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Head of Chase says bank customers stand to lose out if Washington enacts new rules

The head of America’s biggest retail bank has a warning for its 86 million customers: prepare to pay for your bank accounts.

Marianne Lake runs Chase Bank, the sprawling franchise inside JPMorgan JPM -0.07%decrease; red down pointing triangle Chase that is the country’s biggest bank for consumers and one of its biggest credit card issuers. Lake is warning that new rules that would cap overdraft and late fees will make everyday banking significantly more expensive for all Americans.

Lake said Chase is already planning to pass on the costs of higher regulation and charge customers for a number of now-free services, including checking accounts and wealth management tools, if the rules become law in their current form. She expects her peers in the industry will follow suit.

“The changes will be broad, sweeping and significant,” Lake said. “The people who will be most impacted are the ones who can least afford to be, and access to credit will be harder to get.”

This isn’t the first time banks have said they would pass on higher costs to consumers when regulators have attempted to cap their fees. In 2010, after the post-financial crisis overhaul of bank regulations, lenders warned that they would levy fees on debit cards because of a cap on some card charges—but few ended up doing so, because consumers threatened to move their business. Some consumer advocates say this time is no different.

“The banks say that their only option is to pass on their costs to customers, but that’s not true,” said Dennis Kelleher, president of Better Markets, an economics think tank that is in favor of the proposed bank regulations. “Yet again, banks are dressing up their attempts to maximize their own profit under the guise of what’s good or bad for customers.”

Banks are saying this time could be different because of the scale of new financial regulations coming out of Washington. Agencies such as the Consumer Financial Protection Bureau are proposing an $8 cap on credit-card late payment fees and a $3 cap for overdrafting bank accounts. They are also planning to further limit debit card fees and how much they can charge to software companies like Venmo and CashApp for accessing and using their customers’ data. On top of that, new bank capital rules would make it harder for banks to lend by requiring them to hold more reserves against mortgages and credit card loans.

It is possible some of the rules could be watered down, or not become law at all, if Donald Trump takes the White House in November. But as the landscape looks right now, Lake said many of the types of basic services that Chase customers have become accustomed to—including free checking accounts, credit score trackers, and financial planning tools—won’t likely be free anymore.

Long considered one of two front-runners to succeed Jamie Dimon as chief executive when he retires, Lake has worked in many different parts of JPMorgan Chase. She served as chief financial officer between 2013 and 2019, and controller for its investment bank between 2007 and 2009.

She said she’s seen how regulation of debit card swipe fees has made some banking services more expensive for customers already, and she expects that to happen again.

“It is not practical for many of the services to be free if we won’t be able to draw from those profit pools,” Lake said.

Banks across the board have launched a number of appeals and taken the government to court to stop the raft of forthcoming rules. Most of the lawsuits have been filed in the Northern District of Texas, a favorite jurisdiction of institutions trying to stop rules and regulations promulgated by the Biden administration.

The rule capping credit card late fees was passed by the CFPB in March, but then a coalition of bank industry groups sued to stop it before it could become law. The law is pending appeal before a judge. Trade organizations representing large banks also sued to prevent changes to the Community Reinvestment Act, which requires banks to offer their services to low-income and historically disadvantaged communities.

Even though the credit card late fee cap hasn’t become law yet, some credit card companies are ready to pass on costs to customers. Chase has already sketched out plans to ratchet up interest rates and take a more conservative approach to underwriting credit card loans, according to an investor presentation.

In the long run, big banks such as Chase might actually stand to be the winners if the rules out of Washington are passed.

“Any change in regulations that would cap fees will create opportunities for institutions that are highly efficient,” said Dan Goerlich, a consulting partner at PricewaterhouseCoopers who advises bank clients. “Big banks can make up for a dent in consumer banking revenues with profit from their wealth management and investment banking arms. Smaller and regional banks will struggle to make up for that.”

But he warned that it might not be so easy for banks to pass on costs, either.

The highly competitive environment for retail deposits means that banks might wind up needing to keep services free, no matter what the final rules end up looking like.

“Most customers can access retail banking easily and seamlessly today,” Goerlich said. “It might be disadvantageous to keep services at zero cost, but banks’ hands could be forced by other competitors who will offer customers low-cost services.”

The fallen crypto tycoon’s brother and mother directed donations to politicians, while his father weighed in with tax advice, previously undisclosed emails show

Two of Sam Bankman-Fried’s former lieutenants face the prospect of prison time over their role in his campaign-spending operation. But other insiders from the FTX chief executive’s orbit were closely involved with his political-donation binge, including members of his family, according to previously unreported emails seen by The Wall Street Journal.

