Recently, JPM CEO Jamie Dimon has been very vocal about the need to reassess financial regulations. This message resonates with Wall Street and Washington as Republican lawmakers hope to reform 2008 banking legislation to simplify federal institutions and promote government efficiency.
Last month, Dimon joined Bank of America, Wells Fargo, Bank of America, PNC, Truist and Capital One in a roundtable with Senate Banking Committee Chairman Tim Scott to discuss a variety of concerns, especially “deprived”, especially the practice of banks to terminate personal or business accounts. Republican lawmakers said major banks have mistakenly terminated their clients’ bank accounts due to their political views. Scott described the phenomenon as “Action Chokepoint 2.0, where federal regulators have used their power to pressure banks to cut off services from conservatively-leaning individuals and businesses.”
The original Chokepoint Operation was a 2013-2017 Justice Department initiative aimed at breaking banks that operate with high-risk industries that are susceptible to money laundering and fraud, such as weapons dealers and payday lenders. Since then, Republican lawmakers have compared the Biden administration’s efforts to combat digital asset scams and similar initiatives with “Operation Chokepoint 2.0” that have led to the revocation of many legitimate clients.
Dimon said JPMorgan will not revoke clients because of its religious or political views. But he acknowledged the need to review the statute. “AML [anti-money laundering]/Fincen rules are unusual, which does lead to many being pushed out of the system because banks are afraid of being prosecuted or fined,” he told Bloomberg ahead of the congressional roundtable. FinCen refers to the U.S. Treasury agency is responsible for enforcing the law to ensure banks do not conduct business with illegal actors.
Margaret Tahyar, head of financial institutions practice at law firm Davis Polk, told JPMorgan that he acquired the First Republic in 2023 after the regional banking crisis, told observers that “revocation is a reliable issue.” She believes it is the result of anti-money laundering and fraud regulations, which leads to “weird incentives where supervisors force banks to circumvent risks as much as possible.” Tahyar said the United States must enforce a money laundering system that prohibits illegal activities but avoids building a culture of overcaution, leading to false termination of accounts of innocent people.
Dimon's focus extends to a wider financial regulatory system. “We have become a highly bureaucratic, litigated, over-regulated society, which is terrible,” he told CNBC last month. “It's not only a waste and fraud, but the result. Why do we spend money on these things? Are we getting what we deserve?” he asked, hinting at the government's efficiency ministry led by Elon Musk.
Reflecting this growing sentiment, President Trump appointed Russell Vought, director of his Office of Management and Budget, as interim director of the Consumer Financial Protection Bureau (CFPB), who stopped the agency’s operations 36 hours after taking office as the reign. Founded in 2011, CFPB is part of the Dodd-Frank Wall Street reform and consumer protection laws following the 2008 financial crisis.
Wall Street has seen pauses as temporary and expects a more streamlined version of the CFPB reform. “The root and branch reform of the CFPB will be carried out, not the organization's removal,” Tashiyal said. She believes there is an urgent need to rethink how the federal government regulates the banking system, questioning, “Why do we have five groups of supervisors at the federal level? Can we be more effective?”
