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Tuesday, April 07,
2020 /07:04 AM / By JP Morgan Chase & Co./ Header Image
Credit: JP Morgan Chase & Co.
Introduction
As we prepare this year's annual letter
to shareholders, the world is confronting one of the greatest health threats of
a generation, one that profoundly impacts the global economy and all of its
citizens. Our thoughts remain with the communities and individuals, including
healthcare workers and first responders, most deeply hit by the COVID-19
crisis.
Throughout our history, JPMorgan Chase
has built its reputation on being there for clients, customers and communities
in the most critical times. This unprecedented environment is no different. Our
actions during this global crisis are essential to keeping the global economy
going and will be remembered for years to come.
In these annual letters, I usually cover
a range of topics, including a review of JPMorgan Chase's principles,
priorities and performance, as well as the broader geopolitical issues facing
our company and the most critical public policy issues affecting our country.
When the time is right and the future is clearer, I will provide a more
complete and current view on how this crisis might change our strategies around
how we run the company, work with our clients and governments, and develop
public policy solutions. However, right now, as we deal with the spiraling
effects of this pandemic, I want to focus on what we as a bank can do to remain
strong, resilient and well-positioned to support our colleagues, clients,
customers and communities across the globe.
Looking back on the last two decades - starting from my time as CEO of Bank One in 2000 - the firm has weathered some
unprecedented challenges, as we will with this current pandemic, but they did
not stop us from accomplishing some extraordinary things. Once again, you
should know how grateful and proud I am of our more than 200,000 employees
around the world. I also want to thank Daniel Pinto, Gordon Smith, our
Operating Committee, our Board of Directors and our senior leaders for the
exceptional leadership they have shown under the most difficult of
circumstances.
We entered this crisis in a position of
strength. 2019 was another strong year for JPMorgan Chase, with the firm
generating record revenue and net income, as well as setting numerous other
records across our lines of business. We earned $36.4 billion in net income on
revenue1 of
$118.7 billion, reflecting strong underlying performance across our businesses.
We now have delivered record results in nine of the last 10 years2 and
are confident we will continue to do so in the future, though it should be
expected that our earnings will be down meaningfully in 2020. Our largest
businesses grew revenue and net income for the year, while the firm continued
to make significant investments in products, people and technology. We grew
core loans by 2%, increased deposits overall by 5% and generally broadened
market share across our businesses, all while maintaining credit discipline and
a fortress balance sheet. In total, we extended credit and raised capital of
$2.3 trillion for businesses, institutional clients and U.S. customers.
JPMorgan Chase stock is
owned by large institutions, pension plans, mutual funds and directly by
individual investors. However, it is important to remember that in almost all
cases, the ultimate beneficiaries are individuals in our communities.
Approximately 100 million people in the United States own stock, and a large
percentage of these individuals, in one way or another, own JPMorgan Chase
stock. Many of these people are veterans, teachers, police officers, firefighters,
retirees, or those saving for a home, school or retirement. Your management
team goes to work every day recognizing the enormous responsibility that we
have to perform for our shareholders.
While we don't run the
company worrying about the stock price in the short run, in the long run our stock price is a measure of the
progress we have made over the years. This progress is a function of continual investments, in good and bad times, to
build our capabilities - our people, systems and products. These important
investments drive the future prospects of our company and position it to grow
and prosper for decades. Whether looking back over five years, 10 years or
since the JPMorgan Chase and Bank One merger (15 years ago), our stock has
significantly outperformed the Standard & Poor's 500 Index and the Standard
& Poor's Financials Index.
The results shown above use our stock
price as of December 31, 2019. If you compare that with our stock price as of
March 31, 2020, you would see a dramatic change. For example, the overall stock
price gain from the date of the JPMorgan Chase and Bank One merger was 442% at
the end of last year, but it dropped to 252% three months later. While that's
still far better than many companies' performance, it illustrates the
volatility of returns.
Unlike past letters, the placement of
charts about the performance of our lines of business and our fortress balance
sheet is different - they can be found in an appendix following this letter to
peruse at your leisure. Instead, I am going to focus my comments in the rest of
this letter on issues that relate to our current crisis. And while I enjoy
sharing my opinion on many other matters, I will avoid doing so this year.
