• JPMorgan Chase CEO Jamie Dimon believes that if the Federal Reserve continues to overregulate banks, it will worsen the banking crisis.
• Dimon suggests a holistic approach when modifying regulations instead of adding more rules and regulations to an already 200,000-page long stress test.
• He argues that focusing solely on one stress test gives a “false sense of security” and believes the Federal Reserve never saw issues emerging in the banking industry.
JPMorgan CEO’s Warning
The CEO of JPMorgan Chase — which recently took over failed First Republic Bank — believes there could be more pain ahead for United States banks if the Federal Reserve goes into crisis mode with overregulation. In a Bloomberg television interview on May 11, JPMorgan Chase Chair and CEO Jamie Dimon said he believes it’s “going to get worse for banks” unless the Federal Reserve takes proactive measures beyond simply creating more regulations.
Instead, he proposed taking a holistic approach when modifying regulations, saying:“At one point, it’s making it harder for them to do business. There are already hundreds of rules in place.” He further questioned the effectiveness of stress tests, as companies that completely focus on “that one stress test” could be overlooking issues, such as historical events that “always happen” again. He believes that focusing solely on one stress test gives a “false sense of security.”
Fed’s Overlooked Issues
Dimon suggested that that the Federal Reserve never saw issues emerging in the banking industry, noting that “not one Fed governor forecasted” the banking crisis. This is not the first time a JPMorgan executive has expressed issues with banking regulations in recent times. Bob Michele, the chief investment officer of J.P. Morgan Asset Management stated in an April 27 Bloomberg television interview that First Republic Bank’s liquidity issues “should have been seen by regulators.”
Rise Of Compliance People
Dimon said that it’s “a supervision problem,” with bank CEOs and board members being “people to blame,” as supervisors usually focus on if they are abiding by regulations. However, he noted that adding more regulations makes it harder for banks to conduct business, noting that “some of these community banks now have more compliance people than loan officers.”
In conclusion, Jamie Dimon argued against using overregulation to address problems within U.S Banks and instead proposed implementing a holistic approach when modifying existing regulation while also looking into possible overlooked factors like historical events or liquidity issues which may be leading to these failures within U.S Banks today