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Annual Report 2023
 * Jamie Dimon's Letter 
 * CEO Letters
 * Annual Report




 * CEO LETTERS
   
   
   CONSUMER & COMMUNITY BANKING
   
   Marianne Lake
   
   View Letter »
   
   
   COMMERCIAL & INVESTMENT BANK
   
   Jennifer Piepszak
   
   View Letter »
   
   
   COMMERCIAL & INVESTMENT BANK
   
   Troy Rohrbaugh
   
   View Letter »
   
   
   ASSET & WEALTH MANAGEMENT
   
   Mary Callahan Erdoes
   
   View Letter »
   
   
   CORPORATE RESPONSIBILITY
   
   Tim Berry
   
   View Letter »


 * DOWNLOAD 2023 ANNUAL REPORT
   
   
   2023 COMPLETE ANNUAL REPORT
   
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   CHAIRMAN AND CEO LETTER TO SHAREHOLDERS
   
   download PDF
   
   
   LINE OF BUSINESS CEO LETTERS TO SHAREHOLDERS
   
   download PDF







DEAR FELLOW SHAREHOLDERS,

Across the globe, 2023 was yet another year of significant challenges, from the
terrible ongoing wars and violence in the Middle East and Ukraine to mounting
terrorist activity and growing geopolitical tensions, importantly with China.
Almost all nations felt the effects last year of global economic uncertainty,
including higher energy and food prices, inflation rates and volatile markets.
While all these events and associated instability have serious ramifications on
our company, colleagues, clients and countries where we do business, their
consequences on the world at large — with the extreme suffering of the Ukrainian
people, escalating tragedy in the Middle East and the potential restructuring of
the global order — are far more important.

As these events unfold, America’s global leadership role is being challenged
outside by other nations and inside by our polarized electorate. We need to find
ways to put aside our differences and work in partnership with other Western
nations in the name of democracy. During this time of great crises, uniting to
protect our essential freedoms, including free enterprise, is paramount. We
should remember that America, “conceived in liberty and dedicated to the
proposition that all men are created equal,” still remains a shining beacon of
hope to citizens around the world. JPMorgan Chase, a company that historically
has worked across borders and boundaries, will do its part to ensure that the
global economy is safe and secure.

In spite of the unsettling landscape, including last year’s regional bank
turmoil, the U.S. economy continues to be resilient, with consumers still
spending, and the markets currently expect a soft landing. It is important to
note that the economy is being fueled by large amounts of government deficit
spending and past stimulus. There is also a growing need for increased spending
as we continue transitioning to a greener economy, restructuring global supply
chains, boosting military expenditure and battling rising healthcare costs. This
may lead to stickier inflation and higher rates than markets expect.
Furthermore, there are downside risks to watch. Quantitative tightening is
draining more than $900 billion in liquidity from the system annually — and we
have never truly experienced the full effect of quantitative tightening on this
scale. Plus the ongoing wars in Ukraine and the Middle East continue to have the
potential to disrupt energy and food markets, migration, and military and
economic relationships, in addition to their dreadful human cost. These
significant and somewhat unprecedented forces cause us to remain cautious.

2023 was another strong year for JPMorgan Chase, with our firm generating record
revenue for the sixth consecutive year, as well as setting numerous records in
each of our lines of business. We earned revenue in 2023 of $162.4 billion1 and
net income of $49.6 billion, with return on tangible common equity (ROTCE) of
21%, reflecting strong underlying performance across our businesses. We also
increased our quarterly common dividend of $1.00 per share to $1.05 per share in
the third quarter of 2023 — and again to $1.15 per share in the first quarter of
2024 — while continuing 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 risk disciplines.

Throughout the year, we demonstrated the power of our investment philosophy and
guiding principles, as well as the value of being there for clients — as we
always are — in both good times and bad times. The result was continued growth
broadly across the firm. We will highlight a few examples from 2023: Consumer &
Community Banking (CCB) extended its #1 leadership positions and grew share
year-over-year in retail deposits, credit card sales and credit card
outstandings (adding close to 3.6 million net new customers to the franchise);
the Corporate & Investment Bank (CIB) maintained its #1 rank in both Investment
Banking and Markets and gained more than 100 basis points of Investment Banking
market share; Commercial Banking (CB) added over 5,000 new relationships
(excluding First Republic Bank), roughly doubling the prior year’s achievement;
and Asset & Wealth Management (AWM) saw record client asset net inflows of $490
billion, over 20% higher than its prior record.

In 2023, we continued to play a forceful and essential role in advancing
economic growth. In total, we extended credit and raised capital totaling $2.3
trillion for our consumer and institutional clients around the world. On a daily
basis, we move nearly $10 trillion in over 120 currencies and more than 160
countries, as well as safeguard over $32 trillion in assets. By purchasing First
Republic Bank, we brought much-needed stability to the U.S. banking system while
allowing us to give a new, secure home to over half a million First Republic
customers.

As always, we hold fast to our commitment to corporate responsibility, including
helping to create a stronger, more inclusive economy — from supporting work
skills training programs around the world to financing affordable housing and
small businesses to making investments in cities like Detroit that show how
business and government leaders can work together to solve problems.

We have achieved our decades-long consistency by adhering to our key principles
and strategies (see sidebar on Steadfast Principles below), which allow us to
drive good organic growth and promote proper management of our capital
(including dividends and stock buybacks). The charts below show our performance
results and illustrate how we have grown our franchises, how we compare with our
competitors and how we look at our fortress balance sheet. Please peruse them
and the CEO letters in this Annual Report, all of which provide specific details
about our businesses and our plans for the future.

STEADFAST PRINCIPLES WORTH REPEATING (AND ONE NEW ONE)

Looking back on the past two+ decades — starting from my time as Chairman and
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 discipline, constant investment in innovation and ongoing
development of our people have enabled us to achieve this consistency and
commitment. In addition, across the firm, we uphold certain steadfast tenets
that are worth repeating.

First, our work has very real human impact. While JPMorgan Chase 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
communities. More than 100 million people in the United States own stocks; many,
in one way or another, own JPMorgan Chase stock. Frequently, these shareholders
are veterans, teachers, police officers, firefighters, 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 management team goes to work every day recognizing 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,
employees and communities. Conversely, how can you have a healthy company if 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 strengthening shareholder value.

Third, while we don’t 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 progress
over time. This progress is a function 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 company’s future prospects and
position it to grow and prosper for decades. Measured by stock performance, our
progress is exceptional. For example, whether looking back 10 years or even
farther to 2004, when the JPMorgan Chase/Bank One merger took place, we have
outperformed the Standard & Poor’s 500 Index and the Standard & Poor’s
Financials Index.

Fourth, we are united behind basic principles and strategies (you can see the
principles for How We Do Business on our website and our Purpose statement in my
letter from last year) that have helped build this company and made it thrive.
These allow us to maintain a fortress balance sheet, constantly invest and
nurture talent, fully satisfy regulators, continually improve risk, governance
and controls, and serve customers 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 businesses, which rely on and benefit from
one another, but we are not a conglomerate. This structure helps generate 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 extensively in the past and cover it again in
this letter. We recognize our strengths and vulnerabilities, and we play our
hand as best we can.

Sixth, and this is the new one, we must be a source of strength, particularly in
tough times, for our clients and the countries in which we operate. We must take
seriously our role as one of the guardians of the world’s financial systems.

Seventh, we operate with a very important silent partner — the U.S. government —
noting as my friend Warren Buffett points out that his company’s success is
predicated upon the extraordinary conditions our country creates. He is right to
say to his shareholders that when they see the American 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 the last 10 years, we paid more than $46
billion in federal, state and local taxes in the United States and over $22
billion in taxes outside of the United States. Additionally, we paid the Federal
Deposit Insurance Corporation over $10 billion so that it has the resources to
cover failure in the American banking sector. Our partner — the federal
government — also imposes significant regulations upon us, and it is imperative
that we meet all legal and regulatory requirements imposed on our company.

Eighth and finally, we know the foundation of our success rests with our people.
They are the front line, both individually 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 company’s
prosperity requires a great team of people with guts, brains, integrity,
enormous capabilities and high standards of professional excellence to ensure
its ongoing success.

I remain proud of our company’s 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 have never stopped doing all the
things we should be doing to serve our clients and our communities. As you know,
we are champions of banking’s essential role in a community — its potential for
bringing people together, for enabling companies and individuals to attain their
goals, and for being a source of strength in difficult times. I often remind our
employees that the work we do matters and has impact. United by our principles
and purpose, we help people and institutions finance and achieve their
aspirations, lifting up individuals, homeowners, small businesses, larger
corporations, schools, hospitals, cities and countries in all regions of the
world. What we have accomplished in the 20 years since the Bank One and JPMorgan
Chase merger is evidence of the importance of our values.


CELEBRATING THE 20TH ANNIVERSARY OF THE BANK ONE/JPMORGAN CHASE MERGER

J.P. Morgan Chase

By 2004, J.P. Morgan Chase already represented the consolidation of four of the
10 largest U.S. banks from 1990: The Chase Manhattan Corp., Manufacturers
Hanover, Chemical Banking Corp. and, most recently, J.P. Morgan & Company. And
some of their predecessor companies stretched back into the 1800s, one even into
the late 1700s.

Bank One

Bank One had been even busier on the acquisition front, especially across the
United States. By 1998, then Banc One had more than 1,300 branches in 12 states
when it announced a merger with First Chicago NBD, a Chicago-based bank created
just three years earlier by the merger of First Chicago and Detroit-based NBD.
Now headquartered in Chicago, the new Bank One became the largest bank in the
Midwest, second largest among credit card companies and fourth largest in the
United States. But the merger didn’t go as planned, with Bank One issuing three
different earnings warnings. In March 2000, Bank One reached outside its
executive ranks, and my tenure began as Chairman and CEO, working to overhaul
the company and help bring it back to profitability and growth.

The story begins ... A merger 20 years ago helped transform two giant banks

Fast forward to 2003, and another wave of consolidation was well underway in
U.S. banking. Most of the nation’s larger banks were trying to position
themselves to be an “endgame winner.” In the biggest deal, Bank of America
agreed to buy FleetBoston Financial Corp. for more than $40 billion. Those two
banks — already amalgamations of several predecessor companies — touted the
breadth of their combined retail branch network.

But they were hardly alone. In 2003, some 215 deals were announced among U.S.
commercial banks and bank holding companies for a total value of $66 billion,
according to Thomson Financial, which tracks merger data.

In July 2004, J.P. Morgan Chase and Bank One merged — as part of a 225-year
journey — to form this exceptional company of ours: JPMorgan Chase. At its
merger in 2004, the combined bank was the fourth largest bank in the world by
market capitalization. But with patient groundwork over the years — fixing
systems and upgrading technology, managing the notable acquisitions of Bear
Stearns and Washington Mutual (WaMu) and continuing to reinvest, including in
our talent — we have made our company an endgame winner.

In earlier years, banks worried about their survival. While the past two decades
have brought some virtually unprecedented challenges, including the great
financial crisis and a pandemic followed by a global shutdown, they did not stop
us from accomplishing extraordinary things. Our bank has now emerged as the #1
bank by market capitalization.

Each of our businesses is among the best in the world, with increased market
share, strong financial results and an unwavering focus on serving our clients,
communities and shareholders with distinction and dedication. The strengths that
are embedded in JPMorgan Chase — the knowledge and cohesiveness of our people,
our long-standing client relationships, our technology and product capabilities,
our presence in more than 100 countries and our unquestionable fortress balance
sheet — would be hard to replicate. Crucially, the strength of our company has
allowed us to always be there for clients, governments and communities — in good
times and in bad times — and this strength has enabled us to continually invest
in building our businesses for the future.

You can see from the following charts what gains and improvements we have
achieved along the way.

Read footnoted information here

Read footnoted information here

Read footnoted information here

Within this letter, I discuss the following:

I. SUMMARY OF OUR 2023 RESULTS AND THE PRINCIPLES THAT GUIDE US

 * Celebrating the 20th anniversary of the Bank One/JPMorgan Chase merger
   * Steadfast principles worth repeating (and a new one)
   * A timeline of accomplishments
 * Financial performance

II. UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY

 * The critical impact of artificial intelligence
 * Our journey to the cloud
 * Acquiring First Republic Bank and its customers
 * Navigating in a complex and potentially dangerous world
 * Our extensive community outreach efforts, including diversity, equity and
   inclusion
   * What we learned: A five-point action plan to move forward on the climate
     challenge
   * Powering economic growth in Florida
 * Giving the bank regulatory and supervisory process a serious review
 * Protecting the essential role of market making (trading)

III. STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS

 * The pressure of quarterly earnings compounded by bad accounting and bad
   decisions
 * The hijacking of annual shareholder meetings
 * The evolving influence of proxy advisors
 * The benefits and risks of private credit
 * A bank’s strength: Providing flexible capital

IV. MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION — DELIBERATELY AND
WITH HEART

 * Benefiting from the OODA loop
 * Decision making and acting (have a process)
 * The secret sauce of leadership (have a heart)

V. A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY
MATTER

 * Coalescing the Western world — A uniquely American task
 * Strengthening our position with a comprehensive, global economic security
   strategy
 * Providing strong leadership globally and effective policymaking domestically
   * Manager’s Journal: "A Politician's Dream Is A Businessman's Nightmare"
 * Out of the labyrinth, with focus and resolve
   * We should have more faith in the amazing power of our freedoms
   * How we can help lift up our low-income citizens and mend America's torn
     social fabric


UPDATE ON SPECIFIC ISSUES FACING OUR COMPANY

Each year, I try to update you on some of the most important issues facing our
company. First and foremost may well be the impact of artificial intelligence
(AI).

While we do not know the full effect or the precise rate at which AI will change
our business — or how it will affect society at large — we are completely
convinced the consequences will be extraordinary and possibly as
transformational as some of the major technological inventions of the past
several hundred years: Think the printing press, the steam engine, electricity,
computing and the Internet, among others.

THE CRITICAL IMPACT OF ARTIFICIAL INTELLIGENCE

Since the firm first started using AI over a decade ago, and its first mention
in my 2017 letter to shareholders, we have grown our AI organization materially.
It now includes more than 2,000 AI/machine learning (ML) experts and data
scientists. We continue to attract some of the best and brightest in this space
and have an exceptional firmwide AI/ML and Research department with deep
expertise.

We have been actively using predictive AI and ML for years — and now have over
400 use cases in production in areas such as marketing, fraud and risk — and
they are increasingly driving real business value across our businesses and
functions. We're also exploring the potential that generative AI (GenAI) can
unlock across a range of domains, most notably in software engineering, customer
service and operations, as well as in general employee productivity. In the
future, we envision GenAI helping us reimagine entire business workflows. We
will continue to experiment with these AI and ML capabilities and implement
solutions in a safe, responsible way.

While we are investing more money in our AI capabilities, many of these projects
pay for themselves. Over time, we anticipate that our use of AI has the
potential to augment virtually every job, as well as impact our workforce
composition. It may reduce certain job categories or roles, but it may create
others as well. As we have in the past, we will aggressively retrain and
redeploy our talent to make sure we are taking care of our employees if they are
affected by this trend.

Finally, as a global leader across businesses and regions, we have large amounts
of extraordinarily rich data that, together with AI, can fuel better insights
and help us improve how we manage risk and serve our customers. In addition to
making sure our data is high quality and easily accessible, we need to complete
the migration of our analytical data estate to the public cloud. These new data
platforms offer high-performance compute power, which will unlock our ability to
use our data in ways that are hard to contemplate today.

Recognizing the importance of AI to our business, we created a new position
called Chief Data & Analytics Officer that sits on our Operating Committee.

Elevating this new role to the Operating Committee level — reporting directly to
Daniel Pinto and me — reflects how critical this function will be going forward
and how seriously we expect AI to influence our business. This will embed data
and analytics into our decision making at every level of the company. The
primary focus is not just on the technical aspects of AI but also on how all
management can — and should — use it. Each of our lines of business has
corresponding data and analytics roles so we can share best practices, develop
reusable solutions that solve multiple business problems, and continuously learn
and improve as the future of AI unfolds.

Clearly, AI comes with many risks, which need to be rigorously managed.

We have a robust, well-established risk and control framework that helps us
proactively stay in front of AI-related risks, particularly as the regulatory
landscape evolves. And we will, of course, continue to work hard with our
regulators, clients and subject matter experts to make sure we maintain the
highest ethical standards and are transparent in how AI helps us make decisions;
e.g., to counter bias among other things.

You may already be aware that there are bad actors using AI to try to infiltrate
companies’ systems to steal money and intellectual property or simply to cause
disruption and damage. For our part, we incorporate AI into our toolset to
counter these threats and proactively detect and mitigate their efforts.

OUR JOURNEY TO THE CLOUD

Getting our technology to the cloud — whether the public cloud or the private
cloud — is essential to fully maximize all of our capabilities, including the
power of our data. The cloud offers many benefits: 1) it accelerates the speed
of delivery of new services; 2) it simultaneously reduces the cost of compute
power and enables, when needed, an extraordinary amount of compute capability —
called burst computing; 3) it provides that compute capability across all of our
data; and 4) it allows us to be able to constantly and quickly adopt new
technologies because updated cloud services are continually being added — more
so in the public cloud, where we benefit from the innovation that all cloud
providers create, than in the private cloud, where innovation is only our own.

Of course, we are learning a lot along the way. For example, we know we should
carefully pick which applications and which data go to the public cloud versus
the private cloud because of the expense, security and capabilities required. In
addition, it is critical that we eventually use multiple clouds to avoid
lock-in. And we intend to maintain our own expertise so that we’re never reliant
on the expertise of others even if that requires additional money.

We invested approximately $2 billion to build four new, modern, private
cloud-based, highly reliable and efficient data centers in the United States (we
have 32 data centers globally). To date, about 50% of our applications run a
large part of their processing in the public or private cloud. Approximately 70%
of our data is now running in the public or private cloud. By the end of 2024,
we aim to have 70% of applications and 75% of data moved to the public or
private cloud. The new data centers are around 30% more efficient than our
existing legacy data centers. Going to the public cloud can provide 30%
additional efficiency if done correctly (efficiency improves when your data and
applications have been modified, or “refactored,” to enable new cloud services).
We have been constantly updating most of our global data centers, and by the end
of this year, we can start closing some that are larger, older and less
efficient.

ACQUIRING FIRST REPUBLIC BANK AND ITS CUSTOMERS

The purchase of First Republic Bank was not something that we would have done
just for ourselves. But the regulators relied on us to step forward (we worked
hand in hand with the Federal Reserve, the Federal Deposit Insurance Corporation
(FDIC) and the U.S. Treasury), and the purchase of First Republic helped
stabilize and strengthen the U.S. financial system in a time of crisis.