Within this letter, I discuss the
following:
Dealing With An Extraordinary Crisis
A corporation - essentially any
institution - is a living, breathing organism made up of people, technology,
institutional knowledge and relationships and is generally organized around
mission and purpose. Entering into a crisis is not the time to figure out what
you want to be. You must already be a well-functioning organization prepared to
rapidly mobilize your resources, take your losses and survive another day for
the good of all your stakeholders.
No matter the challenge, we manage our
company consistently with principles that have stood the test of time. I have
written about these inviolable principles often - the need for extremely
talented and motivated employees; a fortress balance sheet that allows us to
invest in good times and in bad times; clear, comprehensive and accurate
financial, risk and operating reporting to let us make quick and accurate
decisions; a devotion to our customers and communities; and continuous
investing in technology to better serve both our employees and our customers.
(These principles also underlie an organization's preparedness for tough
competition - I was going to write this year that the competition is back in
all of its facets. There'll be more to come on that next year.)
We are there for our customers, employees and
communities in good and bad times - we are a port in the storm. It is in the
toughest of times that we need to use our capital and liquidity to help clients -large and small. COVID-19 is one of those extraordinary times. Below are some
of the things we are doing to help our company and our customers during this
global crisis.
First and foremost, we
have to be prepared to operate under extremely adverse circumstances.
The significant economic fallout from
this crisis reinforces the critical need to keep the global financial system
fully functioning - and we recognize that our firm is an important part of the
global economy.
Therefore, we incorporate plans for
resilience in everything we do - resilience for hurricanes, data center
failures, cyber attacks and other issues. And while we had not envisioned the
effects of a pandemic like this one, all of this preparation has paid off - and
we have been able to accomplish far more and far more quickly than we
originally thought possible. It is absolutely essential that we be up and
functioning for all of our customers each and every day.
How else would we process $6 trillion in payments or buy and sell approximately
$2 trillion in securities and foreign exchange transactions for our clients on
a daily basis? And how else would we raise more than $2 trillion of credit and
capital for our clients each year? Our branches, collectively, have 1 million
customer visits each day, and our combined credit card and debit card
transaction volume totals $1.1 trillion a year.
During this crisis, we have been
utilizing our disaster recovery sites and implementing alternative work arrangements
globally. We now have more than 180,000 employees working from home (and quite
effectively), including traders, bankers, portfolio managers, and operations
and call center teams across the globe. We are ensuring they continue to
operate at the highest standards with the proper technological tools and access
so they can serve their clients safely and seamlessly. Over the past few weeks,
we have had nearly 150,000 concurrent virtual sessions - nearly five times our
pre-pandemic average - and we have capacity in reserve to support significantly
more demand if necessary.
We're taking significant steps to help our
consumer customers.
After Superstorm Sandy, Hurricane Harvey
and other devastating natural disasters around the globe, after wildfires
ravaged California towns and after a number of other tragic events, we stepped
up for our customers. Today, we are doing the same across the country as
we work individually with customers facing COVID-19-related hardships.
We have been
helping our customers, who tell us about their financial struggles as a result
of the crisis, and are offering relief measures such as:
Of our approximately 5,000 Chase
branches, we have managed to keep three-quarters of them open - and safe - for
our customers who need our services. In every one of our markets, almost all of
our 2,300 branches with drive-up windows have remained open for business,
allowing people to maintain a safe distance. Our 17,000 bankers have continued
to take appointments and proactively reach out to customers - helping them
manage their finances and use our digital tools - often letting customers stay
home. In addition, the vast majority of our 16,850 ATMs are well-stocked and
still functioning to provide needed cash to our customers. Our call centers
have not fared as well; many of them have been effectively shut down by local
restrictions. As the volume of calls has increased from customers seeking
assistance, hold times have also increased. We have mobilized quickly to
address this issue, reminding customers that our digital self-service
capabilities are always available for them to check balances, deposit checks or
make payments. Additionally, we have built new tools - digital and electronic - to allow customers to request relief without waiting for a specialist. And we
are making it possible for our displaced phone specialists to work from home.
We are also taking significant action to
support businesses - small, midsize and large - and state and local
governments.
