Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing, and Urban Affairs Committee’s Annual Oversight of Major Banks, Sept. 22, 2022, in the Hart Building.
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JP Morgan Chase Executives warned on Friday that tighter regulations in the wake of three bank failures this year would increase costs for consumers and businesses, while forcing some lenders to exit the business altogether.
When asked by Wells Fargo Analyst Mike Mayo discusses the impact of changes proposed by Federal Reserve Vice Chair for Supervision Michael Barr. speech Earlier this week, JPMorgan CEO Jamie Dimon said other financial players could be winners.
“This is great news for hedge funds, private equity, private credit, Apollo, Black room” Dimon said, naming two of the biggest private equity players. They are dancing in the streets.
Blackstone and Apollo did not immediately respond to requests for comment on Damon’s remarks.
Banks face requirements from both US and international regulators to hold more capital as a cushion against risky activities. Authorities are proposing higher capital requirements for banks with at least $100 billion in assets after the sudden collapse of Silicon Valley Bank in March. But it also coincides with a long-awaited set of international rules spurred by the 2008 financial crisis known as Basel III. End game.
The rise of shadow banks
“How much business does JPMorgan or the industry leave if the capital ratio rises to the potential recommended limit?” Mayo asked.
CFO Jeremy Barnum said banks will raise prices on loans and other products to end users before eventually deciding to exit some areas entirely.
“To the extent we have pricing power and higher capital requirements mean we’re not generating the right return for shareholders, we’ll try to re-price and see,” Barnum said. That’s how it lasts.”
“If the re-pricing is not successful, then in some cases, we will have to remix and that means exiting some products and services,” he said. “This probably means that those products and services leave the regulated perimeter and move elsewhere.”
After the 2008 financial crisis, tougher rules forced banks to pull back from activities including mortgages and student loans. For corporates and institutional players, acquisitions and other huge loans are now in place. Faster financing by private equity players like Blackstone and Apollo.
This has contributed to the rise of non-bank players, sometimes called the “shadow banking” industry, which has worried some financial experts because they typically face less federal scrutiny than banks. have to face
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Source by [CNBC News]
