Top banker and regulator offer dueling agendas

WASHINGTON Wed Mar 30, 2011 6:13pm EDT

Jamie Dimon, CEO and chairman of JPMorgan Chase & Co., answers a question in his office in New York, in this photo taken December 22, 2010. REUTERS/Lucas Jackson

Jamie Dimon, CEO and chairman of JPMorgan Chase & Co., answers a question in his office in New York, in this photo taken December 22, 2010.

Credit: Reuters/Lucas Jackson

WASHINGTON (Reuters) - Jamie Dimon and Elizabeth Warren, both power players in U.S. finance, used a high-profile U.S. Chamber of Commerce platform on Wednesday to advance opposing agendas in the debate over regulation reform.

The two did not cross paths at the forum on capital markets in the chamber's stately Washington headquarters, situated within view of the White House, but their remarks reflected the intensity that still characterizes the issue.

Two and a half years after the peak of the 2007-2009 banking crisis, tensions and tempers continue to run high over a regulatory crackdown approved last year by Congress, with European and Asian governments moving on reforms as well.

Dimon, chief executive of Wall Street giant JPMorgan Chase, lashed out at efforts by regulators to police the $600 trillion swaps market, in which his bank is a big player.

New regulations being implemented by the U.S. Commodity Futures Trading Commission, mandated under 2010's post-crisis Dodd-Frank reforms, "would damage America," he said.

He said a part of the Dodd-Frank legislation requiring banks to spin off swap dealing operations was "one of the most irrational pieces of legislation I've ever seen."

Another part requiring reduction of fees charged in debit card transactions, he said, was "price fixing at its worst, which basically just penalizes us for having debit cards."

Once a close adviser to President Barack Obama on financial policy, Dimon has become a sharp critic since Dodd-Frank was pushed through Congress by Democrats in July 2010 over the opposition of most Republicans and an army of bank lobbyists.

Despite his criticisms about Dodd-Frank, Dimon was upbeat about the economy. "Corporate America is in very good shape. It's well-financed, it's well-funded," he said. "The consumer is spending ... housing is better than it was."

IMPLEMENTATION UNDER WAY

The remarks from one of Wall Street's highest-paid bankers, and arguably its most politically influential, came as U.S. regulators work to implement scores of new Dodd-Frank rules as lobbyists and Republicans try to weaken them.

The profits and pay at big banks that were bailed out by taxpayers, including Dimon's, are up strongly since the crisis, while many Americans still struggle to recover from a severe recession with high unemployment.

The chamber event also saw Elizabeth Warren come before some of her sharpest critics to defend the independent funding of the U.S. financial consumer watchdog she is setting up for the Obama administration. She said she is a strong supporter of competition and that she believes the chamber is too.

"I know that you believe in it passionately and so do I," she said at the event held by the chamber, the nation's largest and richest business lobbying group.

"The chamber and I have not always seen eye to eye ... But I don't consider myself in hostile territory right now, and that is because I believe we share this principle," she said.

Her appearance at the event was the latest stop in her charm campaign as the administration weighs whether to formally nominate her to be director of the Consumer Financial Protection Bureau (CFPB) that was created by Dodd-Frank.

Obama has done more recently to reach out to business, after a testy first two years in power, but the chamber has remained a foe, analysts said.

"The chamber has been very aggressive in opposing pretty much any policy the Obama administration has proposed," said Christian Weller, an associate professor of public policy at the University of Massachusetts-Boston.

"These attacks on the administration and its policies are very surprising considering that the Obama administration has gone out of its way to make sure that its policies will in fact enhance the functioning of private markets," he said.

WARREN DEFENDS FUNDING

Warren used the chamber event to attack a proposal from congressional Republicans to put the CFPB's funding through the congressional appropriations process, instead of getting funds independently as the Dodd-Frank legislation required.

CFPB funding should be independent of the appropriations process, she said, as it is for other bank regulators.

Chamber President Thomas Donohue, speaking at the event, said Dodd-Frank threatens a "steady decline in our share of global economic activity ... We're in a dangerous position."

In a familiar theme, he warned that "layer after layer or regulation" is driving business to other nations. For years, Donohue and the chamber have warned that excessive regulation would drive U.S. businesses to the United Kingdom.

The Wall Street Journal reported on Wednesday that UK banking giant Barclays Plc is considering moving its global headquarters from London to New York due to the threat of higher capital requirements in the UK.

The bank has had preliminary conversations with U.S. regulatory officials on a move and is conducting an analysis of whether switching its domicile makes sense, the newspaper reported, citing a person involved in the process.

Barclays declined to comment on the report.

CAT CEO HITS ILLINOIS

At the chamber event, the chief executive of Caterpillar Inc criticized the business climate in the heavy equipment maker's home state of Illinois in remarks at the event, while downplaying reports that the company might leave.

"Legislators in Illinois have created an environment that is unfriendly to business and investment. At Caterpillar we want to help and lead a change," said Douglas Oberhelman.

He sent a letter last week to Illinois' governor that mentioned that four states have invited the company to relocate since Illinois raised taxes in January.

"I want to stay here. But as the leader of this business, I have to do what's right for Caterpillar," Oberhelman wrote in the letter obtained by a local media outlet.

At the chamber event, Oberhelman said headlines suggesting that Caterpillar might leave the state were misleading. "That's not really what I said," he said. "I actually said I was looking forward to finding a way to invest more in Illinois and change the business climate. Illinois is our home."

(Reporting by Kevin Drawbaugh; Editing by Tim Dobbyn)

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