JPMorgan Chase & Co. chief executive Jamie Dimon called a 1,100-page proposal from federal regulators to require banks to hold more capital looms “hugely disappointing,” and warned that the regulation would cause more market volatility down the road.
“I would really know what they would like to accomplish,” Dimon said Monday at his appearance at the Barclays Global Financial Services Conference. “All I want is fairness, transparency, openness and they should do what’s right for the United States of America. I’m not sure they did.”
Dimon found little to complement in the proposal approved by the Federal Deposit Insurance Co. and the Federal Reserve in late July to bring U.S. banks in compliance with international Basel III banking guidelines that were put in place after the Global Financial Crisis that broke out in 2008. The rules are currently under a comment period through the end of November.
Dimon was more positive about the “pretty good” state of the U.S. consumer, which has been driving the economy.
“Wages are going up, particularly at the low end so it’s pretty good, which is why you have a pretty good economy,” Dimon said.
However, Dimon said the macroeconomic backdrop remains is overshadowed by uncertainty about a potential recession, war in Ukraine, fiscal stimulus, tensions with China and the threat of higher commodity prices all in the mix.
As the new capital requirement rules are currently drafted, JPMorgan Chase & Co.
will have to hold 30% more risk-weighted assets than European banks.
“The banks are quite upset,” Dimon said. “I’m not sure it’s a great thing that we have these constant battles with regulators as opposed to open, thoughtful things. We used to have real conversations with regulators There’s none anymore in the U.S., virtually none. It’s all from the top imposed down below. Of course, we simply have to take it because they’re judge, jury, hangman.”
The new rules may also have unintended consequences such as more volatility in the market while the cost of borrowing for businesses and consumers may increase.
JPMorgan sees opportunities to grow market share in all of its various divisions, whether it’s payments, or mortgages, small business banking, investment banking and card cards, he said.
Dimon praised comments by Treasury Secretary Janet Yellen about allowing further consolidation in the banking industry through mergers and acquisitions (M&A).
“They should allow bank M&A so they can compete,” Dimon said. “It’s better for the system.”
Asked about how the third quarter is going for the bank thus far, Dimon said JPMorgan Chase will likely do “a little better” than its projected $87 billion in net interest income in 2023.