JPMorgan's Dimon's aggressive style may hurt bank cause
* Dimon's style shocks global bankers
* Fight highlights deep divide between bankers, regulators
* Basel ignores Dimon, imposes capital surcharge anyway
* Dimon later calls Carney, says he thinks world of him
By Rachelle Younglai and Philipp Halstrick
WASHINGTON/FRANKFURT, Sept 29 (Reuters) - Masters of the
universe are not always so masterful after all.
JPMorgan Chase <JPM.N> 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 <BNS.TO> 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'
<GS.N> Lloyd Blankfein and Deutsche Bank's <DBKGn.DE> 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 Cameron French in Toronto; Writing by Rachelle
Younglai; Editing by Dan Grebler)
((rachelle.younglai@thomsonreuters.com; +1 202 898 8411))
Keywords: FINANCIAL REGULATION/DIMON
