JPMorgan lawyer says regulation of banks out of control
Stephen Cutler, the top counsel for JPMorgan Chase, aired his sentiment against government regulators in an industry conference at The Clearing House. He said that regulation of banks is getting out of control and that regulators were levying various penalties for the same issue. By piling one infraction on another against banks, Cutler said the regulators were wasting the money of taxpayers.
Cutler also took issue with hefty fines imposed on the banks. Just this week, JPMorgan finalized a USD 13 billion settlement with regulators over shoddy mortgage assets sold in the years leading to the financial crisis. He told bankers and regulators who attended the conference, "We should all be concerned that there doesn't seem to be a natural end point to how high fines could go. One hundred million dollars is still meaningful." The Clearing House is a trade organization representing the biggest banks in the US.
Cutler found it unfair that the country's largest lenders were made to pay bigger penalties just because of their size. He said "Issues that used to be seen as part of regulators' normal supervisory function are now being treated as a basis for an enforcement action. Not sure how we got here." He suggested that an inter-agency task force be formed to look into the issue of the overlapping functions of regulators. With their limited resources, Cutler said there was not much sense in having multiple regulators conduct probes on the same issues. He cited the various requests they received from various regulators in the London Whale case. Cutler said, "In the London Whale case, we found that anytime anyone came up for questioning we got requests from seven regulators. Basically, the interviews had to be conducted in auditoriums."
He also asked what the guidelines were, if there were any, that regulators followed when urging for admissions of guilt in settling cases.