JPMorgan's Trump Account Closure Intensifies Political Risk Amid Regulatory Overhang

What happened

JPMorgan Chase has acknowledged in a court filing that it shut down bank accounts tied to former President Donald Trump and his businesses after the January 6 Capitol riot, now at the center of Trump's $5 billion lawsuit against the bank. This legal revelation emerges as JPMorgan faces heightened political scrutiny over its credit card operations, with CEO Jamie Dimon publicly opposing a proposed 10% APR cap that threatens one of its highest-ROE segments. The DeepValue master report notes JPMorgan is 'priced for perfection' at ~$300, embedding high returns despite a ~$105B expense base and regulatory risks, including this card cap. Dimon's combative stance on regulatory issues, combined with this lawsuit, signals that political and legal battles are escalating beyond rhetoric into tangible operational challenges. Thus, the news reinforces existing investor concerns that political headwinds could erode card profitability and validate the report's 'POTENTIAL SELL' rating.

Implication

First, this legal acknowledgment increases JPMorgan's exposure to costly litigation and reputational damage, diverting management focus from core operations. Second, it concretizes the regulatory overhang on credit cards, a key profit driver, raising the odds of adverse policy actions like APR caps that could slash earnings. Third, with JPMorgan trading at a premium ~14.7x P/E and 2.3x book, any political fallout could swiftly compress multiples in a crowded, sentiment-driven market. Fourth, this aligns with the DeepValue report's bear case where binding regulation impairs card economics, dragging ROTCE below mid-teens and pressuring shares toward $240. Fifth, investors should treat this as a confirmation of heightened political risk, warranting reduced exposure or awaiting better entry points below $260 as per the report's guidance.

Thesis delta

The Trump account closure news does not alter the core investment thesis but sharpens the political risk assessment already embedded in the DeepValue report. It provides real-world evidence that regulatory threats, such as the proposed card APR cap, are actively playing out in legal arenas, increasing the probability of downside scenarios. This reinforces the report's cautious stance, suggesting no new capital should be deployed until political uncertainties resolve or the stock retreats to more attractive levels.