It was some of the regulation that inhibited the development of real Capital Markets. That is in the interest of the european people, wider Capital Market system. Regulators work with governments, whoever, to say lets develop a regulatory system that is the best, not just more. Dont look at changing something is always being a negative. It could be a Huge Positive for the public good. James, let me give you a different twist. Policy donetary we have the right regulatory structure in place to ensure that is something pops, it will not have the kind of affects it had in the past . You always have a risk of bubbles. Fear and greed, the bull in a bear instinct. You are always providing opportunity for a bubble at some point. Based upon what we see certainly in the banking or, its very low. Just on the regulation point, we have been living with this from crisis times. What the regulators did was absolutely necessary and the right thing to do. Banks were over levered, operating with anywhere between using 60 times leveraged, a lot of their Balance Sheet for illiquid investments, they did not have the kind of risk control structures that all the major banks in this country have, and they did not have an annual health checkup. Kind of like you go to your doctor. You find out how you are doing on your stress tests. The preemptive stub, capital and liquidity, that is like maintaining your health and exercise. You go for a checkup, and if things go bad, you have your resolution plan. That basic structure, which i dont think was designed with that complete picture in mind, made sense to me. So how much is enough capital . I dont know. Lets do as much as what you would have needed to get through the financial crisis. Lets style it up a bit because things could get worse. And then lets add a buffer to that because there are unintended things. And then lets have another buffer because we can. Well, hang on. That is where we are. 10 years in, do you design something which is so safe the mandate of the regulators is safety and soundness. If institutions are not investable, they are not sound. If something is so safe that becomes unsound, i think youll drive the growth that jamie is talking about. If you have a growing economy and the bank is not growing, youll have a shrinking corporate and employment sector. Is it time to make some changes to the dials . Sure. If you took 10 people from this room and made the same changes, probably not. Most people would say that it feels like the dials are at that upper level. There are changes in the volcker rule which are Pretty Simple and go back to what paul volcker originally conceived of. The qualitative tests that the Federal Reserve had, that makes sense. You do an annual supervisory letter. That meets the test. I am not at all for junking the Regulatory Framework we have. Meansks, it is good, it banks are in a much more prudent liquidity position. The question is when is enough enough. We had a hiccup in the repo market. You have said its an issue providing liquidity. Regulatory issue, market issue, plumbing issue . A little bit of both. I must tell you why when you talk about coordinating between different policies. You want liquidity in the system. Today,ty in the system about 4 trillion. That is how much liquid assets banks on between deposits for the fed, repose, treasuries, and other stuff. You are at a point where that 4 trillion can never be used for anything else. Days would have in your Checking Account with the fed very little money. They wanted more money, so you never had a negative balance. We always had negative balance in the fed. We send money to you, you send it to us by the end of the day. The Checking Account was a small plus. Now jpmorgan has 120 billion at the fed. Liquidity is critical, absolutely. Why 122 160 . Rules say that we want you to have enough in that account. Im not sure if that is what the fed wanted, but it is what these other rules required, so that youll never hit zero. Of course, hitting zero, we wanted to add a buffer. I think we were all approximately in the same place on this. At one point, it was excess excess. Managing ourare own requirements, it doesnt matter what the repo rate was. We could not move that over. I would have moved the 120 billion. We like making money for nothing. Why didnt go down . Repo was difficult. Corporate checks go out, the fed drops. Banks typical, but the hit that limit and could not redeployed liquidity. The same issue will happen eventually in the big liquidity thing, the 4 trillion. That is a little bit of a red line. When these markets get rough and they might. These were very Healthy Markets during the repo issue. When markets get tough, you have the same issue about the ability to intermediate. If you lock up because of regulations, that may cause more consternation in the market, which you dont want. These things are set up in a rigid way. We have spoken to regulators. I agree, they are quite right. They should do this before the crisis happens, because it will happen. Objectives of the Regulatory Framework was to move risk out of the Banking System into the nonBanking System. Have we moved risk into places where we cannot see, hard to identify . There is not a binary yes or no. In some ways, the system is efficient. Very sophisticated investment that are not bank regulated depositary institutions are looking at that. Hedge firms, other investment vehicles that have been set up. Discomfort . Use me not really. Sophisticated investors, taking risk out of the Balance Sheet, ensuring we have a healthier and safer Banking System. It doesnt bother me. There are other areas, whether it is clearing