Basel III Endgame Rules Draw JPMorgan Warning on Small Business Credit

A bank executive takes the capital fight to Main Street

The banking industry's long fight over how much capital the largest U.S. lenders must hold has a new pitch, and this time it is aimed at small business owners. Stevie Baron, who runs Chase Business Banking at JPMorganChase, warned in an August memo that the Basel III Endgame capital rules, as currently drafted, could make credit more expensive or harder to get for companies that depend on bank lending.2128 Baron said the latest revisions to the 2023 proposal were "a step in the right direction." He added that more work was needed so the final rules do not raise the cost of lending or reduce credit access for small firms.23

The memo appeared in a new JPMorganChase series called "from the desk of," in which senior executives, including CEO Jamie Dimon, publish their views on economic and policy questions.21 Fox News Digital reported it first, and other outlets carried it in nearly identical form within hours.2224 Several weeks later, the questions it raises remain open. Regulators are still working toward final rules, and the data on small business conditions point in different directions.

What the proposal actually does

Basel III is the global capital framework written after the 2008 financial crisis to make sure banks hold enough of a cushion to absorb losses without a taxpayer rescue.21 The Federal Reserve, the FDIC and the Office of the Comptroller of the Currency first proposed the U.S. version, called Basel III Endgame, in 2023. After heavy pushback they withdrew it for revision.21 Trump administration regulators released a new draft in March, with comments due in July. Banks are still lobbying for changes as the agencies move toward a final rule.21

Baron's main target is not the Basel package as a whole. It is a related piece: the surcharge on global systemically important banks, or GSIBs. JPMorganChase is one of those banks, so it already holds more loss-absorbing capital than smaller lenders.21 In his memo, Baron objects to two things. The first is a proposed technical change to the short-term wholesale funding part of the surcharge formula. He argues it would raise requirements for "universal banks" that lend to consumers and small businesses more than for other GSIBs.28 The second is that surcharges have risen over the past decade partly because the economy has grown. He says the Fed has only partly corrected for that effect since the calculation was finalized in 2015.28

Baron also points to the Basel proposal's new operational-risk requirements. He says these could add capital charges on small business loans that duplicate charges elsewhere in the framework.28 His proposed fix has three parts. Keep the current treatment of wholesale funding. Stop capital requirements from rising just because the economy grows. Make sure the framework works "as a coherent whole" and does not stack several requirements on the same risk.2328

How the coverage framed it

Most of the coverage repeated the bank's argument with little challenge. Fox Business and its syndication partners presented the memo as a warning on behalf of Main Street. They paired it with comments from Senate Banking Committee Chairman Tim Scott, who has said overly complicated capital rules can slow growth without making the system safer.2324 Liberty One News described the dispute as a matter of whether local businesses can get the money they need to expand, and largely adopted Baron's framing.27

Financial World was the main exception. It agreed that small firms are especially exposed, because many cannot borrow in bond markets and rely on banks for working capital and equipment.25 It also noted that banks have an obvious financial reason to oppose higher capital requirements. It argued that complaints about how the rules are built deserve separate scrutiny from complaints about how high they are.25

That distinction is the right way to judge the memo. Baron's strongest point is about incentives, not totals. If the surcharge formula makes trading more attractive than relationship lending, that would work against the goal of steering capital into productive activity. Financial World made the same point.2528 His weaker point is the familiar argument that any increase in capital requirements will be passed on to borrowers. Skeptics in Congress have challenged that argument directly.

The counterargument from Capitol Hill

In September 2025, Senators Elizabeth Warren and Bernie Sanders wrote to Dimon after JPMorgan raised its dividend by 7.1% and authorized a $50 billion share buyback.29 They noted that the Fed's 2025 stress tests had lowered JPMorgan's stress capital buffer from 3.3% to 2.5%. They argued that the bank used the freed-up capital to reward shareholders rather than lend more or cut rates for small businesses and households.29 The letter also cited industry trade groups, including the Bank Policy Institute, that had warned in 2023 that stronger capital rules would limit small business loans and credit cards. The senators said that claim ran against the empirical evidence.29

The letter does not disprove Baron's point about the structure of the surcharge. It does weaken the general argument that lower capital requirements lead directly to cheaper credit on Main Street. Anyone weighing the memo should keep both points in mind.

