In a live interview, Dimon said the worse-than-expected quarter resulted from the "normal culprits"—mortgages, credit, and high-yield bonds and loans. Dimon didn't give any projections on results, but his comments sent JPMorgan's stock (NYSE: JPM) down more than 10%.
Still, the CEO was upbeat about the bank's future. "We continue to grow," he said. "Earnings themselves may go up or down, but if you continue to grow the franchise, you'll do in the long run a very good job."
Still, financial stocks tumbled in reaction to Dimon's comments.
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"It reiterates how difficult this market is and how the real economy is weighing down on financial stocks," said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois, referring to Dimon's comments. "It's continuing news that the world really hasn't changed. It's still a tough world out there."
Watch the full interview
- Part 1 of Dimon interview
- Part 2 of Dimon interview
- Part 3: Fourth-Quarter Outlook
Dimon, meanwhile, said JPMorgan has used its portion of government bailout money to lend aggressively on a variety of fronts.
Though Dimon said JPMorgan didn't need its $25 billion allotment from the Troubled Asset Relief Program, or TARP, the banking giant was willing to cooperate with the government's efforts to boost liquidity in the financial system.
"When the government asks you to do something like that, you want to do it," Dimon said. "We did get the money. We got $25 billion in and we're going to try to do exactly what they want us to do, which is to make more loans, help this economy grow and in fact we are making more loans."
The Treasury has come under heavy criticism from Congress for giving out billions of dollars of TARP money to banks without any guarantees that the funds would be used to make new loans to consumers and businesses.
Just yesterday, House members threatened to withhold the remaining half of the $700 billion of TARP money unless Treasury officials do more to help homeowners avoid foreclosure.
Overall, Dimon said JPMorgan has increased commercial loans this year by $10 billion and credit card loans by $5 billion, while interbank lending has soared to $60 billion.
Though Dimon said his institution is in solid shape, he said the economy was facing many challenges ahead, primarily from unemployment. He said aggressive attempts to lower mortgage rates will be necessary to pull real estate from its slump.
JPMorgan Chase, meanwhile, is working closely with at-risk homeowners to prevent them from defaulting on their mortgages.
While citing a "dramatic downturn" in economic indicators, he rejected predictions of a second Great Depression.
"I'll make a bet we're the first to recover," he said, referring to the US. "We've been through tough times before. Good companies and good countries, they reform, they get better, they learn from the past and they moved on. I'm convinced we're going to do that, but I'm prepared for a tough 2009."
Looking ahead, the CEO said U.S. housing prices—which spawned the current credit crisis— could fall another 20 percent.
He said that, "if we're lucky,'' the market could start to recover after two more quarters.
Dimon added that it does not currently make sense for two major investment banks to merge, adding that acquiring a brokerage unit is not a strategic imperative for JPMorgan.
—Reuters contributed to this report.For more stories from CNBC, go to cnbc.com.