The acquisition of a major company entails a lot of complexity. People tend to
focus on the financial and economic outcomes, which is a reasonable thing to do.
And in the case of First Republic, the numbers look rather good. We recorded an
accounting gain of $3 billion on the purchase, and we told the world we expected
to add more than $500 million to earnings annually, which we now believe will be
closer to $2 billion. However, these results mask some of the true costs. First,
approximately one-third of the incremental earning was simply deploying excess
capital and liquidity, which doesn’t require purchasing a $300 billion bank — we
simply could have bought $300 billion of assets. Second, as soon as the deal was
announced, approximately 7,600 of our employees went from working on tasks that
would benefit the future of JPMorgan Chase to working on the merger integration.
Overall, the integration involves effectively combining more than 165 systems
(e.g., statement, deposit, accounting and human resources) and consolidating
policies, risk reporting, and other various rules and procedures. We hope to
have most of the integration done by the middle of 2024.

Fortunately, we were very familiar and comfortable with all of the assets we
were acquiring from First Republic. What we didn’t take on was First Republic’s
excessive interest rate exposure — one of the reasons it failed — which we
effectively hedged within days of the acquisition.

Our people did a great job of respectfully managing this transition, knowing
that circumstances were particularly tough for our new colleagues, whom we tried
to welcome with open arms. We did everything we could to redeploy individuals
whose jobs were lost because of the merger (we directly hired over 5,000
people). Our approach has always been to go into an acquisition knowing we can
learn things from other teams, and in this case, we did: First Republic had done
an outstanding job serving high-net-worth clients and venture capitalists, and
we are developing what is effectively a new business for us following First
Republic’s servicing model. We will serve these high-net-worth clients through a
single point of contact, supported by a concierge service model, across our
distribution channels — including more than 20 new JPMorgan Chase branded
branches.

NAVIGATING IN A COMPLEX AND POTENTIALLY DANGEROUS WORLD

In the policy section, we talk about how we may be entering one of the most
treacherous geopolitical eras since World War II. And I have written in the past
about high levels of debt, fiscal stimulus, ongoing deficit spending and the
unknown effects of quantitative tightening (which I am more worried about than
most) so I won’t repeat those views here. However, the impacts of these
geopolitical and economic forces are large and somewhat unprecedented; they may
not be fully understood until they have completely played out over multiple
years. In any case, JPMorgan Chase must be prepared for the various potential
impacts and outcomes on our company and our people.

We remain wary of economic prognosticating.

While all companies essentially budget on a base case forecast, we are very
careful not to run our business that way. Instead, we look at a range of
potential outcomes for which we need to be prepared. Geopolitical and economic
forces have an unpredictable timetable — they may unfold over months, or years,
and are nearly impossible to put into a one-year forecast. They also have an
unpredictable interplay: For example, the geopolitical situation may end up
having virtually no effect on the world’s economy or it could potentially be its
determinative factor.

We have ongoing concerns about persistent inflationary pressures and consider a
wide range of outcomes to manage interest rate exposure and other business
risks.

Many key economic indicators today continue to be good and possibly improving,
including inflation. But when looking ahead to tomorrow, conditions that will
affect the future should be considered. For example, there seems to be a large
number of persistent inflationary pressures, which may likely continue. All of
the following factors appear to be inflationary: ongoing fiscal spending,
remilitarization of the world, restructuring of global trade, capital needs of
the new green economy, and possibly higher energy costs in the future (even
though there currently is an oversupply of gas and plentiful spare capacity in
oil) due to a lack of needed investment in the energy infrastructure. In the
past, fiscal deficits did not seem to be closely related to inflation. In the
1970s and early 1980s, there was a general understanding that inflation was
driven by “guns and butter”; i.e., fiscal deficits and the increase to the money
supply, both partially driven by the Vietnam War, led to increased inflation,
which went over 10%. The deficits today are even larger and occurring in boom
times — not as the result of a recession — and they have been supported by
quantitative easing, which was never done before the great financial crisis.
Quantitative easing is a form of increasing the money supply (though it has many
offsets). I remain more concerned about quantitative easing than most, and its
reversal, which has never been done before at this scale.

Equity values, by most measures, are at the high end of the valuation range, and
credit spreads are extremely tight. These markets seem to be pricing in at a 70%
to 80% chance of a soft landing — modest growth along with declining inflation
and interest rates. I believe the odds are a lot lower than that. In the
meantime, there seems to be an enormous focus, too much so, on monthly inflation
data and modest changes to interest rates. But the die may be cast — interest
rates looking out a year or two may be predetermined by all of the factors I
mentioned above. Small changes in interest rates today may have less impact on
inflation in the future than many people believe.

Therefore, we are prepared for a very broad range of interest rates, from 2% to
8% or even more, with equally wide-ranging economic outcomes — from strong
economic growth with moderate inflation (in this case, higher interest rates
would result from higher demand for capital) to a recession with inflation;
i.e., stagflation. Economically, the worst-case scenario would be stagflation,
which would not only come with higher interest rates but also with higher credit
losses, lower business volumes and more difficult markets. Under these many
different scenarios, our company would continue to perform at least okay.
Importantly, being prepared means we can continue to help our clients no matter
what the future portends.

The mini banking crisis of 2023 is over, but beware of higher rates and
recession — not just for banks but for the whole economy.

When we purchased First Republic in May 2023 following the failure of two other
regional banks, Silicon Valley Bank (SVB) and Signature Bank, we thought that
the current banking crisis was over. Only these three banks were offsides in
having the toxic combination of extreme interest rate exposure, large unrealized
losses in the held-to-maturity (HTM) portfolio and highly concentrated deposits.
Most of the other regional banks did not have these problems. However, we
stipulated that the crisis was over provided that interest rates didn’t go up
dramatically and we didn’t experience a serious recession. If long-end rates go
up over 6% and this increase is accompanied by a recession, there will be plenty
of stress — not just in the banking system but with leveraged companies and
others. Remember, a simple 2 percentage point increase in rates essentially
reduced the value of most financial assets by 20%, and certain real estate
assets, specifically office real estate, may be worth even less due to the
effects of recession and higher vacancies. Also remember that credit spreads
tend to widen, sometimes dramatically, in a recession.

Finally, we should also consider that rates have been extremely low for a long
time — it’s hard to know how many investors and companies are truly prepared for
a higher rate environment.

We seek to be engaged globally and carefully manage complex countries and
geopolitical issues.

JPMorgan Chase does business in more than 100 countries, and we have people on
the ground in over 60 countries. In almost all those locations, we do research
on their economy, their markets and their companies; we bank their government
institutions and their companies; and we bank multinational corporations,
including the U.S. multinational corporations within their borders. This is a
critical role — not only in helping those countries grow and improve but also in
expanding the global economy.

Many of these countries are quite complex with different laws, customs and
regulations. We are occasionally asked why we bank certain companies and even
certain countries, particularly when countries have some laws and customs that
are counter to many of the values held in the United States. Here’s why:

 * The U.S. government sets foreign policy. And when it does, we salute.
   Wherever we do business, we follow the law of the United States, as it
   applies in that country (in addition to the laws of the country itself), in
   all respects. Think of trade rules, sanctions, anti-money laundering and the
   Foreign Corrupt Practices Act, among others. By and large, these things help
   improve those countries. In most cases, the U.S. government does not want us
   to leave because it agrees, generally, that the engagement of American
   business enhances our relationships with other countries and helps those
   countries themselves.
 * Engagement makes the world a better place. We all should want the world to
   continue to improve. Isolation and lack of engagement do not accomplish that
   goal. While we believe that it makes sense for the United States to push for
   constant improvement around the world — from advocating for human rights to
   fighting corruption — this is rarely accomplished through coercion, and, in
   fact, is enhanced by engagement.
 * We need to be prepared for emerging challenges and position ourselves to
   understand them. We created a new role — Head of Asia Pacific Policy and
   Strategic Competitiveness — to focus specifically on key policy issues
   critical to the firm’s (and, in fact, the country’s) competitiveness, such as
   trade restrictions, supply chains and infrastructure. We also created a new
   strategic security forum to focus on emerging and evolving risks, including
   trade wars, pandemics, cybersecurity and actual wars, to name just a few.

OUR EXTENSIVE COMMUNITY OUTREACH EFFORTS, INCLUDING DIVERSITY, EQUITY AND
INCLUSION

JPMorgan Chase makes an extraordinary effort as part of our “normal” day-to-day
outreach to engage with individual clients, small and midsized businesses, large
and multinational firms, government officials, regulators and the press in
cities all around the world. This dialogue is part of the normal course of
business but it is also part of building trust and putting down roots in a
community.

We believe that companies, and banks in particular, must earn the trust of the
communities and countries in which they operate. We believe — and we are
unashamed about this — that it is our obligation to help lift up the communities
and countries in which we do business. We believe that doing so enhances
business and the general economic well-being of those communities and countries
and also enhances long-term shareholder value. JPMorgan Chase thrives when
communities thrive.

This approach is integral to what we do, in great scale, around the world — and
it works. We are quite clear that whether our efforts are inspired by the
goodness of our hearts (as philanthropy or venture-type investing) or good
business, we try to measure the actual outcomes.

It’s also interesting to point out that many of our efforts were spawned from
our work around Advancing Black Pathways, Military and Veterans Affairs, and our
work in Detroit. While we’ve banked Detroit for more than 90 years, our $200
million investment in its economic recovery over the last decade demonstrated
that investing in communities is a smart business strategy. We are one of the
largest banks in Detroit, from consumer banking to investment banking, and it’s
quite clear that not only did our efforts help Detroit, but they also helped us
gain market share. The extent of Detroit’s remarkable recovery was recently
highlighted when Moody’s upgraded the city’s credit rating to investment grade —
an extraordinary achievement just over 10 years after the city filed the largest
municipal bankruptcy in U.S. history.

For JPMorgan Chase, Detroit was an incubator for developing models that help us
hone how we deploy our business resources, philanthropic capital, skilled
volunteerism, and low-cost loans and equity investments, as well as how we
identify top talent to drive successful business and societal improvements. I
hope that, as shareholders, you are proud of our focus on promoting opportunity
for all, both within and outside our organization, which includes economic
opportunity. Some of our initiatives are listed below.

 * Business Resource Groups. To deepen our culture of inclusion in the
   workplace, we have 10 Business Resource Groups (BRG) across the company to
   connect more than 160,000 participating employees around common interests, as
   well as to foster networking and camaraderie. Groups welcome anyone — allies
   and those with shared affinities alike. For example, some of our largest BRGs
   are Access Ability (employees with disabilities and caregivers), Adelante
   (Hispanic and Latino employees), BOLD (Black employees), NextGen (early
   career professionals), PRIDE (LGBTQ+ employees) and Women on the Move.
 * Women on the Move. At JPMorgan Chase, they sure are! Women represent 28% of
   our firm’s senior leadership globally. In fact, our major lines of business —
   CCB, AWM and CIB, which would be among Fortune 1000 companies on their own —
   are all run by women (one with a co-head who is male). More than 10 years
   ago, a handful of senior women at the company, on their own, started this
   global, firmwide, internally focused organization called Women on the Move.
   It was so successful that we expanded the initiative beyond the company; it
   now empowers clients and consumers, as well as women employees and their
   allies, to build their careers, grow their businesses and improve their
   financial health. The Women on the Move BRG has more than 70,000 employees
   globally.
 * Advancing Black Pathways. This comprehensive program, which just reached the
   five-year mark, focuses on strengthening the economic foundation of Black
   communities because we know that opportunity is not always created equally.
   The program does so by, among other accomplishments, helping to diversify our
   talent pipeline, providing opportunities for Black individuals to enter the
   workforce and gain valuable experience, and investing in the financial
   success of Black Americans through a focus on financial health, homeownership
   and entrepreneurship. An important part of the program’s work is achieved
   through our investment in Historically Black Colleges and Universities
   (HBCU). We now partner with 18 schools across the United States to boost
   recruitment connections, expand career pathways for Black students and other
   students, and support their long-term development and financial health. As a
   measure of the program’s success, in four years we have made nearly 400 hires
   into summer and full-time analyst and associate roles at the firm.
 * Military and Veterans Affairs. This firmwide effort sponsors recruitment,
   mentorship and development programs to support the military members and
   veterans working at JPMorgan Chase. Back in 2011, we joined with 10 other
   companies to launch the Veteran Jobs Mission (VJM), whose membership has
   since grown to more than 300 companies representing various industries across
   the United States and has hired over 900,000 veterans and military spouses.
   In 2023, VJM announced the creation of its Advisory Board, which is composed
   of 14 corporate leaders, to provide strategic direction and oversight of VJM
   as it continues to expand its commitment to support economic opportunities
   for veterans and military spouses, including its goal to hire 2 million
   veterans and 200,000 military spouses by 2030. JPMorgan Chase alone has hired
   in excess of 18,000 veterans since 2011 and currently employs more than 3,100
   military spouses.
 * Creating opportunity for people with disabilities. The firm’s Office of
   Disability Inclusion continues to lead strategy and initiatives aimed at
   advancing economic opportunity for people with disabilities. In 2023, we
   joined lawmakers and business leaders in Washington, D.C., to show support
   for passage of the Supplemental Security Income (SSI) Savings Penalty
   Elimination Act. Modernizing the SSI program, by updating asset limits for
   the first time in nearly 40 years, would allow millions of people with
   disabilities who receive SSI benefits the opportunity to build their savings
   without putting their essential benefits at risk. We also provided business
   coaching to more than 370 entrepreneurs with disabilities.
 * Virtual call centers. When we sought to expand our customer service
   specialists program across the United States, we turned to Detroit, launching
   our first virtual call center in 2022. Investments in Detroit’s workforce
   development infrastructure helped us hire 90 virtual customer service
   specialists for a program that has outperformed many of our traditional call
   centers around the world. Following this success, we expanded our hiring
   efforts and this virtual program to Baltimore to create new jobs that
   jump-start careers. And now we’re evaluating the possibility of expanding
   even further.
 * Entrepreneurs of Color Fund. A critical challenge we have seen in so many
   communities is that traditional lending standards render too many
   entrepreneurs — particularly entrepreneurs of color and those serving these
   communities — ineligible for credit. In response, we helped launch the
   Entrepreneurs of Color Fund (EOCF) in Detroit, a lending program designed to
   help aspiring small business owners gain access to critical resources needed
   for growth that are often not equitably available — capital, technical
   assistance and mentorship, among others. These challenges aren’t unique to
   Detroit so we worked with community development financial institutions to
   replicate the EOCF program in 10 markets across the United States in 2023,
   deploying more than 2,900 loans and $176 million in capital to underserved
   entrepreneurs across the country.
 * Senior business consultants. To help entrepreneurs and small businesses make
   the transition from community lending to accessing capital from traditional
   financial institutions, we created a new job — senior business consultant —
   to provide support. Senior business consultants in branches that focus on
   underserved communities offer coaching and help business owners with
   everything from navigating access to credit to managing cash flow to
   generating effective marketing. Since 2020, these consultants have mentored
   more than 5,500 business owners, helping them improve their operations, grow
   revenue and network with others in the local business community.
 * AdvancingCities The organizing principles that define the business and
   community investments we make and how we best achieve an overall impact in
   local economies were heavily influenced by our experience in Detroit. Seeing
   Detroit’s comeback begin to take shape several years ago, we created
   AdvancingCities to replicate this model for large-scale investments to other
   cities around the world. From San Francisco to Paris to Greater Washington,
   D.C., we’ve applied what we learned in Detroit to communities where
   conditions are opportune for success and require deeper investments — where
   community, civic and business leaders have come together to solve problems
   and get results.
 * JPMorgan Chase Service Corps. Ten years ago, we launched the JPMorgan Chase
   Service Corps to strengthen the capacity-building of nonprofit partners. We
   brought employees from around the world to Detroit to assist with its
   recovery — from creating a scoring model for a nonprofit to helping
   prioritize neighborhoods for development funding to devising an
   implementation plan for an integrated talent management system. Since that
   time, the Service Corps has expanded, with more than 1,500 JPMorgan Chase
   employees contributing 100,000 hours to support over 300 nonprofits globally.
 * Community Centers/Branches and Community Managers. A local bank branch,
   especially in a low-income neighborhood, can be successful only when it fits
   the community’s needs. That is why over the last several years we have
   shifted our approach to how we offer access to financial health education, as
   well as low-cost products and services to help build wealth. Since 2019, we
   have opened 16 Community Center branches, often in areas with larger Black,
   Hispanic or Latino populations, and have plans to open three more by the end
   of 2024. These branches have more space to host grassroots community events,
   small business mentoring sessions and financial health seminars, which have
   been well-attended — to date, over 400,000 people have taken advantage of the
   financial education seminars. In each of these Community Center branches, we
   hired a Community Manager (who acts as a local ambassador) to build
   relationships with community leaders, nonprofits and small businesses. The
   Community Manager concept and practice have become so successful that we have
   also placed these managers in many of our traditional branches in underserved
   communities. We now have 149 Community Managers throughout our branch
   network.
 * Work skills development. Detroit showed us how talent in communities is often
   overlooked. We saw this in the early days of our investment when we visited
   our partners at Focus: HOPE, a training program designed to help Detroiters
   develop skills for high-demand jobs. Quickly, it became clear that the
   training and education system in Detroit was disconnected from employers and
   their talent needs. By investing in programs like Focus: HOPE, we have been
   able to help bridge local skills gaps by training people for in-demand jobs
   in communities like Dallas, Miami and Washington, D.C. Between 2019 and 2023,
   we supported more than 2 million people through our extensive learning and
   career programming around the world.
 * Increasing our rural investment. We are proud to be the only bank with
   branches in all 48 contiguous states, which include many rural communities.
   Nearly 17 million consumers living in rural areas hold over $100 billion in
   deposits with us and $175 billion in loans. We are also a leading wholesale
   lender in these communities, helping to fuel local economies through
   relationships with local companies, governments, hospitals and universities.
   Since 2019, we have made material progress in extending our footprint to
   reach more rural Americans, including expanding our branch network into 13
   new states with large rural populations. Now we are raising the bar. With our
   new strategy, we have a goal to have a branch available to serve 50% of a
   state’s population within an acceptable driving distance, including in
   heavily rural states such as Alabama and Iowa. This focus is part of our
   recently announced plan to build an additional 500 branches and hire 3,500
   employees over the next three years. Through this expansion, we will partner
   across lines of business and our Corporate Responsibility organization to
   help advance inclusive economic growth and bring the full force of the firm
   to America’s heartland.

