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1、Creating PossibilityAnnual Report2022 Financial HighlightsAs of or for the year ended December 31,(in millions,except per share,ratio data and headcount)2022 2021 2020Selected income statement dataTotal net revenue$128,695$121,649$119,951Total noninterest expense 76,140 71,343 66,656 Pre-provision p
2、rofit(a)52,555 50,306 53,295Provision for credit losses 6,389 (9,256)17,480Net income$37,676$48,334$29,131Per common share data Net income per share:Basic$12.10$15.39$8.89 Diluted 12.09 15.36 8.88Book value per share 90.29 88.07 81.75Tangible book value per share(TBVPS)(a)73.12 71.53 66.11Cash divid
3、ends declared per share 4.00 3.80 3.60Selected ratiosReturn on common equity 14%19%12%Return on tangible common equity(ROTCE)(a)18 23 14Liquidity coverage ratio(average)(b)112 111 110 Common equity Tier 1 capital ratio(c)13.2 13.1 13.1Tier 1 capital ratio(c)14.9 15.0 15.0Total capital ratio(c)16.8 1
4、6.8 17.3Selected balance sheet data(period-end)Loans$1,135,647$1,077,714$1,012,853Total assets 3,665,743 3,743,567 3,384,757Deposits 2,340,179 2,462,303 2,144,257Common stockholders equity 264,928 259,289 249,291Total stockholders equity 292,332 294,127 279,354Market data Closing share price$134.10$
5、158.35$127.07Market capitalization 393,484 466,206 387,492Common shares at period-end 2,934.2 2,944.1 3,049.4Headcount 293,723 271,025 255,351(a)Pre-provision profit,TBVPS and ROTCE are each non-GAAP financial measures.Refer to Explanation and Reconciliation of the Firms Use of Non-GAAP Financial Me
6、asures on pages 5860 for a discussion of these measures.(b)Refer to Liquidity Risk Management on pages 97-104 for additional information on this measure.(c)Refer to Capital Risk Management on pages 86-96 for additional information on these measures.JPMorgan Chase&Co.(NYSE:JPM)is a leading financial
7、services firm with assets of$3.7 trillion and operations worldwide.The firm is a leader in investment banking,financial services for consumers and small businesses,commercial banking,financial transaction processing and asset management.Under the J.P.Morgan and Chase brands,the firm serves millions
8、of customers,predominantly in the U.S.,and many of the worlds most prominent corporate,institutional and government clients globally.Information about J.P.Morgans capabilities can be found at and about Chases capabilities at .Information about JPMorgan Chase&Co.is available at .Wealth Management ran
9、ked#1 in J.D.Power 2022 U.S.Wealth Management Digital Experience StudyFinanced and facilitated$482 billion toward this target since 2021$10 million in humanitarian aid and philanthropic support for Ukraine the largest giving campaign in the firms historyGenerated$15 billion of net new income on reve
10、nue of$48 billionExtended$40 billion to support vital institutions like hospitals,schools and local governments since 2021Opened 1.5 million Chase Secure BankingSM low-cost checking accounts since 2019Ranked in the top five on Fortune magazines Most Admired Companies list for the first timeHelped cr
11、eate or preserve over 210,000 affordable housing units and financed$27 billion toward affordable housing since 2021 Named#1 in retail deposit market share and#1 primary bank for U.S.small businessesIn its first year,Chase in the U.K.acquired more than 1 million customersOver the last five years,Asse
12、t&Wealth Management(AWM)client asset inflows totaled$1.1 trillionRanked#1 on the Evident AI Index,the first public benchmark of major banks on their AI maturity$10 MILLION TO SUPPORT UKRAINE$2.5 TRILLION SUSTAINABLE DEVELOPMENT TARGET#1 CUSTOMER SATISFACTION210,000+AFFORDABLE HOUSING UNITS#1 IN DEPO
13、SITS AND FOR SMALL BUSINESSESTOP 5 MOST ADMIRED COMPANIES$1.1 TRILLION AWM CLIENT ASSET INFLOWS1 MILLION NEW CUSTOMERS#1 CORPORATE&INVESTMENT BANK$40 BILLION TO SUPPORT VITAL INSTITUTIONS1.5 MILLION LOW-COST CHECKING ACCOUNTS#1 IN ARTIFICIAL INTELLIGENCEDear Fellow Shareholders,Across the globe,2022
14、 was another year of significant challenges:from a terrible war in Ukraine and growing geopolitical tensions particularly with China to a politically divided America.Almost all nations felt the effects of global economic uncertainty,including higher energy and food prices,mounting inflation rates an
15、d volatile markets,and,of course,COVID-19s lingering impacts.While all these experiences and associated turmoil have serious ramifications on our company,colleagues,clients and the countries in which we do business,their consequences on the world at large with the extreme suffering of the Ukrainian
16、people and the potential restructuring of the global order are far more important.As these events unfold,America remains divided within its borders,and its global leadership role is being challenged outside of its borders.Nevertheless,this is the moment when we should put aside our differences and w
17、ork with other Western nations to come together in defense of democracy and essential Jamie Dimon,Chairman and Chief Executive Officer2freedoms,including free enterprise.During other times of great crisis,we have seen America,in partnership with other countries around the globe,unite for a common ca
18、use.This is that moment again,when our country needs to work across public and private sectors to lead while improving American competitiveness which also means re-establishing the American promise of providing equal access to opportunity for all.JPMorgan Chase,a company that historically has worked
19、 across borders and boundaries,will do its part to ensure the global economy is safe and secure.In spite of the unsettling landscape,2022 was somewhat surprisingly another strong year for JPMorgan Chase,with the firm generating record revenue for the fifth year in a row,as well as setting numerous r
20、ecords in each of our lines of business.We earned revenue in 2022 of$132.3 billion1 and net income of$37.7 billion,with return on tangible common equity(ROTCE)of 18%,reflecting strong underlying performance across our businesses.We also maintained our quarterly common dividend of$1.00 per share and
21、continued to reinforce our fortress balance sheet.We grew market share in several of our businesses and continued to make significant investments in products,people and technology while exercising strict credit discipline.In total,we extended credit and raised capital of$2.4 trillion for our consume
22、r and institutional clients around the world.I remain proud of our companys resiliency and of what our hundreds of thousands of employees around the world have achieved,collectively and individually.Throughout these challenging past few years,we never stopped doing all the things we should be doing
23、to serve our clients and our communities.Adhering to our basic principles and strategies(see sidebar on Steadfast Principles on page 5)allows us to drive good organic growth and properly manage our capital(including dividends and stock buybacks),as we have 1 Represents managed revenue.3consistently
24、demonstrated for decades.Our performance results are shown in the charts on pages 6-12,which illustrate how we have grown our franchises,how we compare with our competitors and how we look at our fortress balance sheet.I invite you to peruse them at your leisure.In addition,I urge you to read the CE
25、O letters in this Annual Report,which will give you more specific details about our businesses and our plans for the future.As you know,we are champions of bankings essential role in a community its potential for bringing people together,for enabling companies and individuals to attain their goals,a
26、nd for being a source of strength in difficult times.As I often remind our employees,the work we do matters and has impact.We help people and institutions finance and achieve their aspirations,lifting up individuals,homeowners,small businesses,larger corporations,schools,hospitals,cities and countri
27、es in all regions of the world.4STEADFAST PRINCIPLES WORTH REPEATINGLooking back on the past two+decades starting from my time as CEO of Bank One in 2000 there is one common theme:our unwavering dedication to help clients,communities and countries throughout the world.It is clear that our financial
28、dis-cipline,constant investment in innovation and ongoing development of our people are what enabled us to achieve this con-sistency and commitment.In addition,across the firm,we uphold certain stead-fast tenets that are worth repeating.First,our work has very real human impact.While JPMorgan Chase
29、stock is owned by large institutions,pension plans,mutual funds and directly by single investors,in almost all cases the ultimate beneficiaries are individuals in our com-munities.More than 100 million people in the United States own stock;many,in one way or another,own JPMorgan Chase stock.Frequent
30、ly,these shareholders are veterans,teachers,police officers,fire-fighters,healthcare workers,retirees or those saving for a home,education or retirement.Often,our employees also bank these shareholders,as well as their families and their companies.Your man-agement team goes to work every day recogni
31、zing the enormous responsibility that we have to all of our shareholders.Second,shareholder value can be built only if you maintain a healthy and vibrant company,which means doing a good job of taking care of your customers,employ-ees and communities.Conversely,how can you have a healthy company if
32、you neglect any of these stakeholders?As we have learned over the past few years,there are myriad ways an institution can demonstrate its compassion for its employees and its communities while still upholding shareholder value.this letter.We recognize our strengths and vulnerabilities,and we play ou
33、r hand as best we can.Sixth,we operate with a very important silent partner the U.S.government noting as my friend Warren Buffett points out that his companys success is predi-cated upon the extraordinary conditions our country creates.He is right to say to his shareholders that when they see the Am
34、erican flag,they all should say thank you.We should,too.JPMorgan Chase is a healthy and thriving company,and we always want to give back and pay our fair share.We do pay our fair share and we want it to be spent well and have the greatest impact.To give you an idea of where our taxes and fees go:In
35、the last 10 years,we paid more than$43 billion in federal,state and local taxes in the United States and almost$19 billion in taxes out-side of the United States.We also paid the Federal Deposit Insurance Corporation over$10 billion so that it has the resources to cover failure in the American banki
36、ng sector.Our partner the federal govern-ment also imposes significant regula-tions upon us,and it is imperative that we meet all legal and regulatory requirements imposed on our company.Seventh and finally,we know the founda-tion of our success rests with our people.They are the frontline,both indi
37、vidually and as teams,serving our customers and communities,building the technology,making the strategic decisions,managing the risks,determining our investments and driving innovation.However you view the world its complexity,risks and opportunities a companys prosperity requires a great team of pe
38、ople with guts,brains,integrity,enormous capabilities and high standards of professional excel-lence to ensure its ongoing success.Third,while we dont run the company worrying about the stock price in the short run,in the long run we consider our stock price a measure of our prog-ress over time.This
39、 progress is a func-tion of continual investments in our people,systems and products,in good and bad times,to build our capabilities.These important investments will also drive our companys future prospects and position it to grow and prosper for decades.Measured by stock perfor-mance,our progress i
40、s exceptional.For example,whether looking back 10 years or even farther to 2004,when the JPMorgan Chase/Bank One merger took place,we have significantly out-performed the Standard&Poors 500 Index and the Standard&Poors Finan-cials Index.Fourth,we are united behind basic prin-ciples and strategies(yo
41、u can see the How We Do Business principles on our website)that have helped build this company and made it thrive from maintaining a fortress balance sheet,constantly investing and nurturing tal-ent to fully satisfying regulators,contin-ually improving risk,governance and controls,and serving custom
42、ers and clients while lifting up communities worldwide.This philosophy is embedded in our company culture and influences nearly every role in the firm.Fifth,we strive to build enduring busi-nesses,which rely on and benefit from one another,but we are not a conglomer-ate.This structure helps generate
