JPMorgan Hasn’t Damaged Institutional Banks: Whalen

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Sept. 20 (Bloomberg) -- Chris Whalen, executive vice president at Carrington Holding Co., discusses the impact of Dodd-Frank on banking, JPMorgan’s “Whale” fine and the state of bank regulation. He speaks on Bloomberg Television’s “Bloomberg Surveillance.”

The late 1930's and others that you capture brilliantly in your book and what is different this time about dodd-frank?

Dodd-frank was a reaction by congress, and the american public, a calvinist approach of limiting credit and punishing people.

We are angry at the big banks.

But the reality is the government and congress are the most culpable in the subprime crisis.

They are the ones who created the circumstances.

And of course the bank is obliged and it's silly and reckless things.

We have to understand, the embrace of the u.s. government with the housing sector was the catalyst of the subprime crisis.

A lot of my friends, berry results and others say it was agreed and stability -- barry rithiltz say he was agreed -- everybody has to own a home.

With the pooling of risk.

-- without the pooling of risk, you would not have had this.

Jamie dimon right now, onward and forward, build revenues and cash and move on or is there a more nuanced approach?

I think that is what they are doing.

We do a lot of business with jpmorgan.

They are a very important part.

I do not think there has been particular damage as far as the institutional community.

Certainly a lot of public relations heat.

What i look at at morgan is they are guiding down on the mortgage business and they say they will lose money on mortgages this year because volumes are falling.

Those people you talk about jpmorgan, do they like james dimon?

Of course.

He is a great operator.

He made a mistake.

Dawn kopecki engaged him and he responded and i don't think he would do it in the future.

As a prudent risk management -- manager?

It produced a large banks are difficult to manage.

Why do we know about the london whale question mark the volcker rule and dodd-frank.

In england they take a radically different approach.

Anna edwards, what is the difference between the approach at lloyds bank or this horrific story at rbs versus what we hear from christopher whalen?

The differences.

Instead of splitting banks -- the selling of proprietary trading desks -- they decided to do ring fencing, putting walls between parts of big international businesses.

Bob diamond writing in this over the weekend warned about this, you have regulators in different parts of the world in a global industry doing different things and it undermines the credibility of the regulations.

Do you go along?

Of course.

We have the image, this neurotic global regulation but we -- we don't have it.

We have international treatment.

I would say to my friends in the u.k., get on with it -- you need to sell those banks and get them into private sector.

The longer they stay under state ownership the worse it will be.

You talk about the banks in the mortgage companies and everybody being blamed, what about the credit rating agencies?

We have not heard anything about that and there has not been regulation addressing their role and structure.

At carrington are -- at carrington, we are traditionally non-agency shop.

I don't think they understand our business at all.

We had the fiasco earlier this year with fitch and the forbearance balances on mortgages.

Way too much jargon.

The point is, they don't help.

What we look for in our firm are investors who want to do the work, who understand risk, and deploy capital on that basis.

The rating agencies, i think, have gone into irrelevancy, frankly.

I have about eight more

This text has been automatically generated. It may not be 100% accurate.


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