Jamie Dimon likes a big number. On Monday, Oct. 19, JPMorgan Chase (JPM) said it has financed $230 billion of projects under the national-security program it announced a year ago. The goal is $1.5 trillion. Dimon told the WSJ Leadership Institute the bank will go well past it. Part of that first $230 billion, though, is work the bank would have done anyway.
The bank calls it the security and resiliency initiative. The idea is simple. The country's biggest bank has a balance sheet of more than $4 trillion. It uses some of that to back companies its bosses see as vital to the U.S. economy, such as defense makers, energy suppliers and heavy industry. Sometimes it buys a stake. Sometimes it lines up the loans. Dimon says the program lets JPMorgan take chances its usual lending desks couldn't. It can also get in earlier than it normally would. In his words, “We'll blow way past that trillion and a half dollars.”
What's in the count
Here's the part the Journal's Alexander Saeedy flagged. The $230 billion tally counts the $125 billion merger of Dominion Energy (D) and NextEra (NEE). Bankers have said they'd have done that deal with or without the new program. The paper adds that the full merger value isn't what gets counted. So part of the headline is credit for business that was already walking in the door. That's no knock on the bank. It's just how a tally like this gets built.
The program started a year ago. That was when the administration began taking stakes in companies it saw as nationally important, such as Intel and U.S. Steel. JPMorgan was advising MP Materials, the biggest U.S. rare-earths maker, when the Pentagon took a 15% stake in it last year. Dimon said he wished the bank had invested alongside. Last month JPMorgan teamed up with the state of Michigan and Ford Motor to put more than $2 billion toward new manufacturers that can plug supply-chain gaps. Dimon has passed 20 years as CEO. He told employees this summer he'd love to be president, but that he has a great job. The paper reads the program partly as his way to shape policy without running for anything. He also admits money can't fix everything. He points to a thin skilled workforce and slow permits. As he put it, “often it's not capital.”
Our read
Investments/Risk · IN04. We hold JPMorgan at weight in 26 books; nothing added. NextEra sits in 21 and Dominion Energy in 2, also at weight. The useful lesson is how big numbers get built. A $230 billion headline can include deals that were coming anyway, counted at less than face value. Lending to defense and power companies earns a bank interest and fees. Dimon himself says some of it is riskier than the bank's normal book. That's fine at the right size. It isn't a reason to buy more.
Here's where this touches your own money. If you own a broad U.S. stock index fund, you already own a slice of JPMorgan, the country's biggest bank. You may also hold it directly, or through a bank or financial-sector fund. The bank now says it is taking earlier, riskier bets than its normal lending allows. That's a reason to know your total exposure, not a reason to sell. This week, add up what you hold in JPMorgan and other banks across your 401(k), IRA and brokerage account. Use each fund's fact sheet to see its top holdings. If one bank tops about 5% of everything you own, that's worth a closer look at your next review.