JPMorgan Chase Fires Back At Warren-McCain Plan To Reinstate Glass-Steagall

This, I think, is a story to follow. It isn’t going away, and neither I think is Elizabeth Warren. ~J

by Mark Gongloff
Huffington Post
Posted: 07/12/2013 1:17 pm EDT
Updated: 07/12/2013 5:32 pm EDT

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Shocking news: JPMorgan Chase is not exactly jazzed about some recent plans to regulate banks, including Elizabeth Warren and John McCain’s bill to reinstate the Glass-Steagall law splitting investment and commercial banks.

Even more shocking: JPMorgan seems to think it will probably be able to water down or avoid these plans.

In a Friday conference call to discuss the bank’s second-quarter profits, an analyst asked whether the Warren-McCain bill to reinstate the Depression-era Glass-Steagall law would hurt business at the biggest U.S. bank by assets.

JPMorgan’s chief financial officer, Marianne Lake, dismissed the whole idea.

“Glass-Steagall didn’t have anything to do with the crisis,” Lake said, “and our business model allowed us to be a port in the storm. Our customers like doing business with us in the model we have now, so …” She trailed off, took a long pause, and then added: “We don’t spend time thinking about that.”

In another not-exactly-stunning development, JPMorgan CEO and Chairman Jamie Dimon grumbled just a bit about new rules proposed by U.S. regulators this week limiting how much risk big U.S. banks will be allowed to take on. Specifically, he grumbled about how those rules are stricter than proposed global rules, and how that gap could make U.S. banks less competitive.

“If you have a world where some businesses have to have two times as much capital as other companies, over time that can create a huge competitive disadvantage,” Dimon said. “We have interest in a safe and sound system, but not for a hugely imbalanced competitive playing field.”

But Dimon also suggested that regulators are aware of these discrepancies and are trying to “harmonize” their efforts — and who doesn’t love harmony, especially when it makes it easier for banks to get more leveraged and dangerous?

Similarly, Lake suggested there were “fundamental issues” with proposed new rules limiting banks’ riskiness and forcing them to seek out more capital. She suggested that regulators seem to be willing to consider having mercy on the banks and loosening up some of those fetters.

What is ironic is that the new capital and leverage proposals don’t seem to create all that much of a hardship for banks, at least not for JPMorgan — as DealBreaker’s Matt Levine points out, the bank admits that about the worst that might happen is that it will not be able to shovel cash out the door to shareholders quite as quickly as it had hoped. Not exactly the econopocalypse bank flaks are predicting.

Anyway, seeing regulators back down on these rules would hardly be shocking. We have already seen aggressive bank lobbyists water down, muddle and delay implementation of the Dodd-Frank financial reform law. JPMorgan alone spent $8 million last year lobbying on financial reform and other issues, according to the Center for Responsive Politics.

As for the Glass-Steagall revival, the consensus on Wall Street and in Washington is that it stands pretty much no chance of becoming law. JPMorgan argues that its own size and complexity is super-attractive to customers, and that argument will probably win the day. The competing argument — that the country enjoyed decades of relative financial calm after the segregation of bank activities after the Great Depression, and that it fell into a financial crisis not long after the removal of those safeguards — is not taken seriously.

For what it’s worth, Former Rep. Barney Frank — the Frank in Dodd-Frank — basically agreed with JPMorgan’s Lake about Glass-Steagall, telling CNBC on Friday that he didn’t think reinstating the law was nearly as important to the safety of the financial system as reforming the trade of the credit derivatives that nearly helped bring down that system the last time. And of course JPMorgan is lobbying hard on that issue, too.

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5 Responses to JPMorgan Chase Fires Back At Warren-McCain Plan To Reinstate Glass-Steagall

  1. Kanga Moo says:

    I like Elizabeth Warren what a Champion she is….She callls a spade a spade not a “Shovel”… She is on for this fight to Legislate to protect people WORLDWIDE from These Organised Giant Criminal Financial Behemoths [ Commonly referred to as BANKS ] These Thieving Financial Monsters that contol our lives everyday in everyway…Elizabeth won’t give up or lay down, you can bet on it… You can see it in her eyes… …..Unlike the Thieving Criminal Scumbags at JP Morgan especially Jamie Dimon….The Guy is a Slimy Snake…who only employs other snakes… All those snakes combined control the Main Stream Media…Like the CNBCs Greasey Brown-nosers.. Joe…Maria…Becky…and hundreds of others to spread the good word about JP Morgan… Goldman Sachs..CitiBank…HSBC…and many other Criminal Financial Monsters….May God Bless her and keep her safe…This is the Biggest Move that can be made to bring about an honest worthwhile FUTURE OF HOPE for us…our children & our childrens children….Bravo Elizabeth and all who support you….What can we do to help you…???

  2. kibitzer3 says:

    Discussion on rearranging the deck chairs on the Titanic comes to mind…

  3. Clara says:

    “We have interest in a safe and sound system, but not for a hugely imbalanced competitive playing field.”

    Yup, they’ve certainly have shown us how safe and sound they have been. If the Glass-Stegall doesn’t pass we know who our politicians really work for. Time to take our money out and start our own citizens banks if our country chooses not to protect us.

  4. Tigrr says:

    JP Morgan Chase is part of the Carlyle Group – which includes the Bushs. All NY State ( maybe other ) unemployment benefits get handled through Chase. Seems with each transaction Chase gets a fee handling governmet accounts. Follow the money, find the rats.

  5. janetfduhon says:

    Yeah, Chase Bank doesn’t want Stegall-glass act back because then they couldn’t steal millions from the people anymore. Trust me…their plan is to fail and do a bail in like they pulled on Cyprus.
    Hedgefunds , Derivatives and Elite would get paid first with FDIC AND the regular
    depositors would lose all their money. Stay on this.Its VERY IMPORTANT that the Glass/Stegall act get reinstated. Peaprincess

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