Jamie Dimon’s Letter to Shareholders, Annual Report 2021

Fenika Bench




We face challenges at each flip: a pandemic, unprecedented authorities actions, a robust restoration after a pointy and deep international recession, a extremely polarized U.S. election, mounting inflation, a warfare in Ukraine and dramatic financial sanctions in opposition to Russia. Whereas all this turmoil has critical ramifications on our firm, its impact on the world — with the intense struggling of the Ukrainian folks and the potential restructuring of the worldwide order — is way extra necessary.

Including to the disruption, these occasions are unfolding whereas America stays divided inside its borders, with many arguing that it has misplaced its important management function exterior of its borders and around the globe. However throughout this tough time, we’ve a second to place apart our variations, provide options and work with others within the Western world to come back collectively in protection of democracy and important freedoms, together with free enterprise. Now we have seen America, in partnership with different nations across the globe, come collectively beforehand throughout situations of battle and disaster. This juncture can be a second when our nation must work throughout the personal and public sectors to guide as soon as once more by, amongst different remediations, enhancing American competitiveness and higher fulfilling equal entry to alternative for all. JPMorgan Chase, an organization that has traditionally labored throughout borders and limits, will do its half to make sure the worldwide financial system is secure and safe. I talk about these themes later on this letter.

Though I start this annual letter to shareholders in a difficult panorama, I stay happy with what our firm and our tons of of hundreds of workers around the globe have achieved, collectively and individually. As you understand, we’ve lengthy championed the important function of banking in a group — its potential for bringing folks collectively, for enabling firms and people to achieve for his or her desires, and for being a supply of energy in tough instances. All through these previous two difficult years, we by no means stopped doing all of the issues we needs to be doing to serve our shoppers and our communities.

Wanting again on the final yr and the previous twenty years — ranging from my time as CEO of Financial institution One in 2000 — it’s clear that our monetary self-discipline, fixed funding in innovation and ongoing improvement of our persons are what enabled us to persevere in our steadfast dedication to assist shoppers, communities and nations all through the world. 2021 was one other robust yr for JPMorgan Chase, with the agency producing file income, in addition to setting quite a few different information in every of our traces of enterprise. We earned $48.3 billion in internet revenue on income of $125.3 billion versus $29.1 billion on income of $122.9 billion in 2020, reflecting robust underlying efficiency throughout our companies. Included within the $48.3 billion is $9.2 billion after tax in reserve releases as a result of volatility launched by the brand new present anticipated credit score loss accounting customary. Now we have identified repeatedly that we don’t think about these reserve releases core or recurring income as a result of they’re pushed by hypothetical, probability-weighted situations. Excluding these reserve releases, we nonetheless earned 18% on tangible fairness — an especially wholesome quantity. We typically grew market share throughout our companies and continued to make vital investments in merchandise, folks and expertise, all whereas sustaining credit score self-discipline and a fortress steadiness sheet. In complete, we prolonged credit score and raised capital of $3.2 trillion for giant and small companies, governments and U.S. customers.

I’d like to notice some steadfast rules which are value repeating. The primary is that whereas JPMorgan Chase inventory is owned by massive establishments, pension plans, mutual funds and immediately by particular person traders, in virtually all instances, the final word beneficiaries are people in our communities. Greater than 100 million folks in america personal inventory, and a big share of those people, in a method or one other, personal JPMorgan Chase inventory. Many of those persons are veterans, academics, cops, firefighters, healthcare employees, retirees or these saving for a house, training or retirement. Your administration crew goes to work every single day recognizing the big duty that we’ve to our shareholders.

Second, whereas we don’t run the corporate worrying concerning the inventory worth within the quick run, within the long term our inventory worth is a measure of the progress we’ve made through the years. This progress is a perform of continuous investments in our folks, methods and merchandise, in good and dangerous instances, to construct our capabilities. Whether or not trying again 10 years or because the JPMorgan Chase/Financial institution One merger in 2004, these investments have resulted in our inventory’s vital outperformance of the Commonplace & Poor’s 500 Index and the Commonplace & Poor’s Financials Index. These necessary investments can even drive our firm’s future prospects and place it to develop and prosper for many years.

Jamie Dimon’s Letter to Shareholders, Annual Report 2021



Bar graph showing 2004 to 2021 trend of tangible book value per share, with overlayed line for average stock price



Chart showing total stock return (both compounded annual gain and overall gain) across different time periods for Bank One/JPMC (as applicable), the S&P 500 Index and the S&P Financials Index


Now we have constantly described to you, our shareholders, the fundamental rules and methods we use to construct this firm — from sustaining a fortress steadiness sheet, consistently investing and nurturing expertise to totally satisfying regulators, frequently enhancing danger, governance and controls, and serving clients and shoppers whereas lifting up communities worldwide.

Should you look deeper, you will discover that our success and accomplishments are based on our dedication to our shareholders. Shareholder worth will be constructed solely when you keep a wholesome and vibrant firm, which implies doing job taking good care of your clients, workers and communities. Conversely, how are you going to have a wholesome firm when you neglect any of those stakeholders? As we’ve discovered in 2021, there are myriad methods an establishment can exhibit its compassion for its workers and its communities whereas nonetheless upholding shareholder worth.

Adhering to our fundamental rules and methods permits us to drive good natural progress and correctly handle our capital (together with dividends and inventory buybacks), as we’ve constantly demonstrated over the previous a long time. All of that is proven within the charts beneath, which illustrate how we’ve grown our franchises, how we examine with our rivals and the way we take a look at our fortress steadiness sheet. I invite you to peruse them at your leisure. As well as, I urge you to learn the CEO letters on this Annual Report, which gives you extra particular particulars about our companies and our plans for the longer term.

There are two different vital factors I want to make. We attempt to construct enduring companies, and we’re not a conglomerate — all our companies depend on and profit from one another. Each of those elements assist generate our superior returns. However, regardless of our greatest efforts, the moats that defend this firm aren’t significantly deep — and we face extraordinary competitors. I’ve written about this actuality extensively up to now and canopy it in additional element on this letter. Nonetheless, it’s the hand we’ve been dealt, and we’ll play it as finest we will.

My good friend, Warren Buffett, spoke in his letter this yr about his silent accomplice — the U.S. authorities — noting that every one his firm’s success relies upon the extraordinary situations our nation creates. He’s proper to say to his shareholders that after they see the flag, they need to all say thanks. We must always, too. I do exactly need to word that in our case, the silent accomplice shouldn’t be so silent. JPMorgan Chase is a wholesome and thriving firm, and we all the time need to give again and pay our justifiable share. We do — and we would like it to be spent properly and have the best influence. To provide you an concept of the place our taxes and costs go: Within the final 10 years, we paid $42 billion in federal, state and native taxes in america and $17 billion in taxes exterior of america. We additionally paid the Federal Deposit Insurance coverage Company $11 billion in order that it has the sources to cowl the failure of any main American financial institution.

Lastly, the premise of our success is our folks. They’re those who serve our clients and communities, construct the expertise, make the strategic choices, handle the dangers, decide our investments and drive innovation. No matter your view is of the world’s complexity and the dangers and alternatives forward, having an incredible crew of individuals — with guts, brains, integrity and massive capabilities to navigate personally difficult circumstances whereas sustaining excessive requirements {of professional} excellence — is what ensures our prosperity, now and sooner or later.

Chart showing 2006, 2011, 2020 and 2021 key metrics across lines of business




Stacked bar graph showing 2008 to 2021 trend of new and renewed credit and capital for our clients (split by Corporate clients, Small business / Middle Market / Commercial clients, Consumers, and Government / Government-related / nonprofits)



Stacked bar graph showing, at December 31, 2008 to 2021 trends of deposits and client assets (split by Corporate clients, Commercial clients and Consumer), and bar graph below showing 2008 to 2021 trend of assets under custody



Bar graph showing 2016 to 2021 daily payment processing dollars with overlayed line showing the number of daily merchant acquiring transactions



Chart showing, at December 31, 2008 and 2021 key balance sheet and income statement metrics: total assets, total liabilities and equity, revenue, expenses, net charge-offs, reserve builds, pre-tax profit.



Chart showing 2010 and 2021 market size metrics split by the following categories: size of banks, shadow banks, and size of non-bank competitors




Chart showing 2021 efficiency and returns for JPMC compared to best-in-class peers across lines of business, and bar graphs below showing efficiency and returns for JPMC and large peers, ordered from best to worst




Inside this letter, I talk about the next:



Vital Geopolitical and Financial Challenges

  • The U.S. financial system is powerful.
  • Persistent inflation would require rising rates of interest and a large however crucial shift from quantitative easing to quantitative tightening.
  • The warfare in Ukraine and the sanctions on Russia, at a minimal, will sluggish the worldwide financial system — and it may simply worsen.
  • The confluence of those elements could also be unprecedented.
  • The warfare may have an effect on geopolitics for many years.
  • How are we managing our international financial institution in these tough markets and sophisticated instances?

The Extraordinary Want for Sturdy American Management

  • Whereas America has flaws, its important strengths endure.
  • To keep up our competitiveness, our nation should regain its competence — and our rules, together with free enterprise, have to be nurtured.
  • Authorities, with its distinctive powers, has an important function in managing the financial system — however it must be real looking about its limitations on what it might and can’t do.
  • We should confront the Russia problem with daring options.
  • A robust America needn’t concern a rising China.
  • There are compelling causes for international commerce restructuring
  • We will have a path ahead for U.S. coverage: Agree on what we would like, then execute.

Aggressive Risk Redux

  • Banks carried out magnificently through the COVID-19 disaster.
  • The function of banks within the international monetary system is diminishing.
  • Probably extra necessary: The function of public firms within the international monetary system can be diminishing.
  • Extra regulation is coming — 10 years after the disaster, we’re nonetheless rolling out Basel IV — and we want extra considerate calibration of the foundations.
  • How ought to we deal with our G-SIB conundrum?
  • Banks must acknowledge the dramatically altering aggressive panorama.

Investments and Acquisitions: Figuring out the Finest Use of Capital and Assessing ROIs

  • Some investments generate predictable returns.
  • Acquisitions ought to pay for themselves — and every one has its personal logic.
  • We need to construct upon our international footprint.
  • We make intensive investments in expertise for a broad vary of causes, from enhancing operations and safety to enhancing our services.

Updates on Particular Points Dealing with Our Firm

  • We’re vigilant in opposition to cyber assaults.
  • Our dedication to sustainability is knowledgeable by power realities.
  • Progress continues in our range, fairness and inclusion efforts.
  • Morgan Well being helps us lead in healthcare transformation.
  • We proceed to assist data-driven policymaking by the JPMorgan Chase CoverageHeart and Institute.
  • We be a part of different firms in evolving our imaginative and prescient of the office.

Administration Lesson: The Advantage of Goal and the Great Worth of Work

  • Good your Picasso — have one thing to try for and inspire you.
  • Acknowledge the super worth of labor.
  • Nurture the extraordinary worth of belief.
  • Fight the enemy inside.
  • Drive excessive efficiency, the suitable method.
  • Retaining expertise is necessary and so is life exterior of labor.







Vital Geopolitical and Financial Challenges

America and the remainder of the world are dealing with the confluence of three necessary and conflicting forces: 1) a robust U.S. financial system, which, we hope, has COVID-19 in its rearview mirror; 2) excessive inflation, which implies rising rates of interest and, importantly, the reversal of quantitative easing (QE); and three) the warfare in Ukraine and the accompanying humanitarian disaster, with its influence on the worldwide financial system within the quick time period, in addition to its vital influence on the geopolitics of the longer term. These elements will doubtless have a significant impact on the financial system over the subsequent few years and on geopolitics for the subsequent a number of a long time.

I ought to remind the reader that we usually don’t fear about — and even attempt to predict — regular fluctuations of the financial system. In all instances, we’re ready for tough markets and extreme recessions, in addition to for unpredictable occasions, not solely so we’ll survive them but in addition so we will be there for our shoppers after they want us essentially the most. Nonetheless, generally there are highly effective underlying structural traits that we should attempt to perceive since their influence will be so massive, with widespread influence on many elements of human existence.


The U.S. financial system is powerful.

