THE BASIS POINT

Chase CEO Jamie Dimon: Has Regulation Gone Too Far?

JPMorgan Chase’s CEO Jamie Dimon asked Federal Reserve Chairman Ben S. Bernanke if regulators have gone too far by reining in the U.S. banking system and are slowing economic growth. “Dimon asked whether the central banker has measured the cumulative effects of new capital requirements, mortgage standards and other rules imposed on the system in the wake of the U.S. financial crisis. Dimon asked Bernanke if he “has a fear like I do” that overzealous regulation “will be the reason it took so long that our banks, our credit, our businesses and most importantly job creation to start going again. Is this holding us back at this point?”

It’s easy to beat up on big bankers when they make comments like this, but it’s hard to disagree with his concerns. More below on Bernanke’s speech.

Ben Bernanke’s speech yesterday mostly reiterated the previous Fed stance. He is looking for a second half bounce. While several indicators “suggest some loss of momentum,” Bernanke expects growth to “pick-up somewhat in the second half.” The economic recovery, broadly speaking, is continuing at a “moderate pace” but “frustratingly slow” in that the unemployment rate is not descending in a more appreciable way. Looking at inflation, Bernanke reiterated his core position: first, the slack in the US labor market “should continue to have a moderating effect on inflationary pressures.” Second, inflation expectations remain well anchored and “reasonably stable.”