Senators delve deeper into Zelle fees, inflation and ‘uber-woke’ policies in bank CEOs hearing

Senators delve deeper into Zelle fees, inflation and ‘uber-woke’ policies in bank CEOs hearing

Democratic senators criticized banks for not serving consumers fairly, while Republicans complained about liberal social agendas promoted by the same institutions, while chief executive officers of the nation’s seven largest consumer-facing banks sat on Capitol Hill on Thursday for a second day of testimony. .

The CEOs meeting with both the House and Senate banking committees were JPM of JPMorgan Chase & Co.
-0.60%
Jamie Dimon, BAC of Bank of America Corp.,
-1.54%
Brian Moynihan, Citigroup Inc.’s C,
-1.36%
Jane Fraser, WFC of Wells Fargo & Co.,
-1.54%
Charles Scharf, PNC Financial Services Group,
-1.86%
William Demchak, TFC of Truist Financial Corp.,
-2.11%
William Rogers Jr. and US Bancorp’s USB,
-1.50%
Andy Cecere.

sen. Elizabeth Warren, a Democrat from Massachusetts, said only Truist has provided data she requested from banks in a July letter about the number of fraud complaints on Zelle since 2018. The payment service is owned by seven banks, six of which appeared before the committee.

“Last year Zelle users were scammed $500 million as far as we know,” Warren said. “You built it, you profit from every transaction and you tell people it’s safe.”

Truist reported 52,000 transactions totaling $46 million, but the other banks did not respond.

The bank’s CEOs said they would provide the data to Warren.

Banks reimburse customers for unauthorized transactions, Moynihan said, but are focusing more on consumer education to fight scammers persuading people to make payments with Zelle.

Warren asked the executives if they were willing to honor all complaints from Zelle customers who report that they have been scammed. None of the CEOs agreed, but they said they are working to improve fraud detection in the system.

Also read: US stocks extend decline after Fed’s third jumbo rate hike

Dimon said the banks would like to see more criminals locked up, but added: “Think about what would happen if you agreed to refund any transaction someone agreed to.”

Members of the Senate Committee on Banking, Housing and Urban Affairs questioned the CEOs a day after the same group of seven executives appeared before the House Committee on Financial Services.

sen. Sherrod Brown, an Ohio Democrat, said industry missteps, such as fake account scandals at US Bancorp and Wells Fargo and high fees, have alienated consumers.

“Wall Street’s largest banks have lost the trust of the American people,” pushing customers toward cryptocurrencies and less regulated financial technology companies, Brown said in his opening statement.

Brown called on banks to work harder to provide affordable home loans in all communities, treat their employees better and lower costs. He thanked the banks that have announced pay increases and cuts in overdrafts over the past year.

sen. Pat Toomey, a Republican from Pennsylvania, said that “activist regulators” and progressives on Capitol Hill “view banks as a tool to advance their social policies” on issues ranging from global warming to gun control, voting and abortion rights. Many of these social issues are not at the heart of banking, but banks have addressed them, he said.

“Banks have become involved [liberal] social issues’, he says. “It’s a bad thing to alienate half the country.”

sen. John Neely Kennedy, a Republican from Louisiana, told CEOs to avoid trying to “win the uber-woke sweepstakes” by bowing to liberal pressure.

As inflation continues to “pulverize the American people like a fish,” Kennedy asked the CEOs what kind of policies they would like to see that would help.

Fraser of Citi and Dimon of JPMorgan said the US does not need more stimulus at this point. Dimon said he would like to see a “more calibrated” tax system and urged Congress to promote sensible taxes and policies on immigration, health care and infrastructure to help the economy grow.

When asked about innovation, Dimon said banks should continue to accelerate payments for consumers, but institutions are using electronic payment systems effectively.

At Wednesday’s House hearing, Dimon and other bank CEOs defended their lending activity to the fossil fuel industry.

Any ban on financing new oil and gas projects “would be America’s road to hell,” said Dimon, whose bank is the largest US provider of loans and other capital to the energy sector.

Dimon also said he remains a skeptic of cryptocurrencies, which he described as “decentralized Ponzi schemes”.

While politicians found plenty to complain about at banks, investors this year have been bearish on the sector amid tremors surrounding an economic slowdown.

The Financial Select SPDR ETF XLF,
-1.28%
is down 19.1%, compared to a 21.1% drop by the S&P 500 SPX,
-0.33%.

Also read: Mortgage applications rise for the first time in six weeks despite interest rates rising to 6.25%, pointing to housing ‘volatility’

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