JPMorgan CEO warns banks doing 'dumb things' could trigger a financial crisis like 2008
On paper, the US economy is doing quite well, with asset values appreciating to record highs. But all of that might be for naught as JPMorgan Chase CEO Jamie Dimon believes the country could be heading towards a 2008-like situation all over again. Dimon expressed anxiety over the direction the market was headed, and said that he did not have much confidence in high-value assets either. If anything, the situation is mirroring the market in the years leading up to the 2008 crash.
“There will be a cycle one day. I don’t know what confluence of events will cause that cycle. My anxiety is high over it. I’m not assuaged by the fact that asset prices are high. In fact, I think that adds to the risk,” Dimon said as per a report in CNN, before adding, “Unfortunately, we did see this in 2005, 2006, and 2007, almost the same thing. The rising tide lifts all boats. Everyone was making a lot of money. People were leveraging to the hilt. The sky was the limit.”
Dimon was also not pleased with some banks in the country doing “dumb things” like taking on risky loans. He remained adamant that his bank remained cautious in its approach and abided by the rules. “And I think today, the rising tide is lifting all boats. My own view is people getting a little comfortable that this is real, these high asset prices and high volumes, and we won’t have any kind of problem, whatsoever,” he said.
“I don’t know how long it’s going to be great for everybody. I see a couple of people doing some dumb things,” Dimon added. It is not just the market and the banks that the JPMorgan Chase CEO is concerned about. He also expressed similar feelings about the impact of artificial intelligence on the country, especially in the software sector. Dimon believes that disruptions in the software industry were typical of past events.
“There’s always a surprise in a credit cycle. And this time around, it might be software, because of AI….There are moving tectonic plates underneath it, which cause the industry to be challenged,” he explained. Dimon isn’t against the rapid development of AI, but he still urged people to exercise caution with the technology. In fact, he believes AI won't reduce jobs drastically but will instead make life easier for mankind, as he previously said, "Look, I don't think AI is going to dramatically reduce jobs like unbelievably next year. And for the most part, AI is going to do great stuff for mankind, like tractors did, like fertilizer did, as vaccines did — it'll save lives."
That said, just like cars, airplanes, and pharmaceuticals, Dimon believes that AI needs to be properly regulated. He further claimed that if the government figures out a way to regulate AI, then it will eliminate some jobs, but people will still have other professions to fall back on.
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