Senator Warren attacks JPMorgan’s Dimon over ‘baloney’ overdraft fees

Progressive firebrand Senator Elizabeth Warren on Wednesday attacked JPMorgan Chase & Co (JPM.N) chief executive Jamie Dimon after the country’s largest lender reaped $1.46 billion in overdraft fees during 2020 while borrowers were struggling to make ends meet amid pandemic lockdowns.

Warren told Dimon during a banking industry U.S. Senate hearing that the fees were especially egregious after federal agencies and Congress gave lenders a raft of regulatory breaks to allow them to preserve capital and better help customers. JPMorgan collected more overdraft fees than its immediate competitors, Warren said.

“You and your colleagues came in today to talk about how you stepped up to help your customers during the pandemic. It’s a bunch of baloney,” Warren told Dimon in a fiery exchange during which the pair, at times, spoke over each other.

Dimon responded that JPMorgan waived overdraft fees for customers who asked. When Warren asked Dimon if the bank would refund the fees, he flatly said, “No.”

After the hearing, a spokesperson for the bank said in an email response to Reuters that in 2020 the bank waived fees on over 1 million deposit accounts, including overdraft fees, “no questions asked.”

The JPMorgan CEO testified alongside Bank of America Corp (BAC.N) CEO Brian Moynihan, Citigroup Inc (C.N) CEO Jane Fraser, and Wells Fargo & Co (WFC.N) CEO Charles Scharf, who also got heat from Warren for overdraft fees. Collectively, the four banks gathered $4 billion in such fees last year, Warren said.

With their smaller retail businesses, Goldman Sachs Group (GS.N) CEO David Solomon and Morgan Stanley (MS.N) CEO James Gorman largely dodged Warren’s wrath during their testimony.

Speaking to CNBC after the hearing, Warren, a former 2020 presidential candidate who rose to prominence during the 2008 financial crisis, said the banks had used the pandemic to “pump up their profits” and required aggressive regulation.

The cost of overdrawing a checking account hit a new high in 2020, increasing to an average of $33.47, according to Bankrate, a consumer finance service. Banks say overdrafts are an important source of credit for customers, but consumer groups say the fees are usurious.

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“We believe this exchange only improves the prospects that the (Consumer Financial Protection Bureau) will look at further limits on overdraft fees,” wrote Jaret Seiberg, an analyst at Cowen Washington Research Group.

HEAT FROM BOTH SIDES

The same six CEOs are due to appear before the House Financial Services Committee on Thursday as scrutiny of the industry grows under Washington’s Democratic Party leadership.

Warren’s attack on Dimon and overdraft fees will come as a blow to the industry which thought it had a good story to tell lawmakers after dishing out $69 billion of COVID-19 aid to struggling businesses and launching programs to tackle racial injustice and wealth inequality.

But the Wall Street bosses frequently found themselves under fire from both sides of the aisle, with Democrats criticizing the banks for not doing enough to help everyday Americans, and Republicans wary of their growing support for liberal causes.

Senator Sherrod Brown, a Wall Street critic who became chair of the Senate Banking Committee following Democratic gains in the 2020 election, also took a tough line, saying the banks’ success navigating the pandemic was not enough.

“Under the current system, Wall Street profits no matter what happens to workers, because those profits now come at the expense of workers,” he told the CEOs in his opening remarks and implored them to justify their multi-million dollar paychecks and stock buy backs.

Republicans, on the other hand, criticized the banks for trying to drive social policies by limiting financing for fossil-fuel companies and gun manufacturers and by speaking out against a new Georgia voting rights law.

“Big banks face fire from progressives and conservatives,” Seiberg wrote after the hearing. “What satisfies one side outrages the other side.”

Our Standards: The Thomson Reuters Trust Principles.

Source: https://www.reuters.com/business/wall-street-ceos-tout-covid-assistance-diversity-efforts-before-us-senate-2021-05-26/