1 00:00:00,440 --> 00:00:03,360 Speaker 1: It's going to get worse before it gets better. That's 2 00:00:03,400 --> 00:00:07,480 Speaker 1: according to JP Morgan Chase CEO Jamie Diamond, but he's 3 00:00:07,480 --> 00:00:10,560 Speaker 1: not talking about the economy. Instead, Diamond is warning of 4 00:00:10,760 --> 00:00:14,200 Speaker 1: overregulation in the banking industry in the wake of several 5 00:00:14,240 --> 00:00:17,520 Speaker 1: regional bank failures. It's one of the topics Diamond covered 6 00:00:17,520 --> 00:00:20,520 Speaker 1: when he joined Bloomberg's Francine Laqua and Paris for a 7 00:00:20,560 --> 00:00:23,920 Speaker 1: wide ranging discussion. They touched on everything from regional banks 8 00:00:23,920 --> 00:00:27,200 Speaker 1: to China and the debt ceiling. Let's go to that 9 00:00:27,240 --> 00:00:28,760 Speaker 1: conversation right now. 10 00:00:29,080 --> 00:00:32,200 Speaker 2: Debt ceiling or banking turmoil? What are you most worried about? 11 00:00:32,200 --> 00:00:36,599 Speaker 3: You'd be here. Well, I think the debt sh thing 12 00:00:36,640 --> 00:00:39,680 Speaker 3: is potentially catastrophe. Yeah, so that's a whole different issue. 13 00:00:39,680 --> 00:00:42,440 Speaker 3: Hopefully won't happen. You know, the banking crisis, I still 14 00:00:42,440 --> 00:00:45,080 Speaker 3: believe will kind of sort its way through and it's 15 00:00:45,120 --> 00:00:48,519 Speaker 3: not anything like eight or nine. Only a couple of 16 00:00:48,520 --> 00:00:50,600 Speaker 3: people off size with all these various things which you 17 00:00:50,680 --> 00:00:53,360 Speaker 3: knew about. So hopefully you know it's getting near the 18 00:00:53,400 --> 00:00:53,920 Speaker 3: tail end of that. 19 00:00:54,240 --> 00:00:56,120 Speaker 2: But if you're Janet Yellen right now, what would you 20 00:00:56,160 --> 00:00:56,720 Speaker 2: do differently? 21 00:00:57,720 --> 00:00:59,840 Speaker 3: I don't know. I think we need to finish the bank. 22 00:01:00,720 --> 00:01:03,320 Speaker 3: I think we've been we've had uncertain policy on mergers. 23 00:01:03,320 --> 00:01:05,839 Speaker 3: This first Arizon deal. I think we have to assume 24 00:01:05,840 --> 00:01:07,800 Speaker 3: they'll be a little bit more so, you know, whatever 25 00:01:07,840 --> 00:01:10,720 Speaker 3: the FD I see, the OCC the Federal Reserve, you know, 26 00:01:10,760 --> 00:01:14,319 Speaker 3: whatever they need to do to uh make it better, 27 00:01:14,319 --> 00:01:17,360 Speaker 3: they should do. Be thoughtful, be very forward looking. You 28 00:01:17,560 --> 00:01:20,040 Speaker 3: not be surprised constantly because some of these things have 29 00:01:20,120 --> 00:01:22,440 Speaker 3: been known about for quite a while. And so we've 30 00:01:22,480 --> 00:01:29,920 Speaker 3: handled three SBB signature first Republic and so Yes, but 31 00:01:29,959 --> 00:01:32,080 Speaker 3: I think it's very important. The regional banks who I've 32 00:01:32,120 --> 00:01:34,280 Speaker 3: been speaking to like every day for the last week, 33 00:01:34,400 --> 00:01:37,040 Speaker 3: they're quite strong. You know, they're quite worried because of 34 00:01:37,080 --> 00:01:39,959 Speaker 3: the run and deposits all that, but the financial results 35 00:01:40,000 --> 00:01:42,839 Speaker 3: are good. The financial results are gonna be good, Okay 36 00:01:42,880 --> 00:01:45,440 Speaker 3: next quarter. You know, they're earning money. They've got a 37 00:01:45,520 --> 00:01:49,760 Speaker 3: very good clientele, very diversified. Uh uh, and they're they're 38 00:01:49,840 --> 00:01:50,320 Speaker 3: quite strong. 39 00:01:50,640 --> 00:01:52,880 Speaker 2: Jemmy for like a comprehensive solution. So if you're asking 40 00:01:52,920 --> 00:01:54,880 Speaker 2: Jennet Young to get the job done, what does that 41 00:01:54,920 --> 00:01:55,720 Speaker 2: look like that solution? 42 00:01:55,960 --> 00:01:59,920 Speaker 3: Asking for solution? Why not just be prepared for problem. 43 00:02:00,440 --> 00:02:02,120 Speaker 3: There's no we don't need a copy of solution. 44 00:02:02,920 --> 00:02:06,120 Speaker 2: What do we need right now? Do we regulators to 45 00:02:06,200 --> 00:02:07,920 Speaker 2: look at short sellers of banks? 