The CEOs of America’s largest banks are set to appear before lawmakers on Wednesday in an effort to convince Washington and the world that the banking sector is back on solid ground following the regional banking crisis earlier this year. The highly anticipated hearing before the Senate’s banking committee, as part of Congress’s annual oversight of the financial sector, will feature top bosses from JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup, Wells Fargo, State Street, BNY Mellon, and Morgan Stanley.
Much of the focus during the hearing is expected to be on the higher capital requirements proposed this summer by the Federal Reserve, called Basel III endgame measures. The assembled CEOs have been lobbying fiercely against these measures for months, arguing that they will create more risk in the financial system and fundamentally alter the US economy in ways that the Federal Reserve has not studied or contemplated.
At a conference in New York, the CEOs touted the resilience of the US economy but urged restraint when it comes to expectations for 2024. They also expressed concerns about the potential negative impact of the proposed capital regulations on capital markets functioning. Wells Fargo CEO also weighed in on the Fed’s capital regulations, saying the requirements could limit the bank’s activities in the future.
The CEOs of the banks will testify before a panel of 23 senators, including Chairman Sherrod Brown and prominent figures like two former presidential candidates, Sen. Tim Scott and Elizabeth Warren. The central issue of the hearing is expected to be the Basel III measures aimed at expanding the amount of capital that banks must have in reserve to protect themselves from insolvency.
The proposal has raised concerns among the CEOs and some members of Congress, with arguments being made that the stricter requirements are not needed and could harm consumers, businesses of every size, and the economy as a whole. Federal Reserve Governor Christopher Waller called the proposal “excessive,” and indicated that the proposal may need refinement in areas including provisions around operational risk.
The hearing is also likely to touch on an array of other concerns, including consumer issues, the national debt, and CEO compensation. The wide-ranging impacts of America’s national debt and the need for change in Washington’s regulations will also likely be high on the agenda of the hearing.
The CEOs’ appearance before lawmakers comes amid ongoing debates surrounding the regulations and requirements that will shape the future of the banking sector. It presents an opportunity for the CEOs to voice their concerns and influence the decision-making process as lawmakers work to finalize the proposal.