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 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 12 months, 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 “individuals responsible,” as supervisors often 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 check isn’t the answer to the present banking disaster.
He argued that extra rules make it tougher for banks to conduct enterprise, noting that “a few of these group banks now have extra compliance individuals than mortgage officers.”
As a substitute, he proposed taking a holistic strategy when modifying rules, saying:
“At one level, it’s making it tougher for them to do enterprise. There are already tons of of guidelines in place.”
He additional questioned the effectiveness of stress exams, as corporations that utterly concentrate on “that one stress check” may very well be overlooking points, akin to historic occasions that “all the time occur” once more.
He believes that focusing solely on one stress check provides a “false sense of safety.”
Dimon prompt 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 current occasions.
Bob Michele, the chief funding officer of J.P. Morgan Asset Administration, acknowledged 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 lately, it was reported on Might 1 that JPMorgan was set to amass First Republic Financial institution’s (FRB) property, after its earlier efforts to rescue it failed.
1/ On Monday, JPMorgan Chase acquired a considerable majority of property and assumed sure liabilities of First Republic Financial institution from the FDIC. https://t.co/2a3bnTJJJW
— First Republic (@firstrepublic) Might 5, 2023