houses, Cloud Service providers, lots of other things that have evolved since the financial crisis that you it is always the risk that you dont know about. Anything we are talking about today is not the thing that will cause the problem. It is the unintended consequences from the Way Industries evolved. Why i think ciber is so important not just across the Banking Center but the whole system. Over the last two years, you have talked passionately about the drop in the number of publicly held companies. Why has that happened . How can we resuscitate Public Markets . I agree about the shadow bank. It is growing rapidly. I agree it is not a new issue. You have so much to keep an eye on. We do a shadow banking book report. We lend to shadow banks because we are concerned about that. There are the question was Public Markets. We have gone in this country from 8000 to 4000. I dont think that thats a good thing. Other countries are going up. Im not against private equity. Some in consolidation. Those 4000 companies are bigger. It is hard to figure out why. Im in favor of good corporate governance. When shareholder meetings and that being a farce, when litigation can cripple companies, when boards of directors spend all their time crossing ts and dotting the i, as opposed to talking about the business issues, operational cyber, thenr risks, it is just easier to be private. If you interview people, they can compensate, they can specialize compensation, it is not in the eye of the public who may have a different view. I think we are driving companies to the private market. If i could go private, i could. Being a Public Company has real negative downsides to it. It shouldnt be that way. It takes away the ability of the public to invest in companies, because they cannot invest in these other vehicles. It should be looked at very carefully, and we should have a Public Policy debate around how we want Public Companies to be governed. This trend has been going on for a long time. It is sort of the confluence of a lot of things. There is a lot of money available through professional industry that was not around effectively 40 years ago. Still relatively small 20 years ago the private equity space. Secondly, as far as economic growth, Companies Like ours looking for ways to grow are going to be buying other institutions, both public but also taking Public Companies out of the market by buying them, but also companies that would have gone public, buying those. It is a burden to be a Public Company. There are some joys to it. You obviously have more liquidity with your ownership structure. In many regards, more credibility. Tted by institutions such as the sec. You kicked up today, we just finished our earnings report. I dont know how much time jamie spent on it, but its a lot. The funny thing about quarters, they come with alarming frequency. I have not figured out a way to stop that. Why wouldnt we just report revenues every three months and do a full Earnings Release every six months . When the world be really worse off than that . We have more security guards in our shareholder meetings then shareholders. Too. Are shareholders, but it is kind of insane. You are talking to three people probably you get more people. In westchester, if anybody wants to come. It gets lonely. That are certain things are anachronisms of the way that business was done 50 years ago. We need to move a little more modern. Speaking of, technology. You probably spent 20 billion a year on technology between you two. About 11. 5 billion. We are 4. Because youpending feel like you have just been for defensive purposes, offensive purposes, do you feel like you are getting good value . It is what it always was. Technology has been at the forefront of us changing things were customers, offering things that are better, faster, cheaper. Thats been going on my whole life. The benefit is the cost of the customer, doing business goes down. You can buy and sell things on your phone. You can get money all over the world. That is competition. The part that is different is it. S faster now ai is real, digital israel, cloud is real, and it is faster. You can organize around it differently. In the older days, you may have a statement system, and you release once a quarter. Now you marginalize it, and you can take a piece of it and change it every week. We have great products and services that we give people all the time that are part of the big system but you can change that flow, that data. You can customize it, design things the way you want. Is, it is faster, tougher, you organize differently, different winners and losers because of that, but they are using technology to do better. Thats been my whole life. Creating new risks. Cyber risks, moving to cloud providers. Are these new critical infrastructures that need a Regulatory Regime put in place . Im not sure i will recommend on new Regulatory Regimes this stage. We will put more stuff in the cloud. We are managing more data, investing in big data, investing in ai, machine learning, robotics. I dont know if it is Regulatory Framework so much as it is common standards. I think that is starting to come. We are not a technology company, but technology infuses everything that we do. We started doing electronic trading equities in the 1990s, gave birth to that industry, has worked into the fixed income space. What is different, as jamie said, the pace of change is spectacular. The amount of attention the fintec sector has created. You go to where the money is. The banking Financial System has a lot of money swirling around. Opportunityorm us to make more efficient and more productive. There is no reason