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Bank CEOs Head to Washington Citing Efforts for Underbanked (1)

May 26, 2021, 10:49 AM

JPMorgan Chase & Co., Bank of America Corp. and their largest rivals are preparing to tell lawmakers they’ve stepped up efforts to bank under-served communities, ahead of scrutiny into their lending to Americans facing hard times during the pandemic.

“We took steps to make sure those in need, including those without access to traditional banking services, received each round of stimulus payments quickly,” JPMorgan Chief Executive Officer Jamie Dimon said. The bank also delayed payments and extended forbearance options on mortgage and other accounts, and funded more than 400,000 loans to small businesses, according to remarks prepared for his appearance alongside other banking CEOs before Congress on Wednesday and Thursday.

The two days of testimony will mark the first time top bankers have faced a public cross-examination -- albeit on video -- since Democrats took control of the Senate and the White House early this year. The CEOs are expecting to meet with frustration from policy makers who are concerned about evictions and mortgage defaults after historic job losses, as well as the pace of lending to consumers and small businesses. Bankers have said sluggish loan growth has been a product of low demand.

That argument has been met with skepticism from lawmakers including Senator Elizabeth Warren, a Democrat from Massachusetts.

“The big banks and giant corporations made billions in profits during the pandemic and passed those gains on to their executives and shareholders,” Warren said in an emailed statement. “This is corporate greed plain and simple. Instead, we need financial institutions to make the big investments in communities and small businesses that our country needs for an equitable recovery, and it is our job to fight for that.”

Bank of America’s Brian Moynihan and Charlie Scharf of Wells Fargo & Co. highlighted in prepared remarks the loans and services they extended during the Covid-19 crisis, including to underserved communities. They pointed to their roles disbursing loans under the government’s Paycheck Protection Program, an initiative designed to help small businesses keep workers on payroll. Bank of America didn’t prioritize client applications in its provision of PPP loans to almost 500,000 small businesses, it said. Wells Fargo’s lending supported 1.7 million jobs, according to Scharf.

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Despite such efforts, the recovery from an economy nearly shuttered by the pandemic is uneven and the struggle continues for many, Citigroup Inc.’s Jane Fraser said in her prepared remarks.

“We are already seeing the shoots of a K-shaped recovery in which some will do better and others will struggle,” Fraser said. “Unfortunately, those who will struggle have been economically disadvantaged historically, and they will need special attention from our industry.”

Among its initiatives, Citigroup expanded access to check-cashing services for non-customers, scrapped surcharges for prepaid debit cards issued for stimulus payments and tweaked policies covering the garnishment of customer stimulus payments, Fraser said.

Lawmakers have also been pressing the banks for more disclosure on racial and gender equality within their own ranks. Fraser became the first woman to lead a big six U.S. bank, while others have begun to report more robust metrics about their workforces and elevated more women to senior roles. JPMorgan’s Dimon highlighted the bank’s commitments toward advancing racial equity, noting that while his company’s investment commitment is significant, “we know there’s more work to do.”

Goldman Sachs Group Inc. CEO David Solomon cited goals to boost diversity across many levels of hiring.

“I believe a core part of my tenure as CEO will be defined by our progress on this front,” he said in prepared remarks. “I believe that we should have a company that looks like the regions and communities we serve.”

(Updates with Elizabeth Warren’s comment in fourth and fifth paragraphs.)

--With assistance from Hannah Levitt.

To contact the reporter on this story:
Sonali Basak in New York at sbasak7@bloomberg.net

To contact the editors responsible for this story:
Sally Bakewell at sbakewell1@bloomberg.net

Steve Dickson

© 2021 Bloomberg L.P. All rights reserved. Used with permission.

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