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Jamie Dimon (JPM) challenges Bernanke after today's speech: "Has anyone bothered to study the...

Jamie Dimon (JPM) challenges Bernanke after today's speech: "Has anyone bothered to study the cumulative effect of all these [regulations]" - that it could be the reason it's taking so long for credit and jobs to come back? Bernanke essentially says no: "it's just too complicated. We don't have quantitative tools to do that... There is going to be some trade-off here."
Comments (79)
  • 7footMoose
    , contributor
    Comments (2266) | Send Message
     
    Well Ben don't you think it is about time this Administration looked at the potential impact of these laws they are passing before they load more onto the already faltering economy? This ladies and gentlemen is a problem with academicians, it worked in the classroom so it must work in the real world, bunk.
    7 Jun 2011, 06:21 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    Keynesian spending didn't work. Spend more.

     

    That didn't work. Spend even more.

     

    Krugman will then say that didn't work, spend more.

     

    Meanwhile, the economy will rot like a fish from the head down.
    7 Jun 2011, 06:29 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    Jamie Dimon having a tantrum, he should know he is speaking to the Honorable Ben Bernanke....

     

    By the way, Ben Bernanke knows that the banking industry needs more regulation, in fact he supports it......and that's why Dimon was bitter today...
    7 Jun 2011, 06:30 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    Dimon was having a tantrum. Just like when mom is taking away the Kool-Aid

     

    No more POMO trading for you young man, you have had quite enough.

     

    www.thestreet.com/stor...

     

    Time to contribute to the economy and provide long term, sustainable value to your shareholders.

     

    Want to trade? Quit, go start a hedge fund and put your own personal capital at risk, like a real man.
    7 Jun 2011, 06:48 PM Reply Like
  • drekon
    , contributor
    Comments (180) | Send Message
     
    what regulations do we need specifically?
    7 Jun 2011, 06:48 PM Reply Like
  • LuckyPick
    , contributor
    Comments (740) | Send Message
     
    i wonder if Brian Moynihan will throw tantrum just like Dimon
    i am guessing maybe not simply because BofA still feeding on POMO milk
    7 Jun 2011, 08:16 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    Lucky.

     

    Moynihan, unlike Dimon, is not one of the " Chosen " cronies.

     

    BAC sucks!
    7 Jun 2011, 08:29 PM Reply Like
  • WMARKW
    , contributor
    Comments (10221) | Send Message
     
    Reinstate Glass Stegall !
    7 Jun 2011, 10:29 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Ya Think????
    8 Jun 2011, 02:33 PM Reply Like
  • Yokyok
    , contributor
    Comments (325) | Send Message
     
    gee and why do we need regulations?
    because the banks are run like organized crime operations?
    could that be it?
    7 Jun 2011, 06:31 PM Reply Like
  • drekon
    , contributor
    Comments (180) | Send Message
     
    nice bumper sticker. what regulations are helping? what is in Dodd-Frank? how has it helped?
    7 Jun 2011, 06:49 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Not exactly. If it was run by organized crime there would be some serious accountability. Actually, that's the kind of accountability I'd like to see.
    8 Jun 2011, 02:35 PM Reply Like
  • User 487974
    , contributor
    Comments (1105) | Send Message
     
    Yeah, way to go Mr. Dimon! This is the single greatest theft of American treasure in history!
    Bernanke is not to be trusted. His word has dropped in stature. There is no one single banker/ central banker alive right now with the true sense of "God and Country" to save our sinking ship! No moral rectitude, no shame. Look at Anthony Wiener, resign man with what little respect you still have!
    The major threat we face as a country comes from within. This socialist/progressive nightmare must come to an end.
    Jerry
    7 Jun 2011, 06:37 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Geez Jerry you almost had it right, but, your last sentence invalidated everything you said. It should have read" This NOT SO FISCALLY CONSERSERVATE nightmare must come to an end.
    8 Jun 2011, 02:38 PM Reply Like
  • montanamark
    , contributor
    Comments (1434) | Send Message
     
    whining baby bankers. let them make a living doing real work - on their own w/o taxpayers back stopping them. parasites
    7 Jun 2011, 07:01 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    To hear most of the people here, the taxpayer that wants a few crumbs from the table after paying for them all their lives, like adequate healthcare, and SS are the parasites. Indeed, I've been called a selfish "Baby Boomer".
    8 Jun 2011, 02:40 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Are we to then conclude that the state of affairs that lead to the near collapse in 2007/8 for the US and global financial system (as state of affairs in which Jamie Dimon was intimately associated) is the necessary price of financial capitalism (a fact therefore that we all mere mortals should suck up and accept for the future)? What do the Jamie Dimon of this world really have to offer as viable reforms to
    (a) allow the private sector financial industry to perform its legitimate function of distributing capital efficiently and effectively to optimize economic productivity in society,
    (b) restrain the over-concentration of banking functions in too few banks and near banks and the creation of too much debt unsupported by real productive assets, and
    (c) promote the timely reorganization, breaking up into smaller units or winding up of banks and near banks that are failing or have grown so large as to threaten objectives (a) and (b) above?
    7 Jun 2011, 07:07 PM Reply Like
  • realornot
    , contributor
    Comments (1281) | Send Message
     
