CONTACT: Barbara Hagenbaugh
(202) 457-8783
bhagenbaugh@fsforum.com
Highlights from Forum Member Testimony
Forum members highlight important contributions of the largest U.S. banks and concerns about unnecessary regulation that would harm U.S. businesses, consumers, and economy
Washington, D.C. – Financial Services Forum members are testifying tomorrow before the Senate Committee on Banking, Housing, and Urban Affairs. Below are some highlights from their prepared testimony.
On the Value of the Largest U.S. Banks
“Through decades of geopolitical shifts and technological advances, we have seen how the U.S. banking system is truly unmatched. The isolated bank failures of the spring may have tested some of the confidence that people have in our industry. But I am proud of the swift and collaborative response by our government and industry, which affirmed the underlying strength and stability of our financial system. As we chart a path forward, we need to make sure we don’t inadvertently upend the unique system we have.
“Our financial system is the envy of others because it’s underpinned by the most competitive banking sector and the deepest capital markets. We’re home to banks of all sizes, each with an important role to play. Collectively, our banks serve as engines of growth, supporting businesses and households and promoting access to financial services in hard-to-reach communities.”
Citi CEO Jane Fraser
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“…there are some things that can only be done by large, complex banks – things that are essential to a thriving U.S. economy and American competitiveness. Large banks on this panel serve America’s interests overseas and serve America’s multinational corporations around the world. Large banks meet the funding needs of other financial institutions such as mortgage finance companies, insurance companies and community banks. Large banks provide critical financing to every sector of the U.S. economy, fueling job creation and new business development. Large American banks support the deepest and most liquid capital markets in the world. We underwrite initial public offerings, corporate bonds and municipal bonds, which provide federal, state and local governments financing for roads and bridges, schools, libraries and other public works projects.”
JPMorgan Chase & Co. Chairman and CEO Jamie Dimon
On the Strength of the Largest U.S. Banks
“Despite the challenges of COVID, and the banking stress earlier this year — the eight GSIB banks before you have done their jobs exceedingly well — partnering with regulators during COVID and the SVB/First Republic crises, and providing stability to our financial system. I am proud of State Street’s strong performance over these stressful periods.”
State Street Corporation Chairman and Chief Executive Officer Ronald P. O’Hanley
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“The U.S. banking system remains strong and is the envy of the world. Large U.S. banks have undergone a dramatic change in their capital and liquidity profile since the financial crisis 15 years ago, when the U.S. government acted decisively and quickly in implementing the Dodd-Frank and CCAR reforms. As we saw earlier in the year, the crisis among some regional banks in the spring was quickly averted by prompt regulatory action, and with the strength and support from the large U.S. banks. We were pleased to be one of the 11 banks that together provided $30 billion in uninsured deposits to First Republic. It was gratifying, after being part of the problem in the 2008 financial crisis, to have the financial strength and stability to be part of the solution.”
Morgan Stanley Chairman and CEO James P. Gorman
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“In March of this year, we all saw how market events rapidly impacted the banking sector. In response to this crisis, Wells Fargo and many of the other institutions represented here today served as a source of strength and stability against a backdrop of volatility and uncertainty. I am proud that Wells Fargo was able to lend support to our economy during that difficult period, and I believe our steadiness in the face of such unease is a testament to our company’s soundness.”
Wells Fargo & Company CEO and President Charles W. Scharf
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“We believe that the global financial system, and particularly the eight U.S.-based GSIBs, are stronger today as a result of the safeguards put in place over the past 15 years. I can confidently say that BNY Mellon is even more resilient than it was a decade ago, with strong capital and liquidity positions; cyber, technology, and data privacy protections; and controls to comply with applicable laws.”
The Bank of New York Mellon Corporation President and CEO Robin Vince
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“We finance infrastructure projects for local governments to invest in schools, hospitals and roads. We also invest on behalf of our clients so that jobs can be created, retirement savings can grow and economies can expand. We are able to facilitate all of these activities because of the strength and resiliency of our balance sheet. In fact, since 2007, Goldman Sachs’ capital has nearly tripled, our liquidity has increased more than five times, and our leverage has decreased by half. In addition, the Federal Reserve’s stress tests have consistently confirmed that all of us here have sufficient capital to withstand a severe global recession.”
