- changes need to be done wisely with eyes open;
- there should be a debate over better regulation;
- companies need to start doing the right thing before a crisis;
- need for a systemic risk regulator;
- too-big-to-fail needs to be worked out;
- regulation needs to be by product, mortgages, derivatives, etc.;
- hedge funds and private equity need to be brought into regulation;
- need to simplify the regulatory system;
- need to fix Basel II;
- regulation needs to be fairly applied;
- in securitization, all parties need to have some skin in the game;
- need to regulate entire mortgage industry;
- need to stop letting real estate bring us to our knees;
- need to get accounting under control, mark to market accounting is fine but it has come to a ridiculous point, certain marks create too much volatility. There is too much flexibility in accounting;
- need for counter-cyclical policies;
- High loan-loss reserves need to be kept at all the time - as a reminder that things can be bad.
Friday, July 03, 2009
Jamie Dimon speech at U.S. Chamber on 11 Mar 2009
An insightful speech was given by Jamie Dimon to the U.S. Chamber in Washington D.C. on 13 Mar 2009. He touched on many of the issues that created the economic mess.
He started by saying that there's no silver bullet that can solve the crisis. He stressed that the economy faces a very different situation than in prior recessions. The run on bank was not a traditional one. He also confessed that not shutting down JPMorgan's mortgage broker business sooner was "the biggest mistake of my career."
Dimon read from the text of a note that he sent to former Treasury Secretary, Hank Paulson, and said he will send the same to Fed Chairman, Ben Bernanke. His quote was a Teddy Roosevelt gem, designed to give some measure of solace not just to Paulson and Bernanke, but everyone toiling in the beleaguered industry. He read:
"It is not the critic who counts, nor the man who points out how the strong man stumbled, or the doer of deeds could have done better. The credit belongs to the man or woman who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spend himself for a worthy cause; who, at best, in the end, knows the triumph of great achievement, and who, at worst, if he fails, at least fails while daring greatly, so that his place will never be with those cold and timid souls who know neither victory or defeat."
Some of his thoughts on the future of the system are:
With his closing volley, Dimon took his shots at Washington, calling on the President to lead and members of Congress to stay their partisan bickering and follow. "There's a silver bullet," he said though. "There's plenty of blame to go around, when the war is over we should go ahead and do that. But we need all of our soldiers, and we're all soldiers in this war, to get this problem fixed - Abe Lincoln said a house divided against itself cannot stand - We need now everybody, everybody to act in unison to accomplish objectives I'd put the House, the Senate, the Democrats and the Republicans in that category. This is not politics as usual; we cannot be a dysfunctional family. We have a commander in chief, he needs to lead us so we can overcome this, and if he does, we will prevail."