46 00:02:08,320 --> 00:02:10,880 Speaker 3: Yes, you know, like look, my folks would tell me 47 00:02:10,880 --> 00:02:13,440 Speaker 3: that that's not the problem the short selling ban. If 48 00:02:13,480 --> 00:02:16,239 Speaker 3: you actually analyze stocks and short sales, it doesn't seem 49 00:02:16,280 --> 00:02:18,400 Speaker 3: to that big a deal. I think they may partially 50 00:02:18,440 --> 00:02:22,000 Speaker 3: be wrong, because, as you know, some people are unscrupulous 51 00:02:22,000 --> 00:02:24,400 Speaker 3: and they use other means to go short. I think 52 00:02:24,400 --> 00:02:27,400 Speaker 3: that if you look at the detail, the SEC has 53 00:02:27,440 --> 00:02:31,000 Speaker 3: the enforcement capability to look at what people are doing 54 00:02:31,040 --> 00:02:35,840 Speaker 3: by name in options, derivatives, short sales, and they should 55 00:02:35,840 --> 00:02:38,160 Speaker 3: go if someone's doing anything wrong, people are in collusion, 56 00:02:38,480 --> 00:02:41,160 Speaker 3: or people going short and then making a tweet about 57 00:02:41,160 --> 00:02:43,880 Speaker 3: a bank, they should go after them and vigorously, and 58 00:02:43,880 --> 00:02:46,000 Speaker 3: they should be punished to the full extental law allows it. 59 00:02:46,080 --> 00:02:48,360 Speaker 3: So I think it's possible is taking place. We have 60 00:02:48,400 --> 00:02:50,400 Speaker 3: no evidence of it, but you know, my experience in 61 00:02:50,440 --> 00:02:52,680 Speaker 3: life has been don't assume too much. 62 00:02:52,880 --> 00:02:54,399 Speaker 2: Do you think that they're looking into it? 63 00:02:54,760 --> 00:02:56,280 Speaker 3: I hope so. I don't know. 64 00:02:57,240 --> 00:02:59,280 Speaker 2: When you look at some of the position of JP 65 00:02:59,360 --> 00:03:01,200 Speaker 2: mor Agan, of course you didn't really buy any long 66 00:03:01,280 --> 00:03:03,960 Speaker 2: dated bonds, and at the time, a lot of people said, look, 67 00:03:03,960 --> 00:03:07,600 Speaker 2: stop boarding cash. Do you think regulators and investors had 68 00:03:07,680 --> 00:03:10,519 Speaker 2: pushed some of these banks to take unwarranted risk? 69 00:03:11,320 --> 00:03:14,519 Speaker 3: Yes, I do, but let's be clear the people to blame, 70 00:03:14,639 --> 00:03:17,120 Speaker 3: or the bank CEOs and the bank boards and things 71 00:03:17,200 --> 00:03:19,799 Speaker 3: like that. Having said that, I think there would be 72 00:03:19,880 --> 00:03:23,840 Speaker 3: a humility on the part of regulators that the Federal 73 00:03:23,880 --> 00:03:27,720 Speaker 3: Reserve itself never forecast insurratees going off. Not one Fed 74 00:03:27,760 --> 00:03:30,640 Speaker 3: governor forecast it. And whether you forecast it or not, 75 00:03:30,720 --> 00:03:33,320 Speaker 3: you should be stressed testing people for it. Their stress 76 00:03:33,360 --> 00:03:36,880 Speaker 3: tests always had low rates. We always knew about uninsured deposits. 77 00:03:37,120 --> 00:03:40,280 Speaker 3: And there were huge incentives that banks to put securities 78 00:03:40,320 --> 00:03:45,160 Speaker 3: in health and maturity, lower capital requirements, huge incentives own treasuries, 79 00:03:45,320 --> 00:03:48,600 Speaker 3: lower capital acquirements, and they counted for liquidity. And I'm 80 00:03:48,640 --> 00:03:50,840 Speaker 3: hoping all that guests looked at and they should look 81 00:03:50,840 --> 00:03:52,320 Speaker 3: at and say, oh, okay, we're a little bit part 82 00:03:52,360 --> 00:03:54,960 Speaker 3: of the problem, as opposed to just pointing fingers. 83 00:03:55,160 --> 00:03:57,200 Speaker 2: So this is what not a regulation problem, it's a 84 00:03:57,240 --> 00:03:58,400 Speaker 2: supervision problem. 85 00:03:58,760 --> 00:04:02,240 Speaker 3: Yeah, it's a little bit of both. They become very related. 86 00:04:02,440 --> 00:04:06,480 Speaker 3: I mean, supervisors, look at are you doing the right 87 00:04:06,520 --> 00:04:09,200 Speaker 3: thing by regulations? And so, and like even the stress tests. 88 00:04:09,280 --> 00:04:11,400 Speaker 3: I've always thought that you know, when you have one 89 00:04:11,440 --> 00:04:14,800 Speaker 3: stress test and you have a company completely focused on 90 00:04:14,800 --> 00:04:17,040 Speaker 3: that for three months, you know, does it all people 91 00:04:17,080 --> 00:04:19,280 Speaker 3: have a false sense of security that all these other 92 00:04:19,320 --> 00:04:21,640 Speaker 3: things aren't going to happen. And all these other things 93 00:04:21,640 --> 00:04:23,800 Speaker 3: in history always happen, and so, you know, I think 94 00:04:23,800 --> 00:04:25,280 Speaker 3: it was a little bit of a mistake. Have one 95 00:04:25,279 --> 00:04:27,960 Speaker 3: stress test. I'm not asking to do many at this 96 00:04:28,120 --> 00:04:30,360 Speaker 3: level of detail, but you know, our stress test is 97 00:04:30,400 --> 00:04:32,800 Speaker 3: two hundred thousand pages long. Do you think that last 98 00:04:32,839 --> 00:04:35,320 Speaker 3: one hundred thousand pages added value? And my view is 99 00:04:35,320 --> 00:04:35,680 Speaker 3: it did not. 100 00:04:36,640 --> 00:04:38,480 Speaker 2: Do you think? But things will change because of this? 101 00:04:38,560 --> 00:04:39,400 Speaker 2: Is this like a catalyst? 102 00:04:39,440 --> 00:04:41,760 Speaker 3: We always gonna get worse for banks? I think that 103 00:04:41,960 --> 00:04:45,760 Speaker 3: people they're just more regulations and more rules and more requirements. 