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…ou 15 to 20 billion dollars. The $12 billion we wrote off didn't cost us. We didn't really pay for it.And then the government sued us on the mortgages, which I was quite offended by, and I really was. I thought it was his problem.And then, this is the government. When, whatever government you did a deal with, that's not the government down the road that decides, "I don't care, we're going to come after you anyway."So, while we kind of saved the system a lot, we bailed a lot of people out. They made us pay $5 billion on the bad mortgages that Bear Stearns had done. And that's what made me make the statement I wouldn't do it again. I wouldn't put it this way. I don't know how to say this: I wouldn't really trust the government again. Okay. I've got to ask a follow-up question to that. Is that a structural thing, just the way that we're set up with a new administration every four years? Yeah. They don't feel obligated to what the prior administration did. And even some contracts were violated in this thing, which I won't go through, literally, contract. I mean, it would have been tortious interference had it been company to company. But they basically, since you operate under their laws, they can basically take you down.So, I went to see Eric Holder trying to settle this mortgage stuff, which we settled. I put my lead director... He expected me to come and be pounding my chest. And I went in and said, "Eric, I am here to surrender. I cannot fight and I cannot win against the federal government. You know that a criminal indictment can sink my company. I will not do that to my company or my country. I'm here to surrender."Before I surrender, I want you to know the circumstances by which we bought WaMu and Bear Stearns, because 80% of what they're asking for related to Bear Stearns and WaMu, not JPMorgan Chase.And I went through the whole thing. He said, "Thank you, I'll take it into consideration." But they never gave me the accounting, so I don't know what they did. And so it is what it is. It was quite painful, but I've got to move on. We'll move on from this. We won't keep you. Well, we'll move on from the specifics. David's like, I do have one more thing. Whether you would have done it again, or wouldn't have, it's very clear. It was not a great deal on paper for JPMorgan. But as we look at it now, the reputational value that JP... the reputation of JPMorgan now is unlike any other in the industry. Part of why you're worth $800 billion is that reputation. A lot of what created that reputation... Was that weekend. Yeah. Yes. And I know I say I wouldn't trust the government. If the government called me up... If they called me again and said, "We need your help to save our country," of course I'm going to. I'm a patriot that way.I would just try to come up with some ways to avoid the punishment by the next president. I would come up with something. You know what you need? Like a version of the merger agreement with JPMorgan Chase where 75% of Congress needs to vote not to sue you. The default is you're not going to get sued. All right, all right, all right. So Bear Stearns happens. Six months later, you get another phone call. WaMu is going under. needs to vote not to sue you. The default is you're not going to get sued. All right, all right, all right. So Bear Stearns happens. Six months later, you get another phone call. WaMu is going under. You do buy WaMu. Contrary to everything we're talking about with Bear, WaMu is actually a great acquisition. Right? Yeah. So this is a lesson about acquisitions. It's very hard. Remember, we bought WaMu a week after Lehman went bankrupt. And most boards wouldn't have touched that. At all, because the whole system feels... Like the whole system was in trouble. But WaMu put us in California, parts of Nevada, Arizona — no, not Arizona — Georgia, Florida, which we weren't in. So think of these really healthy states.And they had 2,300 branches. They had huge mortgage problems. But we had looked at it over and over and over. So we knew their mortgage books cold, and we wrote off losses. We bought it for... And this was all before... We bought it for $30 billion, discounted to tangible book value because they had debt, and we left the debt behind. And that $30 billion was approximately what the mortgage loss was going to be. So we bought the company. Think of it. We bought a company clean. We wrote off all that stuff. The books were clean.And then we did something unheard of, too. The next day or two days later, I went in the market, raised another $11 billion of equity, which I didn't really need. But again, this is my conservatism. I was like, "You know what? This can get even worse."And I don't want to be short capital or liquidity. So we raised that to make sure our balance sheet was just as strong after WaMu than it was before WaMu. And you already had the reputation to pull this off, right? I'm imagining in the worst month of the financial crisis, who can go out and raise $11 billion of equity? Yeah. People trust you. Well, yeah, we knew a lot of shareholders, and you earned your trust over time with shareholders.And we explained, we gave them a quick little presentation. Yeah. A lot of them stepped up and said, "This is great." They also know we can execute it because behind the Bear Stearns acquisition, people forget the work. The next day, you had 50,000 people consolidating 5,000 applications, branches, compensation programs, settlement programs, payment systems. It's a lot of work.But we obviously have the capability to do that, and we have the capability to do WaMu. I think we finished the WaMu consolidations in nine months — all of them. So that within nine months, they were all in the same systems, which allows you to start doing a better job in customer service and things like that. So this fortress balance sheet strategy, raising this equity capital, and having additional margin of safety and conservative accounting — in retrospect, it seems like the obvious right strategy for running a large financial institution. Why wasn't everyone else copying it? Have people changed, and does everyone else run their banks like this now? I think people are more conservative today. I think regulators are more conservative today. wasn't everyone else copying it? Have people changed, and does everyone else run their banks like this now? I think people are more conservative today. I think regulators are more conservative today. But again, I go back to people get involved in aggressive accounting; they don't look at stressing their own bank in a real way.You saw people take too much interest rate risk, too much credit exposure, too much optionality risk, or sometimes it's new products. So if you look at the financial services, very often it's the new products that blow up. It takes a while. They haven't been through a cycle.And you had that with equities way back in 1929. You had it with options, you had it with equity derivatives, you had it with mortgages, you had with Ginnie Maes. Even Ginnie Maes at one point blew up even though they're government guaranteed. Arguably you had it with quant and with LTCM. It happened with leveraged lending. And then people become more rational in how they run these balance sheets now. They think through the... So I have to ask you, is this private credit today? I don't really think so. I don't think it's $2 trillion. It's grown rapidly. That's an issue. But the other thing about markets is there are some very good actors in it who know what they're doing. Customers like the product. So I always say, the customers like it, but there are also people who don't know what they're doing, and it's grown rapidly. So there may be something in there that would become a problem one day, but I don't think it's systemic.So that $2 trillion... the mortgage market, when the market blew up, was, I'm going to say, nine trillion, and a trillion dollars was lost. This is, and it was... A trillion dollars was also in a... Highly leveraged. Back then. Yeah, a lot of these private credits are not leveraged. That doesn't mean there won't be problems. But it's slightly different. But if you look at the whole system, there are other things out there that are leveraged that can cause problems. Of course, people take secret leverage in ways that don't necessarily... I see it. What are some of these in your mind that are potentially problematic today? Well, look, when you look at asset prices, they're rather high. I'm not saying that's bad. But if today P/Es were 15 as opposed to 23, I'd say that's a lot less risk, a lot less to fall. And you have some upside. I would say at 23, there's not a lot of upside, and there's a long way to fall. And that's true with credit spreads.So, we stress test everything. We do like 100 stress tests a week to make sure we can handle a wide variety of things.And then the other thing, and the biggest risk to me, is cyber. I mean, I think this cyber stuff is, we're very good at it. We work with all the government agencies. They would say the chamber, we spend $800 million a year or something on it. We educate people on it. We just do.But it is... you're talking about grids and communications companies and water and even part of the military establishment. The protections are not what you need if we ever get any kind of war where cyber is involved.…

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