As Americans brace for Trump’s vision of a deregulated banking system, US businessman and JP Morgan chief Jamie Dimon explains how regulatory imposed credit restrictions have actually hurt consumers – not the banks.
In a recent video interview, LinkedIn’s editor in chief, Daniel Roth, asked the US bank boss for his views on potential changes to American banking regulation.
Last month, the US House of Representatives passed the Financial CHOICE Act. If enacted this would repeal much of the legislation brought in from the 2010 Dodd-Frank Act, which former President Barrack Obama signed into federal law during the aftermath of the US subprime mortgage crisis that triggered the GFC.
“First of all, regulations need to be looked at and need to be rational,” Mr Dimon said. “I’ve always agreed that they hurt smaller banks more than they hurt bigger banks,” he said.
“We are not here saying ‘throw out Dodd Frank’. I’m not talking about going back to subprime. I’m talking about where it’s ok to lend to a first-time buyer who has a little more risk.
The ones who have really been hurt by the restriction in mortgage credit in the United States, Mr Dimon said, are “young people, immigrants, self-employed and prior defaults”.
“It wasn’t JP Morgan” who was hurt, he added: “When you look at this, too many people argue that the banks just want it for themselves. But I think we hurt our citizens. I think our rules and regulations have hurt small business formation, a lack of ability to get permits and infrastructure and jobs. I could go on and on about the things that we have done to hurt ourselves.
“Every type of regulation needs to be calibrated right. Just saying ‘more, more, more’ isn’t sufficient.”
Deregulation has been a high priority on President Trump’s agenda and with the wind-back now in motion, Americans are being forced to consider how the regulatory environment impacts their lives.
Meanwhile, in Australia, borrowers are being squeezed by tighter credit and higher rates - all of which are a direct consequence of regulatory measures designed to create a safer system.