NEW YORK–The CEO of the nation’s largest bank is weighing in on recent turmoil in the industry, what if any regulation may be needed, other changes he’d like to see, and more.
Jamie Dimon, president and CEO of JPMorgan Chase, wrote in his annual letter to shareholders that the turmoil “is not yet over,” and opined on what caused the crash. He also weighed in why more regulation isn’t necessarily the cure, and why it will have “repercussions” for years.
Dimon, who helped pull together the $30 billion deal to save First Republic Bank, wrote that when it came to the failed Silicon Valley Bank, “Most of the risks were hiding in plain sight.” He said the problems included that SVB’s corporate clients “were controlled by a small number of venture capital companies and moved their deposits in lockstep.”
Dimon said he does not agree with those who have suggested that Trump-era rollbacks of smaller bank regulations were to blame for the crisis and he cautioned against “politically motivated responses.”
What Else Should be Considered
As CUToday.info has reported, in response President Biden has called for increased scrutiny of banks with between $100 billion and $250 billion in assets, such as SVB, but Dimon argued in his letter that any new regulations, including revamped stress tests and leverage ratios, should take into account factors such as customer concentration, uninsured deposits and possible limitations on hold-to-maturity loans.
In addition, he called for increased focus on factors taking place outside regulated banks, from trading to lending.
“Among many questions that need definitive answers, a few big ones would be: Do you want the mortgage business, credit and market-making, along with other essential financial services, inside the banking system or outside of it?” Dimon wrote.
Economic Downturn Predicted
Dimon, who has in the past forecast an economic downturn, again had a warning about the economy. “The market’s odds of a recession have increased,” he wrote, adding, “While this is nothing like 2008, it is not clear when this current crisis will end.”
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