JPMor­gan CEO shifts topic to pol­i­tics from fi­nan­cial re­sults

The Mercury (Pottstown, PA) - - BUSINESS - By Ken Sweet AP Busi­ness Writer

NEW YORK » Af­ter JPMor­gan Chase posted a record $7 bil­lion quar­terly profit, the last thing a con­tentious Jamie Dimon wanted to talk about Fri­day was his com­pany’s earn­ings.

In­stead, the CEO of the na­tion’s largest bank vented his ir­ri­ta­tion with politi­cians and what he called grid­lock that’s pre­vent­ing the econ­omy from do­ing even bet­ter.

Dimon, a mem­ber of President Don­ald Trump’s busi­ness ad­vi­sory coun­cil, has a rep­u­ta­tion for speak­ing with lit­tle to no fil­ter. He’s com­plained in the past that U.S. pol­i­cy­mak­ers spend too much time ar­gu­ing rather than im­prov­ing the econ­omy.

The U.S. econ­omy has been ex­pand­ing at less than 2 per­cent a year since the Great Re­ces­sion, which is be­low the typ­i­cal growth af­ter an eco­nomic down­turn. Dimon said growth would be higher if Washington grid­lock would ease.

“It’s al­most an em­bar­rass­ment be­ing an American cit­i­zen trav­el­ing around the world ... lis­ten­ing to the stupid (ex­ple­tive) we have to deal with in this coun­try,” he said in a call. “At one point we all have to get our act to­gether or we won’t do what we’re sup­posed to do for the av­er­age Amer­i­cans.”

As head of the na­tion’s big­gest bank, Dimon has a big stake in how Washington op­er­ates and how the U.S. econ­omy per­forms. And while Trump’s busi­ness ad­vi­sory coun­cil can­not make pol­icy de­ci­sions, it does have in­put on what the White House’s pri­or­i­ties should be for big com­pa­nies like JPMor­gan.

Repub­li­cans who con­trol of both houses of Congress and the White House have pro­posed cut­ting cor­po­rate in­come taxes, which would di­rectly ben­e­fit JPMor­gan’s bot­tom line, and in­fra­struc­ture spend­ing would add to U.S. gross do­mes­tic prod­uct. There is also talk about trim­ming back some of the strict reg­u­la­tions put in place fol­low­ing the fi­nan­cial cri­sis that bank CEOs like Dimon have ar­gued are re­strict­ing the abil­ity of banks to lend money.

Whether those reg­u­la­tions are re­ally re­strict­ing lend­ing is a topic of de­bate. Nearly all banks are mak­ing more loans, in­clud­ing JPMor­gan Chase, and bank prof­its are up.

“What’s the ev­i­dence that reg­u­la­tions are se­ri­ously im­ped­ing the bank­ing in­dus­try or any other in­dus­try?” said Dean Baker, an econ­o­mist with the left-lean­ing Cen­ter for Eco­nomic and Pol­icy Re­search.

Baker said one rea­son for the grid­lock is the in­abil­ity of Repub­li­cans to co­a­lesce around a uni­fied agenda. For ex­am­ple, some want tax cuts to stim­u­late growth, but other Repub­li­cans are wor­ried about deficits that could rise if taxes were cut too sharply.

Dimon, when asked by a busi­ness jour­nal­ist about the firm’s bond trad­ing re­sults fol­low­ing the Fed­eral Re­serve’s in­ter­est rate in­crease last month, called for re­porters to fo­cus less on the quar­ter-to-quar­ter changes in its busi­ness and more on big­ger is­sues like in­fra­struc­ture, the opi­oid epi­demic, tax­a­tion and jobs.

“(Re­porters) should be writ­ing a lot more about that the stuff that is hold­ing back and hurt­ing av­er­age Amer­i­cans. Who re­ally cares about fixed-in­come trad­ing in the last two weeks of June, I mean se­ri­ously?” he said.

While the bank over­all has ben­e­fited from the Fed’s de­ci­sion and has been mak­ing more loans across all its busi­nesses, this quar­ter’s quiet stock and bond mar­kets de­pressed the bank’s trad­ing rev­enue by 17 per­cent. Fixed-in­come trad­ing rev­enue was down 19 per­cent from last year, while stock trad­ing was mostly flat.

Even so, the bank re­ported a profit of $7.03 bil­lion, or $1.82 per share, an im­prove­ment from a profit $6.20 bil­lion, or $1.55 a share, a year ago. The re­sults beat an­a­lysts’ ex­pec­ta­tions, but its shares fell 1 per­cent to $92.08 in af­ter­noon trad­ing.

JPMor­gan’s in­vest­ment and cor­po­rate bank­ing divi­sion earned $2.71 bil­lion com­pared with $2.49 bil­lion a year ear­lier, and saw a 17 per­cent rise in in­vest­ment bank­ing fees.

It was part of a trio of big banks, with Cit­i­group and Wells Fargo which re­ported their quar­terly re­sults Fri­day. All three re­ported a rise in in­ter­est in­come, and were gen­er­ally lend­ing more across all their busi­nesses.

Cit­i­group also re­ported a de­cline in trad­ing, al­beit not as big as JPMor­gan. Typ­i­cally less-volatile mar­kets re­sult in lower trad­ing rev­enue for the ma­jor banks, as its traders can­not take ad­van­tage of heavy trad­ing and big­ger swings in stock and bond prices.

One area of con­cern, par­tic­u­larly for JPMor­gan, is bad loans in its credit card busi­ness. The bank also set aside more money this quar­ter to cover bad loans, mostly in its credit card divi­sion. JPMor­gan ex­ec­u­tives have said the bank is start­ing to of­fer and ap­prove ap­pli­ca­tions for credit cards to higher-risk bor­row­ers that it pre­vi­ously would have re­jected.

De­spite the money des­ig­nated to ad­dress bad loans, Dimon said: “the U.S. con­sumer re­mains healthy.”

Gov­ern­ment fig­ures re­leased Fri­day showed that Amer­i­cans cur­tailed their shop­ping in June, with less spend­ing at restau­rants, depart­ment stores and gaso­line sta­tions. That came de­spite a healthy job mar­ket and sug­gests that eco­nomic growth could re­main slug­gish.

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