JPMorgan's Dimon Accuses Regulators of Using 'False' Calculations for Capital Rules

JPMorgan Chase CEO Jamie Dimon intensified his criticism of forthcoming U.S. bank capital rules, arguing during a quarterly earnings call on Tuesday that regulators are using "false" calculations to artificially inflate requirements. Dimon stated the proposals are "unfair" and would penalize large, diversified banks like his own.

'Unfair' and 'False' Numbers

Speaking after the bank reported a record second-quarter profit, Dimon claimed the proposed methods for calculating the capital banks must hold to absorb losses are being manipulated. "They should not do the numbers in a false way to make the number higher," he said, according to a Reuters report of the call. "The number should be the number."

JPMorgan has previously estimated that under the new drafts, it would face a capital increase of roughly 4%. In contrast, the bank projects that its competitors would see an average capital reduction of 4.8%, a disparity Dimon believes gives an advantage to Wall Street trading giants.

Focus on GSIB Surcharge

The CEO's primary target is the calculation of the GSIB surcharge, an additional capital buffer required for the nation's most systemically important banks. Dimon has long advocated for the Federal Reserve to adjust the surcharge's formula to fully account for economic growth since its implementation in 2015, which would reduce the perceived systemic footprint of large lenders.

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JPMorgan also highlighted a proposed change to how short-term wholesale funding reliance is treated in the surcharge calculation. This change is expected to benefit firms like Goldman Sachs and Morgan Stanley, which are more reliant on this type of funding than commercial banks with large deposit bases. JPMorgan CFO Jeremy Barnum said this outcome would be "disproportionately damaging the ability of banks to serve Main Street."

Regulatory Context

The comments underscore ongoing tension between the nation's largest bank and federal regulators, who are working to finalize a sweeping set of capital proposals. The current drafts are widely seen as more favorable to the industry than a stricter version introduced in 2023, which was met with significant industry opposition.

Federal Reserve Vice Chair for Supervision Michelle Bowman has said she aims to complete the rulemaking process by the end of the year. The proposals are being finalized by the Fed along with two other federal banking agencies.