The recent argument between JPMorgan CEO Jamie Dimon and Bank of Canada Governor Mark Carney was a rare bit of high drama in Canada's otherwise (thankfully) quiet banking sector.
But the fight isn't over. Canadian financiers are coming out of the woodwork to defend the BoC governor and take the fight to Dimon, who they say is being irresponsible and even "out to lunch" with his attacks on the global financial reforms Carney is pushing.
First out of the gate was Eric Sprott, the prominent founder of Sprott Asset Management.
"In our opinion, the current economic crisis is still, at its heart, a banking crisis," Sprott wrote last week in a letter to the Globe and Mail. "Mr. Dimon's alleged criticism reflects his inability to acknowledge this. Banking regulation is a wholly crucial issue and we stand behind Mr. Carney's attempts to address it."
And this week, a senior executive at a Canadian financial institution was quoted in the Financial Post anonymously, aggressively criticizing Dimon's stance. That the banker insisted on anonymity is a sign of how high tensions are rising in the financial reform debate -- and how influential JPMorgan is, even in Canada.
"Dimon is absolutely wrong at this point to try and argue that more stringent regulation in aid of trying to prevent a reoccurrence of the greed-induced self immolation that the banks were guilty of in 2008 is inappropriate," the Post cited the anonymous banker as saying.
"[The banks must have] within their own holdings in advance, the elements of their own rescue so that they don't require TARP. On that issue he [Dimon] is completely out to lunch," the banker continued.
The unnamed banker went on to say Dimon "is completely at sea in relation to where the peoples minds' are," and that Dimon's claims bank reform is hindering growth and is "anti-American" amounts to "a new definition of chutzpah.
"If Dimon thinks he can win that contest he is totally out to lunch. If somebody wants to take him on politically, he will be turned into mincemeat," the banker reportedly said.
At issue in the spat is Basel III, a proposed international agreement meant to address the problems that led to the 2008 financial crisis. If agreed to by G20 leaders, Basel III would require banks to increase their capital reserves, meaning the banks would have to hold a larger portion of their deposits in the bank.
The countries behind Basel III want to see its rules implemented by 2018. The OECD estimates that the resulting reduction in lending would shrink the global economy by 0.05 to 0.15 per cent.
Dimon has been railing against the plan for months, and at a closed-door Washington meeting late last month, the CEO launched what the Financial Times described as a "tirade" against the Bank of Canada governor.
According to news reports, an angry Carney stormed out of the meeting. Two days later, the BoC chief gave a speech in which he declared that "if some institutions feel pressure today, it is because they have done too little for too long, not because they are being asked to do too much, too soon."