Bank CEOs testify on Capitol Hill over capital requirements

CEOs of major banks, including JPMorgan Chase (JPM) and Bank of America (BAC), testified to lawmakers on Capitol Hill on Wednesday, addressing concerns on economic conditions and inflation that could be brought on by capital requirement revisions found in the "Basel III Endgame" provisions.

Yahoo Finance Reporter Jennifer Schonberger highlights statements made by chief executives and Senate Banking Committee members.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

This post was written by Luke Carberry Mogan.

Video transcript

- CEOs, meanwhile, from the nation's largest banks are gathering on Capitol Hill today and testifying before Congress for the annual oversight hearing.

Bank execs discussing a wide range of topics for the annual oversight hearing.

But the Basel end game, which focuses on the amount of capital that banks must have in reserve to protect themselves from insolvency, was the focal point.

For more coverage on today's hearing on Capitol Hill, we turn now to Yahoo Finance's Jennifer Schonberger.

Jennifer.

JENNIFER SCHONBERGER: Josh, CEOs from the nation's largest banks questioned for three hours by the Senate Banking Committee this morning in what's become an annual oversight hearing of Wall Street.

The main message from CEOs in unison the Federal Reserve's proposed capital requirements will hurt consumers, first-time homebuyers, and the economy.

BRIAN MOYNIHAN: If you have the same capital requirements increased by 20% to do the exact same activities you did yesterday, you have to get a higher return.

And that higher return will be borne by the customer base.

JENNIFER SCHONBERGER: JP Morgan Chase CEO, Jamie Dimon, warning that the capital plan will increase inflation by way of increasing capital requirements for hedging, which will trickle down to consumers in the form of higher prices for everything from a can of soda to meat products.

Many Republicans were in agreement with bank CEOs and expressed concern over credit availability and the impact on the economy.

Senator Mike Rounds asked the CEOs to raise their hands if the capital proposals would hurt first-time homebuyers.

SEN. MIKE ROUNDS: And I'm going to ask you to raise your hands.

I apologize for that.

But if you agree with these assessments, would you please raise your hands.

Do you believe in its current form could these regulations negatively impact first-time home buyers?

JENNIFER SCHONBERGER: Democrats expressed concern-- even moderate Democrats expressed concern about the rule, expressing concern that we could see activity move from the regulated banking sector into the non-regulated banking sector and expressing concern about the timing of this rule.

Senator Mark Warner.

SEN. MARK WARNER: My questions on Basel III have been raised already.

I've indicated I think the timing at this moment is very problematic with interest rates as high as they are.

JENNIFER SCHONBERGER: But Senate Banking chair, Sherrod Brown, would have none of it, saying that bank CEOs don't want capital requirements to move higher because they don't want to sacrifice profits.

I caught up after the hearing with Bank of America CEO, Brian Moynihan, and asked him whether he thought he was able to change the narrative at all.

He told me they had a fruitful discussion with senators.

When asked whether he would be prepared to take this to court if the current rule were to pass in its current form, he told me we'll see.

Back to you.

JULIE HYMAN: Our Jennifer Schonberger, thanks so much.

Really appreciate that summary of what has gone on today.