[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
HOLDING MEGABANKS ACCOUNTABLE:
OVERSIGHT OF AMERICA'S LARGEST
CONSUMER FACING BANKS
=======================================================================
HYBRID HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 21, 2022
__________
Printed for the use of the Committee on Financial Services
Serial No. 117-100
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
HOLDING MEGABANKS ACCOUNTABLE: OVERSIGHT OF
AMERICA'S LARGEST CONSUMER FACING BANKS
HOLDING MEGABANKS ACCOUNTABLE:
OVERSIGHT OF AMERICA'S LARGEST
CONSUMER FACING BANKS
=======================================================================
HYBRID HEARING
BEFORE THE
COMMITTEE ON FINANCIAL SERVICES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 21, 2022
__________
Printed for the use of the Committee on Financial Services
Serial No. 117-100
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-840 PDF WASHINGTON : 2022
HOUSE COMMITTEE ON FINANCIAL SERVICES
MAXINE WATERS, California, Chairwoman
CAROLYN B. MALONEY, New York PATRICK McHENRY, North Carolina,
NYDIA M. VELAZQUEZ, New York Ranking Member
BRAD SHERMAN, California FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York BILL POSEY, Florida
DAVID SCOTT, Georgia BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri ANN WAGNER, Missouri
ED PERLMUTTER, Colorado ANDY BARR, Kentucky
JIM A. HIMES, Connecticut ROGER WILLIAMS, Texas
BILL FOSTER, Illinois FRENCH HILL, Arkansas
JOYCE BEATTY, Ohio TOM EMMER, Minnesota
JUAN VARGAS, California LEE M. ZELDIN, New York
JOSH GOTTHEIMER, New Jersey BARRY LOUDERMILK, Georgia
VICENTE GONZALEZ, Texas ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida WARREN DAVIDSON, Ohio
MICHAEL SAN NICOLAS, Guam TED BUDD, North Carolina
CINDY AXNE, Iowa TREY HOLLINGSWORTH, Indiana
SEAN CASTEN, Illinois ANTHONY GONZALEZ, Ohio
AYANNA PRESSLEY, Massachusetts JOHN ROSE, Tennessee
RITCHIE TORRES, New York BRYAN STEIL, Wisconsin
STEPHEN F. LYNCH, Massachusetts LANCE GOODEN, Texas
ALMA ADAMS, North Carolina WILLIAM TIMMONS, South Carolina
RASHIDA TLAIB, Michigan VAN TAYLOR, Texas
MADELEINE DEAN, Pennsylvania PETE SESSIONS, Texas
ALEXANDRIA OCASIO-CORTEZ, New York RALPH NORMAN, South Carolina
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts
Charla Ouertatani, Staff Director
C O N T E N T S
----------
Page
Hearing held on:
September 21, 2022........................................... 1
Appendix:
September 21, 2022........................................... 103
WITNESSES
Wednesday, September 21, 2022
Cecere, Andy, Chairman, President, and CEO, U.S. Bancorp......... 5
Demchak, William, Chairman, President, and CEO, The PNC Financial
Services Group, Inc............................................ 6
Dimon, Jamie, Chairman and CEO, JPMorgan Chase & Co.............. 8
Fraser, Jane, CEO, Citigroup..................................... 10
Moynihan, Brian, Chairman and CEO, Bank of America............... 11
Rogers, William H., Jr., Chairman and CEO, Truist Financial
Corporation.................................................... 13
Scharf, Charles W., President and CEO, Wells Fargo and Company... 15
APPENDIX
Prepared statements:
Cecere, Andy................................................. 104
Demchak, William............................................. 115
Dimon, Jamie................................................. 139
Fraser, Jane................................................. 153
Moynihan, Brian.............................................. 166
Rogers, William H., Jr....................................... 190
Scharf, Charles W............................................ 226
Additional Material Submitted for the Record
Waters, Hon. Maxine:
American Association for Justice, ``Forced Arbitration and
Big Banks: When Consumers Pay To Be Ripped Off,'' dated
September 2022............................................. 247
Written statement of the National Iranian American Council... 254
Rose, Hon. John:
Federal Reserve, FDIC, National Credit Union Administration,
and OCC Joint Statement on the Risk-Based Approach to
Assessing Customer Relationships and Conducting Customer
Due Diligence, dated July 6, 2022.......................... 257
Article from The Wall Street Journal entitled, ``Gas-Station
ATMs Are a Banking Battleground,'' dated February 19, 2022. 259
Cecere, Andy:
Written responses to questions for the record from Chairwoman
Waters..................................................... 265
Written responses to questions for the record from
Representative Garcia...................................... 283
Written responses to questions for the record from
Representative Green....................................... 287
Written responses to questions for the record from
Representative Mooney...................................... 284
Written responses to questions for the record from
Representative Norman...................................... 286
Demchak, William:
Written responses to questions for the record from Chairwoman
Waters..................................................... 299
Written responses to questions for the record from
Representative Garcia...................................... 290
Written responses to questions for the record from
Representative Green....................................... 293
Written responses to questions for the record from
Representative Mooney...................................... 295
Written responses to questions for the record from
Representative Norman...................................... 297
Dimon, Jamie:
Written responses to questions for the record from Chairwoman
Waters..................................................... 328
Written responses to questions for the record from
Representative Garcia...................................... 357
Written responses to questions for the record from
Representative Gooden...................................... 356
Written responses to questions for the record from
Representative Green....................................... 355
Written responses to questions for the record from
Representative Mooney...................................... 353
Written responses to questions for the record from
Representative Norman...................................... 351
Fraser, Jane:
Written responses to questions for the record from Chairwoman
Waters..................................................... 360
Written responses to questions for the record from
Representative Garcia...................................... 373
Written responses to questions for the record from
Representative Green....................................... 375
Written responses to questions for the record from
Representative Mooney...................................... 378
Written responses to questions for the record from
Representative Norman...................................... 377
Moynihan, Brian:
Written responses to questions for the record from Chairwoman
Waters..................................................... 410
Written responses to questions for the record from
Representative Garcia...................................... 393
Written responses to questions for the record from
Representative Green....................................... 397
Written responses to questions for the record from
Representative Mooney...................................... 400
Written responses to questions for the record from
Representative Norman...................................... 404
Written responses to questions for the record from
Representative Timmons..................................... 408
Written responses to questions for the record from
Representative Williams.................................... 406
Rogers, William H., Jr.:
Written responses to questions for the record from Chairwoman
Waters..................................................... 443
Written responses to questions for the record from
Representative Garcia...................................... 437
Written responses to questions for the record from
Representative Green....................................... 439
Written responses to questions for the record from
Representative Mooney...................................... 440
Written responses to questions for the record from
Representative Norman...................................... 442
Scharf, Charles W.:
Written responses to questions for the record from Chairwoman
Waters..................................................... 467
Written responses to questions for the record from
Representative Garcia...................................... 510
Written responses to questions for the record from
Representative Green....................................... 504
Written responses to questions for the record from
Representative Mooney...................................... 502
Written responses to questions for the record from
Representative Norman...................................... 500
HOLDING MEGABANKS ACCOUNTABLE:
OVERSIGHT OF AMERICA'S LARGEST
CONSUMER FACING BANKS
----------
Wednesday, September 21, 2022
U.S. House of Representatives,
Committee on Financial Services,
Washington, D.C.
The committee met, pursuant to notice, at 10:05 a.m., in
room 2128, Rayburn House Office Building, Hon. Maxine Waters
[chairwoman of the committee] presiding.
Members present: Representatives Waters, Maloney, Sherman,
Scott, Green, Perlmutter, Himes, Foster, Beatty, Gottheimer,
Lawson, San Nicolas, Axne, Casten, Pressley, Torres, Lynch,
Adams, Tlaib, Dean, Ocasio-Cortez, Garcia of Texas, Williams of
Georgia, Auchincloss; McHenry, Lucas, Luetkemeyer, Huizenga,
Wagner, Barr, Williams of Texas, Hill, Loudermilk, Mooney,
Davidson, Budd, Hollingsworth, Gonzalez of Ohio, Rose, Steil,
Gooden, Timmons, Taylor, Sessions, and Norman.
Chairwoman Waters. The Financial Services Committee will
come to order.
Without objection, the Chair is authorized to declare a
recess of the committee at any time.
Today's hearing is entitled, ``Holding Megabanks
Accountable: Oversight of America's Largest Consumer Facing
Banks.''
I now recognize myself for 4 minutes to give an opening
statement.
Testifying before us today we have the CEOs of the seven
largest U.S. commercial banks that each serve millions of
consumers.
As chairwoman of this committee, I have prioritized
conducting rigorous oversight over our nation's largest banks
and their activities. Last year, four of these megabanks
testified before us.
Since then, our nation continues to battle an ongoing
epidemic--inflation--that is affecting every household's
budget. Russia's invasion of Ukraine, rising interest rates,
and other crises have battered our economy. In this
environment, the role that banks play to protect consumers and
provide access to affordable credit is absolutely critical.
Over the past several years, we have seen the system of
banking in this country take a dramatic shift. Our nation's
largest banks have gotten even bigger during the pandemic, in
part through mergers. Regulators have rubber-stamped these
merger applications for far too long. And it is past time we
get to the bottom of whom these mergers are actually
benefiting.
For starters, I remain concerned that branch closures
across the country, which are often a consequence of mergers,
are expanding banking deserts and harming communities that rely
on branches for basic banking services.
The committee will also examine banks' commitments to
underserved communities. As our nation's racial wealth gap
widens, and Black applicants and others continue to be
discriminated against, I am eager to hear about their efforts
to ensure that communities of color finally get their
opportunities to build generational wealth.
The CEOs will be asked for an update on the diversity and
inclusion commitments they made following the murder of George
Floyd, and details on additional measures they will take.
In addition, following news that Equifax sent inaccurate
credit scores to lenders, who in turn used them to charge
consumers higher interest rates or even deny them credit, I
would like to hear what these banks are doing to ensure that
harms to their customers are identified and that those
customers are made whole.
As the compensation for these CEOs goes up dramatically
when compared to the tellers and other customer-facing
employees, many of the banks they represent have simultaneously
earned the title, ``repeat offenders,'' for their continued
violations of the law. The committee has received a long list
of unlawful actions resulting in fines, but these fines pale in
comparison to the billions in profits these banks make, and
amount to nothing more than another cost of doing business.
I would like to hear how these banks are working to update
their compliance practices and that they commit to following
the law.
There are many other issues the committee will explore
today, including the rise of emerging technologies. Many
consumers have reported being scammed through money transfer
apps like Zelle, and all of the banks before us shrug their
shoulders.
We also want to know what these banks are doing to protect
their employees following the Supreme Court's shameful decision
to abolish Roe v. Wade, along with efforts to combat gun
violence and much more.
So, I look forward to hearing testimony from our witnesses
today. And I yield back.
I now recognize the ranking member of the committee, Mr.
McHenry, for 5 minutes.
Mr. McHenry. Thank you, Madam Chairwoman.
And, frankly, I disagree with the premise of this hearing.
It is not because I disagree with holding folks accountable.
Rather, it is the opposite. In fact, I think this committee has
done woefully little over the past few years to hold agencies
and those industries we oversee accountable.
I disagree with this hearing because it is theater, not
oversight. The Majority has had 2 years to do its job of
oversight, and they have failed miserably. Now that we are just
over a month away from the midterms, they are posturing.
Democrats first held this hearing back in 2019 in search of
a headline, and when they failed to garner the positive press
they were seeking, Democrats felt emboldened by the Biden
Administration and their one-party rule of Washington to drag
the CEOs back in 2022, demanding they parrot their aggressive
agenda.
Now, one year later, we expect more of the same, this time
at the expense of focusing on the real issues the American
people are facing. And when it comes to the financial system,
the list of issues is long. We are going to hear Democrats
encourage banks to make lending decisions based on woke
politics rather than creditworthiness. We're going to talk
about social issues rather than economic issues, although we
are an economic committee.
But that is not all. Unelected bureaucrats, Congressional
Democrats, and the Biden Administration have conspired to
create uncertainty and stifle innovation in our financial
system. This will create long-term problems. They are targeting
essential and popular products and services used by millions of
consumers, such as overdraft protection, peer-to-peer payments,
and buy now/pay later.
These policies limit options for consumers at a time when
they can least afford it and make it more challenging for
financial institutions to innovate and compete.
Coupled with reckless spending, Democrats' bad policymaking
is devastating Americans' budgets. The price of gas is still
higher today than it was a year ago, and it threatens to spike
again this winter. Groceries are more expensive, up more than
13 percent from this time last year.
Biden's inflation continues to clobber American families.
Last week's Consumer Price Index (CPI) numbers showed that
prices continue to rise at 8.3 percent over the prior year and
up over the month before. Everything costs more now, and low-
to middle-income Americans are hurt the most.
Add to all this the looming housing crisis in an
inflationary and rising-interest-rate environment, and
consumers are already having a harder time accessing affordable
credit. Families are being priced out of the housing market
because the Federal Reserve is forced to keep raising interest
rates as Democrats continue to dump jet fuel on their economic
dumpster fire. It is offensive to all of the senses.
And if none of that bothers you, how about this? The Biden
Administration is treating the U.S. Treasury like it is its own
megabank, dolling out half-a-trillion in taxpayer dollars to
repay student loans.
And that economic concept is that the same folks who are
paying for someone else's American Dream can no longer afford
their own. You are taking from some and demanding that the
populace, some of whom couldn't afford to go to college, pay
for those who have debt that they shouldn't have taken on.
We should focus on those issues. We should focus on the
substance of how the American people live and seek to work.
That should be the discussion today.
We have an economy that is in an inflexion point. We should
focus on that.
We should talk about the regulatory challenges of giving
consumers the options that they want and demand. That should be
the focus of this hearing, if we are going to even have a
hearing like this.
And then, it should be about the substance of making
people's lives better by reducing regulatory barriers that make
products more expensive and make life harder for average
Americans.
My colleagues have instead called on large bank CEOs to
publicly pressure them to promote divisive partisan priorities.
We will hear a lot of that. In fact, you might hear it from
both sides, by the way, where we are, a month before the
election.
Instead of focusing on what your institutions do best,
providing capital and serving customers, you are here. It is a
shame, it is theater, and it offers zero solutions to millions
of Americans who are bearing the financial brunt of the
Democrats' virtue signaling.
I yield back.
Chairwoman Waters. Thank you very much, Ranking Member
McHenry.
I now recognize the gentleman from Colorado, Mr.
Perlmutter, who is also the Chair of our Subcommittee on
Consumer Protection and Financial Institutions, for 1 minute.
Mr. Perlmutter. Thank you, Madam Chairwoman.
Good morning, and welcome to our committee.
If there is anything that is built on trust, it is banking,
and the banking sector lost a lot of trust in 2008. But with
the passage of the Dodd-Frank Act, and disciplined and prudent
operations, our banks are now well-capitalized. Banks have been
a source of strength during the pandemic, and in many cases,
have made progress in restoring consumer trust over the last
decade.
But it is not all sunshine and roses. This committee has
heard reports of modern-day redlining, high and misleading
fees, and unfair use of credit scores. According to the FDIC,
one-third of unbanked households don't use banks because they
don't trust them. Other consumers are turning to risky
cryptocurrencies to avoid the system altogether.
I hope today's hearing can be a productive dialogue on how
to continue to instill trust in our banking system and to
ensure that it works for everyone.
With that, I yield back.
Chairwoman Waters. Thank you very much, Mr. Perlmutter.
I want to welcome today's distinguished witnesses to the
committee: Andy Cecere, the chairman, president, and CEO of
U.S. Bancorp; William Demchak, the chairman, president, and CEO
of the PNC Financial Services Group; Jamie Dimon, the chairman
and CEO of JPMorgan Chase & Company; Jane Fraser, the CEO of
Citigroup; Brian Moynihan, the chairman and CEO of Bank of
America; William Rogers, Jr., the chairman and CEO of Truist
Financial Corporation; and Charles Scharf, the president and
CEO of Wells Fargo and Company.
Each of you will have 5 minutes to summarize your
testimony. You should be able to see a timer on your screen
that will indicate how much time you have left, and a chime
will go off at the end of your time. I would ask you to be
mindful of the timer and quickly wrap up your testimony if you
hear the chime.
And without objection, your written statements will be made
a part of the record.
Before we begin with your oral testimonies, I would like to
swear in the witnesses.
Would all of you please raise your right hands?
Do you solemnly swear or affirm that the testimony you will
give before this committee in the matters now under
consideration will be the truth, the whole truth, and nothing
but the truth, so help you God?
Let the record show that all of the witnesses answered in
the affirmative.
We will now begin with your oral testimonies.
Mr. Cecere, you are now recognized for 5 minutes to present
your oral testimony.
TESTIMONY OF ANDY CECERE, CHAIRMAN, PRESIDENT, AND CEO, U.S.
BANCORP
Mr. Cecere. Good morning, and thank you.
Chairwoman Waters, Ranking Member McHenry, and
distinguished members of the committee, thank you for inviting
me to speak with you today.
U.S. Bank is based in Minneapolis, Minnesota, and holds one
of the longest active banking charters in the United States. We
have spent nearly 160 years serving individuals, families,
businesses, and communities, and striving to be a responsible
and innovative leader in the financial services industry.
At U.S. Bank, we operate a simple, straightforward company
with four core businesses: consumer and business banking;
corporate and commercial banking; payment services; and wealth
management and investment services.
We have earned a reputation for being well-managed,
financially sound, and responsible in our approaches to
underwriting and risk. Because of this, we have one of the
highest debt ratings, and we have been recognized for 8
consecutive years as one of the world's most ethical companies.
These achievements are possible only because of our
exceptional team members. We work hard to take care of their
needs and invest in their career growth and development. This
commitment has been further reflected in our newly-expanded
leave benefits and our recently-announced increases in entry-
level pay.
Thanks to our incredible team, we provide an exceptional
banking experience for our customers. Our retail banking
services are accessible when, where, and how our customers
prefer, whether virtually or in person in one of our retail
branches which we operate in 26 States.
There are a few areas of our retail banking business that I
want to highlight today.
First, we have pioneered several digital enhancements. In
addition to our award-winning mobile app, we created a tool for
our bankers to co-browse remotely with their customers on
video. This solution helps customers feel heard and understood
when they need help making important financial transactions.
Second, we have made it easier for individual customers and
small businesses to access credit. I know that policymakers on
this committee have been seeking a short-term, low-cost, small-
dollar solution for people who have emergency cash needs. Four
years ago, we provided a solution for our customers. Our Simple
Loan product allows customers to receive a loan of up to $1,000
in a matter of minutes on our mobile app.
We have similarly streamlined our services for small
businesses. We now can process and fund a small business loan
in less than 15 minutes.
And thanks to our investments in new point-of-sale
technologies, our small-business customers can more easily
manage their money and serve their customers.
Third, we are working to make homeownership a reality for
more Americans both across rural communities and in our
country's cities. One such initiative we have launched is
Access Home, a program designed to increase Black homeownership
by engaging with community partners. We continue to provide
mortgage services to local housing finance authorities, as we
did throughout the pandemic, and we are a leading FHA lender.
Our commitment to serving the financial needs of Americans
truly includes all Americans. We recognize that being a good
corporate citizen goes beyond providing world-class financial
services. In 2021, we developed our Access Commitment, a
multidimensional initiative to work to close the racial wealth
gap across communities.
Fulfilling these commitments is important to me, and we
have made substantial progress. Last year, we provided nearly
$200 million in capital to Black-owned or -led businesses and
organizations. We made $305 million in loan commitments to
community development financial institutions (CDFIs), and we
have made supplier diversity a priority and are spending nearly
$500 million on these efforts annually.
Still, we have pledged to do more. In addition to our
commitment to closing the racial wealth gap, U.S. Bank is also
committed to promoting diversity. The commitment starts with
me, and I have seen firsthand the benefits of championing
diversity at U.S. Bank. Diversity strengthens our business,
attracts talent, and allows us to better serve our customers.
Our efforts in this area were recognized earlier this year,
when DiversityInc named U.S. Bank to the top 50 companies for
diversity for the fourth year in a row.
In closing, we believe relationships are a key
differentiator for our bank. That is why we are taking the best
of our person-to-person interactions and enhancing them with
new digital capabilities to connect our customers with their
trusted partners and advisers.
Today, as always, our focus is on serving people.
Relationships are the center of our business and the core of
all of the communities we serve, and that commitment will never
change.
With that, thank you for your time and for the work you do
for our country. I look forward to your questions.
Thank you.
[The prepared statement of Mr. Cecere can be found on page
104 of the appendix.]
Chairwoman Waters. Thank you very much, Mr. Cecere.
Mr. Demchak, you are now recognized for 5 minutes to
present your oral testimony.
TESTIMONY OF WILLIAM DEMCHAK, CHAIRMAN, PRESIDENT, AND CEO, THE
PNC FINANCIAL SERVICES GROUP, INC.
Mr. Demchak. Thank you, Chairwoman Waters.
And, Chairwoman Waters, Ranking Member McHenry, and
distinguished members of the committee, I am pleased to be here
on behalf of PNC Financial Services.
PNC is a Main Street banking organization focused on
traditional banking activities. We have essentially been in the
same business for 170 years, which is when we were founded. Our
priority has always been to help customers save, borrow, and
move money.
Now, we are a large bank by historical standards, but we
are just one-sixth the size of some of the banks represented on
this panel. We have limited capital markets activities, and
limited derivatives and foreign operations.
PNC is not a global systemically important bank (G-SIB).
What we are is a financially strong and resilient bank that is
committed to serving consumers in a fair and transparent way.
I am proud that PNC was the first large bank to actually
modify its overdraft practices. Since the rollout of our Low
Cash Mode products, overdraft fees at PNC have dropped by
nearly 50 percent.
We have also made it easier for consumers to send and
receive payments. PNC, along with the other owner-banks of
Early Warning Services, developed and rolled out Zelle, a real-
time person-to-person (P2P) platform. Zelle provides consumers
with a free and convenient way to send money to individuals and
businesses.
And despite the headlines, disputes within the Zelle
network make up less than 10 basis points of all transactions.
This is not true of unregulated P2P digital payment services,
which in at least one instance, in PNC's case, has 13 times the
disputes that we see on the Zelle Network.
But better is not good enough, and the scams, in
particular, continue to grow across the financial ecosystem.
Scams are different than traditional fraud in that a bad actor
gets a customer to actually initiate the transaction
themselves. These scams are growing daily, and the industry,
regulators, and, importantly, legislators, need to respond. It
is not enough that we apportion blame after the fact. We need
to stop fraud and scams before they occur.
Secure networks like Zelle, Real Time Payments, and
potentially, FedNow, allow for direct authentication with a
host bank. They also allow members of the network to identify,
close, and police against scam accounts.
This is not the case with non-bank networks. These networks
are not held to the same security standards as banks. When a
scam occurs with these other networks, banks like PNC have zero
visibility into where the money went, zero capability to
recover the money, and zero capability to close the bad
account.
Banks follow the standards set under the Gramm-Leach-Bliley
Act and are regularly, almost continuously, examined for
compliance.
Non-bank data aggregators are not subject to examination
and supervision. Instead, they hold the financial data of tens
of millions of U.S. consumers and rely on, ``screen scraping,''
to gather and then sell that consumer information.
Twelve years ago, the Consumer Financial Protection Bureau
(CFPB) was given authority, based on Section 1033 of the Dodd-
Frank Act, to end screen scraping, to secure data, and to stop
the reselling of confidential consumer data through the fintech
ecosystem. This hasn't happened and consumers are paying the
price.
PNC has had a social purpose since the day it was founded.
As a service organization, we believe our success is directly
tied to the success of our customers and communities. We
succeed when our customers and communities thrive, and when our
employees feel valued and are rewarded for helping to fulfill
our purpose.
Our commitment to our communities is reflected in PNC's
outstanding rating under the Community Reinvestment Act (CRA)--
a rating, by the way, that we have enjoyed since the enactment
40 years ago.
We also succeed by being diverse and inclusive, which
starts at the top of the organization. Today, nearly half of
our independent directors on our board are women or people of
color, and half of the executives who report to me are women or
people of color.
I am honored to represent the nearly 60,000 PNC employees
who work hard every day to help our customers and deliver for
our communities. It is a safe assumption that all of those
constituents are as divided on the views of today's challenges
as everyone else in our country.
Our job as a bank--and my job as a leader--is not to
arbitrate on who is right or wrong, but rather to find common
ground and deliver on our promise to serve customers, keep them
safe, and to provide capital to our great economy so that
everyone may prosper.
With that, I welcome any questions that you may have.
[The prepared statement of Mr. Demchak can be found on page
115 of the appendix.]
Chairwoman Waters. Thank you, Mr. Demchak.
Mr. Dimon, you are now recognized for 5 minutes to present
your oral testimony.
TESTIMONY OF JAMIE DIMON, CHAIRMAN AND CEO, JPMORGAN CHASE &
CO.
Mr. Dimon. Chairwoman Waters, Ranking Member McHenry, and
members of the committee, I appreciate the opportunity to talk
about JPMorgan Chase and the role of America's largest banks as
a force for good for the country, its citizens, and the global
economy.
We live in the greatest country in the world, predicated on
foundational beliefs in freedom of speech, freedom of religion,
freedom of enterprise, the sanctity of the individual, and the
promise of equality and opportunity for all. These core values
are the fabric that binds us as Americans, where the best of
what we are shines through, especially in times of adversity.
This system has created what is still the most prosperous
and innovative economy the world has ever seen and one that
nurtures vibrant businesses, large and small, and is a
welcoming environment for innovation, science, and technology.
My enduring faith in the strength of the country remains as
strong as ever.
The free flow of credit and investments is key to our
nation's global competitiveness. Free enterprise is the
flywheel of the economy as capital seeks out investments,
individuals, and ideas that drive growth and innovation.
And free enterprise celebrates, and is inseparable from,
human freedom and innovation, which ultimately are the stimulus
for human progress. The secret sauce of free enterprise is not
only the free movement of capital, but, more importantly, the
value of knowledge and free people exercising their rights.
What this country needs most is free enterprise,
extraordinarily competent government and policies, and more
civic-minded companies and citizens.
The work we do at JPMorgan Chase matters in good times, but
particularly more in tough times. We provide critical financing
to nearly every sector, including manufacturing, service,
energy, real estate, and transportation.
Importantly, we finance Federal, State, and local
governments, schools, bridges, hospitals, universities, and
transit.
We have long championed the essential role of banking in a
community, its potential for bringing people together, for
enabling companies and individuals to reach for their dreams,
and for being a source of strength in difficult times. We
finance Americans' ambitions with loans for homes, autos, and
for growing small businesses, and we provide valuable products
and services to more than half of American households.
We know that our business is only as strong as our
communities, so we are focused on lifting up traditionally-
underserved communities by increasing homeownership, expanding
affordable rental housing, and growing small businesses.
The last few volatile years have brought stress and
disruption to so many as the world grapples with war in
Ukraine, economic volatility and inflation, energy insecurity
and climate change, and a pandemic.
It has also shown what great companies with the size and
scale of JPMorgan Chase can do as a source of strength to the
economy. Because we have a strong and healthy company, we
consistently serve and finance American households and
businesses while building our communities and protecting
America and the American economy.
We are all here as guardians of the financial system. We
support our government and national security efforts to combat
financial crimes, and we carry out complex sanctions. Each year
we proactively identify nation-state and cybercriminal threats
and work closely with the financial services and energy
industry and with the United States Government to help protect
critical infrastructure.
And we fuel good American jobs. The businesses we all
finance collectively employ hundreds of millions of Americans,
and as a large employer ourselves, we employ people in every
State in the country with starting wages that far exceed any
government minimum wage, plus full benefits, retirement, job
training, and career growth opportunities.
I want to close by thanking the more than 200,000 employees
of JPMorgan Chase. I would like the public to know how proud I
am of these people who work in every State in the country.
You all work tirelessly for our customers with a singular
focus on doing the right thing. You work on behalf of our
shareholders, real people and communities, including teachers,
law enforcement, healthcare workers, and people saving for
retirement. Many of you have faced personal challenges
throughout the pandemic, whether your own health or the health
of a loved one, while managing your children's education and
childcare needs.
At the same time, our work has never been more important or
more difficult than the last several years. You continue to
persevere with grace and a fortitude that makes me proud.
I have been particularly moved by our essential worker
population, the tens of thousands of you who continued to come
to work during the height of the pandemic to serve our
customers when they needed you the most. You have my deep
gratitude.
And for all JPMorgan Chase employees who perform your jobs
with integrity and excellence every day, you embody the best of
American values and make your country proud.
Thank you, members of the committee, for the work you do
for our country. I look forward to working with all of you to
help solve the challenges facing our country and to help grow
and safeguard this great country.
Thank you.
[The prepared statement of Mr. Dimon can be found on page
139 of the appendix.]
Chairwoman Waters. Thank you, Mr. Dimon.
Ms. Fraser, you are now recognized for 5 minutes to present
your oral testimony.
TESTIMONY OF JANE FRASER, CEO, CITIGROUP
Ms. Fraser. Thank you very much indeed, Chairwoman Waters,
Ranking Member McHenry, and members of the committee. Good
morning, and thank you for the opportunity to represent
Citigroup today.
When a similar group convened with this committee last
year, we shared how our bank supported the economy during the
global pandemic.
Today, while the worst of COVID may be behind us, the
economic challenges we are facing are no less daunting. The
reforms you put in place, and the work we have done since the
financial crisis to strengthen our bank's financial foundation,
have enabled us to continue to serve as a source of stability.
While today I am a proud American citizen, as someone who
grew up in the U.K., I can attest that the banking system and
the capital markets in the States are the envy of others. Our
financial institutions and our financial markets are essential
to American competitiveness abroad, and they are the reason why
the U.S. is the top destination for foreign investment.
As living expenses for Americans increase and concerns
about the economy grow, we remain very focused on our role as a
bank in job and in wealth creation. Through Citi's extensive
global network and footprint, we partner with the most iconic
American businesses, as well as the Federal Government, to help
them navigate the global economy. We have been supporting our
clients as they build resiliency, reconfigure supply chains,
and adapt to inflationary pressures, and we help these
institutions invest in projects that put them in a position to
succeed in the 21st Century.
And it is these investments that put a lot of people to
work in the United States. The private sector clients we serve
are where millions of Americans proudly earn their living, and
those clients rely on vendors and suppliers, which in turn
employ millions here at home. At Citi, we employ 70,000 people
here in the U.S., working in cities across the country such as
Jacksonville, St. Louis, and Los Angeles.
The work we do with our public sector partners is a prime
example of how we put our balance sheet to work to benefit
local communities. In 2021, we partnered with State and local
governments to catalyze more than $27 billion in infrastructure
investment, such as schools, hospitals, and roads, and many of
these large projects just wouldn't have been possible without a
bank of Citi's scale to back them.
We financed more than $5.6 billion in affordable housing
projects last year in communities across 32 different States,
from California to Ohio to New York, and this total made us the
number-one affordable housing lender in the U.S. for the 12th
year in a row.
Breaking down the barriers to banking is also a top
priority for us. In fact, this past summer we became the first
of the largest U.S. banks to completely eliminate overdraft
fees and returned item fees for our customers.
We have also been a leading proponent of pay equity.
Earlier this year, we launched a first-of-its-kind diverse
financial institutions group to lead our engagement with
minority depository institutions (MDIs) and diverse broker-
dealers and asset managers.
