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Chase CEO: ‘Big, Dumb Banks’ Should Be Allowed to Fail

commercial-falling-moneyShould banks actually be allowed to fail? Well, the “big, dumb” ones should, according to JPMorgan Chase chairman and CEO Jamie Dimon, who on Wednesday blasted the institutionalized belief that mega-dollar bailouts for badly run banks is good for the economy.

Dimon’s comments that banks should be allowed to fail is the latest in a growing movement among top-tier banking execs who believe that financial institutions earn their own success or failure. In June, Wells Fargo’s former CEO, Dick Kovacevich, called the Troubled Asset Relief Program, or TARP, “an unmitigated disaster” for several reasons, including institutionalizing the concept that there are some banks that can’t be allowed to go under. For Dimon, if a bank can’t keep its house in order, it does not deserve help getting out of the trouble it caused itself.

The call to end bailouts has even become a political campaign issue. In October,

presidential candidate Hillary Clinton stressed to TV host Stephen Colbert the importance of investors knowing that their banks could fail, and that the price of mismanagement should be suitably harsh.

Dimon’s comments also coincide with a series of bills passed Wednesday by the House Financial Services Committee that aim to boost economic growth by increasing the accountability of financial regulators. At the sessions, Committee Chairman Jeb Hensarling (R-Texas) said that the Dodd-Frank Act of 2010, rather than eliminating the “too big to fail” concept, has simply made more bureaucrats more untouchable and left more taxpayers to pick up an increasingly hefty bill for the economy in the wake of TARP assistance.

"Banks should be allowed to fail," said Dimon, speaking to 300 CEOs and senior executives at the Fortune Global Forum in San Francisco. "For the American public, [bailouts] should be called 'bankruptcy for big, dumb banks.'"

Noteworthy is that JPMorgan Chase accepted $25 billion in TARP assistance in 2008, which Dimon at the time said the bank accepted “because we were asked to.” The bank has since paid the money back, plus more than $1 billion in fines related to the company’s acquisitions of Bear Stearns and Washington Mutual.

About Author: Scott Morgan

Scott Morgan is a multi-award-winning journalist and editor based out of Texas. During his 11 years as a newspaper journalist, he wrote more than 4,000 published pieces. He's been recognized for his work since 2001, and his creative writing continues to win acclaim from readers and fellow writers alike. He is also a creative writing teacher and the author of several books, from short fiction to written works about writing.
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