New international bank capital rules are “anti-American” and the US should consider pulling out of the Basel group of global regulators, Jamie Dimon, chief executive of JPMorgan Chase, has said.
In an interview with the Financial Times, Mr Dimon said he was supportive of forcing banks to have more capital but argued that moves to impose an additional charge on the largest global banks went too far, particularly for American banks
The Basel III capital rules are designed to make the financial system safer by making banks build up risk-absorbent “core tier one” capital to at least 7 percent of risk-weighted assets. The biggest, including JPMorgan, have to reach 9.5 percent.
“I’m very close to thinking the United States shouldn’t be in Basel any more. I would not have agreed to rules that are blatantly anti-American,” he said. “Our regulators should go there and say: ‘If it’s not in the interests of the United States, we’re not doing it’.”
Mr Dimon also criticised global liquidity rules, arguing that regulations that viewed covered bonds – a European market feature – as highly liquid but discounted government-backed mortgage-backed securities in the US were unfair and that other details hit investment banking activity core to US banks hardest.
Regulators say all countries compromised on agreeing the rules, which put eight banks – five from outside the US – in the top level of capital. But Mr Dimon said there was a threat that Asian banks, in particular, could take US market share because of the combination of US domestic and global rules.
“I think any American president, secretary of Treasury, regulator or other leader would want strong, healthy global financial firms and not think that somehow we should give up that position in the world and that would be good for your country,” said Mr Dimon. “If they think that’s good for the country then we have a different view on how the economy operates, how the world operates.”
US banks are struggling to deal with new regulations and litigation, both stemming from the financial crisis. Mr Dimon said it could be “three to 10 years” before the industry emerged from lawsuits brought by investors looking for compensation for the losses incurred on structured products underpinned by bad mortgages.
He said he was ready to agree a settlement over lax servicing and foreclosure standards that is expected to see the industry pay $20 billion in penalties. But he said banks could not be placed in “double jeopardy” and needed an appropriate release from legal liability