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Congress to grill CEOs of top US banks on the state of the economy

By:
on Sep 21, 2022
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  • Congress to grill executives of leading US banks
  • JPMorgan Chase’s Jamie Dimon to present testimony in Congress
  • Dimon says strict capital requirements for banks an economic risk

Congress will, this week, grill CEOs of top US banks, including JPMorgan Chase & Co (NYSE: JPM), Bank of America Corp (NYSE: BAC), Wells Fargo & Co (NYSE: WFC), Citigroup Inc. (NYSE: C), and other retail banks on a range of issues regarding the state of the economy and their stand on issues like fossil-fuel lending.

Congress to grill CEOs of US’s top banks

According to congressional aides, bank officials, and lobbyists, the CEOs will appear before the Senate banking Committee and the House Financial Services Committee. Other issues during the grilling include boosting diversity, access to bank branches, mergers, and payments fraud.

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The CEOs to appear before the Senate Committee include JPMorgan’s James Dimon, Citi’s Jane Fraser, Wells Fargo’s Charles Scharf, Bank of America’s Brian Moynihan, and PNC Financial CEO William Demchak, Truist Financial CEO William Rogers, and USBancorp CEO Andy Cecere.

Even though these sessions seldom lead to legislative change, they are nonetheless dangerous for CEOs since they will have to defend respective institutions on various fronts as lawmakers try to improve their reputations before the Midterm elections.

The hearing occurs amid mounting concerns that rate increases by the Federal Reserve intended to combat inflation might push the nation into an economic crisis.

Jamie Dimon: US economy facing “storm clouds.”

JPMorgan CEO Jamie Dimon is expected to inform Congress that the US economy is facing “storm clouds” based on his prepared testimony. Dimon will highlight the competing forces the US economy is facing. He explains that a solid job market and robust consumer spending are signs of resilience but disrupted supply chains, high inflation, and the Ukraine conflict portend difficult times.

Dimon’s testimony stated:

While these storm clouds build on the horizon, even the best and brightest economists are split as to whether these could evolve into a major economic storm or something much less severe.

Another significant economic risk could be the strict rules requiring banks to hold more money which might affect lending capacity. Following the 2008 financial downturn, global regulators instituted strong capital conditions on financial institutions.

Dimon warns this is bad for the US since it handicaps regulated banks, leaving them cash-constrained and impacting growth areas such as lending as the economy faces challenging times.