Prosecutors say Bankman-Fried used funds stolen from FTX customers for more than $100 million in political contributions as part of a wide-ranging influence scheme ahead of the 2022 election. Two former FTX executives, Ryan Salame and Nishad Singh, have pleaded guilty to taking part in an illegal straw-donor scheme to mask the source of their contributions. Salame steered money to Republicans so the FTX chief executive wouldn’t be associated with the contributions, while Singh backed liberal candidates, prosecutors say.

In May, Judge Lewis Kaplan sentenced Salame to 7½ years in prison, citing the importance of election integrity in handing down the tougher-than-expected penalty. The 30-year-old is set to begin serving his sentence in August. Singh, 28, is still awaiting sentencing. Bankman-Fried was sentenced to 25 years in prison after a jury convicted him of multiple counts of fraud.

Among the revelations in the emails reviewed by the Journal:

Bankman-Fried’s father advised on Salame’s withdrawals. In September 2022, Joe Bankman introduced the budding Republican megadonor to FTX’s tax lawyers at law firm Fenwick & West. He suggested that they discuss the tens of millions of dollars that Salame had withdrawn from Alameda Research, FTX’s affiliated crypto hedge fund.

“Alameda has distributed a lot of money to Ryan, which he has used to make political donations. (Ryan is the key employee who works on the other side of the aisle, as it were). Ryan and I talked about categorizing these as loans,” Bankman wrote in an email seen by the Journal.

Bankman, a Stanford Law School professor, was employed by FTX at the time. His remarks in the email are strong evidence that he knew about the illegal straw-donor scheme, said David Mason, a former chairman of the Federal Election Commission who reviewed the emails for the Journal. “If Bankman knew about the contributions in the name of another while they were going on, he could be held directly liable as an accomplice,” Mason said.

“Mr. Bankman had no knowledge of any alleged campaign finance violations,” a spokesman for Bankman-Fried’s father said. Fenwick advised Salame on taxes rather than campaign-finance laws, a person familiar with the firm’s work said.

Gabriel Bankman-Fried directed many of the contributions. In a lengthy email thread from the summer of 2021, Sam Bankman-Fried’s younger brother Gabriel asked him to contribute to a who’s-who of Democratic politicians, such as Sens. Joe Manchin of West Virginia and Cory Booker of New Jersey, and groups such as the Democrat-aligned Senate Majority PAC.

In bullet-point lists, Gabriel spelled out the desired contributions and whether they should come from Sam’s personal fortune or FTX. Sam often replied with brief messages such as “done!”, while Salame handled many wire transfers, the emails show. Gabriel’s biggest ask was a $5 million gift to Guarding Against Pandemics, an advocacy group he created in 2020.

“Gabe’s political fundraising supported like-minded policymakers who saw pandemic prevention as among the most critical issues facing humanity,” said Michael Tremonte, a lawyer who represents Gabriel Bankman-Fried and his mother, Barbara Fried.

Bankman-Fried’s mother also directed spending from her son’s crypto fortune. “Hi Sam and Nishad: Can I hit you guys up for $92K (by tomorrow if at all possible!) to close the gaps on two projects we have committed to fund as part of our new Research Initiative?” Fried wrote in an August 2021 email.

She identified a pair of progressive-leaning groups, New Virginia Majority and Activate America. “Sure,” Bankman-Fried replied.

Fried was co-founder of Mind the Gap, a super political-action committee dedicated to helping Democrats win elections. Tremonte said she had advised hundreds of political donors. “There was nothing in any way inappropriate about her providing such advice,” he said.

Singh’s involvement was aimed, in part, at helping Sam Bankman-Fried save on taxes. In September 2021, Gabriel told Sam in an email that he would begin directing contributions by Singh—a maneuver that would help the FTX chief executive’s gift-tax obligations.

“I’m going to ask Nishad (in a separate thread) to make gifts publicly to politically-minded folks in our network…to save you gift tax $. The gifts will be in the hundreds of thousands to low million depending on the value of the person and the need for $,” Gabriel wrote.

Singh was friends with Gabriel from their school days in California. During Sam’s trial in October, Singh testified that he had initially embraced his role as a political donor but later became a more passive participant. “After some point in time, my role was to click a button,” Singh said.

Sam Bankman-Fried had dinner with Mitch McConnell. On Sept. 7, 2022, the FTX founder and Salame were preparing for a small dinner with Senate Minority Leader Mitch McConnell (R., Ky.) and Sen. Susan Collins (R., Maine) at a Washington steakhouse. Their purpose was to urge the senators to redirect unspent federal Covid funds to fighting future pandemics, according to an unsigned memo prepared for the two FTX executives.

“If the Leader or Senator Collins speak, let them talk…Let them bring up crypto—if it comes up at all,” said the memo, which was included among the emails seen by the Journal.

The memo noted, for Bankman-Fried’s benefit, that there would be vegan options on the menu.

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