we cannot adopt that ourselves. We are. We are buying, working in partnership with these companies. There is no reason we cannot adopt that ourselves. Talent has changed dramatically in the last 15 years. Tags wouldve had their first choice. For a period of time post crisis, they were the last choice. Now it has come back. Much more competitive in the marketplace. There are a huge number of dynamics in this but this has been going on for 40 years. With thest accelerated incredible innovation coming out of the fintech sector. Ciber we mentioned, resiliency, conversions. These are all additional risks. The Financial Market utilities, they should come in my opinion, should be stressed tested the way the banks are. In a lot of ways, we concentrated a tremendous amount of risk there. We said derivatives, bilateral was bad. Think of a spider web. When lehman went down, no other company went down because of derivatives. The spiderweb worked. We had now contributed a huge amount of risk at these clearinghouses. If one of these Financial Market utilities goes down, that is a huge thing. Of course, some are backed up by us, which creates an issue. They should have the discipline to do that right. I believe doddfrank gave the regulators that right under their umbrella. I think they should spend more time with them, then with us. Than with us. One Technology Getting a lot of headlines is libra. Do you have any impressions, real or not real . It was a neat idea that will never happen. I have nothing else to say about it. We already have stable coins. They were not averse to do that. A stable call the jpmorgan coin. It is backed by the dollar, so israel stable. [laughter] do either one of you worry about competition . I heard it at the Board Meeting yesterday. Internet Platform Companies that can great your data. An asymmetric relationship. Bank data,e enrichment, and use it for their purposes, but banks dont have the same opportunity. Are you worried about Internet Companies taking away market share . Yes, these companies are great competitors. Some are good, some are not good. Some will do well, some will not. We should be competing with them on a level playing field. All know this, but a lot of account tour bank someone many years ago. You gave it to them for a reason, but they may still be coming in and taking your bank data every day. Account to someone many years ago. That should not be allowed. We have sued people over this, we have locked people down. We have put a system in place that i think everyone should do. We will tell you what data is being taken by whom, and you have the data to turn it off or not. We are not saying thatthat shou. You should or should not do it, but we are telling you what it is. We have deals with several of these screen scrapers to do it the right way. Also, they dont have your bank passcode. They get permission to get the data, and we push the data to them. They dont have unlimited access. There are secure ways to give people the benefit of the aggregation of stop without you knowing where it is. If that money is taken out of your bank account because it aggregated around the proper controls in your bank account, they may be liable, not us. Which means your money is not money good. James, are you concerned about internet Platform Companies that engage in financial intermediation activities that have a different role book . As jamie said, we are in a open capitalist world, you take all manner of competitors. 30 or 40 years ago, when the online brokerage business , which by the way, was a plethora of many companies. It is now basically three. In this industry am a you need scale in almost everything you do. There is a reason institutions get big. The resiliency, cybersecurity, operation support, risk management, all of this drives scale. You see consolidation going on. We worry particularly in our set lesssinesses probably relevant than what jamie is doing, dealing with hundreds of millions of consumers around the world. Expertisey upon our and our brand, capability. We have to have best in class data management. We had to be as good or better doing with our clients data. Shame on us if we are not. Both of you use the word capitalism. Jamie, you are the chairman of the business roundtable. Great work. You have come up with a change in policy that has been in place for a long time. The wall street journal editorial page attack you as selling out to the left. Elizabeth warren said if you really believe in what you said, you would vote for her bill. She has attack you as being insincere. If you are being attacked from the wall street journal and elizabeth warren, have you got it right . Absolutely. These large institutions have an great institutions in terms of how they treat their employees. Medical, dental, retirement, gyms, training, advancement. Great jobs over time. We take great care of our customers. Obviously you fail in our society if you dont. That doesnt mean that we dont make mistakes. You take care of the local Little League or religious institution. We all do training and jobs, we are mayors, governors. The statement we had before said basically, a fiduciary responsibility. Promisee to shareholder value. Profittaking is not what we do. It was an evolutionary statement. We did not get rid of shareholder value. We said and employees, and communities. It doesnt have to be simpler than that. If you fail at any one of those, you are probably going to fail. There is nothing wrong with saying the quarterback and the running back and the defensive line, you need all of them to succeed. The wall street journal come in my view, is confused and how it speaks to the