Chiefs of Wall Street’s banking corporation will play a full role in bringing the pandemic-hit U.S. economy back on track this week before Congress, but they will probably face tough social and economic issues.
The Senate Banking and House of Representatives Financial Services Committees will hear from the chief executives of JPMorgan Chase & Co, Bank of America Corp, Citigroup Inc, Wells Fargo & Co, Goldman Sachs Group and Morgan Stanley on Wednesday and Thursday, respectively.
Wednesday’s hearing is the first time the CEOs of the nation’s largest banks have testified before the Senate Banking Committee since the aftermath of the 2008 financial crisis. Democratic gains in the 2020 election handed control of that panel to Senator Sherrod Brown, a fierce Wall Street critic.
While the hearings are unlikely to result in policy proposals, they are politically risky for the CEOs as scrutiny of their industry grows in Washington under Democratic leadership.
They may be grilled with economic inequality, fair lending, diversity, racial justice, climate change, crippling and fiscal policy.
“The hearings are expected to be nebulous and disjoined, but nevertheless they will be must-watch television,” wrote Isaac Boltansky, Director of Compass Point Research & Trading, in a statement.
In Washington, since the financial crisis of ten years ago, the banking industry’s image has improved and big banks are thinking they have good stories to tell when 850,000 struggling small enterprises have received 69 billion Dollars of COVID-19 aid.
“Chief executive Officer, Mr. Kevin Fromer, the CHO of Financial Services Forum, which comprises the larger eight U.S. banks and their CEOs, has shown that the nation’s largest banks can provide essential support for large and small enterprises, in the face of an effective stress test.
The CEOs are also likely to extol their banks’ efforts to promote diversity and inclusion both externally and internally. In that regard, Wednesday will mark a watershed for the industry with Citigroup’s Jane Fraser, the first female CEO of a Wall Street bank, making her Capitol Hill debut.
She will appear alongside JPMorgan’s Jamie Dimon, Morgan Stanley’s James Gorman, Well Fargo’s Charles Scharf, Bank of America’s Brian Moynihan and Goldman Sachs’ David Solomon.
“Diversity, equity, inclusion – these banks have a great story to tell on these issues,” said Richard Hunt, chief executive of the Consumer Bankers Association.
“They have many initiatives to continue to identify and promote people of color and people from diverse backgrounds and this is an opportunity to tell lawmakers about those programs.”
Still, the executives are likely to get heat from some lawmakers, particularly progressives who want them to do more to tackle wealth inequality, racial injustice and climate change.
Legislators will probably also seek answers from CEOs to reports from Congress that lenders discriminated against some lenders when distributing pandemic aid and whether the wealthy of Wall Street pay enough taxes.
On the other hand, the Republicans are angry at the liberal leanings of Wall Street and are likely to criticize CEOs for their efforts to drive social policies by reducing credit for sectors such as gunmen, private prisons and the oil and gas industries.
“Banks which influence elements of social policy are…representing a dangerous political dynamic, as attempts by the Left to placate their historic allies on the right will certainly be frustrated,” wrote Boltansky.