In 2020 and 2021, huge QE — roughly $4.4 trillion, or 18%, of 2021 gross home product (GDP) — and massive fiscal stimulus (which has been and all the time will probably be inflationary) — roughly $5 trillion, or 21%, of 2021 GDP — stabilized markets and allowed firms to boost huge quantities of capital. As well as, this infusion of capital saved many small companies and put greater than $2.5 trillion within the arms of customers and virtually $1 trillion into state and native coffers. These actions led to a fast decline in unemployment, dropping from 15% to beneath 4% in 20 months — the magnitude and velocity of which have been each unprecedented. Moreover, the financial system grew 7% in 2021 regardless of the arrival of the Delta and Omicron variants and the worldwide provide chain shortages, which have been largely fueled by the dramatic upswing in shopper spending and the shift in that spend from companies to items. Fortuitously, throughout these two years, vaccines for COVID-19 have been additionally quickly developed and distributed.

In right now’s financial system, the buyer is in wonderful monetary form (on common), with leverage among the many lowest on file, wonderful mortgage underwriting (although we’ve had dwelling worth appreciation), plentiful jobs with wage will increase and greater than $2 trillion in extra financial savings, largely as a consequence of authorities stimulus. Most customers and corporations (and states) are nonetheless flush with the cash generated in 2020 and 2021, with shopper spending during the last a number of months 12% above pre-COVID-19 ranges. (However we should acknowledge that the account balances in lower-income households, smaller to start with, are happening sooner and that revenue for these households shouldn’t be preserving tempo with rising inflation.)

In the present day’s financial panorama is totally completely different from the 2008 monetary disaster when the buyer was terribly overleveraged, as was the monetary system as a complete — from banks and funding banks to shadow banks, hedge funds, personal fairness, Fannie Mae and plenty of different entities. As well as, dwelling worth appreciation, fed by dangerous underwriting and leverage within the mortgage system, led to extreme hypothesis, which was missed by nearly everybody — ultimately main to almost $1 trillion in precise losses.

Throughout 2020 and 2021, many aberrant issues additionally occurred: 2 million folks retired early; the availability of immigrant employees dropped by 1 million as a consequence of immigration insurance policies; accessible jobs skyrocketed to 11 million (once more unprecedented); and job seekers dropped to five million. Wage progress accelerated dramatically, significantly in low-income jobs. We shouldn’t be sad that wages are going up — and that employees have extra selections and are making completely different choices — regardless of the truth that this causes some difficulties for enterprise. Home costs surged through the pandemic (housing grew to become and nonetheless is in extraordinarily quick provide), and asset costs remained excessive, some, in my opinion, in bubble territory. Inflation soared to 7%; whereas clearly a few of this rise is transitory as a consequence of provide chain shortages, some shouldn’t be, as a result of greater wages, greater housing prices, and better power and commodity costs will persist (extra to come back on this later). All these elements will proceed in 2022, driving additional progress in addition to continued inflation. One extra level: Shopper confidence and shopper spending have diverged dramatically, with shopper confidence dropping. Spending, nonetheless, is extra necessary, and the drop in shopper confidence could also be in response to ongoing fatigue from the pandemic shutdown and issues over excessive inflation.


Persistent inflation would require rising rates of interest and a large however crucial shift from quantitative easing to quantitative tightening.

It’s straightforward to second-guess complicated choices after the actual fact. The Federal Reserve (the Fed) and the federal government did the suitable factor by taking daring dramatic actions following the misfortune unleashed by the pandemic. In hindsight, it labored. But in addition in hindsight, the medication (fiscal spending and QE) was most likely an excessive amount of and lasted too lengthy.

I don’t envy the Fed for what it should do subsequent: The stronger the restoration, the upper the charges that comply with (I imagine that this could possibly be considerably greater than the markets anticipate) and the stronger the quantitative tightening (QT). If the Fed will get it good, we will have years of progress, and inflation will ultimately begin to recede. In any occasion, this course of will trigger plenty of consternation and really risky markets. The Fed shouldn’t fear about risky markets until they have an effect on the precise financial system. A robust financial system trumps market volatility.

That is on no account conventional Fed tightening — and there are not any fashions that may even remotely give us the solutions. I’ve all the time been vital of individuals’s extreme reliance on fashions — since they don’t seize main catalysts, comparable to tradition, character and technological advances. And in our present state of affairs, the Fed must take care of issues it has by no means handled earlier than (and are inconceivable to mannequin), together with provide chain points, sanctions, warfare and a reversal of QE within the face of unparalleled inflation. Clearly, the Fed all the time must be data-dependent, and that is true right now greater than ever earlier than. Nonetheless, the information will doubtless proceed to be inconsistent and risky — and arduous to learn. The Fed ought to try for consistency however not when it’s inconceivable to attain.

One factor the Fed ought to do, and appears to have executed, is to exempt themselves — give themselves final flexibility — from the sample of elevating charges by solely 25 foundation factors and doing so on an everyday schedule. And whereas they might announce how they intend to scale back the Fed steadiness sheet, they need to be free to alter this plan on a second’s discover in an effort to take care of precise occasions within the financial system and the markets. A Fed that reacts strongly to knowledge and occasions in actual time will in the end create extra confidence. In any case, charges might want to go up considerably. The Fed has a tough job to take action let’s all want them the very best.

The shift from QE to QT will trigger a large change within the circulation of funds out and in of Treasury bonds and, due to this fact, all securities. Our state of affairs right now is totally not like the financial coverage changes following the nice monetary disaster of 2008. When central banks have been shopping for bonds from 2008 to 2014, there was an incredible quantity of deleveraging in the remainder of the monetary world. Clearly, this deleveraging slowed progress, which in flip lowered the necessity for enterprise funding. As well as, banks have been required to purchase Treasuries to fulfill their new liquidity necessities. This motion lowered each lending and the cash provide within the years after the nice monetary disaster. Low progress additionally led to much less capital wanted, and QE added to the financial savings glut. I’m nonetheless satisfied that these are a number of the major causes our financial system skilled low progress and so-called “secular stagnation.”

In right now’s financial setting, nations’ central banks don’t want to extend their overseas alternate reserves as they did after the nice monetary disaster, and banks don’t want to purchase Treasuries to enhance their liquidity ratios. This time round, enterprise funding will doubtless be greater, each due to greater progress and since the capital required to fight local weather change is estimated to be greater than $4 trillion yearly. Lastly, governments can even must borrow extra money — not much less.

This large change within the circulation of funds triggered by Fed tightening is for certain to have market and financial results that will probably be studied for many years to come back. Our financial institution is ready for drastically greater charges and extra risky markets.


The warfare in Ukraine and the sanctions on Russia, at a minimal, will sluggish the worldwide financial system — and it may simply worsen.

The results of geopolitics on the financial system are more durable to foretell. For as a lot consideration because it will get, geopolitics over the previous 50 years have hardly ever disrupted the worldwide financial system within the quick run (assume Afghanistan; Iraq; Korea; Vietnam; conflicts between Pakistan and India, India and China, China and Vietnam, Russia and China; and not less than 10 different upheavals and wars within the Center East). The 1973 Group of the Petroleum Exporting International locations, or OPEC, oil embargo was an exception, when the sharp leap in oil costs pushed the world into a world recession. Nonetheless, it’s necessary to level out that whereas previous geopolitical occasions usually didn’t have short-term financial results, they incessantly had massive, longer-term penalties — comparable to America’s expertise with the Vietnam Warfare, which drove the nice inflation of the Seventies and Eighties and tore the physique politic aside.

As I write this letter, the warfare in Ukraine has been raging for properly over a month and is creating a major refugee disaster. We have no idea what its end result in the end will probably be, however the hostilities in Ukraine and the sanctions on Russia are already having a considerable financial influence. They’ve roiled international oil, commodity and agricultural markets. We anticipate the fallout from the warfare and ensuing sanctions to scale back Russia’s GDP by 12.5% by midyear (a decline worse than the ten% drop after the 1998 default). Our economists presently assume that the euro space, extremely depending on Russia for oil and gasoline, will see GDP progress of roughly 2% in 2022, as an alternative of the elevated 4.5% tempo we had anticipated simply six weeks in the past. In contrast, they anticipate the U.S. financial system to advance roughly 2.5% versus a beforehand estimated 3%. However I warning that these estimates are primarily based upon a reasonably static view of the warfare in Ukraine and the sanctions now in place.

Many extra sanctions could possibly be added — which may dramatically, and unpredictably, enhance their impact. Together with the unpredictability of warfare itself and the uncertainty surrounding international commodity provide chains, this makes for a doubtlessly explosive state of affairs. I converse later concerning the precarious nature of the worldwide power provide, however for now, merely, that provide is simple to disrupt. (We must also take into account that, as a share of worldwide GDP, oil is just about 40% of what it was in 1973 – however it’s nonetheless important and demanding.)


The confluence of those elements could also be unprecedented.

Every of those three elements talked about above is exclusive in its personal proper: The dramatic stimulus-fueled restoration from the COVID-19 pandemic, the doubtless want for quickly elevating charges and the required reversal of QE, and the warfare in Ukraine and the sanctions on Russia. They current utterly completely different circumstances than what we’ve skilled up to now – and their confluence might dramatically enhance the dangers forward.

Whereas it’s doable, and hopeful, that every one of those occasions can have peaceable resolutions, we should always put together for the potential damaging outcomes. Within the subsequent part, I talk about speedy actions we should always take to guard us from potential critical issues.


The warfare may have an effect on geopolitics for many years.

Russian aggression is having one other dramatic and necessary consequence: It’s coalescing the democratic, Western world — throughout Europe and the North Atlantic Treaty Group (NATO) nations to Australia, Japan and Korea. The USA and the West understand there is no such thing as a alternative for robust allies and robust militaries.

The warfare and prior commerce disputes with China additionally spotlight the vital significance of financial relationships and commerce, significantly commerce that includes something affecting nationwide safety. The end result of those two points will transcend Russia and certain will have an effect on geopolitics for many years, doubtlessly resulting in each a realignment of alliances and a restructuring of worldwide commerce. How the West comports itself, and whether or not the West can keep its unity, will doubtless decide the longer term international order and form America’s (and its allies’) necessary relationship with China, which I speak extra about later on this letter.


How are we managing our international financial institution in these tough markets and sophisticated instances?

Our hearts exit to all of these affected by the warfare — JPMorgan Chase and its workers have already donated over $5 million to the Ukrainian humanitarian disaster, with extra to come back.

JPMorgan Chase has additionally performed its half within the implementation of the Western world’s insurance policies and sanctions concerning Russia. After all, we’re following each the letter of the legislation and the spirit of all of the American and allied sanctions, working hand in hand with governments to implement complicated insurance policies and directives, after which some. Managing this has been an unlimited enterprise. It’s utterly completely different from navigating a monetary disaster or a extreme recession. This entails sanctioning people, together with their possession of property and corporations; decreasing exposures throughout a number of services; analyzing and stopping billions of {dollars} of funds as directed by governments; and plenty of different actions.

We aren’t frightened about our direct publicity to Russia, although we may nonetheless lose about $1 billion over time. However we’re actively monitoring the influence of ongoing sanctions and Russia’s response, involved as properly about their secondary and collateral results on so many firms and nations. Now we have been steadfast in our working rules to be ready for the unpredictable. Relaxation assured that our administration groups, tons of of us, globally, have been working across the clock to do the suitable factor.




The Extraordinary Want for Sturdy American Management

Even earlier than the warfare in Ukraine jeopardized the world order, we have been dealing with distinctive and massive international challenges — nuclear proliferation (that is nonetheless the most important danger to mankind, bar none, and made all of the extra stark by the warfare in Ukraine), threats to cybersecurity, terrorism, local weather change, pressures on free and truthful commerce, and huge inequities in society. Crucial to fixing these issues is powerful American management. American international management is the very best course for the world and for America — and our management must articulate to its residents why that is the case. The warfare in Ukraine reminds us that in a troubled world, nationwide safety all the time turns into the paramount concern. We must always by no means once more overlook that that is true even in peaceable instances – and we should always by no means once more be lulled right into a false sense of safety. Energy abhors a vacuum, and it needs to be more and more clear to all that with out robust American management, chaos doubtless will prevail.

The world doesn’t need an boastful America telling everybody what to do however, as an alternative, needs America working with allies, collaborating and compromising. Many of the world would applaud mature, respectful and civil management by America. We will arrange navy and financial frameworks that make the world secure and affluent for democracy and freedom solely if we work with our allies.

If Western allies throughout Europe and Asia understand there may be energy in robust partnership, it places the Western world in a greater place to deal with future challenges, together with these posed by China’s progress. That is relevant to areas the place we’ve widespread pursuits (e.g., anti-terrorism, nuclear proliferation, local weather change), in addition to to areas the place we might not (e.g., financial and political competitors).

It additionally is evident that commerce and provide chains, the place they have an effect on issues of nationwide safety, have to be restructured. You merely can not depend on nations with completely different strategic pursuits for vital items and companies. Such reorganization doesn’t have to be a catastrophe or decoupling. With considerate evaluation and execution, it needs to be rational and orderly. That is in everybody’s finest curiosity.