43、 our superior returns.Nonetheless,despite our best efforts,the walls that protect this company are not particularly high and we face extraordinary competition.I have written about this reality exten-sively in the past and cover it again in 5An important note to describe why we are showing the table
44、above:The loan loss reserve accounting rules which are life-of-loan estimated losses based upon probability-based economic scenarios generate huge swings in earnings that can be unrelated to actual credit performance.This was particularly true for the COVID-19 years when,during the first six months
45、of the pandemic,we built approximately$16 billion in reserves.Then in the next six quarters,we released essentially the equivalent number.We did so only because the scenarios used to estimate future credit losses changed dramatically.The table above shows reported net income,with and without loan lo
46、ss reserve changes.Throughout this period,the credit portfolio was healthy,and charge-offs remained below pre-pandemic levels.Either way,the company had strong absolute and relative performance.?Net income?Diluted earnings per share(EPS)?Return on tangible common equity(ROTCE)202220218201
47、72000007200620052004$4.5$8.5$15.4$17.4$19.0$21.3$17.9$21.7$24.4$14.4$24.7$24.4$26.9$38.4$36.4$37.7$48.3$32.5?10%15%24%22%6%10%15%15%15%11%13%13%12%17%19%14%23%18%13%?$1.52$4.00$4.33$1.35$2.26$3.96$4.48$5.19$4.34$5.29$6.00$6.31$10.72$15.36$12.09?$8.88?$9.00$6.19$2.35$
48、5.6$11.7$29.1$39.1ReportedExcluding reserve release/build1 2020 2021 2022 2020 2021 2022Net income($B)Diluted EPS($)ROTCE$29.1$8.88 14.4%$48.3$15.36 23.0%$37.7$12.09 17.7%$38.4$11.87 19.3%$39.1$12.35 18.5%$40.4$12.99 19.1%1 Firmwide results excluding reserve release/build are non-GAAP financial meas
49、ures.2 Adjusted net income excludes$2.4 billion from net income in 2017 as a result of the enactment of the Tax Cuts and Jobs Act.GAAP=Generally accepted accounting principlesROTCE=Return on tangible common equityAdjusted net income2Net income excluding reserve release/buildAdjusted ROTCE2 was 13.6%
50、for 2017ROTCE excluding reserve release/build was 19.3%for 2020 and 18.5%for 2021Earnings,Diluted Earnings per Share and Return on Tangible Common Equity20042022($in billions,except per share and ratio data)6Stock total return analysisBank OneS&P 500 IndexS&P Financials IndexPerformance since becomi
51、ng CEO of Bank One(3/27/200012/31/2022)1Compounded annual gain11.3%6.1%4.6%Overall gain1,047.8%287.7%176.1%JPMorgan Chase&Co.S&P 500 IndexS&P Financials IndexPerformance since the Bank One and JPMorgan Chase&Co.merger(7/1/200412/31/2022)Compounded annual gain9.9%8.9%4.4%Overall gain471.6%386.8%120.0
52、%Performance for the period ended December 31,2022 Compounded annual gain/(loss)One year(12.6)%(18.1)%(10.5)%Five years7.7%9.4%6.4%Ten years14.9%12.6%12.1%This chart shows actual returns of the stock,with dividends reinvested,for heritage shareholders of Bank One and JPMorgan Chase&Co.vs.the Standar
53、d&Poors 500 Index(S&P 500 Index)and the Standard&Poors Financials Index(S&P Financials Index).1 On March 27,2000,Jamie Dimon was hired as CEO of Bank One.Tangible Book Value1 and Average Stock Price per Share20042022?Tangible book value?Average stock price 2022202001
54、2200082007200620052004$60.98$66.11$71.53$73.12$56.33$15.35$16.45$18.88$21.96$22.52$27.09$30.12$33.62$38.68$40.72$44.60$48.13$51.44$53.56$38.70$36.07$43.93$47.75$39.83$35.49$40.36$39.36$39.22$51.88$58.17$63.83$65.62$113.80$106.52$155.61$128.13$110.72$92.01 1 9%compound annual growth rate s
55、ince 2004.High:$169.81 Low:$101.287Client Franchises Built Over the Long Term 2006 2012 2021 2022Consumer&CommunityBankingAverage deposits($B)1Deposits market share2#of top 50 markets where we are#1(top 3)Business Banking primary market share3Client investment assets($B)1Total payments volume($T)4%o
56、f digital non-card payments5 Credit card sales($B)Debit card sales($B)Debit and credit card sales volume($B)Credit card sales market share6Credit card loans($B,EOP)Credit card loans market share7Active mobile customers(M)#of branches#of advisors1$204 4.4%7(14)5.1%$80 NA 90%of Fortune 500 companies d
57、o business with us Presence in over 100 markets globally#1 in global investment banking fees for the 14th consecutive year14 Consistently ranked#1 in Markets revenue since 201115 J.P.Morgan Research ranked as the#1 Global Research Firm,#1 Global Equity Research Team and#1 Global Fixed Income Researc
58、h Team19#1 in USD payments volume20#1 in U.S.Merchant transaction processing21#2 custodian globally22Commercial Banking#of top 75 MSAs with dedicated teams#of bankersNew relationships(gross)23Average loans($B)Average deposits($B)Gross investment banking revenue($B)24Multifamily lending25 36 1,203 NA
59、$53.6$73.6$0.7#28 52 1,240 NA$120.1$195.9$1.6#1 66 2,254 2,252$205.0$301.5$5.1#1 69 2,360 2,277$223.7$294.3$3.0#1 141 locations across the U.S.and 34 international locations,with 7 new cities added in 2022$1.5B revenue from Middle Market expansion markets,up 26%YoY Credit,banking and treasury servic
60、es to 25K Commercial&Industrial clients and 31K real estate owners and investors 18 specialized industry coverage teams#1 overall Middle Market Bookrunner in the U.S.26 Over 80,000 incremental affordable housing units financed in 202227Asset&Wealth ManagementMutual Funds with a 4/5-star rating28Clie
61、nt assets($T)29 Traditional assets($T)29,30 Alternatives assets($B)29,31 Deposits($B)29Loans($B)29#of Global Private Bank client advisors29Global Private Bank(Euromoney)32 119$1.3$1.2$100$52$30 1,506#7 172$2.0$1.7$177$141$79 2,371#3 206$4.3$3.6$364$282$218 2,738#1 203$4.0$3.4$372$233$214 3,137#1 90%
62、of 10-year JPMAM long-term mutual fund AUM performed above peer median33 Business with 61%of the worlds largest pension funds,sovereign wealth funds and central banks#3 in 5-year cumulative net client asset flows behind BlackRock and Morgan Stanley34 Positive client asset flows in 2022 across all re
63、gions,with strength in brokerage,equity,custody and fixed income$98B in Alternatives fundraising over two years#2 in Institutional Money Market Funds AUM35 49%of Asset Management AUM managed by female and/or diverse portfolio managers36 NA=Not available USD=U.S.dollar NM=Not meaningful YOY=Year-over
64、-year AUM=Assets under management M=MillionsEOP=End of period B=Billions FICC=Fixed income,currencies and commodities T=TrillionsJPMAM=J.P.Morgan Asset Management K=ThousandsMSA=Metropolitan statistical area For footnoted information,refer to page 43 in this Annual Report.8New and Renewed Credit and
65、 Capital for Our Clients20082022($in billions)?Corporate clients?Small Business,Middle Market and Commercial clients?Consumers?Government,government-related and nonprofits1 2022202000092008$1,088$167$312$1,115$136$243$1,158$167$252$1,392$222$252$1,264$1,51
66、9$281$309$275$274$1,494$1,577$1,866$1,820$2,102$1,693$399$265$2,357$1,619$430$258$2,307$1,789$480$227$2,496$1,346$440$226$333$288$216$250$615$2,345$3,186$2,410$1,294$463$244$262$641$1,926$1,329$331$2,263$1,443$368$233$2,044$1,621$326$197$2,144$1,5671 Government,government-related and nonprofits avai
67、lable starting in 2019;included in Corporate clients and Small Business,Middle Market and Commercial clients for prior years.9?Client assets?Wholesale deposits?Consumer depositsDeposits and client assets1($in billions)2002001020092008$1,883$730$398$2,061$7
68、55$439$2,329$824$464$2,376$861$503$2,353$2,427$722$757$558$618$3,255$3,617$3,740$3,633$3,802$3,781$4,240$1,186$1,209$959$1,132$5,926$6,580$4,488$1,314$1,148$6,950$3,258$844$718$4,820$2,740$792$679$4,211$2,783$784$660$4,227$3,011$1,881$558$372$2,811$1,743$573$365$2,681$1,415$648$361$2,4241 Represents
69、 assets under management,as well as custody,brokerage,administration and deposit accounts.2 Represents activities associated with the safekeeping and servicing of assets.Assets under custody2($in trillions)20202021 2022 200001020092008$16.9$18.8$20.5$13.2$14.9$16.1$2
70、0.5$19.9$20.5$23.5$23.2$26.8$33.2$31.0$28.6?Assets Entrusted to Us by Our Clientsat December 31,202210?Daily payment processing1($T)?Daily merchant acquiring transactions(M)20222021820172016$9.7$9.8$8.6$7.3$7.0$6.7$6.1 113.4 102.4 90.4 82.4 72.1 62.3 55.1 Daily Payment Processing and Merc
71、hant Acquiring Transactions($in trillions and transactions in millions)1 Based on firmwide data using regulatory reporting guidelines as prescribed by the Federal Reserve Board.M=MillionsT=TrillionsJPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared with Large Peers and Bes
72、t-in-Class Peers176%73%68%66%65%58%WFCMSCGSBACJPM9%9%11%15%15%18%WFCCGSMSBACJPMEfficiencyReturnsOverhead ratio2ROTCEJPMorgan ChaseEfficiencyReturns JPM 2022 overhead ratioBest-in-class peer overhead ratio3JPM 2022ROTCEBest-in-class all banks ROTCE4,6Best-in-class GSIB ROTCE5,6Consumer&Community Bank
73、ing57%52%BAC-CB29%31%BACCB31%BACCBCorporate&Investment Bank57%55%GSIB&GM14%17%GSIB&GM17%GSIB&GMCommercial Banking41%37%TFC16%20%WFCCB20%WFCCBAsset&Wealth Management67%61%NTRSWM&ALLIANZAM25%41%UBSGWM&AM33%MSWM&IMG-SIB=Global systemically important banks ROTCE=Return on tangible common equityFor footn
74、oted information,refer to page 43 in this Annual Report.11Our Fortress Balance SheetSelected data for the year ended December 31,2022Net income applicable to common stockholders($B)$16.6$20.1$22.4$22.6$22.6$30.7$34.6$27.4$46.5$35.9Capital returned to common stockholders($B)3$9.2$9.6$10.8$14.4$22.0$2
75、7.9$34.0$16.3$28.5$13.2ROTCE(%)11%13%13%13%12%17%19%14%23%18%CAGR=Compound annual growth rateCET1=Common equity Tier 1ROTCE=Return on tangible common equityFor footnoted information,refer to page 43 in this Annual Report.Excellent returnsHuge capital generation(even in a recession)Dividends Investme
76、nt Stock buyback or Retain if necessary?Tangible common equity(average)($B)?CET1(%)1 202220201520142013$204$203$191$187$183$185$180$170$161$14913.2%13.1%13.1%12.4%12.0%12.1%12.2%11.6%10.2%10.7%3.5%CAGRsince 2013Tangible Common Equity(Average)($in billions)?Liquid assets($B)2?Av
77、erage loans/Liquid assets(%)$1,652$1,427202220201520142013$1,437$860$755$764$786$745$921$80463%77%70%115%129%119%110%106%80%90%?6.6%CAGRsince 2013Liquid Assets2($in billions)12Within this letter,I discuss the following:WHY WE ARE PROUD OF JPMORGAN CHASE United by principles and
78、 purpose Our purpose Highlighting our diversity,equity and inclusion efforts The state of Ohio:How JPMorgan Chase drives community growthUPDATE ON SPECIFIC ISSUES FACING OUR COMPANY Climate complexity and planning AI,data and our journey to the cloud Banking turmoil and regulatory goals Adjusting ou
79、r strategy to the new regulatory reality(Basel III Endgame)Keeping an eye on all of our competitorsMANAGEMENT LESSONS Building true franchise value Learning from Investor Day Balancing a customer-centric approach with(excessive)riskSOME COMMONSENSE PRINCIPLES FOR CORPORATE GOVERNANCE Promoting open
80、communication and trust with the board Confronting succession planning Active engagement with asset managersEVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEAD The current economy:Pretty good but storm clouds ahead Potential trouble brewing from unprecedented fiscal spending,quantitati
81、ve tightening and geopolitical tensions Preparing for what may be a new and uncertain futureOUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENT Developing effective policy and effective government The Wall Street Journal Op-Ed:“The West Needs Americas Leadership”Creating a com
82、prehensive global economic strategyPage 14Page 14Page 15Page 16Page 18Page 20Page 20Page 20Page 21Page 24Page 26Page 27Page 27Page 28 Page 29Page 30Page 30Page 30Page 31 Page 32Page 32 Page 33Page 35Page 38 Page 38Page 39Page 4013Why We Are Proud of JPMorgan ChaseOur vision is simple and unchanged:W
83、e aim to be the most respected financial services firm in the world,serving corporations and individuals.To that end,it is imperative that we run a healthy,vibrant and responsible company.In addition to traditional banking,we do a lot to help the com-munities in which we operate,which,in turn,pro-vi
84、des the foundation for increased opportunity and prosperity for all.And just to note,while we are proud of the good things we do every day,we are also an organization that acknowledges the mis-takes we make along the way,which is important to do.And when we do make mistakes,we own up to them,learn f
85、rom them and then move on.UNITED BY PRINCIPLES AND PURPOSEWeve always had and published principles to guide how we do business,with values embedded within them,which I described in the preceding section.These tenets unite our company across the globe.To complement these guidelines,we recently develo
86、ped a clearly stated purpose Make dreams possible for everyone,everywhere,every day to knit together our values with our everyday business principles and explain how we have done business for years.While our company has a rich history,is proud of the critical role it plays in powering economic growt