    Trouble is govn regulates the banks ... banks regulate us by imposing hefty fees, zero rate pay out for savings and limit our borrowing credit with them.
    7 Jun 2011, 07:13 PM Reply Like
  • Tom Armistead
    , contributor
    Comments (5164) | Send Message
     
    I was listening when Dimon asked his question. He prefaced it with a speech in which he gave a version of what was wrong and how it's all been fixed and doesn't matter anymore, his own viewpoint of the financial crisis and its causes and consequences. It was distorted in favor of big banks, and totally inappropriate.

     

    What he chose to gloss over was the total lack of prudential regulation that preceded the financial crisis. The repeal of Glass-Steagall, the exemption from regulation accorded to CDS by CFMA, the scheme where JPM, MS, GS, C, Bear Stearns and Lehman were regulated by the SEC as CSEs, they reported their risk profile once a month, based on their own opinion, and that was their supervision.

     

    If JPM and other members of the Financial Services industry had called off their lobbyists with their checkbooks and sat down with COngress and come up with something simple and straightforward, it could have been as easy as restoring Glass-Steagall and making CDS and other deriviatives subject to regulation as insurance, with a requirement of insurable interest on the part of the buyer and adequate capital on the part of the seller, then Dodd-Frank would have been one tenth of its current size, and very effective.

     

    Instead, the lobbyists connived with Congress to make the whole thing so unwiedly that no-one can or will enforce it. That was the whole point, sabotage by lobbying for complexity, which they have achieved, in spades.

     

    None of this brings us any closer to a day when the banks are restricted to their legitimate functions as financial intermediaries. Instead, they tax the real economy with derivatives, manipulation and speculation.

     

    I would ask Diman, has anyone in the banking industry sat down and done an honest analysis of their contribution to the financial crisis?
    7 Jun 2011, 07:23 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    Tom,

     

    Good comment, Thumbs up to ya!
    7 Jun 2011, 07:36 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Tom, your analysis of this is remarkable. But, what is also remarkable is the utility of this approach across many of our problems. And its always big money and big interests that use this tactic. Healthcare for instance. Lobbyists descended on healthcare and made it so convoluted no one likes it. It could have been much simpler and much more affordable. The ploy is, if you don't want something, make sure you give it to the citizenry in such a way as to make it ultimately unsuccessful, unaffordable, and makes government look bad.
    7 Jun 2011, 08:04 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Tom:

     

    You are hopelessly biased although you thread some truths through your narrative. And you talk about banks as one large homogeneous industry.
    7 Jun 2011, 08:35 PM Reply Like
  • apberusdisvet
    , contributor
    Comments (2851) | Send Message
     
    The Bernanke Reality Show summarized for the uninitiated:

     

    They listened politely to just another thief, in a long line of thieves dating back to 1913, as he explained how he would continue the crimes that would destroy America. A key question from one of his criminal cartel members begged for removal of whatever constraints were left so that the unfettered pillage and rape could continue.
    7 Jun 2011, 07:35 PM Reply Like
  • Jolly_Rancher
    , contributor
    Comments (545) | Send Message
     
    I'm as big a banker-basher as anyone, but requiring them to keep a higher percentage of lower performing assets will cause them to take more risk with the assets they are allowed to play with. They have already proved that they are willing to jeopardize their jobs, their banks, and our economy for a few hundred million extra in bonuses. Will this 3% really change that equation, especially since almost none paid the price by losing his job. I think the answer is to either nationalize the banks, or remove every government regulation and open up competition, even to foreign banks, and let there be no more bailouts. I'd seriously consider putting my money in a Canadian bank.
    7 Jun 2011, 07:48 PM Reply Like
  • realornot
    , contributor
    Comments (1281) | Send Message
     
    "Jamie Dimon" someone mis-wrote his name Demon instead yesterday. Mr. Dimon should be happy when Fed loaned them so much play money to make billions and lined their pockets with.
    Now QE2 is winding down, they are complaining.
    7 Jun 2011, 07:57 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    If I am Jamie Dimon, I will keep my mouth shut and worry about JP Morgan. Government will not like somebody from bank giving advise after rescuing them.
    7 Jun 2011, 07:57 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    Tigerscam,

     

    You nearly made an intelligent comment for the first time ever.

