Virtual Hearing - Holding Megabanks Accountable: An Update on Banking Practices,... (EventID=)

Connect with the House Financial Services Committee
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On Wednesday, May 27, 2021, at 12:00 p.m. (ET) full Committee Chairwoman Waters and Ranking Member McHenry will host a virtual hearing entitled, “Holding Megabanks Accountable: An Update on Banking Practices, Programs and Policies."

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Witnesses for this one-panel hearing will be:

• Mr. Jamie Dimon, Chairman & Chief Executive Officer, JPMorgan Chase & Co.

• Ms. Jane Fraser, Chief Executive Officer, Citi

• Mr. James P. Gorman, Chairman & Chief Executive Officer, Morgan Stanley

• Mr. Brian T. Moynihan, Chairman & Chief Executive Officer, Bank of America

• Mr. Charles W. Scharf, Chief Executive Officer & President, Wells Fargo & Company

• Mr. David M. Solomon, Chairman & Chief Executive Officer, Goldman Sachs

Overview

In the 116th Congress, the Committee held several hearings with the Chief Executive Officers of the U.S. global systemically important banks (G-SIBs) to review trends and developments in the industry since the 2008 global financial crisis and the implementation of post-crisis reforms, most notably the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Today, we are in the midst of a devastating global pandemic. More than 32.9 million people in the U.S. have had confirmed cases of COVID-19, and more than 587,000 have lost their life due to COVID-19. However, the number of new COVID-19 cases has recently fallen sharply in the U.S. as the population becomes vaccinated; nearly 50 percent of U.S. adults are now fully vaccinated. Nevertheless, the pandemic has had and continues to have a profound impact on the U.S. and global economy, with millions of Americans having lost their jobs and many small and minority-owned businesses having closed their doors for good. The pandemic exposed several frailties in the economy and financial system, including pervasive racial inequalities, unequal access to traditional banking products and services, and unaddressed systemic risks threatening U.S. financial stability. Meanwhile, many megabanks have grown even larger during the pandemic and have recently reported record quarterly profits, in some instances roughly five to seven times higher than the first three months of 2020.3 The CEOs have been asked to testify on their bank's activities during the COVID-19 pandemic and to provide an update on the various issues explored in the hearings held last Congress, including safety and soundness, consumer protection, diversity and inclusion, risk management, compensation, climate risk, and the use of emerging technology, among other topics.

Recent Growth, Mergers, and Acquisitions

Bank of America (BofA), Citigroup (Citi), Goldman Sachs, JPMorgan Chase (JPM), Morgan Stanley, and Wells Fargo are the six largest banks in the United States as measured by total consolidated assets.4 These banks have generally increased in size since 2019 and hold a combined $12.7 trillion in assets as of December 31, 2020, which represents a combined 26% increase in size over four years. While growth during the pandemic can be attributed to increased deposits, mergers and acquisitions played a role. Implementing the Fed's approach to post-crisis mergers in 2012, Governor Daniel Tarullo stated that he would apply a "significant presumption against acquisitions" by G-SIBs. Yet, four of the six banks have merged with or acquired other businesses in 2020. Although prices were not reported for several of these acquisitions, Morgan Stanley reportedly accounted for the two largest acquisitions in the financial services industry in 2020. On October 2, 2020, Morgan Stanley acquired E*TRADE, a brokerage and bank. While Morgan Stanley's share of national bank deposits remained relatively small after the merger, the Fed noted that Morgan Stanley would control nearly 13% of deposits in Virginia despite not operating any retail branches in the state. After the merger, Morgan Stanley's assets exceeded $1 trillion for the first time. All six banks now have over $1 trillion in assets, with the smallest of the six banks, Morgan Stanley, being roughly twice as large as the next largest bank.

Pandemic Response

The pandemic has had a significant impact on consumers and small businesses. Under the CARES Act, mortgage servicers are obligated to provide forbearances to borrowers of qualifying federally backed mortgages for up to a year upon request. However, borrowers lack similar protections for most other kinds of mortgages and loans. Today, nearly 3 million borrowers are behind on their mortgage payments, with roughly 1.7 million borrowers expected to exit forbearance programs in September 2021 and the following...