Wall Street Bosses Lash Out Over Proposals for Higher Capital

It’s not unusual for Wall Street executives to be annoyed by new rules. They rarely make it this obvious.

(Bloomberg) — It’s not unusual for Wall Street executives to be annoyed by new rules. They rarely make it this obvious.

At a normally staid annual gathering hosted by Barclays Plc this week, the industry’s top brass took turns panning a proposal that would force them to hold more capital.

Jamie Dimon, the outspoken JPMorgan Chase & Co. boss, spoke in particularly strong terms, calling a key calculation in the new plans “asinine,” cursing multiple times while discussing the proposals, and predicting his complaints wouldn’t matter because regulators will “do what they want anyway.”

Morgan Stanley’s Dan Simkowitz, head of investment management, called it “inconsistent with the real world,” and Goldman Sachs Group Inc. Chief Executive Officer David Solomon said: “I don’t think these rules make sense.” 

It was an uncharacteristically strong and consistent public rebuke as the industry gears up for a battle over the biggest overhaul to capital rules since the Dodd-Frank Act. While Wall Street’s top executives made their case at the Barclays conference, a half-dozen trade groups — including the Bank Policy Institute and the American Bankers Association — wrote a letter to regulators asking them to try again. 

The Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said in July they want to force banks with at least $100 billion in assets to boost their capital cushions, with the eight largest banks on the hook for an estimated 19% increase. The long-awaited reforms are tied to Basel III, an international overhaul that began in response to the 2008 financial crisis. 

Companies, consumer advocates and any other interested parties have months to weigh in, and not everyone was as pessimistic as Dimon was about the coming back-and-forth with regulators.

“There was some commentary from the regulators that they were quite open to getting to the right answer for the economy,” Simkowitz said. “It was not unanimous around how that rule looked and how it will come out. So we’re in a period of real engagement.”

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