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JPMorgan Chase & Co.
JPM,
Chief Executive Jamie Dimon says proposed capital requirements for banks would make small-business loans more expensive and make it harder for people with lower credit scores to get mortgages.
Also, the economic issues cited in a closely-watched downgrade of U.S. debt by Fitch Ratings have already been widely seen by investors and reflected in financial markets, he said Wednesday in an interview with CNBC.
Also read: Fitch cuts U.S. credit rating: Here’s what you need to know
Dimon remains more worried about geopolitical uncertainty around the war in Ukraine as well as efforts by the U.S. Federal Reserve to fight inflation by hiking interest rates and reducing its balance sheet in a policy known as quantitative tightening.
Dimon told CNBC it’s “ridiculous” that the U.S. has a lower debt rating than countries such as Canada that benefit from the U.S.’s military umbrella.
“This is the most prosperous nation on the planet…with the best military, the best economy,” Dimon said. “It should be the highest-rated credit in the world.”
The downgrade from Fitch Ratings “doesn’t really matter than much” because the markets decide the value of U.S. debt and other securities, not the ratings agencies, he said.
The debt ceiling should be abolished because it’s used as a political tool by both parties and eliminating it would create more stability in the economy, Dimon said.
Dimon held up a chart to the TV camera showing the myriad, interlocking federal agencies that enforce hundreds of rules on banks and said the U.S. consumer would probably be better off if banks faced fewer requirements.
“There’s a lack of transparency [of rules] made by lot of people in ivory towers,” he said. “They’ve never been in the real world. I’d like to see them in the boxing ring.”
Dimon cited a 1992 letter to the Wall Street Journal by onetime presidential candidate and U.S. Sen. George McGovern entitled, “A Politician’s Dream is a Businessman’s Nightmare” on the realities of running a small inn.
Dimon’s comments came after the Federal Reserve and the FDIC proposed higher capital requirements for banks.
Regulators need to spend more time “recalibrating” rules to make them less burdensome instead of issuing new regulations, he said.
Dimon reiterated recent comments about the health of the U.S. economy and said U.S. consumers continue to spend.
He supports a doubling of the earned income-tax credit as a way to help low- and moderate-income families.
Asked if he would care to shape public policy, Dimon said “No,” but added that banks and other businesses should promote measures to help the economy.
JPMorgan Chase and other companies have to be prepared for multiple outcomes in the economy including higher inflation or the 10-year Treasury note
TY00,
reaching a 5% yield, he said, adding he has “enormous respect” for Fed Chair Jerome Powell.
Dimon praised the recent acquisition of PacWest Bancorp
PACW,
by Banc of California
BANC,
and said the regional-bank crisis is over.
JPMorgan Chase could pay more than $2 billion to the FDIC to replenish its insurance fund after the collapse of Silicon Valley Bank. Bank of America Corp.
BAC,
and Wells Fargo & Co.
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have said they will pay a combined $3.7 billion, he said.
While further consolidation between banks is possible in the sector, JPMorgan Chase has no immediate plans to buy another bank as it absorbs its acquisition of First Republic Bank, as announced on May 1, he said.
The interview marked Dimon’s return to the bully pulpit after the bank’s second-quarter profit beat expectations on July 14 when he said the U.S. consumer remains in “good shape.”
Dimon also told The Economist on July 11 that he didn’t agree with all of the Biden administration’s economic policies.
Also read: Jamie Dimon says U.S. consumers are in ‘good shape.’ Evidence says he’s wrong.
Hedge-fund manager Bill Ackman last month repeated his call for Dimon to run for president, but so far Dimon has said he has no plans to do do.
Also Read: JPMorgan CEO Jamie Dimon sees ‘a lot of underlying inflation,’ rates at 6% in a recession
