[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]




                                                     


                     HOLDING MEGABANKS ACCOUNTABLE:

                    AN UPDATE ON BANKING PRACTICES,

                         PROGRAMS, AND POLICIES

=======================================================================

                            VIRTUAL HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 27, 2021

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-28
                           
                           
                           


    HOLDING MEGABANKS ACCOUNTABLE: AN UPDATE ON BANKING PRACTICES, 
                         PROGRAMS, AND POLICIES
                         
                         
                         



 
                     HOLDING MEGABANKS ACCOUNTABLE:

                    AN UPDATE ON BANKING PRACTICES,

                         PROGRAMS, AND POLICIES

=======================================================================

                            VIRTUAL HEARING

                               BEFORE THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 27, 2021

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 117-28
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]      






                            ______                       


               U.S. GOVERNMENT PUBLISHING OFFICE 
 45-252 PDF              WASHINGTON : 2021 
                           
                           
                           

                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             FRANK D. LUCAS, Oklahoma
GREGORY W. MEEKS, New York           PETE SESSIONS, Texas
DAVID SCOTT, Georgia                 BILL POSEY, Florida
AL GREEN, Texas                      BLAINE LUETKEMEYER, Missouri
EMANUEL CLEAVER, Missouri            BILL HUIZENGA, Michigan
ED PERLMUTTER, Colorado              ANN WAGNER, Missouri
JIM A. HIMES, Connecticut            ANDY BARR, Kentucky
BILL FOSTER, Illinois                ROGER WILLIAMS, Texas
JOYCE BEATTY, Ohio                   FRENCH HILL, Arkansas
JUAN VARGAS, California              TOM EMMER, Minnesota
JOSH GOTTHEIMER, New Jersey          LEE M. ZELDIN, New York
VICENTE GONZALEZ, Texas              BARRY LOUDERMILK, Georgia
AL LAWSON, Florida                   ALEXANDER X. MOONEY, West Virginia
MICHAEL SAN NICOLAS, Guam            WARREN DAVIDSON, Ohio
CINDY AXNE, Iowa                     TED BUDD, North Carolina
SEAN CASTEN, Illinois                DAVID KUSTOFF, Tennessee
AYANNA PRESSLEY, Massachusetts       TREY HOLLINGSWORTH, Indiana
RITCHIE TORRES, New York             ANTHONY GONZALEZ, Ohio
STEPHEN F. LYNCH, Massachusetts      JOHN ROSE, Tennessee
ALMA ADAMS, North Carolina           BRYAN STEIL, Wisconsin
RASHIDA TLAIB, Michigan              LANCE GOODEN, Texas
MADELEINE DEAN, Pennsylvania         WILLIAM TIMMONS, South Carolina
ALEXANDRIA OCASIO-CORTEZ, New York   VAN TAYLOR, Texas
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
NIKEMA WILLIAMS, Georgia
JAKE AUCHINCLOSS, Massachusetts

                   Charla Ouertatani, Staff Director
                   
                   
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 27, 2021.................................................     1
Appendix:
    May 27, 2021.................................................    89

                               WITNESSES
                         Thursday, May 27, 2021

Dimon, Jamie, Chairman and Chief Executive Officer, JPMorgan 
  Chase & Co.....................................................     7
Fraser, Jane, Chief Executive Officer, Citi......................     9
Gorman, James P., Chairman and Chief Executive Officer, Morgan 
  Stanley........................................................    10
Moynihan, Brian T., Chairman and Chief Executive Officer, Bank of 
  America........................................................    12
Scharf, Charles W., Chief Executive Officer and President, Wells 
  Fargo & Company................................................    14
Solomon, David M., Chairman and Chief Executive Officer, Goldman 
  Sachs..........................................................    15

                                APPENDIX

Prepared statements:
    Dimon, Jamie.................................................    90
    Fraser, Jane.................................................    99
    Gorman, James P..............................................   110
    Moynihan, Brian T............................................   136
    Scharf, Charles W............................................   167
    Solomon, David M.............................................   182

              Additional Material Submitted for the Record

Huizenga, Hon. Bill:
    Letter from State Treasurers to Hon. John F. Kerry...........   200
Dimon, Jamie:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................   204
    Written responses to questions for the record from 
      Representative Dean........................................   228
    Written responses to questions for the record from 
      Representative Chuy Garcia.................................   229
    Written responses to questions for the record from 
      Representative Sylvia Garcia...............................   225
    Written responses to questions for the record from 
      Representative Kustoff.....................................   227
Fraser, Jane:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................   231
    Written responses to questions for the record from 
      Representative Dean........................................   262
    Written responses to questions for the record from 
      Representative Kustoff.....................................   264
Gorman, James P.:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................   266
    Written responses to questions for the record from 
      Representative Dean........................................   278
    Written responses to questions for the record from 
      Representative Sylvia Garcia...............................   279
    Written responses to questions for the record from 
      Representative Kustoff.....................................   280
Moynihan, Brian T.:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................   283
    Written responses to questions for the record from 
      Representative Dean........................................   281
    Written responses to questions for the record from 
      Representative Kustoff.....................................   282
Scharf, Charles W.:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................   319
    Written responses to questions for the record from 
      Representative Dean........................................   347
    Written responses to questions for the record from 
      Representative Kustoff.....................................   350
Solomon, David M.:
    Written responses to questions for the record from Chairwoman 
      Waters.....................................................   352
    Written responses to questions for the record from 
      Representative Dean........................................   351
    Written responses to questions for the record from 
      Representative Kustoff.....................................   351


                     HOLDING MEGABANKS ACCOUNTABLE:

                    AN UPDATE ON BANKING PRACTICES,

                         PROGRAMS, AND POLICIES

                              ----------                              


                         Thursday, May 27, 2021

             U.S. House of Representatives,
                    Committee on Financial Services
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 12:04 p.m., via 
Webex, Hon. Maxine Waters [chairwoman of the committee] 
presiding.
    Members present: Representatives Waters, Maloney, 
Velazquez, Sherman, Meeks, Scott, Green, Cleaver, Perlmutter, 
Himes, Beatty, Vargas, Gottheimer, Gonzalez of Texas, Lawson, 
San Nicolas, Axne, Casten, Pressley, Torres, Lynch, Adams, 
Tlaib, Dean, Ocasio-Cortez, Garcia of Illinois, Garcia of 
Texas, Williams of Georgia, Auchincloss; McHenry, Lucas, 
Sessions, Posey, Luetkemeyer, Huizenga, Wagner, Barr, Williams 
of Texas, Hill, Emmer, Zeldin, Loudermilk, Mooney, Davidson, 
Budd, Kustoff, Hollingsworth, Gonzalez of Ohio, Rose, Steil, 
Timmons, and Taylor.
    Chairwoman Waters. The Financial Services Committee will 
come to order.
    Without objection, the Chair is authorized to declare a 
recess of the committee at any time.
    As a reminder, I ask all Members to keep themselves muted 
when they are not being recognized by the Chair. The staff has 
been instructed not to mute Members except where a Member is 
not being recognized by the Chair and there is inadvertent 
background noise. Members are also reminded that they may only 
participate in one remote proceeding at a time. If you are 
participating today, please keep your camera on, and if you 
choose to attend a different remote proceeding, please turn 
your camera off.
    Additionally, I want to announce that for this hearing, it 
is my intention to recess the committee for 5 minutes every 2 
hours. Lastly, before we begin, I would like to take a moment 
to recognize Congresswoman Alma Adams, who is celebrating her 
75th birthday today. Happy birthday, Congresswoman Adams.
    Ms. Adams. Thank you, Madam Chairwoman.
    Voice. Happy Birthday.
    Ms. Adams. Thank you so much.
    [applause]
    Chairwoman Waters. Thank you. I now recognize myself for 4 
minutes to give an opening statement.
    Good afternoon, everyone. Today, this committee convenes 
for a hearing entitled, ``Holding Megabanks Accountable: An 
Update on Banking Practices, Programs, and Policies.'' And of 
course, as you know, testifying before the committee today, we 
will have the CEOs of JPMorgan Chase, Citigroup, Morgan 
Stanley, Bank of America, Wells Fargo, and Goldman Sachs, who 
testified before the Senate yesterday, and today's testimony 
concludes 2 historic days which are a true testament of the 
accountability that comes from Democratic control of the House 
and Senate.
    As chairwoman of this committee, I have made it a priority 
to ensure that we are conducting rigorous oversight over 
megabanks and their activities. We last had all of the megabank 
CEOs testify before the committee in 2019. Since then, there 
have been many developments involving megabanks that this 
committee will be examining today. I am eager to hear about the 
megabanks' responses to the pandemic crisis, including their 
provisions for mortgage forbearance, affordable loan 
modifications, support for extending the foreclosure 
moratorium, and Paycheck Protection Program (PPP) loans. I am 
concerned that the institutions led by our witnesses raked in 
billions of dollars in overdraft fees during the pandemic at a 
time when so many individuals and families across the country 
were struggling through no fault of their own.
    Additionally, some of our banks prioritized wealthier 
clients for PPP lending, while processing smaller loans at a 
much slower rate, or, in some cases, turning small and 
minority-owned businesses away altogether. We have heard so 
much about this from all over the country. I have also asked 
our witnesses to describe their institutions' efforts to reach 
underserved communities and to address banking deserts, where 
communities do not have access to a bank branch. The four 
largest banks have closed thousands of bank branches over the 
past decade, and I am concerned that this is exacerbating the 
bank desert problem and harming communities that rely on 
branches for basic banking services.
    This week also marks the tragic anniversary of the murder 
of George Floyd, a Black man, by White police officers, which 
focused Americans' attention on racial injustice in this 
country. The megabanks responded by making a number of large 
commitments to support Minority Depository Institutions (MDIs) 
and Community Development Financial Institutions (CDFIs) in 
communities of color. Given that these banks have repeatedly 
been found to discriminate against our communities, the CEOs 
will be asked to explain if their banks are following through 
on those commitments and to learn what additional actions they 
will take this year to address the racial disparities that 
remain pervasive in our banking system. I am also looking 
forward to hearing from our witnesses about their progress in 
improving the diversity and inclusion in their senior 
leadership and on their boards, and their investment in 
diverse-owned firms. Diverse representation at senior levels is 
key to ensuring a fair and equitable recovery for all 
communities.
    There are many other topics of interest to this committee 
that we will address today, including banks' wages for their 
employees and compensation for their CEOs, their use of 
emerging technology, such as artificial intelligence or 
products like cryptocurrency, and the recent growth of 
megabanks, and megabanks' actions to address climate risk. I 
look forward to hearing testimony from all of our witnesses 
today.
    I will now recognize the ranking member of the committee, 
the gentleman from North Carolina, Mr. McHenry, for 4 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman, and thank you all 
for being here today. We are here today for the sequel that 
nobody asked for; in 2019, Democrats held this exact hearing to 
grill you CEOs on everything from firm size to your salaries. 
Republicans in that hearing used the hearing to focus on 
systemic risk issues to our current financial system.
    Clearly, none of us could have predicted what would happen 
just 1 year later. The pandemic presented us with a once-in-a-
generation challenge. Congress, the Federal Reserve, and 
Treasury stood together and met this crisis head on. Your 
institutions also played a critical role, as did the financial 
system, generally speaking, banks of all sizes and credit 
unions of all sizes, and FinTechs, making sure that support was 
available to families and small businesses. You deserve some 
credit for that.
    So, where are we now? Nearly 50 percent of adult Americans 
have been fully vaccinated, businesses are starting to reopen, 
and we should be talking about the amazing recovery that has 
taken place. But I also am very concerned about some of the 
troubling data that is starting to emerge. The April data from 
the Bureau of Labor Statistics showed that employment increased 
by only 266,000 people. At the same time, we have more than 8 
million jobs remaining unfilled. Businesses are struggling to 
hire workers, and the cost of household goods is rising 
sharply. Our economy is at a fragile moment right now.
    To be clear, I agree that things are looking up, and that 
is great, but make no mistake, there are some very troubling 
signs ahead, so our focus must be on jobs and getting people 
back to work. That is what Republicans are doing. In fact, 
according to the Bureau of Labor Statistics, 17 out of the 20 
States led by Republicans are recovering jobs the fastest, but 
Democrats seem to have other priorities. Their so-called 
American Rescue Plan actively discouraged people from returning 
to work, and now they are preparing to ram through trillions of 
dollars more in spending and massive tax hikes, all under the 
guise of, ``infrastructure.'' Americans are quite literally 
being forced to pick up the tab for Democrats' progressive 
agenda items.
    And our witnesses might be wondering what this has to do 
with them. I think this is a cautionary tale to be careful what 
you wish for. My colleagues on the other side of the aisle want 
you bank CEOs to focus on political activism instead of doing 
what your institutions do best, which is to provide capital and 
serve customers.
    As we learned during COVID, when you mix science and 
politics, you get politics, and as we are learning now, when 
you mix business and politics, you get politics. Some may say, 
come on in, the water is fine, but our political waters are 
quite troubling, and we don't need the business world to become 
the political world. I don't think we are better for that or 
our economy is better for that. And shunning law-abiding 
businesses to appease to the woke left as well won't help 
employers, it won't help our economy recover, and it won't help 
the average working person in America. Instead, we should be 
working together on a shared goal of rebuilding the greatest 
economy in the world that we had pre-COVID, and moving forward.
    Speaking of moving forward, Madam Chairwoman, when will 
this committee get back to normal? We want to urge normalcy for 
the American economy and for the American people. For months 
now, we have gone back and forth about returning to in-person 
hearings, with the option for Members to join remotely. I think 
that is a reasonable request again today. I also think the 
American people we represent would be pretty ticked off if they 
knew we weren't going back to work for them and not doing what 
they have to do on a daily basis. I am encouraged by vaccines 
being widely available and by us being able to follow available 
safety protocols.
    So, CEOs, I look forward to your testimony. I look forward 
to the questions today, and I am looking forward to all of us 
getting back to normal as soon as possible, especially Congress 
getting back to the work of the American people. Thanks so 
much, and I yield back.
    Chairwoman Waters. Thank you very much. At this point in 
time, I am going to call on Mr. Perlmutter for 1 minute for an 
opening statement.
    Mr. Perlmutter. Thanks, Madam Chairwoman, and I want to 
thank our panel for their leadership during this pandemic. None 
of us expected it, and I just thank you for your leadership. 
The last 15 months have been challenging for our country, but 
through the leadership of the Biden Administration, 50 percent 
of Americans are fully or partially vaccinated, and the 
American Rescue Plan has provided relief to many communities 
through economic impact payments, help for small businesses, 
and support for State and local governments. Unfortunately, 
many Americans remain vulnerable, and there is still 
uncertainty in our economy.
    Financial institutions and their employees have been on the 
frontlines of delivering PPP loans to small businesses and 
working with consumers impacted by the pandemic. As chief 
executive officers, I would like you to focus on two things: 
first, keeping your institutions safe and sound; and second, 
ensuring that everyone has access to banking services and all 
are treated fairly and honestly without fear of abusive 
practices. With that, I yield back.
    Chairwoman Waters. I now recognize the gentleman from 
Missouri, Mr. Luetkemeyer, for 1 minute.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman, and thank you 
to the panel for testifying today. In the past decade, we have 
seen a trend where the liberal left has tried to use financial 
institutions to eliminate legally-operating industries they do 
not like, from gun manufacturers to energy companies. This was 
first attempted under Operation Choke Point, where financial 
regulators in the Obama Administration forced banks to cut 
services to certain industries. While the last Administration 
largely stopped that, the left now has a new method of 
accomplishing their goal: publicly naming and shaming financial 
institutions and applying political pressure to drop companies. 
In fact, some members of this committee publicly urged you to 
unbank certain industries at this same hearing in 2019.
    Unfortunately, a number of banks represented here today 
have been all too eager to comply, making them willing 
participants in the systemic unbanking of legally-operating 
businesses in this country, in contrast to investments in 
operations in other parts of the world. Today, I look forward 
to hearing why. With that, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much. At this time, I ask 
unanimous consent to respond to an issue, a very important 
issue that was raised by Mr. McHenry, and to engage him in a 
small, limited colloquy. I want to thank the ranking member for 
his comments and his letter. As has been the case throughout 
the pandemic, the health and safety of Members and staff is of 
the highest importance. It is my intention to continue to 
conduct this committee's proceedings in a manner that is safe 
and in accordance with the most recent advice from medical 
experts.
    Now that we have updated guidance from both the CDC and the 
Office of the Attending Physician, I am working with staff to 
think through how we can adjust committee protocols to allow 
for hybrid committee meetings. I will note that the latest 
guidance from the Office of the Attending Physician and the 
corresponding flexibilities around social distancing and mask 
wearing are specific to those who have been fully vaccinated. 
Those who have not yet been fully vaccinated or who are vaccine 
indeterminate are still strongly advised to wear masks and 
social distance. Further, the updated guidance specifies that 
there should be continued mask wearing and social distancing in 
committee meetings due, in part, to the substantial number of 
people who are not yet fully vaccinated or who are vaccine 
indeterminate.
    Therefore, I look forward to working with the ranking 
member to ensure that we are verifying the vaccination status 
of all individuals who are attending in person at committee 
meetings, including Members and staff. I welcome further 
conversation with the ranking member on how we can move to 
hybrid proceedings safely without creating unintended issues, 
such as additional technical issues or concerns regarding 
uneven participation, considering we cannot accommodate all 
Members and persons at this time.
    Mr. McHenry. Madam Chairwoman?
    Chairwoman Waters. And I will yield to the ranking member 
for a limited time for this colloquy.
    Mr. McHenry. Thank you, Madam Chairwoman, for responding in 
some context to my letter. What I raised in my letter was that 
this committee operated in person and in a hybrid format before 
vaccines were distributed to the public, and I am asking the 
Chair to return to her standard, which was then the case. That 
was a standard well beyond what the Attending Physician 
recommended then, and is again the case now. We need to show 
the American people that we can safely re-emerge. Everyone who 
wants a vaccine has had the option to get it. In fact, Congress 
was one of the first branches, the first group of people in the 
country and in the world who had vaccines available, so all of 
the Members who want vaccines have had ample time to do this.
    And what I am asking is for us to return safely to work as 
a sign to the American people that we can do our business and 
get it done. The digital format, as Members and as the public 
will see today, is a fairly miserable one, given the nature of 
this technology and with the load on this technology. We were 
better off with in-person hearings, just how we operate when we 
have committee markups where we have been hybrid. And the 
Minority has been quite willing to work with you in the 
Majority on doing this safely, as we did in the midst of the 
pandemic before vaccines were available.
    So the answers right now, I think, are way too limited, far 
more limited than what the science indicates, number one. And 
number two, there is no provision under House Rules by which a 
Committee Chair or the Speaker of the House can verify 
somebody's health records, and, in fact, important seminal 
health privacy laws in this country also guard against that. I 
am vaccinated, and I am proudly vaccinated, and I think it is 
the safest vaccine brought to market in global history, and my 
family has benefited from this.
    Let's show that we can actually get back to work and be an 
example for the American people rather than having this 
absurdity that we can't be back together safely. And with that, 
I yield back, and I certainly understand that we can continue 
this dialogue in the coming days.
    Chairwoman Waters. Absolutely.
    Mr. McHenry. I thank you, Madam Chairwoman, for raising it, 
and I yield back.
    Chairwoman Waters. Thank you. I thank you so very much. 
Yes, we must continue this dialogue. I am very proud to 
announce that the entire Democratic Caucus has been vaccinated, 
and I will leave it up to you to deal with your Caucus on how 
you are going to deal with that.
    Mr. McHenry. Madam Chairwoman?
    Chairwoman Waters. Yes.
    Mr. McHenry. On those records, as a Member of Congress, I 
have expressed that I am vaccinated. I am going to leave it up 
to Members to talk about their own health status under their 
own regard. But, Madam Chairwoman, as you and I know, you have 
one of the best health records in Congress, and you fear no 
person, so I am confident sitting next to you that I am well-
fortified and protected. And with that, I yield back.
    Chairwoman Waters. I am so proud of the Democratic Caucus, 
and I would hope that you would do everything that you can to 
encourage the Members of your Caucus to be in the safety mode 
for all of us, and encourage them to be vaccinated.
    Mr. McHenry. I have, and I will.
    Chairwoman Waters. I am going to move on to our witnesses 
now: Mr. Jamie Dimon, the chairman and chief executive officer 
of JPMorgan Chase and Company; Ms. Jane Fraser, the chief 
executive officer of Citigroup; Mr. James P. Gorman, the 
chairman and chief executive officer of Morgan Stanley; Mr. 
Brian T. Moynihan, the chairman and chief executive officer of 
Bank of America; Mr. Charles W. Scharf, the chief executive 
officer and president of Wells Fargo and Company; and Mr. David 
M. Solomon, the chairman and chief executive officer of Goldman 
Sachs.
    Each of you will have 5 minutes to summarize your 
testimony. You should be able to see a timer on your screen 
that will indicate how much time you have left, and a chime 
will go off at the end of your time. I would ask you to be 
mindful of the timer and quickly wrap up your testimony if you 
hear the chime. And without objection, your written statements 
will be made a part of the record.
    Before we began with your oral testimonies, I would like to 
swear the witnesses in. I will call each of your names 
individually to respond. Would all of you please raise your 
right hands? Thank you.
    Do you solemnly swear and affirm that the testimony you 
will give before this committee in the matters now under 
consideration will be the truth, the whole truth, and nothing 
but the truth, so help you God? Mr. Dimon?
    Mr. Dimon. Yes.
    Chairwoman Waters. Ms. Fraser?
    Ms. Fraser. Yes.
    Chairwoman Waters. Mr. Gorman?
    Mr. Gorman. Yes.
    Chairwoman Waters. Mr. Moynihan?
    Mr. Moynihan. Yes.
    Chairwoman Waters. Mr. Scharf?
    Mr. Scharf. Yes.
    Chairwoman Waters. Mr. Solomon?
    Mr. Solomon. Yes.
    Chairwoman Waters. Let the record show that all of the 
witnesses answered in the affirmative. We will now begin with 
their oral testimony.
    Mr. Dimon, you are now recognized for 5 minutes to present 
your oral testimony.

