To quote Elton John... "I'm still standing." Works well for JPMorgan Chase CEO Jamie Dimon. He's the last remaining big bank CEO still on the job after the '08 financial crisis. He saw the Lehman Bros bankruptcy in '08, the economic tank in '09, and was there for the 10-year recovery. Now, Dimon is sharing a few thoughts about our current crisis:
- "A bad recession": He expects it's coming. Back in January, we learned that JPMorgan had the most profitable year of any American bank ever. Back then the unemployment rate was at a record low — things have deteriorated dramatically. Still, JPM is ready to face the thunder...
- "A port in a storm": What JPM has spent years preparing to be. Based on internal stress tests, the bank would be able to increase lending even if America's GDP dropped a whopping 35% for the rest of the year. It won't even consider cutting the dividends it pays to shareholders until a drop greater than that. Other major banks are also defending dividends.
Banks have changed since '08... They were fundamentally broken during the financial crisis — this time they're not. Intense regulation post-crisis helped banks emerge stronger than ever. They have to keep more cash on hand (to withstand a bad downturn) and abide by stricter lending rules (to avoid risky loans). That means more swagger for Dimon as his bank faces this crisis.
Banks are like the heart of the economy... They pump blood through the entire system and provide us with the cash money we need to perform life's functions. Banks are also crucial for withstanding economic crises: they're the ones doling out the lifeline loans for businesses to survive — and when the crisis is over, they'll be the ones offering the capital for businesses and consumers to rebuild. The fact that JPMorgan — the America's biggest bank — appears strong and healthy is a silver lining.