I’ve written in these pages before about my admiration of Jamie Dimon, his wisdom and his management style. Ever since our first meeting many moons ago I’ve been a follower and a fan. His Annual Letter to the Shareholders is a “must read”, and Chase’s strategic plan which they share from time to time has both data and insights that should guide us all.
Tom Brown’s recent interview with Jamie had, as always, numerous perspectives that serve all of us well, particularly during these tumultuous times. His calmness and long-term, perspective are truly inspirational.
Note that Mr. Dimon is speaking as a senior stateman, an American and a bank CEO. His points are non-partisan, which, in today’s world, is both rare and precious. Here are some passages from that interview:
“What about tariffs? Dimon pointed out that tariffs and non-tariff trade barriers have been around forever, and he supports addressing some of them. “I would like to see the administration negotiate trade deals,” he said. “I think they’ll be good for everybody, and they want to do it, too.” Dimon suggested that any trade negotiations should initially focus on goods vital to our national security. As he mentioned during the earnings call:
National security is paramount. All things should be subordinated to it. You may need tariffs to help fix some problems related to national security. National security is a small part of trade—think rare earths, penicillin, medical ingredients, and semiconductors.
Dimon believes some of these deals could have been unilateral, but the Trump administration opted instead for a broad approach involving over 100 countries and the imposition of severe tariffs. In addition, the administration developed a convoluted formula for calculating the tariffs that few understand. Dimon’s optimistic scenario has trade negotiators prioritizing the U.S.’s key economic and military allies. He said, “The best thing to do is to allow the secretary of the Treasury and his team to finalize agreements around tariffs and our trading partners as quickly as possible. They’ll be agreements in principle, not the lengthy trade agreements that are 5,000 to 10,000 pages long which will follow.”
While these agreements are being worked on, all Dimon hopes for with China are discussions that might ease some marketplace tension.
Players in the Trump administration. We also discussed, off the record, specific players in the Trump administration who are working on the trade accords. He confirmed that he has met Trump but does not have direct regular conversations with him; instead, he talks to others who do have direct access. Dimon was struck—whether positively or negatively—by the number of advisors Trump listens to. My guess is that Dimon views this as a positive. Like many, he is concerned about the exodus of experienced bureaucrats from various government agencies.
The bank regulatory environment. After we discussed tariffs, I showed Dimon my notes, which included a list of acronyms: CCAR, B3, SCB, SLR, LCR, and living wills. (When I asked for his thoughts, he simply looked at me and said, “FUBAR.”) I got his drift, but didn’t know FUBAR actually means Fouled Up Beyond Any Recognition. These acronyms largely stem from the disastrous Dodd-Frank Act of 2009.
I then asked whether he thinks Scott Bessent has sufficient time to lead the efforts to rationalize the bank regulatory system alongside the work on trade agreements. I was surprised at how quickly Dimon said that he did, and emphasized that he thought that consolidating and reforming the regulatory process are high priorities for Bessent. Dimon expressed his desire for regulators to come together after 15 years of regulatory changes and ask, “What have we accomplished? What changes worked, what needs adjustment, and what should be eliminated?” Given the disruptions caused by large bank failures in the spring of 2023, Dimon believes it is clear that the new laws and regulations have not achieved their intended outcomes. He then highlighted several specific issues within the regulatory ecosystem:
- SIFI designation: Dimon believes U.S. Basel negotiators were outmaneuvered by their foreign counterparts regarding SIFI, which resulted in U.S. banks holding more capital than their foreign counterparts. He believes this is simply unfair.
- CCAR: Dimon has long criticized the flaws in the annual bank stress tests, and notes that it’s maddening there have been virtually no changes to the process. While JPMorgan conducts over 100 stress tests a week with a variety of economic and market assumptions, the Fed’s stress test relies on a single set of adverse assumptions that require the submission of 20,000 pages of data.
The test assumes that during economic turmoil, loans will grow, expenses will rise, interest rates will fall, and the dollar will increase in value. Dimon pointed out that during the mini-economic panic following Liberation Day, long-term interest rates rose and the dollar fell. He called for more scenarios and stress tests.
Last Friday, the Fed announced it would average the last two years of stress tests to determine a bank’s Stress Capital Buffer. I can’t believe this is the change they proposed—combining two years of garbage results will not result in especially worthwhile or finely tuned capital protection.