TESTIMONY OF JAMIE DIMON, CHAIRMAN AND CHIEF EXECUTIVE OFFICER, 
                      JPMORGAN CHASE & CO.

    Mr. Dimon. Chairwoman Waters, Ranking Member McHenry, and 
distinguished members of the committee, I, the proud grandson 
of Greek immigrants, appreciate the invitation to appear before 
you to talk about JPMorgan Chase, including the people, 
businesses, and communities we serve.
    We are living through unprecedented times in which history 
will judge the leaders of government and industry by actions we 
take to address the health and economic crises and longstanding 
structural inequities. At JPMorgan Chase, we entered this 
crisis from a position of strength and leveraged our size and 
scale to contribute to the stability in our country and ongoing 
support for the real economy to our customers, employees, and 
communities impacted by the global crisis.
    In 2020, we extended credit and raised capital totaling 
$2.3 trillion for customers and businesses of all sizes, 
helping them meet payroll, avoid layoffs, and support 
operations. We waived fees and delayed payments on about 3 
million accounts for customers who said they were affected by 
COVID, with no questions asked. We waived over $600 million in 
fees for COVID and non-COVID reasons, including over $400 
million in overdraft fees. We funded over 400,000 PPP loans to 
small businesses, supporting over 3 million jobs for more than 
$40 billion in total funding. About 90 percent went to 
businesses with fewer than 20 employees, and around one-third 
went to businesses in communities of color. Outside of PPP, we 
provided $18 billion in renewed credit for small businesses.
    We committed $250 million in business and philanthropic 
initiatives with a focus on helping and encouraging small 
businesses and not-for-profits, and we support our employees, 
especially our frontline workers, when approximately 75,000 
went to work every day, including me, for the most part, and 
who continue to show up to their jobs in branches, call 
centers, lock boxes, and other roles that could not be done at 
home. We gave special payments and additional paid time off, 
and we continue to pay for regularly-scheduled hours, even when 
hours were reduced.
    There is no doubt that the bold and swift action taken by 
Congress--you all--the Federal Reserve, and the Administrations 
over the past 15 months were instrumental in reversing 
financial panic and avoiding a deep and lasting economic 
crisis. But the last year exacerbated longstanding inequality, 
particularly among Black and Latinx families, increasing 
barriers to wealth creation and holding us back as a country. 
This is why JPMorgan Chase recently committed an additional $30 
billion over 5 years to address racial and economic inequality, 
focused on expanding affordable housing, growing Black- and 
Latinx-owned businesses, and improving access to banking. These 
are new business commitments that will help to drive real 
change. We have already made solid progress and are on track 
for our 5-year commitment.
    We have refinanced over $2 billion in mortgages for Black 
and Latinx households, and funded investments and loans for an 
additional 5,500 multifamily affordable housing units. We have 
funded over $60 million in investments in nine MDIs. We also 
opened community center branches in areas like Harlem, Chicago, 
Minneapolis, and Crenshaw, with many more coming in the next 
year.
    At JPMorgan Chase, we consider our people to be our 
greatest strength. Our 160,000 U.S. employees are located in 38 
States, and soon we will be in 48 contiguous States this 
summer. Thirty percent of the new branches are opening or 
located in low- to moderate-income areas, and nearly one-third 
of all branches are minority census tracts. For the 3rd time in 
5 years, this year we increased entry-level wages to $16 to $20 
an hour, and we provide annual benefit packages worth about 
$13,000. Nearly 70 percent of our employees who started before 
2017 with a salary of less than $40,000 are still at the 
company and have experienced an average increase of 40 percent 
in compensation.
    We have also made progress in recruiting, retaining, and 
promoting ethnically-diverse employees. Over the past 5 years, 
for example, we have increased the number of Black senior 
leaders by more than 50 percent and established a new program 
that holds managers accountable for the diversity priorities 
through compensation and performance evaluations.
    Our country is poised for a strong economic rebound, but we 
must ensure the economic recovery benefits all and that we 
address longstanding inequities that threaten the promise of 
America. Access to affordable healthcare, an education system 
that is failing too many of our children, crumbling 
infrastructure, climate change, and racial inequality are just 
some of the problems challenging our great nation. All of us--
government, business, and civic society--must work with a 
common purpose to address these challenges.
    I want to close by thanking our employees for their 
tireless work and relentless focus on doing what is right for 
our customers. They have performed their jobs with integrity 
and commitment to serve our customers and our country. I look 
forward to working with you all as we shape the future of our 
country for generations to come. We all share a collective 
American interest to ensure that we are a country of unlimited 
opportunity for all. Thank you.
    [The prepared statement of Mr. Dimon can be found on page 
90 of the appendix.]
    Chairwoman Waters. Thank you very much, Mr. Dimon. We will 
now go to Ms. Fraser.

    TESTIMONY OF JANE FRASER, CHIEF EXECUTIVE OFFICER, CITI

    Ms. Fraser. Thank you, Chairwoman Waters, Ranking Member 
McHenry, and members of the committee, and thank you very much 
for the opportunity to represent Citi today. By way of 
introduction, my name is Jane Fraser. I joined the bank 17 
years ago, and I became CEO in March. I grew up in a small 
village in Scotland, but I first came to the U.S. in 1987, and 
I very proudly became a citizen in 2001. My husband emigrated 
to the U.S. from Cuba when he was a young boy, and he is also a 
proud citizen of our country. So, we both feel very fortunate 
about the opportunities this country has created for our 
family, and we believe we have an obligation to make sure 
everyone can participate in the American Dream.
    At Citi, we recognize that this has been an incredibly 
challenging time for Americans, millions of whom we are very 
proud to call our customers. The origins of this global crisis 
are very unlike the last one. This is a public health crisis 
with severe economic consequences for many. Throughout the 
pandemic, Citi has shown that we are a very different bank than 
the one that entered the financial crisis more than a decade 
ago. We are smaller, but we are safer, we are stronger, and we 
are far less complex. We have had the financial resources to 
support our clients and communities through COVID, and we are 
laser-focused on driving a sustainable and an equitable 
recovery.
    I will always be proud that we were the first bank to 
provide relief programs for retail and small business customers 
in the United States. We are also proud to be a reliable 
conduit for the extraordinary consumer and business aid that 
Congress and the Federal Reserve have provided. We helped 
deliver this aid across many government-sponsored programs, 
including the Paycheck Protection Program. As a result of the 
tremendous need from small businesses, we went from being a 
relatively small, Small Business Administration (SBA) lender, 
to so far funding over $5 billion in PPP loans to the hardest-
hit small businesses, and nearly 80 percent of these loans have 
gone to businesses with 10 or fewer employees. And we are 
donating all of the net profits from the program to provide 
further support to vulnerable small businesses and communities 
in the U.S.
    And at the same time, we made our own people a priority. We 
provided special compensation awards and benefits to many of 
our colleagues to help them ease their personal financial 
burdens and worries through the crisis.
    As the world's most global bank, we will continue 
supporting many of the most iconic American businesses as they 
navigate the uncertainty of markets abroad, and working in 
concert with Federal assistance programs, we are going to 
continue to serve as a source of strength for our customers and 
our communities here at home as a very high priority. While we 
have a smaller branch footprint than our peers, we will harness 
the full power of our bank's capabilities to extend our reach 
and to help make sure the recovery leaves no one behind.
    We are proud of our record of enabling opportunity in 
communities. For 11 straight years, we have been the number-one 
lender of affordable housing in the U.S., and in 2020 alone, we 
worked with the State and local governments to finance over $27 
billion in vital capital projects such as roads, schools, 
hospitals, and utilities. And through low-cost and no-fee 
products, we continue expanding financial services in 
underbanked neighborhoods.
    Almost exactly a year ago, as calls for social justice rang 
out in the wake of George Floyd's murder, Citi answered those 
calls with action. We launched a firm-wide effort, including a 
billion dollars in strategic initiatives, to help close the 
racial wealth gap, and just this morning, we announced a new 
$200 million program to invest in affordable housing and 
workforce projects with Black investment managers.
    We are not alone in our commitment to equity, but what 
distinguishes us is how we hold ourselves accountable for 
results, and where we have more work to do, we are very upfront 
about it. This is the transparency that has defined our 
representation goals and our efforts to close our gender pay 
gap. It is also part of our sustainability agenda and our 
commitment to net zero emissions by 2050, which I announced on 
my first day as CEO, because helping our clients transition to 
a low-carbon economy is going to be central to this work.
    I am determined that Citi will continue leading on these 
issues. They are central to our mission of enabling growth and 
progress, and I thank you again for the opportunity to talk 
about Citi's efforts to be part of the solution in the recovery 
to this pandemic. Thank you very much.
    [The prepared statement of Ms. Fraser can be found on page 
99 of the appendix.]
    Chairwoman Waters. Thank you, Ms. Fraser. Next, we will go 
to Mr. Gorman. You are now recognized for 5 minutes to present 
your oral testimony.

