Stress tests, livings wills are good for industry, Dimon says

From a possible scaling back of the Dodd-Frank Act to a massive corporate tax cut, regulatory changes are on the horizon that would appear to strongly favor the banking industry.

But JPMorgan Chase Chairman and CEO Jamie Dimon said Thursday that many regulatory requirements imposed on banks in the wake of the financial crisis were good for the industry and that he supports most of them.

In a wide-ranging conversation on Thursday between Dimon, the chairman and CEO of JPMorgan Chase, and industry analyst Mike Mayo at a Wells Fargo Securities conference, Dimon discussed his views on proposed regulatory changes, his outlook on lending and other topics.

Simon Dawson/Bloomberg

“No one is asking for Dodd-Frank to be thrown out. It has never been on any agenda,” Dimon said. “We’re for [comprehensive capital analysis and review]. We’re for living wills. We’re for SLR [supplementary leverage ratio] and I’m not against those things.”

But if some regulatory relief comes to pass for banks, it could open up credit to a wide range of businesses and consumers, Dimon said. Mortgage lending, in particular, could benefit if changes are made to regulations related to mortgage servicing and securitization, he said.

To put a finer point on it, Dimon predicted that if the changes he supports are approved, it could generate an additional $1 trillion to $2 trillion of new mortgage originations.

“It's not even about JPMorgan,” Dimon said. “It's about opening up the credit things in a proper way for the American people to make credit more available in the way they want it.”

Even with profound regulatory changes on tap, Dimon expects most new regulations to remain intact. The CCAR stress testing regime, for example, will almost certainly survive, he said.

“I think going too far is absurd, when it’s gone all one way for eight years,” Dimon said. “I’m not worried at all about deregulation going back to the good old days. I’m not against CCAR.”

During their conversation, the JPMorgan CEO had a quibble with how Mayo described the economic and policy critiques that Dimon makes.

“You’ve written about regulations, you’ve railed against some of the new types of regulation,” Mayo said, as a prelude to a question about regulatory relief.

“I hate the word rail,” Dimon responded. “We give logical, thoughtful, analytical [comments] to what should be changed. When a regulator says it … that’s considered thoughtful. And when I say it, you know, it’s railing.”