And this group has focused on helping these diverse
institutions scale and expand into new markets, and it includes
a groundbreaking rotational program that embeds Citi executives
within MDIs for up to a year.
Bottom line, my Citi colleagues and I understand and
embrace the responsibilities that banks have for advancing
economic empowerment and mobility.
I hope my pride in Citi's story has come through, but I
also want to be clear about recognizing the need to continue
improving as we strive to build an even safer and sounder bank
for the future.
Thank you for the opportunity to speak with you about the
work we are doing to support American consumers and businesses,
and I look forward to your questions later on today.
Thank you very much.
[The prepared statement of Ms. Fraser can be found on page
153 of the appendix.]
Chairwoman Waters. Thank you very much, Ms. Fraser.
Mr. Moynihan, you are now recognized for 5 minutes to
present your oral testimony.
TESTIMONY OF BRIAN MOYNIHAN, CHAIRMAN AND CEO, BANK OF AMERICA
Mr. Moynihan. Thank you, Chairwoman Waters, Ranking Member
McHenry, and distinguished members of the committee. Good
morning to all of you.
It is an honor to be here to represent my 210,000-plus
teammates at Bank of America and to talk to you about how we
deliver responsible growth. This is how we run our company, and
it is the same thing I told you last year and the year before,
and every time we have done these hearings: We deliver for our
clients, for our teammates, for our communities, and for our
shareholders. We believe in delivering both profits and
purpose.
That includes being a great place to work, which is a core
tenet of responsible growth. We invest heavily in our teammates
and their families. This year, we raised our U.S. minimum
hourly wage to $22, and are on track to increasing it to $25 by
2025.
We also made an across-the-board pay adjustment for all of
our U.S. employees mid-year, in the late spring, who earn under
$100,000, to increase their wages by 3 to 7 percent based on
years of service. This is above and beyond any B of A pay
review cycle.
For the fifth time this year, we delivered special
compensation awards to our teammates, this year $1 billion over
and above other compensation, to 97 percent of our employees.
We again did not raise medical premiums for teammates who earn
under $50,000, the 12th year in a row we have done that.
Our global workforce is 50 percent women, and 49 percent of
our U.S. teammates are people of color. Our management team is
55 percent diverse, including 32 percent women. Our board is 53
percent diverse, including 33 percent women.
We also continue to help our clients manage their financial
lives. Over the past year alone, our lending to individuals and
families grew by 9 percent and our loans to small businesses
grew by 8 percent. We are the top small-business lender, with
$22 billion in outstanding small business loans today.
Our brand in customer scores are in the best sustained
shape we have ever seen. We support our clients with a trillion
dollars in loans to help them with their financial lives. We
hold $1.9 trillion of their deposits to help them also. Ninety-
five percent of our Paycheck Protection Program (PPP) loans
have been paid off or forgiven. We continue to expand our
nationwide network of financial centers and our industry-
leading and award-winning digital capabilities.
Through both, we deliver transparent, easy-to-use products
and services to help our clients save, spend, and borrow. As an
example, beginning in 2009, we began to take steps to empower
our clients to reduce overdraft usage. We first eliminated
overdraft fees for clients when using debit cards at point of
sale and have not allowed opt-in for a dozen years.
We also have created no-overdraft-fee accounts, now over 4
million in our client base. We have since eliminated fees for
nonsufficient funds in our consumer deposit accounts. We have
reduced overdraft fees from $35 to $10 per occurrence. And we
removed the ability to overdraft at an ATM. You can see that in
the second quarter call reports which show that our
nonsufficient funds and overdraft fees are down 66 percent from
last year's second quarter.
Now, responsible growth also shows how we make an impact in
communities where we live and work. In 2021, we continued our
long record with $375 million in charitable giving. Our
teammates reported 1.6 million volunteer hours during the year.
We also continue to be a lender and to support our small
businesses and entrepreneurs in our communities. We provide
more than $2 billion to CDFIs to finance affordable housing,
community facilities, and small businesses. We have invested in
the common equity of dozens of minority depository institutions
and have $100 million-plus in deposits with those institutions.
We have also committed, in a unique program, $350 million
to over 100 private equity funds that are run by women and
minority entrepreneurs as private equity partners and invest in
companies with like owners.
Responsible growth requires us to work with clients of
every size and every sector to support a just transition to a
sustainable future and energy security for the United States
and around the world. We believe that capitalism remains the
best way to tackle the big challenges facing society.
We all face a transition to a secure energy environment.
The private sector has the funding, the scale, and the long-
term thinking to help with the toughest issues, including
those.
In 2021, we had $250 billion in loans and other support to
clients in the area of sustainable finance. This includes more
than $150 billion focused on a clean energy transition.
We work with all companies in the energy sectors, oil and
gas clients, who are also investing to help drive clean energy
solutions.
Responsible growth also means delivering for our
shareholders. We deliver strong profitability and returned
billions of dollars to shareholders in dividends and stock
repurchases. But our balance sheet, capital, and liquidity are
the strongest in our company's history.
This is responsible growth. This is capitalism in action.
Thank you, and we look forward to your questions.
[The prepared statement of Mr. Moynihan can be found on
page 166 of the appendix.]
Chairwoman Waters. Thank you, Mr. Moynihan.
Mr. Rogers, you are now recognized for 5 minutes to present
your oral testimony.
TESTIMONY OF WILLIAM H. ROGERS, JR., CHAIRMAN AND CEO, TRUIST
FINANCIAL CORPORATION
Mr. Rogers. Chairwoman Waters, Ranking Member McHenry, and
members of the committee, good morning. I am Bill Rogers, the
chairman and CEO of Truist. I am extremely proud to be here on
behalf of Truist's 50,000 purpose-driven teammates. Thank you
for this opportunity to testify today.
Truist is a purpose-driven company, and that purpose is to
inspire and build better lives and communities. This drives our
mission for our teammates, our clients, and the many
communities and stakeholders that we serve.
For teammates, our mission is to create an inclusive and
energizing environment that empowers teammates to learn, grow,
and have meaningful careers. Truist's minimum starting pay of
$22-per-hour is among the highest in the industry.
Our career development programs provide a pathway to
professional growth. They include offerings at the Truist
Leadership Institute, as well as tuition reimbursement for
education that supports career advancement. We have also
accelerated career development for Truist leaders from diverse
backgrounds, which has helped us meet our goal of 15 percent
diverse representation in leadership roles a year ahead of our
original target date.
To help ensure our teammates' financial security extends
into retirement, we offer eligible teammates both a defined
benefit pension plan and a 401(k) match at perhaps the highest
level in the industry.
For our clients, our mission is to provide distinctive,
secure, and successful client experiences through our
technology-plus-touch-equals-strategy. We recently launched
Truist One Banking, which includes two new deposit accounts
with no overdraft fees, as well as other features to accelerate
our clients' journey towards financial well-being.
Today, 87 percent of our client interactions occur
digitally. We are evolving our products and services to help
ensure we continue to offer a best-in-class client experience
that is intuitive, efficient, and secure.
Client security is a Truist priority, and my written
testimony outlines actions we are taking to protect our
clients. We welcome opportunities to work more closely with law
enforcement and policymakers at every level to help protect our
banking system from organized and sophisticated criminal
attacks.
Even when most client interactions occur digitally,
exceptional client service often requires the personal touch
that our Truist teammates provide. Personal touch made the
difference for many of our clients navigating the PPP process.
At the outset of the pandemic, and in the middle of our merger,
thousands of our teammates worked directly with their business
clients to meet their fast-changing financial needs.
I am extremely proud and appreciative of the client letters
we received thanking our teammates for their help in securing
PPP loans that kept small businesses open and employees
employed.
For the many other stakeholders we serve, our mission is to
optimize long-term value through safe, sound, and ethical
practices. Truist is a Main Street bank, and teammates serve
our clients at more than 2,000 branches in 17 States and
Washington, D.C. We are committed to being a good neighbor and
contributing back to the communities where we do business.
In 2019, we committed to a $60-billion community benefits
plan, which included mortgage lending for low- and middle-
income borrowers, commitments to small businesses and community
development lenders, community development grants, as well as
the establishment of 15 new branches in low- and moderate-
income (LMI) communities.
I am pleased to report that through August of 2022, we
estimate that our combined lending, investing, and
philanthropic financing activities already exceeded the $60-
billion mark, and that we will open 16 new branches in LMI or
majority-minority communities by the end of this year.
In addition, Truist has been a strong supporter of MDIs and
CDFIs.
In 2022, a $40-million Truist donation helped establish
CornerSquare, a new nonprofit that provides capital to
racially- and ethnically-diverse small-business owners.
In 2021, Truist committed $50 million to serve as an anchor
investor, along with Microsoft, on FDIC's mission-driven
Institution Investment Fund.
And in June, Truist committed an additional $120 million to
strengthen and support small businesses, with a focus on Black,
Latine, and women-owned businesses.
I am inspired by the opportunity to lead this purpose-
driven company and to serve our clients and our teammates and
our communities.
Thank you for this opportunity to share our purpose journey
with you, and I look forward to your questions today.
[The prepared statement of Mr. Rogers can be found on page
191 of the appendix.]
Chairwoman Waters. Thank you, Mr. Rogers.
And Mr. Scharf, you are now recognized for 5 minutes to
present your oral testimony.
TESTIMONY OF CHARLES W. SCHARF, PRESIDENT AND CEO, WELLS FARGO
AND COMPANY
Mr. Scharf. Chairwoman Waters, Ranking Member McHenry, and
members of the committee, good morning, and thank you for the
opportunity to be here today.
Since October of 2019, I have had the privilege of leading
Wells Fargo. As I reflect on my time at the company, I am
incredibly proud of how we have used our strength during
difficult times to support our customers, employees, and the
communities we serve while we have worked to transform the
company at the same time.
I believe that our nation benefits from a strong Wells
Fargo, and that has never been more true than today.
The last time I appeared before this committee the country
was in the middle of a pandemic, and my testimony and many of
your questions were focused on what banks were doing to support
the communities in which we operate. Those were important
questions then, and they are equally important today given the
complexity of today's high inflationary environment.
Since 2020, Wells has provided billions of dollars in
emergency lending to America's small businesses, and we have
donated approximately $420 million in fees from that lending to
small business owners who struggled during the pandemic through
our Open for Business Fund. These funds are estimated to have
reached more than 150,000 business owners nationally and have
preserved approximately 250,000 jobs.
Last year alone, we helped more than half-a-million
homeowners with new, low-rate loans to purchase a home or
refinance an existing mortgage, and we closed billions of
dollars in new commitments in affordable housing.
Between 2017 and 2021, we increased average wages for our
U.S. hourly employees by nearly 25 percent, and increased
investments in our U.S. employee benefits by over 20 percent.
And we launched a unique Special Purpose Credit Program,
committing $150 million to help eligible Black homeowners lower
their interest rates and reduce their monthly payments.
In addition, we issued a second sustainability bond in the
amount of $2 billion that will finance projects and programs
supporting housing affordability, economic opportunity,
renewable energy, and clean transportation.
Our work is bolstered by our Banking Inclusion Initiative,
a 10-year program to help unbanked individuals gain access to
affordable, mainstream, digitally-enabled accounts.
Although our work is not complete, Wells Fargo approaches
issues differently and is a better company than when I arrived.
We have driven a tremendous amount of change and established a
much stronger foundation for the long term, with a clear sense
of urgency on building our risk and control infrastructure.
We have changed our operating structure, simplified our
business, and have a new leadership team in place with the
necessary skills and experience to transform Wells Fargo.
Almost 70 percent of our company's Operating Committee is
new to the company since I joined. Additionally, well over half
of the senior-most people, meaning those who are one level
below the Operating Committee, are new to their roles. We have
also meaningfully improved diversity in our senior ranks.
Additionally, last week we announced that we will
commission an external third-party racial equity audit. The
assessment will focus on elements of Wells Fargo's efforts to
serve diverse communities and promote a diverse workforce.
Commissioning this work is a critical next step in reinforcing
our commitment to racial equity and helping close the wealth
gap in this country.
Looking forward, I recognize that the country may be facing
uncertain economic times for months to come. I can assure you
that Wells Fargo Bank is keeping a close eye on consumer
spending and credit trends, and we will continue to be a
constructive partner in forging an inclusive recovery.
We recognize that COVID-19 has left many people still in
need and the current inflationary environment has added stress.
As a company, we will continue to provide support to our
customers, employees, and communities over the long term.
In conclusion, I want to express my sincere gratitude to
everyone at Wells Fargo who has continued to serve our
customers, each other, and our communities through these
challenging times. I appreciate their dedication and resiliency
as we have worked to make Wells Fargo better.
While we still have much more to do, our foundation is
stronger, our business is more focused, we are driving cultural
changes, and the changes we have made to the company are having
a positive impact. I am confident that we have the management
team in place to complete the work ahead.
Thank you. I welcome your questions.
[The prepared statement of Mr. Scharf can be found on page
226 of the appendix.]
Chairwoman Waters. Thank you very much, Mr. Scharf.
I now recognize myself for 5 minutes for questions.
Mr. Scharf, I recognize that you have only been the CEO for
a little less than 3 years, and I remember the commitments that
you have made, and I am listening to what you consider has been
your progress since you have been there. Your commitment was to
clean up the culture of corruption that existed in Wells Fargo.
Since you last testified, the Office of the Comptroller of
the Currency (OCC) fined your bank $250 million for violating a
previous consent order regarding risk management and for
engaging in unsafe and unsound practices related to serious
deficiencies in your home lending loss mitigation program.
In May 2022, The New York Times reported that current and
former employees of Wells Fargo described hiring practices that
led to fake job interviews so that internal diversity goals
could be achieved.
A 2021 report by the Committee for Better Banks found that
Wells Fargo failed to sufficiently disclose employment
diversity data, making it impossible to examine advancement
opportunities for workers of color.
One Wells Fargo employee, who is a call center worker in
San Antonio, Texas, responded to the last report, saying, ``It
is extremely deflating to be a person of color at Wells Fargo.
In the past couple of years, I have watched a handful of Black
managers at Wells Fargo get fired or leave.''
Mr. Scharf, I know the bank has made various commitments to
address the racial wealth gap, and you have finally agreed to
do a racial equity audit.
I also appreciate that Wells Fargo is one of the few banks
that has maintained a presence in the Caribbean as a
correspondent bank, while, of course, we had Citi who responded
to us when we were in Barbados that they had closed their
correspondent banking operations. So, I do appreciate it. But
it is not at all clear that you are doing enough to finally
break the pattern of repeat offenses.
To take another example, a Bloomberg investigation found
that Wells Fargo approved fewer than half of Black homeowners
who applied for mortgage refinancing in 2020, the worst Black
approval rate compared to other major lenders.
I know you will point to things like FICO scores, and
requirements of the Government-Sponsored Enterprises (GSEs),
but this doesn't fully explain why your bank was comparatively
worse in this market compared to other major lenders.
When you look at this track record, and when you hear
feedback like that from your own employees, what is your
assessment of your performance since you last testified before
us? You gave us some indication, but would you respond to the
fines and the criticisms at this point?
Mr. Scharf. Madam Chairwoman, first of all, thank you for
the opportunity to address those things.
I was brought in to bring about substantial change at Wells
Fargo, and we have made tremendous changes.
I have also been very clear since the day I arrived,
including when I testified in front of this committee in March
of 2020, that it was going to take multiple years to make all
of the changes that were necessary so that the company was run
in a way that I would be proud of, our regulators would be
proud of, and you would be proud of.
We have closed four consent orders since I have been there.
We have returned our CRA rating to, ``Outstanding.'' We have
plans in place for all of the remediation work that has to take
place. And I firmly believe that we are making progress across
that body of work.
And as I said in my remarks, I am very confident that we
have the team in place, but that we also have the processes,
the discipline, and the sense of urgency to get done what is
needed.
Chairwoman Waters. If I may interrupt you, will you respond
to the accusation of fake interviews? What does that mean to
you? And I think you have heard this criticism.
Mr. Scharf. Nobody should go through an interview without
the belief that they could have a reasonable shot at getting
that job. We firmly believe that having a policy in place that
requires diverse candidates helps us attract the best
candidate. We believe that with the policies we put in place,
that is happening, and that is the reason why our diverse
hiring is up substantially since we put these policies in
place.
And to the extent that anyone feels as if they have not
been treated properly, that is something that is on our
management team to ensure doesn't happen.
Chairwoman Waters. Is it true that you interviewed an
African-American employee for a position after you had already
hired a White employee? Is that true?
Mr. Scharf. We are in the middle of continuing an
investigation to make sure that we understand every instance
where people felt as if they were not treated fairly, and if we
have findings, we will take appropriate action.
Chairwoman Waters. Thank you very much.
At this point in time, I will call on the gentleman from
North Carolina, Mr. McHenry, who is the ranking member of the
committee.
You are now recognized for 5 minutes, Mr. McHenry.
Mr. McHenry. Thank you for your testimony.
Let's talk about the main thing. The main thing here is the
economy, the state of the economy. We see a changing rate
environment that has a severe impact on financial institutions
and families. We see it first for the housing market, with 7
months of receding home sales, in a time where we need more
housing units in America. We see inflation eroding families'
budgets on a weekly, and monthly basis, made worse by policies
out of Washington.
Let's talk about inflation. I want to know the impact, as
you see it.
Ms. Fraser, you have a global footprint. You are in
jurisdictions that have rampant, persistent inflation, where
there is huge pressure placed on consumers and businesses in
that environment. What are the economic consequences and
challenges of a high-inflation environment?
Ms. Fraser. Thank you very much for the question,
Congressman.
We are very concerned about the high prices that consumers
are facing in America and indeed around the world. We certainly
have lived through very unusual times, through the pandemic,
through the recovery from that, and thenz, the impact was
greatly exacerbated by the war in Ukraine.
The impact of the higher rates that are required to try and
tame the inflation is likely to be moderating growth in America
and around the world and will be putting pressure on many of
the drivers of the recovery that we have been looking for.
Mr. McHenry. You have this backdrop of the economy, and all
of you are making decisions for your institutions.
In our economic system in America, banks are a key piece of
our economic system, and the multiplier effect that you all
provide and the lending and the risk that you take in our
economy.
Let's talk about regulatory capital and what that would do.
Truist. In the regional banks are--we have heard from
Federal bank regulators about additional long-term debt
requirements potentially placed on institutions like yours.
Mr. Rogers, what effect would that new layer of capital
requirement have on an institution like yours and your
customers?
Mr. Rogers. Ranking Member McHenry, thank you for that
question.
First and foremost, we think that regulation ought to be
tailored and follow the risk of individual institutions, and I
think that is consistent with the philosophy that we all
support.
Additional capital at a higher cost caused us to actually
potentially impair lending or slow down our lending. It may
cause us to do other things from a competitive standpoint to
cover the costs of additional capital.
Mr. McHenry. Is that what U.S. Bank thinks, Mr. Cecere?
Mr. Cecere. Thank you.
We continue to have a very simple business model, and
although we are larger than we were a few years ago, the
businesses that we are in are substantially the same. Our
capital levels since 2007 are actually 3 times what they were
at that time. So, we believe we have a very strong capital
rating, which is reflected in our high debt rating. Additional
capital will increase the cost of debt.
Mr. McHenry. Mr. Dimon, you spoke yesterday about
additional requirements for regulatory capital and liquidity
standards and the impact it would have on the marketplace. Will
you speak to that?
Mr. Dimon. Yes, sir.
To give credit where credit is due, Dodd-Frank accomplished
a lot of what needed to be accomplished. Lehman Brothers would
not happen again. I think the regulators should take a victory
lap for that.
Having said that, as often happens, things went a little
bit too far. It is not just capital; liquidity requirements,
international requirements, Basel requirements, et cetera, do
restrict lending, raise the cost of lending, damage markets a
little bit, and reduce mortgage lending on the part of some of
our banks.
We want good regulations. But I think we need to spend a
little more time recalibrating the effect of these regulations
across the whole financial system.
Mr. McHenry. So, there is a cost to this, and there is an
economic cost, and it changes behavior at the institution,
which means you don't lend as aggressively on the margins?
Mr. Dimon. Yes. And unfortunately, some of that is going to
happen when things get worse. So, JPMorgan will be sitting with
a trillion dollars, unable to deploy it to help our clients to
meet intermediate markets at precisely the wrong time.
You all saw Treasury markets, and other markets get very
rattled in March 2020, going back to 2019, and part of the
reason was the inability of very well-capitalized, very liquid
banks to do what they really should be doing.
Mr. McHenry. Which means you can't provide liquidity in the
system at end of quarter, end of year, and so we are going to
have choppier markets as a result of regulatory policies that
impair your ability to make markets.
Is that how you see it, Mr. Moynihan, with Bank of America?
Mr. Moynihan. There is no question that increasing capital
for us 1 percent makes us not be able to lend $160 billion of
loans into the economy. It is that straightforward. It is a
simple calculation.
Mr. McHenry. So, there is an economic cost to regulatory
capital requirements that is beyond economic historic needs for
your institutions.
Thank you for your testimony.
Chairwoman Waters. Thank you very much.
The gentlewoman from New York, Mrs. Maloney, who is also
the Chair of the House Committee on Oversight and Reform, is
now recognized for 5 minutes.
Mrs. Maloney. Thank you so much, Chairwoman Waters, for
calling this important hearing.
And to our panelists, I thank all of you for your comments,
particularly those who talked about wanting to reduce the
overdraft fees that drain billions of dollars from America's
poor and working-class communities every year.
The Consumer Financial Protection Bureau (CFPB) has found
that overdraft fees cost our consumers over $15 billion in 2019
alone, and these fees disproportionately target and penalize
low-income consumers. They found that almost 80 percent of
overdraft and nonsufficient fund fees are borne by only 9
percent of consumers, and they are all financially vulnerable.
While I am glad to see some banks have taken some
initiative by eliminating or moving in that direction, it is
concerning to me that it has taken this long and that many
banks still have yet to make any voluntary changes.
And with banks enacting different policies, consumers are
left with little consistency. They are very confused by these
different policies.
We must ensure that we have a comprehensive permanent
solution and act to protect consumers, and that is why I have
introduced the Overdraft Protection Act, which has been
reported out of the committee. It builds on the Credit Card
Bill of Rights which passed in 2009 and, according to the CFPB,
has saved consumers over $16 billion a year by just keeping
fees in their pockets, in the consumers' pockets.
I want to ask Bank of America and Citibank, because in your
testimony you talked about your actions to eliminate fees, can
you elaborate on what product offerings you have changed to
reduce or eliminate the overdraft fees? And can you speak to
how your consumer banking division has remained profitable in
light of all of these changes?
First, Mr. Moynihan, and then, Ms. Fraser.
Mr. Moynihan. I think you heard many of my colleagues talk
about this, and this is a product in the industry. The first is
a no-overdraft product, especially for students and younger
people. We have formulated those, and I think if you total it
up, across-the-board, that product allows people to have no
overdraft capacity.
Then, you have the other products for people to opt into.
And what we've done is reduced our overdraft per-occurrence fee
from $35 to $10. We've reduced the no-ability-to-have-the-NSF-
type-fees, the numbers of occurrences.
All of that totals up that we're down 60 percent second
quarter, last year's second quarter. This year, it'll fall
further because a lot of those changes took place. And we
recently announced that it's down 90 percent.
But we're able to do that because of the scale and
capabilities of our team in consumer banking. And these larger
banks--a variety of banks participate in our system; there's a
variety of business models. But one of the things that will be
consistent is the scale we've been able to achieve. And our
company and these companies at this table have allowed us to
pass through those benefits to the consumers and still remain
profitable.
Mrs. Maloney. Thank you.
Ms. Fraser?
Ms. Fraser. Thank you very much, Representative. It's
lovely to see you.
At Citi, we are proud to have eliminated overdraft fees and
NSF. This was the right decision for our bank and is reflective
of a multiyear commitment to having a customer-friendly
approach to fees.
Similar to my colleague, Mr. Moynihan, we also have a
product, called the Access product. It accounts for almost 20
percent of all of our accounts. In addition to the no-
overdraft, it also is a very low-cost, customer-friendly
account that has grown substantially over the last few years
and played a very important role during the pandemic for those
who were most affected. It's something that we're committed to
continuing to grow.
Thank you.
Mrs. Maloney. Are there any other banks that can commit to
eliminating overdraft fees altogether by 2025? Anyone else on
the panel who can follow the leadership of these two banks?
Then, I'd like to move to the interest rates that are
rising and causing problems or challenges with the housing
market and making it harder for first-time homebuyers to be
able to take out mortgages.
Again, I'd like to ask both Bank of America and Citibank
what you have done. Do you have any programs or ideas of how we
can help facilitate homeownership, even with the challenges of
increased interest rates? Would moving the 30-year mortgage to
sort of a 50-year mortgage to lower the interest-rate payments
per month--would that help?
I welcome any ideas that you may have. And after them,
anyone else's ideas are also welcome. First Mr. Moynihan, then
Ms. Fraser.
Mr. Moynihan. I think we have programs that provide down
payment assistance and grants for that if you get HUD
counseling. We have programs to develop housing in our
community development program. We do $6 billion a year in low-
income housing development and other types of housing
development.
It's a multifaceted thing, but I think at the end of the
day, the amount of adjustment will go on as rates adjust, as
intended, to attack the inflation, and it will take a period of
time for that to sort through.
Chairwoman Waters. Thank you.
The gentlewoman's time has expired.
Mrs. Maloney. Thank you. I yield back.
Chairwoman Waters. The gentlewoman from Missouri, Mrs.
Wagner, is now recognized for 5 minutes.
Mrs. Wagner. Thank you, Madam Chairwoman.
I'd first like to note that this is our third time hearing
from these witnesses, the second time this Congress, and the
Majority is likely to make the same assertions that they did
last time to name-and-shame just to try and score political
points.
Meanwhile, we have an SEC Chair moving at breakneck speed
to propose an historic number of rules--more than the SEC
proposed even after the 2008 financial crisis. Yet, this
committee refuses--refuses--to conduct any oversight. Why is
the Majority unable or unwilling to bring in SEC Chair Gensler?
The Senate Banking Committee didn't seem to have a problem
getting him to testify.
Inflation has outpaced workers' wages for 17 months in a
row under President Biden's watch, and America's workforce is
paying the price. The majority of U.S. workers' income has
fallen behind rising costs. Everyday items, across-the-board,
keep rising in price. The cost of eggs is up 40 percent;
chicken, 25 percent; bread, 16 percent.
Instead of addressing this 40-year-high inflation crisis,
President Biden and the House Democrats spent last week
celebrating their reckless spending and failed agenda, which
ironically coincided with the stock market crashing and erasing
retirement savings for millions of hardworking Americans.
The very same day, the Consumer Price Index numbers jumped
to 8.3 percent over last year, and the White House celebrated
with James Taylor singing, ``Fire and Rain.'' Let me tell you
what, the only fire that's raining down on my constituents in
Missouri's Second Congressional District is the cost of putting
food on their table, putting gas in their tanks, and paying
their utilities. One in every six Americans, over 20 million of
them, are in arrears on their utility bills, and we haven't
even hit winter yet.
Why aren't we having hearings to address the drivers of
inflation: the effect that the $5 trillion in Democrat
government spending over the last year-and-a-half has had; the
lack of our energy independence; or perhaps the overregulatory
burden of President Biden's administrative state that,
honestly, adversely affects small community banks even more
harshly than those before us today?
The recent Consumer Price Index numbers show that inflation
is not going away any time in the near future. Everything costs
more now. And low- to middle-income Americans are hurt the
most.
Mr. Cecere, and Ms. Fraser, in your opinion--I know that
the ranking member touched on some of the implications of
sustained inflation, particularly on consumers' credit and the
economy. But in terms of the level of savings and credit card
debt, what are you seeing on the ground, from your customers,
your clients?
Mr. Cecere?
Mr. Cecere. Thank you, Representative. You are correct that
inflation is impacting those who can afford it the least.
While consumers' spend levels in total are about 10 percent
above last year, the things that people are spending money on
have changed substantially from discretionary to
nondiscretionary items like food and gas, as you mentioned.
And I think it's appropriate that we're very focused on
inflation, because, again, it is most harmful for those who can
afford it the least.
Mrs. Wagner. And are you seeing, in fact, credit card debt
go up and savings go down?
Mr. Cecere. Savings levels continue to be above pre-
pandemic levels across all stratas of deposit levels, from 2 to
4 times. However, they're stabilized, where for 18 months they
were growing each and every month, and they've stabilized in
the last 3 months.
Credit card spend rates continue to be high, and payment
rates are actually starting to normalize, but are still well
above pre-pandemic levels.
Mrs. Wagner. Thank you.
Ms. Fraser, please?
Ms. Fraser. Thank you very much.
I would say that it's early days still, in terms of seeing
the impact of high interest rates on the consumer in the
States. Fortunately, they entered this period with pretty
strong balance sheets, but we would anticipate that if interest
rates remain high in order to tame inflation, we will see
greater stress, particularly in lower FICO scores, in credit,
and that we will also see the savings rates coming down further
than we have done.
I think we're fortunate to have had the consumer in good
health entering into this, but we do expect we're going to be
in for tougher times ahead.
Mrs. Wagner. Thank you. I've run out of time.
And I yield back.
Chairwoman Waters. Thank you very much.
The gentleman from California, Mr. Sherman, who is also the
Chair of our Subcommittee on Investor Protection,
Entrepreneurship, and Capital Markets, is now recognized for 5
minutes. He's also an accountant who understands that inflation
is a worldwide phenomenon.
Mr. Sherman. Thank you.
For the 2\1/2\ decades I've been on this committee, we've
brought the SEC forward to push them because they weren't
writing the regulations that the law required them to write.
And I want to commend the SEC for beginning to deal with that
backlog. I don't criticize them for working too hard.
The Inflation Reduction Act reduced the Federal deficit by
$300 billion, partially ameliorating the inflationary effect of
the Trump tax cut, which added $2 trillion to our deficit by
cutting taxes for the wealthy and large corporations. And, of
course, the Inflation Reduction Act provides tax cuts designed
to reduce global warming.
I have a lot of questions. We have a lot of witnesses, so
my questions are designed to be yes-or-no questions.
ESG investing is for those who want to contribute to
society and to any improvement of the environment, which is
kind of the exact opposite of giving money to Vladimir Putin.
Mr. Dimon, back in March, Politico reported that you were
going to mull over the possibility of removing Russia from your
ESG fund suite. Has JPMorgan removed Russia from its ESG fund
suite?
Mr. Dimon. Probably.
Mr. Sherman. Can you get back to us with a definitive
answer on that, Mr. Dimon?
Mr. Dimon. I would be happy to do that.
Mr. Sherman. We clearly have sanctions on Russia and
Belarus. There is a loophole in those sanctions that we don't
have in Iran or North Korea sanctions, which is that the
subsidiaries of U.S. corporations are not legally-bound. My
hope is that the institutions here wouldn't be exploiting that
loophole.
This House of Representatives in May passed my bill, the
Russia and Belarus Financial Sanctions Act, which would block
that loophole. Unfortunately, the Senate remains somewhat
dysfunctional.
The question is, are you going to exploit that loophole?
But I'll be more specific.
Mr. Dimon, has JPMorgan cut its ties with Gazprom and
Vitol?
Mr. Dimon. First of all, I wouldn't call those loopholes.
The American Government, the Secretary of the Treasury--
Mr. Sherman. Wait, wait, wait. Please don't respond--I
didn't ask you to respond to my editorialization. Just a
specific question: Have you cut the ties to Gazprom and Vitol?