We’ve nearly completed our five-year, $30 billion Racial Equity Commitment — it
will now become a permanent part of our business.

What began in 2020 as a five-year, $30 billion commitment is now transforming
into a consistent business practice for our lines of business in support of
Black, Hispanic, Latino and other underserved communities. By the end of 2023,
we reported over $30 billion in progress toward our original goal. However, our
focus is not on how much money is deployed — but on long-term impact and
outcomes. And going forward, these programs will be embedded in our
business-as-usual operating system.

 * Affordable rental housing. Through our Affordable Housing Preservation
   program, we approved program funding to date of approximately $21 billion in
   loans to incentivize the preservation of over 190,000 affordable housing
   rental units across the United States. Additionally, we financed
   approximately $5 billion for the construction and rehabilitation of
   affordable rental housing.
 * Homeownership. In 2023, we expanded our $5,000 Chase Homebuyer Grant program
   to include over 15,000 majority Black, Hispanic and Latino communities — and
   in January 2024, we increased our grant amount to $7,500 in select markets.
   Since our grant program began in 2021, we have provided about 8,600 grants
   totaling $43 million. We also have provided home purchase and refinance loans
   in 2023 worth over $4.6 billion for more than 14,000 Black, Hispanic and
   Latino households across the economic spectrum.
 * Small business. The Business Card Special Purpose Credit Program, launched in
   January 2023, has provided over 10,900 cards, totaling over $43 million in
   available credit lines to underserved entrepreneurs and communities across
   the United States.
 * Supplier diversity. In 2023, our firm spent approximately $2.3 billion
   directly with diverse suppliers — an increase of 10% over 2022. As a part of
   our racial equity commitment, over $450 million was spent in 2023 with more
   than 190 Black-, Hispanic- and Latino-owned businesses.
 * Minority depository institutions and community development financial
   institutions. To date, we have invested more than $110 million in equity in
   diverse financial institutions and provided over $260 million in incremental
   financing to community development financial institutions to support
   communities that lack access to traditional financing. JPMorgan Chase also
   helped these institutions build their capacity so they can provide a greater
   number of critical services like mortgages and small business loans.

We’re thoughtfully continuing our diversity, equity and inclusion efforts.

Of course, JPMorgan Chase will conform as the laws evolve. We will scour our
programs, our words and our actions to make sure they comply.

That said, we think all the efforts mentioned above will remain largely
unchanged. And, in fact, around the world, cities and communities where we do
business applaud these efforts. We also believe our initiatives make us a more
inclusive company and lead to more innovation, smarter decisions and better
financial results for us and for the economy overall.

We are often asked in particular about “equity” and what that word means. To us,
it means equal treatment, equal opportunity and equal access … not equal
outcomes. There is nothing wrong with acknowledging and trying to bridge social
and economic gaps, whether they be around wealth or health. We would like to
provide a fair chance for everyone to succeed — regardless of their background.
And we want to make sure everyone who works at our company feels welcome.

We want to articulate how we weigh in on social issues and what it means for our
customers.

Before I comment about culture issues, I have a confession to make: I am a
full-throated, red-blooded, patriotic, free-enterprise (properly regulated, of
course) and free-market capitalist. Our company is frequently asked to take a
position on an issue, rule or legislation that might be considered “cultural.”
When that happens, we take a deep breath and study the matter. Many of the laws
in question have many specific requirements, some of which you would agree with
but not others. But we are being asked to support the entire law. In cases like
these, we simply make our own statement that reflects our educated view and
values; however, we do not give our voice to others.

We believe in the values of democracy, including freedom of speech and
expression, and are staunchly against discrimination and hate. We have not
turned away — and will not turn away — customers because of their political or
religious affiliations nor would we tell customers how they should spend their
money.

Our commitment to these ideals is also reflected in our employees. The talent at
our firm is a vibrant mix of cultures, beliefs and backgrounds. We are, of
course, fully committed to freedom of speech. There are things that you can say
that would be permitted under freedom of speech but would not be allowed under
our Code of Conduct. For example, we do not allow intimidation, threats or
highly prejudicial behavior or speech. Our Code of Conduct clearly stipulates
that certain statements and behavior, while allowed under freedom of speech, can
lead to disciplinary action at our company — from being reprimanded to being
fired.

WHAT WE LEARNED: A FIVE-POINT ACTION PLAN TO MOVE FORWARD ON THE CLIMATE
CHALLENGE

In May 2023, we gathered with knowledgeable and influential people from the
energy industry writ large to the government and financial services arena in
Scottsdale, Arizona, for an action forum. The goal was to explore various
aspects of the climate challenge and try to devise effective solutions that
could help lead to meaningful progress. The climate challenge is immense and
complex. Addressing it requires more than making simplistic statements and
rules; rather, energy systems and global supply chains need to be transformed
across virtually all industries. And there is also a deep need for new research
and development. Energy systems and supply chains provide the foundation of the
global economy and must be treated with care.

At the same time, the opportunity here is immense. The investment required to
meet climate goals — estimated at over $5 trillion annually — could generate
economywide growth and opportunity at a scale the world has not seen since the
Industrial Revolution.

The task for industry, policymakers and finance is to help formulate solutions
that support the transition to a low-carbon economy, balancing affordable,
reliable access to energy with generating economic growth.

To find a way forward, we sought input from diverse stakeholders in pursuit of a
North Star. In Scottsdale and in discussions with clients across industries
about what’s needed to achieve a low-carbon economy, these five action steps and
reforms were top of mind:

 * Supportive government policy and leadership to advance the transition. Policy
   that promotes favorable economic conditions to make the transition viable is
   a critical first step for clients. This includes government leadership via
   mandates, incentives or subsidies to support jobs and investment in the
   transition; actions on permitting and interconnection reform; and regulatory
   clarity and certainty, especially around long-term investments. As one vital
   example, current grid infrastructure is insufficient to accommodate the
   growth in renewables.
 * Public/private partnerships in scaling bankable projects. Scaling investments
   needs to happen both for commercially proven technologies (e.g., wind and
   solar) and for emerging technologies (e.g., green hydrogen, sustainable
   aviation fuel and carbon capture). Developing “bankable” clean energy
   projects will require the application of smart financial tools, as well as
   further policy support. It will take public/private partnerships and
   innovation to create catalytic forms of capital that can step into these
   gaps, absorb first-mover risks and provide the necessary funding. The cost of
   capital is too high for some companies — and public funds ought to be
   deployed in a smart way that effectively attracts private capital.
 * Public education and engagement. Without question, clients told us that
   public commitment to and investment in energy-related infrastructure is one
   of the most important parts of combating the climate crisis and running their
   businesses. Supporting the buildout of energy-related infrastructure with
   speed and scale is critical. Public acceptance of building and advancing the
   infrastructure needed to meet climate goals is at the heart of progress.
   While the energy transition is poised to deliver benefits to communities
   across the world, securing acceptance and support to build clean energy
   infrastructure at scale is challenging. Access to job-creating renewable
   energy projects can help rural communities thrive by advancing local
   economies. Ensuring public support and social license to operate requires
   better engagement strategies, including widespread stakeholder education
   about the benefits of these technologies for local communities.
 * Communication about concrete successes. Across industries, market
   participants need to do a better job of celebrating and championing concrete
   successes and tangible milestones. This includes highlighting success stories
   around emerging technologies and the complex nature of the carbon transition.
   Stakeholders also should better convey the benefits of clean energy — across
   all technologies — to help combat misinformation and foster a more informed
   dialogue.
 * Work skills training. Businesses depend on healthy, thriving communities so
   the carbon transition needs to work for everyone. This includes helping to
   ensure that workers are trained in the skills for the future, such as through
   improved engineering schools and job training programs. Work across the
   entire supply chain is essential to moving at pace. As one example, the U.S.
   Bureau of Labor Statistics estimates we will need more than 70,000 additional
   electricians per year through 2031; it is currently unclear how the market
   will meet that demand. If the deployment of heat pumps and electric vehicle
   chargers accelerates, demand for electricians will be even higher. A
   concerted focus to train electricians can help the United States meet some of
   its climate goals while providing well-paying jobs that do not require a
   four-year college degree. Also, broadly speaking, businesses are in a better
   position to make investments with confidence when labor requirements across
   the value chain — from design and manufacturing to installation — are
   satisfied.

We recently reconsidered certain memberships.

JPMorgan Chase recently exited Climate Action 100+ and the Equator Principles.
“Why?” we are asked. While we don’t necessarily disagree with some of the
principles many organizations have, we make our own business decisions. We think
we have some of the best-in-class environmental, social and risk standards
because we have invested in our own in-house experts and matured our own risk
management processes over the years. As a result, we are going to go our own way
and make our own independent decisions, gathering the best learnings of experts
in the field, and, of course, we will follow all legal requirements.

We are engaged but recognize our role: three more important points.

First, everyone should understand that conquering the climate problem needs
proper government action, particularly around taxes, permitting, grids,
infrastructure building and proper coordination of policies — we are not there
yet. Second, there is no known technology that can fill the gap between our
“aspirations” and the current trajectory of the world. We hope and believe that
this will be found (for example, through carbon capture, improved batteries,
hydrogen or other measures). This new technology will also require proper
government research and development funding, as the effort cannot be
accomplished by private enterprise alone. And third, we are going to use the
word “commitment” much more reservedly in the future, clearly differentiating
between aspirations we are actively striving toward and binding commitments.

For JPMorgan Chase to play the right role in tackling the climate challenge, we
have organized a special group around the green economy and related
infrastructure investment. This group will coordinate and inform our work across
all established industry groups (from auto to real estate, energy, agriculture
and others) and includes hundreds of employees devoted to these efforts.

POWERING ECONOMIC GROWTH IN FLORIDA

From Tallahassee to Miami and from Tampa to Palm Bay, JPMorgan Chase has been
committed to Florida for more than 130 years and has enjoyed being the bank for
all communities. Each year, we contribute billions of dollars to the economy,
hire and train local residents, help to revitalize neighborhoods and remove
barriers to opportunity for Floridians across the state. Our partnerships with
businesses, nonprofits, government entities and community organizations have
enabled us to drive sustainable impact and help them achieve their goals. We
couldn’t be more proud to help make opportunity happen in Florida.

This year, we forged a relationship with Inter Miami CF, one of the most
recognizable sports teams in the world. Through this partnership and the newly
named Chase Stadium, we’re continuing to contribute to South Florida and its
local communities. In Tampa, home to nearly 6,000 of our employees, we’re
triggering an additional $210 million in economic activity and creating over 660
local construction jobs through the renovation of our Highland Oaks campus and
downtown Tampa office. We’re proud that one-third of all Floridians do business
with us through deposits, credit cards or a mortgage. Through each of our
investments across the state, we’re ensuring that residents have the resources
and tools they need to thrive.

Our support to government, higher education, healthcare and nonprofit
organizations:

 * We serve over 150 government, higher education, healthcare and nonprofit
   clients throughout the state, and over the last five years, we have provided
   more than $20.2 billion in credit and capital to them.
 * Our clients range from the city of Jacksonville to the Orlando Utilities
   Commission, the University of South Florida, Broward Health and the District
   School Board of Pasco County — a decades-long client.
 * We are the lead treasury bank for the Wounded Warrior Project, one of the
   largest veteran service organizations in the United States. Headquartered in
   Jacksonville, the organization caters to wounded veterans and service members
   who served in the military on or after 9/11.

Our support to investment and middle-market banking clients:

 * Over the last five years, we have provided in excess of $318 billion in
   credit and capital to local clients, such as utility, technology and tourism
   companies.
 * We have more than 12,500 large and midsized clients across the state.

Our support to local financial firms:

 * Over the last five years, we have provided more than $24 billion in credit
   and capital for financial institutions, such as local banks, insurance
   companies, asset managers and securities firms.
 * We bank over 50 of Florida’s regional, midsized and community banks, helping
   them play an essential role in maintaining the state’s economy and serve
   local communities.

Our support to small business:

 * At the end of 2023, balances for loans extended to Florida’s small businesses
   totaled more than $1.2 billion — funds being used to help those businesses
   scale and grow, contribute to the economy and create local jobs.
 * Across the state, we have over 654,000 small business customers.
 * In 2023, our bankers and senior business consultants spent more than 375,000
   hours advising and supporting Florida business owners.

Our support to consumer banking needs:

 * We operate 1,445 ATMs and 410 branches across the state.
 * In 2023, we supported more than 6.1 million customers with mortgages, auto
   loans and savings, checking and credit card accounts, giving JPMorgan Chase
   one of the largest consumer banking market shares in the state.
 * We managed more than $70 billion in investment and annuity assets for local
   clients.

Our business and community investments:

 * Over the last five years, we have committed nearly $65 million in
   philanthropic support, including:
   * $3 million to The Miami Foundation’s Resilient 305: Building Prosperity
     Collaborative to increase access to quality jobs and develop small
     businesses through training, investments and capacity-building.
   * $1.6 million to the Community Justice Project, which empowers
     community-based legal advocates to help delay displacement and improve
     conditions for housing stability for renters across nine Florida counties.
 * In 2022, we committed $10 million over five years to Tech Equity Miami to
   advance equal access to tech skills, careers and education, including:
   * A $1 million investment to Florida Memorial University, South Florida’s
     only HBCU, to help traditionally underresourced students pursue a career in
     technology.

Our support as a local employer:

 * We employ more than 14,000 residents throughout the state, including nearly
   1,900 veterans and over 660 people with a criminal background who deserve a
   second chance.
 * In Florida, the average salary of our employees is more than $87,000 (plus a
   starting comprehensive annual benefits package worth nearly $17,600) compared
   with the statewide per capita income of nearly $40,300.

GIVING THE BANK REGULATORY AND SUPERVISORY PROCESS A SERIOUS REVIEW

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) was
finished 14 years ago, and we believe it accomplished a lot of good things. But
it’s been quite a while since then, and we’re still debating some very basic
issues. It’s time to take a serious, hard, honest look at what has been done and
what can be improved.

It’s good to remember that the United States has the best financial system in
the world, with diversified, deep and experienced institutions, from banks,
pension plans, hedge funds and private equity to individual investors. It has
healthy public and private markets, transparency, rule of law and deep research.
The best banking system in the world is a critical part of this, and, integrated
with the overall financial system, is foundational to the proper allocation of
capital, innovation and the fueling of America’s growth engine.

This is not about JPMorgan Chase — we believe we can manage through whatever is
thrown our way. This is about the impact on all parts of the system — from
smaller banks to larger regional banks that may not have the resources to handle
all of these regulatory requirements. It’s also about the effect on the
financial markets and the economy from the rapidly growing shadow banking
system, as well as the ultimate impact on the customers, clients and communities
we serve. This is about what’s right for the system.

The banking and financial system is innovative, dynamic and constantly changing.

The banking system is not static: There are startup banks, mergers, successful
upstarts and fintech banks, and even Apple, which effectively acts as a bank —
it holds money, moves money, lends money and so on. Nonbanks are competing with
traditional banks, and, in general, this dynamism and churn are good for
innovation and invention — with success and failure simply part of the robust
process. Innovation runs across payments systems, budgeting, digital access,
product extensions, risk and fraud prevention, and other services. Different
institutions play different roles, and, importantly, small banks and big banks
serve completely different strategic functions. Large banks bank multinational
corporations around the world, make healthy markets, and wield technology and a
product set that are the best in the world. A small bank simply cannot bank
these same multinational governments and safely move the amount of money and
securities that large banks do. Regional and community banks have exceptional
local knowledge and presence and are critical in serving thousands of towns and
certain geographies.

It is also important to recognize that the banking system as we know it is
shrinking relative to private markets and fintech, which are growing and
becoming increasingly competitive. And remember that many of these new players
do not have the same transparency or need to abide by the extensive rules and
regulations as traditional banks, even if they offer similar products — this
often gives them significant advantage.

To deal with this fluid environment, banks of all sizes develop their own
strategies, whether to specialize, expand geographically or embark on mergers
and acquisitions. There are certain banking services where economies of scale
are a competitive advantage, but not all banks need to become bigger to gain
this benefit (there are many highly successful banks that are smaller). What is
clear is that banks should be allowed to pursue their individual strategies,
including mergers and acquisitions, as they see fit. Overall, this process
should be allowed to happen — it’s part of the natural and healthy course of
capitalism — and it can be done without harming the American taxpayer or
economy.

While we all want a strong banking and financial system, we should step back and
assess how all the regulatory steps we have taken measure up against the goals
we all share. Since Dodd-Frank was signed into law in 2010, thousands of rules
and reporting requirements written by 10+ different regulatory bodies in the
United States alone have been added. And it would probably be an understatement
to say that some are duplicative, inconsistent, procyclical, contradictory,
extremely costly, and unnecessarily painful for both banks and regulators. Many
of the rules have unintended consequences that are not desirable and have
negative impacts, such as increasing the cost of credit for consumers (hurting
lower-income Americans the most).

The whole process, including the Basel III endgame, could be much more
productive, streamlined, economical, efficient and safe.

Both regulators and banks should want the same thing — a healthy banking system,
serving its clients and striving for continuous improvement. We all should also
want the enormous benefits that would come from good collaboration between
regulators and bank management teams and boards.

Over time, these relationships have deteriorated, and, again, are increasingly
less constructive. There is little real collaboration between practitioners —
the banks — and regulators, who generally have not been practitioners in
business. While we acknowledge the dedication of regulators who work with banks
on a daily basis, management teams across the industry are putting in a
disproportionate amount of time addressing requests for extra details,
documentation and processes that extend far beyond the actual rules — and
distract both regulators and management from more critical work. We should be
more focused on the truly important risks for the safety of the system. And
unfortunately, without collaboration and sufficient analysis, it is hard to be
confident that regulation will accomplish desired outcomes without undesirable
consequences. Instead of constantly improving the system, we may be making it
worse. A few additional points:

 * The Basel III endgame disadvantages American banks. The Basel III endgame has
   been 10 years in the making, and it still has not been completed. In my view,
   many of the rules are flawed and poorly calibrated. If the Basel III endgame
   were implemented in its current form, it would hamper American banks: As
   proposed, it would increase our firm’s required capital by 25%, making our
   requirement 30% higher than it would be under the equivalent European Union
   proposal. That means for every loan and asset financed in the United States
   by a major American bank, that bank would have to hold 30% more capital than
   any international competitor. The proposed regulations would also damage
   market making (see the following section). There are many other flaws but
   suffice it to say that much of the work being done today to analyze the
   effects should have been done before the proposed rulemaking.
   
