Bankers have become slightly more contrite and their overseers
may have softened their determination to constrain bank risk, but
there are still widely differing opinions on issues like how big the
sector should be.
Jamie Dimon, the chief executive of JPMorgan Chase, apologized
again for the bank's recent $6 billion trading loss, this time in
front of an audience that included the elite of the financial world.
But it was a diet portion of humble pie. Mr. Dimon went on to
energetically defend his bank and the behavior of banks in general.
"If you're a shareholder of mine, I apologize," Mr. Dimon said at
the World Economic Forum annual meeting here. But he quickly added:
"We did have record profits. Life goes on."
Mr. Dimon's remarks may have exemplified the tone of the debate
at Davos among bankers, economists and regulators Wednesday.
For the last five years, the financial crisis has been a dominant
theme at the gathering, which attracts many of that melodrama's top
protagonists. In that time, bankers have become slightly more
contrite, and their overseers may have softened their determination
to constrain bank risk taking. But there is still wide disagreement
on basic questions like how big the banking sector should be.
Nor is there consensus on how central bankers and political
leaders should be responding to the crisis. Axel Weber, who resigned
in 2011 as president of the German Bundesbank because of his
opposition to European Central Bank policy, said in Davos Wednesday
that he remained concerned that cheap money was creating conditions
for the next crisis.
Mr. Weber, now chairman of the Swiss bank UBS, said it was wrong
to combat a crisis caused by excessive borrowing by encouraging even
more borrowing. Record-low official interest rates and other
emergency measures would eventually backfire, he said.
"We are trying to solve the crisis with more leveraging," he said
during the same panel discussion in which Mr. Dimon made his
comments. "We are having a better life at the expense of future
But in other closed-door discussions, top central bankers, who
under Davos rules could not be quoted directly, said those financial
pump-priming measures had prevented a global depression and that the
long-term consequences were not serious.
They noted that there had been no sign of the inflation and other
dire consequences predicted by critics of the U.S. Federal Reserve's
so-called quantitative easing financial stimulus program.
During an often contentious panel discussion in Davos that
included several other bank executives, Mr. Dimon clashed with a top
official of the International Monetary Fund about whether the
banking system was still too dangerous.
Zhu Min, deputy director of the I.M.F., said the financial
industry was too large in proportion to the overall economy. Banks
still operate on too much borrowed money, he said, and still trade
in overly complicated derivatives that were impossible for outsiders
"The whole financial sector is too big," Mr. Min said.
Mr. Dimon responded that JPMorgan was fulfilling its duty to lend
to businesses and governments. …