J.P. Morgan Chase & Co Chairman and Chief Executive Jamie Dimon on Monday told bank investors that while the current credit market crunch may soon be over, the US economy could still face a deep and extended recession.
The slump in mortgage and corporate loan markets could bottom out this year, said Dimon, whose bank largely side-stepped the losses and mark-downs that have hobbled rivals during the past year. Yet the economy may face a longer-term challenge even as financial markets begin to function again, the "slower burn" of a recession that may rival the severity of the 1982 contraction, he said.
These challenging conditions, marked by tighter bank credit, new rounds of mark-downs, further capital infusions and asset sales by banks, could last through next year and into 2010, he said. If that happens, Dimon warned that New York-based J.P. Morgan and its national consumer lending businesses would suffer some significant losses, such as home equity losses doubling to $900 million by year-end.
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