US set to relax rules for banks – too big to fail problem solved

Jamie Dimon, the CEO of JP Morgan Chase has come out in support of Donald Trump’s move to relax financial regulations, saying that the slew of new rules put in place since the crisis has essentially “solved” the problem of banks being “too big to fail”.

US set to relax rules for banks – too big to fail problem solved

In Dimon’s annual letter to shareholders, the chairman and chief executive argued that the big US banks have “dramatically” boosted capital, liquidity and risk controls in recent years, while taking a series of steps to ensure they could be safely wound down without burdening the taxpayer – according to an article in the FT.

As a result, he wrote, it was time to take a good look at ways to alleviate the regulatory burden on the big banks, which have been labouring under a regime which “is unnecessarily complex, costly and sometimes confusing”.

Dodd-Frank and other laws should not be thrown out entirely, Mr Dimon wrote, but it was “appropriate to open up the rule book in the light of day” and “rework” parts of it that did not work as well as they could.

“Regulations must be flexible enough to allow banks to act as a bulwark against [market panics], rather than forcing financial institutions into a defensive crouch that will only make things worse,” he said. The remarks are in tune with the new Republican administration, which has promised to make life a little easier for the big US banks by reviewing the thicket of rules and regulations that were put in place under President Barack Obama.

In one of his first acts after moving into the White House in January, Mr Trump ordered financial regulatory agencies to report back within a few months on measures to lighten the regulatory load — a pledge the president echoed on Tuesday, at a gathering of chief executives in Washington, by promising “a major haircut” on regulation.

Mr Dimon has long been the most outspoken of the big bank chiefs, often using his shareholder letter as a way of challenging the regulatory architecture put in place since the 2008 crisis.

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