Hey, good morning, everybody, and welcome to the 42nd Annual Strategic Decisions Conference. I'm Ken Usdin. I'm the large cap banks analyst here at Autonomous. Really happy to be back, and also, joining us today for our first session, Jamie Dimon, Chairman and CEO of JPMorgan Chase. Jamie's led the company for over 20 years since becoming the CEO in 2006, and JPMorgan Chase has grown to now being the largest bank in the U.S. with over nearly $5 trillion in assets. Jamie, thank you very much for being here today with us. Great. Just as a reminder before we go, there's the Pigeonhole app you can submit questions through. We're going to start big picture. Jamie, you've described the environment as cautiously optimistic, but recent company update and earnings, you talked also about several existing risks out there. Walk us through your base case of how you see the economy progressing from here across the different areas of the bank, and what might be your top concerns as we look forward? Great. Okay, welcome, everybody. I think I was cautiously pessimistic. I am quite cautious and also, just as a matter, a base case is a mistake in this kind of environment because it's a false sense of security that somehow you think this is a forecast and it'll be a little bit better or a little bit worse than that. I think it's more dramatic than that today. If you look at the short run, the One Big Beautiful Bill is $300 billion of stimulus. Deregulation's a form of stimulus. The AI expenditure's a form of stimulus, $300 billion a year-over-year, another $300 billion for next year. All those things, money supply is going up. That's a stimulus. Banks lending more money, that's a stimulus. That's what we have today, and you see that. You see that in markets, you see it in liquidity, you see it in pricing. There's a long list of issues which I think should concern people, and it's not concerning for banks per se. We're just canaries in the coal mine when it comes to that. It is concerning for the free and democratic world. You have a real war taking place in Ukraine, unresolved. You have terrorism in the Middle East, other than Iran, and then you have, obviously, Iran. You have huge global deficits. You have very high asset prices, very low credit spreads. I just put that, there's a lot of uncertainty there. There's Trade 2.0, people negotiating what that means for them. People looking at how they want to protect their nations. You have things like rare earths, our relations with China. I just think it's a lot of uncertainties that take a base case and you should really be looking at what are the potential range of outcomes, and when might these things happen or not happen. They may not affect the environment at all. They all may disappear over time. Again, they may have consequences which are bigger than people think. Base case, so far so good this year. Hold on. You really don't know. JPMorgan, you have top market shares across all of your businesses. In your annual letter for the last couple of years, you've acknowledged that there's a lot of competition out there, some stronger than ever, across all sub-sectors, traditional banks, non-banks, fintechs, new digital entrants. As you think about building the business for the next decade, what are the most important moats you have to defend, and what are the areas that you need to really focus on to ensure you maintain those leadership positions? Yeah. Things have changed. If you go back 15 years ago, it was almost like set pieces. You had Wells Fargo and Bank of America and JPMorgan and Goldman and Morgan and specialty banks and credit card companies and all of that. Today, you do have this extraordinary amount of competition, and I think my view is they're very smart and they're coming. Some have been quite successful and have taken pieces of our business that we could've, would've, should've. I think it's very important that management acknowledges what it also missed, not just what it did well. There's more money, there's more capability. AI and things like that will create opportunities, and they also create additional risks. We look at, you can go by any area, payments, credit card, consumer banking, investments. Every one of those areas has got all these different types of competitors and banks, by their nature, didn't have very big moats before. When Warren Buffett talks about the moats, there are real moats out there for companies when you have virtual monopolies or people can't catch up. One of the biggest moats is having a bank that is hungry and not complacent and not arrogant and constantly investing in its future, like technology. That does create a little bit of a moat temporarily. I think in certain businesses, it's more than others. In payments, we're so big globally, corporate bank. If we don't build the new set of things, like even with stable coins or JPMorgan Deposit Coin, that could be a challenge, too. We are hyper-focused on all these forms of competition, and constantly investing to compete in that world. Yeah. You mentioned AI. It's touching every part of the banking business already as it continues to evolve, coding, ops, risk, marketing, advice. From your seat, what are the most tangible benefits that JPMorgan's already seeing as you embed it within the technology ecosystem, and how do you think AI's going to change the overall economics of banking as we look longer term? Yeah. We look at AI like any other technology. We talk about it all the time. It's on every business review. What are you deploying? I forgot, I think there are 1,000 use cases today, but maybe there are 50 or 60 which I would put in the significant category. Some of them we do NPVs on. We know exactly what it is. We did this, we're going to save this money, overhead, error rates, better prospecting, better marketing. The NPVs are real. We're saving real money, and we see real changes taking place. Think of it as every job, every app, every application, everything. Certain things won't change. I tell people, "You're going to have to move money, raise money, send money, manage money, raise capital for people." But everything else can change. How that gets done, how the blockchain gets used and all these other things. AI is an enormously dramatic thing. This also creates a risk. You all know about Mythos and all that. Some AI we do not do NPVs on. We talk about our LLM. If you're JPMorgan, you got all these products and internal products with LLMs or something like that. Everyone in the room, we have 150,000 people using it a week, every week. That's pretty powerful. They would tell you if you surveyed them, "We're saving four hours a day." We don't NPV that because we don't see the productivity. It's just you telling us that it makes you more