104 00:04:45,960 --> 00:04:48,960 Speaker 3: I hope they do it very thoughtfully, because you know, 105 00:04:48,960 --> 00:04:51,400 Speaker 3: if you really love the community banks, the regional banks, 106 00:04:51,440 --> 00:04:54,080 Speaker 3: we're the biggest banks of those folks. But you know, 107 00:04:54,080 --> 00:04:57,520 Speaker 3: if you overdo certain rules, requirements, regulations. You know, some 108 00:04:57,560 --> 00:04:59,880 Speaker 3: of these community banks tell me to have more compl 109 00:05:00,000 --> 00:05:02,479 Speaker 3: cions people, the loan officers, you know, and so at 110 00:05:02,520 --> 00:05:04,599 Speaker 3: one point you make it harder for them to new business. 111 00:05:04,880 --> 00:05:07,320 Speaker 3: There are already hundreds of rules in place, and in 112 00:05:07,320 --> 00:05:09,279 Speaker 3: a lot of ways, it's to mix the rules. If 113 00:05:09,279 --> 00:05:11,200 Speaker 3: you're gonna change the liquidity and maybe not capital. If 114 00:05:11,200 --> 00:05:13,280 Speaker 3: you can change capital and maybe not liquidity. If you're 115 00:05:13,279 --> 00:05:15,200 Speaker 3: gonna add t LAC, then maybe you should do something 116 00:05:15,240 --> 00:05:18,039 Speaker 3: with deposit insurance. They should. They should sit down and 117 00:05:18,040 --> 00:05:21,280 Speaker 3: have a very thoughtful conversation about what those things are 118 00:05:21,400 --> 00:05:23,320 Speaker 3: and what we want the outcome to be. If you 119 00:05:23,320 --> 00:05:25,320 Speaker 3: look at the present outcome, a lot of things are 120 00:05:25,400 --> 00:05:27,800 Speaker 3: leaving banks and they should you know, I'm not and 121 00:05:28,160 --> 00:05:29,520 Speaker 3: if that's what they want, so be it. But that 122 00:05:29,560 --> 00:05:31,800 Speaker 3: should be done with the forethought. That should not be 123 00:05:31,880 --> 00:05:34,479 Speaker 3: done because you just putting rules and regulations in place 124 00:05:34,600 --> 00:05:37,560 Speaker 3: and you don't know the consequences. The mortgage business, for example, 125 00:05:37,600 --> 00:05:40,000 Speaker 3: is you know, largely not largely eighty percent out of 126 00:05:40,000 --> 00:05:42,280 Speaker 3: banks today, and just be careful about what you what 127 00:05:42,320 --> 00:05:42,800 Speaker 3: you wish for. 128 00:05:43,279 --> 00:05:46,120 Speaker 2: So you bought First Republic, you've had I imagine how 129 00:05:46,200 --> 00:05:47,960 Speaker 2: a good look at what's inside it? What did you 130 00:05:47,960 --> 00:05:48,640 Speaker 2: find out? 131 00:05:49,160 --> 00:05:50,840 Speaker 3: Yeah, no, we had to go look before we bought it. 132 00:05:51,160 --> 00:05:52,359 Speaker 2: Okay, that's reassuring. 133 00:05:52,400 --> 00:05:54,600 Speaker 3: But anything that you sign up eight hundred people working 134 00:05:54,600 --> 00:05:57,080 Speaker 3: around the clock for a long time to look at 135 00:05:57,120 --> 00:05:59,960 Speaker 3: something like that, and in reality, look, they did something 136 00:06:00,200 --> 00:06:02,720 Speaker 3: really well. Like if you touch their customers, I've getten 137 00:06:02,760 --> 00:06:06,640 Speaker 3: calls and emails and great great culture, great customers and 138 00:06:06,680 --> 00:06:09,880 Speaker 3: things like that. Their credit is kind of pristine. You know, 139 00:06:10,080 --> 00:06:12,040 Speaker 3: that's good. So of course we marked all the market 140 00:06:12,080 --> 00:06:13,920 Speaker 3: and roll in very good shape, and we've had all 141 00:06:13,920 --> 00:06:17,360 Speaker 3: the trade exposure together. We've got thousands of people now 142 00:06:17,520 --> 00:06:20,000 Speaker 3: going out learning about what their best is. We want 143 00:06:20,040 --> 00:06:21,560 Speaker 3: the best of both, about the kind of coming that 144 00:06:21,600 --> 00:06:24,279 Speaker 3: comes in our highway, our way or the highway, and 145 00:06:24,360 --> 00:06:27,440 Speaker 3: so there's no surprise there. You know, it's it had 146 00:06:27,440 --> 00:06:30,000 Speaker 3: to make sense for shareholders. But you know this notion, 147 00:06:30,600 --> 00:06:32,440 Speaker 3: this notion that it was unbelievad in it was a 148 00:06:32,520 --> 00:06:34,839 Speaker 3: nice thing for shows. That's my I have to do that. 149 00:06:35,320 --> 00:06:37,960 Speaker 3: But we also really did it to assimilate the bank 150 00:06:38,000 --> 00:06:40,520 Speaker 3: in a way that's very safe for the system and 151 00:06:40,800 --> 00:06:44,160 Speaker 3: didn't cost unassured deposits, didn't cost the ft, it costs 152 00:06:44,160 --> 00:06:46,479 Speaker 3: the FDA C as little as possible. But I also 153 00:06:46,520 --> 00:06:48,160 Speaker 3: want to point out I'd be fine if they want 154 00:06:48,200 --> 00:06:49,360 Speaker 3: to change the rules a little bit to make