French President Nicolas Sarkozy and Jamie Dimon, the chief executive officer of JPMorgan Chase & Co., sparred over financial regulation today in Davos, after the U.S. bank chief said he was concerned "bad policies" could impede economic recovery.
Dimon, who oversees the second-biggest U.S. lender by assets, said at the World Economic Forum in Switzerland that the Group of 20 nations should focus on jobs and growth. Regulators must avoid implementing policies "out of anger," he said.
“Don’t be accusatory of us,” replied Sarkozy, the chairman of the G-20 and G-8 nations this year. “We will be reasonable, but we will be wise."
France passed a law last year to increase the power of supervisors over bank bonuses and rating companies. In a letter last June, Sarkozy and German Chancellor Angela Merkel called for permanent surveillance of pay, saying the Financial Stability Board ‘‘should establish directives to be put in place by national supervisors and establish a permanent mechanism to follow big financial institutions.’’
In the U.S., the Financial Crisis Inquiry Commission was set to publish a report today that blamed ‘‘weak’’ federal regulators and ‘‘reckless’’ Wall Street firms for contributing to the economic collapse. The watchdogs found many banks were deficient in curtailing risk-taking that fueled the worst financial crisis since the Great Depression.
Dimon, 54, credited government intervention for stabilizing the system even as he cautioned regulators from overreaching.
‘‘We had an unprecedented financial crisis and if it hadn’t been for actions of governments around the world, it would have gotten worse,’’ Dimon said. Still, JPMorgan tried to fight reforms that "weren’t rational," Dimon said, without giving specifics.
"It would be important when we go to the G-20 when it comes to financial reform that people take a deep breath," Dimon said. "Business and banks are part of the solution."
Sarkozy, 55, criticized the practices that led to the bankruptcy of Lehman Brothers Holdings Inc. and the ensuing financial crisis. A loss of ‘‘common sense’’ at financial institutions precipitated the collapse, which caused widespread job losses and forced taxpayers to assume the costs, he said.
In a United Nations speech following Lehman’s collapse, Sarkozy called for those responsible to be ‘‘held accountable and punished.’’ He threatened to walk out of a Group of 20 summit meeting in April 2009 if his push for tougher financial regulation was rebuffed.
‘‘I don’t want to be presented as obsessed with regulation,’’ Sarkozy said today. "I just want to put some more regulation in sectors that have lacked some.”
Sarkozy was "speaking more his own view as president of France than as a representative of the G-20," said Juan J. Daboub, CEO of the Global Adaptation Institute and a former World Bank official. "Not all of G-8 or G-20 would agree with his response. What he said implied more government intervention. His answers, to put it mildly, were very French."
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