Mr. Dimon. We are following the instructions of the
American Government, as they asked us to do it, and I think
they're doing a great job.
Mr. Sherman. Mr. Dimon, it's a yes-or-no question. You have
not cut your ties to Gazprom and Vitol.
Do you continue to own a major stake in the Russian bank,
Sberbank?
Mr. Dimon. No, we do not own a stake in Sberbank. I think
that's in a--
Mr. Sherman. Thank you.
Mr. Dimon. --somewhere.
Mr. Sherman. But I--
Mr. Dimon. And we've materially cut out some of the
relationships with--
Mr. Sherman. --I would hope you would cut all your ties to
Gazprom and Vitol.
Let me go on to Citigroup. Have you cut your ties with
Lukoil and Vitol?
Mr. Dimon. Can I just add one other thing?
Mr. Sherman. Not on my time, you can't.
Mr. Dimon. No one is doing--
Mr. Sherman. Reclaiming my time--
Mr. Dimon. No one--
Mr. Sherman. --Mr. Dimon.
Chairwoman Waters. The time belongs to the gentleman from
California.
Mr. Sherman. You can do a press conference afterwards and
comment as you like. Not on my time.
Ms. Fraser, has Citigroup cut its ties to Lukoil and Vitol?
Ms. Fraser. Similar to Mr. Dimon, we have been working down
our exposures in Russia and--
Mr. Sherman. So, you have not cut your ties yet.
Let's move on.
A number of the banks here have said that you're going to
cut investment in new coal-fired electric plants. The question,
though, is, are you going to finance crypto mining, which
creates electricity that is then wasted on something that
doesn't keep anybody's lights on, and doesn't cook anybody's
food?
Ms. Fraser, are you going to be financing crypto mining?
Ms. Fraser. I do not believe so.
Mr. Sherman. Mr. Moynihan?
Mr. Moynihan. We do not have any.
Mr. Sherman. Mr. Scharf?
Mr. Scharf. I'm not aware of any financing like that.
Mr. Sherman. Okay.
Finally, a capital markets question.
We have limits on margin lending designed to protect the
lender--and, in this case, the lender is you, and you're
systemically important to us. It's designed to protect the
investor, but, most importantly, it's designed to protect the
capital markets. That's why on equity investments we only allow
a one-to-one margin.
But the total default swap is a loophole that allowed
Archegos to get a nine-to-one margin. Can you commit now to
follow the rule that we provide only a one-to-one margin? Or do
you want to use loopholes to provide the nine-to-one margin?
I might add that, with Archegos, the lenders lost well over
$5 billion.
Mr. Cecere?
Mr. Cecere. We have no relationship with that firm and do
not have--
Mr. Sherman. Do you use credit default--these swaps to
avoid the margin limit requirements?
Mr. Cecere. Not that I'm aware of, sir.
Mr. Sherman. I believe my time has expired.
Chairwoman Waters. Thank you very much.
The gentleman from Michigan, Mr. Huizenga, is now
recognized for 5 minutes.
Mr. Huizenga. Sorry, Madam Chairwoman. It was my
understanding that my colleague, Mr. Posey, was going to be
next? He's on the screen. Just clarifying before we get going
on the time.
Chairwoman Waters. The gentleman has 5 minutes.
Mr. Huizenga. But my colleague who is onscreen was supposed
to be next in line and is ready. He's in between--
Chairwoman Waters. The gentleman from Florida, Mr. Posey,
is now recognized for 5 minutes.
Mr. Posey. Thank you, Madam Chairwoman.
Mr. Dimon, in late May, you told stakeholders to, ``brace
yourselves,'' for an economic hurricane. What's your current
outlook along those lines?
Mr. Dimon. Sir, I think you've heard that the American
consumer is still actually in rather good shape. They're
spending money, 10 percent more than in the prior year. They
have a good balance sheet. Their debt balances are low. Their
confidence level is going up. Jobs are plentiful. I think it's
a good thing that wages have gone up for the lower end. That's
all the good news.
That's being met by other forces which we don't know the
full effect of: war in Ukraine; oil prices going up; interest
rates going up; inflation. And the worst possible outcome is
stagflation. Those things will absolutely cause a slowdown and,
at some point, increase unemployment. And we don't know the
full outcome.
Mr. Posey. In your opinion, what is the most urgent
regulatory reform that this committee could make in terms of
improving our nation's economic and financial well-being?
Mr. Dimon. I think when you're looking at something like
inflation, there are really three things to do. Rates will have
to go up. That will reduce demand. I think spending less money
reduces demand. And we should also focus on the supply side.
And there is evidence in certain areas--mortgages, small-
business regulation, some capital regulation--that regulations
could actually reduce the burden on businesses and get people
to hire more employees and produce more products and services.
Mr. Posey. What role did monetary and fiscal policy,
especially the Fed's financing of congressional deficit
spending, play in our spiraling inflation, particularly in food
and shelter prices and other components of the Core CPI?
Mr. Dimon. To give credit where credit is due, I think the
government did the right thing early on in the crisis by taking
dramatic action to reduce the pain of the pandemic. Remember,
unemployment went from 4 percent to 15 percent in 3 or 4
months.
But since then, in total, fiscal spending has been $6
trillion, 30 percent of the GDP, which is bigger than any time
in history other than World War II. And QE probably went on for
too long, another $3 or $4 trillion, and we are paying the
price of too much fiscal monetary stimulus.
I don't want to second-guess all of the people doing that.
That might have been predictable at the time. They're taking
the right action to reverse it. But I don't think you could
spend $6 trillion and not expect inflation.
And I don't like to cry over spilled milk. Let's do the
things we have to do to fix all that and then move forward, and
grow the economy, which is the best way to reduce inflation and
help all of our citizens.
Mr. Posey. How likely do you believe it is that the Fed
will achieve a so-called, ``soft landing''--reducing inflation
without an unacceptable decline in economic activity?
Mr. Dimon. I do not like to make forecasts. I don't think
I've ever seen anyone forecast the future properly. I look at
probabilities. I think there's a chance, not a big chance, a
small chance, of a soft landing. There's a chance of a mild
recession, a chance of a harder recession.
Because of the war in Ukraine and the uncertainty that it
causes in the global energy supply and food supply, there's a
chance it could be worse. And I think policymakers should be
prepared for the worst, so that we take the right actions, if
and when that happens.
Mr. Posey. Are ESG ratings useful in terms of supplying
investors with enough information to make intelligent tradeoff
decisions among economic rates of return and environmental,
social, and government (ESG) objectives? Or are they merely a
rating of past ESG performance?
Mr. Dimon. I think we need more work to make it clearer
what these ratings are and what they mean.
Mr. Posey. What do you think our nation's near-term energy
strategy should be in terms of traditional energy sources like
oil and gas?
Mr. Dimon. We aren't getting this one right. The world
needs 100 million barrels, effectively, of oil and gas every
day, and it'll be needed for 10 years. To do that, we need
proper investing in the oil and gas complex. Investing in the
oil and gas complex is good for reducing CO2. Because what
we've all seen is that, because of the high-priced oil and gas,
particularly for the rest of the world, you've seen everyone
going back to coal, not just poor nations like India, China,
Indonesia, and Vietnam, but also wealthy nations like Germany,
France, and the Netherlands. CO2 is getting worse.
We need to have proper rules and regulations and government
policy to have an effective transition to reduce CO2, keeping
energy secure. We've all learned that energy supply globally is
not secure, is still precarious. The United States is self-
sufficient. We use and produce 10 million barrels of oil a day.
Many countries don't. And their sense of energy-insecurity is
enormous. It is quite dangerous for them. And you see that in
Germany and the war of Russia and Ukraine.
Mr. Posey. Thank you for that frank response.
My time has expired, and I yield back. Thank you, Madam
Chairwoman.
Chairwoman Waters. Thank you very much.
The gentleman from New York, Mr. Meeks, who is also the
Chair of the House Committee on Foreign Affairs, is now
recognized for 5 minutes.
Mr. Meeks. Thank you, Madam Chairwoman.
Let me address my first question to Mr. Dimon.
JPMorgan has committed to releasing a report on its racial
equity audit by the end of this year. And I think that's a
critical audit. I want to focus on two aspects of your racial
equity audit.
JPMorgan has noted on its website that workforce will be
included in the audit. But it simply states, ``build a more
equitable and representative workforce and hold executives
accountable.''
Can you please explain what that entails? Is JPMorgan
conducting this particular piece of the audit? And what are
your plans to ensure that people of color hired at entry-level
positions will be supported in achieving higher-ranking
positions and being able to move up the ladder?
Mr. Dimon. Yes. I'm extremely proud of our efforts in
diversity. And I think the racial equity, the $30-billion
commitment, that's what's being audited. That's $8 billion in
mortgages to minorities, $12 billion for affordable housing,
$500 million of small businesses, and a lot of education.
Twenty-five percent of the new branches are in LMI communities.
That's what the audit is for. There are other diversity
efforts, like hiring, training, and recruiting, which are not
part of the audit, which we do report on, so you will get to
see our progress in that.
Mr. Meeks. Also, will the audit examine JPMorgan's
partnerships with diverse-owned asset managers and firms to
build stronger portfolios? And do you have any specific goals
or accountability measures currently in place?
Mr. Dimon. There are, in the racial equity, the $30
billion, there are vendor efforts that are in that. There are
also vendor efforts outside of that. One is being audited; one
isn't. And we'd be happy to report on that too.
Mr. Meeks. I look forward to having both of those reports.
Mr. Dimon. Thank you.
Mr. Meeks. One other thing that's extremely important to
me--I wouldn't be here today--is that the greatest investment
that takes place by the average American, but especially the
largest for African Americans, is homeownership, which I
believe is extremely important.
Mr. Scharf, I'll just ask you this question. It has been
reported that Wells Fargo, along with other banks, is looking
to reduce its mortgage lending business, including in areas
like FHA lending.
Can you please explain the factors that Wells Fargo
considered in making this decision to shrink its mortgage
lending business? And how do you believe it will impact
communities of color and vulnerable communities, who are
already struggling to access affordable mortgage programs?
Mr. Scharf. Thank you, Congressman.
I think it's important to--first of all, we are committed
to the home lending business, and we're deeply committed to
doing our part to increase Black homeownership through our home
lending business.
But it's important to note that the mortgage market has
changed dramatically. And if you were to turn the clock back
probably 10 or 15 years, you would find most of the banks up
here as the largest mortgage lenders in the country. That's not
even close to true today. I believe we were the number-one
mortgage lender in the country, and we're now number six.
And it's not because we have purposely deemphasized the
business. Regulations are inconsistent between banks and
nonbanks, and cost structures are different. And the nonbanks
have taken an increasingly larger share of the market as we
have continued to try to focus on providing home lending
products both for our customers but in the communities that we
serve.
To the extent that our mortgage business does get smaller
from here, I can assure you, that we're going to do everything
that we can to ensure that we're continuing to lend to those
most in need, whether they are within communities of color or
those which are more racially- and ethnically-diverse. That's
something that we're going to track and we're very, very aware
of.
Mr. Meeks. And let me just emphasize how important, because
I am focused on closing the wealth gap. And the way you close
the wealth gap, starting out, is homeownership.
In our area, we talk about how in most markets, owning a
home is an appreciating asset, so you buy the house and rent
the car, because one is an appreciating asset and the other is
a depreciating asset.
So, making sure that opportunity continues in our
communities is extremely important. And to hear that the banks
are shrinking that is concerning to me. And that opens up to
where else you can get a mortgage on an equitable basis.
I'm almost out of time, but Mr. Moynihan, I was concerned
about climate change and the reporting of Scope 1 and Scope 2
emissions and, where material--I think that your comment letter
said that you would support Scope 1, Scope 2, and, where
material, Scope 3.
And I'm out of time, so I'm not going to get a chance to
get to it, but I would like to get an answer from you in
writing. Can you please explain what Bank of America's position
is with respect to materiality of Scope 3 emissions and what
the relevant safe harbors should include? Just do that in
writing. I would appreciate it.
Chairwoman Waters. The gentleman's time has expired.
Thank you.
The gentleman from Michigan, Mr. Huizenga, is now
recognized for 5 minutes.
Mr. Huizenga. Thank you, Madam Chairwoman.
And to our newbies, welcome.
To our frequent flyers--Mr. Scharf, Mr. Moynihan, Mr.
Dimon, and Ms. Fraser--welcome back. One more punch on the
punchcard and I think you get a free cup of coffee.
Interestingly enough, you've actually been here more than SEC
Chair Gary Gensler has.
I wish we would pay as much attention to the actual
regulators--the folks, by the way, whom we have a
constitutional duty to have oversight of--than those that the
regulators are supposed to regulate.
Mr. Dimon, and Ms. Fraser, I want to give you a very quick,
brief moment. Do you comply with U.S. and international
sanctions? I think that was what the implication was earlier
when you were interrupted. Very quickly.
Mr. Dimon. Absolutely.
Mr. Huizenga. Okay.
Ms. Fraser?
Ms. Fraser. Absolutely.
Mr. Huizenga. Okay. Those are U.S. and international
sanctions. Got it.
Last time, those of you who are returning Members and
returning players will remember that I asked everybody what the
one issue was that they thought was going to be the biggest
barrier.
Mr. Moynihan, you said the economy.
Ms. Fraser, you touched on cybersecurity.
Mr. Scharf, you hit on cyber as well.
Mr. Dimon, you talked about public policy. And I'd like to
give you a moment to clarify that. This is multifaceted, the
various elements to that. But if you could just lend a little
color to that, I'd appreciate it.
Mr. Dimon. It would be a pleasure.
Public policy--I think America, in the last 20 years, we've
grown 2 percent. It should have been 3 percent. We should
aspire to do more. That lack of growth has hurt, I think,
household income by $15,000 or $20,000. By the end of the 20
years, it would have lifted up all of our citizens, and it
would have paid for a lot of programs we want.
We don't strive for growth. If you look at why it wasn't 3
percent--which is why I was exploring public policy--it's our
bad infrastructure planning, it's our inner-city school
education, it's excess regulation, it's expensive healthcare.
We have the best healthcare in the world; we also have the most
expensive, and 50 million people are uninsured. It's excessive
litigation, which is 1 percent more than the rest of the world,
ans I can go on and on and on.
It's mortgages. You want to make mortgages more accessible
to minorities and lower mortgages? Reduce the burden of
regulation. It'll bring down the cost and make it more
accessible--
Mr. Huizenga. And then, reclaiming my time on that, as a
former, long-ago licensed REALTOR, and someone whose family is
still involved in housing and construction, please, for the
love of everything that is holy, do not offer a 50-year
mortgage. Okay. This will do nothing, absolutely nothing, to
build wealth or build equity. All you will be doing is having a
long-term rental, because you folks are going to be getting all
of the interest.
So, homeownership is the key, and I agree with my friend
from New York on this. But it is not just extending payments.
We have to get at the root cause of why housing is not
affordable.
Mr. Dimon, very quickly, you said in your testimony, ``Our
success and accomplishments are founded on our commitment to
our shareholders.''
Obviously, that seems to have been shifting. I would say
that the Securities and Exchange Commission and others, who
have done an about-face on shareholder proposals with new staff
guidance and those kind of things, seem to have a different
take.
I'm curious, how are you balancing--is there a shift in
this? And you have 15 seconds.
Mr. Dimon. We will still focus on building the best company
by serving shareholders, employees, and customers, and we'll
have to navigate whatever the new SEC rules may be.
Mr. Huizenga. Okay.
Mr. Rogers, we're going to touch on mergers. I would, by
the way, posit that mergers are more because of Dodd-Frank than
greed or nefarious motives.
And, in fact, I think, Mr. Dimon, you, on a shareholder
call at one point, said that Dodd-Frank was good for your
business, and the consolidation that was going on.
Mr. Rogers, would you agree that retail banking is a
highly-competitive business?
Mr. Rogers. It is. Yes, Representative. It's very
competitive.
Mr. Huizenga. Okay. And your bank, Truist, is the result of
a merger in 2019, correct?
Mr. Rogers. That's correct.
Mr. Huizenga. Do you believe that merger allowed you to
increase or decrease the accessibility to banking for your
customers?
Mr. Rogers. I think the merger has afforded us a great
opportunity to increase accessibility for our customers.
And that was never more apparent than during the pandemic,
when we were able to do $17-billion worth of loans, and be the
4th-largest PPP lender, doing 120,000 loans and 80,000 to small
businesses. We wouldn't have been able to do that with our
prior scale.
Mr. Huizenga. Okay. I appreciate that.
I only have seconds remaining here. I do believe that the
policies that we've had as a Federal Government, including and
leading with the spending that we have done, have led the Fed
to this spot, where they probably need to do a 100-point basis
increase, if not--certainly that 75 points. Otherwise, we are
going to find ourselves in a worse inflationary situation. And
we have to stop the spending and get our policy house in order.
With that, I yield back.
Chairwoman Waters. The gentleman from Georgia, Mr. Scott,
who is also the Chair of the House Agriculture Committee, is
now recognized for 5 minutes, and he knows a lot about Dodd-
Frank.
Mr. Scott. Thank you very much for your kind remarks, Madam
Chairwoman.
Protecting our consumers from online fraud and theft has
now become the number-one issue facing the security of our
great financial system. One of the things that several of us
have been working on in this committee is to bring together
public-private partnerships to address this, because this
technology is overwhelming, and you can see how so many of our
consumers have become victims.
I'm delighted to know about the public-private partnership
that is going on now between FS and the Wharton School of
Finance at the University of Pennsylvania over in Philadelphia.
Mr. Rogers, you have expressed your support for public-
private-sector collaborations to help us protect our customers
from things like this electric payment scam.
Would you mind telling us, how do you see our public bank
regulators and our private-sector financial institutions
working together to ensure that we have Federal laws that will
provide electronic transfer protection for our defrauded
consumers in our great nation?
Mr. Rogers. Thank you, Representative Scott, and thank you
for leading on this very important issue of the fraud that has
been experienced by our consumers. It's being perpetuated by
organized criminal activity, and that got exacerbated and
accentuated during the pandemic.
I think we have some existing role models in cybersecurity
already, where we coordinate as banking institutions and we
work with our various agencies so that when something happens
on a cyber case, we communicate that immediately. And I think
we have that same opportunity with fraud.
Mr. Scott. Very good.
Tell me exactly how you would propose that we reimburse
victims who have been scammed into initiating an electronic
payment transfer?
Mr. Rogers. We do reimburse today. We do reimburse those
who have been scammed, and particularly those who have been
scammed with our bank's name used in particular. We're very
consistent in that.
But I think, in addition to reimbursement, we need to be
focused on eliminating the fraud and fighting the criminal
activity.
Mr. Scott. Mr. Dimon, may I come to you, please?
One of my biggest priorities has been reducing the number
of unbanked families in our nation. What is your institution
doing to get more of the unbanked population into the
traditional, regulated banking system?
Mr. Dimon. Sir, we have 25 percent of our branches in LMI
neighborhoods. We have a new thing called a community branch,
which is much larger; we invite in the population. We have
things like community management, where we walk down the
street.
We have financial education seminars about mortgages,
saving money, and opening checking accounts. We invite the
community in, tell them to come as you are, and learn about
these services. These seem to be working quite well. They're
part of the OCC Bank On program, and the Roundtable for
Economic Access and Change (REACh) program. And I do think
these programs are starting to actually have an effect.
Mr. Scott. And, also, let me ask you this: What is your
institution, JPMorgan Chase, doing to overcome the mistrust
that many people--one of our biggest known problems with
decreasing the number of unbanked families in our nation is
mistrust of traditional banks like each of yours. What is your
institution doing to overcome this mistrust of large banks?
And if there are any of you who are addressing this issue,
please pipe in.
Mr. Dimon. I would love you to come visit some of those
community branches in Harlem, the south side of Chicago,
Crenshaw, and New Orleans, Ward 5, and Ward 6 over there, and
you'll see what we're doing.
Local vendors, local folks, they're all coming in. We do
tens of thousands of seminars. We try to make people very
comfortable. We have products specifically designed with very
low fees, no overdraft, and things like that.
And I totally agree with you. That is part of the job.
Mr. Scott. Thank you.
And I really appreciate this hearing.
Chairwoman Waters. Thank you very much.
The gentleman from Oklahoma, Mr. Lucas, is now recognized
for 5 minutes.
Mr. Lucas. Thank you, Madam Chairwoman, for holding this
hearing.
And thank you to the witnesses for appearing today.
The financial institutions you all represent and the U.S.
banking system at large plays a vital role in the communities
by protecting savings, delivering quick and secure payments,
and providing access to credit. Banks will have to help their
communities, their businesses, and their consumers weather the
intense economic uncertainty we're now in today.
Inflation remains at a 40-year high. Businesses and
consumers are still grappling with commodity price swings,
elevated energy prices, a tight labor market, and supply-chain
disruptions. U.S. real GDP declined in the first and second
quarters of 2022. The Federal Reserve will again raise interest
rates today, I suspect, which is designed to discourage
consumption and business activity. How are you advising your
customers on how to prepare for these conditions?
And I'll start with you, Mr. Moynihan. What are you telling
your folks out there?
Mr. Moynihan. I think, with the amount of uncertainty, job
number one is to deal with inflation. Inflation has impacts, as
my colleagues said, on the people who can least afford it.
And while the impact on the mortgage market of raising
rates doesn't feel good, it needs to be done to slow down
housing appreciation, because 20-percent-per-year housing
appreciation is not a good thing for people to keep up with.
That's job number one.
And when we talk to our clients, it's the same thing. The
Fed will raise rates to get inflation. And then, as an
operating entity, as a consumer, as a company, as a small
business, you'll understand what that impact is. It's going to
have an impact of slowing demand; it's going to have an impact
of raising your cost-to-debt. And you should be making sure
your business plans and personal plans adjust to that.
Mr. Lucas. Does anyone else wish to touch on that?
Okay.
I remember the economic suffering we endured in the early
1980s. I was in college and just beginning to farm on my own
when the Fed had to strangle--and that's the appropriate word--
high inflation out of the economy. And I worry that the
reckless policies and excessive stimulus we've seen make the
Fed's job even more difficult.
But turning to question number two: During a recent speech,
the Fed Vice Chairman for Supervision, Michael Barr, discussed
how the Federal Reserve is considering how to develop and
implement risk-related scenario analysis.
I worry that the regulations could begin to use climate
stress tests to shape and enhance capital requirements, which
could have negative, long-term economic consequences.
Climate-scenario design and associated data remain
considerable obstacles, as well as the high potential for
politicization.
Mr. Dimon, could you discuss your perspective on the
argument that the Fed should tie climate risks with increased
capital requirements, please?
Mr. Dimon. Just for the folks here, we do 100 stress tests
a week. We are quite worried about it. We always have been. We
always did it. The Fed does one a year, and it's only one type.
We do multiple different types.
Among the stresses we've always had were hurricanes,
storms, floods, and things like that. So, to the extent it's
real like that, I'd say yes. To the extent it's for social/
public purposes, to have banks do something different on how
they [inaudible] oil and gas, absolutely not. And if they did
that, it would have an effect.
Mr. Lucas. It does kind of come back to the old principle
that banks are about collecting capital, pricing it and
distributing it appropriately, and pricing it fairly.
One last question. The state-owned Chinese banks continue
to play a large international role. And the Chinese Community
Party (CCP) is intimately involved in the banking system and
has the ability to influence banks' lending activities and
credit allocations. Could you discuss the challenges this
creates in terms of global competition for U.S. institutions?
Back to you, Mr. Dimon.
Mr. Dimon. Yes, that's a very good point. We have to
compete with global Chinese banks. The four largest are now the
largest in the world in terms of assets. They also operate in
50 or 60 countries, which they didn't do 20 or 30 years ago.
They have less capital requirements than we do. They enjoy
government support. Their government wants them to succeed. And
I do look at that not as today's competition but as tomorrow's
competition.
All of the banks here play a different role in the
ecosystem, but to bank big companies in countries around the
world, you need big banks. If you want to bank Boeing, you have
to operate in the 50 countries in which they operate.
I'm going to do everything in my power to make sure we can
compete with the best Chinese banks in the world. It's very
important to the future of America that America maintain its
financial supremacy, just like almost anything else.
Mr. Lucas. Thank you.
Madam Chairwoman, I yield back the balance of my time.
Chairwoman Waters. Thank you very much.
The gentleman from Texas, Mr. Green, who is also the Chair
of our Subcommittee on Oversight and Investigations, is now
recognized for 5 minutes.
Mr. Green. Thank you, Madam Chairwoman.
Madam Chairwoman, the great Maya Angelou summarized the
essence of my very existence when she proclaimed, ``Bringing
the gifts my ancestors gave, I am the dream and the hope of the
slave.'' I proudly say that I am a descendant of enslaved
people. Slavery existed in this country for some 246 years. The
value of 246 years of unpaid slave labor has been estimated to
be as much as $14.2 trillion.
Let's examine for just a moment each megabank's involvement
in financing slavery.
Truist Financial Corporation has assets of approximately
$532 billion. Five predecessor institutions engaged in
financing slavery.
PNC Financial Services Corporation has assets of
approximately $534 billion. A predecessor loaned $135,000 to a
railroad company that used slave labor in 1852.
U.S. Bancorp has assets of approximately $582 billion. A
predecessor institution made a loan secured by enslaved people.
Wells Fargo has assets of approximately $1.71 trillion. A
predecessor bank accepted enslaved people as collateral in at
least 24 transactions, took temporary possession of enslaved
people from defaults on loans, and conducted business with the
Confederacy.
Citicorp has assets of approximately $1.72 trillion. They
provided a chart of mergers and acquisitions over a course of
210 years, pursuant to a request that we made, that is lengthy
and complex, but didn't give us a detailed report. Staff has
asked for more information, but hasn't received it to this
date. More to be said on that at a later time.
Bank of America has assets of approximately $244 trillion.
A predecessor bank secured a mortgage with real and personal
property. The borrower's property included 13 enslaved people.
A predecessor bank agreed to a $10,000 mortgage to U.S.
Secretary of State John Forsyth, with 40 enslaved people as
collateral.
JPMorgan Chase has assets of approximately $3.38 trillion.
Predecessor banks accepted 13,000 enslaved people as collateral
for loans, and they came into possession of 1,250 enslaved
people from defaults on loans.
In the case of JPMorgan Chase, there has been an apology
publicly made and an announcement of a $5-million scholarship,
which amounts to about $384.61 per enslaved person. These
scholarships went to persons in Louisiana.
I have a question for each of you. The question is this: If
you believe your bank has done enough to atone for your
involvement with slavery, kindly raise a hand into the air.
Let the record reflect that no hand has been raised.
Next question: Will you publicly publish an atonement plan
on or before your next appearance before the committee? An
atonement plan. You have indicated that you have not done
enough. Will you publish an atonement plan on or before your
next visit? If so, raise your hand.
Let the record reflect that not one bank has proposed an
atonement plan.
Let's quickly on move to another area. I don't perceive any
of you to be a person of color. Have any of you self-identified
as a person of color? Raise your hand.
Not one person raises their hand.
In the next 10 years, will there be a person of color to
head your institution? If so, raise your hand.
Truist Bank, and that is the only one, I think.
Thank you. I yield back.
Chairwoman Waters. Thank you very much.
The gentleman from Kentucky, Mr. Barr, is now recognized
for 5 minutes.
Mr. Barr. Thank you, Madam Chairwoman.
Mr. Dimon, in your April letter to shareholders, you called
for a new Marshall Plan to ensure energy security for the
United States and our European allies who are overly dependent
on Russian energy.
I couldn't agree more, which is why I am so skeptical of
ESG and the weaponization of financial regulation designed to
discriminate against American energy companies. It's why I
oppose the imposition of European-style climate stress tests on
U.S. banks, requiring banks to hold more capital when lending
to fossil-energy- or carbon-intensive firms, and the SEC's
flawed climate disclosure rule, which would politicize capital
allocation, redirect capital away from American energy firms,
and steer retail investors into higher-fee, less-diversified,
and lower-return ESG investments.
I commend you for recognizing in your letter that,
``National security demands energy security for ourselves and
our allies overseas,'' and for rejecting the demands of climate
alarmists who have called on you to immediately cut off
financing for fossil energy firms.
But my specific question relates to coal, since coal still
accounts for 22 percent of all electricity generation in the
United States. And you write in your letter that, ``using gas
to diminish coal consumption is an actionable way to reduce CO2
emissions expeditiously.''
Mr. Dimon, do you believe that a coal company with a strong
balance sheet, little or no debt, and a demonstrable track
record of creditworthiness should have the same access to
conventional bank financing as a natural gas company with
similar financial characteristics?
Mr. Dimon. Yes.
Mr. Barr. And will your institution commit to the continued
financing of American coal producers, who are still needed and
will be for some time, to supply the most affordable, reliable
source of base-load power to the American economy?
Mr. Dimon. We are working with responsible coal producers
and utility companies--many of whom, by the way, dramatically
reduced the CO2--as we speak.
Mr. Barr. Mr. Moynihan, I'll spare you similar questions,
as you and I have discussed this, and notwithstanding your net-
zero commitment, I appreciate your focus that job number one is
on addressing inflation.
And to lower the rate of inflation, we cannot rely
exclusively on Fed tightening. We must also address the supply
side. And that means more, not less, financing of American
energy exploration and production. And I urge all of the CEOs
here to adopt a similarly-measured approach to financing fossil
energy.
Mr. Moynihan, my question pertains to the FDIC's March
request for information on the regulatory framework that
applies to merger transactions involving one or more insured
depository institutions.
The FDIC's action signals a heightened regulatory
resistance to bank mergers, presumably on the grounds that
consolidation of the banking industry, which has significantly
reduced the number of smaller banking organizations and
increased the number of large and systemically important
banking organizations, is a threat to financial stability.
My question, Mr. Moynihan, is, which of the following
institutions is a more formidable competitor to Bank of
America? Is it SunTrust operating alone? Is it BB&T operating
alone? Or is it the combination of the two institutions, now
known as Truist?
Mr. Moynihan. Undoubtedly, the combination of the two
institutions, sir, is a more formidable competitor.
Mr. Barr. And, Mr. Rogers, since I invoked the name of your
institution, would you care to comment?
Mr. Rogers. I'm proud that Mr. Moynihan named me as a
strong competitor to his business.
Mr. Barr. I take it from the responses of both of these
gentlemen that an overly-aggressive resistance to mergers by
the FDIC could actually diminish competition at the G-SIB level
and therefore undermine financial stability.
Final question to all of you, for anyone who wants to chime
in is, do you assess the impact of a central bank digital
currency (CBDC) as positive or negative for our credit market?
Specifically, how would a CBDC impact your deposit base and
therefore your ability to deploy capital into the real
econoomy.
Mr. Dimon?
Mr. Dimon. If it's properly done, it'll be fine, but I
don't trust that it'll be properly done. You're not going to
have the Federal Reserve running call centers. There's a lot
more banking services than the actual token that moves the
money. There are fraud risk alert services, call centers, bank
branches, ATMs, and the CRA.
Properly done, it's not a problem. Improperly done, we'll
have an issue.
Mr. Barr. And, Ms. Fraser, in my remaining time, Vice Chair
Barr suggests that he wants to review increased capital
requirements. What would that do to the ability of your
customers to repair supply chains, and your ability to deploy
capital and fix inflation?
