Dec. 6 (UPI) — Wall Street bankers are testifying Wednesday before the Senate Banking Oversight Committee on the stability of the U.S. banking system.
CEOs of Wells Fargo, Bank of America, JP Morgan Chase, Citigroup, Morgan Stanley, Goldman Sachs, BNY Mellon and State Street are expected to argue against proposed higher capital requirements from the Federal Reserve.
“My commitment as chair of this committee is to always put the Main Street economy — and the workers who power it — at the center of everything we do. Part of that commitment is to hear directly from the biggest banks that hold too much power in the economy. It’s our job to hold them accountable to their workers, to their customers, and to the American people,” Banking Committee Chair Sen. Sherrod Brown, D-Ohio, said in a statement.
Bankers testifying at the hearing are JP Morgan Chase’s Jamie Dimon with annual compensation of $34.9 million, Morgan Stanley’s James P. Gorman at $39.4 million, Goldman Sachs CEO David Solomon with $31.6 million annual compensation, Citigroup’s Jane Fraser at $22 million, Bank of America’s Brian Thomas Moynihan with $30.1 million a year, Wells Fargo CEO Charles W. Scharf at $24.6 million, BNY Mellon’s Robin Vince with $11.2 million and State Street’s Ronald O’ Hanley with $3.8 million.
Those financial institutions have a combined $14.8 trillion in assets, $8 trillion in deposits and $34.7 billion in total stock buybacks.
The committee highlighted some of the fines and settlements for bank misconduct, including Bank of America’s $1.2 billion in penalties and settlements in 2022, Chase’s $290 million settlement with victims of the late billionaire Jeffrey Epstein, Citigroup’s $25.9 million fine for discrimination against Armenian Americans, and three claims that Wells Fargo allegedly tried to intimidate union organizers.
In prepared testimony, Dimon opposed the proposed higher capital requirements for Wall Street banks known as the Basel III Endgame Rule.
“Despite zero evidence that large U.S. banks are undercapitalized today, the proposed Basel III Endgame rule, if enacted, would unjustifiably and unnecessarily increase capital requirements by 20-25% for the largest banks. Banks would be limited in their ability to deploy capital in the times we’re most needed, and the rule will have a harmful ripple effect on the economy, markets, businesses of all sizes and American households,” Dimon said in his prepared statement.”
In their prepared statements, the other bank CEOs assert that the banking system is solid.
Goldman Sachs CEO David Solomon said the additional capital requirements proposal from the Fed would have a “particularly negative impact to capital markets functioning.”
He said the new proposed capital rules mean that “banks will need to hold capital twice for the exact same risks associated with market activities.”
The Basel III bank capitalization rules emerged from the 2007-2009 global financial crisis.
The latest proposal to raise capital requirements followed the regional bank collapses of Silicon Valley bank and Signature Bank earlier this year.
The Fed said in the case of Silicon Valley Bank’s collapse it was a “textbook case of mismanagement.”
The Wall Street bank CEOs today say despite those regional collapses, the banking system is strong. The assert that increasing the capital requirements is unnecessary.
