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‘It’s going to worsen for banks’ — JPMorgan CEO on overregulation

May 12, 2023
2 minutes read

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The CEO of JPMorgan Chase — which not too long ago took over failed First Republic Financial institution — believes there may very well be extra ache forward for United States banks if the Federal Reserve goes into disaster mode with overregulation.

In a Bloomberg tv interview on Might 11, JPMorgan Chase Chair and CEO Jamie Dimon stated he believes it is “going to worsen for banks” except the Federal Reserve takes proactive measures past merely creating extra rules.

Jamie Dimon talking on Bloomberg Surveillance. Supply: Bloomberg

In simply the primary few months of the yr, three main U.S. banks collapsed — Signature Financial institution, Silicon Valley Financial institution and First Republic Financial institution.

Dimon stated that it’s “a supervision downside,” with the financial institution CEOs and board members the “folks responsible,” as supervisors often give attention to if they’re abiding by rules.

Nonetheless, Dimon believes including extra rules to the Federal Reserve’s already 200,000-page lengthy stress check is just not the answer to the present banking disaster.

He argued that extra rules make it more durable for banks to conduct enterprise, noting that “a few of these neighborhood banks now have extra compliance folks than mortgage officers.”

As an alternative, he proposed taking a holistic strategy when modifying rules, saying:

“At one level, it’s making it more durable for them to do enterprise. There are already lots of of guidelines in place.”

He additional questioned the effectiveness of stress checks, as firms that fully give attention to “that one stress check” may very well be overlooking points, equivalent to historic occasions that “all the time occur” once more.

He believes that focusing solely on one stress check offers a “false sense of safety.”

Dimon steered that that the Federal Reserve by no means noticed points rising within the banking business, noting that “not one Fed governor forecasted” the banking disaster.

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This isn’t the primary time a JPMorgan govt has expressed points with banking rules in latest occasions.

Bob Michele, the chief funding officer of J.P. Morgan Asset Administration, said in an April 27 Bloomberg tv interview that First Republic Financial institution’s liquidity points “ought to by no means have occurred,” as banking is the “most closely regulated capitalized business on the planet.”

Extra not too long ago, it was reported on Might 1 that JPMorgan was set to accumulate First Republic Financial institution’s (FRB) belongings, after its earlier efforts to rescue it failed.

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