regulatory reform

What JPMorgan's Dimon is complaining about now

September 12, 2012: 2:10 PM ET

When it comes to regulatory reform, the bank chief says he's moving on, but it's not clear he's there yet.

Jamie DimonFORTUNE -- Jamie Dimon says there is no need to continue to complain about increasing bank regulations. But that won't stop the CEO of JPMorgan Chase (JPM) from doing just that.

Speaking at the Barclay's 2012 Global Financial Conference, Dimon added bank stress tests to his growing list of measures implemented by regulators and lawmakers in the past few years that he says are misguided and possibly holding back the economy.

Dimon says the Fed's stress tests are forcing banks to hold onto more of their cash than necessary rather than lending it out or investing it. "A lot of banks by 2014 or so will have their capital cups running over," says Dimon. "They're not going to use all that capital. They'll be hitting their targets and there is going to be no way to put it all to use. "

MORE: What the Fed should do but probably won't

Once hailed as the turning point in the financial crisis, the stress tests, which are suppose to gauge the banks' ability to survive another crisis, have more recently come under fire. Some believe they are too easy. Another critique is that they test for the conditions that arose in late 2008. The next crisis is unlikely to be a carbon copy.

In the most recent stress tests, which were completed in March, the Fed told four of the nation's 19 largest banks that they had to hold onto more capital than the banks originally planned. In June, a group of bankers complained that the tests were creating "uncertainty and confusion."

Still, the complaint that the stress tests are constricting lending is odd coming from the CEO of JPMorgan, which seems to be more than able to make more loans. In the most recent quarter, JPMorgan had about $1 trillion in deposits and only about $700 billion in loans. The bank also has $200 billion in cash sitting in government banks around the world.

MORE: Wall Streeters fall out of the 1%

Along with the stress tests, Dimon told the crowd of analysts and investors at the conference that regulators are making banking rules more complicated than they need to be. He said portions of the proposed international capital rules, so-called Basel III, could exacerbate future credit crunches. In the next year, Dimon says a good portion of his and his bank's time will be spent complying with banking rules.

Dimon, who says he supports most of what's in Dodd-Frank, has been one of Wall Street's loudest critics of financial reform. He once called rules requiring so-called too-big-to-fail banks to hold more capital than small ones un-American. Some guessed that Dimon would dampen his criticism of regulators following an incident in May in which an ill-advised trade cost the bank nearly $6 billion. But that doesn't seem to be the case. Regulators are still investigating whether the bank or traders at the bank broke any rules.

MORE: How Jamie Dimon hid the $6 billion loss

Last week, the American Banking Association decided to form a political fund that would donate money to influence the outcome of a number of close U.S. Senate races. In the past, the ABA has sought to limit the changes being put in place by Dodd-Frank. Officials at JPMorgan are on the board of the ABA.

"But again, I'm not complaining. That's life," says Dimon. "We're moving on." Really.

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    The financial reform legislation hammered out Friday morning on Capitol Hill closes many of the loopholes that led to the last crisis. But it stops well short of breaking the bad habit that has fed outlandish risk-taking for almost three decades: too big to fail.

    The reform bill does take strides toward a safer financial system. It will create a process for MORE

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