   One of the single most important lessons from the great financial crisis is
   that there is enormous value to having a bank that is well-managed and has
   diverse revenue sources. Yet regulation since then both punishes
   consolidation and diversification — and punishes performance — through many
   features of the GSIB surcharge.
 * Built over many years, the framework is now full of duplication. The
   following is only a partial list: American gold-plating and conceptual
   inconsistencies among Comprehensive Capital Analysis and Review (CCAR),
   recovery and resolution plans, liquidity requirements, global systemically
   important bank (GSIB) requirements, and safety and soundness principles. The
   many overlapping rules contribute to the bureaucracy that generates an
   extraordinary amount of make-work (an 80,000-page CCAR and shockingly
   another, coincidentally, 80,000-page recovery and resolution plan).
 * The new rules do virtually nothing to fix what caused the failure of SVB and
   First Republic. For example, they don’t improve certain liquidity
   requirements, limit HTM accounting or reduce allowable interest rate
   exposure.
 * The current regulatory approach to liquidity might simply run counter to the
   stated intent. Regulations should recognize the value and importance of
   lending and borrowing against good collateral and using central bank
   resources, such as the discount window. Adhering to current liquidity
   requirements permanently ties up good liquidity in a way that makes the
   system more fragile and more risky.
 * It is not clear what the full intent of the Basel III endgame was – it will
   have unintended consequences. Without real analysis of expected outcomes,
   additional regulation will likely reduce the number of banks offering certain
   services and increase costs for all market participants and activity,
   including loans, market making and hedging (by farmers, airlines and
   countries, among others). And new rules might even increase consolidation as
   companies race to achieve economies of scale in certain products and
   services.

Unfortunately, some recent regulations are ending up in court. You can imagine
that no one wants to sue their regulators. Banks would not sue if they did not
think they were right — or if they thought they had any other recourse — which
they effectively do not. This is definitely not what anyone should want. A more
constructive relationship with regulators would reduce confusion and uncertainty
and would lead to better outcomes for banks, their shareholders, and their
clients, customers and communities.

Collaboration between banks and regulators could improve the use of resources
and create better outcomes.

True collaboration could dramatically improve the banking system. For example:

 * Redirect enormous resources from things that don’t matter to things that do.
   As mentioned, it takes 80,000 pages to describe a CCAR test and 80,000 pages
   to detail recovery and resolution. The talent and resources at the banks and
   regulators could be better used elsewhere. Such overload is distracting and
   takes your eye off the ball on real, emerging risks, including China, trade,
   payment systems and cybersecurity, among others.
 * Reduce bureaucratic processes that provoke a tendency to herd mentality. For
   example, CCAR is just a point-in-time stress test, and it can lull you into a
   false sense of security — for reference, we do more than 100 stress tests
   each week. On interest rate exposure, focusing on the documentation of
   details may stop you from thinking about big interest rate exposure.
   Sometimes analyzing “what ifs” and fat tail risks is better than excessive
   and rigid models and documentations.
 * Examine risks outside the regulatory system that are rarely analyzed and
   largely unaddressed. These risks include data and privacy, as well as
   consumer banking and payment systems, which are growing fast in the
   unregulated market. In addition, there are potential risks from private
   credit markets (which I talk about later in this section).
 * Let’s imagine what’s possible with real collaboration. Working together, we
   can improve how the FDIC manages failing institutions, how to limit contagion
   and restore confidence to depositors, how liquidity requirements can create
   more flexible funding for banks under stress, how the banking and Federal
   Reserve’s payment system can become more interoperable, how clearinghouse
   risk can be reduced, how stress tests can protect the system from a wider
   variety of outcomes, how costs and therefore consumer costs can be reduced
   (not increased), how anti-money laundering requirements can be simplified and
   improved at the same time, and how financial products can be brought to the
   unbanked.
   
   We can fix the housing and mortgage markets. For example, mortgage
   regulations around origination, servicing and securitization could be
   simplified, without increasing risk, in a way that would reduce the average
   mortgage by 70 or 80 basis points. The Urban Institute estimates that a
   reduction like this would increase mortgage originations by 1 million per
   year and help lower-income households, in particular, buy their first home,
   thereby starting them on the best way to build household net worth.
   
   There are many more things that can be improved — and we really should start
   working on them.

We need a detailed review and probably a complete revamp.

I know this might be wishful thinking, but now would be a good time to step back
and have a thorough and candid review of the thousands of new rules passed since
Dodd-Frank. After this review, we should ask what is it that we really want: Do
we want to try to eliminate the possibility of bank runs? Do we want to change
and create liquidity rules that would essentially back most uninsured deposits?
Do we want the mortgage business and leveraged lending business to be inside or
outside the banking system? Do we want products that are inside and outside the
banking system to be regulated the same way? Do we want to reasonably give
smaller banks a leg up in purchasing a failing bank? And while Dodd-Frank did
some good things, shouldn’t we take a look at the huge overlapping jurisdictions
of various regulators? This overlap creates difficulties, not only for banks,
but for the regulators, too. Any and all of this is achievable, and, I believe,
could be accomplished with simpler rules and guidelines and without stifling our
critical banking system.

PROTECTING THE ESSENTIAL ROLE OF MARKET MAKING (TRADING)

Before we discuss market making and financial markets, readers should understand
that market making occurs in almost all businesses. There are healthy markets in
farm animals, foreign products, commodities, energy, logistics, healthcare and
so on. Healthy markets increase customer choice and reduce cost. They almost
always involve holding inventory and taking some risk, which is simply a part of
the process. America’s financial markets are the biggest in the world — U.S.
public debt and equity markets total $137 trillion, constituting the biggest
“market” in the world, and are larger than America’s gross domestic product
(GDP) of $27 trillion.

Market participants are not “Wall Street.” They are large and small, mainly
sophisticated, global investors (pension plans, mutual funds, governments and
individuals) representing retirees, veterans, individuals, unions, federal
workers and others. They all benefit from our efficient, low-cost and
transparent markets.

Some regulators seem to think that market making is a speculative, hedge
fund-like activity — and this thinking is what might be leading them to
constantly increase capital requirements. The proposed capital rules could
fundamentally alter market-making activities that are critical to a thriving
economy, particularly in difficult markets when market making is even more
important. The new rules would raise capital requirements by 50% for major banks
— which could undermine market stability, make banking services costlier and
less accessible, and push even more activity to a less regulated banking system.

Our financial system and markets are the best in the world and benefit ALL
participants; exceptionally good market making in the secondary market makes our
primary markets the best in the world.

We should recognize that the United States has the biggest, deepest and most
liquid capital markets in the world. For these markets to function, it is
critical for transparency and liquidity to be in the secondary market. Market
making provides this, promoting the flow of capital to real economy investments
and supporting all sectors of the economy, including companies, state and local
governments, universities, hospitals, pension plans and overall job creation.
Without market making in the secondary market, it would be extremely difficult
for companies to raise capital through the primary market — equity and debt
offerings — which have totaled approximately $3.6 trillion on average over the
past few years. The incredible strength of these markets enables companies of
all sizes to grow and expand especially during times of volatility and stress.
It also enables consumers to access cheaper credit and governments (local, state
and federal) to reduce their borrowing costs.

It takes enormous resources to properly support the Markets business.



JPMorgan Chase spends $700 million per year in extensive research coverage of
nearly 5,200 companies across 83 countries. This massive effort continuously
educates investors and decision makers around the world and often leads to
improved governance and management. It also critically complements the firm’s
market-making activities and further promotes transparency, enabling investors
to make thoughtful choices around investing in capital markets.

I would also like our shareholders to know that our market making is backed by
approximately $7 billion in support expenses, including over $2 billion in
technology spend alone each year. This investment allows us to maintain global
trading systems and constantly improve upon risk management and efficiency.

JPMorgan Chase deploys approximately $70 billion in capital to maintain our
Markets franchise. This capital supports $500 billion in securities inventory
(largely hedged) — and this inventory allows us to buy and sell $2 trillion
(notional) in securities daily for our clients.

Market making entails risk but is not particularly speculative.

The main objective of market makers is to continuously quote prices and
diligently manage an inventory to transact at those prices, which includes
assuming certain risks to support heavy volumes and orderly trading. Market
makers have a moral obligation to try to make markets in good times and in bad.
Part of our brand promise is to stand ready as the willing buyer and seller. In
this, we have never failed. In addition, in most cases regarding government
debt, where we serve as a government securities dealer, we are legally obligated
to make markets. This constant visibility into prices provided by market makers
fosters investor confidence, keeps fees low and promotes economic growth by
attracting more investors.

Many large market participants — for example, hedge funds and high-frequency
traders, among others — have no obligation to make markets. In fact, many of
these market participants often “step out” of the markets and dramatically
reduce liquidity specifically when market conditions are difficult.

Market making is not particularly speculative since market makers generally
hedge their positions, as you will see from some real life examples of the
economics and risks. We earn revenue of approximately $100 million on a typical
day. In the average year, the total is nearly $30 billion. On our $2 trillion in
notional daily trading, this amounts to only one hundredth of a cent charged to
the investor for these services — an extraordinarily low cost compared with any
other market in the world.

Now let’s take a look at the actual risk and results versus the hypothetical
risk and results. The hypothetical global market shock of the CCAR stress test
has us losing $18 billion in a single day and never recovering any of it. Let’s
compare that to actual losses under real, actual market stress.

Now consider these historical data points: First, over the last 10 years, the
firm’s market-making business has never had a quarterly loss and has lost money
on only 30 trading days. These loss days represent only 1% of total trading
days, and the average loss on those days was $90 million. Second, when markets
completely collapsed during the COVID-19 pandemic (from March 2 through March
31, 2020, the stock market fell 16%, and bond spreads gapped out dramatically),
J.P. Morgan’s market-making activities made money every day prior to the Federal
Reserve’s major interventions, which stabilized the markets. During that entire
month, we lost money on only two days but made $2.5 billion in Markets revenue
for the month. And third, in the worst quarter ever in the markets following the
2008 failure of Lehman Brothers, we lost $1.7 billion, but we made $5.6 billion
in Markets revenue for the full year. The firm as a whole did not lose money in
any quarter that year. In 2009, there was a complete recovery in Markets, and we
made $22 billion in Markets revenue.

You can see that our actual performance under extreme stress isn’t even close to
the hypothetical losses of the stress test.

Another major fallacy is that derivatives are objects of financial destruction.
In reality, derivatives are an essential part of managing financial risk and are
used by investors, corporations, farmers, businesses, countries, governments and
others to manage their risks. And more than 85% of derivatives are fairly basic
forms of foreign exchange or interest rate swaps.

One last fallacy is that the repo markets are all about speculation. While it’s
true that repo is used by certain investors to leverage up their positions,
about 75% of repo is essential to normal money market functioning, i.e., is done
by broker-dealers financing their actual inventory positions, money market funds
investing their cash backed by highly rated collateral and clients hedging their
positions.

Market makers add confidence, liquidity and transparency to U.S. capital markets
— market making helps stabilize markets and can reduce volatility.

In addition, more liquidity, not less liquidity, will be needed to maintain
market stability. Large banks keep an inventory of securities they can deploy in
times of stress to help soothe markets; however, with the implementation of new
regulations, banks now hold 70% as much inventory in securities as they did
before the 2008 financial crisis, while the total size of the market has almost
tripled. Higher capital requirements will accelerate this trend even further,
impacting banks’ ability to deliver support to clients and markets in times when
it is needed the most.

Washington’s Basel III endgame proposal damages market making, hurts Americans
and drives activity to less transparent, less regulated markets.

If this proposal is enacted as drafted:

 * Everyday consumer goods could be impacted. Households contending with
   inflation could also feel the effects of higher capital requirements on
   market-making activities when they shop. From beverage companies that need to
   manage aluminum costs to farms that need to protect against environmental
   risks, if the cost of hedging those risks increases, it could be reflected in
   what consumers pay for everything from a can of soda to meat products.
 * Mortgages and small business loans will be more expensive. Consumers seeking
   a mortgage — including first-time homebuyers and historically underserved,
   low- to moderate-income borrowers with smaller down payments — will face
   higher interest rates or will have a tougher time accessing one. This will
   occur not only because the cost of originating and holding these loans is
   higher but also because the cost of securitizing them will rise for banks,
   nonbanks and government agencies. Not only that, but the proposal will likely
   lead to reductions in the size of unfunded credit card lines, which will put
   pressure on FICO scores and thereby make it more difficult for some people to
   access other forms of retail credit such as mortgages. Again, this will have
   the greatest impact on low- to moderate-income borrowers who rely most
   heavily on credit cards for day-to-day spending and to build their credit
   history. It could even be argued that existing regulations go too far and
   that there is an opportunity to help underserved communities by dialing down
   regulations that lead to higher borrowing costs. This should be studied and
   the pros and cons analyzed. The same can be said for small business loans,
   which will become more expensive and less accessible.
 * Saving for retirement or college will be harder. The cost of products that
   families count on to save for retirement or college will go up as a result of
   this proposal. Asset managers, money market funds and pension funds all buy,
   sell and safekeep securities and other financial instruments for American
   investors. Under the proposed rules, the cost of banking products used on
   behalf of clients each day — including brokerage, advisory, clearing and
   custody services — will go up and feed through to customers. That will lead
   to lower returns on retirement accounts, college funds and other long-term
   savings.
 * Government infrastructure projects and corporate development will become more
   expensive. Federal, state and local governments, as well as corporations and
   other institutions, rely on large banks for access to U.S. capital markets to
   fund development. If accessing capital markets becomes more expensive, it
   will have a ripple effect on the hiring of American workers, investment in
   research and development, and funding to build hospitals, roads and bridges,
   including the planned infrastructure projects from the Inflation Reduction
   Act (IRA).

More market activity will move to unregulated institutions, out of sight from
regulators and without the same level of consumer protections that Americans
expect from their banks. Other market participants that don’t have holistic
client relationships are less likely to provide liquidity to help stabilize
markets.

In volatile times, banks have been able to intermediate to help their clients
and to work with the regulators. With new regulations, they may be less able to
do so. There have been several times in the past few years where banks had ample
liquidity and capital but were unable to rapidly increase their intermediation
in the markets due to very rigid liquidity and capital requirements. Finally,
the proposed rules increase the chance that the Federal Reserve will have to
step in again — and this is not something they should want to do on a regular
basis but only in an extreme emergency.


STAYING COMPETITIVE IN THE SHRINKING PUBLIC MARKETS

In previous letters, I have described the diminishing role of public companies
in the American financial system. From their peak in 1996 at 7,300, U.S. public
companies now total 4,300 — the total should have grown dramatically, not
shrunk. Meanwhile, the number of private U.S. companies backed by private equity
firms — which does not include the rising number of companies owned by sovereign
wealth funds and family offices — has grown from 1,900 to 11,200 over the last
two decades. This trend is serious and may very well increase with more
regulation and litigation coming. Along with a frank assessment of the
regulation landscape, we really need to consider: Is this the outcome we want?

There are good reasons for private markets, and some good outcomes result from
them. For example, companies can stay private longer if they wish and raise more
and different types of capital without going to the public markets. However,
taking a wider view, I fear we may be driving companies from the public markets.
The reasons are complex and may include factors such as intensified reporting
requirements (including investors’ growing needs for environmental, social and
governance information), higher litigation expenses, costly regulations,
cookie-cutter board governance, shareholder activism, less compensation
flexibility, less capital flexibility, heightened public scrutiny and the
relentless pressure of quarterly earnings.

Along with the universal proxy — which makes it easier to put poorly qualified
directors on a board — the pressures to retreat from the public market are
mounting. In addition, corporate governance principles are becoming more and
more templated and formulaic, a negative trend. For example, proxy advisors may
automatically judge directors unfavorably if they have a long tenure on the
board, without a fair assessment of their actual contributions or experience.
Another example is the constant battle by some proxy advisors who try to split
the chairman and CEO role when there is no evidence this makes a company better
off — in fact, today, lead directors generally hold most of the authorities
previously assigned to the chairman. The governance of major corporations is
evolving away from guidance by governance principles that focus on a company’s
relationship to long-term economic value toward a bureaucratic compliance
exercise. Good corporate governance is critical, and a little common sense would
go a long way.

THE PRESSURE OF QUARTERLY EARNINGS COMPOUNDED BY BAD ACCOUNTING AND BAD
DECISIONS

There is something very positive about detailed and disciplined quarterly
financial and operating reporting. But company CEOs and boards of directors
should resist the undue pressure of quarterly earnings, and it is clearly
somewhat their fault when they don’t. However, it is naïve to think that the
pressure doesn’t exist because companies that “disappoint” can face extensive
criticism, particularly those with a new or young CEO. It’s possible for
companies to take short-term actions to increase earnings, such as selling more
product cheaply at the end of a quarter, cutting certain investments that may be
terrific but can show accounting losses in the first year or two, or just
deploying more aggressive accounting methods at times. Once shortcuts like this
begin, people all over the company understand that it is okay to “stretch” to
meet your numbers. This could put you on a treadmill to ruin. Obviously, a
company should not resort to these tactics, but it does happen in the public
markets — and it’s probably less likely in the private markets.

THE HIJACKING OF ANNUAL SHAREHOLDER MEETINGS

One of the reasons it is less desirable to be a public company is because of the
spiraling frivolousness of the annual shareholder meeting, which has devolved
into mostly a showcase of grandstanding and competing special interest groups.
We should treat shareholders with tremendous respect — and we do. At JPMorgan
Chase, we are constantly talking with our investors — our directors, our lead
director and our corporate governance experts visit most of our major investors
whether they be direct owners or asset managers who manage the money for others.
Meeting with your shareholders and investors is critical, but the annual
shareholder meeting itself has become ineffective. We should try to come up with
a far more constructive alternative.

THE UNDUE INFLUENCE OF PROXY ADVISORS

There are essentially two main proxy advisors in the United States. One is
called Institutional Shareholder Services (ISS), and the second is called Glass
Lewis. These proxy advisors started out providing reams of data from companies
to help their institutional investor clients vote on proxy matters (information
on executive compensation, stock returns, detail on directors, policies and so
on). However, they soon also began to provide advice on how shareholders should
vote on proxy matters. And, in fact, institutional investors generally execute
their voting on an ISS or Glass Lewis platform, which often includes a clear
statement of the advisory service’s position.

I should also point out, because it may be relevant, that ISS is owned by
Deutsche Boerse, a German company, and Glass Lewis is owned by Peloton Capital,
a Canadian private equity firm. I question whether American corporate governance
should be determined by for-profit international institutions that may have
their own strong feelings about what constitutes good corporate governance.

