For example, Jamie Dimon of JPMorgan Chase has blasted the proposal for stricter capital rules, warning that it could prompt lenders to pull back and thereby stymie economic growth. Before dismissing such outbursts as self-serving “bankerspeak”, we should ponder the bank capital’s role and whether regulators are moving in the right direction.
Partly in response to the banking failures of March 2023, US regulators now want to impose higher capital requirements on banks with over US$100 billion ($137 billion) in assets. But this is a puzzling choice, considering that some of the most egregious risk-taking recently has been found among smaller banks.
Some of the proposed changes — such as requiring banks to include unrealised gains and losses from certain securities in their capital ratios — are overdue. By and large, however, CEOs of large banks are not pleased.
