Calling Texas a “shining example of how to do things right,” the head of the country’s largest bank is scheduled to swing through the state Thursday, including a stop in Austin to meet with local employees and clients.
Jamie Dimon, the chairman and CEO of JP Morgan Chase, will use the tour to meet with many of the bank’s 31,000 employees, looking for a ground-up view of how he can fine-tune the business.
While Dimon said he planned to pull on his cowboy boots and enjoy some good Texas barbecue, the trip also underscores his dual role as the top manager and banker at JP Morgan — a combination that has brought him a particular level of scrutiny in recent months and years.
He’s widely credited for steering the bank largely unscathed through the financial crisis. And earlier this week, JP Morgan reported a $21.3 billion profit for 2012, a company record.
Yet Dimon also remains the figurehead of a bank that many critics say is too big to fail. After a rogue trader nicknamed the “London whale” lost more than $6 billion on bad derivatives trades last year, a coalition of shareholders, including pension funds, has suggested that JP Morgan needs to hire an independent chairman.
In telephone interview with the Statesman last Friday, Dimon acknowledged some of the criticisms lobbed in his direction. But he also adamantly rejected the notion that JP Morgan was too big to fail, that Wall Street was no friend to Main Street, and that anyone other than the company’s board should decide whether he’s capable of handling his current duties.
“I know there’s a tsunami of criticism – some of which is well-earned, by the way – and we need reform,” Dimon said of the banking industry in general. “Things need to be fixed. I don’t want to argue that point. But it’s just not that everyone’s in the same position here. All I can do is the best I can do every day with every client that stands in front of every banker. That’s who I work for.”
Dimon’s Texas swing will include meet-and-greets with many of those key clients. While in Austin, he also plans to meet with some of the company’s 850 employees at its 68 branches in the area.
The trip comes just days after the company announced it would cut 17,000 jobs over the next two years. A relatively small portion of those job cuts will come from the consumer banking operations, which account for the vast majority of the Texas jobs. Executives said they hope to pare those primarily through attrition.
Dimon said he wouldn’t be surprised if JP Morgan Chase eventually had more employees in Texas than it does in New York.
“We have 31,000 in Texas,” he said. “I will make you a bet the lines cross soon, because you have such a positive environment there. We can’t wait to come.”
While the Texas economy has fared well compared with the rest of the country, the slow recovery continues to have an impact on big banks. While JP Morgan recorded a 12 percent profit increase in 2012, revenue was essentially flat at $99.9 billion.
The health and size of huge banks like JP Morgan Chase remain a concern in Washington and finance centers around the world because the impact that their failure could have on the national and global economies. As a whole, U.S. banks posted their second-highest annual profits in 2012, trailing only 2006, according to the Federal Deposit Insurance Corp.
Most critics concede that the U.S. and international economies need healthy, large banks to keep capital moving in a global economy. They can fund projects on the local and multinational levels that are too large and complex for smaller banks.
Yet, as with the bankruptcy of Lehman Brothers in 2008, the impact of a large bank failure can ripple far beyond its own direct interests.
“The concentration of banking assets in a handful of giants is troubling, and I believe not a good thing for the economy or for consumers,” said Steve Scurlock, executive vice president at the Independent Bankers Association of Texas. “When a bank is so large as to convey ‘systemic risk’ to a national or international economy, it’s simply too big.”
Even Federal Reserve Bank of Dallas President Richard Fisher, not exactly the harshest critic of capitalism’s successes, has suggested that many of the country’s largest banks still pose a systemic risk.
Dimon concedes that JP Morgan is big, but said it’s not too big to fail.
“The regulators have a valid point — that they need better and more tools to be able to unwind a big bank in a way that they can, with certainty, tell the American public, ‘This won’t cost you money’,” he said.
But for the most part, he added, federal regulators have the laws and the capabilities to take down a big bank in a way that doesn’t damage the economy or the taxpayers. Ultimately, the U.S. has the best and most-transparent capital markets in the world, and large banks such as JP Morgan Chase play an indispensable role in that system — a role that he’s unabashedly proud of.
“That’s one of the reasons the country has been so damn successful for 200 years,” he said. “That’s a good thing. So fix the bad things, but don’t throw the baby out with the bathwater.”
Jamie Dimon on TV
Fox Business Network host Melissa Francis will accompany CEO Jamie Dimon and other JP Morgan Chase executives during their tour of Texas on Thursday. Highlights will air at 4 p.m. on Fox Business Network, Time Warner Cable channels 90, 363 and 1634.