Dimon defends dollar -- and JPMorgan
The chief executive officer of JPMorgan Chase said the U.S. needs a strong dollar and that job creation is key to a rebound; also says his bank is not 'too big to fail.'
NEW YORK (Fortune) -- JPMorgan Chase chief executive officer defended the dollar -- and the size of his company -- at a securities industry conference Tuesday.
"The ultimate strength of the dollar will depend on the strength of the United States," Dimon said.
Dimon discussed the dollar and other key financial topics with PBS host Charlie Rose as part of the Securities Industry and Financial Markets Association (SIFMA) annual meeting held in New York.
He said that the dollar needs two things to remain strong: the economy must grow and, equally as important, the government must demonstrate fiscal responsibility.
The fate of the dollar is not about "the deficit over the next year or two," said Dimon, but about proving that the country's long-term plan is to rein in spending and reduce the nation's debt over time.
"We'll be voting on this," Dimon told the crowd. "It's not only a matter of what happens at the [Federal Reserve] but about what happens in Congress."
The dollar has spent much of October bouncing around its 14-month low against the euro as investors worried that low U.S. interest rates and months of stimulus injections would spark inflation. Moreover, the market recovery has made stocks more attractive to investors than super safe assets like the dollar.
The dollar got a bit of a lift earlier this month when Fed chairman Ben Bernanke said that the central bank is poised to raise interest rates if the economic recovery strengthens in order to avoid a surge in inflation. But given that employment remains weak, many analysts and economists believe that the government would rather not boost rates rise anytime soon.
In his wide ranging remarks, Dimon also noted that the economic recovery was not tied to hotly debated issues in Congress such as health care reform and cap and trade energy proposals.
Dimon said that these are long-term issues the administration must tackle, but added that "getting people back to work" is the most important ingredient in a true economic recovery. If Congress does pass another stimulus bill, Dimon said he hopes that it will focus on job creation.
Dimon also defended his company's role as one of the largest banks in the country, arguing that it had not reached a point that it was "too big to fail." He stressed that the firm's size was appropriate given the number of its clients and their business needs.
"Large businesses are large for a reason," Dimon said. "You can't do an $8 billion loan if you are a small bank."
JPMorgan Chase (JPM, Fortune 500) has been one of the nation's fastest growing banks in recent years. In the wake of last year's financial chaos, it bought investment bank Bear Stearns and the savings-and-loan giant Washington Mutual.
Both deals were done at what analysts felt were relatively low prices. JPMorgan Chase bought WaMu after it was seized by the FDIC in the nation's largest bank failure.
But the size of the nation's largest financial firms has been a key issue among regulators and lawmakers following the near collapses and government bailouts of AIG (AIG, Fortune 500) and Citigroup (C, Fortune 500). Congress continues to debate how best to reform the U.S. financial system.
One leading proposal in Washington has been for regulators to create a system that would allow regulators to handle the failure of a large financial institution. Many have argued the absence of such a system exacerbated the problems associated with the bankruptcy of Lehman Brothers last fall.
Dimon, echoing previous comments, threw his support behind such a system. But he added that there would need to be coordination with international regulators to work effectively.