JPMorgan warns capital rules could take economic toll

JPMorgan Chase executives are warning that regulators’ plan to strengthen capital requirements for large banks will make loans more expensive for borrowers and drive more consumers to do business with nonbank lenders, creating potentially adverse outcomes for the broader economy.

The largest U.S. bank by assets told analysts Friday that the $3.9 trillion-asset company may need to hike interest rates on loans and pull back from offering certain products and services, depending on how much capital banks will be required to carry under forthcoming new rules.

The capital increases proposed by regulators are “excessive” and will put pressure on JPMorgan to “increase price” where it can, Chief Financial Officer Jeremy Barnum said during the company’s quarterly earnings call. “That is generally a bad thing for the real economy, and how all that plays out in detail across different products and services remains to be seen,” he said.

Source: American Banker