The CEO of JPMorgan Chase — which not too long ago took over failed First Republic Financial institution — believes there could possibly 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” until the Federal Reserve takes proactive measures past merely creating extra rules.
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 drawback,” with the financial institution CEOs and board members the “folks guilty,” as supervisors normally concentrate on if they’re abiding by rules.
Nonetheless, Dimon believes including extra rules to the Federal Reserve’s already 200,000-page lengthy stress take a look at 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 group banks now have extra compliance folks than mortgage officers.”
As a substitute, 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 a whole bunch of guidelines in place.”
He additional questioned the effectiveness of stress checks, as corporations that utterly concentrate on “that one stress take a look at” could possibly be overlooking points, corresponding to historic occasions that “at all times occur” once more.
He believes that focusing solely on one stress take a look at provides a “false sense of safety.”
Dimon urged 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 government 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 Bank’s liquidity issues “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 acquire First Republic Financial institution’s (FRB) belongings, after its earlier efforts to rescue it failed.
1/ On Monday, JPMorgan Chase acquired a considerable majority of belongings and assumed sure liabilities of First Republic Financial institution from the FDIC. https://t.co/2a3bnTJJJW
— First Republic (@firstrepublic) May 5, 2023