     

    Only thing is the Fed is not the US gov't, just a banking Cartel.
    7 Jun 2011, 08:18 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    You mean I still have time to get smart. I decided not to say anything bad to you no matter how ill comments you make towards me. Every time I say something bad to you my whole day goes bad.
    8 Jun 2011, 11:04 AM Reply Like
  • LuckyPick
    , contributor
    Comments (740) | Send Message
     
    lol i smell sour plums
    just joking!
    8 Jun 2011, 11:10 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    I seen this exchange and it was not hostile. Jamie clicked down through a myriad of things that have changed or are completely gone since the mortgage industry melted down including a lot of players that are gone and then posed the question does anyone really know what the effect of all this unknown regulation is having and will have on the economy? Bernanke said nobody knows because there are no models available to use in this analysis.

     

    This is very similair to the situation in 2008 when the Fed was thinking everything was OK and funds were available so credit drying up was not even remotely on their mind. They could not see what was happening on the street between businesses as they were pulling back and not lending to each other. We almost had a complete meltdown because of all this high level ivory tower analysis.

     

    Unfortunately we are going from one extreme to another it seems. No regulation then overregulation.

     

    Stepping back from this point it is worth noting that hating banks is like hating your carotid artery. They are a conduit for capital formation and if you bang on them or run roughshod over their legal agreements then they don't work so well. If our banking system does not work well then forget about growth.

     

    This is a different arguement than if one believes that banks should be broken up. Whether we have smaller banks or bigger banks we need the system to work well which means all the uncertainty needs to go away with respect to regulation.
    7 Jun 2011, 08:33 PM Reply Like
  • Joe Morgan
    , contributor
    Comments (1500) | Send Message
     
    Tomas, you are spot on, I agree we need to regulate, but we cannot overextend ourselves, we need to reach a medium in which banks can sustain another crisis without taxpayers money and credit can flow freely to boost growth...

     

    Having said that, banks are under intense scrutiny because of the serious
    mistakes they made and they deserve some criticism.

     

    We need to reach an equilibrium....
    7 Jun 2011, 09:03 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Joe

     

    The most abusive banks are gone with the exception of Citibank. AIG is not even a bank but they were the biggest basket case.

     

    People are behaving like irrational children. We are beating the horses that are still in the barn and the horses that created the offense are down the road or in the grave.
    7 Jun 2011, 10:32 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Good. The ones still in the barn will be less likely to do stupid SH!+. Beat em' some more.
    8 Jun 2011, 02:48 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Mon

     

    when I read your comment dumb ass comes to mind
    8 Jun 2011, 07:31 PM Reply Like
  • T in Az
    , contributor
    Comments (35) | Send Message
     
    Reinstate Glass-Steagall, Problem solved. Why was it repealed anyway?
    7 Jun 2011, 09:04 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    T in AZ

     

    You would have to ask Bob Rubin (C) down 80+% by the way, along with Bill Clinton.

     

    But we all know it is Bush and Cheney's fault, Right Terry 330?
    7 Jun 2011, 09:12 PM Reply Like
  • AnchorMan
    , contributor
    Comments (115) | Send Message
     
    bush, cheney, clinton, rubin, in the end it was a republicans fault, so what difference does it make?? (yes, clinton was a republican, never understood why the repubs hated him, he did everything they wanted and more, even more than reagan was willing to do)
    7 Jun 2011, 09:29 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    Anchorman,

     

    That is funny.

     

    True, Repubs hated Clinton and he gave them everything.
    Meanwhile GWB never vetoed a single spending bill for about his first 7 yrs in office, and the Dems hated him too, LOL
    7 Jun 2011, 09:35 PM Reply Like
  • Jolly_Rancher
    , contributor
    Comments (545) | Send Message
     
    Clinton nominated liberal bench and appointed liberal watchdog agency heads. Clinton supported right to choose. Clinton supported unions nominally despite giving them the shaft with NAFTA. THAT is the huge difference. Believe it not, Republicans do have to pretend to worry about their base sometime rather than only take the payoff from big business.
    7 Jun 2011, 09:47 PM Reply Like
  • WMARKW
    , contributor
    Comments (10221) | Send Message
     
    Don't forget Mr. Summers
    7 Jun 2011, 10:34 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Hate to tell you, I want to blame the Republicans for this more than anyone, but, can't in good conscience do it. But, to blame it on the Dems is just as disingenuous. They are both equally complicit as far as I can tell. That's what really pisses me off.
    8 Jun 2011, 02:53 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    You are absolutely right. Clinton out Republican-ed the Republicans. I never have understood why they hated him so much. I guess it was because he stole all their tricks.

     

    It really pisses people off when you steal their scams.
    8 Jun 2011, 02:55 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    Clinton was forced to smell the glove.

