JPMorgan Chase’s chief executive voiced sharp objections to current U.S. bank capital proposals, saying regulators should not artificially raise required capital by employing what he described as misleading calculations. Speaking on the bank’s quarterly earnings call, Jamie Dimon reiterated his contention that the proposals are "unfair" and place an outsized drag on large, diversified banks compared with trading-centric competitors.
"They should not do the numbers in a false way to make the number higher," Dimon said. "The number should be the number. If they think we should have more capital, they should ask us... I’m not happy to have these numbers falsely done."
The comments underscore a widening disconnect between the nation’s largest bank and federal regulators as agencies advance several rule changes that would alter how banks measure and hold capital to absorb potential losses. Regulators are working to finalize a package of proposals that include revisions tied to the Basel framework on risk weights and adjustments to the global systemically important bank, or GSIB, surcharge - an extra layer of capital applied to the country’s largest institutions.
Agency officials have received formal comment letters from banks and other interested parties highlighting concerns with the drafts, including what some firms call double-counting of certain risks and a newly proposed capital charge on unused credit lines. Fed Vice Chair for Supervision Michelle Bowman has indicated a desire to complete the rule-writing process by the end of this year.
While the March proposals are widely viewed as more industry-friendly than a 2023 draft that stalled, Dimon has remained vocal, particularly over how the GSIB surcharge is calculated. He again urged that the Fed adjust the calculation to reflect economic growth since the surcharge was first imposed in 2015, an approach he says would lower banks’ measured footprints in the economy and reduce the resulting surcharge.
Regulators have also floated changes that would lessen the weight given to institutions’ reliance on short-term wholesale funding when computing the GSIB surcharge. Those proposed adjustments are expected to be beneficial to brokerage-heavy banks that depend more on short-term wholesale funding than their large peers with substantial deposit franchises. The proposals, if finalized as written, would likely favor firms that rely heavily on trading and wholesale funding over banks supported by large deposit bases.
JPMorgan has previously estimated that under the new drafts it would face roughly a 4% increase in capital requirements, whereas certain competitors would see, on average, a 4.8% reduction in required capital. That competitive divergence has heightened JPMorgan’s objections and prompted public appeals for recalibration of the proposed methodology.
On the same earnings call, JPMorgan Chief Financial Officer Jeremy Barnum cautioned that the current direction of the proposals risks hampering banks’ capacity to serve Main Street. "I don’t understand why you would want that as a policy outcome, because it is disproportionately damaging the ability of banks to serve Main Street," Barnum said. "If that’s not what they want, then they shouldn’t let it happen by accident," he added.
The bank also reported a record profit for the second quarter. Executives attributed part of the performance to a resurgence in large initial public offerings and dealmaking, which pushed investment banking fees to their highest levels since 2021. The trading desk also benefited from volatile markets, helping contribute to the quarterly results.
Regulatory agencies leading the effort include the Federal Reserve and two other federal bank regulators. A spokesperson for the Federal Reserve did not respond to a request for comment on the remarks and ongoing rulemaking effort.
Context and next steps remain in flux as agencies work to reconcile industry feedback with policy objectives. The rule package under consideration touches several facets of banking regulation, and the final shape of the proposals will determine how capital burdens are distributed across different business models within the sector.
For now, the dispute highlights two central tensions: how to measure systemic footprint fairly across banks with divergent funding profiles and how to design capital surcharges that reflect both systemic risk and economic changes since prior rules were adopted.