JPMorgan CEO: Banking crisis ‘not yet over,’ but not like 2008

In his annual letter to shareholders, JPMorgan (JPM) CEO Jamie Dimon said the current banking crisis is "not yet over," but that it "involves far fewer financial players and fewer issues that need to be resolved." He advised shareholders to be "very thoughtful in our reaction" to recent events. Dimon said that the "recent failures of Silicon Valley Bank (SVB) in the United States and Credit Suisse (CS) in Europe, and the related stress in the banking system, underscore that simply satisfying regulatory requirements is not sufficient. Risks are abundant, and managing those risks requires constant and vigilant scrutiny as the world evolves. Regarding the current disruption in the U.S. banking system, most of the risks were hiding in plain sight… This is not to absolve bank management – it’s just to make clear that this wasn’t the finest hour for many players. All of these colliding factors became critically important when the marketplace, rating agencies and depositors focused on them." Dimon also wrote that "The failures of SVB and Credit Suisse have significantly changed the market’s expectations, bond prices have recovered dramatically, the stock market is down and the market’s odds of a recession have increased. And while this is nothing like 2008, it is not clear when this current crisis will end. It has provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative. However, it is unclear whether this disruption is likely to slow consumer spending (as of April 1, 2023, spending has been consistently running higher versus the prior year). Although higher rates, particularly in mortgages, have reduced both home sales and prices, do remember that consumer spending drives more than 65% of the U.S. economy. While the current crisis has exposed some weaknesses in the system, it should not be considered, as I pointed out, anything like what we experienced in 2008." Reference Link