Jamie Dimon reportedly exploded in a meeting at the IMF conference when the governor of the Bank of Canada argued in favour of tighter bank regulations.
The governor, Mark Carney, who many believe is the future head of the Financial Stability Forum, supported what bankers call “growth-killing” capital requirements.
According to the Financial Times, Carney and Dimon were at a private meeting of the Financial Stability Forum in Washington DC at the IMF conference.
Arguing against the regulations, which he believes will kill jobs, growth, and the recovery, Dimon “launched a tirade” against Carney in a “closed-door meeting in front of more than two dozen bankers and finance officials,” the FT says.
According to the FT, Dimon said:
Many of [Basel III’s] rules discriminate against US banks, and I’m going to continue to use the phrase “anti-American” [which he first used in a Financial Times interview this month] because it seemed to resonate with people who might be able to modify the reforms.
The confrontation reportedly got so bad that the CEO of Goldman Sachs (who is head of the Financial Services Forum bankers’ group which arranged the session) had to step in. Lloyd Blankfein emailed Carney, currently the Bank of Canada Governor, to try to smooth relations, says the FT.
Besides what we quoted above from the FT, what Dimon said exactly is not known. However because Dimon has been outspoken about the issue before, at a June speech by Ben Bernanke, we can surmise that it was similar. Back then, he said –
- Banks passed 2 stress tests with “flying colours”
- Many successful improvements that have been made since the financial crisis
- And now there are going to be even higher capital requirements, and we know there are 300 rules coming.
- Has anyone bothered to study the cumulative effect of the regulations authorities are about to impose?
- Dimon predicts they will be the reason that it will take so long our banks, our credit, our businesses, and most importantly, our job creation, to start going again
Basically: regulations kill growth. Imposing them during a crisis might curtail a recovery.
Dimon confronted Carney during a small meeting at this weekend’s IMF conference in D.C., in front of around 30 bank officers.
Now the fight is ON. Two days later, Carney hinted publicly that Dimon’s speech had no effect on his opinion.
“Carney delivered a speech to global bankers at the Institute of International Finance, warning them “it is hard to see how backsliding [on implementing new capital rules] would help” the global economy.
“If some institutions feel pressure today, it is because they have done too little for too long, rather than because they are being asked to do too much, too soon.”
“Authorities are increasingly hearing concerns about the pitch of the playing field for Basel III implementation. Everyone is claiming to be a boy scout while accusing others of juvenile delinquency.”
“However, neither merit badges nor detentions will be self-selected but, rather, determined by impartial peer review and mutual oversight.”
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