JPMorgan Chase CEO Jamie Dimon is drawing parallels between the current financial landscape and the period leading up to the 2008 financial crisis, citing a resurgence of risky lending practices. The comments from one of the banking industry’s most influential voices come as investors weigh the potential for economic headwinds.
“Unfortunately, we saw this in 2005, 2006, and 2007, pretty much the same thing: the rising tide was lifting all boats, everyone was making a lot of money,” Dimon told investors on Monday. While JPMorgan Chase is not pursuing more aggressive lending to boost net interest margin, he noted, “I notice a couple of people doing some dumb things. They’re just doing dumb things to get net interest income.”
Dimon, who led the largest U.S. Bank through the 2008 financial crisis and absorbed two major competitors that collapsed, anticipates a deterioration in the credit cycle, though the timing remains uncertain. His observations underscore the growing concerns among financial leaders about potential risks building within the system.
The CEO has been issuing warnings about potential credit quality deterioration for months. Following the struggles of automotive finance company Tricolor Holdings and auto parts supplier First Brands Group last year, Dimon stated that spotting “a cockroach” often signals the emergence of further issues.
Artificial Intelligence and Potential Disruptions
Recent weeks have seen various industries grapple with what some are calling the “fear trade” surrounding artificial intelligence, as investors assess the potential for the technology to disrupt markets.
“There’s always a surprise in a credit cycle,” Dimon said, adding that the surprise often centers on which industry will be most affected. “This time, it could be software because of AI.”
While this could lead JPMorgan to review certain loans, Dimon expressed skepticism that it would significantly impact credit losses.
The financial industry, like many others, has also experienced declines in its stock valuations in recent weeks due to concerns about AI. Dimon stated on Monday that he views his bank as a likely winner in the AI race.
“in 100 areas, we’ll be winners in 75 and losers in 25,” Dimon concluded. During an investor update, Dimon also addressed questions regarding succession planning. He has led JPMorgan for 20 years, establishing it as the largest and most profitable bank in the United States. The timing of his potential retirement and the identity of his successor have been a subject of ongoing speculation on Wall Street.
His response largely mirrored recent statements: he expects to remain CEO for “a few years,” and “maybe some after that” as executive chairman, adding that the ultimate decision rests with the JPMorgan Chase board of directors.
