WHEN: Today, Thursday, February 23, 2023
WHERE: CNBC’s “Mad Money”
Following is the unofficial transcript of a CNBC exclusive interview with JPMorgan Chase Chairman & CEO Jamie Dimon on CNBC’s “Mad Money” (M-F,6PM-7PM ET) today, Thursday, February 23rd. Video of the interview will be available on CNBC.com.
All references must be sourced to CNBC.
JIM CRAMER: Jamie, I saw a smile this morning and it’s a smile that reminds me of who you are. You’re a banker trying to get business for JPMorgan, but also change a neighborhood. Is that why you’re here on 52nd in Philadelphia?
JAMIE DIMON: Look, we love Philadelphia. We now have 50 branches here on our way to 80. I was so happy you joined us in the community branch you got to see it in action – our people are happy, how proud we are of them.
CRAMER: Individual bank.
DIMON: And that one story about Khalif who got a mortgage from Tanika who I gave a big hug and she called him every single day. And that one mortgage – his whole family – talked about his family, the problems, they had rented the place for 25 years. That’s changing the world. That one thing. And you know, the thing we didn’t mention is we got rid of college to be required for a lot of jobs. We use that community branch, we use local, we hire local people, local vendors for food. It was a Black construction company that reconstructed the branch. We bring in small businesses, we give them advice. We’ve had like 60 events they told me there already. 60 events teaching people how to save money, how to start a business, how to do a mortgage and stuff like that. So it warms our heart. And I mentioned when I was there that a lot of our people, I told them you didn’t get your job because your brain, your work ethic, which is part of it, you got your job because you have a heart and you care about people. Whether it’s your employees or the person who walks in the front door of that branch.
CRAMER: And in a discriminate neighborhood. You know that. That was one point as I mentioned. A red line neighborhood. They couldn’t get any mortgages.
DIMON: Well you know it better than us and we’re trying to do things to reverse all the heritage of redlining, including doing things like including rent, which is not included in FICO scores. So you could be paying rent for 20 years, it’s not included. But using alternative data like that to make them more you might not otherwise make.
CRAMER: Okay, so this morning, Wells Fargo lays off a lot of mortgage bankers. Is this the right time to expand a bank to get mortgages?
DIMON: Yeah, so we have expansion plans which we just do nonstop –
CRAMER: But the Fed, the Fed, the Fed. You forgot the Fed.
DIMON: Makes no difference to me. We open branches, hire bankers, build technology, nonstop. That’s what we do. The mortgage business is a very tough business. So if you said as a business matter, that is true. So I’m very sympathetic to what you know, Charlie is going through. It’s very tough regulatory, it’s very tough legal. It’s the profit margins move all over the place. So a lot of people are making different decisions. You’ve probably seen that 80% of the mortgage business is out of banks now, you know, and that’s kind of unfortunate.
CRAMER: Now, I often struggle when I listen to you to think about well, is the government an impediment? Is the Fed an impediment? Or are these actually trying to help things to make them better?
DIMON: You know, I think the Fed has to do what they think is the right thing to do and you know look –
CRAMER: But you’ve talked to them. They’re not doing what you think.
DIMON: They kind of are. I think we all know they were probably late, okay. And their models didn’t really work. Inflation got out of control and then they kind of quickly caught up. So they’ll probably pause at one point a little over 5%. Whether it’s enough or not, we don’t know. And I don’t think it will be. I think that inflation will come down but maybe by the end of the year they have got to do a little bit more. But remember, inflation could be far worse than a mild recession. And so they’ve got to figure out what’s the right thing for the long run, not just what’s the right thing for next year or something like that. So I wish them – we all want them to do as well as they can.
CRAMER: But I still do not hear you say there will not be recession. I still hear you say that it could be a hard landing. I’m not getting away from that.
DIMON: Yeah, well, you can’t avoid I mean, I look at the world as possibilities and probabilities. So there’s still a chance for a soft landing or no landing. There’s still a chance for hard landing and there’s still a chance for what I call other because of Russia, oil, gas, migration, China, trade. Those are serious things. And I also point out we’ve never had QT before. And QT, the early part may be easy — harder later – later parts might be a little harder. So I expect that will cause a lot of volatility in the markets at one point.
CRAMER: Now your banks probably – people don’t know this – but your bank has the best Asian desk. You’ve had unbelievable relations with China. Did it have to go as awry as it is?
