By Simon Johnson
On Tuesday, June 7, Jamie Dimon (CEO of JPMorgan Chase) pressed Fed Chair Ben Bernanke on the costs of bank regulation after the financial crisis of 2008. Could this be what is slowing the economic recovery? Bernanke was very polite in his response, but the question – as posed – made no sense at all. (The full tape of his question is here,)
Most of what Jamie Dimon lists under the heading of changes are just symptoms of the crisis itself, e.g., badly run firms and crazy products disappeared. His substantive issue appears – from his question – to be just about capital requirements.
But the implication of Dimon’s question – that higher capital requirements will slow growth – is simply wrong. I explain this in a column now running on Bloomberg. Here’s the link: http://www.bloomberg.com/news/2011-06-09/the-missing-math-in-dimon-s-economic-argument-simon-johnson.html.