Financial regulatory reform has added more complexity to the already difficult financial institution world and according to Tim Ryan, president and CEO of the Securities Industry and Financial Markets Association, Dodd-Frank and regulations like the Volcker Rule are so complex that “even regulators can't figure them out.”
“They have added additional complexity,” Ryan said following JPMorgan CEO Jamie Dimon's testimony before the Senate Banking Committee last week.
“The rules are not well synchronized, they are not prioritized and quite frankly a lot of them are not being done that well,” he continued. “Some of that is because they are dealing with complex issues and they are trying to deal with that in a sophisticated manner.”
Ryan added that the real issue behind JPMorgan's losses linked to a credit derivatives trade made last month is figuring out what appropriate hedging is for financial institutions.
“No one talked about the reality,” he said of the Senate hearing. “The reality of the Dodd-Frank statute is that they recognize that hedging and portfolio hedging are acceptable. They recognize that market making is something that is required.”
“I thought the best part of [Dimon's] testimony was talking about the vibrancy of the capital markets, the need for the ability for banks to make markets and provide liquidity, and for the government not to really mess that up,” Ryan said.