Ms. Fraser. Given that we passed our stress test, which
should be a test of whether we have sufficient capital, which
is important for safety and stability, then the question
becomes when you increase capital above that limit. And that
can have a very detrimental effect on one's ability to lend
right at the point when the capital markets shut them down.
Mr. Barr. Thank you.
I yield back.
Chairwoman Waters. The gentleman's time has expired.
The gentleman from Missouri, Mr. Cleaver, who is also the
Chair of our Subcommittee on Housing, Community Development,
and Insurance, is now recognized for 5 minutes.
Mr. Cleaver. Thank you, Madam Chairwoman.
Let me just express some appreciation for the fact that
some of you have already taken steps to make corrections as it
relates to banking in distressed communities.
As all of you probably know, in 1977, Congress passed the
Community Reinvestment Act (CRA). And we did so because we were
concerned about banks that were using deposits, even in some
distressed neighborhoods, to fund out-of-State, and in some
cases, international lending activities at the expense of
addressing the local areas.
So, the CRA was created. And we have not had any upgrades
to the CRA since 1995, I think. Is there anyone of you who
believes that we do not need to update the CRA?
You have made me happier now, because I'm going to keep
going toward happiness.
Are all of you interested in and willing to look at ways in
which we can increase CRA, even to the extent that you can get
CRA credit for housing, affordable housing in urban areas? Is
anyone willing to, and very, very, very interested in doing
that kind of program?
My joy level is continuing to rise.
Ms. Fraser. Yes.
Mr. Cleaver. Thank you very much.
Now, to jump over a little bit, the role of non-bank
lenders has increased, as you all know--and we have to deal
with it--dramatically since our 2008 economic collapse. Non-
bank lenders now originate more mortgages in the United
States--it was almost 69 percent of all mortgages in 2020.
Nonbanks also originate four out of every five FHA loans,
which are more likely to be originated in low- and moderate-
income communities. Between 2010 and 2016, the FHA share of
loans originated by the 3 largest banks fell from 43 percent to
5 percent.
Are any of you willing to explain the retreat from FHA
loans? And what are your banks doing to extend mortgages to
low- and moderate-income borrowers? Is anyone's bank--yes?
Mr. Moynihan. Having learned our lesson in FHA/VA practice,
a lot of us have brought our percentages down, as you said. But
we replaced it with programs that we put on our own balance
sheet that are safe and sound for the consumer, that provide
down payment assistance up to $17,000 on a loan. And that's
what we did to offset it. So, I wouldn't look at FHA/VA as the
only indicia of loans going into the communities, et cetera.
But the risk of doing that business--the put-back risks, the
servicing--it just wasn't worth it, honestly.
And we still do 5, 6 percent of our loans in the FHA/VA
program to help us with first-time homeowners, but we built
programs outside where we can work with the consumer, and build
great programs that will actually do more for the consumer, we
believe.
Mr. Demchak. Congressman, we work with FHA and have done
so. We also put those loans on our own balance sheet.
FHA, in my view, needs to be revamped. Today, there is a
limit, because we become something called an, ``interested
party,'' where we are only able to contribute 6 percent of the
proceeds of the loan either in closing costs or in down payment
assistance, by their regulation. When we do that, if we go
beyond that, we balance-sheet it on our own. We don't actually
participate in their program. They ought to change that.
Mr. Cleaver. My time is running out--yes. I heard it is.
Madam Chairwoman, I yield back.
Chairwoman Waters. Thank you very much.
We will now take a brief recess and resume in 10 minutes.
The committee now stands in recess.
[recess]
Chairwoman Waters. The committee will come to order.
The gentleman from Missouri, Mr. Luetkemeyer, is now
recognized for 5 minutes.
Mr. Luetkemeyer. Thank you, Madam Chairwoman.
And welcome back, witnesses.
I'd like to focus on a larger issue today that affects
every U.S. consumer and consumers all over the world, which is
heavy investment in volatile and unfriendly countries, such as
Russia and China.
Ms. Fraser, Mr. Dimon, Mr. Moynihan, each of your banks has
significant investments in Russia, which you drew down after
Putin's invasion of Ukraine. While American sanctions were an
impetus for those actions, it should be said that you did the
right thing by shrinking your assets there.
We learned two important lessons during the period. Number
one, there is a large risk in investing in volatile nations
with dictatorial governments. And number two, your investments
play a significant role in supporting those nations' economies.
In recent months, China has continually threatened our
ally, Taiwan, with military exercises and violent rhetoric.
Should the CCP follow through on its threat to invade Taiwan,
are your banks prepared to pull your investments out of China?
Mr. Moynihan, do you want to start?
Mr. Moynihan. Sure. I think we'll follow the government's
guidance, which has been, for decades, to work with China. And
if they change that position, we'll immediately change it, as
we did in Russia.
Mr. Luetkemeyer. Ms. Fraser?
Ms. Fraser. Yes, we would do likewise. We would follow the
government guidance on that. We very much hope it doesn't
happen.
Mr. Luetkemeyer. Mr. Dimon?
Mr. Dimon. Yes. We would absolutely salute and follow
whatever the American government said, which is you all, and
what you want us to do.
Mr. Luetkemeyer. I appreciate your willingness to follow
U.S. law, but you and your banks have made decisions that have
gone well beyond U.S. law and entered the realm of moral
judgments. For example, in 2018, Citi and Bank of America
announced lending restrictions to certain gun manufacturers and
retailers. In 2019, JPMorgan publicly announced that it will
not fund private prisons. None of these decisions were made
because of a law passed by Congress.
Mr. Dimon, would an invasion of an American ally be enough
for JPMorgan to make the moral determination to stop doing
business with the Chinese?
Mr. Dimon. I missed your question.
Mr. Luetkemeyer. I asked if an invasion of an American ally
would be enough for JPMorgan to make the bold determination to
stop doing business with the Chinese Communist Party?
Mr. Dimon. We'll have to decide when that happens.
Mr. Luetkemeyer. You're not going to commit to pulling
assets out of China if they invade Taiwan. That is what you
just said.
Mr. Dimon. The first thing I would do is call the American
Government and ask for guidance. That's what I would do. That's
what they would expect me to do.
Mr. Luetkemeyer. Mr. Moynihan?
Mr. Moynihan. It would be the same in terms of the
decision. But we always look at clients and risk. And, in fact,
you would find that before the Russia situation took place in
Ukraine, we made adjustments to our risk, and we do that all
the time in every country that is volatile, irrespective of--
Mr. Luetkemeyer. Ms. Fraser?
Mr. Moynihan. Clearly, it would be driven by the
government. In an occasion that you're talking about, that
would be driven by the government rules and regulations and
laws and Congress' desire.
Mr. Luetkemeyer. Ms. Fraser?
Ms. Fraser. Similar to both Mr. Dimon and Mr. Moynihan, the
first call would be to the U.S. Government to understand what
they would be expecting and wanting us to do and the timeframe
to do so.
Mr. Luetkemeyer. Suppose the government said it's up to you
to make your own decision, it's a business decision on your
part. What would you say?
Ms. Fraser. It's highly likely that we would have a
materially-reduced presence, if any at all, in the country.
Mr. Luetkemeyer. So if the business decision were left up
to you, you would probably pull out or reduce some assets?
Ms. Fraser. It's a hypothetical question, but it is highly
likely that we would have a reduced presence.
Mr. Luetkemeyer. Okay. Each of your banks has published
statements pledging your commitment to supporting and
protecting human rights around the globe. According to the
State Department's 2021 report, genocide and crimes against
humanity occurred in China last year. Those crimes include
arbitrary and unlawful killings by the government, arbitrary
imprisonment, forced sterilization, and rape and torture of a
large number of those arbitrarily detained.
Mr. Moynihan, do you condemn the Chinese Communist Party
for those horrible acts that they regularly carry out?
Mr. Moynihan. We look at any client we do business with, to
their operations in any matter, and we make that decision. The
governmental condemnation isn't the important thing of whom we
do business with in China. It's actually the company that we
underwrite. It's client selection, is what we call it, sir.
Mr. Luetkemeyer. Would you explain that again? I missed
that. I'm sorry.
Mr. Moynihan. I think the question is, when we look at what
we do in a country, it's individual clients. It's not a
theoretical concept. We look at that client, if that client--
Mr. Luetkemeyer. Mr. Moynihan, with all due respect, the
government of China is the Communist Party. The Communist Party
of China is the government. If you're doing business in that
country, you're doing it willingly, with respect to them
allowing you to be there, and you're doing it under their laws,
which the last time you were here, one of you three actually
made that comment.
If they're committing these atrocities, are you okay with
that? Are you willing to continue to do business with people
who are committing these kinds of atrocities, when you say in
other statements that that's a bad deal?
Mr. Moynihan. We don't do business with companies that we
believe are doing atrocities or something like that. You're
asking a hypothetical question.
Mr. Luetkemeyer. [inaudible] Under the protection and
auspices of this government. That's my point.
Ms. Fraser?
Ms. Fraser. We obviously take any accusations of human
rights abuses very, very seriously. Similar to Mr. Moynihan, we
do not do any activity with companies that are involved in
forced labor or the like.
Mr. Luetkemeyer. It's okay to do business with the
government?
Ms. Fraser. We do business with the Chinese government.
Mr. Luetkemeyer. Even though they commit those atrocities?
Thank you. I yield back.
Chairwoman Waters. The gentleman from Colorado, Mr.
Perlmutter, who is also the Chair of our Subcommittee on
Consumer Protection and Financial Institutions, is now
recognized for 5 minutes.
Mr. Perlmutter. Thanks, Madam Chairwoman.
My questions are going to be a little simpler than that.
Mr. Moynihan, Bank of America has some of the best
economists in the world working for it. I have had a chance to
meet with a couple of them. And I guess I'm coming at things a
little differently than my Republican colleagues, and some of
you.
Looking at the last few months, from May on, prices have
held steady or dropped. The University of Michigan anticipates
prices to drop over the course of the next year.
In conversations with your economists, what do they
predict? What do they think is going to happen?
Mr. Moynihan. Our economists have this quarter, third
quarter of 2022, as a positive GDP, negative for the fourth
quarter of this year, negative for the first quarter of next
year, and I think negative for the second quarter of next year,
and then moving positive and ending up at a 2-percent year-
over-year growth rate in the fourth quarter of 2022. That's the
estimates they have.
Mr. Perlmutter. Thank you. I dealt with them at the
beginning of COVID--I don't know if you recall--just to kind of
get their analysis of what they expected COVID to do to the
economy if we did nothing, if we just held steady, if
everything went--of we didn't do PPP, we didn't do
unemployment, we didn't do any of that. And they said, well,
then, we're going to have trouble.
Thank goodness, from my point of view, we did a lot to keep
the economy moving. And obviously, there is a year-over-year
increase in prices, but if we go forward on an annualized
basis, just based on August, it's 1.2 percent for the next
year. And if you look at the whole summer, it's less than that.
What I'm worried about is an overreaction by the Federal
Reserve. The last time we saw them increase interest rates like
this was back in the 1980s and early 1990s. And I can tell you
that Colorado got clobbered. The housing market just stopped,
as did everything else.
And so, Mr. Demchak, I'm going to turn to you, because PNC
had a pretty good-sized subsidiary called the Kissel Company
back in those days; I don't know if you're familiar with it.
But it suffered a lot of foreclosures back in the 1980s and
1990s, as did some predecessors to U.S. Bank, and certainly
JPMorgan. And Citi had the same issues.
What do you see? What does your bank see on the horizon in
terms of foreclosures? If Mr. Dimon is correct and we get hit
hard because of Ukraine and this and that--I think most of what
we're facing is supply chain disruptions caused by COVID, and
that's why we have seen some prices go up.
But are you prepared, is your bank prepared to handle a lot
of foreclosures if the bottom falls out, as is a potential
problem here?
Mr. Demchak. Thank you for the question.
I would suggest that I think inflation is going to be a
little bit stickier than we would like, and I think as a result
of that, interest rates are going to be a little bit higher
than we would like for longer than we would like.
The impact of that on housing is clearly already felt in
the creation of new homes and the sale of homes. The impact of
that on existing homeowners in LMI communities, in their
inability to make payments as a function of inflation absorbing
a greater percentage of their income, is a real issue.
We work with government-funded programs, State-funded
programs, and PNC-funded programs to make sure people stay in
their homes.
Mr. Perlmutter. Have you seen delinquencies rise?
Mr. Demchak. We have not, at this point.
Mr. Perlmutter. You have not seen delinquencies.
Have any of the banks seen delinquencies rise or rising on
home mortgages?
Nope.
Mr. Dimon and I have disagreed over the years on the amount
of capital that should be retained, and part of this comes--my
dad was on a bank board of a predecessor bank to U.S. Bank, and
he was operating under a memorandum of understanding (MOU)
during those years when the Fed took the interest rate up
dramatically, back in the 1980s and early 1990s.
Mr. Dimon, if you get your worst-case scenario that you
kind of outlined, is JPMorgan capitalized to take such an
economy?
Mr. Dimon. Absolutely.
Mr. Perlmutter. Does everybody else feel you're well-
capitalized?
Mr. Demchak. Yes.
Ms. Fraser. Yes.
Mr. Perlmutter. Wells Fargo? Truist?
Mr. Rogers. Yes.
Mr. Perlmutter. Even if Mr. Dimon's worst predictions
come--he didn't make a prediction; he was just saying it's a
possibility.
Mr. Rogers. Yes, sir. I think our stress tests are beyond
Mr. Dimon's predictions.
Mr. Perlmutter. Bank of America?
Mr. Moynihan. Yes. You don't have to take our word for it.
Look at the stress tests. For 10 years in a row, they have been
stress testing under scenarios that have the worst indicator of
every element that has occurred, so the highest residential
real estate prices, the highest commercial real estate prices,
the highest unemployment, the highest stock market, and look at
the results.
Mr. Perlmutter. Thank you.
I yield back.
Chairwoman Waters. Thank you.
The gentleman from Texas, Mr. Williams, is now recognized
for 5 minutes.
Mr. Williams of Texas. Thank you, Madam Chairwoman.
And I thank all of you for being here today. I appreciate
it.
Last week, a new merchant category code (MCC) was approved
for gun and ammunition sellers. My Republican colleagues and I
have expressed concerns that this will make it easier to track,
expose, and limit the constitutional rights of millions of law-
abiding gun owners.
Progressives are already cheering that this will be a huge
step forward in monitoring suspicious gun purchases.
After the left claimed victory, Visa came out with a
statement about how they had been dragged into the political
arena, and it reads, ``We do not believe private companies
should serve as moral arbitrators. Asking private companies to
decide what legal products or services can or cannot be bought
and from what store sets a dangerous precedent. Further, it
would be an invasion of consumers' privacy for banks and
payment networks to know each of our most personal purchasing
habits. Visa is firmly against this.''
So even though I think the credit card company should
disregard the new code, I do agree with the statement released
by Visa.
The problem with these new classification codes is that
determining what is suspicious is a subjective exercise. And
anyone who is against the rights of gun owners will want your
institutions to flag every single transaction with a gun MCC to
law enforcement.
Before I continue, I want to quickly get a yes-or-no answer
from each of you on two things: first, if you agree with
implementing this new MCC for guns; and second, if you agree
with Visa's public statement?
We can start with you, Mr. Scharf.
Mr. Scharf. Would you just please repeat Visa's public
statement?
Mr. Williams of Texas. Read the public statement that I
just read?
Mr. Scharf. Yes. Could you just repeat it? I didn't follow
it.
Mr. Williams of Texas. I can read it, but it's going to cut
into our time. It just says they don't need to be in the
political business and they want to get out of it, so--
Mr. Scharf. To answer your question, we don't set the
merchant category codes. The International Organization for
Standardization (ISO) sets them, and we're instructed to follow
them. So, what we think is not really relevant at this point.
Mr. Williams of Texas. Okay.
Mr. Rogers?
Mr. Rogers. We'll certainly follow the rules set by the
credit card companies' intermediaries, but we'll also abide by
the laws for bank privacy and privacy of our clients.
Mr. Williams of Texas. Do you agree with Visa's public
statement?
Mr. Rogers. We'll protect the privacy of our clients
according to the law.
Mr. Williams of Texas. Mr. Moynihan?
Mr. Moynihan. As my two colleagues have said, the rules of
the ISO are not up to us. We just have to implement them. But
we believe in the privacy of our customer data, and we have
held that true for many years.
I'm not sure I agree with Visa's public statement at all,
but it's their statement. I'm not sure I don't agree with it. I
just really don't reflect on other people's statements,
frankly.
Mr. Williams of Texas. Ms. Fraser?
Ms. Fraser. Similar to Mr. Moynihan, I can only speak for
our own bank. We do not intend to use the code to limit sales
of firearms for our individual card holders.
Mr. Williams of Texas. You said you do not?
Ms. Fraser. We do not intend to limit the purchase of
firearms by our individual card holders as a result of the
code.
Mr. Williams of Texas. Mr. Dimon?
Mr. Dimon. We actually don't know what they use it for, and
we don't want to be in the business of telling American
citizens what they can do with their money. But we understand
your concerns over the issue.
Mr. Williams of Texas. Okay. Thanks.
Mr. Demchak?
Mr. Demchak. I have nothing new to add. I think everybody
has covered it.
Mr. Williams of Texas. Okay.
Mr. Cecere. We will abide by the rules and protect the
privacy of the customers.
Mr. Williams of Texas. Thanks for those answers.
Ms. Fraser, what are the criteria that Citibank will use
when determining if they should flag a suspicious transaction
with this new code?
Ms. Fraser. We will follow the regulatory requirements in
terms of them filing suspicious activity reports (SARs) as we
always do. But at first blush, in looking at this, we don't
think it will be a factor in filing a SAR.
Mr. Williams of Texas. Okay.
Mr. Moynihan, on a similar note, how would Bank of America
determine if a customer's first-time gun purchase warrants a
SAR filing or is it just someone who recently became interested
in hunting?
Mr. Moynihan. Again, as my colleagues have said, if they
purchase a gun at a shop, the fact that they purchased it has
nothing to do with a SAR filing.
Mr. Williams of Texas. My last question, when I talk to
business owners in Texas, where I'm from, there doesn't seem to
be any debate about whether or not we're in a recession, and
they're concerned about it.
And I'll be quick with this question, Mr. Dimon.
Early this summer, you said that you believe there is a
strong possibility of a recession, and a 20 to 30 percent
chance of something much worse.
Can you describe the economic hurricane that we could be
seeing, and if you think we can avoid further economic damage?
Mr. Dimon. Yes. Just that a strong American economy, strong
consumers being offset by high rates, stagflation, inflation,
war, QT, which we have never had before. And those are meeting
as we speak, and they will meet for the next 6 to 9 months. We
don't know the outcome.
Mr. Williams of Texas. Thank you.
I yield back.
Chairwoman Waters. Thank you.
The gentleman from Connecticut, Mr. Himes, who is also the
Chair of our Subcommittee on National Security, International
Development and Monetary Policy, is now recognized for 5
minutes.
Mr. Himes. Thank you, Madam Chairwoman.
And thank you all for being here.
I first sat in this room in the first quarter of 2009, when
the economy was contracting at an annualized rate of 10
percent, and I really did worry that a number of your
institutions weren't going to survive the week. We have come a
long way.
Mr. Dimon, thank you for acknowledging, I think you said
where credit is due, that Dodd-Frank was a big part of that. I
was assured at the time by people on my side of the aisle that
Dodd-Frank would crumble like a sand castle in a hurricane. I
was assured by my friends on the other side of the aisle that
it would obliterate the banking sector. None of those things
proved anywhere close to being correct.
Credit where credit is due, we got through the mother of
all stress tests in these last 2 years because of Dodd-Frank,
but also because of your stewardship of the institutions that
you run. And thank you for that, not just for not creating
systemic problems, but for actually getting the PPP, which was
so important to so many businesses in my district.
I say all that just because I will forever focus on risk,
and I have three questions about risk in 4 minutes.
Mr. Dimon, 70-percent-plus of the mortgage origination
market has migrated outside of a banking environment. We have a
lot less visibility. Take a minute to talk about whether we
should be focused on that risk.
Mr. Moynihan, I'm going to ask you in a minute or so for
nonobvious risks that Mr. Dimon doesn't cover.
And then, Ms. Fraser, I'm going to close with you with a
minute on, because of your global footprint, what risks are out
there that we may not have jurisdiction over, whether it's Asia
or Europe, that could get transmitted into our system here.
Mr. Dimon, the mortgage origination market.
Mr. Dimon. I wouldn't call it systemic risk. It is riskier
because the smaller companies cannot finance and advance funds
to securitization when there is a crisis--we could--and that we
need to--we do need to reform it for the sake of the industry
so that people can get mortgages at all times.
Mr. Himes. Mr. Moynihan, what risks are we not thinking
about? What's the bullet we're not seeing right now?
Mr. Moynihan. Are you talking about in the mortgage
business?
Mr. Himes. No, no, no, generally.
Mr. Moynihan. I think--
Mr. Himes. Inside or outside of the banking sector.
Sometimes, I worry just as much about what's happening outside
of the banking sector than what's happening inside.
Mr. Moynihan. I think when you think about the economy and
where it goes to create risk versus leverage, and honestly,
there is more of that outside the banking system than inside.
And that's something I think the Financial Stability Oversight
Council (FSOC) and others should be carefully watching now in
terms of funds, private lending funds, private lending funds
that have leverage in them, private lending funds that lend at
high-leverage multiples.
Our industry, because of the examination practices in,
frankly, the way the companies are run, does not participate in
them. That's where I'd say a risk is. But it's always going to
be about the economy and the demand--
Mr. Himes. Let me ask you to be just a little bit more
specific. When you say private lending funds, are we talking
about collateralized loan obligations (CLOs)? Are we talking
about the high-yield market? What are you talking about and
what should we be focused on?
Mr. Moynihan. It would be all of them. In other words, the
amount of private credit, not only in mortgage but every single
asset class, more than half of it is sitting outside our
industry. And if you look at where the leverage multiples and
individual deals get done, they tend to get done outside our
industry at higher multiples due to the regulatory.
Mr. Himes. Okay. And I think you have all said this morning
that you feel like your institutions are either adequately
capitalized or perhaps overcapitalized. Are you saying that
there are private nonbanks that are undercapitalized relative
to the lending they're doing?
Mr. Moynihan. Yes, but they will have net asset value--in
other words, their liabilities are interest in those funds that
will be mark-to-market, so you won't have the same kind of
stress.
But the impact on the economy of liquidating those
companies by people who don't work the same way the banking
system works with the companies could cause more damage than
if--we build reserves. We work out companies. This is what we
have done for literally hundreds of years.
Other people don't have the staff to do that. Therefore,
they just sell them, and the liquidation process can cause more
ongoing damage to the economy.
Mr. Himes. Okay. Thank you.
Ms. Fraser, let me close with you. Again, we have
jurisdiction over some stuff but not over lots of stuff. What
do we need to be wary of internationally?
Ms. Fraser. When we look internationally, I think that what
has happened from the pandemic and the war is that it has
highlighted a lot of fragility in the global economy. And,
therefore, we have to increase our concern around energy
security, food security, and cybersecurity, which will not
necessarily all have an impact in the U.S., but there could
well be a spillover effect.
For example, in Europe the supply shocks in the energy
market that they are facing could well be a factor affecting
the U.S. economy next year as demand slows and they enter a
highly likely recession.
So, the interdependencies and these fragilities are going
to be the pieces we have to keep an eye on.
Mr. Himes. Connect that for me. You identified energy and
food. What's the mechanism of transmission--I get the economy,
if there is an economic slowdown--by which global energy or
food markets actually create a prudential problem for you?
Ms. Fraser. It could result in--if there is a material
energy shock continued in Europe, you could see industrial
production shutting down this winter. You could see people who
are cold. And that can have discontent from their populations,
which could then translate into lower demand and, therefore,
lower demand for American goods and services and that would
impact the U.S. economy.
So, that's where the main mechanism would come from.
Mr. Himes. Thank you. My time has expired.
Thank you, Madam Chairwoman.
Chairwoman Waters. Thank you very much.
The gentleman from Arkansas, Mr. Hill, is now recognized
for 5 minutes.
Mr. Hill. Thank you, Madam Chairwoman.
And thank you all for taking time away from your day jobs
to spend a day with us. I'm glad to know you had a comfort
break a few moments ago. That was kind of you, Madam
Chairwoman. Thank you. And I hope each of you got a little cup
of water and a cracker maybe to go with that.
This is a good discussion. I thought Mr. Lucas raised the
discussion quite well on climate stress testing. I saw where
Mr. Barr, our new Vice Chair of the Fed, thinks this is a
priority. And some of you are complying with that in Europe,
are you not?
Ms. Fraser, are you complying with a climate stress test
over in your operations in Europe?
Ms. Fraser. Yes, we have had to conduct those in compliance
with the legal requirements.
Mr. Hill. What do you think that costs the company, pre-
tax, to do that?
Ms. Fraser. I would have to get back to you with a number.
I don't--
Mr. Hill. Similarly, if you don't mind, if you would
respond in writing on that.
Ms. Fraser. I will.
Mr. Hill. You all just passed the stress test that the Fed
imposed. And in that analysis of sharp declines in unemployment
and sharp failures in performing assets, when you look at those
performing assets, you take climate into account when you make
a loan to build a tower on Miami Beach?
Mr. Moynihan, do you not do that?
Mr. Moynihan. Sure. Leaving aside the stress test, you have
to take into account the risk in the project to borrow or the
person. Of course, we do.
Mr. Hill. Mr. Casten has a bill that he's introduced here
for the Majority, H.R. 3571, the Climate Change Financial Risk
Act, that would require climate stress testing, and would add
capital requirements to anyone who fails that stress test based
on a panel of scientific experts advising the Fed.
Is this a good idea? Who would like to answer that
question?
I'd be happy to call on Ms. Fraser again.
Is that a good idea? Do you like that idea?
Ms. Fraser. The challenge with that idea at the moment is
we just don't have the data.
Mr. Hill. Right. It's not comparable, is it? These
proposals are not comparable within an industry or between
industries. Is that a fair statement of what I read in the
Financial Disclosure Task Force?
Yes. The record shows they're nodding.
Mr. Moynihan, privacy. You comply with the European General
Data Protection Regulation (GDPR) privacy rules, is that
correct, in Bank of America's operations in Europe?
Mr. Moynihan. Yes, we do.
Mr. Hill. And you are a big bank in California, so you
comply with California's privacy law, right?
Mr. Moynihan. We have to obviously.
Mr. Hill. And you do, I'm sure, a magnificent job there.
Do you think we need a Federal preemption and a Federal
privacy law? Would that aid the financial services industry
generally?
Mr. Moynihan. I think the financial services industry has
had 30 years of privacy regulation that other industries
haven't, and I think we do a pretty good job of it. We're
examined on it. It's very different from other industries. We
have an ongoing examination process.
I think--and, frankly, we are exempted from some of those
rules because of that long history.
Mr. Hill. Yes. So, Gramm-Leach-Bliley is pretty powerful
for privacy?
Mr. Moynihan. Yes, sir.
Mr. Hill. I hope, Madam Chairwoman, that maybe in the next
Congress we can work with the House Energy and Commerce
Committee and make sure we're all on the same page on privacy.
Mr. Scharf of Wells Fargo, you made some good comments
about the mortgage banking, and there were comments today that
mortgage banking has shifted to the non-bank sector.
Do you think regulation had anything to do with that?
Mr. Scharf. Congressman, I did say that there is a
difference between the way banks and nonbanks are regulated.
And there is no question that degree of regulation will impact
your cost base, what you want to do inside your company.
Mr. Hill. So when Dodd-Frank said that banks and bank
holding companies couldn't do mortgage servicing rights, was
that a bad provision in Dodd-Frank?
Mr. Scharf. Congressman, I'm not aware of that provision.
Mr. Hill. It caused all of you to divest your mortgage
servicing portfolios, even though you're the largest one- to
four-family mortgage lenders in the country. You had a natural
hedge. But after the financial crisis, all of you were asked to
lower that so you wouldn't be charged a capital surcharge on
that.
Was that a good idea or not? Does anybody else want to
respond to that?
Mr. Scharf. Congressman, I'll just keep going. We still
have a large mortgage servicing asset.
Mr. Hill. But you can't grow it.
Mr. Scharf. The capital requirements are very specific on
it. But it's up to us to determine how much of our capital we
choose to put into [inaudible] versus something else.
Mr. Hill. Okay. Thank you. If you have more on that, please
follow up in writing.
Mr. Dimon, the Fed has a dual mandate, price stability and
growth of the economy, and we have had a proposal by the
Majority here to add equity to the Fed's mandate.
Should the Fed focus on its price stability mandate?
Mr. Dimon. In my opinion, yes.
Mr. Hill. And, Mr. Cecere at U.S. Bank, can you write a
memo persuasively that you should have a living will, or do you
think that's not necessary for a bank your size?
Mr. Cecere. We have a living will on the resolution plan
that has been reviewed by the FDIC for the past 10 years.
Mr. Hill. And do you think the Fed should just leave it at
that, or should they impose something different?
Mr. Cecere. I think it's been successful. We have a very
simple operation; 99 percent of our bank is within the holding
company.
Mr. Hill. Thank you very much.
I yield back, Madam Chairwoman. Thank you.
Chairwoman Waters. Thank you.
The gentleman from Illinois, Mr. Foster, who is also the
Chair of our Task Force on Artificial Intelligence, is now
recognized for 5 minutes.
Mr. Foster. Thank you, Madam Chairwoman.
I would just like to touch briefly again on regulatory
capital levels. I'm amazed at how consistent that your industry
is; when you come to us, it is almost always with some
elaborate set of logic to try to convince us that you should be
allowed to lever out more.
And it's interesting because if you--you probably have all
been forced to learn all about the Modigliani-Miller theorem
which says that the return on equity is independent of capital
structure and, in particular, independent of leverage. So, why
is it that you are always demanding higher levels of leverage?
And I think part of the answer was well-analyzed at the end
of the financial crisis, that you all benefit from having the
Federal Government and the Federal taxpayer as the insurer of
last resort.
Under an extreme disaster, if one of the cities you do
business with gets nuked, you're all insolvent, and you will be
bailed out by the government. Now, that's okay, but the
question is, how far out on the tail the government should
assume that risk?
And so the game that you will always be in is trying to
allow you to lever up and expose the taxpayer to that risk, and
our job will always be to push back against that and demand
enough levels of regulatory capital that it's very unlikely
that the taxpayer will be called upon to do that.
Just a quick question: Do any of you believe that the
higher capital, regulatory capital levels of Dodd-Frank have
prevented you from having an extraordinarily-profitable decade?
Let the record show that no one has indicated such. I think
that's a very significant conclusion from the whole debate
here.
And I'd like to spend some time talking about secure
digital ID and Know Your Customer (KYC) requirements.
Mr. Demchak spoke eloquently about the difficulties of
dealing with financial fraud, and a lot of that is identity
fraud.
Mr. Moynihan had a very unpleasant experience with the
failure of the Federal Government or State Governments to have
any kind of secure, reliable way of authenticating that you are
who you say you are online, and exposing you to very high
levels of fraud and having to do something quick and dirty and
unfortunate in trying to fix that.
This experience wasn't shared in countries where they had a
secure and reliable way of proving that you are who you say you
are online.
