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The chief executives of big U.S. banks are arguing that banking regulations aimed at strengthening the country’s financial system will instead hurt the economy.
As Wall Street went to Capitol Hill on Wednesday, the bank honchos also supported more regulations on crypto currency and delivered a mixed but cautiously optimistic view of the 2024 economy under higher-for-longer interest rates.
Jamie Dimon, chief executive of the largest U.S. bank, JPMorgan Chase & Co.
JPM,
told lawmakers at the Senate Committee on Banking, Housing and Urban Affairs that they should be thoughtful about the cumulative impact of proposed capital rules on “affordable credit and traditional banking products, capital markets and market liquidity, and the economy overall.”
Lawmakers should crack down on cryptocurrency transactions by terror groups and rogue nations, Dimon said.
“If I were the government I’d close it down,” Dimon said when asked by Sen. Elizabeth Warren, Democrat of Massachusetts, about digital currency transactions during the hearing.
Transactions by North Korea and Hamas, among others, have funded terrorism around the world, Warren said.
Bank of America’s Brian Moynihan, JPMorgan’s Jamie Dimon and Citigroup’s Jane Fraser testifying on Capitol Hill.
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Dimon and chief executives from seven other of the U.S.’s largest banks agreed that cryptocurrency brokers should be subject to the same regulations as banks under the Bank Secrecy Act, which is designed to prevent terrorists and drug traffickers from using the financial system to fund their activities.
Dimon said he’s “always been deeply opposed to crypto.”
Turning back to changes in bank regulations, a proposed cap on interchange fees could also make bank accounts more expensive for lower-income borrowers, Dimon said.
Citigroup Inc.
C,
Chief Executive Jane Fraser said the bank is forecasting a recession but sees no “drastic downturn” on the horizon despite persistent inflation in services, rising debt, a slowdown in global growth and wars in the Middle East and Europe.
“Consumers appear to be taking a more cautious approach to spending in recent months, reflected in moderate sales growth, a shift in spend choices and segment differentiation,” Fraser said.
Goldman Sachs Group Inc.
GS,
Chief Executive David Solomon said the proposed capital rules will increase the bank’s capital requirements by 25%, and nearly double the capital needed for market-making activity.
“These higher requirements are simply layered on top of the global market shock … without any consideration for how they interact, resulting in a significant double count,” he said.
The “punitive” regulatory measures may harm U.S. competitiveness and capital-markets activity around the globe and push activity overseas and to the private-banking space without making the system safer, Solomon said.
Bank of America Corp.
BAC,
Chief Executive Brian Moynihan said the bank has maintained its “responsible growth” effort despite “the challenging economic and geopolitical environment that continues in 2023.”
Some of the efforts across the bank include eliminating nonsufficient-fund fees and reducing overdraft fees to $10 from $35.
State Street Corp.
STT,
Chief Executive Ronald O’Hanley, Bank of New York Mellon Corp.
BK,
Chief Executive Robin Vince and Morgan Stanley
MS,
Chief Executive James Gorman also testified.
Sherrod Brown, Democrat from Ohio, chaired the Senate committee, which includes ranking Republican member Tim Scott of South Carolina.
Since the banks are all able to achieve the higher capital requirements that “leads me to conclude they’re not too onerous,” Brown said.
Scott said that just because banks may be able to hold more capital, it may not be the best path forward for the economy.
Brown also asked Wells Fargo’s Scharf about unionization efforts at the bank.
Scharf said the bank believes it’s best if it has a direct relationship with its employees, and that it intends to exercise its right to speak to employees.
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