There’s been some regulatory rhetoric as the CEOs of top-tier U.S. banks, including JPMorgan, Bank of America and Citigroup engage in a showdown before Congress.

Arguing that capital hikes and new regulations could spell economic gloom, the executives dived into hot topics like worker rights, climate change, mortgages, and financial stability. With the Basel Endgame proposal threatening a shake-up in calculating loss-absorbing capital, the hearing was a battleground for CEOs to win over moderate Democrats and prove that regulations won't stifle lending. Did the CEOs sway opinion or face a skeptical reception from lawmakers? Only time will tell.

Regulatory Roulette: CEOs Navigate Capitol Hill

As the CEOs of major U.S. banks faced the Senate Banking Committee, their primary target was the Basel Endgame proposal, a potential game-changer in capital calculation. The industry, in an all-out campaign, aims to thwart the proposal, citing concerns of economic impact. Amidst debates on fair lending, fee caps, and regulatory burdens, CEOs strove to convince lawmakers that stringent regulations could impede lending, affecting small businesses and consumers. However, skepticism loomed, with the Committee's chair, Sherrod Brown, emphasizing accountability and safety after the recent bank collapses.

CEO Advocacy: From Defense to Assertiveness

In a departure from years of defense, the CEOs took a stance, supported by Republicans critical of regulatory red tape. Basel and other regulatory proposals took center stage, with CEOs arguing against perceived burdens. With Democrats expressing concerns about potential lending pullbacks, the CEOs aimed to strike a chord by emphasizing the critical role of banks in supporting customers, the economy, and financial stability.

An End to the Endgame?

After three hours of back and forth, Senator Sherrod Brown brought everything to a close. While not everything had been antagonistic, there was a certain chill in the air. However, there was consensus on the need to help American ex-servicemen get their entitlements, and the Committee praised the banks there.

Brown even praised the ever pugnacious Dimon for his role in campaigning for the reform of Supplemental Security Income (SSI). There was even kind words for the banks’ work on financial inclusion.

U.S. bank CEOs expected to protest regulation push before Congress https://t.co/AxmerFLsCe pic.twitter.com/cX8AamT2jW

— Reuters (@Reuters) December 4, 2023

The Elephant in the Room

However, let’s not beat around the bush. Brown told the banks in clear terms that they had to stop lobbying against regulatory measures designed to protect taxpayers. Banks have been weighing in on social issues, including voter identification laws, ones that often run to the heart of the Republican mantra on freedom. If they’re going to oppose Republicans there, then Republicans are hardly likely to support the banks in their fight against regulations. There’s no chance of that happening.

Choosing Your Battles

It's also worth noting that Jaime Dimon of JP Morgan was just recently in front of a Committee saying that he'd ban crypto if he could. It seems that regulations are good for some, and bad for others.

Politics is politics and money is money. Where the two meet can often cause strange conflicts between erstwhile allies.