Dayton Business Journal – by Neil Westergaard, DBJ Contributor
Date: Saturday, May 21, 2011, 10:58pm ED
If the United States fails to get its fiscal house in order it will trigger financial consequences that will “dwarf Lehman Brothers” and seriously diminish the nation’s role as a world economic leader, the CEO and chairman of JPMorgan Chase & Co., Jamie Dimon, told a Denver audience Thursday night.
Dimon, the man who the New York Times dubbed “the nation’s least hated Wall Street banker,” said political talk about not raising the U.S. debt ceiling could trigger a default on the nation’s financial obligations, which he said will constitute a “moral disaster” that the U.S. will have a nearly impossible time recovering from.
“Things are going to happen that are not going to be pretty,“ Dimon said in a wide-ranging question and answer session at the University of Colorado Denver School of Business’ Celebration of Success dinner.
Congress and the president have to come to grips with gross overspending by the federal government, he acknowledged. But he complained that even though half of the deficit problem is over issues the two major political parties agree on, partisan considerations are preventing progress on any of it.
“Congress needs to deal with the half of it, and leave the rest of it until later,” Dimon said.
U.S. tax rates on corporate profits make the country uncompetitive with other nations of the world, driving capital and jobs overseas, he said. Noting that JPMorgan Chase has paid $100 billion in taxes to the federal government over the last 10 years, Dimon said anti-banking attitudes that permeate political discussions are wrong.
“I’m tired of listening to that crap,” Dimon said.
Dimon received his most enthusiastic applause, however, when he talked about the role the U.S. plays in the world. The U.S., he said, “is still the shining light in the world and we spend too much time denigrating it.”
He said business lending is improving across the board, especially in middle market companies that drive the economy the most, although he acknowledged that consumer lending, especially mortgage lending, is lagging. But the United States has been through far worse.
“We’re going to be fine,” Dimon said.
But regulatory policy in the wake of the financial collapse of some financial institutions in the recession is hindering recovery. Bank capital requirements on U.S. banks are out of sync with the requirements on foreign banks and that’s hurting the ability of U.S. institutions to compete, he said.
Dimon argued that improving opportunities for inner-city children to get a quality education and reforming U.S. immigration policies should be higher priorities in Congress and coupled with reducing the deficit, these challenges threaten U.S. economic dominance if “we don’t do it right.”
JPMorgan Chase is the third largest bank in the Dayton region and is among the largest banks in the nation. In terms of assets, Bank of America Corp. held $2.27 trillion in assets at the end of last year, while JPMorgan Chase had $2.12 trillion in assets at year-end. Citigroup Inc. had $1.91 trillion and Wells Fargo & Co. had $1.26 trillion. All of those banks have operations in the Dayton region.
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