HuffPO: Jamie Dimon Worries that Financial Regulation Will DOOM banking forever

Yesterday, Jamie Dimon, CEO of Banking giant J.P. Morgan Chase and arguably the most influential person on Wall St said in a public interview that he believes Financial Regulation will kill the financial sector.  While he has great support for his argument, he has major incentive surrounding anti-regulatory measures.  Less regulation means that JP Morgan will, in fact, make more money, Dimon will be thought of as more powerful and more successful and much more wealthy than he is now.  However, the financial services industry will most likely need to change their practices if there comes a time when the government pushes more regulation.

In 2007, the 70-1 leveraged bank ($70 in debt per $1 in capital), was engaged in risky operations.  A lack of regulation allowed JP Morgan to be leveraged so high and gave them incentive to conduct high risk proprietary trading operations (trading on the banks behalf).  This behavior, was a major reason why the unemployment rate in our country is at its highest level in twenty years and the economy is struggling for growth. 

The Interviewer of Dimon issued the following post on his blog

“Jamie Dimon, chief executive of JPMorgan Chase, launched a broadside against financial regulation on Wednesday, warning that new capital rules could be “the nail in our coffin for big American banks.” …Restrictions on debit card fees charged to retailers are also coming under attack in Congress….”It basically penalises us for having debit cards,” he said. “I think it was very unfairly done in the middle of the night with no facts and analysis whatsoever. This is not the way legislation should be done.”

It is in no way unfair when the financial sector is still, undoubtly engaged in risky transactions because it gives them higher paychecks.  Due to that the risk is not fully on them, Bankers and traders working for leveraged banks have the opportunity to make millions of dollars while no downside exists.  Regulation needs to curb this because the financial industry has become a “money” monopoly.  They have created anti-competative nature on capital the way that a monopoly creates anti-competative industry.  I think Dimon, while extremely intellgent, has way to much incentive to be credible in any anti-regulation argument.

GOP Challanges Dodd-Frank Bill in sight of next Election

Last week Senate Republican leaders said that they will support attempts to overrun the “Dodd-Frank” act that was pitched in 2010 and voted into place.  Republicans argue that the plan is ineffective and was only accepted because there was nothing better.  While the Dodd-Frank act does not cover every thing, it has the abillity to mold to future situations.  Since the bill was instated there have already been at least ten major changes.  Because of this, I do not find it to be ineffective but rather incomplete. 

It is obvious that the Republicans are using the Dodd-Frank act as leverage for their next presidential election.  I agree that the Dodd-Frank needs help and is yet complete, however a new bill is not necessary.  The demise of the DF act and the instatement of a new bill will not only be costly, but the cost will be unnecessary.  Its funny because today, Republican GOP announced a budget where spending is 170mil less than Obama’s proposal.  I think the 170 million would be FULLY swept up by a repeal of the Dodd-Frank and the instatement of a new act.