productive and so far. I do think it will drive huge amounts of change in productivity, and in my view, it'll create things we are better at and we can win at. It will also probably create things that we're going to lose at because competitors will find ways to bite off something or do something like that. We just have to be really, really good at it. I also don't agree with this notion that people say that, "Well, if JPMorgan does it first and we're going to create higher margins and that lasts forever." It lasts temporarily. What happens in a competitive world is if I do something better, well, so is everyone else eventually, and that gets competed away, or it's being given to the client. I think you can create temporary margin, but not permanent margin. I think it's a mistake to think that somehow it'll all accrue to you. That might be true in certain tech worlds. Right. You and I can argue and debate all day long how many winners there are going to be in LLMs. For banks, I think it'll be competed away. Then, of course, what's also going to happen is that Fiserv and FIS will offer these same services to smaller banks, and they should. Yeah. It isn't like we're going to have it, and they won't. Everyone's going to have it over time and find ways to do a better job for their clients. Yeah. Speaking of margins and returns, JPMorgan's had a longstanding 17% ROTCE target. You've been above it for the last eight years. Can you talk about the balance and the decision tree as you think about growth versus return, given the fact that you've been above it at 20% or so, how you balance what type of growth at what type of return? This is an important thing about. First of all, 17 is pretty good. Any of you can do the calculation. If you can compound at 17% for 40 years, you're probably going to be worth 100% of the stock exchange. Okay. The notion that somehow we should do better than an excessive return in the marketplace, I think is a little bit. Also, we did a chart this year, as Jeremy Barnum showed you all, that said how many banks have achieved over 17% of our 12 competitors over the last 10 years. I think it happened eight times or nine, and we were six or seven of them. Yeah. Cap One did it a couple of times. Goldman did it a couple of times. The notion that somehow, I personally think that right now we're overearning. I know that's a hard concept, but I think credit losses, they kind of normalize it, but they still may be a little low. Volumes are very high. Remember, when you have high volumes and low credit losses and certain markets like we have today, we're probably overearning. Our competition is also very good. Everyone's good now. It isn't like anyone is really lagging behind on competition. That wasn't true years ago. Eventually this will sort out. After a dividend, our preference is always to reinvest the money if we think we can get a good return. I think we can. We're going to end up with $40 billion or $50 billion of excess capital, depending on how it all sorts out, which is more than everybody, by the way. They'll still have a higher CET1 ratio, but I think we can. I think the reason for that, which I wasn't so sure a couple of years ago, is because the world is so big, it is so complex. You see these needs of the hyperscalers, of countries, of global capital markets, of deficits around the world. You're going to need some very large financial institutions to handle it. I think that capital could be deployed in very good ways over time. I also pointed out, which is important, that sometimes our capital is deployed by expenses. Yeah. It's not deployed by capital. To me, it's almost exactly the same thing. If I can put money in the ground in branches of bank or something like that, and I know I'm going to get a return on the ultimate return of 17% of the capital is deployed, including the expense, I'm going to do more of that. I really don't care that the expense ends up in year one. We've always constantly invested in looking ahead that these are good investments, but this year, the expense might outweigh everything else. Think of a branch, that's what a branch is. It loses money in the first couple of years. Yeah. You mentioned CET1 capital, and we recently got the re-proposal of the Basel III and the GSIB rules. You've been vocal about the continuing overlaps and complications that still exist in the framework. Where and how do you see this impacting JPM in the industry from both a competitor's perspective and the economy from a growth perspective, if the rules go through as proposed? Yeah. The big picture, you can't really look at some of the stuff that we've done and think it's semi-rational, not JPMorgan, CCAR, resolution, recovery. It'll never happen. Unbelievable amount of work, and it's one scenario. I actually think it's a mistake to say, "Oh, I can handle that one scenario," whereas JPMorgan's got to handle hundreds of scenarios. We really do that. To me, the CCAR is a test, and it's not a perfect test. In fact, it's completely flawed. Resolution recovery, in my opinion, will never be used that way. You saw Silicon Valley Bank and First Republic, and let's see things for what they are, call them what they are, and banks didn't have too little capital. Even operational risk, it's in CCAR, and it's in G-SIFI, and it's in some other measurement. Market risk is in this one, that one. Our market risk capital today is like $80 billion. We make $150 million-$200 million a day. In the last 10 years, we've lost money on 30 days. Okay. I've told this to regulators. The worst quarter we ever had, ever, we lost $1.7 billion in trading, and we have $80 billion. It bounces around of course, because there's risk you take there, but have we lost the plot in this thing at one point. I believe in being totally properly capitalized. I think liquidity is much more of an issue for banks. How you have liquidity, how you use the discount window, do you have concentrated deposits? All that kind of stuff. I think the regulators have a chance to really look at this and fix it all. The last thing I will say about G-SIFI, G-SIFI is definitely anti-JPMorgan, and in my view, quite deliberately so, and I really do not like it, how they look at short-term wholesale funding, which is flawed in the start of it. Look, whatever it is, we will make our points to the regulators. They will decide. You are going to see the capital come. You guys have done the studies. The capital is going to come down for most of our competitors. Maybe a little bit for us, net. We will still do very well. I am not even sure it is really good for our competitors for us to be up here and them to be here in capital. I think that creates a distortion in your view on how people look at the safety and