87、h and has done exceptionally well over the past 200 years,research has shown that pur-pose-driven companies achieve stronger business results and have greater impact by doing better for their customers,employees and shareholders.Our intention in documenting our purpose for ourselves is to help energ
88、ize our employees,differentiate our company from our competitors,and push our orga-nization to innovate on behalf of our clients,col-leagues and communities.In addition,we are launching a new effort internally and externally to showcase how the work we do matters and has tangible impact locally and
89、around the world.In detailing the elements of our purpose,shown in the following sidebar,we have tried to make every word meaningful.14WHY WE ARE PROUD OF JPMORGAN CHASE Make Dreams Possiblefor everyone,everywhere,every dayWe aim to be the most respected financial services firm in the world,serving
90、corporations and individuals.Our PurposeOur VisionOur ValuesOur quality and rigor at scale are unmatched.We attract world-class talent and create an environment where they can thrive.We set high expectations,commit to strong performance and hold ourselves accountable to the highest standards of inte
91、grity.We lead with expertise,foresight and fortitude to deliver exceptional results.We face facts and make disciplined decisions grounded in data,with a long-term view.We strive to stand up for what we believe in and do the right thing.Were distinguished by our capacity to imagine and build.Our inno
92、vations are powered by a deep understanding of our customers and clients.We bring our capabilities and experience to bear on the toughest challenges in the world.We take pride in what we do and care deeply about our customers,communities and each other.We have a culture of teamwork,trust,humanity an
93、d humility.We create space for people to bring their full selves to work.We put our customers first,building with their needs in mind,providing world-class service and growing to reach people,businesses and communities everywhere.Our PrinciplesOur PromisesThe impact that JPMC aspires to haveExceptio
94、nal Client ServiceOperational ExcellenceA Commitment to Integrity,Fairness and ResponsibilityA Great Team and Winning CultureThe Business Principles that guide how we workThe mindsets that unite us allOur value proposition to employees,customers,communities,and shareholdersThe ambition we hold ourse
95、lves toWe power economic growth,serving our customers,clients and communities for over 200 years.We champion opportunity and enterprise that unlock equity,inclusion and sustainable growth.We uplift communities around the world,making tangible impact at scale.We are a great place to work an unmatched
96、 combination of humanity and excellence at scale.ServiceHeartExcellenceCuriosityCourage15WHY WE ARE PROUD OF JPMORGAN CHASE We are also dedicated to corporate responsibility,and our efforts extend far beyond significant phil-anthropic contributions(which total more than$350 million a year globally).
97、For example,at the local level,we support educational institutions and work-skills training programs around the world,as well as finance affordable housing and small busi-nesses.In addition,we help formulate broad-based policies that are good for countries on issues such as healthcare,infrastructure
98、,educa-tion and employment.Sometimes we promote spe-cific initiatives;for example,programs that help individuals with a criminal background get a sec-ond chance.Lest anyone think that Ive become a little soft,rest assured your CEO is a red-blooded,patriotic,free-enterprise and free-market capital-is
99、t(properly regulated,of course)and finds noth-ing inconsistent with the multifaceted ways we use our capabilities to lift up our communities.Part of our corporate responsibility efforts are focused on progress toward diversity,equity and inclusion(DEI),which is detailed in the sidebar below.And the
100、sidebar on pages 18 and 19 shows how our work on the ground translates to a partic-ular geography,in this case the state of Ohio.HIGHLIGHTING OUR DIVERSITY,EQUITY AND INCLUSION EFFORTSWe seek to create a company that reflects the diverse communities that we serve,a workplace in which all employees f
101、eel they belong and are respected.We believe these efforts not only make us a positive work environment,but they also make our company stronger,our business more profitable and our institution a better global cor-porate citizen.This objective is integrated into how we do business every day.Some of o
102、ur recent progress is highlighted below:We continue to identify ways to support our military veterans.In 2011,along with 10 other companies,JPMorgan Chase co-founded the Veteran Jobs Mission(VJM),a coalition commit-ted to hiring at least 100,000 veterans by 2020.Since its founding,more than 300 memb
103、er com-panies representing various industries across the United States have reported over 880,000 veteran hires.In 2022,VJM increased its goal to 2 million veteran hires and 200,000 military spouse hires over the next decade.JPMorgan Chase alone has hired over 18,000 veterans since 2011 and currentl
104、y employs approximately 3,000 military spouses.We continue to make strides in developing a diversified workplace.By year-end,women rep-resented 49%of the firms total workforce.Over-all,Hispanic,Asian and Black representation grew to 21%,18%and 14%,respectively.In 2022,the number of employees who sel
105、f-identified as LGBTQ+increased by 35%year-over-year,following 50%year-over-year growth in 2021.The firms Office of Disability Inclusion(ODI)con-tinues to lead strategy and initiatives aimed at advancing careers while helping the firm be a bank of choice for people with disabilities.As ODI kicked of
106、f its business growth and entrepre-neurship work in 2022,it provided business coaching to over 225 entrepreneurs with disabilities and commissioned research with the National Disability Institute,which identified unique opportunities and challenges among small business owners who have a disability.A
107、n update on our$30 billion racial equity commitmentWhat began in 2020 as a$30 billion,five-year commitment is now transforming into a consistent business practice that our lines of business deliver each day to support Black,Hispanic,Latino and other underserved communities.By the end of 2022,we repo
108、rted nearly$29 billion in progress toward our original goal.But our focus is not on how much money is deployed it is on long-term impact and outcomes.16WHY WE ARE PROUD OF JPMORGAN CHASE Here are some details on our programs progress through 2022:Supplier diversity.In 2022,our firm spent approximate
109、ly$2.1 billion directly with diverse suppliers an increase of 25%over 2021.As a part of our racial equity commitment,$400 million was spent in 2022 with over 200 Black-,Hispanic-and Latino-owned businesses more than doubling the amount spent in 2021.Affordable rental housing.Through our Affordable H
110、ousing Preservation program,we approved funding of approximately$18 billion in loans to incentivize the preservation of nearly 170,000 affordable housing rental units across the United States.Additionally,we financed approximately$4 billion for the construction and rehabilitation of affordable renta
111、l housing.Homeownership.In a rising rate environment,we continue our efforts to provide homeowner-ship opportunities for Black,Hispanic and Latino households across all income levels,including advocating for policies that reduce barriers to owning a home.The biggest barriers are upfront cash for a d
112、own payment and closing costs.In 2022,we expanded our$5,000 Chase Home-buyer Grant program to include over 11,000 majority Black,Hispanic and Latino communi-ties.Since our grant program began in 2021,we have provided about 2,700 grants totaling$13.5 million.We have also assisted Black,Hispanic and L
113、atino homeowners with 11,500 incremental home loans together worth over$4 billion,mainly driven by refinance activity when rates were low.Small business.In 2022,we launched a Special Purpose Credit Program,the first of its kind nationally,to expand credit access for small busi-nesses in majority Bla
114、ck,Hispanic and Latino communities,which have traditionally been underserved.When I visited Houston last year,I met Sherice and Steve Garner,Chase customers who own a local barbecue business,Southern Q.They are examples of the types of customers we want to support.Previously,they had been using thei
115、r personal bank account to run their busi-ness.We helped them secure a small business loan to purchase their business location.To assist more families like the Garners,we hired 45 local senior business consultants to provide one-on-one coaching and host educational events,community workshops and bus
116、iness training seminars to support minority entrepre-neurs across 21 U.S.cities.Minority depository institutions(MDI)and community development financial institutions(CDFI).We invested more than$100 million in equity in diverse financial institutions and pro-vided over$200 million in incremental fina
117、ncing to CDFIs to support communities that lack access to traditional financing.We also helped them build their capacity so they can provide a greater number of critical services like mort-gages and small business loans.Additionally,we do not charge a fee for nearly all our partici-pating MDI and CD
118、FI customers who make a withdrawal at a Chase ATM.Access to banking.We helped more than 400,000 customers open low-cost checking accounts;weve also opened 13 Community Center branches(a total of 15 Community Center branches since 2019),often in areas with larger Black,Hispanic and Latino populations
119、;and we hired over 140 Community Managers in under-served communities to build relationships with community leaders,nonprofits and small busi-nesses.These Community Center branches are unique spaces in the heart of urban communi-ties with more space than standard bank branches to host local events,s
120、mall business mentoring sessions and financial health semi-nars.The majority were built with minority contractors from the community;we hire staff locally and we engage local artists to help ensure these locations complement their neigh-borhood.We have been pleased by the dramatic positive effect th
121、ese specialized branches have had on their communities to date and expect to expand the program.By driving inclusive economic growth,we can help create a brighter future for all,no matter where people live or the circumstances theyre born into.We provide regular updates on our corporate web-site abo
122、ut our progress toward equity and equal-ity,and I encourage you to read about the mean-ingful impact were making within our firm and with the people we serve.17WHY WE ARE PROUD OF JPMORGAN CHASE THE STATE OF OHIO:HOW JPMORGAN CHASE DRIVES COMMUNITY GROWTH Our support to local financial firms:We have
123、 provided nearly$20 billion in credit and capital over the last five years for financial institutions such as local banks,insurance companies,asset managers and securities firms.Importantly,we bank 19 of Ohios regional,midsized and community banks,helping them serve local communities and accomplish
124、their other goals.Our support to small businesses:By the end of 2022,loan balances for small business customers in Ohio totaled over$800 million funds being used to run and grow companies and create jobs.Includes support for distribution of the federal governments Paycheck Protection Program(PPP)to
125、help small businesses navigate the pandemic in 2020 and 2021 In 2022 alone,JPMorgan Chase helped over 160,000 small businesses thrive and grow through access to customers,capital and networks,giving us the second largest business banking market share in the state.We also offered some 106,000 hours o
126、f advice and support to small businesses.Our support to consumer banking needs:We operate nearly 225 branches and over 530 ATMs across the state.To help Ohioans build wealth and be financially healthy,we have provided more than 4 million savings,checking and credit card accounts,enabling these consu
127、mers to gain access to resources such as free financial health services,as well as mortgage and auto loans.Ranked as the second largest provider of consumer banking in Ohio with over 2 million checking and savings accounts and customer deposits totaling nearly$37 billion in 2022 In 2022,we oversaw m
128、ore than$20 billion in investment and annuity assets for clients.When JPMorgan Chase does business in a commu-nity,we do more than just open branches.We lend to small,midsized and big businesses;we hire,pay well and provide great benefits;and we finance hospitals,schools,grocery stores,homes,automo-