     

    Newt made him sniff it with the GOP majority, BJ didn't have 'a choice', but re-write it however you want so that you can sleep at night. Sound good?
    8 Jun 2011, 03:13 PM Reply Like
  • Jason Rines (iThinkBig)
    , contributor
    Comments (2231) | Send Message
     
    Oh come now 1980XLS. She isn't even on the thread to defend her Marxist ideology.
    8 Jun 2011, 04:28 PM Reply Like
  • valueinvestor123
    , contributor
    Comments (327) | Send Message
     
    I have a way to solve Jaime's problem. Let's just go back to Glass Steagall and call it even on everything else.
    7 Jun 2011, 09:21 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    Valueinvestor123,
    If one was a long term investor in Citi, it would take quite a bit for one to call it even.

     

    Bob Rubin, Chuck Prince, are you listening?
    7 Jun 2011, 09:26 PM Reply Like
  • WMARKW
    , contributor
    Comments (10221) | Send Message
     
    Elitists don't listen! It's against their nature.
    9 Jun 2011, 12:06 AM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    The following set out two comments I posted to SA articles about 18 months ago. I repeat them now because
    (a) I continue to believe they are relevant, and
    (b) revisiting those proposals now illustrates how little necessary reform has been achieved to date.

     

    The first dealt with the oligopolistic nature of US investment banking and was as follows:

     

    We face in the US investment banking industry an oligopolistic situation, one that existed prior to 2007 and has only grown as a result of the consolidations beginning around 2008. While a persuasive argument can be made that the reflation needed following the 2008 meltdown required the further consolidations as a short term measure, now is the time that serious regulatory and structural reform of the industry needs serious and concerted attention. It would be tragic if matters were simply allowed to ride and the unstable bubble economy of around 2005 re-emerged with its mirage of false and unstable prosperity; the next crash would be grim and the capacity of the monetary and fiscal authorities to respond productively then to the crisis impaired by the failure to follow up their recent expensive but necessary reflation measures with vitally required reform of the banking sector.

     

    Looking back at the trust busting actions of Theodore Roosevelt and William Howard Taft and to the creation of the ‘Baby Bells’ in 1984 through the legislated breakup of AT&T, it can be seen that restructuring of oligopolistic sectors is not foreign to US practice. Is it not time to consider concerted efforts of an analogous nature in the US banking industry?

     

    My second earlier comment addressed the structure of US private sector banking more broadly and read as follows:

     

    The debate about creation of a better structural and regulatory framework for the operation of the US banking sector through legislation or other means continues with some beginning to argue that periodic risk of financial collapse is a necessary adjunct to freedom and the very success of that sector over time and others arguing for reinforcement of that framework. Others continue to advocate reform and are becoming frustrated with the slow and tepid pace of current efforts in that direction. The opening premise for a meaningful debate must be that the US banking sector is very complex and that there therefore will be many interlocking facets to its needed modernization.

     

    The very size, diversity and world wide scope of the US banking and related investment services industry make the structural, governance and regulatory requirements of the US banking system unique. This uniqueness extends to the array of measures that recent history shows must be in place in order that this industry can be safe, dynamic and serve the diverse requirements of its domestic and international cliental. Re-enacting the essence of Glass-Steagall or a Volcker Rule was therefore a necessary but not a sufficient reform. It remains to be seen whether the recently enacted legislative package will be sufficient in that regard. The following are a few further thoughts about what the framework of reform for the US banking system.

     

    Arguably the key points that must be appreciated in envisaging the framework of reformed banks are that:
    1. The focus of investment banking is properly on accepting and managing risk of a nature and extent that is very different than what is acceptable for other, properly “boring”, banking functions.
    2. Globalization and information technology have increased both
    (a) the possibility that unforeseen risk in investment banking will arise, and
    (b) the means for its better management.
    3. In the modern world the pre-eminent global investment banking centres (New York, London, Zürich etc.) are comprised of investment banks, hedged funds and other shadow banks and ‘near banks’ and insurance bodies to back-stop investment banking and it is often difficult and unnecessary to distinguish banks, hedged funds etc. dedicated to investment banking from each other by role or function and therefore the new investment banking framework needs to cover them all.
    4. It follows that the reformed investment banking system needs to be segregated from the system for boring banking and the global dimension of investment banking must be accommodated in the reformed investment banking system.

