I've seen people when they get a big job, their insecurity comes out. They start to cover up. You know, they don't embarrass the boss. The people who work for them, you know, make the boss happy. The job of no one in this company is to make me happy. The job of this company is to do the right thing for the company, the clients, the community, the country.
Thank you all for being here. Thanks to all the members of the Wall Street Journal CEO Council who are here. It's warming to see you all, and thank you, Jamie, for hosting us.
Thrilled to be here. Thank you.
The bankers earned it. We take good care of our people.
I mean, here you're at the top of the world here, you know, you're the most important financial institution, tallest building in the city, most important city in the world. Does it ever go to your head?
Not really. First, I am thrilled to be here. I hope you all notice the American flag when you come in, blowing in the wind. I salute that every morning. And...
I'm not joking. No. And it reminds me of the values that created this great country of ours that should be celebrated and taught everywhere. Freedom of speech, freedom of religion, freedom of enterprise. A lot of these entrepreneurs Michael was talking about are from other countries. And how deeply they love this country, and they came here to actually have the American dream, the American principles, and that is kind of foundational even to SRI, by the way. So...
I want to talk about SRI, but this is a monument to the American dream in some ways. Is that... I mean, you must feel some real emotion when you come in here.
Every morning, and I just got back from London last night, and every morning I walk in, I just... I do. This is a labor of love. Remember, we're paper pushers. You know, we move paper around and we move electrons around and money and stuff like that, but the whole management team worked on this very building. The entryway, these spaces, the dining rooms, the first eight floors are trading floors that trade, you know, two trillion, three trillion dollars a day with the securities. There's security floors, there's a Morgan's Pub on 13, which I insisted they put in. You actually get Guinness beer after 4:00. Pretty nice bar on 57.
There's a patriot... we call it the Patriots Bar. There are flags up there from the USS Constitution, which is the Revolutionary War boat. One of the flags is from the top of Pointe du Hoc, June 6th, 1944. And there's a picture up there of the Rangers still taking prisoners. There are flags from Apollo missions, from Vietnam, from the Revolutionary War. A black regiment is the 25th Regiment. I think it was one of the first fighting regiments that actually helped take Richmond. It's very touching. And the first event I did here was up there having, you know, cocktails for the veterans that work in this building. And I'm telling you, there were a lot of tears in those eyes, you know, both being thanked. They came from all ages and it was extraordinary.
Well, it leads right into the Security and Resilience Initiative because that is about national security, right?
What do you look back at the last year, one-year anniversary? What are you most proud of that you've accomplished?
I mean, this is, first of all, it's really lifted up our people. I mean, you know, Mike said it was for the purpose, and we have a couple guys here who are prior partners of mine, and they heard about it and said, 'I'm coming back.' In advanced manufacturing over there, in advanced manufacturing. But it's also been an amazing learning thing. It's been far more than we would have expected. Other companies are doing it, I think that's great. The purpose is security resiliency, and the breadth has just gotten bigger. We'll blow way past that trillion and a half dollars. I know Todd Combs is not here, but I see a bunch of his partners. That 10 billion is direct investing in security resiliency, and also opened up a lot of other issues. You know, one of the... we go to a lot of these vendors that Mike was talking about. Those companies have tons of vendors, the prime contractors, everyone in the space. A lot of those vendors need help, and often it's not capital. They need the skills. So, you know, the American dream is kind of another side of this part. This is actual security and resilience in drones and space and missiles and advanced manufacturing and farming and healthcare and grids and all the things that we all know we need. And obviously we should have done some of this before, but the other side is skills and training and small businesses and vendors and other things we can do.
So, some of this stuff, I mean, you're the biggest bank in the country and the world. Some of this stuff is stuff you would have done anyway. How do you distinguish what's really new and different?
Yeah. So, we really, you know, and that came up from the start. A lot of people didn't want to announce it because of that. I was like, 'Just stop that crap. Just tell me what you're going to do, why you're going to do it, how you're going to do it, what you hope to accomplish.' So, when we did the work, and we have published a little bit about this, it wasn't Boeing, it was Boeing military division. You know, it wasn't Exxon or energy, it was energy LNG going to Europe because they need it for security. And security is different for every country. So, it's 29 industries, you know, around five, but it's grids and power, it's AI. It's not all AI, it's not AI for consumers. It is some of the AI for military.
