JPMorgan Chase executive warns Basel III changes could curb credit for small firms

Chase Business Bank CEO Stevie Baron warned that the latest draft of the Basel III Endgame capital standards could unintentionally restrict credit for small and medium-size enterprises. He highlighted that changes to the Global Systemically Important Bank surcharge formula might incentivize banks to favor trading activities over loan issuance, thereby raising borrowing costs for millions of small business owners. Baron called on the Federal Reserve to retain the existing short-term wholesale funding factor and to ensure the surcharge does not penalize everyday lending services.

The memo, arrives as U.S. regulators—including the Federal Reserve, FDIC and the Office of the Comptroller—seek to finalize the rules, with public comments due in July. Senate Banking Committee Chairman Tim Scott and other officials have similarly warned that overly complex capital rules could slow economic growth. JPMorgan Chase, classified as a GSIB, oversees more than 7 million small and medium businesses and $19 billion in average business loans for FY2025, underscoring the stakes of the proposed changes.