NEW YORK (AP) — CEOs of the nation’s largest banks who recently met with lawmakers on Capitol Hill have been urged by Senate Democrats to do more to help and protect their customers.
Bank executives have been called to testify before Congress at a time when prices for food and other basic necessities are at their highest in decades. JPMorgan Chase’s Jamie Dimon, Citigroup’s Jane Fraser and five others told lawmakers the US consumer is in relatively good shape but faces threats of high inflation and rising interest rates.
The senators’ early comments reflected lingering populist anger toward Wall Street more than a decade after the financial crisis as well as the looming election.
“You are among the most powerful players in our economy,” said U.S. Senator Sherrod Brown, D-Ohio and Chairman of the Senate Banking Committee. “Your entire industry and its important safety net are supported by American taxpayers. It is high time that the financial sector was as good for the American people as the country has been for you.
Although billed as day-to-day finance and industry oversight hearings, CEOs have also been given a healthy dose of electoral politics in both houses of Congress.
“Ms. Fraser, good to see you because you’re about the only diversity we’ve seen in this industry,” said U.S. Sen. Bob Menendez, D-New Jersey.
Menendez focused on overdraft fees, acknowledging that banks have made progress in reducing them, but also pushing CEOs to eliminate these fees altogether. Most CEOs said they now generally offer no overdraft fee products and expect to see their overdraft fee revenue continue to decline. Bank of America recently said its revenue from overdraft fees fell 90% from a year ago.
One of the most contentious discussions concerned Zelle, the private peer-to-peer payment network jointly owned by the banks. Zelle has come under scrutiny due to the growing number of complaints from bank customers unknowingly authorizing payments to scammers through Zelle and unable to recover their funds. Credit card fraud and scams, on the other hand, are usually covered by credit card companies.
Elizabeth Warren, D-Mass., pressed Banks on Zelle’s safety issue. While acknowledging that there are ways to improve Zelle, CEOs have attempted to differentiate Zelle from other peer-to-peer payment networks. CEOs have said that services such as Cash App, Venmo or PayPal have significantly higher fraud cases than Zelle.
“The problem is if a customer authorizes a transaction and it later turns out it was a scam, the banks shouldn’t be responsible for that,” said Brian Moynihan, CEO of Bank of America. He also said that scams make up a very small percentage of transactions made through Zelle.
Republicans have focused on social issues, including banks making the decision to pay employee abortion costs, gun rights and funding for the oil and gas industry. Several senators also referred to the influence that large asset managers like BlackRock and Vanguard have on companies when it comes to social policies, as asset managers are often the largest shareholder in many of these companies.
“I can’t help but observe that when the banks weigh in on highly charged social and political issues, they always seem to fall on the liberal side,” said Sen. Pat Toomey, R-Pennsylvania, the committee’s top Republican. . .
Dimon seemed to agree with Toomey’s assertion that federal regulators as well as asset managers have the power to influence banks on issues such as climate change or lending to oil and gas companies.
“As far as I’m concerned, (the regulators) are my judge, my jury and my executioner,” Dimon said. “They can do whatever they want unless they have to,” referring to Congress.
In response to a question about asset managers, Dimon joked, “This is causing a lot of consternation among companies.”
Alongside the CEOs of the big Wall Street megabanks were the CEOs of three regional banking giants: US Bank, Truist and PNC Financial. These three banks, with over $500 billion in assets, were appearing before the House and Senate for the first time.
Regional banks merged and grew rapidly, leading some leading Democrats in Congress to question whether they should be more tightly regulated like “too big to fail” banks such as JPMorgan and Citi.
“They’re more like Wall Street than Main Street these days,” Brown told reporters after the hearing ended. Her counterpart in the House — U.S. Rep. Maxine Waters, D-California — also called for tougher scrutiny of regionals.