By Pete Schroeder
WASHINGTON (Reuters) – The chief executives of JPMorgan (NYSE: NYSE), Bank of America (NYSE), City Group (NYSE :), Wells Fargo (NYSE 🙂 and other major US retail banks will be questioned this week by lawmakers on a slew of issues, from the state of the economy to their positions on hot issues including abortion and fossil fuel lending.
Payment fraud, promoting diversity and consolidation and access to bank branches, is also expected when CEOs appear before the House Financial Services Committee and Senate Banking Committees on Wednesday and Thursday, respectively, according to bank officials, congressional aides and lobbyists.
The line-up includes the chief executives of the four largest US banks: Jamie Dimon of JPMorgan, Brian Moynihan of Bank of America, Jane Fraser of Citizen and Charles Scharf of Wells Fargo. They will be joined by Andy Sisser, CEO of USBancorp, CEO of PNC Financial (NYSE:) William Demchak, and CEO of Trust Financial (NYSE:) William Rogers (NYSE:), who manage the nation’s largest regional lenders.
While such hearings rarely lead to legislative action, they are still fraught with peril for chief executives, who will have to defend their banks on a number of fronts as lawmakers look to bolster their profiles ahead of the November elections.
During a similar hearing last year, Damon got into a fiery conversation with Democratic Senator Elizabeth Warren about overdraft fees. Meanwhile, former Wells Fargo CEO Tim Sloan abruptly resigned in March 2019 after two weeks of faltering during a House committee hearing on the bank’s progress in fixing its regulatory problems.
The hearing comes amid growing concerns that raising the Federal Reserve with the aim of taming inflation could push the country into recession. In June, Jamie Dimon said the US economy was facing a “hurricane” but he couldn’t predict how bad it would be.
Lawmakers are likely to question CEOs about how consumers’ finances are lagging and how lenders plan to help Americans as borrowing costs soar.
“We will continue to hold the nation’s largest banks accountable so Americans can keep more of their hard-earned cash – at a time when they need it most,” Senate Banking Committee Chairman Sherrod Brown said in a statement to Reuters.
Banks believe they have a positive story to tell about how well they are doing during the COVID-19 pandemic while helping to distribute billions of dollars in aid; their continuing role in the broader economy; and their efforts to increase the salaries of ordinary workers, promote racial equality in the communities they serve, and promote employee diversity.
This is a message conveyed by bank executives, lobbyists and trade groups during a series of private meetings with key lawmakers over the past few weeks, the sources said.
“There is a lot that our banks have to point out, to show how much they have done to support consumers, small businesses and the economy throughout the pandemic and continuing today,” said Lindsey Johnson, CEO of the Consumer Bankers Association.
“He woke up”
Since the 2007-2009 financial crisis, Democrats including Brown and House Financial Services Committee Chairman Maxine Waters (NYSE:) have taken a tough stance on the banking industry and are expected to keep up pressure in the hearings.
In private letters, the committees asked chief executives to provide details on capital levels, bank branch locations, employee pay, CEO salaries, efforts to reduce carbon emissions, share buybacks, fair lending, and abortion coverage, among other things, according to the report. For a copy seen by Reuters.
But bank executives are also wary of growing criticism from Republicans, traditional allies who have opposed tough regulation, over what they see as Wall Street’s increasingly liberal leanings on the environment and social issues.
Republicans at the state and federal levels are cracking down on banks for “boycotting” industries such as energy and arms, an interbank dispute over characterization. Conservatives have also criticized lenders for their “wake-up” stances on other issues such as covering travel costs for out-of-state employee abortions.
“Americans deserve to hear how these banks will support their customers through economic headwinds…instead of far-left talking points,” House Republican Patrick McHenry said in a statement to Reuters.
Analysts said that while executives faced some crucial questions from Republicans on such issues last year, the pressure will be greater this time around.
Brian Gardner, chief Washington policy strategist at Stifel Financial (NYSE:) Corp.