     

    Arguing from the perspective of those seeking a better structural and regulatory framework for the US banking sector, the following changes are suggested:
    1. Segregate ‘boring banking’ from investment banking by creating and implementing a modern version of Glass-Steagall or Volcker Rule of sufficient force and effect.
    2. This need for segregation need not forbid a ‘boring’ bank from engaging to a limited extent in an investment banking activity but must preclude it from doing so to a degree that changes the risk profile of the bank as a whole. Further, consolidation to weed out the ‘too small to survive’ banks at a reasonable pace and without creation undue regional or national concentration of ‘boring’ commercial banking should be encouraged.
    3. The objective should be that investors in investment banks should not be protected by public financed depositor insurance and insurance for investment banks and their satellite institutions should be obtainable through the private and not public sector. By contrast, boring banks, being in many ways like public utilities, should continue to be subject to public insurance, including that for deposits.
    4. A regulatory and governance framework broadly analogous to those in Canada and Australia should be created for boring banks.
    5. A regulatory and governance framework for the banks, hedged funds, shadow banks and other ‘near banks’ dedicated to investment banking and for insurance bodies that back-stop investment banking needs to be devised and implemented through cooperative and coordinated efforts, where possible in a timely manner, among the nations that are the primary centres of global investment banking.
    6. Because the actual demarcation line between investment and boring banking is somewhat arbitrary this line should be defined arbitrarily by the new modern version of the Glass-Steagall Act.
    7. Given the nature and extent of risk involved, the terms of the new the regulatory and governance framework for investment banking must reflect the fact that if a bank, hedged fund or other near bank dedicated to investment banking or one of their insurers becomes insolvent this can not be allowed to endanger the solvency or ongoing functioning of the system generally. The allowed size, governance, capitalization, regulation, allowable risk exposure etc. for participants in investment banking must therefore be crafted to reflect this need.
    8. While it would be preferable if the banks and near banks etc, themselves split and reorganized voluntarily to transition into the new Glass-Steagall Act regime and the size limits envisage above, in light of the current insolvency of many of them absent the current support from the US authorities it would be appropriate and advisable to employ the current and new legislation and the capacity to bring FDIC proceedings to achieve restructuring expeditiously if needed.

     

    Reform of the framework within which the debt rating agencies operate is also a key element of the general reform edifice just proposed. At minimum, these agencies must not be rating debt under the guise of objective independence when they are, in fact, preparing and publishing reports on behalf of debt issuing clients.

     

    Obviously there are further issues of internal governance, external oversight, political lobbying etc. not discussed above but the intent is simply to outline the framework for banking reform broadly for discussion purposes.
    7 Jun 2011, 09:54 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Bob

     

    War and Peace has nothing on you.

     

    The simple point of the matter is that mortgages are what almost brought the entire world face down in the gutter. Not fancy Wall Street instruments although there were plenty of them in play but a simple loan to somebody who wanted to buy a house. If all the credit in mortgages was good nothing else would have mattered. You can package whatever you want however you want and it would not matter because the underlying securities would perform. Conversely if the credit is bad nothing can save the system from signficant loss and that is with or without packaging and reselling.

     

    It is impossible to build a sound financial system with or without regulation or securitization if the credit standards are bad. Bad credit will always lead to the same ending no matter what else is done. If regulators would have insisted on 20% down on all mortgages we would have never seen any of these problems. Even 10% would have helped immensely.

     

    Everything else is a sideshow. Maybe worth discussing and exploring and provides intellectual stimulation but a sideshow.
    7 Jun 2011, 10:44 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Tomas -

     

    Guilty as charged. It was a very long comment!

     

    Turning to your point about residential mortgages extended to people unlikely to have the capacity to pay, the real engine of that credit bubble (and of the analogous bubble in consumer debt generally) over the decade or more preceding 2007 was the fact that these resulting debt instruments could be bundled and securitized, collateralize and ensured on a very negligent but highly profitable basis for both the commercial and investment banking industries (until, of course, the house of cards collapsed).. The growth in the money supply generated by the private banking and shadow banking industry before 2007 represented over 14 trillion dollars in assumed value. Since the 2007/8 meltdown of confidence in the backing of that assumed value we have been forced to deal with the various aspects of the impact of this credit void.
    7 Jun 2011, 11:24 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Bob

     

    Still a sideshow to bad loan underwriting. We could have kept debt levels the same or even brought them down but if we drop underwriting standards then get ready to see the financial system fall apart.
    7 Jun 2011, 11:30 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Tomas -

     

    You have to ask the question, however, why the practice of 'bad loan underwriting' persisted and actually accelerated within the banking industry during the years before 2007. I would argue that the incentive for this very destructive trend was as I tried to summarize in my earlier comment.
    7 Jun 2011, 11:38 PM Reply Like
  • Jason Rines (iThinkBig)
    , contributor
    Comments (2231) | Send Message
     
    The outline is brilliant. But I cannot support the Federal Reserve in 2013 when its charter comes up for renewal. It was their job to pull the punchbowl away. Those educated know what happened instead. Making the American people backstop $9T in counterpary swap fees in a global market most Americans don't even play in?!?

