U.S. bank CEOs grilled by Congress over economy, Russia, China ties

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WASHINGTON — Some of the nation’s top bankers have endorsed Federal Reserve rate hikes as a way to tame rising inflation, noting that consumers continue to hold up well when they appeared before Congress on Wednesday during a wide-ranging and mostly quiet hearing.

Testifying before the House Financial Services Committee, the CEOs also commended their financial strength, their role in distributing billions of dollars in aid related to the COVID-19 pandemic and their efforts, both lending to poorer communities and diversity promote in their ranks.

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The lineup included CEOs of the four largest US banks: Jamie Dimon of JPMorgan Chase & Co, Charles Scharf of Wells Fargo, Brian Moynihan of Bank of America and Jane Fraser of Citigroup. They were joined by the CEOs of the country’s largest regional lenders, US Bancorp, PNC Financial and Truist.

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While such hearings rarely lead to legislative action, they are risky for CEOs, who have been forced to defend their banks on issues such as their ties to Russia and their stances on firearms purchases and worker unionization while lawmakers seek to raise their profile in the US Ahead to strengthen November elections, where control of Congress is at stake.

However, Republicans and Democrats alike were concerned with the impact of rising inflation on the economy and bank customers.

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Dimon and Moynihan said consumers remain in good shape, spending is holding up well and both said rate hikes are needed to get inflation under control.

While Moynihan acknowledged that this meant higher borrowing costs for key consumer products like mortgages, “the reality is it has to be done,” he said. The central bank announced on Wednesday afternoon that it would raise interest rates again by 75 basis points.

As interest rates rise, Fraser expects people with lower credit ratings to experience greater financial stress. Saving rates, which have skyrocketed during the COVID-10 pandemic when Americans have stayed at home, are likely to fall, she added.

“We’re going to have tougher times ahead,” Fraser said. Dimon said there was a possibility of a mild recession in the US, which could be worse depending on the course of Russia’s war in Ukraine, which has created uncertainty about global energy and food supplies.

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Pressing on the risks to the US financial system, Fraser later added that energy supply shocks in Europe could hurt the US economy by reducing demand for American goods and services.

Dimon said the Ukraine conflict, which Russia describes as a special military operation, and rising tensions with China are the biggest vulnerability to global financial stability.


While the hearing was generally cordial, some lawmakers went after the CEOs about their institutions’ operations in Russia and China, whose increasingly belligerent stance toward neighboring Taiwan is causing growing tensions with Washington.

California Representative Brad Sherman, a Democrat, hounded Dimon and Fraser about their Russian customers, sparking a brief, controversial exchange in which Dimon — known for his blunt and direct style — attempted to intervene while Sherman spoke.

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In an unusual question for a Republican congressman who supports the industry, Blaine Luetkemeyer pressed Dimon, Fraser and Moynihan on how they would react if China invaded Taiwan, which Beijing regards as sovereign Chinese territory.

In one such case, executives said they would follow US government guidance. “We will follow decades of government guidance to work with China. If they change positions, we will change them immediately, as we did in Russia,” Moynihan said.

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Bank of America’s CEO warned that the long-term competitiveness of Chinese banks is the “real problem” of concern. “They could acquire any of us without much trouble in terms of financial resources.”

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The CEOs also faced criticism from Republicans, who were frustrated by what they saw as Wall Street’s increasingly liberal stance on the environment and firearms. Banks dispute this characterization.

Some Republicans pressed executives on how they would handle gun deals days after an international standards body approved a new dealer code for gun dealers.

“I’m afraid this is one step closer to a backdoor gun registry,” said Rep. Alex Mooney, a West Virginia Republican.

(Reporting by Pete Schroeder, Lananh Nguyen in Washington; additional reporting by Saeed Azhar in New York; editing by Michelle Price, Will Dunham and Nick Zieminski)



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