  TESTIMONY OF JAMES P. GORMAN, CHAIRMAN AND CHIEF EXECUTIVE 
                    OFFICER, MORGAN STANLEY

    Mr. Gorman. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, thank you for having me here again 
today. I am also an immigrant, coming from Australia, and let 
me tell you, it is a long journey from Melbourne to New York, 
and I am very proud that I made it and I am now a citizen of 
this great country.
    When we were last here in 2019, none of us could have 
predicted the extraordinary public health crisis that would 
unfold around the world. We remain in the midst of the crisis 
that has caused serious humanitarian and economic issues, 
leaving an indelible mark on many of us. Our hearts go out to 
all of those directly and indirectly impacted by this crisis. 
In response to these extraordinary and challenging times, we 
were focused on serving our clients and our communities and 
taking care of our employees.
    We helped our corporate and institutional clients raise 
additional liquidity and obtain financing. We raised over $50 
billion of capital for the industry sectors most affected by 
COVID--the airlines, the cruise ships, the travel industry. Our 
teams also helped raise healthcare capital for both Moderna and 
Pfizer, including a sustainable bond issuance by Pfizer, to 
support patient access to medicines and vaccines, especially 
among underserved populations. For our retail clients, we 
guided them to manage their investment portfolios amidst midst 
extreme volatility.
    Today's Morgan Stanley, through its three businesses, 
provides a stable foundation of support in any market 
environment. In our institutional business, we are a financial 
advisor to companies. We help them raise debt and equity 
capital, from taking companies public to helping them issue 
bonds, so they can grow and create jobs. We help public sector 
entities raise municipal financing. We help pension funds, 
mutual funds, and other financial institutions trade and manage 
assets. In our other two businesses--wealth and asset 
management--we manage over $5.6 trillion of assets for 
households and institutions, including endowments and pension 
funds that manage the retirements of our teachers, 
firefighters, and other public service employees. For millions 
of U.S. households, our services help families save money, 
whether that be for college payments, retirement, or to put a 
down payment on their mortgages.
    Beyond a day-to-day core businesses, we also support the 
most vulnerable in our communities through philanthropic and 
employee engagement. A number of well-publicized events last 
year led to a heightened and necessary focus on racial and 
social justice, and a recognition that explicit support and 
purposeful collective action will be required.
    Some of our efforts in the last year included providing 
grants to minority depository institutions to help them bolster 
their loan loss reserves in the wake of the pandemic, and to 
assist minority- and women-owned businesses to ensure an 
equitable recovery. We also started a program to provide 60 
students with full 4-year scholarships to Howard University, 
Morehouse College, and Spelman College, three of America's 
leading Historically Black Colleges and Universities (HBCUs).
    In addition, we are concerned, like everyone, with how to 
deal with climate risk over the next decades, which will have a 
profound socioeconomic effect on our communities. Morgan 
Stanley recognizes the threat that global climate change poses, 
and we are working with our clients to find ways to mitigate 
it.
    Finally, early in the pandemic, we committed to making no 
reductions in our workforce through 2020 to help our employees 
navigate this crisis, thereby providing reassurance to 70,000 
families in a very difficult time. I am proud of that 
commitment and the commitment our employees have shown to their 
clients.
    Chairwoman Waters, in your letter dated April 30, 2021, you 
asked me to provide information on 14 topics. In the spirit of 
brevity, that information is now included in the attached 
addendum, and I look forward to your questions.
    [The prepared statement of Mr. Gorman can be found on page 
110 of the appendix.]
    Chairwoman Waters. Can you hear me?
    Voices. Yes.
    Chairwoman Waters. Thank you, Mr. Gorman.
    Next, we will go to Mr. Moynihan. You are now recognized 
for 5 minutes to present your oral testimony.

 TESTIMONY OF BRIAN T. MOYNIHAN, CHAIRMAN AND CHIEF EXECUTIVE 
                    OFFICER, BANK OF AMERICA

    Mr. Moynihan. Chairwoman Waters, Ranking Member McHenry, 
and distinguished committee members, at Bank of America, we 
serve 1 in 2 American households, and my 200,000-plus teammates 
and I take that responsibility very seriously. Our incredible 
team interacts with clients tens of millions of times a day. We 
do so through our 4,300 financial centers, one-third of which 
are located in low- or moderate-income (LMI) communities, 
17,000 ATMs, on the phone, and through our digital capabilities 
with 40 million active digital users.
    In 2020, our clients turned to us for support like they 
hadn't done before. Thanks to years of investment and focus on 
responsible growth, our teammates were there to support those 
in need, and through it all, a growing number of clients have 
placed their trust in us. Since the start of the healthcare 
crisis, deposits have increased significantly, and our customer 
base has grown across all of our businesses. We helped our 
clients and the U.S. economy through the worst economic shock 
in recent years. For clients in need, we delivered financial 
assistance through our business-as-usual work and by helping 
deliver the timely Federal relief programs that you and your 
colleagues authorized.
    We helped nearly 2 million consumers and small businesses 
defer payments on credit cards, vehicle loans, and home loans. 
Even with a deferral, the vast majority of these clients remain 
current on their payments, and that is a good thing. We 
provided PPP loans to nearly half-a-million small businesses: 
83 percent of those loans have gone to businesses with 10 or 
fewer employees; and nearly 40 percent have gone to businesses 
in majority-minority communities. We sent millions of emails to 
help clients understand the program and to encourage them to 
apply, including targeted outreach to drive awareness to all 
communities.
    Apart from PPP, we remain the largest lender to small 
businesses in the United States, according to the FDIC, with 
$35 billion in small business loan balances, 60 percent of 
which is in LMI communities. We also processed more than $73 
billion in stimulus payments authorized by Congress, and took 
additional steps to help overdrawn clients access their full 
payment without any offset.
    The products and services we provide are central to our 
clients, to our communities, and to the economy, and we 
continue to take steps to help our clients with their day-to-
day financial needs. And 2020 is a complement to our successful 
Safe Balance, no overdraft checking account. We launched 
Balance Assist, a low-cost digital-only alternative to payday-
type loans, allowing clients in need to borrow up to $500 for a 
flat fee with no interest. We also increased investments in our 
team during the pandemic. We expanded many of our benefits, 
including support for mental health, free virtual medical 
consultations, and no-cost coronavirus testing. We offered 
teammates $100 per day to hire someone to come into their home 
to take care of their children or their adult dependents. We 
have funded more than 4 million days of care for our teammates.
    We implemented coronavirus testing and daily health 
screening, and installed wellness fairs in all of our branches. 
We provided special compensation programs for our teammates, 
including supplemental pay and enhanced overtime pay, as well 
as transportation and meal subsidies, and we had no layoffs in 
2020.
    We ensure that all employees are compensated well. Last 
year, we increased our minimum hourly wage rate of pay for U.S. 
teammates to $20, one year earlier than planned, and we have 
committed to raise that to $25 per hour by 2025. Vendors within 
the United States are also required to provide wages at or 
above $15 per hour if they serve us. Today, thousands of vendor 
employees have benefited by this. Since 2012, we have not 
increased medical premiums for teammates earning less than 
$50,000. For 2020, we provided special compensation awards to 
97 percent of our talented team globally, the 4th straight year 
we have done so.
    Maintaining our diverse and inclusive workplace also 
continues to be a priority: 50 percent of our management team 
and 50 percent of our board of directors is diverse. More than 
half of our global workforce are women, and 45 percent of our 
U.S.-based teammates are people of color. We hired and trained 
more than 10,000 employees from LMI communities in the last 3 
years alone.
    Finally, over the past year, we increased our investments 
to support our communities. In June 2020, we accelerated our 
longstanding work to promote racial equality and economic 
opportunity to drive investment, jobs, small business, housing, 
and healthcare to our local communities. We have committed 
$1.25 billion over 5 years, and have already deployed $350 
million of that, including common equity capital investments in 
17 MDIs and CDFIs, investments in 90 private equity funds that 
are both run by minority women entrepreneurs and also focus on 
minority- and women-owned businesses.
    We have distributed 29 million masks and other PPE to 
underserved communities and community centers. We increased our 
Home Ownership Assistance Program to raise the goal from $5 
billion to $15 billion. We also are accelerating the transition 
to a low-carbon economy. At Bank of America, we are committed 
to achieving net zero greenhouse emissions before 2050. We are 
working alongside and supporting our clients in every industry 
to help make that transition.
    We at Bank of America believe in capitalism and believe it 
is the best way to solve the challenges facing society. We can 
deliver for our shareholders and for society. We call that 
responsible growth. Thank you.
    [The prepared statement of Mr. Moynihan can be found on 
page 136 of the appendix.]
    Chairwoman Waters. Thank you very much, Mr. Moynihan.
    Mr. Scharf, you are now recognized for 5 minutes to present 
your oral testimony.

  TESTIMONY OF CHARLES W. SCHARF, CHIEF EXECUTIVE OFFICER AND 
                PRESIDENT, WELLS FARGO & COMPANY

    Mr. Scharf. Chairwoman Waters, Ranking Member McHenry, and 
members of the committee, good afternoon, and thank you for the 
opportunity to be here today.
    Just over a year ago, I appeared before this committee upon 
assuming my role as CEO. We were on the verge of a global 
pandemic, and I cannot help but look back and think how little 
we understood of what 2020 would bring. When the pandemic 
struck, we all came together to stand up unprecedented 
assistance at a scale and speed that had never been done 
before. Although the process was not perfect, we, the 
government, and others rallied to do what needed to be done, 
and now we must continue to work together to ensure a fair and 
equitable recovery. As we begin taking steps towards recovery, 
I am proud of Wells Fargo's efforts to support our customers, 
our employees, and the communities we serve, all while 
continuing to transform our organization. We believe our 
country and communities benefit from a strong Wells Fargo.
    I am proud that we have been a source of strength for our 
customers and communities during the toughest of times. They 
are our core and must remain our priority in all we do. To 
support our customers during the pandemic, we deferred payments 
and waived fees for more than 3.7 million consumer and small 
business accounts to help people make ends meet. We provided 
over 1 million mortgage forbearances and suspended residential 
property foreclosures and evictions to keep Americans in their 
homes. And we acted as a leading lender in the Paycheck 
Protection Program, funding more than $13.7 billion in aid to 
small businesses. Over 40 percent of our loans were made to 
businesses located in low- to moderate-income or majority-
minority census tracts.
    Recognizing that the goal of the PPP was to provide a 
lifeline to struggling small businesses, we also took more than 
the $400 million in fees generated by the program in 2020, and 
are donating them to our Open for Business Fund, which is 
allowing us to engage CDFIs, not-for-profits, and others to 
help businesses manage the economic effects of COVID-19, and we 
will continue to do our part by working on solutions to tackle 
the problem of unbanked and underbanked individuals and other 
efforts to foster an inclusive recovery. We look forward to 
defeating the impact of the pandemic together, and believe 
Wells Fargo will play an important role in helping to rebuild a 
stronger America.
    To our employees, I am proud of the work you have done over 
the past year to support our customers and communities during 
these uncertain times. We prioritize safety and well-being, and 
my deepest gratitude goes out to our frontline workers who made 
it possible to keep branches safely open. We transitioned more 
than 200,000 employees to remote work last March, and we 
understood the tremendous strain the pandemic would place on 
all of our employees and their families. We made special cash 
awards to approximately 165,0000 employees, offered enhanced 
support for employees who are parents or caregivers, provided 
free, voluntary COVID-19 testing for all employees working in a 
Wells Fargo location, and we offered paid time off to employees 
for vaccination appointments.
    For the communities we serve, we continue to invest in the 
institutions critical to their success. While we are very 
encouraged to see signs of improvement, we realize that not all 
of our communities are benefiting equally in the recovery. That 
is why Wells Fargo has been working to support a more inclusive 
economic recovery with a focus on racial and social equity, 
economic mobility, and investments in low- to moderate-income 
communities. For example, we are investing in Black-owned 
Minority Depository Institutions (MDIs) across the country as 
part of our $50 million commitment to support MDIs, and we have 
given more than $150 million to CDFIs around the country who 
are providing grants to hard-hit small businesses. 
Additionally, last week we announced our Banking Inclusion 
Initiative, a 10-year commitment to accelerate unbanked 
individuals' access to affordable mainstream accounts, and 
helped unbanked communities have easier access to low-cost 
banking.
    We are also committed to helping transition to a low-carbon 
economy and have set a goal of achieving net zero greenhouse 
gas emissions, including our financed emissions, by 2050. And 
finally, for our company, while we still have significant work 
to do, we are committed to devoting the resources necessary to 
operate with strong business practices and controls, maintain 
the highest levels of integrity, and have an appropriate 
culture in place.
    Thank you again for having me, and I look forward to 
answering your questions.
    [The prepared statement of Mr. Scharf can be found on page 
167 of the appendix.]
    Chairwoman Waters. Thank you very much, Mr. Scharf. 
Finally, we will go to Mr. Solomon. You are now recognized for 
5 minutes to present your oral testimony.

