AP

Bank CEOs questioned on consumer protections, social issues

Sep 22, 2022, 6:57 AM | Updated: Sep 23, 2022, 10:59 am

NEW YORK (AP) — The CEOs of the nation’s biggest banks returned to Capitol Hill for a second day Thursday, and Senate Democrats strongly urged them to do more to help and protect their customers, while Republicans questioned whether banks should weigh in on hot-button social issues.

The bank leaders testified at a time when prices for food and other necessities are the highest in decades. JPMorgan Chase’s Jamie Dimon, Citigroup’s Jane Fraser and five other chief executives repeated the message they gave to a House panel Wednesday: The U.S. consumer is in relatively good shape but faces threats from high inflation and rising interest rates.

Senators’ initial comments reflected the lingering populist anger toward Wall Street more than a decade after the financial crisis as well as the looming election.

“You are among the most powerful actors in our economy,” said Sen. Sherrod Brown, D-Ohio and the chairman of the Senate Banking Committee. “Your entire industry, and its substantial safety net are supported by American taxpayers. It’s past time for the financial industry to be as good to the American people as the country has been to you.”

While billed as hearings on everyday finances and industry oversight, the CEOs also received a hefty dose of election-year politics in both chambers of Congress.

“Ms. Fraser it’s good to see you because you’re about the only diversity we have seen in this industry,” said Sen. Bob Menendez, D-New Jersey.

Menendez homed in on overdraft fees, acknowledging that banks have made progress in reducing them but also pushing the CEOs to completely eliminate such fees. Most of the CEOs said they now generally offer no overdraft fee products, and expect to see their overdraft fee income continue to decline. Bank of America recently said its revenue from overdraft fees has fallen 90% from a year ago.

One of the more contentious discussions involved Zelle, the private peer-to-peer payment network jointly owned by the banks. Zelle has come under scrutiny because of rising complaints of bank customers unknowingly authorizing payments to scammers via Zelle, and being unable to get their funds back. In contrast, fraud and scams on credit cards are generally covered by the credit card companies.

Elizabeth Warren, D-Massachusetts, pressed the banks on the issue of Zelle’s safety. While acknowledging there are ways Zelle can be improved, the CEOs tried to differentiate Zelle from other peer-to-peer payment networks. The CEOs said services such as Cash App, Venmo or PayPal have significantly higher cases of fraud than Zelle.

“The issue is that a customer authorizes a transaction and it later turns out to be a scam, banks shouldn’t be on the hook for that,” said Brian Moynihan, CEO of Bank of America. He also said the scams account for a very small percentage of the transactions that take place via Zelle.

Republicans were focused on social issues, including banks making the decision to pay for employees’ abortion costs, gun rights and the financing of the oil and gas industry. Several senators also brought up the influence large asset managers like BlackRock and Vanguard have on corporations regarding social policies, because the asset managers are often the largest single shareholder in many of these companies.

“I can’t help but observe that when banks do weigh in on highly charged social and political issues, they seem to always come down on the liberal side,” said Sen. Pat Toomey, R-Pennsylvania, the top Republican on the committee.

Dimon seemed to agree with Toomey’s assertion that federal regulators as well as asset managers have the power to sway banks on issues like climate change or lending to oil and gas companies.

“Speaking for myself, (the regulators) are my judge, my jury and my hangman,” Dimon said. “They can do whatever they want unless constrained by you,” referring to Congress.

In response to a question on the asset managers, Dimon quipped, “It’s causing a lot of consternation among companies.”

Joining the CEOs of big Wall Street megabanks were the CEOs of three regional banking giants: U.S. Bank, Truist and PNC Financial. These three banks, with more than $500 billion in assets, were appearing for the first time in front of the House and Senate.

Regional banks have been merging and and growing quickly, which has made some top Democrats in Congress question whether they need to be more strictly regulated like the “too big to fail” banks such as JPMorgan and Citi.

“They are looking more like Wall Street than Main Street these days,” Brown said to reporters after the hearing ended. His counterpart in the House — Rep. Maxine Waters, D-California — has also called for stricter scrutiny of the regionals.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Lead water pipes pulled from underneath the street are seen in Newark, N.J., Oct. 21, 2021. (AP Pho...

Associated Press

Biden to require cities to replace harmful lead pipes within 10 years

The Biden administration has previously said it wants all of the nation's roughly 9 million lead pipes to be removed, and rapidly.

4 days ago

Facebook's Meta logo sign is seen at the company headquarters in Menlo Park, Calif., on, Oct. 28, 2...

Associated Press

Meta shuts down thousands of fake Facebook accounts that were primed to polarize voters ahead of 2024

Meta said it removed 4789 Facebook accounts in China that targeted the United States before next year’s election.

4 days ago

A demonstrator in Tel Aviv holds a sign calling for a cease-fire in the Hamas-Israel war on Nov. 21...

Associated Press

Hamas releases a third group of hostages as part of truce, and says it will seek to extend the deal

The fragile cease-fire between Israel and Hamas was back on track Sunday as the first American was released under a four-day truce.

9 days ago

Men look over the site of a deadly explosion at Al-Ahli Hospital in Gaza City, Wednesday, Oct. 18, ...

Associated Press

New AP analysis of last month’s deadly Gaza hospital explosion rules out widely cited video

The Associated Press is publishing an updated visual analysis of the deadly Oct. 17 explosion at Gaza's Al-Ahli Hospital.

12 days ago

Peggy Simpson holds a photograph of law enforcement carrying Lee Harvey Oswald's gun through a hall...

Associated Press

JFK assassination remembered 60 years later by surviving witnesses to history, including AP reporter

Peggy Simpson is among the last surviving witnesses who are sharing their stories as the nation marks the 60th anniversary.

12 days ago

Israeli Prime Minister Benjamin Netanyahu, chairs the weekly cabinet meeting in Jerusalem, Sunday, ...

Associated Press

Israeli Cabinet approves cease-fire with Hamas; deal includes release of 50 hostages

Israel’s Cabinet on Wednesday approved a cease-fire deal with the Hamas militant group that would bring a temporary halt to a devastating war.

13 days ago

Sponsored Articles

Follow @KTAR923...

The best ways to honor our heroes on Veterans Day and give back to the community

Veterans Day is fast approaching and there's no better way to support our veterans than to donate to the Military Assistance Mission.

...

Dierdre Woodruff

Interest rates may have peaked. Should you buy a CD, high-yield savings account, or a fixed annuity?

Interest rates are the highest they’ve been in decades, and it looks like the Fed has paused hikes. This may be the best time to lock in rates for long-term, low-risk financial products like fixed annuities.

Follow @KTAR923...

The 2023 Diamondbacks are a good example to count on the underdog

The Arizona Diamondbacks made the World Series as a surprise. That they made the playoffs at all, got past the Milwaukee Brewers in the NL Wild Card round, swept the Los Angeles Dodgers in the NLDS and won two road games in Philadelphia to close out a full seven-game NLCS went against every expectation. Now, […]

Bank CEOs questioned on consumer protections, social issues