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Congress Grills Bank Chiefs for First Time Since Financial Crisis

Wednesday, 10 April 2019 02:03 PM

Chief executives of some of the largest U.S. banks appeared before Congress on Wednesday, giving lawmakers their first opportunity to grill the lenders since the 2007-2009 financial crisis.

Democratic lawmakers focused many of their questions on who the banks were doing business with, probing for answers about their Russian accounts and financing of gun manufacturers.

The tone, questions and players were distinctly different from a decade ago, when lawmakers focused on banks’ ability to safeguard the financial system and avoid future bailouts. Among the CEOs on the panel, JPMorgan Chase & Co’s Jamie Dimon was the only one who headed his bank before the financial crisis.

Still, bank executives got a few chances to flag hoped-for talking points like their positive contribution to the economy when Republican lawmakers quizzed them on more systemic issues.

Along with JPMorgan’s Dimon, Bank of America Corp’s Brian Moynihan, Citigroup Inc’s Mike Corbat, Goldman Sachs Group Inc’s David Solomon and Morgan Stanley’s James Gorman all faced off against the House Financial Services Committee.

Ronald O’Hanley, CEO of State Street Corp, and Charles Scharf, CEO of Bank of New York Mellon Corp, the country’s two largest custody banks, also appeared.

The hearing was led by Democratic Representative Maxine Waters and staffed with some high-profile freshman representatives like progressives including Alexandria Ocasio-Cortez.

Waters’ first question, directed at three of the bank CEOs, was whether they had found suspicious activity within their banks related to Russian accounts.

Citi’s Corbat declined to comment, citing an ongoing investigation into the matter. The Bank of America and Morgan Stanley CEOs said they had conducted internal investigations and did not find any suspicious activity.

Questions largely focused less on systemic risks and more on social issues like how banks are addressing wealth inequality by adjusting overdraft fees in checking accounts, and whether banks are extending loans to businesses that need them.

Democratic Representative Carolyn Maloney pressed JPMorgan’s Dimon to commit to a policy that would reduce the bank’s financing of gun makers. Citi and Bank of America last year said they would no longer provide certain banking services to gun manufacturers.

Some Republican lawmakers criticized such policies on Wednesday, with Representative Bill Posey cautioning banks against withholding financing from legal business and Representative Sean Duffy accusing Bank of America of denying Americans their Second Amendment rights.

The bank executives’ prepared remarks focused on arguing that Wall Street has reformed the practices that fueled the crisis and stressing the contribution banks make to the broader economy.

Dimon said that JPMorgan “will never lose sight of what we learned.” Still, the bank has taken steps that went a long way to preventing another crisis, Dimon argued.

Since the crisis, the country’s largest banks have added more than $800 billion in capital to bolster the financial system.

In the months leading up to the hearing, the banks also made a string of announcements to show how they are helping customers and communities.

Bank of America said on Tuesday it would raise its minimum hourly wage to $20 from $15 by 2021.

Last month, JPMorgan said it would no longer finance the private prison industry and would invest $350 million in job training programs.

Goldman Sachs has publicly set targets for hiring women and minority groups, a move Citigroup also made late last year.

Wells Fargo & Co was not present at the hearing since former CEO Tim Sloan resigned abruptly last month, two weeks after appearing before the same committee.

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Chief executives of some of the largest U.S. banks will testify before Congress on Wednesday, giving lawmakers their first opportunity to grill the lenders since the 2007-2009 financial crisis.
bank, ceos, congress, financial, crisis, ocasio cortez
Wednesday, 10 April 2019 02:03 PM
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