By John BIERS
CEOs of giant US banks were grilled Wednesday on their swelling pay packages, commitment to diversity and other hot-button issues in the industry’s biggest congressional once-over since the financial crisis.
Representative Maxine Waters, a California Democrat and chairwoman of the House Financial Services Committee, set the tone, hitting out at the industry’s “chronic lawbreaking,” documented in the fines and settlements worth hundreds of billions of dollars, while also alluding to financial crisis bank bailouts.
But with the industry on firmer footing today, there was somewhat less focus on financial stability than on the industry’s social footprint, with the hearing coming as leading Democratic presidential candidates jostle for attention with proposals on taxes, universal health care and regulation.
Several Democrats ripped into the 2017 tax cut signed by President Donald Trump, portraying it as a boon to the rich that has done little to help families still struggling after the 2008 recession.
JPMorgan Chase Chief Executive Jamie Dimon defended the measure for boosting US banks, saying “a more competitive business will drive wages in time.”
Dimon and other CEOs emphasized the industry’s work to support low-income communities and minority-led businesses, as well as to push for greater gender parity in the workforce.
But Dimon got an earful from Democratic California Representative Katie Porter, who asked the JPMorgan chief for “advice” for how a teller could live in California on $35,700 a year.
After essential expenses such as gasoline, rent and child care, she would be down $567 a month, Porter calculated.
“I don’t know,” Dimon said. “I’d have to think about it.”
“Mr. Dimon, you make $31 million a year and this is a budget problem you can’t solve,” Porter shot back.
-‘In a bubble’ –
In another probing exchange, Nydia Velazquez, a Democrat of New York, pressed Citigroup Chief Executive Michael Corbat to justify his 2018 pay of $24.2 million, an estimated 486 times that of the average employee.
Corbat said his pay was set by the board of directors and that, if he were an average employee who observed the yawning gap, “I would hopeful that there’s the opportunity to continue to advance.”
That response did not sit well with Velazquez, who said “this is why people who live in a bubble and in an ivory tower cannot understand the anger out there, especially among millennials,” she said.
At another point, Representative Al Green, Democrat of Texas, asked the witnesses whether any anticipated that their successor would be a woman or a person of color.
None of the witnesses — all white men — raised their hand.
“All white men and not one of you believe your successor will a female or a person of color,” Green said. “I want you to know that we believe you can do better.”
– ‘Are you a capitalist?’ –
Republicans on the panel were generally less confrontational.
Patrick McHenry of North Carolina, the panel’s ranking Republican, criticized the session as a “hearing in search of a headline” and used his time to quiz CEOs on the financial system’s ability to withstand a no-deal Brexit.
Most of the executives said a “hard” Brexit would be a “challenge” but probably not a source of global systemic risk.
Another Republican, Ralph Williams of Texas, asked the CEOs, “Are you a socialist or are you capitalist?”
All seven said they were capitalists.
“We need to put socialism on trial and we need to do it today,” Williams said, echoing views frequently stated by the White House.
Representative Sean Duffy of Wisconsin was among the Republicans who balked at a retreat by major banks from financing gun makers, rebuking Bank of America’s Brian Moynihan, who said the bank restricted financing of gun companies because of employees who had been personally affected by shootings.
“Take away the rights of the law-abiding citizen where I live, that does not compute with my idea of America,” Duffy said.