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"I am altering the deal. Pray I don't alter it any further."
September 26, 2011 5:01 am
Jamie Dimon of JPMorgan Chase launched a tirade at Mark Carney, Bank of Canada governor, in a closed-door meeting in front of more than two dozen bankers and finance officials, underscoring mounting tensions between bankers and officials over financial regulation.
The JPMorgan chief executive’s remarks to Mr Carney, who is touted as a potential next head of the Financial Stability Forum, the international group of regulators, were focused on a capital surcharge for the largest banks, according to several people who attended the meeting of about 30 bank chiefs.
The atmosphere was so bad after the meeting that Lloyd Blankfein, chief executive of Goldman Sachs and head of the Financial Services Forum bankers’ group which arranged the session, emailed the central banker to try to smooth relations, people familiar with the matter said.
On Sunday, 48 hours after the contretemps, Mr Carney delivered a speech to global bankers at the Institute of International Finance, warning them “it is hard to see how backsliding [on implementing new capital rules] would help” the global economy.
“If some institutions feel pressure today, it is because they have done too little for too long, rather than because they are being asked to do too much, too soon,” he said.
Mr Dimon told Mr Carney that many of the rules discriminated against US banks and he was going to continue to use the phrase “anti-American”, first used in a Financial Times interview this month, because it seemed to resonate with people who might be able to modify the reforms.
In his speech, Mr Carney said: “Authorities are increasingly hearing concerns about the pitch of the playing field for Basel III implementation. Everyone is claiming to be a boy scout while accusing others of juvenile delinquency.”
He added: “However, neither merit badges nor detentions will be self-selected but, rather, determined by impartial peer review and mutual oversight.”
The rules agreed by the Basel group of international regulators force all banks to hold 7 per cent core capital against risk-weighted assets. The biggest face an additional surcharge of up to 2.5 per cent.
In his FT interview, Mr Dimon said the surcharge was unnecessary and the way capital and liquidity were calculated for the new standards – for example discounting mortgage servicing rights that are a common feature in the US – discriminated against American groups.
Regulators have more sympathy with banks’ concerns that activity will migrate to the unregulated “shadow” banking sector.
Mr Carney said shadow banking was “at least as large as the regulated sector…[but] often unregulated and/or overseen by authorities without a systemic focus. This should change.”
A JPMorgan executive declined to comment on Mr Dimon’s tirade at Mr Carney. The Bank of Canada confirmed that Mr Carney met chief executives but declined to comment on the episode with Mr Dimon. “We continue to engage in constructive dialogue with a range of stakeholders both domestic and international,” he said.
The JPMorgan chief executive’s remarks to Mr Carney, who is touted as a potential next head of the Financial Stability Forum, the international group of regulators, were focused on a capital surcharge for the largest banks, according to several people who attended the meeting of about 30 bank chiefs.
The atmosphere was so bad after the meeting that Lloyd Blankfein, chief executive of Goldman Sachs and head of the Financial Services Forum bankers’ group which arranged the session, emailed the central banker to try to smooth relations, people familiar with the matter said.
On Sunday, 48 hours after the contretemps, Mr Carney delivered a speech to global bankers at the Institute of International Finance, warning them “it is hard to see how backsliding [on implementing new capital rules] would help” the global economy.
“If some institutions feel pressure today, it is because they have done too little for too long, rather than because they are being asked to do too much, too soon,” he said.
Mr Dimon told Mr Carney that many of the rules discriminated against US banks and he was going to continue to use the phrase “anti-American”, first used in a Financial Times interview this month, because it seemed to resonate with people who might be able to modify the reforms.
In his speech, Mr Carney said: “Authorities are increasingly hearing concerns about the pitch of the playing field for Basel III implementation. Everyone is claiming to be a boy scout while accusing others of juvenile delinquency.”
He added: “However, neither merit badges nor detentions will be self-selected but, rather, determined by impartial peer review and mutual oversight.”
The rules agreed by the Basel group of international regulators force all banks to hold 7 per cent core capital against risk-weighted assets. The biggest face an additional surcharge of up to 2.5 per cent.
In his FT interview, Mr Dimon said the surcharge was unnecessary and the way capital and liquidity were calculated for the new standards – for example discounting mortgage servicing rights that are a common feature in the US – discriminated against American groups.
Regulators have more sympathy with banks’ concerns that activity will migrate to the unregulated “shadow” banking sector.
Mr Carney said shadow banking was “at least as large as the regulated sector…[but] often unregulated and/or overseen by authorities without a systemic focus. This should change.”
A JPMorgan executive declined to comment on Mr Dimon’s tirade at Mr Carney. The Bank of Canada confirmed that Mr Carney met chief executives but declined to comment on the episode with Mr Dimon. “We continue to engage in constructive dialogue with a range of stakeholders both domestic and international,” he said.
Thursday, September 29, 2011 at 9:04AM
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