The CEO of JPMorgan Chase – which recently acquired the failed First Republic Bank – believes there could be more pain for United States banks if the Federal Reserve goes into crisis mode with overregulation. .
at Bloomberg Television Interview On May 11, JPMorgan Chase Chairman and CEO Jamie Dimon said he believed it was “going to get worse for banks” unless the Federal Reserve took proactive measures beyond simply making more rules. .
In the first few months of the year, three big banks of America drowned – Signature Bank, Silicon Valley Bank and First Republic Bank.
Dimon said it is a “supervision problem”, with bank CEOs and board members being “the people to blame”, as supervisors usually focus on whether they are following the rules.
However, Dimon believes that adding more rules to the Federal Reserve’s already 200,000-page-long stress test is not the solution to the current banking crisis.
He argued that more regulations make it harder for banks to do business, noting that “some of these community banks now have more compliance people than loan officers.”
Instead, he proposed taking a holistic approach when revising the rules, saying:
“At one point, it’s making it harder for them to do business. There are hundreds of regulations already in place.
He further questioned the effectiveness of stress tests, as companies that focus solely on “that one stress test” may overlook issues, such as historical events that “always happen”.
He believes that focusing on only one stress test creates a “false sense of security”.
Dimon suggested that the Federal Reserve never saw issues emerging in the banking industry, noting that “not one Fed governor predicted” the banking crisis.
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This isn’t the first time a JPMorgan executive has expressed issues with banking regulations in recent days.
Bob Mitchell, chief investment officer of JP Morgan Asset Management, said in a Bloomberg Television interview on April 27 that the first Liquidity issues of Republic Bank “That should never happen,” because banking is “the most heavily regulated capitalized industry on the planet.”
More recently, on May 1, there was news that JP Morgan was ready to acquire property of First Republic Bank (FRB), after its previous attempts to rescue it failed.
1/ On Monday, JPMorgan Chase acquired a substantial amount of assets from the FDIC and assumed some of First Republic Bank’s liabilities. https://t.co/2a3bnTJJJW
— First Republic (@firstrepublic) May 5, 2023
