(Reuters) – Chief executives of some of the largest U.S. banks faced off with the House Financial Services committee for the first time since the financial crisis on Wednesday armed with the healthy balance sheets, but lawmakers grilled executives more on social issues than business fundamentals.
CEOs from JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Goldman Sachs Group Inc, Morgan Stanley, State Street Corp and Bank of New York Mellon Corp walked into the hearing room ready to argue Wall Street has reformed the practices that fueled the 2007-2009 crisis and stress the contribution banks make to the broader economy.
But the tone, questions and players were distinctly different from a decade ago, when lawmakers focused on banks’ ability to safeguard the financial system and avoid future bailouts. Among the CEOs on the panel, only JPMorgan’s Jamie Dimon was at the helm of his bank before the financial crisis.
The hearing was led by Democratic Representative Maxine Waters and staffed with some high-profile freshman representatives like progressives including Alexandria Ocasio-Cortez.
Democratic lawmakers focused many of their questions on who the banks were doing business with, probing for answers about financing of gun manufacturers and fossil fuels.
Efforts to curry favor in the capital in recent weeks, like raising the minimum wage or pulling back from private prisons, earned some praise from politicians on the committee, but did not prevent lawmakers from pushing banks on their role in wealth inequality and corporate diversity.
Still, bank executives got a few chances to flag hoped-for talking points like their positive contribution to the economy when Republican lawmakers quizzed them on more systemic issues.
Democratic Representative Carolyn Maloney pressed JPMorgan’s Dimon to commit to a policy that would reduce the bank’s financing of gun makers. Citi and Bank of America last year said they would no longer provide certain banking services to gun manufacturers.
Jamie Dimon, chairman & CEO of JP Morgan Chase & Co., alongside James P. Gorman, chairman & CEO of Morgan Stanley, and other bank ceos are sworn in before a House Financial Services Committee hearing on “Holding Megabanks Accountable: A Review of Global Systemically Important Banks 10 Years After the Financial Crisis” on Capitol Hill in Washington, U.S., April 10, 2019. REUTERS/Aaron P. Bernstein
Some Republican lawmakers criticized such policies on Wednesday, with Representative Bill Posey cautioning banks against withholding financing from legal business and Representative Sean Duffy accusing Bank of America of denying Americans their Second Amendment rights.
Waters also questioned three of the bank CEOs whether they had found suspicious activity within their banks related to Russian accounts.
Citi CEO Michael Corbat declined to comment, citing an ongoing investigation into the matter. The Bank of America and Morgan Stanley CEOs said they had conducted internal investigations and did not find any suspicious activity.
Dimon said that JPMorgan “will never lose sight of what we learned.” Still, the bank has taken steps that went a long way to preventing another crisis, Dimon argued.
Since the crisis, the country’s largest banks have added more than $800 billion in capital to bolster the financial system. In the months leading up to the hearing, the banks also made a string of announcements to show how they are helping customers and communities.
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Bank of America said on Tuesday it would raise its minimum hourly wage to $20 from $15 by 2021.
Last month, JPMorgan said it would no longer finance the private prison industry and would invest $350 million in job training programs.
Goldman Sachs has publicly set targets for hiring women and minority groups, a move Citigroup also made late last year.
Wells Fargo & Co was not present at the hearing since former CEO Tim Sloan resigned abruptly last month, two weeks after appearing before the same committee.
Reporting by Imani Moise, Writing by Michelle Price; Editing by Meredith Mazzilli