Whitney’s zombie-bank claim is ‘hogwash,’ Dimon contends

JPMorgan Chase & Co. chief executive Jamie Dimon, disputing Meredith Whitney’s description of U.S. lenders as “zombie banks,” said that the firms can navigate low interest rates and other revenue pressures.

“I love Meredith and all that, but honestly, most of that stuff is hogwash,” he told CNBC when asked about the analyst’s comments during an appearance last week. “All businesses have things that change all the time — interest rates, commodities prices, cost of wages, demand, supply — and you have to manage around that.”

JPMorgan, the second-biggest U.S. bank, was the most profitable among the nation’s largest lenders last year with a record $17.4 billion in earnings. The firm reported its highest half-year profit ever at almost $11 billion as of June 30, even as it labored under bad mortgages and rising litigation costs.

“The large banks which dominate most of the lending in the United States are effectively zombie banks,” Ms. Whitney told CNBC, according to its website. “You’ve got an expense structure that just doesn’t match the revenue structure.”

The KBW Bank Index of 24 companies fell 14% this month through last Tuesday amid concern that the U.S. economy is weakening and that firms may face losses linked to the European sovereign-debt crisis.

SHOT IN THE FOOT

Mr. Dimon said that the recent volatility hasn’t shaken his optimism about the U.S. economy, which he said was unnecessarily set back by a prolonged political debate over raising the government’s debt ceiling.

Standard & Poor’s subsequent downgrade of the nation’s credit rating wasn’t “that material a thing,” and few executives would make decisions based on it, Mr. Dimon said.

Still, “we shot ourselves in the foot,” he said. “The debt ceiling thing demoralized the American public.”

The underlying economy and financial system remain strong, with mortgage, credit and other markets open and healthy, Mr. Dimon said.

JPMorgan’s stock price will be higher in five years, he predicted.

“The strength of the system is going to blow your socks off when it comes out of this malaise,” Mr. Dimon said.

“The fundamental strength of the nation is still there,” he said. “We’re just stuck.”

Mr. Dimon also dismissed speculation that he is a candidate for Treasury secretary if and when Timothy F. Geithner steps down, saying that he would never be interested in the job.

“If you know me at all, and you all do a little bit, I’m not suited to politics. So you guys should stop asking that question,” Mr. Dimon said. “I know it, and you know it.”

Related Topics: Banking, ING Group, JPMorgan Chase & Co.