(James Saft is a Reuters columnist. The opinions expressed are his own.)
By James Saft
(Reuters) – In case you were wondering, Jamie Dimon has thoughtfully explained why he’s richer than you and all the analysts covering J.P Morgan.
It isn’t, as I thought, our inability to pick lottery numbers.
Hint: it is because he is chairman and CEO of a bank.
Actually, that’s not entirely fair. Dimon is richer than we because he runs a bank and understands the relationships between capital levels, regulation, profits and human nature.
At a J.P. Morgan investor event this week Mike Mayo, an analyst at CLSA, who has been a critic of large banks and, at times, Dimon, asked if J.P. Morgan wasn’t at a competitive disadvantage compared to more highly capitalized peers. (Here is a playback via Business Insider: here)
Mayo: I think what I hear UBS saying in the presentation is that if I’m an affluent customer I’ll feel a lot better going to UBS if they have 13.5 (percent) capital ratio than another big bank with a 10 percent ratio. Do you agree with that?
Dimon: You would go to UBS and not JPMorgan?
Mayo: I didn’t say that. That’s their argument.
Dimon: That’s why I’m richer than you.
Laughter, perhaps embarrassed, perhaps of the schoolyard variety, ensues.
That, indeed, is why Dimon is richer than most of us. He’s not gotten rich running a bank on 19th-century lines, conservative with high capital to make its tony clients comfortable. He’s gotten rich, and he’s not alone, running banks with high leverage under comparatively loose regulatory regimes.