JPMorgan CEO Jamie Dimon Calls Out the Fed: Too Many Rules, Questions Reliability Of Stress Tests
Jamie Dimon, the CEO and chairman of JPMorgan Chase & Co (NYSE:JPM), expressed concern about the impact of potential Federal Reserve overregulation on American banks.
His remarks come in the wake of several significant banking failures this year, including Signature Bank (OTC:SBNY), Silvergate Capital Corp.'s (NYSE:SI) Silicon Valley Bank and First Republic Bank (OTC:FRCB), which was bought by JPMorgan Chase on May 1.
In an interview with Bloomberg, Dimon pointedly criticized the approach to supervision in the sector, suggesting the key players to hold accountable for these failures are the chief executives and board members of these institutions, rather than focusing solely on compliance with regulations.
Dimon voiced his concerns about the Federal Reserve's inclination to add to the already extensive regulatory framework. He suggested that the current 200,000-page stress test is not the panacea for the ongoing banking crisis.
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According to Dimon, the burden of additional regulations could create obstacles for banks, particularly smaller ones, where he noted "some of these community banks now have more compliance people than loan officers."
He recommended a more balanced and comprehensive approach to regulation:
"At one point, it's making it harder for them to do business. There are already hundreds of rules in place."
Dimon also questioned the reliability of stress tests, warning that an overemphasis on these could lead to overlooking other potential issues.
He believed focusing solely on one stress test gives a "false sense of security."
Interestingly, Dimon noted the Federal Reserve had been blindsided by the problems that emerged in the banking industry, with not a single Fed governor having anticipated the banking crisis.
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Photo: Steve Jurvestson via Flickr Creative Commons