it 155 00:06:49,400 --> 00:06:52,080 Speaker 3: easier for a regional bank to buy a big bank. 156 00:06:52,279 --> 00:06:54,200 Speaker 3: And the other thing about big banks, which again is 157 00:06:54,839 --> 00:06:56,800 Speaker 3: now I know, I know. But the thing about big banks, 158 00:06:56,920 --> 00:06:59,080 Speaker 3: we need healthy big banks. We have the best banking 159 00:06:59,080 --> 00:07:01,400 Speaker 3: system in the world, you know, and you want that 160 00:07:01,680 --> 00:07:04,919 Speaker 3: very big. But but not banks are becoming smaller or 161 00:07:04,920 --> 00:07:07,320 Speaker 3: smaller as a part of the global system. So when 162 00:07:07,320 --> 00:07:09,720 Speaker 3: they look at banks, they say, oh, it's big. But when 163 00:07:09,720 --> 00:07:12,360 Speaker 3: you look at the banking system, to the system mortgage 164 00:07:12,360 --> 00:07:14,880 Speaker 3: of the left, a lot of private credits left, certain 165 00:07:14,880 --> 00:07:16,760 Speaker 3: trading functions of the left, a lot of things are 166 00:07:16,760 --> 00:07:19,440 Speaker 3: going to leave. You have Apple, you have the neo banks, 167 00:07:19,480 --> 00:07:21,720 Speaker 3: you have you better be a little more thoughtful about 168 00:07:21,720 --> 00:07:24,440 Speaker 3: when you say what you mean banking per se and so. 169 00:07:25,120 --> 00:07:28,400 Speaker 2: But the US, the Americans, should not fear too much 170 00:07:28,520 --> 00:07:30,720 Speaker 2: finance consolidation in your hands. 171 00:07:31,080 --> 00:07:33,600 Speaker 3: No, because you know, most of our size accrues to 172 00:07:33,640 --> 00:07:36,160 Speaker 3: our clients. So if you look at you know we 173 00:07:36,240 --> 00:07:39,120 Speaker 3: do most large small banks can't do. We do like 174 00:07:39,400 --> 00:07:42,080 Speaker 3: banking large corporations of fifty countries around the world to 175 00:07:42,120 --> 00:07:44,800 Speaker 3: move ten trillion dollars a day. They you know, it's hard. 176 00:07:44,880 --> 00:07:47,040 Speaker 3: So these are these are big, complex things. We're not 177 00:07:47,080 --> 00:07:49,280 Speaker 3: big and complex. We want to be. We're big and 178 00:07:49,280 --> 00:07:51,880 Speaker 3: complex because the pee we serve at bigger compon. We 179 00:07:52,000 --> 00:07:55,920 Speaker 3: bank countries, the World Bank. You know, we do a 180 00:07:55,920 --> 00:07:58,240 Speaker 3: lot of things, and yes we also bank consumers in the 181 00:07:58,280 --> 00:08:00,800 Speaker 3: United States. So, but I want the banks to thrive. 182 00:08:01,040 --> 00:08:02,600 Speaker 3: I mean, like I said, we want to do everything 183 00:08:02,720 --> 00:08:04,800 Speaker 3: kind of help them. We didn't want this to happen. 184 00:08:05,000 --> 00:08:08,000 Speaker 3: We didn't cause to happen. The second happened, we knew 185 00:08:08,000 --> 00:08:09,080 Speaker 3: it was bad for old banks. 186 00:08:09,560 --> 00:08:10,560 Speaker 2: Are you too big to fail? 187 00:08:12,520 --> 00:08:14,640 Speaker 3: I don't know what that word means anymore. I mean, 188 00:08:14,680 --> 00:08:16,280 Speaker 3: we're not going to fail, and I don't know what 189 00:08:16,360 --> 00:08:18,200 Speaker 3: that means. But we certainly didn't mean it to be 190 00:08:18,200 --> 00:08:21,160 Speaker 3: an advantage. Like so, you know, we've asked all our 191 00:08:21,160 --> 00:08:24,560 Speaker 3: people when this crisis happened. I don't want anyone so 192 00:08:24,640 --> 00:08:27,480 Speaker 3: listing any client or any bank or from any of 193 00:08:27,520 --> 00:08:30,680 Speaker 3: the any bank's regional bank or community bank, et cetera. 194 00:08:30,800 --> 00:08:33,600 Speaker 2: So is there anything else that you that you'd be buying. 195 00:08:33,600 --> 00:08:35,120 Speaker 2: I mean some of the smaller banks fault, you know, 196 00:08:35,240 --> 00:08:36,040 Speaker 2: fun that's it. 197 00:08:36,360 --> 00:08:38,320 Speaker 3: No, I mean, we're gonna have a lot of blowback 198 00:08:38,360 --> 00:08:40,360 Speaker 3: and having bought this one, but it was the right thing. 199 00:08:40,400 --> 00:08:43,000 Speaker 3: To do, you know, but we'll get the blowback. But again, 200 00:08:43,040 --> 00:08:45,559 Speaker 3: my job is this people at this thing. They always 201 00:08:45,559 --> 00:08:48,040 Speaker 3: look at like the financial deal. Forget the financial deal. 202 00:08:49,160 --> 00:08:52,400 Speaker 3: Eight hundred people working around the clock. Ten thousand people 203 00:08:52,440 --> 00:08:57,439 Speaker 3: deployed now to consolidate systems, risk fraud, credit payments, branches, 204 00:08:57,520 --> 00:09:00,880 Speaker 3: real estate vendors, technology. It's a lot of work, you know, 205 00:09:00,920 --> 00:09:02,920 Speaker 3: and it just tracks us from those other things. And 206 00:09:03,000 --> 00:09:05,200 Speaker 3: so you know, like I said, we did it. It 207 00:09:05,360 --> 00:09:08,559 Speaker 3: was margely benefits for shareholders, it was good for the system. 