FORTUNE — At JPMorgan Chase’s annual investor day on Tuesday, CEO Jamie Dimon answered one analyst’s question by saying, “That’s why I’m richer than you.”
Zing. The line got a bunch of laughs. And it quickly became a headline for articles recounting the Q and lack of A between Dimon and the Credit Agricole analyst Mike Mayo, who has the reputation of being one of the few analysts to be tough on Wall Street CEOs.
But what did Dimon mean by it? Mayo’s question was about bank capital. European regulators are requiring banks there to hold more capital than U.S. rivals. Mayo wanted to know if that would give those banks, in this case UBS, an advantage over JPMorgan (JPM) in attracting clients who want a safe place for their money.
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There are a lot of reasonable ways to answer that question. He could have said: U.S. banks have lots more capital than they did before the financial crisis, so I don’t think solvency is a concern. Or, European regulators are being too conservative and everyone knows it.
But instead, the answer he did give didn’t make much sense. Here is what analysts and others around Wall Street think he meant when he decided to remind everyone why he is so stinkin’ rich:
1) I am richer than you because I am willing to take some risks in life, you pansy.
If you’re the type of investor who needs to put their money in a bank with a 13% capital ratio to sleep at night, you are probably being too conservative. You have to risk money to make money. I left Citigroup when my mentor Sandy Weill was still at the top of his Glass-Steagall busting ways. And I left the East Coast to join a Midwestern bank that none of my Park Avenue buddies had ever heard of. And you know what? I parlayed that job into one running the most profitable bank in the world. That’s how you make money. Live a little.
2) I am richer than you because I understand JPMorgan is still way too big to fail.
Didn’t you learn anything from the financial crisis? I did. That’s why as everyone was worried about how big the banks have gotten, I used the financial crisis to buy up Bear Stearns and Washington Mutual and make JPMorgan even bigger. Regulators don’t like to admit it, but if JPMorgan or any of the other big banks get into trouble again, it’s right back to bailout city. So the only capital I need to hold is what I am required to hold. The rest will come from the American taxpayer. And clients get that. JPMorgan’s deposits have soared since the financial crisis.
3) I am richer than you are because I can answer questions whatever way I want, even if it contradicts something I have said in the past. Afterall, I am the head of the most important bank in America.
Good point, Mike Mayo. You know who else made that very same point less than a year ago: Me. Last year, in my annual letter to JPMorgan’s shareholders, I wrote that banks with more capital would win clients from banks that hold less. Here’s what I wrote:
We believe banks will be forced to increase their capital levels in order to “cluster around” their major competitors. Even if a bank could run at 7% capital, it probably will have to run at the higher number to be perceived as strong competitively.
But back then I was using the argument to prove how forcing big banks to hold more capital than small banks was bad. It would give us big banks a competitive advantage over small banks, which as you know everyone loves and would never want to do anything to hurt. But I don’t really believe that. I just want to be able to hold as little capital as I can. So let the Swiss force their banks to hold more capital. Good luck to them. Besides, we all know the only reason someone opens a Swiss bank account.
