The US banking crisis is ongoing and will have effects for years to come, according to JP Morgan Chase chief Jamie Dimon.
‘The current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,’ the Wall Street veteran wrote in his 43-page annual letter to shareholders.
Storm clouds are still threatening the economy, he added. And the banking system is under renewed stress after the failure of Silicon Valley Bank and Credit Suisse’s rescue by UBS last month.
JP Morgan Chase chief Jamie Dimon said the market’s odds of a recession have increased
‘The market’s odds of a recession have increased,’ Dimon wrote.
‘And while this is nothing like 2008, it is not clear when this current crisis will end. It has provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative.’
And in an attack on regulators, the 67-year-old said the risks that led to the current crisis were ‘hiding in plain sight’.
Dimon said rules encouraged banks to amass large portfolios of US government debt – or Treasury bonds – that dropped in value as the US Federal Reserve raised interest rates.
This left banks nursing huge losses that spooked investors.
Turning on the Fed, he said that stress tests of the banking system ‘never incorporated interest rates at higher levels’.
