JAMIE DIMON yesterday expressed JPMorgan Chase’s desire to be free from government intervention, calling the US Treasury’s toxic assets plan “irrelevant” to his bank and saying the lender could immediately repay $25 billion (€18.96 billion) in federal aid without raising new capital.
The chief executive’s comments underscore the belief at healthier banks, such as JPMorgan and Goldman Sachs, that severing financial ties with the government would give them an edge on weaker rivals.
However, JPMorgan’s eagerness to repay the government and unwillingness to participate in the toxic asset plan could deepen investor fears of a polarisation of the US banking sector, with some banks recovering and others, such as Citigroup and Bank of America, remaining mired in the crisis.
After JPMorgan reported strong first-quarter results driven by record investment banking profits, Mr Dimon said that being a recipient of government funds was “a scarlet letter” that had brought banks unwanted political and regulatory constraints.
He said his bank could repay “tomorrow” the government aid it received last year. But, unlike Goldman, which raised $5.5 billion this week to help repay its $10 billion capital injection, JPMorgan needed no extra capital.
Government officials have encouraged banks to raise equity before repaying funds to show their financial strength. But Mr Dimon said JPMorgan’s capital position was strong.
“I don’t see why a company with that kind of capital would have to raise capital . . . what Goldman did is what Goldman did. It has nothing to do with us.”
Mr Dimon vowed not to participate in the authorities’ $1,000 billion plan to help banks sell toxic assets to public-private partnerships, partly because of the risk of further government scrutiny.
Mr Dimon’s comments came after JPMorgan reported a 10 per cent fall in net income to $2.1 billion in the first three months of the year, ahead of analysts’ expectations. The results were driven by record quarterly profits of $1.6 billion in the investment banking unit.
The bank took $10 billion in charges in its mortgage and credit card portfolios and increased provisions for loan losses as its consumer and commercial banking business continued to be hit.
Mr Dimon said there were “some positive signs” in the US economy, but added that activity remained subdued. – Copyright Financial Times Limited 2009
