If you want to know who exercises real power in American government, take a look at Wednesday’s congressional testimony from the CEOs of the nation’s biggest banks. Over the course of seven relentless hours, lawmakers fell all over themselves to heap praise on the CEOs of JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup, Morgan Stanley, State Street and Bank of New York Mellon ― seven men who together control nearly $12 trillion in total assets.
Republican lawmakers, in particular, seemed to enjoy transforming what was ostensibly an oversight hearing into an opportunity to demonstrate whom America’s elected officials really work for. With the unchecked glee of children encountering their favorite cartoon characters at Disneyland, members of Congress praised the assembled CEOs not only for their business savvy but for the apparently profound moral contributions they have made to American communities.
These well-tailored men were not just captains of industry; they were incubators of the American dream and guardians of our national security.
“I just want to make a note to the panel [of bank CEOs],” Rep. Sean Duffy (R-Wis.) said. “I appreciate what you do for America.”
“Thank you for the good work that you do,” said Rep. John Rose (R-Tenn.).
“I actually wanted to say thank you to [JPMorgan CEO Jamie] Dimon,” said Rep. Lee Zeldin (R-N.Y.), celebrating the head of the largest American bank for … making car loans and stuff. “If that person wants to achieve the American dream and get a car, you’ll help finance it. If that person wants to be able to own a home to achieve the American dream, they’re gonna come to you.”
At times, the obsequiousness bordered on comedy, at others, the surreal. Rep. Roger Williams (R-Texas) cast the hearing as a battle in the long war between socialism and capitalism. After coaxing the bank CEOs into acknowledging that they were, in fact, capitalists, Williams was ready to declare victory: “We need to put socialism on trial and do it today.”
Not be outdone, Rep. Bryan Steil (R-Wis.) wanted to know if SEC rules against conflict minerals in Africa were contributing to a “drought” of initial public offerings from American small businesses. Rep. Patrick McHenry (R-N.C.) scolded the press for saying big bank CEOs had been lobbying for “deregulation” when the truth was so much more benign. “Your institutions weren’t here begging for deregulation, you were presenting facts” about “drafting errors” and “inappropriate regulations,” McHenry said. Totally different.
As recently as last year, the idea of publicly embracing the bailed-out banks responsible for the 2008 financial crisis was too embarrassing even for Republicans. Lawmakers preferred to disguise their profit-padding efforts on behalf of Wall Street as aid to small lenders. When President Donald Trump signed a bill repealing key elements of the 2010 Dodd-Frank financial reform law, he hailed it as a victory for George Bailey and apple pie.
The Obama-era law was “crushing community banks and credit unions,” Trump said. It “gave large banks an unfair competitive advantage at the expense of neighborhood banks,” and outside of small banks, “local businesses have few other resources and few other ways of getting credit.”
This was, of course, nonsense. The law was a grab-bag of favors for banks of all sizes. But Republicans at least felt the need to hide their dirty work for the bailouteers.
Not anymore. As it turns out, Republicans argued Wednesday, big banks are the true lifeblood of Main Street. “If it weren’t for you, Main Street America wouldn’t exist,” Williams told the CEOs at the hearing. Big banks, Duffy suggested, don’t even compete with small banks. Instead, they compete with other megabanks from other countries. Anything that takes away business for an American banking giant would undercut American competitiveness, a blow against the nation itself.
Rep. Steve Stivers (R-Ohio) took this theme to absurd new heights. “Would everyone agree that having large financial institutions is good for America’s national security?” Stivers asked, prodding Dimon into arguing that large American banks were essential to the enforcement of economic sanctions against rogue regimes.
If it weren’t for Wall Street’s patriotic rigor, according to Stivers, we might have to turn over this enforcement to “foreign megabanks” that might not have America’s best interests at heart.
And yet Dimon’s bank has repeatedly settled with both the Obama and Trump administrations for violating U.S. sanctions against Iran, Cuba and Syria, paying $88.3 million in 2011 ― the largest sanction violation settlement ever involving a U.S. financial institution ― and another $5.3 million to settle further sanction violations late last year.
At least one Democrat wanted in on the lovefest with our lords of finance. Freshman Rep. Josh Gottheimer (D-N.J.), who has raised over $3.1 million from the financial sector in his brief congressional career, repeatedly told the execs he was both “grateful” and “very grateful” for all of their small business lending, all the mortgages they had issued in his district, and just “how much has been invested in our country” by very large banks.
The parade of compliments was occasionally interrupted for the sake of actual policy discussions, which often became opportunities for bankers to request weaker capital requirements. Once upon a time, capital was a sacred cow in Washington ― the basic, sensible rule that Republicans pointed to when they attacked other regulations. Capital requirements curb the amount of borrowed money banks can operate with. Higher capital was the to-be-sure standard that proved someone was serious about real regulation when they complained about other annoying rules involving securities speculation or margin requirements.
Suddenly in 2019, however, there is a new consensus between Wall Street and the Republican Party that capital requirements are too high. Capital requirements, they insisted Wednesday, were diverting important resources from lending and productive investment into unnecessary safeguards.
But in one of the day’s few truly uncomfortable moments for Dimon, Rep. Cindy Axne (D-Iowa) pressed him about his claim that he could put this capital to work more effectively. In his most recent letter to shareholders, Dimon boasted that JPMorgan Chase has spent “almost 55 billion” on stock buybacks over the past five years by “generating excess capital that we do not expect to use in the next few years.” Stock buybacks flush money to shareholders rather than invest in or grow a company’s operations.
But for the most part, Dimon and Co. enjoyed their time on Capitol Hill. In Trump’s America, corruption isn’t just normal, it’s something to celebrate.