JPMorgan Chase Chief Jamie Dimon Calls for Tougher Regulation On His Own Firm
He did so in a letter to investors.
Jamie Dimon, the head of JPMorgan Chase, has called for tougher regulations on the American financial system; even though, this would, of course affect his own firm. . He also wrote about the benefits of remote working, the benefits of the expansion in fintech, and other things in an open letter to JPMorgan Chase shareholders.
On fintech companies he said that they have done a great job in, “developing easy-to-use, intuitive, fast and smart products.” Dimon wrote about how fintech’s ability to merge social media, use data smartly and integrate with other platforms rapidly (often without the disadvantages of being an actual bank) will help these companies win a significant market share.
Jamie Dimon cited the major corporations which he said will, at a minimum, “embed payments systems within their ecosystems and create a marketplace of bank products and services.” He expects that some may create, “exclusive white label banking relationships, and it is possible some will use various banking licenses to do it directly.”
On the issue of regulations, Dimon is concerned about the liquidity of financial institutions. He wrote that there is a need to calibrate how much liquidity and capital should be required for banks in a way that, “balances what you want in the regulatory system while maximizing both safety and soundness of banks and the growth of the economy.”
Jamie Dimon said that in the future people will wonder how it could have been that the banking system currently has $4 trillion either in the form of cash or deposits at the Fed or as Treasury securities and does not use this liquidity to help the economy grow. He thinks that this is the case because since the 2008 sub-prime mortgage crash financial institutions are too concerned with appearances. As a result using the discount window at the Fed is, “so stigmatized that far fewer banks consider it a viable option, meaning that liquidity never reaches the banking system and, by default, the broader economy.”
His main point here is that the government regulators need to find the right balance for institutional liquidity. Too little liquidity and there will be a repast of the crash of 2008; too much, and there will be little growth.
Jamie Dimon also sees remote working, which became a necessity because of the Covid-19 pandemic, as a positive change for organizations. But it needs to be done properly. He wrote, “While working from home will become more permanent in American business, it needs to work for both the company and its clients.”
Remote working, says Dimon, must come only after teams of people get to know one another and are properly trained. “Performing jobs remotely is more successful when people know one another and already have a large body of existing work to do. It does not work as well when people don’t know one another,” he wrote.
“Most professionals learn their job through an apprenticeship model, which is almost impossible to replicate in the Zoom world. Over time, this drawback could dramatically undermine the character and culture you want to promote in your company.”
But he does not want to see people depending too much on Zoom writing, “A heavy reliance on Zoom meetings actually slows down decision making because there is little immediate follow-up.”
The main drawback in remote work, said Dimon, is that it “virtually eliminates spontaneous learning and creativity because you don’t run into people at the coffee machine, talk with clients in unplanned scenarios, or travel to meet with customers and employees for feedback on your products and services.”