Category Archives: Finance

Money Laundering Post 9/11

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Munich-based economic journalist Markus Schulze Wehninck writes:  Money laundering has been an international issue since the end of the 1980s but its career on the global agenda did not start until September 11, when it was connected to the fight against terrorist financing. After the attack on the World Trade Center, a global Counter Terrorist Financing (CFT) regime was built up by the United Nations and pre-existing anti-money laundering (AML) measures were expanded. It was believed that the expertise of AML professionals could be used for the fight against terrorist financial flows. The main task of the Financial Action Task Force (FATF) – an OECD-based international body established by the G7 in 1989 – was extended to the combined ‘label’ of anti-money laundering and counter terrorist financing (AML/CFT).

The connection of these two phenomena has had significant consequences. The ‘dirty money’ to fight is no longer only affiliated with crimes already committed, as money laundering only concerns funds from illicit activities, but as well with future terrorist activities. This boosted the international efforts to fight dirty money flows and new obligations for the private sector.

With its ’40 recommendations’, the FATF had already published an extensive blueprint for financial institution regulation to fight money laundering in 1990. The recommendations, which are implemented – at least in part – by most states, commit banks and other institutions to analyse their customers and financial flows, keep records and report suspicious activities to the authorities.

In 2003, the FATF published nine special recommendations for counter terrorist financing and included “designated non-financial businesses and professions” like (internet-)casinos, real estate agents, dealers in precious metals and stones, and lawyers or notaries. Furthermore, alternative remittance systems, like the informal value transfer system ‘hawala’, and non-profit organisations have been taken into the regulatory focus of the international expert body.

At the same time, other standard setters like the Basel Committee on Banking Supervision or the private sector initiative Wolfsberg Group have expanded and further specified the duties of banks in analysing customers and their financial behaviour. A global system of financial surveillance has emerged which obliges the everyday customer’s local bank to act as a financial watchdog. This surveillance system has merits, as it makes tracking dirty money flows more easy and efficient. But, nevertheless, it creates problems which did not exist before 9/11.

Firstly, the global financial surveillance system clearly violates the banking secrecy provision. The FATF recommendations point out, the secrecy laws of financial institutions are to be constrained where they may “inhibit the implementation” of the recommendations. States get what they wanted for a long time – access to private sector financial data. This data is not only supposed to be shared among domestic state agencies, but in cooperation with their foreign counterparts on a global scale..

The financial surveillance system has its weak points and carries the risk of customers beinging suspected by mistake, a ‘false positive’. Private sector institutions use IT-tools to trace suspicious money flows within the huge amount of financial data. A whole industry sector has evolved to commercially exploit the needs of financial institutions, that is, to find the ‘needles in the haystack’. Data management software develops ‘patterns of normality’ in order to identify abnormalities in financial transactions – an error-prone system.

The best strategy of blame avoidance is thus: reporting, reporting, reporting. How many transactions, banking accounts or credit cards are audited by this surveillance system is not known. However, a 2004 evaluation of the private sector reporting behaviour in Germany notes that 6400 suspicions had been reported the year before, from which about 900 had been false alerts, or just a little over 1 in 7 reports.

Another negative effect is that the fight against dirty money threatens to exclude poor people from financial services. Before 9/11, AML measures were merely associated with rather high sums and certain transaction thresholds, while the relatively small amounts of money used for 9/11 have refocused the dirty money chase on daily retail banking.

Their obligations force banks to prove identity and residence of their customers, which might be a minor problem in developed countries, but is of extreme significance in the developing world. As evaluations of the impact of the FATF-recommendations on the access to financial services show, ‘know your customer’-rules pose problems in countries where many households do not have formal addresses. This adverse impact has been shown in South Africa, Indonesia, Kenia, Pakistan and Mexico.  Cash Limits by Fernando Llera

Will Corruption Hold Latin America Back?

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From the Wharton Business School’s online comments: Buoyed by high prices for the commodities they export, the major nations of Latin America have enjoyed strong growth in recent years, but that slowed down in 2014. Last year, the aggregate growth rate for gross domestic products (GDP) in the region was just 1.1%, the slowest rate since 2009.

For 2015, the UN Economic Commission for Latin America (ECLAC) expects regional growth to recover to 2.2%. This year, Brazil, the world’s seventh-largest economy, is forecast by ECLAC to grow by 1.3%.