Clearly, some clients may be much more
vulnerable than others - for example, transportation companies, hospitality
enterprises, hospitals, utilities and, in particular, small businesses that do
not have enough capital to withstand sudden and sustained downturns in income.
JPMorgan Chase Institute research reveals that 50% of small businesses have
less than 15 cash buffer days, reinforcing why small businesses are being
heavily disrupted by the current crisis and will feel the effects for a
significant period of time - even as more capital from the recent federal stimulus
program reaches them.
To support
businesses during this current crisis, we are doing the following:
Recognizing the extraordinary extension
of new credit, mentioned above, and knowing there will be a major recession
mean that we are exposing ourselves to billions of dollars of additional credit
losses as we help both consumer and business customers through these difficult
times. (We will provide more detail on these actions later in this letter.) Of
course, we are in continual contact with our regulators about our actions and
efforts.
We
stand ready to assist the government in implementing stimulus package benefits
to support the economy.
We applaud the speed with which the
federal government and the Federal Reserve (the Fed), as well as other central
banks around the world, put together a stimulus package and other funding
benefits to help individuals, businesses, and state and local entities across
the United States and beyond. Much remains to be done to assure these resources
can be quickly and effectively rolled out. We hope to be at the forefront of
using this assistance to help our customers get through what is
certain to be a difficult next few months. We will not use this relief funding
for ourselves.
Times like these reinforce that our employees are our
most important asset - they are fundamental to the vibrancy and success of our
company. Excellence in everything we do - from operations and technology to
service and reputation - depends upon the abilities and character of our employees.
Our vast and diverse team of people serves our customers and communities,
builds the technology, makes the strategic decisions, manages the risks,
determines our investments and drives innovation. Setting aside differing views
of our complex world and the risks and opportunities ahead, it is inarguable
that having such an extraordinary team - people with guts, brains and enormous
capabilities who can navigate whatever circumstances bring - is what ensures
our future prosperity.
In last year's letter, I wrote about the
many ways we take excellent care of our employees: competitive wages and
compensation, 401(k) retirement benefits, health benefits and wellness
programs, extensive training programs, volunteer and employee engagement
opportunities, generous parental leave policies and much more.
During this pandemic, we have also taken
extensive steps to protect and support our employees and their families. For
example:
It's amazing how quickly we have
mobilized and implemented work-from-home and other resiliency measures - in
weeks instead of months or years. There are great lessons to be learned from
this experience.
While conditions may sometimes be
unusual and difficult, we are functioning smoothly. In fact, over the last
month in certain parts of our company, we've had the highest volume and
transaction totals we have ever seen.
Needless to say, this success would be
impossible without our exceptional employees, and we recognize our
responsibility to support both their professional and personal lives now more
than ever.
A DIVERSE
AND INCLUSIVE COMPANY IS A STRONGER COMPANY
While the
health crisis we are facing supersedes all other topics in this year’s letter,
the subject of diversity and inclusion is such an important one that I feel
compelled to include it. As a firm, we have an unwavering commitment to
integrity, fairness and responsibility. That’s why any instances of racist
behavior and discrimination are so deeply unsettling.
Recently,
Daniel Pinto and Gordon Smith, our Co-Presidents and Chief Operating Officers,
sent a note to employees about steps we're taking to ensure our values reach
all corners of our company.
Dear
colleagues,
We are managing through uncertain times right now and recognize many of you are focusing much of your day on responding to the ongoing spread of the COVID-19 coronavirus. While this is a top priority for all of us, we want to make sure you know we haven't lost sight of our commitment to keeping you informed about our ongoing efforts to strengthen our culture. Now, more than ever, we need the best of everyone because only together will we get through these unprecedented times.
As you know,
after the media reported on alleged discrimination in our firm last year, Jamie
asked Gordon to lead an internal team to take a hard look at how we do business
so that we could gain a deeper understanding of what more we can do to root out
racism and discrimination anywhere it exists.
Challenging
our people to be clear-eyed and open to change, we tasked many of our senior
leaders from across the firm, from multiple lines of business and control
functions, to evaluate our policies, procedures and programs firmwide, to
ensure they are fair for all employees and customers. To be clear, we are
looking across the whole firm and at everything we do.
