The creator of the modern behemoth that is JPMorgan Chase says that banks need to stay gargantuan to do their jobs.
"It would be a horrible idea to break up the banks," William Harrison, former chairman and CEO of JPMorgan Chase, told CNBC on Wednesday. "There was a reason why all the banks became large, and that was scale and efficiency, economies of scale, that drove it. ... It was natural for it all to happen."
Harrison, who orchestrated the largest bank merger in U.S. history, listed common tropes about why big banks supposedly are good for the economy. According to Harrison, big banks are more efficient and help the U.S. compete in a global economy. Without large financial institutions, Harrison claimed, big U.S. companies would flee to foreign banks. "We create huge jobs from this," he said.
He also said that big banks should not get all the blame for the financial crisis; instead, the government, rating agencies and borrowers also should take some flak. "I mean, borrowers were abusing the system, so there were a lot of people and institutions involved in causing it," he said.
Harrison's defense of big banks stands in contrast to the recent reversal of Sandy Weill, the former Citigroup CEO who turned that bank into the colossus it is today. Weill told CNBC in July that the big banks should get broken up so that they are no longer "too big to fail."
Harrison served as CEO of JPMorgan Chase between 2001 and 2005, and as chairman between 2001 and 2006. He orchestrated JPMorgan's purchase of Bank One in 2004: the largest bank merger in U.S. history. His successor as chairman and CEO, Jamie Dimon, is one of only a couple of big bank CEOs that outlasted the financial crisis.
Harrison wrote an op-ed in the New York Times in late August exhorting the government not to force big banks to split up into smaller financial institutions. He called the massiveness of U.S. banks "a competitive advantage that we can’t afford to lose."
Check out some of current JPMorgan CEO Jamie Dimon's most memorable quotes:
Dimon said JPMorgan Chase's unexpected $2 billion loss on credit trades in May "puts egg on our face, and we deserve any criticism we get."
In March 2011, Dimon expressed his fear over new regulations, warning that higher capital requirements would be "pretty much the nail in our coffin for big American banks," according to the Financial Times.
Warning that limiting proprietary trading would also affect market making, Dimon was quoted by CNBC, "The United States has...the most liquid [capital markets in the world]. If you lose liquidity because you lose market making, you cost investors money."
"Proprietary trading had very little to do with the financial crisis," Dimon told FOX Business Network Senior Correspondent Charlie Gasparino in January, adding that "you can't even make markets for your clients" with the Volcker Rule.
"Paul Volcker by his own admission has said he doesn't understand capital markets," Dimon told FOX Business. "He has proven that to me."
in February, Dimon asserted the Volcker Rule had been written too narrowly. "If you want to be trading, you have to have a lawyer and a psychiatrist sitting next to you determining what was your intent every time you did something," he was quoted as saying in Businessweek.