JPMorgan CEO Jamie Dimon: New Bank Capital Requirements ‘Hugely Disappointing’
The head of America’s biggest bank said new capital requirements may have slowed economic growth. J.P. Morgan Chase CEO Jamie Dimon said in a Wednesday (Aug. 2) CNBC interview that the Federal Reserve and Federal Deposit Insurance Corporation’s (FDIC) proposed requirements would make mortgages and loans less affordable. “It’s hugely disappointing,” Dimon said of the […]
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The head of America’s biggest bank said new capital requirements may have slowed economic growth.
J.P. Morgan Chase CEO Jamie Dimon said in a Wednesday (Aug. 2) CNBC interview that the Federal Reserve and Federal Deposit Insurance Corporation’s (FDIC) proposed requirements would make mortgages and loans less affordable.
“It’s hugely disappointing,” Dimon said of the capital requirements, adding the “operational risk capital is based on a model that makes no sense.”
He said regulators should be “cautious” about their models, arguing they are flawed.
“If they want to put all mortgages and small business loans out of the banking system, so be it, but they should tell that to the American public,” Dimon said in the interview. “It will have a real effect on consumers.”
The capital requirements, announced in the wake of March’s banking crisis, will mainly impact the eight largest U.S. banks, with the rules expected to apply the so-called Basel III international standards to banks with assets of $100 billion to $250 billion asset range.
“There may be some capital increases for other banks,” Federal Reserve Chairman Jerome Powell said in June. “None of this should affect banks under $100 billion.”
Dimon’s comments come amid increasing evidence that Main Street small- to medium-sized businesses (SMBs) are under increasing strain.
An example of this could be found during PayPal’s earnings call Wednesday, when acting Chief Financial Officer Gabrielle Rabinovitch said the company has increased its provisions for anticipated credit losses, in part because it expects losses in its business loans portfolio.
“Like the broader industry, we’re seeing a normalization of our credit portfolio to pre-COVID delinquency levels across our consumer and PayPal working capital portfolio,” she said. “That said, we have seen some deterioration in our business loans portfolio.”
In response, the company has tightened originations, which indicates that loans may be harder to secure for potential borrowers.
PYMNTS data shows that around half of Main Street SMBs are shopping for credit, and 40% of Main Street SMBs with annual revenues of up to $10 million have no access to ready financing. And about 22% of firms said they will seek out business loans from online lenders while 16% said they are considering merchant cash advances.
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