Bank of Canada Governor Mark Carney is the latest senior policy maker to feel the wrath of JPMorgan Chase (JPM-N30.360.772.60%) chief executive officer Jamie Dimon. In a scene that resembles a public confrontation Mr. Dimon had with Federal Reserve Chairman Ben Bernanke in June, Canada’s central bank governor was the lightning rod for a tirade by the JP Morgan chief over tougher financial regulations.
The clash occurred on Friday at a closed-door meeting held at the National Archives in Washington, where global financial leaders had assembled for weekend meetings of the International Monetary Fund and the World Bank. Financiers were in the U.S. capital for a meeting of the Institute of International Finance, a bank lobby that represents more than 400 firms in 70 countries.
Mr. Carney was invited to meet a group of about 30 chief executives at a gathering put together by the Financial Services Forum, a Washington-based group that represents the leaders of the biggest U.S. banks, and the IIF. Canada’s Rick Waugh, the head of Bank of Nova Scotia and a member of the executive of the IIF, was at the meeting, according to a person familiar with the gathering.
Mr. Dimon is on a campaign against plans by the Group of 20 to force the world’s biggest banks to retain larger capital buffers than their smaller rivals, going so far as to call the push “anti-American.”
Mr. Dimon, who has emerged as a leading figure on Wall Street because his bank suffered relatively less than most during the financial crisis, unleashed his frustration on Mr. Carney, declaring that the proposed capital levels are too high, the person said. Mr. Carney defended the G20 position just as passionately, the person said.
Jeremy Harrison, the Bank of Canada’s spokesman, confirmed the meeting took place, but declined to discuss the details of a private gathering. “We have been involved in constructive dialogue with a range of stake holders, both domestic and international, as we move the financial sector reform process forward,” Mr. Harrison said.
A spokesperson for the Financial Services Forum declined comment.
The confrontation between Mr. Carney and Mr. Dimon, which was first reported by the Financial Times, highlights the tension between regulators and banks as leaders press ahead with their promises to overhaul financial regulation in an attempt to lower the risks of future crises.
Bankers say they broadly support the G20’s regulatory push. However, many say authorities are moving too quickly, choking the profitability of financial firms at the same time governments are calling on them to boost lending to fuel the economic recovery.
Mr. Carney dismissed that argument in a speech to the IIF on Sunday morning. “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,” Mr. Carney said.
The head of Canada’s banking regulator said Mr. Dimon’s attacks were familiar territory for the JPMorgan CEO.
Mr. Dimon has been a vocal critic of global banking regulations he views as going too far, such as requiring some of the world’s largest banks to hold additional capital to buffer their operations in a crisis.
“I think that Jamie Dimon’s always been quite vocal,” Julie Dickson, the federal Superintendent of Financial Institutions said after a speech to the banking industry in Toronto. “It wouldn’t be the first time that institutions were opposed to the capital increase route.”
Mr. Dimon called this capital surcharge on the world’s largest institutions “anti-American” since several U.S. banks would be hit.
Ms. Dickon said she disagreed. Though several U.S. banks are likely to make the list of financial institutions that could be affected, it is uncertain if any Canadian banks would make the list.
“The fact of the matter is that there are regions in the world where banks are perceived to be undercapitalized. So it’s not really a question of going too far too fast,” Ms. Dickson said. “So I don’t know if I consider this anti-American.”
In her speech to the Canadian banking sector, Ms. Dickson said global financial supervisors are mostly in agreement on safeguards needed to ensure the sector is not crippled by a crisis. However, any friction that is arising has occurred mostly among politicians.
She suggested afterward that Mr. Dimon’s comments might get traction in political quarters in the U.S., but would not likely get support at the G20 level where banking regulation such as the Basel III proposals are discussed.
“There will be receptivity in some quarters to [his comments], but I think on the whole there won’t be,” Ms. Dickson said.
“It was the G20 who endorsed the Basel community proposals in terms of Basel III. It will be the G20 who will be asked to endorse this capital surcharge initiative. So when November comes around, one will be able to see where the G20 has landed on that. But they will be asked to endorse it.”
Origin
Source: Globe&Mail
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