Wall Street Bank CEOs to Testify Before Congress Next Month
(Bloomberg) -- The chief executives of the largest U.S. banks, including JPMorgan Chase & Co. and Goldman Sachs Group Inc., are being called to Capitol Hill to testify before lawmakers next month.
The Senate Banking Committee and House Financial Services Committee scheduled hearings on May 26 and 27, respectively, to question the heads of six major banks, also including Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Morgan Stanley, according to a Thursday statement. The CEOs have appeared in Congress as a group twice since the 2008 financial crisis, and they were expecting these latest invitations.
The hearings are being organized by congressional Democrats, including Chairman Sherrod Brown on the Senate panel and Chairman Maxine Waters on the House side, who are harsh critics of Wall Street. The announcement didn’t indicate the topics they’ll raise, though the tone will likely be tough.
While other matters may emerge before then, the way big banks became entangled with Archegos Capital Management’s implosion could be discussed. Brown recently said he was “troubled, but not surprised” at their involvement.
The executives will also likely face questions on their performance during the Covid-19 pandemic’s economic turmoil, their eagerness to shed capital through stock buybacks and investor dividends, and their track record on diverse hiring.
“Progressive Democrats will attack the executives for their paychecks, for the profitability of their companies and for how they treated consumers over the past year,” said Jaret Seiberg, a Cowen & Co. analyst, in a note Thursday. If the attacks resonate or the executives make any verbal blunders that can be used against them, further regulation could be at stake, but he said it’s more likely the Wall Street bankers will have reasonable answers for the expected attacks.
Republicans may have their own issues to raise, having been critical of major lenders turning away legal, yet controversial industries, such as firearms businesses and energy companies.
One difference between this and previous events will be the appearance of Wall Street’s first female megabank CEO, Citigroup’s Jane Fraser. That absence had been noted by some lawmakers during previous testimony, when one of them asked the top executives to raise a hand if they thought a woman or person of color would be their successors and none of them did.
In that hearing in 2019, seven bank CEOs were grilled for hours under often tense questioning from Democrats on topics that ranged from income inequality to capital rules. But it wasn’t as trying as the 2009 hearings in which they were called to answer for the financial meltdown.
The big banks weathered the pandemic well, and their profits in the most recent quarter have soared. They’ve cleared multiple stress tests from the Federal Reserve, and their regulators have all publicly agreed that the lenders have maintained ample capital throughout. So, lawmakers won’t have fresh taxpayer bailouts to complain about, as they did in 2009.
Another difficulty for lawmakers: The sheer number of CEOs at the witness table has tended to make it difficult in the earlier hearings to pin any one of them down with targeted questioning.
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