Dimon has been a critic of the recent financial reform legislation passed by the Obama administration and he has decided to take his concerns up another rung, passing them on to Fed Chairman Bed Bernanke himself at a question and answer session after a speech that Bernanke gave at the International Monetary Conference Tuesday, June 7 in Atlanta.
During Bernanke’s speech the top official of the Federal Reserve stated twice that the job market was “far from normal” and acknowledged that “the economy is still producing at levels well below its potential.” He then went on to state that the reasons for the disappointing May job numbers and the less than stellar projected economic growth results—the earthquake, tsunami, and nuclear concerns in Japan and oil prices, namely—would eventually fade, allowing the American economy to pick up right where it left off.
“With the effects of the Japanese disaster on manufacturing output likely to dissipate in coming months, and with some moderation in gasoline prices in prospect, growth seems likely to pick up somewhat in the second half of the year.” He further encouraged Congress to acknowledge the national deficit and contend with it with a look to the future, but not to make too drastic of moves—cuts—that would derail the country’s fragile recovery, calling such actions self-defeating.
To Bernanke’s comments Dimon responded, “I don’t personally buy the argument that because it was a financial crisis it has to take a long time coming out,” and went on to explain how he believes “FrankenDodd” financial reform is responsible for the stifling growth America is currently experiencing. “Most of the bad actors are gone,” “off-balance-sheet businesses are virtually obliterated,” “money market funds are far more transparent” and “most very exotic derivatives are gone,” he states.
Calling the Fed Chairman out directly, Dimon asked, “Has anyone bothered to study the cumulative effect of all these things? Is this holding us back at this point?”
Bernanke’s first response shows how seriously he takes his opposition: “Well, Jamie, that list you gave me made me feel pretty good there for a while, because it sounds like we’re getting a lot done.” However, Bernanke then went on to concede that officials have not, in fact, examined the effect of stricter banking regulations may be having, if any, on economic growth.
“Has anybody done a comprehensive analysis of the impact on — on credit? I can’t pretend that anybody really has,” Bernanke said. “You know, it’s — it’s just too complicated. We don’t really have the quantitative tools to do that.”
Really? An administration that has grown tenfold in its first three years thinks finding out what the impact of all its financial regulations is too hard? Please. Jamie Dimon is on the right track, and personally I hope that he continues his fight against Bernanke and the FED; if he doesn’t do it, who else will?