And the EU--probably most of you do business
internationally, and you're probably aware the EU has a very
comprehensive roadmap for a secure digital ID that would allow
you to, if you want, open a bank account. You walk into a
branch. You get out your cell phone. You say okay. You get your
passport, or whatever it is, or your REAL ID-compliant driver's
license if it's in the U.S. that's on your cell phone, convince
your cell phone that it's really you and someone hasn't stolen
your cell phone, and with a pretty quick interaction, have a
very secure way of proving that you are a single, legally-
traceable person.
And there is a roadmap that's actually going to be rolled
out by a number of States. Ironically, the technical standards
behind those were all developed by the National Institute of
Standards and Technology (NIST) in the United States, now
adopted by ISO and being used in Europe.
There are countries that you do business in, like Korea,
where this is a reality today, you can use modern technology,
use your cell phone effectively like a security dongle.
What is your stance on this? What are the differences you
see in the different countries in which you operate, some of
which have secure digital IDs, and some of which are moving
toward it? And what is your feeling about where the United
States should be going on this?
Mr. Demchak, we'll start with you.
Mr. Demchak. Thank you for the question and for the thought
that you clearly put into this.
It is a big problem in our country, and I think we should
move towards a digital ID. It's something that the banking
industry is actually working towards today with a product
called Authentify, where once you authenticate yourself with
one bank, we can share that ID in any other service that you
might want to use electronically.
We have to get this sorted. Fraud is a massive problem. And
our methods or historical ways to deal with this aren't
working.
Mr. Foster. Yes. And that's a very noble approach to deal
with a serious problem.
But I think that there is ultimately a real government
function in issuing that authentication, and we have that in
the REAL ID. We have that for physical ID. And there are
standards that are being deployed in individual States.
I'd just like to end with a shout-out to the Improving
Digital Identity Act that we now have moving in both the House
and the Senate. Senators Lummis and Gillibrand are behind it.
And if we can get this across the finish line, at least on
the government level, we will hopefully have something to avoid
the nightmare that Mr. Moynihan's bank went through and at
least have the government given a way to have citizens
authenticate themselves.
Thank you. I yield back.
Chairwoman Waters. Thank you.
The gentleman from Texas, Mr. Sessions, is now recognized
for 5 minutes.
Mr. Sessions. Madam Chairwoman, thank you very much.
And to the panel that's in front of us, thank you for
taking time to be here.
Mr. Dimon, it's good to see you again.
The opportunity that I think you have today has shown some
light about how complex your businesses are, the varying
attacks against you, the things that have happened to our
country economically, the changes that are going on, and your
ability to work with industry and others who are needing
capital, and needing reassurance from you.
During the pandemic, your employees did not close down
their chance to go to work. Maybe some of you had different
restrictions based upon where you live. But your employees went
to work. People kept the business running. There was not a run
on the bank. There was thoughtfulness that went on by each of
you in your own way. The trillions of dollars that flowed
through systems that you had to take and understand who your
customers were and are.
We are going through instances of monetary and fiscal
policy changes too. We are watching with great caution what is
going to happen next.
But I want to take this time and tell you that I'm
impressed. I'm glad we have big banks. I'm glad we have stable
people. I'm glad we have professionals who get up and go to
work, take care of the free enterprise system, and take care of
large companies and small companies.
I'm from Waco, Texas. Many of you are in Waco, Texas. It is
now a destination of choice where people are moving. They're
even opening up wealth offices there because people with money
are moving there.
But I want to thank you, because we need to hear from you
as we are hearing today. And there are some specific
questions--Mr. Foster had some questions, and others do. But we
really look to you to be the capitalist leaders of our country.
We look to you to stand for America.
And I know certainly Citi and other people have done
business in China for decades. You see things. You see a bigger
viewpoint than we do.
When you get in your car and leave today, I want you to
feel like there are people who respect you. There are people
who know you're in a tough place. There are people who know
you're having trouble getting people to not just come to work
but to learn the business.
I appreciate you. I appreciate the hard work that you do. I
know that what you do is picked at and looked at in different
ways and second-guessed.
Mr. Dimon, I know you've been the object of some
challenges, and each of you have in your own way. But please
know that we need you, that we should not run you out of
business, we should not be onerous in what we do to you. We
should give you the latitude.
But you showing up today to me is an example of what kind
of professionals you are, what kind of men and women are in the
organizations that you represent, who represent you, who will
be there tomorrow, and who do care about the challenges.
And sox, we need to hear from you again. I hope you'll come
back next year, and instead of putting us on the witness side,
we'll put you on the witness side, but you'll really tell us:
Here's the way we see the world and here's where we need to be
the leading edge, the continued supporter of the dollar, and
here are the things that we need to hear from you.
So, I appreciate each of you.
I want to thank the gentlewoman, the young chairwoman of
our committee. I want to thank the gentleman from Arkansas for
sitting in.
But I want you to go back today and I want you to know that
we need you, that you are the basis of how our nation can
operate, and that we have so many other people in the financial
services industry who are there because we need them too.
So no questions, but a big thank you. I hope you'll go back
and tell your employees that you appreciate them, just like I
do my employees, at a time when America needs them the most.
I yield back my time.
Chairwoman Waters. Thank you very much. I thank the elderly
gentleman for his participation.
The gentlewoman from Iowa, Mrs. Axne, who is also the Vice
Chair of our Subcommittee on Housing, Community Development,
and Insurance, is now recognized for 5 minutes.
Mrs. Axne. Thank you, Madam Chairwoman.
And guaranteed I'll be asking some questions here, so get
ready.
I really appreciate all of you being here. Of course, it's
nice to see you.
But Mr. Scharf, I'm going to be concentrating on you today
as you were here in March of last year, I believe. Now, you've
been in that role for a period of time. So it's good to hear
that we're going to be able to have a good conversation here.
I want to focus on the 13,000 Wells Fargo employees in our
district. We spoke here last year, as you mentioned. You said
that you were going to make those folks a priority. We talked a
little bit about some of the organizational structure pieces
you were going to put in place and the ways you were going to
engage employees. And I was very excited to hear about those
things.
But the news is very disconcerting at this time. There have
been nine rounds of layoffs--notices--to more than 350 Iowans
since April. From what I understand, that is due to a slow
mortgage industry. Is that correct?
Mr. Scharf. I believe that is correct, Congresswoman, yes.
Mrs. Axne. Okay. Thank you.
And last month, Bloomberg reported that Wells Fargo is
planning a major retreat from its mortgage business, which,
boy, I do not like the sound of those words. Those mortgage
operations are, of course, one of the primary businesses in
Iowa.
Can you confirm whether that story is accurate? And can you
discuss what will happen with the 13,000 Iowans that Wells
employs if you shrink mortgage operations?
Mr. Scharf. Congresswoman, first of all, as we have
discussed, Iowa, Des Moines specifically, is a very, very
important location for us. It has been for a long time, and I
see that continuing to be the case for a long time to come. I
don't see that changing.
We do operate within businesses that are susceptible to
market conditions. Volumes go up and volumes go down. The
changes that we have seen in the mortgage business are the most
significant changes we have seen, in the shortest amount of
time, given the move in rates. So we, like all other mortgage
companies, have had to take a look at our own infrastructure
and ensure that it's sized properly.
The first thing we do is we try and figure out if there are
other roles inside the company that impacted employees can
play. And I know that we have moved a significant number of
employees from one division to another as we have gone through
these changes in the mortgage business.
The other thing I should just point out is the mortgage--
Des Moines began--I shouldn't say began. I think when we
acquired a company that was in Des Moines way back, it was a
mortgage business. And for quite a number of years, the only
thing that we had in Des Moines was mortgage.
That's not true today. We have large parts of the company
that reside there. So, if you live there and you want a role
elsewhere, it's quite likely that you'll be able to stay in Des
Moines and play that other role.
Mrs. Axne. That's good to hear. You still haven't answered
the question.
Can you confirm whether that is accurate, that you will be
seeing a major retreat from the mortgage business?
Mr. Scharf. Congresswoman, we have--
Mrs. Axne. Yes or no?
Mr. Scharf. Well, I don't--
Mrs. Axne. Is it accurate?
Mr. Scharf. I don't know how to define what a major retreat
is.
Mrs. Axne. Was Bloomberg correct when they said you're
planning a major retreat out of the mortgage business? This is
a really easy question.
Mr. Scharf. No, it's not, Congresswoman--
Mrs. Axne. Yes or no?
Mr. Scharf. The mortgage market is substantially lower
today than it was, and so we are significantly--
Mrs. Axne. Okay. So, I'm not getting an answer.
What I did think I heard from you is that with the 13,000
Iowans, if I'm hearing you correctly, you will do everything in
your possible power to find another job for them within the
other parts of Wells Fargo that are located in Iowa. Is that
correct?
Mr. Scharf. Congresswoman, that is something that we do
across the whole country, not just within Iowa.
Mrs. Axne. Okay. We're going to have to follow up on this,
because I'm still not getting a straight answer on what's going
to happen to the tons of people in our district since you won't
answer this question about what's happening. And what I don't
want to see is all of a sudden, we wake up, and in the Des
Moines Register, I have a thousand people lining up to make
sure that they can get unemployment.
And the other thing I want to make sure that we do is
address Trade Adjustment Assistance (TAA) if there is going to
be any conversation about moving jobs out of this country.
Okay? We'll be in touch with you about that.
Next, I just want to move on a bit, and this was good to
hear. I saw some stories suggesting Wells would cover travel
expenses for employees seeking abortion care.
Our Iowa Governor Reynolds is attempting to push her ban
through that she pushed through last time and was shot down,
but she will now because of Roe v. Wade.
Can you confirm if Wells is covering those expenses and how
that will work for the workers?
Mr. Scharf. Congresswoman, we have changed our plans so
that abortion is consistent with other healthcare options, so
that we will pay for the expenses of someone to cross State
lines to get a legal procedure. And we have not worked out
specifically, to my knowledge, exactly how that will work, but
we can certainly share that with you.
Mrs. Axne. Thank you.
And one last question. Can you clarify if your commitment
to remaining neutral and not interfering with employees on
unionizing will be upheld?
Mr. Scharf. Do you want me to answer that? Time is up?
Chairwoman Waters. The gentlelady's time has expired.
Mrs. Axne. Would he be able to answer that, Madam
Chairwoman?
Chairwoman Waters. We're going to continue with the rules
that we have used all day.
Mrs. Axne. Thank you. I'll follow up on that.
Chairwoman Waters. The gentleman from Georgia, Mr.
Loudermilk, is now recognized for 5 minutes.
Mr. Loudermilk. Thank you, Madam Chairwoman.
And thank you all for being here. I know that you have been
anticipating and looking forward to this day for quite a while.
We do thank you for taking time to be here.
One of the issues that is paramount to me, and I think it
is to a lot of people, is cybersecurity. Especially as we move
more into a digital age, it becomes more and more imperative
that we protect data, especially data of citizens, your
customers.
I come from an intelligence background in the military
where I had a very high security clearance. We had one
principle that we lived by, which is the best, that if you
don't need data, don't keep it, because you only have to
protect what you have. So if you don't absolutely need
information, then you are to dispose of it.
Part of my concern is the amount of data that you are
required, not only to keep, but to pass on to the Federal
Government, which, from what we have learned, becomes the weak
leak in the cybersecurity protection chain. And that is a
discussion for another day, whether it's revisions of the BSA
and CTRs and SARs.
The massive amount of data that is passed along that you're
required to give to the Federal Government, the majority of
which is never looked at, becomes a cybersecurity issue.
But at the last several hearings that we have had with you
and the CEOs of large banks, I have been one of the few
Members, if not the only one, to bring up cybersecurity. And
the reason I bring this up is not just with my interest, but
I'm hearing from you that that is one of your top issues and
concerns.
Mr. Cecere, can you give us an update on cybersecurity
threats in the banking industry that you're facing and maybe
some things you're doing to address those?
Mr. Cecere. Certainly. And I agree that cyber is one of the
significant risks that we are all facing. I will also say that
we're all working very well together. If we see a node that was
attacking one of us, we make sure that we communicate with each
other to make sure we're shutting it down as quickly as
possible.
I know that we all, including U.S. Bank, have made
significant investments in cybersecurity, both from a personnel
standpoint as well as an investment standpoint. We have doubled
the staff in the last 2 years within our cyber group as well as
the investment in spend.
The reason for that is because it is such a significant
risk. And I think it requires coordination among the banks, the
regulators, and the government, and we're working hard on it.
Mr. Loudermilk. Okay. Thank you.
Mr. Rogers, I know that this is an area of concern for
Truist, and if I may interject that that is the name of the
home park of the World Series Atlanta Braves, but that aside, I
know that cybersecurity is a serious concern for Truist as
well.
Can you discuss the threats that you're seeing and what
Truist is doing?
Mr. Rogers. Thank you for your focus on this,
Representative. And I can add now playoff-bound Atlanta Braves,
just to add to that distinction.
It has been a big focus, and one of the reasons we merged
was to create additional capacity to invest in things that are
relevant for our clients, and relevant for our communities, but
also in the protection of important data that we preserve for
our clients.
We have multiple, multiple thresholds that we analyze every
day related to cyber. We hire third parties to come in and test
and actually try to invade us at any particular time and test
our particular forces. We participate in all of the industry
things, including horizontal reviews by our regulators who are
constantly looking at where we are relative to cyber.
We have the capability to bring in talent and capacity that
has exceeded what we could do before the merger.
Cyber is clearly a focus for us, and one of the reasons we
merged was to create a stronger shield for our clients.
Mr. Loudermilk. Thank you for that.
And while I have you, one of the things that Republicans
have been working on and we're currently accepting feedback on
is a draft bill that would finally establish a national
consumer data privacy standard. We have to positively identify
what data belongs to the consumer, what data belongs to the
financial institution, et cetera, and protect that.
Mr. Rogers, can you discuss why a national data privacy
standard would help provide consumers with clarity about who
owns their data, as well as those privacy issues?
Mr. Rogers. Representative, I'm not exactly familiar with
all of the intricacies of that particular bill. But the
important part of data being owned by the client is critical,
and that is how we approach data, is it's the client's data,
not ours. It's our duty to protect the data.
Mr. Loudermilk. Okay.
Thank you, Madam Chairwoman, I yield back.
Chairwoman Waters. Thank you.
The gentlewoman from Ohio, Mrs. Beatty, who is also the
Chair of our Subcommittee on Diversity and Inclusion, is now
recognized for 5 minutes.
Mrs. Beatty. First of all, let me say thank you, Madam
Chairwoman, not only for this committee hearing, but for
entrusting me to chair the Diversity and Inclusion
Subcommittee.
And let me say thank you to all of the witnesses, faces
that I know. But for the record, my comments and questions are
not divisive, nor are they a part of any political elections
coming up.
And I can clearly say that, because anyone who has followed
me, met with me, or known me, using your words, I find myself
to be the guardian of Dodd-Frank, especially Section 342, as
well as diversity and inclusion, MDIs, especially coupled with
protege banks, equity for those who are unbanked, racial
disparity; the wealth gap, narrowing it, looking at CRA, and
external contracts with asset managers, lawyers, et cetera.
With that said, it was reported on April 20, 2022 by the
GAO that there are some 7 million U.S. households that don't
have bank accounts, and they gave three primary reasons.
Does anybody know what those three reasons are?
Let me share them with you. Number one, people believe that
they don't have enough money. Number two, people believe that
the fees are too excessive or complicated or they don't know
how to access it.
But number three is the lack of trust. And oftentimes that
is because people don't see people who look like them or their
community. That supports what I believe in.
Now, let me tell you some good news. Every one of you
sitting here has met with me. On June 16th, I had the
opportunity to spend more than an hour with every one of you.
In addition to that, many of you, as recently as yesterday,
brought staff, and walked me through your changes.
I'm going to applaud you for that, and let me tell you why.
But for this chairwoman pushing the envelope, maybe having
subpoena power, but making sure that she was consistent. If
we're going to talk about justice, if we're going to talk about
democracy and fairness, then we can't get to all of the other
things, whether it's intelligence, whether it's cybersecurity,
if you don't reflect the people who put all those dollars into
your bank.
Buying homes, and everything that they are doing comes back
to what I believe in and what I stand for.
You have moved the needle, and that's what I asked you to
do. You sucked before that. And many of you still have a lot of
work to do.
But I am going to give you credit, because I really don't
believe but for this committee, you would have been in here. I
really don't believe that you would have been as serious and
intentional, not just the window dressing that you've done for
years, not impressed with us saying, go hire people, and then
you go hire 40 or 50 people. And none of those people report to
you. None of those people have an opportunity to go into the
boardroom. But now, we are moving the needle.
Now, don't get too excited. We have a lot more work to do.
But I do believe in rewarding people who are moving the needle,
because that's what I asked you to do.
It gets much tougher as we go along because once you move
the needle--I'm a clinical psychologist by trade--it means that
now I should be able to look at your board and see that same
type of diversity.
Congressman Green asked you about the future, and that was
really good, but I want to talk about the present. How many
people have someone who would represent diversity, who reports
to you?
We didn't have that, Chairwoman Waters, before you
established this subcommittee.
How many people have taken a D&I or someone into their
board of trustees room and did a report on D&I? We did not have
that before this committee.
So if you could move the needle now, part two, which starts
tomorrow, is that I'm going to give you a bigger needle to
move.
But I want to say thank you for being here. And I'm going
to tell you something. We aren't just beating up on you and
asking you to do these good things. You are making America
better. And it means you can do much more.
We have done the same thing to asset managers. Yesterday,
we brought in the largest insurance investment companies, and
they did not do so well.
So, we're going to use you as a benchmark. Now, we will set
the needle higher.
And I want to know how many people are going to make a
commitment to come back, to continue to do this and to continue
to move that needle.
Let the record show, Mr. Green, that they all raised their
hands, and I'm going to hold them accountable.
Thank you. And I yield back.
Chairwoman Waters. Thank you very much.
The gentleman from West Virginia, Mr. Mooney, is now
recognized for 5 minutes.
Mr. Mooney. Thank you, Madam Chairwoman.
Despite its initial resistance, leftist activists
successfully pressured the International Organization for
Standardization and major credit card companies to adopt a new
merchant category code for firearm retailers which they say can
be used to flag lawful gun purchases and target law-abiding
citizens.
Merchant category codes, or MCCs, are typically used to
identify merchants by the goods or services they provide.
West Virginia, the State I'm blessed to represent, is one
of the most pro-Second Amendment States in the country. Nearly
60 percent of West Virginians have firearms in their homes--
which is, frankly, why it's one of the safest States in the
country, because guns actually protect and save lives, despite
what the left says about it.
Mr. Rogers, I would just say, Truist Bank services over
260,000 West Virginians. There has also been talk of using this
new data to flag what they call, ``suspicious purchases.''
To me, it seems like a straightforward way to target gun
owners without actually helping to prevent crime. In fact, the
opposite is true. The more folks avail themselves of their
constitutional right to the Second Amendment, the less crime
you have.
My question is what, in your mind, constitutes a,
``suspicious transaction?'' And what additional information
does this new code really provide for you to make that
determination?
Mr. Rogers. Thank you, Representative, for that question.
As we discussed earlier, this is a developing area at this
particular time. Our positions will follow the rules that are a
part of this system. But as of today, we'll also protect all
the laws, and protect the rights of our consumers in terms of
reporting.
I can't speak to exactly what will be required in terms of
reporting, but it won't be something that we'll do on a
voluntary basis.
Mr. Mooney. Thank you for that response.
A follow-up question: My constituents now may consider
purchasing firearms with cash instead of a credit card out of
fear of what the Federal Government might do with their data.
Who decides which merchants fall under a merchant category
code? And does Truist Bank plan to go back and re-code
businesses and past purchases that may now most closely fall
under the new merchant category code?
Mr. Rogers. Representative, we don't control the merchant
codes. That's not actually a decision that Truist makes.
Mr. Mooney. Okay. Great.
In closing, I just want to say that never before have we
seen an Administration weaponize financial regulators and
pressure lenders to push its agenda like we've seen with the
Biden Administration. I fear this is one step closer to a
backdoor gun registry. Banks and corporations must resist this
political pressure.
The best thing we can do to help our constituents and all
Americans is competition, free-market competition between your
banks, and between small banks. That's the way you get better
service for all.
We have to make a choice in this country. My mother fled a
communist country. She left Cuba when she was 19-years-old. And
you have a choice between--in this country, some are pushing
socialism. And what socialist countries like Russia do is they
invade other countries, because their economy is a total
disaster, because socialism does not work. So, they go try to
gobble up other countries.
We have to make a basic choice between freedom and free
markets and capitalism in this country or socialism. There are
those pushing socialism constantly. It has failed everywhere it
has been tried.
I think our role as Americans should be to push free
markets; reject socialism; reject, frankly, government control
of people. Let people be free to make their own choices. Don't
target them.
Thank you for your participation today.
And I yield back.
Chairwoman Waters. The gentleman from Florida, Mr. Lawson,
is now recognized for 5 minutes.
Mr. Lawson. Thank you very much, Madam Chairwoman.
And I'd like to again, as everyone else has, welcome all of
the witnesses to our committee today.
And my first question is to the whole panel.
For the U.S. to be strong economically, and to compete
globally, we need a strong U.S. financial system. When you
compare U.S. banks to the rest of the world using International
Financial Reporting Standards (IFRS), the largest four banks
are all Chinese. And they are working around the globe to
expand their strength and influence.
What are some of the most significant challenges that U.S.
banks face when trying to compete with banks around the globe?
And this is to the whole panel.
Chairwoman Waters. Mr. Lawson, are you addressing that to
any of our witnesses?
Mr. Lawson. I'll just say to the whole panel.
Mr. Moynihan. Why don't I start, Madam Chairwoman?
As Mr. Dimon said earlier, the near-term competitiveness of
the Chinese banking system is an issue, but the longer-term
competitiveness is the real issue.
These institutions are the top four in the world. They
decide the economic issues in the country of China right now.
They've made substantial amounts of money. And they are
developing the techniques to compete on a worldwide basis to
support, in particular, the multinational client base of the
world outside the country of China.
I think it is something to be concerned about. And frankly,
they can operate in the U.S. under the current rule set, and
they could acquire many of us without much problem, in terms of
financial resources to do it.
Mr. Lawson. Is there anyone else who would like to comment
on that before I go to another question?
Ms. Fraser. I would.
Mr. Lawson. Go ahead.
Ms. Fraser. It's Jane Fraser from Citi. Thank you very much
for the question, Congressman.
I would add in that, when our banks are brought abroad,
many of us are supporting American multinationals abroad and
their competitiveness. Scale matters in supporting these
companies. And they also result in jobs in America and the
support of the economy here.
So, for that not to be operating on American rails could be
problematic in terms of safety, security, cyber, privacy, and
many of the themes that we've been discussing at today's
hearing. It's better on American rails than on others'.
Mr. Lawson. Okay. Thank you very much.
And I have another question for the panel.
In 2021, a report from Freddie Mac demonstrated that homes
in Black and Hispanic neighborhoods are much more likely to
receive appraisal values below the ones that are in majority
White neighborhoods.
After taking into account the differences in home and
neighborhood quality, racial biases lead to the valuation of
homes in majority Black neighborhoods at 23 percent less than
those in other neighborhoods with fewer or no Black residents.
Are any of your banks using alternative traditional
appraisals, like automated valuation models, as a means of
reducing the prevalence or the impact on appraisal values?
And I want to say this to you. In a lot of the--and I'll
just use as an example an area in Florida, and break it down a
little bit to the area--and I need to hurry up, because I'll
probably run out, because I want to have y'all--and, let's say,
in the area of Tallahassee in Florida, many of the young
graduates who are coming out of school seem to go into Black
neighborhoods to try to rebuild them, but they are having a
problem because the banks don't want to finance those
mortgages, and say, why don't you go someplace else, so to
speak. But that's how you can improve the community.
But I just want to know, are you all using any alternative
valuation model for appraisals so that the young ones coming
out--and I'm going to just cut it right there--will be able to
get mortgage financing?
Mr. Demchak. Thank you, Congressman. I'll speak to that
very quickly.
We use alternative models, alternative sources of payment
where we see past rental payments and so forth, to do that.
That's easier to do when we own the mortgage or the home
equity, whatever the case may be, than it is to do inside of
the Fannie Mae, Freddie Mac, or Ginnie Mae programs. The
government programs don't support that.
Mr. Lawson. Okay.
With that, Madam Chairwoman, I yield back. I have a lot
more questions, but I'll just submit them for the record.
Chairwoman Waters. Thank you very much.
The gentleman from Ohio, Mr. Davidson, is now recognized
for 5 minutes.
Mr. Davidson. Thank you, Madam Chairwoman. And thanks to
our witnesses and to my colleagues. I appreciate having this
hearing.
A few years ago, we saw a few large banks adopt a policy of
refusing cash deposits. Is accepting cash deposits a liability?
And, if so, is it more of a market risk or a regulatory bank
secrecy risk?
Anyone?
Mr. Dimon?
Mr. Dimon. You're reminding me of something from years ago.
I do believe it was a regulatory risk that made us very
cautious about accepting cash deposits, particularly
interstate.
Mr. Davidson. Mr. Scharf?
Mr. Scharf. I don't have anything to add.
Mr. Davidson. The regulators have intimidated the banks--
the megabanks, as my chairwoman likes to refer to y'all--to the
point where no one will even speak about taking cash.
Are permissionless payments a risk to this financial
system? Permissionless, like cash, like I can give a person
cash. Whether it's cash or some sort of electronic payment, is
a permissionless, peer-to-peer transaction some sort of threat
to the financial system?
Mr. Dimon. No.
Mr. Davidson. No? Okay. That's good to hear. I was getting
a little nervous.
And it's hard, because a lot of people still deal in cash.
When we talk to people who don't necessarily use your bank
about some of the barriers to people using the financial sector
at any size or scale, they're still transacting in the cash
economy.
And as people become more nervous about whether it's
government or just surveillance capitalism, the idea that
everybody needs to know everything about every transaction and
everyone else--we have a couple of colleagues who are really
passionate about digital identity. You basically have to
background-check somebody to even talk to them. People are kind
of opting out of that, and they're choosing using cash.
I think that's a big factor in the crypto space. And just
by a show of hands, does your bank custody any crypto assets
for any level of client?
Not much.
So, not much change there. There are a lot of regulatory
challenges that have made that hard as well. And certainly,
we've worked, some of us have, for years to remedy that.
Our financial markets--we are home to about 5 percent of
the world's population, almost 25 percent of the world's GDP,
but roughly 50 percent of the world's invested capital in
capital markets. Unfortunately, in the crypto space, roughly 70
percent of the liquidities are offshore. I think that's a
burden for this body here in Congress, to provide regulatory
clarity in those things.
And I'd just note the, I guess, hesitancy for titans of
industry, people in the financial sector, literally atop the
sector, to address some of these issues. And I think it's a
concern when we look at regulators, the power the regulators
have over the sector.
And, frankly, one that I think was a win of sorts was not
seeing Saule Omarova confirmed for the Office of the
Comptroller of the Currency. No one made President Biden
nominate her, or Senator Sherrod Brown give her high praise and
walk her around the Senate and try to get her confirmed. But
she's someone who described herself as radical and held
fundamentally different views on the banking industry, going so
far as to suggest that the Federal Reserve or even the Postal
Service should be retail banking outlets.
Mr. Dimon, do folks who have no industry experience and
only academic experience have a hard time understanding
soundness and risk in the private sector?
Mr. Dimon. I would love to see the Federal Reserve be in
the retail banking business and running call centers and
operating centers and ATMs and branches and hiring and all that
kind of stuff.
And I would love to see more people who are not academics
and lawyers and economists in a lot of jobs in Washington, D.C.
There's a great quote: ``In theory, practice and theory are the
same. In practice, they're not.'' I think the country would
benefit greatly from something like that.
Mr. Davidson. Yes, I have been concerned, because I think
the median--there was a study that showed the median years of
private-sector experience in the Biden Administration is zero.
And hopefully, the next few years change that.
Ms. Fraser, as I have just a few moments left, your bank
does a lot with sanctions--as do all of yours. But, if you look
at the international aspects of it, the Office of Foreign
Assets Control (OFAC), when you look at the opportunity to
improve that, the way that the system is done causes a little
bit of collateral damage for domestic companies.
Do you have any ideas on how we could reform that? And if
you can't finish your answer, could you please send something
in writing to our office about your experience?
Ms. Fraser. I'd be delighted to. It will involve
international collaboration.
Mr. Davidson. Thank you.
Chairwoman Waters. I wish we had time for more correction
of information that's being given about the banks and cash.
However, we must move on.
The gentlewoman from North Carolina, Ms. Adams, is now
recognized for 5 minutes.
Ms. Adams. Thank you, Madam Chairwoman. And thank you for
hosting today's hearing.
To our witnesses, thank you. I am particularly glad to see
some folks from back home: Charlie Scharf from Wells; Bill
Rogers from Truist; and Brian Moynihan from Bank of America.
Thank you all for being here, and everyone else as well.
But I do want to get right to it. And I'd like to ask you
to keep your remarks around 30 seconds so we can hear from
everyone. And this question is to each of the witnesses.
As you all may know, I am founder and co-Chair of the
Bipartisan Historically Black Colleges and Universities (HBCU)
Caucus, and through that caucus, and through the Congressional
Black Caucus (CBC), we've helped secure historic wins for
Historically Black Colleges and Universities (HBCUs). So, I'm
grateful that several of you here today have taken our
Partnership Challenge. Some of you, like Truist and Wells
Fargo, have endorsed our signature legislation, the IGNITE HBCU
Excellence Act. Thank you for doing that.
This, by the way, is HBCU Week, and the White House
initiative is pushing that as well.
But my question is, I want to know--and please be as
detailed as you can--what is your long-term plan to engage
with, to support, and to recruit from HBCUs? And how are you
evaluating the effectiveness of your external recruiting
efforts and internal pipeline programs?
Mr. Scharf, let's start with you.
Mr. Scharf. Sure. Thank you, Congresswoman, and thank you
for your leadership in this area. It's extraordinarily-
important work, and we're proud to be a part of a lot of your
leadership efforts.
The HBCUs, for us, are just an incredibly important
relationship. And it's multifold, from the things that we do to
support the HBCUs, to the things that we get out of the HBCUs,
including just the broad-based talent in locations across the
country. And we have had just outstanding experiences with some
of our incredibly senior folks across the company who are
products of the HBCU system.
Ultimately, what we will look at is the success factor that
we have in keeping the folks that we bring on from the HBCUs,
and, ultimately, the level of seniority and the scope of the
roles that they carry inside our company.
Ms. Adams. Okay.
Let me move on. Mr. Rogers? And we want to really keep it
to 30 seconds if we can, okay? Thank you.
Mr. Rogers. Again, thank you for your great leadership in
this area as well.
And, similarly, we are investing--and we've invested as
much as $20 million recently--in HBCUs in terms of direct
investment, but also in the important work that we do in hiring
HBCU graduates, and we're committed to increase our hiring of
HBCU graduates.
And then, working on using the resources that we have in
our company. And as you have participated in our Leadership
Institute, using it to help educate and provide leadership
training in the HBCU community. And things like the Tech
Summit, which we've supported together.
So, using our own resources and working in partnership with
HBCUs, I think is what's important to me.
Ms. Adams. Great. Thank you.
Mr. Dimon?
Mr. Dimon. I've been going to HBCUs for 30 years. We hire
100 kids a year now. We just recruited four. We now recruited
20. We help finance them, we help grow them, and we hire a lot
of their kids.