Though ECLAC may look at the region’s nations en masse, it would be a mistake to think of it as one homogeneous economic zone.  Mexico and Central America export chiefly to hte US.  Now that the US economy is recovering, they are doing better.

The sub-region which covers much of South American including Brazil is where most of the countries are essentially exporters of commodities and energy, largely agricultural commodities and minerals such as iron ore. These countries have been beaten up by the slowdown in demand for their commodity exports from China.  Chile is also having trouble because of dropping commodity prices, especially of copper.

Bolivia, Venezuela and Argentina are “places where the problems are essentially self-inflicted because of their populist policies which have discouraged foreign investment and trade.

A fourth sub-region to is the Caribbean which is the subject of increased attention now thanks to the recent economic and diplomatic overtures to Cuba.

Given its vast area, huge population and immense natural resources, Brazil is the key problem in South America.  The country’s challenges aren’t limited to a weakening demand for commodity exports.  Stifing regulations, lack of a trained workforce and a corrupt political system are throttling economic development.

Mexico’s economic expansion will be buoyed by the continued rapid growth of its automotive sector. In 2014 alone, Honda began production at a new $800 million plant in Guanajuato state; Mazda opened its first plant in North America, a $770 million facility also in Guanajuato, and Kia announced plans for a new $1 billion plant in Nuevo Leon. Other major firms preparing to open new plants in Mexico include Audi and BMW. Guillen notes that these investors “are not going to go anywhere” else, because their plants are “becoming increasingly more competitive” with auto factories elsewhere in the world. He adds that Mexican plants “also have another advantage; they have cheap energy coming from North America.”

Like Brazil, however, Mexico faces political challenges that could cloud its prospects for faster growth.  Can promise overcome corruption?   Latin America’s Future

Corruption in Latin America

Making Entrepreneurs Central

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Dani Rodrik writes:  A specter of job-killing technology is haunting the world.  How this challenge is met will determine the fate of the world’s market economies and democratic polities.

When the new industrial working class began to organize, governments defused the threat of revolution from below by expanding political and social rights, regulating markets, erecting a welfare state that provided extensive transfers and social insurance, and smoothing the ups and downs of the macroeconomy. In effect, they reinvented capitalism to make it more inclusive and to give workers a stake in the system.

Today’s technological revolutions call for a similarly comprehensive reinvention. The potential benefits of discoveries and new applications in robotics, biotechnology, digital technologies and other areas are all around us and easy to see. Indeed, many believe that the world economy may be on the cusp of another explosion in new technologies.

The  bulk of these new technologies are labor-saving. They entail the replacement of low- and medium-skilled workers with machines operated by a much smaller number of highly skilled workers.

A world in which robots and machines do the work of humans need not be a world of high unemployment. But it is certainly a world in which the lion’s share of productivity gains accrues to the owners of the new technologies and the machines that embody them. The bulk of the workforce is condemned either to joblessness or low wages.

Indeed, something like this has been happening in the developed countries for at least four decades. Skill and capital-intensive technologies are the leading culprit behind the rise in inequality since the late 1970s. By all indications, this trend is likely to continue, producing historically unprecedented levels of inequality and the threat of widespread social and political conflict.

The key is to recognize that disruptive new technologies produce large social gains and private losses simultaneously. These gains and losses can be reconfigured in a manner that benefits everyone. Just as with the earlier reinvention of capitalism, the state must play a large role.

Consider how new technologies develop. Each potential innovator faces a large upside, but also a high degree of risk.

These risks are especially high at the dawn of a new innovation age. Achieving the socially desirable level of innovative effort then requires either foolhardy entrepreneurs – who are willing to take high risks – or a sufficient supply of risk capital.

Imagine that a government established a number of professionally managed public venture funds, which would take equity stakes in a large cross-section of new technologies, raising the necessary funds by issuing bonds in financial markets. These funds would operate on market principles and have to provide periodic accounting to political authorities (especially when their overall rate of return falls below a specified threshold), but would be otherwise autonomous.

Designing the right institutions for public venture capital can be difficult. But central banks offer a model of how such funds might operate independently of day-to-day political pressure. Society, through its agent – the government – would then end up as co-owner of the new generation of technologies and machines.

The public venture funds’ share of profits from the commercialization of new technologies would be returned to ordinary citizens in the form of a “social innovation” dividend – an income stream that would supplement workers’ earnings from the labor market. It would also allow working hours to be reduced.

