The Jamie Dimon Interview: How JP Morgan Became an $800 Billion Bank

Jamie Dimon · 1h 06m · youtube.com ↗

19 korrents from this recording

Jamie Dimon did not write this page.

Every claim below is a statement made in this recording, quoted word for word and linked to the second it was said, so you can hear it rather than take our word for it. The wording comes from the transcript published alongside the recording; the sentence above each quote is our reading of the claim, not their wording.

0:17:28 · watch on youtube.com↗

Our reading
Being risk-conscious does not mean getting rid of risk; it means pricing it properly and understanding the range of outcomes.

Their wordsI've always been very risk-conscious. And risk-conscious does not mean getting rid of risk. It means properly pricing it and understanding the potential outcomes.

Interesting
3 min later
0:20:51 · watch on youtube.com↗

Our reading
Financial history rhymes because every crisis has the same cause: too much leverage, too much risk, and everybody believing it will stay good.

Their words1929, and man, history does rhyme. Too much leverage, too much risk. Everyone thinks it's going to be great. No one thinks it's going to go down a lot.

Interesting
1 min later
0:22:06 · watch on youtube.com↗

Our reading
A bank should be managed against the fat tails it can imagine, not against the stress test its regulator hands it.

Their wordsAnd so, I always look what I call the fat tails and manage that we can handle all the all the fat tails. And not the stress test the Fed gives us, but all the fat tails.

Interesting
0:22:21 · watch on youtube.com↗

Our reading
In financial services what kills you is leverage and aggressive accounting, not bad luck.

Their wordsAnd and the thing about financial services, leverage kills you. Aggressive accounting can kill you, which a lot of companies do do.

Interesting
1 min later
0:23:16 · watch on youtube.com↗

Our reading
The banks earning the highest returns on equity before 2007 mostly went bankrupt, and earning less in the good years is what let JP Morgan survive.

Their wordsif you look at the history of banks from up until 2007, a lot of banks were earning 30% equity. Most of them went bankrupt. We never did that much. Okay, but in '08 and '09, we were fine, and they weren't.

Interesting
1 min later
0:24:15 · watch on youtube.com↗

Our reading
A fortress balance sheet is a way of operating rather than a capital ratio: good margins, liquidity, capital, and the most conservative accounting you can find.

Their wordsthe fortress balance sheet is that you run a company serving clients well, you have good margins, good liquidity, good capital. I'm as conservative in accounting as you can find. I don't up-front profits when I can spread them over time.

Interesting
0:24:41 · watch on youtube.com↗

Our reading
Bad loans are bad revenue that will eventually kill you, even though for a while they look like profit.

Their wordsAnd then, revenues, you know, if I make bad loans, they are bad revenues. They will kill you, but for a while, they look pretty good.

Interesting
0:24:49 · watch on youtube.com↗

Our reading
A bank takes on the character of the clients it chooses, so who you do business with is the first risk decision you make.

Their wordsYou know, in the banking business, the character the clients you have will reflect in your bank. So, the first thing is who you're doing business with, how you're doing business

Interesting
11 min later
0:35:20 · watch on youtube.com↗

Our reading
Nobody should be paid on a particular deal, because a person paid on a particular thing will do the wrong thing.

Their wordsThere are no winks there are no nods there are no side deals there's almost no one paid on a particular thing because if you're paid on a particular thing you can do the wrong thing and meanwhile not helping the company you know manage its risk or something like that.

Interesting
1 min later
0:35:52 · watch on youtube.com↗

Our reading
Give a banker twenty per cent of the profits on a thirty-times-levered book and he will take it to forty times, because the extra leverage is worth a quarter of his bonus.

Their wordsSo you if you look at the leverage in some of these securitization books and mortgage books if you have 30 times leverage and you're getting 20% of the profits you'll go to 40 times leverage. It's just going to it's literally will add you know 25% to your bonus.

Interesting
5 min later
0:40:46 · watch on youtube.com↗

Our reading
Rescuing a failing bank at the government's request is not worth doing again, because a later administration will make you pay for the sins you inherited.

Their wordsSo, you while we kind of saved the system a lot, we bailed a lot of people out, they made us pay 5 billion dollars on the more the bad mortgages that Bear Stearns had done. And that's what made me make the statement I wouldn't do it again.

Interesting
6 min later
0:46:57 · watch on youtube.com↗

Our reading
In financial services it is very often the new products that blow up, because they have not yet been through a cycle.

Their wordsSo, if you look at the financial services, very often it's the new products that blow up. It takes a while. They haven't been through a cycle.

Interesting
2 min later
0:48:34 · watch on youtube.com↗

Our reading
At a market price-earnings ratio of twenty-three there is little upside and a long way to fall, where at fifteen there would be much less risk.

Their wordsif we if if today PEs were 15 as opposed to 23, I say that's a lot less risk. A lot less to fall and you have some upside. I would say at 23, there's not a lot of upside and there's a long way to fall.

Interesting
0:48:57 · watch on youtube.com↗

Our reading
Cyber is the biggest risk to the system, and the grids, water and communications networks are not protected well enough for a war in which cyber is used.

Their wordsAnd then the other thing and the biggest risk to me is cyber. I mean, I I think this cyber stuff is, you know, we we're very good at it.

Interesting
1 min later
0:50:06 · watch on youtube.com↗

Our reading
Silicon Valley Bank failed because its deposits were concentrated, not because they were uninsured -- the usual account of it is a misstatement.

Their wordsBut they they both had something something unique that we didn't know at the time. I'm going to call them concentrated deposits. Not uninsured cuz people are misstating that, concentrated.

Interesting
1 min later
0:50:51 · watch on youtube.com↗

Our reading
Held-to-maturity accounting hides interest-rate risk, which is how a bank's tangible book value could be halved by marking a single line to market.

Their wordsAnd the interest rate exposure was hidden by accounting. It was called held to maturity, where you don't have to mark even treasuries to market.

Interesting
5 min later
0:55:48 · watch on youtube.com↗

Our reading
A group of businesses only works when every one of them feeds the others, and everything that does not fit the strategy should be sold.

Their wordsA lot of our middle market clients use investment banking products. A lot of our consumer clients use some effects. So, all of our businesses feed each other. There's no extraneous. We got rid of everything that didn't fit a strategy.

Interesting
3 min later
0:58:42 · watch on youtube.com↗

Our reading
A margin only counts while you are still investing heavily, because cutting the investment raises this year's margin and lowers the long-term one.

Their wordswe can cut billions of dollars of marketing out tomorrow. We can stop opening branches and save a billion dollars next year. We could do a lot of things. Your margins will go up. Your growth will go down. Your long-term margins will probably get worse.

Interesting
1 min later
0:59:46 · watch on youtube.com↗

Our reading
A team of jerks almost never becomes a great team, in sport or in business.

Their wordsIf you have a a sport team with a bunch of real jerks on it, are they going to be a great team? Almost never.

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