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JPMorgan Chase & Co. CEO Jamie Dimon said the recent blowups of Silicon Valley Bank and Signature Bank have sparked a banking crisis that is not yet over.
But Dimon used his annual letter to shareholders to point out that the current challenges facing the banking system are not as bad as they were in 2008.
“This wasn’t the finest hour for many players,” Dimon said in a section of the letter entitled, “Banking Turmoil and Regulatory Goals.”
“The current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” Dimon said. “But importantly, recent events are nothing like what occurred during the 2008 global financial crisis (which barely affected regional banks).”
Dimon’s comments came less than a month after the Federal Deposit Insurance Corp. took control of Silicon Valley Bank on March 10 after a run on deposits.
While bank management was not absolved by Dimon, he also said the Federal Reserve’s rapid rise of interest rates “placed heightened focus on the potential for rapid deterioration of the fair value of hold-to-maturity portfolios and, in this case, the lack of stickiness of certain uninsured deposits.”
Dimon said the U.S. government also provided an incentive for banks to own “very safe government securities because they were considered highly liquid by regulators and carried very low capital requirements.”
On top of that, the Fed’s annual stress test for banks never incorporated interest rates at higher levels, Dimon said.
JPMorgan, along with The Federal Reserve, has provided a backstop for First Republic Bank
FRC,
a large regional lender that has seen an outflow of deposits after Silicon Valley Bank.
JPMorgan Chase
JPM,
stock is down 2.9% so far in 2023, compared to a 7.4% increase by the S&P 500
SPX,
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