Elizabeth Warren Labels Dimon ‘Star of the Overdraft Show’
(Bloomberg) -- JPMorgan Chase & Co.’s Jamie Dimon is the longest serving bank chief who testified before Congress Wednesday, but to the Senate’s biggest critic of Wall Street, he’s also “the star of the overdraft show.”
Massachusetts Democrat Elizabeth Warren lit into Dimon, as she sought to make the point that banks kept charging onerous fees to customers struggling during the pandemic -- even as regulators in Washington eased rules for lenders. JPMorgan, Warren noted, made almost $1.5 billion from overdrafts last year, seven times more per account than its competitors. Still, it didn’t automatically waive the penalties as the government had suggested.
Dimon, appearing at a Senate Banking Committee hearing featuring the chief executive officers of the six biggest U.S. banks, sharply disputed Warren’s analysis and said JPMorgan dropped its overdraft fees for customers who requested relief.
“I think your numbers are totally inaccurate,” he told the senator as the two talked over each other in a contentious exchange about penalties banks assess when consumers withdraw more cash than they have in their accounts.
Warren, who said banks collectively took in $4 billion in overdraft fees last year, accused Dimon of ducking her question and asked him to return the money. He refused.
“You and your colleagues come in today to talk about how you stepped up and took care of customers during the pandemic, and it’s a bunch of baloney,” replied Warren.
She wasn’t alone in attacking bankers. Senate Banking Committee Chairman Sherrod Brown kicked off the proceedings with a blistering critique, arguing lenders’ business models are “built on short-term profits at the expense of long-term growth for everyone.”
The Ohio Democrat challenged the CEOs to “be as good to the American people as the nation has been to you,” noting that taxpayers spent billions to rescue banks during the 2008 financial crisis. When employees get sick or lose their jobs, they “don’t get a taxpayer bailout.” Brown said. “And they all remember that Wall Street did.”
The remarks set the tone for hours of tough questions on everything from workforce diversity to minority lending and executive pay.
The hearing was the first time the CEOs have been called before the panel -- and, much to the chagrin of some in the industry, it may also not be the last. Brown’s title for the event: ”Annual Oversight of Wall Street Firms.”
Among the CEOS testifying with Dimon was Citigroup Inc.’s Jane Fraser, the first women to lead one of the U.S.’s biggest banks. Also appearing were Goldman Sachs Group Inc.’s David Solomon, Bank of America Corp.’s Brian Moynihan, Morgan Stanley’s James Gorman and Wells Fargo & Co.’s Charles Scharf. They will testify again Thursday before the House Financial Services Committee.
In their opening statements Wednesday, the executives pointed out the leading role that big banks played in getting out billions of dollars in government stimulus and assistance for businesses and homeowners jolted by coronavirus. As for their own firms, the leaders said, they remain well-capitalized and didn’t struggle during the market turmoil caused by Covid-19.
U.S. banks have thrived during the pandemic, with the Federal Deposit Insurance Corp. putting out a report Wednesday that showed the industry made $76.8 billion in the first quarter, shattering all previous profit records. Much of the earnings came from lenders releasing reserves that were set aside last year for potential losses that never materialized.
Democrats weren’t the only lawmakers who faulted banks, as Republicans pointedly questioned decisions to curtail lending to politically unpopular businesses such as gun manufactures and oil companies. Senator Pat Toomey, the top GOP member of the Banking Committee, said corporations shouldn’t pursue social agendas that risk hurting shareholder returns.
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