JPMorgan Chase CEO Jamie Dimon kept up his critical tone toward regulators and their potential role in preventing the next financial crisis in his annual letter to shareholders sent April 8.
Dimon has been a staunch opponent against regulators on a number of issues — going as far in the company’s last quarter’s earnings call to say that “banks are under assault.” His letter focused on how pressure put on banks to jump through hoops to abide to certain requirements have placed harm against major banks like JPMC. He indicated regulatory measures could also be bringing down the company’s stock.
“I believe that legal and regulatory costs and future uncertainty regarding legal and regulatory costs have hurt our company and the value of our stock and have led to a price/earnings ratio lower than some of our competitors,” he wrote in the letter. “We are determined to limit (we can never completely eliminate them) our legal costs over time, and as we do, we expect that the strength and quality of the underlying business will shine through.”
Focusing on JPMC’s role in helping shape the regulatory environment by working collaboratively across the industry, Dimon said the company is committed to understanding the objectives of the Feds to determine how they best fit in its decision-making process.
“Uncertainty remains around regulatory requirements, though we believe this will diminish over time, too,” Dimon said. He added that he spends much of his time talking to analysts and investors about regulatory pressures and not the core of what makes up JPMC — like services such as client transactions, market share gains or other business drivers.
“Many questions still remain, and they are hard to explain or are difficult to answer,” he said, later writing that “we must and will meet the regulators’ demands on recovery and resolution — whatever it takes.”
Turning toward the payments side of the company, Dimon dug into the topics of cybersecurity, fraud and privacy, which he said needs to be viewed as in “collaboration with the government and regulator.”
“It is critical that government and business and regulators collaborate effectively and in real time. Cybersecurity is an area where government and business have been working well together, but there is much more to be done,” Dimon said. “And if it is not done in a concerted way, we all will pay a terrible price. The banking system is far safer than it has been in the past, but we need to be mindful of the consequences of the myriad new regulations and current monetary policy on the money markets and liquidity in the marketplace — particularly if we enter a highly stressed environment.”
And on its payments side of the business, Dimon said JPMC plans to move forward with its initiatives in an “aggressive” manner. He mentioned that the bank must look toward evolving toward real-time systems, enhanced encryption techniques, and reduction of costs and “pain points” for customers.
“We particularly are excited about our payments business in total. The combination of Chase Paymentech, our merchant acquirer, ChaseNet, our proprietary Visa-supported network, and ChasePay, our proprietary wallet, allows us to offer merchants – large and small – better deals in terms of economics, simpler contracts, better data and more effective marketing to their clients,” Dimon said. “It also allows us to better serve consumer clients with a wide variety of offers and ease of use. We are going to be very aggressive in growing this business, and we will be disappointed if we don’t announce some exciting and potentially market-changing ventures.”