Jamie Dimon On Fannie Mae and Freddie Mac

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Jamie Dimon On Fannie Mae and Freddie Mac

In an interview on FOX Business Network’s (FBN) Mornings with Maria (weekdays, 6a-9a/ET), JPMorgan Chairman and CEO Jamie Dimon discusses the 2016 election results, his expectations for the economy, tax reform, and infrastructure with Maria Bartiromo.

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On his expectations for the economy:

“You know, so I like the fact that that there — that the focus has been on growth and you see it when the — and the talk about the tax policy, you know, regulatory policy. I think growth is going to be very good for all Americans, not just for companies. So I like that. In fact, I think you’ve seen some of that optimism reflected in the stock price. And hopefully, they will be able to deliver some of that.”

On election results:

“I was surprised. I think most people were surprised with the results. But I went to sleep at, you know, at one point and woke up and drove to work and was thinking, oh, maybe this would be good for the economy and for the average American. And so I’ve kind of moved on.”

On corporate taxes:

“I’ve been on this for a long time, that our corporate tax rate is higher than all other developed nations, whether you look at the statutory rate or the effective rate, it’s been driving capital, brains and capability overseas for a long time. So if you reduce the corporate tax rate and you allow people to repatriate, you’re going to have — capital will come back to the United States, more investment will be made here. You know, some may end up in stock buy-backs and dividends, but so be it. That’s the people’s money, too. And so yes, I think there will be a very big positive. I think it’s very important the public understands that a lot of studies show that when you have corporations with lower tax rates, that one of the big beneficiaries is wages. They compete. They compete, you know, hard, to — to grow and expand. So, yes, I’m thinking — I’m hoping that will lead to a lot of growth.”

On tax reform:

“I think it’s very complex. I think at one point, you’re going to see, you know, them making the sausage. It will be painful for us to watch the sausage. You’ll be talking about it every day. So I think there’s a good chance you’ll have major tax reform. It hasn’t been done, I think, since like 1986. I would love to see it done.

In any event, I think you’ll see some tax reform done, lower corporate tax rates, some form of repatriation, which maybe will help fund infrastructure programs. So you’ll see something.”

On the market reaction to the election:

“I’ve always thought that, you know, particularly bank stocks, but maybe for other stocks, that the political, regulatory, legal environment was pretty tough and that, you know, for a rational reason that you would pay less for a company that’s under, you know, you’re uncertain about future regulations, you’re uncertain about litigation, you’re uncertain about the politics and that therefore, if you remove some of that or you think it’s going to get better, that should be a plus. So I think that if you think the economy is going to be stronger, that the regulatory environment will be more pro-business, that policy will be more pro-growth, that’s good for business. And like, again, like I said, the important part is it good for all Americans? This isn’t just about, you know, business.”

On tax rate:

“I mean our — our effective tax rate is 30 percent. So, you know, if you somehow cut that in half and reduce our tax bill a considerable amount — and I don’t know offhand exactly what that means to corporate earnings, but again, remember, the reason to do some of this stuff isn’t just to help big companies. It’s to do things which are good for the economy which help everybody. And, you know, that — that’s what the focus should be. And that’s why I think they’re doing it. I don’t think their interest in life is to help a bank. I think their interest in life is to help the United States of America.”

On 4% growth rate:

“I think it’s possible. You know, I point out to “The Economist” that if you look at all of the things we’ve been through in the last eight, 10, 12 years of war, great recession, huge regulatory environment, more and more global regulations, those things hold back growth. And they hold back confidence, both consumer and business confidence. So reducing those things, I think, will add to growth, yes. So I’m optimistic we’ll go north of 3.”

On whether Steve Mnuchin, Wilbur Ross, and Rex Tillerson are going to get past hearing confirmations this week:

“I hope so. You know, I mean past history says yes, unless something comes out that is terrible or that — but past history says yes. I also want to point out, I like the fact that a lot of these folks, they’re successful. They’ve been around. They’re knowledgeable. They’ve traveled the world. And they’re making a huge sacrifice to go do this, you know, not just the public scrutiny they’re about to go through, but in their own business life and personal life. And so I applaud them. And I think that a lot of these folks, you know, they’re patriots. They care about their country. They’re not doing this to line their pockets. They’re doing this because they think America can do better, you know, both here and around the world.

So I thank them for doing it. And hopefully, they’ll be part of a team that accomplishments some of these things we’ve been talking about.”

On infrastructure:

“Well, infrastructure is a very complicated thing. So you’re talking about ports and rivers and tunnels and roads… and grids and some of those things will be eligible for a PPI. And so I — and to the extent that is done, that’s done through tax cuts, etc. We will participate. And other things which are done not through PPI, but through government agencies, we’d (INAUDIBLE) for that, too. So but I think the really important thing is, the United States needs to have long-term, thoughtful proper infrastructure planned at the city level, the state level and the federal level. And, you know, it’s a shame that we — we can’t make that stop-start. We don’t run a company that way. You wouldn’t run your life that way. You have to think these things through, you know, and — and, you know, we’ve done a terrible job maintaining our infrastructure.

