Canada’s Dickson Rejects Notion That Basel Is Anti-American
Canada’s banking regulator said new global capital requirements aren’t “anti-American,” arguing the standards are prudent measures to insulate financial institutions against another crisis.
Julie Dickson, head of the Office of the Superintendent of Financial Institutions, was responding to comments by Jamie Dimon, chief executive officer of JPMorgan Chase & Co. (JPM), who has criticized the so-called Basel III rules.
“Basel is anti the old way of doing things, for sure, but I don’t think I’d call it anti-American,” Dickson told reporters after a speech in Toronto today. “Jamie Dimon’s always been quite vocal. It wouldn’t be the first time that institutions who are opposed to capital increases would talk about things that would appeal to governments.”
Some banks have been pushing for regulators to delay the deadline to implement higher capital standards set by the Basel Committee on Banking Supervision. Dimon has been a vocal critic of Basel III, telling Federal Reserve Chairman Ben Bernanke at a conference in June that more study is needed to determine the impact on big banks such as JPMorgan.
At a gathering of bank executives on Sept. 23 in Washington, Dimon, 55, criticized regulators’ plans to require the biggest lenders to hold extra capital and got into a dispute with Bank of Canada Governor Mark Carney, said three people with knowledge of the encounter.
Joseph Evangelisti, a spokesman for JPMorgan, and Jeremy Harrison, a spokesman for the Bank of Canada, declined to comment on what was said at the meeting. Harrison said in an e-mailed statement that the central bank has been “engaged in constructive dialogue with a range of stakeholders, both domestic and international, as we move forward through this financial-sector reform process.”
Carney worked at Goldman Sachs Group Inc. for more than a decade before joining Canada’s central bank and has led a committee at the Bank of International Settlements that monitors risks in global financial markets. He said Sept. 25 that new financial regulations won’t hobble the global economic recovery.
“The implementation timetable for Basel III begins in two years and ends in 2019,” Carney said in a speech to the Institute of International Finance in Washington. “It is difficult to believe that prolonging this implementation phase even further would have a material impact on real economic outcomes.”
‘More to Come’
Steps to meet the Basel III rules are the “biggest implementation operations our members have ever experienced, and there’s more to come,” Terry Campbell, chief executive officer of the Canadian Bankers’ Association, said in a May 25 speech.
Dickson said her agency, known as OSFI, continues to expect Canadian financial institutions to meet the capital standards early in the Basel III transition period, which starts January 2013.
“When it comes to Basel III applying to healthy banks, I don’t think that the issue is one of going too far, too fast,” Dickson said. “I think it is just prudent to increase capital levels as soon as you can.”
Dickson said in her speech that Canadian banks, which have been judged the world’s soundest by the Geneva-based World Economic Forum for four straight years, must increase investments in risk controls.
“We must not become complacent in Canada,” she said. “Canadian financial institutions must continue to invest in their risk controls and systems. In fact, control expectations are rising and spending must follow, particularly on data aggregation.”
Dickson warned banks not to act as if they have “more leeway while others catch up to them, in the meantime allowing them even more flexibility to grow and expand.”
She said her agency is increasing monitoring of mortgage loans by banks, and added that imprudent lending through vehicles such as home-equity lines of credit can cause “major problems.”
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