NEW YORK (AP) — The heads of Wall Street's biggest banks used an appearance on Capitol Hill to plead with senators to stop the Biden administration's proposed changes to how banks are regulated, warning that the proposals could negatively impact the economy at a time of geopolitical turmoil and inflation.
Wall Street's most powerful bankers have regularly appeared in front of Congress going back to the 2008 financial crisis. Among those testifying before the Senate Banking Committee Wednesday include JPMorgan's Jamie Dimon, Bank of America's Brian Moynihan, Jane Fraser of Citigroup and Goldman Sachs' David Solomon.
Whereas in previous years the bank CEOs used the hearing to highlight the industry’s good deeds, this year they’re warning about the potential dangers of over-regulating the industry.
The banks are adamantly against new regulations proposed by the Biden administration that could hit their profitability hard, including new rules from the Federal Reserve that would require big banks to hold additional capital on their balance sheets. The industry says the new regulations, known as the Basel Endgame, would curtail lending and weaken bank balance sheets at a time when the industry needs more flexibility.
“Almost every element of the Basel III Endgame proposal would make lending and other financial activities more expensive, especially for smaller companies and consumers,” Fraser said in her prepared remarks.
The other seven CEOs were uniform in their comments in both their prepared remarks and answers to Senators' questions.
“(The regulations) were not thoughtfully done and should be relooked at,” Dimon said.
“I've been at this for a long time. I've sat on the board of the New York Federal Reserve. I've seen a lot of rules, and (this proposal) just doesn't make sense,” said James Gorman, CEO of Morgan Stanley.
There are also proposals coming from the Consumer Financial Protection Bureau that would rein in overdraft fees, which have also been a longtime source of revenue for consumer banks.
This year has been a tough one for the banking industry, as high interest rates have caused banks and consumers to seek fewer loans and consumers are facing financial pressure from inflation. Three larger banks failed this year — Signature Bank, Silicon Valley Bank and First Republic Bank — after the banks experienced a run on deposits and questions about the health of their balance sheets.