Chase’s Dimon Talks Credit Losses in Auto, Future Regulation

JP Morgan Chase & Co. remains “cautious” that credit losses could rise in the auto sector, Jamie Dimon, chairman and chief executive officer, of the company said during the Goldman Sachs Financial Services Conference today.

The comment came as a brief acknowledgement that there could be a downturn in the sector. Earlier this year, the company signaled its cautionary stance by pulling back on 84-month loan terms, it announced in September.

Dimon didn’t have much to say about the auto sector specifically, but did touch on regulatory matters that affect all financial institutions.

“We’re not asking for a wholesale throw out of Dodd-Frank but it’s always been a rational thing to look at major legislation, open it up, take a look at it, recalibrate it, and change it a little bit,” Dimon said of the regulatory landscape following November’s election. “It needs to be done in a bipartisan way so we don’t have to re-litigate and re-legislate again.”

The company has previously stated that it’s spending $3 billion on compliance and control costs, but a lot of that spending was done up front to get the proper systems in place, Dimon said. Now that those automations are in place, compliance costs may not be so onerous in the future.

“If you asked ‘what are your really spending in regulation?’ it’s far more than ($3 billion) because we’re building systems and the front office takes times, and middle office takes time, and back office takes time, so it’s almost impossible to tease all that out,” Dimon said. “But as those things get automated, and embedded — and we simplify certain businesses and product lines — you’ll start to see some of those costs go down.”