As a result,
we've identified a number of areas that, with enhanced, scaled or new
programming or processes, would serve to improve our culture in important ways.
For example, we focused on employee and customer complaints - examining common
themes, where they originated and where opportunity exists to improve.
We also
looked at how employee discretion may affect product accessibility across lines
of business. We found opportunities to increase awareness about the firm's
Diversity & Inclusion strategy, and we identified a need to expand our
diversity recruitment efforts to help us hire more diverse talent, and to
implement mandatory firmwide training.
While this
work is ongoing, here are five initial areas where work is now underway,
including:
Enhancing
our employee feedback process
We are
looking hard at how we treat an employee complaint when it comes in. We are
already working to simplify escalation channels so employees are clear on where
to submit complaints, in addition to further building out our capabilities
across complaints to better understand the full scope of the individual's
experience. Feedback suggests that employees are not always clear on where to
submit complaints, so we are working to identify where improvements are needed.
Employees
are encouraged to use existing channels to report inappropriate conduct or
discrimination. We will continue to strengthen these "listening posts" and
reporting channels in an effort to make sure every one of us feels safe and
confident identifying and reporting inappropriate behavior.
Making it
easier for customers to access products and services
We regularly
review the products and services we offer to customers, and we are looking for
ways to boost customer connectivity across our full spectrum of consumer
products. To start, we are focusing on:
We will
improve product parameters and strengthen monitoring tools to ensure the
exercise of discretion works as intended.
Bolstering
our hiring systems to build a more robust pipeline of diverse talent
Attracting
the best talent can only be achieved through a dedicated focus on inclusive
recruiting, so we are recommitting ourselves to this effort. We have made
progress in this area, with programs such as Advancing Black Leaders, a program
focused specifically on increased hiring, retention and development of talent
from within the black community.
Over the
past four years, we have increased the number of black professionals in our
most senior ranks, with the number of black managing directors and executive
directors up by more than 50 percent.
In addition,
we are expanding our specialized team dedicated to conducting more targeted
outreach to recruit diverse talent. We will expand on our program to hold
hiring managers and recruiters at the highest levels of the company accountable
for hiring a diverse group of professionals.
Instituting
required firmwide Diversity & Inclusion Training
In order to
drive more diverse and inclusive behaviors amongst our leaders, managers,
employees and customers, we are requiring diversity and inclusion training for
all employees at various points throughout an employee lifecycle, including at
the time of hire, and periodically thereafter. We expect all employees to
fulfill these requirements.
Because the
role of the manager is arguably the most critical role in promoting our culture
deep into the organization, we will make additional manager training mandatory
at the time of promotion to a people-manager role, and at the time of promotion
to a senior leader role, in addition to other developmental moments for
managers. We already have training in many parts of the organization, including
programs like "Journey to Inclusive Teams" and the required unconscious bias
training for branch managers. We will continue to enhance and embed this
required training throughout the manager's career.
We know that
it is essential for managers to be inclusive leaders and we will focus on
helping them recognize ways they can be intentional about inclusion as they
recruit, hire, retain and develop diverse talent.
Increasing
the diversity of the businesses we partner with firmwide
We are fully
committed to a fair, equitable and inclusive company for our customers, our
employees, our partners and our suppliers. This is part of every manager's job,
and they will be held accountable.
The
diversity of the businesses we partner with across the firm is just as
important as our employee diversity - from the small businesses to which we
provide access to capital, to our asset managers, to our suppliers and to the
companies we assist in bringing public.
We intend to
increase diverse representation through structural process improvements in how
we select partners and build our pipeline.
The firm
will also continue to use data and research to further inform the development
of products, services, employee programs and community investments that help
address racial disparities in wealth building.
This all
goes to say our work described above is representative of our deep commitment
and is ongoing. It is not a "one and done" event. We will remain steadfast,
continue to work now and in the future, and remain ever-vigilant in our effort
to maintain a culture where racism cannot live or thrive. Over the next 30
days, each business will review their current strategies and contribute a plan
to bring this to life and each business will be held accountable.
