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Jamie Dimon's new letter says America is great, but regulation is holding us back

Andy Serwer
Editor in Chief

Follow Yahoo Finance’s full coverage of JPMorgan Chase CEO Jamie Dimon’s annual letter to shareholders.

Two bullet points in Jamie Dimon’s 2016 letter to shareholders neatly sum up the theme of the JPMorgan Chase CEO’s communication this year:

  • “The United States of America is truly an exceptional country.”
  • “But it is clear that something is wrong — and it’s holding us back.”

And while Dimon goes through a laundry list of our nation’s foibles in his high-profile letter, he focuses most keenly on over-regulation and bad policy, which he says is holding us back.

“The lack of economic growth and opportunity has led to deep and understandable frustration among so many Americans,” Dimon writes. “Our problems are significant, and they are not the singular purview of either political party. We need coherent, consistent, comprehensive and coordinated policies that help fix these problems.”

Dimon, whose letter to shareholders is perhaps the business world’s second most-read chairman’s letter after Warren Buffett’s, writes that “By some estimates, approximately $2 trillion is spent on regulations annually (which is approximately $15,000 per U.S. house- hold annually).” And he continues: “…it is an understatement to say improvements could be made. The regulatory environment is unnecessarily complex, costly and sometimes confusing. No rational person could think that everything that was done was good, fair, sensible and effective, or coherent and consistent, in creating a safer and stronger system.

JPMorgan Chase CEO Jamie Dimon (AP Photo/Richard Drew)

“We are not looking to throw out the entirety of Dodd-Frank or other rules (many of which were not specifically prescribed in Dodd-Frank). It is, however, appropriate to open up the rulebook in the light of day and rework those rules and regulations….This complexity can sometimes create even more risk. There are far too many regulations to talk about in this letter, and, if I tried, it would not only frustrate you but bore you to tears.”

Idle capital

“Banks in the United States in total now hold $200 billion in operational risk capital,” Dimon says. “This is permanently idle capital never to be utilized to support our economy. It was an unnecessary add-on that should be eliminated.”

He argues that there isn’t enough mortgage lending right now and says that’s hurting those who need it the most.

“[I]t’s noteworthy that those who lost access to mortgage credit are the very ones who so many people profess to want to help – e.g., lower income buyers, first-time home buyers, the self-employed and individuals with prior defaults who deserve another chance.”

Dimon also observed that since the financial crisis, bank loans have lagged bank deposits.

“The new liquidity rules require banks to hold approximately $2 trillion at the Federal Reserve, whether or not there is loan demand,” he notes.

The JPMorgan CEO also declares the banking system to be safe: “Essentially, Too Big to Fail has been solved — taxpayers will not pay if a bank fails.”

America is not relegated to slower growth

Dimon counters the concern that Harvard’s Larry Summers and others have about our economy by writing, “many economists believe we are now permanently relegated to slower growth and lower productivity (they say that secular stagnation is the new normal), but I strongly disagree.”

Dimon has two lists of negatives for the nation’s economy.


  • Wasteful defense spending
  • Government student loans sector
  • High health care costs compared to other developed nations
  • Not enough visas for STEM students
  • Not enough jobs for released felons
  • An underserved mortgage market

And second:

  • The real labor participation is too low
  • Bad education system for those in need
  • Not enough infrastructure spending
  • High corporate tax rates
  • Over-regulation

Dimon is optimistic that many of these hindrances are fixable.

“The solutions are not binary – they are not either/or, and they are not about Democrats or Republicans,” he says. “They are about facts, analysis, ideas and best practices (including what we can learn from others around the world).”

More from Jamie Dimon’s annual letter: