 |
Jamie
Dimon, CEO and chairman of JPMorgan Chase & Co., poses for
a portrait in his office in New York, in this photo taken December 22, 2010. (Credit: Reuters/Lucas Jackson) |
(Reuters) -
Masters of the universe are not always so masterful after all.
JPMorgan
Chase Chief Executive Jamie Dimon's squabble with the head of the Bank of
Canada over bank regulation managed to achieve only one thing -- angering the
central banker.
Once viewed
as a star for helping the U.S. government prop up the now-defunct Bear Stearns
during the 2008 financial crisis, Dimon is in danger of becoming a pariah among
global regulators.
At a
meeting last week between the world's most powerful bankers and Bank of Canada
Governor Mark Carney, Dimon tried to tell the central banker that banks were
suffering under the weight of all the new bank rules. But his aggression drove
a red-faced and visibly angry Carney out of the room, according to people
familiar with the encounter.
Dimon
referred to new global bank liquidity rules as "cockamamie nonsense,"
according to one of the attendees at the closed-door meeting held by the
Institute of International Finance on Friday.
Dimon also
said the rules did not bear any relation to financial reality and that they
were constructed by regulators, academics and people who did not have any
market experience, the attendee said.
Major banks
have lashed out at the slew of new rules being implemented in response to the
financial crisis. They contend higher capital standards and other new
regulations will impede their ability to lend and hurt the already-fragile
economy, although their arguments appear to be falling on deaf ears with
regulators.
Another
person at the meeting said Dimon acted very aggressively and complained about a
plan from the Basel committee of global regulators to force the world's biggest
banks to hold up to 2.5 percent in extra capital.
Carney, who
spent more than decade at Goldman Sachs before becoming Canada's central
banker, was calm at first and tried to appease Dimon, responding: "I hear
what you are saying. I don't think it will surprise you that I am taking a
different view. These are reasonable responses to the financial crisis,"
one of the attendees recalled.
But Dimon
grew increasingly aggressive, prompting Bank of Nova Scotia CEO Rick Waugh to
jump in to try to smooth relations, the source said.
The
outspoken Dimon has already blasted the new international bank rules as
anti-American and went a step further at the meeting. "I have called it
anti-American. The only reason I am calling it anti-American is because I am
American. I also think it's anti-European," the attendee recalled him
saying.
In the end,
an agitated Carney left in the middle of Dimon's tirade. Other chief executives
such as Goldman Sachs' Lloyd Blankfein and Deutsche Bank's Josef Ackermann
looked stunned, the sources said.
Ackermann
tried to explain why Carney left abruptly, saying the central banker was on a
tight schedule.
Some
bankers were shaking their heads. "It was Dimon's style that astonished
all bankers, not the content," said one banker familiar with the meeting.
Another voiced concern that Dimon's anger hurt his message. Others said they
thought Dimon's comments were appropriately delivered.
Once
singled out by President Barack Obama for running a well-managed bank, Dimon
has become increasingly more vocal in his opposition to the new bank rules. For
over a year, he has fought the administration privately and publicly over the
Dodd-Frank regulation bill.
In June,
Dimon took U.S. Federal Reserve Chairman Ben Bernanke to task and said new
financial regulations could jeopardize the country's economic recovery and job
creation.
At the time,
he was praised for speaking out. But Dimon may have exacerbated the
already-tense relations between the banking community and its financial
supervisors with his latest exchange, first reported by the Financial Times.
On Monday,
Dimon called Carney to put his comments in context, a source close to Dimon
said. Dimon told the central banker that he had the utmost respect for him and
that he thought the world of him, the source said.
But that
was too late for Carney, who is rumored to be in line to become the next head
of the Financial Stability Board -- a body of international regulators that
makes policy recommendations to the Group of 20 economies.
The Bank of
Canada and JPMorgan both declined to comment.
Two days
after the encounter, Carney rejected bankers' complaints in a public speech to
the IIF, a lobby group for global banks.
"If
some institutions feel pressure today, it's because they have done too little
for too long rather than being asked to do too much too soon," Carney said
on Sunday.
"While
the worsening global economic outlook has implications for bank performance, it
does not provide a rationale for delaying the implementation of Basel III (bank
capital rules,)" he said.
(Additional
reporting by Louise Egan in Ottawa, Lauren LaCapra in New York and CameronFrench in Toronto; Writing by Rachelle Younglai; Editing by Dan Grebler)
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