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JPMorgan Chase Chief Executive Officer Jamie Dimon again criticized several proposed new U.S. banking regulations, telling lawmakers that the rules risk harming low-income customers and would pose other risks to the financial system.
Dimon’s comments, made in written testimony released Tuesday, set the stage for his appearance before the U.S. Senate Banking Committee on Wednesday alongside the CEOs of other major American banks.
Dimon pointed to a Federal Reserve proposal to cap debit card interchange fees, which he said would make certain accounts popular with lower-income customers less economically viable for banks, since debit fees make up a large portion of generating income from such accounts.
Dimon, an influential figure in Washington, called the “lack of economic analysis” for consumer regulations “alarming.”
“Without a sustainable revenue stream, fewer banks will offer these accounts, and those that do will have to increase monthly maintenance fees or reduce their services – or both,” he wrote. “Lawmakers should be concerned that this could lead to a return to these inflated alternative financial options for the unbanked.”
A proposal by the Consumer Financial Protection Bureau to lower late fees on credit card payments risks increasing costs for all consumers, Dimon said.
Dimon, along with Goldman Sachs’ David Solomon, Citigroup’s Jane Fraser and outgoing Morgan Stanley boss James Gorman, will be among eight CEOs answering questions from senators at an annual hearing on banking regulation.
Dimon, Gorman and Solomon were among those who reiterated criticism in their testimony of new capital requirements for banks, known as the “Basel III endgame,” based on international banking standards set by the Basel Committee. Dimon said the “risk reduction proposal will create even more risks in the financial system.”
“Although there is no evidence that large U.S. banks are undercapitalized today, the proposed Basel III endgame rule, if enacted, would unjustifiably and unnecessarily increase capital requirements for the largest banks by 20 to 25 percent,” he wrote .
Solomon argued that without changes, capital requirements would result in higher borrowing costs for customers such as manufacturers, food producers and pension funds.
Bank chief executives expressed optimism that regulators will make changes to the proposal after a comment period that runs until Jan. 16. Gorman wrote that he hoped “federal regulators would be open to change and carefully consider industry comments.”
However, at an industry conference on Tuesday, Marianne Lake, co-head of consumer banking at JPMorgan, expressed doubts that there would be meaningful changes to capital requirements.
“It’s a little bit like being a hostage,” Lake said. “First of all, it’s so shocking. So even if it changes a little bit, you’re kind of grateful for it, but it’s probably still going to be high.”
Source : www.ft.com