soundness of my bank. It will be a positive, particularly in a crisis. I think people should be really thoughtful why they do it. The G-SIFI, by the way, that calculation is probably the dumbest calculation you've ever seen. Bar none. Look at the calculation and tell me that makes any sense. I understand the point that a bigger bank may create more risk for the system. In operational risk capital, they create assets. They make up assets, as opposed to saying that you're setting aside $20 billion for operational risk. They're artificial on the face of it, and it's a one in 1,000-year loss. Who the hell came up with that? Even if you close down the business that had the loss, you still have the capital. I can go on and on about these things that are irrational. Whatever it is, we'll compete, we'll deal with it. After I complain, we'll suck it up and move on. We'll go one step further then on liquidity. To that point you mentioned about changing liquidity roles, how would you address that while both protecting the regulatory environment and protecting the ability for banks to do that? I think we can make banks safer. I want to get rid of this concept. When Silicon Valley Bank failed, that everyone goes into a kerfuffle, the markets are moving, everyone's looking for the next dead one. I think we can fix that, and I think it's much more on the liquidity side. I actually recommended in my chairman's letter, if you could use the discount window. JPMorgan has, I forgot the exact numbers, $1.5 billion of marketable cash and marketable securities, and something like $1.4 billion of uninsured deposits. IT. Right. It can be fully backed up, leave the FDIC with other stuff, the insured deposits and a lot of other assets we have, things like that. I think if you set it up right, you can almost make banks fail-safe, so you don't have to worry about it anymore. If a bank fails, it just goes through the regular way. Remember, when a bank fails, the other flaw is that people say the taxpayer. The taxpayers never paid a penny for bank failures. We pay. There's huge moral hazard. They screwed up, how they did with Silicon Valley Bank, we paid. I'd literally like to run the FDIC. I think it's a mutual insurance company, and the people who would do a better job being responsible for that, because I would be much tougher on other banks on the interest rate exposure and the liquidity exposure. Yep. Jamie, you mentioned earlier that you prefer after the dividend to put money into organic growth and always build the balance sheet, and then there's buybacks and then there's acquisitions. On the last one, how do you think about inorganic growth opportunities, and where might acquisitions be a better use of capital rather than building or growing it internally? The good news is, I believe we can grow every business internally, organically. I think that's good that we have those opportunities. We can do it in payments, we can do it in banking, we can do it in innovative economy, we can do it in global investment banking around the world, we can do it in asset management, we can do it in ETFs, we can do it in consumer, credit card, travel, connected commerce, every one of them. I think we could deploy capital and grow. Organic growth is hard. If you sit around a lot of management meetings, the first thing they do when they're not doing well in organic growth is they start to bullshit about M&A. My management meetings, I don't want to hear about M&A. That's a separate conversation. What are you doing to grow your business? Sales, branches, tech, profits, products, services, all that competition I mentioned. A lot of those things we could be building ourselves, and we don't. We can partner with somebody else. Yes, looking at acquisitions is important. It keeps you quite smart, and I do think there might be opportunities. We are on the lookout, but it's got to make sense. It can't be just a pie in the sky type of thing. It's got to make sense, that we can integrate it, that the cultural get it the right way, that it enhances our business, and it's not like some separate standalone thing I have to pray we don't screw up. We have great businesses, and we want to continue to build them. I do think there might be, in the next couple of years, a chance to put $10 or $20 billion to work buying something. When we do that, we'll explain to you why we think it's a great purchase. Yep. Also, I think, just if you hear me, I think asset prices are high, including JPMorgan stock. I'm not that fond of buying stock at these prices, or companies. We're quite patient with capital. It's not burning a hole in our pocket at all. It will sit there for a while, no problem. Yep. Speaking about high stock prices, and you mentioned earlier good volumes, maybe a couple of questions on the environment. Capital markets backdrop has been really strong through the first quarter and still been active across both the markets business and investment banking. Can you give us an update on how the second quarter is progressing? Can I get this done with right away? Markets, you guys, I think your analyst estimates are up 11%, you're approximately right, might be a little better. Investment banking, you have it up 10%, you're approximately right. Could be a little better depending on how the rest of the quarter turns out for you. A lot of big deals are being spoken about there. NII is the same we gave you last time, $95 billion. Expenses, we gave you $105 billion, we think it'll be closer to $106 billion, mostly driven by better performance, so it's a good extra billion. Fees driving the incentives to pay more. Fees, trading. That's more than we expected. Yes. Yeah. We budget that stuff conservatively, by the way. We don't budget pie in the sky stuff. Yeah. On the environment, just the uncertainty that we've been moving through, what do you sense when you talk to clients in both the markets business, investment banking, commercial banking, about willingness to transact, sponsors, corporates, et cetera? Is it a this is the new normal, we go forward? Is there any hesitation, any change in the environment? It's gung ho, folks. There are exceptions to that, people are doing, M&A is like the best year we've had, I've forgotten how many years. ECM is going to be huge this year. Remember, ECM is like a accordion. It opens and closes. It can close tomorrow. ECM, DCM, a lot of DCM is repeat. You know it's going to be there, the M&A related, obviously that's different. I think sponsors are busy, companies are busy. There's a lot of exuberance out there. Yeah, right now it's good. It wasn't 1972, 1986, 2000, 2007. That doesn't give me comfort. I look at it, yeah, it's exuberance. Of course it feels good. It feels good for all of us. There's a huge