     

    The other debt of spending beyond means and current bank bonusing ia $5T.

     

    Sorry gentleman you need a "time out". Right idea Chairman Bernanke to evolve and bring Democracy to Central Banking but your out of time. Should have given the finger to your mentor Alan Greenspan sooner.
    8 Jun 2011, 11:37 AM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    Well, I think you are absolutely right. The problem with this is if the banks require 10 or 20 % down and good credit they will be accused of not giving enough credit and slowing the recovery.

     

    Its a similar situation with the regulations Jamie complained about. I'd rather have a regulated, slower, stable, rational recovery than one based on the same BS that got us here in the first place.
    8 Jun 2011, 03:05 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    You mean you're against CRA, HUD and FHA's? You sound like Bush when he confronted Barney Frank in '05. The left told people like you to shut up and stop being so mean.

     

    Back then it 'wasn't fair' if everyone couldn't buy a house.

     

    So now you're fully converted to reality, eh?
    8 Jun 2011, 03:15 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Monngie -

     

    I agree with you that "I'd rather have a regulated, slower, stable, rational recovery than one based on the same BS that got us here in the first place". The goal shouldn't be to try to micromanage through excessive regulatory oversight the day to day conduct of investment and commercial banking but rather, even at the cost of curtailing some areas of profitable activity (like the derivative market) and the size and areas of practice of particular types of banks and shadow banks (i.e. a modern version of Glass-Steagall) the capacity of individual banks and near banks to upend the financial system as was almost the case during 2007/8.
    8 Jun 2011, 05:48 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Bob

     

    So what is your rationale for the S&L crisis of the early 80's?

     

    Environmental factors and players change but bad credit sinks an economy like a stone.
    9 Jun 2011, 12:31 AM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Tomas –

     

    I’m a Canadian and don’t pretend to have a detailed knowledge of the US S&L crisis of the early 1980s. That said, the standard explanation rings true (i.e. The foundation of that crisis was set by earlier changes to the regulatory regime allowing these Thrifts to loan money for a much larger range of commercial activities but with few if any constraints. Lax and even criminal lending practices ensued. Uneconomic housing and other development took place but after a short boom these investments tanked etc. The Government was left to clean up the economic mess)

     

    Obviously there are some parallels to the current US banking crisis but in assessing these parallels it is important to appreciate that there are a series of phases to financial crises like these and that the policy role of government shifts at each phase. Clearly if government never unduly loosened the rules that requiring S&Ls to be soundly managed within a sound business plan (or, more recently, removed the constraints associated with the Glass-Steagall Act etc.) the foundation of these crises would not have been set. Likewise, as evidence of bad practices arose, the regulatory agencies should have both applied what powers they possessed and also alerted the executive and legislative arms of government to the need to enhance regulatory oversight of the industry before these bad practices had a chance to do their damage. Later, as the crises broke and meltdown occurred (because earlier remedial measures just described did not occur), governments and central banks are left the sticky task of preventing damage to the general economy, stabilizing the financial industry and reforming the regulatory system so that the crisis in question will end and not recur.

     

    I would argue that we are now in that last phase related to the 2007/8 meltdown and, while a good case can be made that more fiscal and monetary restraint during the two decades before 2007 would have materially helped prevent the bubble economy within which the excesses of the investment and commercial banks and their shadow bank affiliates ran amuck, at the current recovery and reform phase the need is for moderate fiscal stimulus and monetary easing to continue until the financial industry is reformed and it and the general recovery have progressed sufficiently to allow governments and central banks to repair their own balance sheets.

     

    In short, there are different roles that governments and central banks need to stress at different phases of the business cycle and great harm can occur if these roles are emphasized out of order.
    9 Jun 2011, 11:07 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Bob

     

    The sophisticated approach you outline presupposes we have the institutional intelligence year over year to understand and execute the plan. We don't have it and it changes based on who is in power and all kinds of other variables. Never mind every agency would hire unlimited PHD's to analyze it and build huge staff around it which would be hugely expensive and they would fail and then come back and ask for more funding. So we need to keep it simple.

     

    The choke point for all these issues is the credit underwriting standards. If we have good credit underwriting it does not matter if rates are high or low or if there is or is not securitization or a Dem in the WH or a Rep. All that washes away.

     

    The execution of the policy is at the lender which the regulatory bodies audit every year and the GSE's that guarantee over 90% of the loans. No 20% down means no mortgage loan. Anyone that cannot put 20% down does not have the capital reserves to own a house. PERIOD.
    9 Jun 2011, 02:01 PM Reply Like
  • bob adamson
    , contributor
    Comments (4555) | Send Message
     
    Tomas –

     

    I don’t in any way disagree with you insofar as you are saying that at all times credit must be extended to borrowers only on a basis upon which it is reasonable to assume that these borrowers will be able to honour their debt obligations.