A bank with a lot riding on small business

JPMorganChase's interest in this fight is commercial as well as policy-driven. Baron's unit serves more than 7 million small and medium-sized businesses and averaged over $19 billion in business banking loans in fiscal 2025.23 In March, Dimon announced an American Dream Initiative with a goal of raising the number of small and medium-sized businesses to 10 million.23 Yahoo Finance later reported that the effort includes a plan to deploy $80 billion in capital and add 1,000 small-business bankers. It also reported that the bank plans to hire 300 small business bankers next year, with the goal of adding 3 million small business customers over several years.30

In September, Dimon said small businesses were having a "mini boom."30 Census data supports him: Americans filed 4.3 million business applications through August, the highest total for the first eight months of any year since tracking began in 2004.30 The same report noted that a Federal Reserve survey from March found small firms still describing tighter credit conditions than before the pandemic.30 That gap between strong business formation and tight credit is what gives Baron's warning its political weight.

Optimism is holding, but uncertainty is high

Small business sentiment has recovered over the summer but remains fragile. The NFIB Small Business Optimism Index rose to 99.8 in July, its highest level since August 2025. Hiring plans reached their highest point since October 2022, and planned capital outlays hit their highest level since December 2024.13 In August the index fell 1.1 points to 98.7, still slightly above its 52-year average of 98.0.12 NFIB chief economist Bill Dunkelberg described owners as dealing with weaker sales, supply chain disruptions and inflation, while still mostly confident about their own businesses.18

NFIB's uncertainty gauge is the more telling number. It rose to 91 in July, far above its historical average of 68, mainly because owners were unsure whether it was a good time to expand.13 Expansion is the kind of spending that depends on credit lines and term loans, which are the products Baron says the rules could make more expensive.28 Earlier in the year, NFIB reported that fewer owners were paying higher rates on their latest loans, a sign that credit was getting somewhat easier.16 The September index is due on October 13.11

Business credit cards are already expensive

Many of the smallest companies borrow on credit cards rather than through bank loans, and those balances are costly. WalletHub puts the average business credit card APR at about 21.2%, compared with a low of 15.11% in 2012.83 Experian, using Curinos data, reports lower averages for business cards: 16.80% for rewards cards at banks and 14.35% for non-rewards cards.10 The gap between the two likely reflects different methods, but both show that card credit costs far more than a typical small business loan.

Card pricing is part of a separate regulatory fight. President Trump called in January for a one-year 10% cap on credit card interest. Bills that would impose such a cap, S.381 and H.R.1944, remain stuck in committee.1 Citadel founder Ken Griffin argued that a cap would shrink the supply of credit for people who "literally start their business with their Visa card."4 The American Bankers Association estimated that a 10% cap could lead to the closing or reduction of 74% to 85% of open card accounts.1

The bottom line

Whether the capital rules or a rate cap is under debate, the big banks make the same case: rules meant to protect the system or consumers end up rationing credit for small businesses. Sometimes that argument holds up. On the narrow question of whether the GSIB surcharge formula penalizes lending compared with trading, Baron makes a specific, technical case that regulators should answer on its merits.28 The broader claim that capital relief turns into cheaper loans has a weaker record, as the dividends and buybacks that followed the 2025 stress tests showed.29

For small business owners, the outcome will matter more than the arguments. Optimism is near its long-run average, uncertainty is high, and card APRs are above 20%.12138 In that environment, even small changes in what banks charge for lending will reach owners quickly. Regulators should fix any part of the surcharge formula that genuinely discourages lending without accepting the industry's broader push for lower capital requirements.