Whereas America has flaws, its important strengths endure.

Many really feel despondent concerning the “decline” of America. Our financial system has had anemic progress for many years. COVID-19 and George Floyd’s homicide forged a highlight on what we already knew — that our lower-income residents, usually minorities, undergo extra in our society, significantly throughout recessions and instances of turmoil. Persevering with revenue inequality might very properly be inflicting rising partisanship, as some folks imagine the American dream is fraying and that our system is unfair, leaving a lot of our residents behind.

In prior letters, I’ve detailed our poor administration of fundamental coverage in America and what the results have been from that dysfunction: ineffective training methods, hovering healthcare prices, extreme regulation and forms, the lack to plan and construct infrastructure effectively, inequitable taxes, a capricious and wasteful litigation system, irritating immigration insurance policies and reform, inefficient mortgage markets and housing coverage, {a partially} untrained and unprepared labor pressure, extreme scholar debt, and the dearth of correct federal authorities budgeting and spending, which result in enormous inefficiencies. Since I’ve coated these points at size up to now, I cannot elaborate on them right here. I do, nonetheless, need to level out (and I discover it disheartening) how readily we settle for the failure, usually with a chuckle, of our forms and insurance policies.

Our nation shouldn’t be excellent, however our fundamental rules — i.e., the rule of legislation, particular person liberties, freedom of speech and faith, and the idea of equal alternative — are nonetheless distinctive beliefs that many of the world needs but usually shouldn’t be in a position to obtain. These rules nonetheless make America the accomplice of alternative for a lot of nations and the vacation spot of alternative for a lot of people. Our American system gave us one of many world’s most affluent and modern economies. I don’t prefer it when anybody disparages this excellent nation due to our flaws. Although our sins could also be actual, they’re the sins of all nations. We will have a good time this nation for having given a lot to so many whereas acknowledging prior errors and fixing them. It’s stunning to me how many individuals denigrate not simply America however free enterprise and the important function of enterprise. If America may open its borders to all, I’ve little doubt that billions of individuals, if they may, would need to come right here, and few would depart.

America has confronted powerful instances earlier than — the Civil Warfare, World Warfare I, the U.S. inventory market crash of 1929 and the Nice Melancholy that adopted, World Warfare II and 9/11, amongst others. As just lately because the late Nineteen Sixties and Seventies, we struggled with the lack of the Vietnam Warfare, political and racial injustice, recessions and inflation. (Do you bear in mind America’s obsession and concern concerning the emergence of Japan as an financial energy within the Eighties?) In every case, nonetheless, America’s resiliency persevered and in the end strengthened our place on this planet. We hope this time is not any completely different, however we shouldn’t be complacent as we would not have a divine proper to success.


To keep up our competitiveness, our nation should regain its competence — and our rules, together with free enterprise, have to be nurtured.

America’s ethical, financial and navy would possibly all derive from our rules and are additionally predicated on the energy and competence of the American system. We should acknowledge that nurturing and sustaining our enormously affluent financial system supplies the inspiration of that system. Finally, that financial system is what pays for the very best navy the world has ever seen.

Over the previous 20 years, our financial system has grown, on common, at solely 2%. American ingenuity, work ethic, expertise and enterprise functionality have been in a position to overcome some — however not all — of our mismanagement. We must always not settle for mediocrity; we now not think about what needs to be: Over the previous decade, we should always have grown at 3.5%.

Freedom and its brother, free enterprise, correctly regulated are the reply — not unconstrained capitalism nor crony capitalism, the place enterprise makes use of authorities and rules to keep up its place or strengthen its hand. All curiosity teams, enterprise teams included, ought to applaud good public coverage and never resist it for self-serving causes.

Free enterprise celebrates, and is inseparable from, human freedom and creativity, which in the end are the sources of all human progress. The key sauce of free enterprise shouldn’t be solely the free motion of capital but in addition, extra importantly, the worth of information and free folks exercising their rights.

Nonetheless, many nations — inadvertently by a long time of following dangerous coverage or intentionally by proscribing freedoms — injury the complete advantage of free enterprise and sometimes discourage financial savings, innovation, and the free motion of individuals and labor. All of us imagine in nice social security nets that cut back poverty, present alternative for good jobs and function an engine for financial progress. However freedom slowly disappears when a rustic’s authorities controls an excessive amount of of its financial system, and folks in practically each nation, free or not, don’t like consistently being instructed what to do. It’s disingenuous when political leaders say that authorities “constructed the roads” after which use that assertion as an argument to suppress free enterprise. The roads have been constructed by the folks and for the folks so that every one may journey and prosper.

What we actually want are free enterprise, extra civic-minded firms and residents, and terribly competent authorities and insurance policies.


Authorities, with its distinctive powers, has an important function in managing the financial system — however it must be real looking about its limitations on what it might and can’t do.

Now we have fallen into the rut of false narratives, which distracts us from dealing with actuality. We don’t outline our issues correctly. In case you have the incorrect analysis of an issue, you’ll definitely have the incorrect resolution. Even when you have the suitable analysis, you continue to might arrive on the incorrect resolution — however your odds are definitely significantly better. Our insurance policies are sometimes incomprehensible and uncoordinated, and our coverage choices incessantly don’t have any forethought and no identification of desired outcomes.

We generally blame inflation on company income — for instance, the price of meat in america is excessive not due to the income earned by the meat packing business however due to excessive cattle and feed prices and disruptions in logistics. Equally, power prices are excessive not due to worth gouging however due to the dramatic decline in investments in power, which leads to lowered provide when demand goes up. Regulation has dramatically impeded our potential to construct good infrastructure in a well timed method — the price of constructing a freeway has greater than tripled in 20 years purely due to bills as a consequence of rules.

Our politics are dysfunctional, which has prevented a few of our greatest, brightest and most competent to need to work in authorities. Whereas we’ve loads of economists, teachers and lifelong politicians in authorities, who I do know are dedicated to doing their finest, we want extra brainpower, capabilities and expertise from leaders throughout all sectors of our society, together with enterprise. It will take extraordinary, broad-based management to unravel our issues.

There are some issues solely the federal authorities can do — amongst them, defend nationwide safety, function federal courts, act as a central financial institution, carry out sure analysis and improvement (R&D), and execute some nationwide infrastructure.

Whereas authorities can not create jobs exterior of presidency itself, it might optimize the situations beneath which jobs will be created. If it merely displays consistency and competence within the efficiency of its duties, authorities will maximize investments and jobs. Conversely, authorities can destroy jobs and capital funding by forms, crimson tape and fixed coverage adjustments. Authorities can not and will be unable to carry again expertise, however it might foster an setting that promotes fast retraining of those that are changed by technological developments.

Our issues are neither Democratic nor Republican — nor are the options. Sadly, nonetheless, partisan politics are stopping collaborative coverage from being designed and carried out, significantly on the federal degree. We might do higher if we listened to 1 one other.

Democrats ought to acknowledge Republicans’ reliable issues that cash despatched to Washington usually leads to massive wasteful packages, in the end providing little worth to native communities. Democrats may acknowledge that whereas we want good authorities, it isn’t the reply to every part. Democrats may additionally acknowledge {that a} wholesome concern of a big central authorities shouldn’t be irrational (like a leviathan).

Republicans must acknowledge that America can and may afford to supply a correct security internet for our aged, our sick and our poor, in addition to assist create an setting that generates extra alternatives and extra revenue for extra Individuals. Republicans may acknowledge that if the federal government can exhibit that it’s spending cash properly, we should always spend extra — assume infrastructure and training funding. And that will very properly imply greater taxes for the rich. Ought to that occur, the rich ought to take into account that if tax monies enhance our society and our financial system, then those self same people will probably be, in impact, among the many foremost beneficiaries.

Democrats and Republicans usually appear to be ships passing within the evening — with each events speaking at cross functions even when they might share the identical objectives. Compromise shouldn’t be incompatible with democracy — the truth is, compromise is a core precept of democracy. Enacting main insurance policies on a purely partisan foundation (assume healthcare and tax reform) nearly ensures a long time of preventing. It’s not unreasonable to say that main insurance policies needs to be bipartisan or under no circumstances.

We should keep in mind that the ideas of free enterprise, rugged individualism and entrepreneurship aren’t incompatible with significant security nets and the need to raise up our deprived residents. We will acknowledge the distinctive historical past of America and additionally acknowledge our flaws, which want redress.

We should confront the Russia problem with daring options.

America have to be prepared for the potential of an prolonged warfare in Ukraine with unpredictable outcomes. We must always put together for the worst and hope for the very best. We should take a look at this as a wake-up name. We have to pursue short-term and long-term methods with the purpose of not solely fixing the present disaster but in addition sustaining the long-term unity of the newly strengthened democratic alliances. We have to make this a everlasting, long-lasting stand for democratic beliefs and in opposition to all types of evil.

Our nation’s options have to be daring, courageous and dynamic — and so they should be bipartisan — as a result of we all know solely bipartisan options stand on agency floor. Bipartisanship may begin with the appointment of Republicans to the cupboard. We have to assume broadly as a result of no matter we do is not going to solely assist decide the destiny of the warfare in Ukraine however doubtless will decide the power of the Western democratic world to deal with vital future challenges. We additionally want to make sure that the Western coalition stays economically aggressive on the world stage. The higher America performs as a rustic in coping with Russia now, the simpler it will likely be for us to interact with the remainder of the world, together with China, going ahead.

Along with being massive, clear-eyed and real looking, our options ought to acknowledge that we’re basically, and sadly, reverting to some Chilly Warfare methods. Listed here are some actions we should always take instantly:

  • Exhibit management and dedication to a long-term navy technique by meaningfully rising our navy price range and troop deployment on NATO’s borders, as applicable. To each side, these steps make our resolve clear and mirror our recognition of the grave new geopolitical realities.
  • Direct billions of {dollars} in help to Ukraine, introduced now, to assist the nation presently and to assist rebuild sooner or later. We must also assist the Europeans with the big migration points they’re dealing with. The USA may take the lead in humanitarian efforts and ask all nations, together with China, to hitch us on this response.
  • Flip up sanctions — there are various extra that could possibly be imposed — in no matter method nationwide safety consultants suggest to maximise the suitable outcomes.
  • We want a “Marshall Plan” to make sure power safety for us and our European allies. Our European allies, who’re extremely depending on Russian power, require our assist. For such a plan to succeed, we have to safe correct power provides instantly for the subsequent few years, which will be executed whereas decreasing CO2 emissions.

    As we’re seeing — and know from previous expertise — oil and gasoline provide will be simply disrupted, both bodily or by extra sanctions, considerably impacting power costs. Nationwide safety calls for power safety for ourselves and for our allies abroad. Fortuitously, we don’t want to alter our long-term aims on local weather change and greenhouse gases, and we should always remind ourselves that utilizing gasoline to decrease coal consumption is an actionable approach to cut back CO2 emissions expeditiously. Whereas america is pretty power impartial, we have to enhance our power manufacturing and get extra gasoline (within the type of liquefied pure gasoline) to Europe instantly. Our work with all of our allies ought to embody urging them to each enhance their manufacturing and ship a few of it to Europe. To do that, we additionally want speedy approval for added oil leases and gasoline pipelines, in addition to permits for inexperienced power tasks; i.e., photo voltaic and wind. We can not accomplish our objectives with misguided and counterproductive insurance policies.


Sturdy, daring and complete short-term and long-term insurance policies, persistently and correctly executed, will maximize the energy and the sturdy unity of the democratic world. Not solely will this be superb for the Western world on the whole, however it’ll assist body our method with China.


A robust America needn’t concern a rising China.

An important relationship over the subsequent 100 years would be the one between America (and its allies) and China. The stronger the allied nations, the higher it’s for America. However for America to get this important relationship proper, we have to have a clear-eyed view of our strategic financial and nationwide safety pursuits.

America shouldn’t be working from a place of weak point; certainly, our strengths are extraordinary. Conversely, over the subsequent 40 years, China must grapple with some critical points: For all of its strengths, China nonetheless wants extra meals, water and power to assist its inhabitants; air pollution is rampant; corruption continues to be an issue; state-owned enterprises are sometimes inefficient; company and authorities debt ranges are rising quickly; monetary markets lack depth, transparency and sufficient rule of legislation; revenue inequality stays extremely prevalent; and its working age inhabitants has been declining since 2015. China will proceed to face strain from america and different Western governments over human rights, democracy and freedom in Hong Kong, and exercise within the South China Sea and Taiwan.

