Jamie Dimon’s claim that regulating big banks is un-American reveals far too much

Matt Yglesias puts the Basel Accords in historical perspective, explaining how Wall Street’s plea for more financial deregulation gets the facts backwards:

Jamie Dimon’s preposterous assertion that the United States should pull out of the Basel rules for international financial oversight on the grounds that higher capital requirements are “anti-American” is a welcome reminder to beware corporate executives brandishing patriotism.

It’s important to remember that when Dimon makes business decisions, . . .  the interests of the United States of America or the welfare of the American people play approximately zero role in his thinking. Beyond that, even if he secretly did start making decisions based on patriotic considerations he’d get fired. It’s business. There’s no gauzy sentimentality involved. Which is fine if you ask me. But it should make us extremely wary of these kind of arguments on the other side. There’s nothing “American” about an “American” bank like JP Morgan that should make us think that a regulation that’s bad for JP Morgan is somehow an attack on “America.”

Unfortunately for the world, the United States and United Kingdom spent a fair amount of the 1990s and 2000s pursuing a kind of finance-focused industrial policy, aimed at fostering giant national champion diversified financial services companies that would benefit from relatively lenient domestic regulation. In a world of cheap Chinese labor, being nice to banks to create high-value service exports was supposed to be the future of the Anglosphere. It simply didn’t work. Service exports didn’t come close to closing the trade gap, finance profits flew into the hands of a tiny number of people and both internal and regulatory risk control of Wall Street turned out to be wildly inadequate. I’m not the Basel III expert, and doubtless there are valid criticism one can offer of the Basel III rules. But the idea that a country should adopt lax bank regulation as a growth strategy, or view protection of its domestic banks’ bottom lines as a foreign policy objective, is incredibly pernicious and the time to ditch it is long past.

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About Guy N. Texas

Guy N. Texas is the pen name of a lawyer living in Dallas, who is now a liberal. He was once conservative, but this word has so morphed in meaning that he can no longer call himself that in good conscience. Guy has no political aspirations. He speaks only for himself.
This entry was posted in Economic policy, Economics, Finance, News, Uncategorized. Bookmark the permalink.

One Response to Jamie Dimon’s claim that regulating big banks is un-American reveals far too much

  1. Per Kurowski says:

    Yes! It is un-American because by allowing banks to leverage more their capital when earning the risk-adjusted-interest-rate from those perceived as “not-risky” than when earning the same rate from those perceived as “risky”, regulators have introduced a silly an unproductive risk-adverseness that is not compatible with a “the land of the brave”

    Yes! It is un-American because allowing banks to leverage immensely more their capital when lending to the government than when lending to their small businesses and entrepreneurs, is communism, not at all compatible with a “the home of the free”

    PS. Here´s a video that explains a small part of the craziness of our bank regulations, in an apolitical red and blue! http://bit.ly/mQIHoi

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