While asset managers and institutional investors have a fiduciary responsibility
to make their own decisions, it is increasingly clear that proxy advisors have
undue influence.

Asset managers (who manage money on behalf of others) and institutional
investors (e.g., pension plans and endowments) may rely on a variety of
information sources to support their valuation decision-making process. While
data and recommendations may form pieces of the information mosaic, their votes
should ultimately be based on an independent application of their own voting
guidelines and policies. To the extent they use recommendations from proxy
advisors in their decision-making processes, they should disclose that they do
so and should be satisfied that the information upon which they are relying is
accurate and relevant. However, many companies would argue that this information
is frequently not balanced, not representative of the full view and not
accurate. In addition, companies complain that they often cannot get the data
corrected, and, therefore, a vote may go uncorrected.

Almost all asset managers receive proxy advisor data and recommendations; while
some asset managers vote completely independently of this information, the
majority do not. Most asset managers have formed corporate governance or
stewardship committees that are responsible for their voting, and these
committee positions are often held not by portfolio managers and research
analysts (i.e., the people buying and analyzing the individual securities) but
by stewardship experts. While it is good to have stewardship experts, the
reality is that many of these committees default large portions of what they do
to proxy advisors and, more troubling, make it harder for actual portfolio
managers to override this decision making.

Some have argued that it’s too hard and too expensive to review the large number
of proxies and proxy proposals — this is both lazy and wrong. If issues are
important to a company, they should be important to the shareholder — for the
most part, only a handful of proposals are important to companies.

We are making enhancements to J.P. Morgan Asset Management’s proxy voting
processes to amplify the role of portfolio managers and to address the
perception of asset managers’ reliance on third-party advisor voting
recommendations.

Enhancements to the firm’s internal proxy voting process will include:

 * More portfolio manager participation in proxy committee decision making. The
   firm has significantly expanded the representation of portfolio managers on
   its North American Proxy Committee in an effort to increase the diversity of
   viewpoints represented on the committee. As part of this change, and in
   recognition that portfolio managers, as fiduciaries, may differ in their
   views on how to vote on particular proposals depending on a mandate’s
   investment strategy and guidelines, we are broadening our capabilities to
   support voting results that may vary across our platform.
 * Diminished role of proxy advisor recommendations. J.P. Morgan Asset
   Management makes its own independent proxy voting decisions (based on deep
   fundamental research) and stands behind the depth and rigor of its processes
   and historical information advantage. In most cases, the firm will only use
   proxy advisory firms for research, data and technical mechanics of vote
   transmission and not for outsourced recommendations. By the end of 2024, J.P.
   Morgan Asset Management generally will have eliminated third-party proxy
   advisor voting recommendations from its internally developed voting systems.
   Additionally, the firm will work with third-party proxy voting advisors to
   remove their voting recommendations from research reports they provide to
   J.P. Morgan Asset Management by the 2025 proxy season.
 * Other enhancements. We are working to give a company and its management even
   greater access to the ultimate decision makers; to raise critical issues to a
   company as early as possible in a constructive and proactive way; and to be
   willing to tell companies how we have voted once our decision is made rather
   than waiting until votes are finally counted.

Taken together, these steps are designed to respond to a growing perception
(and, I believe, reality) that the asset management industry generally places
undue reliance on proxy advisors in how proxies are voted. We believe these
actions will strengthen our relationships with our clients and with companies
while helping to build trust between shareholders, investors and companies.

THE BENEFITS AND RISKS OF PRIVATE CREDIT

I have already mentioned some of the benefits of private credit, and I’ll now
mention some more. Many people in the private credit arena are very smart and
creative and want to help the companies they invest in navigate through market
shoals. They can move quickly, discreetly and flexibly. Most generally
understand that bad accounting drives bad decisions, and their goal is to make
the right decisions for the future of the company.

On the other hand, not all players are that good. And problems in the private
credit market caused by the bad players can leak onto the good ones, even though
private credit money is locked up for years. If investors feel mistreated, they
will cry foul, and the government will respond by putting a laser focus on the
business. It’s a reasonable assumption that at some point regulations will focus
on the private markets as they do on the public markets.

This scrutiny will include a look at how private credit values its assets, which
isn’t as transparent as public market valuations. In addition, private market
loans commonly lack liquidity in the secondary market and are not generally
supported by in-depth market research.

New financial products that grow extremely rapidly often become an area of
unexpected risk in the markets. Frequently, the weaknesses of new products, in
this case private credit loans, may only be seen and exposed in bad markets,
which private credit loans have not yet faced. When credit spreads gap out, when
interest rates go up and when some leveraged companies suffer in the recession,
we will find out how those loans survive stress testing. In addition, they can
create a little bit of a “credit crunch” for borrowers since it might be hard
for private creditors to roll over loans under those conditions. Under stress
conditions, private creditors would have to charge exorbitant prices that
companies simply cannot afford in order to book the new loan at par. Banks are
in a slightly different position.

A BANK’S STRENGTH: PROVIDING FLEXIBLE CAPITAL

Banks generally try to be there for their borrowers in difficult times —
striving to roll over loans, renegotiate terms and raise additional capital.
Banks do this for multiple reasons: They normally feel an obligation to help
their clients, they have long-term relationships and they can commonly earn
other sources of revenue from client-driven transactions. Banks can also flex
their capital and lending base as needed by their clients. This is because a
bank can and should make decisions to help companies through good times and bad,
seeking to retain them as long-term clients across many areas of the bank. They
can and do take “losses” that help the client maintain the franchise. But an
asset manager must act as a “fiduciary” of other people’s money and cannot lend
based on a moral obligation or potential future relationship.

Recently, we have been witnessing a convergence between the public and private
markets. But it’s too soon to say how this ultimately will play out,
particularly if we go through a recessionary cycle.

Read footnoted information here


MANAGEMENT LESSONS: THINKING, DECIDING AND TAKING ACTION – DELIBERATELY AND WITH
HEART

I always enjoy sharing what I’ve learned from watching others, reading and
experiencing through my own journey.

BENEFITING FROM THE OODA LOOP

The military, which often operates in extreme intensity of life and death and in
the fog and uncertainty of war, uses the term “OODA loop” (Observe, Orient,
Decide, Act — repeat), a strategic process of constant review, analysis,
decision making and action. One cannot overemphasize the importance of
observation and a full assessment — the failure to do so leads to some of the
greatest mistakes, not only in war but also in business and government.

A full assessment is critical.

To properly manage any business situation, you need to perform a full and
complete assessment of it. In business, you have to understand your competitors,
their distribution, their economics, their innovations, and their strengths and
weaknesses. You also need to understand customers and their changing
preferences, along with your own costs, your people and their skills. Then
there’s knowing how other factors fit in, like technology, risk, motivations …
hope you get the point. For countries, you need a thorough grasp of their
economies, strengths and weaknesses, population and education, access to raw
materials, laws and regulations, history and culture. Research, data and
analytics should be at a very detailed level and constantly reassessed. Only
after you complete this diligent study can you start to make plans with a high
degree of success.

Get on the road – it builds knowledge and culture.

I have frequently wondered about all the nonstop road trips, client meetings,
briefings, greetings, bus trips, and visits to call centers, operating centers
and branches, regulators and government officials, among others: Did they make a
difference? The answer is absolutely yes because they enabled a process of
constant learning, assessment and modification of best practices — gaining
insights from employees to clients to competitors. Employees will tell you what
you are doing well or poorly if you simply ask them, and they know you want to
hear the real answer. Curiosity is a form of humility — acknowledging that you
don’t know everything. Responding to curiosity allows other people to speak
freely. Facts and details matter and inform a deeper and deeper analysis that
allows you to continually revise and update your plans. This, of course, also
means that you are constantly admitting prior mistakes.

You need to shed sacred cows, seek out blind spots and challenge the status quo.

Very often companies or individuals develop narratives based upon beliefs that
are very hard to dislodge but are often wrong — and they can lead to terrible
mistakes. A few examples will suffice. Stripe, Inc. built a payments business by
working with developers — something we never would have imagined but might have
figured out if we had tried to seek out what others were doing in this area.
Branches were being closed, both at Bank One and Chase, because the assumption
was that they would not be needed in the future. We underinvested for years in
the wealth management business because we were always focused on the value of
deposits versus investments. Question everything.

Use your brains to figure out the truth — not to justify what you already think.

It’s often hard to change your own attitudes and beliefs, especially those you
may have held on to for some time. But you must be open to it. When you learn
something that is different from what you thought, it may affect many
conclusions you have, not just one. Try not to allow yourself to become rigid or
“weaponized,” where other employees or interest groups jazz you up so much that
you become a weapon on their behalf. This makes it much harder to see things
clearly for yourself. When people disagree with you, seek out where they may be
partially right. This opens the door for a deeper understanding and avoids
binary thinking.

It's hard to see certain long-term trends, but you must try.

There is too much emphasis on short-term, monthly data and too little on
long-term trends and on what might happen in the future that would influence
long-term outcomes. For example, today there is tremendous interest in monthly
inflation data, although it seems to me that every long-term trend I see
increases inflation relative to the last 20 years. Huge fiscal spending, the
trillions needed each year for the green economy, the remilitarization of the
world and the restructuring of global trade — all are inflationary. I’m not sure
models could pick this up. And you must use judgment if you want to evaluate
impacts like these.

Also, a block of time as short as one year is an artificial framework for
judging the impact of long-term trends that could easily play out over years. A
helpful exercise is to think “future back,” in which you imagine different
future outcomes, including the ones you want, and then work backward to events
that are happening today (or that might happen or that you cause to happen),
closely examining the connections between those events and your projected or
desired outcomes. Those connections inform your risk and R&D planning.
Similarly, when companies compare the attributes of their products and services
with their competitors, they usually only consider where they are versus their
competitors. But nothing is static — they should consider where their
competitors will be in the future. Conditions are always changing, crises are
always emerging. When analyzing the playing field, it is better to assume that
your competitors are strong and are already in the process of improving and
innovating. This minimizes the chance of arrogance leading to complacency.

DECISION MAKING AND ACTING (HAVE A PROCESS)

There is a time for an individual to decide and act.

Sometimes you should take the time to measure twice and cut once. And then
sometimes making a quick decision is better than delaying. You should try to
distinguish between the two. For example, with decisions that are hard to
reverse, it’s usually better to go slow. With other decisions where you can
test, learn, probe and change direction, it’s often better to go fast. It’s been
my experience that it’s hard for some people to actually decide and act. This
could be from analysis paralysis, lack of “perfect” information, fear of failure
or the feeling that full consensus is needed before a decision can be reached.
But whatever it is, it can slow down and possibly seriously damage a company.

To get people to think like decision makers and take a strong point of view, we
like to ask, “What would you do if you were king or queen for a day?” It helps
shift the direction to individual decision making. We also ask questions like,
“What would you wish for if you knew X was going to happen?” (for example,
higher interest rates). Decision making takes a mix of courage, grit and guts.

One exercise that I find useful (and sometimes painful) is to draw up a list of
important decisions that need to be made — the ones I often avoid confronting.
So I take time every Sunday to think about these tough issues and almost always
make progress. Progress doesn’t always mean that you come to the final
conclusion — sometimes it’s just a very rational next step that can put you on a
path to the final decision.

Try to have a good decision-making process.

Try to give yourself the time to decide. Make sure you speak with the right
people and make sure the right people are in the room. Information should be
fully shared. People should be made very comfortable with open debate. Quite
often, the “right” answer is simply waiting to be found — you don’t have to
guess.

Crowdsourcing, compromise, consensus and committees have benefits and risks.

There are huge benefits to crowdsourcing intelligence. It is a form of full
assessment, a strategy for getting the best ideas and challenging the status
quo. We should do this for almost every major decision. It is perfectly fine on
some occasions to compromise and gain consensus, particularly on decisions that
are not critical and can easily be reversed. Often people spend too much time
debating issues that are simply not that important; it’s better to decide and
move on. Also, before you compromise, you should know exactly what you want to
achieve and the consequences of any tradeoffs. However, sometimes compromise and
consensus cannot work and only lead to a feel-good decision that is probably
wrong — this could be the road to ruin.

The use of committees can be good when done properly. For example, if our risk
committees could do a full assessment and crowdsource all potential risks, that
would lead to better decision making. I will give one very personal and painful
example, which is when we had a major trading scandal, called The London Whale.
The scandal was not caused by the complexity of the trade but rather the failure
to go to the proper Risk committee for a thorough review, which should have
happened but didn’t. I have no doubt that had the trade been raised there, the
flaws would have been exposed immediately, thereby dramatically reducing or
eliminating the problem. On the other hand, the opposite can happen when a
committee, with everyone staring at each other, devolves into herd-like behavior
with people looking for confirmation and ending up with a compromise that is a
poor choice.

Good leadership involves great observation and the ability to act, but there is
more …

THE SECRET SAUCE OF LEADERSHIP (HAVE A HEART)

You need to earn trust and respect with your employees.

You can be great at assessment, you can be brilliant and you may often be
willing to act. But all of that is not good enough for “complete” leadership. To
become a true leader, you need to be trusted and you must earn your respect,
every day. People have to know that you do not have ulterior motives and that
you’re trying to do the right thing — not trying to burnish your personal
reputation. Good people want to work for people they respect, and they will not
respect people who take all the credit and share all the blame. People need to
know that even when you make mistakes, you’re willing to admit them and take
corrective action. And there is more …

The importance of vision, communication and inspiration.

The reason I’ve always hesitated to talk about “vision” is because often it is
the basic BS of corporate speak — that somehow if you impart your vision to
people, they will take the mountain. What it really is all about is this: After
you’ve done your full assessment and decision making, you can then continuously
educate, explain, train, simplify, propel and fight. But this only works if
people know you are in the trenches with them, if they understand the mission
and if they are there side by side with your effort.

We know that bureaucracy can lead to politics, corporate stasis and terrible
decisions. So you can communicate your vision about how to fight bureaucracy by
telling stories about the silly things we do — but with a smile — and then by
showing people that you will actually fix the problems.

Finally, your vision needs to be clear, coherent and consistent. Within an
organization, people very quickly pick up the pattern of management saying one
thing but doing another. Because if words and actions are inconsistent (for
example, and I could give many, when we say we want employees to be treated with
respect, but we allow a jerk to be their boss), confidence in leadership will be
eroded.

Heart cannot be overstated.

Heart matters. And it makes a difference when people know and see that you
actually care. One example: Many years ago when I was new to JPMorgan Chase, I
learned that the company’s security guards had been outsourced — to save money.
Since after outsourcing, when the same guards continued coming to work every day
at the same salary, I wondered, “How could this be?” (FYI, this was brought to
my attention by the head of the Service Employees International Union, who came
to see me over the objection of my management team.) The reason we were saving
money is because the healthcare benefits were cut in half for the guards and
their family members (currently worth approximately $15,000 a year), and the
savings were split with us. This was a heartless thing to do — and the second I
found out, I reversed the decision. JPMorgan Chase’s success will not be built
off the backs of our guards — it will be the result of fair treatment of all of
our employees — and we’re thankful that many of those guards are still with our
company today.

You know heart and soul when you see it in effect on sports teams or with “the
boys in the boat” — it’s a beautiful thing to watch. It’s not as obvious, but it
happens in business, too.

It’s essential to build trust with your customers, constituencies and, yes, even
competitors.

Of course, I’m not bringing this up as a matter of corporate governance or a
corporation’s purpose: A business should, over the long run, try to maximize
shareholder value. It is completely obvious that running a decent business
—treating everyone ethically and earning trust and respect in all your
communities — is not only fundamental to shareholder value but also to a healthy
society.


A PIVOTAL MOMENT FOR AMERICA AND THE FREE WESTERN WORLD: STRATEGY AND POLICY
MATTER

In past years, I have written extensively about public policy issues. It is
important to engage in these conversations, particularly around domestic
economic policy because policy matters. While JPMorgan Chase can execute
specific plans to improve outcomes for customers and communities, there is no
replacement for effective government policies that add to the general well-being
of the country. A stronger and more prosperous country will make us a stronger
company.

As CEO of this company, every year I visit numerous countries around the globe.
I meet with foreign government leaders, presidents and prime ministers, business
leaders, and civic and academic experts, which allows me to learn a significant
amount about how public policy is executed around the world. It also reinforces
some of the critical values and virtues that are essential to a healthy country.

Every time I see the American flag, it reminds me of the values and virtues of
this country and its founding principles conceived in liberty and dedicated to
the notion that all men and women are created equal. Talk with someone who has
recently become a naturalized citizen or watch a ceremony where groups of people
take the oath to America, and you will see extraordinary joy and newfound pride.
They now live free, with individual rights protected by the Constitution and
with their life and the well-being of their family and community protected by
the U.S. military. As Americans, we have much to be grateful for and much to
defend.

If you read the newspaper from virtually any day of any year since World War II,
there is abundant coverage on wars — hot and cold — inflation, recession,
polarized politics, terrorist attacks, migration and starvation. As appalling as
these events have been, the world was generally on a path to becoming stronger
and safer. When terrible events happen, we tend to overestimate the effect they
will have on the global economy. Recent events, however, may very well be
creating risks that could eclipse anything since World War II — we should not
take them lightly.

February 24, 2022 is another day in history that will live in infamy. On that
day, 190,000 Russian soldiers invaded a free and democratic European country —
importantly, somewhat protected by the threat of nuclear blackmail. Russia’s
invasion of Ukraine and the subsequent abhorrent attack on Israel and ongoing
violence in the Middle East should have punctured many assumptions about the
direction of future safety and security, bringing us to this pivotal time in
history. America and the free Western world can no longer maintain a false sense
of security based on the illusion that dictatorships and oppressive nations
won’t use their economic and military powers to advance their aims —
particularly against what 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 its importance seems to recede in
tranquil times.

The fallout from these events should also lay to rest the idea that America can
stand alone. Of course, U.S. leaders must always put America first, but global
peace and order are vital to American interests. 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 conquer the bickering
democracies. America needs to lead with its strengths — not only its military
but also its economic, diplomatic and moral forces. And now we must do so as
America’s leadership is being challenged around the world. There is nothing more
important.

Policy and strategy matter, and it’s important to be engaged.

In our increasingly complex world, there is a vital interrelationship between
domestic and foreign economic policy, particularly around trade, investment,
national security and other issues. And, of course, while American voters and
leadership set U.S. foreign policy, being a constructive part of the global
conversation has become more important than ever.