Asia is a really tangled continent, geopolitically talking. Lots of China’s neighbors (Afghanistan, India, Indonesia, Japan, Korea, Pakistan, the Philippines, Russia and Vietnam) are massive, sophisticated and never all the time pleasant to China — the truth is, China has had border skirmishes and wars with India, the Soviet Union and Vietnam since World Warfare II. These neighbors don’t all take a look at the rise of China as being utterly useful. By comparability, America is at peace with its North American neighbors and is protected by the Atlantic and Pacific oceans.

America and China have massive variations: ideological, democracy versus single-party rule, and market capitalism versus state-controlled capitalism. We even have widespread pursuits: halting nuclear proliferation, decreasing terrorism, stopping local weather change and selling peaceable relationships. All nations, together with China, need to raise up their folks. Finished proper, we will set up and keep a relationship with China that may permit each nations and the world to thrive.

As a result of we’re coping with a mixture of circumstances that we’ve by no means confronted earlier than — the rise of a rustic equal in dimension to us, unfair commerce and bilateral funding rights, and state-sponsored subsidies and competitors — we might want to reply in equally unprecedented methods.

We must always cease complaining about unfair practices and simply take applicable motion. Each nations can take unilateral actions as they see match within the financial area – and so they already do – and that’s okay.

To counter unfair competitors on China’s half (i.e., subsidies and state-sponsored monopolies), we might want to develop considerate insurance policies and methods that work. We additionally must develop “industrial insurance policies” that assist industries necessary to nationwide safety (for instance, semiconductors, 5G, uncommon earths and others) succeed. I imagine this could possibly be executed intelligently and never as “handouts” or subsidies that create extreme income. This can even require elevated authorities R&D targeted on actions that enterprise merely can not do alone — superior science, navy applied sciences, amongst others.

Though there will probably be international commerce restructuring, plenty of international commerce (and commerce with China) will stay even after commerce partnerships have been altered. Consider, China’s commerce with the West and america in 2021 totaled $3.6 trillion (exports and imports). In contrast, China’s complete commerce with Russia in 2021 totaled virtually $150 billion. Clearly, these financial relationships are vital to China and the West – China additionally has an enormous curiosity in making this work.

All of those insurance policies have to be executed along side our allies or they won’t be efficient – as a result of with out a united entrance, unfair financial and commerce practices will nonetheless be allowed to flourish. If it have been as much as me, I might rejoin the Trans-Pacific Partnership (TPP). We have to take a look at commerce as just one a part of strategic financial partnerships — and that’s precisely what TPP did. There’s a lot at stake, however there is no such thing as a cause why critical, complete, trustworthy negotiations can’t result in good outcomes.


There are compelling causes for international commerce restructuring.

There isn’t any query that provide chains have to be restructured for 3 completely different causes:

  • For any merchandise or supplies which are important for nationwide safety (assume uncommon earths, 5G and semiconductors), the U.S. provide chain should both be home or open solely to utterly pleasant allies. We can not and shouldn’t ever be reliant on processes that may and will probably be used in opposition to us, particularly after we are most weak.
  • For comparable nationwide safety causes, actions (together with funding actions) that assist create a nationwide safety danger — i.e., sharing vital expertise with potential adversaries — needs to be restricted.
  • Corporations will diversify their provide chains merely to be extra resilient.


This restructuring will doubtless happen over time and doesn’t have to be terribly disruptive. There will probably be winners and losers — a number of the foremost beneficiaries will probably be Brazil, Canada, Mexico and pleasant Southeast Asian nations.

Together with reconfiguring our provide chains, we should create new buying and selling methods with our allies. As talked about above, my desire could be to rejoin the TPP — it’s the finest geostrategic and commerce association doable with allied nations.


We will have a path ahead for U.S. coverage: Agree on what we would like, then execute.

We want extra actual leaders — individuals who know how one can get issues executed, who’re succesful and who can educate and clarify to all residents what we want and why. We want a renaissance of the American dream and American “can-do” exceptionalism.

Our leaders must agree on what we would like after which execute to get it executed. At a minimal, we should always all agree that we would like:

  • The world’s most affluent financial system, which might additionally imply having the world’s reserve foreign money. The energy and the significance of the U.S. greenback are predicated on the energy and openness of the U.S. financial system, the rule of legislation and the free motion of capital.
  • Laws and insurance policies that foster progress and attain said objectives however don’t cripple enterprise innovation and funding. Insurance policies have to be constant, dependable and consistently reviewed to scale back crimson tape and enhance effectivity.
  • A brand new strategic financial and aggressive framework, devised in partnership with our allies (significantly because it pertains to China), which incorporates commerce and industrial coverage, as beforehand mentioned. This does want rebranding. Commerce is just a part of an financial relationship (there are funding rights, property rights, training, immigration rights and so forth). We must always all the time negotiate strategic financial agreements remembering that whether or not you emerge with a proper settlement or not, you doubtless have created a coverage.
  • A “Marshall Plan,” as beforehand talked about, to make sure power safety for us and our European allies, requiring us to safe correct power provides instantly for the subsequent few years (which will be executed whereas decreasing CO2 emissions and combatting local weather change).
  • The strongest navy on this planet — frequently maintained, although used judiciously and along side our allies. The energy of the navy must be matched by the energy of our diplomatic, improvement and intelligence businesses.
  • A extra equitable labor market that maximizes employment and values all jobs, efficient and steady job coaching for employees of all ages, and practices that higher promote sharing the wealth — i.e., greater minimal wages, an elevated Earned Revenue Tax Credit score (EITC), broader healthcare protection and different associated insurance policies.
  • A robust America that respects all its residents, helps the poor and deprived, honors once more the dignity of labor, and demonstrates character and civility. And all of us need well-functioning, wholesome social security nets.


The warfare in Ukraine and the rising competitiveness of China — together with its rising navy and strategic alliances throughout the globe — dictate that we transfer ahead on our complete wants. If we don’t resolve our issues and restore efficient long-term management, it’s straightforward to ascertain darker days forward in each the financial and geopolitical realms. However with nice management, America, our allies and the remainder of the world will get pleasure from a brighter future.


Studying from different nations’ successes — and failures

It’s all the time instructive to look around the globe at insurance policies and nations that work — and insurance policies and nations that don’t work. For instance, yow will discover nations which have executed an incredible job offering security nets — with out damaging labor — and constructing infrastructure effectively with out crippling rules. Plenty of nations have succeeded in growing themselves, surprisingly usually with minimal pure sources: Eire, Israel, Singapore, South Korea and Sweden. Singapore has developed efficient healthcare packages. Germany and Switzerland have created spectacular work apprenticeship fashions, and Hong Kong has excelled at infrastructure. One other inspiring instance is Eire. After a long time of sectarian strife and terrorism, Eire is now a melting pot with a thriving financial system as a consequence of good authorities insurance policies.

Then there are the counterexamples, nations generally flush with pure sources — Argentina, Cuba and Venezuela. Not often is the profitable nation the socialist or autocratic one. And the entire damaging instances are both socialist governments or governments hypothetically run within the identify of the folks. The profitable nations, however, all are market-based economies of barely differing types with insurance policies that develop their financial system and share the nation’s wealth. Sweden is an effective instance of a rustic that many think about socialist, however it’s removed from it. By most measures, Sweden is definitely extra of a market-based financial system than america, and it has huge wealth and very robust social security nets.







The rising competitors to banks from one another, shadow banks, fintechs and huge expertise firms is intensifying and clearly contributing to the diminishing function of banks and public firms in america and the worldwide monetary system. Earlier than we give an replace on the structural shifts happening, it might be good to deal with the query: How did banks carry out through the latest COVID-19 disaster?


Banks carried out magnificently through the COVID-19 disaster.

Inside days of realizing COVID-19 was a pandemic that will nearly shut massive elements of the world’s economies, the U.S. authorities moved with unprecedented velocity. Fortuitously, most banks have been a part of the answer — not like through the Nice Recession when many banks weren’t. And thankfully, not like through the Nice Recession, the U.S. financial system was truly in good condition going into the COVID-19 recession.

Sure, in fact, it’s true that enormous authorities actions dramatically helped people, firms (together with banks) and the financial system total. However it’s also true that banks carried out magnificently through the COVID-19 disaster. They prolonged an enormous quantity of credit score, waived charges and postponed debt compensation, and have been on the forefront of delivering Paycheck Safety Program (PPP) loans to small companies. And so they did it the suitable method, defending authorities cash by making an attempt to make reliable loans to debtors in want. In contrast, nonbanks have been concerned in situations of illegitimate PPP loans and Financial Harm Catastrophe Mortgage help, in addition to stimulus cash fraud, usually at charges virtually 5 instances these of conventional banks. As for us:

  • JPMorgan Chase was the #1 PPP lender — over the lifetime of this system, we funded greater than 400,000 loans totaling over $40 billion.
  • Since March 13, 2020, we delayed funds due and refunded charges for greater than 3.5 million buyer accounts — refunding greater than $250 million for practically 2 million shopper deposit and lending accounts and providing delayed funds and forbearance on greater than 2 million mortgage, auto and bank card accounts, representing roughly $90 billion in loans.
  • In 2020, we raised capital and supplied credit score totaling $2.3 trillion for purchasers and companies of all sizes, serving to them meet payroll, keep away from layoffs and fund operations throughout that first yr of the pandemic disaster.
  • In 2020, we dedicated $250 million in international enterprise and philanthropic initiatives, with specific deal with the folks and communities most weak and hardest hit by the pandemic.
  • As well as, JPMorgan Chase launched a number of formidable flagship packages, together with our $30 billion dedication to assist shut the racial wealth hole and drive financial inclusion, which is described in additional element inside this letter.



Whereas the U.S. authorities’s actions have been a profit to the entire financial system, together with the banking business, banks have been greater than in a position to climate the horrible monetary storm whereas setting apart intensive reserves for potential future mortgage losses. Importantly, throughout this time, the Fed carried out two extra, severely adversarial Complete Capital Evaluation and Assessment stress checks, which projected financial institution outcomes beneath excessive unemployment, GDP loss, market disruption and a smaller authorities stimulus. The outcomes confirmed that banks may stand up to these excessive situations whereas persevering with to finance the financial system.

I even have little or no doubt that if the severely adversarial state of affairs performed out, JPMorgan Chase would carry out much better than the stress check projections. One supporting knowledge level: From March 5, 2020 to March 20, 2020, when the inventory market fell 24% and the bond index unfold gapped from 191 to 446 previous to main Fed intervention, our precise buying and selling income was greater than regular as we actively made markets for our shoppers. In contrast, the hypothetical stress check had us dropping an enormous amount of cash in market-making, primarily based on the way in which it’s calculated.

Whereas I perceive why regulators stress check this fashion — they’re basically making an attempt to make sure that banks survive the worst-case state of affairs — the methodology clearly doesn’t end in an correct forecast of how our firm would carry out beneath adversarial circumstances.

List of benefits provided by the firm to consumers and small businesses







The function of banks within the international monetary system is diminishing.

Banks have benefits and downsides. Among the benefits, together with economies of scale, profitability and model, might solely diminish slowly. Sadly, it additionally appears doubtless that a number of the disadvantages, comparable to uneven or pricey regulation, might not diminish in any respect. Different disadvantages, like legacy methods, will diminish over time.

Laws have penalties, each supposed and unintended — however many rules are crafted with little regard for his or her interaction with different insurance policies and their cumulative impact. In consequence, rules usually are disconnected from their doubtless outcomes. That is significantly true when making an attempt to find out what services will stay contained in the regulatory system versus these more likely to transfer exterior of it.

Remember that markets, not regulators, set capital necessities. If regulators set capital requirements which are too excessive for banks to carry loans, then the markets will drive these loans exterior of the banking system. There are additionally non-capital regulatory requirements that may pressure actions out of the regulatory system, comparable to extreme reporting and social necessities, amongst others.

Banks around the globe are already engaged in powerful competitors with one another. A fast evaluate of the chart above exhibits the outstanding dimension of nonbanks — from funds firms and fintechs to exchanges and Massive Tech — that compete with conventional banks, however exterior of the banking regulatory system, in offering sure monetary companies. And people don’t embody many others, comparable to Schwab, Constancy or Vanguard – which additionally present banking-type companies. The information additionally doesn’t present that final yr alone, $130 billion was invested in fintech, permitting them to hurry issues up — and at scale.