American Public with this simplistic thing about shareholder value. We still have a fiduciary responsibility, longterm shareholder value, but these are the ways that you get. We are telling the American Public we are devoted to doing these things well. It,he left, who says prove we already do a lot of those things. We can acknowledge things that dont work in society. I hear people talk about it. Even the democratic left. They are kind to write about it. Innercity school did not work because of us, big companies. But we can be more involved. Income inequality, thats true, its gotten worse over the years. There are things that we can do to help that. There are policies to help that. We should be engaged in making society and the world a better place. But the notion that socialism i know im taking too much time free market capitalism, free enterprise, and freedom are inextricably linked. Freedom of speech or freedom of religion, freedom of enterprise are capitalism. The notion that somehow the government the constitution was written to say all the rights belong to you the individual, other than these given to the government. They were afraid about a government that took control of everything. Ofernment is taking control assets and companies, they start to use those companies for one thing only, keeping themselves in power. Companies are rolled over time and you end up with venezuela. Every one of these Companies Get polluted over time. We can acknowledgment fix what goes on in a corporation. Sweden is a bigger free market in the u. S. If you analyze it, more of the assets owned by the private sector, they are very tough on it. They have a Better Safety net than we do, they take better care of their people. We should do that, too. We should improve it, negative income tax, we should improve schools, all of these things. Social democracy is not socialism. It depends on how the battle plays out what they means, but Controlling Companies is socialism. You are taking care of your vendors. , your the whole ecosystem with which you operate. Is it a Communications Problem . Do we not do a good job telling the story of being a Good Community citizen. The whole ecosystem with which you operate. Is it a communications . May be. I had a city Pretty Simple view of this. This is what we do. Why wouldnt you sign it . All but seven companies signed it. Maybe they had specific regions. Sometimes you just need to affirm the obvious. Will giveefore you an example. Core values. One of them is to do the right thing. Nobody has the value of do the wrong thing. Nobody has the value of do the wrong thing. So why do we have that as a core value . Every now and then there is an ongoing on where you just have to affirm what is the obvious. With the financial crisis, i felt we need to affirm the obvious. In complex financial institutions, when you do the wrong thing, it has caught us traffic consequences, so do the right thing. Every day that when you walk in the building, have that mindset. Of course we are in our communities. We have the Morgan Stanley childrens hospital. People are proud of that. We want to be attractive to folks coming out of college. We want our legislators to think we are responsible citizens in their district. If you are not, things get nationalized in some countries. There is no ultimate right to exist. It is up to the population who elects the legislators, engages the legislators. Brt team did,e when jamie did, made all the sense to me. It was an obvious reaffirmation of what we do. By the way, our employees and clients are demanding that we speak out on a wide range of social issues, which i resist the vast majority of. Our job is not to be the chief proponent of every social issue out there in the marketplace, but to be responsible citizens in the communities in which we operate, for the benefit of all those communities. Obviously, if we dont do that right, our shareholders lose. I am a shareholder. I want that. I really didnt understand the pushback on it. I think the collaboration, and we can do more to help lift up society, business, civic society, and government work together. Ithat is what works around the world. Are you not concerned about someone trying to measure the difference you are making and somehow coming up with a metric that says you said you were going to do x, you did not, and therefore you failed. So what . We do that all the time. Everyone has their own point of view on what we should do. We should not go do what china is doing, which is having a social metrics index for every company. One of the top topics we are taking on, that has come out of nowhere, is sustainability, green finance, climate. Climate week in new york. How are you at jpmorgan and Morgan Stanley looking at sustainability from an environmental perspective . How are you embracing this . Im surprised you said it came out of nowhere in the last 18 months. It was not on our agenda. We cannot hire enough people to fill the needs we are trying to cover. Recently. Somewhere it was a congressional hearing. I was asked about how the Financial System would do with what is going on with global warming. I set a little facetiously but accurately that if we do not have a planet, we will not have a very good Financial System. We set up a Sustainability Institute about seven years ago led by one of our Management Committee members who is probably here. We are interested in it as an contributing in a number of ways. Newto help think through forms of energy and what the right transition is. Investors who want choice of funds. Now we are doing a major effort around plastics. Not Just Recovery plastic from the oceans, but what ddo