Jamie Dimon rips Fed stress test as 'terrible way to run' financial system


Jamie Dimon, CEO of JP Morgan Chase, speaking at the Business Roundtable CEO Innovation Summit in Washington, D.C. on Dec. 6th, 2018. 

Janvhi Bhojwani | CNBC

JPMorgan Chase CEO Jamie Dimon didn’t mince words when it came to the regulatory process that forced his bank to suspend its stock buybacks.

Asked by veteran banking analyst Betsy Graseck of Morgan Stanley on Thursday about the Federal Reserve’s recent stress test, Dimon unleashed a series of critiques about the annual exercise, which was implemented after the 2008 financial crisis nearly capsized the world’s economy.

“We don’t agree with the stress test,” Dimon said. “It’s inconsistent. It’s not transparent. It’s too volatile. It’s basically capricious, arbitrary.”

JPMorgan, the biggest U.S. bank by assets, is scrambling to generate more capital to help it comply with the results of the Fed test. Last month, steadily increasing capital requirements within the test hit the biggest global financial institutions, forcing the New York-based bank to freeze its dividend. While Citigroup made a similar announcement, rivals including Goldman Sachs and Wells Fargo boosted investor payouts.

Under the exam’s hypothetical scenario, JPMorgan was expected to lose around $44 billion as markets crashed and unemployment surged, Dimon said. He essentially called that figure bunk on Thursday, asserting that his bank would continue to earn money during a downturn.

After JPMorgan released second-quarter results, it disclosed a raft of other measures it is taking to husband capital, including by temporarily halting share repurchases. That move, in particular, wasn’t welcomed by investors, as the stock hasn’t been this cheap in years.

Shares of the bank fell as much as 5%, hitting a fresh 52-week low.

Big changes

‘Making it worse’


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