Ben Bernanke Confronted By Jamie Dimon

Jun 7, 2011
J. Webster
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Reuters Pictures

Update: watch video of Dimon’s question here

Jamie Dimon confronted Ben Bernanke in a way, asking him what will be the effect of all these regulations on the banks. And have they studied this and how it will affect the economy and the jobs market in particular.

Does the federal reserve know what they’re doing? Can they lesson up on all the rules and let the banks do their jobs? This is what he seemed to suggest if not demand. The WSJ has the story:

“I have a great fear that somebody will write a book that the things we did in the crisis will slow down the recovery,” Mr. Dimon sniffled.

He ran through a list of the ways markets have changed since the crisis, saying “most of the bad actors are gone,” that exotic derivatives are gone, lending standards are higher, banks have more liquidity and capital, and boards and regulators are tougher.

Hey, Mr. Dimon seemed to suggest, enough is enough. And now on top of it all there are higher capital requirements and 300 new rules coming, and maybe it will all be too much for banks to take. Nice economy you’ve got there, he seemed to say. Shame if anything happened to it.

“Has anyone bothered to study the cumulative effect of these things, and do you have the fear, like I do, that when we look at it all, it will be the reason” why banks aren’t lending, he asked. “Is this holding us back at this point?”

“That list you gave me made me feel pretty good for a while,” Mr. Bernanke replied. “It sounded like we’re getting a lot done.”

Everybody had a good long laugh at that one.

Mr. Bernanke said he “can’t pretend” that anybody knows what the right balance of regulation and capital is going to be, but that they’re going to try to strike a balance that prevents future crises and keeps banks lending.

“It’s been the most comprehensive financial reform since the 1930s, we don’t have quantitative tools to do that,” Bernanke said. “There is going to be some trade-off here,” he said, adding the rules could be tweaked later.

What with the bank stocks struggling, it was no wonder Jamie Dimon stood up and asked Bernanke point blank in a public forum if they’d take a closer look at how all of their regulations are going to impact the banks and the economy, lesson up in a way. Give them a break. Trust them more he seemed to intimate. Stare into my eyes, my beautiful blue eyes, trust me, do what I say.

No, he didn’t try to hypnotize Bernanke but it wasn’t far off. He seemed to have Bernanke in his sights with his initial list of accomplishments. It wasn’t to be though. Even though Bernanke loved how long Dimon was talking to him, to him alone, and with such respect and deference, the CEO of JP Morgan, his beard growing as he talked, he wasn’t going to fall into the Jamie Dimon spell.

In truth, it was a valid question. Bernanke seemed to laugh it off in a way, and, amazingly, stated how they don’t really know. They don’t know? What?

Bernanke did say the federal reserve was trying to ensure that a crisis like the one in 2007-2008 doesn’t happen again. And they were trying to move as quickly as possible with the reforms, but it was a complex matter and they could make adjustments later – tweaks he called it.

Tweaks? Later? How much later? What kind of tweaks? How long do the unemployed have to wait?

Here’s the full video of the exchange between Dimon and Bernanke:

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