. An innovation state, established along the lines sketched above, would reconcile equity with the incentives that such investment requires.

The Innovation State?

Unpegging the Swiss Franc

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Markus Brunnermeier and Harold James write:  Since the European sovereign-debt crisis erupted in 2009, everyone has wondered what would happen if a country left the eurozone. At first, the debate focused on crisis countries – Greece, or maybe Portugal, Spain, or Italy. Then there was a rather hypothetical discussion of what would happen if strong surplus countries – say, Finland or Germany – left.
Through it all, a consensus emerged that an exit by one country could – like the collapse of Lehman Brothers in 2008 – trigger a wider meltdown. Now, in Switzerland, we have a demonstration of just some of the risks that might emerge were a surplus country to leave the eurozone.

In September 2011, Switzerland pegged its currency to the euro to set a ceiling to the Swiss franc’s rapid appreciation in the wake of the global financial crisis that erupted in 2008. The country thus became a temporary adjunct member of the European monetary union. But, on January 15, the Swiss National Bank (SNB) suddenly and surprisingly abandoned the peg.
Obviously, exiting a real currency union is far more complex and legally fraught than ending a temporary exchange-rate arrangement; the effects of such a move would be greatly magnified. Nonetheless, the Swiss move reveals at least some of the uncertainties that a full-fledged exit could create.
The SNB was not forced to act by a speculative run. No financial crisis forced its hand, and, in theory, the SNB’s directorate could have held the exchange rate and bought foreign assets indefinitely. But domestic criticism of the SNB’s large buildup of exchange-rate reserves (euro assets) was mounting.
In particular, Swiss conservatives disliked the risk to which the SNB was exposed. Fearing that eurozone government bonds were unsafe, they agitated to require the SNB to acquire gold reserves instead, even forcing a referendum on the matter. Though the initiative to require a fixed share of gold reserves failed, the prospect of large-scale quantitative easing by the European Central Bank, together with the euro’s recent slide against the dollar, intensified the political pressure to abandon the peg.
Whereas economists have modeled financial attacks well, there has been little study of just when political pressure becomes unbearable and a central bank gives in. The SNB, for example, had proclaimed loyalty to the peg just days before ending it. As a result, markets will now hesitate to believe central banks’ statements about future policy, and forward guidance (a major post-crisis instrument) will be much more difficult.

Today, the global ramifications of a major central bank’s actions are much more pronounced than in 1971. When the Bundesbank acted unilaterally, German banks were not very international. But now finance is global, implying large balance-sheet exposures to currency swings.
Big Swiss banks fund themselves in Swiss francs, because so many people everywhere want the security of franc assets. They then acquire assets worldwide, in other currencies. When the exchange rate changes abruptly, the banks face large losses – a large-scale version of naive Hungarian homeowners’ strategy of borrowing in Swiss francs to finance their mortgages.
Though the SNB had given many warnings that the euro peg was not permanent, and though it had imposed a higher capital ratio on banks, the uncoupling from the euro came as a huge shock. Swiss bank shares fell faster than the general Swiss index.
The risks created by the SNB’s decision – as transmitted through the financial system – have a fat tail. The negative effects for the Swiss economy – through the decreased competiveness of its export industries (including tourism and medicine) – may already be showing that abandoning the euro peg was not a good idea.
But the consequences will not be limited to Switzerland. After years of wondering whether the exit of a small, fiscally weak country like Greece could undermine the euro, policymakers will have to deal with an even bigger shock stemming from the exit of a small, fiscally strong country that is not even a member of the European Union.

Swiss Franc

Tigers for Profit?

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Tiger Trade:  In 1991, wildlife investigator J. A. Mills went to China to verify rumors about tiger farming.  “I mainly pretended I was a student of traditional Chinese medicine to try to figure out not only what was being traded, but why it was being traded,” Mills told National Public Radio.

She says she found China’s first tiger farm — complete with a hand-written ledgers filling up with orders for tiger bone.

Back then, when tiger trade was first flagged as an issue, the main demand for bone was for use in traditional Chinese medicine. Today, the trade has changed to more of a luxury goods market — and Mills says that although China banned the trade of tiger bone in 1993, demand for luxury items still thrives today. She estimates that there are 6,000 tigers on farms in the country.

