Jamie Dimon said it’s time for regulators to help put an end to the turmoil in the banking industry, but he’s already predicting policymakers will take away the wrong lessons from this year’s upheaval.
Q1 2023 hedge fund letters, conferences and more
“I think it’s going to get worse for banks — more regulations, more rules, and more requirements,’’ JPMorgan Chase & Co.’s chief executive officer said in a Bloomberg Television interview from Paris Thursday. “If you overdo certain rules, requirements, regulations — there are some of these community banks that tell me they have more compliance people than loan officers.’’
The only major bank CEO from the financial crisis still in command, Dimon has played a central role in the reaction to the industry’s worst period of tumult in more than a decade. He brought his typically blunt style to critiques of regulators and fellow bankers, spearheaded an industry lifeline to First Republic Bank, and ultimately stepped in to buy the lender last week when those efforts proved insufficient.
“We need to finish the bank crisis,’’ Dimon said. “Whatever the FDIC, the OCC, the Fed — whatever they need to do to make it better they should do.”
Four regional firms have collapsed amid steep Federal Reserve interest-rate hikes and deposit outflows. JPMorgan’s purchase of First Republic and Dimon’s declaration that “this part of the crisis is over” did little to quell investor concern about the strength of the industry. The KBW Regional Banking Index has dropped 13% since that deal was announced.
Banks should have been encouraged to look at a broader range of potential pitfalls, rather than one annual stress test that ran hundreds of thousands of pages, breeding a “false sense of security,” Dimon said. The Fed itself wasn’t predicting interest-rate increases before it started hiking and then was surprised when banks also got caught wrong-footed, according to the CEO.
Dimon said regulators need to get a better handle on smaller banks’ financial situations, to “not be surprised constantly.”
While blame should be placed at the feet of bank CEOs and boards of directors, “I think there needs to be humility on the part of regulators,’’ Dimon said. “They should look at it and say, ‘OK, we were a little bit a part of the problem’ as opposed to just pointing fingers.’’
Read the full article here by Jennifer Surane, Francine Lacqua, Advisor Perspectives.