amount of stimulus, and I should have mentioned, our deficits are so big, I don't know when that's going to come to bite. The thing I remind people about the deficit, it also fuels all the other stuff we just spoke about. The government borrows money and gives it to people, and that money gets spent. It also fuels corporate profits. When we all look back over the $10 trillion or $12 trillion we've borrowed and spent in the last six or seven years, we're all going to realize that drove corporate profits, too. Corporations, it's just not all automatically they're all geniuses all of a sudden. The other thing I remember about corporate profits is at the margin, $1 trillion will drive $300 billion of profit or whatever the number is, because everyone's making money at the margin, not the average. That's why you have huge corporate profit results this year and so we'll see. In terms of the other side of the environment, when you think about JPMorgan, the balance sheet, you've got the strong reserves, the strong capital level you mentioned before. We talked through the potential risks to the economy, to the environment. What are you looking at in terms of the most substantial credit risks as you think about the portfolio and the overall environment? First of all, the way we look at credit risk is always through the cycle. We don't look at it like what you're going to do today or tomorrow or something like that. It's through the cycle at a very detailed level. Credit cards, subprime is different than credit card, different than business card, different than auto, and auto leasing is different than all these things. We're going to have a credit cycle one day. I don't know when that's going to happen. I think when it happens, it will be worse than people expect. If unemployment goes to 6%, people will expect credit laws be here. I think they'll be higher. I think they'll be higher in some banks, in some private credit, and stuff that may surprise you, stuff that other people are doing. Because when I look at standards, it's been so long since we had a real credit cycle because COVID lasted three months. When you look at standards, there's been a stretch. There's a stretch in EBITDAs, add backs. How many people are doing stress test assumptions on credit? I think there's been a stretch on diversification, like too little sometimes. You saw a little bit in software because you're always surprised a little bit what industry gets hurt. I think covenants have got a little bit weaker. I think there's a stretch on refi risk. You have a lot of people who've got refi risk. If things stay where they are, that's fine. If rates go up or credit spreads go up, that creates a lot more risk for leveraged companies and, I'm not sure all the marks, you're going to see marks change, so you're soon going to hear about the marks on private credit and private equity relating to March 31st. Obviously, software comes down 25%. What are they going to mark those down? What does that mean? I'm not saying they're bad, and of course, some people do a very good job at this. The problem with credit is some people aren't going to do a good job. It's the ones who don't do a good job who cause all the problems. If you go back to the mortgage crisis, the banks and subprime and near-prime mortgages massively out, they did badly, but their credit losses, if I remember correctly, were 25% of the credit loss of the mortgage brokers. 25%. Still three times worse than they should have been. You're going to see some kind of cycle, and it'll work its way through. I think we'll be fine. We have, and obviously CECL, I remind people during COVID, I think we added $15 billion of reserves in two quarters, and then we reduced $15 billion of reserves over the next three quarters. You will have, because of CECL, which is also upfronting all your losses lifetime, you have some dramatic swings in certain institutions that takes place. I think it'll be okay. I don't think it's systemic. If you look at the big picture, corporations in general, their leverage is not that different than in the past. The total debt burdens, I think if you look at consumers' debt service ratios, they gain a little bit worse. They will be stretched if rates go up. You'll see that in the subprime areas more than most. You haven't seen that. Again, when I see people doing their reports, I don't see anyone looking at maybe interest rates will be 300 basis points higher. Maybe credit spreads will be 300 basis points worse. You can have real stress in the environment. I just think when that happens, it'll be kind of worse than we expect, but not systemic. On the topic of private markets and private capital, a lot of banks, including JPMorgan, talked in the April earnings about the relative confidence in the portfolios and the quality of the books and the underlying characteristics, and made the market feel directionally better. For JPMorgan, how do you see that as a potential opportunity going forward? How do you look at private credit, whether it's direct lending or lending to the funds? How do you see that interplay with private markets evolving over time? Lending to the funds is two things, okay? It's arbitrage. We do arbitrage, too. I'm not generally in favor of it, but that's what we do. That's what the rules are, the regulators, all that capital crap we have to deal with. We have no problem doing that. They're clients, so we get other business. We look at those loans, we look at the client in total, and we think they're rational. We think it adds leverage. If those assets fall 20%, the net asset values fall 40%. It does create some things. I think if you have a downturn, people are going to get a little concerned with some of that stuff, but we think that's generally okay. For us, loans are an outcome. They're not an objective. Listen really close to me. They're an outcome. We do not make loans to make loans. This is very important to me. If I can go in the marketplace and buy a loan at par, I haven't created value by making a loan at par. My grandmother could do that. That's not value to us. We look at the relationship in total, and we know that people need credit, and we provide credit in multiple different ways globally to clients. It's also the whole relationship that makes sense to us. I do think if you have a downturn, it will create a little bit of a competitive advantage for the healthy banks. By the healthy private credit funds, too, because some of them have a lot of cash to do stuff with at that time because they've raised money. That's always been true. In downturns, healthy companies have opportunities. We also look at direct lending. There are benefits to doing a direct loan. It's faster, smaller covenants, one person to negotiate