Dimon Presses Bernanke on Impact of New Bank Rules
Tue 07 Jun 11 | 04:40 PM ET
jamie, please? mr. chairman, jamie dimond, jpmorgan chase. i have a totally, completely agree when he a crisis and that it entailed doing a lot of things to fix and reduce risk. i have a great fear someone's going to write a book in 20 years and the book is going to talk about all the things that we did in the middle of a crisis to actually slow down recovery. i don't personally buy the argument because there's a financial crisis, it has to take a long timei icoming out. i made a list of the things already done and a few things to be done. most of the bad actors are gone. thift thrifts, old mortgage brokers and obviously some banks. some of gone, z zivs, money mar funds far more transparent. derivatives gone. transparency in -- fannie mae and freddie mac in the government hospital. higher capital and liquidity already in the marketplace. we estimate more than double than it was before. there are tougher requirements, boards are tougher. risk committees tougher. oversight committee regulations much toucher in every way, shape possible. one of the course of problem with mortgage underwriting, gone back to what it was 30 years ago. it's a good thing, but no more subprime, no more resident, no more packaged. the cnbs market has been completely reformed. far more transparent accounting. we've been through two stress tests one at treasury one at the fed. the bank passed, the recent ones with flying color, partially for the reasons i just said. now told higher capital requirements, the so-called charges et cetera and know there are 300 rules coming. has anyone bothered to studied cumulative effect of all of these things and do you have a fear like i do that we will look ak and look at them all, they that will be the reason it took so long that our banks and businesses -- most importantly, job creation isn't going again. is this holding us back? that list you gave me made me feel pretty good for a while. sounds like we're getting a lot done. that's great. well, the -- the crisis revealed lots of weak spots. lots of problems, and we are -- you know, it's a comprehensive. the most comprehensive reform since the 1930s and we're trying to execute it and trying to address all of the problems and you didn't mention three or four others i could think of. so, yes. it was a big problem. it has a huge impact. there were many, many sources. i think one of the -- this is sort of just a pet peeve is that many people tried to say, the single cause of the crisis was x. there was no single cause of the crisis in respect were many, many different causes that interacted in a way in many ways where unpredictable and led to the disaster we experienced. so there are many, many things to fix. we're working on them and making, i hope, a lot of progress. has anybody done a comprehensive analysis of the impact on credit? i can't pretend that anybody really has. you know, it's just too complicated. we don't really quantitative tools to do that. but we are trying, and i'll speak for the federal reserve, we are trying to move as expeditiously as we can to develop new framework, and set traditions consistent with doing it right. trying to develop rules that make sense, that are consistent with good practice. but which do not unnecessarily impose costs, or impose costs, or unnecessarily constrict credit. the second thing, i realize many of you here are heads of large institutions, but you know, you think it's difficult for jpmorgan chase, it's very, very difficult for the small banker, for the community banker, and we have set up a number of different screens, filter, committees, processes in the federal reserve to try to make sure that when new rules are put in place, that the smaller institutions are sheltered from them as much as possible. unless there's a necessary impact. so i hear what you're saying. we're very -- there's a traysoff ther trade-off. we have to take steps to make sure we don't have a repeat of what happened. i think we can do that in a way that preserves the key functions of banking, allows credit to be extended, allows banking finance servicesextended, but there is trade-off and you're right to point that out. it's probably going to table a little bit of time before we, over time, figure out where the cost exceeds the benefit and we make the appropriate adjustments, but to answer your question, nobody's looked at it in all detail, but we certainly are trying as in each part to develop a system that is coherent and that is consistent with banks performing their vital social functions of extending credit and providing other key financial services.
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