[ADVERT]
Share Name Share Symbol Market Type
Bank of America Corporation NYSE:BAC NYSE Common Stock
  Price Change % Change Share Price High Price Low Price Open Price Shares Traded Last Trade
  0.67 1.44% 47.15 47.24 46.05 46.46 40,412,540 00:59:42

Bank CEOs Navigate Partisan Strife Over Voting Rights, Climate Change -- 3rd Update

26/05/2021 10:17pm

Dow Jones News


Bank of America (NYSE:BAC)
Historical Stock Chart


From Apr 2021 to Oct 2021

Click Here for more Bank of America Charts.
By Andrew Ackerman and Orla McCaffrey 

WASHINGTON -- The chief executives of the six largest U.S. banks drew fire from both Republicans and Democrats at a Senate hearing that highlighted challenges facing corporate leaders seeking to navigate partisan strife over hot-button issues including voting rights, climate change and racial justice.

In sometimes tense exchanges Wednesday before the Senate Banking Committee, CEOs including JPMorgan Chase & Co.'s Jamie Dimon, Citigroup Inc.'s Jane Fraser and Wells Fargo & Co.'s Charles Scharf were criticized by Democrats for perceived faults, including excessive executive compensation and overdraft fees.

Banking committee Chairman Sherrod Brown (D., Ohio) faulted the firms for a drop in overall lending amid the pandemic while criticizing Mr. Dimon for a large pay gap between the JPMorgan chief and his workers.

Mr. Dimon pushed back against criticism over his $31.7 million compensation package in 2020. "My compensation is set by the board; they look at multiple factors," he said. He defended worker pay, saying his firm takes "very good care of our people" in terms of training, healthcare and retirement benefits.

Bank of America Corp.'s Brian Moynihan said clients borrowed less from banks outside the federal government's Paycheck Protection Program, which helped many small businesses pay employees and cover rent and other expenses.

Pennsylvania Sen. Pat Toomey, the top Republican on the panel, pressed the firms on their stated support for "stakeholder capitalism." Mr. Dimon led a group of executives who in 2019 said corporate decisions should take all stakeholders -- employees, customers and society at large -- into account.

"I would just ask you to reconsider this because stakeholder capitalism is meant to diminish the importance of a company's obligation to shareholders, relative to other stakeholders, and I think that's a contradiction of the fundamental aspect of capitalism," Mr. Toomey said.

The bankers are due to testify virtually again on Thursday before the House Financial Services Committee. The hearings mark the first time in about two years that the chief executives of major banks have appeared together before U.S. lawmakers.

In prepared remarks, the bankers touted their efforts to help customers and the economy weather the pandemic-induced recession, including deferred loan payments and small-business lending.

"Banks were a part of the solution to beat back the economic impacts of a global pandemic, and now we must continue to work together to ensure a fair and equitable recovery," said Wells Fargo's Mr. Scharf.

Sen. Elizabeth Warren (D., Mass.) criticized JPMorgan for collecting nearly $1.5 billion in overdraft fees in 2020. "You and your colleagues come in today to talk about how you stepped up and took care of customers during a pandemic, and it's a bunch of baloney," Ms. Warren said.

JPMorgan waived fees upon request for customers who were under stress because of Covid-19, Mr. Dimon said, as he and Ms. Warren spoke over one another. The bank didn't waive the charges automatically.

Some questions generated an awkward silence. Sen. Tim Scott (R., S.C.) pressed the executives to explain why some of their firms or executives signed a recent statement that expressed opposition to Republican-led voting bills in Georgia and other states.

Asked what specific portions of the Georgia law they objected to, none of the executives responded.

"It came out of our teammates...expressing grave concern," Mr. Moynihan said.

More than 300 companies and their executives -- including from Goldman Sachs Group Inc., Bank of America, Wells Fargo and Citigroup -- signed a statement last month to "defend the right to vote and oppose any discriminatory legislation."

The statement didn't address specific voting legislation, nor did it call on companies to take business action or halt political donations to lawmakers supporting such bills.

Mr. Brown asked the CEOs whether they would remain neutral if their employees wanted to form a union. Mr. Dimon said no, while others said they would listen to their workers' concerns.

About 11% of American workers are represented by unions, according to the Bureau of Labor Statistics. In the finance industry, the proportion is 1.1%. Unionization efforts have garnered attention in recent months, including the failed attempt of Amazon.com warehouse workers in Alabama last month.

The hearings come after blockbuster earnings on Wall Street in the first quarter. JPMorgan notched its highest quarterly profit on record, driven by record revenue from trading stocks. Wells Fargo enjoyed its best-ever quarterly profit in corporate and investment banking.

"Profits have gone up, stock prices have soared, your own compensation is stratospheric -- but workers get a smaller and smaller share of the wealth they create...and they're working harder than ever," Mr. Brown said.

After the 2008 financial crisis, big-bank CEOs were lightning rods for the anger and misery fueled by millions of foreclosures, rising unemployment and a deepening recession. Today, populist ire against the firms has waned, and the banking industry says it is helping to lead the economic recovery.

Banks say they have played a key role in keeping businesses and consumers afloat during the pandemic. They helped disburse almost $796 billion in loans through the federal Paycheck Protection Program as of late May.

Still, some of the largest banks restricted loans to current customers or those who had previously taken out loans. Smaller banks picked up much of the slack. They issued 28% of PPP loans, despite holding about 12% of the industry's assets in 2020, according to the Federal Deposit Insurance Corp.

Overall, loans increased 3.3% in 2020, the lowest annual growth rate since 2013, according to Jason Goldberg, a banking analyst at Barclays. Excluding an estimated $407 billion PPP loans last year, 2020 saw a 0.6% decline in lending, the first decrease since 2009, a year that saw the end of an 18-month recession.

Last spring, when some lenders braced for a severe recession, banks tightened lending standards noticeably. Conditions remain tighter than before the pandemic on products including credit cards, auto loans and mortgages.

Demand has ebbed as well. Government lending and record-low interest rates made it cheap for companies to access cash, reducing their reliance on loans from banks.

Write to Andrew Ackerman at andrew.ackerman@wsj.com and Orla McCaffrey at orla.mccaffrey@wsj.com

 

(END) Dow Jones Newswires

May 26, 2021 17:05 ET (21:05 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.

1 Year Bank of America Chart

1 Year Bank of America Chart

1 Month Bank of America Chart

1 Month Bank of America Chart
ADVFN Advertorial
Your Recent History
NYSE
BAC
Bank of Am..
Register now to watch these stocks streaming on the ADVFN Monitor.

Monitor lets you view up to 110 of your favourite stocks at once and is completely free to use.

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V:gb D:20211021 00:54:03