JPMorgan Warns of Lending Consequences from Basel III Endgame

JPMorgan Chase executive Stevie Baron has warned that proposed federal capital rules could reduce credit access for small businesses across the US. The Basel III Endgame framework, currently under review by regulators, may have unintended consequences by making lending more expensive or less available to small firms.

Baron, who oversees 7 million small and medium-sized businesses with $19 billion in average business loans, noted that revisions to the 2023 proposal are a step forward but require further adjustments. He specifically pointed out that the Global Systemically Important Bank (GSIB) surcharge formula could favor trading over lending, thereby raising borrowing costs for millions of small business owners.

As a GSIB, JPMorgan Chase is subject to higher capital requirements than smaller banks. Baron urged the Federal Reserve to reconsider the GSIB surcharge calculation, particularly the treatment of short-term wholesale funding, to avoid penalizing everyday lending and banking services that small businesses rely on.