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JP Morgan predicts more volatility due to regulator rigidity
The next financial crisis could be 'more volatile' than the last one because regulators have hamstrung the banks and made it less likely that the strong ones would take over weakened rivals again, JP Morgan's chief executive, Jamie Dimon, has said.
JP Morgan predicts a more violatile 'next' financial crisis TK Kurikawa
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In his annual letter to shareholders, Mr Dimon devotes three pages to a 'thought exercise' in which he envisages the next financial crisis. In this scenario, the large banks are less able to rescue troubled rivals as they did last time. This is because they have been tied up by the tougher capital requirement rules brought in by regulators in the meantime.
Exorbitant prices
Back in 2008, JP Morgan took on US$100b of deposits from other banks that were struggling. But Mr Dimon says it is 'unlikely that we would want to accept new deposits the next time around'. Many non-banks - including peer-to-peer lenders and crowdfunders - have entered the lending market in recent years. Mr Dimon added added that non-banks involved in lending would 'not continue rolling over loans or extending new credit except at exorbitant prices that take advantage of the crisis situation'. Source: Financial Times
