Dimon warns of bank ‘nail in coffin’

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”.

Regulators are negotiating international capital standards for the biggest banks but Mr Dimon said setting the new requirements too high, or allowing overseas banks to calculate their asset base differently, could disadvantage US banks and was already stifling economic growth.

“If you want to set it so high that no big bank ever goes bankrupt … I think that would greatly diminish growth,” he told a US Chamber of Commerce conference. Too large a disparity in capital requirements between Europe and the US would mean “you’re pretty much putting the nail in our coffin for big American banks,” he said.

Urging regulators to make a quick decision, he said the uncertainty meant banks were already restricting their lending, nervous of the “anger and the shrillness – and Switzerland says it’s got to be 19 per cent and people in the UK say it’s got to be 15 per cent.”

“If you think that’s helping growth, it’s not,” Mr Dimon said, adding that a 7 per cent capital ratio would be adequate.

Mr Dimon’s comments come as Wall Street executives and Republican members of Congress are starting to attack regulation as anger at the financial industry subsides. On Tuesday, Alan Greenspan, the former Federal Reserve chairman, wrote in the Financial Times that the Dodd-Frank financial reforms risked creating “the largest regulatory-induced market distortion since America’s ill-fated imposition of wage and price controls in 1971”.

Spencer Bachus, the Republican chairman of the House financial services committee, has said that regulators are there to “serve” the banks and warned the Treasury not to hurt Goldman Sachs’ shareholders when it writes new rules implementing Dodd-Frank.

Restrictions on debit card fees charged to retailers are also coming under attack in Congress. John Tester, Democratic senator from Montana, has closed in on the 60 votes he needs to overturn the rule. He was supported on Wednesday by Mr Dimon who called it “basic price fixing at its worst”.

“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.”

Attacking another aspect of Dodd-Frank, Mr Dimon said rules requiring companies to put up collateral as they trade derivatives would “damage America”. Gesturing at the chief executive of Caterpillar, Mr Dimon predicted the industrial company would take its derivatives business to Singapore.

He said the new law had failed to improve the regulatory architecture. “We had a system of too many regulators, too much overlap and too many gaps. Instead of simplifying and strengthening, we added more. It’s even more complicated now.”

Separately, Mr Dimon said that he did not expect a rash of defaults of municipality debt but did say that “maybe 100” could default. “It’s not going to shatter America,” he said.