Business leader Dimon calls for action against regulators and large retailers, stating it's time to stand up and resist
Jamie Dimon, the CEO of JPMorgan Chase, voiced his concerns about ongoing regulatory actions during a keynote speech at the American Bankers Association (ABA) convention in New York City.
Dimon questioned whether regulators intend to drive a significant portion of mortgages, lending, and payments out of banks, expressing doubt about their understanding of the risks they might be creating on the other side. He also criticized regulatory efforts related to capital requirements and open banking.
One of the main points of contention is the Consumer Financial Protection Bureau's (CFPB) Open Banking Rule, which grants Americans the right to link their bank accounts with third-party platforms. However, this rule faces legal challenges from major banks, including JPMorgan, and no specific publication date for the final rule is provided in the available information.
Industry trade groups such as the ABA, the Financial Services Forum, and the Bank Policy Institute are coordinating to attack perceived problems with the rule, with the BPI, Kentucky Bankers Association, and Lexington, Kentucky-based Forcht Bank filing a lawsuit last week challenging the CFPB's open banking rule. CFPB Director Rohit Chopra has defended the rule, stating that the industry hasn't read it thoroughly.
Dimon stated that banks are suing regulators due to unfair and unjust actions, and he expressed frustration with Regulation II, the Fed's proposal to reduce debit card interchange fees. He also flagged liability over data security as a top concern regarding open banking, suggesting that legislation and enforcement may be needed to assign third-party responsibility.
Dimon believes that if you're in a "knife fight," you better bring a knife, implying that litigation might be necessary. He also expressed concern about the movement of banking activity outside the banking system, particularly in shadow banks and nonbanks, which aren't subject to the same requirements.
The CEO also lamented increased scrutiny for banks trying to pursue mergers or acquisitions. He described the regulatory environment for banks as an "onslaught." Despite recent regulatory activity, measures on resolution and stress testing didn't prevent the collapse of Silicon Valley Bank, according to Dimon.
In a Q&A session with ABA CEO Rob Nichols, topics such as artificial intelligence, fraud, and geopolitics were covered. Dimon wants regulators to step back and assess why and consider what can be done to improve the system to avoid bank failures causing "complete hysteria" in the banking system.
Dimon stated that the industry will fight and win the lawsuit regarding the open banking rule. He also suggested reconsidering deposit insurance or liquidity access as potential improvements. Dimon bemoaned the response to the industry's reaction to the open banking rule, stating that regulators should respond to what has actually been said instead of dismissing it as complaints.
In a surprising revelation, Dimon mentioned that he has been told by people at the Federal Reserve that they are coming after him due to his comments and writings. Despite these challenges, Dimon emphasised that banks have to "constantly up our own game" in beating back fraud, but the moral hazard of being responsible for every payment knowingly sent is extraordinary.
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