Off the reservation?

12 September 2011 By Richard Beales Follow @richardbeales1

The JPMorgan boss has made good arguments against bad regulation. But suggesting the U.S. should opt out of “anti-American” Basel III rules undermines his case. If huge private sector banks are to avoid future government rescues, they will need to hold more capital.

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Jamie Dimon, the chief executive of JPMorgan, suggested in an interview with the Financial Times published on Sept. 12 that so-called Basel III rules on global bank capital were “blatantly anti-American” and that the United States should consider pulling out of adopting them.

The new Basel rules will force all banks to maintain a 7 per cent ratio of core Tier 1 capital to risk-weighted assets. The largest financial firms, a group of those deemed systemically important and including JPMorgan, will have to hold an additional buffer of between 1 and 2.5 percentage points of capital.

Dimon told the FT: “There are plenty of countries out there that are happy with the changes being implemented in the U.S. They realize that they can be huge beneficiaries of this. I’m talking about China, India, Singapore, Japan. I wouldn’t want to see, 20 years from now, the U.S. asking, ’What happened? How come the winners in the marketplace are all outside the U.S.?’”

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