     

    It is equally important, however, that
    (a) credit be available on reasonable terms to ensure that the economy develops productively and that all individuals have fair access to develop and enjoy their individual economic and social capacities, and
    (b) public and private sector institutions exist and function adequately to ensure the extension of credit on the liberal, sound and productive basis I’ve just tried to describe.

     

    In other words, for any one of these three aspects to function adequately, the other two must function adequately as well. They can not be viewed in isolation one from the other in my view.

     

    9 Jun 2011, 03:00 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Bob

     

    Here is why I have a different approach than what you suggest. You are taken up with analyzing the structure of the industry and the players and looking at optimal structures that diminishes risk, etc. What I am looking at is the health of the industry overall and integrity of the economy. I truly believe that you cannot build walls between these players when they are all operating in the same ecosystem. And by they way there are no large IB's left in the US which is an interesting issue as they all took on bank charters.

     

    But anyways if an IB under the old structure was going long on securities they were funding those purchases with loans from "boring" banks or Mutual Funds or rich investors. If they securitized bad underwriting and sold the securities they were bought by banks, funds, etc. The connections are already in place and are not going away.

     

    Bad mortgage underwriting is the root of all this evil and it cannot be fenced off by any constructs because the market is so immense and the underlying paper is held in all corners of the investment market. And our government is guaranteeing 90% plus which means the taxpayer already owns the downside.

     

    So you have to focus on the quality of the paper and not the players that come and go and may change legal charters and who knows what else. Home loans must be made to people with excellent credit and the ability to put down 20%. If not then rent and save.

     

    Everything else in my opinion is too smart by half.

     

    This is not a concern in credit card loans and other small loans because they are smaller and the banks reserve actively against those loans.
    9 Jun 2011, 08:18 PM Reply Like
  • EMS
    , contributor
    Comments (550) | Send Message
     
    Through Turbo Timmy, Jamie has all of the inside information that he needs to make a lot money at nearly all times. Per chance 90 % of the days actively trading. The info from TT makes it all work, and they have the info at the volatile turning points (be they be up or down). So what Jamie D. says to anyone in public, or even to Mr. Bernanke is irrelevant, it is amusing, thats all.
    7 Jun 2011, 10:08 PM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    Mr Dimon should focus more on returns to shareholders instead of how regulation affects his bonus payouts. During his tenure while he has personally enriched himself, his shareholders have earned about 2% annually including dividends. While he can claim that those returns are better than the other horribly run big banks, how can the board justify approving these massive salary and bonus levels when the shareholders have earned a rate of return far below inflation ?
    7 Jun 2011, 10:20 PM Reply Like
  • LuckyPick
    , contributor
    Comments (740) | Send Message
     
    well said
    as an investor, i would likely avoid JPM and look into Canadian banks like TD which offers a much better dividend payout
    7 Jun 2011, 10:26 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Ken

     

    Jamie bought most of the stock he has in JP with his own money. He gets an OK pay package relative to other CEO's.

     

    Question on performance should be relative to peers over the past 10 years.
    7 Jun 2011, 10:46 PM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    Yes...but he bought it at greatly reduced option strikes. Come one you know better than to try and fool the members here. That's called compensation...he made more on his shares because he could buy them for less than any other retail investor.
    8 Jun 2011, 07:10 AM Reply Like
  • 1980XLS
    , contributor
    Comments (3310) | Send Message
     
    Ken,

     

    Thank you,

     

    I have brought up the subject you mention several times
    only to be accused od "Bank Bashing'

     

    We have a serious corporate governance issue in many sectors, not just the Banks.

     

    When JPM is "Best in Breed" there most certainly is a problem.
    The fact that Jeff Immelt is still at the Helm at GE means there is a BIG problem.

     

    These CEO's and their Crony boards need to be held accountable, for enriching themsevles while returning absolutely nothing to shareholders for 10 year periods, while during the same time their compensation has risen near tenfold.
    8 Jun 2011, 07:33 AM Reply Like
  • Ken Hasner
    , contributor
    Comments (427) | Send Message
     
    The thing I simply cannot figure out is as an investor, why institutional managers would have held on to JPM shares (or any large bank for that matter) when returns are to put it plainly.....crap. I know guys like Bruce Berkowitz try to buy them at cycle bottoms and make a killing (latest attempt is not working out yet) but many managers have this POS as a core holding.

