Executives of JPMorgan Chase cautioned that should stricter regulations be imposed following the bank bankruptcies in 2020, it would increase costs for customers and businesses. CEO Jamie Dimon suggested that other financial entities may benefit from this, expressing "This could be fantastic news for hedge funds, private equity, private credit, Apollo, Blackstone" - referring to two of the biggest private equity firms - and claiming "they must be jumping for joy".
JPMorgan Chase executives suggested on Friday that more stringent regulations following the failure of three banks this year would make services to customers and firms more expensive, and may lead some lenders to exit certain operations. When Wells Fargo analyst Mike Mayo inquired about the influence of Michael Barr's speech earlier in the week, JPMorgan CEO Jamie Dimon pointed out that other financial firms could emerge triumphant. He said, "This is great news for hedge funds, private equity, private credit, Apollo, Blackstone; they're dancing in the streets." Neither Blackstone nor Apollo responded to requests for comment on Dimon's remarks. Regulatory authorities are proposing rules for banks with at least $100 billion in assets after the incident at Silicon Valley Bank in March, in addition to the Basel III endgame which follows the 2008 financial crisis.
Mayo queried how much JPMorgan or the industry would lose business if capital ratios were elevated as much as proposed. CFO Jeremy Barnum stated that banks would raise costs on end users of loans and other services beforehand, then would have to exit some areas completely if the new pricing did not take. Barnum continued, "If the repricing is not successful, then in some cases, we will have to remix and that means getting out of certain products and services. That probably means that those products and services leave the regulated perimeter and go elsewhere." Following the 2008 financial crisis, increased regulations led banks to reduce mortgages and student loans. For businesses and institutional investors, mergers and immense loans are now usually funded by private equity firms such as Blackstone and Apollo. This has caused the growth of non-bank players, known as the "shadow banking" industry, which has prompted apprehension among certain financial specialists as they generally receive less federal oversight than banks.
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