Anamika Dey, editor
Brief news
- JPMorgan CEO Jamie Dimon criticized U.S. financial regulations, claiming they do not enhance bank safety and may harm lower-paid individuals, advocating for a more effective regulatory approach.
- Dimon expressed concerns over overlapping rules, particularly regarding capital requirements and open banking, and indicated the bank’s readiness to litigate against unfair regulations.
- He highlighted the need for clarity in upcoming proposals under Basel III and criticized the Consumer Financial Protection Bureau’s open banking rule for potential consumer data risks.
Detailed news
NEW YORK, October 28 (Reuters) – JPMorgan Chase (JPM.N) initiates a new tab. On Monday, CEO Jamie Dimon condemned numerous significant financial regulatory initiatives in the United States and declared his intention to oppose them, claiming that they would not enhance the safety of banks.
The largest U.S. lender is overseen by the outspoken executive, 68, who criticized the overlapping or ill-conceived regulations on capital requirements, card payments, and open banking.
Dimon stated at a conference, “It is time to respond.” He further stated that numerous banks are apprehensive about “fighting with their regulators, as they would merely return to impose additional penalties.”
“I have been told by people at the Fed, know that because of what you have said and what you wrote about, you know they are coming after you.”
The Federal Reserve declined to provide a response.
“We are suing our regulators over and over and over because things are becoming unfair and unjust, and they are hurting companies, a lot of these rules are hurting lower-paid individuals,” according to him.
“The devil is in the details,” Dimon stated, as banks anticipate new proposals under the Basel III denouement.
He was alluding to a proposal by U.S. regulators in July 2023 to harmonize their standards with those of the Basel Committee on Banking Supervision in order to enhance the industry’s ability to withstand economic fluctuations.
The previous proposal to increase capital by 19% was eased by the Federal Reserve’s regulatory chief, Michael Barr, who last month unveiled a plan to increase the capital of large banks by 9%. It was a significant concession to Wall Street banks that had lobbied to weaken the draft.
The plan was still beset by uncertainty, as crucial details were opaque and the Nov. 5 U.S. presidential election raised questions about its viability under a new administration, despite the apparent industry victory.
Dimon stated that it will be challenging to accomplish any tasks if the proposals do not emerge prior to the election.
He stated that the capital surcharge for global systemically important institutions was one of the “stupidest” components of the Basel framework, its operational risk calculations were “ridiculous,” and the liquidity coverage ratio contained “inconsistencies.”
“The biggest problem I have with all these overlapping rules is that we are not stepping back and saying, what could we do better to make the system work better,” he pointed out.
Dimon has been proposed for prominent roles in U.S. economic policy, including Treasury secretary. He has not publicly endorsed either candidate, despite his opinion on the qualities that the next president should possess.
The bank’s CEO has been a vocal opponent of regulations and has indicated that the bank is prepared to litigate certain regulations in court if there are no other viable alternatives.
“It is time to fight back,” Dimon stated to the American Bankers Association, eliciting laughter and acclaim. “We don’t want to get involved in litigation just to make a point, but if you’re in a knife fight, you better bring a knife and that’s where we are.”
The CEO also stated that regulators should not permit card-issuing financial services firms, including American Express (AXP.N), Capital One (COF.N), and Discover Financial Services (DFS.N), to charge a premium for debit card transactions.
This is due to the fact that banks are restricted in the amount they can charge for debit cards, whereas card issuers are not subject to such restrictions.
“It’s grossly unfair to allow them to do more,” said the representative.
The top U.S. consumer finance watchdog’s rules, which were unveiled last week, were also criticized by Dimon, the longest-serving bank chief at a major Wall Street bank. These rules would facilitate the transition of consumers between financial services providers.
The “open banking” rule of the Consumer Financial Protection Bureau regulates the exchange of data between traditional banks and fintech firms, enabling consumers to effortlessly transmit their personal data between providers at no cost.
Dimon stated that he was not opposed to open banking; however, he acknowledged that it could potentially compromise consumer data and result in fraudulent money transfers. He was prepared to oppose it.
Source : Reuters
