The banking crisis caused by the recent collapse of Silicon Valley Bank and Signature Bank has increased the odds of a US recession, JPMorgan Chase CEO Jamie Dimon told CNN’s Poppy Harlow in an exclusive interview on Thursday.
Speaking in his first interview since the failure of SVB, Dimon said that while the banking system is strong and sound, the recent turmoil around the financial system is “another weight on the scale” towards recession.
“We are seeing people reduce lending a little bit, cut back a little bit and pull back a little bit.” While the banking chaos won’t “necessarily force a recession,” he said, “it is recessionary.”
There are storm clouds ahead for the economy, said Dimon. The Federal Reserve’s current tightening regimen, plus higher, sticky inflation and Russia’s war on Ukraine are the largest risks he sees for the economy. But Dimon said he does feel hopeful about the strength of human capital in the United States.
“I’m a red-blooded, full-throated, free-market, free-enterprise capitalist,” said Dimon of supporting local entrepreneurship. “I think we should applaud free enterprise and we should sing from the hills the benefits while we fix the negatives, as opposed to denigrate the whole thing.”
imon sat down with Harlow after the opening of Chase’s Atlanta community branch. The Atlanta bank is Chase’s 16th branch built in conjunction with local communities and which host free events, financial health workshops and skills training for locals. Community branches also provide storefront spaces for small business pop-ups.
These branches, said Dimon, are not charity in any form. They’re good for business. “We need to get money into local communities,” he said. Part of that is as simple as opening a savings account. “A lot of us had moms and dads who took us to open our first accounts,” he said. “And then you see your money go from like $84.75 to $85.17. It was like magic, that interest.”
Dimon said that is part of what he hopes to achieve with his community branches.
“We don’t want people to be afraid to walk into a branch here. Come as you are, bring your kids and learn,” he said.
As part of the initiative, Chase has hired a number of community managers with the express purpose of encouraging those who don’t feel comfortable in a bank setting to come in and learn about their finances.
This role, he said, is essential and is often filled by regional, mid-sized community banks, which is partially why the recent failures of SVB and Signature and the possibility of contagion were so harrowing.
Banking sector meltdown
Dimon said he isn’t sure if the US economy is through the thick of the current banking crisis just yet.
“I’m hoping it will resolve, you know, rather shortly,” he said.