Monday, September 26, 2011

Jamie Dimon Now Trying to Beat Up on Heads of Central Banks

Jamie Dimon Now Trying to Beat Up on Heads of Central Banks from Naked Capitalism

We’ve mentioned in older posts that Dimon’s history as a bully goes back at least to business school. Former section mates report that even by Harvard Business School standards, Dimon was a standout in the aggression category.

Readers may also recall that Dimon’s latest effort to get out of having international capital standards imposed on JP Morgan was to call them “anti-American”. It appears that, for a big bank, “American” = “not having to obey any rules”.

We did point out that since foreign markets are, well, foreign, it wasn’t exactly reasonable to expect everyone abroad to roll over and do things US style, particularly since one of our major exports was the US way of doing capital markets, plus a boatload of toxic securities, which in combination produced a global financial crisis.

But Dimon apparently got so much reinforcement in the US on his “anti-American” line that he has tried taking it on the road. His first browbeating object was Mark Carney, the governor of the Bank of Canada. Dimon appears to have been going on the “my dick economy is bigger than yours” basis of argumentation, no doubt assuming that because Canada is a smaller economy that is attached at the hip to the US, of course he would be able to get his way.

What Dimon seems to have forgotten is that Canada got accolades during the crisis precisely because its banks came through the crisis is very good shape, and that is because they are more heavily regulated than US banks, particularly with regard to entering new markets and creating new products. In addition, a foreign private company browbeating a public official, particularly on close to indefensible grounds, is guaranteed to boost his stature at home. Finally, Carney is ex Goldman, and so has likely seen tricks like Dimon’s in spades over his career and is therefore not easily cowed.

I was amused at Dimon’s abuse merely stiffening Carney’s resolve. From the Financial Times:

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…

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.”

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