- B3 capital standards: The banks successfully sidelined Michael Barr’s Basel III endgame proposal, which would have raised capital requirements by about 18%. Dimon wants regulators to finalize the requirement with some tweaks in the calculation that wouldn’t necessitate additional capital. Ideally, he envisions a simplified system that might look like this:
- 10% CET1 Minimum;
- 9.5%: No dividend increase or share repurchases;
- 9.0%: Dividend eliminated;
- 8.5%: Capital raise required.
- SLR and LCR: Dimon has always believed that regulators didn’t fully grasp the implications of these requirements on banks’ ability to provide liquidity during times of stress. He described it as the banks’ balance sheets needing to act like an accordion in concert with the Fed during stressful periods, rather than being largely fixed, as they are now.
- Living wills: Don’t get Dimon started on this topic; he considers it a complete waste of time. JPMorgan’s living will submission to the Fed is an astonishing 80,000 pages long.
All Dimon wants is for regulators to review their work over the past 15 years, have them retain what works, and change or eliminate what doesn’t contribute to the stability of the financial system. He estimates that thoughtful reforms of these Dodd-Frank regulations could free up $30 billion to $50 billion in capital at JPMorgan.
Dimon’s AI message. Dimon was eager to discuss details, but wanted to make two clear points: first, AI will continue to transform every aspect of banking. Second, everyone should leverage AI tools to enhance their job performance. JPMorgan has deployed LLMs that access some of the bank’s internal databases to over 150,000 employees. Over time, more internal databases will be made available, and eventually employees will be allowed to combine internal and external data while preventing sensitive internal information from going outside the bank. Notably, AI tools have already enabled 50% of employees in BSA/AML monitoring to transition to other areas of the bank.
Management reporting. I had met with Hans Morris, managing partner at fintech investor Nyca Partners, the prior day, and he told me about the management reporting system Dimon, Sandy Weill, and Bob Lipp had put in place at Travelers years ago. Morris was at Smith Barney when Weill’s firm bought Smith Barney. One of the keys to the system is the rollup of strategic business units into bigger SBUs. In addition, each SBU can be broken down into five to ten key variables, with various members of management held responsible for a key variable. Monthly executive management reports summarized the financial results, which are then discussed among managers at various SBU levels. For example, Dimon tries to attend two out of the three monthly meetings of the biggest SBUs each quarter. As companies often get bigger, they collapse SBUs together, which makes management of them less granular but saves management time. For example, at JPMorgan there is a “mortgage” SBU, but there are sub SBUs for branch-originated mortgages, non-branch retail mortgage, and correspondent. The fact that JPMorgan still keeps its SBUs so tightly focused is one of the reasons the company is so well managed.
Steadfast principles. As our meeting was winding up, I asked Dimon which of the eight steadfast principles he has listed in each of his last three annual shareholder letters was the most difficult to maintain. He said, “Which do you think?” I said the fifth one, “We strive to build enduring businesses, which rely on and benefit from one another, but we are not a conglomerate.” Dimon said that is not tough because, going back to his Travelers days, operating the company as a single business has always been one of his bedrock principles. He said conglomerates like Travelers and Berkshire Hathaway can be successful, but that is not the company structure he wants to employ.
AB: Last month Jamie emphasized four key management principles:
- Honest and direct assessment. Dimon stresses the importance of providing feedback without sugarcoating reality, focusing on facts and figures to understand performance rather than using them to support pre-conceived notions. He also advocates for radical honesty and direct communication, even when uncomfortable, to drive performance and transparency. AB: Thos of you who have worked with me over the years know I’m hard-wired that way. It’s an israeli trait.
- Avoiding complacency and arrogance. Complacency, or the arrogance of being slow to adjust, is a leading cause of corporate failure, according to Dimon. He emphasizes the need for constant assessment and adaptation to changing circumstances.
- Humility and care. Leaders should exhibit humility by showing genuine care and respect for their employees, regardless of their position. Dimon also cautions against leaders who deflect blame and takes undue credit.
- Grit and decisiveness. Leaders need to be resilient and make tough decisions, sometimes saying absolutely not or embrace calculated risks. Dimon emphasizes the need to take decisive action and the courage to push forward despite challenges.
Dimon’s shareholder letter was published April 7, 2025. You can read it in its entirety by clicking here. https://www.jpmorganchase.com/ir/annual-report/2024/ar-ceo-letters