Jamie Dimon, America's most celebrated banker, heaped criticism on regulators and politicians during a high-profile visit to the nation's capital Wednesday, warning that overregulation is inhibiting business and that political stalemates threaten the economy.
The chief executive officer and chairman of JPMorgan Chase spoke before the Council on Foreign Relations, denying he has any interest in becoming Treasury secretary but sounding exactly like a man who wanted the job. One example: He sympathized with critics who complain that no major Wall Street actor has gone to jail for the financial crisis.
"I do think the American public feels there was no Old Testament judgment. They saw banks bailed out and people making all that money," said Dimon, 56, adding that "it pisses me off too."
But Dimon, self-identified as a Democrat, said that's not an excuse to punish the entire sector. He was particularly scornful of a civil suit brought Oct. 2 against his bank by New York's attorney general and supported by the Obama administration. That suit seeks damages for alleged misdeeds by Bear Stearns, the failed investment bank that regulators asked Dimon to purchase in March 2008 to save the financial system from a meltdown.
Asked whether he'd make the purchase again with help of the Federal Reserve, Dimon snarled the acquisition has cost his bank as much as $10 billion and that he was the one offering the helping hand.
"No, we did them a favor. Let's get this one exactly right," he snapped, adding it'd be difficult to do it again if asked. "It's real close, it's really close. My board wouldn't allow me."
The nation's most prominent banker warned lawmakers to make a deal on the debt and deficits soon, noting that they risk crisis in not getting both under control.
"I can't honestly tell you I know it's going to be two years or five years, but it will happen," he said, adding it "is a matter of time and the United States can't borrow indefinitely."
Dimon said he understands the need for regulation in the wake of crisis.
"But I think government should think twice before it punishes businesses every time something goes wrong," he said, looking past the scale of what went wrong in the run up to the worst financial crisis since the Great Depression.
Dimon repeated that he supports much of what's in the Dodd-Frank Act, the sweeping 2010 revamp of financial regulation that was a response to the crisis, but he took issue with some of its most important provisions. One is regulatory requirements to keep more capital on hand to respond to future crises, which he argued crimps lending and investment.
Bert Ely agreed. He's a prominent banking researcher who feels the tougher capital requirements on banks will build up so-called shadow banks that lend but aren't technically banks.
"In fact it is going to be a problem, and they're ignoring it," said Ely, noting that unregulated non-bank lenders were a big part of what brought on the financial crisis.
Many of the thorniest issues in the Dodd-Frank Act remain in the rule-making phase, and Dimon alleged regulators are acting with a heavy hand.
"I think regulation should be formed and designed with practitioners too. At one point it's just got to be a dialogue, not people going into a dark room and deciding," he said.
Those comments were at odds with reality. Much of Dodd-Frank left it to the regulators to determine how to write and implement the law, and Dimon himself noted that there were 18,000 comments filed in response to a proposal in the law called the Volcker Rule. That suggests perhaps too much consultation.
Named after its proponent, former Federal Reserve Chairman Paul Volcker, the rule seeks to split off commercial banking activities from the investment activities of banks.
Lobbying disclosure reports show JPMorgan Chase has worked to influence rule-making on the Dodd-Frank Act.
Repeating a controversial public challenge of Federal Reserve Chairman Ben Bernanke, Dimon said the cumulative effects of financial regulation are hurting the economy.
"I'm convinced that Ben Bernanke Jr. will (someday) write a book that says it could have been a lot better," said Dimon.
Dimon supported calls for an end to taxation of foreign profits, saying U.S. tax laws drive companies overseas and keep them from returning their profits.
"That is not immoral, folks. That is economics," the CEO said, adding that he is fine with going back to Clinton-era tax brackets if the corporate tax system is fixed.
Dimon said he supports a "more equitable" society, as long as it doesn't "mess up the economic engine that made it all possible."
Famous for a "fortress balance sheet" that allowed his bank to weather the financial crisis, Dimon shook off criticism of the infamous $5 billion losing bet earlier this year by a JPMorgan Chase trader nicknamed the London Whale.
The company "had a gap, we screwed up, and by the way, that quarter we made $5 billion. . . . It isn't going to sink our ship, we have $150 billion in capital," Dimon boasted. "If an airplane crashes, should we stop flying all airplanes? . . . Only when I come to Washington do people act like making a mistake should never happen."
By Kevin G. Hall
McClatchy Newspapers