208 00:09:08,640 --> 00:09:10,920 Speaker 3: But and you know, we got to now we have 209 00:09:10,960 --> 00:09:12,480 Speaker 3: to be prepared for the other side of that mountain. 210 00:09:12,600 --> 00:09:14,880 Speaker 2: How worried are you about the dead ceiling? So Donald Trump, 211 00:09:14,960 --> 00:09:17,160 Speaker 2: yesterre in a town halicy and na did not seem 212 00:09:17,200 --> 00:09:19,360 Speaker 2: too worried and too actually told Republicans to stick to 213 00:09:19,360 --> 00:09:19,800 Speaker 2: their guns. 214 00:09:19,920 --> 00:09:21,800 Speaker 3: It's one more thing he does know very much about. 215 00:09:24,960 --> 00:09:28,240 Speaker 3: It may be put in two categories. One is actual default. 216 00:09:28,960 --> 00:09:32,200 Speaker 3: That is potentially catastrophic. And you can go through a 217 00:09:32,200 --> 00:09:36,880 Speaker 3: million ways, but everyone, anyone's anyone knows that's potentially catastrophic. 218 00:09:37,080 --> 00:09:38,600 Speaker 3: And I don't think it's going to happen because it 219 00:09:38,600 --> 00:09:40,800 Speaker 3: gets catastrophic and the closer you get to it, you 220 00:09:40,840 --> 00:09:43,240 Speaker 3: will have panic. And so the closer you get you 221 00:09:43,280 --> 00:09:45,840 Speaker 3: have markets get volatile. Maybe there's Doc mar go down 222 00:09:46,160 --> 00:09:49,080 Speaker 3: the treasury. Markets will have for their own problems. It's amazing. 223 00:09:49,160 --> 00:09:52,320 Speaker 3: You already have certain T bills it's trading three percent 224 00:09:52,400 --> 00:09:55,040 Speaker 3: and right next to them five percent. This is not good. 225 00:09:55,320 --> 00:09:58,280 Speaker 3: And people just remember the American financial system is the 226 00:09:58,360 --> 00:10:01,760 Speaker 3: foundation to the to the global economic system. And so 227 00:10:02,160 --> 00:10:04,800 Speaker 3: and the closer we get more panic, we might get downgraded. 228 00:10:04,920 --> 00:10:07,040 Speaker 3: The last time were downgrade, we had like sixty five 229 00:10:07,120 --> 00:10:10,120 Speaker 3: or seventy percent debt to GDP. Now it's one hundred 230 00:10:10,120 --> 00:10:12,840 Speaker 3: and five. Now our defenits are two or three times 231 00:10:12,880 --> 00:10:15,280 Speaker 3: that that we had back then. So you know, we 232 00:10:15,400 --> 00:10:18,160 Speaker 3: better be very careful. And I wish we didn't get 233 00:10:18,160 --> 00:10:21,120 Speaker 3: there at all. I'm respectful of both sides who you know, 234 00:10:21,200 --> 00:10:23,040 Speaker 3: one side wants to use it the makeup for we've 235 00:10:23,040 --> 00:10:25,480 Speaker 3: got jammed down their throats, you know. And I would 236 00:10:25,480 --> 00:10:27,080 Speaker 3: love to get rid of the debt ceiling thing, but 237 00:10:27,720 --> 00:10:28,920 Speaker 3: please negotiate a deal. 238 00:10:29,240 --> 00:10:30,480 Speaker 2: Do you think that it'll be at the end of 239 00:10:30,520 --> 00:10:32,560 Speaker 2: the day of the markets that will spur a deal 240 00:10:33,160 --> 00:10:34,600 Speaker 2: that we have to get to the point where there's 241 00:10:34,679 --> 00:10:35,520 Speaker 2: where there's panic. 242 00:10:35,760 --> 00:10:39,120 Speaker 3: It's a really bad idea because panic becomes something that 243 00:10:39,240 --> 00:10:42,520 Speaker 3: is not good and it could affect other markets around 244 00:10:42,520 --> 00:10:44,520 Speaker 3: the world. But yes, at the end of the day, 245 00:10:44,600 --> 00:10:46,840 Speaker 3: if it gets to that panic point, people have to react, 246 00:10:47,480 --> 00:10:50,360 Speaker 3: and we've seen that before. Another thing about markets is 247 00:10:50,400 --> 00:10:53,160 Speaker 3: always remember panic is the one thing that scares people 248 00:10:53,880 --> 00:10:57,600 Speaker 3: like they take irrational decisions. I remember even in eight 249 00:10:57,920 --> 00:11:01,480 Speaker 3: people are selling certain securities at twenty percent of what 250 00:11:01,520 --> 00:11:04,240 Speaker 3: they would be worth if we had a great depression. 251 00:11:05,120 --> 00:11:07,520 Speaker 3: But they were like, I want out, I want cash. 252 00:11:07,640 --> 00:11:10,360 Speaker 3: I'm not betting my my family's money on this and 253 00:11:10,440 --> 00:11:13,520 Speaker 3: my company's money. People will panic, and again we got 254 00:11:13,520 --> 00:11:16,320 Speaker 3: to be very careful about getting closer situation that causes that. 255 00:11:16,520 --> 00:11:18,400 Speaker 2: Do you get a call from Jennet yelling about this. 256 00:11:18,360 --> 00:11:20,280 Speaker 3: I'm not going to talk about personal calls I'm getting 257 00:11:20,679 --> 00:11:23,400 Speaker 3: We've all spoken about that's young, I mean everyone, that's 258 00:11:23,600 --> 00:11:25,520 Speaker 3: that's everyone's no for big banks. 