Jamie Dimon tells shareholders he expects the coronavirus to cause a 'bad recession' and 'financial stress similar to the global financial crisis,' at a minimum
- Jamie Dimon's annual letter to JPMorgan shareholders was published Monday.
- In it, the bank's CEO addressed the coronavirus pandemic and the impact it could have on the US economy and JPMorgan.
- The bank has stopped buybacks, but has not asked for regulatory relief, Dimon said.
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In his annual letter to JPMorgan shareholders, CEO Jamie Dimon warned that while the bank is strong, it won't be untouched by the fallout stemming from the coronavirus pandemic.The coronavirus pandemic will be damaging to the US economy, according to Dimon. "At a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008," he said.
Dimon's annual letter comes as the US is grappling with the economic consequences of the coronavirus pandemic, which has roiled global markets and shut down much of the country in an attempt to curb the spread of disease. Most agree that the US is either already in a recession or will soon be in one, marked by massive slowdowns in output and an elevated unemployment rate - in the last two weeks alone, 10 million Americans have filed for unemployment benefits as coronavirus layoffs persist.In response to the crisis, JPMorgan has stopped buying back its own stock, Dimon said, adding that halting buybacks "was simply a prudent action." Dimon also said that the board would consider suspending the bank's dividend only in an "extremely adverse scenario" that would include a 35% contraction of gross domestic product in the second quarter and an unemployment rate of 14%.
JPMorgan is working "closely" with all levels of government during the crisis, but has not yet asked for any regulatory relief, Dimon said. But he said that the financial system is in need of overhaul, which should come when the current crisis subsides.
Next, there needs to be a solid plan to "carefully" return Americans to work that includes testing, Dimon said."The country was not adequately prepared for this pandemic - however, we can and should be more prepared for what comes next," he wrote. "Done right, a disciplined transition would maximize the health of Americans and minimize the time, extent and suffering caused by the economic downturn."
Dimon briefly addressed well-wishes he received after having emergency heart surgery in March, but didn't give any further updates on his health.
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