If you doubt how important public policy is for the health of a country, you
need to look no further than the recent history of Greece, Ireland or Singapore.
Each of these countries, starting from deeply challenging places, implemented
effective government and policies that have done a great job of lifting up their
people when many thought it wasn’t possible. Sweden is another great example of
a country with good broad-based policies that have succeeded at precisely what
we all may want — a dynamic, innovative, free-market economy (Sweden actually
has fewer government-owned enterprises than America) and safety nets that work.
Conversely, you need to look no further than North Korea or Venezuela to see the
complete destruction and havoc that terrible public policies (often in the name
of the people) can cultivate.

Strategy by its nature must be comprehensive. In the rest of this section, I try
to answer the question: What must we do to ensure that the world stays safe, not
only for America but for freedom and democracy? A comprehensive strategy entails
four important pillars, and we must succeed at each:

 1. Maintain American leadership (including military).
 2. Achieve long-term economic success with our allies.
 3. Strengthen our nation domestically.
 4. Deepen focus and resolve on addressing our most pressing challenges.

COALESCING THE WESTERN WORLD — A UNIQUELY AMERICAN TASK

Only America has the full capabilities of military might, economic power and the
principles that most people around the world yearn for — based on “liberty and
justice for all” and the proposition that all people are created equal. America
remains the bastion of freedom and the arsenal of democracy.

There is no alternative to American leadership.

In the free and democratic Western world, and, in fact, for many other
countries, there is no real or good alternative to America. The only other
potential superpower is China. Other nations know they can rely on the founding
principles of America. If we reach out our hand, most nations will happily take
that hand. America is still the most prosperous nation on the planet, which not
only can guarantee our military strength but also positions us to help our
allies develop and grow their nations (though we should minimize the “our way or
the highway” type of behavior). This leadership is needed today to help Ukraine
stay free in its battle with Russia.

Most of the world wants American leadership.

America continues to be the envy of much of the world, and as we’ve seen with
the challenges at our borders, there is a reason people want to come here and
not to autocratic nations. If you opened America’s borders to the rest of the
world, I have little doubt that hundreds of millions of people would want to
move here. By contrast, not many would want to emigrate to autocratic nations.
Also, I have little doubt that if most investors across the globe could only
invest in one country, they would choose the United States. Beyond our country’s
borders, people and nations around the world understand the role that America
has played in promoting world peace — known as Pax Americana. For the most part,
Pax Americana has kept the world relatively peaceful since World War II and
helped lead to enormous global economic prosperity, which has helped lift 1.3
billion people out of poverty.

Modern America does not engage in economic coercion or foreign wars to steal
land or treasure. The fact that some of our foreign excursions might have been
misguided does not negate this. We helped rebuild Europe and Japan after the
devastation of World War II, and we, with our allies, have helped create global
institutions to maintain peace. We are still trusted.

First and foremost, the Western world needs unquestioned military might — peace
through strength.

“We know only too well that war comes not when the forces of freedom are strong,
but when they are weak,” said Ronald Reagan in 1980.

So far, the Western world has done a good job in strengthening military
alliances in response to the war in Ukraine. Ukraine is essentially the front
line that needs immediate support. Providing that support is the best way to
counter autocratic forces that would seek to weaken the Western world,
particularly America. But the ongoing wars in Ukraine and the Middle East could
become far worse and spread in unpredictable ways. Most important, the specter
of nuclear weapons — probably still the greatest threat to mankind — hovers as
the ultimate decider, which should strike deep fear in all our hearts. The best
protection starts with an unyielding resolve to do whatever we need to do to
maintain the strongest military on the planet — a commitment that is well within
our economic capability.

American leadership requires not only the military but also the full “symphony
of power.”

Former Secretary of Defense Robert Gates, in his book Exercise of Power, writes
extensively in the first chapter about “the symphony of power.” He makes the
critical point that America has often overused and misused military power and
has massively underused other muscles — diplomacy, intelligence, communication
(explaining to the world the benefits of democracy and free enterprise) and
comprehensive economic policy.

America has the most extensive group of partners, friends and allies — both
military and economic — that the world has probably ever seen. We should put
this to better use.

The American public ought to hear more about why this is so important.

International isolationism has run through American foreign policy throughout
our history, frequently with good reason. The chant, “Don’t get involved in
foreign wars” was often right. That said, the American public should remember
that even after the Revolutionary War, we did, in fact, have British and French
armies on our soil. The sinking of American merchant and passenger ships during
World War I and the surprise attack on Pearl Harbor in World War II brought
isolationism to a close for a time. America is never far from being dragged into
terrible conflicts. Global wars come to our shores whether we like it or not —
we need to stay engaged.

In perilous periods of history when our allies and other democracies were under
serious assault, great American leaders have inspired the American people —
through words and actions — to stand up to help and defend them. Staying on the
sidelines during battles of autocracy and democracy, between dictatorship and
freedom, is simply not an option for America today. Ukraine is the front line of
democracy. If the war goes badly for Ukraine, you may see the splintering of Pax
Americana, which would be a disaster for the whole free world. Ukraine’s
struggle is our struggle, and ensuring their victory is ensuring America first.
It is imperative that our national leaders explain to the American people what
is at stake and make a powerful case – with energy, consistency and clarity –
for our strong enduring commitment to Ukraine’s survival for as long as it takes
(and it could take years).

One last point: Ukraine needs our help immediately, but it’s important to
understand that much of the money that America is directing to Ukraine is for
purchasing weapons and equipment, most of which will be built in America. Not
only is our aid helping Ukraine, but it is going directly to American
manufacturers, and it is helping the country rebuild our military industrial
capacity for the next generation.

STRENGTHENING OUR POSITION WITH A COMPREHENSIVE, GLOBAL ECONOMIC SECURITY
STRATEGY

Sustaining America’s economic strength is a bedrock for our long-term military
strength. There are many things we need to do to strengthen the U.S. economy,
and I talk about that later in this section. This discussion is about foreign
economic policies – the economic battlefield.

The whole Western world is rethinking and reimagining its military strategies
and alliances. We need to do the same for our economic strategies and alliances,
but we should be guided by a comprehensive global strategy that deals with
critical issues. Done properly, such a strategy would help strengthen, coalesce
and possibly be the glue that holds together Western democratic alliances over
decades.

Foreign economic policy involves trade and investment, export controls, secure
and resilient supply chains, and the execution of sanctions and any related
industrial policies. It must also include development finance — think of the
“Belt and Road” efforts in China — which are critical to most developing
nations. This framework should tell us not only how to deal with our allies but
also how to work with nonaligned nations around the world. These strategies
should not be aimed against any one country (such as China) but rather be
focused on keeping the world safe for democracy and free enterprise.

Economic national security is paramount — both for the United States and for our
allies.

It is a valid point that the Western world — both government and business —
essentially underestimated the growing strength and potential threat of China.
It’s also true that China has been comprehensively and strategically focused on
these economic issues, all while we slept. But let’s not cry over spilled milk —
let’s just fix it.

We missed the potential threat from three vantage points. The first is
companies’ overreliance on China as the sole link in their supply chain, which
can create vulnerabilities and reduces resiliency. But to the extent this
involves everyday items, like clothes, sneakers, vaccine compounds and consumer
goods, this dependency is not as critical or complex and will eventually be
sorted out.

The second is the most critical. The United States cannot rely on any potential
adversaries for materials essential to our national security — think rare
earths, 5G and semiconductors, penicillin and materials critical to essential
pharmaceuticals, among others. We also cannot be sharing vital technologies that
can enhance an adversary’s military capabilities. The United States should
properly and narrowly define these issues and then act unilaterally, if
necessary, to fix them.

The third is also complex, which is countering unfair competition or
“mercantilist” behavior in critical industries; think electric vehicles,
renewable energy and AI, among others. Examples of this would be where a state,
any state, uses government powers, capital, subsidies or other means to dominate
critical industries and deeply damage the economic position of other nations.
Weakening a country economically can render it a virtual “vassal state,” reliant
on potential adversaries for essential goods and services, which also weakens it
militarily. We cannot cede our important resources and capabilities to potential
adversaries.

All these issues can be resolved, though they will take time and need devoted
effort.

Every nation will have different national security issues. For example, Europe
in general and countries like India, Japan and Korea need reliable, affordable
and secure energy; many nations would put food security as their top concern.
This means that we must work with our allies to accomplish our own goals and to
help them accomplish theirs. We have extraordinary common interests in our joint
security: We must hang together — because if we don’t, we will assuredly hang
separately.

We already engage in trade — improving it is good economics and great
geopolitics.

We must have a better understanding of trade. As a nation, we refuse to get into
genuine trade discussions, but this ignores the complete and obvious truth — we
already have trade relationships with all these countries. Approximately 92% of
the world’s consumers live outside the United States. Increased trade allows our
workers and farmers to access those markets. We should negotiate trade
agreements that can achieve more, economically, for ourselves and our allies, as
well as meet all of our national security needs. While it is appropriate to use
trade to continue to nudge allies in the right direction around human rights and
climate, this objective should be subordinated to our national interests of
long-term security.

Negotiating must be done in concert with our allied nations so as not to cause a
fissure in economic relations. This is critical — strong economic bonds will
help ensure strong military alliances. The Inflation Reduction Act has much good
in it (more on this later), but it angered many of our allies. To them, the bill
was by America and for America, and, subsequently, they felt a need to match it
so their businesses would not be disadvantaged. The terms of the legislation
could have been better negotiated with our allies in mind, strengthening our
economic ties with the free world.

We should also immediately re-enter, if possible, the prior negotiated
Trans-Pacific Partnership agreement. Not only is it good for the economy, but it
also could be a brilliant, strategic, economic security move — an economic
alliance that binds us with 11 other important countries (including Australia,
Chile, Japan, Malaysia, Mexico, Singapore and Vietnam). Geopolitically and
strategically, this might be one of the most important moves to counter China.
While this is a challenging step, our political leaders need to explain and lead
— and not be afraid of dealing with the tough issues. We also need to
acknowledge that there have been real negative job impacts as a result of trade,
which are usually concentrated around certain areas and businesses. So any new
trade policy should be combined with a greatly enhanced Trade Adjustment
Assistance program, which provides retraining, income assistance and relocation
for those workers directly impacted by trade.

Trade is realpolitik, and the recent cancellation of future liquified natural
gas (LNG) projects is a good example of this fact. The projects were delayed
mainly for political reasons — to pacify those who believe that gas is bad and
that oil and gas projects should simply be stopped. This is not only wrong but
also enormously naïve. One of the best ways to reduce CO2 for the next few
decades is to use gas to replace coal. When oil and gas prices skyrocketed last
winter, nations around the world — wealthy and very climate-conscious nations
like France, Germany and the Netherlands, as well as lower-income nations like
Indonesia, the Philippines and Vietnam that could not afford the higher cost —
started to turn back to their coal plants. This highlights the importance of
safe, secure and affordable energy. Second, the export of LNG is a great
economic boon for the United States. But most important is the realpolitik goal:
Our allied nations that need secure and affordable energy resources, including
critical nations like Japan, Korea and most of our European allies, would like
to be able to depend on the United States for energy. This now puts them in a
difficult position — they may have to look elsewhere for such supplies, turning
to Iran, Qatar, the United Arab Emirates or maybe even Russia. We need to
minimize anything that can tear at our economic bonds with our allies.

The strength of our domestic production of energy gives us a “power advantage” —
cheaper and more reliable energy, which creates economic and geopolitical
advantages.

Industrial policy is now necessary, but it should be carefully constructed and
limited.

In some cases, industrial policy (using government resources to subsidize
investments to help make businesses more competitive) may be the only solution
for quickly building up the industries we need (rare earths and semiconductors,
among others) to guarantee resilient national security. The IRA and CHIPS Act
are good examples of this and government has to get it right.

Such policy can also be used to help combat unfair competitive policies of
nations that are using state capitalism and state control to dominate critical
industries. However, when crafting industrial policy, the function of government
needs to be narrowly defined and kept simple; i.e., governmental jurisdiction
should be limited to very specific products and probably to what we know works,
such as tax credits and, to a lesser extent, loan guarantees. And industrial
policy should include twin provisions: 1) strict limitations on political
interference, like social policies, and 2) specific permitting requirements,
which, if not drastically improved, will badly inhibit our ability to make
investments and allow infrastructure to be built. Adding social policy, politics
and matters other than simple tax credits dramatically reduces the economic
efficiency of industrial policy and creates conditions for corporate America to
feed at the trough of government largess. We should quickly address how we can
improve on already executed legislation. We do not want to look back and have
great regrets about how so much of this policy work failed.

There are those who argue that the U.S. government needs much more far-reaching
industrial policy to be able to micromanage and accomplish its many ambitious
objectives. To those I say, read further in this section about how ineffective
so many government policies have been.

We should be tough, but we should engage with China.

Over the last 20 years, China has been executing a more comprehensive economic
strategy than we have. The country’s leaders have successfully grown their
nation and, depending on how you measure it, have the first or second largest
economy in the world. That said, many question the current economic focus of
China’s leadership as they don’t have everything figured out. While China has
become the largest trading partner to many countries around the world, its own
GDP per person is $13,000. And the country continues to be beset by many
economic and domestic issues.

China has its own national security concerns. The country is located in a very
politically complex part of the world, and many of China’s actions have caused
its neighbors (e.g., Japan, Korea, Philippines, among others) to start to re-arm
and, in fact, draw closer to the United States. It also surprises many Americans
to hear that while our country is 100% energy sufficient, China needs to import
10 million barrels of oil a day. It is clear that China’s new leadership has set
a different course, with a much more intense focus on national security,
military capability and internal development. That is their right, and we simply
need to adjust to it.

America still has an enormously strong hand — plenty of food, water and energy;
peaceful neighbors; and what remains the most prosperous and dynamic economy the
world has ever seen, with a per person GDP of over $80,000 a year. Most
important, our nation is blessed with the benefit of true freedom and liberty.
See the sidebar on the amazing power of freedom later in this section.

While we may always have a complex relationship with China (made all the more
complicated and serious by ongoing wars), the country’s vast size and importance
to so many other nations requires us to stay engaged — thoughtfully and without
fear. At the same time, we need to build and execute our own long-term,
comprehensive economic security strategy to keep our position safe and secure. I
believe that respectful, strong and consistent engagement would be best for both
our countries and the rest of the world.

We need to strengthen and rebuild the international order — we may need a new
Bretton Woods.

The international rules-based order established by the Western world after World
War II is clearly under attack by outside forces, somewhat weakened by its own
failures and inability to keep up with the increasingly complex world. This
international order relies on a web of military alliances, trade agreements
(e.g., World Trade Organization), development finance (e.g., International
Monetary Fund and the World Bank) and related global tax and investment policies
and diplomacy organizations (e.g., United Nations), which have evolved into a
confusing and overlapping regime of policies. You can now add to it the new
issues of cyber warfare, digital trade and privacy, and global taxes, among
others.

It might be a good idea to convene a group of like-minded leaders to build and
improve upon what already exists. The time may be right for a reimagined Bretton
Woods — and by this, I mean revitalizing our global architecture. Since too many
parts of the world have been neglected, any new system has to take into account
and properly address the needs of all nations, including areas of concentrated
poverty.

While we hope the wars in Ukraine and in the Middle East will end eventually
(and, we hope, successfully from the standpoint of our allies), these other
critical economic battles could possibly continue throughout our lifetime. If
the Western world is slowly split apart over the next few decades, it will
likely be the result of our failure to effectively address crucial global
economic challenges.

PROVIDING STRONG LEADERSHIP GLOBALLY AND EFFECTIVE POLICY MAKING DOMESTICALLY

When you travel around the United States and talk with people of all types and
persuasions, there is a rather common refrain; namely, why are we helping
foreign nations with the safety of their borders and economies when we are not
doing a particularly good job of protecting our own? While there is no moral
equivalency in these arguments, they are understandable. It is clear that many
Americans feel we need to do a better job here at home before we can focus over
there. We can understand why some people living in this country, who have been
neglected for decades, ask how their government can find the money for Ukraine
and other parts of the world but not for them. It is a reasonable question.

From my point of view, our highly charged, emotional and political domestic
issues are centered around 1) immigration and lack of border security and 2) the
fraying of the American dream, particularly for low-income and rural Americans
who feel left behind amid the growing wealth and prosperity of others around
them. Please read the sidebar below, which I believe explains the legitimate
frustration of some of our citizens. And I agree with them.

In the sidebar, I also explain how two policies (a large expansion of the Earned
Income Tax Credit and focus on work skills and job outcomes at high schools,
community colleges and colleges) would not only dramatically increase both the
income and employment opportunities for many of those left behind but would also
have the virtue of actually growing the workforce. The combined effect of all of
this would be quite a boon to our GDP.

I believe that many affected Americans are not angry at hardworking, law-abiding
immigrants and, in fact, acknowledge the critical role immigrants continue to
play in building this wonderful country. Rather, they are angry that America has
not implemented proper border control and immigration policies. It is astounding
that many in Congress know what to do and want to do it but are simply unable to
pass legislation because of partisan politics. Congress did come close on a few
occasions — and I hope they keep trying.

Deliberate policies meant to drive healthy growth are needed.

For over two decades, since 2000, America has grown at an anemic rate of 2%. We
should have strived for and achieved 3% growth. Had we done so, GDP per person
today would be $16,000 higher, which would, in turn, have paid for better
healthcare, childcare, education and other services. Importantly, the best way
to handle our excess deficit and debt issues is to maximize economic growth.

Growth policies include (the list could be very long so I’ll just mention a
few):

 * Consistent tax policies, conducive to both employment and capital investment.
   Capital investment is the primary driver of innovation, productivity and,
   therefore, growth in America. Tax policies change too frequently, which
   causes uncertainty and complicates long-term capital investment decision
   making (I won’t bore you with the details here). A bipartisan committee of
   Congress is probably required to fix this — and the sooner the better.
 * Well-conceived regulations (and related laws). This requires an ongoing
   concerted effort to streamline regulations to cost-effectively drive better
   outcomes for the United States. The last thing we need is a constant pile-on
   of politically driven, fragmented policies. Please read the sidebar, an
   editorial in The Wall Street Journal by George McGovern, one of the most
   liberal presidential nominees in our lifetime, in which he clearly lays out
   the complexity, risks and costs that businesses, large and small, face every
   day. While he acknowledges the worthiness of the goals of many regulations,
   he points out their negatives. He also calls out the “blame-shifting and
   scapegoating" and "the endless exposure to frivolous claims and high legal
   fees.” Not only is this state of affairs demoralizing, but it also reduces
   employment, capital investment and the formation of new businesses, as well
   as cause unnecessary bankruptcies. Estimates of the regulatory costs for
   America are approximately $19,000 per worker, dwarfing the regulatory burdens
   in other countries. We all want sensible regulations that make us a better
   and safer nation – but this number is astounding. We should be able to
   accomplish our goals while sharply reducing needless and wasteful expenses.
   And remember, it’s discouraging not only to companies but to all citizens who
   have to deal with it on a daily basis.
   