A tiger farm is basically a feed lot for tigers where they’re bred like cattle for their parts to make luxury goods such as tiger bone wine and tigerskin rugs. This is about wealth, not health.  This is about a handful of investors poised to launch a multi-billion-dollar-a-year luxury goods market. This about products looking a market, rather than a market looking for products.

Tigers in the wild are solitary, of course, except when … they’re mothers with cubs. These [farmed] tigers are basically kept in cages. They are speed-bred. Cubs are taken from their mothers almost right after birth so the mothers can breed again. And the males run around in packs.

It’s something you would never, ever see in the wild.

The problem with tiger farming is that it stimulates demand for tiger products, which in turn stimulates poaching of wild tigers because tiger products from wild tigers are considered superior, more prestigious and exponentially more valuable. Some people are even buying tiger products as an investment — much as they would, say, rare art or antique jewelry. And if even a tiny fraction of China’s 1.4 billion people seek wild tiger products, we could lose the last 3,000 wild tigers before we know it.

The same forces are driving the slaughter of elephants for their ivory and rhinos for their horn. It all involves organized criminals supplying investors hoping to profit from extinction. Unfortunately what’s happened in the United Nations in the context of the treaty that governs … international trade and endangered species is that everyone’s gone silent.

 Tigers for Profit

Can You Do Business in Cuba?

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Bradley Klapper writes:  The Obama administration is putting a large dent in the U.S. embargo against Cuba as of Friday, significantly loosening restrictions on American trade and investment.

The new rules also open up the islland to greater American travel and allow U.S. citizens to start bringing home small amounts of Cuban cigars after more than a half-century ban.

Thursday’s announcement of new Treasury and Commerce Department regulations are the next step in President Barack Obama’s plan to re-establish diplomatic relations with Cuba. They come three days after U.S. officials confirmed the release of 53 political prisoners Cuba had promised to free.

Only Congress can end the five-decade embargo. But the measures give permission for Americans to use credit cards in Cuba and U.S. companies to export telephone, computer and Internet technologies. Investments in some small business are permitted. General tourist travel is still prohibited, but Americans authorized to visit Cuba need no longer apply for special licenses.

With the new regulations public, the focus shifts to American businesses and the Cuban government. Some changes could take months as U.S. firms analyze the risks and benefits of moving into a complicated new market. And the Cuban government has said nothing publicly about how it will regulate new trade with the United States. Foreign companies currently deal almost entirely with state-owned firms that are notoriously slow, inefficient and short on cash.

Cuba will likely be more open to a surge in new travelers than to other potential effects of the loosened rules.

But Cuban hotels generally fall short of international standards and those with better food and service are almost always fully booked during the winter high season.

Casting a shadow on potential deals is the possibility of litigation by Cuban-Americans and U.S. firms whose property was confiscated in Fidel Castro’s 1959 revolution and may try to sue companies entering into business with the Cuban government. In Washington, Congress may also seek to erect barriers to new investment.

Thomas Donohue, the head of the U.S. Chamber of Commerce  said it was better for the U.S. to sell computers, smartphones and cars to Cuba than to cede such business to countries like Russia and China. Still, the embargo as a whole appears unlikely to fall anytime soon.

Starting Friday, U.S. companies will be able to export mobile phones, televisions, memory devices, recording devices, computers and software to a country with notoriously poor Internet and telecommunications infrastructure. Internet-based communications will fall under a general license. The new rules “immediately enable the American people to provide more resources to empower the Cuban population to become less dependent upon the state-driven economy,” White House spokesman Josh Earnest said Thursday.

The U.S. is now “one step closer to replacing out of date policies,” Treasury Secretary Jacob Lew said Thursday.

Other changes include:

—The elimination of limits on how much money Americans spend in Cuba each day or what they spend it on.

—Permissible use of U.S. credit and debit cards.

—Travel agents and airlines can fly to Cuba without a special license.

—Insurance companies can provide coverage for health, life and travel insurance policies for individuals residing in or visiting Cuba.

—Financial institutions may open accounts at Cuban banks to facilitate authorized transactions.

—Investments can be made in some small businesses and agricultural operations.

—Companies may ship building materials and equipment to private Cuban companies to renovate private buildings.

Further down the road, Washington envisions reopening the U.S. Embassy in Havana and carrying out high-level exchanges and visits between the governments. Secretary of State John Kerry could travel to the island later this year.

Doing Business in Cuba

Credit Suisse Gets Out of Jail Free?

