Sunday, October 23, 2011

Chase's CEO backs a bright outlook

JPMorgan Chase & Co CEO Jamie Dimon talks with several thousand bank employees and customers at Chase Field in Phoenix.
Charlie Leight/The Arizona Republic JPMorgan Chase & Co CEO Jamie Dimon talks with several thousand bank employees and customers at Chase Field in Phoenix.

During a quick stop in Phoenix on Wednesday, the head of JPMorgan Chase said housing appears to be slowly on the mend, the economy is faring better than many people think and the European debt crisis won't spill over to the U.S. in a big way.

Jamie Dimon, Chase's chairman and CEO, said he expects Greece won't be able to pay some of its government bonds, but he doesn't think that will produce a "domino effect" that takes down major banks, in the U.S. or Europe.

"I expect (the Europeans) will find a way to muddle through," though possibly with a new recession hitting Europe, said Dimon, who recently returned from a trip there.

Standing on the Arizona Diamondbacks' dugout at Chase Field, Dimon gave an informal talk to nearly 5,000 of the bank's Arizona employees.

He fielded questions on topics ranging from mortgages to the company's health benefits before chatting with the media. He then addressed roughly 300 business customers, bankers and political leaders at a stadium luncheon.

Dimon said he thought the economy was doing better than commonly assumed, citing rising retail sales and strong corporate profits while conceding that confidence remains low.

As for housing, he predicted the volume of distressed homes on the market will start to drop and said that mortgage interest rates are near record lows, while affordability is near a record high.

Dimon said he wasn't sure what might spark the housing market and economy but indicated that rising job growth and consumer confidence would help.

Debit fees also have been in the news, with rival Bank of America announcing it would start charging $5 on certain debit accounts next year, drawing a flood of consumer complaints.

Chase is testing a similar debit fee in two other states, and Dimon didn't say whether his bank will increase these fees nationally.

He said the government's recent decision to "fix" debit costs to favor merchants over banks is the key factor behind debit-fee changes.

Retailers long have complained about the charges they incur whenever consumers swipe their debit cards to make purchases, but Dimon said merchants also face costs to process checks and handle cash.

He said banks incur considerable expenses, most of which are fixed, to run debit networks.

If Chase boosted debit fees, "It would relate only to some accounts," Dimon said, while adding that no such decision has been made.

He estimated that about 10 to 15 percent of accounts would be affected - those that don't maintain minimum balances or meet other requirements.

Dimon offered measured words of sympathy for the Occupy Wall Street movements in New York, Phoenix and other cities, affirming the demonstrators' right to protest and acknowledging that they have legitimate frustrations over the nation's high jobless rate.

But he questioned whether the protesters are "factually accurate" on various issues and predicted that many middle-class Americans will realize they don't have much in common with the movement.

Chase has been a target of some demonstrations, including those in Phoenix.

As for jobs, Dimon said Chase has added 13,200 employees so far in 2011, including 2,000 veterans. The company employs nearly 257,000 people nationally, with 11,000 in Arizona.

Dimon also defended Chase's lending practices, citing what he said was a 71 percent rise in small-business loans so far in 2011.

"Yet you read all this . . . babble that banks aren't lending," he said.

Dimon suggested that the national mood would lift a bit if Americans stopped "beating up" on businesses so much.

"Not that it would hurt my feelings, but many of these are fine companies," he said.

Chase last week reported quarterly net income of $4.3 billion. Dimon said he didn't think the European debt situation would undermine the company's profitability or ability to lend.

As a worst-case scenario, he speculated that the debt crisis might result in charges roughly equal to its latest quarterly profit.

"It would be a bad quarter," he said, "but we would survive."

Dimon said the U.S. remains a world leader in terms of innovation, business strength, universities, legal system, military power and other aspects.

He described himself as a "Democrat, barely," but said he has issues with the extreme wings of both major political parties.

Dimon indicated a coming test will involve the congressional supercommittee's ability to cut $1.5 trillion in spending, as called for in the budget deal passed earlier this year.

He said he'd like to see Congress reform the income-tax code to keep the tax system progressive while broadening the base so that more lower-income individuals pay something, "even if it's $50."

Dimon said he backed tax proposals put forth by Erskine Bowles, the North Carolina businessman and political figure who co-chaired President Barack Obama's panel on fiscal responsibility.

Jamie Dimon

Who: Chairman and CEO of JPMorgan Chase, which employs 11,000 people in Arizona and ranks second in statewide deposits.

What: Wednesday marked his first visit to Phoenix in three years, with talks to bank employees and clients at Chase Field.

Experience: Became Chase's CEO in December 2005 and chairman a year later. He previously held senior-executive positions at companies including Citigroup, Travelers and American Express.

Education: Graduate of Tufts University in 1978; MBA from Harvard Business School in 1982.

Politics: "I'm still a Democrat, barely."

Personal: Married, with three adult daughters.

Quote: "Confidence is low but (the economy) actually isn't all that bad. . . . We see a very steady economy."

Who's No. 1?

Jamie Dimon, chairman and CEO of JPMorgan Chase, came to Phoenix nearly one week after the bank disclosed deposits of $1.09 billion, slightly higher nationally than those at Bank of America. But Bank of America still ranks first in other key measures.

Deposits: Chase counts $1.09 billion vs. $1.05 billion for Bank of America.

Assets: Bank of America leads $2.3 billion to $2.29 billion for Chase.

Revenue: Bank of America had $28.5 billion in the latest quarter vs. $23.8 billion for Chase.

Net income: Bank of America earned $5.89 billion in the latest quarter vs. $4.3 billion for Chase.

by Russ Wiles The Arizona Republic Oct. 19, 2011 06:14 PM

Chase's CEO backs a bright outlook

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