  TESTIMONY OF DAVID M. SOLOMON, CHAIRMAN AND CHIEF EXECUTIVE 
                     OFFICER, GOLDMAN SACHS

    Mr. Solomon. Thank you, Chairwoman Waters, Ranking Member 
McHenry, and members of the committee. Thank you for giving me 
the opportunity to speak today.
    These last 14 months have been an incredibly challenging 
time as the pandemic has swept across the world, killing almost 
600,000 Americans and plunging us into a steep economic 
retraction. Even today, our hearts go out to the people of 
India and others around the world who continue to suffer from 
this virus. However, because of the swift actions taken by 
Congress, the Federal Reserve, and others to combat this health 
and economic crisis, I am optimistic about our future. As more 
people are vaccinated, the U.S. is poised for a very strong 
recovery, and I would be remiss if I didn't thank Moderna, 
Pfizer, Johnson & Johnson, and AstraZeneca for the amazing work 
they and others have done on lifesaving vaccines.
    The banking industry performed well during this crisis, as 
the Fed's two stress tests in 2020 confirmed. This is due in 
part to the Dodd-Frank Act and other financial regulations put 
in place since the 2008 crisis. Goldman Sachs remained well-
capitalized both leading up to and throughout the pandemic. 
Goldman Sachs has more than 40,000 employees, and I continue to 
be in awe of their resilience. To help them through the 
pandemic, we gave people an additional 10 days of paid family 
leave, expanded access to child and adult care, offered free 
telemedicine, and rolled out a global COVID testing regime. In 
addition, we have continued to pay our onsite vendor staff, 
whether they worked or not. That includes our mailroom staff, 
cafeteria workers, security guards, and janitorial staff.
    Over the last year, we experienced historically-elevated 
levels of client demand, and because we were well-capitalized, 
we were able to help our corporate clients weather the impact 
of COVID-19 and position themselves for a post-pandemic 
recovery.
    For our digital bank customers, we launched a COVID 
Customer Assistance Program, which allowed customers to defer 
loan payments for 4 months, and credit card payments for 6 
months, at no additional cost.
    We also found innovative ways to support small businesses. 
We are not an SBA lender, so we did not participate directly in 
the Paycheck Protection Program. Instead, we committed $1.4 
billion in capital to Community Development Financial 
Institutions (CDFIs) and mission-driven lenders, who 
facilitated PPP loans across the country. The capital we 
deployed with our CDFI partners reached very small businesses, 
nearly half of which are in minority communities. The average 
loan size is around $43,000, and the median employee count is 
two.
    In addition, last week we committed another $1 billion in 
partnership with the SBA and our CDFI partner, Lendistry, to 
fund approximately 40,000 PPP loans, over half of which will 
benefit minority-owned businesses. We did this to ensure these 
applicants were able to have their loans processed and approved 
before the PPP funds were exhausted. We also continue to 
support small businesses through our 10,000 Small Businesses 
program, launched in 2010. Through this program, we provide 
education by partnering with community colleges, and greater 
access to capital to thousands of small businesses. Last year, 
we committed an additional $250 million to serve another 10,000 
small business owners. We have also committed an additional 
$500 million to our program for diverse entrepreneurs, launched 
with Goldman Sachs.
    I now want to focus on three other initiatives that are 
incredibly important to us. First, we have already achieved 
more than a 5th of our 10-year target of $750 billion in 
financing, investing, and advisory activity focused on climate 
transition and inclusive growth. We have been carbon-neutral 
across our operation since 2015, and we recently set a goal of 
net zero carbon emissions in our supply chain by 2030.
    Second, we commissioned extensive research on how to 
mitigate income inequality, which showed that Black women are 
one of the most marginalized groups in this country. It found 
that if we can reduce the earnings gap for Black women, we 
could see U.S. GDP increase by $300 billion a year. In 
response, we developed a new initiative called One Million 
Black Women, where we will invest $10 billion over the next 10 
years to narrow opportunity gaps for at least 1 million Black 
women in the United States.
    The final initiative relates to our diversity and 
inclusion. When I became CEO 2\1/2\ years ago, I said that this 
would be a top priority. Since I last testified before 
Congress, we have made progress. Our board will now have 6 out 
of 13 directors who are women, 62 percent diverse by race, 
gender, or sexual orientation. Our newest partner class 
includes the highest percentage of women and Black partners in 
our history. In addition, our 2020 Campus Analyst Class in the 
Americas was 55 percent women and 11 percent Black talent, our 
highest ever. However, I am not satisfied with where we are, 
and we continue to work to address this.
    Thank you. I would be happy to answer any questions you 
have.
    [The prepared statement of Mr. Solomon can be found on page 
182 of the appendix.]
    Chairwoman Waters. Thank you very much, Mr. Solomon. I now 
recognize myself for 5 minutes for questions.
    I am going to go to a question that I had not anticipated 
at this point, because I wanted to talk about low-cost homes. 
But let me just ask, we have supported forbearance, and some of 
you certainly have been very good at doing that. However, we 
are hearing a lot of concerns from homeowners, many of whom 
have lived in their homes for 15 or 20 years, and because of 
the pandemic, they found themselves in difficulty. They were 
laid off from their jobs, or the jobs closed down, et cetera. 
They could not afford to pay their mortgages in the same way 
that they had been doing for many, many years. We had 
forbearance in the Coronavirus Aid, Relief, and Economic 
Security (CARES) Act, I believe, and also in the American 
Relief Plan. That foreclosure moratorium ends around June 30th 
for those who have been in forbearance. I want to know from 
each of you, how many of you are going to offer these 
homeowners an opportunity for loan modifications, real loan 
modifications? Even if they don't know about them, are you 
going to initiate them? Are you going to deal with them in ways 
that will help them save their homes and avoid foreclosure? Let 
me start right out with Jamie Dimon.
    Mr. Dimon. Yes?
    Chairwoman Waters. Can you tell me whether or not you are 
going to employ the kind of operation such that we won't have 
to get into a confrontation about that, and we don't have to 
try and do something in the law? Are you going to initiate this 
program?
    Mr. Dimon. Well, I can't promise you that, because I don't 
know the details, but we don't like foreclosing on people. We 
give modifications. We have plans. We will work with everyone, 
and where appropriate, we will not be foreclosing on people. I 
do want to point out that some are appropriate, where homes are 
vacant, where people have been paying for years, their vacation 
homes, their second homes. So, where appropriate, you can 
expect us to bend over backwards to help those folks stay in 
their homes.
    Chairwoman Waters. Thank you very much, Mr. Dimon. I 
described the kind of homeowner who would be looking for a loan 
modification. I didn't talk about any houses that were boarded-
up and no one was there, and all of that. I took an opportunity 
to describe that. I am going to hold you to it. Let me go on to 
Ms. Fraser.
    Ms. Fraser. Thank you very much, Chairwoman Waters. We no 
longer service our own mortgages. We do so with our partners 
now. We require that they follow GSE and Federal guidelines on 
these matters, and we only work with people who have good best 
practices in these--
    Chairwoman Waters. Okay. So, you are going to be offering 
loan modifications. People don't have to not know about them, 
you will be offering them, is that right?
    Ms. Fraser. We will be ensuring that our partners provide 
that, yes.
    Chairwoman Waters. Okay. Thank you. Mr. Moynihan?
    Mr. Moynihan. Chairwoman Waters, we have already modified a 
bunch of these loans, and the good news is that a lot of them 
also have paid off through normal things, a lot of concurrency. 
Yes, we will continue to modify them, because, as Mr. Dimon 
said, the last thing we like to do is to take the home of 
someone who can pay us through foreclosure.
    Chairwoman Waters. Okay. Thank you. I don't have time to 
continue on that line of questioning, because I want to talk 
about the fact that the cost of housing is just escalating so 
much. In my own State of California, it has increased probably 
about 20 percent, and so it is very difficult for people to be 
able to get these down payments, et cetera. But I want to ask 
you about this low-cost housing, housing that is under 
$100,000. In some of these areas all across the country, in 
small towns and communities of color, in particular, they can't 
get loans from your banks, they tell me. I asked you to submit 
some information on that. Most of you did, but how many of you 
are absolutely committed to taking a look at this market and 
understanding that this is a way by which people in low-cost 
housing can become owners if, in fact, they can get their loans 
from you? I will go back to Mr. Dimon again.
    Mr. Dimon. You raised a very good point with us a couple of 
days ago, and we are going dig deep into it and see if we can 
come up with programs that work.
    Chairwoman Waters. Ms. Fraser?
    Ms. Fraser. Exactly the same, Chairwoman Waters.
    Chairwoman Waters. Okay. Mr. Moynihan?
    Mr. Moynihan. Chairwoman Waters, yes, we are going to take 
a look at it. You raised a good point, and as we enter some 
markets with lower-cost housing, we probably will be doing more 
of them anyway.
    Chairwoman Waters. Mr. Scharf?
    Mr. Scharf. Chairwoman Waters, we do a significant amount 
of loans under $100,000. We will absolutely look to see if we 
can do more.
    Chairwoman Waters. Okay. Mr. Gorman?
    Mr. Gorman. It is not really a business, Chairwoman Waters, 
that we are in. We only did seven loans this year of that size.
    Chairwoman Waters. Okay. Thank you. My time has expired, 
and I can't get into this any deeper, so I yield back the 
balance of my time. And I will now call on our ranking member, 
Mr. McHenry, for 5 minutes.
    Mr. McHenry. Thank you, Madam Chairwoman, and I want to 
thank you all for being here in this format. And as I opened, 
this is a sequel that no one asked for. In the hearing 2 years 
ago, I don't know that much was learned. We are going to have a 
similar issue set, but modified by the political discourse of 
the day. And so, I think of this is as an opportunity for me to 
ask you important questions about your insight into the 
economy. We know that through the financial crisis, the banking 
sector provided important liquidity and played its role in our 
economy to ensure that lending was possible, that smart 
underwriting and lending was still possible in the midst of a 
pandemic. So, I think that is commendable work that your 
institutions, and banks, and FinTechs, and credit unions put in 
during the financial crisis.
    The question I have for the whole panel is to have the 
outlook on jobs going forward. We had 8 million unfilled jobs 
last month. We had a 266,000 net increase in employment, but 8 
million jobs unfilled. There is a lot of debate in Washington 
about why that is happening. I would like to hear from you as 
experts on the economy about the nature of that. So if we can 
begin with you, Mr. Scharf, and then you, Mr. Moynihan.
    Mr. Scharf. Congressman, I am not sure I have a great 
answer as to why that is the case. What I can tell you is what 
we hear from our clients and what we see ourselves, and what we 
see from our clients is that their confidence is building and 
they have very, very good prospects for the second half of the 
year. Debt levels are down on a corporate basis--
    Mr. McHenry. But how can you have economic growth if you 
can't get people to go back to work? That is the fundamental 
question. Let me move on to you, Mr. Moynihan. Same question.
    Mr. Moynihan. Our small business customers--we just 
completed a survey and the issue raised has come up to the 
highest level of all of the issues. It was the pandemic, 
obviously, 6 months ago, and now it has turned to getting 
workers for the jobs. I think it is a serious concern, and I 
think that the States and others I talked to are trying to put 
money to work to train people. And I agree with you, if you 
think forward about the risk to the economy, it is the 
inability to get stuff through ports, and it is the inability 
to get people back to work in a fashion now that the economy is 
opening up.
    Mr. McHenry. Ms. Fraser?
    Ms. Fraser. Yes, I think we are seeing significant 
dislocations as the economy normalizes. One of the pieces that 
will be critical as the savings go back to work and as 
liquidity that is sitting out there at the moment gets 
translated into ways that create more employment and new 
business creation to drive the recovery.
    Mr. McHenry. Mr. Dimon?
    Mr. Dimon. Ranking Member McHenry, I think the reasons are 
many-fold, including some of the unemployment insurance, 
including the fact that our schools haven't reopened, and 
including the fact that people actually have a lot of money and 
they don't particularly feel like going back to work, but I 
think you should rest assured--I think we are going to see a 
completely booming economy. A lot of people are going back to 
work, and hopefully it will continue for quite a while.
    Mr. McHenry. Thank you for answering that. Now, I have 
questions about, on the international front, we see the lack of 
transparency associated with China's lending across the globe. 
China has resisted international standards set by a body, such 
as the Paris Club and the Organisation for Economic Co-
operation and Development (OECD), an arrangement on officially-
supported export credits. We see this globally. Moreover, we 
see the Federal Reserve has flagged elevated debt levels in 
China, high real estate valuations, and weaknesses in their 
financial sector. And what I see is a lack of transparency in 
their lending and a lack of transparency internationally to 
their domestic actions. Can you give me further insight into 
this, and should we believe China? Do you believe that China's 
lack of transparency and its official financial sector 
vulnerabilities pose a potential risk to global financial 
stability? Mr. Solomon, that question is for you, then to you, 
Mr. Dimon.
    Mr. Solomon. I appreciate the question, Ranking Member 
McHenry, and I think you have raised a bunch of issues that are 
issues that we spend a lot of time thinking about. Transparency 
in markets is always extremely important, and more transparency 
is better. I think that we understand that we operate in 
globally-interconnected markets, so to the degree that some of 
the issues you highlight do become issues that have an impact 
on China's economic activity, we will certainly feel it back 
here in the United States, and it will have a contagion effect. 
I don't see that at the moment as a likely issue given the 
recovery they have had coming out of their pandemic, but I 
think all of these things are things that should be watched and 
observed closely.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. McHenry. Mr. Dimon, I think you were saved by the bell, 
and thank you all for testifying.
    Chairwoman Waters. The gentlewoman from New York, Mrs. 
Maloney, who is also the Chair of the House Committee on 
Oversight and Reform, is now recognized for 5 minutes.
    Mrs. Maloney. Thank you, Chairwoman Waters, for holding 
this hearing and for standing up for consumers, and thank you 
to the panel for participating.
    I want to follow up on the questions from Senator Warren 
about overdraft fees. President Obama signed into law my Credit 
Card Act, the bill I wrote to end the most abusive practices of 
the credit card industry.
    According to one study, this bill alone is estimated to 
have saved consumers nearly $12 billion a year. A 2015 CFPB 
study estimated that it saved consumers $16 billion in the 
first years of its enactment.
    But where we made great progress on topping abusive 
practices in the credit card market, there is still much work 
to do on banks' overdraft practices. I plan to soon reintroduce 
