A decade after the financial crisis, the chiefs of the largest U.S. 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 ranking member Patrick McHenry called the gathering “a hearing in search of a headline.”
The roughly six hours of testimony touched on the financial crisis, probes, capital rules, wages, interest rates, the economy, the Federal Reserve, China, climate change, gender equality, diversity, cybersecurity and cryptocurrencies, as well as how banks serve rural areas, small businesses, millennials, immigrants in the DACA program, gunmakers, prisons, fossil-fuel companies, car buyers, 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.
The CEOs also took turns fielding questions about appointments President Donald Trump has said he’ll make to the Fed board. Most of the executives said it’s important the Fed remain politically independent. Dimon noted he has enormous faith in Fed Chairman Jay Powell, but said some beliefs expressed by Heritage Foundation economist Stephen Moore would give him pause.
There were also a few announcements: Dimon said JPMorgan would consider developing a firm policy on dealing with gun manufacturers and supporting reform to overdraft fees. State Street Corp. CEO Ron O’Hanley called cyber risk a “clear and present danger” that requires banks and regulators to cooperate.
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 like 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.
Shares of all seven companies represented at the hearing climbed, adding about $6 billion to their total market value. It was a move similar to when Blankfein famously faced a Senate hearing nine years ago, watching his company gain $549 million as lawmakers took turns lashing its business.
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 last month, 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 for the company.
On Wednesday, lawmakers repeatedly bemoaned the difficulty of digging into weighty industry issues in the time allotted. At one point, Wisconsin Republican Sean Duffy asked if he could have 10 seconds back after the committee’s chair, Maxine Waters, interjected to ask Bank of America Corp.’s Brian Moynihan to speak louder.
Many questions were aimed at Dimon, who runs the nation’s largest bank and was first to enter the room. Waters opened the session by addressing a running joke in Washington that other CEOs might skate through by letting him do all the talking. Everyone would needs to speak for himself, she said, quipping, “We know he’s smart.”
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.
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