WASHINGTON (AP) — The heads of the nation's big Wall Street firms were back on Capitol Hill on Tuesday, the start of two days hearings where the big banks are expected to be scolded by members of Congress on both sides of the aisle over issues like inequality and the corporate culture of Wall Street.
The first hearing is happening in front of the Senate Banking Committee, headed by the Sen. Sherrod Brown, D-Ohio. A self-described progressive, Brown said that when he became chair of the committee earlier this year, he planned to subpoena the CEOs to testify as soon as he could.
WHY ARE BANKS TESTIFYING?
Since Democrats took control of the House in 2019, the heads of the major banks have been summoned annually to testify in front of the House Financial Services Committee, chaired by Rep. Maxine Waters, D-California. The Senate, which is holding its hearing first, is following her lead. The House will hold its hearing on Thursday.
WHAT ARE THE HOT BUTTON ISSUES?
The banks are appearing in front of Congress as the U.S. economy is recovering from the pandemic. The industry, which was blamed for the Great Recession more than a decade ago, has spent most of 2020 and now 2021 trying to appear helpful and willing to work with struggling borrowers and businesses. Banks across the country waived fees, put millions of mortgages into forbearance to shore up Americans' distressed finances in the pandemic.
“We are a very different bank than the one that entered the financial crisis more than a decade ago,” said Jane Fraser, the new CEO of Citigroup.
Most of those measures are now going away. Congress will likely also have questions regarding what banks are doing to increase diversity among their ranks, and address systematic financial inequality between Black and Latino households and white households.
“You’ve heard from everyone on this panel that we’re trying to do more,” said JPMorgan Chase CEO Jamie Dimon, in response to questions over how well banks were doing in lending to minorities and the poor.
INEQUALITY REMAINS A TOP ISSUE.
Brown criticized the CEOs for the banks reducing lending to small businesses hit by the pandemic while buying back their own stock. Bank of America, he said, reduced small business lending by 14% while buying back some $25 billion of stock. Moynihan parried the attack, saying, “The good news is that we can do both.”
Challenged by Brown on the wide gulf between bank CEOs’ compensation and the average employees’ pay, Dimon responded “We’re very proud of the opportunities we give to all of our people.”
WHAT ARE REPUBLICANS TALKING ABOUT?
Senate Republicans pushed back on issues like increased regulation and promote programs they created last year when they controlled the Senate like the Paycheck Protection Program.
Sen. Pat Toomey of Pennsylvania, the senior Republican on the panel, said the banking industry showed remarkable resilience during the pandemic recession. But he expressed an idea with cultural currency among conservatives, saying he was concerned about growing pressure on banks “to embrace wokeism” and promote social activism through their practices.
“Thanks to capitalism, life is better for the vast majority of Americans than it has ever been.” Toomey said.
GOP Senators also pushed back on the big banks' statements regarding Republican efforts to restrict voting after the 2020 elections.
WHO IS TESTIFYING?
The panel of CEOs testifying this year is smaller and has changed slightly. Familiar faces include Dimon as well as Goldman Sachs' David Solomon, Morgan Stanley's James Gorman, and Bank of America's Brian Moynihan. A new face on the panel is Fraser, who is first female CEO of a big bank.
Gone are the two CEOs of two banks, Bank of New York-Mellon and State Street. Both of those banks don't have consumer financial businesses, and their previous appearances in front of Congress were seen as a waste of time.
Ken Sweet And Marcy Gordon (), The Associated Press