I would tell anyone that the talent is unbelievable. I've
been to many of them, I've been to six or seven now--
extraordinary talent. And my advice to anyone who's looking for
young Black kids who want to be successful, go to an HBCU if
you think you can't find any.
Ms. Adams. That is where you can find them.
Ms. Fraser?
Ms. Fraser. Thank you very much for the question.
I think, like our other colleagues on the panel today,
we're very proud to be working with the HBCUs. Our CFO at Citi
is the Vice Chair at Howard and puts tremendous passion into
making sure that we have broader programs to bring in and
recruit and grow and develop the talent that we bring in from
the HBCUs. And I think, similar to what you've heard today,
it's wonderful talent. And we're proud to give opportunities in
our company, to the benefit of the company as much as the
individuals.
Ms. Adams. Thank you, ma'am.
Mr. Moynihan, we just have a few more seconds.
Mr. Moynihan. Sure.
I think, along with the hiring that we have continued to
increase across time, along with the fiscal support of
contributions to HBCUs, endowments and budgets for helping
build them out, which was $25 million over the last few years,
on top of that, the other thing we've done is created an
entrepreneurial center in Atlanta between the two HBCUs,
Spelman and Morehouse, which, to get them to work together was
kind of interesting, but we were able to create an
entrepreneurial center that's--
Ms. Adams. Thank you, sir.
Mr. Moynihan. --going to be quite successful.
Ms. Adams. I apologize. I'm out of time. And we'll be
watching.
Madam Chairwoman, I yield back.
Chairwoman Waters. Thank you so very much for all of the
work you do with the HBCUs, Ms. Adams. We appreciate that. And
the proof of the pudding is in the eating. Thank you.
The gentleman from Ohio, Mr. Gonzalez, is now recognized
for 5 minutes.
Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman.
I'm going to do a little macro/micro. Mr. Dimon, I'm going
to ask you some macro questions; and Mr. Moynihan, more on the
micro side.
Mr. Dimon, you've been outspoken about the state of the
economy, global economy, and some of concerns.
I'm going to define a soft landing, just for the purposes
of this, as a mild recession with limited financial stability
risks, and a hard landing as a prolonged recession, two-plus
quarters, with heightened stability risks. Keep that in mind.
From a policy standpoint, what are you most concerned about
or what do you believe needs to happen to avoid the hard-
landing scenario?
Mr. Dimon. I think the sooner that the Federal Reserve gets
their hand around inflation so we avoid stagflation--that is
the worst outcome, is inflation with no growth and
unemployment. And that hurts the most people and the most
businesses, et cetera.
And second is to make sure we have a secure energy policy
so that oil prices don't skyrocket. Energy is precarious. If we
see it at 150, it will cause a global recession.
Mr. Gonzalez of Ohio. How confident are you in the Fed's
ability do that?
Mr. Dimon. I'm keeping my fingers crossed.
Mr. Gonzalez of Ohio. Yes. Me, too.
In the event of a hard landing, where do you believe the
economy is most vulnerable, from a financial stability
standpoint?
Mr. Dimon. The consumer, going into a recession, is
actually in rather good shape, particularly compared to 2008
and 2009, and businesses are in rather good shape. I think if
you have a hard landing, you'll see a fairly traditional effect
on financial stability.
I don't think that's the issue. I think the real issue is
global stability relating to Ukraine and China and kind of more
forward-looking. The financial industry here can easily handle
the hard landing.
Mr. Gonzalez of Ohio. I agree with you on--and this is a
comment now for everybody, I guess--the China piece for sure. I
would encourage your banks to be a lot more thoughtful about
the role that you all play in facilitating the Chinese economy.
They rely on U.S. capital markets to grow their economy. We
know that they are no friend of ours. And when you talk about
global stability, it's Russia and China that are posing the
greatest threats, by far, and I don't believe it's even close.
Mr. Moynihan, I want to switch to you, and get back to the
consumer. Your retail consumers, how do you feel they are today
from a health standpoint? And then, in the event of a hard
landing, what are you most concerned about at, sort of, the
retail level?
Mr. Moynihan. Sure.
If you look at where the consumer stands today, they have
more money in their accounts, as my colleague said earlier,
they have borrowing capacity left, the employment rate is very
low, and their wages are rising. Working against them are
inflation price increases that will eat up part of that
increase, and also unemployment. At the end of the day, we
haven't seen unemployment move.
The question is, can the Fed tighten strongly enough to
choke off inflation without creating such high levels of
unemployment? And that's the discussion you have in the
probability of having a hard landing and a soft landing.
And the view is, we all hope that the balance can be
restored to the system. But it needs to be restored, because
right now it's not in proper balance after the last couple of
years and the fiscal stimulus and monetary stimulus and all of
those things.
The consumer is spending 10 percent more in September than
they did last September, and they have multiples of money in
their accounts now than pre-pandemic, and they're employed, and
they're earning more. Right now, it's okay. The question is,
what happens to them?
And that's always going to come down to: If they're
working, they'll be fine. At the end of the day, no matter what
kind of loan they have--car, home, credit card, you pick it--if
they're working, they're fine.
And I think the issue is to actually get labor markets to
be less tight. You're going to have to work--the Fed knows that
the unemployment is probably going to rise, so the question is,
can they guide it to the right place and not have it go too
far?
Mr. Gonzalez of Ohio. Yes. And that's the disaster
scenario, right? That's, definitionally, the hard landing. The
only tool the Fed has right now is to destroy demand, which
would drive inflation up--or, I'm sorry, unemployment up and
put the consumer at enormous risk.
Mr. Dimon, back to you for one final macro question. The
Fed has a dual mandate, as you know--maximum employment and
stable prices. Do you have an opinion on whether the dual
mandate is appropriate? Or would you consider moving us to
simply stable prices?
Mr. Dimon. I would say it's appropriate, but it should be
monitored.
Mr. Gonzalez of Ohio. Thank you.
With that, I yield back.
Chairwoman Waters. Thank you very much.
At this time, we will take a brief recess to--
Mr. Green. Madam Chairwoman?
Chairwoman Waters. Yes?
Mr. Green. I have a unanimous consent request. I have a
special purchase credit program question that I'd like to
submit to all of the members of the panel.
Chairwoman Waters. Without objection, it is so ordered.
Mr. Green. Thank you.
Chairwoman Waters. We will take a brief recess to allow
Members to vote on the House Floor. We will resume immediately
following votes.
And let me just say to all of the witnesses, I appreciate
your patience with the work that we are doing today. You may
want to take this as a time to grab some lunch.
The committee will stand in recess. Thank you.
[recess]
Mr. Lynch. [presiding]. The committee will come to order.
The Chair now recognizes the gentleman from Guam, Mr. San
Nicolas.
You're recognized for 5 minutes. Welcome.
Mr. San Nicolas. Thank you so much, Mr. Chairman. Can you
hear me okay?
Mr. Lynch. Loud and clear, yes. Thank you.
Mr. San Nicolas. Thank you, Mr. Chairman.
I want to first begin by recognizing Ms. Fraser and
Citigroup. The conversation I'm going to have actually involves
all of the panelists, but I wanted to begin with her company
and herself, as, based on our research, it looks like Citigroup
pays 5 times more in interest to its depositors than the rest
of the individuals sitting at the table.
Ms. Fraser, is it correct that your deposits are currently
yielding a .05-percent interest rate?
Ms. Fraser. We have a variety of different deposit
products, and we believe them to be competitive and fair.
Mr. San Nicolas. The information I have here on your basic
account package is a .05-percent interest rate. Is that
correct?
Ms. Fraser. We do have one of our deposit products that has
that. That is correct.
Mr. San Nicolas. And for the rest of the panel, is it fair
to say that my numbers here are accurate, that the remainder of
you are paying about 0.01 percent on deposits?
Mr. Demchak. That is inaccurate.
Mr. San Nicolas. Could you please clarify, then, for me the
figure?
Mr. Demchak. Yes. Our base account pays about the same as
Citigroup's, at 5 basis points or so, but we have many products
that pay substantially more, and it varies. But I don't know of
any that pay zero.
Mr. San Nicolas. Okay. Can we just clarify this? Just go
across the panel from left to right? And just on the record for
the American people, tell us what your basic standard savings
deposit is currently yielding in your institutions.
Mr. Chairman? I'm waiting for the panel to respond.
Mr. Lynch. Let's go from left to right.
Mr. Cecere?
Mr. Cecere. We have a variety of products that range from 5
basis points to over 200 basis points, depending upon the size
of the deposit as well as the tenor of the deposit.
Mr. San Nicolas. Yes, but the general public accounts is
what I'm talking about. The majority of your deposits, what are
they yielding right now?
Mr. Cecere. The general retail deposit would be at that
lower end of that range. And then, there are also CDs available
for term deposits that approach 3 percent.
Mr. San Nicolas. Sure.
I don't have a lot of time. Can we just go across the
panel, please, Mr. Chairman?
Mr. Lynch. Okay.
Mr. Demchak?
Mr. Demchak. We're the same. Five basis points at the lower
end, with different products yielding more, depending on
several factors.
Mr. Lynch. Thank you.
Mr. Dimon?
Mr. Dimon. We're pretty much the same as everybody else
here.
Mr. Lynch. Ms. Fraser?
Ms. Fraser. Yes, we're in the same range.
Mr. Lynch. Mr. Moynihan?
Mr. Moynihan. We have a range of products that would cover
the same ranges as my colleagues have spoken about.
Mr. Lynch. Mr. Rogers?
Mr. Rogers. We have a very similar approach.
Mr. Lynch. Mr. Scharf?
Mr. Scharf. I believe we're in the same range.
Mr. San Nicolas. Thank you. Thank you so much, Mr.
Chairman.
As inflation is battering our public, and as interest rates
are rising and causing credit card interest rates to go up and
general consumer interest rates to go up, it's just an across-
the-board devastation for the American public.
We have had it on the record earlier today that there is,
``more money in their accounts,'' in all of these financial
institutions. In other words, there are a lot more deposits
being held by these financial institutions as interest rates
are rising.
One of the only silver linings in a rising-interest-rate
environment is that savers are supposed to be rewarded for
their savings. They're supposed to see the interest that they
earn on their savings accounts go up.
And yet, what we have here is a Fed Funds Rate that is
currently, Mr. Chairman, at 2.5 percent--on the record, a Fed
Funds Rate of 2.5 percent--with our depository institutions
paying between .01 percent and .05 percent, which means that on
risk-free money being put to the Fed, they're making anywhere
between 2.45 percent interest to 2.49 percent interest on the
deposits of their customers.
And so, I wanted ask quickly, Mr. Chairman, can they
confirm whether or not they are going to be increasing the
interest rate that they're paying to their depositors any time
soon?
Mr. Lynch. Mr. Cecere, you heard the question?
Mr. Cecere. Yes, I did. Thank you.
We would expect to continue to monitor rates and raise
rates as appropriate given what's going on with the Fed as well
as our competition.
Mr. Lynch. Mr. Demchak?
Mr. Demchak. The same. We'd expect us to raise them over
time.
Mr. Lynch. Mr. Dimon?
Mr. Dimon. We expect them to go up soon.
Mr. Lynch. Ms. Fraser?
Ms. Fraser. Yes, we will.
Mr. Lynch. Mr. Moynihan?
Mr. Moynihan. Rates will go up in the future with this rate
structure.
Mr. Lynch. Thank you.
Mr. Rogers?
Mr. Rogers. Yes, we'll be raising them.
Mr. Lynch. And Mr. Scharf?
Mr. Scharf. Yes, the same.
Mr. Lynch. Thank you.
Mr. San Nicolas. I yield back, Mr. Chairman. Thank you.
Mr. Lynch. Thank you.
The gentleman's time has expired.
The Chair now recognizes the gentleman from North Carolina,
Mr. Budd, for 5 minutes.
Mr. Budd. I thank the Chair.
On, ``60 Minutes,'' on Sunday, President Biden tried to
downplay the negative impact of 40-year-high inflation. He
basically said that 8.3 percent inflation isn't that bad
because it hasn't spiked recently.
As you also know, the second quarter's GDP was negative for
the second consecutive quarter, which is the textbook
definition of a recession. Of course, President Biden is trying
to deny this as well.
Now, as the leaders of financial institutions that deal
directly with American consumers every day, I'd like to ask you
some brief questions to gauge the financial health of the
average American consumer. And I'll just stick with the--for a
lack of time, I'll stick with the North Carolina institutions,
if you would, please, Mr. Rogers of Truist, and Mr. Moynihan of
Bank of America. And just brief answers, if you would. It could
be yes or no or just a sentence or less.
Are consumers' savings decreasing?
Mr. Rogers. Consumer savings are actually stable at this
particular juncture, after having grown for quite a few months.
Mr. Budd. Mr. Moynihan?
Mr. Moynihan. The consumer deposits are stable.
Mr. Budd. Are they using more credit now than they were a
year ago?
Mr. Rogers. Consumers are starting to access more credit,
particularly in their credit cards.
Mr. Budd. Mr. Moynihan?
Mr. Moynihan. Credit card balances have grown since the
last year but aren't back to pre-pandemic levels yet.
Mr. Budd. So, when you factor in inflation, are consumers'
real wages down?
Mr. Rogers?
Mr. Rogers. If you factor in inflation, for most consumers,
I believe real wages would be down.
Mr. Budd. Real wages are down. Thank you.
Mr. Moynihan?
Mr. Moynihan. On a 1-year basis, the inflation rate exceeds
the wage growth.
Mr. Budd. Okay.
Has the number of consumers with access to, say, $1,000 for
an emergency, gone up or down?
Mr. Rogers. Consumers currently have more in their checking
accounts, and the opportunity to have an emergency savings
account has actually increased during the last few years.
Mr. Budd. Mr. Moynihan?
Mr. Moynihan. Consumer deposits in their accounts are
multiples of where they were pre-pandemic.
Mr. Budd. Do you think the economy will get worse before it
gets better?
Mr. Moynihan? Let's switch it around. Mr. Moynihan first.
Mr. Moynihan. I said earlier that our experts have positive
GDP growth for this quarter, and then negative GDP growth for
the next couple of quarters. That's their base assumption, of
the research team that we have.
Mr. Budd. Mr. Rogers?
Mr. Rogers. We have a very similar forecast.
Mr. Budd. Thank you.
We see that the state of our economy is not good. President
Biden's failed economic policies have made life worse for
working families in North Carolina and across the country.
According to the Federal Reserve Bank of St. Louis, the
personal savings rate has been declining since March of last
year, and it's the lowest since 2008.
A recent survey said that 60 percent of respondents have
been in more credit card debt over the last year.
And, according to the Federal Reserve Bank of New York,
household debt surpassed $16 trillion for the first time ever
in the second quarter.
According to the Census Bureau, median household incomes
have remained stagnant or have declined 2 years in a row.
According to Bankrate, 56 percent of Americans cannot cover
a $1,000 emergency expense with savings anymore.
A recent ABC News poll found that 69 percent of respondents
said that they think the U.S. economy is getting worse.
Bottom line: Americans are buying less, earning less, and
saving less, while paying more for their daily lives. It's what
I see in all 100 counties in North Carolina. Life seems to have
gotten worse under President Biden, and I believe that it's
time that he admits it.
Thank you all for your time.
I yield back.
Chairwoman Waters. Thank you.
The gentleman from Illinois, Mr. Casten, who is also the
Vice Chair of our Subcommittee on Investor Protection,
Entrepreneurship, and Capital Markets, is now recognized for 5
minutes.
Mr. Casten. Thank you, Madam Chairwoman.
And thank you all for being here on this long day.
I want to just start with a statement that I think is
obvious, but all of you do a wonderful job. And I appreciate
your work to minimize the risk of loss to your equity capital
while still honoring your obligations to shareholders to
maximize return. If any of you disagree with that statement,
please chime in. But I want to start, just because I want to
focus on risk and return.
Two years ago, Mr. Dimon, Ms. Fraser, Mr. Moynihan, and Mr.
Scharf, in a Senate Banking Committee hearing, Senator Warren
asked you, and you all, I believe, essentially acknowledged
that you were, ``using new tools and services to gauge climate
risk to your portfolios.''
I could put the question to all of you, but I want to focus
on you, Mr. Scharf, because I think you have the largest
mortgage book. In the 2 years since, have you changed your
lending, your diligence standards for properties that are
exposed to climate risk--wildfires, forest fires? You've had 2
years to gauge those risks. Have you changed your lending
standards in those regions?
Mr. Scharf. Congressman, it's something that we talk a lot
about, and we've always factored some of those risks into the
properties that we've financed. And it continues to be
something that we talk about. Whether or not we've specifically
changed the magnitude of that, I can't answer right now.
Mr. Casten. Okay. And I don't mean it as a critical
question. There's been some data suggesting that there's a
disproportionate flow of those mortgages to Fannie Mae and
Freddie Mac in those high-risk areas. And if you don't know off
the top of your head, we can follow up offline. But there has
been a lot of reporting on that, and I'd like to see the data,
because it's obviously a concern if we're moving risks onto the
taxpayers.
Mr. Scharf. We can certainly go back and look at the data
and share it with you.
Mr. Casten. Okay.
Shifting to the return side of the question, Mr. Dimon--
this might be a dumb question, but I'm sure you'll tell me if
it is--would you support legislation that compelled you to
preferentially invest in industries that were struggling to
attract capital?
Mr. Dimon. I would not.
Mr. Casten. Okay. I assumed that would be your answer.
I ask that because, over the last 12 years, the entire oil
and gas E&P sector is running at about a seven-times multiple.
And NextEra Energy, Tesla, FirstEnergy, all of the sort of
leading lights of the clean-energy space, are running at 10
times that number, for the most part. And yet, we are seeing a
lot of my colleagues suggest that we should prevent the
financial sector from investing in areas that are getting high
returns, out of some completely bastardized theory of, ``woke
capitalism,'' whatever that means.
The State Financial Officers Foundation, a right-wing-
backed group, is intentionally promoting that. They are pushing
State legislation across the country. And as recently as July,
West Virginia's treasurer announced that he was canceling
hundreds of millions of dollars in State contracts to five
banks, including yours and Wells Fargo.
I think you said that their analysis was disconnected from
the facts. And I think Wells Fargo said that they disagreed
with the decision.
Subsequent to that, Federated Hermes has announced that
they are no longer going to fund this group. As of a few weeks
ago, JPMorgan and Wells Fargo were both funding the State
Financial Officers Foundation. It's not listed on the website
anymore.
Are you still providing resources to this organization that
is spreading policies that are encouraging you to invest in
places that are struggling to attract capital?
Mr. Dimon. I don't know the answer to that, but I'll be
happy to get back to you, and I'll look at it if I can.
Mr. Casten. Okay.
Mr. Scharf, is Wells Fargo still supporting the State
Financial Officers Foundation?
Mr. Scharf. I don't know the answer, but I'm glad to take a
look at it.
Mr. Casten. Can either of you commit, while we're here,
that you will not continue to fund an organization that is
spreading disinformation, that is blocking the capital sector
from freely allocating capital?
Mr. Dimon. I won't commit until I read something, but if
that is true, we probably would cancel it.
Mr. Casten. Mr. Scharf?
Mr. Scharf. I agree with Mr. Dimon.
Mr. Casten. Okay. As we look at their website today, the
only people supporting this are groups with active agendas.
I want to see you continue to minimize equity risk. I want
to see you continue to earn shareholder returns. And I want to
leave a better planet for our kids than the one that our
parents left us. And I would hope that you'd all work together
with us on that.
Thank you, and I yield back.
Chairwoman Waters. The gentleman from Indiana, Mr.
Hollingsworth, is now recognized for 5 minutes.
Mr. Hollingsworth. Good afternoon. I'm excited to be here
with each of you.
Before I get started on my questions, Mr. Moynihan, I
wanted to let you know--Sruthi? Raise your hand, Sruthi. She
has been my team member for a couple of years now, but on
Monday she becomes a Bank of America team member, about which
she is very, very excited. So, I hope you'll take good care of
her and know and recognize the talent that she has shown
already in our office. I'm sure she'll do the same at Bank of
America.
Mr. Moynihan. We will do that. And her father already works
for us, so--
Mr. Hollingsworth. Oh.
Mr. Moynihan. --he'll take care of her.
Mr. Hollingsworth. You should have told us. Well, good.
I appreciate the opportunity to chat about some of these
issues today. What I'm really interested in is the state of the
economy, and Mr. Budd touched a little bit upon this, but I
want to delve deeper into this.
We are, as of today, at a truly unprecedented pace
unwinding the quantitative easing as well as the accommodative
monetary policies of the last couple of years. Although the Fed
continues to talk about soft landing, I worry that this pace
will lead to a harder landing than perhaps they are yet
forecasting.
But there are a couple of ballasts to that: first, very,
very strong corporate balance sheets. Earnings have been
relatively resilient, but balance sheets are better than
they've ever been in the S&P 500. Second, household balance
sheets are better than they have quite literally ever been. And
you all touched on this a little bit, but one thing that I
continue to notice is the tremendous amount of savings that
households have in excess of the savings they had in 2019.
Have you begun to see households mobilizing that or not
begun to see them mobilizing that? Because I think this is
really important to real, underlying economic demand going
forward. In the face of some of the extra costs that are being
incurred, are we seeing them dip into those savings?
And, with all due respect to Mr. Budd, there's a difference
between a decline in savings rate and a decline in the level of
savings.
I'm curious, and maybe I'll start with you, Mr. Moynihan,
and then I'll ask Mr. Dimon and Ms. Fraser about the same
thing.
Mr. Moynihan. The consumers at Bank of America have
multiples of the amount of money they had pre-pandemic and that
amount is stable right now. It had been growing for the last
year-and-a-half. Since the last stimulus, it grew, and kept
growing. It went up a little bit in tax time, came down a
little bit after tax time, came down a little bit when they
paid for vacations, and now it's back up. So, it's basically
stable.
Mr. Hollingsworth. Understood.
Mr. Moynihan. And we measure that and we put out data about
it from our institute every month so that you can see it.
Mr. Hollingsworth. Understood. Thank you.
Mr. Dimon?
Mr. Dimon. The consumer currently is in very good shape.
Mr. Hollingsworth. Yes.
Mr. Dimon. High savings. Jobs available. Wages going up at
the lower end. Even with debt going up a little bit, it's so
much lower than it was before. Debt-service ratios are lower
than they've been in 50 years.
So, even if we go into a recession--but you have to ask
later, not right now. That's the good news, which is now. The
bad news is later.
Mr. Hollingsworth. Right.
Mr. Dimon. And it's coming.
Mr. Hollingsworth. Got it.
Ms. Fraser?
Ms. Fraser. I think, similarly, it's always a little
dangerous to talk about averages rather than what we see across
the spectrum. But stability in the deposits, still elevated
levels of spending, and, equally importantly, still low credit
losses across-the-board.
Mr. Hollingsworth. I would assume any controller or CFO
worth their salt has spent the last couple of years locking in
very low rates and extending out their maturity ladders to
ensure they don't face upcoming maturities.
Are any of you seeing any stress in corporates yet with
higher rates? No? Not even in PE, sponsor, kind of high-
leverage scenarios?
Mr. Dimon. Not actual stress, but spreads are way up. And
the markets. The markets--
Mr. Hollingsworth. Yes.
Ms. Fraser. Again, I--
Mr. Moynihan. --for those types of credits, but--
Mr. Hollingsworth. It's harder to transact today?
Mr. Moynihan. Yes.
Mr. Hollingsworth. Okay.
One of the things that we continue to talk about up here is
ensuring that we are investing enough in research and
development. We want to maintain the significant competitive
advantage we have in developing new technologies, whether
that's at research institutions across the country or in very
innovative, smart companies across the country.
One of the things we have noticed is that venture capital
funding is declining dramatically. In some estimates, there's a
trillion-dollar gap between what we've funded in the last 5
years and what we're likely to fund in the next 5 years. And
some of that is reluctance of companies to recognize valuations
today versus what they might have been even 6 months ago.
But I wondered if you've seen an uptick in earlier-stage
venture-backed funds seeking loans instead of equity, given
some of the transactions and the values that they're seeing
versus what they were before?
Does anybody want to comment on that?
Ms. Fraser. We haven't seen evidence of it yet, but it is
early days.
Mr. Hollingsworth. Yes.
Mr. Dimon. They generally don't borrow money. So, you're
not going to see a lot of that.
Mr. Hollingsworth. Indeed, but I had heard that more were
inclined to do so rather than recognize significant down-rounds
in their equity valuations.
With that, I yield back, Madam Chairwoman.
Chairwoman Waters. Thank you.
The gentlewoman from Massachusetts, Ms. Pressley, who is
also the Vice Chair of our Subcommittee on Consumer Protection
and Financial Institutions, is now recognized for 5 minutes.
Ms. Pressley. Thank you, Madam Chairwoman, for holding this
critical hearing and for ensuring that oversight remains a
priority for this committee.
While we have the CEOs in front of us, I do want to take
just a moment, for the official record, to center on that which
is most important, and that is the workers, from the bank
tellers who wear a smile day in and day out, processing
hundreds of transactions, to the custodial staff who keep
facilities clean and safe. Too often, I think their labor is
lost in these hearings, or, worse, used as cover-up talking
points. Your workers deserve better, and they deserve to be
respected.
Mr. Scharf, workers at Wells Fargo have been advocating for
a greater voice on the job for years. For the record, will you
commit to neutrality in the workers' organizing effort and
ensure that workers who speak out do not face retaliation? And
I'm looking for a yes-or-no response.
Mr. Scharf. We believe that we're best--
Ms. Pressley. Yes or no?
Mr. Scharf. --having a direct relationship with them.
Ms. Pressley. Is that a yes or a no?
Mr. Scharf. That is--
Ms. Pressley. Will you commit to neutrality in the workers'
organizing effort and ensure that workers who speak out--
Mr. Scharf. We will--
Ms. Pressley. --do not face retaliation? It's really easy.
Yes or no?
Mr. Scharf. We will follow the law--
Ms. Pressley. Okay.
Mr. Scharf. --but we will encourage our--
Ms. Pressley. I'm going to reclaim my time. I was looking
for a yes or no on whether or not you would commit to
neutrality in the workers' organizing efforts and ensure that
workers who speak out do not face retaliation.
After years of scandals and billions of dollars in fines,
you owe your employees accountability. If there had been a
union at Wells Fargo, then perhaps the toxic policies and
behaviors driving these scandals would not have gone unchecked
for so long.
I introduced the Greater Supervision in Banking Act to
shine a light on working conditions for employees, from pay
equity to accountability for workplace harassment. Congress
must pass this bill to support workers. My bill would also
require transparency on meaningful consumer protections.
Now, I've been having a hard time really keeping track of
the various illegal actions that have taken place by those
represented here on this panel, including your own bank, Mr.
Cecere, so let's establish a few things for the record.
On July 28th of this year, the Consumer Financial
Protection Bureau (CFPB) announced that your bank had illegally
accessed customers' credit reports and opened checking and
savings accounts, credit cards, and lines of credit without
those customers' permission.
Mr. Cecere, how many accounts were opened without
customers' permission?
Mr. Cecere. Thank you for the question.
First, we sincerely regret and take full responsibility
that even one customer account would've been opened in an
inappropriate fashion. It's against not only our standards and
procedures but it's against our core ethics as an organization.
This relates to a 5-year opportunity with the CFPB that
dates back to 2010. And, during that timeframe, we've
identified 342 accounts--
Ms. Pressley. Thank you.
Mr. Cecere. --which represents .001 percent of accounts
opened in--
Ms. Pressley. So, 342 accounts. Okay.
Mr. Cecere. Yes.
Ms. Pressley. And that was actually going to be my next
question. Do you take full responsibility for these violations
of the law?
Mr. Cecere. We do. It's not what--
Ms. Pressley. Thank you.
Mr. Cecere. --we seek to do. And we've remediated almost--
Ms. Pressley. Thank you. You should. Thank you.
As the CFPB's investigation certainly did tell a disturbing
top-down story of failure, your bank imposed sales goals on
employees as part of their job requirements while knowing that
this pressure was leading employees to unlawful behavior.
Based on reports, I believe if your employees had had the
opportunity to collectively bargain and improve their working
conditions, consumers would not have been exploited. And that's
not limited to just your recent scandal. It goes for every bank
present.
Again, for the record, I would like a response from the
entire panel. For all witnesses, please raise your hand if you
are willing to commit to noninterference in any of your
employees' efforts to organize a union.
And I'll begin from right to left here, my right.
Mr. Cecere, yes or no?
Mr. Cecere. We believe in dealing directly with the
employees. And we welcome feedback--
Ms. Pressley. Sir, could you just raise a hand? I'm sorry,
I'm running out of time, 50 seconds. Will you raise a hand if
you agree to not interfere.
Mr. Cecere. We would not retaliate or interfere.
Ms. Pressley. Okay. You can raise your hand then.
Mr. Demchak, can you raise your hand if you're willing to
commit to noninterference in any of your employees' efforts to
organize a union.
I don't need to go one person at a time. This is an easy,
easy, easy question. Please raise your hand--
Mr. Demchak. I don't think I can raise my hand to that. We
wouldn't interfere with our--
Ms. Pressley. Okay. I'll keep going.
Mr. Cecere--
Mr. Demchak. --employees on anything. And, importantly--
Ms. Pressley. --you're committing to noninterference.
Mr. Demchak, you are not.
Mr. Dimon?
Mr. Dimon. I would interfere.
Ms. Pressley. Okay. Thank you for your transparency on the
record that you will interfere.
Ms. Fraser, will you interfere? A show of hands or yes or
no?
Ms. Fraser. We certainly will not retaliate, but we will
expect to have an active conversation with--
Ms. Pressley. Okay. I'll take--
Ms. Fraser. --with our employees.
Ms. Pressley. --that as a yes. Thank you for your
transparency for the record. Thank you, Ms. Fraser.
Mr. Moynihan, will you interfere?
Mr. Moynihan. We will deal directly--
Ms. Pressley. Sorry. I'm running out time. Show of hands,
gentlemen. Mr. Scharf, Mr. Rogers, Mr. Moynihan, could you
raise your hand--
Mr. Moynihan. We will not retaliate.
Ms. Pressley. --if you agree to not interfere?
Mr. Moynihan. I thought I answered the question. We will
agree to abide by the law, and we will not retaliate against
employees. And it's not a simple question.
Ms. Pressley. Mr. Rogers?
Mr. Rogers. We would listen to our teammates and not
retaliate.
Ms. Pressley. Mr. Scharf, yes or no?
Mr. Scharf. We will listen and not retaliate.
Ms. Pressley. Okay. Your workers are watching, and they
deserve accountability.
Thank you, Madam Chairwoman, and I yield back.
Chairwoman Waters. Thank you.
The gentleman from Tennessee, Mr. Rose, is now recognized
for 5 minutes.
Mr. Rose. Thank you, Chairwoman Waters, and Ranking Member
McHenry, for holding this hearing.
And I think it's important that we conduct oversight of the
nation's largest banks, particularly in this climate where many
are bending to progressive activists and declining to provide
access to financial services for legally-operating businesses.
Mr. Dimon, you previously testified before the committee in
May 2021 that there are certain areas where you have, ``cut
back,'' because, ``the risk, legal or regulatory, is too high
to do business.''
I have become aware of bank denial letters that JPMorgan
and, for the record, others of the banks here today have sent
to independent ATM operators, where JPMorgan states that they
have a policy in place where the bank does not bank private ATM
operators.