Does it have a different hurdle rate than other things you do, or how do you think...
Yeah, what I told the board is that, first of all, I'm a patriot and we can do things because we want to. We're patriots. That is probably riskier and lumpier results, but it has hopefully the same commercial outcome. And, you know, so we are doing things with companies at earlier stages than JPMorgan normally do. Like, you know, these companies talk about, you know, death valley. They need money. They need to build the plant to satisfy the contract, but they don't have the contract and they can't get the contract unless they can prove they can build a plant. And so, you know, trying to bridge some of that. So, some of this stuff we would have done anyways, not risky, but some is slightly riskier. And it's okay. We used to take a risk. We're quite good at it. We take it around the world. And then we've extended it very importantly to Europe. So, think of Germany, Italy, France, UK, Poland, and then Australia, Japan, South Korea, you know, other countries that are, you know, basically allies of the United States, and they all need it. And we've set up... we have an advisory group that has really worked, including Jeff Bezos and Michael Dell and Condi Rice and Bob Gates, and Connie's doing something on the skills side, and Paul Nakasone is doing stuff, the former general, on the cyber side, which he ran. So, everyone's getting involved, and the learnings are really high. Like you mentioned, the 4,500 companies. So, we've hired a lot of bankers to cover them, both in SRI and outside of SRI. Policy is a big deal. How do you get the government to make purchases of bigger? How do you get... we did research, and this is great research, on the shipbuilding ecosystem, the chip-building ecosystem, the pharma ecosystem. And these are ecosystems that are far more complicated than build a ship. Like, you know, the chip-building one, you need chemicals from Japan, stuff from Korea, the ASML etching equipment from the Netherlands. You have these extensive supply chains. You just can't move stuff.
But, you know, it almost sounds, when you talk about it, it almost sounds like a wartime industrial policy. I mean, first of all, is that what it is? And second, does JPMorgan belong in the wartime industrial policy space?
Yeah, I'm a patriot, and I wouldn't call it wartime industrial policy, but I say we should have been doing this anyway. And my view...
You were early. You were early this time.
Well, if you read my chairman's letter, last year I spoke about some of it. And actually, General George came to see me. You know, he actually came to see me today. And people like General Milley, who we do work with, and some other generals. But it's really Randy George said we need help on educating with these ecosystems, financing these ecosystems, getting Congress to have different ways to authorize purchasing, which they have done, by the way. They're moving very quickly now. Whether it all works or not isn't the point. They need to move quickly. And then when you look at our weaknesses on rare earths, and these are the ones you thought rare earths, we rely on China for... And I'm not... China's not enemy. I wouldn't rely on anyone for all of our rare earths. I wouldn't rely... I mean, we know at JPMorgan we got multiple supply chains, and it's true for semiconductors, it's true for active pharmaceutical ingredients, it's true for some of this advanced manufacturing that we sent out. You know, it's an... This is an amazing... You know how much money we save by outsourcing rare earths? Almost nothing. $500 or some number like that. You know, but it made sense at the time. You know, you're saving 5 cents a magnet, which could be $10 a car. You know, people are trying to reduce costs, but we also, when we did that, we lost the ability to advance the IP. And so in advanced manufacturing, it isn't just that you outsourced it to a cheaper place, you actually lost the ability, and that IP was improved since we outsourced it 10 years ago. And to me, we should... You know, if you look at it, I like to do postmortems and be self-critical, we should have done this way before China did. China was very strategic all these years. They've been planning for, you know, Straits of Hormuz.
We just... We just like a bunch of gangly teenagers who want to have a beer. You know, like...
At the Patriots bar. And we just didn't get... Some people knew, there were warnings, there was... We just didn't think it all through at the time, and the world was, you know, for a long time everyone was doing stuff, and we're doing fine. But the fact is, forget all that. You know, my view is roll up sleeves and get to work, and that's what this is. But we... Yeah.
Yeah, isn't it also because the world has become a more dangerous place? I mean, we've got two wars going on, neither of them seems to end. We've got this great superpower rivalry going on. The institutions that were created after World War II to create peace and prosperity are all deteriorating. How worried are you about America's place in the world and the state of the world?
