In a speech held in New York this week, JPMorgan (Stock Quote: JPM) CEO Jamie Dimon had a message for those Washington politicians pushing financial reform last June: Banks won't bear the brunt of financial reform, but bank consumers will.
Is this a case of banks skipping accountability, or have politicians unwittingly set a trap where bank consumers will wind up footing the bill for financial reform?
Dimon made his comments on Sept. 14 at a New York City banking conference hosted by Barclays Capital. He told the group that the financial regulations Washington had imposed on the banking industry (he called them “ill-conceived”) would cost his company “billions of dollars.” But he also said the new rules won’t impact bank profits “that much” — and that bank clients will wind up feeling the real financial pain of financial reform.
That could manifest itself in higher rates and fees on loans, as well as higher rates on credit card cards and stiffer investment trading fees. Dimon also hinted that the bank will likely pass the reorganizing costs of meeting the new regulations along to customers.
Speaking on the debit card fee provisions included in the Dodd-Frank Wall Street Reform and Consumer Protection Act, Dimon said that government had no business dictating retail prices in a private industry, and that the 285 laws that comprise the Dodd-Frank Act were “too complex.”
Additionally, government efforts to control debit card fees were a “huge misconception about how businesses run … [Businesses] don’t charge for costs,” he said, “they charge for value.” But in the end he told the audience “we’re going to earn it all back.”
Dimon mentioned the brunt of the bank’s costs in adhering to the new financial reform rules will come from moving its commodities and credit default swap business (as directed by the “Volcker Rule” embedded in the financial reform bill). Calling the move an “organizational nightmare,” Dimon claims it will cost Chase $1 billion in lost revenues.