Bank CEOs are set to appear before the Senate Banking Committee to protest new regulations and capital hikes, arguing that these measures will harm the economy.
The CEOs of major banks, including J.P. Morgan, Bank of America, Citigroup, Wells Fargo and others, are expected to address a range of issues such as worker pay and rights, climate change, mortgages and financial stability, Reuters reported Monday (Dec. 4).
The executives aim to convince lawmakers that these regulations could negatively impact lending, which in turn would hurt small businesses and consumers, per the report.
However, they face the challenge of persuading skeptical lawmakers, including the Democratic chair of the committee, Sherrod Brown, who highlighted the need to prioritize the Main Street economy and hold banks accountable in a September statement announcing the hearing.
The executives are expected to focus their arguments on the “Basel Endgame” proposal, which seeks to revamp how banks calculate their loss-absorbing capital. The industry has launched a campaign against this proposal, claiming it could stifle lending and hinder economic growth, the report said.
“The proposal is projected to raise capital for large banks,” said Michael Barr, the Federal Reserve’s vice chair for supervision. “This may result in higher funding costs. But this is only half the story. Capital also enables banks to absorb more losses without risking their ability to repay their creditors.”
The rules proposed by the Fed and other regulators would force medium-sized banks to face stricter requirements and mandate that bigger banks set aside greater amounts of capital.
Speaking at a conference in New York in September, J.P. Morgan CEO Jamie Dimon warned the regulations could hinder economic growth and called for more transparency in regulators’ decision-making. In August, Dimon argued that the proposed requirements would make mortgages and loans less affordable.
As he told CNBC at the time: “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.”