After the resignation of Federal Deposit Insurance Corporation chairman Martin Gruenberg on 20 May, the Basel Endgame looks increasingly shaky. And having accumulated excess capital in anticipation of the Endgame, US banks are either distributing the capital to shareholders, or in the case of JP Morgan, are making a $200 billion trading bet on equities and bonds.

Trading assets at the top six banks rose to a nine-year high of $2.5 trillion in the first quarter of this year, according to the Risky Finance banking tool. The surge was led by JP Morgan with a $213 billion rise in trading assets, of which $110 billion were invested in equities and $70 billion in government bonds.

CEO Jamie Dimon asked shareholders to trust JP Morgan with the excess capital, and in particular the bank’s skill at managing the risk of its $750 billion of trading assets. “Excess capital is not wasted capital”, he said.

Total trading assetsExcess capital

JP Morgan leads trading asset surge This visualisation shows the evolution of trading assets and excess capital for the 6 US G-SIBs since 2016. Data compiled from regulatory filings. Subscribe to access to our ten-year database of bank risk disclosures, many not available anywhere else.

The G-SIBs’ excess capital, which totalled $138 billion at the end of March, was freed up because of the way the Fed currently incorporates stress tests into capital requirements.