259 00:11:25,559 --> 00:11:29,320 Speaker 2: Are you ready? Actually, how do you prepare for possible? 260 00:11:29,320 --> 00:11:32,360 Speaker 3: We have a group of people who are very smart. 261 00:11:32,440 --> 00:11:36,000 Speaker 3: We're looking at again, it's very unfortunate, it's time consuming. 262 00:11:36,320 --> 00:11:40,280 Speaker 3: Hopefully it won't happen, but it affects contracts, collateral, clearing 263 00:11:40,320 --> 00:11:44,200 Speaker 3: houses clients and affects clients differently around the world. You 264 00:11:44,280 --> 00:11:46,280 Speaker 3: have to then anticipate what people are going to do, 265 00:11:46,320 --> 00:11:49,120 Speaker 3: which is very different than the legality of it. And 266 00:11:49,880 --> 00:11:51,680 Speaker 3: you know, and the closer we get, the more those 267 00:11:52,040 --> 00:11:53,720 Speaker 3: kind of that war room will start. Now it's taking 268 00:11:53,720 --> 00:11:57,560 Speaker 3: place once a week, but my guess is sometimes called 269 00:11:57,600 --> 00:12:00,400 Speaker 3: May twenty. First it'll be every day, then it'll be 270 00:12:00,440 --> 00:12:03,400 Speaker 3: three times a day, and then there'll be much more 271 00:12:03,400 --> 00:12:05,720 Speaker 3: conversations with clients. But what they need to do to 272 00:12:05,720 --> 00:12:08,560 Speaker 3: help get them through it and things like that. It's 273 00:12:08,840 --> 00:12:11,400 Speaker 3: very unfortunate. It should never happen this way. 274 00:12:11,760 --> 00:12:13,760 Speaker 2: Fortress Diamond is always about the balance sheet. Should there 275 00:12:13,840 --> 00:12:17,439 Speaker 2: be a special commission looking at debts in the US 276 00:12:17,679 --> 00:12:18,640 Speaker 2: that you should run? 277 00:12:19,160 --> 00:12:21,560 Speaker 3: Oh god no, why not? I don't want to. 278 00:12:23,280 --> 00:12:27,559 Speaker 2: On China, they went after tech, they're looking now at finance. 279 00:12:27,800 --> 00:12:30,480 Speaker 2: What kind of message does it tell companies that want 280 00:12:30,520 --> 00:12:31,480 Speaker 2: to do business there? 281 00:12:32,000 --> 00:12:33,959 Speaker 3: Well, I think we say they're looking at finance. It's 282 00:12:33,960 --> 00:12:37,079 Speaker 3: been very limited. They've been very much more careful about 283 00:12:37,080 --> 00:12:42,240 Speaker 3: touching the financial system. Who we're outsiders. But look, this 284 00:12:42,360 --> 00:12:45,760 Speaker 3: is a serious subject and anything that relates to national security. 285 00:12:45,840 --> 00:12:47,960 Speaker 3: I'm a patriot first, and I'm going to salute my government, 286 00:12:48,320 --> 00:12:51,280 Speaker 3: So put that, but put that aside. What the government 287 00:12:51,480 --> 00:12:53,360 Speaker 3: should do and it wants to do, and is now 288 00:12:53,400 --> 00:12:55,960 Speaker 3: say they are going to do, is have conversations. They're 289 00:12:55,960 --> 00:12:58,560 Speaker 3: gonna be tough, but they should be thoughtful. Certain things 290 00:12:58,600 --> 00:13:01,920 Speaker 3: are really national security, certain things are not, you know, 291 00:13:02,040 --> 00:13:05,040 Speaker 3: And we shouldn't confuse the two American shine of a 292 00:13:05,080 --> 00:13:09,679 Speaker 3: lot of common interest climate, nuclear pliferation, anti terrorism, and 293 00:13:09,880 --> 00:13:12,960 Speaker 3: global stability, you know, And we have differences. You know. 294 00:13:13,040 --> 00:13:16,720 Speaker 3: We're capitalists, they're not, you know, And it's okay, we 295 00:13:16,720 --> 00:13:18,840 Speaker 3: could sort that out. But we need to keep the 296 00:13:18,880 --> 00:13:22,680 Speaker 3: Western alliances together, not just around war and Ukraine, but 297 00:13:22,800 --> 00:13:28,120 Speaker 3: around strategic economic reladerships, including trade, including trade. We can't 298 00:13:28,160 --> 00:13:29,880 Speaker 3: take trade of the table every time we talk to 299 00:13:30,280 --> 00:13:32,319 Speaker 3: you know, Europe or Asian stuff like that. So I 300 00:13:32,320 --> 00:13:35,600 Speaker 3: would go back into TPP. I would surround the world. 301 00:13:35,640 --> 00:13:38,840 Speaker 3: I'd want to keep the world safe for democracy, and 302 00:13:39,000 --> 00:13:41,839 Speaker 3: i'd want to have open markets, particularly Europe. And I 303 00:13:41,840 --> 00:13:44,040 Speaker 3: mean I obvious here last time is when we passed Iraq. 304 00:13:44,360 --> 00:13:46,560 Speaker 3: A lot of great things that act, but there are 305 00:13:46,559 --> 00:13:49,080 Speaker 3: things I don't like, like too much social engineering inside 306 00:13:49,120 --> 00:13:50,959 Speaker 3: of it, but also a pistol off all of our 307 00:13:51,000 --> 00:13:52,920 Speaker 3: allies putting on the China side. 308 00:13:52,920 --> 00:13:55,320 Speaker 2: So they if they start doing more noise on finance, 309 00:13:55,400 --> 00:13:56,760 Speaker 2: does that hurt Chinese growth? 