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Letter from the boss of JPMorgan Chase | The banking crisis will have “multi-year” consequences

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(New York) The month-long crisis in the banking industry is “not over” and will have “multi-year” consequences, JPMorgan Chase CEO Jamie Dimon warned in a letter to shareholders released on Tuesday.

“The current crisis is not over, and even when it is behind us, it will have repercussions for several years,” wrote the emblematic boss of the first American bank by asset size, in a document appearing in the Annual Report.

Within days, the sector experienced the failure of three institutions in the United States, including two of the three largest bank failures in American history. The sequence continued with the takeover, in disaster, of Credit Suisse by its Swiss competitor UBS to avoid the implosion of this major European player.

“While it is true that this banking crisis ‘benefited’ the larger banks, which received an influx of deposits from smaller institutions, the idea that this collapse was good for anyone is absurd” , argued Jamie Dimon.

In the week that saw Silicon Valley Bank (SVB) and Signature Bank go out of business, smaller banks saw their deposits decline by $185 billion, while big names in the marketplace saw a jump of $185 billion. 120 billion, according to figures published by the American central bank (Fed).

“These bankruptcies have not been good for any bank, regardless of size,” the CEO hammered home. “Any crisis that affects Americans’ confidence in their banks is bad for all institutions. »

“And even if it has nothing to do with 2008, it is not easy to determine when this crisis will end,” wrote Jamie Dimon, who expects it “to cause a tightening of conditions financial, as banks and other lenders will become more cautious. »

While he expects the banking crisis to lead to regulatory changes, he urges authorities to avoid “a knee-jerk, drawn-out, or politically driven response.”

“We shouldn’t be trying to put in place a [regulatory] regime that eliminates the possibility of bankruptcy,” he says, “but rather a system that reduces the likelihood of default and contagion.” »

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