News Tech: The CEOs of the major banks in the country testified before Congress on Wednesday and offered a pessimistic assessment of the state of the economy, mirroring the financial and economic hardships many Americans are experiencing.
The Federal Reserve raised its benchmark interest rate by three-quarters of a percent on the same day as the hearing in an effort to rein in inflation. The bank CEOs were increasingly doubtful when questioned by lawmakers about whether the Fed can achieve its objective of a “soft landing,” where inflation is brought back down without significantly harming the economy.
The chief executives of JPMorgan Chase’s Jamie Dimon, Citigroup’s Jane Fraser, and other companies claimed that while the American consumer is in good position, rising interest rates and soaring inflation pose risks.
Dimon said, “I’m crossing my fingers.”
“We must put inflation in the past. I wish there was an easy method to accomplish that. There isn’t,” Powell declared at a press conference held after the rate increase was revealed.
While less optimistic about a “soft landing,” the seven bank executives unanimously endorsed Powell’s capacity to control inflation in response to a question from Massachusetts Representative Jake Auchincloss. The CEOs were subjected to a barrage of political questions even though the hearing was supposed to be about ordinary finances. Democrats pressed the CEOs on subjects like racial fairness, bank worker unionisation campaigns, and perennial financial challenges like overdraft fees and fraud.
Rep. Maxine Waters, a Democrat from California and the head of the House Financial Services Committee, stated, “In this context, the role that banks play to safeguard customers and offer access to affordable credit is extremely critical. Republicans used the occasion to criticise both the hearing’s necessity (this is the third time Democrats have called Wall Street CEOs before this committee since taking over the House in 2019) and the high rate of inflation. Gun store sales were one contentious issue. The three main credit card companies, Visa, Mastercard, and American Express, announced earlier this month that they will begin classifying gun store sales as a unique merchant code. It’s a choice that proponents of gun control have campaigned for, perhaps to prevent spikes in gun sales before a mass massacre.
Texas Republican Representative Roger Williams pressed the bank CEOs on whether they would adhere to the payment networks’ decision. All six CEOs responded by pledging to uphold legal firearms sales as well as consumer privacy. According to Dimon, “We don’t want to tell Americans what to do with their money.”
The financial industry bailout nearly 15 years ago is still fresh in many Americans’ minds, so the CEOs also utilised the opportunity to promote themselves as a force for good. The super regionals used the hearing to position themselves as a competitive “Main Street” rival to the Wall Street mega banks in an effort to escape the political problem that comes with being identified as being a part of “Wall Street.”
With thousands of branches and hundreds of billions of dollars in assets, each of them manages “super regionals,” which are enormous in their own right but dwarfed in scale by JPMorgan, BofA, Citi, and Wells. The investment banking firms Goldman Sachs and Morgan Stanley did not appear in person at the hearing on Wednesday. Instead, Andy Cecere of U.S. Bank, William Demchak of PNC Financial, and Bill Rogers Jr. of Truist were appointed as the CEOs of three new banks.