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james gorman
Warren Shames Chase's Dimon, Other Big Bank CEOs for Charging Overdraft Fees During Pandemic
"This past year has shown that corporate profits are more important to your bank than offering just a little help to struggling families—even when we are in the middle of a worldwide crisis."
May 26, 2021
Sen. Elizabeth Warren on Wednesday publicly shamed JPMorgan Chase CEO Jamie Dimon and three other big bank chief executives for raking in a collective $4 billion from overdraft fees during the coronavirus pandemic.
"Will any of you agree to refund the overdraft fees that you collected? ...I didn't think so."
--Sen. Elizabeth Warren
The Senate Committee on Banking, Housing, and Urban Affairs held a virtual hearing Wednesday that featured testimony from Dimon as well as Charles Scharf of Wells Fargo, David Solomon of Goldman Sachs, Jane Fraser of Citigroup, Brian Thomas Moynihan of Bank of America, and James Gorman of Morgan Stanley.
While questioning the Chase CEO, Warren (D-Mass.) also took aim at Wells Fargo, Citi, and Bank of America. She contrasted "generous" pandemic-era policies of bank regulators with those that banks had for their customers, as millions of people struggled with the economic consequences of the public health crisis.
Warren highlighted that as regulators delayed compliance for some rules and let banks to avoid paying overdraft fees for Federal Reserve accounts, they also recommended that banks waive overdraft fees for their customers.
Citing research from Pew Charitable Trusts, the senator noted that such fees disproportionately impact "working people making less than $50,000 a year, African Americans, Hispanics--people who are struggling to get by."
She told Dimon, "You are the star of the Overdraft Show. Your bank, JPMorgan, collects more than seven times as much money in overdraft fees per account than your competitors."
\u201cThe big bank CEOs came to the Senate today to talk about how they stepped up and took care of customers during the pandemic \u2013 and I told them that\u2019s a bunch of baloney. They nickel and dimed their struggling customers with overdraft fees to line their own pockets.\u201d— Elizabeth Warren (@Elizabeth Warren) 1622043529
Dimon said that his bank's Fed account was never negative and that customers who needed relief from overdraft fees could submit a request. He also told Warren, "I think your numbers are totally inaccurate, but we'll have to sit down privately to go through that."
She responded that "these are public numbers." According to Warren, JPMorgan Chase collected $1.463 billion dollars in overdraft fees from its customers in 2020.
"Now, do you know how much JPMorgan's profit would have been in 2020 if you had followed the recommendation of the regulators and waived overdraft fees to help struggling consumers? In other words, without that overdraft money, would your bank have been in financial trouble?" Warren asked.
Dimon replied that "we waived the fees for customers upon request if they were under stress because of Covid."
Warren told him, "I appreciate that you want to duck this question," and asked again; he reiterate his previous answer.
"The answer is your profits would have been $27.6 billion dollars. I did the math for you," Warren said. "So here's the thing: you and your colleagues come in today to talk about how you stepped up and took care of customers during the pandemic, and it's a bunch of baloney. In fact, it's about $4 billion dollars worth of baloney."
\u201cBank overdraft fees snatch billions of dollars from struggling families. Even during this crisis, Wall Street milked people for more. I gave the CEOs a chance to fix that today \u2013 and they didn't. More proof that they care more about profits than people. https://t.co/JharjhMIqi\u201d— Elizabeth Warren (@Elizabeth Warren) 1622054194
"But you could fix that right now," she continued. "Mr. Dimon, will you commit right now to refund the one-and-a-half billion dollars you took from consumers during the pandemic?"
His response was concise: "No."
Warren then put the question to the other CEOs: "Will any of you agree to refund the overdraft fees that you collected?"
In the face of silence, she said, "I didn't think so." The senator concluded by adding that "no matter how you try to spin it, this past year has shown that corporate profits are more important to your bank than offering just a little help to struggling families--even when we are in the middle of a worldwide crisis."
Sens. Sherrod Brown (D-Ohio) and Cory Booker (D-N.J.) in March 2020 unveiled legislation that would temporarily ban bank overdraft fees for the duration of the pandemic--but it didn't go anywhere. The following month, the pair sent letters to 15 big bank CEOs, urging them to voluntarily enact such policies.
Brown, who chairs the U.S. Senate on Banking, Housing, and Urban Affairs, declared Wednesday that "Wall Street is on notice. The days of these banks and their allies controlling this committee are over."
