JP Morgan Chase 2015 Annual Report Download - page 49

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There will be a time to comprehensively review,
coordinate and modify regulations to ensure
maximum safety, create more eciency and
accelerate economic growth.
Every major piece of legislation in the United
States that was large and complex has been
revisited at some point with the intention of
making it better. The political time for this
is not now, but we should do so for banking
regulations someday. We are not looking
to rewrite or to start over at all – just some
modifications that make sense. Here are a
few specific examples:
• Liquidity. Regulators could give them-
selves more tools for adjusting liquidity
to accommodate market needs. This could
be done with modest changes that could
actually ameliorate the procyclical nature
of the current rules and, in my opinion,
enhance safety and soundness and
improve the economy.
• Mortgages. Finishing and simplifying mort-
gage rules around origination, servicing,
capital requirements and securitizations
would help create a more active mortgage
market at a lower cost to customers and,
again, at no risk to safety and soundness
if done right. This, too, would be a plus to
consumers and the economy.
• Capital rules. Without reducing total
capital levels, capital rules could be
modified to be less procyclical, which
could serve to both dampen a bubble and
soften a bust. This alone could boost the
economy and reduce overall economic
risk. There are also some rules – for
example, requiring that capital be held
against a deposit at the Federal Reserve –
that distort the normal functioning of the
market. These could be eliminated with
no risk to safety and soundness unless
you think the Fed is a risky investment.
Finally, finishing the capital rules for
banks will remove one additional drag on
the banks and allow for more consistent
capital planning. This would also help to
improve confidence in the banks and, by
extension, investor confidence.
• Increased coordination among regulators.
Having five, six or seven regulators
involved in every issue does make things
more complicated, expensive and inef-
ficient, not just for banks but for regula-
tors, too. This slows policymaking and
rulemaking and is one reason why many
of the rules still have not been completed.
One of the lessons we have all learned is
that policymakers need to move quickly
in a crisis. While everyone has worked
hard to be more coordinated, far more
can be done.
• Be more forward looking. This is already
happening. As banks are catching up on
regulatory demands, the pace of change,
while still rapid, is slowing. This sets the
stage for both banks and regulators to be
able to devote more resources to increas-
ingly critical issues, including cyberse-
curity, digital services, data protection,
FinTech and emerging risks.
As the financial system reaches the level of
strength that regulations require, we hope
banks can begin to expand slightly more
rapidly (and, of course, responsibly) – both
geographically and in terms of products and
services – with the support and confidence
of their regulators. This will also foster
healthy economic growth, which we all so
desperately want.