The tempo of change and the scale of the competitors are extraordinary, and exercise is accelerating. Walmart, for good cause (over 200 million clients go to their shops every week) can use new digital applied sciences to effectively carry banking-type companies to their clients. Apple, already a robust presence in banking-type companies with Apple Pay and the Apple Card, is actively extending companies into different banking-type merchandise, comparable to cost processing, credit score danger evaluation, person-to-person cost methods, service provider buying and buy-now-pay-later provides. The big tech firms, already 100% digital, have tons of of hundreds of thousands of shoppers, huge sources in knowledge and proprietary methods — all of which give them a rare aggressive benefit.

Correctly regulated banks are supposed to defend and improve the monetary system. They’re clear with regulators, and so they try mightily to guard the system from terrorism financing and tax evasion as they implement know your buyer (KYC) and anti-money laundering legal guidelines. They defend shoppers’ property and shoppers’ cash in motion. Additionally they assist clients — from defending their knowledge and minimizing fraud and cyber danger to offering monetary training — and should abide by social necessities, such because the Group Reinvestment Act, which requires banks to increase their companies into lower-income communities. Regulators want to determine what they actually need to obtain.

The chart above exhibits banks’ lowering function within the international financial system, however a couple of examples will put it in stark distinction.

  • Banks’ dimension and market cap (U.S. international systemically necessary financial institution [G-SIB] market cap is $1.5 trillion) have dramatically diminished relative to their nonbank rivals.
  • U.S. banks’ broker-dealer inventories have barely saved tempo with the big enhance in complete markets. Banks’ dramatic decline in market-making potential relative to the scale of the general public markets is an element within the periodic disruptions that happen within the public markets.
  • U.S. banks’ loans in an 11-year interval have solely grown 65% and now symbolize solely 8% of complete U.S. debt and fairness markets, down from 11% in 2010.
  • Conversely, U.S. banks’ liquid property are up greater than 300% to $8.6 trillion, most of which is required to fulfill liquidity necessities.
  • Banks’ share of mortgage originations has gone from 91% to 32%.
  • Banks’ share of the leveraged mortgage market has decreased during the last 20 years from 46% to 13%.
  • Neobanks, now with over 50 million accounts, bypass the Durbin Modification and so earn greater income per debit swipe — and so they don’t should abide by sure different regulatory or social necessities.
  • Different firms offering banking-type companies have tons of of hundreds of thousands of accounts that maintain shopper cash, course of funds, entry financial institution accounts and extensively use buyer knowledge.
  • A large and rising portion of fairness buying and selling has moved off clear exchanges to nontraditional buying and selling companies, inflicting a lack of entry to on-exchange liquidity for a lot of market members.



I can go on and on, however suffice it to say, we have to be ready for this development to proceed.

It appears unlikely to me that every one the banks, shadow banks and fintech firms will thrive as they try to take share from one another over the subsequent decade. I might anticipate to see many mergers amongst America’s 4,000+ banks — they want to do that, in some instances, to create extra economies of scale to have the ability to compete. Different firms will strive completely different methods, together with bank-fintech mergers or mergers simply between fintechs. You need to anticipate to see some winners and plenty of casualties — it’s simply not doable for everybody to carry out properly.



Probably extra necessary: The function of public firms within the international monetary system can be diminishing.


Along with banks’ shrinking international function, you’ll be able to see that the variety of public firms, which ought to have grown considerably over the previous decade, is remarkably lowered. As an alternative, U.S. public firms peaked in 1996 at 7,300 and now complete 4,800. Conversely, the variety of personal U.S. firms backed by personal fairness firms has grown from 1,600 to 10,100 — a exceptional enhance.

This migration is worthy of great research. The explanations are complicated and should embody public market elements, comparable to onerous reporting necessities, greater litigation bills, pricey rules, cookie-cutter board governance, much less compensation flexibility, heightened public scrutiny and the relentless strain of quarterly earnings.

It’s incumbent upon us to determine why so many firms and a lot capital are being moved out of clear public markets to much less clear personal markets — and whether or not that is within the nation’s long-term curiosity. We do must ask some questions: Do we would like public firms? Are we okay with increasingly of our capital markets being personal and, due to this fact, much less regulated? If I have been a shareholder of an organization, I might ask myself, do I actually assume that every one the foundations we impose on public firms truly make them higher? Lastly, we have to think about, is it factor that many traders gained’t have the chance to spend money on these firms if and when they’re personal?

There are good and dangerous the explanation why capital goes personal. For instance, personal firms can elevate cash extra simply now than up to now. Personal firms’ boards and administration groups can focus totally on the enterprise, and personal traders will be extra affected person with capital — they aren’t essentially frightened about short-term outcomes.

We have to research this public market diminishment thoughtfully and deeply — significantly since extra regulation is coming that may have an effect on this development. This can be a good time to assume by and create the outcomes we need — and never simply let a number of, usually well-meaning however uncoordinated authorized, regulatory and coverage choices take us the place we don’t need to go.


Extra regulation is coming — 10 years after the disaster, we’re nonetheless rolling out Basel IV — and we want extra considerate calibration of the foundations.

Basel IV appears more likely to enhance capital necessities for banks on credit score, loans, buying and selling books and operational danger, a few of which is pointless. These dangers are actual, however they have to be correctly and rationally calculated. For instance, operational danger is actual; it exists in all enterprises and is often dealt with within the unusual course of enterprise. If all massive firms needed to maintain capital for operational danger, following the usual set for banks, trillions of {dollars} of extra capital could be completely held in idle funds. The query for all capital necessities is: How a lot is sufficient?

If executed correctly, financial institution rules could possibly be recalibrated, including nearly no extra danger, to make it simpler for banks to make loans, intermediate markets and finance the financial system. Relating to political debate about banking rules, there may be little fact to the notion that rules have been “loosened” – not less than within the context of huge banks.

We must always remember the big unintended penalties that would consequence from any coverage (e.g., rules) not being correctly thought by. Coverage with no forethought — designed with out a complete plan or instigated out of anger or false morality — can have dangerous outcomes. Just a few examples will suffice:

  • The U.S. authorities administration of scholar lending has been a catastrophe. Within the 11 years since they’ve taken over scholar lending, they’ve prolonged a further $1 trillion in loans. Previous to the pandemic, $300 billion of those loans have been both severely delinquent or not being paid. We aren’t in opposition to scholar lending, however the disciplined use of capital needs to be utilized right here, too. I typically agree with the place that for loans that ought to not have been made and the place the borrower reaped no profit, there needs to be some forgiveness. Nonetheless, many loans have been correctly made and introduced the profit that was anticipated. Authorities ought to reform its insurance policies to cease making loans that ought to by no means be made.
  • Fannie Mae and Freddie Mac contributed to the disaster within the mortgage market. Within the mad rush to enhance dwelling possession ranges, these government-guaranteed establishments performed a significant half (together with many others engaged within the mortgage markets), over a long time, in loosening mortgage underwriting requirements. Finally, this proved catastrophic, main to almost $1 trillion in mortgage losses. Conversely, since then, mortgage rules’ extreme tightening shouldn’t be solely pushing the mortgage market into the unregulated monetary system but in addition making mortgages much less accessible to largely lower-income Individuals.


How ought to we deal with our G-SIB conundrum?

The U.S. implementation of G-SIB necessities doesn’t allow a degree enjoying area — plain and easy. Not solely have American guidelines made the G-SIB designation worse for American banks (if JPMorgan Chase may function on the identical foundation as massive European banks, our Tier 1 capital necessities could be lowered by $30 billion), however the guidelines haven’t been adjusted because the framework permits. G-SIB capital necessities have been presupposed to be modified to account for the rising dimension of the worldwide financial system and the smaller dimension of banks in relation to that international financial system — this merely has not occurred. So JPMorgan Chase will probably be required to carry 2% extra widespread fairness Tier 1 capital as a consequence.

Now we have all the time stated that the G-SIB calculation is nonsensical as it isn’t risk-based in any respect. It drives absurd habits, comparable to favoring varied acquisitions which may be imprudent however don’t require G-SIB capital or encouraging very dangerous loans that require no extra G-SIB capital than risk-free loans. Being a big, diversified firm, with robust income and revenue streams, is often a supply of energy in troubled instances, however this can be a damaging in regard to G-SIB capital. Although American banks are performing properly right now, these additional capital necessities we’re required to fulfill can have long-term damaging penalties.

This additional capital is a drag on our return on fairness (ROE), successfully decreasing no matter our ROE could be by roughly 15% (hypothetically, our 17% goal needs to be 20%). In consequence, the dilemma is that this: Will we limit our progress and our potential to serve our shoppers in an effort to cut back our capital necessities over time and search a better ROE or will we make investments our capital to develop with our shoppers (and in lots of instances stay aggressive) and settle for a completely decrease ROE?


Banks must acknowledge the dramatically altering aggressive panorama.

If banks need to compete on this new and more and more aggressive world, they should acknowledge the reality of this new panorama and reply appropriately — generally it really is change or die.

As they undertake new applied sciences like cloud, synthetic intelligence (AI) and digital platforms, banks might have a bonus in having the ability to leverage their massive buyer base to supply more and more complete services, usually at no extra price. Whereas many fintech firms specialise in one space, you already see many fintechs transferring on this route — making an attempt to deepen and broaden their shopper relationships.

The chart beneath exhibits the intensive variety of companies we already provide to our clients — a lot of which, relying on the product and buyer relationship, are at no extra price.


Chart showing services for consumers and small businesses


Now we have all the time invested for the longer term, and that’s much more true right now than it has been up to now. However the precept is identical — consistently make investments and innovate to make sure our future prosperity.




Investments and Acquisitions: Figuring out the Finest Use of Capital and Assessing ROIs

Now we have all the time stated {that a} regular and rising dividend together with reinvestment in a single’s personal enterprise — organically and inorganically, offensively and defensively – are the best and finest use of capital. Reinvestment would ordinarily come earlier than inventory buybacks until the inventory is awfully low-cost. And we typically solely purchase again inventory after we don’t see a transparent want for the capital over the subsequent few years.

In actual fact, inventory buybacks at our firm will probably be decrease within the subsequent yr or so as a result of we might must retain extra capital as a consequence of required capital will increase (which, by any actual measure, we undoubtedly don’t want) and since we’ve made some good acquisitions that we imagine will improve the way forward for our firm.

We attempt to be rigorous in how we make investments for the longer term. Above all, we attempt to unlock our capital and capabilities with the next in thoughts: 1) we cut back complexity in our firm and simplify as a lot as doable; 2) we periodically assess and get rid of hobbies (which have a hazard all their very own); and three) we assess investments and actions that appeared good after we began them however aren’t understanding as deliberate. Nonetheless, some issues merely are complicated (like airplanes, prescription drugs, expertise and banking) however worthwhile — and in reality essential to compete. We don’t let concern of that complexity cease us from investing.

Earlier than we discuss various kinds of investments, we should always acknowledge that our most necessary asset — way more necessary than capital — is the standard of our folks.

We introduced earlier within the yr that our complete bills would enhance by roughly $6 billion. Of that quantity, $2.5 billion is usually associated to folks, reflecting each inflationary and aggressive labor market dynamics. (Now we have been fairly adamant that we’ll do what is critical to retain expertise – we can’t be among the finest firms with out having a number of the finest expertise.) Included on this $2.5 billion are sure bills (assume journey and leisure) as economies have reopened.

On this part of the letter, I’m going to deal with investments — describing how and why we do them and providing a couple of examples. Now we have all the time believed that investing constantly and rigorously for the longer term is vital for our ongoing success. This yr, we introduced that the bills associated to investments would enhance from $11.5 billion to $15 billion. I’m going to attempt to describe the “incremental investments” of $3.5 billion, although I can’t evaluate all of them (and for aggressive causes I wouldn’t). However we hope a couple of examples gives you consolation in our decision-making course of.


Some investments generate predictable returns.

Some investments have a reasonably predictable time to money circulation constructive and and predictable return on funding (ROI) nonetheless you measure it. These investments embody branches and bankers, around the globe, throughout all our companies. Additionally they embody sure advertising bills, which have a identified and quantifiable return. This class mixed will add $1 billion to our bills in 2022.

Our shareholders must also know that after we make investments like these, we incorporate through-the-cycle considering — we don’t solely take a look at present margins and charge-offs but in addition consider what we anticipate them to be over the subsequent a number of years.



Acquisitions ought to pay for themselves — and every one has its personal logic.

Acquisitions typically lengthen merchandise, add companies or herald expertise that we might have needed to in any other case construct ourselves. These acquisitions are described in additional element within the letters from the opposite CEOs included on this report. During the last 18 months, we spent practically $5 billion on acquisitions, which can enhance “incremental funding” bills by roughly $700 million in 2022.

