The Wall Street Journal has a front-page feature on Jamie Dimon, the CEO of J.P. Morgan Chase, that explains his frustration with government regulation. (I would link to the article if the WSJ posted it in full length for nonsubscribers.)
Dimon cuts a less unsympathetic figure than most elite bankers. Like any banker who draws a bonus, he believes regulators go too far, but he does believe that Washington has a valid role. He favored the TARP bailout, even though he says his bank didn't need the $25 billion loan it got, because TARP strengthened the banking system.
It bugs Dimon that people don't make distinctions between his bank, which didn't cripple itself by overdoing subprime mortgages, and banks that did threaten the financial system by excreting all manner of subprime loans and derivatives. Why is he lumped in with guys like Goldman Sachs CEO Lloyd Blankfein, who is about as likeable as a salmonella bacillus?
Dimon tells the Journal: "Punishing whole industries, whether you were reckless or not, just isn't the way to do things."
Dimon is wrong to equate regulation with punishment. When you tell your teenager to be home by 10, you're not punishing; you're setting a boundary for proper behavior. When your teenager confuses rules with punishment, it's a sign of petulance and immaturity. Ditto with Dimon and other bankers.
Dimon opposes creation of an independent consumer financial protection agency, which would enforce consumer-protection regulations and allow the myriad safety-and-soundness regulators to stick to their critical paths. Dimon views the proposed consumer financial protection agency as a duplication of effort, telling investors last month: "If our legal department isn't doing a great job, I don't start another legal department."
But if Dimon truly believes that, then he should start a grassroots effort to merge the Federal Reserve, the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Association and the FDIC. By having all of these federal regulatory agencies, we allow financial institutions to choose their regulators. And regulators compete on friendliness to bank executives. They don't compete on friendliness to consumers.
Also, it's disingenuous for Dimon to say that "I don't start another legal department," when, in fact, Chase does hire outside law firms to handle foreclosures.