   
   
 * View Text Version
   
   WALL STREET JOURNAL
   
   June 1, 1992
   
   (Copyright © I992, Dow Jones & Co., Inc.)
   
   Manager's Journal: A Politician's Dream Is a Businessman's Nightmare
   
   By George McGovern
   Wisdom too often never comes, and so one ought not to reject it merely
   because it comes late.
   
   — Justice Felix Frankfurter
   
   It's been 11 years since I left the U.S. Senate, after serving 24 years in
   high public office. After leaving a career in politics, I devoted much of my
   time to public lectures that took me into every state in the union and much
   of Europe, Asia, the Middle East and Latin America.
   
   In 1988, I invested most of the earnings from this lecture circuit acquiring
   the leasehold on Connecticut's Stratford Inn. Hotels, inns and restaurants
   have always held a special fascination for me. The Stratford Inn promised the
   realization of a longtime dream to own a combination hotel, restaurant and
   public conference facility — complete with an experienced manager and staff.
   
   In retrospect, I wish I had known more about the hazards and difficulties of
   such a business, especially during a recession of the kind that hit New
   England just as I was acquiring the inn's 43-year leasehold. I also wish that
   during the years I was in public office, I had had this firsthand experience
   about the difficulties business people face every day. That knowledge would
   have made me a better U.S. senator and a more understanding presidential
   contender.
   
   Today we are much closer to a general acknowledgment that government must
   encourage business to expand and grow. Bill Clinton, Paul Tsongas, Bob Kerrey
   and others have, I believe, changed the debate of our party. We intuitively
   know that to create job opportunities we need entrepreneurs who will risk
   their capital against an expected payoff. Too often, however, public policy
   does not consider whether we are choking off those opportunities.
   
   My own business perspective has been limited to that small hotel and
   restaurant in Stratford, Conn., with an especially difficult lease and a
   severe recession. But my business associates and I also lived with federal,
   state and local rules that were all passed with the objective of helping
   employees, protecting the environment, raising tax dollars for schools,
   protecting our customers from fire hazards, etc. While I never have doubted
   the worthiness of any of these goals, the concept that most often eludes
   legislators is: "Can we make consumers pay the higher prices for the
   increased operating costs that accompany public regulation and government
   reporting requirements with reams of red tape." It is a simple concern that
   is nonetheless often ignored by legislators.
   
   For example, the papers today are filled with stories about businesses
   dropping health coverage for employees. We provided a substantial package for
   our staff at the Stratford Inn. However, were we operating today, those costs
   would exceed $150,000 a year for health care on top of salaries and other
   benefits. There would have been no reasonable way for us to absorb or pass on
   these costs.
   
   Some of the escalation in the cost of health care is attributed to patients
   suing doctors. While one cannot assess the merit of all these claims, I've
   also witnessed firsthand the explosion in blame-shifting and scapegoating for
   every negative experience in life.
   
   Today, despite bankruptcy, we are still dealing with litigation from
   individuals who fell in or near our restaurant. Despite these injuries, not
   every misstep is the fault of someone else. Not every such incident should be
   viewed as a lawsuit instead of an unfortunate accident. And while the
   business owner may prevail in the end, the endless exposure to frivolous
   claims and high legal fees is frightening.
   
   Our Connecticut hotel, along with many others, went bankrupt for a variety of
   reasons, the general economy in the Northeast being a significant cause. But
   that reason masks the variety of other challenges we faced that drive
   operating costs and financing charges beyond what a small business can
   handle.
   
   It is clear that some businesses have products that can be priced at almost
   any level. The price of raw materials (e.g., steel and glass) and life-saving
   drugs and medical care are not easily substituted by consumers. It is only
   competition or antitrust that tempers price increases. Consumers may delay
   purchases, but they have little choice when faced with higher prices.
   
   In services, however, consumers do have a choice when faced with higher
   prices. You may have to stay in a hotel while on vacation, but you can stay
   fewer days. You can eat in restaurants fewer times per month, or forgo a
   number of services from car washes to shoeshines. Every such decision
   eventually results in job losses for someone. And often these are the people
   without the skills to help themselves — the people I've spent a lifetime
   trying to help.
   
   In short, "one-size-fits-all" rules for business ignore the reality of the
   marketplace. And setting thresholds for regulatory guidelines at artificial
   levels — e.g., 50 employees or more, $500,000 in sales — takes no account of
   other realities, such as profit margins, labor intensive vs. capital
   intensive businesses, and local market economics.
   
   The problem we face as legislators is: Where do we set the bar so that it is
   not too high to clear? I don't have the answer. I do know that we need to
   start raising these questions more often.
   
   - - -
   
   Mr. McGovern. the 1972 Democratic presidential candidate, is president of the
   Middle-Eastern Policy Council in Washington.
   
   (See related letters: "Letters to the Editor: A Politician's Dream Is a
   Businessman's Nightmare" •· WSJ July 2, 1922)
   
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 * Timely permits on projects large and small. There is virtually no industry —
   from agriculture and construction to transportation, technology, and oil and
   gas — or business, large or small, that isn’t disadvantaged by the tedious
   process and the length of time it takes to get approvals for permits to get
   things done. This includes federal, state and local requirements. These
   bottlenecks also make investment far more costly and slow. Timely permits
   would improve infrastructure and save lives, not endanger them.
 * Proper federal government budgeting and fiscal management. The staggering
   inability of the government to draft and pass a proper budget causes deep and
   unnecessary damage to our growth. Some people estimate that the waste alone
   (due to improper payments, overlapping programs, and fragmented and
   duplicative contracts, among other things) could cost the nation hundreds of
   billions of dollars annually. This uncertainty filters through virtually
   every part of the American economy and should not be accepted.

We can all forgo a little self-interest to do what is right for our country.

Those of us who have benefited the most from this country bear even greater
responsibility to do this. It’s perfectly understandable that institutions,
including businesses, unions and industries, lobby in Washington, D.C., to
protect themselves — in good ways and bad — but we should more regularly put
national interests ahead of self-interests. It’s good to want to ensure
well-paying jobs and healthy industries. But it is not good when it reduces
competition, stops the deployment of enhanced technology, harms efficiency,
creates fake jobs or builds bridges to nowhere or damages the general health of
the economy. Doing the right thing, the right way – which is achievable – would
be better for everyone. As former President John F. Kennedy said, “Ask not what
your country can do for you — ask what you can do for your country.”

Celebrate American exceptionalism.

We can safely say that America is an exceptional nation built and grounded on
principles — principles of freedom of speech, freedom of religion, free
enterprise (capitalism), and the freedom and empowerment brought to us by our
democracy through the power to elect our leaders and of our Constitution, which
makes these individual freedoms sacrosanct. Much of the world yearns to be here
because of those principles — the right to life, liberty and the pursuit of
happiness. We should extol those virtues while recognizing that America has
never been a perfect nation, like all other nations. We can acknowledge our
flaws and strive to constantly correct them, without denigrating our nation.

Let’s celebrate the shared sense of sacrifice that gives us all strength.

There were very few positives from the pandemic, but I’m mentioning one, which,
unfortunately, didn’t last, but reflected the best of us. In New York City, at 7
p.m. every evening, people throughout the city would open their windows,
shouting and screaming and banging pots and pans to show gratitude to the
essential workers — sanitation workers, police, firefighters, emergency
responders, nurses and doctors. Of course, these workers were always essential,
but I was hoping that spirit and civility would become deeply embedded and have
longer lasting effects in our society.

I can understand when an individual for conscientious reasons chooses not to do
work that helps our military. But I cannot understand when an entire company
takes that position. How can we have a sense of shared sacrifice, when America
is home to 18 million veterans who were willing to risk their lives for
America’s safety, and yet some companies are not even willing to use their
fingertips to help?

For example, back in 1969 the cancellation of the Reserve Officers’ Training
Corps programs by the country’s most prestigious universities and colleges
likely fueled the great divide – between elites and others in our country – that
persists today. Our strength as a nation is best served when the best students
and the best soldiers are brought together and we would all benefit from more
civility and better teaching around basic virtues like hard work, shared
sacrifice, justice, rationality and more respect for the enduring values of
American freedom and free enterprise.

Resist being “weaponized.”

We can start by trying to understand other people’s and other voters’ points of
views, even around deeply emotional topics. We can stop insulting whole classes
of voters. We can stop name calling. We can stop blame-shifting and
scapegoating. We can stop being petty. Politicians can cease insulting, baiting
and belittling each other, which diminishes them and the voter. It has also
become too acceptable for some politicians to say one thing in private and
deliver a completely different message in public. It would also be nice to see
some cabinet members from the opposing party. We should also stop degrading and
demonizing American business and American institutions, which are the best in
the world, because it erodes confidence in our very country.

Social media could do more.

There is no question that social media has some real negative effects, from the
manipulation of elections to the increasingly documented negative effects on the
mental health of children. These are issues impacting our individual and
collective spheres, and it’s time for social media companies to take more action
to remedy these challenges — and swiftly. Rapid advances in technology will not
only make these existing issues harder to address, but they will likely create
new ones. The current state of the online information landscape has wide-ranging
implications on trust in institutions, information integrity and more — and it
bears on institutions like ours, where platform policy has increasingly
widespread implications for concerns about fraud, security and other issue
spaces.

A range of tools and approaches is required to address this complex and
important situation — and there are several measures that platform companies can
immediately enact, voluntarily, while strengthening and improving their business
models. One common sense and modest step would be for social media companies to
further empower platform users’ control over what they see and how it is
presented, leveraging existing tools and features — like the alternative feed
algorithm settings some offer today. I believe many users (not just parents)
would appreciate a greater ability to more carefully curate their feeds; for
example, prioritizing educational content for their children.

Platforms could also consider enhanced authentication measures; i.e., having
users identify themselves to the platform or to a trusted third party. This
would have the virtue of increasing individual accountability and reducing
imposters, bots and possibly foreign political actors on platforms. It would
have immediate benefits for users who prefer content from authenticated sources
that take responsibility for their postings. There are clear competing values
that need to be balanced in such an approach, including those related to our
cherished right to free speech, individual privacy and inclusion (for example,
roughly 850 million people globally don’t have a way to easily authenticate
themselves today). There are also legitimate questions as to whether
authentication would be used as a tool to chill or block speech or quash bona
fide political dissenters, and real work needs to be done to identify policy and
technical solutions that balance such risks and benefits.

I offer these approaches as a starting place, understanding that it's crucial to
continue honest conversation across sectors about the immediate, incremental
improvements we can make to our online public square, considering the high
stakes involved in how information is created and shared.

Effective measures will require time, money, learning and improvement, all in
service of significantly enhancing the well-being, quality, and civility of our
experiences online and in the world around us.

Healthy collaboration with business is needed.

Companies big and small create jobs, pay for employee healthcare and benefits,
and build bridges, roads and hospitals. The people who work for and run these
companies care deeply about their country — they are patriots, and they want to
see people and communities succeed and prosper.

Unfortunately, the message America hears is that the federal government does not
value business — that business is the problem and not part of the solution.
There are fewer individuals in government who have any significant experience in
starting or running a company, which is apparent every day in the political
rhetoric that demonizes businesses and free enterprise and that damages
confidence in American’s institutions. The relationship between business and
government, in fact, might improve if there were more people from the business
sector working in government. Inexperience with business is also evident from
the regular lack of transparency or curiosity from regulators as they develop
economic policies with potentially seismic consequences for the economy.

When I travel around the country, I experience a very different perspective on
the street and at the local level — I see that many governors, mayors and city
council members understand they are not facing big challenges alone. They stand
shoulder to shoulder with our company, even when some of their constituents
disagree or are skeptical about big banks. These government officials know they
need partners who have the same stake in helping successful communities thrive
and who care about building a prosperous future as much as they do. For example,
in fewer than 10 years, Detroit saw one of the greatest turnarounds because of a
vibrant collaboration between government and business. And businesses know they
cannot succeed if individuals, families, towns and cities are not flourishing.
We obviously don’t agree on everything, but there is a shared belief that we
must work together. We can and should be full partners in developing solutions
to our big problems.

The federal government, regardless of which party is in charge, needs to earn
back trust through competence and effective policymaking.

The world is becoming more complex, more technologically competent and faster.
Unfortunately the government simply is not built to innovate, compete and move
quickly, as in the competitive business world. This may be the reason why
government is becoming less effective. We need to take action on this because
the loss of trust in government is damaging to society. We should be brutally
honest about the staggering number of policies, systems and operations that are
underperforming: Too many ineffective public schools do not give students the
skills they need to land a well-paying job; we have over 25 million uninsured
Americans, soaring healthcare costs and too many bad outcomes; we are unable to
plan, permit and build infrastructure efficiently; our litigation system is
capricious and wasteful; progress on immigration policies and reform is
frustrating; lack of efficient mortgage markets and an affordable housing policy
keep housing out of reach for many Americans; problems plague the Department of
Veterans Affairs, the Federal Aviation Administration and the Internal Revenue
Service; public universities don’t take responsibility for their costs and are
often funded by excessive student lending; underinvestment in the electric grid
results in high costs and unreliable service; highly inefficient U.S. merchant
shipping and ports; and we have unfunded pension plans and no action on deficit
spending, Social Security and Medicare. I’ll stop here. This should be
unacceptable to all of us.

We need to find a way to bring more varied expertise and accountability to
government.

We should be more ambitious in striving for excellence in government. I
acknowledge that some of the best and the brightest are in government and the
military today. Yet we should return to a government that seeks out more of the
best and the brightest people from every background, including the private
sector, to benefit from their knowledge and experience. Government also needs to
leverage the expertise of business to address problems that it cannot solve on
its own. And to be fair, business could use its influence to do less to further
its own interest and more to enhance the nation as a whole.

We need good government. And there are some things only governments can do, such
as oversee the military and justice systems. And while most innovation happens
through the private sector, there are certain types of foundational innovations
that can only be advanced by the government, such as basic research that simply
cannot be funded by business. The Democrats want the government to do even more
and the Republicans even less — I think we should spend more time trying to do
even better. But no one, not even my most liberal Democratic friends, thinks
that sending the government another trillion a year would be a wise use of
money.

OUT OF THE LABYRINTH, WITH FOCUS AND RESOLVE

Even America, the most prosperous nation on the planet with its vast resources,
needs to focus its resources on the complex and difficult tasks ahead.

I hope to never read a book about How the West Was Lost, summarized as follows:
The failure to save Ukraine and find peace in the Middle East led to more
bickering among the allies and weakened military alliances. This accelerated a
division within the Western world, splitting countries into different economic
spheres and with each nation trying to protect its economy, trade and energy
sources. America’s economy weakened, eventually leading to the loss of its
reserve currency status. Besotted by populism and partisanship and crippled by
bureaucracy and lack of willpower, America failed to focus on what it needed to
do to lead and save the Western world. The enemy was within — we just didn’t see
it in time.

Paraphrasing what Winston Churchill was thought to have said: America, after it
had exhausted all other possibilities, would do the right thing.

What I want and hope to see is a book about How the West Was Won. As the wars in
Ukraine and the Middle East dragged on and as the fears of the Western world
mounted, America rose to the challenge as it had in other turbulent times in
history. America coalesced with its allies to form the alliances necessary to
keep the world safe for freedom and democracy.

I remain with a deep and abiding faith in the strength of the enduring values of
America.

WE SHOULD HAVE MORE FAITH IN THE AMAZING POWER OF OUR FREEDOMS

The heart and soul of the dynamism of America is human freedom — freedom of
speech, freedom of religion, free enterprise (capitalism), and the freedom and
empowerment brought to us by our democracy through the right to elect our
leaders. Free people are at liberty to move around as they see fit, work as they
see fit, dream as they see fit, and invest in themselves and in the pursuit of
happiness as they see fit. This freedom that people enjoy, accompanied by the
freedom of capital, is what drives the dynamism — economic and social — of this
great country.

Our civil liberties depend upon the rule of law, property rights, including
intellectual property, and restrictions on government encroachment upon these
freedoms. Our Constitution and Bill of Rights secure our individual freedoms and
reserve all rights to the individual other than those important but limited
authorities given to the government.

The issue of individual rights is not all or none or freedom versus no freedom.
There are, of course, terrible examples where individual rights were trampled
upon, and the results were devastating — both for the individual and for the
economy — in East Germany, Iran, North Korea, Russia, Venezuela, to name a few.
And there are many countries that protect individual rights and are on a
spectrum closer to American values. Think of Europe, for example. But even in
some countries that have some of these rights, a lack of dynamism — often due to
bureaucracy, weak institutions and government, and corruption — is palpable and
has clearly led to less innovation, lower growth and, in general, a lower
standard of living.

Freedom must necessarily be joined with the principle of striving toward equal
opportunity. Equal opportunity is what allows individuals to rise to the best of
their ability — it also means unequal outcomes. Equal opportunity is the
foundation for fairness and meritocracy. The fight for equality, which is a good
moral goal, should not damage the rights of the individual and their liberties.

Democracy and freedom are cojoined — together, they make freedom more durable.
Democracy also has a self-correcting element — every four years you get to throw
out leadership if you don’t like them (which you do not see in autocracies). But
we all know that democracy can be sloppy: Maintaining an effective democracy is
hard work. Democracy fosters open debate and compromise, which lead to better
decisions over time (whether in government or in business). Intelligence is
effectively “crowdsourced” with constant feedback. Good public policy comes from
good debate and analytics, guided by reason coupled with a firm understanding of
what you would like the outcomes to be and complemented with an honest
assessment of what is really happening.

Even democracies can become stagnant, bureaucratic and self-perpetuating. Good
government does many admirable things, but admitting to mistakes is often not
one of them. It takes civically engaged citizens and a strong free press to
bring sunlight to issues and keep a nation strong.

Autocratic societies by their nature subjugate the individual to the state. By
definition they are not meritocracies — they are more about “who you know,” and
they exist to perpetuate the existing ruling class. Their decisions are based on
a completely different calculation, and their decision-making process does not
encourage and, therefore, benefit from open debate. Democracy means that it is
immoral to subjugate individual freedoms to state actors other than to protect
the existence of the nation itself.

There are values that many of us hold dear, such as religion, family and
country. But none may be more important than the freedoms that allow us to
choose to live our life as we see fit. We should do more to applaud the virtue
and amazing power of our freedoms.