Goldman Sachs Chairman and CEO David M. Solomon
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“Since we met last year, we know there was market turbulence early this year as some financial institutions faced challenges from the impacts of rising rates and other factors. As we did during the pandemic banks represented here today served as a source of strength and stability for individuals and families, business owners and investors as we provided the products and services, expertise and liquidity needed to navigate the markets and manage their financial needs.
“At Bank of America, we have a common purpose: to make financial lives better. To best achieve that outcome, in 2014 our company adopted the four tenets of what we call Responsible Growth. This longstanding common focus on driving Responsible Growth has helped us be well-positioned to be a source of strength and stability when our customers, employees, communities, and shareholders need us most. Over the past decade, we have seen Responsible Growth work in the relative calm of 2015 to 2019, the pandemic tumult of 2020 and 2021, the inflationary period that began in 2022, and the challenging economic and geopolitical environment that continues in 2023. In each of these periods, our company benefited from the long-term consistency provided by our adherence to Responsible Growth.”
Bank of America Chairman and CEO Brian Moynihan
On Regulations, Including Capital Requirements, and the U.S. Economy
“The geopolitical environment is complex and unpredictable. The U.S. and global economic recovery is uncertain as we all navigate higher interest rates and debt levels. And the financial services regulatory environment in the U.S. is in flux, in many cases with unclear goals.
“From a State Street perspective, I am most concerned with the U.S. banking regulators’ capital proposal, which I fear could negatively impact the U.S. economy by limiting bank credit extension and impairing the ability of U.S. banks like State Street to continue to provide high quality custody and asset management services.
“I am also concerned by the SEC’s proposed “safekeeping” rule, which, with no clear rationale, challenges some of the foundational elements of custody banking and in effect destroys the low cost, near perfect service now provided to investors.
“I am hopeful these proposals can be adjusted, for if not they create risk of negative economic, market, and individual outcomes going forward.
State Street Corporation Chairman and Chief Executive Officer Ronald P. O’Hanley
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“The debate should not always be about more or less regulation but about what mix of regulations will keep America’s banking system the best in the world. I urge lawmakers and regulators to be thoughtful about the effect of arbitrary and unstudied regulatory proposals and their cumulative impact on access to affordable credit and traditional banking products, capital markets and market liquidity, and the economy overall.”
JPMorgan Chase & Co. Chairman and CEO Jamie Dimon
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“One headwind to the U.S. economic recovery is the finalization of a new set of capital rules referred to as the Basel 3 Endgame. These new rules were conceived to create a common set of international capital standards, without raising the aggregate amount of capital. However, the U.S. proposal does exactly the opposite: it is significantly more stringent than any other jurisdiction, and it would increase our capital requirements by about 25%.
“These punitive regulatory measures also run the risk of harming U.S. competitiveness and capital markets activities globally, as well as pushing activity overseas and outside of the regulated banking sector, without making the U.S. financial system safer. Indeed, we believe the proposal will result in increased costs for airlines, manufacturers and food producers, pension and mutual funds, insurance companies, small businesses and energy companies. These costs will likely get passed on to consumers. For example, it would quadruple our capital requirements for clean energy tax equity projects and would increase our capital eight times for important transactions that we enter into with pension funds to improve their returns for retirees.”
Goldman Sachs Chairman and CEO David M. Solomon
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“Current proposals to put additional capital requirements on the largest U.S. banks – commonly called the Basel III Endgame – need to consider the full impact to the U.S. economy and the U.S. consumer. Regulations are only effective when they balance both the safety and soundness of the financial system, with the proper functioning of bank financing that spurs our economic growth.”
Morgan Stanley Chairman and CEO James P. Gorman
On Emerging Technologies in Financial Services
“As we look ahead to the next few decades, the U.S. has an opportunity to set the standard for the rest of the world on the development and deployment of technologies set to transform our economy, namely AI and blockchain and distributed ledger technology. We are encouraged by recent focus on these topics and will continue to work with policymakers to build safety, security and trust into emerging technology solutions to maintain U.S. economic and technological leadership.”
The Bank of New York Mellon Corporation President and CEO Robin Vince
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The Financial Services Forum is an economic policy and advocacy organization whose members are the chief executive officers of the eight largest and most diversified financial institutions headquartered in the United States. Forum member institutions are a leading source of lending and investment in the United States and serve millions of consumers, businesses, investors, and communities throughout the country. The Forum promotes policies that support savings and investment, deep and liquid capital markets, a competitive global marketplace, and a sound financial system.