Yeah, so absolutely it is more urgent today than 5 years ago, than 10 years ago, than 20 years ago. Absolutely. But when Ukraine was invaded, you know, I wrote a little thing in my chairman's... I'd like to... chairman's letter, I know they're long to read sometimes, but that the world didn't change that day. We were just reminded the world's realpolitik. And that peace was never always at hand. And bad people do bad things and we weren't prepared. So I've been hearing that alarm bell kind of since then. Of course, in Ukraine, you've seen it's gotten worse and worse, but you've seen how quickly the technology changes. And, you know, our military's kind of on it. Now you travel around, you actually see enormous progress very quickly in space and drones and supersonic missiles and new small nuclear reactors and governments trying to quickly allow things to take place. But absolutely the urgency today, it is time urgent. We never should have been here. And maybe less... more time urgent it was 10 years ago, but I don't... again, I know that, and I'm not the kind of person... I like to put my head in the, you know, put my head in the sand and cry about it. Wake up, and I come in every day, roll up my sleeves and get to work. That's it. You can, you know, with the urgency on a scale of 1 to 10, you know, five or seven doesn't matter to me. We should have done it anyway. It is far worse today. And yes, the American... the American lead, you know, America still has 40 military alliances, you know, trade agreements with I think 20 different countries. You know, we're still the leader of the world and they still rely on us, and this is why we're also expanding this to the rest of the world. And so, you know, you can criticize some of the actions that we've done, but it is critical, in my view, to keep the Western world together properly economically and militarily.
What's the biggest risk you see out there right now?
Probably... Well, there's two I'll mention. One is these wars develop in a way that you don't expect and they can cause huge disruption to populations, to who allies with who, and obviously it's the world economy. And the second is cyber. You know, we've always known about cyber, and obviously cyber again, I wrote about cyber this year. I said, and I meant it, it's our biggest risk. Okay? And that was a couple weeks before... mythos. And now it is our biggest risk by far. So, that... And I put that now. We always had cyber on the list for this thing. But I give you... guys have seen even like, you know, these fiber cables. So, a lot of your companies move a tremendous amount of data across these fiber cables. They're all vulnerable. Russia cut some in the Baltic Sea. You can cut off a whole country and that traffic cannot be replaced by satellites.
Yeah. And some of these things are asymmetric. So, some... Yeah, if they do that, you can do it back. But some aren't, as you see with the drone warfare.
To come back to cybersecurity in a minute, but I want to ask you first, do you... because you are now so deep into policy and national security, are you working closely with the administration on this?
I wouldn't say closely. What we do is we deal with the... These guys, I mean, we deal a lot with all the government agencies. And we try to help them to the extent we can. They're not going to... They're not going to always support us or vice versa, but we are deeply there and yeah, we're going to... That's always been true. Yeah, we try to help our government and governments around the world, you know, get their jobs done. We have to deal with the politics of that, but that absolutely we're trying to...
But, you know, some people raise the political piece of it. I mean, in 2020 when George Floyd was killed, you stepped up and said, 'We're going to devote $30 billion to racial equity.' A couple of years later, you stepped up and said, 'We're going to devote $2.5 trillion to fighting the climate crisis.' Are those things driven in part by changing political trends?
Well, no. George Floyd was murdered. I wouldn't put that in the political trends category. And I think we should... again, you got to take everything in context. I think it's good that the world said that stuff has got to end and we should... we can do more for the black community. We still reach out to the black community, the gay community, the female community, the Hispanic community, the every community. That hasn't changed. The law has changed how you do it. I think some people overdid it and some didn't. And the climate stuff, we were always very clear. You know, we were... we knew exactly some of the stuff was stupid, some was smart, and then we can help the smart and not the stupid. I think we've been very good on that. And so I think climate's a problem. I think New York's going to solve it. It wasn't... our policies were terrible. You know, we wrote about it, we talked about it. Even, you know, some of these things I said, 'If you don't have proper government policy and proper innovation, it is not fixable with the current stuff we have.' And a lot of the stuff we did was counter climate. Like, for example, I think this number may be roughly accurate. Our CO2 per input to GDP is down 50% or something. Half of that, which was you outsourced dirty stuff to other people. And so people taking victory laps here and it didn't do a damn thing for CO2.
Just shipping it offshore.
No, steel, rare earths, you know, aluminum. Just name it. A lot of that was being done by coal over there. And somebody cleaning it here. So I just... And some of these policies back, they were thoughtless. They... Like a lot of policies, we put in place policies that would have the opposite effect. So I think we're going to conquer CO2. I'm not... I still think we can reduce that. I think it's going to be AI that does it.