And, Madam Chairwoman, I would like to enter into the
record an article from The Wall Street Journal from February
19th of this year that's entitled, ``Gas-Station ATMs Are a
Banking Battleground.'' The subtitle: ``Banks worried about
risk are turning away the owners of independent ATMs, a
lifeline to the underbanked.''
Chairwoman Waters. Without objection, it is so ordered.
Mr. Rose. Thank you very much.
A previous iteration of the Federal Financial Institutions
Examination Council's (FFIEC's) Bank Secrecy Act Manual
categorized the entire independent ATM industry as high risk.
The new version, released in December 2021 after the
hastening of many Members on a bipartisan basis of this
committee, now states that, ``not all independent ATM owner or
operator customers pose the same risk, and not all independent
ATM owner or operator customers are automatically higher
risk.''
Additionally, as hopefully you're all aware, on July 6th,
all of the FFIEC agencies issued a statement saying that
independent ATM operators are not categorically high risk.
And, again, Madam Chairwoman, I'd like to enter a copy of
that statement for the record.
Chairwoman Waters. Without objection, it is so ordered.
Mr. Rose. Mr. Dimon, why is the bank still categorically
denying access to financial services for an entire legally-
operating industry?
Mr. Dimon. I don't like it when I hear that we're doing the
whole industry, because I think that's a mistake. You should
evaluate each customer one by one and determine whether risk is
high. I don't know if that's true, and I have to get back to
you on it. I do know there's one large one we stopped banking.
Mr. Rose. Okay. I appreciate that.
And I guess my next follow-up question was, would you
commit to taking a look at the bank's policy with respect to
this class of customers?
Mr. Dimon. Of course.
Mr. Rose. Thank you.
And to save time, for the record, I would appreciate if the
rest of you would also respond to the question of whether
you'll take a fresh look, in light of this new guidance, at
whatever policies you have in place with respect to this class
of customers. Would you all commit to giving us a review of
your policies on that?
Very good.
I'm concerned about this issue in a broader context, which
is, other places where your banks are not banking legally-
operating businesses. It is an area of heightened concern. And
I hope you all will be mindful of how important that is,
particularly when you're serving customers and are lifelines to
financial services for the underbanked. Thank you for that
commitment.
Mr. Moynihan, I want to shift gears for a moment. In 2019,
at Fortune's inaugural Brainstorm Finance conference, you said
that you want a cashless society and that Bank of America has
more to gain than anybody if we were to eliminate cash as a
payment option.
Mr. Moynihan, this may be difficult for you to empathize
with, but I can assure you that in my district, not everyone
has access to financial services. I bet you have a bank
account--I do, as well--and can readily access funds to pay for
goods and services, but not everyone has that luxury. If you
eliminate cash and cash options to pay for food and other
necessities, you end up making it more difficult to survive for
our most-vulnerable populations.
I'm wondering if you and Bank of America--why do you think
it is okay to make it more difficult to be poor? What would you
tell someone who gets their pay in cash and who walks into a
grocery store that does not accept cash under your ideal
society?
Mr. Moynihan. Sir, I think--a couple of things.
One is, between today and tomorrow at this time, $200
million will go out of the ATMs as our company cash. The idea
of eliminating cash is when people don't need to use cash, and
it's safer and more secure. And we have multiple means to do
it.
Anybody can get a bank account at Bank of America if they
have proper identification, for $5 a month, which allows them
to get cash out of the ATMs, to go into any branch, and to do
anything you or I could do there.
I think the context of that was, how do we save money in
the industry for people like yourself or companies in terms of
moving cash and accepting cash?
Mr. Rose. Thank you.
I yield back, Madam Chairwoman.
Chairwoman Waters. The gentleman from New Jersey, Mr.
Gottheimer, who is also the Vice Chair of our Subcommittee on
National Security, International Development and Monetary
Policy, is now recognized for 5 minutes.
Mr. Gottheimer. Thank you, Madam Chairwoman.
And thank you to all of the witnesses for being here.
The financial services and banking industry directly
supports more than 75,000 jobs in New Jersey, and provides
local small businesses with the capital they need to create
thousands more. I want you to know that I'm grateful, and I
thank you for doing business in New Jersey.
Mr. Dimon, if I can start with you, please. Thanks for
being here and for all of the important work JPMorgan does to
support thousands of New Jersey jobs.
I believe more New Jersey residents who work in New York
should have the option to stay and work in New Jersey if they
can, to support our local small businesses, spend more time
with family, and save on gas and parking in New York.
Staying in New Jersey also means stopping New York's
proposed outrageous congestion tax plan. The Metropolitan
Transit Authority's (MTA's) congestion tax will cost commuters
$23 a day and, by the MTA's own admission, shift pollution and
congestion to New Jersey and the outer boroughs. This tax hike
is unaffordable for many New Jersey residents and will hurt
nurses, restaurant workers, and others in mass-transit deserts
who have no choice but to commute into New York City.
I just wanted to get your sense, if you would, on what you
think of MTA's congestion tax proposal. And do you think
there's something that we should reconsider, given how hard it
will hit hardworking families?
Mr. Dimon. I honestly have not really looked into it. I've
read about it. And if it hurts certain groups
disproportionately, we should look at it. It has worked in
other citiies and there may be ways to ameliorate the people
who get hurt by it.
Mr. Gottheimer. I appreciate that. Yes. We're very
concerned about the impact it's going to have on hardworking
families, and that it will actually cause more congestion and
pollution.
Ms. Fraser, if I can turn to you for a second, I'm working
with New Jersey legislators to create tax incentives for New
York businesses to open up new regional hubs in northern New
Jersey to allow workers who would normally commute to New York
to stay and work in New Jersey.
If the MTA moves forward with things like their proposed
congestion tax hike, would you consider expanding your offices
in New Jersey for this purpose of allowing people to have more
regional flexibility to work?
Ms. Fraser. We very much appreciate how expensive it's
getting for our people to commute. We're very mindful around
that, as well as being flexible for working families and
providing them more options. Additional facilities and spaces
for them to work, either at home or in New Jersey or in
Connecticut, are certainly things that we've been looking at
actively in the tri-State area.
Mr. Gottheimer. Thank you. And thank you for the, I think,
6,000 jobs you have in New Jersey. Thank you.
Mr. Dimon, if I can ask you one other question, I'd like to
ask about another topic that I've been very focused on, which
is the rapid development of digital assets and related
financial technology.
I believe the United States should leave the development of
emerging technologies like distributed ledgers and blockchain
and the Federal Government should provide the certainty needed
for the country to serve as a hub for financial innovation. And
I've developed legislation to help define qualified
stablecoins, which I know the chairwoman and the ranking member
are also working on, and to select the appropriate regulator.
I've read that you're a little skeptical of some of these
new technologies, but what are the biggest things keeping you
from being more active in this space? And do you worry that we
would miss the boat and give other nations, like China, an
opportunity to advance their digital currency and other payment
systems that could undermine the U.S. dollar? I'd love to get
some of your thoughts on that.
Mr. Dimon. You have to separate blockchain, which is real;
DeFi, which is real; ledgers; tokens that do something and
deliver information, money, ideas, simplify smart contracts.
That's one thing. I'm not a skeptic.
I'm a major skeptic on crypto tokens, which you call
currency, like bitcoin. They are decentralized Ponzi schemes,
and the notion that that is good for anybody is unbelievable.
We sit here in this room and talk about a lot of things, but $2
billion has been lost? Every year, $30 billion in ransomware,
AML, sex trafficking, and stealing. It's dangerous.
There would be nothing wrong with a stablecoin that was
properly regulated like a money market fund. You have some of
them today and they are not.
JPMorgan was a big user of blockchain. There's a JPMorgan
coin, which is a token, but if you send it to us, we give you a
U.S. dollar. It's a dollar deposit. It can be moved just the
way cryptocurrencies can be moved. Stable value, very low cost.
Mr. Gottheimer. Thank you so much.
Mr. Scharf, I have a bill called the Stablecoin Innovation
and Protection Act, which would create guardrails for
stablecoins and ensure they're backed one-to-one with cash or
equivalents to prevent runs like we saw with the so-called
stablecoin, Terra, earlier this year.
Do you think that might be a step in the right direction?
Have you considered this?
Mr. Scharf. That's certainly an option in order to ensure
that people understand the underlying value of that stablecoin.
Mr. Gottheimer. Mr. Dimon, how do you feel about
protections like that more clearly defining what a stablecoin
is, and making sure that it's backed one-to-one?
Mr. Dimon. It's equivalent to a money market fund. You
should look at it exactly the same way in terms of disclosure,
backup, gates, and a whole bunch of different things.
Mr. Gottheimer. Thank you.
And thank you all, again, for being here. We are all very
grateful. Thank you.
Chairwoman Waters. Thank you very much.
The gentleman from South Carolina, Mr. Timmons, is
recognized for 5 minutes.
Mr. Timmons. Thank you, Madam Chairwoman.
And thank you all for being here. There are so many of you.
And you are very kind to take time out of your busy, busy days
to come and testify before us here today.
Earlier in this hearing my colleague, Congressman
Luetkemeyer, I thought took a pretty fascinating line of
questioning with you all. I don't want to rehash that, but I do
think it's worth discussing the economic relationship between
the United States and China.
Our two countries are obviously competing in a multitude of
ways, economically, geopolitically, et cetera. But it really is
more than that. It's also a clash of civilizations. And it's a
clash of autocracy versus democracy. It's a clash between a
command economy and capitalism. And I think we all realize the
vastness of the Chinese market and how lucrative it may appear
to you all, but there is a cost of doing business there.
And as my colleague said earlier, for the time being, China
is the CCP and the CCP is China. They control everything.
Culturally, the Chinese Government views it as their obligation
to give Chinese businesses a competitive advantage in the
global economy through a variety of avenues.
When you are doing business in China, in many, if not most
instances, you are also doing business with the Chinese
Communist Party.
Mr. Dimon, can you speak to this competition between our
country and the West more broadly with China, and what you see
as your institution's role, and other similar global
institutions in that competition being? And if China becomes
the dominant economic power in the world, which is no doubt
their goal, what do you think will be the consequences for free
enterprise?
Mr. Dimon. America--you have to do a full comparison--we
have all of the food, water, and energy we need. They don't. We
have the Atlantic and Pacific Oceans and wonderful neighbors in
Canada and Mexico. They are the most complex region of the
world. They have the negatives of autocracy. They have a huge
amount of corruption. They don't have our financial system.
They don't have our innovative society. They don't have the
gifts the Founding Fathers called free enterprise.
And so I think before Americans panic about it, we should
be very thoughtful.
But you are absolutely correct, this relationship for the
next 50, 100 years is the most important in the world. And if
America wants to make the next century our century, we have to
be very careful around strategic, economic, trade, and all of
those issues that really matter.
I think it's very important that you understand that the
American Government sets foreign policy. The American
Government does not want American business to disengage from
certain parts of the world because it probably would be a bad
idea. And policy is diplomatic, development, aid, economic, and
America should negotiate what it's very comfortable with.
And almost everyone at this table will do what we are asked
to by the American government. That's what we want to do. And
we do, obviously, talk to them quite a bit about this issue,
because it's just as important to me as it is to you and your
constituents.
Mr. Timmons. Sure. Thank you for that.
Ms. Fraser, do you have any thoughts?
Ms. Fraser. When we look at the clients that we serve, many
of them are multinational clients in China. And we see that
there is a high degree of interdependence, as we have
experienced and the Europeans have experienced as they have
tried to decouple the Russian economy from the Western
economies.
So I think as we look forward, we have to take a strategic
view in America as to where it is that we need more strategic
independence and to build that in a thoughtful manner, but also
in a way that doesn't cause economic crises along the way.
I'm obviously not in a position to comment on the broader
factors.
Mr. Timmons. Sure. Thank you.
I just have serious concerns that the way that the Western
world, the way that Western democracies united against the
Russian aggression in Ukraine and the economic sanctions that
were placed upon Russia and the military aid that was given to
Ukraine--and things seem to be going in the right direction
there--my concern is that China was watching and learned what
the West is not going to tolerate, and that there is a way to
try to thread the needle in a moment of what I would argue is
weakness for our country.
And I'm just afraid that if something happens in Taiwan,
not only will the Western democracies not unite, but the global
economy will not step forward and defend our allies in Taiwan.
I'd just keep that in mind as developments progress over
the coming months.
And with that, Madam Chairwoman, I yield back.
Chairwoman Waters. Thank you.
The gentleman from New York, Mr. Torres, is now recognized
for 5 minutes.
Mr. Torres. Thank you, Madam Chairwoman.
A few months ago, The New York Times wrote an article
called, ``Fraud is Flourishing on Zelle. The Banks Say It's Not
Their Problem.''
The article features the story of Bruce Barth, who was in
the hospital for COVID-19 when a thief stole his phone,
accessed his digital wallet, ran up charges on his credit card,
took cash out of the ATM, and made a money transfer via Zelle.
Bank of America reimbursed Mr. Barth for losses associated
with his credit card and the ATM, but not with the losses
associated with Zelle. According to the article, after being
contacted by The New York Times, Bank of America ultimately
relented and reimbursed Mr. Barth for the losses associated
with Zelle.
Since the episode with Mr. Barth, my question for Bank of
America is, has Bank of America adopted a policy of reimbursing
Bank of America Zelle customers for losses caused by
unauthorized users or fraud?
Mr. Moynihan. We have a policy where we, if a client of
ours sends money to another client in defraud, we will take
care of that because we shouldn't have let the other person in.
And, frankly, that's the kind of work we are doing as an
industry.
I think just--you weren't here earlier, but the context of
Zelle fraud is it's lower than check at our company, claims for
fraud.
And so, we are working hard as an industry to take the
fraud out of the system among all of us by working together,
because inside the Zelle platform it's another bank customer,
and we actually kick banks out of Zelle who don't have the
capabilities to assess--
Mr. Torres. I just want to make sure I'm understanding the
answer, though. If there are losses caused by an unauthorized
user or by fraud via Zelle to a Bank of America customer, in a
situation like Mr. Barth's, would you reimburse them?
Mr. Moynihan. If it's a situation of what they call Me-to-
Me, an account transfer between a customer and a customer, we
will reimburse. And then across the industry, we work with our
other colleague institutions to do the same thing.
Mr. Torres. What if the victim is only a customer?
Mr. Moynihan. Then, the other institution where the money
went tries to recover it, and we work it through. We reimburse
a lot of the fraud.
Mr. Torres. The headline says: ``The Bank Says It's Not
Their Problem.'' The headline suggests that the banks deny--
Mr. Moynihan. I will tell you categorically--
Mr. Torres. Let me ask my question. I have to reclaim my
time.
The article claims that the banks deny that it's their
responsibility. I just want to ask all of the owners of Zelle,
do you acknowledge that your bank, as a partial owner of Zelle,
has a responsibility for combating fraud on Zelle and
reimbursing Zelle customers for losses caused by unauthorized
users and fraud?
Mr. Moynihan. Let me be precise--
Mr. Torres. I'm going to start with U.S. Bancorp.
Mr. Cecere. Yes. If the customer's credentials were stolen,
and they do not transact, we will reimburse in that situation.
Mr. Torres. Thank you for that clear answer.
PNC?
Mr. Demchak. Yes. You are describing a traditional fraud
that is covered under Reg E, and we would cover that, yes.
Mr. Torres. JPMorgan?
Mr. Dimon. Unauthorized is generally covered.
Mr. Torres. And I don't think Citibank is an owner of
Zelle, but do you want to try to give me a clear answer?
Mr. Moynihan. I gave you one. Unauthorized transactions are
covered. You asked for something else.
Mr. Torres. Mr. Rogers?
Mr. Rogers. Unauthorized transactions are covered.
Mr. Torres. Mr. Scharf?
Mr. Scharf. Same. Unauthorized transactions would be
reimbursed.
Mr. Torres. I have a question about cybersecurity.
With the Russian invasion of Ukraine comes a high-end
threat of cyber retaliation from Russia. Has your bank seen an
escalation in cyber attacks on the financial services sector?
I will start with U.S. Bancorp.
Mr. Cecere. We have not. We heightened our alerts, but we
have not seen any indication of an attack.
Mr. Torres. PNC?
Mr. Demchak. The same.
Mr. Torres. JPMorgan?
Mr. Dimon. I have to give the United States Government
credit for working closely with the banks. We expected a lot,
but we have not seen a lot, just a very little bit. But that
doesn't mean it's over.
Mr. Torres. Citigroup?
Ms. Fraser. We have not seen that in the United States.
Mr. Torres. Bank of America?
Mr. Moynihan. We haven't seen a major increase, but the
question is, what happens next?
Mr. Torres. Truist?
Mr. Rogers. We have not seen a major increase specifically
related to that.
Mr. Torres. Wells Fargo?
Mr. Scharf. The same answer as my colleagues.
Mr. Torres. And I'm just curious, what's the size of your
budget for cybersecurity in each of your banks?
PNC?
Mr. Demchak. I don't know off the top of my head. I would
assume it's close to the size of U.S. Bank's.
Mr. Torres. JPMorgan?
Mr. Dimon. $700 million directly, and a lot more
indirectly.
Mr. Torres. Citigroup?
Ms. Fraser. I'm the same, almost $800 million.
Mr. Torres. Bank of America?
Mr. Moynihan. Roughly $1 billion, and a lot indirectly with
our partners.
Mr. Torres. Truist?
Mr. Rogers. Several hundred million dollars, directly and
indirectly.
Mr. Torres. And Wells Fargo?
Mr. Scharf. Approximately $700 million to $800 million.
Mr. Torres. And my time is about to expire.
Thank you.
Chairwoman Waters. Thank you very much.
The gentleman from Texas, Mr. Gooden, is now recognized for
5 minutes.
Mr. Gooden. Thank you, Madam Chairwoman.
I want to start by thanking you all for being here.
And, thank you, Mr. Scharf. The last time we had a Wells
Fargo CEO come before us here, it didn't go well. You've done a
tremendous job with your institution, and I want to
congratulate you. Thank you.
I had some follow-up to a lot of the conversations we had
on China earlier today.
I will start with you, Ms. Fraser.
Citi's former global head of corporate and investment
banking praised the Chinese Communist Party's Belt and Road
Initiative. In fact, he said, ``Citi's strategy is directly
associated with 32 of the 69 countries, which is more than any
other global institution or any other financial institution,
and Citi should play a leading role in this Belt and Road
Initiative.''
It's my belief that the Chinese Communist Party uses this
initiative to give unfair advantages to Chinese companies and
forces developing countries into debt traps, often with public
corruption paving the way.
I witnessed this on a trip to the Middle East with my great
chairwoman, Maxine Waters, where we were told of extreme
corruption that the Chinese companies have been involved in
across the African continent. And by participating in the Belt
and Road Initiative, you are supporting significant risk to our
national security and global economy.
Ms. Fraser, Citi's support of the Belt and Road Initiative
presents a serious conflict of interest by helping our
strongest adversary expand across the globe.
Do you understand that Citi's support of the Belt and Road
Initiative is directly opposed to the national security
interests of the United States?
Ms. Fraser. Thank you very much for the opportunity to
answer the question.
I do not believe, certainly since I took over as CEO, but I
don't believe before that either that we have played a
meaningful role, if any role, in the Chinese Belt and Road
Initiative.
Mr. Gooden. That is wonderful to hear. And if that has
changed, I celebrate that. But that was, I believe, recently
that the head of corporate strategy said that.
With respect to Russia, I will continue with you, Ms.
Fraser. You recently stated that you want Citi to be a bank
with a soul. Would you explain to me or justify perhaps how
financing Russian oil and gas giant, Lukoil, while pledging to
reduce financing for American energy producers, accomplishes
that goal?
Ms. Fraser. As we talked about, we have already, in a short
period of time, materially reduced our activities in Russia. We
are winding down our consumer franchise there and commercial
banking franchise as we speak, and have been doing similarly
with our aquifer franchise.
What we are primarily doing is supporting the
multinationals that are still operating in Russia and helping
them in large part with their exit and wind-down on the ground.
Mr. Gooden. Will you commit today to divest from Russian
oil and gas giant, Lukoil, which is funding this invasion of
Ukraine?
Ms. Fraser. I cannot imagine that we would have a
meaningful role with them going forward.
Mr. Gooden. Thank you.
Mr. Moynihan, do you support a free and democratic Taiwan?
And does your bank as well?
Mr. Moynihan. Yes.
Mr. Gooden. Mr. Dimon, do you all share those views as
well, of a free and democratic Taiwan?
Mr. Dimon. I support freedom and democracy everywhere. I'm
not going to specifically comment on Taiwan. That's up to the
United States Government to make that kind of statement.
Mr. Gooden. Some of you struggled earlier today to condemn
the ongoing human rights abuses in China of the Uyghurs. The
Department of State, the United Nations, human rights
organizations, and the like have condemned China's actions.
Will Citibank condemn the ongoing human rights abuses in
China at the hands of the Chinese Communist Party?
Ms. Fraser. We certainly take any of the accusations of
human rights abuses, wherever they are in the world, very
seriously, and we'll be vocal in our distress that they're
occurring.
Mr. Gooden. Will you condemn the ongoing human rights
abuses in China at the hands of the Chinese Communist Party?
Ms. Fraser. Condemn is a very strong word.
Mr. Gooden. Yes, it is. So is genocide and slavery.
Ms. Fraser. Yes. We certainly are very distressed to see it
going on, and we do not want to have human rights abuses
happening anywhere in the world where we or anyone else
operate.
Mr. Gooden. Thank you.
I would encourage all of you to get out of doing business
with Russia, and to be very careful with China, because they
are working very strongly against our nation. And some of the
answers earlier and the hesitancy to offend the Chinese, when
many of your organizations are so willing to come down to
Washington and insert yourselves into policy, yet you seem
hesitant to condemn things as simple as slavery and genocide,
is alarming to me.
But, thank you.
I yield back.
Chairwoman Waters. Thank you, Mr. Gooden.
The gentleman from Massachusetts, Mr. Lynch, who is also
the Chair of our Task Force on Financial Technology, is now
recognized for 5 minutes.
Mr. Lynch. Thank you, Madam Chairwoman.
Mr. Moynihan, Bank of America has a very strong presence in
my district, which includes half of the City of Boston. I share
that with Ms. Pressley. But I also have Quincy and Brockton.
I just want to say, to your credit, we are trying to build
or rebuild over a thousand deeply-affordable housing units in
the City, at the Mary Ellen McCormack Housing Development, one
of the oldest public housing developments in the history of the
country. And that will allow us not only to do thousands of
deeply-affordable units, but also workforce housing for people
who are in the middle, who seem to be priced out in our area.
But I just want to thank you, because Bank of America
committed funding to that some time ago. It's good work, and we
appreciate it.
I serve on our Diversity and Inclusion Subcommittee here
with Mrs. Beatty, and I had a chance to sit with Miceal
Chamberlain, who represents you in our area, and I asked him
about progress on our hiring goals within the Cities of Boston
and Brockton in my district. The numbers were much improved.
But I would like to hear you talk about the system more
generally, not just in my district.
And one area where I think we do need a lot more progress
is that, as the Chair mentioned, I chair the Task Force on
Fintech, and there is very little funding going to minority
fintech principals in terms of pushing their projects forward.
It's really deplorable in terms of--I think less than 5 percent
of the money goes to minority heads of fintech firms. So I'm
concerned about that.
I would like to hear about your efforts in both regards.
Mr. Moynihan. On hiring, starting with who works for our
company, women make up more than half of the workforce, and we
are 49 percent diverse from the top of the company to the
bottom. Managers, 42 percent women, 41 percent people of color.
This is a 30-year effort of continuing to work and watch
how the hiring flows through to get to a representation of our
society. And the team has done a good job with that.
In addition, we committed to hire 10,000 people of all
ethnicities, from low- and moderate-income neighborhoods. We
completed that. We said in 5 years, but we did it in 3 years.
And we have committed to hire another 10,000 people.
In addition to that, we are working on job initiatives in
Boston and other cities where we try to get kids to come work
for companies like ours and my colleagues' companies that are
great companies, offer great benefits and great starting wages
right out of high school, and do the training. Here's a job.
Here's the training we need for them. We go to the community
colleges and help them do it.
Going to the question of funding, one of the things that we
perceived as we looked at it was the exact point you made of
the need to create equity in smaller sizes for women-owned
businesses, African-American-owned businesses, and Black
businesses, Asian, Hispanic, Latino.
As we looked at that, the private equity funds weren't
there. So, we went out and found a hundred private equity funds
across the country. We have committed $350 million to those
funds. Other people have come in, and they have now funded
almost a thousand companies.
The entrepreneurs, the private equity people, for lack of a
better term, are from those ethnicities, and the companies they
invest in are owned by those ethnicities or gender. And that
thousand companies didn't get funded in prior cycles because
they were too small, hard to find, and all that stuff. And now
it's happening.
And we expect this program to build. And we have clients
who come in and say: Can we put money with this that's good?
My colleague companies have done similar things. But we're
all trying to find a way to create the same opportunities seen
in our companies, outside our companies, and that's what we've
been trying to do.
Mr. Lynch. Very good. Let me ask--and I know we had a
series of questions before on Zelle, the whole payments piece
of this. And I'm just trying to figure out how to get at some
of the fraud.
Is the lack of latency in that system, does that lend
itself more to fraud because of the speed and finality of the
transaction? Does that seem to be--
Mr. Demchak. If I could jump in?
Mr. Lynch. Sure. Please.
Mr. Demchak. Traditional fraud in Zelle is minute. It's
smaller than what we see in checking. It is two basis points--
Mr. Lynch. Let me just say, though, let me just interject;
I'm not just talking about that instance.
When we issued money through the CARES Act, through the
Small Business Administration, 75 percent of the fraud on the
money going out to people--it was emergency funding, and we had
to get it out in a hurry, so part of the blame is with us--was
through digital lending and applications. There's more to it.
Mr. Demchak. You're hitting on very important points for
our country, and for our industry.
Zelle is a closed network system. If there's a bad
transaction between JPMorgan and ourselves, I can tell Jamie,
he closes the account, and it gets fixed. If it's outside the
banking system in a fintech open system, it's invisible to us.
Mr. Lynch. Yes.
Mr. Demchak. And that's where the scams occur. We have no
regulation once it gets outside of the banking system.
Mr. Lynch. Okay.
Madam Chairwoman, thank you for your indulgence. I yield
back. Thank you.
Chairwoman Waters. Thank you very much.
The gentleman from Wisconsin, Mr. Steil, is now recognized
for 5 minutes.
Mr. Steil. Thank you, Madam Chairwoman.
I want to bring us back to inflation. The American people
are getting clobbered by higher costs every day. Before us, we
have some of the best financial minds in the country, backed by
a whole array of economists and experts who are looking at
economic data.
And as we see 40-year highs of inflation, 8.3 percent,
people finding it harder and harder to buy the things that
their family needs, I think a lot of this was avoidable and was
the result of bad policy choices here in Washington.
I would love to get your take here as to what policies are
driving inflation in our country so we can help families who
are struggling to get by.
Mr. Dimon, the $1.9-trillion reconciliation bill has been
described as inflationary, excessive spending. Do you believe
that $1.9-trillion bill that was signed by the Biden
Administration played into inflation?
Mr. Dimon. I mentioned earlier today that we had $6
trillion in spending over 2 years, 30 percent of the GDP, the
largest it has been since World War II. Obviously, that drives
some of the inflation.
We did have war in Ukraine and other--
Mr. Steil. Not that there's not other factors at play, I
absolutely agree with that. But it piled onto that.
I want to continue on. Inside of that, we have the
Inflation Reduction Act, that I think drives inflation.
Then, we saw the Biden Administration unilaterally act on
student loans. I'm not asking you to comment on the
constitutionality of that. I think it's an illegal move, but
I'm not asking you to comment on the fairness of that.
Is it an inflationary move by the Biden Administration to
shift the burden of student debt to all taxpayers?
Mr. Dimon. It was badly done. I wish they had targeted the
people who actually needed help. And they reformed the
underwriting. When the government took it over in 2012, they
stopped underwriting. We got out of the business the second
that happened, knowing it was going to be an unmitigated
disaster. They still didn't fix the underwriting, and they
haven't fixed the cost of college.
And so we basically put a Band-Aid on, spent a lot of
money, and didn't fix the problem, which will now be ongoing.
Please give it a fix.
Mr. Steil. And we would be well-served to actually hold
hearings here in Congress before hundreds of billions of
dollars are spent. I'm concerned about the fairness aspect. I
think there are far better ways to do it.
And I completely agree with you that it does not address
the underlying problem, which is the fact that we have
skyrocketing college tuition costs.
Let me shift gears slightly and look at the impact of
housing. I know many of you have exited the housing sector due
to a whole host of regulatory burdens put in place by the
Federal Government driving up the costs for Americans who are
trying to get loans.
But as we look at the impact that higher interest rates are
having on Americans, I think it's quite significant. The median
home price in the State of Wisconsin is $271,000. Last year, it
was $250,000, an increase of $20,000. And the interest rate on
the 30-year mortgage went from 2.86 percent to 6 percent.
So your monthly payment on the same home in Wisconsin,
which is similar to across the country, increased from $828 a
month to $1,302 a month, $500 a month more to buy the same
house in Wisconsin at a period of time when families can't keep
up with rising costs.
Mr. Dimon, I'm aware that your bank, for many reasons,
exited this space, but you have a lot of visibility into
millions of Americans' financial picture. Sketch this out. How
is this impacting your customers?
Mr. Dimon. Currently, the customers are actually doing
okay. That inflation, high rates are going to eat away at their
balance sheets, their health, eventually their jobs, and their
spending money. And there are things that I wish this group
would work on that could reduce the cost of mortgages
efficiently and effectively and make them more affordable
today, in spite of rates going up.
Mr. Steil. Let's dive into that, if I can pivot to you, Mr.
Demchak, for a second.
Over the last decade, Congress and regulators have
implemented a complex bank capital liquidity standard regime,
and I would argue the spring of 2020 presented a stress test of
all stress tests. And the banking system came through that and
showed that it was adequately-capitalized.
How do you react to proposals to increase capital
requirements, including proposals to take U.S. standards over
and above international standards?
Mr. Demchak. Yes. In the U.S., we call it gold plating,
where we take whatever the international standards are, and
then add some to it, because we want to be better.
I think the stress tests have shown in the real live stress
tests that the system is very adequately-capitalized and has a
lot of liquidity.
Thank you.
Mr. Steil. Thank you very much.
Madam Chairwoman, I yield back.
Chairwoman Waters. Thank you very much.
And this side of the aisle applauds President Biden on
student loan forgiveness. It's very important.
The gentlewoman from Pennsylvania, Ms. Dean, is now
recognized for 5 minutes.
Ms. Dean. Thank you, Madam Chairwoman.
And thank you to all of our CEOs for your time today.
I listened with interest to all of your opening statements,
and there were certain phrases that popped out to me.
For example, Mr. Cecere, you said you are one of the
world's most ethical companies.
Ms. Fraser, you said--and you spoke globally--that our
banks are the envy of the world.
Mr. Dimon, you said that part of your work is to help solve
the problems facing our country.
That's our mission too, to help solve the problems that are
facing our country. One of the problems that is facing our
country day in and day out is the deaths from gun violence.
Since 2009, the United States has suffered a devastating 281
mass shootings, causing more than 1,500 deaths and, obviously,
so many more injured and terrified.