310 00:13:57,559 --> 00:14:02,800 Speaker 3: Like probably, I think you've already seen it's not trade, 311 00:14:02,800 --> 00:14:05,880 Speaker 3: but you've seen investment going both ways coming down, and 312 00:14:07,640 --> 00:14:09,439 Speaker 3: that's okay. In the short run and the long run. 313 00:14:09,480 --> 00:14:12,240 Speaker 3: We should say what And the government's got to decide. 314 00:14:12,400 --> 00:14:15,760 Speaker 3: This is not gonna be business companies decide, nor should they. 315 00:14:15,840 --> 00:14:19,280 Speaker 3: So when Congress criticizes business sometimes there may be truth 316 00:14:19,320 --> 00:14:22,320 Speaker 3: to that. They have to decide what is okay, what's 317 00:14:22,360 --> 00:14:24,960 Speaker 3: not okay? What do they want? What's security? And that's 318 00:14:25,000 --> 00:14:27,480 Speaker 3: around trade, that's around investment, and that's around sharing. 319 00:14:27,560 --> 00:14:29,720 Speaker 2: IP I give you a million pounds or maybe you 320 00:14:29,720 --> 00:14:31,480 Speaker 2: take it, you know, your own million pounds. Where'd you 321 00:14:31,560 --> 00:14:32,320 Speaker 2: invest in? 322 00:14:32,480 --> 00:14:36,920 Speaker 3: Organ I wouldn't. I wouldn't buy sovereign dead anywhere. Why 323 00:14:38,120 --> 00:14:43,240 Speaker 3: I think there's too much The amount of fiscal stimus 324 00:14:43,280 --> 00:14:45,880 Speaker 3: took place and still surging through the system, the amount 325 00:14:45,920 --> 00:14:49,280 Speaker 3: of qi these were extraordinary numbers, and not just in 326 00:14:49,320 --> 00:14:51,520 Speaker 3: the US, but in Europe and in other parts of 327 00:14:51,520 --> 00:14:54,320 Speaker 3: the world. When I say extraordinary, I mean extraordinary, and 328 00:14:54,480 --> 00:14:57,320 Speaker 3: therefore I think there's a chance you have more inflation 329 00:14:57,360 --> 00:14:59,920 Speaker 3: than people think. So while the Fed control short ray, 330 00:15:00,320 --> 00:15:03,320 Speaker 3: they don't completely control longer rates, and then you could 331 00:15:03,360 --> 00:15:07,280 Speaker 3: see longer rates ticking up because of higher inflation, and 332 00:15:07,360 --> 00:15:09,520 Speaker 3: even if there's a mild recession, they continue to tick up. 333 00:15:09,600 --> 00:15:11,000 Speaker 3: You know a lot of us experience that in the 334 00:15:11,000 --> 00:15:13,440 Speaker 3: seventies and eighties, and I would be a little worried 335 00:15:13,480 --> 00:15:15,280 Speaker 3: about that. So rates are kind of low, spreads are 336 00:15:15,280 --> 00:15:15,880 Speaker 3: still kind of low. 337 00:15:15,920 --> 00:15:17,800 Speaker 2: Okay, so you're not putting them in suffer, and where 338 00:15:17,800 --> 00:15:18,720 Speaker 2: are you putting that million? 339 00:15:19,360 --> 00:15:21,160 Speaker 3: I'm central banks. 340 00:15:22,680 --> 00:15:25,520 Speaker 2: For stability. If you look at fragmentation, I mean, the 341 00:15:25,560 --> 00:15:27,680 Speaker 2: world seems a little bit odd like equities are doing 342 00:15:27,680 --> 00:15:29,920 Speaker 2: one thing, but we keep on being told there's a recession. 343 00:15:30,200 --> 00:15:32,760 Speaker 2: Why is there this massive adusyncrasy. 344 00:15:33,280 --> 00:15:38,320 Speaker 3: That's the contradiction. There's still consumers in America job unemployed 345 00:15:38,440 --> 00:15:41,000 Speaker 3: three point five percent. Home prizes have gone up for 346 00:15:41,040 --> 00:15:44,240 Speaker 3: ten to fifteen years. Stock prize has gone in for 347 00:15:44,240 --> 00:15:46,760 Speaker 3: ten to fifteen years. They have a trillion dollars more 348 00:15:46,760 --> 00:15:49,880 Speaker 3: in their checking accounts. They're spending that money. You see 349 00:15:49,920 --> 00:15:52,200 Speaker 3: in travel, you see in restaurants, you see it, and 350 00:15:52,480 --> 00:15:54,120 Speaker 3: you've been around here and you see in hotels, you 351 00:15:54,160 --> 00:15:56,640 Speaker 3: see it. That's all good, But the excess money's being 352 00:15:56,640 --> 00:15:59,640 Speaker 3: spent down. So the bite of that is going to 353 00:15:59,640 --> 00:16:02,000 Speaker 3: happen this year early next year. And the bite of 354 00:16:02,080 --> 00:16:05,160 Speaker 3: QT hasn't happened yet. So if you have higher inflation, 355 00:16:05,240 --> 00:16:07,400 Speaker 3: so I think it's a reasonable thing to say those 356 00:16:07,440 --> 00:16:10,920 Speaker 3: things are coming to fruition. Maybe sometime in the end 357 00:16:10,920 --> 00:16:12,800 Speaker 3: of the year. We don't know the effect of that, 358 00:16:13,320 --> 