Jamie Dimon Has Harsh Words for Regulators?


But if Jamie follows my advice, they will sing his praises

breaking_news_3-150x150There he goes again.* Jamie Dimon is complaining about having to answer questions from regulators. The nerve of those regulators! Don’t they know that Jamie Dimon runs the biggest bank in the United States? What’s going on—and how can Jamie fix it?

Regulators are concerned about the dangerously low 3% level of reserves banks keep on hand to cover unpleasant surprises, like downturns and recessions. Does Jamie believe JPMorgan Chase has mysterious powers to predict future downturns? (Did JPMorgan know the price of oil would shrink so much so fast and hit markets so hard?) Experts warn that reserves at 3% at could help create a 2007-like financial collapse.

Jamie is also ticked at regulators who question whether his bank is both too large to fail and too large to be efficiently managed. It brings up stuff that irritates Jamie, like obscure fees and big exec bonuses.

Jamie wants to change the subject to what regulators do rather than what JPMorgan Chase does. But there is a better way that would make Jamie Dimon into a national hero:

First, Jamie can get regulators (like the FBI, SEC and Department of Justice) off his back by ordering his people to follow the regulatory rules, stop seeking loopholes and stop hiding information. Next, increase the JPMorgan Chase reserves from 3% to 9%. That’s not as high as experts want, but it would be a regulator-pleaser.

And here is how Jamie Dimon becomes a national hero, maybe even a presidential candidate: Jamie requires his banks to raise their interest rates on savings accounts to match inflation, or no less than 2.5%. And what a payoff for Jamie: thousands of new depositors rush to JPMorgan Chase with billions in deposits for Jamie’s bank. Jamie becomes the guy who ends “savings accounts” as “shrinking accounts.”

If Jamie follows my advice, Congress will put his image on the nickel.

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*See “Dimon Has Harsh Words for Regulators,” by Nathaniel Popper, Business Day, New York Times, January 15, 2015, pages B1, 6.

 

 

 

 

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