Let us say again, we are all the keepers of our culture and we are committed to ensuring that ours is one where all employees and customers are treated equally and fairly, and where all of us receive the opportunity and mutual respect we deserve.
I can assure
you, it did not take one particular story to make us realize that a diverse and
inclusive culture is important.
We know that
too many people are being left behind - particularly in the black community. The
Civil War ended more than 150 years ago, and we still have not come even close
to parity. We need to do more as a nation, and we have more to do as a
firm.
I believe
that our shareholders know we make extraordinary efforts to lift up our
communities, both at a local level - supporting schools and work skills
training, for example - and at the national level, helping to formulate
policies that are good for countries. These policies affect healthcare,
infrastructure, education and employment, including initiatives such as those
that help people with a criminal background get a second chance.
We know that crises like COVID-19 create
further inequities in society so it is even more important that we be present
for those communities hit hard by the pandemic. JPMorgan Chase made a $50
million commitment to help address the immediate humanitarian crisis, as well
as the long-term economic challenges people face. Funding will be deployed over
time with particular focus on the most vulnerable people and communities,
including:
There is a tremendous amount we do day
to day - in addition to traditional banking - to help the communities in which
we operate, including the following, some of which you might be surprised to
know:
Of course, we do not know how this
crisis will ultimately end, including how long it will last, how much economic
damage it will do, or how fast or slow the recovery will be. We have always
been serious about stress testing and run an enormous number of tests per week
so that we are prepared for most crises. But as is often the case, this "actual
new crisis" - while it shares attributes with what is being stress tested - is
dramatically different from the expected.
We stopped buying back our stock: We
have always held the position that the highest and best use of our equity is to
reinvest it in our own business and, of course, to be able to withstand tough
times. Halting buybacks was simply a very prudent action - we don't know
exactly what the future will hold - but at a minimum, we assume that it will
include a bad recession combined with some kind of financial stress similar to
the global financial crisis of 2008. Our bank cannot be immune to
the effects of this kind of stress.
We will share in detail our latest
thinking on the impact this crisis will have on our financials in our first
quarter earnings release in mid-April; however, to put it in context, here is
how our shareholders can think broadly about a reasonable range of outcomes.
Our 2019 pretax earnings were $48 billion3 - a huge and powerful earnings stream that enables us to absorb the loss of
revenues and the higher credit costs that inevitably follow a crisis. For
comparison, the Comprehensive Capital Analysis and Review (CCAR) results for
2020 that we submitted to the Federal Reserve in 2019 (which assumed outcomes
like U.S. unemployment peaking at 10% and the stock market falling 50%) showed
a decline in revenue of almost 20% and credit costs of approximately $20
billion more than what we experienced in 2019. We believe we would perform
better than this if the Fed's scenario were to actually occur. But even in the
Fed's scenario, we would be profitable in every quarter.4 These
stress test results also show that following such a meaningful reduction in our
revenue (and assuming we continue to pay dividends), our common equity Tier 1
(CET1) ratio would likely hold at a very strong 10%, and we would have in
excess of $500 billion of liquid assets.
Additionally, we have run an extremely adverse scenario that
assumes an even deeper contraction of gross domestic product, down as much as
35% in the second quarter and lasting through the end of the year, and with
U.S. unemployment continuing to increase, peaking at 14% in the fourth quarter.
Even under this scenario, the company would still end the year with strong
liquidity and a CET1 ratio of approximately 9.5% (common equity Tier 1 capital
would still total $170 billion). This scenario is quite severe and, we hope,
unlikely. If it were to play out, the Board would likely consider suspending
the dividend even though it is a rather small claim on our equity capital base.
If the Board suspended the dividend, it would be out of extreme prudence and
based upon continued uncertainty over what the next few years will bring.
It is also important to be aware that in
both our central case scenario for 2020 results and in our extremely adverse
scenario, we are lending - currently or plan to do so - an additional $150
billion for our clients' needs. Despite this, our capital resources and
liquidity are very strong in both models. We have over $500 billion in total
liquid assets and an incremental $300+ billion borrowing capacity at the Federal
Reserve and Federal Home Loan Banks, if needed, to support these loans, as well
as meet our liquidity requirements (these numbers do not include the potential
use of some of the Fed's newly created facilities). We could, of course, make
our capital and liquidity buffer better by restricting our activities, but we
do not intend to do that - our clients need us.
