Wall Street bank chiefs will promote the role their institutions have played in getting the pandemic-hit U.S. economy back on track when they appear in Congress this week, but are likely to face difficult issues on economic and social issues.
Senate Financial Services and House of Representatives committees will hear key executives from JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Citigroup Inc (CN), Wells Fargo & Co (WFC ). N), Goldman Sachs Group (GS.N) and Morgan Stanley (MS.N) on Wednesday and Thursday, respectively.
Wednesday’s hearing is the first time CEOs of the country’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 ‘this group to Senator Sherrod Brown, a fierce Wall Street critic.
While audiences are unlikely to result in policy proposals, they are politically risky for CEOs as the scrutiny of their industry grows in Washington under democratic leadership.
A number of issues such as economic inequality, fair lending, diversity, racial justice, climate change, cryptocurrencies and fiscal policies are likely to be raised.
“We expect these audiences to be disjointed and nebulous, but they will be obligatory television,” Isaac Boltansky, director of Compass Point Research & Trading, wrote in a note.
The image of the banking industry has improved in Washington since the financial crisis a decade ago and big banks believe they have a good story to tell after getting $ 69 billion in COVID-19 aid at the hands of 850,000 small businesses in difficulty.
“The country’s largest banks have shown that, in the face of a real-life stress test, they could provide essential support to small businesses, households and large entrepreneurs, while remaining safe and strong,” Kevin said Fromer, CEO of the Financial Services Forum, representing the eight largest banks in the United States and their CEOs.
CEOs are likely to extol the efforts of their banks to promote diversity and inclusion both externally and internally. In this regard, Wednesday will mark the starting point for the industry with Jane Fraser, the first female CEO of a Wall Street bank, Citigroup, to debut on Capitol Hill.
He will appear alongside Jamie Dimon of JPMorgan, James Gorman of Morgan Stanley, Charles Scharf of Well Fargo, Brian Moynihan of Bank of America and David Solomon of Goldman Sachs.
“Diversity, equity, inclusion: these banks have a great history to tell about these issues,” said Richard Hunt, executive director of the Consumer Banking 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 inform lawmakers about these programs.”
Still, executives are likely to receive warmth from some lawmakers, especially from progressives who want them to do more to combat wealth inequality, racial injustice and climate change.
Lawmakers are also likely to seek answers from CEOs on evidence marked by congressional reports indicating that lenders discriminated against some borrowers when handing out pandemic aid and whether Wall Street rich paid enough taxes.
Republicans, on the other hand, are angry at what they see as the liberal trend on Wall Street and will likely criticize CEOs for trying to push social policies by reducing credit to sectors such as arms manufacturers, private prisons and oil and gas.
“Banks that influence elements of social policy … present a dangerous political dynamic as attempts to calm the left will no doubt frustrate their historic allies on the right,” Boltansky wrote.
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