Jamie Dimon, CEO of JPMorgan Chase, has expressed significant concerns about recent regulatory measures aimed at the U.S. banking sector. During a speech at an American Bankers Association conference, he suggested that these regulations might be misguided or insufficient and hinted at potential legal action if necessary.
Taking Aim
Dimon criticized last year’s proposal to increase capital requirements for systemically important banks under the Basel III endgame reforms. Originally, lawmakers proposed a 19% capital requirement for these large financial institutions. However, after intense lobbying from Wall Street, this figure was reduced to 9%. Nonetheless, Dimon argued that even this lower threshold is inadequate, claiming it would place undue strain on major banks and pointing out that the Basel rules are based on faulty operational risk calculations and inconsistent liquidity coverage ratios.
Unfair Treatment
The CEO also took issue with the current arrangement where credit card companies like Capital One and American Express can charge higher fees on debit card transactions than card-issuing banks. Additionally, he voiced his disapproval of the Consumer Financial Protection Bureau’s proposed framework for open banking in the U.S., aiming to give consumers control over their financial data.
Dimon acknowledged that while open banking is more prevalent overseas, the CFPB’s rules may compromise consumer data rather than protect it. He believes this could lead to an increase in fraudulent activities.
Time for Action
The outcome of both the Basel III reforms and the CFPB’s open-banking framework remains uncertain until after the U.S. presidential election. However, financial institutions may hesitate to openly challenge regulators due to fear of retaliation. Despite this caution, JPMorgan Chase has felt compelled to act in response to what Dimon describes as an “unfair and unjust” regulatory environment.
“It is time to fight back,” Dimon stated. “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.”
