Executives participating in ASR sister publication American Banker's regulatory symposium Monday urged regulators to consider the industry costs of implementing the Basel III capital rules, including a capital surcharge on systemically important institutions.
Sitting on a panel discussing the Basel accords, James Beit, managing director at JPMorgan Chase, reiterated concerns about the capital rules raised by his company's CEO Jamie Dimon. In a recent op-ed in the Financial Times, Dimon called the extra surcharge on globally significant financial institutions "anti-American."
While Beit downplayed whether U.S. regulators should abandon the surcharge, he said the extra charge could further hamper the economy.
"The proposed capital surcharge in our view will have a negative competitive impact on U.S. institutions, especially very large institutions, and is likely to strain economic growth," he said.
Meanwhile, PNC Financial Services Group executive Reginald Imamura said in the same panel discussion that the Basel III rules — though not yet implemented — are already having real-world implications. Institutions looking ahead at future decisions must now plan accordingly if they are going to have to hold more capital, he said.
"There's just not a lot of time," said Imamura, an executive vice president and head of financial services advisory and banking. "In the real world, well-managed companies make plans two, three years out. People are making decision now."
The bankers' comments reflect concerns about Basel III as part of growing uncertainty about future regulation, which many say is causing banks to limit their lending at a time when the economy is trying to recover. The new capital rules, outlined by international regulators in the wake of the financial crisis, call for large banks to hold common equity of 7%. The extra surcharge for the largest institutions would be between 1% and 2.5%.
Participating in the Basel discussion, Karen Shaw Petrou, managing partner at Federal Financial Analytics, said regulators have tried to tackle too much too quickly.
"You'd really think the regulators … have walked into Wendy's, … ordered every topping, added every condiment, asked for a side of fries and then decided to have a shake," she said. "They ordered everything all at once."
The "ingredients" might be good, Petrou said, but she warned that all of them together "are going to make us sick."
