Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro. If you ask Jamie Dimon, no one walked out of the Silicon Valley Bank fiasco looking good. “This wasn’t the finest hour for many players,” the longtime JPMorgan Chase CEO wrote in his annual letter to shareholders this morning. Silicon Valley Bank’s exposure to rising interest rates and heavy reliance on flighty deposits from venture capitalists created tremendous risks, many of which were “hiding in plain sight,” Dimon wrote. Even if the bank had been subjected to a Federal Reserve stress test prior to its collapse, regulators wouldn’t have flagged how its massive portfolio of long-dated U.S. debt would fare against higher rates as cause for concern. In other words, there’s plenty of blame to go around. This is not 2008. The problems plaguing SVB aren’t as pervasive as the financial system’s pre-crisis exposure to toxic mortgages. But “there will be repercussions from it for years to come,” he wrote. For Dimon — the only crisis-era CEO of a major bank still standing — that’s where the danger lies. “It is extremely important that we avoid knee-jerk, whack-a-mole or politically motivated responses,” he wrote, later adding that many post-crisis “disruptions in the market were, in my opinion, largely caused by certain regulations that did not improve the safety of the market maker but, instead, damaged the safety of the whole system.” That means taking a holistic look at how existing rules are applied across the breadth of the financial system – including at so-called “shadow banks” — to assure that institutions of all sizes can continue to serve the market. While that shouldn’t preclude a bank from failing, it should limit “the chance of failure and the odds of contagion,” he wrote. What else did Dimon have to say? On the state of the economy: It’s a mixed bag. The regional banking crisis “provoked lots of jitters in the market and will clearly cause some tightening of financial conditions as banks and other lenders become more conservative,” he wrote. Nevertheless, “it is unclear whether this disruption is likely to slow consumer spending.” On energy policy: “Permitting reforms are desperately needed to allow investment to be done in any kind of timely way. We may even need to evoke eminent domain – we simply are not getting the adequate investments fast enough for grid, solar, wind and pipeline initiatives.” On private equity’s growing sway over markets: The onerous requirements facing public companies, which has been compounded environmental, social and governance-related from demands from investors and new shareholder proxy rules, is putting pressure on businesses to remain private. “This migration [to private markets] is serious and worthy of critical study, and it may very well increase with more regulation and litigation coming. We really need to consider: Is this the outcome we want?” IT’S TUESDAY — Sorry that this arrived a bit later than usual. We wanted to make sure that Dimon’s letter was at the top of your inbox. Send tips, suggestions and gossip to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com.
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