Robert Reich: Jamie Dimon’s Bizarre Idea About Why The Recovery Has Stalled

[ProSense]

Jamie Dimon’s Bizarre Idea About Why The Recovery Has Stalled

<...>

At a financial conference today, Dimon told Fed chief Ben Bernanke there’s no longer any reason to crack down on Wall Street. “Most of the bad actors are gone,” he said. “ff-balance-sheet businesses are virtually obliterated, … money market funds are far more transparent” and “most very exotic derivatives are gone.”

Dimon said he worried that financial reform legislation is “holding us back at this point” from a stronger economy.

Someone should remind Dimon that a few years ago, before any stricter regulation or oversight went into effect, he and his colleagues on the Street almost eviscerated the American economy. Remember, Jamie? The Street’s antics required a giant taxpayer-funded bailout.

<...>

Off budget businesses obliterated? Funds more transparent? Exotic derivatives gone? Dimon still doesn’t get it. The only reason there’s been any progress at all to date is because rules have been tightened and regulators are more vigilant. But at this very moment the banks — including JPMorgan Chase — are lobbying heavily to relax the rules so they can return to their old ways.

more

[Andy823]

1. Typical

Wall street tries to blame it all on "regulation reform", and they are doing their best to make sure the economy isn't moving so they can use the reform as "blackmail" to get "LESS" reform! These peope make me sick! They got bailed out with taxpayer money, they are sitting on "TRILLIONS" right now and they have the nerve to try and blame everything on to much regulation! :puke:

It's time they pay their fair share, and time they are forced to OBEY the regulations so we don't go through the same economic crisis that the Bush gang got us into, and that we are still trying to get out of!

[ladjf]

2. Dr. Reich is doing a wonderful job of trying to keep Americans

informed about how they are being screwed by the wealthy manipulators. nt

[FSogol]

3. K & R. n/t

[dkf]

4. Reich missed the main point of what Dimon was saying...

The Basel 3 accord which could change reserve requirements, is keeping banks from lending by making them unsure of how much capital they need.

It seems like a legit point to me.

Sometimes I wonder if people like Reich are listening properly.

[ProSense]

5. So you're

agreeing with Dimon on the basis of Basel III?

If that's Dimon's concern it's bullshit!

[dkf]

7. Well we've been wondering why the banks aren't lending.

I was also informed that our own requirements have changed where preferred trust shares are no longer eligible for tier 1 capital. This is being phased in over several years.

There are still a lot of things going on with banks balance sheets.

[ProSense]

9. We've

also been wondering why gas prices are going up.

The notion that regulations and requirements to protect investments and prevent a financial crisis are responsible for Dimon and other bankers' response to Dodd-Frank is ludicrous.

The regulations that were enforced before they were repealed over the last couple of decades didn't prevent banks from being profitable. Repealing those regulations led to the worse economic crisis in more than 70 years.

Banks are not strapped for cash, and are finding ways even in the face of regulatory reform to bilk consumers.

"There are still a lot of things going on with banks balance sheets."

Yes, and the biggest things are profits and bonuses, which were still climbing to record highs in 2010.

[dkf]

11. Raising Reserve requirements are one way to tighten lending.

Keeping things uncertain limits lending.

Has Reich never gotten on the banks case about not lending enough?

[ProSense]

12. Well,

"Keeping things uncertain limits lending."

...it's time to make things certain. Dimon and his buddies can stop trying to weaken the legislation, allow the regulators to do their jobs and complete the rulemaking process, and enact strong regulations to cut down on abuses by Dimon and his buddies.

Certainty, delivered.

[dkf]

13. Then that limits lending and we should stop complaining about the cash they are holding.

Really Obama should have gotten the govt into small business lending in a big way. But they declined to do so and leave the banks in limbo and then they complain. It's counter productive.

[ProSense]

14. "Really Obama should have gotten the govt into small business lending in a big way."