HOW WE CAN HELP LIFT UP OUR LOW-INCOME CITIZENS AND MEND AMERICA’S TORN SOCIAL
FABRIC

To fix problems, we must first acknowledge them. Despite decades of government
programs and all the moralizing that surrounds them, we have not done a
particularly good job lifting up our low-income fellow citizens. I may be wrong,
but I do believe this is tearing at the social fabric of America and is among
the root causes of the fraying of the American dream.

The gap between low-wage and well-paid workers has been growing dramatically.
From 1979 to 2019, the wage growth of the top 10% was nearly 10 times that of
the bottom 10% — which, basically, had not increased at all. The growth of
low-income workers’ annualized real wages after the pandemic was, for the first
time in decades, higher than the top 60%, but that’s not enough. The net worth
for the bottom 25% of households is $20,800, and the net worth for the bottom
10% is essentially $0. This makes it increasingly difficult for low-wage workers
to support their families. Of the 160 million Americans working today,
approximately 40 million are paid less than $15 per hour.

Low-income individuals bear far greater burdens than the rest of us. Nearly 40%
of Americans don’t have $400 in savings to deal with unexpected expenses, such
as medical bills or car repairs, which leads to financial distress. More than 25
million Americans don’t have medical insurance at all; of these, one in five are
in a family with income below the federal poverty level. People who live in
low-income neighborhoods also tend to have worse health outcomes, including
higher rates of mental health issues, depression and suicide, and a lower life
expectancy — as many as 20 years. Finally, low-income Americans generally
experience higher unemployment and more crime.

No one can claim that the promise of equal opportunity is being offered to all
Americans through our education systems. Students in the lowest socioeconomic
bracket are 50% less likely to attend college than those in the highest
socioeconomic groups. Many inner city schools graduate under 50% of their
students — and even those who graduate may not be well-prepared for the
workforce. In addition, boys growing up in the bottom 10% of family income are
20 times more likely to be incarcerated. Those who do run afoul of our justice
system generally do not get the second chance that many of them deserve. Their
exclusion from the workforce is not only unfair to them but also results in an
estimated $87 billion average annual cost to the economy.

Too many policies that are wrong — affecting housing and mortgage markets,
healthcare, immigration, regulation, education and student lending, to name a
few — are jeopardizing the opportunity for American citizens to succeed. The
people who suffer the most, throughout all of this, are not high-income
individuals. I strongly believe that these outcomes are destroying the concept
of “fair” in America and are driving populism and diminishing, if not
eliminating, trust — not only in government but in all our institutions. Simply
put, the social needs of far too many of our citizens are not being met. We
should never accept these outcomes — we must fix them.

There are two policy changes that I believe can have a dramatic effect on jobs,
growth and equality — and they go a long way toward repairing the frayed
American dream. Let’s start by treating all jobs with respect. Even starter
jobs, which are the first rung on the ladder of opportunity, bring dignity and
create better social outcomes in terms of health, higher household formation and
lower crime. Of these two policy changes, one would better utilize existing
resources, and the other would cost some money. But both would significantly
change outcomes for low-income Americans.

The free one is so blindingly obvious that it’s almost embarrassing to propose.
Our schools (high schools, community colleges and perhaps even four-year
colleges) should take responsibility for outcomes — they should be judged on the
quality and income level of the jobs that their graduates and even non-graduates
attain. This means providing graduating students and other individuals with work
skills (in fields such as advanced manufacturing, cyber, data science and
technology, healthcare and so on) that will lead to better paying jobs. These
schools should work with local businesses to replicate effective programs that
are in place — because that is where the actual jobs are now. This would be good
for growth and, as there are so many examples of successful programs, we already
know what to do. With nearly 9 million job openings and just under 6 million
unemployed workers in the United States, job skills training has never been
needed more. We already spend a tremendous amount of money on education — just
not the right way.

The second step is related to the first: Get more income to low-paid workers.
While this one would cost money, it is to me a complete no-brainer since it is
an expansion of an existing program, the Earned Income Tax Credit (EITC), which
many Democrats and Republicans already agree upon. Today, the EITC supplements
low- to moderate-income working individuals and couples, particularly with
children and people living in rural areas. 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 year-end. Workers without children receive a very
small tax credit (96% of all EITC dollars were received by families with
children). This should be dramatically expanded, including eliminating the child
requirement from the calculation altogether. We should convert the EITC to make
it more like a negative income payroll tax, paid monthly. Any tax credit income
should not be offset by any other benefits these individuals already receive (we
have to eliminate benefit “cliffs” that disincentivize work).

An increase in the EITC to a maximum of $10,000 would cost tens of billions a
year, but I have little doubt that these policy changes would do more than
anything else to lift up low-income families and their communities. Well-paying
jobs have been shown to reduce crime, increase household formation, improve
health and reduce addiction. Both of these policies would have the virtue of
increasing the number of people in the workforce. I also have little doubt that
this would add to GDP.

We should attack all our other problems as well, but these two policy changes
alone would dramatically improve our low-income neighborhoods, broadly
strengthen the economy and give more opportunity to deserving citizens. It would
restore the American Dream for many.


IN CLOSING

It’s been 20 years since the Bank One-JPMorgan Chase merger — and it’s been an
extraordinary journey. I can’t even begin to express my heartfelt appreciation
and respect for the tremendous character and capabilities of the management team
who got us through the good times and the bad times to where we stand today. And
I recognize that we all stand on the shoulders of many others who came before us
in building this exceptional company of ours.

I would also like to express my deep gratitude to the 300,000+ employees, and
their families, of JPMorgan Chase. Through these annual letters, I hope
shareholders and all readers have gained a deeper understanding of what it takes
to be an “endgame winner” in a rapidly changing world. More important, I hope
you are as proud of what we all have achieved — as a business, as a bank and as
a community investor — as I am. Thank you for your partnership.

Finally, we sincerely hope to see the world on the path to peace and prosperity.

Jamie Dimon
Chairman and Chief Executive Officer
April 8, 2024

Bank of Client Franchises Built Over the Long Term
Note: figures may not sum due to rounding

Return to footnote1 Certain wealth management clients were realigned from Asset
& Wealth Management (AWM) to Consumer & Community Banking (CCB) in 4Q20. 2005
and 2013 amounts were not revised in connection with this realignment. 2 Federal
Deposit Insurance Corporation (FDIC) Summary of Deposits survey per S&P Global
Market Intelligence applies a $1 billion deposit cap to Chase and industry
branches for market share. While many of our branches have more than $1 billion
in retail deposits, applying a cap consistently to ourselves and the industry is
critical to the integrity of this measurement. Includes all commercial banks,
savings banks and savings institutions as defined by the FDIC. 3 Barlow Research
Associates, Primary Bank Market Share Database. Rolling 8-quarter average of
small businesses with revenues of more than $100,000 and less than $25 million.
2023 results include First Republic. Barlow’s 2005 Primary Bank Market Share is
based on companies with revenues of more than $100,000 and less than $10
million. 4 Total payment volumes reflect Consumer and Small Business customers’
digital (ACH, BillPay, PayChase, Zelle, RTP, external transfers, digital wires),
non-digital (non-digital wires, ATM, teller, checks) and credit and debit card
payment outflows. 5 Digital non-card payment transactions includes outflows for
ACH, BillPay, PayChase, Zelle, RTP, external transfers, and digital wires,
excluding Credit and Debit card sales. 2005 is based on internal JPMorgan Chase
estimates. 6 Represents general purpose credit card (GPCC) spend, which excludes
private label and Commercial Card. Based on company filings and JPMorgan Chase
estimates. 7 Represents GPCC loans outstanding, which excludes private label,
American Express Company (AXP) Charge Card, Citi Retail Cards, and Commercial
Card. Based on loans outstanding disclosures by peers and internal JPMorgan
Chase estimates. 8 Represents users of all web and/or mobile platforms who have
logged in within the past 90 days. 9 Represents users of all mobile platforms
who have logged in within the past 90 days. 10 Based on 2023 sales volume and
loans outstanding disclosures by peers (AXP, Bank of America Corporation,
Capital One Financial Corporation, Citigroup Inc. and Discover Financial
Services) and JPMorgan Chase estimates. Sales volume excludes private label and
Commercial Card. AXP reflects the U.S. Consumer segment and JPMorgan Chase
estimates for AXP’s U.S. small business sales. Loans outstanding exclude private
label, AXP Charge Card, Citi Retail Cards and Commercial Card. Card loans
outstanding market share has been revised to reflect a restatement to the 2022
reported total industry outstandings disclosed by Nilson, which impacts annual
share growth in 2023. 11 Inside Mortgage Finance, Top Owned Mortgage Servicers
as of 4Q23. 12 Experian Velocity data as of FY23. Reflects financing market
share for new and used loan and lease units at franchised and independent
dealers. 13 Coalition Greenwich Competitor Analytics (preliminary for FY23).
Market share is based on JPMorgan Chase’s internal business structure and
revenue. Ranks are based on Coalition Index Banks for Markets. 2006 rank is
based on JPMorgan Chase analysis. 14 Dealogic as of January 2, 2024, excludes
the impact of UBS/CS merger prior to the year of the acquisition (2023). 15
Client deposits and other third-party liabilities pertain to the Payments and
Securities Services businesses. 16 Firmwide Payments revenue metrics exclude the
net impact of equity investments; 2005 data represents Treasury Services
firmwide revenue only. All other periods include Merchant Services revenue. 17
Coalition Greenwich Competitor Analytics (preliminary for FY23) reflects global
firmwide Treasury Services business (CIB and CB). Market share is based on
JPMorgan Chase’s internal business structure, footprint and revenue. Ranks are
based on Coalition Index Banks for Treasury Services. 18 Institutional Investor.
19 Based on third-party data. 20 The Market Share number represents US dollar
payment instructions for direct payments and credit transfers processed over
Society for Worldwide Interbank Financial Telecommunications (“SWIFT”) in the
countries where J.P. Morgan has sales coverage. 21 Nilson, Full Year 2023. 22
Coalition Greenwich FY23 Competitor Analytics (preliminary). Rank is based
JPMorgan Chase’s internal business structure and revenue and Coalition Index
Banks for Securities Services. 23 Data in 2005 column is as of 12/31/2006. 24
New relationships (gross) exclude impact of First Republic acquisition. 25
Includes gross revenues earned by the Firm that are subject to a revenue sharing
arrangement between CB and the CIB for Investment Banking and Markets’ products
sold to CB clients. This includes revenue related to fixed income and equity
markets products. 26 S&P Global Market Intelligence as of December 31, 2023. 27
London Stock Exchange Group, FY23. 28 Aligns with the affordable housing
component of the Firm’s $30 billion racial equity commitment. 29 Percentage of
active mutual fund and active ETF assets under management in funds ranked in the
1st or 2nd quartile (one, three and five years): All quartile rankings, the
assigned peer categories and the asset values used to derive these rankings are
sourced from the fund rating providers. Quartile rankings are based on the
net-of-fee absolute return of each fund. Where applicable, the fund rating
providers redenominate asset values into U.S. dollars. The percentage of AUM is
based on fund performance and associated peer rankings at the share class level
for U.S.-domiciled funds, at a “primary share class” level to represent the
quartile ranking for U.K., Luxembourg and Hong Kong SAR funds and at the fund
level for all other funds. The performance data may have been different if all
share classes had been included. Past performance is not indicative of future
results. “Primary share class” means the C share class for European funds and
Acc share class for Hong Kong SAR and Taiwan funds. If these share classes are
not available, the oldest share class is used as the primary share class. Due to
a methodology change effective September 30, 2023, prior results include all
long-term mutual fund assets and exclude active ETF assets. 30 In the fourth
quarter of 2020, the Firm realigned certain wealth management clients from AWM
to CCB. Prior-period amounts have been revised to conform with the current
presentation. 31 Traditional assets includes Equity, Fixed Income, Multi-Asset
and Liquidity AUM Brokerage, Administration and Custody assets under
supervision. 32 AUM only for 2005. Prior period amounts have been restated to
include changes in product categorization. 33 Source: Euromoney. 34 Percentage
of active mutual fund and active ETF assets under management in funds rated 4-
or 5-star: Mutual fund rating services rank funds based on their risk adjusted
performance over various periods. A 5-star rating is the best rating and
represents the top 10% of industry-wide ranked funds. A 4-star rating represents
the next 22.5% of industry-wide ranked funds. A 3-star rating represents the
next 35% of industry-wide ranked funds. A 2-star rating represents the next
22.5% of industry-wide ranked funds. A 1-star rating is the worst rating and
represents the bottom 10% of industrywide ranked funds. An overall Morningstar
rating is derived from a weighted average of the performance associated with a
fund’s three-, five and ten- year (if applicable) Morningstar Rating metrics.
For U.S.- domiciled funds, separate star ratings are provided at the individual
share class level. The Nomura “star rating” is based on three-year risk-adjusted
performance only. Funds with fewer than three years of history are not rated and
hence excluded from these rankings. All ratings, the assigned peer categories
and the asset values used to derive these rankings are sourced from the
applicable fund rating provider. Where applicable, the fund rating providers
redenominate asset values into U.S. dollars. The percentage of AUM is based on
star ratings at the share class level for U.S.-domiciled funds, and at a
“primary share class” level to represent the star rating of all other funds,
except for Japan, for which Nomura provides ratings at the fund level. The
performance data may have been different if all share classes had been included.
Past performance is not indicative of future results. 35 Source: Company filings
and JPMorgan Chase estimates. Rankings reflect publicly traded peer group as
follows: Allianz, Bank of America, Bank of New York Mellon, BlackRock, Charles
Schwab, DWS, Franklin Templeton, Goldman Sachs, Invesco, Morgan Stanley, State
Street, T. Rowe Price and UBS. JPMorgan Chase ranking reflects Asset & Wealth
Management client assets, U.S. Wealth Management investments and new-to-firm
Chase Private Client deposits. 36 Source: iMoneynet. 37 Represents AUM in a
strategy with at least one listed female and/or diverse portfolio manager.
“Diverse” defined as U.S. ethnic minority.

JPMorgan Chase Exhibits Strength in Both Efficiency and Returns When Compared
with Large Peers and Best-in-Class Peers

1 Bank of America Corporation (BAC), Citigroup Inc. (C), The Goldman Sachs
Group, Inc. (GS), Morgan Stanley (MS) and Wells Fargo & Company (WFC). 2 Managed
overhead ratio = total noninterest expense/managed revenue; revenue for GS and
MS is reflected on a reported basis. 3 Best-in-class peer overhead ratio
represents the comparable business segments of JPMorgan Chase (JPM) peers:
Capital One Domestic Card and Consumer Banking (COF-DC & CB), Bank of America
Global Banking and Global Markets (BAC-GB & GM), Fifth Third Bank (FITB),
Northern Trust Wealth Management (NTRS-WM) and Allianz Group (ALLIANZ-AM). 4
Best-in-class all banks ROTCE represents implied net income minus preferred
stock dividends of the comparable business segments of JPM peers, when
available, or of JPM peers on a firmwide basis when there is no comparable
business segment: Bank of America Consumer Banking (BAC-CB), Bank of America
Global Banking and Global Markets (BAC-GB & GM), Wells Fargo & Company
Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management & Investment
Management (MS-WM & IM). 5 Best-in-class GSIB ROTCE represents implied net
income minus preferred stock dividends of the comparable business segments of
JPM GSIB peers, when available, or of JPM GSIB peers on a firmwide basis when
there is no comparable business segment: Bank of America Consumer Banking
(BAC-CB), Bank of America Global Banking and Global Markets (BAC-GB & GM), Wells
Fargo & Company Commercial Banking (WFC-CB) and Morgan Stanley Wealth Management
& Investment Management (MS-WM & IM). WFC-CB is the only GSIB peer to disclose a
comparable business segment to Commercial Banking. 6 Given comparisons are at
the business segment level, where available; allocation methodologies across
peers may be inconsistent with JPM’s.

Our Fortress Balance Sheet

1 Tangible common equity 2005-2007 reflects common stockholders’ equity less
goodwill and other intangible assets. 2 Basel III Transitional rules became
effective on January 1, 2014; prior-period CET1 data is based on Basel I rules.
As of December 31, 2014, the ratios represent the lower of the Standardized or
Advanced approach calculated under the Basel III Fully Phased-In basis. 3
Includes eligible High Quality Liquid Assets (HQLA) as defined in the liquidity
coverage ratio (LCR) rule and unencumbered marketable securities, such as equity
and debt securities, that the Firm believes would be available to raise
liquidity including excess eligible HQLA securities at JPMorgan Chase Bank, N.A.
that are not transferable to nonbank affiliates; for December 31, 2023 and 2022,
the balance includes eligible end-of-period HQLA as defined in the LCR rule,
issued December 19, 2016. For December 31, 2017–2021, the balance includes
average eligible HQLA. Periods prior to 2017 represent period-end balances.
December 31, 2016 and 2015 balances are under the initial U.S. rule approved on
September 3, 2014. The December 31, 2014 amount is estimated prior to the
effective date of the initial rule, and under the Basel III liquidity coverage
ratio (Basel III LCR) for December 31, 2013. 4 2005-2012 reflect cash and cash
due from banks and investment securities. 5 Capital returned to common
stockholders includes common dividends and net repurchases.

Size of the Financial/Sector Industry

1 2007 and 2010 sourced from WorldBank.org annual GDP publication. 2023 is
calculated using JPM Research forecasts. Figures are represented in 2015 prices.
2 Consists of cash assets and Treasury and agency securities. 3 2023 figure is
as of 3Q23. 4 Top 50 fund AUM data per Sovereign Wealth Fund Institute (SWFI). 5
Loans held by nonbank entities per the FRB Z.1 Financial Accounts of the United
States. 6 U.S. money market fund investment holdings of securities issued by
entities worldwide. 7 Methodology updated in 2022, previous years have been
restated. 8 NYSENYSE + NASDAQ; excludes investment funds, ETF’s unit trusts and
companies whose business goal is to hold shares of other listed companies; a
company with several classes of shares is only counted once. 9 Inside Mortgage
Finance and JPMorgan Chase internal data; consists of Top 50 Originators (Top 40
for 2007). 10 Preqin, Dealogic, JPM Credit Research.

 * Introduction
   
 * Update on Specific Issues Facing Our Company
   
 * Staying Competitive in the Shrinking Public Markets
   
 * Management Lessons: Thinking, Deciding and Taking Action – Deliberately and
   With Heart
   
 * A Pivotal Moment for America and the Free Western World: Strategy and Policy
   Matter
   
 * In Closing
   

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 * Annual Report 2023
 * ©2024 JPMorgan Chase & Co.


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