Jamie Dimon wants one banking phrase erased for good, here’s why

Jamie Dimon has spent more than two decades at the helm of JPMorgan Chase, navigating the bank through the 2008 financial crisis, multiple regulatory overhauls, and the most turbulent period in modern banking history. His latest widely quoted line is characteristically direct: ‘The term “too big to fail” must be excised from our vocabulary.’

The phrase came into common use during the 2008 financial crisis, when governments around the world decided that certain banks were so deeply woven into the economy that letting them collapse would do more damage than rescuing them. Taxpayer money went in, banks were saved, and the phrase stuck around as a permanent feature of how people talk about big finance.

Dimon’s problem with it goes beyond optics. His argument is that once you accept that some institutions are simply too big to be allowed to fail, you have also accepted that those institutions operate under a different set of rules than everyone else — they can take on risk knowing the downside is someone else’s problem.

The word he reaches for, ‘excised,’ is surgical rather than gradual. As long as the phrase exists in the vocabulary of regulators, investors and policymakers, Dimon argues, the thinking it carries comes along for the ride, making an honest conversation about systemic risk impossible.

Image: Wikimedia Commons/by Steve Jurvetson