James Dimon and Paul Singer Duke It Out At DavosVW Staff
JPMorgan Chase & Co. (NYSE:JPM)'s CEO, James (or Jamie) Dimon, came to Davos ready to answer questions about the London Whale, but he probably didn't anticipate putting on his boxing gloves and going against Paul Singer, principal of the hedge fund Elliott Associates, in a panel discussion.
At the opening session of this year's World Economic Forum, Dimon and Singer butted heads over a discussion on whether big banks are too opaque or not. After enduring a rough 2012 with risk management problems at his bank, James Dimon brushed off Singer's criticisms that banks made “completely opaque” disclosures, reported the Financial Times.
Words between the two continued with Singer saying that from banks’ infinite public accounts, it is essentially impossible to know which ones were “actually risky or sound.” Dimon responded that JPMorgan Chase & Co. (NYSE:JPM)’s accounts were clear, adding that “With all due respect hedge funds are pretty opaque too.”
Singer isn't alone in his criticisms, he has been joined by other hedge funds and institutional investors. This is just part of the pressure banks are facing to share more information about their balance sheets.
He did add that derivatives positions, specifically, are hard for external investors to go through; Singer expressed concern that banks aren't always collateralizings their positions. Dimon responded that his bank did for all “major” clients with Singer responding, “Well, we’re a minor client then.”
In addition to the exchange between the two, Dimon also apologized to JPMorgan Chase & Co. (NYSE:JPM) shareholders and discussed regulation.
Regarding the “London Whale” incident which caused $6 billion in losses to the bank, he said to the forum's audience, “If you’re a shareholder of mine, I apologize deeply.”
He did add that the bank’s customers had not been hurt, however, he took a $10 million pay cut from the incident.
He put on his boxing gloves again, when he discussed regulation.
Not one of his favorite areas, he said that “in the United States we’ve created more regulators, not less” and then noted they were trying “to do too much, too fast.”
He also complained this has resulted in greater bureaucracy, commenting, “In the United States five years [after the crisis] we don’t have mortgage rules yet.”
While the 2010 Dodd-Frank Act has mandated regulations, this has yet to be finalized by regulators.
As noted by the Financial Times, the regulatory debate had been tempered a bit this year than in previous ones, owing partially to international rules not having been decided yet.
Dimon sat among his fellow panelists and suggested regulators utilize restraint. Zhu Min, deputy head of the International Monetary Fund, disagreed and commented it would be a “huge mistake” to scale back on reforms including Basel III regulations on higher capital and liquidity standards.
Zhu noted, “Financial markets structures haven’t changed much. We’re not safer yet.”