Dimon Sees Pre-2008 Crisis Parallels as Rivals Do ‘Dumb Things’

JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, asked about fierce competition across the financial industry, said he’s starting to see parallels to the era before the 2008 financial crisis, when a rush to make loans ended disastrously.

“Unfortunately, we did see this in ’05, ’06 and ’07, almost the same thing — the rising tide was lifting all boats, everyone was making a lot of money,” Dimon told investors on Monday. While JPMorgan isn’t willing to make riskier loans to boost net interest income, he said, “I see a couple people doing some dumb things. They’re just doing dumb things to create NII.” Bloomberg's Katherine Chiglinsky discusses with Paul Sweeney and Scarlet Fu. JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, asked about fierce competition across the financial industry, said he’s starting to see parallels to the era before the 2008 financial crisis, when a rush to make loans ended disastrously.

“Unfortunately, we did see this in ’05, ’06 and ’07, almost the same thing — the rising tide was lifting all boats, everyone was making a lot of money,” Dimon told investors on Monday. While JPMorgan isn’t willing to make riskier loans to boost net interest income, he said, “I see a couple people doing some dumb things. They’re just doing dumb things to create NII.”

WATCH: “I see a couple people doing some dumb things,” Dimon told investors on Monday.

Dimon, who led the largest US bank through the 2008 financial crisis and scooped up two major competitors that collapsed, said he expects the credit cycle will eventually sour again — though he is not sure when. The CEO has been warning for months about the potential deterioration in credit quality. When auto lender Tricolor Holdings and car-parts supplier First Brands Group imploded last year, he said that seeing one “cockroach” meant more would likely crop up.

In recent weeks, various industries have confronted the artificial intelligence “scare trade,” as investors weigh how the new technology could disrupt markets.

“There’s always a surprise in a credit cycle,” Dimon said, adding that the surprise has often been which industry. “This time around it might be software because of AI.”

While that may prompt JPMorgan to scrutinize certain lending, Dimon expressed doubt it would have a major impact on credit losses.

Private Credit

Dimon’s lender largely stayed on the sidelines early in the private credit cycle. His own comments have threatened the delicate detente between rapidly growing private credit firms that have taken some business from banks’ leveraged loan desks, but have also become some of their biggest clients as well as occasional partners. The cockroach quip sparked a war of words over whether banks or private credit firms are better positioned to weather a broader downturn.

At the same time, JPMorgan has also been flexing its muscles, winning business from private credit managers and Wall Street rivals with substantial financing packages to win coveted debt deals that included a $20 billion check to back the acquisition of Electronic Arts Inc., the largest-ever commitment by one bank for a leveraged buyout.

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