Our accounting is bad. We treat a massive investment in a bridge or a grid or a tunnel exactly the same way we treat throwing away, you know, half a trillion dollars. You know, I mean one is good for 10 years and conducive to future growth and one is not. So, you know, I would — I would change the accounting for it. I’d change how I look at it. I’d — and I’d have a lot be done at the city level. You know, see mayors know what they need and, you know, sometimes the federal government, you know, is giving money away and it kind of becomes a, you know, it doesn’t get — maybe get used in the best way.”

Please see below for full transcript:

PART ONE

DIMON: I was surprised. I think most people were surprised with the results.

But I went to sleep at, you know, at one point and woke up and drove to work and was thinking, oh, maybe this would be good for the economy and for the average American. And so I’ve kind of moved on.

BARTIROMO: So you thought about the economic portion of what’s going on, what Trump is coming out with.

Let me ask you about that.

What are your expectations for the economy as a result of his proposed tax policy and roll back of regulations?

DIMON: You know, so I like the fact that that there — that the focus has been on growth and you see it when the — and the talk about the tax policy, you know, regulatory policy. I think growth is going to be very good for all Americans, not just for companies.

So I like that. In fact, I think you’ve seen some of that optimism reflected in the stock price. And hopefully, they will be able to deliver some of that.

BARTIROMO: So do you think that companies will, in fact, behave differently with a 15 percent corporate tax rate, with this idea that money will come back from overseas because of a better environment in terms of repatriation?

Will we see companies respond and do something different that they weren’t doing as a result of this?

DIMON: Yes, I think the quote — I’ve been on this for a long time, that our corporate tax rate is higher than all other developed nations, whether you look at the statutory rate or the effective rate, it’s been driving capital, brains and capability overseas for a long time.

So if you reduce the corporate tax rate and you allow people to repatriate, you’re going to have — capital will come back to the United States, more investment will be made here. You know, some may end up in stock buy-backs and dividends, but so be it. That’s the people’s money, too.

And so yes, I think there will be a very big positive.

I think it’s very important the public understands that a lot of studies show that when you have corporations with lower tax rates, that one of the big beneficiaries is wages. They compete. They compete, you know, hard, to — to grow and expand.

So, yes, I’m thinking — I’m hoping that will lead to a lot of growth.

BARTIROMO: So you think tax reform will actually get done?

DIMON: I think it’s very complex. I think at one point, you’re going to see, you know, them making the sausage. It will be painful for us to watch the sausage. You’ll be talking about it every day.

So I think there’s a good chance you’ll have major tax reform. It hasn’t been done, I think, since like 1986. I would love to see it done.

In any event, I think you’ll see some tax reform done, lower corporate tax rates, some form of repatriation, which maybe will help fund infrastructure programs. So you’ll see something.

The big question is how much?

And they’re — and they have to coordinate that, obviously, it has to go through legislation.

BARTIROMO: The market had such an incredible reaction. I mean your stock up better than 20 percent just since election day.

Why do you think that is?

DIMON: I’ve always thought that, you know, particularly bank stocks, but maybe for other stocks, that the political, regulatory, legal environment was pretty tough and that, you know, for a rational reason that you would pay less for a company that’s under, you know, you’re uncertain about future regulations, you’re uncertain about litigation, you’re uncertain about the politics and that therefore, if you remove some of that or you think it’s going to get better, that should be a plus.

So I think that if you think the economy is going to be stronger, that the regulatory environment will be more pro-business, that policy will be more pro-growth, that’s good for business.

And like, again, like I said, the important part is it good for all Americans?

This isn’t just about, you know, business.

BARTIROMO: I’ve got to tell you, you sound a little like a Republican, Jamie. The last time we spoke, you said you were a Democrat hanging on by your fingernails.

DIMON: Yes.

BARTIROMO: How would you characterize yourself today?

DIMON: I don’t anymore.

(LAUGHTER)

DIMON: I mean Independent of mind.

BARTIROMO: A lot of analysts are saying as a result of the 15 percent corporate tax rate, earnings could be up 20 percent when we actually see this take place.

Does that sound right to you?

Could you see JPM earnings up 20 percent on a year that the corporate tax rate is at 15 percent?

DIMON: I mean our — our effective tax rate is 30 percent. So, you know, if you somehow cut that in half and reduce our tax bill a considerable amount — and I don’t know offhand exactly what that means to corporate earnings, but again, remember, the reason to do some of this stuff isn’t just to help big companies. It’s to do things which are good for the economy which help everybody. And, you know, that — that’s what the focus should be. And that’s why I think they’re doing it. I don’t think their interest in life is to help a bank. I think their interest in life is to help the United States of America.

BARTIROMO: In fact,