Jamie Dimon: ‘It’s Going to Get Worse’ for Banks

JPMorgan Chase

The head of America’s biggest bank is predicting tough times for his industry.

At least as far as regulations go.

“I think it’s going to get worse for banks — more regulations, more rules and more requirements,’’ JPMorgan Chase Chief Executive Jamie Dimon said in a Bloomberg Television interview Thursday (May 11).

“If you overdo certain rules, requirements, regulations — there are some of these community banks that tell me they have more compliance people than loan officers.’’

Dimon’s comments came 10 days after JPMorgan agreed to purchase the collapsed regional bank First Republic following its takeover by the Federal Deposit Insurance Corp. (FDIC). It was the fourth regional bank to shut down since March, and the third seized by regulators.

“We need to finish the bank crisis,’’ Dimon told Bloomberg. “Whatever the FDIC, the OCC, the Fed — whatever they need to do to make it better they should do.”

The report notes that JPMorgan’s acquisition of First Republic — and Dimon’s statement that “this part of the crisis is over” — haven’t calmed investor worries about the state of the industry, as the KBW Regional Banking Index has fallen 13% since that was announced.

Acknowledging that the failed banks had themselves to blame, Dimon also told Bloomberg that regulators need a better grasp on the health of smaller lenders, as well as some humility.

“They should look at it and say, ‘OK, we were a little bit a part of the problem’ as opposed to just pointing fingers.”

Following JPMorgan’s purchase of First Republic, the bank now holds an astonishing $3.7 trillion in assets.

As PYMNTS reported last week, the deal accelerates the bank’s exposure to high-net worth clients. CFO Jeremy Barnum said on a call with investors that the 84 First Republic branches, with a concentration in San Francisco (32 branches) and New York (13 branches), represent “attractive locations in affluent markets.”

And Dimon added at the time that adding First Republic’s private wealth operations to JPMorgan will allow the roughly 150 brokers from First Republic to “grow their practices,” as their bank’s private wealth management platform becomes part of JPMorgan Advisors.

And while investors remain uneasy about the future of regional banks, “questions are swirling around whether the successive failures were due to individual banks’ management teams, or if there is something more structural and systemic at the root,” PYMNTS wrote earlier this week.

And if a sea change is underway for the business model of traditional, regional banking — what will happen next?

“There’s a potential moment that we’re seeing here around the franchise value” of banks, Amias Gerety, partner at QED Investors, told PYMNTS following the JPMorgan/First Republic deal.