129、biles and governments.For more than 200 years,this approach has enabled us to make investments that have a lasting impact on local economies,families and neighborhoods while also supporting them in good and challenging times.We have been in Ohio since 1812,and our experi-ence there serves as a great
130、 example of how our resources drive growth on the ground.Our support to government,higher education,healthcare and nonprofit organizations:We serve approximately 150 government,higher education,healthcare and nonprofit clients throughout the state,and over the last five years,we provided nearly$9 bi
131、llion in credit and capital to them.Our clients range from University Hospitals Health System,Inc.to the Ronald McDonald House in Columbus and the University of Dayton in Dayton.We are the primary treasury bank for Ohio State University and the primary bank for the city of Columbus;we also bank near
132、ly 50 counties,cities and school districts across the state.Our support to investment and middle market banking clients:Our support includes$120 billion in credit and capital over the last five years for Commercial&Industrial clients such as energy,retail and auto businesses.We have over 4,800 large
133、 and midsized clients in Ohio,up over 70%compared with 2019,which also includes emerging middle market companies owned by veterans,women,LGBTQ+individuals and people of color.This gives us leading market shares in the state compared with other banks.18WHY WE ARE PROUD OF JPMORGAN CHASE Our business
134、and community investments:The firms national$30 billion racial equity commitment takes place very specifically on the ground.Since the program began,we have committed more than$260 million across the state,including:Over$163 million in loans for Black,Hispanic and Latino households to purchase or re
135、fi-nance a home$54 million financed through investments and loans for the construction and rehabilitation of affordable housing$14 million in New Markets Tax Credit invest-ments to support the Ronald McDonald House Charities in central Ohio Over$12 million spent with Black,Hispanic and Latino suppli
136、ers Weve committed$45 million in philanthropic support across the state since 2018 such as:$5 million to support The 614 for Linden,a CDFI and nonprofit collaborative,in Columbus,which helped catalyze a$20 million fund for affordable housing;create or preserve nearly 750 affordable housing units;pro
137、vide 57 microloans to local entrepreneurs;support technical assistance for over 100 small busi-nesses;and increase wraparound services for prenatal care,as well as facilitate access to healthy foodOur impact as a proud employer in Ohio:Today,as the largest private employer in Columbus,JPMorgan Chase
138、 employs over 20,000 Ohioans throughout the state,including more than 2,000 veterans and 500 people with a criminal background who deserve a second chance.We also support an additional 3,200 jobs for contractors in our branches and corporate offices across the state.In Ohio,our average salary is$96,
139、000,not including benefits.Our lowest starting wage is$41,000(plus a comprehensive annual benefits package worth nearly$15,000)compared with Ohios average salary of$35,0001.1 Ohio per capita income of$35,000 sourced from 2021 U.S.Census Bureau American Community Survey data released December 2022.19
140、WHY WE ARE PROUD OF JPMORGAN CHASE Update on Specific Issues Facing Our CompanyCLIMATE COMPLEXITY AND PLANNING The window for action to avert the costliest impacts of global climate change is closing.At the same time,the ongoing war in Ukraine is roiling trade relations across Europe and Asia and re
141、de-fining the way countries and companies plan for energy security.The need to provide energy affordably and reliably for today,as well as make the necessary investments to decarbonize for tomorrow,underscores the inextricable links between economic growth,energy security and climate change.We need
142、to do more,and we need to do so immediately.To expedite progress,governments,businesses and non-governmental organizations need to align across a series of practical policy changes that comprehensively address fundamental issues that are holding us back.Massive global investment in clean energy tech
143、nologies must be done and must continue to grow year-over-year.At the same time,permitting reforms are desper-ately needed to allow investment to be done in any kind of timely way.We may even need to evoke eminent domain we simply are not getting the adequate investments fast enough for grid,solar,w
144、ind and pipeline initiatives.Policies like the Bipartisan Infrastructure Law,the Creating Helpful Incentives to Produce Semiconductors(CHIPS)and Science Act,and the Inflation Reduction Act(IRA)that hold the potential to unlock over$1 trillion in clean technology development need to be imple-mented e
145、ffectively.The upside is undeniable:Wide-spread investing across the private sector will aid domestic manufacturing,invigorate research and development in green innovation,help create resil-ient supply chains,lift up local economies and build the U.S.clean energy workforce by up to 9 million jobs ov
146、er the next decade.While major advances have been made in the last few years on technology to help this cause,we are hopeful that the great American innovation machine(most advancements will ultimately come from the huge capabilities and capital of Americas largest companies)will find the additional
147、 technologies that are desperately needed.There is a downside massive,inefficient and malinvestment of capital.I talk more about this in the last section on public policy.Polarization,paralysis and basic lack of analysis cannot keep us from addressing one of the most complex challenges of our time.D
148、iverse stakehold-ers need to come together,seeking the best answers through engagement around our common interest.Bolstering growth must go hand in hand with both securing an energy future and meeting science-based climate targets for future generations.AI,DATA AND OUR JOURNEY TO THE CLOUD Artificia
149、l intelligence(AI)is an extraordinary and groundbreaking technology.AI and the raw material that feeds it,data,will be critical to our companys future success the importance of implementing new technologies simply cannot be overstated.We already have more than 300 AI use cases in production today fo
150、r risk,prospect-ing,marketing,customer experience and fraud prevention,and AI runs throughout our payments processing and money movement systems across the globe.AI has already added significant value to our company.For example,in the last few years,AI has helped us to significantly decrease risk in
151、 our retail business(by reducing fraud and illicit activity)and improve trading optimization and portfolio construction(by providing optimal execution strategies,automating forecasting and analytics,and improving client intelligence).We currently have over 1,000 people involved in data management,mo
152、re than 900 data scientists(AI and machine learning(ML)experts who create new models)and 600 ML engineers(who write the code to put models in production).This group is 20UPDATE ON SPECIFIC ISSUES FACING OUR COMPANYfocused on AI and ML across natural language processing,time series analysis and reinf
153、orcement learning to name a few.Were imagining new ways to augment and empower employees with AI through human-centered collaborative tools and workflow,leveraging tools like large language models,including ChatGPT.We also have a 200-person,top-notch AI research group looking at the hardest problems
154、 and new frontiers in finance.We were recently ranked#1 on the Evident AI Index,the first public benchmark of major banks on their AI maturity.We take the responsible use of AI very seriously and have an interdisciplinary team of ethicists helping us prevent unintended misuse,anticipate regulation,a
155、nd pro-mote trust with our clients,customers and commu-nities.AI and data use is complex;it must be done following the laws of the land.But it is an absolute necessity that we do it both for the benefits I just described and,equally,for the protection of the company and the financial system because
156、you can be certain that the bad guys will be using it,too.All of our technology groups firmwide work together in a flywheel of innovation and deliver state-of-the-art improvements.We are proud that our AI teams have contributed top-quality novel research and compelling solutions that are trans-formi
157、ng more and more business cases every day.AI is inextricably linked with cloud-based systems,whether public or private,and digital capabilities.Our company needs the cloud for its on-demand compute capacity,flexibility,extensibility and speed.Native cloud-based approaches will ulti-mately be faster,
158、cheaper and aligned with the newest AI techniques,and they will give us easy access to constantly evolving developer tools.We have spent over$2 billion building new,cloud-based data centers and are working to modernize a significant portion of our applications(and their related databases)to run in b
159、oth our public and private cloud environments.To date,we have migrated approximately 38%of our applications to the cloud,meaning over 50%of our application portfolio(this includes third-party,cloud-based applications)is running on modern environments.This journey to the cloud is hard work but neces-
160、sary.Unlocking the full potential of the cloud and nearly 550 petabytes of data will require replat-forming(putting data in a cloud-eligible format)and refactoring(i.e.,rewriting)approximately 4,000 applications.This effort will involve not just the 57,000 employees we have in technology but the ded
161、icated time of firmwide management teams to help in the process.BANKING TURMOIL AND REGULATORY GOALS The recent failures of Silicon Valley Bank(SVB)in the United States and Credit Suisse in Europe,and the related stress in the banking system,under-score that simply satisfying regulatory require-ment
162、s is not sufficient.Risks are abundant,and managing those risks requires constant and vigi-lant scrutiny as the world evolves.Regarding the current disruption in the U.S.banking system,most of the risks were hiding in plain sight.Interest rate exposure,the fair value of held-to-maturity(HTM)portfoli
163、os and the amount of SVBs uninsured deposits were always known both to regulators and the marketplace.The unknown risk was that SVBs over 35,000 corporate clients and activity within them were controlled by a small number of venture capital companies that moved their deposits in lockstep.It is unlik
164、ely that any recent change in regulatory requirements would have made a difference in what followed.Instead,the recent rapid rise of interest rates placed heightened focus on the potential for rapid deterioration of the fair value of HTM portfolios and,in this case,the lack of sticki-ness of certain
165、 uninsured deposits.Ironically,banks were incented to own very safe government securities because they were considered highly liq-uid by regulators and carried very low capital requirements.Even worse,the stress testing based on the scenario devised by the Federal Reserve Board(the Fed)never incorpo
166、rated interest rates at higher levels.This is not to absolve bank man-agement its just to make clear that this wasnt the finest hour for many players.All of these col-liding factors became critically important when the marketplace,rating agencies and depositors focused on them.21UPDATE ON SPECIFIC I
167、SSUES FACING OUR COMPANYAs I write this letter,the current crisis is not yet over,and even when it is behind us,there will be repercussions from it for years to come.But importantly,recent events are nothing like what occurred during the 2008 global financial crisis(which barely affected regional ba
168、nks).In 2008,the trigger was a growing recognition that$1 trillion of consumer mortgages were about to go bad and they were owned by various types of entities around the world.At that time,there was enor-mous leverage virtually everywhere in the finan-cial system.Major investment banks,Fannie Mae an
169、d Freddie Mac,nearly all savings and loan insti-tutions,off-balance sheet vehicles,AIG and banks around the world all of them failed.This current banking crisis involves far fewer financial players and fewer issues that need to be resolved.These failures were not good for banks of any size.Any crisi
170、s that damages Americans trust in their banks damages all banks a fact that was known even before this crisis.While it is true that this bank crisis“benefited”larger banks due to the inflow of deposits they received from smaller insti-tutions,the notion that this meltdown was good for them in any wa
171、y is absurd.Lets be very thoughtful in our reaction to recent events.While this crisis will pass,lessons will be learned,which will result in some changes to the regulatory system.However,it is extremely important that we avoid knee-jerk,whack-a-mole or politically moti-vated responses that often re
