The U.S. economy is “still booming,” and inflation may not subside as expected when the overall economy cools, JPMorganChase Chairman and CEO Jamie Dimon told the American Bankers Association’s Annual Convention today. He observed that “wages [are] going up for the first time in 30 years for the bottom 20%” but added that “we’re coming in for a landing.” Dimon commented that “inflation may not go away so quickly,” noting that “it may start ticking up a little like it did in the 1970s” and that bankers would be wise to manage exposures with the risk of stagflation in mind.
In conversation with ABA President and CEO Rob Nichols, Dimon said the banking industry needs to ramp up the fight on interchange issues like the Durbin Amendment and Regulation II. “If you’re in a knife fight, you’d better damn well bring a knife—including the big box retailers,” he said. Dimon pointed out that interchange fees paid by merchants support a robust—and expensive—suite of anti-fraud investments. “It costs a lot of money . . . and there are a lot of third parties who have no responsibility,” he added. “You can’t have a system where every payment that is knowingly sent we’re responsible for.”
Dimon also pointed out that accepting cash, the alternative to digital credit and debit payments rails, costs small retailers 5-7% of a transaction’s value in insurance, security, transportation and other expenses. He also pointed out that capping interchange revenue raises the cost of offering basic banking products, adding that the 2009 Durbin Amendment “caused five to 10 million people to go unbanked.”
