Reform reading: JPMorgan CEO not embarrassed to be banker

Introduction

JPMorgan Chase & Co’s chief executive, Jamie Dimon, says he is “not embarrassed to be a banker” and sees his institution as a kind of financial Wal-Mart that sells products ranging from mortgages to credit cards to commercial loans. In a lengthy profile published by the New York Times Magazine, Dimon says bankers are being unfairly cast as villains by some lawmakers and critics.

He defended the size of JPMorgan, which has $2 trillion in assets and now controls about 46 percent of all U.S. bank deposits after acquiring Bear Stearns and Washington Mutual during the financial crisis. “Economies of scale are a good thing,” Dimon says in the interview. “If we didn’t have them, we’d still be living in tents and eating buffalo.”

Prepaid cards look better to banks

The Fed’s expected crackdown on debit card fees has U.S. banks looking at prepaid cards to help make up lost revenue. Wells Fargo, Bank of America Corp., and U.S. Bancorp are among the banks looking at prepaid cards, which are used like debit cards once they have money loaded on them, the Wall Street Journal reports.

The Dodd-Frank reform law gives the Fed the power to set a ceiling on the interchange rate for debit cards, currently a lucrative source of revenue for banks. That could translate into a decline of as much as $9 billion of the $22.8 billion in annual interchange fees, according to a CardHub survey. Meanwhile, prepaid cards, which are now mostly marketed to low-income consumers without bank accounts, carry about the same interchange rates as debit cards, or about 0.75 percent to 1.25 percent of each transaction.

Another plus about prepaid cards: They are exempt from restrictions in the reform law.

Mortgage lenders & money laundering

Mortgage lenders, which already face tougher regulations from the Dodd-Frank financial reform law, may soon also have to tell the U.S. government when they encounter suspicious transactions involving at least $5,000.

The federal Financial Crimes Enforcement Network today proposed regulations that would require mortgage brokers and lenders not affiliated with banks to create anti-money laundering programs and to file suspicious activity reports. The reports are a tool for law enforcement to investigate mortgage fraud-related crimes such as false statements, identity theft, and use of straw buyers, FinCEN said.

Mortgage lenders and brokers “are ideally positioned to assess and identify money laundering risks,” FinCEN Director James Freis said in a statement, adding that the requirements would be another form of due diligence to assess creditworthiness in lending. Small banks have long criticized the reports as time-consuming and costly.