The virtual hearing started off with the CEOs of the nation’s six largest banks touting their pro-social efforts to support customers and small businesses amid the coronavirus pandemic — using their opening remarks to highlight their involvement in the Paycheck Protection Program (PPP) and outline new or ongoing commitments to diversity and green initiatives.
But senators on both sides of the aisle showed little interest in hearing from the bankers’ brag sheets, opting to instead grill the executives on employee compensation, overdrafts, the fossil fuel industry and voting rights — topics that have become hot-button issues dividing Republicans and Democrats.
In his opening remarks, Senate Banking Committee Chairman Sherrod Brown, D-OH, challenged the CEOs to prove to lawmakers that they planned to use their positions to change Wall Street "to make our economy work for everyone, not just for CEOs and the wealthy."
Brown called out the major banks for engaging in stock buybacks amid the pandemic, questioning why they didn’t instead use the capital to lend to small businesses and families.
"We want to hear what concrete actions you'll take to undo the damage that Wall Street has done and continues to do to communities of color," he said. "Stop investing in corporations that fuel climate change threatening people's communities and livelihoods and channel your vast resources into businesses that employ actual people in cities and towns."
Sen. Pat Toomey, R-PA, the ranking member on the panel, took issue with what he called the increasing pressure on banks to embrace "woke-ism and appease the far left’s attacks on capitalism."
Toomey said banks should stay out of certain highly charged social or political issues that involve balancing competing values, alluding to Georgia's new election law, which has drawn criticism among Democrats who say the legislation restricts access for people of color. Bank of America, Citi, Wells Fargo and Goldman Sachs each signed a letter in April opposing the law.
Toomey criticized the move, saying such actions should be left to elected lawmakers, not corporations.
"Those are the folks who are elected to make these difficult policy decisions, and most importantly, they're the people who are directly accountable to the American people who hire and fire them, the voters in their jurisdictions," he said.
Sen. Tim Scott, R-SC, directly asked the four banks that signed the letter to point out what part of the law specifically restricted voting rights or was discriminatory.
Without citing a specific provision, Bank of America CEO Brian Moynihan said the bank signed the letter after employees expressed concern with the law. No other CEO answered Scott’s question.
Sen. Elizabeth Warren, D-MA, engaged in a testy exchange with JPMorgan Chase CEO Jamie Dimon over the fees the bank charges when customers overdraft their accounts.
Calling Dimon "the star of the overdraft show," Warren said JPMorgan collected close to $1.5 billion in overdraft fees over the past year — a total she said was seven times more per account than its competitors.
"I think your numbers are totally inaccurate," Dimon countered, adding the bank waived fees upon request for customers who were struggling amid the pandemic. A brief yet heated exchange followed where he and the senator began to talk over one another.
Warren said the $27.6 billion in profits JPMorgan would have still made had it not collected the overdraft fees would hardly have hurt the bank financially.
"You and your colleagues come in today to talk about how you stepped up and took care of customers during the pandemic, and it's a bunch of baloney," she said. "But you could fix that right now."
When Warren challenged Dimon to commit to refunding the $1.5 billion JPMorgan Chase collected in overdraft fees during the pandemic, his answer was simple: "No."
"No matter how you try to spin it, this past year has shown that corporate profits are more important to your bank than offering just a little help to struggling families, even when we are in the middle of a worldwide crisis," Warren responded.
Fossil fuels and gun manufacturers
Several Republican lawmakers used their time to question the CEOs on the pressure their banks are facing in divesting from certain industries, such as fossil fuels, private-prison operators and weapons manufacturers.
Banks’ decisions to pull away from lending to these often-controversial areas has long been a talking point for Republicans who say financial institutions are giving in to political pressures.
"Restricting access to capital for law-abiding companies results in higher costs for consumers and slower economic growth," said Sen. Richard Shelby, R-AL.
Toomey said natural gas companies in his Pennsylvania constituency are finding it difficult to stay in the black because of commitments financial institutions have made to reduce greenhouse gas emissions.
Citing Citi’s commitment to end all financing for thermal coal companies by 2030, he asked if the New York City-based bank plans to establish a similar policy for the oil or natural gas sectors.
"We don't plan to have a prohibition against this," said Citi’s Jane Fraser, who in March became the first female CEO of a major U.S. bank. "We plan to help our clients in the transition to cleaner carbon technologies."
Lawmakers questioned the CEOs on employee pay, giving Bank of America the chance to highlight its recent commitment to raise its minimum hourly wage from $20 to $25 by 2025.
When Sen. Chris Van Hollen, D-MD, asked the other CEOs if they planned to follow Bank of America’s lead, Morgan Stanley CEO James Gorman said his bank would look into it.
Gorman said he had found out the previous night the investment bank had one employee making minimum wage, around $7.50 an hour.
"One employee out of 70,000," he said. "I promise you, that person's getting a raise."
Goldman Sachs CEO David Solomon said his bank has relatively few employees making less than $25 an hour, but said he would get back to Van Hollen regarding the bank’s plans to raise its minimum wage.
Fraser also said she would reply to Van Hollen on the specific question, while Dimon touted JPMorgan’s training, pension, dental and healthcare benefits.
"We've done a pretty good job of going our own way," he said. "We're not going to imitate anybody else, but we will be competitive."
The topic of wages also gravitated to Dimon’s own salary, with Brown noting the CEO makes 900 times more than the bank’s lowest-paid worker.
"I don't think any of us on this panel or any of the senators asking questions thinks that you work 900 times harder than the tellers and customer service agents at JPMorgan Chase," Brown said.
Dimon, who made $31.7 million in 2020, defended his compensation.
"My compensation is set by the board. They look at multiple factors," he said.
All six CEOs will return Thursday for a second day of testimony in front of the House Financial Services Committee.