     

    There are simply so many better places to put your money. I guess I have a bigger problem with the JPM board than Mr. Dimon. Yes he has done better than all the other big banks...whoop de doo...but his record for shareholders stinks to high heaven plain and simple and his compensation should reflect that. If he does not think the industry is structured for better returns as he states...then let him try and manage another line of business and see how he does without a built in government subsidy and assured bailout.
    8 Jun 2011, 07:40 AM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Wrong he bought most of his shares when he took over bank one at the market
    8 Jun 2011, 12:50 PM Reply Like
  • WMARKW
    , contributor
    Comments (10221) | Send Message
     
    If, as Bernanke says, the economy is to complicated to figure out, then it's clearly time for the government wonks who stick their noses everywhere to go home and let the people of this country figure it out with the combined impact on market forces.

     

    I, for example, have pulled my savings out of big banks and started using local credit unions. If enough people abandon JPM, GS, etc, then guess what, they don't survive being large without deposits.

     

    As a former public company CFO, I would NEVER use JPM or Goldman for any corporate finance work.
    7 Jun 2011, 10:40 PM Reply Like
  • Scootger
    , contributor
    Comments (228) | Send Message
     
    CEO's want you to believe they are in a "tough" situation. They want you to be scared, that is why they are talking their own stocks down. They want you to sell. This is situation where you must begin to think as an intelligent contrarian and read through the rhetoric. Morgan Stanley book value is 31 bucks and change, announced on their conference call on April 21st. They took in another 11.4BB in assets in the first Q. They had a small mistep with their Japanese JV which has stock under pressure. They have 16.7% Teir 1 capital sitting on their books doing NOTHING but waiting to buy back their own shares, and trust me they will have started buying before the next q is announed with eligible FCF they have activated for this purpose. AND they are about to hack out 500MM in costs. Buy Morgan Stanley, this stock is a double into year end...Low expectations are easy to beat, when the accounting, AND business is on your side. And expectations are LOW, especially with Jamie out chirping them down....Dont read headlines, read research.
    7 Jun 2011, 11:25 PM Reply Like
  • Tack
    , contributor
    Comments (12442) | Send Message
     
    Yes, let's have our noble politicians keep the banks punished, regulated, risk averse, tied down, fee laden, taxed and otherwise rendered non-entities in the economy, going forward.

     

    Oh, and we're wondering why we have the banks sitting on cash, not expanding private-sector loans, while the economy underperforms and hiring remains stagnant?
    8 Jun 2011, 05:36 AM Reply Like
  • sellside_pov
    , contributor
    Comments (29) | Send Message
     
    Demand for loans is low because sales are low, business cannot expand when people cannot afford to buy things. It's got nothing to do with regulation.
    8 Jun 2011, 06:25 AM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4503) | Send Message
     
    Yeah, no.
    8 Jun 2011, 12:12 PM Reply Like
  • Monngie
    , contributor
    Comments (928) | Send Message
     
    NO, NO, NO, lets completely deregulate them so they can find an even higher cliff to drive us all off.
    8 Jun 2011, 03:14 PM Reply Like
  • Tack
    , contributor
    Comments (12442) | Send Message
     
    Monn:

     

    Barney Frank and Goldman (along with the captive bond raters and their phony RMBS ratings) drove you off a cliff, and the banks got crushed in the process. It's hilarious to me that folks get so easily duped into thinking the banks somehow orchestrated this mess, as if they had a clever plan to lose themselves hundreds of billions and even go bankrupt, possibly. Yeah, I'm sure they were all sitting in the back of smokey conference rooms ginning up that plan.

     

    Wake up! The Government politicos caused this mess with their mandated loan programs and unlimited cheap money, all in the name of buying votes from their poverty-stricken, dependency-laden voter constituency.
    8 Jun 2011, 03:29 PM Reply Like
  • Jason Rines (iThinkBig)
    , contributor
    Comments (2231) | Send Message
     
    Vendor finger pointing at its finest, going both ways.
    8 Jun 2011, 04:35 PM Reply Like
  • Jason Rines (iThinkBig)
    , contributor
    Comments (2231) | Send Message
     
    Who controls the debt punchbowl Tack? Stop being disingerous. Independence has been compromised. The whole damn U.S. brand is tarnshed beyond repair. Good times await! (sarcasm off).
    8 Jun 2011, 04:37 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4845) | Send Message
     
    Tack

     

    You are not following the conspiracy script along with black helicopoters and the grassy knoll theorists. Never mind the banks mostly hate each other so trying to get them into a conspiracy is hilarious.

     

    People want culprits and definitely don't want it to be them. Congress owns the microphone and the stage so they can deflect quite well although people have a good sense they are a bunch of liars or at best irresponsible. The banks cannot easily defend themselves as there is no microphone or stage and the press certainly does not want to give them one.

     

    Meanwhile UE hovers around 10%. At some point people are going to have to admit that a lot of the wounds are self inflicted.
    9 Jun 2011, 12:38 AM Reply Like
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