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JPMorgan CEO: Bank Tie-Ups Needed

JPMorgan Chase CEO Jamie Dimon says 'there are still too many banks' and lobbies for regulators to find a way to make it happen.

Further bank consolidation is needed and regulators need to have a process in which they allow more financial institutions to fail,

JPMorgan Chase

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Chairman and CEO Jamie Dimon said Monday.

Dimon, speaking on a conference call hosted by CLSA analyst Mike Mayo, said there needs to be a "mechanism" in place for large failing institutions like

Bear Stearns


Lehman Brothers

, like there is for faltering commercial banks like

Washington Mutual


"There are still too many banks in the United States," Dimon said during. "No one is too big to fail."

Dimon said he did not mean financial institutions necessarily had to be smaller. JPMorgan Chase purchased both

Bear Stearns


Washington Mutual

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at the behest of regulators last year and has grown market share in many of its businesses throughout the financial crisis.

In terms of future acquisitions "a natural would always be adding states and branches," he said.

Regulators "still might look to us" to take on another institution, despite the banking institution being "at the 10% deposit cap or close to it," Dimon said.

Observers speculated whether banks would have to lobby to get

deposit market share

limits expanded or repealed, given that several large banks have done significant acquisitions in light of the financial crisis, including

Bank of America

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, which bought

Countrywide Financial


Merrill Lynch

, and

Wells Fargo's

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purchase of


late last year.

Banks are allowed to be above the 10% cap if the deposits are grown "organically" instead of through acquisitions. Banks can also technically be above the deposit cap if they acquire deposits from a financial company that is not a bank holding company, such as a savings and loan association or thrift, credit union, or other more obscure institutions, such as an industrial loan company. The law does not count deposits from these institutions as part of the caps on banks.

Additionally, banks can exceed the threshold if the acquisition was of a bank in default, or in danger of default, or where government assistance was provided.

In answer to a question, he said that at this juncture in time it didn't look like as if legislators would be changing the rules. "So we haven't even tried," lobbying to get it changed, he said.

Dimon reiterated that the company's acquisition of WaMu through a federally-assisted deal last September added "some great states in a material way" to JPMorgan Chase's footprint, namely California.


By the time you finish the consolidation, we will dramatically increase the products and services

WaMu branches can offer," as well as add small business, middle-market lending and private-client businesses.

"Those three things can add an awful lot to those communities and awful lot to the bottom line here," Dimon said.

"One of the great misconceptions there is is that banks aren't lending," he also said. The company is lending $2 billion a day, between interbank loans, corporate and consumer lending.

"While I can't predict with any certainly the rest of

2009 and 2010, I am very confident of the years ahead of that," Dimon said ending the call in an unusually optimistic manner.

JPMorgan Chase shares recently were up 4.8% to $34.06 on Monday.