Bank CEOs Sidestep Democrat Rebukes on Overdraft Fees, Lending

(Bloomberg) -- Wall Street CEOs kept their cool in the face of pointed lawmaker questions on everything from overdraft penalties to China’s increasing economic dominance to whether tax hikes would make U.S. corporations less competitive.

House Financial Services Committee Chairwoman Maxine Waters set the tone at a Thursday hearing -- the second this week featuring the heads of the six largest U.S. banks -- by blasting the industry for raking in “billions in overdraft fees” last year when millions of families were struggling due to the pandemic. Her fellow Democrat, New York’s Carolyn Maloney, later continued the attack, saying the “predatory” charges are paid by Americans who can least afford them.

But Wells Fargo & Co. Chief Executive Officer Charles Scharf didn’t take the bait. He said the bank is constantly evaluating ways to become more friendly to consumers and noted that it began offering an account last year that prevents the charges.

Maloney said she was surprised and pleased. That’s how it went for most of the proceedings; both Democrats and Republicans hit on hot-button topics and the CEOs either dodged the queries or pledged to do better. The responses kept the hearing largely free of controversy and embarrassing “YouTube” moments that are dreaded by corporate chieftains who get dragged in front of Congress.

Representative Patrick McHenry, the senior Republican on the panel, dismissed the session as the “sequel that nobody asked for.” Still, he warned the executives that his party was growing tired of Wall Street’s leftward move on social issues, a “political activism” that McHenry said was being encouraged by Democrats. That theme came up repeatedly on Wednesday in the Senate as well, with GOP lawmakers criticizing banks for curtailing lending to gun manufacturers and oil drillers.

“When you mix business and politics, you get politics,” North Carolina’s McHenry noted. “Our political waters are quite troubling and we don’t need the business world to become the political world.”

Senate Grilling

The CEOs had a chance to fine-tune their remarks during the Senate appearance. The six bank leaders came well prepared with statistics on workplace diversity, low-income lending and assistance they gave both employees and customers who were facing economic hardships during the pandemic. They also noted that their firms, thanks to government capital rules, had no problems surviving the turmoil.

Topics that came up Thursday included how banks were handling possible pandemic-fueled mortgage foreclosures, the opaqueness of China’s financial system, the Biden administration’s proposal to increases taxes for the wealthy and corporations and whether the massive bets that family office Archegos Capital Management was able to make on stocks before it imploded revealed an unfair advantage firms give to well-heeled investors.

On foreclosures, both JPMorgan Chase & Co.’s Jamie Dimon and Bank of America Corp.’s Brian Moynihan said their banks are committed to modifying loans because they hate to kick borrowers out of their homes. On China, Goldman Sach Group Inc.’s David Solomon avoided making waves about an important market for his bank by simply saying his firm supports transparency. Both Dimon and Moynihan said raising taxes would hurt U.S. businesses.

Waters held a similar hearing in 2019 and five of the CEOs faced the committee for the second time. New to the proceedings was Citigroup Inc.’s Jane Frazer, the first woman to run a major Wall Street firm. Also appearing was Morgan Stanley’s James Gorman.

©2021 Bloomberg L.P.