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Jamie Dimon Interview with Economic Club of Washington DC (Sept 2016)

As always, David Rubenstein does a very good job with this interview of Jamie Dimon at the Economic Club of Washington, DC. Conducted in September 2016, it clearly illustrates why some consider Jamie Dimon to be a natural for politics (even though Dimon has said he isn't interested and doesn't think he will have much success in it). I don't think businesspeople are very good in politics--business is all about maximizing profits and doing anything including discriminating against customers, whereas politics is almost the opposite with the goal of satisfying all stakeholders and funding something for the very-long term irrespective of what "profits" may appear to be. But I think Dimon, unlike most bankers and wealthy individuals, has a very good understanding of society at large and what is happening at the street level--hence I think he can probably do a good job.

I neither follow nor know much about the financial services industry but from what little I have read, Dimon is probably one of the top bankers in the last few decades and maybe one of the top in the last century. He sort of  reminds me of a larger version of Ed Clark in Canada, CEO of the successful TD bank--someone who has a good feel for the retail and business customers of the bank, manages risk very well, and has created a lot of wealth for shareholders and employees.




I still think that Dimon underplays the role of banks in the financial crisis and the huge amounts of wealth transferred to the financial firms from other sectors of the economy and from citizens. Like almost all bankers, I feel like he blames regulations and government policy too much. The reason we ended up with so much regulation is precisely because of the huge debt problems. In fact, in this interview he downplays the potential problems in the banking sector in Europe and China. Dimon basically suggests that European banks would do better if regulators were easier on them, when in fact European banks have their problems due to their higher leverage (too much debt relative to American banks even pre-crisis) and the lack of a diversified economy from which wealth can be transferred to the financial sector. Similarly, Dimon suggests that Chinese banks have huge earning power, which is true but as shareholders, employees and customers of Bear Stearns and Lehman Brothers found out, small changes in assets can completely wipe out financial firms due to leverage (for those not familiar, financial firms have massive leverage compared to non-financial firms). I remain bearish on China and I don't see how the banks get out of this without big impairments.

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