Megabankers get toast both sides on Capitol Hill


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As he was about to question a panel of bankers from the six largest Wall Street banks and investment banks in turn, Bill Huizenga, senior Republican member of Michigan’s House Financial Services Committee, took a moment. to greet panelist Jane Fraser, Citigroup. CEO. Acknowledging his promotion to the top Citi position in March 2021, Huizenga said, “Congratulations – and welcome to the pan.”

He wasn’t exaggerating.

In back-to-back hearings at the end of May, members of the Senate Banking Committee and then the House Financial Services Committee sizzled the main leaders of the country’s financial services. In addition to Citi, CEOs Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo have all occupied the seat – virtually.

The financiers caught fire on both political sides. Democrats typically asked questions and made comments indicating their concerns about employee pay levels, racial and gender balance in executive ranks, fair products, helping those affected by the loss of employment or other economic fallout from Covid-19, and the risk of foreclosures.

Republicans tended to criticize large financial institutions which they believed appeared to favor “awakened capitalism” and attacked indications that rulers and their institutions favor “stakeholder capitalism,” the desire to serve interests. beyond those of business owners. Republicans also attacked lending policies that excluded certain “unpopular” industries, including coal mining and gun manufacturing.

Expiry date of recognition:

Both hearings gave bankers the opportunity to make brief statements about the efforts of their institutions to assist the public throughout the Covid period and to discuss measures taken to address social concerns that have arisen during the last year. These statements were essentially dismissed, as politicians on both sides focused on their own agendas.

Sherrod Brown (D.-Ohio), president of the Banking Senate, for example, painted a picture in his opening statement of Wall Street Banks against America and asked specific questions about what the six executives in attendance would do. whether employees were considering unionization. (None favored it and gave neutral responses at best.) Maxine Waters (D.-Calif.), In her opening, referred to the slowdowns in processing loan applications to minority businesses, the “deserts” of branches ”, overdraft fees“ raked ”during the pandemic and More

Waters also said, referring to the two hearings, that “today’s testimony concludes two historic days, which are a true testament to the accountability that comes from democratic control of the House and the Senate.”

Feisty Exchange on overdraft fees during the pandemic

One of the most heated discussions during the Senate banking hearing was between Senator Elizabeth Warren (D.-Mass.) And Jamie Dimon, President and CEO of JPMorgan Chase. Warren’s comments sometimes came close to vitriol.

The senator pointed out that federal regulators had said that if banks had a negative balance at the Federal Reserve during the Covid crisis, the Fed would waive overdraft fees. She said regulators have encouraged banks to give consumers the same treatment.

She then told the CEOs of Chase, Citi, Bank of America and Wells Fargo, “Could you please raise your hand if you offered the same automatic protection to your clients and automatically waived all of their overdraft charges?”

Senator Elizabeth Warren asked Jamie Dimon of JPMorgan Chase if he would reimburse any overdraft fees billed during the pandemic. “No,” Dimon said.

Seconds later, Warren cited figures from Pew Research indicating that workers, including minorities, paid $ 4 billion in overdraft fees during the pandemic.

Warren singled out Dimon because “you are the star of the overdraft show. Your bank collects more than seven times more money in overdraft fees per account than your competitors. She often spoke of Dimon as he tried to answer questions.

“I think your numbers are totally inaccurate, but we’ll have to sit in private to go over this. I also want to point out that we did not discover an overdraft on the Fed’s account. “

—Jamie Dimon, JPMorgan Chase

Warren dismissed that and asked if Dimon knew how much the bank had collected in overdrafts in 2020. Dimon said he did not have the number on hand, but “on request we have waived the charges if they were. stressed because of Covid “.

Bored, Warren claimed the bank billed nearly $ 1.5 billion in overdrafts in 2020 and if the bank had automatically waived all overdrafts it would still have made billions in profit.

“You and your colleagues are here today to talk about how you’ve stepped up and taken care of clients during the pandemic,” Warren said. “And that’s a bunch of nonsense. If that’s true, that’s about $ 4 billion worth of bullshit.

She said, “But you can fix this now. Mr. Dimon, are you going to commit now to repaying the $ 1.5 billion that you took from customers during the pandemic? “

“No,” Dimon retorted.

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Warren turned (virtually) to the other three consumer banks and asked them if they would. Without waiting, she continued, “I didn’t think so. So, however you try to do it, the past year has shown that corporate profits are more important to your bank than offering just a little help to struggling families, even when we are. in the midst of a global crisis.

During the House committee hearing, Representative Carolyn Maloney (D.-NY), who was one of the leading authors of the prior overdraft legislation, specifically followed Warren’s line of questioning during the previous Senate hearing.

She turned to Charles Scharf, CEO and President of Wells Fargo, and demanded to know what his institution was doing. Scharf offered several options, including two new accounts and the “Overdraft Rewind” service which allows a rollback to avoid overdrafts when a direct deposit is received.

“We’re looking to become more consumer friendly, but it’s definitely something we’ll continue to look at,” Scharf said. He noted that both accounts had been offered for over six months.

Maloney seemed unaware of these efforts and asked a few questions about the new offerings. She noted that she doesn’t see why a consumer wouldn’t choose one of these options, rather than paying $ 35 for an overdraft caused by buying a cup of coffee or a sandwich.

Read more:

Capitalism, ‘awakened capitalism’ and the old-fashioned energy sector

“The financial system has proven to be remarkably resilient during Covid, but I am concerned about the increasing pressure on banks to embrace the ‘wake-up call’ and quell far-left attacks on capitalism,” said Pennsylvania Senator Pat Toomey, the committee’s rank Republican. “I am concerned that continuing on this path will lead to skewed credit allocation, activists seeking to make political changes through the financial system instead of the democratic process, and ultimately less prosperity for the people. Americans. “

“Decisions are being made to pacify political activists who want to do what the law cannot do, which is to shut down legal American businesses.”
– Blaine Luetkemeyer, House of Representatives

Much of the industry’s Republican questioning and criticism during the hearings was about whether to cut fossil fuel companies and other businesses in industries unpopular with the Liberals.

During questioning, Toomey asked Fraser of Citicorp about his bank’s policies.

“I understand that Citigroup is committed to ending all funding for thermal coal companies by 2030. And frankly, there may still be a need for thermal coal after that date,” he said. declared. “But my real question for you is, have you established or are you considering establishing a similar policy prohibiting the financing of oil or natural gas, other than if the economy dictates that you should not provide the financing? ? “

Fraser took a long-term view in his response.

“Our aim is to responsibly support our customers and help them switch to cleaner energy, in order to create jobs in the future,” she said. “This will require investing in new technologies and helping them develop. So what we’re looking to do is work with our clients in the transition and support them in that transition, so that we can balance the evolution.

During the House committee hearing, rhetoric sometimes heated up. Republican Blaine Luetkemeyer of Missouri spoke of the anti-fossil fuel stances major financial institutions have taken: “What’s worse is that these decisions are clearly not made out of conscience, as investments in China prove it. . These decisions are made to pacify political activists who want to do what the law cannot do, which is shut down legal American businesses.

Dimon de Chase, during the Senate hearing, appeared to be promoting a middle-ground approach to the climate debate.

“We need a really mature climate conversation. We need a carbon tax. We need an industrial policy. It’s not just that the banks stop funding. We are going to need oil and gas for a long time. It can be made much cleaner. So the conversation should be about how we’re going to get there in the right way, ”said Dimon.

He added that if the challenge is not met properly, “we will not reduce CO2 … because it will just go elsewhere and we can hurt the economy.” So I beg you, let’s have a rational, mature and thoughtful conversation, how do we go about it?

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