The JPMorgan CEO said the Fed should focus on fixing the banking crisis rather than making more regulation for banks.
Jamie Dimon, CEO of JPMorgan Chase, which recently took over the bankrupt First Republic Bank, believes that more problems await the Banks of the United States if the Federal Reserve enters crisis mode with overregulation. Jamie Dimon told Bloomberg television on May 11 that he believes the situation will worsen for banks if the Federal Reserve does not take proactive measures beyond making more regulation.
Dimon Questioned The Efficiency Of Stress Tests
Jamie Dimon said it’s an audit issue, and it’s bank CEOs and board members who should be blamed, as auditors often focus on whether they’re complying with regulations.
But the CEO believes adding more regulation to the Federal Reserve’s already 200,000-page stress test is not the solution to the current banking crisis. Arguing that more regulation is making it harder for banks to do business, Dimon said: “Some of these community banks now have more compliance officers than loan officers.”
Instead, he suggested taking a holistic approach to changing regulations, saying: “In many ways it is necessary to mix the rules. If you are going to change the liquidity, you may not change the capital. If you are going to change capital, you may not change liquidity.”
He also questioned the effectiveness of stress tests, as companies that focus entirely on a single stress test may miss issues such as always recurring historical events.
Dimon claimed that the Federal Reserve has never seen the problems that arise in the banking sector, noting that not a single FED chairman has predicted the banking crisis.
This isn’t the first time a JPMorgan executive has raised issues with banking regulations. Bob Michele, chief investment officer of JP Morgan Asset Management, said in an interview with Bloomberg television on April 27 that First Republic Bank should never have liquidity problems because banking is the most heavily regulated capitalized sector on the planet.
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