\u201cOur nation's biggest banks are sending companies a clear message \u2013 the more you pay employees, the worse you\u2019ll do on Wall Street.\n\nThis view \u2013 that American workers are a cost to cut, instead of an asset to invest in \u2013 is what\u2019s wrong with this system. #WallStreetOversight\u201d— Senate Banking and Housing Democrats (@Senate Banking and Housing Democrats) 1622062862
"The CEOs that came before us are the most powerful economic actors in the country and the signals they send to other companies influence workers at companies all over the country, not just their own employees," Brown said. "They can't say they value their workers and then pledge to fight employees who want to form a union. They can't say they are focused on lending to small businesses and growing the economy while spending billions on stock buybacks."
"They can't say they put their customers first while charging them overdraft and late fees during a global pandemic," he continued. "And they can't say climate change is a threat to the entire economy, while dragging their feet when it comes to investing in new technology and the jobs of the future. We need an economy that reflects our values not Wall Street's. These CEOs have a lot of work to do."
As Economic Suffering Grips Regular Americans, Wall Street Behemoths Ready Feast of Stock Buybacks
"We're going to be aggressively buying back, and consistently," said Morgan Stanley chief executive James Gorman.
Jan 21, 2021
For millions of regular Americans, the end of 2020 was marked by economic distress, with millions suffering pandemic-triggered job losses--and thus the loss of their employer-tied health insurance--still waiting on robust economic relief from federal lawmakers, and facing a weak social safety net.
For the nation's biggest banks, however, the year closed out with reason for celebration, and they're looking to take advantage of the banner year with a feast of stock buybacks.
As Axios reported Friday,
Banks cashed in on the white-hot IPO market, record debt issuance, and sky-high trading volume--all of which played out as economic peril softened the consumer side of their businesses.
The big picture: Financial results show that banks, which rake in money as middlemen, made a killing thanks to unprecedented action by the Federal Reserve--which caused a rush of activity in financial markets, pushed a slew of companies to issue debt, and led to a flood of others to go public for the first time.
Earnings were particularly sweet for banking behemoths including JPMorgan Chase, Goldman Sachs, and Morgan Stanley.
Reporting from Bloomberg on Tuesday gave a picture of the final quarter:
As the banner year for markets came to a close, JPMorgan Chase & Co. posted record profit in the fourth quarter, helped by a 20% increase in revenue from trading, a business where it already ranked No. 1 heading into the turmoil. At rival Goldman Sachs Group Inc., second only to JPMorgan in dealmaking, a flurry of transactions helped send its quarterly profit soaring 135%.
The results--from JPMorgan on Friday and Goldman on Tuesday--mirrored trends in many corners of industry and society during the shocks set off by Covid-19: The strong got stronger.
"Big banks' Wall Street business is booming," as the New York Times put it Friday. The banks signaled they may take advantage of that windfall by buying back shares--a practice the Fed last month allowed to resume last month and which critics say simply rewards wealthy shareholders but are essentially "manipulation of the stock market." From the Times:
What do banks plan to do with all that cash? "We have so much capital, we cannot use it," Jamie Dimon of JPMorgan told investors. The bank's cash pile has doubled over the past year, to more than $500 billion.
It's a similar story at other banks, and now that they've been cleared by regulators to resume share buybacks, "we're going to be aggressively buying back, and consistently," said James Gorman, Morgan Stanley's chief executive.
The reporting came as a new regulatory filing revealed that Dimon, a billionaire, was rewarded in 2020 with the same compensation as in 2019--$31.5 million.
"In determining Mr. Dimon's compensation, the independent members of the board took into account thefirm's strong performance in 2020 and over the long term, across four broad dimensions: Business Results; Risk, Controls, and Conduct; Client/Customer/Stakeholder; and Teamwork & Leadership," the company said.
At a conference call earlier this month, Dimon referenced the nation's growing wealth divide.
"We believe that inequality is a real problem," said Dimon, adding that "40% of Americans make $15 an hour or less."
Dimon also pointed to the fact with the new Biden administration, "there will be a new set of regulators," whom he expected would "be tougher" than those in the Trump administration.
President Joe Biden, according to reporting Friday, is considering naming former Obama Treasury Department official Michael Barr as the nation's top bank cop.
As head the Office of the Comptroller of the Currency, Barr would have the power to regulate banks like JPMorgan Chase.
Progressive groups like People's Action, however, have urged Biden to instead tap Mehrsa Baradaran, who teaches at the University of California at Irvine Law School and is an expert on the racial wealth gap. Bree Carlson, deputy director of People's Action, said in a statement Friday of Barr that "it's hard to imagine a worse pick," citing his ties to Wall Street and Silicon Valley corporations as reasons for his disqualification.
"President Biden must prove to voters that the government cares about all of us, not just wealthy elites," said Carlson. "If Biden truly wants to 'Build Back Better,' he needs to lock the revolving door and ensure no one with ties to the financial industry is in charge of regulating it."
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