DIMON: No, but I think Covid set everyone way back where people didn’t talk and they didn’t relate to each other. I think Russia showed the world that the world is not safe for Western – completely safe with Western democracy. And you need American leadership that can coalesce the Western world. But you have what’s happening today is you have a lot of countries around the world who do a ton of pick and choose between who they are going to lie with, who they want to trade with. We’ve got to put trade back on the table. I travel around the world and a lot of these countries are “hey, if you’re not going to trade with us and China’s coming to walk in here.” So we need diplomacy, economic strategy, trade, very thoughtfully done with allies, and then private negotiation with China. We can take – I think we’re doing a lot of right around national security. I think that’s a cynic going on.
CRAMER: Okay, so I listen to you and I say okay, experienced banker, experience worldwide. 67, can’t be JPMorgan forever. People who are running for president are in their 80s Why not Jamie?
DIMON: I’ve never been a politician. That’s why –
CRAMER: Well maybe that is what we need.
DIMON: I would love to be anointed president. But you have to win. You have to run and there’s almost no chance –
CRAMER: Yeah that’s a problem. We saw that yeah.
DIMON: That would be a big problem.
CRAMER: That is absolutely the problem. Now, where are we as a country? How do we stand? Our natural resources are great, but our leadership is paralyzed because we have so many people in Washington who hate each other.
DIMON: Yeah I wouldn’t be that dramatic about it.
CRAMER: Okay.
DIMON: If you look at the history of America, we’ve been through tough times, Revolutionary War, Civil War, World War I, Depression, World War II and a lot of things past that. And so huge resiliency, which Warren Buffett always talks about. The way Americans think about it is we are the most prosperous nation on the planet. And I’m going to contrast this to China just to put it in perspective. 75,000 per person GDP here versus 13 there. We have all the food, water and energy we need, okay, we’ve got the gifts of the founding fathers – freedom of speech, freedom of religion, freedom of enterprise, freedom of capital. You can do what you want with yourself. You can start businesses, you can invest in things –
CRAMER: On 52nd street in Philly.
DIMON: You can do all that.
CRAMER: But they haven’t given everybody – there’s not been equal opportunity for people to get capital.
DIMON: We have done a terrible job lifting up the bottom 20% of society.
CRAMER: The government or the banks? Are you –
DIMON: Government.
CRAMER: — taking leadership because the government has failed so many people.
DIMON: I think every institution should do something to help. Hire people, train people, open this community branch. But we also have to get with the government –we need good, effective competent government. And a lot of government policies backfired, but we need the inner city schools to get these kids ready to work. We need – we got rid of college to be required, but we need the schools to work. We need zoning, if you want more affordable housing – very often its zoning, you know, we need immigration policy –
CRAMER: Are you telling me that there’s enough – that you would lend credit, give credit and your bank has enough savings and people have enough savings. That if we just were kind of Prometheus unbound when it comes to the economy, we’d be doing much better.
DIMON: I think so. I think we hold ourselves back because we don’t have really effective public policy around regulations, taxation, immigration.
CRAMER: Is the American consumer good despite this?
DIMON: The American consumers in fabulous shape today.
CRAMER: Well, I’m not –what’s the uncertainly here? I mean, yes, Ukraine. You’ve given me probably eight certainties to 2 uncertainties.
DIMON: So here it is. They’re spending 40% more than pre Covid, they have a trillion and a half or something like that left their checking accounts, more than they had pre Covid. Jobs are plentiful. Wages still going up.
CRAMER: Millennials going to your bank?
DIMON: Yeah.
CRAMER: Or are they going to fintechs. Where? Is Square going to beat you.
DIMON: No. We are getting our share of everybody.
CRAMER: I’m baiting you. You’re supposed to take that bait.
DIMON: I said no, they are not going to beat us. But the problem is that money is being spent down now, so it’s going to, we think sometime by the end of the year, it’ll be zero excess balance.
CRAMER: Well, that means good for the credit card business.
DIMON: And it is being eroded by inflation. So you can look at that and say, well, at the end of that, you’ll have a little bit of a dip, but maybe not. You know, if we go into a recession, the consumer’s in better shape because unlike ’08 and ’09 mortgages are well underwritten, even though people say “oh my credit card debt,” it’s just normalizing.
CRAMER: Well, then the Fed with its method, meet x method of five and a half, six is not going to solve the inflation problem that you were just talking about.
DIMON: My view is that it might go a little bit higher.
CRAMER: Higher than six?
DIMON: Yeah, possibly.
CRAMER: Higher than six a lot of people are going to be thrown out –
DIMON: When you when I grew up, okay, like when I graduated school, I was 21 — was 21 and a half percent. Things change. There’s been a big sea change—
CRAMER: Buying treasuries at 14.
DIMON: Yeah, I still wouldn’t buy treasuries today.
CRAMER: Well, okay, so north of six would be news. That’s kind of news, Jamie.
