For Jamie Dimon, the lone crisis-era CEO left on Wall Street, the move hardly looked like the deal of the decade.
But behind his recent bid for a young health-care payments company called InstaMed is a tectonic shift for JPMorgan Chase & Co. -- and the rest of American banking.
Since the 2008 financial crisis, federal regulators have publicly -- and often privately -- tried to keep giant banks like JPMorgan, already deemed too big to fail, from getting even bigger. Operating through back channels, Washington snuffed out merger ambitions and discouraged plans to expand businesses, offer new products and open branches. The goal: to contain the industry, and its worst impulses, without the glare of public scrutiny.
That’s over now. The Trump administration has rolled back the stealth campaign. And the implications -- for the banks, their customers, investors and the economy -- could be enormous.
Interviews with more than two dozen current and former industry executives and regulators underscore how banks have managed to wriggle free from much of the strict oversight enacted to prevent another meltdown -- all without any wholesale changes to the laws enacted on Wall Street after the crisis.
Behind the scenes, the industry’s primary regulators -- the Federal Reserve and Office of the Comptroller of the Currency -- have adopted a friendlier approach, giving banks more leeway to expand into new markets, introduce products and make acquisitions.
The lighter touch has unleashed bankers’ animal spirits. Dealmaking and boom-time arms races are back -- as witnessed by a burst of expansion plans like JPMorgan’s push into new states and its InstaMed Inc. takeover, the bank’s biggest purchase since the financial crisis.
Much of how regulators such as the Fed and OCC interact with banks is confidential. It’s illegal to divulge supervisory information about specific banks because bad news might panic customers. But people with knowledge of the matter described the growth restrictions as one of the more extreme ways regulators during President Barack Obama’s term exerted their control behind the scenes. Some argue that what seems like a policy shift now is partly just a reflection of the banks’ improved health, which makes their case for growth easier to approve.
The numbers tell at least part of the tale. Banks announced more mergers and acquisitions in the first five months of this year than they did during any full-year period in the past decade, according to data from S&P Global. BB&T Corp.’s $28 billion tie-up with SunTrust Banks Inc., announced in February, was the biggest banking combination proposed since the 2008 financial crisis. Four days after that announcement, Morgan Stanley unveiled its largest acquisition in a decade: a $900 million deal to expand the firm’s wealth business. Goldman Sachs Group Inc. followed suit three months later with its biggest acquisition in almost 20 years.
Banks are also being allowed to expand their reach into everyday America. After years of shutting branches to save costs, four of the six biggest banks -- JPMorgan, Bank of America Corp., U.S. Bancorp and PNC Financial Services Group Inc. -- have indicated they’re looking to push into new markets, in some cases for the first time since before the Great Recession.