'Confusing' Rules Hurt Consumers, JP Morgan CEO Says

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In a letter to shareholders, banking giant JP Morgan said today that a confusing tangle of overlapping regulations and oversight are increasing costs for consumers and strangling lending. The latest round of financial reforms has cost JP Morgan $3 billion.

"We have hundreds of rules, many of which are uncoordinated and inconsistent with each other," JP Morgan CEO Jamie Dimon wrote in the letter. "While legislation obviously is political, we now have allowed regulation to become politicized, which we believe will  likely lead to some bad outcomes.  And we have been very slow in finishing rules  that are critical to the health of the system."

The letter includes a flowchart of regulatory oversight the bank must navigate.  It has so many overlapping lines of reporting to so many agencies that it looks like the route map of the old Pan Am Airways.

See the flowchart.

"And while we need reform, we must be very careful not to throw the baby out with the  bathwater. Clear, fair and consistent rules  need to be put in place as soon as possible so  that our economy, once again, can grow and meet its potential," Dimon writes.

"The rules under which mortgages can be  underwritten and securitized still have not  been completed three and a half years  after the crisis began. This is unnecessarily  keeping the cost of mortgages higher than  they otherwise would be, slowing down the  recovery."

A cap on debit-card transaction fees in the Dodd-Frank Act is "price-fixing by the government that will have the unfortunate consequence of leaving millions of Americans unbanked," the letter states.

Stricter capital rules will make it "prohibitively more expensive" for banks to lend to consumers with credit scores below 640, about 40 percent of all Americans.

JP Morgan was one of the big banks that agreed to pay part of a $25 billion industry-wide settlement with state and federal officials over abusive foreclosure practices.  The bank also got a $12 billion bailout from the U.S. government in 2008, when shoddy lending practices led to a near meltdown of the worldwide financial system.

And although the bank claims the regulatory burden is high, profits are strong.

"Your company earned a record $19.0 billion in 2011, up 9 percent from the record earnings of $17.4 billion in 2010," the letter begins.

Read the full shareholder letter.

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