Washington D.C. – Banking, Housing, and Urban Affairs Committee Hearing Reviews Impact on U.S. Financial Institutions
In a recent Banking, Housing, and Urban Affairs Committee hearing, U.S. Senator Katie Britt (R-Ala.) delved into discussions with the CEOs of eight globally systemic banks (G-SIBs) in the United States. The distinguished witnesses included Charles Scharf of Wells Fargo, Brian Moynihan of Bank of America, Jamie Dimon of JPMorgan Chase, Jane Fraser of Citigroup, Ronald Hanley of State Street, Robin Vince of BNY Mellon, David Solomon of Goldman Sachs, and James Gorman of Morgan Stanley.
Senator Britt’s line of questioning focused on the potential impact of the Basel III Endgame proposed rule on lending at rural bank branches, especially considering that over 42% of Alabama residents live in rural areas.
Wells Fargo’s CEO, Charles Scharf, expressed concerns about the proposed rule, asserting that it would affect the “availability of credit and pricing of credit in the marketplace.” He emphasized that the bank would be submitting comments to the Federal Reserve regarding the potential consequences.
Brian Moynihan, Chairman and CEO of Bank of America, echoed these concerns, noting that raising capital requirements would have a more significant impact than some believe. Each witness, including those from other banks, concurred that the Basel III proposal would not only impact financial institutions with over $100 billion in assets but also trickle down to community banks, local credit unions, small businesses, and individuals across Alabama.
Jane Fraser, CEO of Citigroup, raised concerns about the global competitiveness of American financial institutions if the Basel III Endgame proposed rule is implemented. She affirmed that the rule would put American banks and companies at a disadvantage in the global financial landscape.
During the hearing, Senator Britt underscored the complexity and market-altering nature of recent rules from federal financial agencies. She highlighted the apparent lack of initiative by regulators to understand the quantitative and cumulative impacts of these rulemakings. The discussion explored the potential downstream effects on smaller financial institutions, small businesses, and individuals seeking loans or liquidity.
Senator Britt also questioned whether the proposed rule, if implemented, would put the United States banking sector at a global competitive disadvantage. Jane Fraser affirmed that it would, emphasizing the importance of American banks on the global stage and their impact on the competitiveness of American companies.