We anticipate most of those acquisitions to provide constructive returns and robust earnings inside a couple of years, absolutely justifying their price. In a couple of instances, these acquisitions earn cash — plus, we imagine, assist stave off erosion in different elements of our enterprise. Importantly, on an ongoing foundation, a lot of our acquisitions will probably be comparatively capital-lite, which means they’ll develop over time however require little extra regulatory capital.


We need to construct upon our international footprint.

Whereas we don’t disclose our funding right here, our worldwide shopper growth is an funding of a special nature. We imagine the digital world offers us a chance to construct a shopper financial institution exterior america that, over time, can grow to be very aggressive — an choice that doesn’t exist within the bodily world. We begin with a number of benefits that we imagine will get stronger over time: a world model, with long-term capital and endurance; a world Funds enterprise; a world Personal Financial institution; international Asset Administration merchandise; and best-in-class buying and selling platforms. Now we have the expertise and know-how to ship these by cutting-edge expertise, permitting us to harness the complete vary of those capabilities from all our companies. We will apply what we’ve discovered in our main U.S. franchise and vice versa. We could also be incorrect on this one, however I like our hand.


We make intensive investments in expertise for a broad vary of causes, from enhancing operations and safety to enhancing our services.

Investments in expertise and operations, in addition to associated services, are essentially the most sophisticated class. A few of these investments merely have to be executed to maintain the corporate’s well being. Investments on this bucket assist preserve the ship in tip-top form and contact a broad vary of office wants: regulatory necessities and crucial enhancements for cybersecurity, in addition to operational resiliency and safety. Some issues we’ve executed with no direct income profit, fairly merely to keep up our aggressive place. I name these desk stakes — consider digital account opening for shopper and small enterprise accounts. Different investments are particular enhancements to services, usually with identifiable advantages. Lastly, there are particular investments on this class which are extra like forward-looking R&D, as described within the examples that comply with.

Mixed, this class will add somewhat bit lower than $2 billion to our “incremental funding” bills in 2022 (the precise expense traces could possibly be for folks, {hardware} or software program, or bought companies). Nearly the entire $2 billion in bills are analyzed and studied for his or her ROI or different vital advantages.

Typically folks check with a few of these bills as modernizing or adopting new applied sciences. I favor to not discuss it that method as a result of, successfully, we’ve been modernizing my complete life. Additionally, the time period implies that when you get to a contemporary platform, these bills ought to dramatically lower — which is never the case. In actual fact, after we analyze these bills, we incorporate not solely the price to construct the services or products but in addition the price to keep up it going ahead. Moreover, after getting constructed the brand new platforms, they often create a complete new set of funding alternatives to be analyzed. Expertise all the time drives change, however now the waves of technological innovation are available in sooner and sooner. The science behind them can be more and more complicated as expertise (together with AI) is “embedded” in additional merchandise. In right now’s world, I can not overemphasize the significance of implementing new expertise.

We hope a couple of examples will clarify how these bills are managed. To take action, we’re going to discuss two various kinds of investments which are clearly associated: infrastructure and software program.

First, on the trail to new and trendy infrastructure, cloud-based methods, whether or not personal or public, will in the end be sooner, cheaper, extra versatile and in addition AI-enabled — all extraordinarily invaluable options. Just a few different extra particulars:

  • Now we have spent $2.2 billion constructing new, cloud-based knowledge facilities. Our complete expensed price of information facilities is greater than in earlier years — largely due to the duplicative expense that’s generated as we run each the brand new and older facilities.
  • Hundreds of purposes (and their associated databases) are being replatformed and refactored to run within the personal and public cloud setting. To provide you an instance: We migrated our Card mainframe to the brand new knowledge heart and are already seeing roughly 20% sooner response instances for our main customer-facing purposes. This one software will use only one.5% of the capability of our new knowledge facilities: Of our greater than 5,000 purposes that may nonetheless be in use in two years, 40% can have been replatformed.
  • These “infrastructure” prices embody issues like modernizing developer instruments and embedding operational resiliency and cybersecurity controls.


Second, a lot of our “incremental funding” expertise spend includes constructing software program for brand spanking new services. There are tons of of those, massive and small. Once more, a couple of examples will describe the method:

  • In sure product areas, we made massive, multi-year investments to enhance a selected enterprise. In Funds, we’ve been investing constantly over the previous 5 years to modernize our companies and compete with each banks and fintech firms. Since 2016, we’ve invested greater than $1.5 billion in expertise, operations, gross sales, merchandise and controls and generated an incremental $4 billion in natural income yearly, taking our total market share in Treasury Companies from 4.5% in 2016 to 7.2% in 2021. In 2021, we continued this robust momentum, initiating a big majority of all real-time funds in america in our cloud-native, sooner funds platform, which is now stay in 45 nations. We’re additionally successful greater than 80% of all international bids that embody digital account options accessible on our liquidity platform.

    We now course of funds for eight of the highest 10 international Massive Tech firms (up from three out of 10 firms 5 years in the past), constantly successful enterprise from robust rivals. We proceed to carry to the market and commercialize modern merchandise, comparable to embedded banking; AI-driven fraud controls and forecasting; and account validation and programmable funds on JPM Coin. Decentralized finance and blockchain are actual, new applied sciences that may be deployed in each private and non-private style, permissioned or not. JPMorgan Chase is on the forefront of this innovation. We use a blockchain community known as Liink to allow banks to share complicated data, and we additionally use a blockchain to maneuver tokenized U.S. greenback deposits with JPM Coin. We imagine there are various makes use of the place a blockchain can exchange or enhance contracts, knowledge possession and different enhancements; for some functions, nonetheless, it’s presently too costly or too sluggish to be deployed.

    We anticipate to attain double-digit market share over time in Funds, being the world’s most modern financial institution, in addition to the most secure and most resilient.

  • We constructed the aptitude for our Self-Directed Investing, which now has 800,000 new funding accounts totaling practically $60 billion on the platform. We’re excited to boost and roll out this product to all of our clients, as we predict it’s a vital providing in right now’s new aggressive setting.
  • More and more, we’re investing extra money (assume tons of of hundreds of thousands of {dollars}) annually on AI for very particular functions. For instance, we use AI to generate insights on current and potential shoppers from public data, comparable to KYC protocols, regulatory filings, social media, information, public web sites and paperwork. As soon as standardized, the data is then utilized to a number of makes use of, comparable to producing leads, figuring out firms and traders, onboarding shoppers, and detecting environmental, social and governance (ESG) themes. In all of those instances, there are identifiable returns as a consequence of decrease prospecting prices or improved companies. One particular instance will suffice:

    • Within the shopper world, we’ve spent about $100 million since 2017 on AI, machine studying and different expertise initiatives to enhance fraud danger methods. We all know this funding is working. Our annual fraud losses have come down 14% since 2017 regardless of volumes being up virtually 50%, and we estimate that our expertise investments alone have contributed about $100 million in annual financial savings.

  • Now we have developed over 1,000 software programming interfaces that give varied varieties of clients entry to our methods in a managed method, permitting them to automate our banking methods into their enterprise methods.
  • There are many forward-looking and thrilling R&D investments, too. For instance, we’re engaged on a number of research-based tasks which have the potential for vital future influence. These contain multi-agent simulation, artificial knowledge and encryption strategies — components which have the capability to unlock new methods of buying and selling, managing danger and assessing productiveness. Multi-agent simulations, for instance, allow the exploration of methods that may deal with difficult regimes as variations of novel historic knowledge. Artificial knowledge, well-calibrated by actual knowledge, permits efficient testing, experimentation and improvement with out triggering privateness and regulatory restrictions related to utilizing actual knowledge. Encryption strategies give us higher instruments to guard our shoppers’ privateness and in addition equip us with the mandatory methods to deal with the metaverse. This class additionally consists of funding within the vital space of quantum computing.


Whereas we measure every of those incremental investments (and there are tons of of them) as diligently as we will, you’ll be able to assess the general outcomes by asking the next questions: Will we keep the competitiveness of our merchandise? Are we gaining market share? Do we’ve actual wins in opposition to some powerful rivals, each within the banking world and in fintech firms? What are our buyer satisfaction scores? Have we constructed fantastic new merchandise, like Credit score Journey and Self-Directed Investing, that will not generate income however clearly have improved our enterprise? How are our merchandise serving our shoppers’ must entry our methods how and when they need?

Lastly, additionally think about: Is the financial institution sustaining its total aggressive place, rising at tempo and nonetheless sustaining a really wholesome return on tangible widespread fairness whereas investing for the longer term? We hope you will note some nice new and thrilling services this yr.





Updates on Particular Points Dealing with Our Firm

We’re vigilant in opposition to cyber assaults.

As we’ve highlighted in earlier letters, we can not overemphasize how cyber threats pose excessive hazards to our firm and our nation. This has grow to be much more evident as the price of ransomware has elevated dramatically (cyber assaults might have brought on the dying of some folks as hospitals couldn’t present the mandatory procedures). And it’s evident to everybody, with the warfare in Ukraine, that grave injury could possibly be inflicted if cyber is extensively used as a software of warfare. We imagine that our firm has a number of the finest cyber protections in place, in addition to the very best expertise to observe and guard our data. We additionally work extensively, and more and more, with the suitable businesses of the U.S. authorities to assist defend the monetary system and the nation.


Our dedication to sustainability is knowledgeable by power realities.

Regardless of the expansion in well-intended local weather pledges from governments and corporations, the world is properly in need of assembly its internet zero emissions objectives by 2050. However the warfare in Ukraine and sanctions on Russia are driving gasoline costs up and threatening Europe’s entry to pure gasoline. Useful resource shortage results in greater power prices and reduces reliability, hindering nationwide safety and hurting essentially the most weak. Disruptions to the worldwide power system are once more highlighting our pressing international want to supply power sources securely, reliably and affordably and, on the identical time, deal with long-term clear power options and methods to scale back our carbon footprint.

These aims are not mutually unique. We will — and should — do each.

To start, we have to discover a higher method ahead that may carry various stakeholders collectively in pursuit of the North Star: one other “Marshall Plan” (as described earlier). Listed here are 4 methods to jump-start that course of:

  • First, we should promote power safety. Constraining the circulation of capital wanted to provide and transfer fuels, particularly because the warfare in Ukraine rages on, is a nasty concept. The world nonetheless wants oil and pure gasoline right now, however not all hydrocarbons are equal on the subject of their carbon footprint. We needs to be directing extra capital towards much less carbon-intensive gas sources and investing in improvements, comparable to carbon seize and sequestration, as we glance to transition to inexperienced applied sciences delivered at scale for society. Our firm is firmly dedicated to serving to finance these sorts of investments and expediting the usage of lower-carbon fuels. For this reason we established the Heart for Carbon Transition, centralizing shopper entry to financing, advisory and analysis options to assist them make the low-carbon transition and thrive.
  • Second, we have to scale funding massively in clear applied sciences. Because the Worldwide Power Company has emphasised, “enormous leaps in clear power innovation” are core to reaching internet zero. It is because the world will depend on conventional fuels till alternate options, like clear hydrogen, are absolutely accessible. To speed up progress, JPMorgan Chase has a purpose of financing and facilitating $1 trillion by 2030 to advance local weather motion — supporting initiatives comparable to renewable power, inexperienced buildings and automobile electrification.
  • Third, governments ought to play a management function by enacting considerate insurance policies that spur long-term and large-scale capital deployment for low-carbon options that create jobs and profit the worldwide financial system. Listed here are some examples: a carbon tax that directs some proceeds to assist offset power prices for underserved communities; measures to advertise funding in expertise R&D; and reductions in allowing timelines for power infrastructure, comparable to wind and photo voltaic farms and liquefied pure gasoline.
  • Lastly, let’s set significant objectives and establish a couple of tangible, cost-effective options to scale back emissions right now. This could embody minimizing fugitive methane emissions and nearly eliminating wasteful flaring of pure gasoline. Instantly actionable alternatives like these would possibly require extra financing, not much less, to scale back the short-term price of local weather change and put together firms to thrive in a lower-carbon future. In 2021, JPMorgan Chase set 2030 targets to scale back the carbon depth of our financing portfolio, beginning with oil and gasoline, electrical energy and automotive manufacturing — with extra to come back.


There isn’t any silver bullet to fulfill the world’s power and local weather objectives. However we will begin by prioritizing emissions reductions, growing significant short- and long-term objectives and crafting modern coverage options. The curve towards internet zero can nonetheless be bent earlier than it’s too late.


Progress continues in our range, fairness and inclusion efforts.

