Republicans Slam Democrats At Banking Hearing

Topline

Members of the House Financial Service Committee grilled major bank CEOs at a hearing on Wednesday over issues facing the US economy, including rising interest rates and the possibility of recession—though the hearing also brought out partisan vitriol over who was to blame for the country’s economic woes.

House Committee members slammed major bank leaders, including JPMorgan Chase CEO Jamie Dimon.

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Key Facts

The event was the latest in a series of hearings dating to March, 2019, focusing on consumer protection issues related to the nation’s major banks including Bank of America, Citi, JPMorgan Chase and Wells Fargo, addressing issues ranging from racial inequity in banking and emerging technologies to worker rights and abortion access.

Committee Chair Sen. Maxine Waters (D-Calif.) pressed Wells Fargo CEO Charles Scharf on a Bloomberg report that Wells Fargo rejected half of Black applicants for mortgage refinancing in 2020, as well as a New York Times report that the bank conducted fake job interviews for people of color—which Scharf said the company is looking into.

Rep. Brad Sherman (D-Calif.) sparred with JPMorgan Chase CEO Jamie Dimon and Citigroup CEO Jane Fraser over whether the banks have cut ties with Russian energy companies Gazprom and Vitol, with Fraser saying Citigroup is working on a plan to reduce the company’s “exposure” in Russia.

The meeting comes a year after Congress also grilled banks over controversial overdraft fees that have been found to penalize minorities and low-income people during the Covid-19 pandemic—with Rep. Carolyn Maloney (D-N.Y.) saying on Wednesday she was happy banks have “taken some initiative,” including plans to eliminate the fees, but arguing it’s “concerning that it’s taken this long.”

Republican committee members, however, used the meeting to slam Democrats on soaring inflation rates, with Rep. Patrick McHenry (R-N.C.) arguing President Joe Biden and Congressional Democrats accelerated inflation, accusing them of dumping “jet fuel on their economic dumpster fire.”

Dimon told the committee he predicts there’s a 90% chance of a “soft landing” to avoid a recession, although uncertainty in global energy and food supplies due to Russia’s invasion of Ukraine could increase the chance of recession, saying banks should be “prepared for the worst.”

What To Watch For

The Senate will hold a similar hearing Thursday. Senate Banking Committee Chair Sherrod Brown (D-Ohio) told Reuters earlier this week that the Senate Banking Committee will “continue to hold the nation’s biggest banks accountable” at a time Americans most need to “keep more of their hard-earned money,” when it meets with bank CEOs on Thursday.

Key Background

The “Holding Megabanks Accountable” hearing comes as inflation continues to rise, climbing 8.3% in August, and after two rounds of Federal Reserve interest rate hikes. Economists now worry a third rate hike could bring the economy into recession as stock prices fall. The hearing is the latest example of House and Senate members slamming major banks over a wide range of economic issues, from Covid-19 to inflation. Last year, Dimon sparred with Massachusetts Sen. Elizabeth Warren (D) at a Senate committee hearing over overdraft fees charged to customers during the Covid-19 pandemic, when regulators asked them to cancel collections, accusing the nation’s largest bank of prioritizing profits while Americans struggled financially. In 2019, former Wells Fargo CEO Tim Sloan abruptly resigned in the wake of scandals, including the creation of credit cards for millions of Americans without their knowledge, and after being pressed in a House committee hearing.

Crucial Quote

“Our nation’s largest banks have gotten even bigger during the pandemic, in part through mergers—regulators have rubber-stamped these merger applications for far too long and it’s past time we get to the bottom of who these mergers are actually benefiting,” Waters said.

Chief Critic

McHenry slammed the hearing as “theater, not oversight,” arguing the committee has done “woefully little” to hold megabanks accountable. He accused the committee of making decisions on social issues, arguing the hearing is based on “woke politics” rather than banks’ credit worthiness.