Bank CEOs describe pandemic support; senators divided on questions
WASHINGTON – CEOs of America’s six largest banks went to Congress on Wednesday, eager to show their support for struggling consumers and small businesses hit hard by the pandemic.
But lawmakers focused more during a Senate hearing on the controversial social and political issues dividing the country.
Climate change, the right to vote and racial inequity animated the debate and questioning of leaders during a hearing by the Senate Banking Committee. Democrats have called on the powers of Wall Street to do more to help struggling minority communities. Republicans cautioned against promoting social activism through banking practices.
“Profits have risen, stock prices have skyrocketed, your own compensation is stratospheric – but workers are getting a smaller and smaller share of the wealth they create and they are working harder than ever,” the report said. Democratic Senator Sherrod Brown of Ohio, the chairman committee, told CEOs. “We have a racial wealth and income gap that has barely budged since we passed the Civil Rights Act. Show us that you’re going to use your positions to … make our economy work for everyone – not just CEOs and the rich. “
Sen. Pat Toomey of Pennsylvania, the lead Republican on the panel, said the banking sector has shown remarkable resilience during the pandemic recession as it mounted a strong defense of capitalism. Toomey echoed an idea with growing cultural currency among conservatives, expressing concern over increased pressure on banks “to embrace revival” and to promote social activism through their policies.
The CEOs of JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Morgan Stanley and Goldman Sachs appeared by video for the Senate committee hearing, which will be followed by a House committee session on Thursday.
CEOs emerged as the US economy recovered from the recession. Big bank profits surged in the first three months of the year as the recovery takes hold. They were able to free billions of dollars from their loan loss reserves initially set aside at the start of the pandemic last year.
The industry, which was blamed for the Great Recession over a decade ago, has spent most of 2020 and this year trying to appear useful and willing to work with borrowers and businesses. Banks across the country have waived the fees and have forbidden millions of mortgages to shore up the struggling finances of Americans in the pandemic.
“Citi quickly took action with a comprehensive approach to provide immediate assistance on the ground,” said Jane Fraser, the new CEO of Citigroup.
Most of the bank relief measures were supposed to be temporary and are now being phased out. Senators pushed CEOs to promise they would not force anyone into foreclosure or bankruptcy following a pandemic crisis after the measures expired. Democratic senators also insisted on what banks are doing to increase diversity in their ranks and to tackle wealth inequalities between black and Latino households and white households.
“You’ve heard from everyone on this panel that we’re trying to do more,” said Jamie Dimon, CEO of JPMorgan Chase, in response to questions about banks’ performance in lending to minorities and the poor. .
Brown criticized banks for cutting lending to pandemic-ravaged small businesses while buying back their own shares. Bank of America, he said, cut small business loans by 14% while buying back tens of billions of dollars of its stock. CEO Brian Moynihan parried off the attack, saying, “The good news is we can do both.”
Challenged by Brown over the wide gap between bank CEO pay and average employee pay, Dimon replied, “We are very proud of the opportunities we provide to all of our employees.”
Longtime critic of the big banks, Senator Elizabeth Warren, D-Mass., Emphasized why they collected overdraft fees on checking accounts during the pandemic.
In a tense exchange, she called Dimon “the king of overdraft fees,” saying JPMorgan charges more than seven times the fees per account than its competitors.
Dimon disputed the accuracy of Warren’s numbers. The bank says last year it waived fees on more than one million deposit accounts, including overdraft fees, with no questions asked. JPMorgan Chase has an account called Secure Banking with no overdraft fees and says it makes other accommodations to clients in specific situations.
Warren said last year “showed that corporate profits are more important to your bank” than helping people in difficulty.
Republicans, now in a minority in Congress after the last national election, have renewed their warnings against seeking new regulations for the banking sector as a solution to the problems. They praised programs created by Congress last year and renewed in early 2021, such as the Paycheck Protection Program, which has funneled hundreds of billions of dollars in forgivable loans to small businesses. U.S. banks have helped distribute more than $ 700 billion in loans under the program through the end of May.
Senator Tim Scott, RS.C., challenged some of the CEOs for their public opposition to Georgia’s new Republican election law. Critics say Georgia’s drastic rewrite of electoral rules will limit access to the vote, especially for voters of color, and has become a flashpoint in the polarized political battle dividing the country.