JPMorgan Chase CEO Jamie Dimon warned Monday that present financial circumstances and banks doing “dumb things” like taking up dangerous loans could lead to a market meltdown comparable to the one earlier than the 2008 financial crisis.
“There will be a cycle one day,” he mentioned, “I don’t know what confluence of events will cause that cycle. My anxiety is high over it. I’m not assuaged by the fact that asset prices are high. In fact, I think that adds to the risk.”
In remarks to buyers Monday Dimon mentioned the circumstances available in the market, together with record levels, could be trigger for concern.
“Unfortunately, we did see this in 2005 and 2006 and 2007, almost the same thing. The rising tide lifting all boats. Everyone was making a lot of money. People were leveraging to the hilt. The sky was the limit,” he mentioned.
“And I think today, the rising tide is lifting all boats. My own view is people getting a little comfortable that this is real, these high asset prices and high volumes, and we won’t have any kind of problem, whatsoever,” he mentioned. “I don’t know how long it’s going to be great for everybody. I see a couple of people doing some dumb things.”
Dimon didn’t specify which establishments he was referring to, and assured buyers that his financial institution, the nation’s largest, is “quite cautious,” noting that “we stick to our own rules.”
He additionally mentioned that current concern amongst buyers about artificial intelligence disrupting the software sector can also be typical of disruptions within the financial markets prior to now.
“There’s always a surprise in a credit cycle,” he mentioned, citing some earlier examples of industries that appeared steady bets proper up till they developed issues, reminiscent of newspapers, utilities and cellphone firms. “And this time around, it might be software, because of AI….There’s moving tectonic plates underneath it, it causes the industry to be challenged.”
In October, Dimon warned of weak point within the personal credit score market after subprime auto lender Tricolor and components producer First Brands each filed for chapter following allegations of financial fraud. JPMorgan Chase later took a $170 million impairment cost on its mortgage to Tricolor. “My antenna goes up when things like that happen,” he mentioned on the time. “When you see one cockroach, there are probably more.”