my legislation, the Overdraft Protection Act, to crack down on 
unfair, predatory overdraft fees.
    Bank overdraft fees are outrageously priced, predatory, and 
beyond the scale of what a reasonable charge should be for this 
service, and we know that these fees and practices are harming 
consumers and taking billions out of their pockets.
    According to an S&P Global Market article from earlier this 
year, the larger banks collected $8.8 billion in overdraft fees 
alone and reported over $147 billion in net income in 2020.
    Making these practices even more egregious, overdraft fees 
hit those who can afford them the least, the hardest. Those who 
are trapped are often cash-strapped hardworking Americans and 
college students who are struggling to pay their bills.
    And so, that $8.8 billion collected last year is money 
taken out of the hands of Americans who are trying to just keep 
food on the table and stay afloat in the middle of our 
pandemic.
    Each bank has slightly different policies, making this even 
more confusing to consumers. All of your banks, basically, 
charge around $35 for each overdraft. But the worst of these 
fees can be on debit card transactions, where the overdraft 
averages $20, but comes with a $35 fee.
    Multiple transactions can quickly add up to where a 
consumer is charged well over $100 in fees alone.
    Let's focus on Wells Fargo. Mr. Scharf, neither Citi nor 
Bank of America charge overdraft fees on debit card 
transactions, apparently deciding this practice was not in the 
best interest of their customers.
    I find it curious--why has your bank made the opposite 
decision, seemingly thinking a sandwich or a cup of coffee at a 
deli should result in a $35 overdraft fee if they can't afford 
it?
    Mr. Scharf. I'm sorry. Are you--
    Mrs. Maloney. I am waiting for your answer.
    Mr. Scharf. Congresswoman, we are constantly looking at 
ways to be more consumer-friendly. We introduced an account 
last year which has no overdraft fees at all. It is actually 
one of--probably our most popular account since we have 
introduced it. So, we have options that are readily available 
for customers who do not want to overdraft.
    We also offer overdraft protection in something called 
Overdraft Rewind for those who have an account that can 
overdraft, which allows us to look back 24 hours for a direct 
deposit coming into that account.
    These are things that we have added where we are looking to 
become more consumer-friendly. But it is, certainly, something 
that we will continue to look at.
    Mrs. Maloney. When did you introduce your--you have an 
account that has no overdraft fees?
    Mr. Scharf. We introduced it--
    Mrs. Maloney. I would think that everybody would take that 
one because I don't think many people want to pay a $35 
overdraft fee for a cup of coffee. When did you introduce the 
program that has no overdraft fees?
    Mr. Scharf. We announced it approximately a year ago, and I 
believe we have had it in the market for probably 6 months or 
so. I will get you the specific dates.
    Mrs. Maloney. And how do you inform your customers that 
they can have this option of not having any overdraft fees?
    Mr. Scharf. It is part of the suite of products that we 
talk to our customers about on a very regular basis.
    Mrs. Maloney. It seems like everyone would choose that, if 
it was really possible, and I think everyone likes a good 
sandwich and a cup of coffee, but not at a cost of $40 or $50, 
and I feel that these fees are unfair, unaffordable, and 
unreasonable for all Americans, plain and simple.
    Let me ask you, Mr. Scharf, do you think a $35 fee for a $6 
debit charge is reasonable?
    Chairwoman Waters. The gentlelady's time has expired. Would 
you please get back to Mrs. Maloney to answer that question?
    With that, we are going to go on to Mrs. Wagner from 
Missouri. You are recognized for 5 minutes.
    Mrs. Wagner. Thank you, Madam Chairwoman, and I would like 
to also thank our witnesses for being with us today. It is 
important to me that public companies such as the ones that you 
all lead continue to focus less on political agendas and more 
on what will benefit your investors, your customers, and your 
workers the most, that is, maximizing profits and shareholder 
value. I would just like to say that up front.
    Mr. Moynihan, and Mr. Dimon, this is for you. The Biden 
Administration has proposed an increase in the tax rate as high 
as 28 percent for American businesses and industry, along with 
many other tax increase measures, all to offset an additional 
anywhere from $1.7 trillion to $2.3 trillion in government 
spending.
    How would an increased rate impact your ability to support 
our economic recovery and what sort of burden would American 
workers and small businesses bear? I will start with Mr. 
Moynihan's response first.
    Mr. Moynihan. Thank you for the question.
    I think, starting with your point about what our customers 
tell us, our small and medium-sized businesses, of which we 
have many, are worried about tax increases slowing down their 
ability to invest in employees, invest in new equipment, and be 
competitive, because many of the small businesses supply into 
the supply chain for the larger companies in this country. And 
so, their concern is about that.
    When you go to the larger companies, an increase in taxes 
is a couple of things. One is that their fear is that it will 
lead them back to put more capital available outside the United 
States because, frankly, the type of demand, the globalization 
of the economy provides opportunities that weren't here 30 
years ago and I think they are concerned about that. They are 
also concerned about the impact of prices coming into them from 
suppliers.
    So, yes, I think that is what is on the minds of our 
customers, and I know that there is a lot of work going on in 
this body and other bodies regarding the merits of all that. 
But that is what we hear from our customers.
    Mrs. Wagner. Thank you. I appreciate it.
    Mr. Dimon, briefly?
    Mr. Dimon. Yes. The Biden tax number has taxes going from 
21 percent to 28 percent, which is halfway back to what we 
think we had in 2017 before the last Tax Act of 1935.
    But the tax increase is actually 4 times what the tax 
decrease was in 2017. You all know the phrase, ``the devil is 
in the details.'' Well, the details here are all that matter, 
not the top line of 28 percent.
    I have always believed that we need--if you want to have a 
healthy, growing, competitive America against the rest of the 
world, you need a global competitive tax rate, because at the 
margin capital, will be retained and invested overseas, the 
same cap you want retained and invested over here.
    So, I think it would be detrimental to a lot of--I am not 
worried about banks, per se. It will be detrimental to a lot of 
companies. It will push a lot of capital overseas. It will be 
unfortunate. There are better ways to collect taxes that would 
do less than that.
    Mrs. Wagner. And it would hurt the customers and the 
clients that you serve every single day?
    Mr. Dimon. That is correct.
    Mrs. Wagner. And we must also remember that 55 percent of 
small businesses are organized as a C-corp. Quickly, would an 
increased rate allow your firms to be more or less competitive 
globally?
    Mr. Moynihan, more or less competitive?
    Mr. Moynihan. I am so sorry.
    An increased rate could lead to less competitiveness 
globally.
    Mrs. Wagner. Mr. Dimon?
    Mr. Dimon. They will be less competitive and they will get 
increasingly worse over time.
    Mrs. Wagner. Thank you.
    Mr. Dimon, and Ms. Fraser, would you describe the 
challenges your firms face in terms of global competition? 
Specifically, how does China factor into those challenges as a 
global competitor?
    I will start with Ms. Fraser's response, please?
    Ms. Fraser. Thank you very much.
    China is playing an increasing role in the global financial 
system, and I think it is very important that preserving 
American multinationals abroad and, indeed, the U.S. Government 
and other entities that the important flows of foreign 
exchange, trade, cash management, and, indeed, the access of 
global investors, the U.S. market happens on American rails and 
not on another country's. I think it is of strategic importance 
for our multinational companies and those working abroad.
    Mrs. Wagner. Mr. Solomon and Mr. Gorman, discussions around 
a financial tax transaction tax have increased over the last 
several months. I am concerned about the harm that this tax 
would do to our Main Street investors saving for college or 
retirement.
    What adverse effects would this type of tax create within 
our financial system, Mr. Solomon? And I have very limited 
time.
    Mr. Solomon. It impacts investors and it would impact 
investor activity, Congresswoman.
    Mrs. Wagner. If I could, Madam Chairwoman, I have run out 
of time. I would ask for Mr. Solomon and Mr. Gorman to send me 
a written response, if they wouldn't mind, on the concept of 
this financial transaction tax.
    I thank you, and I yield back.
    Chairwoman Waters. Thank you very much.
    The gentlewoman from New York, Ms. Velazquez, who is also 
the Chair of the House Committee on Small Business, is now 
recognized for 5 minutes.
    Ms. Velazquez. Thank you, Madam Chairwoman.
    Mr. Dimon, I would like to address my first question to 
you. In addition to being a senior member of this committee, as 
mentioned by the Chair, I am also the Chair of the House Small 
Business Committee, which has primary jurisdiction over the 
Paycheck Protection Program.
    Despite making several changes to the program between the 
first round and the second round to make it easier for LMI 
small businesses to access funding, and including a specific 
set-aside for borrowers located in LMI areas, the number of PPP 
loans issued by JPMorgan in LMI communities actually decreased.
    In round one, your bank issued approximately 58,000 loans 
to LMI small businesses, while in round two, you only issued 
approximately 14,000. Can you explain this decrease?
    Mr. Dimon. We were the largest lender in PPP. We loan as 
much as we can, everywhere we can, according to government 
guidelines.
    Ninety percent of the loans in the first round went to 
companies of less than 20 employees, and we reached out 
everywhere to LMI communities. I will get you the exact 
numbers, but I think we did a fairly good job at it. I would 
like to add to the--
    Ms. Velazquez. Well, I do have the numbers. I do have the 
data because I am the Chair of the Small Business Committee, 
and I work with the SBA. In fact, we held a hearing yesterday.
    So my question to you is, despite the fact that we put 
aside a set-aside for just lending to LMI small businesses, 
your bank not only decreased the number, compared to the first 
tranche and the second tranche, but also the size of those 
loans.
    It went down from approximately $120,000 in round one to 
$80,000 in round two at the exact time we all knew that small 
businesses in LMI communities were starving for capital, and 
despite how hard they worked at applying for those loans.
    So, it doesn't seem to me that your bank was doing 
everything it could to reach these businesses.
    Mr. Dimon. Well, we did, and we reached out everywhere we 
could. There was less demand. The second program was smaller, 
and then we went at it in other ways, too. We invested $70 
million in MDIs.
    We invested in some of the Latinx banks. We reached out to 
CDFIs. We begged them to help us find more people. So, we did 
everything we could reasonably do and we always try to do the 
best we can.
    Ms. Velazquez. Well, sir, the numbers showed otherwise, and 
those numbers change in LMI communities when we worked and 
brought in mission-based lenders such as CDFIs, CDCs, micro 
lenders.
    I hope that we can do a better job in reaching out to those 
businesses that are starting to get access to capital.
    Ms. Fraser, when we held this hearing 2 years ago, I 
questioned your predecessor on Citigroup's CEO pay ratio, which 
was the largest of any bank testifying that day, a remarkable 
486-1 ratio.
    Can you explain how you are working to reduce this ratio? 
And in your explanation, can you discuss not only the CEO side 
of the equation but the median employee compensation side as 
well?
    Ms. Fraser. Thank you very much for the question.
    Yes, I want to start by saying I completely appreciate how 
fortunate I am for the compensation that I do get as the new 
CEO at Citi.
    We want to make sure that our employees have a fair 
competitive wage, that they have the opportunity to grow inside 
our company, that we provide them development opportunities, 
and also provide them the different benefits that they need to 
support their families and for all of the challenges during 
COVID and beyond.
    The different things that we are looking at are the 
programs that we can put in place to support our employees' 
growth in their compensation, going forward.
    Ms. Velazquez. I yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. The gentlelady's 
time has expired.
    The gentleman from Missouri, Mr. Luetkemeyer, is now 
recognized for 5 minutes.
    Mr. Luetkemeyer. Thank you, Madam Chairwoman.
    As the largest financial institutions in the country, we 
understand it was for $8.3 trillion in credit last year, which 
is a testament to your ability to advance our economy, and I am 
very thankful for that, quite frankly.
    However, when you all decide to boycott industries, you use 
your size and power to put companies out of business. What is 
worse is that these decisions, clearly, are not made as a 
matter of conscience.
    Your investments in China prove that. These decisions are 
being made to pacify political activists who want to do what 
the law cannot do, which is shut down legal American 
businesses.
    By complying, you are no longer supporting our economy, but 
actively working against it, I would argue. To that end, there 
is a report that all of you have put out, ``The Environmental, 
Social and Governance Report,'' where you publicly acclaim the 
actions of your bank in these different areas.
    Five of the six reports of your institutions specifically 
mentioned moving away from coal financing and investing in 
other things. There was an article that came out in Bloomberg 
titled, ``Goldman, Citi Lead U.S. Banks Plowing Billions into 
China.'' Specifically, JPMorgan and Citi, $21 billion; Goldman 
Sachs, $17 billion; Bank of America, $13 billion; and Morgan 
Stanley and Wells Fargo, $4 billion.
    To that end, it is worth noting that in the ESG reports 
condemning the coal industry, only Goldman Sachs mentioned 
China in terms of carbon emissions.
    Ms. Fraser, a quick question for you. Is coal, and drilling 
for oil and gas, illegal?
    Ms. Fraser. No, it is not illegal.
    Mr. Luetkemeyer. Are you taking similar actions in China to 
what you are doing in the United States by boycotting specific 
industries and putting pressure on companies to change their 
business model?
    Ms. Fraser. We are supporting the clients that we serve, 
multinationals and local companies, to make the transition to 
lower carbon technologies, mindful that different industries 
are at different stages of doing so.
    Mr. Luetkemeyer. So, you are probably not. Is that what you 
are telling me?
    Ms. Fraser. Correct.
    Mr. Luetkemeyer. Okay.
    Mr. Gorman, Morgan Stanley has about $4 billion. Same 
question, is mining coal and drilling for oil and gas illegal?
    Mr. Gorman. No, it is not.
    Mr. Luetkemeyer. Are you taking similar action in China 
that you are doing here with boycotting specific industries and 
putting pressure on companies to change their business model?
    Mr. Gorman. We continue to support coal--existing coal 
businesses around the world. We are not financing new coal 
businesses in any country in the world. That all goes to our 
franchise committee.
    Mr. Luetkemeyer. Thank you for that.
    In addition to the ESG reports, each of your institutions 
has published statements on human rights which include actions 
your companies are taking to improve human rights around the 
globe. I want to point out that not one of your statements on 
human rights mentions China. Not one single company mentioned 
China in your human rights statement.
    The State Department has a statement out with regards to 
what is going on in China, which is widely reported, the kind 
of religious genocide that is going on, the horrible torture 
and other things that are going on with minority religious 
groups over there.
    And now, even the Administration, in the last couple of 
