JP Morgan Chase 2015 Annual Report Download - page 45

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covenants in place or forcing the sale of
assets. This does not always create friends,
but it is critical for appropriate lending and
the proper functioning of markets. Banks
have to continuously make judgments on
risk, and appropriately price for it, and they
have to do this while competing for a client’s
business. There is nothing about banking
that remotely resembles a utility.
America’s financial system is the finest the world
has ever seen — let’s ensure it stays that way.
The position of America’s leading banks
is like many other U.S. industries – they
are among the global leaders. If we are not
allowed to compete, we will become less
diversified and less ecient. I do not want
any American to look back in 20 years and
try to figure out how and why America’s
banks lost the leadership position in finan-
cial services. If not us, it will be someone
else and likely a Chinese bank. Today, many
Chinese banks already are larger than we
are, and they continue to grow rapidly. They
are ambitious, they are supported by their
government and they have a competitive
reason to go global – the Chinese banks
are following and supporting their Chinese
companies with the financial services that
are required to expand abroad.
Not only are America’s largest banks global
leaders, but they help set global standards for
financial markets, companies, and even coun-
tries and controls (such as anti-money laun-
dering). Finally, banks bring huge resources
– financial and knowledge – to America’s
major flagship companies and investors,
thereby helping them maintain their global
leadership positions.
Why do you say that banks need to be steadfast and always there for their clients — doesn’t
that always put you in the middle of the storm?
Yes, to an extent. When an economy
weakens, banks will see it in lower busi-
ness volumes and higher credit losses. Of
course, we want to manage this carefully,
but it is part of the cost of doing business.
Building a banking business takes decades
of training bankers, nurturing relation-
ships, opening branches and developing
the proper technology. It is not like buying
or selling a stock. Clients, from consumers
to countries, expect you to be there in both
good times and the toughest of times. Banks
and their services are often the essential
lifeblood to their clients. Therefore, it is part
of the cost of doing business to manage
through the cycles.
JPMorgan Chase consistently supports
consumers, businesses and communities in
both good times and the toughest of times. In
2015, the firm provided $22 billion of credit
to U.S. small businesses, which allowed them
to develop new products, expand operations
and hire more workers; $168 billion of credit
to Commercial and Middle Market clients;
$233 billion of credit to consumers; more
than $68 billion of credit or capital raised for
nonprofit and government entities, including
states, municipalities, hospitals and universi-
ties; and $1.4 trillion of credit or capital raised
for corporations. In total, we extended credit
and raised capital of more than $2 trillion for
our clients.
Banks were there for their clients, particularly
when the capital markets were not — we need this
to continue.
The public markets, even though they are
populated with a lot of very bright and
talented people, are surprisingly fickle. The
psychology and wisdom of crowds are not
always rational, and they are very imper-
sonal. People who buy and sell securities
do not have a moral obligation to provide
credit to clients. This is when banks’ long-
term relationships and fairly consistent