By Jena McGregor, The Washington Post
JPMorgan Chase CEO Jamie Dimon said Tuesday that his closely watched annual letter to investors was written with shareholders, employees and the community in mind. But other parties might be interested in what he has to say: the White House and Congress, as the high-profile banker sounded off on policy issues in his investor letter in a very big way.
“This is the first time I probably ever took on public policy as just a main theme,” Dimon said in an interview with Yahoo Finance’s Andy Serwer at the U.S. Chamber of Commerce on Tuesday after the letter’s release. “I’ve mentioned it before many times, but this is the first time I put it down and said I’m going to deal with public policy.”
Dimon devoted one of three sections — 12 of the letter’s 45 pages — to a wide-ranging policy blueprint, as well as another 15 pages focused specifically on financial regulation. In the policy section, he weighs in on topics including education and infrastructure, immigration and corporate taxes, speaking out about labor participation, spending on wars and student lending.
And though he maintains that the United States is an “exceptional” country, with the world’s best military, hospitals, universities and an entrepreneurial culture, the typically optimistic CEO also wrote that “something is wrong” in America, spelling out a host of concerns regarding the challenges the country faces. “Making this list was an upsetting exercise,” he wrote.
Trump advisory council
Dimon, a member of President Donald Trump’s CEO advisory council whose name was floated as a possible Treasury Secretary in the Trump administration and who has contributed to Democrats in the past, joins other high-profile CEOs who’ve devoted parts of their investor letters this year to policy or politics. In February, Berkshire Hathaway CEO Warren Buffett promoted the U.S. economy’s dynamism, pointing out the value of immigrants and entitlements, while General Electric CEO Jeffrey Immelt zeroed in on trade, warning the country will be “less of a leader in trade” while expressing hope about some of the new policies.
Dimon said he thinks business has a responsibility to weigh in. Though some CEOs “don’t want to do that because they don’t want to be a target,” he said in the interview at the Chamber, “I think it’s particularly important for business today to take an active role in trying to fix the problems that this country does have.”
Like Buffett and Immelt, Dimon did not identify Trump by name, but wrote about policies that reveal how his views compare with the administration’s. Like the president, Dimon said he “strongly disagrees” with economists who think the country is stuck with slower growth and lower productivity. For example, factors such as rising health-care costs and defaults on student loans, which aren’t usually reflected in economic models, have likely hurt growth. Working to improve those issues could help the economy.
He said the “regulatory environment is unnecessarily complex, costly and sometimes confusing” and wrote in favor of corporate tax reform, saying the current system “is driving capital and brains overseas.”
Populist forces
He also echoed an understanding, at least, of the populist forces that drove Trump’s campaign. Factors such as declining wages, high health care costs and income inequality “all have created deep frustration,” he wrote, as well as a “disenchantment” with trade and globalization. “It is understandable why so many are angry at the leaders of America’s institutions, including businesses, schools and governments — they are right to expect us to do a better job. Collectively, we are the ones responsible.”
In the interview, Dimon also spoke directly about Trump and some of his policies, saying, for instance, that Trump is right about unfair trade practices with China: “I hate to tell you, he’s right. We all know that. The Chinese know it. They steal intellectual property. There’s cybersecurity. There are very high tariffs for certain things.” He also said he is “somewhat optimistic” on issues such as corporate taxes, infrastructure and regulations, where he thinks the Trump administration “is on the right track.”
Geopolitical risk
Yet Dimon also cited areas that reveal where there are differences. Dimon listed “anti-globalization sentiment” — a sentiment that helped sweep Trump to victory — as a major geopolitical risk to his company. Trump made “buy American, hire American” a line in his inauguration speech and plans to restrict highly skilled foreign workers; Dimon called it “alarming” that some 40 percent of students who get advanced degrees in areas such as science and mathematics “are foreign nationals with no legal way of staying here even when many would choose to do so.”
On financial regulation, Dimon was also clear that he did not think “the entirety of Dodd-Frank or other rules” should be thrown out, noting that factors like more coordinated oversight and laws that let regulators unwind failing banks have made the system stronger, even suggesting the “too big to fail” problem had essentially been solved. Dimon did, however, cite rules that he thinks need to be reworked, such as creating more consistent and simplified capital standards.
In his letter, Dimon dug into a host of other concerns he thinks society is facing, from infrastructure problems to lower labor participation rates to education, which he cited as particularly distressing.
Schools are failing
“We should be ringing the national alarm bell that inner city schools are failing our children,” he wrote, calling for more partnerships between business and schools and more vocational training. In his interview at the Chamber, Dimon had particularly strong words, saying the nation’s leaders were to blame and calling problems with the education system a “national emergency” that should be treated like World War II or smallpox. “This is a slow train wreck,” he said.
While there, he also admitted that he did get “a lot of complaints” from people who opposed his participation on Trump’s advisory group. While he said he “absolutely” does not agree with all of Trump’s policies — joking that “Mr. Trump doesn’t agree with everything he’s said himself” — he also had an answer for those critics.
“Here’s what I told everybody: When you get on the airplane, you better be rooting for the success of the pilot,” he said. “I’m a patriot. I will do what I can to help the United States of America. And that includes helping whoever’s president.”
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