FBN's Charlie Gasparino Reports "Banks Lower Cost Of Financial Reform Estimates"

FOX Business Network’s (FBN) Charlie Gasparino is reporting that Wall Street expects 5-10% losses from financial regulation reform. Highlights of his report can be found below courtesy of Fox Business Network. “A consensus is forming among Wall Street chief executives that costs of financial reform will be significantly less than originally predicted, with JP Morgan CEO Jamie Dimon confidently predicting that with a little luck he can reduce the earnings hit to a little less than 10%.” “The lower loss projections stemming from the legislation is a function of several factors, say senior people at the large banks. A plan to raise a bank tax appears to have hit a snag and likely won’t make the final bill, and top executives believe there is now enough wiggle room in the “Volcker Rule” so they can continue to take risk trading and maintain their holdings in hedge funds and private equity.” “Senior executives say they have received assurances from the Obama Administration, and Treasury Secretary Tim Geithner that US banking authorities will make sure that domestic firms are not “disproportionately impacted” with costs so it puts them at a competitive disadvantage with foreign banks. A Treasury Department press official had no immediate comment.” “Geithner is also calling major banks and other business leaders trying to dispel the notion that the Obama Administration is “anti business,” said a senior executive at one major firm. President Obama has been criticized in recent weeks by several CEOs for adopting anti business rhetoric and policies such as higher taxes and new entitlements that have dampened the economic outlook.” “Officials at the banks believed the costs of the bill, which once ranged as high as an earnings reduction of anywhere from 10 percent to 20 percent, are being revised downward to anywhere from 5 percent to 10%.” “Dimon, the JP Morgan CEO, appears confident enough that he has told people that he can get the costs “down to 8%” from his original cost estimate of 17% according to one person close the firm. A spokesman for JP Morgan says Dimon does know what the specific costs would be, and the firm will be exploring the impact over the next several weeks.” “To be sure, much of the analysis is pure guess work, which Dimon himself has concede with his senior staff. The bill isn’t completed yet, much less signed into law, so assumptions could change. US Senator Scott Brown, for example, vowed to vote against the bill if it contained a $19 billion bank tax. The measure is likely to be removed, but the situation is still fluid as House and Senator conferees debate the final package.” “In addition, lawmakers will have to debate the exact language of how various pieces of the bill is interpreted. A very strict interpretation of the so-called Volcker Rule, named after Obama senior economic adviser Paul Volcker, would mean a drastic cut back in trading and thus lower profits. But senior people on Wall Street believe the interpretation will be less onerous, thus trading will be largely untouched.” “The situation is so murky that officials Goldman Sachs believe it’s impossible to determine costs of the legislation. “People at Goldman have determined that no one really knows what the bill might cost,” said one senior banking official.”