The head of the country's second-biggest bank, considered by many to be "too big to fail," said Tuesday that no firm should be immune from failure.
"Everyone should be allowed to fail," said Jamie Dimon, chief of JPMorgan Chase. "Failure is a good thing."
Dimon's comments were made during the Securities Industry and Financial Markets Association's annual meeting in New York.
Leading a bank many consider to be the strongest in the country -- of the four biggest banks it's the only one to not experience a quarterly loss during the financial crisis -- JPMorgan Chase has emerged from the crisis even stronger, thanks to its acquisition of Washington Mutual and Bear Stearns.
During a conversation touching on a variety of topics, a few nuggets emerged. Among them:
*He's a Democrat.
*Dimon said that consumer credit will decrease. Total outstanding household debt -- which includes mortgage debt -- stands at $13.7 trillion. Dimon said it's going to come down to $12 trillion.
*Lending standards have tightened. "We're going back to old fashioned lending," he said.
*Consumers bear some responsibility for the crisis because of the amount of debt they assumed during the boom years. Referencing consumers who got loans under false pretenses, like borrowers who got mortgages saying they'd live in the home but instead bought them as investment properties: "Shame on them," Dimon said, "And shame on us for not doing our due diligence."
*In discussing the causes of the crisis, he pinned a lot of the blame on the federal government, namely the government-sponsored mortgage giants Fannie Mae and Freddie Mac. They were the biggest of the regulatory failures, he said.
*"Derivatives aided" the collapse, he said, "but they didn't cause [it]."
*On these last two points, Dimon brought up the Office of Thrift Supervision and its handling of troubled insurer and massive bailout recipient AIG.
Some background: The OTS regulates savings banks and thrifts -- banks that are required to invest heavily in mortgages by virtue of their charter. AIG owned a thrift, and the company division behind its risky derivatives bets, the unit that was responsible for the company requiring about $182 billion in taxpayer-funded commitments -- AIG Financial Products -- was structured in a way so that it would fall under the OTS's supervision. The regulator has since admitted its oversight "fell short."
Talking about regulatory failures, Dimon said: "The OTS regulated the derivatives arm of AIG -- you gotta be kidding me."
"The problems didn't happen in the OCC-regulated part [of the financial system]," Dimon said, referring to the federal regulator of national banks, the Office of the Comptroller of the Currency. Rather, the problems "happened in the OTS-regulated part."
The bank knew AIG's derivatives unit fell under the OTS -- "we knew that," Dimon said.
The agency "should have never been allowed to exist," he added.