But there's clearly value to you to being in line with the current administration.
We've never been in line with the current administration. We've always tried to help the current administration.
And I'm never embarrassed about that. My daughter, years ago when Trump became president, I went on that business council thing and she wrote me a long letter. Beautiful, elegant, thoughtful, ending with a... like, how could your dad... ending with a quote from Martin Luther King from the Birmingham jail. And then my other two daughters and my wife said, 'Ditto.' And like, don't come home for dinner. And I wrote them back a note and said, 'Well, you know, Julia, you got everything right except for one thing.' She said, 'What's that?' I said, 'The conclusion.' Martin Luther King would have gone to the White House every day to further what he thought was the interest of his goals and his values. So, the notion when people... you people get pushed around by the press, they get pushed around, don't do that. Forget all that. What's the right thing to do and then do it. And of course the press will attack you from the left and right. So, we've always been that way. And we've always tried to support the American government, and the American government, all of them have attacked us in various ways.
And, you know, I'm used to that. And that was true under every president. Try to help them and they attack us.
I'll leave politics in a minute, but you know, you have built this amazing building here in the middle of New York City. So, you must have some kind of a relationship with the new mayor. What do you think?
We'll see, you know. I've... but my view is I had him here, by the way, and I saluted the flag down. I took...
Take him to the Patriot bar?
I didn't... I think I had him... I gave him an... I didn't do it, but I had someone take him, I think, there. But I saluted the flag when I came in and I said, you know, 'Mr. Mayor, I just want you to know that my grandparents were Greek immigrants who didn't finish high school. Three of them came here, you know, right after World War I. And I salute that flag every day, and my grandparents came for the same reason your parents came. This country and its freedoms.' And I'm quite serious about that. And we spoke... I was very open about it. And I'm not... but someone going to argue about that, too, Jamie. I know. I told him exactly what I think about stuff, including I am against racism of any type, including anti-Jewish, anti-Muslim, anti-gay, anti-whatever you want to call it. And that anti-Semitism is anti-Jewish. Okay? You don't have to like what the Israeli government is doing. I don't like what the Iranian government is doing. I'm not anti-Iranian. And I think people have to be quite clear what they mean by these things. And he listened, we had a nice conversation, and I told him my experience with all CEOs, but it's true for governors and mayors and prime ministers, that good policy affects you, gets things done. And that I've seen people grow into the job, they get good people to attack it. And it's not ideology. Like our potholes, our crime, our hospitals, our schools, our subways is not ideology. Getting affordable housing is not ideology. If you confuse ideology with those things, it's something you have a better moral position. But most of the policies we do around these things don't work. You know, and like take our... and then in the work skills initiative, which is in our American Dream initiative, you know, we... I think we spend a trillion dollars in K-12. And we... but we never say... but we never happens that it fails. And not everywhere. A lot of your kids go to public schools, they're fine, your schools are fine, don't worry about it. But in a lot of inner cities and rural areas, it fails. Why can't we just acknowledge it's not working? It's intergenerational. What can we do to fix it? And there are things we can do to fix it. And by the way, it's free. Good policy is free. I think we can grow our economy 1% more, free. Don't have to raise taxes, don't have to spend more money. Just...
You need a functioning political system in order to get to that.
And functioning policies.
Yeah. And how do we get to that? I mean, we got an election coming up, but we increasingly have a situation where people of goodwill from both sides can no longer get together and get things done.
Been true for most of our history, by the way. Look, my only... again, my view is if you read history, I love reading history, that's true in a lot of places, and some people get it, some don't. And like that, people need to be involved and to take some responsibility. So, should people ask, should JPMorgan be involved? Yes. You know, we're going to... we lift up society by banking cities, schools, states, hospitals. We do a lot of stuff. We do a lot of philanthropy, mostly to catalyze important stuff. But, of course, you should want to lift up your society. The founding fathers, you know, it's not constitutional, but they always spoke about civic responsibility. And including business civic responsibility. So, the thing about business, they should get involved, in my view, like the BRT, but it can't be about your personal thing. It can't be about ethanol taxes or carried interest taxes or, you know, bank regulations. It's got to be about policies that help your country, like President Kennedy said.