Wait, why have banks?

Maybe the banks should be nationalized. Problem solved!

[dkf]

15. Like Fannie and Freddie? Forget it.

Govt isn't very good at monitoring risks either and the deep pockets give it an aura of invincibility.

[ProSense]

16. "Govt isn't very good at monitoring risks"

Yet you want the government to become the primary source of small business lending.

Got any other GOP talking points: Agreeing with Dimon's claim that regulations are bad, attacking Fannie and Freddie (which were OK until deregulation got to them, thank Dimon and his buddies), and criticizing government for not being effective.

[dkf]

19. Actually I was thinking of turning the small business loan thing into more of an

Expense. It would have been a better use of stimulus dollars.

[muriel_volestrangler]

6. Can you show us anything saying this is about uncertain reserve requirements?

Here's another report:

Dimon blames financial reform for stifling growth. He gave the Fed Chairman a laundry list of ways regulators have already cracked down on the banking system, after the Dodd-Frank financial reforms were passed last year. "Most of the bad actors are gone," "off-balance-sheet businesses are virtually obliterated," "money market funds are far more transparent" and "most very exotic derivatives are gone," he said.

Dimon, who is known for his vocal opposition of many of the Dodd-Frank reforms, said he fears those reforms may be hindering, rather than helping, the recovery.

"Has anyone bothered to study the cumulative effect of all these things?" he asked Bernanke. "Is this holding us back at this point?"

http://finance.yahoo.com/news/Jamie-Dimon-questions-cnnm-1875358383.html?x=0&.v=2

That seems to say Reich was right about Dimon's complaints.

[dkf]

10. Here's What Jamie Dimon Is Really Worried About

http://m.cnbc.com/us_news/43325105

In either case, it seems that what provoked Dimon were recent signals from a Fed governor that the largest banks might face an additional capital surcharge, above and beyond the new capital and liquidity requirements agreed to last year in Basel.

At Basel, regulators agreed to more than double the minimum common equity requirement for banks to 4.5 percent from 2 percent, with an added liquidity buffer of 2.5 percent. That means banks will have to have total risk reserves of 7% of weighted assets. Regulators did not reach a consensus on proposals for an additional buffer—or "surcharge"— for "systemically important financial institutions"—which is regulator speak for Too Big To Fail.

In a speech last week, Fed Governor Daniel Tarullo said additional capital requirements are needed to prevent systemwide financial instability that could be caused by the failure of one of the world’s biggest or most interconnected banks. Tarullo, who is the Fed's point man on bank regulation reform, said the Fed was considering capital requirements that could amount to between 20 percent to more than 100 percent over the Basel III requirements.

There’s a growing consensus the regulators will likely propose a uniform surcharge of 3 percent on the biggest banks. Another alternative would be to have a sliding scale surcharge that would grow with the size of the bank. Some have suggested a surcharge that could be moved counter-cyclically, requiring more capital in good times and allowing banks to operate with thinner capital when the economy needs more lending.

[muriel_volestrangler]

17. That's just one commentator's guess as to his real worry

There's video of the question here: http://www.businessinsider.com/video-jamie-dimon-ben-bernanke-2011-6

Dimon gives no indication this is mainly about capital requirements. Reich is commenting on what was actually said. I think he listened just fine.

[golfguru]

8. Bailout of BIG Wall Street banks was a clusterf--k of taxpayers

The banks got bailed out, but they did not bailout mortgage seekers and mortgage holders. The bailout benefited only the banks, mainly the big shots there.

That bailout money would have been much better spent on direct help to home owners, business loan seekers and such.

The depositors were already covered by FDIC. Other, more efficient banks would have taken over the failing banks and most bank employees would still have their jobs. The big shots were the only one to lose their jobs and high salaries.

[Dawson Leery]

18. The banks must be required to hold more capital on hand

and they are required by law to pay into a fund that will be used to wind down their operations should they fail.