- Regional lenders say interests not aligned with Wall Street
- JPMorgan chief said banks of all sizes need to work together
Thanks, but no thanks.
That was the response of small banks after Jamie Dimon called for a truce this week between large and small lenders. The JPMorgan Chase & Co. chief executive officer said the industry needs to work together, particularly in Washington, to achieve its policy goals with Congress and regulators.
“Just because Jamie Dimon says ‘let’s sing kumbaya’ doesn’t mean community banks are going to just line-up like a Greek chorus," said Camden Fine, president of the Independent Community Bankers of America, a lobbying group for small banks. “This is just an attempt to link the interests of mega banks to community banks in order to mitigate the political heat that is on them right now. CEO’s of all the too-big-to-fail banks are clearly worried about the political climate."
Attacks on Wall Street haven’t dissipated eight years after the financial crisis, with calls to break up the U.S.’s largest banks a constant refrain on the presidential campaign trail. Adding to the chorus are small banks across the country who fault big lenders for a slew of new rules they now must follow that affect everything from mortgages to capital requirements. The friction has prompted small lenders to form new trade groups to push their own agenda in Washington.
“Mr. Dimon is a hair glib to say big banks are not the enemy," said Curt Bradbury, chief operating officer of Little Rock, Arkansas-based Stephens Inc. and chairman of the American Securities Association, a lobbying group for mid-size banks and brokerage firms. “It’s the regulations intended for Wall Street that applies to small banks that is most definitely the enemy."
Dimon used his annual letter to shareholders and a op-ed published Wednesday in the Wall Street Journal to defend his firm, the biggest U.S. bank, and argue that small banks shouldn’t denounce their larger peers. Small and large lenders rely on each other for business, he said, while adding that small banks are often clients of big banks.
JPMorgan and other big banks “are very supportive of the efforts by small and regional banks to work responsibly with their regulators and, if necessary, the Congress to address new rules and requirements," Dimon wrote in his op-ed.
Bradbury said he appreciated Dimon’s acknowledgment of smaller firm’s efforts in Washington but that there’s a lot more big banks can do to help. Fine of the community bankers group said he isn’t convinced Dimon goal is to help community banks.
Wall Street firms often rely on the support of their smaller peers to advance policy changes, in part because lawmakers are typically more responsive to the concerns of banks that lend to businesses in their states and congressional districts. A growing number of Republicans and Democrats in Congress have called for regulatory relief for small banks.
“All of the large banks are aware that there’s a community bank in every congressman’s district," said David Hilder, a bank analyst at Drexel Hamilton in New York. “They are a very effective lobbying group."
An example of Wall Street benefiting from regional banks came at the end of 2014, when the industry secured one of its most significant wins in Washington since the financial crisis.
Congress approved legislation that overturned some restrictions on derivatives trading after banks including PNC Financial Services Group Inc. and SunTrust Banks Inc. argued they would face increased compliance costs and have to redirect massive amounts of capital. Killing the provision known as "swaps pushout" was important to JPMorgan, with Dimon personally pressing lawmakers before a December 2014 vote.