We’ve made super progress over the previous few years to create a extra inclusive firm and promote fairness in all our communities. The work shouldn’t be straightforward, however we’re as dedicated as ever to doing what is true and simply. I’ll highlight a couple of areas of focus and describe the progress we’ve made.

A Extra Numerous Workforce
We proceed to imagine that if our crew is extra various, we’ll generate higher concepts and higher outcomes, get pleasure from a stronger company tradition and outperform our rivals. This seems to be proving true.

Regardless of the pandemic and expertise retention challenges, we proceed to spice up our illustration amongst ladies and folks of colour. Listed here are some examples:

  • Extra ladies have been promoted to the place of managing director in 2021 than ever earlier than; equally, a file variety of ladies have been promoted to government director. By yr’s finish, primarily based on workers who self-identified, ladies represented 49% of the agency’s complete workforce. General Hispanic illustration was 20%, Asian illustration grew to 17% and Black illustration elevated to 14%.
  • We expanded our international Range, Fairness and Inclusion division to incorporate three new Facilities of Excellence: Advancing Hispanics and Latinos, The Workplace of Asian and Pacific Islander Affairs, and The Workplace of LGBT+ Affairs.
  • To advertise better participation in our workforce by Black professionals, we expanded our Traditionally Black Schools and Universities partnerships to 17 faculties throughout america to spice up recruitment connections, increase scholar profession pathways, and assist long-term scholar improvement and monetary well being.
  • We proceed to seek out methods to raise our LGBT+ workers, professionals with disabilities and navy veteran colleagues. We simply celebrated the tenth anniversary of the Veteran Jobs Mission, which is a coalition JPMorgan Chase co-founded in 2011 because the 100,000 Jobs Mission. It started as 11 firms dedicated to hiring navy expertise throughout the personal sector, and now membership exceeds 300 firms with greater than 830,000 veterans employed.


Lastly, I need to be clear: We oppose any and all types of discrimination in opposition to anybody. Being the financial institution of alternative for all is our purpose ― and we would like everybody to really feel welcome right here and have the ability to contribute to our core mission to the very best of their potential.

An Replace on Our $30 Billion Racial Fairness Dedication
The homicide of George Floyd in 2020 highlighted what we already knew: Extra was required by all of us to deal with systemic racism. In October 2020, lower than 5 months after his tragic homicide, our firm made a five-year, $30 billion dedication to assist shut the racial wealth hole. We dedicated to making an attempt new issues and placing the complete pressure of our agency behind options that would actually make an influence.

By the tip of 2021, we had deployed or dedicated greater than $18 billion towards our purpose. That dedication focuses on rising homeownership, increasing inexpensive rental housing and rising small companies, spending extra with Black, Hispanic and Latino suppliers, enhancing monetary well being and entry to banking, investing in minority depository establishments (MDI) and group improvement monetary establishments (CDFI), and investing in communities by philanthropic capital. Listed here are some particulars on our progress to this point:

  • Provider Range: In 2021, we spent a further $155 million with 140 Black, Hispanic and Latino suppliers ― greater than doubling the first-year spend purpose and rising the variety of new Black, Hispanic and Latino suppliers by greater than 40% over 2020.
  • Inexpensive Rental Housing: We accredited funding of roughly $13 billion in loans to create and protect greater than 100,000 inexpensive housing and rental items throughout america.
  • Homeownership: We established a Group and Inexpensive House Lending enterprise, hiring over 150 Group House Lending Advisors and increasing the Chase Homebuyer Grant to $5,000 to assist cowl clients’ closing prices and down funds for houses bought in 6,700 minority neighborhoods nationwide.
  • Small Enterprise: We employed 25 various senior enterprise consultants to supply free one-on-one teaching for minority enterprise homeowners in 14 U.S. cities and to mentor greater than 1,000 small companies.
  • MDIs: We invested greater than $100 million in fairness in 16 various monetary establishments that serve practically 90 communities in 19 states and the District of Columbia.
  • CDFIs: We supplied greater than $350 million in financing to CDFIs to assist communities that lack entry to conventional financing.
  • Entry to Banking: We helped greater than 200,000 clients open low-cost checking accounts with no overdraft charges; opened 10 Group Heart branches (the sidebar that follows consists of extra particulars about this initiative), usually in areas with bigger Black, Hispanic and Latino populations; and employed over 100 Group Managers in underserved communities to construct relationships with group leaders, nonprofits and small companies.


Our dedication to racial fairness shouldn’t be merely a five-year effort. We’d not all the time get it proper, however we’re dedicated to advancing racial fairness and sharing our progress on the journey.


Group constructing by group banking

Individuals have misplaced belief within the potential of huge establishments just like the federal authorities, nationwide media and large firms — even massive banks — to know or care about their wants. This view is properly earned, significantly amongst communities of colour and low-income households. Merely put, our nation has executed a nasty job of searching for and creating alternative for everybody. We have to think about extra thoughtfully the distinctive wants of communities throughout america. Corporations of all sizes want to indicate up, pay attention, and make the suitable investments and choices to earn a neighborhood’s belief. And it must be executed on the bottom and locally itself to be genuine and sustainable. Influence is best when it’s native.

An area financial institution department, particularly in a low-income neighborhood, will be profitable solely when it matches the group’s wants. That’s the reason during the last a number of years we’ve shifted our method to how we provide entry to monetary well being training, in addition to low-cost services, to assist construct wealth, particularly in Black, Hispanic and Latino communities. We’re delivering this method by our Group Heart branches, distinctive areas within the coronary heart of city communities. Starting with Harlem in New York Metropolis and Ventura Village in Minneapolis, we’ve opened 10 extra Group Heart branches in neighborhoods like Stony Island within the South Shore of Chicago, Crenshaw in Los Angeles, and Wards 7 and eight in Washington, D.C. Ten of those branches have been opened since we introduced our $30 billion dedication to racial fairness in October 2020. These branches have extra space to host grassroots group occasions, small enterprise mentoring classes and monetary well being seminars. The bulk have been constructed with minority contractors, and we rent native artists to make these places complement their neighborhoods. With branches increasing to Atlanta, Baltimore, Miami, Philadelphia and Tulsa, we anticipate to have 17 Group Heart branches serving clients in underserved communities by the tip of 2022.

The Group Supervisor, a brand new function inside the financial institution, primarily features as a neighborhood ambassador to construct and nurture relationships with group leaders, nonprofit companions and small companies. Now we have now employed over 100 Group Managers in underserved communities and intend to continue to grow that quantity. Our Group Managers have hosted greater than 1,300 monetary well being occasions with over 36,000 folks in attendance and have participated in 600+ group service occasions. We wish individuals who stay and work in these communities to really feel welcome and included after they go to our branches. We ask them to come back as they’re and produce the household or their canine. They’re additionally more likely to know the workers within the department, as we rent domestically — individuals who stay locally and care about serving their neighbors.

I’ve attended many grand openings of our Group Heart branches in individual. The power is contagious. We’ve hosted mayors, group companions, college students and small enterprise clients who’ve shared their sense of delight and optimism about what these branches imply for his or her group. Our Group Managers are all the time entrance and heart at these occasions, connecting folks to 1 one other and forging new relationships.

We all know that to be sustainable, this effort have to be measured by outcomes. Our firm is intently monitoring the variety of accounts opened, the variety of mortgages funded, the tempo and scale of recent small enterprise loans prolonged, and a number of different metrics to make sure that we’re reaching outcomes and listening to suggestions so we will have even better influence. In October 2021, we printed an in depth report on our racial fairness initiatives, together with our Group Heart branches and Group Managers, which we intend to proceed to supply, letting others study from our expertise.

We’re additionally taking a neighborhood method to our group investments and advocating for native coverage options. Our enterprise is just as robust as our communities, so we elevated our investments in locations like Mattapan in Boston and Oak Cliff in Dallas to assist native minority small companies entry the capital and assist they should develop. We’ve expanded our homebuyer grant program, which supplies $5,000 to cowl closing prices and down funds when clients purchase houses in 6,700 minority neighborhoods nationwide. We’re additionally taking a look at different credit score scores and different methods to extend homeownership in underserved communities and construct generational wealth and stability.

We name this going from “group banking” to “group constructing,” and it is a vital evolution in serving communities the place it’s lengthy overdue. Whereas it’s early, our method has the promise to create actual native influence.


Morgan Well being helps us lead in healthcare transformation.

JPMorgan Chase spends $39 billion on compensation and advantages for our 270,000+ workers. Of that quantity, about $1.5 billion is directed to medical prices for our workers and their households — roughly 460,000 folks. Our workers additionally spend roughly $500 million on their very own medical care. Medical care prices could also be our most necessary profit prices as a result of they’ve a vital influence on the well being and well-being of our workers and their households. As our workers stay our most precious asset, enhancing the standard and supply of healthcare companies is a excessive precedence.

Managing the complexities of healthcare is staggering, whether or not you might be a person or an organization — from dealing with precise well being points (masking the spectrum of a nasty again to diabetes to most cancers) and finding appropriate major or specialist care to deciphering incomprehensible insurance policy and pricing, resolving extreme shock payments and different points. Whereas the U.S. healthcare system is outstanding in some ways, it additionally has many flaws that have to be addressed. Healthcare prices, that are already the best on this planet, proceed to rise (common premiums for household protection have elevated 22% since 2016) for each employers and workers — with no proof that outcomes are enhancing (e.g., solely 46.5% of adults with personal insurance coverage have their blood strain managed, and that quantity has declined within the final 10 years).

For this reason, in 2021, we launched Morgan Well being, a brand new enterprise unit. With Morgan Well being, we’ve a chance to ship and scale new healthcare fashions that enhance the standard, fairness and affordability of employer-sponsored healthcare. We’re targeted on connecting healthcare to improved well being outcomes for our workers. JPMorgan Chase has roughly 20 proficient folks on our Human Assets Advantages crew serving to workers and their households entry the absolute best medical care. In hindsight, it’s stunning how few folks we had devoted to this vitally necessary difficulty. With Morgan Well being, we’re including roughly 30 extra people who will assist our Advantages crew assault this drawback from many alternative angles.

Wanting ahead, Morgan Well being is investing $250 million to speed up the event and supply of accountable care (managing a affected person’s complete care from prevention to outcomes), finishing its first $50 million funding in Vera Complete Well being — and its subsequent funding in Castlight — with plans to deploy these companies to our workers in Columbus, Ohio, this yr. Morgan Well being simply accomplished one other funding in healthcare analytics firm Embold Well being, which can assist facilitate how customers entry the highest-quality care accessible. We’re additionally working towards offering equal entry to equal healthcare, no matter race, revenue or different private traits for our workers and within the communities we serve. Addressing inequities in healthcare is key to Morgan Well being’s technique, and our partnership with Kaiser Permanente in California is transferring ahead rapidly on its collaborative effort targeted on the gathering and reporting of well being fairness efficiency metrics.


We proceed to assist data-driven policymaking by the JPMorgan Chase CoverageHeart and Institute.

Final yr, I wrote that one lesson of management is putting in good decision-making processes. An important a part of that’s good knowledge as a result of the challenges we face are complicated and interconnected. Too usually, determination makers use “information” to justify a pre-existing viewpoint or don’t precisely symbolize actuality. Good knowledge that’s granular and well timed and, when doable, leverages massive knowledge sources have to be on the coronary heart of all coverage processes to make sure measurable and equitable outcomes.

Six years in the past, we created the JPMorgan Chase Institute to ship distinctive knowledge and insights to assist remedy a few of our most urgent financial challenges. This data provides a novel lens into the monetary habits of hundreds of thousands of small companies and households, leveraging anonymized and aggregated buyer knowledge that represents half of U.S. households. The Institute’s knowledge and analyses have helped policymakers higher perceive the influence of choices — starting from scholar mortgage reduction and focused investments in underserved Chicago and Detroit neighborhoods to small enterprise assist and insights about how households handle revenue volatility and use their tax refunds. Importantly, the Institute has additionally helped form a few of our personal merchandise and worker advantages, together with how we incentivize clients to avoid wasting extra money and cut back medical health insurance deductibles for our lower-paid workers.

The Institute’s work has additionally helped inform our coverage advocacy efforts that assist inclusive progress. Two years in the past, we launched the JPMorgan Chase CoverageHeart to drive this work. Grounded in knowledge, we’re growing and advocating for coverage aimed toward decreasing structural limitations to financial mobility and broadening alternative for hundreds of thousands of households who stay on the monetary margins and have been most impacted by COVID-19. For instance, as Congress was debating expanded unemployment advantages, our analysis confirmed how these advantages had boosted spending and stimulated financial exercise throughout COVID-19. Extra analysis has supplied perception into family balances, slicing throughout revenue ranges and offering an necessary barometer on how households are faring as authorities assist expires.