172、sult in achieving the opposite of what people intended.Now is the time to deeply think through and coordinate complex regulations to accomplish the goals we want,eliminating costly inefficiencies and contradictory policies.Very often,rules are put in place in one part of the framework without apprec
173、iating their consequences in combination with other regula-tions.America has had,and continues to have,the best and most dynamic financial system in the world from various types of investors to its banks,rule of law,investor protections,transpar-ency,exchanges and other features.We do not want to th
174、row the baby out with the bath water.We should have common goals on how we want the banking system to work.We want to strengthen regional,midsized and community banks,which are essential to the American economic system.They fill a critical role in small communities,offering local knowl-edge and loca
175、l relationships that some large banks simply cant provide or cant provide cost-effectively.Overall,we want to maintain the extraordinary strength this tiered system affords.JPMorgan Chase directly supports this goal as we are one of the largest bankers in America to regional and community banks.We b
176、ank approximately 350 of Americas 4,000+banks across the country.This means we make loans to them or raise capital for them.In addi-tion,we process payments for them,finance some of their mortgage activities,advise them on acquisitions,provide them with interest rate swaps and foreign exchange,and b
177、uy and sell securities for them.And we also finance their local communities(think hospitals,schools and larger companies)in ways they cannot.We need large,complex banks to continue to play a critical role in the U.S.and global financial system.And we need to recognize that they do so in a way region
178、al banks cant.Large banks are complex not because they want to be but because they operate in complex global markets.Regional banks simply cannot manage the scale and complexity of transactions in 50 or 60 countries around the world to help some of Americas best and largest companies accom-plish the
179、ir goals.Think of equity,debt,M&A,research,swaps,foreign exchange,large pay-ments systems,global custody and so on.It takes a global workforce with deep expertise and significant capabilities to provide these ser-vices.These large global banks finance not just the worlds largest companies but the wo
180、rlds development institutions and even countries.Having some of the best large,complex banks in the world is essential to the success of Americas biggest companies,its economic system and its global competitiveness,which says nothing against the importance of having great midsized and community bank
181、s as well.And contrary to 22UPDATE ON SPECIFIC ISSUES FACING OUR COMPANYwhat some say to be safe,a global bank needs both huge economies of scale and the strength of diversified earnings streams.We should want a system in which a bank failure does not cause undue panic and finan-cial harm.While you
182、dont want banks to fail all the time,it should be allowed to happen,and the resolution should follow a completely prescribed process.In almost all bank failures,uninsured deposits never resulted in lost money but the very fear of loss can cause a run on any bank having characteristics similar to a b
183、ank that has failed.Resolution and recovery regulations did not work particularly well during the recent crisis we should bring clarity and reassurance to both the unwinding process and measures to reduce the risk of additional bank runs.It should also be noted that banks pay for any bank failure(th
184、rough fees paid to the Federal Deposit Insur-ance Corporation)as they pay for the whole financial regulatory system.And yes,while these costs are ultimately passed on to their customers that is true for all industries the cost is just the price of implementing proper regulations.We want proper trans
185、parency and strong regu-lations.However,it should be noted that regula-tions,the supervisory regime and the resolution regime currently in place did not stop SVB and Signature Bank from failing and from causing systemwide issues.We should not aim for a reg-ulatory regime that eliminates all failure
186、but one that reduces the chance of failure and the odds of contagion.We should carefully study why this particular situation happened but not overreact.Strong regulations should not only minimize bank failures but also help to maintain the strength of banks as both the guardians of the financial sys
187、tem and engines that finance the great American economic machine.We should want market makers to have the ability to effectively intermediate,particularly in difficult markets,with central banks only step-ping in during exceptional situations.In the last few years,we have had many situations in whic
188、h disruptions in the market were,in my opinion,largely caused by certain regulations that did not improve the safety of the market maker but,instead,damaged the safety of the whole sys-tem.In addition,many of the new“shadow bank”market makers are fair-weather friends they do not step in to help clie
189、nts in tough times.We need banks to be there for their clients in tough times.And they have been.Banks can flex their capital and provide their clients with a lot of loans and liquidity when they really need it.For example,at the beginning of the COVID-19 crisis in March 2020,banks deployed over$500
190、 billion in liquidity for clients and$500 billion in PPP loans and this does not include banks share of the nearly$2 trillion in loans that entered forbearance.Banks also play a unique and fundamental role in the transmission of monetary policy because deposits in banks can be loaned out,effectively
191、“creating”money.Some regulations and some accounting rules have become too procyclical and make it harder to do this.Regulation,particularly stress testing,should be more thoughtful and forward looking.It has become an enormous,mind-numbingly complex task about crossing ts and dotting is.For exam-pl
192、e,the Feds stress test focuses on only one sce-nario,which is unlikely to happen.In fact,this may lull risk committee members at any institu-tion into a false sense of security that the risks they are taking are properly vetted and can be easily handled.A less academic,more collabora-tive reflection
193、 of possible risks that a bank faces would better inform institutions and their regula-tors about the full landscape of potential risks.We should decide a priori what should stay in the regulatory system and what shouldnt.There are reasons for certain choices,and they should not be the accidental ou
194、tcome of uncoor-dinated decision making.Regulatory arbitrage is already forcing many activities,from certain types of lending to certain types of trading,out-side the banking system.Among many questions that need definitive answers,a few big ones would be:Do you want the mortgage business,credit and
195、 market making,along with other essential financial services,inside the banking 23UPDATE ON SPECIFIC ISSUES FACING OUR COMPANYsystem or outside of it?What would be the long-term effect of that choice?Under the new scheme,would nonbank credit-providing institu-tions be able to provide credit when the
196、ir clients need them the most?I personally doubt that many of them could.We need banks to be attractive investments.It is in the interest of the financial system that banks not become“un-investable”because of uncertainty around regulations that affect capi-tal,profitability and long-term investing.E
197、rratic stress test capital requirements and constant uncertainty around future regulations damage the banking system without making it safer.While it is perfectly reasonable that a bank refrain from stock buybacks,dividends or growth under certain circumstances,it would be far better for the entire
198、banking system if these rules were clearly enumerated(i.e.,stipulate that a bank needs to reduce its buybacks and dividend if they breach certain thresholds).If done properly,banking regulations could be cali-brated adding virtually no additional risk to make it easier for banks to make loans,interm
199、edi-ate markets,finance the economy,manage a run on their bank and fail if need be.When it comes to political debate about banking regulations,there is little truth to the notion that regulations have been“loosened,”at least in the context of large banks.(To the contrary,our capital requirements hav
200、e been increasing for years,as shown on the chart on page 12.)The debate should not always be about more or less regulation but about what mix of regulations will keep Americas banking system the best in the world,such as capital and leverage ratios,liquidity and what counts as liquidity,reso-lution
201、 rules,deposit insurance,securitization,stress testing,proper usage of the discount win-dow,tailoring and other requirements(including potential requirements on shadow banks).Because of the recent problems,we can add to this mix the review of concentrated customers,uninsured deposits and potential l
202、imitations on the use of HTM portfolios.Ideally,new rules and regulations would also make it easier for banks to provide credit in tougher times.ADJUSTING OUR STRATEGY TO THE NEW REGULATORY REALITY(BASEL III ENDGAME)The Basel III Endgame(called Basel IV by some)which,incredibly,has been nearly 10 ye
203、ars in the making seems likely to increase,yet again,capi-tal requirements for banks in general,through higher operational risk changes,and for trading and capital markets activity in particular,among other things.Whether or not we agree with all these changes(and weve discussed these regula-tions i
204、n detail in prior letters),we will simply have to adjust to them immediately.Its important we describe to our shareholders how we will go about doing that and what it means for banks and,in particular,our bank.First and foremost,banks must satisfy all of their regulators.We must satisfy all of our r
205、egulators,and,remem-ber,we have regulators all around the world,including more than 10 in the United States alone.Regulations include stress testing,reporting,com-pliance,legal obligations and trading surveillance,among others.While the business is the first line of defense on all these issues,we al
206、so have 3,700 people in compliance,7,100 in risk and 1,400 lawyers actively working every day to meet the letter and the spirit of these rules along with the final line of defense audit.Rules are constantly changing and/or being enhanced and are sometimes,unfortunately,driven by political motivation
207、s.Relationships with regulators can often be intense,and,recently,we have lost some terrific people in our firm because of this.Regulators know that when banks disagree,we essentially have no choice there is no one to appeal to,and even the act of appealing can make them angry.We simply ask respectf
208、ully to be heard,but at the end of the day,we will do what they ask us to do.24UPDATE ON SPECIFIC ISSUES FACING OUR COMPANYBanks will play a smaller role in the global financial system.The chart above shows both the decreasing role and size of U.S.banks relative to the global econ-omy alongside the
209、increasing role and size of shadow banks.The data illustrates this dynamic.We expect this trend to continue for all the reasons Ive discussed.Banks will continue to be guardians of the financial system.Properly regulated banks are meant to protect and enhance the financial system.They are transpar-e
210、nt with regulators,and they strive mightily to protect the system from terrorism financing and tax evasion as they implement know your cus-tomer guidelines and anti-money laundering laws.They protect clients assets and clients money in movement.Banks also help customers from protecting their data an
211、d minimizing fraud and cyber risk to providing financial education and must abide by social requirements,such as the Community Reinvestment Act,which requires banks to extend their services into lower-income communities.As mentioned previously,unlike the private market,banks do not always choose whe
212、n to provide a product or service but need to be there for their clients when they need credit or liquidity the most.Looking forward,we constantly modify our strategies to adjust to our market realities.Its always best to adjust to new reality quickly.We really dont like crying over spilled milk,alt
213、hough we sometimes do.The new reality is that some things for example,holding certain types of credit are more efficiently done by a nonbank.2010 2022Size of banks in the financial systemGlobal GDP1Total U.S.debt and equity marketTotal U.S.broker-dealer inventoriesU.S.G-SIB market capitalizationU.S.