with, generally. It's more expensive. We want to do it. If you're a client, we want to offer you the full range of products. You get to decide. We'll tell you the pros and cons of bank syndicate lending, of a direct loan. I think we've done, I forgot the number, $20 billion of direct loans ourselves. Maybe we still have $14 billion in the books because they obviously recirculate a little bit. Remember, middle market lending was always direct lending. There's always a leverage component of that. It's not new to us at all. It's just these folks built very successful businesses generating leveraged loans and excess returns, and we don't know what's going to happen to all those spreads over time. I do think, and you've heard this from not just me, but you've heard it from a lot of people in private credit and other investment banks, they're going to converge at one point. As these loans get bigger and bigger and some are investment grade, you're going to have more people making markets and things like that. Yeah. You mentioned stability of net interest income growing even with rates starting to decline. A very resilient revenue base for JPMorgan. With all these new digital capabilities that are coming about, whether it's tokenization, stablecoins, agent, talk about the deposit business in general and how do you think all these new tools will or will not change the nature of deposit-taking and how you approach it and costs, et cetera? Yeah. My bottom line assumption was it will make it more competitive, and you have to pay more for money over time. You got to really divide it into component pieces. People are going to keep money in checking accounts for transactions. I saw a Charles Schwab recently that said only 4% of the money in all their accounts is transaction money, and it gets moved a lot. The same with corporate money. They're already being paid good rates. If you take all these things, the whole spectrum, there are portions which I think are attackable by disruptors. It will be around some of that. We already talked about having a smart cash account. It's nascent. I wouldn't call it an earth-shattering thing, but how we can do a better job for you. If I asked you all, if you have a brokerage account with us and a checking account with us, and we help you manage between the two and give you closer money market rates and some of the stuff, you might find that very attractive. That's what we want to do. We're going to serve the client. That may cost us some money, but at the end of the day, if banks have to compete for that money, they'll compete. Stable coins, I'm not sure they're going to change. I don't know why if you're in the wholesale business, you're going to want a stable coin. Okay. If I send you a stable coin, other than there are benefits, if it's like real time, 24/7, and you can eliminate some FX risk on a salary, that may make sense. We can do that today. A JPM Coin pays you interest while you wait to do with it. Remember, a stablecoin, you got to buy the stablecoin, you got to own the stablecoin, and you got to sell the stablecoin, and there are transaction costs on both sides. Then you're going to say to me, if you're wholesale, "I don't want your stablecoin. Just send me my money." We'll send you your money, and then you can earn interest, or you could put it wherever you want, or keep a JPM Coin and invest in a JPMorgan money market fund or something like that. I do think on the consumer side, internationally, there'll be some use for stablecoins, more for payments than as a transaction vehicle. We'll compete with that. We already have the JPM Coin. We already have intraday repo. We already have a blockchain. We already have Kinexys. We may do a stable coin, or some group may do a stable coin that we'll participate in over time. I'm not afraid of that. I don't think it's going to fundamentally change the nature of money, to tell you the truth. I do think when they criticize today's infrastructure, not because the banks are stupid, we have 24/7. Fedwire is not 24/7. SWIFT is not 24/7. We have 24/7 real-time payments. It's just how the system over time adjusts to that. I do look at it when you hear some of the stable coin people criticize it. They're right, but not right because we're dumb. They're right because this whole ecosystem that's built up isn't yet ready to assimilate some of that. We want them to. I would love to have the Fedwire go $23.6 or something like that, because I think it would be good for the system. On the other side of the revenue ledger, fee income is a big driver of JPM. We talked about a couple of the businesses already. Whether it's investment banking markets, asset management, the payments business, as you look further out, what do you think are going to be the drivers of growth for JPMorgan among the fee side businesses? The way I look at it, look at the big picture. I think all stocks and bonds in the world are worth $350 trillion, something like that. In 10 years it'll probably be $700 trillion. That's the public stuff. There's a lot of private stuff which is worth hundreds of trillions. The actual underlying business, the fuel, is going up. Now the values go like this, but we're paid to custody that, we're paid to move it, we're paid to buy and sell it at very competitive prices. When you do something with us, it's very cheap to move this and do things, and you do it securely with all built-in fraud protections. I think all of that will grow. It just doesn't grow in a straight line. It doesn't make it a bad business. I think markets can grow. There'll be more products and markets. I think the private and public come together. That'll probably create some opportunity. Wealth management, we still have a 1% share in this huge segment from $100,000-$10 million. 