I would like to point out that, as we
get closer to the extremely adverse scenario, current regulatory constraints
will limit additional actions we can take to help clients - in spite of the
extraordinary amount of capital and liquidity we could deploy.
We are just beginning to analyze and
work with the government on all of their various programs. For the most part,
these initiatives will need the deep involvement of the private sector to be
properly executed. We intend to do everything we can - and as soon as possible - to ensure that government support is reaching the people who need it most.
We applaud
and support the recent actions the U.S. Department of the Treasury and the
Federal Reserve have taken to try to mitigate the economic impact of the
COVID-19 turmoil. The Fed's overwhelming actions have already dramatically
reduced the financial stress in the system, and there is still more they could
do if they need to. For example, balance sheet expansion, additional lending
facilities, and changes to capital and liquidity requirements are steps
designed to ensure that more capital will flow through the system, which will
ultimately allow us to help more families and small businesses. These actions
would bolster the U.S. economy with no impact on safety, soundness or
regulatory oversight. We are working with the government to make sure such
crisis-relief measures are structured to work effectively - there are a
significant number of details that need to be resolved, which I will not go
into here.
While we will aggressively help our
customers take advantage of these new programs (though we must take action to
protect ourselves from ongoing - and, more important, future - litigation
risk), we want our shareholders to know that we have not requested any
regulatory relief for ourselves. Saying that we will not ask for regulatory
relief does not mean the government shouldn't change some rules and
regulations, however. For example, some rules can improperly prevent healthy,
well-capitalized banks from lending freely in times of stress. This can hurt
customers as the crisis deepens. Leaving high-quality, available liquidity
undeployed in times of need is an opportunity forever lost.
I have written in detail in past letters
that the regulatory system is in need of both reform and recalibration - not
because we want it to happen but because it would be good for a deepening and
widening of the financial system - something that would benefit all Americans.
While a lot of the rules were constructive and made the financial system
stronger, we are now seeing the impact of poorly coordinated, poorly calibrated
and poorly organized rulemaking. After the crisis subsides (and it will), our
country should thoroughly review all aspects of our preparedness and response.
And we should use the opportunity to closely review the economic response and
determine whether any additional regulatory changes are warranted to improve
our financial and economic system. There will be a time and place for that - but not now.
It is hoped
that the number of new COVID-19 cases will decrease soon and - coupled with
greatly enhanced medical capabilities (more beds, proper equipment where it is
needed, adequate testing) - the healthcare system is equipped to take care of
all Americans, both minimizing their suffering and maximizing their chance of
living. Once this occurs, people can carefully start going back to work, of course
with proper social distancing, vigilant hygiene, proper testing and other
precautions. There are many jobs that can be safely done; however, employees in
certain companies should return to business as usual only if the Centers for
Disease Control and Prevention (CDC) and other government entities deem it safe
to do so.
In addition, this "return to work" process
could be accelerated if federal, state and local governments make tests widely
available that allow people to certify that they have contracted and recovered
from the disease, have the necessary antibodies to prevent them from getting
sick again and are not infectious to anyone. Initially, we need a buffer period
of days or weeks for people to be tested, and then for those who test negative
for the virus, we need to discover whether virus antibodies appear through
serology testing. Both the CDC and private companies are scrambling to produce
such tests: The U.K. has ordered 3.5 million of them, Germany will use them to
issue immunity certificates to COVID-19 survivors, and China and Singapore
already are using tests to determine how extensively the virus spread in large
populations in order to measure the true infection rate. In the United States,
the Food and Drug Administration is allowing doctors to use these serology
tests to identify recovered patients whose antibodies could treat emergency cases
of the disease.
The country was not adequately prepared
for this pandemic - however, we can and should be more prepared for what comes
next. Done right, a disciplined transition would maximize the health of
Americans and minimize the time, extent and suffering caused by the economic
downturn.
Sometimes
extraordinary events in history can cause a change in the body politic. As a
nation, we were clearly not equipped for this global pandemic, and the
consequences have been devastating. But it is forcing us to work together, and
it is improving civility and reminding us that we all live on one planet. E Pluribus Unum.