214、bank loansU.S.bank liquid assets2Federal Reserve total assets Federal Reserve RRP volume$64.9$57.5$4.1$0.8$6.6$2.8$2.4$In Front of Us:Storm Clouds AheadStill Good EconomyAbnormal QT&Fiscal SpendingWar,Energy Crisis,Trade,China Healthy consumer Healthy jobs Higher wages Good credit Home values up ove
215、r 10 years Recovering supply chain Normalized interest rates Healthy business Consumer excess savings close to zero by year-end Large quantitative tightening(QT)and other unknowns,reducing liquidity and triggering higher long-term interest rates Higher fiscal spending Higher climate spending Lingeri
216、ng effects of fiscal stimulus Possible persistent inflation,requiring higher interest rates Maybe no end in sight Unpredictable war Energy and food crisis averted for now Disproportionate suffering imposed on poor people and nations Inflationary trade adjustments Economic alliances in flux Potential
217、 for rising oil and gas prices Huge economic and geopolitical strains33EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEADsupply)that undoubtedly drove increased prices across many investment classes from stocks and bonds to crypto,meme stocks and real estate,among others.Importantly,t
218、his also increased bank deposits from$13 trillion to$18 trillion (and the now-famous uninsured deposits from$6 trillion to$8 trillion).QE is now being reversed into quantitative tighten-ing(QT)as the Fed grapples with inflation.So far,the Fed has reduced its securities holdings by approximately$550
219、billion and is committed to reducing its holdings by almost$100 billion in securities each month or over$1 trillion each year.How all this will unfold is still unknown as the direction and speed of money have changed sig-nificantly from prior years.To varying degrees,banks will compete for money,not
220、 only among one another but also with money market funds,other investments and the Fed itself.Money market fund total assets under management have increased by$650 billion since April 2022,with a significant portion migrating into the Feds reverse repo facil-ity,thereby draining deposits from the ba
221、nking system.So while the Feds balance sheet has come down by approximately$550 billion,deposits at the banks have come down by$1 trillion,largely uninsured deposits.Unfortunately,some banks invested much of these excess deposits in“safe”Treasuries,which,of course,went down in value as rates rose fa
222、ster than most people expected.It should be noted that an inordinate amount of attention is focused on short-term interest rates,which the Fed affects directly.But the Fed does not completely control long-term rates and liquid-ity,which are influenced by both supply and demand(QT)and global investor
223、 preferences and sentiment importantly,including views on risk and safety.It is also important to remember that while the central banks of the world are now sell-ing instead of buying securities,the governments of the world have larger debts to finance.The United States alone needs to sell$2 trillio
224、n in securities,which must be absorbed in the market.This turn of events is generally true globally.There has been huge intervention by central banks around the world over the last decade.While it was completely necessary in 2008 and 2009 to stop the worst of the global financial crisis,and again in
225、 2020 to stop the effects of the global pandemic,the depth and breadth of these interventions will be studied for years as will the extent to which we need QT(whose full effect may not be known immediately).It is unclear how the Fed incorpo-rated the enormous fiscal spending into both its forecasts
226、for growth and inflation,as well as its need to continue QE as it did.And importantly,the Feds ability to reverse course on this strategy(QT)is somewhat constrained by higher inflation(though,of course,it can temporarily adjust its actions to deal with the current bank failure crisis).War complicate
227、s geopolitics and materially adds risks.We have not had a major land war in Europe since 1945.The war in Ukraine,already into its second year,has been particularly devastating in terms of casualties and damage and has been haunted by the threat of nuclear weapons.It may very well last for many more
228、years.Wars are unpredictable,and at the start,most predictions about how they will end have been completely wrong.This war is also affecting global energy and food supplies,with a disproportionate and negative effect falling on poor people and poorer nations,including millions of Ukrainian refugees.
229、There is still a risk that energy and food supply lines,which are not secure,will lead to higher prices and the large migration of people,triggering another level of geopolitical dislocation.The tensions of this war are also leading to the rethinking of many economic alliances,as well as trade and n
230、ational security.All these factors create more risk and potentially higher inflation,and their confluence(along with inflation and QT)creates a somewhat unpredictable and dangerous outcome.This may be a once-in-a-generation sea change,with material effect.Of course,there is always uncertainty.I am o
231、ften frustrated when people talk about todays uncer-tainty as if it were any different from yesterdays uncertainty.However,in this case,I believe it actually is.34EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEADLess predictable geopolitics,in general,and a complex adjustment to rela
232、tionships with China are probably leading to higher military spending and a realignment of global economic and military alliances.Higher fiscal spending,higher debt to gross domestic product(GDP),higher investment spend in general(including climate spending),higher energy costs and the inflationary
233、effect of trade adjustments all lead me to believe that we may have gone from a savings glut to scarce capital and may be headed to higher inflation and higher interest rates than in the immediate past.Essentially,we may be moving,as I read some-where,from a virtuous cycle to a vicious cycle.PREPARI
234、NG FOR WHAT MAY BE A NEW AND UNCERTAIN FUTUREOf course,we hope that everything turns out okay and that all of these storm clouds peacefully and painlessly dissipate and we need to be prepared for that outcome.We also need to be prepared for a new and uncertain future.The new risks(in addition to the
235、 normal ones,like recession)are higher inflation for longer,the market effects of QT and growing political risks.Of course,I cannot be sure this will happen,but I place higher odds on it than the“market.”Managing risks is far more than simply meeting the Feds annual stress test.While it is critical
236、that we meet and pass the Feds Comprehensive Capital Analysis and Review(CCAR)stress test,managing risk is far more than that and we are fairly fanatical when it comes to manag-ing risk.Our company does hundreds of stress tests a week,which include market movements reflective of many past crises(suc
237、h as volatility resulting from the Russia-Ukraine conflict and the pandemic in 2020)and rapidly rising interest rates.The Feds CCAR stress test,by its nature,has fairly arbitrary results since it uses only one different and hypothetical scenario each year.This creates uncertainty around our capital
238、requirements(as I mentioned,this may damage the value of bank stocks and the banking system).If I were a share-holder,I would want to know if my company would really lose the$44 billion after taxes(over a nine-quarter period)that the stress test shows.And the answer is absolutely not.While I underst
239、and why regulators stress test this way they are essentially trying to ensure that banks survive the worst-case scenario(which assumes multiple problems at a struggling bank without any benefit from good management or rapid response)the methodology clearly does not result in an accurate forecast of
240、how our com-pany would perform under adverse circumstances.I have very little doubt that if the severely adverse scenario played out,JPMorgan Chase would per-form far better than the stress test projections.I believe we would actually make money over the nine quarters in the Feds stress scenario.Her
241、es one example that illustrates this.From March 5 to March 20,2020,when the stock market fell 24%and the bond index spread gapped from 191 to 446 basis points prior to major Fed inter-vention,our actual trading revenue was higher than normal as we actively made markets for our clients.By contrast,th
242、e hypothetical stress test had us losing a huge amount of money in market making,based on the way it is calculated.One more thing to point out:JPMorgan Chase now has enough total loss-absorbing capacity to bear out peak CCAR losses(using the Feds numbers)more than eight times over.In addition to CCA
243、R testing,we stress test for vari-ous types of huge market disruptions.For exam-ple,we stress counterparties such as hedge funds,large asset managers or trading houses for extremely large market moves,perhaps an instantaneous 130 basis point move in Treasuries or 50%to 60%moves in commodities.Our sh
244、are-holders should know that regarding any major international bank,we remain well-collateralized across all of our exposures.Even if one of those banks went bankrupt overnight,we would be okay.While there is always a risk that we wont receive a margin call or that some trades may default and leave
245、us exposed to large market risk,the losses likely would not be material.Suffice it to say,our company prepares not only for various forms of extreme economic risk but for various forms of geopolitical risk.Later in this letter I describe how we have enhanced those efforts.35EVALUATING AND MANAGING T
246、HE ECONOMIC AND GEOPOLITICAL RISKS AHEADDont underestimate the extreme importance of interest rates.Interest rates are extraordinarily important they are the cosmological constant,or the mathemati-cal certainty,that affects all things economic.Before I comment on that,I want to share some astounding
247、 numbers to illustrate this point:When you analyze a stock,you look at many factors:earnings,cash flow,competition,margins,scenar-ios,consumer preferences,new technologies and so on.But the math above is immovable and affects all.In a rapidly rising rate environment,any invest-ment where the cash fl
248、ows were expected in the out years would have been dramatically affected think venture capital or real estate development,for example.Any form of carry trade(effectively borrowing short and investing long)would be sorely disappointed.Carry trade exists not just in banks but is embedded and is silent
249、ly present in companies,investment vehicles and others,includ-ing situations that require recurring refinancing.We are prepared for potentially higher interest rates,and we may have higher inflation for longer.If we have higher inflation for longer,the Fed may be forced to increase rates higher than
250、 people expect despite the recent bank crisis.Also,QT may have ongoing impacts that might,over time,be another force,pushing longer-term rates higher than currently envisioned.This may occur even if we have a mild or not-so-mild recession,as we saw in the 1970s and 1980s.Todays inverted yield curve
251、implies that we are going into a recession.As someone once said,an inverted yield curve like this is“eight for eight”in predicting a recession in the next 12 months.However,it may not be true this time because of the enormous effect of QT.As previously stated,longer-term rates are not necessarily co
252、ntrolled by central banks,and it is possible that the inver-sion we see today is still driven by prior QE and not the dramatic change in supply and demand that is going to take place in the future.We have always looked at the“fat tails”of higher interest rates,particularly on our own company.We were
253、 premature in thinking about the possibil-ity of interest rates going to 5%,6%or 7%which still might not happen,but we always want to be protected against this outcome.For example,we have spoken about stockpiling cash,not investing in sovereign debt when rates were low and being willing to forgo inc
254、ome to protect against rising rates.Rest assured,our company can handle significantly higher interest rates no matter how anyone analyzes capital.Higher interest rates will obviously have an important impact,not just for banks but for some of those who borrow on a floating rate or those who have to
255、refinance in a higher rate environ-ment.If this tide goes out,you should assume that it will expose additional weaknesses in the econ-omy.However,our company is prepared not only for higher rates but for a potential recession that could arise and related credit losses.That prepara-tion includes anal
256、yzing all of our clients(in particu-lar our leveraged lending,real estate and other cli-ents)for what the impact of higher rates may mean for them.We believe the risks within our own portfolio are manageable.And we try to ana-lyze the impact of these factors on companies and industries away from us.