00:16:14,640 Speaker 3: you know, if there's I mean I would take a 359 00:16:14,640 --> 00:16:17,920 Speaker 3: mild recession happily. Right now. I am far more concerned 360 00:16:17,960 --> 00:16:25,120 Speaker 3: about geopolitics Ukraine, trade, you know, Russia, our relations with China, etc. 361 00:16:25,720 --> 00:16:27,800 Speaker 3: And I always have to mind all of our public 362 00:16:28,040 --> 00:16:31,560 Speaker 3: America has a seventy five thousand per person GDP, China's 363 00:16:31,640 --> 00:16:34,080 Speaker 3: is fifteen. We have all the food warn and energy 364 00:16:34,080 --> 00:16:36,800 Speaker 3: we want. They import ten million bounds of oil a day. 365 00:16:37,320 --> 00:16:39,480 Speaker 3: I mean it's not They're not a ten foot giant, 366 00:16:39,480 --> 00:16:41,960 Speaker 3: and that's a four foot pigmy. We have to manage ourselves. 367 00:16:42,000 --> 00:16:44,480 Speaker 3: Bat I think we can grow more and more thought forward. 368 00:16:44,800 --> 00:16:46,440 Speaker 2: So you know, a lot of people say it's commercial 369 00:16:46,480 --> 00:16:48,800 Speaker 2: real estate. I mean, we talk about nothing else. Everybody 370 00:16:48,840 --> 00:16:51,240 Speaker 2: knows that that could break. Is there something that we're 371 00:16:51,240 --> 00:16:52,120 Speaker 2: not seeing that could break? 372 00:16:52,200 --> 00:16:54,120 Speaker 3: I think it's amazing when you talk about Marcus that 373 00:16:54,560 --> 00:16:57,440 Speaker 3: sometimes it's and the press sometimes like a bunch of 374 00:16:57,480 --> 00:17:01,200 Speaker 3: birds flocking to one thing with endless common about it. Yes, 375 00:17:01,280 --> 00:17:03,200 Speaker 3: that's an issue. So you know, if you look at 376 00:17:03,200 --> 00:17:06,719 Speaker 3: office real estate in B and C real estate will 377 00:17:06,800 --> 00:17:15,440 Speaker 3: private problem Chicago, New York, Partland, Seattle, but probably not Nashville, Tampa, Orlando, Miami, etc. 378 00:17:15,640 --> 00:17:16,840 Speaker 3: So you got to you gotta be a little more 379 00:17:16,840 --> 00:17:18,800 Speaker 3: thoughtful about it. And I think if I'm the number 380 00:17:18,880 --> 00:17:22,000 Speaker 3: banks have six hundred billion of office commercial real estate, 381 00:17:22,560 --> 00:17:24,320 Speaker 3: you know they had a cushion or you even dropped 382 00:17:24,320 --> 00:17:26,639 Speaker 3: and die. They self equity in it. Maybe something that 383 00:17:26,720 --> 00:17:30,720 Speaker 3: will go bad, particularly the recession, they're gonna be Okay. 384 00:17:31,680 --> 00:17:34,560 Speaker 3: It may take a few banks down. That's normal. Stuff 385 00:17:34,920 --> 00:17:39,400 Speaker 3: that isn't abnormal. What is abnormal is the war trade 386 00:17:39,920 --> 00:17:43,800 Speaker 3: the future of democracy. That is abnormal. I'm much more 387 00:17:43,800 --> 00:17:44,840 Speaker 3: concerned about that than. 388 00:17:44,840 --> 00:17:48,080 Speaker 2: The markets trade that. Right, if there's a big geopolitics, 389 00:17:48,119 --> 00:17:50,639 Speaker 2: there's there's how do the markets talk them do that? 390 00:17:51,080 --> 00:17:55,480 Speaker 3: Okay, Look, if I was a we're cautious I remind people, 391 00:17:55,560 --> 00:17:59,040 Speaker 3: I'm not businesses aren't there to trade its. Sometimes they 392 00:17:59,000 --> 00:18:01,520 Speaker 3: don't serve our clients, okay, and so we're gonna serve 393 00:18:01,520 --> 00:18:02,639 Speaker 3: our clients no matter what happened. 394 00:18:02,960 --> 00:18:05,240 Speaker 2: James, very quickly, final question, how are you feeling about 395 00:18:05,280 --> 00:18:06,720 Speaker 2: the Epstein deposition this month? 396 00:18:07,800 --> 00:18:11,359 Speaker 3: I am so sad that we had any relays with 397 00:18:11,400 --> 00:18:14,280 Speaker 3: that man whatsoever. You know, we had top lawyers of 398 00:18:14,359 --> 00:18:17,960 Speaker 3: value in this, from the SEC, Enforcement, the DOJ, you know, 399 00:18:18,000 --> 00:18:20,439 Speaker 3: and obviously have we known them. We know today we 400 00:18:20,480 --> 00:18:22,960 Speaker 3: would have done things differently. But it's very unfortunate, and 401 00:18:23,040 --> 00:18:26,359 Speaker 3: I have deep respect for these women. That doesn't mean 402 00:18:26,480 --> 00:18:28,760 Speaker 3: reliable for the action of an individual, but I do 403 00:18:28,840 --> 00:18:30,920 Speaker 3: have deep respect for them. My heart goes out to them. 404 00:18:31,320 --> 00:18:37,439 Speaker 1: And that was JP Morgan Chase CEO Jamie Diamond speaking 405 00:18:37,440 --> 00:18:40,159 Speaker 1: with Bloomberg's Francine Lockcroawt from Paris. You can catch the 406 00:18:40,200 --> 00:18:43,879 Speaker 1: full conversation on Bloomberg dot Com, on the Bloomberg terminal, 407 00:18:44,080 --> 00:18:45,879 Speaker 1: and at the Bloomberg Business app.