The Federal Reserve’s ability to prevent a repeat of the 2008 Global Financial Crisis is being questioned by banks and economists. JPMorgan CEO Jamie Dimon claims that stricter regulations need to be scaled back to allow banks to step in during times of market stress.
Dimon argued that current capital requirements are too onerous, stifling consumer lending and preventing banks from taking action when the markets freeze up. He pointed out that this was a major factor in the 2008 crisis, where banks were unable to absorb a massive increase in Treasuries supply due to restrictions like the supplementary leverage ratio.
Dimon’s concerns echo those of Treasury Secretary Scott Bessent and Fed Chair Jerome Powell, who agree that certain adjustments could help banks and broker-dealers hold more Treasuries during market stress. However, Dimon is pushing for sweeping reforms to capital requirements, which he believes will provide relief to the markets rather than just banks.
The Treasury market plays a crucial role in supporting the global economy, but its freeze-up has significant implications for other capital markets. The Trump administration’s goal of lowering yields on 10-year Treasuries may not be achievable due to hedge fund restrictions and basis trades that limit liquidity.
Banks have already been forced to absorb massive losses during the pandemic when the Fed bought $1.6 trillion in Treasuries to stabilize money markets. Dimon believes that fixing capital requirements will free up hundreds of billions of dollars for JPMorgan to lend across the banking system, providing relief to both banks and the broader economy.
Dimon’s comments have sparked hopes that there may be more bank-friendly reforms under the current administration than under President Biden, who has been pushing for stricter regulations. However, the Fed will need to carefully balance its efforts to stabilize the Treasury market with the need to prevent another crisis like 2008.
Source: https://fortune.com/2025/04/12/jamie-dimon-jpmorgan-bond-chaos