257、For example,we do expect that some types of real estate in certain locations may come under pressure.Finally,we assume all of these risks and uncertain-ties will result in volatile markets.Net present value(NPV)of$1.00 annuityLifetime NPV%NPVin first 10 years1%interest rate$1009%10%interest rate$106
258、1%36EVALUATING AND MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEADThere are risks and opportunities in the restructuring of global economic relations.There is no question that supply chains need to be restructured for three different reasons:For any products or materials that are essential for na
259、tional security(think rare earths,5G and semiconductors),the U.S.supply chain must be domestic or only open to completely friendly allies or partners.We cannot and should not ever be reliant on processes that can and will be used against us,especially when we are most vulnerable.All countries will b
260、e protecting their national security in their own way,tailoring their strategies as they see fit.Countries will also be taking specific action to protect critical industries(think electric vehicles(EV),AI and chips)that may not be directly related to national security but are key to national competi
261、tiveness.This is essentially what Americas IRA is meant to do.Companies will diversify their supply chains simply to be more resilient.This restructuring will likely take place over time and does not need to be excessively disruptive.There will be winners and losers some of the main beneficiaries wi
262、ll be Brazil,Canada,Mexico and friendly Southeast Asian nations.For similar national security reasons,activities including investment activities that help create a national security risk(e.g.,sharing critical technol-ogy with potential adversaries)should be restricted.While focusing on the risks,its
263、 also important not to forget the opportunities.The transition to a green economy will eventually require$4 trillion a year in capital expenditures.The IRA,CHIPS Act and Bipartisan Infrastructure Law combined will create huge opportunities for companies,investors and entrepreneurs across virtually e
264、very industry group in the United States.You can rest assured that our company is organizing to help clients make the most of these opportunities.Along with reconfiguring our supply chains,we must create new trading systems with our allies.My preference would be to rejoin the Trans-Pacific Partnersh
265、ip it is the best geostrategic trade arrangement possible with allied nations.You can be certain that our company is closely monitoring and adjusting to the risks and opportunities cre-ated by current events.Believe it or not,inflation and interest rates are not the things that worry me the most.Im
266、most concerned about large geopolitical events,cyber attacks,nuclear proliferation,large dysfunctional markets(partially due to poorly calibrated regula-tions;e.g.,the U.K.Gilt and U.S.Treasury markets)and failure of other critical infrastructure.We have established a new Security Forum.The war in U
267、kraine has exposed the severity,com-plexity and interconnectivity of threats such as physical security,the loss of nonbank critical infra-structure(i.e.,communication networks),pandem-ics,insider threats,trade relations,political risk,sanctions,data privacy,war,and the impact of regulatory and gover
268、nmental actions.All these factors affect our company,as well as our clients and countries and their governments.You should know that we have formed a new Security Forum,which meets periodically and enables manage-ment to continually assess the impact of ongoing threats to our company,our clients and
269、 countries around the globe.These risks which include mar-ket risk,credit risk,cyber risk and operational risk,among others are also covered at the board level by our Risk Committee.Finally,when one talks about risk for too long,it begins to cloud your judgment.Looking ahead,the positives are huge.H
270、owever events play out,it is likely that 20 years from now,Americas GDP will be more than twice the size it is today,and hundreds of millions of people around the world will have been lifted out of poverty.In the next section,I talk more about the need for a global economic strategy.37EVALUATING AND
271、 MANAGING THE ECONOMIC AND GEOPOLITICAL RISKS AHEADLike most Americans,I get frustrated with the mediocrity and bureaucracy of the massive admin-istrative state.We accept it too readily.And it dam-ages the confidence we have in our own country.I have enormous respect for the people who work for the
272、U.S.government,but we simply dont invest enough in making it more effective.Some examples are:antiquated systems at the Federal Aviation Administration,United States Postal Service and Internal Revenue Service;inefficient ports and crumbling infrastructure;an ineffective immigra-tion policy;policies
273、 that prevent affordable housing and leave apartments vacant;policies that hurt Puerto Rico;tenure versus merit-based compensa-tion and promotion;and work rules that dramati-cally reduce efficiency.We have a vast system with a lack of accountability and proper reporting.And usually when reports are
274、issued,they only address how much money was spent not,for example,how many highway miles were built,in what time period and at what cost.Government,which is 20%of the economy,seems to be getting less produc-tive over time,unlike the rest of the economy.In addition,we have too much litigation this is
275、 the bureaucratization of America think Europe.To be completely fair,I am also frustrated with the typically shortsighted selfishness of some busi-nesses,asking for abundant special tax breaks and often using regulations to protect the incumbent.I also want to express exasperation with some of my fe
276、llow citizens who dont pay the taxes they owe on the order of$600 billion a year,who wont con-sider sensible policy measures like a carbon tax to stem climate change and who sometimes seem to only like democracy when the voters agree with them.Democracy by its nature is compromise.One of the lessons
277、 of the past decade is that if major legislation cannot be done in a bipartisan way,maybe it should not be done at all.DEVELOPING EFFECTIVE POLICY AND EFFECTIVE GOVERNMENTTheology is not policy.Policy based on falsehood or oversimplified facts is doomed to failure.Too often now,policy starts as poli
278、tics without the benefit of analytics and experts.Policy should precede politics not the other way around.Policy should be painstakingly developed based on facts and analysis(and on information about how policies were productively developed in other parts of the world).You can effectively crowd-sour
279、ce policy expertise.Why were Germany and Switzerland so successful with apprenticeship pro-grams?Why were Canada and Singapore so effec-tive with permitting and infrastructure?All poli-cies,like education,infrastructure and regulation,need to start with an agreed-upon goal and be comprehensive and c
280、oordinated to accomplish it.After the core of a policy is developed,then,of course,it will be modified by political leaders but it is hoped the core of the policy remains intact.If those modifications bastardize it in such a way as to render it inefficient,it should be dropped.We require a 21st cent
281、ury government.In a company,you are constantly setting up your organization for success.We need to find a way to more rapidly reorganize our government for the new world.While Congress can often move very quickly in a crisis,we are unable to move quickly as a government over the medium term.We need
282、to move faster,adopt new technologies and retrain human capital more quickly.Even in a good company,reorganizing for change can be hard business and staff units fight to maintain their status quo and perceived prerogatives as if their lives were at stake.I can only imagine how hard this is in the go
283、vernment,but it will only get worse if we do not fix this in our fast-changing world.Our Serious Need for More Effective Public Policy and Competent Government38OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENTBy Jamie DimonRussias invasion of Ukraine punc-tured many assumpt
284、ions about the future of the world and thus was a pivotal moment in history.America and the West can no longer maintain a false sense of security based on the illusion that dicta-torships and oppressive nations wont use their economic and military powers to advance their aimsparticularly against wha
285、t they perceive as weak,incompetent and disorganized Western democracies.In a troubled world,we are reminded that national security is and always will be paramount,even if it seems to recede in tranquil times.It should also lay to rest the idea that America can stand alone.U.S.leaders must always pu
286、t America first,but global peace and order is a vital American interest.Only America has the full capability to lead and coalesce the Western world,though we must do so respectfully and in partnership with our allies.Without cohesiveness and unity with our allies,autocratic forces will divide and co
287、nquer the bickering West.America needs to lead with its strengthsnot only military but also economic,diplo-matic and moral.Heres what we can do:Rededicate ourselves to the qualities and principles that made America great.These principles are life,liberty,the pursuit of happiness and the idea that al
288、l people are created equal.Democracy and human freedom are inseparable from freedom of speech,freedom of religion and free enter-prise.It would help to educate all Americans about the sacrifice of those who came before us for democracy at home and abroad.We need to acknowledge the critical role that
289、 government playsand we need government to be more competent and accountable.We must build stronger safety nets to care for the poor,the old and the disabled,and to cushion adjustment to economic change,while also maintaining economic dynamism,individual responsi-bility and the dignity of work.We mu
290、st confront crises and failures of public policy by developing better policies and by dealing with realities.We can recognize the mistakes America has made without disparaging the nation.We support global human rights and stand on the side of liberty,but we also have to be realistic about the compro
291、mises necessary to accomplish long-term goals.Remember Franklin D.Roosevelt and Winston Churchill allied with Stalin against Hitlers imminent threat.Develop a Marshall Plan for global energy and food security.This will be critical both in keeping the Western alliances together and minimizing the glo
292、bal suffering caused by starvation.Global energy and food supply chains are precarious by their nature.And it should be self-evident that energy security and preventing climate change arent contra-dictory:Secure and reliable oil and gas production is compatible with reducing CO2 over the long run,an
293、d is far better than burning more coal.It should also be self-evident that global food and energy security relies on realistic trade policy and American military strength.Increase military spending,along with our allies,as much as necessary to protect the world.Not only is America a bastion of freed
294、om;it is still the arsenal of democracy,and economic sanctions are no substitute for an effective military.“We know only too well that war comes not when the forces of freedom are strong,but when they are weak,”as Ronald Reagan said in 1980.Military strength needs to be combined and coordinated with
295、 strong diplomatic and economic aid for the devel-oping world.Thoughtful policies would help many nations lift up their people,develop their human rights and join eco-nomic unions that are good for all involved.Recover our economic dynamism.A strong economy is the foundation for American power,and w
