Jamie Dimon, CEO of JPMorgan Chase, contends that several recent rules designed to regulate the U.S. banking sector have been misguided or inadequate. He said there may be no recourse other than legal action.
Speaking at an American Bankers Association conference, Dimon took issue with last year’s proposal to raise capital requirements on systemically important banks. The Basel III endgame reforms are designed to strengthen the financial industry against economic downturns, and lawmakers originally proposed a 19% capital requirement for the biggest banks.
Though the requirement was lowered to 9% after lobbying from Wall Street, Dimon said that threshold still isn’t low enough. The executive said the heightened capital requirement would place too much strain on big banks and that the Basel rules were based on faulty operational risk calculations and inconsistent liquidity coverage ratios.
Taking Aim
The CEO also said it is “grossly unfair” that credit card companies like Capital One and American Express are able to charge higher fees on debit card transactions than card-issuing banks.
In addition, Dimon took aim at the Consumer Financial Protection Bureau’s proposed framework to spur U.S. open banking. The goal of the CFPB’s rules is to give consumers control of their financial data and allow them to shop around for the financial institution that has the best rates and products.
Open banking has been much more prevalent overseas, and Dimon said he was not against the model itself. He said the CFPB’s rules would do more to compromise consumer data than safeguard it, perhaps leading to a spike in fraud.
‘Unfair and Unjust’
There is some uncertainty about the outcome of the Basel III reforms and the CFPB’s open-banking rules that will likely be clarified only after the U.S. presidential election. Still, many financial institutions might be hesitant to criticize and sue regulators because of concerns about retaliation.
However, the executive said JPMorgan Chase has been compelled to act because of the “unfair and unjust” regulatory environment.
“It is time to fight back,” Dimon said. “We don’t want to get involved in litigation just to make a point, but if you’re in a knife fight, you better bring a knife, and that’s where we are.”
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