Jamie Dimon, Brian Moynihan, Jane Fraser and the heads of different massive banks will quickly have one thing else to concern from Donald Trump than simply his tariff wars, On The Cash has discovered.
Sources near the Trump administration say The Donald and his financial workforce plan to upend industrial banking by demanding that the CEOs and extra importantly their deep-pocketed banks – locations like JP Morgan, Financial institution of America, and Citigroup — ramp up lending to small companies as a solution to jolt financial progress.
“Trump wants these bankers to go back to running banks, not hedge funds, and that means lending to small businesses,” one Trump insider instructed On The Cash. “If they want to be hedge funds, they should sell off their commercial banks and become Goldman Sachs.”
Small enterprise is mostly outlined as having 500 or fewer workers. It’s thought-about a linchpin of the US economic system, answerable for practically half of all financial exercise, based on the US Small Enterprise Administration.
It was additionally the spine of conventional banking, however the truth that that’s not the case is one thing the White Home desires to alter.
As my Trump supply identified: “When was the last time you heard Dimon talk about real banking like lending to small businesses on Main Street as opposed to his operations around the globe?”
Reps for Dimon, Moynihan and Fraser had no remark. A White Home spokesman had no remark.
The lending to those firms is a $1.7 trillion business, which sounds good till you contemplate it’s dwarfed by different areas of banking.
Starting within the late Nineties – when a wave of deregulation allowed monetary establishments to accommodate securities operations and industrial banking underneath one roof – buying and selling, securitization, M&A and world lending turned extra profitable than doling out loans to restaurateurs or small factories.
Lately, non-bank lenders have stepped in and tried to fill the void, however they don’t have the stability sheets to scale-up lending to small-sized firms like JP Morgan, Financial institution of America and Citigroup, all with $1 trillion or extra in belongings.
After all, the banks will inform you it’s not all their fault that small-business lending is shrinking in significance to them. Demand for these loans has been low since COVID, which shuttered mom-and-pop operations that by no means reopened. Biden-era inflation didn’t assist issues. Regulation turned significantly dicey after the demise of Silicon Valley Financial institution and different group lenders.
The Trumpers are set to remind Dimon & Co., that Biden is gone. The regulatory atmosphere is shifting to de-regulation, so they need to open the spigot to small companies. They usually have an obligation to take action: All the massive banks are Too Huge To Fail establishments, that means in the event that they screw up badly sufficient, the federal authorities will bail them out
Such an ask can be ignored previously given the comfortable relationship financial institution chiefs maintained with DC-based regulators and previous administrations. However I’ve identified previously, financial institution CEOs are deathly afraid of the Orange Man within the White Home, who is understood to be vindictive when he doesn’t get his means.
And for the subsequent three-plus-years, Trump is their regulator, which is why they’re in all probability inclined to play good with him over this regardless of how a lot it prices them.