296、e havent focused enough on economic growth.Between 2000 and 2020,real U.S.GDP grew at an average rate of only 1.7%a year.Had we grown at 3%instead,last years gross domestic product per person would have been$15,000 higher.That would help pay for much of what we need to do as a nation.Economic growth
297、 will repair the fraying of the American dream,particularly if we share the wealth by improving education and wages for lower-paid citizens.There are many effective ways to do this,such as raising minimum wages and expanding the earned-income tax credit.We must also fix the immigration policies that
298、 are tearing us apart,dramatically reducing illegal immi-gration and dramatically increasing legal immigration.Economic growth will reduce inflation,reduce the deficit,and make it easier to afford the strong military we need.We arent going to have the economic growth we need with the legal,regulator
299、y and bureaucratic system we have today.Global trade will necessarily be restruc-tured so that we dont rely on potential adversaries for critical goods and services.This will require more“industrial plan-ning”than America is used toand we must ensure it is properly done and is not used for political
300、 purposes.Yet America should also open its arms,through trade and aid,to all other nations.Most develop-ing countries would prefer to align eco-nomically with the West if we help them solve their problems.We should develop a new strategic and economic framework to make ourselves their partner of cho
301、ice.Deal with China thoughtfully and without fear.America still has an enor-mously strong handplenty of food,water and energy;peaceful neighbors;and what is still the most prosperous and dynamic economy the world has ever seen,with a per person GDP of over$75,000 a year.We can have faith that our sy
302、stem will maintain the economic dynamism we need.China has done a great job lifting up its nation and bringing its GDP per person up to$13,000 a year.Yet any fair assessment must recognize its challengesnot enough food,water and energy;a very complex geopolitical situation with tough neighbors;a lac
303、k of freedom that creates economic rigidity and malinvestment.Whether you think it is a competitor or a potential adversary,we,along with our allies,should firmly negotiate with China(where my company and its predecessor firms have done business for more than a century).We should acknowledge that we
304、 have common interests in combating nuclear proliferation,climate change and terrorism.Tough but thoughtful negotia-tions over strategic,military and economic concernsincluding unfair competitionshould yield a better situation for all.If America leads well,China will be better off forming partnershi
305、ps with a strong Western world than with Russia,Iran and other such nations.Together,we can ensure Americas lead-ership for the next 100 years.Mr.Dimon is Chairman and CEO of JPMorgan Chase&Co.The West Needs Americas LeadershipHow the U.S.can marshal its strengthsnot only military but also moral,eco
306、nomic and diplomaticOriginally published in The Wall Street Journal on January 3,2023.Reprinted with permission.CREATING A COMPREHENSIVE GLOBAL ECONOMIC STRATEGYJust as we need a comprehensive military strategy,globally,to deal with future security risks,we need a comprehensive global economic strat
307、egy to deal with future economic risks.Done properly,this will help strengthen and coalesce the Western demo-cratic alliances over an extended period of time.This strategy has four pillars.First,we need a U.S.growth strategy.Between 2000 and 2022,real U.S.GDP grew at an average rate of only 2%a year
308、.Had we grown at 3%instead,last years GDP per person would have been$15,000 higher.That would help pay for much of what we need to do as a nation.We simply have not focused enough on growing the U.S.economy.In prior letters,we have spoken about how we need to get public policy right to address a mul
309、ti-tude of areas,which span ineffective education systems,soaring healthcare costs,excessive regu-lation and bureaucracy,the inability to plan and build infrastructure efficiently,inequitable taxes,a capricious and wasteful litigation system,frustrat-ing immigration policies and reform,inefficient m
310、ortgage markets and housing markets and hous-ing policy,a partially untrained and unprepared labor force,excessive student debt,and the lack of proper federal government budgeting and spend-ing.I believe that our poor policies have restrained our growth,and simply improving those policies would acce
311、lerate our growth.We should also focus on reducing the worker shortages by allowing both more merit-based immigration and seasonal immigration.Reducing trade barriers could also have a rapid effect,and decreasing regulations and bureaucracy would be helpful.For example,starting a small business toda
312、y generally requires multiple licenses,which take precious months to get.But it doesnt end there.Talk with any small business owner,and that person will describe the mountains of red tape,inefficient systems and huge amount of documen-tation involved to operate the business.We need to reduce the bur
313、dens that are imposed on those who want to open and run a small business.By seeking a bold,comprehensive approach,we increase our ability to positively impact economic growth and jobs;in fact,this is also the best way to reduce inflation and the deficit.Second,an industrial policy,done properly,coul
314、d drive growth and also protect our national security.The United States has essentially never had an“industrial policy,”a strategy by which the federal government,through incentives and policies,drives American industry.We have done it indi-rectly through things like the Defense Advanced Research Pr
315、ojects Agency and NASAs moon mis-sion but not generally by favoring industries.More directly,the IRA and the CHIPS Act provide specific incentives for EVs,semiconductors,rare earths,alternative energy sources and others.There are two reasons we should develop an industrial policy:1)specifically to s
316、afeguard our national security and 2)to counter unfair economic competition,particu-larly where our national security is directly con-cerned.For example,making bicycles would not be part of the second example.But China,using subsi-dies and its economic muscle to dominate batteries,rare earths,semico
317、nductors or EVs,could eventu-ally imperil national security by disrupting our access to these products and materials.We cannot cede these important resources and capabilities to another country.Crafting an industrial policy should be done properly and with a tightly restricted scope.If the policy is
318、 politically motivated,it will be used to benefit vari-ous political benefactors and eventually provoke extreme misallocation of capital and corruption.Managing the economy is extremely complex,and Adam Smiths invisible hand still prevails in a way we can never understand.If the government starts to
319、 micromanage through an industrial policy,it will not stop,and much of the efficiencies meant to be created will not be realized.Industrial policy should come with twins very strict limitations on political interference and related comprehensive policy around factors like permitting require-ments,wh
320、ich if not drastically improved will inhibit our ability to make investments and allow infra-structure to be built.40OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENTThird,fixing income inequality will reignite the American dream.Of all the policy errors we need to remedy in
321、 Amer-ica,there are two that I believe will have a dramatic effect on growth and equality and go a long way toward repairing the frayed American dream.The first is providing graduating students and other individuals with work skills(in fields such as advanced manufacturing,cyber,data science and tec
322、hnology,healthcare and so on)that will lead to better paying jobs.This would be good for growth and much that ails us.And we know what to do.High schools and community colleges should work with local businesses to create specific skills-training programs,internships and apprenticeships that prepare
323、graduating students to be job ready whether they go on to earn a credential,to work or to attend college.With 10.8 million job openings and 5.9 million unemployed workers in the United States,work-skills training has never been needed more.Businesses must be involved in this process,and programs nee
324、d to be offered locally because that is where the actual jobs are.The second step is related to the first:Get more income to lower-paid workers.The gap between skilled and unskilled workers has been growing dramatically so much so that unskilled labor has become less and less a“living wage.”Of the 1
325、50 million Americans working today,approximately 21 million are paid less than$15 per hour.It is hard to live on$15 an hour,particularly for fami-lies(even if two household members are working).But all jobs should be treated with respect.Jobs and living wages bring dignity,lead to more opportunity i
326、n housing,education,childcare,health and overall well-being and also help rebuild communities as that income is used to improve how people live.A major step would be to expand the Earned Income Tax Credit(EITC),which many Democrats and Republicans already agree upon.Today,the EITC supplements low-to
327、 moderate-income working individuals and couples,particularly with children.For example,a single mother with two children earning$9 an hour(approximately$20,000 a year)could receive a tax credit of more than$6,000 at years end.Workers without children receive a very small tax credit this should be d
328、ramatically expanded,too and personally,I would eliminate the child requirement altogether.Last year,the EITC program cost the United States about$64 billion,and 31 million individuals received the credit.We should convert the EITC to make it more like a negative income payroll tax,paid monthly.Many
329、 people who are eligible for this benefit do not get it(often because they do not know about it).Proper reform of this program could increase benefits where deserved and reduce fraudulent and improper payments.Any tax credit income should not be offset by any other benefits these individuals already
330、 receive.I have little doubt that this would do more than anything else to lift up lower-income neighbor-hoods as the money is spent on lifting up their families.I also have little doubt that this would add to GDP because most of this money would,in fact,be spent.Fourth,America must take the lead on
331、 devising a comprehensive global economic strategy.In an op-ed published by The Wall Street Journal earlier this year,I wrote:“Only America has the full capability to lead and coalesce the Western world,though we must do so respectfully and in partner-ship with our allies.Without cohesiveness and un
332、ity with our allies,autocratic forces will divide and conquer the bickering West.America needs to lead with its strengthsnot only military but also economic,diplomatic and moral.”41OUR SERIOUS NEED FOR MORE EFFECTIVE PUBLIC POLICY AND COMPETENT GOVERNMENTGetting military strategy right isnt sufficie
333、nt.We must keep the Western alliances together and actively appeal to developing nations.A compre-hensive economic strategy would tighten the bonds,strengthen our alliances and,importantly,maximize our economic resources.Furthermore,it must encompass a global trade and investment strategy,a holistic plan around energy security and food security,and far more dynamic develop-ment finance for emergin