadow banks new regulations may have helped create. He also points out how size affords banks like JPMorgan the ability to fight back effectively against would-be disruptors in payments and lending.
Dimon even plays the patriotism card. The bank dumped restricted business with thousands of clients after fraud reviews because just one mistake could result in severe consequences. That meant abandoning relationships where he otherwise might “have been supportive of countries around the world that are allies of the United States.”
He can be forgiven the occasional hyperbole given the opposition. As the likes of Democratic presidential hopeful Bernie Sanders and newly installed Minneapolis Federal Reserve President Neel Kashkari advance the carve-up cause with rhetorical flourishes of their own, the banking industry will have to make its case for staying big. Dimon is one of the few who might be up to the task.