DIMON: That will surprise people, yeah.
CRAMER: You don’t want to kind of take that one. I mean, mortgages are— mortgages are like doing terrible things.
DIMON: I’m not saying it is going to do that –
CRAMER: You did say it is going to do that.
DIMON: I suspect it may have to go a little bit higher than five we’re talking about. It could hit six –
CRAMER: The country’s not ready for that.
DIMON: Well, things happen.
CRAMER: Layoffs, unemployment goes to 5% at that rate.
DIMON: It could, yeah.
CRAMER: We go back to five percent.
DIMON: But it could be again, if you’re in the government, what you really want is the best long term outcome. Inflation is so insidious, that that could damage growth for 10 years. So they are trying to do the right thing –
CRAMER: But okay, so it’s homes, it’s food, it’s wages. You have no control over food, but you talk about POS of Ag. Homes, it doesn’t seem to matter. They don’t build enough so we’re always going – homes keep going up in price, it’s a supply demand issue.
DIMON: Well, they are down 10% from their peak so keep that in mind.
CRAMER: Yes.
DIMON: And we need to supply more homes.
CRAMER: Yes we do.
DIMON: So affordable housing and all that, we need more. Yet you’re absolutely correct. We’re not building enough to keep up with the population. That’s a good sign for the future the economy.
CRAMER: But the wages are only going to stabilize if enough businesses including ones that use JPMorgan fail.
DIMON: I don’t think you need failure, but you know, when you have a recession, companies fail. But that’s – hopefully that won’t happen.
CRAMER: Can I leave on artificial intelligence? Something more positive. Your bank – everyone thinks that Nvidia, one of my favorite companies, it’s all new. You guys have used artificial intelligence throughout. You’ve understood, you’ve been able to catch fraud. You’ve been able to get rid of a lot of jobs that are very difficult where people are actually talking to machines and they don’t know it. I mean, is your bank – did you convene a meeting on this? Did you convene a meeting on accelerated computing?
DIMON: All the time. Years ago, I wrote about it years ago. And we actually hired Manuela Veloso who ran Carnegie Mellon here years ago. We have 100 people in research AI. We have thousands of data scientists, machine learning data folks and stuff like that. We run I think about 300 AI programs.
CRAMER: So you weren’t surprised by ChatGPT.
DIMON: No, we were already doing stuff like that. Contracts –
CRAMER: Should the Fed be using it? Would they be better at their job if they were just plugging it in – should rates be at six.
DIMON: I don’t think ChatGPT could figure that out quite yet.
CRAMER: But it sounds like your AI could.
DIMON: No, but we use it for things like risk fraud, marketing, prospecting. We move $10 trillion around the world and I go to zip zap it as we speak, but it’s running through AI systems to make sure is it going to the right place, what are the patterns, what’s the voice recognition –
CRAMER: Is 4% on the ten year the right place to be with ridiculous – isn’t that ridiculously low?
DIMON: I think it’s a little low, yeah.
CRAMER: Little low.
DIMON: Yeah.
CRAMER: Man, you couch it. It’s very low. And capital markets kind of dried up. When are we going to see those numbers get better?
DIMON: Soon.
CRAMER: And interest income how come nobody cares and they think there’s going to be – not interest income, it’s going to be great, but people are now worried about bad loans. I’m not seeing or hearing from you that there’s a lot of defaults.
DIMON: I don’t expect a lot. I think you’ll have – if you have a recession my view is you have what I consider a normal credit cycle. Losses will go up in a way that’s quite predictable in a recession, unlike what happened in ’08 and ’09.
CRAMER: But we can’t necessarily break an economy with 8% if many people are buying homes with cash, there are not enough homes. I’ve been trying to figure out what’s going to go. What goes under or what stops to head off inflation?
DIMON: Well, I think the banking system’s in fabulous shape.
CRAMER: Yes.
DIMON: Consumers will be going through a recession –
CRAMER: The consumers –
DIMON: — In pretty good shape –
CRAMER: — self consumer is the best ever? Best that you’ve seen as a banker?
DIMON: Yeah, pretty much.
CRAMER: Since 2005 is it the best?
DIMON: Pretty much, yeah.
CRAMER: Why am I so worried then? You just made me really worried –
DIMON: I’m not worried about the normal economic cycle. I would only worry about the abnormal stuff like the war in Ukraine, oil and gas.
CRAMER: Okay, you want to worry about existential not 52nd and Market. You’re not worried about 52nd and Market?
DIMON: No.
CRAMER: I like that. That is a good place to leave it. Jamie Dimon. Chairman, CEO of JPMorgan. Thank you very much.
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