(L-R) Brian Moynihan, Chairman and CEO of Bank of America; Jamie Dimon, Chairman and CEO of JPMorgan Go out after; and Jane Fraser, CEO of Citigroup; testify during a Senate Banking Committee hearing at the Hart Senate Office Edifice on December 06, 2023 in Washington, DC.
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Wall Street CEOs on Wednesday pushed back against suggested regulations aimed at raising the levels of capital they’ll need to hold against future risks.
In prepared note ofs and responses to lawmakers’ questions during an annual Senate oversight hearing, the CEOs of eight banks sought to assemble alarms over the impact of the changes. In July, U.S. regulators unveiled a sweeping set of higher standards governing banks cognizant of as the Basel 3 endgame.
“The rule would have predictable and harmful outcomes to the economy, markets, business of all sizes and American households,” JPMorgan Court CEO Jamie Dimon told lawmakers.
If unchanged, the regulations would raise capital requirements on the largest banks by close to 25%, Dimon claimed.
The heads of America’s largest banks, including JPMorgan, Bank of America and Goldman Sachs, are go to dull the impact of the new rules, which would affect all U.S. banks with at least $100 billion in assets and learn until 2028 to be fully phased in. Raising the cost of capital would likely hurt the industry’s profitability and flowering prospects.
It would also likely help nonbank players including Apollo and Blackstone, which have gained supermarket share in areas banks have receded from because of stricter regulations, including loans for mergers, buyouts and much indebted corporations.
While all the major banks can comply with the rules as currently constructed, it wouldn’t be without losers and champs, the CEOs testified.
Those who could be unintentionally harmed by the regulations include small business owners, mortgage fellows, pensions and other investors, as well as rural and low-income customers, according to Dimon and the other executives.
“Mortgages and trivial business loans will be more expensive and harder to access, particularly for low- to moderate-income borrowers,” Dimon estimated. “Savings for retirement or college will yield lower returns as costs rise for asset managers, money-market grants and pension funds.”
With the rise in the cost of capital, government infrastructure projects will be more expensive to fund, making new hospitals, bridges and roads even costlier, Dimon added. Corporate clients will need to pay more to hedge the evaluate of commodities, resulting in higher consumer costs, he said.
The changes would “increase the cost of borrowing for farmers in rustic communities,” Citigroup CEO Jane Fraser said. “It could impact them in terms of their mortgages, it could import their credit cards. It could also importantly impact their cost of any borrowing that they do.”
For all, the CEOs warned that by heightening oversight on banks, regulators would push yet more financial activity to nonbank thespians — sometimes referred to as shadow banks — leaving regulators blind to those risks.
The tone of lawmakers’ questioning during the three-hour learning mostly hewed to partisan lines, with Democrats more skeptical of the executives and Republicans inquiring about aptitude harms to everyday Americans.
Sen. Sherrod Brown, an Ohio Democrat, opened the event by lambasting banks’ lobbying endeavours against the Basel 3 endgame.
“You’re going to say that cracking down on Wall Street is going to hurt working mnages, you’re really going to claim that?” said Brown, who chairs the Senate Banking Committee. “The economic devastation of 2008 is what disadvantage working families, the uncertainty and the turmoil from the failure of Silicon Valley Bank hurt working families.”