1%. You got to imagine, why not 10? We have 10% in most of the businesses. We've opened up branches in rural areas. I think that could be a successful strategy and help the rest of America. I think the Security and Resiliency Initiative is going to be bigger than we thought, helping a lot of these companies that are, for security and resiliency purposes, grow and expand. I think we'll have a little bit of growth everywhere, and some will be fee based, some are not. They're NII based. Even that is a little bit of a subscription business. I remind people in the consumer banking business, when I used to get to the bank, say, "You have cheap deposits." You do not have cheap deposits. People have to stop saying that. To have a checking account costs us $250 a year, mostly fixed. Right. For that, you get a wide range of services. The revenues come from NII. The cost is the $250. Having ATMs, wealth management planning, fraud protection, all these things you built in and products and services and special segments and yeah, we will compete in that. I think in that, there are also opportunities that. We always have a bunch of skunk works going on. I think there's a bunch of stuff in my mind what actually could be good new opportunities for us. When I say opportunity, I'm talking about maybe could be worth $100 billion in 10 years, not $1 billion. Maybe. I don't know if that's true, but you can imagine we think about that. Chase UK. We're not doing that to have a checking account in the U.K. Right? Okay, there's Revolut. I'm jealous. Damn it. Why not Chase UK being as good as Revolut? We have some competitive advantages. They're very smart. You watch these people, they move. We learned a lot by watching some of these folks. We got to get faster and better sometimes. You look at my letter, I criticize us a little bit for being a little too slow in some of the stuff like that. We have opportunities that you don't know about yet. Yeah. You just recently opened, also in Germany, the direct bank too. Right. You talked. Well, part of that gives us a pan-European license and a platform you can use across Europe and more simple regulations. One regulator. Oh, this doesn't usually ring. One of my directors. How we doing? I'm doing fine. You mentioned some of the capital you use is actually going through the income statement and the expenses that you use to build the bank over time. Over the course of time, that expense growth has been higher than peers and you've been very consistent, and it helps the flywheel generate revenue. Walk us through the benefits of, well, first of all, how do you continue to find all those new things to continue to spend incrementally on, but the benefits also within that of self-funding and how you kind of balance between expense growth for revenues, but also expense growth that actually creates efficiencies. Well, we do both. When people talk about margin improvement, continuous margin, we are in a capitalist world, folks. It's an irrational concept that somehow we can create more and more margin and somehow people I believe what Jeff Bezos says, your margin is my opportunity. We look at them separately and we disclose some of this, not all of it. There is no expense that we make that we think is an investment, that we don't do the same analysis on that you would expect us to do. Okay? Sometimes the analysis may be wrong, but it's pretty thorough about, we think we can get a return on that. If we didn't think we'd get a return, we simply wouldn't do it. On technology and some of these other things, it's the same thing for the most part, because there are certain things I say, you got to keep your operations good. We didn't do a NPV on creating digital account opening 10 years ago. It's a waste of time. It's table stakes. When you're the client and you have to get that service, for me to try to NPV it and then not have it is a bad idea. When you look at the NPV, you know what people do, and this is what happens in big bureaucracies, of course, finance and risk, and everyone's got to look at it, and they have to estimate how many people use or how many will use it. Are they better accounts or worse accounts? Do they use a branch at all? If they use a branch, we charge them for the branch. Is it marginal here? Are they going to use a debit card? You build this big model, and it's totally full of shit. You want digital account opening. People will waste a tremendous amount of time. A lot of tech, yeah, we do it, but I can't do it in all tech, so we don't try. We need to have the best operating systems and in other things, yeah, we know when we build an AI system for fraud, we know what the return is, and we can back test it. There are a bunch of things we do, and we try to be pretty rigorous in that. As you know, the tech budget's always the hardest because some of it is just qualitative. If you leave a company where its securities, operations, and back office stuff isn't very good, that is a bad idea. You're constantly upgrading that kind of stuff, and it's just in your expense base. You can call it investment, but I just look at it as normal, regular operating behavior. So, and as you think about. If you were at the company, here's what I say to people, when you have a business review with us, I don't want you to say to me, "It wasn't in my budget. I want to keep the number to 5%." I want you to say to me, "This is what I would do if I owned the company today." All of it. Back office, front office, tech, AI. We have a real conversation about how we're investing in the business, and then make deliberate decisions, we're going to do X or not Y. For the most part, they're good investments, we're going to do them. Take marketing. We spend a lot of money on marketing. If you walked into my office today, which could happen, and Marianne Lake or Allison Beer could walk in my office and say, "We found a way we can deploy another $500 million in marketing today. Can we do it?" We would go through the numbers, and my answer is, if it has a very good ROI, of course. Then I have to tell you that our expense budget might be higher by $500 million this year. I would do it in a second. I wouldn't hesitate. I would do it if it was $4 billion, because we know it's going to have a return. That's part of why you see we continue to grow the franchise, because we're making investments that drive the future and not protecting the past. To that point, you are very consistent about just pushing that agenda and moving forward. Even in softer environments, how do you make that decision tree of what should stick on the page, what could be deferred, or is it always we are building for the future? It's almost always we're building for the future. We price stuff through the cycle. We make mistakes, we trim our sails. It's not like we don't say, sometimes it didn't work. We have failures out there. We're pretty blunt about that internal. Every now and then we waste some money, and sometimes we have, I call, hobbies. Like every year, I think, look at all your hobbies. I start a lot of them. If you ask the management, they say, "Well, those are your hobbies. You started those ideas, and they're not working." Sometimes you got to try them a second time and a third time and a fourth time. Other times, you just kill them. It was a good idea. It didn't work. Move on. Close it down. We do a little bit of both. We try to be very disciplined in that. Some of the things that we have today started as hobbies that it took the third or fourth time before we got it right, like self-directed investing, for example. One of the questions that. Chase Wealth Management in general. One of the questions that's come in is, related to tech and investments, but can you talk a