JP Morgan Chase 2010 Annual Report Download - page 34

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companies.Foralongtime,theUnitedStates
has had the deepest and best capital markets
on the planet. These markets match investors
with companies, large and small, who inno-
vate, invest and grow around the world. They
have helped build some of the best compa-
nies in the world and the best economy on
the planet. America’s financial institutions
have been a critical part of this success.
Whilemistakesweremadeandchangewas
clearly required, we should not throw out the
baby with the bath water.
Some of the laws that were written and some
of the possible interpretations of rules to
come could create competitive disadvantages
for American banks. They are adding up, and
they bear watching. They are:
• Americanbanksnolongerhavetheability
to use tax-deductible preferred stock as
capital(overseasbanksdo).
• Mostothercountrieshavemadeitclear
that they will not accept the Volcker Rule
(despite Paul Volcker’s testimony that inter-
national regulators would adopt it once
theyunderstoodit).
• Manyoftherulesregardingderivatives
beingadoptedintheUnitedStatesare
unlikely to be adopted universally. Certain
countries are licking their chops at the
prospectofU.S.banksbeingunableto
compete in derivatives. Remember, the
clients will go to the place that is the
cheapest and most eective for them.
• Thereareconcentrationlimits,oldand
new, that constrain American banks’ ability
from making acquisitions both here and
abroad. Some of these constraints will not
apply to foreign banks.
• Thereareproposedbanktaxesorother
arbitrary taxes that could disadvantage
large banks – even the FDIC has skewed its
deposit insurance to increase the charge to
bigger banks.
• Manyoftheleadingeconomiesofthe
world may not have their large banks
maintain additional capital requirements in
excessofthe7%calledforinBaselIII.
• Itisclearthatsomecountries’regulation
allows for a much less conservative calcula-
tion on risk-weighted assets.
WedonotbelievethattheFederalReserveor
the Treasury would want to leave American
banksatadisadvantage.WeneedAmerican
leadership to be forceful and engaged to
ensure a fair outcome.
We all have a vested interest in getting this right
The government took great action to stop the
crisis from getting worse. Lawmakers and
regulators have and will take much action
to fix what clearly was a broken system. As
quickly as we reasonably can, we should
finish the remaining rules and requirements
and create the certainty that will help the
system to heal faster. Nothing is more impor-
tant than getting our economy growing and
getting Americans back to work. And the
regulators should remember that they always
have the right to change things again – if and
when appropriate.