Baker Institute banks on financial discussion by JPMorgan Chase CEO

By Henry Deng     4/12/12 7:00pm

The Baker Institute invested in a speaker that staff, faculty and students took interest in when it invited chairman and CEO of JPMorgan Chase & Co Jamie Dimon to speak about the global economy, domestic affairs and his personal experiences on Wednesday.

Dimon talked about his perspective on global affairs, saying that he is optimistic about the condition of the United States despite the economic and political turmoil of the past few years.

He noted that the biggest and most innovative companies in the world are American and millions of jobs were created in the last two years.

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"The U.S. still has the best military, universities, businesses and workers," Dimon said. "Why are we so damned depressed all the time?"

However, Dimon cited education, energy policy, infrastructure, fiscal policy and healthcare as areas that needed improvement.

Dimon also spoke about banking more specifically, noting that American banks needed to stay large to compete with other global financial institutions.

Although the U.S. used to have 44 of the 50 largest banks in the world, it now has six, he said.

However, he added that he believes in bankruptcy for banks that use their large size as an opportunity to engage in overly risky undertakings.

Dimon said the 2008 recession was caused not only by individuals with too much debt but also by faulty banking practices like irresponsible lending.

"I am not against the failure of dumb big banks," Dimon said.

When asked about the Occupy Wall Street movement, Dimon said he agrees that American financial institutions let the public down. However, he noted that not everyone walking around on Wall Street is to blame.

Dimon said that though many people are angry about the businesses that profited while other companies failed, energy should be focused on finding solutions, not just on protesting.

Dimon mentioned Europe's financial woes, stating that the European Union's inability to issue more Euros in individual countries prevented it from stimulating economic growth as much as the US could through its central bank.

However, Dimon noted that if individual European countries were allowed to print their own money, the economic situation could have been exacerbated.

For example, if Greece had continued issuing its pre-EU currency, the drachma, during the crisis, the country would probably be in a worse financial state than it is today, Dimon said.

Dimon also discussed Chase's discontinuation of college loans directly to students. He said the bank would still lend to parents for their children's education but lending to students directly was too risky.

Many students were not graduating from college and paying back their loans, he said. Dimon noted that government loans should be the first option for collegew funding.

Martel College senior Pedro Silva, who attended the talk, said he understood the reasons behind Dimon's opinion about student loans.

"I think the problem is complicated and there are many aspects to it," Silva noted. "His perspective was obviously that of a JPMorgan CEO, as he has a certain job to do."

The last few questions of the session addressed Dimon's personal perspectives. When asked where he would invest, Dimon said he would avoid gold and U.S. Treasury bonds and instead invest in big companies such as General Electric and Walmart because he believes they will sustain growth over the next ten years.

When asked who his mentors were, Dimon said he admired Nelson Mandela for remaining humble after his long imprisonment, Abraham Lincoln for never denigrating anyone, Rice University's James Baker for how he conducted himself around the world and former General Electric CEO Jack Welsh for excellence at every level.

Silva said Dimon's perspective was refreshing and gave him a positive image of the person and his company.

"What was striking to me was how candid he was," Silva said. "He didn't really hold anything back. Usually when you see CEOs and politicians, people in his position, they don't really tend to speak their minds. But he was very frank and cares about educating people and getting his message out there."

JPMorgan Chase & Co. is a global financial services firm with $2.2 trillion in assets and operations in more than 60 countries.

Dimon, who holds a bachelor's degree from Tufts University and a master's of business administration from Harvard Business School, became CEO of JPMorgan in January 2006 and chairman in 2007.

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