Jamie Dimon warns that consumer goods prices could rise

In his annual letter to shareholders on Monday, JPMorgan Chase CEO Jamie Dimon warned that “everyday consumer goods could be impacted” if international banks implement new financial regulations.

• The regulations in question, known as the “Basel lll Endgame,” would raise the amount of capital major banks are required to keep on hand to cover potential losses.
• They’re part of a larger body of rules that a consortium of international bankers developed in the wake of the global financial crisis of 2007 to 2009.
• Basel III is the final set of rules, and they’re set to take effect in 2025.

This is a big deal for banks, but Dimon warned that “households contending with inflation could also feel the effects of higher capital requirements on market-making activities when they shop.”

“From beverage companies that need to manage aluminum costs to farms that need to protect against environmental risks, if the cost of hedging those risks increases, it could be reflected in what consumers pay for everything from a can of soda to meat products,” he added.

The basic argument for the regulations, according to the Brookings Institution, is that “current capital standards don’t adequately address the risks that banks are taking.”

Dimon acknowledged problems in the banking sector that need to be addressed, but said that “many of the rules are flawed and poorly calibrated” and would increase Chase’s required capital by 25%, hampering its ability to make markets and compete with international banks.

Beyond this regulatory issue, Dimon did note that “the US economy continues to be resilient, with consumers still spending, and the markets currently expect a soft landing.”