JPMorgan Chase CEO Jamie Dimon testifies at a Senate Banking, Housing and Urban Affairs Committee hearing titled “Annual Oversight of the Nation’s Largest Banks,” at Hart Building, Sept. 22, 2022.
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JPMorgan Tighter regulation following three bank failures this year will increase costs for consumers and businesses, while forcing lenders to exit some businesses altogether, executives warned on Friday.
when asked FuGuo bank Analyst Mike Mayo on the impact of changes proposed by Fed Vice Chair Michael Barr in a note speech Earlier this week, JPMorgan CEO Jamie Dimon said other financial players could end up being winners.
“This is for hedge funds, private equity, private credit, Apollo, black stonesaid Dimon, referring to the two largest private equity firms. “They’re dancing in the street.” “
Blackstone and Apollo did not immediately respond to requests for comment on Dimon’s comments.
Banks face requirements to hold more capital as a buffer against risky activity by U.S. and international regulators. Following the sudden collapse of Silicon Valley Bank in March, authorities proposed higher capital requirements for banks with assets of at least $100 billion. But it also coincides with a long-awaited set of international rules (Basel III) spawned by the 2008 financial crisis. End Game.
The Rise of Shadow Banking
“How much business would JPMorgan or the industry as a whole lose if capital ratios rose to the expected levels?” Mayo asked.
Chief Financial Officer Jeremy Barnum said the bank would raise prices for end-users of loans and other products before eventually deciding to leave certain areas entirely.
“To the extent we have pricing power and higher capital requirements mean we’re not delivering an appropriate return to shareholders, we’ll try to reprice and see how that holds up,” Barnum said.
“If repricing is not successful, then in some cases we will have to regroup, which means exiting certain products and services,” he said. “This could mean those products and services leave the regulatory sphere and go elsewhere.”
After the 2008 financial crisis, strict rules forced banks to exit businesses such as mortgages and student loans.For corporate and institutional players, acquisitions and other large loans are now more and more money Invested by private equity firms such as Blackstone and Apollo.
That has fueled the rise of nonbank players, sometimes referred to as the “shadow banking” industry, which has raised concerns among some financial experts because they typically face lower levels of federal scrutiny than banks.
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