WASHINGTON — One by one, the leaders of seven of the country’s largest banks told skeptical House Democrats on Wednesday that a decade after the global financial crisis, the industry is financially healthier and less risky.
“Citi had become a smaller, safer, stronger and far less complex company,” Citigroup CEO Michael Corbat told the House Financial Services Committee.
The 200-year-old bank, which is the largest credit-card issuer in the world, has shed several lines of business to focus on core areas such as retail banking, he said. “We recognize that rebuilding trust is harder than rebuilding your balance sheet,” Corbat said.
James Gorman, chief executive of Morgan Stanley, added: “We are safer, sounder and more resilient than we were before the financial crisis.”
When the committee last held such a hearing, the nation was still reeling from the Great Recession, and the banks’ chief executives were defending having taken billions in taxpayer bailouts. Since then, the banking industry has largely repaid taxpayers and rebounded to record profits.
In addition to Corbat and Gorman, the chief executives of Bank of America, Bank of New York Mellon, Goldman Sachs, JPMorgan Chase and State Street also testified. Missing from the group was embattled Wells Fargo, which was pummeled during a separate hearing last month.
Lawmakers grilled the chief executives on a wide variety of topics, from the diversity of their companies, overdraft fees and the Trump administration’s efforts to rollback industry regulations to their policies toward gun manufacturers.
One of the tensest moments came when Rep. Al Green, D-Texas, asked the panel of chief executives to raise their hand if they were not “white men.” After none raised his hand, Green asked if any of them believed that they would be succeeded by a woman or a person of color. None of the executives “appears to believe that your successor will be a female or a person of color,” he said after no hands were raised.
“Do you believe your bank benefited from slavery?” Green then asked.
Only Jamie Dimon, chief executive of JPMorgan Chase, said his bank had. In 2005, JPMorgan Chase acknowledged that two of its predecessor banks had received thousands of slaves as collateral before the Civil War and that the bank had also owned hundreds.
The Democratic takeover of the House has intensified scrutiny of big banks, and the industry is hoping the hearing will focus attention on the positive changes they have made and not turn into a preview of the punches they will take in the run-up to the 2020 presidential election.
“Things are changing a lot. You did well with deregulation in the last Congress. Please do not overwhelm us with requests for deregulation you really don’t need,” Rep. Maxine Waters, D-Calif., chair of the committee, warned the executives.