The CEO of JPMorgan Chase — which just lately took over the failed First Republic Financial institution — believes there may very well be extra ache for United States banks if the Federal Reserve goes into disaster mode with overregulation.
In a Might 11 Bloomberg Tv interview, JPMorgan Chase Chair and CEO Jamie Dimon mentioned he believes except the Federal Reserve takes proactive steps past simply extra regulation, it is “going to worsen for the banks.”
Within the first few months of the 12 months, three main US banks collapsed – Signature Financial institution, Silicon Valley Financial institution and First Republic Financial institution.
Dimon mentioned it is an “oversight downside,” with financial institution CEOs and board members “the folks responsible,” as a result of supervisors usually concentrate on whether or not they’re following the foundations.
Nevertheless, Dimon believes that including extra rules to the Federal Reserve’s already 200,000-page lengthy stress check just 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 neighborhood banks now have extra compliance folks than mortgage officers.”
As a substitute, he proposed taking a holistic strategy when altering the foundations, saying:
“At one time, it made it tough for them to do enterprise. There are already a whole lot of guidelines.
He additionally questioned the effectiveness of stress assessments, as firms that focus completely on “that one stress check” could also be overlooking points, akin to historic occasions that “all the time occur” once more.
He believes that specializing in only one stress check offers a “false sense of safety.”
Dimon advised that the Federal Reserve by no means noticed the rising points within the banking business, noting that “not a single Fed governor has predicted a banking disaster”.
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This isn’t the primary time a JPMorgan government has expressed issues with banking rules in latest occasions.
Bob Mitchell, chief funding officer of JPMorgan Asset Administration, mentioned in an April 27 Bloomberg Tv interview that First Republic Financial institution’s liquidity issues “ought to by no means have occurred,” as a result of banking is “essentially the most regulated capitalized business on the planet.”
Extra just lately, it was reported on Might 1 that JP Morgan is ready to accumulate the belongings of First Republic Financial institution (FRB), after its earlier makes an attempt to rescue it failed.
1/ On Monday, JPMorgan Chase acquired a considerable majority of the belongings and assumed sure liabilities of First Republic Financial institution from the FDIC. https://t.co/2a3bnTJJJW
— First Republic (@firstrepublic) Might 5, 2023
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