CEOs of big banks face off with House Democrats
A decade after the financial crisis, the chiefs of the largest US banks faced a grilling from lawmakers on everything from income inequality to their ties to politically controversial industries.
The spectacle — meant to send a message that the Democratic-controlled House is ratcheting up oversight of the industry — was enough to bring Lloyd Blankfein, who stepped down as chief executive officer of Goldman Sachs Group Inc. last year, off the sidelines. “Boy, I really miss my old job!!!,” he wrote on Twitter.
With lawmakers on the Financial Services Committee each getting five minutes to speak, the seven bank executives were consistently cut off while trying to answer a barrage of quick and often unconnected questions. Topics spanned the political and banking spectrum, as Republican Representative Patrick McHenry called the gathering “a hearing in search of a headline.”
Among the subjects touched on in the roughly six hours of testimony were the financial crisis, probes, interest rates, climate change, and gender equality, as well as how banks serve rural areas, small businesses, millennials, home buyers and people living in Guam.
Among the more dramatic moments: Texas Democrat Al Green asked the lineup of white, male CEOs whether any thought their successor is “likely” to be a woman or member of a minority group. As five raised their hands, JPMorgan Chase & Co. CEO Jamie Dimon shook his head, unfolded his arms and looked over at Morgan Stanley’s James Gorman, the only other executive who kept his arm down.
Green moved on to a question about banks and slavery before the CEOs could elaborate on their gestures. All of them committed to turning over diversity plans to the panel, with Gorman saying he’s focused on creating a sense of “belonging” at his firm.
Yet by the end, the proceedings hadn’t resulted in any meaningful calls for new legislation, or pledges by bank leaders to make dramatic changes. The executives said they will clarify their stances on dealing with industries such as firearms manufacturers and coal miners, and said they will fine-tune policies that currently require customers to settle disputes through arbitration instead of taking them to court.
If lawmakers sought to bring the leader of a major bank down a notch, their decision to host seven at once made it harder. Because of scheduling conflicts, Wells Fargo & Co. sent then-CEO Tim Sloan to field questions by himself at a hearing before the same committee in March, where he endured more than four hours of questions about his efforts to fix consumer abuses. Sloan abruptly resigned days later, saying he didn’t want his leadership to be a distraction.
Many questions were aimed at Dimon, who runs the nation’s largest bank and was first to enter the room. Katie Porter, a freshman Democrat from California and former consumer-protection lawyer, pressed Dimon on behalf of a mother working in a Chase branch and struggling to make ends meet. But the exchange was interrupted when Porter was barred from holding up a small whiteboard to lay out the family’s finances. Dimon said he would be happy to give some advice to the employee.
Lobbyists, who watched the hearing from a private room elsewhere in the building, had worried about the potential for New York Democrat Alexandria Ocasio-Cortez to create a viral moment. Instead, she at one point praised Dimon for halting financing for private prisons.
Committee chair Maxine Waters wrapped up the testimony with a warning.
“Things are changing” with how the committee oversees the industry, she said. “You did well with deregulation with the last Congress,” she said, cautioning banks not to push too hard and overwhelm the panel with further suggestions on easing rules, or to seek relief directly from regulators. As the hearing showed, “you have your concerns, we have our concerns.”