little bit about JPMorgan and broader system readiness for cyber attacks in the world of LLMs and the developments we've seen there? I wrote in my Chairman's letter, cyber is our biggest risk. It's not just ours. I think it's for the system at large, for banks, but it's also true, you could say, and you go industry-wide to telecom, water, utilities, you can go on and on, government services, and as I said, and it'll be made worse by AI. I think I wrote that a couple of weeks before Mythos came out. Mythos it just amplifies it dramatically. I think Anthropic did the right thing to tell the government and then start this Project Glasswing effort. The Project Glasswing effort is not meant to disadvantage anybody. It's meant to give people a chance to figure out what we need to do to fix this on your own applications, open source code, how patching needs to take place. We're probably going to build some utilities that can do open source, so it's for everybody. If we fix an open source thing, as long as you have the up-to-date version, it's fixed for any company you do business with. I do think we got to get it to other banks. The other thing, you have to be very careful you roll it out because you don't want to give it to people who don't know what to do with it. It is dangerous. It's a nuclear weapon in the hand of someone. Even if you give it out to a company, you want to make sure they know how to handle it, and they're going to have restricted access, and they know how to test it and all that kind of stuff. This has to be done properly. I think the government is doing the right thing to slow it down. I think you saw that President Trump spoke to President Xi about it because we have a common interest in this one. This is not our cyber. This is their cyber. DeepSeek will eventually have it. This could be used by insider threats. It could be used by various things, and you have a lot of government. A lot of hardware may be compromised because it's got embedded software. That cannot be patched. We have to figure it out, and we're doing it. All the big banks are working together now. We're trying to inform other banks where we are. The government's going to have to decide with Anthropic how and when it's given to other people. We're doing it for the system. This is not done to benefit large banks versus small banks or anything like that. Another question that's come in is, can you talk about the incoming Fed Chair, and the outlook for both the ability to lower mortgage rates, but also the debate on the Fed balance sheet size, and if you think that there's a right path forward for that? Yeah. I think, first of all, I know Kevin Warsh. I have enormous respect for him. I think he's generally right about the Fed went off and did a lot of stuff. It started with Janet Yellen, basically, and I'm going to call it DEI and climate, and regulations became, I mean, literally, like smoke screens for punishing banks and things were overdone in supervision. I won't even go through it all, by the way. They're right to clean it up a little bit. Take a step back through all these years, look what they're doing, step right. I think he's right, and the Fed is and was the adult in the town. They're looking across the system. They don't have to duplicate everything the OCC does, which is what they were doing, or the FDIC, which is what they were doing. That's kind of regulatory policy. Remember, they're not independent regulatory policy. This also opens them up to a lot of criticism about thinking they're independent on regulatory policy when that regulatory policy follows the same rules as all other things, cost-benefit studies, public notice. A lot of that just didn't take place at all. I mean, zero. In some cases, no forethought about the consequences of some of the things they did, like private credit, like stuff going to insurance companies, which is what they should have done because it's in all of our benefit the system stays safe. So, I think they're right to look at that. I think they will. Remember, Kevin is going to walk in a room with 12 governors, and he knows them all, and he probably knows them all. They're smart people, they're going to be convinced, so it's not going to be immediate. That's number one. I think he's right about the size of the Fed balance sheet. I think that we had too much government stimulus and too much monetary stimulus over the years, and I think it was required during the Great Financial Crisis. I think it got overdone in COVID, and I think there are reasons to reduce it. This is a big but, to reduce the Fed balance sheet, you must change liquidity rules and regulations. It cannot be done without changing them, and that's going to take time. I think they all know that, and it's going to take study. They're smart people. They want to, "Okay, good point, Mr. Warsh. Let's take the time to study the impact of how we use the discount window and how many buffers banks have, and how they do stress testing liquidity. We don't want to make them less safe. We want to keep them safe. It'll take time, but I think if they do that, they can reduce the Fed balance sheet and then go back to old-fashioned monetary, focus on monetary policy, and then focus on also across the system. We'll see how that takes, but it's just going to take time. It can't happen overnight. The other thing is they don't control the 10-year rates. You do. The notion that they can do operation twist, they can do all that kind of stuff, but they do not control it. They influence it. Even the short rate, I remind people, because we all say they control the short rate. Yeah, they do, but not really, because when inflation goes up, they have to follow. They're always trying to look forward at all the data, labor, weaknesses, and anticipate things. At the end of the day, if inflation goes up, which it might, I'm on the side that I think you might have a little more inflation than people expect. They can't do what they want. It isn't complete independence like they're independent of facts. They're not. You can mitigate mortgage rates more. Fannie and Freddie are buying mortgages. Now, that'll have a little effect. At the margin, these things aren't going to change mortgage rates a lot. I think what would change it, by the way, is changing some of the rules and regulations. We estimated, and I've told them this, that securitization requirements, excessive requirements, excessive servicing requirements, and excessive origination requirements add 50 basis points to the average mortgage. They could be fixed with no additional risk. I've been talking about that for 10 years. That's what they should be doing. All the other stuff won't matter. Another question from the crowd. Can you talk just a little bit about