RBC Capital Markets managing director Gerard Cassidy reacts to Jamie Dimon’s ‘cockroach’ principle about latest auto chapter on ‘The Claman Countdown.’
JPMorgan Chase CEO Jamie Dimon warned this week that there might be credit score dangers lurking within the financial system, saying that “when you see one cockroach there are probably more.”
Dimon spoke on the financial institution’s quarterly earnings name on Tuesday and acknowledged that the agency needed to take a $170 million write-off within the third quarter associated to the chapter of subprime auto lender and dealership Tricolor.
He additionally pointed to the chapter of auto elements maker First Manufacturers as suggesting there might be another credit score issues looming within the financial system.
“When you see one cockroach, there are probably more, and so everyone should be forewarned of this one,” Dimon mentioned. “First Brands, I’d put in the same category, and there are a couple of other ones out that I’ve seen put in similar categories. We always look at these things, and we’re not omnipotent – we make mistakes too.”
JPMORGAN’S JAMIE DIMON: WORLD NEEDS AMERICA TO BE STRONG AS FIRM PLEDGES STRATEGIC INVESTMENT
JPMorgan Chase CEO Jamie Dimon warned that when one “cockroach” emerges in credit score markets there are possible others looming. (Hollie Adams/Bloomberg by way of Getty Photos / Getty Photos)
“We’ve had a credit bull market now for the better part of since 2010,” Dimon added. “These are early signs there might be some excess out there because of it. If we ever have a downturn, you’re going to see quite a few more credit issues.”
Dimon mentioned that JPMorgan is reviewing its controls after the Tricolor chapter and mentioned the $170 million loss is “not our finest moment.”
“When something like that happens, you can assume that we scour every issue, every universe, everything about how it could be taking place to make sure it doesn’t take place from here,” Dimon mentioned.
JAMIE DIMON WARNS OF MAJOR MARKET RISK IN NEXT FEW YEARS
Ticker Safety Final Change Change % JPM JPMORGAN CHASE & CO. 298.54 -7.15
-2.34%
“You can never completely avoid these things, but the discipline is to look at it in cold light and go through every single little thing, which you can imagine we’ve already done,” he added.
First Manufacturers is below investigation by the Justice Division’s Workplace of U.S. Trustees, which oversees chapter issues.
The group mentioned in a Wednesday courtroom submitting that there are “ample grounds to suspect that current members of the debtors’ boards or executive management team may have engaged in actual fraud, dishonesty, or criminal conduct in the management of the debtors’ business affairs.”
JPMorgan Chase took a $170 million cost on the chapter of Tricolor. (Tim Clayton/Corbis by way of Getty Photos / Getty Photos)
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Reuters contributed to this report.
