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JPMorgan CEO Criticizes Capital Rules Proposed by US Authorities

Jamie Dimon, chairman of the board and chief executive officer of JPMorgan Chase & Co, said he disagreed with the rules on capital that were proposed by regulators of the United States.

JPMorgan CEO Criticizes Capital Rules Proposed by US Authorities

During a speech at a conference in New York last Monday, September 11, the head of one of the largest American banks said that the new system of norms could become an obstacle to economic growth. Jamie Dimon also asked about the goals of regulators when approving the draft rules they proposed. Separately, the head of the financial institution called on the authorities for greater transparency in addressing this issue. He also stated the special importance of fairness and openness in the regulatory environment.

The Board of Directors of the Federal Deposit Insurance Corporation (FDIC) met at the end of August to discuss with the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency the proposed rulemaking. The new rules stipulate that insured depository institutions whose assets exceed the $100 billion mark must maintain a minimum amount of long-term debt. If this draft regulatory regulation is approved as a mandatory requirement, regional creditors will be forced to issue new debt obligations in the amount of about $70 billion.

The FDIC regulators, during a meeting held at the end of summer, recognized the inevitable fact that in the event of the official introduction of a new rule on long-term debt, the net interest margin of banks will decrease by three basis points. Another consequence of this potential decision will be an increase in the cost of financing for creditors, which will not be significant.

Jamie Dimon said in early August that the new system of norms, which regulators plan to introduce at the official level, will reduce the level of availability of mortgages and loans for consumers. A month ago, during a conversation with media representatives, he said that if there is an intention to withdraw all the mentioned services for small businesses from the banking system, then so be it, but this plan should be made public in the inform space.

Bank of America CEO Brian Moynihan said in July that the new capital requirements should ensure a level playing field for financial institutions. According to him, in this case, the highest degree of caution should be exercised so that the rules do not cause a decrease in the level of competitiveness of the United States.

In his speech at the conference in New York, Jamie Dimon also noted that there is currently a change in the ratio of risk and profit. He said that the risk now outweighs the potential benefits, stressing that this trend is partly due to the slow growth of the Chinese economy in the second quarter. The economic system of the mentioned Asian country grew by only 0.8% over the specified period compared to the results for the previous quarter.

Jamie Dimon has repeatedly spoken about concerns about the uncertainty of the prospects for the development of the Chinese economy and the impact of this state of affairs on investor sentiment. He is a supporter of cooperation between Washington and Beijing in the area of security and trade.

As we have reported earlier, JPMorgan Reportedly Considers Using Blockchain for Cross-Border Payments.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.