the leadership bench and the leadership squad that you could see as you look forward, see leading JPMorgan someday? Look, you guys know a lot of the leadership people. I won't go through them all. I think they're high quality, very smart. I think there are potential successors inside the company. That's, of course, up to the board. There are people you don't know or you may have met a little bit who are potential successors down the road from here. We feel good about it. Succession is always going to be hard, we're quite conscious about it. It is the most important thing, like next. We understand that, and my board understands that, and I understand that. I do think I wrote about this here about culture, too. I think culture gets misused. I always didn't want to use it, but I think culture is critical. Not being arrogant, knowing your facts, dividing into segments, getting detailed, understanding it, open, literally speak up. Everyone's got to speak up. Everyone's got to have a point of view. All information, like my management team sees everything. My operating committee, there's nothing we don't talk about. We tell the board the same stuff, by the way, so it's completely open. You said this should also give you comfort. I think this is a great. You talk about all these governance rules that regulators put in place. A lot of it is a waste of time. There's one that matters, which they didn't do, by the way. Only one that really matters about chairman, CEO, and proper board governance. My board meets every time without me. Every time. They've been doing that since I was at Bank One, so you're talking about 26 years. It's good for me because I tell them what I think, I leave the room, and then lead director calls me back, sometimes they give me a little coaching. Sometimes they tell me, "We think you're wrong about that," or, "Can you give us more detail?" I'm only trying to do the best job I can. Allows them to have a complete open conversation without feeling they're insulting me. Because you're in a room, even asking a question can sound like an insult sometimes. That is really important, and it's important for succession, too. They know all the senior people. There's no guideline. They could play golf with them. They take them to lunch. They have their own opinions about that, and I believe that's a very good way for them to participate in that decision. Yeah. All right, last one. One of the most interesting things I've seen out of the company over the last year are these new business initiatives, Security Resiliency, the special advisory services, American Dream Initiative. Tell us about how that's different, of a different thought process at JPM, and how that's also going to encourage growth while also helping customers. They're all a little different. Security Resiliency, I was just asking We write about policy and sometimes we complain about it, but I like to ask, I always ask management, if you're in the room with me, "Okay, you're king for a day, what would you do?" We asked the question, okay, we know this is a big issue, and you know it, folks. It's rare earths, active pharmaceutical ingredients, production capability, ships, it's everything. Missile production. We asked this, "What can we do to help?" We're just going to help. We've been asked to help by certain military officers and to get involved, and that's what we did. We did the analysis. We broke into 29 sub-segments, drone, space, intelligence, APIs, pharmaceuticals. LNG to Europe is security. LNG in America is not security. We're trying to Boeing military stuff is security. Boeing aircraft is not security. We try to figure it, then we simply said we're going to add 50% to what we're already doing. That's the $1.5 trillion. Todd Combs has been a great add to the company because he's just a brilliant thinker about industries, and he helps us, of course, a broad spectrum of stuff. He's on my floor, and I love talking to him. He's doing the $10 billion, which might be more, in investing in some of these companies. Where we think it would help security resiliency, in a variety of different ways, including AI, by the way. That's what we're doing, and we think it's commercial. There may be a philanthropic component. Think of welders. We are going to be short 2 million welders and electricians in the next five years. We need welder and electrician schools in the right place, okay? That might require some philanthropy, which we're fine with. It was a very thoughtful process. Doug and Troy are running it. There's a whole group of people. Jay Ryan is in Australia today. He's been around the world for us, and we're beefing up research. If you look at it, I love research. You know how much I think research adds to the world, educating about industries and countries. We've done research on the ship ecosystem, the API ecosystem, the rare earth ecosystem, so that we're getting smart about the whole ecosystem so we can decide, and then we're going to advise on policy. We do think policy makes a big difference. The American Dream we already did. We just named it, and we're going to double down on it. Small business, mortgages, affordable housing. We're going to do it local, so we're going to Alabama this summer. We're doing a whole bunch of stuff that is just more, and we think we can do that, again, commercial. There may be some philanthropy related to it. Special advisory service is different. Think of me doing a hobby. CEOs call me up, they say, "Jamie, can we get advice on government affairs or crisis management or board management or lessons on CEO or cyber, AI or" We did it ad hoc. I simply asked the people, "It shouldn't be ad hoc." These are real service we provide people, directors, and that we just formalize it. Liz Myers is running it. How can we provide it? It costs money, so we have to beef up some of these areas because we get a lot of requests. This is kind of meant for clients. It's not meant as a free service to anyone who wants it. It's meant, you're a client of this company, we want to provide you things that can make your company better. It's good for us, it's good for the country, it's good for you. So far, it's been quite successful. SRI, we're doing it in the U.K. I'm going to the U.K. next week, and we're rolling out a whole thing there in the U.K., with the Chancellor. We're doing it in Japan, Korea, Australia, where Jay is today. It's been fun. A lot of patriotism has come out of that about how we can help secure the free and safe world, which I do think is the most important thing facing us, by the way, not the economy. Right. What better way to end than a plug for research in there? We're out of time. Please join me in thanking Jamie Dimon. Thank you. For joining us. Thank you so much.