JPMorgan's Dimon says it's time for a rate hike, sees no economic "potholes"

Jamie Dimon, chairman and CEO of JPMorgan Chase, told a gathering of financiers in Washington, D.C. Monday that timing is right for the Federal Reserve to raise interest rates as the U.S. economy is humming along and called for more infrastructure investment to stir growth.

“Twenty-five basis points is a drop in the bucket,” Dimon said in an on-stage interview at a luncheon hosted by the Economic Club of Washington, D.C. “Let’s just raise rates. You don’t want to be behind the eight-ball. I’d go sooner rather than later.”

Investors are generally more bullish on banks when interest rates are higher as their earnings benefit from interest income derived from customers paying more for loans.

Fed policymakers will meet on Sept. 20-21 to decide whether to raise interest rates for the first time this year amid a tepidly growing economy. In its "beige book" released last week, the Federal Reserve said the U.S. economy expanded modestly in July and August due to heightened manufacturing activity and strong job growth. But it also said the economy has expanded at a sluggish pace for three straight quarters.

Dimon, whose company is the nation’s largest bank by assets, expressed optimism when asked by the interviewer, David Rubenstein, co-founder and co-CEO of private equity firm The Carlyle Group, about the state of the U.S. economy. "There's no immediate potholes,” Dimon said, pointing to rising employment, higher wages and a robust housing market.

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But the executive also expressed concern about the quality of inner-city schools, the rising student loan debt and wage inequality. "We need more infrastructure investment," he said, arguing that spending to improve schools, bridges and roads shouldn't be a partisan issue. "Growth will fix wage inequality."

When asked if he ever wanted to run for president, Dimon, 60, didn't hesitate. "I'd love to be president of the United States," he replied. "But it's just too hard and too late."

Dimon, who in the past has described himself as a Democrat, said he is asked often about the impact of regulations but dismissed the argument that they impede corporate growth. "It's my job to deal with regulations," he said. "The interest of your country should come before the interest of your company or industry."

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He also largely defended the Dodd–Frank Wall Street Reform and Consumer Protection Act, crediting it for restoring banks' capital holdings and consumer confidence following the financial crisis of 2008. The banking system "is in unbelievable shape, he said. "The system is recovered. And Dodd-Frank is partially responsible."

Signed into law by President Obama in 2010, Dodd-Frank created federal agencies to monitor system risk, heightened reporting requirements and requires banks to hold a minimum amount of capital and undergo stress tests for liquidity. "I'm not in favor of throwing (Dodd-Frank) out and starting from the ground up," he said, countering critics who have called for its repeal.