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