Jamie Dimon On Just About Everything

NEW YORK ( TheStreet) -- JPMorgan Chase ( JPM) CEO Jamie Dimon was predictably bullish about the future as he addressed investors' concerns during the bank's annual investor day.

While the bank's planned reduction of 4,000 jobs by 2013 made the headlines on Tuesday, Dimon highlighted the bank's gains in market share, its strong franchise and touted its diversified business model.

"We have been the port in the storm and we will be the port in the storm in the next storm too," he said.

As usual, analysts looked to Dimon to hold forth on everything from fiscal policy to financial regulation and the CEO, true to form, was outspoken in his comments.

Here are a few highlights from his Q&A.

On buybacks and capital

JPMorgan hopes to meet capital and liquidity requirements under new international rules by the end of 2013. That would mean a Basel 3 Tier 1 Common Ratio of at least 9.5% by 2013, compared to 8.7% at the end of 2012.

The company will likely not be returning much capital to shareholders this year, as a result.

But it says it will have a whopping $28 billion in excess capital in 2014 if it makes no buybacks, based on analyst estimates.

"The stock is still a very good deal," Dimon said, implying that buybacks are still attractive, but reiterated that the bank will prioritize opportunities for organic growth over buybacks.

Dimon also believes that all banks will likely have "too much capital" in the next couple of years and "will not know what to do with it."

That raises concerns that banks will do something stupid with it, of course. "Some will," Dimon acknowledged, "But not everyone is equally stupid."

But the kicker was his exchange with CLSA analyst Mike Mayo over capital. Mayo wondered if JPMorgan would want to build even more capital because clients might do business with a bank that has more capital and is implicitly considered safer. Apparently UBS ( UBS) has been making that argument.

"You'd take your business to UBS over that?" Dimon asked. Mayo clarified that it is what other people are contending.

"That's why I am richer than you," Dimon responded.

On Black Swans

Dimon thinks there are three things that investors should worry about.

One, Europe's debt problem is not going away. "It is going to be a rollercoaster," he said. " Some days you will feel good, some days you will be sick to your stomach."

Two, the uncertainty over tax policy is holding back growth. The economic choice would be to strike a grand bargain, he said, but unfortunately this is all political.

And three, the end of QE3 is still a threat. Dimon believes that investors should prepare for a sudden rise in interest rates. "Is it possible for rates to go up in a recession? It can and that's the worst thing that can happen." He added that JPMorgan was positioned for a rise in interest rates even though it was currently expensive to do so.

On JPMorgan's Management Turnover

Dimon sought to allay investor concerns about changes in management in the wake of the debacle, noting that all of the new business heads were insiders and that many of them had prior experience in their respective businesses.

He also spoke at length about the bank's culture which he said allowed employees to make mistakes. "No one at JPMorgan ever, ever worries about losing their job because they made a mistake," he said.

While other places had a culture of firing people for losing money, this only creates a bad incentive for employees to take risks and make as much money while they can because they will get "shot" later anyway, he said.

"We will not pay people on performance metrics alone," he said, while adding that no one has special compensation agreements or multi-year contracts at the firm.

Separation of Chairman and CEO Roles

Dimon dismissed recent shareholder demands that the CEO and Chairman roles be separated at the bank, calling the whole thing a "sideshow."

Citing an unnamed study, he said that performance at companies actually worsen after the roles are separated.

He added that the bank's presiding director ensures that all board members get an equal say. Moreover, the board has the power to fire him and determine his compensation.

Indeed, JPMorgan's board slashed Dimon's compensation in half in 2012 after the $6 billion trading debacle revealed lapses in risk management and delivered a blow to the bank's reputation.

Shares of JPMorgan ended Tuesday marginally lower. Historically, the bank's stock has outperformed in the month following the investor day, on the back of bullish commentary.

--Written by Shanthi Bharatwaj in New York

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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