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Jamie Dimon takes aim at US bank rule proposals in Senate testimony

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JPMorgan Chase chief executive Jamie Dimon hit out again at a variety of proposed new US bank regulations, telling lawmakers that the rules risked hurting low-income customers and would add more risks to the financial system.

The comments from Dimon, made in written testimony released on Tuesday, set the stage for his appearance in front of the US Senate banking committee on Wednesday alongside the CEOs of other large American banks. 

Dimon pointed to a proposal by the Federal Reserve to limit debit card interchange fees, which he said would render certain accounts that were popular with lower-income customers less economically viable for banks, as debit fees generate a large share of the revenues from such accounts.

An influential figure in Washington, Dimon called the “lack of economic analysis” for consumer regulations “alarming”.

“Without a sustainable source of revenue, fewer banks will offer these accounts, and the ones that do will need to increase monthly maintenance fees or scale back services — or both,” he wrote. “Lawmakers should be concerned that this could result in a shift back into these exorbitantly priced alternative financial options for the unbanked.”

A proposal by the Consumer Financial Protection Bureau to lower late fees for credit card payments risked raising costs for all consumers, Dimon said. 

Dimon, along with David Solomon of Goldman Sachs, Jane Fraser of Citigroup, and James Gorman, the outgoing boss of Morgan Stanley, will be among eight CEOs answering questions from senators in an annual hearing on bank oversight. 

Dimon, Gorman and Solomon were among those to use their testimony to repeat criticism of new capital requirements for banks known as the “Basel III endgame”, which are based on the international banking standards set by the Basel Committee. Dimon said the “proposal to mitigate risk will create even more risk in the financial system”.

“Despite zero evidence that large US banks are undercapitalised today, the proposed Basel III endgame rule, if enacted, would unjustifiably and unnecessarily increase capital requirements by 20-25 per cent for the largest banks,” he wrote.

Solomon argued that without changes, the capital requirements would result in higher borrowing costs for clients such as manufacturers, food producers and pension funds.

Bank CEOs have expressed optimism that regulators will make changes to the proposal following a comment period that is due to run until January 16. Gorman wrote that he hoped “the Federal agencies will be open to changes and will review the industry’s comments thoughtfully”.

However, speaking at an industry conference on Tuesday, JPMorgan’s co-head of consumer banking Marianne Lake expressed doubts that there would be meaningful revisions to the capital requirements.

“It’s a little bit like being a hostage,” Lake said. “It’s so shocking in the first instance. So even if it changes a bit, you sort of are grateful for that, but it’s still probably going to be high.”

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