I am hoping
that civility, humanity, empathy and the goal of improving America will break
through.
We have the resources to emerge from
this crisis as a stronger country. America is still the most prosperous nation
the world has ever seen. We are blessed with the natural gifts of land; all the
food, water and energy we need; the Atlantic and Pacific oceans as natural
borders; and wonderful neighbors in Canada and Mexico. And we are blessed with
the extraordinary gifts from our Founding Fathers, which are still unequaled:
freedom of speech, freedom of religion, freedom of enterprise, and the promise
of equality and opportunity. These gifts have led to the most dynamic economy
the world has ever seen - one that nurtures vibrant businesses large and small,
exceptional universities, and a welcoming environment for innovation, science
and technology. America was an idea borne on principles, not based upon
historical relationships and tribal politics. It has and will continue to be a
beacon of hope for the world and a magnet for the world's best and brightest.
Of course, America has always had its
flaws. The current pandemic is only one example of the bad planning and
management that have hurt our country: Our inner city schools don't graduate
half of their students and don't give our children an education that leads to a
livelihood; our healthcare system is increasingly costly with many of our
citizens lacking any access; and nutrition and personal health aren't even
being taught at many schools. Obesity has become a national scourge. We have a
litigation and regulatory system that cripples small businesses with red tape
and bureaucracy; ineffective infrastructure planning and investment; and huge
waste and inefficiency at both the state and federal levels. We have failed to
put proper immigration policies in place; our social safety nets are poorly
designed; and the share of wages for the bottom 30% of Americans has
effectively been going down. We need to acknowledge these
problems and the damage they have done if we are ever going to fix them.
There should have been a pandemic
playbook. Likewise, every problem I noted above should have detailed and
nonpartisan solutions. As we have seen in past crises of this magnitude, there
will come a time when we will look back and it will be clear how we - at all
levels of society, government, business, healthcare systems, and civic and
humanitarian organizations - could have been and will be better prepared to
face emergencies of this scale. While the inclination of some will be to
finger-point and look for blame, I hope we can avoid that. I also hope we can avoid
people using times of crisis to argue for what they already believe. We need to
demand more of ourselves and our leaders if we want to prevent or mitigate
these disasters. This can be a moment when we all come together and recognize
our shared responsibility, acting in a way that reflects the best of all of us.
As President Kennedy historically said, "Ask not what your country can do for
you - ask what you can do for your country."
My fervent hope is that America rolls up
its sleeves and starts to attack these problems. Fixing them would better
prepare us for future catastrophes, create better economic outcomes for
everyone (with policies that aim to maximize economic growth, driving the best
potential outcomes), improve income inequality, protect the most vulnerable and
foster economic growth that is more resilient, which would also strengthen
America's role in the world. We must never forget that America's economic
prosperity is a necessary foundation for our military capability, which keeps
us free and strong and is essential to world peace. These issues could all be
tackled while preserving the freedoms ascribed by our Founding Fathers: life,
liberty and the pursuit of happiness, freedom of speech, freedom of religion
and freedom of enterprise, which means the free movement of capital and labor
(meaning you can work where you want and for whom you want). At the end of the
day, the pursuit of happiness, our freedoms and free enterprise are
inseparable.
If we acknowledge our problems and work
together, we can lift up those who need help and society as a whole. Business
and government collaborating together can conquer our biggest challenges.
In Closing
While I have a deep and
abiding faith in the United States of America and its extraordinary resiliency
and capabilities, we do not have a divine right to success. Our challenges are
significant, and we should not assume they will take care of themselves. Let us
all do what we can to strengthen our exceptional union.
I would like to express my
deep gratitude and appreciation for the employees of JPMorgan Chase, and I’d
also like to thank all of you who shared your good wishes with me while I was
recuperating from my recent heart surgery. From this letter, I hope
shareholders and all readers gain an appreciation for the tremendous character
and capabilities of our people and how they have helped communities around the
world. They have faced these times of adversity with grace and fortitude. I
hope you are as proud of them as I am.
Finally, the countries and
citizens of the global community will get through this unprecedented situation,
undoubtedly stronger for it. Together, we will rise to the challenge.
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