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The heads of Wall Street’s eight biggest banks will warn lawmakers on Wednesday that the “Basel III endgame” proposal will hurt the economy and hamper lending, according to each of their prepared testimonies.
Regulators in July proposed strengthening regulations by requiring large U.S. banks to set aside more capital to absorb potential losses. Banks repeatedly slammed the proposal, saying this is not justified as they are well-capitalized.
The CEOs of the top banks will appear before the Senate Banking Committee on Wednesday to make their case – Wells Fargo’s (NYSE:WFC) Charles Scharf, Bank of America’s (NYSE:BAC) Brian Thomas Moynihan, JPMorgan’s (NYSE:JPM) Jamie Dimon, Citigroup’s (NYSE:C) Jane Fraser, State Street’s (NYSE:STT) Ronald O’Hanley, BNY Mellon’s (NYSE:BK) Robin Vince, Goldman Sachs’ (NYSE:GS) David Solomon, and Morgan Stanley’s (NYSE:MS) James Gorman.
“The proposed Basel III Endgame rule would unjustifiably and unnecessarily increase capital requirements by 20%-25% for the largest banks,” according to Dimon’s prepared testimony. “Banks would be limited in their ability to deploy capital in the times we’re most needed, and the rule will have a harmful ripple effect on the economy.”
Fraser will warn lawmakers against “inadvertently” upending the banking system in reaction to “isolated (regional) bank failures” earlier this year.
“Blanket increases in capital for the large U.S. banks is wholly unnecessary,” according to Gorman’s prepared remarks. “It will make credit more expensive and less accessible, while harming the competitiveness of the economy and driving more activity to the less regulated parts of the financial services industry.”
