CEOs of big banks face off with House Democrats
New York – The heads of some of the largest banks in the U.S. appeared in front of Congress on Wednesday in the largest gathering of heads of the banking industry in Washington since the financial crisis.
The chief executives of JPMorgan Chase and Goldman Sachs, along with the CEOs of five other banks, told the House Financial Services Committee they’ve taken steps to improve the stability of their institutions since the financial crisis. The banks have raised capital, are more diverse, and are more resilient than they were before the financial crisis, the CEOs said.
“There is no doubt that the strength, stability and resiliency of the financial system has been fundamentally improved over the course of the last ten years,” said Jamie Dimon of JPMorgan. “Post-crisis reforms have made banks much safer and sounder in three important areas: capital, liquidity and resolution and recovery.”
The backdrop of this hearing is the 10-year anniversary of the 2008-2009 financial crisis. The banking system required extraordinary efforts by regulators – and a bailout by U.S. taxpayers – in order to survive. All seven banks appearing in front of Congress received funds under the $700 billion Troubled Asset Relief Program, and all paid billions of dollars in penalties and fines for their behavior heading into the housing bubble.
Along with Dimon, among those appearing are David Solomon of Goldman and Brian Moynihan of Bank of America. The CEOs of Citigroup, Bank of New York Mellon, State Street and Morgan Stanley are also appearing. One executive not at the hearing is Tim Sloan, who resigned from his position at Wells Fargo last week, days after a separate appearance before the same committee.
The hearing comes after the banking industry had a record year for profits in 2018, thanks to the tax cuts passed by Republicans in late 2017. Meanwhile, the banking industry’s lobbyists have been pushing Congress to further unwind the rules and regulations put into place after the 2008 financial crisis.
While the hearing was nominally about determining how much safer the financial system is, few finance committee members raised the subject.
One representative to ask about systemic risk so far was Patrick McHenry, the panel’s top Republican, who asked all seven big bank CEOs if there’s any worries about a financial crisis happening if Britain leaves the European Union without a deal. Rep. Blaine Luetkemeyer, another Republican on the committee, asked the banking executives about proposals to change how banks measure their capital for regulatory reasons.
Meanwhile, Democrats asked about non-banking system topics such as concerns on over-the-top executive compensation in the banking industry, and gun regulations. A few Democrats asked about access to bank services and what banks were doing to stop unnecessary foreclosures.