days, has acknowledged the development of the COVID virus at 
Wuhan labs and is going to go after that, which was done, 
obviously, for nefarious purposes.
    Mr. Solomon, Goldman Sachs has been in China since 1994, 
and has $17 billion in investments there. Do you intend to 
alter your business in China as a result of these human rights 
violations?
    Mr. Solomon. Congressman, I appreciate the question, and 
first and foremost, we are an American company, but we operate 
on a global basis.
    I think the bilateral relationship between the U.S. and 
China is incredibly complex. There are places where, obviously, 
we cooperate, and there are places where we are 
confrontational. We try to navigate that in an appropriate way 
and stay engaged with our clients around the globe.
    Mr. Luetkemeyer. So is the lure of profits that great that 
you will turn your eye to the human tragedies and sufferings 
that are going on in China by their government and the 
Communist Party, which is one and the same, which is whom you 
have dealt with for the last almost 30 years here?
    Mr. Solomon. We, I think, look at this broadly as a complex 
relationship. I saw recently that Secretary of State Blinken 
said that we have to at all times be competitive, 
collaborative, and adversarial.
    Our clients are U.S. companies that we serve, Congressman, 
operating in China, and we try to serve them in that context. 
We think it is better to stay engaged than not.
    But we will follow very closely what you all do as 
legislators in terms of how U.S. companies should be engaged 
around the world and we take that very seriously.
    Mr. Luetkemeyer. Mr. Dimon, would you like to answer the 
same question? Do you intend to alter your business in China 
because of these human atrocities that are going on?
    Mr. Dimon. We operate in over 100 countries, and we operate 
under the law of the land in each of those countries, and under 
the law of America's--
    Mr. Luetkemeyer. Even though the law of the land is the 
Communist Party law?
    Mr. Dimon. No, but we follow the foreign policy of the 
United States of America, which is your policies. We follow 
engagement with your policies--
    Mr. Luetkemeyer. Foreign policy in the Trump Administration 
was to get out of China.
    Mr. Dimon. --and when you tell us not to, we don't, like 
Cuba, how we do business with Russia. We follow exactly what 
you tell us to do because we are patriots just like the rest of 
you on this call.
    Mr. Luetkemeyer. I think the previous Administration--
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Luetkemeyer. --was focused on getting China--cutting 
trade ties and getting the trade deficit down. Thank you very 
much. I yield back.
    Chairwoman Waters. The gentleman from California, Mr. 
Sherman, who is also the Chair of our Subcommittee on Investor 
Protection, Entrepreneurship, and Capital Markets, is now 
recognized for 5 minutes.
    Mr. Sherman. In 2008, the financial system caused a 
horrendous crisis that devastated our country. Democrats 
responded by changing the regulatory system, particularly with 
the Dodd-Frank Act.
    Now, the financial system has survived the greatest stress 
test that I could have imagined. It did not cause this crisis 
and it has shown resiliency during this crisis.
    That is, in part, because of the regulatory changes that we 
made and it is in part because of the stewardship of some of 
the executives who are before us today.
    We now face another systemic crisis that is, certainly, not 
at the same level of COVID, and that is the London Interbank 
Offered Rate (LIBOR). We can solve this in advance and avoid 
the problem. My colleagues have heard me talk about this again 
and again.
    We have several trillion dollars of instruments 
outstanding, where next year or in the following year you will 
not be able to calculate the amount of interest that is due 
because they are tied to the LIBOR rate that the folks in 
London will no longer publish.
    So I will ask each of you, and I am going to ask you to 
answer in one word. Do you feel that Federal legislation is 
warranted to deal with the financial and legal fallout that 
will occur if we don't have a replacement rate for LIBOR?
    Mr. Dimon?
    Mr. Dimon. Yes.
    Mr. Sherman. Ms. Fraser?
    Ms. Fraser. Absolutely. Yes.
    Mr. Sherman. Mr. Gorman?
    Mr. Gorman. Yes.
    Mr. Sherman. Mr. Moynihan?
    Mr. Moynihan. Yes.
    Mr. Sherman. Mr. Scharf?
    Mr. Scharf. Yes.
    Mr. Sherman. Mr. Solomon?
    Mr. Solomon. Yes.
    Mr. Sherman. Thank you.
    Mr. Solomon, Archegos put a light on total default swaps in 
family offices. We have and had in this country a limitation on 
margin lending. You have to put up half of the money, and that 
has been the rule, basically, my entire long lifetime.
    But we saw the Archegos family office get 9:1 leverage by 
using the total return swap, and so my question is, should we 
allow the average Robinhood investor to get 9:1 leverage?
    Should we prevent Archegos and the other well-connected and 
wealthy institutions from getting more than 1:1 leverage by 
banning the total return swap and similar devices? Or should we 
have one rule for Robinhood and another rule for the Sheriff of 
Nottingham and his family office?
    Mr. Solomon. I appreciate the question, Congressman, and I 
think that this is an area that I know people are looking at 
closely, and I think it is probably a good thing to continue to 
look at it.
    I think the big thing I would focus on is transparency, and 
I think one of the things that would be interesting is to 
update the disclosure regime around the different, more 
moderate ownership disclosure.
    Mr. Sherman. Mr. Solomon, I asked the question. It is not 
very transparent. If you are a Robinhood customer, you get 1:1 
leverage.
    If you can negotiate a total default swap because you are 
big, you can get 8:1, 9:1 leverage. That is transparent. The 
question I asked you is should we stop it, and your response 
was, well, we should disclose it.
    My question is, should we have the same rule for Robinhood 
as the Sheriff of Nottingham in his family office?
    Mr. Solomon. I think when you look at institutional 
participants in markets, the variety of ways where people can 
get leverage that is more than 1:1, generally, for just 
straight stock ownership, straight-up cash stock ownership, 
whether retail or institutional, if you are looking at straight 
margin Reg T margin rules, it is 1:1. Generally speaking, 
individuals--
    Mr. Sherman. Reclaiming my time, the total default swap is 
a way to have all of the economic benefits of stock ownership 
and obey the rules.
    I am going to try to squeeze in one more question for Mr. 
Scharf, and that is, we see that a trillion dollars of Federal 
taxes go unpaid by the top 1 percent.
    President Biden has indicated, along with his Treasury 
Secretary, that to collect that, we need more reports from 
banks.
    If those are legally required, are you prepared to 
cooperate and not only disclose the taxable income but the 
transactions required?
    Mr. Scharf. Congressman, we will do whatever is legally 
required.
    Mr. Sherman. Thank you.
    Chairwoman Waters. Thank you very much.
    The gentleman from Oklahoma, Mr. Lucas, is now recognized 
for 5 minutes.
    Mr. Lucas. Thank you, Madam Chairwoman.
    Forty years ago as a young man, I was trying to get into 
the farming business, and I went through the inflationary 
period in the late 1970s and early 1980s, very exposed, 
operating in debt, interest rate controls had gone off. It was 
a wild ride.
    That brings me to where we are 40 years later. Over the 
past several months, we have experienced a surge in commodity 
prices, crude oil, natural gas, corn, soybeans, wheat, 
materials like lumber and cotton. What do you believe has been 
driving this rise in prices and do you expect this to be 
sustained for some time to come?
    I would first like to turn to Mr. Solomon and Mr. Gorman.
    Mr. Solomon. Thank you. Thank you, Congressman. I 
appreciate the question. It is, certainly, something that we 
have been spending a meaningful amount of time thinking about.
    I think there are a number of factors that have been 
affecting commodity prices, and I think, as you stand back and 
look, the shutdown of the pandemic and the dramatic contraction 
of the economy had a profound contracting effect and now we are 
opening up very quickly.
    And so, we have the combination of demand picking up very 
quickly and supply production and availability and supply 
chains and distribution chains not being as full as they would 
normally be.
    That is, obviously, leading to inflation in prices. I think 
what is hard to see at this point is whether or not it is going 
to be transitory or whether or not it will continue or be more 
sustained.
    I do think it is something to watch very carefully and the 
speed of recovery--the recovery, combined with other fiscal 
actions or monetary actions we take, will obviously have an 
impact on this.
    Hopefully, the Fed can manage appropriately as we go 
forward in what is, obviously, going to be a strong economic 
pickup from the demand perspective.
    Mr. Lucas. Mr. Solomon?
    Mr. Gorman. Representative Lucas, thank you also, for the 
question. And coming from a long line of farmers from the 
Outback in Australia, where wheat and sheep were the family 
products, I have a lot of sympathy for the space.
    Commodity prices are simply a function of supply and 
demand. We have had interrupted supply, we have had a global 
recession, and now we are getting extraordinary demand. We have 
never had this kind of global synchronized growth that we are 
going through now.
    So, you are going to see surges in prices. But as more 
capacity is brought online, whether it is oil rigs or more 
mining around the world, these things rebalance. But right now, 
we are in a surge.
    Mr. Lucas. I am just a little nervous, having increased the 
national debt from, what, $20 trillion a year-and-a-half ago, 
to $28 trillion. That seems like a rather expensive increase in 
the monetary supply, and as the economy picks up, and what is 
the term, velocity of circulation, increases, I am just 
nervous.
    Anyone under 60 did not live through that period. But when 
Mr. Volcker decided to wring it out of the economy, it almost 
wrung a lot of us out of existence.
    That said, I have a second question. As Congresswoman 
Wagner discussed, the Biden Administration has proposed more 
than $4 trillion in spending for the American Jobs Plan and the 
American Families Plan, which the Administration plans to 
finance by hiking corporate and individual taxes.
    The Administration has also proposed a global minimum 
corporate tax rate. While we should level the playing field for 
U.S. businesses, some argue that global minimal corporate tax 
rates would be disadvantageous to U.S. companies.
    Mr. Dimon, could you comment on this concern and how 
feasible this proposal would be to actually achieve a global 
tax rate?
    Mr. Dimon. Yes. America would be the only country, I think, 
in the world that would have what you would call a global tax 
rate.
    I pointed out earlier that going from 21 to 28 percent 
isn't the issue, because people say it's halfway back to what 
the tax cuts were. But the tax increase because of something 
like that is actually 4 times the tax cut of 2017.
    There is no question in my mind at the margin--not for 
every decision made, but at the margin that will drive capital 
and, eventually, brains and R&D and investment overseas, that 
would be a mistake for America.
    Mr. Lucas. Ms. Fraser, could you share your thoughts on how 
feasible a global minimum corporate tax rate is?
    Ms. Fraser. I think it is very hard to get other countries 
to sign on to an equivalent program, and despite some optimism 
of doing so, I think that will be extremely difficult.
    And, therefore, it could put the U.S. in a position of 
being less competitive around the world.
    Mr. Lucas. My background, and representing an agriculture 
and an energy industry kind of a district, those international 
markets are critically important for us, and we have gone 
through trade wars beyond belief for the last 50 years trying 
to have fair access and to be able to compete.
    I am just very sensitive about undoing the progress we have 
made, just as I am very sensitive about setting off a Carter-
era kind of inflation wave, too.
    Thank you for your comments, and I yield back the balance 
of my time, Madam Chairwoman.
    Chairwoman Waters. Thank you. Thank you very much.
    The gentleman from New York, Mr. Meeks, who is also the 
Chair of the House Committee on Foreign Affairs, is now 
recognized for 5 minutes.
    Mr. Meeks. Thank you, Madam Chairwoman. Thank you for 
having this important hearing.
    Institutional investors are monitoring racial and equity 
commitments. For example, BlackRock announced in April that 
they plan to conduct a racial equity audit to integrate equity 
and inclusion into all aspects of their business model.
    Additionally, here in New York, the New York State 
Comptroller announced in February that the State's retirement 
fund will submit shareholder proposals on conducting racial 
equity audits, including calls upon Amazon to conduct such an 
audit.
    However, many of you seem to disagree with this idea. So 
let me ask Mr. Dimon, JPMorgan's proxy statement states that, 
``Conducting a racial equity audit would not provide us with 
useful additional information.''
    And, Ms. Fraser, similarly, we have heard that Citi 
recently urged its shareholders to vote against a similar 
proposal. So, both Mr. Dimon and Ms. Fraser, could you 
elaborate on your opposition to independent racial equity 
audits?
    Mr. Dimon. I will start. We are devoted to the principle of 
trying to do a better job for the Black and Latinx community.
    We have announced an extraordinary amount of programs that 
you are welcome to come and look at, from community branches--I 
just visited one in Harlem--to $30 billion for affordable 
housing and mortgages for Black folks, for small business 
enterprise, for getting kids through high school, it is pretty 
extraordinary. It is pretty global.
    I think a lot of the other companies do it, too. We are 
doubling down after the murder of George Floyd. So, the company 
is completely devoted, and we report it out. That is completely 
different than the bureaucracy and BS of having outside orders 
come in to certify something. I would rather take our time and 
our effort, put in the effort.
    If there are best practices that we can learn from, we will 
learn from them. But this kind of thing is not going to make it 
much better over time. It just adds another whole layer of 
unnecessary cost.
    Ms. Fraser. And from the Citi end, we feel we have been 
very transparent. We just put out another very extensive update 
on our billion-dollar action for racial equity plan, and it 
covers all different dimensions of the bank's activities, both 
inside the bank and outside, many of which are verified by 
third parties.
    So, we didn't think it was necessary to have a separate 
audit. But it is something that we are looking at again, given 
that it was brought up by our shareholders.
    Mr. Meeks. Yes. I think it is something, and in reply to 
Mr. Dimon, you say it is not unless you can verify something 
with an independent audit.
    I have seen in my time here, for example, internal audits, 
like what happened to Exxon on something that wasn't verified.
    If you are having someone come in independently to verify 
what is going on, then it is something that is trustworthy, not 
something that may be just in favor of a particular company or 
financial institution.
    And that is why independent audits for various institutions 
are always important, just as an independent audit on whether 
or not these commitments are lived up to.
    But I just have a minute. I am pleased to hear that many of 
you have committed significant capital investments towards 
Minority Depository Institutions, and I have really been 
encouraging such investments over the past few years, along 
with Mr. Green and Chairwoman Waters and a number of other 
members of this committee.
    And I would love to hear more about the implementation, 
because a commitment to invest is very different from an 
agreement to invest, and I will be asking all of you for 
written responses to this question.
    But in the meantime, Mr. Scharf and Mr. Moynihan, can you 
let this committee know whether or not your public commitments 
to invest in MDIs have or will result in direct agreements with 
these institutions?
    Mr. Scharf?
    Mr. Scharf. Congressman, we have agreements with 13 Black-
