JPMorgan Chase & Co.: 10-K Risk Factor Changes

Federal Reserve rules require JPMorgan Chase & Co. (the “Parent Company”) to maintain minimum levels of unsecured external long-term debt and other loss-absorbing capacity with specific terms (“eligible LTD”) to recapitalize JPMorganChase’s operating subsidiaries if the Parent Company were to enter into a resolution either in a bankruptcy proceeding under Chapter 11 of the U.S. Bankruptcy Code, or in a receivership administered by the FDIC under Title II of the Dodd-Frank Act (“Title II”). If the Parent Company were to enter into a resolution, holders of eligible LTD, other unsecured creditors and holders of equity securities of the Parent Company will absorb the losses of the Parent Company and its subsidiaries. The preferred “single point of entry” strategy under JPMorganChase’s resolution plan contemplates that the Parent Company would enter bankruptcy proceedings and JPMorganChase’s material subsidiaries would be recapitalized, as needed, so that they could continue normal operations or subsequently be divested or wound down in an orderly manner. As a result, the Parent Company’s losses and any losses incurred by its subsidiaries would be imposed first on holders of the Parent Company’s equity securities and thereafter on its unsecured creditors, including holders of eligible LTD. Claims of the Parent Company’s shareholders and unsecured creditors would have a junior position to the claims of creditors of JPMorganChase’s subsidiaries and to the claims of priority (as determined by statute) and secured creditors of the Parent Company. Accordingly, in a resolution of the Parent Company in bankruptcy, unsecured creditors of the Parent Company, including holders of eligible LTD of the Parent Company, would realize value only to the extent available to the Parent Company as a shareholder of JPMorgan Chase Bank, N.A. and its other subsidiaries, and only after any claims of priority and secured creditors of the Parent Company have been fully repaid. The FDIC has similarly indicated that a single point of entry recapitalization model would be its expected strategy to resolve a systemically important financial institution, such as the Parent Company, under Title II. However, the FDIC has not formally adopted or committed to any specific resolution strategy. If the Parent Company were to approach, or enter into, a resolution, none of the Parent Company, the Federal Reserve or the FDIC is obligated to follow JPMorganChase’s preferred resolution strategy, and losses to unsecured creditors of the Parent Company, including holders of eligible LTD, and to holders of equity securities of the Parent Company, under whatever strategy is ultimately followed, could be 13 13 13 13 Part I Part I greater than they might have been under JPMorganChase’s preferred strategy.PoliticalJPMorganChase’s businesses could be negatively affected by economic uncertainty resulting from political and geopolitical developments.Political developments in the U.S. and other countries could cause uncertainty in the economic environment and market conditions in which JPMorganChase operates. Certain governmental policies or actions could significantly affect U.S. and global economic growth and cause higher volatility in the financial markets, including:•monetary policies and actions taken by central banks, including any sustained large-scale asset purchases, any suspension or reversal of those actions, and changes in interest rate levels•fiscal policies, including with respect to taxation and spending•foreign policies that emphasize national interests•economic or financial sanctions•the implementation of tariffs and other trade policies•requirements to relocate business activities or operations•deployment of the military•changes to immigration policies, or•actions or inactions by a government related to emergencies.These types of political developments, as well as heightened geopolitical tensions, could:•erode investor or consumer confidence in the U.S. economy and financial markets, which could potentially undermine the status of the U.S. dollar as a safe haven currency•provoke retaliatory countermeasures by other countries or otherwise heighten tensions in trade or diplomatic relations•increase the risk of targeted cyber attacks•increase concerns about whether the U.S. government will be funded and will be able to service its outstanding debt•result in periodic shutdowns of the U.S. government•influence investor perceptions concerning government support of certain sectors of the economy or the economy as a whole•influence monetary policy actions of the Federal Reserve to moderate the economic impact of political developments, including decisions on interest rate levels and asset purchases and sales•adversely affect the financial condition or credit ratings of clients and counterparties with which JPMorganChase does business, or•cause JPMorganChase to forgo business opportunities that it might otherwise pursue.These factors could lead to:•slower growth rates, rising inflation or recession•disruptions in labor markets•greater market volatility•a contraction of available credit and the widening of credit spreads•U.S. dollar currency fluctuations•lower investments in a particular country or sector of the economy•large-scale sales of government debt and other debt and equity securities•reduced commercial activity among trading partners or disruptions to supply chains, or•the formation of or changes in political or economic alliances or treaties.These risks could become highly correlated or combine in unexpected ways under certain circumstances, including geopolitically challenging situations in regions such as Russia, the Middle East and China.Any of the foregoing potential outcomes could cause JPMorganChase to:•suffer losses on its market-making positions or in its investment portfolio•reduce its liquidity and capital levels•increase the allowance for credit losses or recognize higher net charge-offs•hamper its ability to deliver products and services to its clients and customers •weaken its results of operations and financial condition or credit ratings, or•become subject to prolonged litigation.MarketAdverse economic and market events and conditions could negatively affect JPMorganChase’s results of operations and investment and market-making positions.JPMorganChase’s results of operations could be negatively affected by the occurrence or persistence of adverse changes in any of the following:•the U.S. and global economies•investor, consumer and business sentiment, or confidence in the financial markets•inflation, deflation, recession or employment•the availability and cost of capital, liquidity and credit•levels and volatility of interest rates, credit spreads or market prices of currencies, securities and greater than they might have been under JPMorganChase’s preferred strategy.PoliticalJPMorganChase’s businesses could be negatively affected by economic uncertainty resulting from political and geopolitical developments.Political developments in the U.S. and other countries could cause uncertainty in the economic environment and market conditions in which JPMorganChase operates. Certain governmental policies or actions could significantly affect U.S. and global economic growth and cause higher volatility in the financial markets, including:•monetary policies and actions taken by central banks, including any sustained large-scale asset purchases, any suspension or reversal of those actions, and changes in interest rate levels•fiscal policies, including with respect to taxation and spending•foreign policies that emphasize national interests•economic or financial sanctions•the implementation of tariffs and other trade policies•requirements to relocate business activities or operations•deployment of the military•changes to immigration policies, or•actions or inactions by a government related to emergencies.These types of political developments, as well as heightened geopolitical tensions, could:•erode investor or consumer confidence in the U.S. economy and financial markets, which could potentially undermine the status of the U.S. dollar as a safe haven currency•provoke retaliatory countermeasures by other countries or otherwise heighten tensions in trade or diplomatic relations•increase the risk of targeted cyber attacks•increase concerns about whether the U.S. government will be funded and will be able to service its outstanding debt•result in periodic shutdowns of the U.S. government•influence investor perceptions concerning government support of certain sectors of the economy or the economy as a whole•influence monetary policy actions of the Federal Reserve to moderate the economic impact of political developments, including decisions on interest rate levels and asset purchases and sales•adversely affect the financial condition or credit ratings of clients and counterparties with which JPMorganChase does business, or greater than they might have been under JPMorganChase’s preferred strategy. Political