Wall Street CEOs Appear on Capitol Hill as Election Looms
JPMorgan CEO and Chairman Jamie Dimon said that Americans are currently being "crushed" by inflation.
September 21, 2022 at 01:07 PM
4 minute read
Financial Services and BankingIn what has become an annual ritual, the CEOs of the major U.S. banks appeared in front of Congress to sell themselves as shepherds of a helpful industry at a time of financial and economic distress for many Americans.
Democrats called JPMorgan Chase, Bank of America, Wells Fargo and Citigroup to Washington to talk about pocketbook issues as households contend with the highest inflation since the early 1980s and the midterm election looms just weeks away.
"While COVID is behind us, the economic challenges we are now facing are no less daunting," said Citigroup CEO Jane Fraser, in remarks prepared for the hearing.
Goldman Sachs and Morgan Stanley, which focus on investment banking, are not testifying this time. Instead, the CEOs of three new banks did: Andy Cecere of U.S. Bank, William Demchak of PNC Financial and Bill Rogers Jr. of Truist.
Each of them run "super regionals," banks that are huge in their own right, with thousands of branches and hundreds of billions in assets, but are dwarfed in size by JPMorgan, BofA, Citi and Wells Fargo.
While billed as a hearing on everyday finances, the CEOs faced difficult political questions with Washington in the midst of an election year. Republicans used the opportunity to ask about the tracking of gun store sales, as well as whether banks should weigh in on hot-button social issues such as student loan forgiveness. Democrats asked about Wall Street's lending to oil and gas companies, racial and wealth equity issues, CEO pay and overdraft fees.
The first hearing took place before the House Committee on Financial Services, where Republicans quickly called into question the need for having the CEOs testify.
"It's theater, not oversight," said Rep. Patrick McHenry, R-North Carolina, and the top Republican on the committee. "They've had two years to do oversight. Now we are a month before the midterms."
Many Americans still remember bailing out the banking industry nearly 15 years ago, so the bank CEOs typically use the annual platform to sell themselves as a force for good.
The Wall Street CEOs used their prepared remarks to talk about the current difficulties in the U.S. and global economy. Along with Fraser, JPMorgan CEO and Chairman Jamie Dimon gave a darker than normal outlook.
Dimon said that Americans are currently being "crushed" by inflation.
"The work we do at JPMorgan Chase matters, in good times, and particularly in tough times," Dimon said in his opening remarks. "We finance Americans' ambitions with loans for homes, autos, and growing a small business, and provide valuable products and services to more than half of American households."
Eager to avoid the political headache that comes with being labeled as part of "Wall Street," the super regionals used the hearing to sell themselves as a competitive alternative to the Wall Street megabanks.
A series of mergers have brought increased scrutiny for the super regionals. U.S. Bank is currently in the process of buying MUFG Union Bank, the U.S. consumer banking arm of the Japanese banking giant. Truist resulted from the merger of SunTrust and BB&T, and PNC bought the consumer banking franchise of Spanish bank BBVA.
"We are a responsible provider that works for American consumers and the economy as a whole," Cecere of U.S. Bank said.
The head of Wells Fargo typically faces tough questions at these hearings because of the various scandals that cost the bank billions of dollars in fines and forced it to operate under the supervision of the Federal Reserve.
Wells Fargo CEO Charles Scharf said the bank has taken a number of steps to revamp its culture. But committee chair Maxine Waters, D-California, was doubtful, noting recent reports about the bank holding fake job interviews for women and having additional fines imposed on it by financial regulators.
The CEOs will return to testify in front of the Senate Banking Committee on Thursday.
Ken Sweet reports for the Associated Press.
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