owned Minority Depository Institutions, representing $50 
million of equity commitments, and that is separate from the 
commitments that we have made to the CDFIs, where we have 
committed another $250 million and we have already given out 
$150 million of that $250 million.
    Mr. Meeks. Mr. Moynihan?
    Mr. Moynihan. Congressman Meeks, we have completed and the 
money is in common equity for 17 institutions today up to 5 
percent, based on what they wanted. And we have made offers to 
the other 120 or so that are out there.
    We, similarly, look at investing in them. Many don't need 
the money and told us they don't want the equity. So we have 
gone, literally, institution by institution to make the 
investments.
    Mr. Meeks. I am out of time. I yield back, Madam 
Chairwoman.
    Chairwoman Waters. Thank you very much.
    The gentleman from Michigan, Mr. Huizenga, is now 
recognized for 5 minutes.
    Mr. Huizenga. Thank you, Madam Chairwoman, and to all of 
the participants, I intend to touch on a few issues that my 
previous colleagues have touched on, but I also want to explore 
some other things.
    And to Ms. Fraser, congratulations, and welcome to the 
frying pan. I want to talk a little bit, and I would like to 
hear, very quickly, from each one of you, what do you see as 
the greatest threat to our financial system right now and to 
your company as well?
    Mr. Moynihan?
    Mr. Moynihan. As a financial institution, the number-one 
question is, what is the economy going to do, because as you 
know--
    Mr. Huizenga. The economy. Okay.
    Mr. Moynihan. Yes, sir.
    Mr. Huizenga. Okay. I need it to be really brief.
    Ms. Fraser?
    Ms. Fraser. Cyber security, given that much of the private 
infrastructure sits in or the infrastructure sits in private 
hands.
    Mr. Huizenga. Okay.
    Mr. Solomon?
    Mr. Solomon. I would highlight three things we are focused 
on: cyber; central clearing risk; and growing government debt 
around the world.
    Mr. Huizenga. Okay.
    Mr. Dimon?
    Mr. Dimon. Public policy not being properly executed in the 
United States of America, which means we may not be able to 
take a leadership role in the world for the rest of our lives.
    Mr. Huizenga. Okay. What does that mean exactly?
    Mr. Dimon. I think we have done public policy not 
particularly well. Whether because of infrastructure, 
immigration, healthcare, taxation, regulation, we have stifled 
the formation of small business. American leadership really 
matters. If we don't get our economic act together, we won't be 
a leader in 20 years.
    Mr. Huizenga. Okay.
    Mr. Gorman?
    Mr. Gorman. Narrow cyber and, specifically, the potential 
impact on consumer data and data privacy.
    Mr. Huizenga. Mr. Scharf?
    Mr. Scharf. Cyber.
    Mr. Huizenga. Okay. So to paraphrase my friend, Mr. 
Perlmutter, in his opening, one of his goals is, basically, to 
have safe and sound lending and banking for everyone. I 
wholeheartedly agree.
    What is interesting to me, though, is that only Mr. Dimon 
came close to talking about sort of the social issues side of 
things. Yet, all of you have indicated that by 2050, you intend 
to be at a zero emission scheme within your banking system.
    Mr. Solomon, I guess you have outdone everybody by saying, 
2025. And I am curious, I didn't hear, ``climate'' in any of 
that. The closest, again, was Mr. Dimon.
    But why are you putting so much time and effort into this? 
Mr. Dimon, you were just expressing why you felt frustrated 
that you would have to be going through formal audits of these 
things because it is not necessarily productive. And I am very 
concerned about the pressure that you all are receiving as CEOs 
and as an organization.
    By the way, I am curious, I would like to hear from 
everybody, very quickly, whether you are banking in Taiwan or 
not? If anybody isn't banking in Taiwan, I would love to hear 
from you. Any clients that are not--everyone else is in Taiwan, 
or you do not have any clients in Taiwan?
    Mr. Scharf. Congressman, it is Wells Fargo--I don't know 
the answer to the question. But we can get back to you.
    Mr. Huizenga. Tell you what, let's reserve that. I would 
like to hear back from everybody, because I think that is 
another pressure point, as one of my other colleagues, Mr. 
Luetkemeyer, was talking about.
    All of your firms have pledged fidelity to this whole 
notion of bowing to the wokeness that is going on, on 
environmental issues.
    And I am curious--and, Madam Chairwoman, I would like to 
submit for the record a letter that is from 15 different State 
Treasurers led by the West Virginia State Treasurer to former 
Senator Kerry--Secretary Kerry, the Special Envoy now, 
indicating that they are going to be coming back to you, their 
financial institutions, with whom they do over $600 billion 
worth of business.
    Now, I know in D.C., we are spending trillions like it is 
Friday night poker money. But $600 billion is a significant 
amount of business for everybody. And I am curious from 
everybody, have you seen this letter and what is your response 
to that?
    And, basically, they are saying if you are going to limit 
our ability to have companies in our States in the energy 
sector, in oil, gas, coal, we are not going to do business with 
you. Are you aware of this letter and what is your reaction?
    Mr. Dimon, you are first on my screen.
    Mr. Dimon. We think that climate is a serious issue--
    Mr. Huizenga. I understand. Are you aware of the letter?
    Mr. Dimon. Yes.
    Mr. Huizenga. Okay. Is anybody unaware of the letter?
    Mr. Solomon. I have not seen the letter.
    Mr. Huizenga. Okay.
    Mr. Scharf. I have not seen the letter either.
    Mr. Huizenga. Okay. We will ship it over. We will make sure 
that you get that. I know my time is up. I do want to hear 
about LIBOR, and SOFR (the Secured Overnight Financing Rate) as 
well, and I will submit some questions in writing on LIBOR--
    Chairwoman Waters. Thank you.
    Mr. Huizenga. --and whether SOFR is the answer for this 
problem. And I yield back.
    Chairwoman Waters. The gentleman's time has expired and 
your letter is submitted, without objection.
    Thank you. We will move on.
    The gentleman from Georgia, Mr. Scott, who is also the 
Chair of the House Agriculture Committee, is now recognized for 
5 minutes.
    Mr. Scott. Thank you, Madam Chairwoman, and I am so excited 
to be on this panel at this time because we have a major issue 
here. I want to talk about our unbanked and underbanked, as we 
apply that to the child tax credit that has been in this, 
because we have an excellent opportunity here with you all who 
are the leaders: Mr. Dimon, Ms. Fraser, Mr. Moynihan, Mr. 
Solomon, Mr. Scharf, and Mr. Gorman.
    You all represent our largest banks, and I want to put this 
to you. We just passed the child credit, expanded the Child Tax 
Credit Act in the $199 trillion COVID relief package.
    Here is what it does: $3,600 for children under 6; $3,000 
for children under 17; and each of the parents are getting 
guaranteed checks every month.
    But here is the problem. They cannot do this and receive it 
with direct payments, and that is what I am concerned about. To 
help us to make sure that their child tax credit payments can 
come by way of direct deposits, it is dangerous out there when 
they don't get it directly.
    These large series of money every month have to go to a 
payday lender or somebody on the check-cashing service where 
they have to pay money. So, we need to find out what we need to 
do about this.
    Mr. Scharf, let me talk with you, because Wells Fargo has 
the largest number of branches, and I also checked with our 
Federal Deposit Insurance Corporation and let me give you the 
statistics: 13.8 percent of Black households are unbanked; and 
12.2 percent of Hispanic households are unbanked. But do you 
know what it is for White households? It is less than 2.5 
percent.
    So it seems to me, my bipartisan colleagues--Reverend 
Cleaver, myself, and Congressman French Hill from Arkansas have 
a bill moving, it is over in the Senate now, for financial 
inclusion.
    Tell us, if you can, what we must do. Seventy percent of 
African Americans live in neighborhoods with no bank branch.
    So please, Mr. Scharf, you may start. What are you all 
doing? What can we do? Is there something we can add to our 
financial inclusion bill?
    Reverend Cleaver, myself, and Mr. French Hill from Arkansas 
would be glad to work with you.
    Mr. Scharf, you have the largest number of bank branches. 
What percentage of yours are in the Black neighborhoods?
    Mr. Scharf. Congressman, I share your concern on the issue 
and also the desire to make changes, and we as an institution 
are committed to bringing about the change that is necessary to 
bring more of the individuals that you are talking about into 
the system. We have just--
    Mr. Scott. What would be that change? A move to make more 
branches available? Reach out to community organizations? Get 
these accounts established. It is dangerous.
    Mr. Scharf. I think it is a combination of financial 
education, product design, and also about having the right kind 
of facilities and the right kind of partners outside of the big 
banks themselves to ensure that what we are building is serving 
the needs of the community.
    Mr. Scott. Mr. Dimon, what about you?
    Mr. Dimon. The answer is financial education. It is us 
doing a better job reaching out to the community and, like 
Charlie said, it is the work of the CDFIs and MDIs to improve 
that outreach.
    Mr. Scott. Okay. What about you, Mr. Solomon?
    Mr. Solomon. We have a very, very small consumer business. 
We have no branches. But I do think at a high level, just 
commenting generally, the comments that Mr. Dimon and Mr. 
Scharf made are correct. Financial education, using the network 
of CDFIs, mission-driven lenders, et cetera, for better 
outreach.
    Mr. Scott. I hope you all know we have to solve this 
problem. We can't leave these poor folks. Many of them are 
single heads of households, people with disabilities, people 
with no bank accounts. They are out there and the predators are 
waiting on them. We have to get direct payment.
    Chairwoman Waters. The gentleman's time has expired.
    Mr. Scott. Thank you.
    Chairwoman Waters. The gentleman from Kentucky, Mr. Barr, 
is now recognized for 5 minutes.
    Mr. Barr. To our witnesses, thank you for your time today. 
Each of you or your predecessors signed the Business 
Roundtables' 2019 restatement of purpose of a corporation, 
subordinating shareholders to so-called stakeholders.
    As yesterday's hearing in the Senate Banking Committee 
demonstrated, this redefinition of a corporate purpose did 
absolutely nothing to placate or appease Senator Warren or the 
extreme far left.
    In fact, it emboldened them, and whether you admit it or 
not, there are instances where the interests of shareholders 
and stakeholders come into conflict.
    For example, in October of 2019, Senator Warren wrote a 
letter to Mr. Dimon stating that because of the restatement, 
she, ``expects that you will endorse and wholeheartedly support 
her Accountable Capitalism Act.''
    The bill would, among other things, require workers to 
comprise 40 percent of the board, and dictate that companies 
obtain a Federal charter to operate. I will ask each of you to 
answer yes or no, if you could. In an event where there is a 
direct conflict between the interests of shareholders and non-
owner stakeholders, will you prioritize shareholder interests?
    Mr. Dimon, we will start with you.
    Mr. Dimon. Yes.
    Mr. Barr. Mr. Moynihan?
    Mr. Moynihan. As I said in my opening testimony, we deliver 
both for shareholders and for society.
    Mr. Barr. When there is a conflict, which one will you 
prioritize?
    Mr. Moynihan. We will prioritize the returns for the 
company.
    Mr. Barr. Thank you.
    Mr. Solomon?
    Mr. Solomon. Yes, we would prioritize shareholders.
    Mr. Barr. Ms. Fraser?
    Ms. Fraser. Yes, we will prioritize our investors.
    Mr. Barr. Mr. Scharf?
    Mr. Scharf. Yes, our shareholders.
    Mr. Barr. Mr. Gorman?
    Mr. Gorman. Generally, shareholders. There are 
circumstances where it is a no. Last year, we guaranteed every 
employee their job as stakeholders. That was, obviously, to the 
detriment of shareholders if we hadn't been profitable.
    Mr. Barr. Thanks for mostly keeping in mind your fiduciary 
duty to shareholders. Three of you signed onto the Net-Zero 
Banking Alliance, while three of you did not.
    The Alliance is part of President Biden's, John Kerry's, 
and the Bank of England's Mark Carney's misguided plan to 
weaponize the financial system and politicize it to choke off 
funding to legal fossil energy businesses.
    Joining the Alliance requires your institutions to submit 
information to the United Nations so they can certify that you 
are green enough.
    Mr. Dimon, you did not sign this. Why not?
    Mr. Dimon. It was too vague. It is hard to meet the 
commitments. We have already made a very detailed public 
statement about what we are going to try to accomplish.
    We will be working very closely with auto companies and oil 
companies and utilities to figure out how to do it the right 
way. We need to do this the right way, and signing statements 
is not the right way.
    Over time, there will be better disclosure of what people 
are trying to get done.
    Mr. Barr. I appreciate it, as we discussed your commitment 
on this in your shareholder letter as well.
    Mr. Moynihan, Mr. Dimon says he doesn't need John Kerry, 
Mark Carney, or environmentalists at the U.N. to tell him how 
to manage his risk or run his business.
    My question to you is, should access to financial services 
be tied to the creditworthiness of borrowers regardless of 
politics?
    Mr. Moynihan. Creditworthiness of borrowers is the primary 
way we underwrite credit. Yes, sir.
    Mr. Barr. That is good to hear. Thank you.
    And I would encourage all of you to prioritize credit risk 
as opposed to politics.
    Finally, on fossil energy, does anyone on the panel think 
it is a good idea to immediately and completely cut off 
financing to fossil energy? Please raise your hand if you think 
it is a good idea to immediately cut off financing for fossil.
    [No response.]
    Mr. Barr. I want the record to show that none of our 
panelists believe that is the case.
    Unfortunately, some of your financing commitments, combined 
with the Administration's desire to, ``change the allocation of 
capital and energy or disrupting supply without doing anything 
about demand,'' data published even by the Biden Administration 
concludes that fossil energy will constitute more than 70 
percent of all energy consumption in the United States by 2050, 
this supply-demand disruption will raise prices for consumers 
and cede economic competitiveness to countries like China.
    In 2020, Citi, JPMorgan, Goldman Sachs, Bank of America, 
and Morgan Stanley had a combined $77.8 billion in exposure to 
China, up 10 percent from 2019. And yet, China is responsible 
for more than 27 percent of total global GHG emissions.
    Are any of you mandating the same environmental standards 
in your Chinese investments as you work with American companies 
to help them with the transition?
    Anyone can offer your opinion?
    Mr. Moynihan. Our standards are globalized.
    Mr. Dimon. Our standards are global, too.
    Mr. Solomon. Our standards are also global.
    Mr. Barr. Ms. Fraser?
    Ms. Fraser. It is a global policy, yes. It is--
    Mr. Barr. I am running out of time. But I appreciate that 
approach. When China is by far the leading emitter of global 
greenhouse gases (GHG), there needs to be a uniform policy.
    If Global Systemically Important Banks (G-SIBs) are to 
promote American competitiveness, let us hold China to the same 
standards to which we hold American companies.
    Thank you for your time, and I yield back.
    Chairwoman Waters. Thank you. The committee will be in 
recess for 5 minutes.
    [brief recess]
    Chairwoman Waters. The committee will come to order.
    The gentleman from Texas, Mr. Green, who is also the Chair 
of our Subcommittee on Oversight and Investigations, is now 
recognized for 5 minutes.
    Mr. Green. Thank you, Madam Chairwoman. Madam Chairwoman, 
regardless as to what anyone says, you are bending the arc of 
the moral universe towards justice. This hearing has been 
centuries in the making, and I am proud that I am here with you 
while you have the hands of justice making a difference in the 
lives of people.
    Chairwoman Waters. Thank you.
    Mr. Green. I don't know of anybody else who would be doing 