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Neil Weinberg writes: Credit Suisse Group AG (CSGN)’s bid to continue managing U.S. pensions after its conviction for helping American clients evade taxes should be rejected by the Labor Department unless the bank improves controls against wrongdoing, according to Representative Maxine Waters.

Waters, the top Democrat on the House Financial Services panel, sent a letter to Labor Secretary Thomas Perez today ahead of an agency hearing in Washington on Credit Suisse’s status as a pension manager, which Waters and two colleagues had pressed the department to hold.

“I believe that at this point, the waiver should be denied given the lack of important public facts and the insufficient proposed conditions,” Waters wrote. If regulators continue to routinely approve waivers, they will be “throwing away valuable enforcement tools and enshrining a policy of too-big-to-bar.”

Unless Labor grants a waiver, the Swiss bank will be disqualified from handling U.S. pension funds following its guilty plea last year to helping thousands of Americans evade U.S. taxes. Credit Suisse oversees billions of dollars of assets for more than 100 U.S. pension plans, according to a July court filing.

Credit Suisse has three asset management units seeking waivers to continue managing U.S. pension funds, Roger Machlis, head of Credit Suisse Asset Management’s legal and compliance unit, said at the hearing. John Popp, managing director of the asset management unit, who also spoke at the hearing, estimated more than 1 million individuals are in the pension plans it manages.

Credit Suisse Get out of Jail

Reform Iran’s Banks?

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At the beginning of January, Tehran hosted the most significant economic conference held in Iran since 1979, with President Hassan Rouhani, his economic team and 1,500 economists focusing on economic hardships that have surfaced in recent years.

The need for restructuring the banking system was among major issues discussed in the two-day event, while top monetary officials on the second day of the conference called on the commercial banks to be selective when offering loans.

Akbar Komijan, the deputy governor of the central bank, implied that if the commercial banks do not provide enterprises with loans, the reason would be lack of eligibility of loan seekers, and not a lack of finances.

In the eight months ending Dec. 21, more than 60% of the granted loans were made to address cash flow issues.  The banks have been faced with a massive number of non-performing loans due to the combination of government’s lending directives to support failing enterprises and harsh depreciation of the rial in 2013 against major foreign currencies.

The commercial banks, troubled with a lack of cash, are now left with few options to meet their daily needs. The central bank is complaining that the banks have been borrowing to much from the treasury.   Komijani said at the conference that the banks’ overdraft from the central bank is “inconveniencing” and called on them to find other ways to meet their needs for cash.

A monetary expert in Tehran said the banks usually fail to pay off their debt, given the high interest rate of 32% for such loans. The banks have no choice but to borrow from either the central bank or one another.

Some struggling banks are even given one-day loans by other financial institutions. These loans would let the banks meet their immediate needs for cash. Monetary officials are fearful that they would soon face a desperate situation as the non performing loans cannot be recovered.

Another option the banks could consider to boost their lending ability is to use the money held by the public in the form of gold and foreign currency, which is estimated to be around $21.5 billion.  The amount is more than five times the estimated gold reserves of the central bank, which is nearly $3.9 billion.

Many believe that the lifting of sanctions is a shortcut to prosperity as they have so far blocked the Iranian government from tapping into the reduced oil income.

The lifting of sanctions would let Iran access $100 billion in foreign assets blocked in international banks in one go and resume economic relations with world nations, a move that would give a boost to the economy and the private sector in particular, which is heavily indebted to the banking system. But for now the negotiations are unlikely to result in a swift deal and the government can do little to shore up the stressed banks.

Among the few measures the regulator may take to help recover the sizable NPLs is create a specialized team or entity to address problems of bad debt. If a list of top defaultors connected t politicians were published, this might also improve matters.

Iran

Colombia, for Entrepreneurs?

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Columbia’s turnaround.   A quarter century ago, the Latin American nation was nearly a failed state, overrun by drug lords. Even today, after the drug cartels have been largely suppressed, a war with leftist guerrillas has become the longest armed conflict in the world – lasting more than a half century. More than 220,000 people have been killed and more than a tenth of the population remains displaced.

Such troubles, which include high corruption and a big gap between rich and poor, might have left an entire people feeling down. Not so in Colombia.

In 2012, the United Nations ranked it third on a “happiness” index. A Gallup poll last year put Colombia in the top 10 of countries in which people like what they do each day and have supportive relationships. And Forbes magazine cites it as one of “10 coolest places to visit in 2015.”

