The CEOs of America’s largest banks testified before Congress on Wednesday that there is reason to worry about the purchasing power of consumers, especially low-income consumers who rely on debt.
The CEOs of JPMorgan Chase, Bank of America, Wells Fargo, and five other major financial institutions also took the opportunity to say that the rules proposed by the administration of President Joe Biden for the sector could affect the US economy as it begins an election year and a recession. remains possible.
Bank bosses have regularly appeared before Congress since the financial crisis of 2008. Among those who testified before the Senate Banking Committee were Jamie Dimon of JPMorgan, Brian Moynihan of Bank of America, Jane Fraser of Citigroup, and David Solomon of Goldman. Sachs.
When both houses of Congress are controlled by Democrats, CEOs speak before the banking committees of both houses. Now that Republicans control the House of Representatives, CEOs speak only before the upper house committee.
This has been a difficult year for the banking sector, as rising interest rates have led banks and consumers to borrow less, and consumers have felt inflationary pressures. Three banks have closed this year—Signature Bank, Silicon Valley Bank, and First Republic Bank—and are experiencing deposit drops and questions about their balance sheets.
On top of that, regulators are proposing new rules that could seriously hit bank profits, including Federal Reserve rules that will force big banks to show greater capitalization on their balance sheets. The industry strongly opposes the new rules, known as Basel Endgame, saying they will harm bank balance sheets at a time when institutions need more flexibility.
“Almost all elements of Basel III Endgame will make lending and other banks more expensive, especially for small businesses and consumers,” Fraser said in written statements.
There are also proposals from the Consumer Financial Protection Bureau to limit the fees charged for overdrafts, which until now have been a major source of income for banks.