We know that some of the deadliest mass shootings have been
financed with credit cards. For example, in Orlando, the Pulse
Nightclub shooter charged more than $26,000 in credit card
charges on guns and ammunition in the 12 days ahead of his
killing spree that killed 49 and wounded 53 others. His average
spending prior to this was $1,500 a month.
Would you consider that to be suspicious activity? Maybe
raise your hand, or nod your head. Do you find that to be
suspicious activity?
I'm seeing some sort of yeses.
Mr. Dimon. We need more facts, and we don't know what they
spend the money on.
Ms. Dean. We have a reason to talk positively about that.
There is a way for us to know.
In addition, before the Pulse Nightclub shooter racked up
credit card debt on gun and ammunition purchases, he ran
several online searches to determine whether his credit card
unusual spending would be flagged and reported to the police.
Of course, it was not.
To your point, Mr. Dimon, you didn't know what he was
spending it on.
And to set the record straight on an issue that a few of my
Republican colleagues have raised today, which is the newly-
created merchant category code, or MCC, for gun and ammunition
retail stores, as you may know, I co-led a letter with Senator
Warren in support of this code.
And given that the International Organization for
Standardization has voted to create the code, I want to confirm
your response to Mr. Williams' questioning that you will be
using the code. Is that correct?
I'm seeing a general absolute yes there.
It's my understanding that you already have practices for
the detection of fraud and suspicious activity. Is that
generally true?
Yes, we've talked a lot about fraud.
Do you think that this code, for example, had it been in
place and shown that extraordinary activity of the ultimate
shooter and killer in the Pulse instance, wouldn't it have been
useful to note that racking up of credit card charges very
unusually? Wouldn't that have been helpful to note?
There is sort of a maybe.
Mr. Dimon. If you know what it's for, and who it is, and
why, then yes.
Ms. Dean. That's why this code is going to be important.
Mr. Dimon. And you do know all of those gun sales get
reported to the government, all of them.
Ms. Dean. And, Ms. Fraser, I was thinking of you, because
you have such a global view of what you are doing--I know you
all do, frankly.
I was in Eastern Europe and Central Europe recently, and it
happened to be the week of Uvalde. And I think about the global
shame that comes upon this country as a result of our out-of-
control problem with gun violence: 54,000 people died last year
of gun violence, 4,400 of them children.
And in these meetings in Europe, each meeting began with:
We are so sorry for your tragic losses in Buffalo and Uvalde.
What responsibilities do you, the banks, have? What
conversations have you had around your boardrooms to say: How
can we help slow the tragic loss of life due to gun violence?
We know that many of the transactions are coming through our
systems.
Ms. Fraser, what can you do?
Ms. Fraser. Yes. Thank you very much for your question.
As you say, we do operate in a number of countries where
they have tragic deaths from gun violence around the world.
This is something, sadly, we see in many different countries.
Ms. Dean. None quite like ours.
Ms. Fraser. Understood. But it is a problem in many
countries. And we have a lot of discussions with our board and
also with our employees who are concerned for their safety and
their security, as well for our customers in branches around
the world. It is an active dialogue about what we can do to
help prevent--
Ms. Dean. I thank the chairwoman.
And I just ask you to continue to partner with us to try to
reduce this scourge.
Thank you.
Chairwoman Waters. Thank you.
The gentleman from South Carolina, Mr. Norman, is now
recognized for 5 minutes.
Mr. Norman. Thank you, ma'am.
And I want to thank all of the witnesses for appearing
today.
I haven't been here for all of the questions, but it shocks
me some of the questions you are being asked. It really shocks
me. I've heard trying to shift blame for gun violence. I've
heard things about unequal equity in housing that you're
responsible for. I've heard one of the Members say you sucked.
When you were asked the question--and I don't understand
this, maybe you all can help me--when asked the question--and I
think the bulk of it was, how many of you will raise your hands
if you're going to have a person of color follow you in
leadership. Why is the--and nobody raised their hand or made a
comment on it.
And, by the way, I'm a real estate developer from Rock
Hill, South Carolina. I'm part of the delegation there. I'm not
a politician. But I don't understand the boldness is just not
there to fly back at some of these people and what they're
asking.
Why wouldn't the answer to that question be: Mr. or Ms.
Politician, we don't look at color. We look at achievement. We
look at past history of building banks, because that's the
business you're in.
And, Mr. Moynihan, when the comment, ``sucked,' came up,
your predecessor, Hugh McColl--I would like to have seen his
response. I don't think it would have been a marine response to
that.
Because you all represent such a vital part of our economy.
You're competitors. You compete. And I don't understand why the
boldness is not there and to fly back. You can't satisfy this
group. And that's why the Americans are so frustrated.
You're talking about global shame? Leaving Americans behind
all over the world is a shame. Leaving $8 billion on the ground
is a shame. Having inflation at a 40-year high is a shame.
Cutting off our gas supplies and buying it from the very people
who are killing your customers, because the last time I
checked, buying oil and natural gas from countries that hate us
doesn't make really good sense for your customers whom you
represent and build shareholder value.
I wrote each of you a letter. We had 37 cosponsors. And I
asked the question: How is paying for abortions for your
employees building shareholder value? And maybe, it's a
disagreement on what healthcare is; I don't consider healthcare
to be killing a baby.
With that being said, you all have such an opportunity to
show boldness. And maybe in my letter to you it was--maybe your
board of directors is not getting involved. We're sending the
letter certified mail to every director of your corporations.
But it's an honest opinion to try to understand it from
somebody who is in the workforce. I didn't make my money in
politics as so many of these professional politicians have
done. I would just beg you to get your voice back.
This ESG stuff, really? You're just lying down and taking
it, the wokeness that exists today.
The silence has been deafening to me as a business guy who
competes and who pays a lot of taxes and who does it gladly to
support our law enforcement, to support our first responders,
to support our schools. And you all represent a great
tradition, and I wish you would just voice your opinion more.
The Disney Company learned a valuable lesson about trying
to get involved in something they don't have any need to be
involved with. The governor kind of taught them a lesson. And I
hope and pray we are going to have more governors who teach
lessons for companies that have no business getting in the
political arena.
Thank you for what you do.
Quickly put a value, what's the cost of ESG that you're
having to comply with?
Let's start with Mr. Scharf. I have 45 seconds.
Mr. Scharf. Today, it's very small, but it's going to grow
to be something substantial.
Mr. Norman. Okay.
Mr. Rogers. Similarly, I don't know the exact number, but
it is small and growing.
Mr. Norman. What's small?
Mr. Rogers. It would be in the tens of millions at this
particular juncture relative to our size.
Mr. Norman. Mr. Moynihan?
Mr. Moynihan. I think that today, the gathering data is
small, but it will grow because we are getting more requests
that we are not sure are the right things. We're getting more
requests for data from more sources.
Ms. Fraser. I would give the same answer, sir.
Thank you.
Mr. Norman. Small things lead to big things, don't they?
And shareholder value and paying dividends is a big thing.
Yes, sir?
Mr. Dimon. We'll get you an exact number. I would say it's
tens of millions. But we have ESG requests from every regulator
around the world, every central bank around the world, every
government around the world. It will likely be hundreds of
millions of dollars at one point.
Mr. Demchak. I can't top that.
Mr. Norman. Will you answer?
Mr. Demchak. It's a large number and growing, and we get
more requests every day, to Jamie's point.
Mr. Cecere. Same comment.
Chairwoman Waters. The gentleman's time has expired.
The gentlewoman from Michigan, Ms. Tlaib, is now recognized
for 5 minutes.
Ms. Tlaib. Thank you, Madam Chairwoman.
And thank you all so much for being here. I really
appreciate this opportunity.
I represent one of the largest-populated counties in
Michigan, and in recent years I know the Michigan chapters of
the Arab American Civil Rights League and the Council on
American-Islamic Relations have filed complaints regarding
banking discrimination against those of the Muslim faith.
Mr. Moynihan, you might know that in May, there was a class
action lawsuit that was filed alleging that Bank of America
engaged in discriminatory banking practices by targeting,
restricting, and closing the accounts of people of the Muslim
faith.
Are you aware of that?
Mr. Moynihan. No, I'm not.
Ms. Tlaib. Right now, it's a class filed. One of them is
Mohammed, who had met all of the bank's requirements of showing
residency and providing proof of that and still his account was
unlawfully closed.
How does your bank ensure that the bank's customer
identification program complies with anti-money laundering
(AML) regulations without freezing out whole classes of
consumers from access to banking services to support their
families and their businesses? What steps have you all taken in
that regard? It sounds like you don't even know about the class
action suit. You don't care?
Mr. Moynihan. I said before, yes, I'm not aware of the
class action suit.
We have a deep history of banking all Americans, and
another million Americans will open accounts with us this
quarter. So, I think we have a strong track record across all
ethnicities and all people.
If you have a specific issue--
Mr. Tlaib. You should be really concerned, Mr. Moynihan,
you should really be concerned about this because, again, you
can see that there is a pattern that specific groups from
certain backgrounds or ethnicities or faith--again, this is a
lawsuit that was filed in May--and that we need to make sure
that Americans of Muslim faith or any national origin are not
being targeted and that you guys are not implementing processes
that single them out.
Are you at least supportive of making sure that you are not
discriminating against a whole community?
Mr. Moynihan. I can assure you that's not the case.
Mr. Tlaib. Okay. I hope you have good lawyers.
You have all committed, as you all know, to transition the
emissions from lending and investment activities to align with
pathways to net zero in 2050.
Do you know what the International Energy Agency has said
is required to meet our global 2050 net-zero targets of
limiting global temperature rise to 2.7 degrees Fahrenheit or
1.5 degrees Celsius? No new fossil fuel production starting
today, so that's, like, zero.
I would like to ask all of you, and go down the list,
because, again, you all agreed to do this. Please answer with a
simple yes or no. Does your bank have a policy against funding
new oil and gas products?
Mr. Dimon?
Mr. Dimon. Absolutely not. And that would be the road to
hell for America.
Ms. Tlaib. Yes, that's fine.
Sir, everybody who got relief from student loans, who has a
bank account with your bank, should probably close their
account. The fact that you're not even there to help relieve
many of the folks who are in debt, extreme debt because of
student loan debt, and you're out there criticizing it.
Ms. Fraser, how about you?
Ms. Fraser. We will continue to invest in and support
clients who are investing in fossil fuels and in helping them
transition to cleaner energies.
Mr. Tlaib. And, Mr. Moynihan?
Mr. Moynihan. We are helping our clients make a transition,
and that means we're lending to both oil and gas companies and
to new energy companies and helping monitor their course
towards the standards you're talking about.
Mr. Tlaib. Mr. Scharf?
Mr. Scharf. The same thing as Mr. Moynihan said.
Mr. Tlaib. Yes. I'm not going to ask you, Mr. Dimon,
because you obviously don't care about working-class people in
frontline communities like ours that are facing huge amounts of
high rates of asthma, respiratory issues, and so much more.
Cancer rates are so high among my communities that I represent.
So, I'm not going to even ask you if you're committing to
ending financing of new oil and gas projects.
But, Ms. Fraser, Mr. Moynihan, Mr. Scharf, we are living
through a climate crisis today, and a commitment to net zero
requires a commitment to ending fossil fuel financing.
It is important, because I want you all to know that at the
end, we're going to pay the cost of the public health impact.
These are people that you are supposed to be serving, the folks
that you're supposed to be providing for and supporting in
communities. Anything else defies all logic and scientific
evidence at our disposal.
If your financial institutions aren't going to follow
through on the net-zero commitment, then regulators, including
the Federal Reserve and Congress, must step in and make them.
And with that, Madam Chairwoman, thank you so much for
holding this hearing. I think it's so important for the people
we represent.
I yield back.
Chairwoman Waters. Thank you.
The gentlewoman from New York, Ms. Ocasio-Cortez, is now
recognized for 5 minutes.
Ms. Ocasio-Cortez. Thank you, Madam Chairwoman.
And thank you to all of our witnesses who are here
testifying today.
I want to dive a little bit into the Paycheck Protection
Program and a bit of what we've seen afterwards. I have one of
three reports here that I would like to present today, a Forbes
report detailing some of the revenues that banks have made
during the Paycheck Protection Program. And also, digging into
a little bit of the fact that when it comes to loan
forgiveness, the Small Business Administration (SBA) recently
opened a portal for small business owners to appeal directly
with them for forgiveness.
Chase, Bank of America, and PNC have opted out of that
direct program. Is that correct, Mr. Demchak, Mr. Dimon, and
Mr. Moynihan?
Mr. Demchak. I believe so.
Mr. Dimon. Yes. I'm not aware of it.
Mr. Moynihan. I'm not aware of it.
Ms. Ocasio-Cortez. Okay. For your awareness, your banks
have opted out of Paycheck Protection Program forgiveness and--
Mr. Demchak. Excuse me. That is incorrect.
Ms. Ocasio-Cortez. With the portal with the SBA. Thank you.
And I was trying to finish my sentence.
Now, I would like to zero in a little bit on Bank of
America.
Mr. Moynihan, are you aware of how many PPP loans your bank
has facilitated on behalf of its customers?
Mr. Moynihan. Almost 500,000, and 95 percent are forgiven
or repaid already, and we're finishing up the rest of them.
Ms. Ocasio-Cortez. How many of those loans, in terms of a
percentage, have been forgiven in full as opposed to in part?
Mr. Moynihan. The ones that are forgiven are mostly--the
vast, vast majority will be forgiven in full.
Ms. Ocasio-Cortez. In full.
What we're starting to see here with some reporting in The
Intercept--and this is just one reason why I was curious about
the numbers--is that we're starting to see that Bank of America
is refusing to forgive some PPP loans in full. But in terms of
the portal that Bank of America has set up, it's very difficult
to appeal these decisions.
And, in fact, what we're seeing is that Bank of America had
pre-populated a forgiveness amount in their portal sometimes
drastically lower than small business owners had anticipated
and had qualified for. And in instances where these small
business owners have documentation, there is very little
recourse or appeal.
Does your portal make it easy to appeal the decisions so
that after two attempts, the SBA can then take over the case?
Mr. Moynihan. Borrowers can appeal. Ninety-five percent of
loans are forgiven and repaid today, so we are only talking 5
percent of loans, and a substantial number of those are going
through the appeal process as we speak. So, the borrowers can
appeal. And we are in the process of finishing up that last
20,000 or so loans. It's a small amount of loans, and they're
finishing up--
Ms. Ocasio-Cortez. And to certify, that 95 percent is a
full forgiveness amount percent?
Mr. Moynihan. Forgiveness or repayment. Some of them--
Ms. Ocasio-Cortez. Full forgiveness, not partial?
Mr. Moynihan. The vast majority are full forgiveness, but I
can get the data to you.
Ms. Ocasio-Cortez. So is the 95--I apologize. Not to
belabor the point, but is that 95 percent a partial loan
forgiveness or a full loan forgiveness rate?
Mr. Moynihan. They're getting what--the borrowers are
applying for the forgiveness entitled in the program. Ninety-
five percent of them have gone through or repaid, and the vast
majority of them are full forgiveness.
But they're entitled to what the program designed. The
government designed the program, and we implemented the program
on very short notice, a half million people, 10,000 people
working on this program, Easter weekend working on the program
to help those borrowers at the time. And so, we're finishing
that up.
Just let the process go. And a lot of what you are reading,
frankly, is not the facts because it's old. It doesn't
understand how the math works. So, just give us some time.
We'll give you the facts, and you'll see it. It's all in the--
Ms. Ocasio-Cortez. What is the reason that Bank of America
chose to opt out of the SBA portal?
Mr. Moynihan. I can get somebody to give you that. I have
no idea of whether--I told you before, I'm not sure if we did
or didn't, and I have no idea why they would have made the
decision. But we are processing loans as fast as anybody.
Ms. Ocasio-Cortez. Okay. And I'm sorry, I'm just having a
tough time. This is about $25.2 billion in loan amounts in your
bank, correct?
Mr. Moynihan. Not anymore. No, it's down to--
Ms. Ocasio-Cortez. At one point in time. So, you're
uncertain as to why the bank has not chosen to enroll in the
SBA portal?
Mr. Moynihan. I said we will get you the information. The
amount of loans we have left on this thing is a billion or so.
It's down to a very small amount.
Ms. Ocasio-Cortez. No worries.
Mr. Moynihan. It's all paid back. It's all through. The
team did a great job. And we're happy to supply the information
to you.
Ms. Ocasio-Cortez. Okay. We look forward to it.
Thank you very much.
Chairwoman Waters. Thank you.
The gentlewoman from Texas, Ms. Garcia, who is also the
Vice Chair of our Subcommittee on Diversity and Inclusion, is
now recognized for 5 minutes.
Ms. Garcia of Texas. Thank you, Madam Chairwoman. And thank
you so much for bringing this hearing to the table today. It's
really important for us to continue our oversight role in this
committee which, as you know, we've been doing and continue to
do today.
I want to thank all of the witnesses. It has been a long
day. And I want to apologize, because you've seen me going in
and out. I was triple booked this afternoon. I have been
running to a markup in Judiciary and a hearing at Armed
Services, so I'm coming and going in all directions.
But I wanted to be here to ask some specific questions
related to a bill that I recently introduced called the
Multilingual Financial Literacy Act. This bill would direct the
Financial Literacy Education Commission to conduct a study of
the impact of limited English proficiency on financial health.
In the U.S., over 20 percent of households speak a language
other than English at home, and nearly 9 percent of individuals
have limited English proficiency, meaning they speak English,
``less than very well.'' This means that 26 million households
in the United States have limited English proficiency, a huge
number of potential customers, in your language.
It is important to me and to my constituents--my district
is about 77-percent Latino--and it's important for the economy
that everyone has the same opportunity for financial health, no
matter what language they speak.
Mr. Demchak, I want to begin with you. PNC Bank started a
new mobile branch service, a function in both English and
Spanish for unbanked and underbanked communities in north
Texas. This banking service operates in a 30-foot mobile unit
resembling an RV. Residents have the option of withdrawing or
depositing from an ATM, opening bank accounts, applying for
loans, and much more.
Has this effort been successful so far? And have you been
able to get a sense of the difference that language inclusion
makes in financial services? And are you expanding this to
other mobile branches? And are you telling your stories so that
perhaps some of the folks at the table with you can copy what
you're doing?
Mr. Demchak. Thank you for that.
Yes, yes, and yes. We have a fleet of mobile branches that
is growing every day. We deploy it into both rural and urban
LMI communities. And the financial economics make sense because
it can cover multiple communities out of--it's fancier than an
RV--one big truck. And it offers every service that you can get
in a traditional bank.
I'll stop there. But we're proud of it, and we would
encourage others to do it.
Ms. Garcia of Texas. I call it the [inaudible] truck model.
Mr. Demchak. It's the old bookmobile from when we were
kids.
Ms. Garcia of Texas. I grew up in a rural community, and,
yes, the bookmobile came by every week during the summer. And
my biggest disappointment was that before the end of the
summer, I had already read every book in the bookmobile. But I
was an avid reader, and I totally believe in mobile units.
Thank you for doing that. And I hope that your colleagues
are listening because I think that's obviously a model that can
be used to serve so many other underserved communities around
our country.
My next question is for Mr. Dimon.
As I said earlier, my district is 77-percent Latino. I
noticed in your written remarks that you said that JPMorgan
Chase was advancing an Hispanics and Latinos program which is
committed to creating a future for Hispanics and Latinos
worldwide.
What does that mean? Can you be specific as to what--
Mr. Dimon. Say it again?
Ms. Garcia of Texas. You said in your written testimony
that you're advancing Hispanics and Latino programs which are
committed to creating a future where Hispanics and Latinos
worldwide have opportunities to grow and thrive. Could you be
more specific?
Mr. Dimon. To hire and train. We have special programs for
mortgages, special programs for affordable housing, special
programs for financial education. We have banks in the bus,
too. We have complete Hispanic-speaking call centers,
documents, forms--
Ms. Garcia of Texas. Hispanic is not a language.
Mr. Dimon. Well, Spanish. I'm sorry.
Ms. Garcia of Texas. Yes, sir.
Mr. Dimon. And so we try to do all of that, and it has been
quite successful, if you want to come visit some of it.
Ms. Garcia of Texas. I certainly don't see much of--if it's
in Houston, I'm not seeing it in my neighborhood.
Mr. Dimon. It's in Houston.
Ms. Garcia of Texas. I just wondered if you could be
specific about a program where you are really working and
making sure that the Latino community is included.
Mr. Dimon. I have been to those communities myself in
Houston, and I'm going to send you all of the documents and
details.
Ms. Garcia of Texas. Okay. I'll look forward to seeing
that.
Just one last thing for Ms. Fraser. Thank you for all of
the work--I noticed in your written testimony that you said
you're the number-one affordable housing lender. Thank you. We
need to do more.
With that, I yield back.
Chairwoman Waters. Thank you.
The gentlewoman from Georgia, Ms. Williams, who is also the
Vice Chair of our Subcommittee on Oversight and Investigations,
is now recognized for 5 minutes.
Ms. Williams of Georgia. Thank you, Madam Chairwoman, for
holding this hearing today.
And thank you to our witnesses who joined us for this very
long day.
As a newer Member of Congress, I have the benefit of
listening to all of the other questions before it is my turn,
so a lot of my questions have already been answered. But I do
have one that is very specific to my district.
I represent Atlanta, Georgia, and, unfortunately, Atlanta
leads the nation in the racial wealth gap. Homeownership has
proven to be one way to help close the racial wealth gap.
Too many people have faced barriers to getting a home loan
because of their lack of traditional credit information. In
fact, 45 million people don't have enough credit history to be
accurately scored, and many of them are our family, our
friends, and our neighbors.
That is why I'm very interested in Bank of America's
announcement last month of a new special purpose credit program
mortgage product which requires no minimum credit score and
relies on factors such as rent, utility bills, phones, phone
bills, and auto insurance payments to underwrite mortgage
loans.
Mr. Moynihan, do you expect that this product will help
more underserved borrowers, including borrowers of color,
qualify for a home mortgage? And, if so, how do you plan to
track those results?
Mr. Moynihan. We expect it to expand mortgages, as you
said, and we will track the results because we will be
reporting on the success of that program, along with our $15
billion homeownership programs. This is another version of
that. So, yes, we expect it to help.
Ms. Williams of Georgia. The question was, how do you plan
to track the results, not if you plan to track them, but how?
Mr. Moynihan. How? Every person who comes in--it's a
special program. It is designated separately so that you can
see the application come through the program. The person is
getting a HUD counselor, down payment assistance. It's a
special program, so you track the results against--you track it
coming through. It's not a regular way program that's available
everywhere.
Ms. Williams of Georgia. Can you tell us more about how
this program will work in practice? For example, how will
borrowers know that they can use rent and other data that's not
typically on their credit report to help them qualify for this
new mortgage product?
Mr. Moynihan. It's available at all of our financial
systems. You can find the information on it in all of our
online systems, which 97 percent of low- and moderate-income
households use, and you can find it in our specialized mortgage
product, our Better Money Habits, and things like that. It's
available in all of our operating channels so everybody can see
it and find it.
Ms. Williams of Georgia. And this is something that people
coming in to look for a mortgage product are told is available?
Mr. Moynihan. I was at the branch up the street here the
day after we announced it, and we had people coming in already
here in Washington, D.C., so I'm sure that we'll have a lot of
people coming into the branches and asking about the program.
Ms. Williams of Georgia. Mr. Moynihan, I think this is a
great thing, so I want to hear more about it. So, if you could
tell me more about why you decided to make this pilot program
available in certain cities and if you expect to expand to
other cities, as well as expanding this product offering in the
future?
Mr. Moynihan. If the program is successful and it serves
the customer the way we hope it does, yes, we'll be able to
bring it to other cities.
It's an extension of work that we've been doing for many,
many, many years. The unique aspect to this is the--from the
1974 Equal Credit Opportunity Act enabling these types of
programs through to now.
This has a little bit different qualification mechanisms to
it. We expect it to be expanded to other cities once we sort of
get used to it and see how it operates. But it's meant to--it's
about where the mortgage is being done and the borrower, not
just about the borrower, which other programs are.
Ms. Williams of Georgia. Do you think it's reasonable and
feasible for other banks to underwrite mortgages with this type
of nontraditional or alternative credit information?
Mr. Moynihan. Not only is it reasonable, they already do
it. I can let them speak to it. But I'm well aware the other
institutions that we spoke to in earlier questions do use a way
to complete that part of the credit analysis above and beyond
traditional means.
Ms. Williams of Georgia. And I would love to hear from
other banks about what they're doing to underwrite mortgages
with information for nontraditional or alternative credit
information.
Mr. Dimon. We're doing fundamentally the same thing, and
we'll send you the package on how we do it.
Ms. Williams of Georgia. I would love to hear more about
it.
Anyone else?
Mr. Scharf. I would just add that this is something that
the OCC has organized around Project REACh, where all of the
banks are working together to try and use all of the
information that we have, to go beyond the FICO score, to help
make credit decisions on a more informed basis, not just for
mortgages but for a host of products.
Ms. Williams of Georgia. Anyone else before my time
expires?
Thank you, Madam Chairwoman, for my time today, and I yield
back.
Chairwoman Waters. Thank you.
The gentleman from Massachusetts, Mr. Auchincloss, who is
also the Vice Chair of the committee, is now recognized for 5
minutes.
Mr. Auchincloss. Thank you, Madam Chairwoman.
This has been a long hearing, but we're almost done.
As we've been in this hearing, the Fed announced a 75-
basis-point increase. The Fed Chairman is channeling his inner
Volcker and is committing publicly to using the full weight of
monetary policy to reverse QE and rein in inflation. His
greatest asset in this endeavor is going to be his credibility
as an inflation fighter.
By a show of hands, how many of you have confidence in the
Fed's resolve through 2022 and 2023 to pursue its mandate of
price stability?
That's a show of confidence from Wall Street in Chairman
Powell.
The best way to reduce inflation, though, is to expand the
productive capacity of our economy. Mr. Dimon, you said this in
your remarks. That means raising labor force participation
rates and, perhaps most impactfully, building more housing.
At the State and local level, that means pushing back on
NIMBY opposition to multifamily housing in particular. At the
Federal level, what can government and big banks do together to
help build more affordable housing? To help build more
affordable housing, not just to finance it.
Mr. Moynihan, because our home State of Massachusetts is so
crucially under the weight of housing costs, I'd like you to
answer first, and then anybody else can jump in.
Mr. Moynihan. If you're talking about developers--first of
all, the financing that we all do as an industry, the financing
our company does, about $5 billion a year in housing, low-
income/moderate-income housing and low-income housing tax
credits.
In terms of development, one of the perceptions is we have
to create more development. So, a group of my colleagues in
Charlotte created $60 million of equity to go to more
developers to close that gap. We're working in Boston to see if
we can put together the same kind of program, on the theory
that there's a need to develop more developers who can do more
work.
Mr. Auchincloss. Right.
Mr. Moynihan. But it's a universal problem, whether it's in
Charlotte, with 20,000, 30,000 housing units short; Boston, the
same thing; or New York City. Getting housing developments fast
is critically important.
But it's a multifaceted question, which requires us to
think about university housing, it requires us to think about
kids who work for us in New York City housing, which is
different from family housing, and it takes some thinking. And
that's one of the planning cycle things you could help with.
Mr. Auchincloss. It takes some thinking, but, most of all,
it takes some building. In Massachusetts, we have created two
jobs for every one unit of housing in the last 20 years. And
you don't have to have the team of economists that you all have
to understand what happens when you do that. Housing prices go
up. And it's the single most important thing we can do in my
home State to help people, and working families in particular.
The property market in the USA is way too tight, but in
China, it's collapsing. Xi Jinping's zero-COVID policy has been
a catastrophe. The U.S. economy has grown faster than the
Chinese economy in the last year for the first time in my
entire lifetime.
Where can Capitol Hill and Wall Street collaborate to seize
the initiative and outcompete the CCP for leadership of the
world economy?
Mr. Dimon, I'd love your thoughts.
Mr. Dimon. I think it's very important. We're kind of doing
that a little bit with some of the bills, the CHIPS Act, et
cetera.
Faster permitting for grids, solar, wind power,
hydroelectric power building. Sometimes, it's a coordinated
thing. The building can't get built because the road can't be
built, because the water's not being put in, because the grid's
not being built.
And getting our schools to--more STEM teaching, which a lot
of them are starting to do together.
The whole panoply of things that--I think we know what they
are, and there's a great list we can send to you.
Mr. Auchincloss. I'd appreciate that.
One other person can jump in if they have a--
Mr. Moynihan. I think that, earlier, one of your colleagues
mentioned investing in research. And what America has is the
best research platform in the world. And that's where you win
long-term. You have to do a lot of things short-term, but long-
term. And so, in the CHIPS Act, it's the investment piece that
is as critical as the other pieces.
Likewise around the medical platforms. And we just saw the
miracle pulled off in the United States--
Mr. Auchincloss. Right.
Mr. Moynihan. --and why we didn't have to have a zero-COVID
policy.
We can't forget research. The great research universities,
labs, et cetera, have to be funded and have to be funded in a
way that they can plan ahead and do the work.
Mr. Auchincloss. And I'll note that it's not just the
United States; it's Massachusetts leading the way on that
biomedical research.
And, with the CHIPS Act, we appropriated and authorized for
the CHIPS, but we did not appropriate for the Science part of
that bill. And we're going to have to continue to appropriate
the money that we authorized in CHIPS and Science for
biomedical research. I'm assuming you'll be committed to that.
Mr. Dimon, in my last 30 seconds, a previous member of this
panel impugned your motives relative to working-class families,
and didn't give you a chance to respond as a courtesy. Do you
want to respond in my last 30 seconds?
Mr. Dimon. We all do a tremendous job taking care of our
employees, trying to help our communities, lifting up
impoverished communities, supporting things like the Earned
Income Tax Credit, minimum wages, and the CHIPS and Science
Act.
Yes, that did impugn me a little bit, and it was wrong.
Most of us care about our employees more than just about
anybody else, and our communities, and hopefully, we
demonstrated a little bit of that here today.
Mr. Auchincloss. Madam Chairwoman, I yield back.
Chairwoman Waters. Thank you very much.
To our witnesses today, we are very appreciative for the
time that you have spent, and we certainly appreciate your
patience. This is difficult work, but, as you know, we have the
responsibility for oversight, investigation, and protecting our
consumers, and we do that with regulations.
Having said all of that, of course there are concerns, and
there are disagreements. But that's how democracy works.
Let me just say thank you for the time that you have spent
here today. Thank you for the way that you have responded to
our concerns and our questions. And, of course, we have a lot
of work that we must continue as we interact with each other to
do the people's business. So, I'd like to thank you for all of
your testimony today.
And I do want to note for the record my concern that
despite providing some of you, or all of you, our invitation
with questions well in advance, at your request, on July 1st,
more than 50 days ago, not all witnesses had fully responded to
the questions in their testimony. I fully expect that those who
did not will promptly provide a complete set of responses
within the next week so we can include those in the hearing
record.
The Chair notes that some Members may have additional
questions for these witnesses, which they may wish to submit in
writing. Without objection, the hearing record will remain open
for 5 legislative days for Members to submit written questions
to these witnesses and to place their responses in the record.
Also, without objection, Members will have 5 legislative days
to submit extraneous materials to the Chair for inclusion in
the record.
With that, again, my sincere thanks for the time that you
have spent and the patience that you have demonstrated.
This hearing is adjourned. Thank you.
[Whereupon, at 4:32 p.m., the hearing was adjourned.]
A P P E N D I X
September 21, 2022
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