The Basel Committee on Banking Supervision and its so-called “Basel III Endgame” was the focus of JPMorgan Chase (JPM) – Get Free Report CEO Jamie Dimon’s prepared remarks to the Senate Banking Committee on Wednesday.
The proposal made by the group — which consists of an international consortium of 45 central banks – would increase bank capital requirements by 25%. While Basel III has been in development since at least 2009 following the global financial crisis, in July, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation published for comment proposed rule changes that would officially make U.S. bank capital rules align with Basel III.
Related: The Federal Reserve has devolved into a ‘giant hedge fund’
But according to Dimon, the proposal would not have prevented the collapse of Silicon Valley Bank earlier this year, and the ripple effect of the passage of such regulation would have “predictable and harmful outcomes for the economy, markets, businesses of all sizes and American households in ways that the Federal Reserve has not studied, contemplated, or shared.”
If Congress passes the proposal, Dimon predicts that mortgages and small business loans will be harder to get, especially for borrowers in lower income brackets, because the cost of originating and securing loans will rise.
Dimon’s doomsday scenario also includes visions of lower returns for college and retirement savings, more expensive government infrastructure projects, and beverage companies paying more for their aluminum and passing that on to the consumer, leading to runaway inflation.
But the worst sin, in Dimon’s view, is that the government seems to not be doing its homework when it comes to the regulations being proposed to govern the banking sector.
“I fear that ‘propose now, study later’ has become a troublesome new theme in Washington. There have been a number of consumer focused products… where virtually no economic analysis had been performed to determine the individual or collective impact of these rules on consumers, small business, lower income families, markets or the economy,” he said.
Dimon wasn’t down on all regulators however, giving a shoutout to Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary (and former Fed chair) Janet Yellen, praising them for their “work” on sanctioning Russia following its invasion of Ukraine and “the steps they took during the regional bank turmoil” earlier this year.
Dimon was joined on Capitol Hill by fellow banking honchos Charles Scharf, CEO Wells Fargo (WFC) – Get Free Report, Brian Moynihan, CEO Bank of America (BAC) – Get Free Report, Jane Fraser, CEO Citigroup (C) – Get Free Report, Ronald O’Hanley, CEO State Street, Robin Vince, CEO BNY Mellon (DHF) – Get Free Report, David Solomon, CEO Goldman Sachs (GS) – Get Free Report and James Gorman, CEO Morgan Stanley (MS) – Get Free Report.
You can check out Dimon’s full remarks below.
“I fear that propose now, study later has become a troublesome new theme in Washington,” says JPMorgan Chase CEO Jamie Dimon on the proposed Basel III Endgame at today’s Senate banking committee hearing. pic.twitter.com/pIDqszHHoZ
— Yahoo Finance (@YahooFinance) December 6, 2023
Get exclusive access to portfolio managers’ stock picks and proven investing strategies with Real Money Pro. Get started now.
