Dimon Says US Banks Should Dictate to Regulators « naked capitalism

Dimon Says US Banks Should Dictate to Regulators « naked capitalism

Now that Steve Jobs has retired from Apple, Jamie Dimon seems determined to assume his role as the CEO with the most effective reality distortion sphere. You can infer that from the magnitude of the whoppers he is telling and the size of the audience he is trying to bamboozle.
But while Jobs’ Svengali tendencies have gotten more than occasional mention, they weren’t a major failing. Jobs not only saved Apple, but he spearheaded the development of important new product categories. By contrast, Dimon has long been a bully, a smart and capable bully, but a bully nevertheless (I have reports going back to his first year at Harvard Business School, and it takes some doing to be memorably obnoxious by dint of the competition in that category).
Now on the surface, Dimon’s latest brazen remark isn’t quite as gross as my headline suggests. He is merely saying that US banks should not be subject to the new incoming international bank rules, known as Basel III. That might seem to be a narrower statement, but as we show, when you parse his logic, it amounts to banking uber alles.
Here is the relevant section of an interview published today in the Financial Times:

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….
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 per cent of risk-weighted assets. The biggest, including JPMorgan, have to reach 9.5 per cent.
“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.”

Let’s start with some background. Treasury secretary Geithner said repeatedly during the Dodd Frank process that the shortcomings in the legislation didn’t matter all that much, since having banks carry larger capital buffers would do the trick, and that was coming with Basel III. In other words, Geithner argued the higher capital requirements to be imposed by international rulemaking process was where the critical banking regulatory fix would happen. And this is what Dimon is now, loudly, out to undermine.
Let’s go to the Dimon argument, such as it is. What about “international” does he not understand? If you want to play outside America’s borders, you can expect to be subject to different rules. The Eurozone, much to the consternation of US and UK players, has basically told the Anglo private equity firms to go to hell. They are forbidden both from doing deals in EU countries and from raising funds there unless they register and obey local rules. The Eurozone has gotten sick of rapacious foreign players buying decent European companies, cutting jobs, saddling them with lots of debt, and shrugging their shoulders when they miscalculate (often) and the rent extraction kills the company. The EU rules, among other things, will restrict how much a PE firm could lever up a portfolio company.

 http://www.nakedcapitalism.com/2011/09/dimon-says-us-banks-should-dictate-to-regulators.html

Bank of America hit hard

Here is a story from MSN money that talks about today's market collapse and some reasons why Bank of America went down so hard. 

Why Bank of America tankedBank of America was the biggest loser among Dow and S&P 500 stocks, down 20.3% to $6.51. Investors worried the banking giant won't be able to handle all the problems created by its mortgage business. The selling accelerated after a big hedge-fund manager sold out his stake.

It's not clear if the collapse today of Bank of America's stock price means the government may be forced to extend assistance again. Most of its problems are mortgage-related and directly the result of its disastrous 2008 acquisition of Countrywide Financial.

It was hit with two bits of bad news today: American International Group (AIG) sued the company for more than $10 billion over what it called a "massive fraud" on mortgage debt, deepening the litigation morass facing the largest U.S. bank.

AIG said it expects to pursue other litigation to recover losses from counterparties that "sought to profit at our expense." Taxpayers still own 77% of AIG, which received $182.3 billion of government bailouts.

The other was that hedge-fund manager David Tepper, who won big in 2009 betting on battered bank shares, now is bailing out on some battered bank shares.


CNBC said Tepper’s Appaloosa Management sold its position in the banking company.











Make big money in penny stocks today

Obama says time to buy!

I saw some tape of President Obama on Bloomberg today and he said it was time to buy. I wonder home much of that nice $400,000 salary he is putting in the market without hedging his investment. Granted he doesn't have to worry much about living expenses for the next four years (at a minimum, could be more of course). I think the administration is perplexed by the meltdown on Wall since they have taken over the office. Yes of course I have heard every excuse in the book about inherited this and previous administration that and that its going to get worse before it gets better. However, it seems the Obama plan hasn't been as well received as they expected on January 20, 2009. There is plenty of skepticism among investors that they might not even have a plan to put in to play. Evidently most investors were hoping for more from this "dream team" that is now the lead dog. I still say that the press did far too much to promote the idea of change and did far to little to uncover the "stimulus" that would fuel such a change in tone and result in Washington.

I agree that it is early and the Obama Administration has had to take a big bite out of this problem. The issues now seems to be that we all agree there is a lot to be done and that the has downward momentum but the political rhetoric used to get elected may be causing a slight back lash. I hope they find the right solutions sooner rather than later. We all need that to happen as soon as possible regardless of our party affiliation. The catch 22 with building high expectations with lofty goals all based on "change" is that when it is your turn, people expect extraordinary results. You can not fault someone for aiming high but at times a little forward progress with tempered expectations might go a long way. (running the country is no easy task....certainly would could all agree with that premise.)

But the past 5 or 6 weeks might shed some light on just how difficult the situation is and that the Obama camp is trying everything it can to right the economy. It is time people realize that the previous administration was on the same program. Maybe that way every one can stop blaming the ghosts of the past and start focusing on solving the issues at hand.

Lets hope we all end up on the same page that moves the country forward sooner instead of later.