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Jamie Dimon Criticizes Basel III Endgame in Senate Hearing: A Dire Warning for Banking Regulations

In a recent Senate Banking Committee hearing, Jamie Dimon, CEO of JPMorgan Chase, directed sharp criticism towards the Basel Committee on Banking Supervision’s “Basel III Endgame” proposal. This initiative, which has been in the works since the 2009 financial crisis, involves a consortium of 45 central banks and suggests a 25% increase in bank capital requirements. However, Dimon’s perspective on the proposal is far from positive.

Dimon argued that the Basel III Endgame wouldn’t have prevented the downfall of Silicon Valley Bank earlier this year. He further warned that adopting this regulation could lead to several negative economic consequences that the Federal Reserve has yet to thoroughly evaluate. Among his predictions are increased difficulties in obtaining mortgages and small business loans, particularly for lower-income individuals, due to the heightened costs of loan origination and security.

But the ramifications don’t stop there. Dimon envisions a cascade of financial repercussions, including diminished returns on college and retirement savings, costlier government infrastructure projects, and inflated consumer prices due to increased production costs. This, he fears, could trigger a spiral of inflation.

Dimon’s critique extends beyond the proposal itself to the broader approach of the government towards banking sector regulations. He expressed concerns over a “propose now, study later” mindset in Washington, emphasizing the lack of comprehensive economic analysis on the potential impacts of such rules on various sectors of society and the economy.

It’s not all criticism, though. Dimon acknowledged the effective actions of Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Janet Yellen, particularly in their response to Russia’s invasion of Ukraine and during the recent regional bank turmoil.

The hearing was a gathering of banking heavyweights, with CEOs from Wells Fargo, Bank of America, Citigroup, State Street, BNY Mellon, Goldman Sachs, and Morgan Stanley also present. As Congress considers the Basel III Endgame proposal, Dimon’s critical insights highlight the need for thorough economic analysis and measured regulation in the banking sector.