This work shouldn’t be straightforward, however we imagine it’s crucial that policymaking embody personal and public sector partnership. We proceed to want higher knowledge to know what is going on in the true financial system so we may also help form insurance policies that make a major and constructive influence on those that need assistance essentially the most.


We be a part of different firms in evolving our imaginative and prescient of the office.

In the present day, in lots of locations COVID-19 has moved from pandemic to endemic standing, though there may be nonetheless struggling in some elements of the world. And we’re cognizant that the chance of recent variants is actual and that in the event that they happen, we might want to take applicable motion.

As an organization, whereas we frequently put together for a number of enterprise resiliency situations (e.g., knowledge heart failures, closures of cities, main storms, even widespread illness), we by no means absolutely ready for a pandemic that entailed a large-scale shutdown of the worldwide financial system. Though a few of our workers, significantly within the branches, continued to work on our premises every single day, we rapidly arrange the expertise — starting from name facilities and operations to buying and selling and funding banking — that enabled a lot of our workers to work at home. We discovered that we may perform nearly with Zoom and Cisco and keep productiveness, not less than within the quick run.

Though the pandemic modified the way in which we work in some ways, for essentially the most half it solely accelerated ongoing traits. Whereas it’s clear that working from dwelling will grow to be extra everlasting in American enterprise, such preparations additionally must work for each the corporate and its shoppers. I imagine our agency’s on-site versus distant work will kind out one thing like this:

  • Usually talking, many workers (roughly 50%) will essentially work at a location full time. That would come with practically all workers in our retail financial institution branches, in addition to jobs in examine processing, vaults, gross sales and buying and selling, vital operations features and services, facilities, safety, medical and plenty of others.
  • Some workers (roughly 40%) will work beneath a hybrid mannequin (e.g., some days on-site and different days at dwelling). Elevated flexibility and hybrid working preparations will range by job sort. We do hope to supply these kinds of preparations the place they’re applicable and for individuals who need them.
  • A small share of workers, presumably 10%, may go full time from dwelling in very particular roles.


In all conditions, these choices rely upon what is perfect for our firm and our shoppers, and we’ll extensively monitor and analyze outcomes to make sure that is the case. As we reopen, and we largely are, we’ll, in fact, comply with authorities tips.

Distant work will change how we handle our actual property. We’ll rapidly transfer to a extra “open seating” association through which digital instruments will assist handle seating preparations (folks can have common neighborhoods the place they’ll congregate), in addition to wanted facilities, comparable to convention room area. In consequence, for each 100 workers, we may have seats for about 60 to 75 on common – with an applicable enhance in convention room, personal workplace and amenity area to make it an incredible work setting.

The digital world additionally presents some critical weaknesses. For instance:

  • Performing jobs remotely is extra profitable when folks know each other and have already got a big physique of current work to do. It doesn’t work as properly when folks don’t know one another.
  • Most professionals study their job by an apprenticeship mannequin, which is sort of inconceivable to copy within the Zoom world. For the reason that onset of COVID-19, JPMorgan Chase has employed over 80,000 new folks into the corporate — and we’re ensuring they’re correctly skilled on all points of our enterprise, from their particular function to the importance of conduct and tradition. However that is more durable to do over Zoom. Over time, this downside may dramatically undermine the character and tradition you need to promote in your organization.
  • A heavy reliance on Zoom conferences truly slows down determination making as a result of there may be much less speedy follow-up.
  • Distant work eliminates a lot spontaneous studying and creativity since you don’t run into folks on the espresso machine, speak with shoppers in unplanned situations or journey to fulfill with clients and workers for suggestions in your services.
  • Lastly, the damaging results of the weaknesses outlined above are cumulative — they weren’t as apparent earlier within the pandemic — and so they worsen over time.


We’re transferring full steam forward with constructing our new headquarters in New York Metropolis. We’ll, in fact, consolidate much more workers into this constructing, which can home between 12,000 and 14,000 folks. We’re extraordinarily excited concerning the constructing’s public areas, state-of-the-art expertise, and well being and wellness facilities, amongst many different options. It’s in the very best location in one of many world’s best cities.

Two remaining factors. Of our complete overhead of $71 billion, $39 billion represents our folks prices. Over time, utilizing plenty of knowledge, surveys and different metrics, we imagine we will achieve efficiencies whereas nonetheless preserving our folks blissful, wholesome and motivated, at an more and more decrease price.

And at last, our leaders should lead. They should stroll the flooring, they need to see shoppers, they have to be seen, they should educate and educate, and so they want to have the ability to conduct impromptu conferences. They can’t lead from behind a desk or in entrance of a display screen.





Administration Lesson: The Advantage of Goal and the Great Worth of Work

Nice administration and management are vital to any massive group’s long-term success, whether or not it’s a firm or a rustic. Sturdy administration is disciplined and rigorous. Info, evaluation, element … information, evaluation, element … repeat. You may by no means do sufficient, and it doesn’t finish. However creating an distinctive administration crew is an artwork, not a science.

Within the part on Investments, I described what we think about our most necessary funding: our folks, who in accounting phrases aren’t even thought-about an asset. However all of us perceive the worth of constructing an incredible crew.

In the remainder of this part, I discuss some administration classes — I all the time get pleasure from sharing what I’ve discovered over time by watching others and thru my very own successes and failures.


Good your Picasso — have one thing to try for and inspire you.

It appears to me that persons are happier and extra motivated after they have a ardour, an ethical function, one thing they’re dedicated to — when they’re portray their very own Picasso, striving for one thing. Some folks discover it in faith, the navy, educating, science, athletics, parenthood, entrepreneurship or just being their finest at their craft. No matter it’s, all this stuff mixed — when executed properly — create a beautiful society. And most of the people I do know get an unlimited sense of satisfaction from the exploration and studying that happen on the journey.

Personally and professionally, I’m motivated by the need to depart the world a greater place — if I do my job properly, this firm can accomplish that a lot for people, shareholders, communities, nations and humanity. I’m motivated once I see our clients and workers in motion, realizing there may be elevated alternative for every of them after we do higher as an organization. I’m motivated once I go to our annual Nationwide Achievers Convention, which acknowledges a few of our most profitable bankers and managers within the branches. Typically they’ve tears of their eyes as they settle for this recognition — many have by no means been acknowledged earlier than — and it’s arduous to explain how this deepens my very own sense of duty.


Acknowledge the super worth of labor.

Work, all work, has worth. It was a stupendous factor through the onset of COVID-19 after we celebrated our important employees (in New York Metropolis, it was unbelievable to listen to the sound of 1 million New Yorkers shouting thanks out their home windows each night at 7:00), together with nurses, firefighters, emergency medical service workers, sanitation employees and cops (though just lately that spirit appears to have waned). They have been all the time important employees, and so they appreciated our recognition.

Alongside the identical traces, some in society diminish “starter” jobs, comparable to cashiers, workplace employees, financial institution tellers, quick meals cooks and others. These “starter” jobs carry dignity, present safety for a lot of households and create a stable work ethic. Typically, they end in higher social outcomes by way of reductions in drug use and crime, much like outcomes we’ve seen from summer time youth employment. For a lot of, these jobs are the primary rung on the profession ladder, main to larger and greater jobs. For instance, greater than 95% of Domino’s franchise homeowners began as supply drivers or pizza makers. At JPMorgan Chase, about one-third of our department managers began as tellers or private bankers.

I’ve expressed remorse for a few years on this letter that we, as a society, haven’t discovered a approach to higher put together our younger folks for jobs, whether or not by standard education or apprenticeships and skills-based coaching, which is extra necessary right now than ever earlier than. Providing higher coaching and getting extra revenue to lower-paid employees would vastly profit the financial system, the people concerned and social outcomes — and would assist rectify revenue inequality. We should do a greater job enhancing the outcomes of an training; i.e., that it results in well-paying jobs. I additionally imagine that we should always instantly enhance the minimal wage and the EITC to each entice extra folks into the workforce and to get extra revenue into the arms of the decrease paid.


Nurture the extraordinary worth of belief.

Belief is earned, given and acquired. To maximise human creativity and freedoms — that are the best items of capitalism — belief is important. We should make it secure to argue, disagree and problem one another whereas persevering with to dig deeper in areas the place we’re not doing in addition to we’d like. It have to be okay to fail or make errors. Belief is the pressure multiplier that will get the very best out of everybody. You don’t earn belief when you finger-point, don’t admit to your personal errors or don’t share the credit score.


Fight the enemy inside.

Whereas belief is the pressure multiplier, a office can not devolve into extreme, feel-good collaboration and forms. I’ve seen work environments through which everyone seems to be so good to one another and so collaborative that it slowly creates crippling forms as everybody’s opinion is sought out — and everybody has a veto.

The opposite illness that arises from inside is a office utterly run by company headquarters: It is rather straightforward to be vital of individuals within the area for his or her failures if you don’t stroll within the trenches with them.

Fairly often, the enemy inside fights change, resists making daring choices and balks at investments which are arduous, comparable to rising the salesforce. When the enemy inside takes over, power and creativity wither rapidly … though it could take a long time for the corporate to die.


Drive excessive efficiency, the suitable method.

So how do you drive excessive efficiency whereas making a secure office that values relationships constructed on belief and respect? The perfect leaders deal with all folks correctly and respectfully, from clerks to CEOs. Everybody wants to assist each other at an organization as a result of everybody’s collective function is to serve shoppers. When robust leaders think about selling folks, they choose those that are revered by their colleagues and ask themselves, “Would I need to work for him? Would I would like my child to report back to her?”

We should try for steady enchancment, set excessive requirements and emphasize the negatives after we observe them however all the time bear in mind to make life enjoyable. After I journey around the globe and see our folks and our firm in motion, I like it. And it’s essential to make it enjoyable — not solely as a result of it has a constructive impact on retention, perspective and the general tradition of the corporate but in addition as a result of it results in sharing and truth-telling.

I’ve loved the present “Ted Lasso.” He tries to get the very best out of all people, and he shows nice gratitude. Whereas I may get somewhat higher at displaying extra gratitude on a day-to-day foundation with my administration crew (I did give them biscuits in little pink packing containers this yr), they do understand how a lot I belief, respect, admire and admire them.

Three extra issues: You don’t create a successful crew by pandering to people. It’s essential to take care of battle instantly, immediately and forthrightly — issues don’t age properly. When folks can not do their job, they need to not have that job. We must always both work with them to seek out one other function the place they’ll thrive or ask them to depart. Simply do it respectfully to everybody concerned — don’t embarrass individuals who have been working for the corporate.

Carry power and drive — not simply every single day — however to each assembly and interplay.

Lastly, sharing credit score, recognizing the contributions of others, and never casting blame or finger-pointing all are vital to incomes belief.


Retaining expertise is necessary and so is life exterior of labor.

Retaining your finest expertise is important. Along with being handled with huge respect, what folks need most is a difficult job with significant work.

All firms have turnover in workers, and all turnover shouldn’t be essentially dangerous. Folks search out new challenges, might discover exterior development alternatives or may desire a change in way of life. Typically good folks go away as a result of they’re getting a greater alternative or elevated compensation at one other firm. You shouldn’t be indignant when somebody receives a better compensation provide from one other firm. Nobody likes to really feel they’re being taken benefit of — everybody needs to go dwelling every day considering they’re handled pretty and equitably. And everybody has their very own wants by way of household, revenue, work-life steadiness and different elements.

However turnover will be dangerous, too. It’s dangerous when inefficiency or forms or ineffective managers drive out good expertise. It’s nonetheless true that most individuals go away their job as a result of they don’t like their boss.

We additionally acknowledge and ask our workers to deal with their thoughts, physique, spirit, soul, family and friends. Whereas we do what we will to assist them, we acknowledge that these are a very powerful issues of their life, and we attempt to consistently remind them to offer the wanted time and a spotlight to what they cherish most.





In Closing

I want to specific my deep gratitude and appreciation for the 270,000+ workers, and their households, of JPMorgan Chase. From this letter, I hope shareholders and all readers achieve an appreciation for the super character and capabilities of our folks and the way they’ve helped communities around the globe. They’ve confronted these instances of adversity with grace and fortitude. I hope you might be as happy with them as I’m.

Lastly, we sincerely hope that every one the residents and nations of the world see an finish to this horrible pandemic, see an finish to the warfare in Ukraine, and see a renaissance of a world on the trail to peace and democracy.




Jamie Dimon, Chairman & CEO, JPMorgan Chase & Co. signature

Jamie Dimon

Chairman and Chief Government Officer
April 4, 2022














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