How do regulated entities “play hardball?” What is the basis for their bargaining position? In theory, the Fed is in the power position. Allowing financial institutions to bully the Fed into allowing more risk cannot be good for consumers, investors, or the economy.
JPMorgan Chase’s Jamie Dimon and other big-bank CEOs played hardball with the Federal Reserve over proposals that the lenders hold more capital. Now, it looks like those tactics are paying off.
The Fed and two other federal regulators are moving toward a plan that would significantly lessen a nearly 20% mandated increase in capital for the biggest U.S. banks, according to people familiar with the matter.
Required increases in capital for banks like JPMorgan and Goldman Sachs—meant to ensure they have sufficient buffers to absorb potential losses—would on average be about half as much as originally floated.
It would be a big win for the banks and Dimon. Banks say the rules as originally proposed would drive up costs and crimp lending. It also represents a shift in the balance of power between big banks and their regulators, turning the page on an era in which the Fed held the upper hand. (emphasis added)
Dimon Led Bank CEOs to Fend Off Tougher Capital Rules – WSJ
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