jpmorgan: Wall Street bank boss warns lawmakers of economic damage from strict new rules

WASHINGTON – JPMorgan Chief Executive Officer Jamie Dimon and other major banks told lawmakers Wednesday that capital raises and other new regulations being considered by U.S. banking regulators would hurt lending, capital markets and the broader economy. He warned that he would give it.

The industry has been campaigning fiercely to kill the “Basel endgame” proposal as it overhauls how banks calculate loss-absorbing capital and regulators roll out fair lending and fee cap rules.

The CEOs are hoping to use the hearing as an opportunity to convince key moderate Democratic senators that the Federal Reserve-led legislation could curb lending and harm small businesses and consumers.

“If enacted as drafted, this proposal would fundamentally transform the U.S. economy in ways that the Federal Reserve has not studied or considered,” Dimon, CEO of JPMorgan, the largest U.S. lender, said in prepared testimony released by the committee Tuesday. said.

Ohio Democratic Sen. Sherrod Brown, who chairs the committee, was quick to accuse the banks of lobbying aggressively against the rules, including through several public advertising campaigns and meetings with lawmakers. He added that banks have exaggerated the potential negative impact of the regulations to preserve profit margins.

“Nothing in this regulation prevents banks from providing loans to working families,” he said. “What your bank wants to do is maximize quarterly profits. Everything and everyone else’s cost is screwed.”

Other CEOs featured include Bank of America’s Brian Moynihan, Wells Fargo’s Charles Scharf, Goldman Sachs’ David Solomon, Morgan Stanley’s James Gorman, State Street’s Ronald O’Hanley and BNY Mellon’s Robin Vince. Regulators say new rules, including capital increases, are needed to protect the banking system from unexpected shocks, especially after the collapse of Silicon Valley Bank and two other lenders earlier this year.

The CEOs are expected to win the support of Republicans who generally oppose tighter regulation, but will have to convince skeptical Democrats that the banking sector is healthy.

Sen. Tim Scott, the committee’s top Republican, echoed the banks’ concerns, saying the proposed rule could have a “devastating impact” on small businesses.

Big bank CEOs have been appearing before Congress for years since the 2007-09 financial crisis and subsequent scandals put the industry in Washington’s crosshairs.

Although bills rarely pass, hearings have made a difference for banks. In 2021, Dimon had a heated exchange with Democratic Sen. Elizabeth Warren over his overdraft fees, and last year, fraud at the bank’s payments network Zelle plagued him. Large banks have since lowered overdraft fees and expanded Zelle fraud prevention measures. (Reporting by Pete Schroeder and Michelle Price; Additional reporting by Lananh Nguyen; Editing by David Gregorio and Nick Zieminski)