Wednesday, June 8, 2011

Diamond's Sum of All Fears

From In a Q&A session with Ben Bernanke in Atlanta, J.P. Morgan’s Jamie Dimon got a chance to ask Mr. Bernanke a question. “I have a great fear that somebody will write a book that the things we did in the crisis will slow down the recovery,” Mr. Dimon sniffled. He ran through a list of the ways markets have changed since the crisis, saying “most of the bad actors are gone,” that exotic derivatives are gone, lending standards are higher, banks have more liquidity and capital, and boards and regulators are tougher. Hey, Mr. Dimon seemed to suggest, enough is enough. And now on top of it all there are higher capital requirements and 300 new rules coming, and maybe it will all be too much for banks to take. Nice economy you’ve got there, he seemed to say. Shame if anything happened to it. “Has anyone bothered to study the cumulative effect of these things, and do you have the fear, like I do, that when we look at it all, it will be the reason” why banks aren’t lending, he asked. “Is this holding us back at this point?” [WSJ]

>>>>>> It's all in the question

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