Yet coolness, love, and happiness might not be enough to explain Colombia’s recent successes and reform efforts. A 2014 survey by the Pew Research Center ranks it the highest country on a few key character traits. Colombians stand out in believing that “getting ahead” takes a combination of hard work and education.  Even more telling is that Colombians rank very high compared to other emerging economies in not believing that “success is determined by outside forces.”

These traits of resilience may help explain why Mark Schneider of the International Crisis Group predicted last week that “the only good news” on the world state in 2015 may be a peace agreement in Colombia’s long war.

Talks between President Juan Manuel Santos and the Colombian Revolutionary Armed Forces, known as FARC, began in 2012. The two sides have reached a couple key agreements. But the hardest parts – how to reintegrate militias and provide reparations to some 6 million victims – are not yet resolved. Even after an agreement, it might take years to reduce the poverty and injustices that first drove the rebellion.

Still, much of Colombia, especially the former drug-addled city of Medellín, is thriving despite the war. Instead of being home to drug barons like Pablo Escobar, Medellín now sports impressive infrastructure, such as a long escalator and cable cars up hillside slums to help connect the poor and rich. The city’s culture of entrepreneurship is creating a Silicon Valley of Latin America.

Colombia has long stood out in Latin America. It was the region’s first democracy. Bogotá was once the “Athens of South America.” Now it has the strongest and fastest-growing economy, ranking in size behind Brazil and Mexico. With aid from the United States, it has curbed much of its major drug trafficking.

It still needs land reform and a better human rights record to uplift its most marginalized people. During his reelection campaign last year, Santos promised to move his country from a “culture of fear” toward a “culture of fair play, of decency, of respect towards institutions.”

A nation that has been at war for 50 years, he says, has to start early to heal the wounds of war. The victims of the conflict have a seat at the peace talks, as Santos has insisted, because they are more willing to forgive and more willing to be generous.

Colombia

 

Jamie Dimon Whines

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Hugh Son writes: Jamie Dimon, grappling with multibillion-dollar legal costs and rising capital requirements at JP Morgan Chase  said overlapping efforts by U.S. regulators place banks “under assault.”

“We have five or six regulators or people coming after us on every different issue,” Dimon, 58, said today on a call with reporters after New York-based JPMorgan reported fourth-quarter results. “It’s a hard thing to deal with.”

JPMorgan, the largest U.S. bank, posted a drop in fourth-quarter profit amid $990 million of legal expenses, about double what some analysts predicted. The legal costs, mostly tied to probes into currency rate-rigging, follow even bigger payments in 2013 related to mortgage bonds sold before the 2008 crisis by JPMorgan and firms it acquired.

Dimon, who previously blamed regulators for stifling economic growth, struck a more conciliatory tone last year. The bank had a “tin ear” when dealing with overseers before settling probes into mortgage lapses and trading losses, he said in an April letter to shareholders.

New Federal Reserve rules that exceed the global standard also could mean JPMorgan needs more than $20 billion in additional capital by 2019.

“The regulators clearly want even more capital,” Dimon said today. “We’ll meet those requirements. But those measures aren’t a measure of risk at all. It is simply a measure of size. This company is as sound as it gets.”

Dimon, who was lauded during the crisis for JPMorgan’s role in buying Bear Stearns Cos. and Washington Mutual Inc.’s banking operations, has criticized the government for penalizing JPMorgan for those firms’ actions.

In 2013, Dimon settled a litany of disputes, including government probes of mortgage-bond sales, energy trading, oversight of a trader known as the London Whale, and scrutiny of services provided to Ponzi-scheme operator Bernard Madoff.

The bank settled foreign-exchange investigations with three regulators in November, paying about $1 billion, and still faces a Justice Department probe.

“In the old days, you dealt with one regulator when you had an issue, maybe two,” said Dimon, 58. “Now it’s five or six. It makes it very difficult and very complicated. You all should ask the question about how American that is. And how fair that is. And how complex that is for companies.”

Dimon’s bank, of course, does only 20% of its business as a conventional commercial bank.  It is in the derivatives market, the commodities market and has already gotten spanked for its involvement in LIBOR.  Maybe Dimon should listen to Goldman Sachs, who has suggested the company should be divided up.  Then each section could deal with its own regulators.

Jamie Dimon