At a hearing Wednesday featuring CEOs of seven of the eight U.S.-based global systemically important banks, the House Financial Services Committee chairwoman worried that “several of these institutions are simply too big to manage their own operations, too big to serve our communities and too big to care about the harm they have caused.”
The chairwoman, Rep. Maxine Waters, D-Calif., grilled the executives on how the banks had tightened operations and diversified since the financial crisis of 2008. Notably, CEO James Gorman of Morgan Stanley cited the bank’s wealth management operation as a “stable foundation.”
During their testimony, the CEOs also agreed that cybersecurity is the primary risk facing the banking sector today, with another top concern being slower global growth.
The banks as a group, Waters said, “have paid at least $163.7 billion in fines since the financial crisis a decade ago, including for consumer abuses and other violations of the law.”
She then broke down those fines for each bank:
- Bank of America has paid $76.1 billion
- JPMorgan Chase has paid $43.7 billion
- Citigroup has paid $19 billion
- Wells Fargo has paid $11.8 billion
- Goldman Sachs has paid $7.7 billion
- Morgan Stanley has paid $5.4 billion
Waters argued that it “appears that they have treated those fines as simply the cost of doing business. All of the megabanks represented on the panel continue to rake in massive profits. Since the crisis, the megabanks have collectively made over $780 billion in profits, or nearly 5 times the amount they paid in fines,” and the CEOs have continued to be rewarded handsomely despite compliance failures on their watch.
Testifying at the hearing were Gorman; Michael Corbat, CEO of Citigroup; Jamie Dimon, CEO of JPMorgan Chase & Co.; Brian Moynihan, CEO of Bank of America; Ronald O’Hanley, president and CEO of State Street Corp.; Charles Scharf, chairman and CEO of Bank of New York Mellon; and David Solomon, chairman and CEO of Goldman Sachs.
Waters questioned the CEOs on their banks’ downsizing moves since the financial crisis hit a decade ago.
Corbat responded that Citigroup had downsized “considerably,” eliminating 70 business lines.
“Has it made management easier?” Waters asked.
Corbat responded: “Yes, it has.”
When asked the question, Dimon responded: “We every year look at … businesses that cause problems and close them down. So the answer is yes,” saying 17 lines of business had been eliminated since the financial crisis.
“Has it made management better?” Waters asked.
“Sure,” Dimon responded.