The chief executives of JPMorgan, Wells Fargo, Citigroup, Bank of America, and other top U.S. retail banks will be questioned this week by lawmakers on a slew of issues, from the state of the economy to their stance on hot-button issues including fossil-fuel lending and abortion.
Payments fraud, mergers, increasing diversity, and access to bank branches, are also supposed to be called to attention when the CEOs appear before the Senate Banking Committees and the House Financial Services Committee on Thursday and Wednesday, respectively, according to congressional aides, bank officials, and lobbyists.
The line-up includes CEOs of the four biggest U.S. banks: JPMorgan’s Jamie Dimon, Wells Fargo’s Charles Scharf, Citi’s Jane Fraser, and Bank of America’s Brian Moynihan. They will be joined by PNC Financial (PNC.N) CEO William Demchak, USBancorp (USB.N) CEO Andy Cecere, and Truist Financial CEO William Rogers, who runs the country’s biggest regional lenders.
While such hearings hardly result in legislative action, they are still risky for CEOs, who will be required to defend their banks on several fronts when lawmakers are seeking to improve their profiles ahead of the November elections.
During a similar hearing in 2021, Dimon was sucked into a fiery exchange with Democratic Senator Elizabeth Warren about overdraft fees. Former Wells Fargo CEO Tim Sloan, meanwhile, stepped down suddenly in March 2019 two weeks after stuttering during a House committee hearing about the bank’s progress in fixing its regulatory problems.
The hearing comes amid deepening concerns that Federal Reserve rate rises aimed at curbing inflation could steer the country into a recession. In June, Jamie Dimon said the U.S. economy was dealing with a “hurricane” but could not project how severe it would be.
Lawmakers are expected to question CEOs about how consumers’ finances are holding up and how the lenders intend to assist Americans as borrowing costs increase.
Senate Banking Committee chair Senator Sherrod Brown said in a statement:
“We will continue to hold the nation’s biggest banks accountable so that Americans can keep more of their hard-earned money – at a time that they need it most.”
The banks maintain they have a promising story to tell about how they performed during the COVID-19 pandemic while helping give out billions of dollars of aid; their ongoing role in the wider economy, their efforts to increase pay for rank-and-file employees, increase staff diversity, and promote racial equity in the communities they serve.
That’s a message the bank’s executives, trade groups, and lobbyists have relayed during a marathon of private meetings with top lawmakers over the past few weeks, the sources said.
Lindsey Johnson, CEO of the Consumer Bankers Association, commented:
“There’s a lot for our banks to point to, to demonstrate how much they’ve done to support consumers, small businesses, and the economy throughout the pandemic and continuing today.”
Since the 2007-2009 financial crisis, Democrats including Brown and Maxine Waters chair House Financial Services Committee have taken a strong stance on the banking sector and are expected to maintain the pressure at the hearings.
In private letters, the committees have requested the CEOs to give details on their capital levels, staff wages, bank branch locations, executive pay, stock buybacks, fair lending, efforts to reduce carbon emissions, and abortion coverage, among other items, based on copies seen by Reuters.
But bank executives are also cautious of intensifying criticism from Republicans, traditionally allies who have fought back against heavy regulation, over what they see as Wall Street’s extremely liberal leanings on social and environmental issues.
Republicans at the federal and state level are fighting banks for “boycotting” industries such as guns and energy, a characterization banks dispute. Conservatives have also criticized lenders for “woke” stances on other issues such as bearing travel costs for workers’ out-of-state abortions.
“Americans deserve to hear how these banks will support their customers through troubling economic headwinds … instead of far-left talking points,” Patrick McHenry, the top Republican on the House panel, said in a statement.
While executives encountered some serious questions from Republicans on such issues in 2021, the pressure will be more intense this time, said analysts.
“The big banks really have fewer friends than they used to, there’s no doubt about it,” said Brian Gardner, Chief Washington policy strategist at Stifel Financial Corp.