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Apollo, Blackstone is happy for tougher banking rules




  • JPMorgan Chase executives warned that tougher regulations in the wake of bank failures this year will raise costs for consumers and businesses.
  • JPMorgan CEO Jamie Dimon said other financial players could end up as winners.
  • “This is good news for hedge funds, private equity, private equity, Apollo, Blackstone,” Dimon said, naming two of the biggest private equity players. “They dance in the streets.”

Jamie Dimon, CEO of JPMorgan Chase, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled Annual Oversight of the Nation’s Largest Banks, in the Hart Building on September 22, 2022.

Tom Williams | CQ-Roll Call, Inc. | Getty Images

JPMorgan Chase executives warned on Friday that tougher regulations in the wake of a trio of bank failures this year will raise costs for consumers and businesses, while forcing lenders to exit some businesses altogether.

Asked by Wells Fargo analyst Mike Mayo about the impact of changes proposed by Federal Reserve Deputy Chairman for Supervision Michael Barr in a speech earlier this week, JPMorgan CEO Jamie Dimon said other financial players could end up as winners.

“This is good news for hedge funds, private equity, private equity, Apollo, Blackstone,” Dimon said, naming two of the biggest private equity players. “They dance in the streets.”

Blackstone and Apollo did not immediately respond to requests for comment on Dimon’s comments.

Banks face demands to hold more capital as a cushion against risky activities from both US and international regulators. Authorities are proposing higher capital requirements for banks with at least $100 billion in assets after the sudden collapse of Silicon Valley Bank in March. But it also coincides with a long-awaited set of international rules spurred by the 2008 financial crisis, referred to as the Basel III endgame.

“How much business is leaving JPMorgan or the industry if capital adequacy increases as much as potentially proposed?” Mayo asked.

Chief Financial Officer Jeremy Barnum said the banks would raise prices to end-users of loans and other products before eventually deciding to exit some areas altogether.

“To the extent that we have pricing power and the higher capital requirements mean we’re not generating the right returns for shareholders, we’ll try to reprice and see how that holds up,” Barnum said.

“If the repricing is not successful, in some cases we will have to remix, and that means getting out of certain products and services,” he said. “That probably means these products and services are leaving the regulated perimeter and going elsewhere.”

After the 2008 financial crisis, increased regulations forced banks to pull back from activities including home loans and student loans. For companies and institutional players, acquisitions and other huge loans are now increasingly financed by private equity players such as Blackstone and Apollo.

That has contributed to the rise of non-bank players, sometimes referred to as the “shadow banking industry,” which has worried some financial experts because they generally face less federal scrutiny than banks.



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