Jamie Dimon Says Enough Is Enough

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Jamie Dimon says financial regulators have forgotten a key lesson most people learn in grade school: When you point one finger at someone, there’s three more pointing back at you.

In an interview with Bloomberg, the JPMorgan Chase CEO said that in their zeal for stamping out the banking crises, policymakers could be setting the country up for future disasters.

Who’s to Blame? What’s his Name?

Of course, the recent regional bank failures can’t be blamed solely on the likes of Fed Chair Jerome Powell. Silicon Valley Bank, Signature Bank, and First Republic Bank — the last of which JPMorgan purchased — all had poor risk management, meaning they were giving out plenty of loans that ended up defaulting. Also, the banks had insufficient cash on hand to pay their own debts once depositors started withdrawing in droves and running to bigger financial institutions.

Dimon gets all this, but he thinks it’s ridiculous that the Fed, the Office of the Comptroller of Currency, and the Federal Deposit Insurance Corporation are so surprised that banks are failing when interest rates have gone up 10 times in just over a year, now sitting between 5% and 5.25%.

“I think there needs to be humility on the part of regulators,’’ Dimon told Bloomberg. “They should look at it and say, ‘OK, we were a little bit a part of the problem’ as opposed to just pointing fingers.’’

  • While Dimon believes the regional banking industry is “quite strong” and the US is nearing the end of this dark tunnel, the country isn’t out of the woods just yet and regulators need to be smarter so this doesn’t occur again. He said stricter compliance rules and lackluster stress tests are not the way to avoid collapses. “If you overdo certain rules, requirements, regulations — there are some of these community banks that tell me they have more compliance people than loan officers,’’ he said.
  • The Beverly Hills-based PacWest Bank is expected to be the next lender to fall. Last week, its share price plummeted more than 50% in just one day. Again, it’s a situation where panicky depositors are taking out their cash and moving it elsewhere, a result the bank blamed on apocalyptic headlines. Though down but not out, PacWest is considering a sale, Bloomberg reported.

SVB and Signature Bank depositors have already been refunded by the government, which means those funds have dried up. On Thursday, the FDIC decided that more than 100 of the country’s largest banks should be on the hook for refilling roughly $16 billion in deposit coffers. The funds will be drawn only from lenders with more than $50 billion of assets as they benefited the most from recent backstops.

You Don’t Like Me. You Really Don’t Like Me: Powell never said getting the economy back on track was going to be easy, but years of economic struggle at the pump, grocery store, bank, and real estate market has many Americans losing confidence in the Georgetown alumnus. A recent Gallup poll found that only 36% of citizens think he’s handling the economic crises well, and 28% said they had almost no confidence in him. It’s the lowest confidence rating Gallup has recorded for any Fed Chair since it started asking the question in 2001 when Alan Greenspan led the central banking system.