JPMorgan's Dimon says regulators should not set 'false' capital requirements

WASHINGTON, July 14 (Reuters) - U.S. bank regulators should not set capital requirements in an artificially high way, JPMorgan Chase JPM.N CEO Jamie Dimon said Tuesday, intensifying his criticism of the new rules, which he has previously said will unfairly penalize his bank. Speaking during a quarterly earnings call, Dimon said proposals to change the way lenders calculate the funds they must put aside to absorb potential losses were "unfair," and disproportionately affected his and other big diverse banks, while giving a leg up to Wall Street trading giants. "They should not do the numbers in a false way to make the number higher," said Dimon. "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 growing rift between JPMorgan — the country's largest bank — and regulators, even as the latest proposals are widely seen as more favorable to the industry than the original 2023 version. JPMorgan has previously said that it would face a roughly 4% capital increase under the new drafts, whereas competitors would face an average of a 4.8% capital reduction. The bank reported a record second-quarter profit on Tuesday, as a wave of big-ticket IPOs and dealmaking helped drive investment banking fees to their highest levels since 2021, while its trading desk capitalized on volatile markets. A spokesperson for the Federal Reserve, which is leading the effort along with two other federal bank regulators, did not respond to a request for comment. The agencies are working to finalize numerous capital proposals, including the Basel rules on risk weights and the GSIB surcharge, which is an added capital layer imposed on the nation's largest and most critical banks. Banks and other interested parties have submitted formal comment letters to the agencies, flagging issues including what banks see as double-counting of some risks and a new capital charge on unused credit lines. Fed Vice Chair for Supervision Michelle Bowman has said she hopes to wrap up the rule-writing effort by the end of this year. The proposals, unveiled in March, are much more industry-friendly than a 2023 draft unveiled by Democratic regulatory officials, which withered on the vine amid industry opposition and the transition to President Trump's administration. Nevertheless, Dimon has become a loud critic, particularly of how the GSIB surcharge is calculated. He advocated again on Tuesday for the Fed to change the surcharge's calculation so that it fully accounts for economic growth since the central bank imposed it in 2015, which would in turn reduce, on paper, lenders' footprint in the economy and the resulting charge. The Fed has also proposed reducing the impact of banks' reliance on short-term wholesale funding in the surcharge calculation. That is likely to benefit Goldman Sachs GS.N and Morgan Stanley MS.N because they are much more reliant on short-term wholesale funding than their GSIB rivals, which have large deposit bases, Reuters previously reported. "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," JPMorgan Chief Financial Officer Jeremy Barnum said on the same call. "If that's not what they want, then they shouldn't let it happen by accident," he added. In his bank's own earnings call Tuesday, Goldman Sachs CEO David Solomon said the bank is "very engaged with our regulators to ensure better alignment of regulatory outcomes with underlying risk, and look forward to swift progress towards a more balanced framework."

JPMorgan's Dimon says regulators should not set 'false' capital requirements

Dimon criticizes proposed capital rules

JPMorgan says the draft would raise its capital

Regulators work to finalize Basel and GSIB rules

Goldman and Morgan Stanley could benefit from the changes

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