Morgan Stanley CEO slams US trade policy, regulations

(Reuters) - The U.S. is edging dangerously close to a “full-blown” trade war with China, and its regulators impose overly punitive financial regulations, Morgan Stanley CEO James Gorman said.

Following a recent visit to Asia, Gorman is concerned that the United States and China have moved from a “tit-for-tat” dispute to something worse, he said at a financial conference hosted by his bank.

“If we have a full-blown trade war, I think that’s a disaster,” Gorman said. “Both countries have enormous self-interest in putting this back on the tracks.”

He also said the U.S. Fed’s policies regarding capital requirements and stress tests remain too stringent, more than a decade after the financial crisis.

Gorman has been a frequent critic of certain capital constraints.

“Regulators in my view were excessively cautious,” he said.

Gorman also suggested that Morgan Stanley’s second-quarter results will not be as strong as in the previous quarter, citing a trading slowdown and issues like higher tax expenses.

The last two weeks have been “quite hard” in trading, he said, but the bank is trying to control expenses to make up for the revenue shortfall.


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