Bank CEOs Take Punches From Democrats, Warnings From Republicans
(Bloomberg) -- Senator Elizabeth Warren called JPMorgan Chase & Co.’s Jamie Dimon “the star of the overdraft show.” Her Democratic colleagues pressed him and other CEOs from the biggest U.S. banks to boost lending, raise wages, diversify staff and save the environment.
Then there was the warning from Republicans: Stay clear of politics.
In what will likely prove a warm-up to a potentially more raucous hearing in the House of Representatives set for Thursday, a panel of six Wall Street chief executive officers took heat from the Senate Banking Committee on Wednesday. As Democrats tried to extract pledges to help struggling Americans and the environment, lawmakers from the other side of the aisle warned executives not to withdraw support for industries such as fossil fuels and firearms.
“Woke capitalism is running amok,” said Senator Tim Scott, a Republican from South Carolina.
One of the tensest exchanges was between Massachusetts Democrat Warren and Dimon, who’ve clashed in the past. Warren blasted banks for not automatically eliminating overdraft fees during the pandemic. The two spoke over each other at times, as she repeatedly asked Dimon how much JPMorgan collected, and he said the fees were waived upon request for stressed customers.
“Mr. Dimon, will you commit right now to refund?” Warren said, referring to the overdraft fees.
“No,” Dimon said, in one of a handful of blunt one-word answers.
Banks thrived through the pandemic, with the industry generating a record $76.8 billion in profits during the first quarter, a Federal Deposit Insurance Corp. report released during the hearing showed. Democrats wanted to know why more of that money isn’t going to middle class and low-income families. They hammered CEOs on their own pay and questioned their decisions to buy back company stock rather than lend more.
Bank of America Corp.’s recent decision to raise its minimum wage to $25 in coming years created a headache for rivals as Democrats urged them to follow suit. Citigroup Inc.’s Jane Fraser, Goldman Sachs Group Inc.’s David Solomon and Morgan Stanley’s James Gorman agreed to look into it, though none would commit to the same policy.
“We’re not going to imitate anybody else, but we will be competitive,” Dimon said.
At least one person is getting an immediate raise, Gorman noted: Morgan Stanley recently discovered a lone employee was making less than everyone else, $7.50 an hour.
The Senate hearing marked the first time the CEOs have been called before the committee, and the session’s label as an “annual” event was a not so subtle hint it will happen again. From the outset, the panel’s Democratic chairman, Sherrod Brown, reminded the CEOs that Democrats are now setting the agenda in Washington and that Donald Trump’s deregulatory era was over. The new focus, Brown said, would be on average Americans.
“We need an economy that reflects our values and not Wall Street’s,” Brown, of Ohio, said in a statement following the hearing. “These CEOs have a lot of work to do.”
Pennsylvania Senator Pat Toomey, the senior Republican on the committee, offered what he called “unsolicited advice” for the group. “If there is a highly charged social or political issue that involves balancing competing values, such as balancing access to voting with election security, leave that to elected lawmakers.”
Banks came under pressure from both parties over how they deal with energy companies.
Maryland Democrat Chris Van Hollen pressed CEOs on whether they will follow Citigroup’s decision to pull back from the coal industry. The firm has promised to stop providing financial services to thermal coal-mining companies by 2030. While no other CEOs took up the pledge at the hearing, Dimon said the U.S. should impose a carbon tax.
Kevin Cramer, a North Dakota Republican, blasted what he called the “woke crowd,” arguing that the fossil fuel industry is lowering emissions on its own and suggesting that social concerns in banking could eventually lead to an interruption of power supplies.
The bipartisan ire was a reminder that the biggest banks -- which have been political piñatas since receiving bailouts in the 2008 financial crisis -- still have to get themselves out of the dock. That is likely to be underscored as the CEOs continue their turn in the spotlight at Thursday’s hearing before the larger, and more unpredictable, House Financial Services Committee.
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