* Dimon supports U.S. systemic risk regulator
* Opposes nationalization of banks
* Blames short-selling for fomenting crisis
(Recasts, adds background)
WASHINGTON, March 11 JPMorgan Chase & Co
(JPM.N) Chief Executive Jamie Dimon said on Wednesday he sees
"modest signs" of an economic recovery and endorsed a plan to
create a U.S. systemic risk regulator.
Dimon, speaking at a U.S. Chamber of Commerce economic
conference, also supports mark-to-market accounting, but banks
may have applied the fair value rule "to a ridiculous point."
The mark-to-market accounting rule, which requires assets
to be valued at market prices, is defended by investor
advocates and some lawmakers as giving a clear picture of the
assets held on banks' books. But the banking industry, which
has been forced to write down billions of dollars' worth of
hard-to-value assets in illiquid markets, has pleaded for a
suspension or modification of the rule.
Dimon endorsed the idea of creating a U.S. systemic risk
regulator, a plan proposed by U.S. Rep. Barney Frank, chairman
of the House of Representatives Financial Services Committee.
Frank plans a broad overhaul of U.S. financial regulation this
Christopher Dodd, chairman of the U.S. Senate Banking
Committee, said on Wednesday he hopes to have comprehensive
reform legislation to address the regulation of the financial
services industry by the summer, instead of a series of
proposals being considered in the House.
"There are modest signs of recovery and healing out there,"
Dimon told the chamber, adding the market just saw the two most
active bond months ever.
Banks, reeling from the U.S. financial crisis as the
economy remains mired in a recession, have seen their stock
prices tumble. Some have blamed short-sellers for pushing down
Several months ago, the Securities and Exchange Commission
temporarily implemented a ban on short selling aimed at halting
the drop of financial services stocks.
Dimon said short-selling and the lapse in the so-called
"uptick rule" contributed to the credit crisis.
The SEC said on Wednesday the agency could act in April to
reinstate the uptick rule, which allowed short sales only when
the last sale price was higher than the previous price. It was
abolished by the SEC in 2007.
Speaking to reporters after his speech, Dimon said he
opposes the nationalization of U.S. banks.
"I don't think any banks should be nationalized. It doesn't
work. It's a mistake," he said.
Dimon said nationalization means different things to
different people, but some banks may need some government help
and they should remain as private as possible, he added.
He said if a bank is in really poor shape the Federal
Deposit Insurance Corp has the responsibility to deal with it.
"That's what the FDIC is for," he said.
The FDIC, which insures up to $250,000 per depositor, takes
control of failed banks in a process in which sometimes a buyer
is found or the agency takes control of the failed bank's
In a wide-ranging speech, Dimon also criticized the Basel
II international banking accord, saying the capital adequacy
plan "allowed too much leverage by banks."
Dimon addressed the government stress tests, which U.S.
banks with at least $100 billion in assets are undergoing in
order to determine how they would withstand even more severe
economic conditions. Regulators want to know how much capital
or other aid they might need in the event of those economic
Dimon believes banks will survive the tests, which could
help "create a lot of credibility within the system."
JPMorgan is among many institutions that received capital
injections from the government, but like other bank CEOs, Dimon
wants to return government money as soon as possible.
Some banks, unhappy with government's executive
compensation restrictions, are seeking to return the money.
Criticized for failing to lend to consumers and businesses,
banks that received government aid argue they are lending.
Dimon reaffirmed banks are lending due to the government's
He also said banks should try "not to overreact" to the
restrictions the government is placing on banks receiving
(Reporting by Karey Wutkowski and John Poirier; Editing by
Matthew Lewis and Andre Grenon)