The CEO of JPMorgan Chase — which lately 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 Could 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.
Three main U.S. banks collapsed in simply the primary few months of the 12 months, together with 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 as “folks accountable,” albeit associated, as supervisors often deal with if they’re abiding by rules.
Nevertheless, Dimon believes including extra rules to The Federal Reserve’s already 200,000-page lengthy stress take a look at shouldn’t be 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 an alternative, he proposed taking a holistic strategy when modifying rules. He famous:
“In a number of methods is to combine the foundations. In case you’re going to alter liquidity, perhaps not Capital. In case you’re going to alter Capital, perhaps not liquidity.”
He additional questioned the effectiveness of stress assessments, as corporations that utterly deal with “that one stress take a look at,” may very well be overlooking points, reminiscent of 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 prompt that that the Federal Reserve by no means noticed points rising within the banking trade, noting that “not one Fed governor forecasted” the banking disaster.
This isn’t the primary time a JPMorgan govt has expressed points with banking rules in current instances.
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 trade on the planet.”
In more moderen information, it was reported on Could 1 that JPMorgan is 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