this, Madam Chairwoman. You are unique in all of history.
    Chairwoman Waters. Wow.
    Mr. Green. Now, to my six friends, I have a question for 
you. If you find that your bank owned slaves or accepted slaves 
as collateral, would you publicly atone for this seminal sin?
    Mr. Solomon, as a person of good will, would you publicly 
atone if you find that your bank owned slaves or accepted 
slaves as collateral? ``Yes'' or ``no,'' kindly, please, sir?
    Mr. Solomon. The bank has never owned slaves, so I don't 
think it is something that I am in a position to opine on.
    Mr. Green. Let's just assume that you could be in error, 
sir. If you find out--
    Mr. Solomon. We were established in 1969, sir.
    Mr. Green. Sometimes, things happen.
    Mr. Solomon. Excuse me. We were established in 1869, and 
throughout our history, we never owned slaves. We had no 
involvement with slavery.
    Mr. Green. If you found that you did, would you atone?
    Mr. Solomon. I am not going to speculate on something that 
is not correct, sir.
    Mr. Green. Quite regrettable, sir. Quite regrettable. Mr. 
Scharf, if you found that you owned them or had slaves as 
collateral, would you atone?
    Mr. Scharf. Yes, Congressman.
    Mr. Green. Thank you, sir. Mr. Moynihan, if you found that 
you had slaves as collateral or your bank owned them, would you 
atone, sir?
    Mr. Moynihan. Yes, sir.
    Mr. Green. Mr. Gorman, if you found that your bank owned 
slaves or had them as collateral, would you atone?
    Mr. Gorman. Like Mr. Solomon, we were founded more 
recently, 1935, but, yes, I would atone if it happened.
    Mr. Green. You would atone. Thank you. I appreciate it. Ms. 
Fraser, similar question for you.
    [No response.]
    Mr. Green. Ms. Fraser?
    [No response.]
    Mr. Green. I am having some technical difficulties on my 
end. It may have something to do with the question, Madam 
Chairwoman. Again, I am having technical difficulties. Madam 
Chairwoman, I am going to have to ask if you would give me an 
additional minute of time. Something is happening.
    Chairwoman Waters. Okay. Mr. Green, you are absolutely 
correct. There is some problem, and I don't know what it is at 
this point. I will ask the staff to try and find out what is 
going on.
    [pause]
    Chairwoman Waters. Okay. Would you try to start again, Mr. 
Green?
    Mr. Green. Yes, ma'am.
    Chairwoman Waters. And we will certainly make up for the 
time.
    Mr. Green. Thank you, ma'am. Ms. Fraser, now to you. Ms. 
Fraser, I have to tell you that I believe that some of the 
things that have been done on this committee are in part 
responsible for your occupying that seat. But be that as it 
may, Ms. Fraser, would you atone if you found that your bank 
owned or had slaves as collateral?
    Ms. Fraser. We would absolutely accept responsibility, yes. 
We believe we never have.
    Mr. Green. Thank you, ma'am. Now, Mr. Dimon, my dear 
friend--and I say that sincerely because of something that I 
know that you have done, that was very positive. At this 
hearing in 2019, you acknowledged that JPMorgan had accepted 
slaves as collateral according to the bank's own analysis, but 
let's strike that. In addition, I would say Citizens Bank and 
Canal Bank in Louisiana, both now a part of JPMorgan, served 
plantations from the 1830s until the American Civil War. These 
banks sometimes took ownership of slaves when the plantation 
owners defaulted on loans. Between 1831 and 1865, these two 
banks accepted approximately 13,000 slaves as collateral and 
ended up owning about 1,250 slaves. Mr. Dimon, there can be no 
redemption without recompense. Mr. Dimon, will you atone? Will 
your bank atone for the ownership of human beings?
    [audio malfunction]
    Mr. Green. Madam Chairwoman, I cannot hear Mr. Dimon.
    Chairwoman Waters. I cannot hear him either. Would you try 
again, Mr. Dimon?
    Mr. Perlmutter. You are muted, Mr. Dimon.
    Chairwoman Waters. Mr. Green?
    Mr. Green. Yes, ma'am?
    Chairwoman Waters. We are going to try and work this out. 
Staff, can you help me to find out what is happening? Mr. Dimon 
is indicating that he is not muted, but we can't hear him.
    Mr. Dimon. Can you hear me now?
    Chairwoman Waters. I can hear you now.
    Mr. Green. I can, as well.
    Mr. Dimon. Okay. I said that the company did research and 
found out that companies that had been bought many years 
earlier, in fact, did take slaves as collateral and ownership 
in some cases. We apologized profusely at the time, and, as you 
know, we are making extraordinary efforts to help lift up the 
Black and the Latinx communities.
    Mr. Green. Mr. Dimon, the question is, will you atone in 
the form of some sort of redemption so that you may receive 
redemption, because there can be no redemption without some 
sort of recompense? What will you do to atone for your bank 
owning human beings? This is not about what you are doing. All 
of the other banks are doing these things that you are talking 
about now. We are talking about the ownership of human beings, 
Mr. Dimon. What are you going to do about this, and I want it 
directly linked to the ownership. You must say, Mr. Dimon, ``We 
owned them, and here is what we are doing to take corrective 
action.'' Find those families that are still with us, and 
atone. Will you atone?
    Mr. Dimon. I would love to come see you and figure out what 
you think we could do that would atone properly to the families 
who were damaged by these activities 200 years ago. I would be 
happy to do that.
    Mr. Green. Mr. Dimon? I am going to accept your offer. I am 
going to accept your offer because once before, you and I had 
an opportunity to resolve a circumstance, and we did. I accept 
your offer, and I look forward to meeting with you. And I am 
going to ask that your staff contact my staff immediately so 
that we can arrange such a meeting.
    Mr. Dimon. Consider it done.
    Mr. Green. Thank you.
    Chairwoman Waters. Thank you very much. The gentleman's 
time has expired. The gentleman from Texas, Mr. Williams, is 
now recognized for 5 minutes.
    Mr. Williams of Texas. Thank you, Madam Chairwoman. I want 
to thank all of you for coming before the committee today. Just 
in background, I am from Texas. I have been a small business 
owner for 51 years. I still own my business. I am a car dealer, 
and there has never been a day in my life that I haven't owed 
money to a bank.
    And with that being said, I have said it many times, the 
United States' banking system, what it did to respond to COVID-
19 and get PPP money into the hands of struggling businesses 
was something no other country, I believe, could have pulled it 
off, and no other banking system. I know you had employees 
working around the clock when PPP first opened to process as 
many loans as possible and help your customers in some of the 
most uncertain times of the pandemic. Your banks were 
instrumental in making that happen. So, I wanted to start off 
by saying thanks to you and all of your employees on behalf of 
the millions of small businesses that were able to survive 
because of their hard work.
    We all know that a strong banking system is essential to 
building a strong economy. Your institutions and the community 
banks they help and support allow entrepreneurs to get the 
necessary capital to start their own businesses, expand 
operations, and hire more people. And we need to make sure you 
can continue getting money out to Main Street America support 
small business owners like myself and others, instead of 
navigating additional regulations and reporting requirements 
from the Federal Government. My hope is we can all get your 
banks hiring more loan officers and compliance officers over 
the next few years so we can get our economy back on track and 
away from this liberal socialist agenda that we hear from the 
Democratic left.
    My first question is to you, Mr. Moynihan. Did your bank 
run into any government regulations during the pandemic that 
prevented you from making additional loans that we, as 
Congress, should be looking to re-evaluate as we look to get 
the economy back to pre-pandemic levels?
    Mr. Moynihan. I think obviously, there are a lot of 
regulations we think could be fine-tuned based on what we 
learned during the pandemic, some liquidity rules and stuff 
which is quite technical. But even to the question of these 
small loans, the Federal Advisory Committee just gave the Fed a 
presentation in which the 12 banks that are representative of 
all the banks said, we need to work on the appraisal process, 
the appraisal regulations, because for these smaller balance 
loans--it might be a $50,000 loan, which is going to have a 
property improved to go to $100,000 or something like that--the 
appraisal guidelines would never let you go to the $100,000 
loan.
    So, I think there are ways that we can, for the safety and 
soundness of this industry and the great work they have done, 
move some of these rules, knowing that the banks are well-
regulated, well-capitalized, very liquid, and could help, but 
sometimes those rules do constrain us. That is just a very 
specific example, which was a topic earlier in the 
conversation.
    Mr. Williams of Texas. We have these rules that affect your 
consumers, too, so the less regulations, the better the 
consumer service gets from you. The Biden Administration has 
proposed increasing taxes--we talked about this already this 
morning--to pay for the progressive wish list that is being 
discussed in Congress. But if we increase the corporate rate or 
raise the capital gains tax, it will make the long-term 
economic prospects of America much less attractive, and we know 
this. We all know that when the government takes a larger 
portion of any business' profits, it will cause them to invest 
less back into their own operations and be very defensive.
    But for global institutions like your own, all of you, 
these actions would be even more detrimental. This would 
increase the competitive advantage that the international banks 
have over all of the institutions that are before us today. And 
my question to you, Mr. Dimon is, can you discuss the 
challenges that your bank currently faces against international 
competition, specifically China, and how raising taxes, as the 
Biden Administration wants to do, could make the challenges 
even harder for you?
    Mr. Dimon. Yes, thank you. I think the way to look at this 
is, obviously, most of these banks are doing fine now, and 
people often say because you are doing fine, it is not a 
problem. But over a long period of time, we have had to compete 
with the Chinese banks, and I think they have huge advantages 
in terms of how their regulations are dealt with and how ours 
are calibrated around things like G-SIFI. And America was gold-
plated, so, in a sense, you have to hold much more capital than 
our Chinese or Japanese competitors. That would be a very big 
one. And another one would be how the liquidity coverage ratio 
(LCR) that Brian mentioned stops us from doing a lot of 
intermediation in the markets that we could otherwise do in the 
United States.
    Mr. Williams of Texas. Thank you for that answer, and less 
government regulation works better. Lower taxes work better and 
keep our economy going. With that, Madam Chairwoman, I yield 
back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Colorado, Mr. Perlmutter, who is also the Chair of our 
Subcommittee on Consumer Protection and Financial Institutions, 
is now recognized for 5 minutes.
    Mr. Perlmutter. Thank you, Madam Chairwoman, and to our 
panel, I just want to restate my thanks to all of you for 
leading your institutions through a difficult time, and I want 
to also agree with Mr. Williams in terms of your lending 
through the PPP program. It wasn't without hiccups, it wasn't 
without some glitches, but it was pretty solid, and so I want 
to thank you for both of those.
    Mr. Solomon, in his opening, credited Dodd-Frank for the 
ability and the strength of the banking sector as it went into 
the pandemic, as it has come through the pandemic, as one of 
the things that has helped the banking sector be a strong 
shoulder to rely on during this period of time. Can all of you 
raise your hands if you agree with the way I paraphrased his 
testimony? Do you think Dodd-Frank is due some credit for us 
getting through the pandemic?
    [hands raised]
    Mr. Perlmutter. I see Mr. Gorman, Mr. Dimon, Ms. Fraser, 
Mr. Scharf, Mr. Moynihan, and Mr. Solomon. Thanks. I appreciate 
that, and I appreciate what you said, Mr. Dimon. There is 
always an issue--too much capital, too little capital--but 
everybody came into this thing strong and was able to absorb a 
real shock to our economy, so thank you.
    Mr. Scharf, I have a couple of questions for you. As a 
customer of the bank for, I was told, 44 years, I just want to 
understand where you are on the various consent orders that the 
bank has had to enter over the course of the last several 
years. I think there has been some progress. I would like to 
hear where you are.
    Mr. Scharf. Yes, Congressman. We believe we are making 
progress, but we are also very, very clear that this is a 
multi-year journey, just given the amount of work that has to 
get done here. We have made extensive changes inside the 
company, from the management team, to how we run the business, 
to how we prioritize the effort, and the way we are going about 
this work is completely different than it was in the past. 
Ultimately, this is all about creating a sustainable set of 
systems and processes inside the company that is appropriate 
for a company of our size and complexity. And so, we are 
completely committed to having this be our number-one priority, 
and ultimately, our regulators will decide when each of the 
individual pieces of work are done to their satisfaction.
    Mr. Perlmutter. Okay. Thank you. And as I said in my 
opening, as the Chair of the CPFI Subcommittee, two 
responsibilities in that subcommittee are: one, the solvency 
and stability of the banking system; and two, consumer 
protection and making sure we don't face increasing sharp 
practices in the financial sector.
    Mrs. Maloney described the Credit Card Act that she passed 
a number of years ago. I am concerned that we see some 
practices seeping back into the financial sector. Mr. Dimon, I 
have had complaints raised with respect to Chase credit cards, 
that the default rate has been increased substantially even as 
the bank has been making substantial profits.
    [audio malfunction]
    Mr. Perlmutter. It must be your microphone, Mr. Dimon. I 
guess the question is, has the bank recently increased the 
default rate under its credit cards to most of its members?
    [audio malfunction]
    Chairwoman Waters. Mr. Dimon, can you hear me? Would you 
check, are you unmuted? Okay. Let's try again. One moment, Mr. 
Perlmutter, and we will make up for the time. Staff, can you 
help us out? Now, it is on my phone. One moment.
    [pause]
    Mr. Perlmutter. Why don't I just have him answer that at 
some point in writing?
    Chairwoman Waters. He can hear you. Mr. Dimon, we still 
can't hear. Go right ahead, Mr. Perlmutter.
    Mr. Perlmutter. Okay. I will just end, Madam Chairwoman. I 
would just make one statement on Archegos. The Justice 
Department has opened an inquiry into that, and I would just 
advise or just recommend that all of you keep your investments 
transparent and minimize the risk.
    The last thing I will say, Madam Chairwoman, as a heads up 
to all of you, is that our subcommittee is probably going to 
have a hearing in the near future on, what does your bank look 
like in 10 years? And we know you do that kind of scenario 
planning, and we are interested in having that as a subject of 
a hearing. Thank you.
    Chairwoman Waters. Thank you very much, Mr. Perlmutter. The 
gentleman from Arkansas, Mr. Hill, is now recognized for 5 
minutes.
    Mr. Hill. Thanks, Madam Chairwoman, and I empathize with 
you in trying to run this hearing remotely. I hope we can get 
back to the hearing room so that we can do this in person and 
not have these distractions, so thank you for endeavoring to 
get that done. I thank our witnesses for spending 2 days on 
Capitol Hill talking about issues of importance to your 
companies, your shareholders, and your employees, as well as to 
Members of the House and Senate. We appreciate your 
perseverance, and I know you appreciate the 5-minute break 
every 2 hours.
    A lot of the questions have been geared towards the banks' 
political agenda or joining in on the political agenda inside 
the beltway, responding to progressive pressures from the left. 
And as a former bank CEO, having been in your shoes, albeit at 
a community bank, both public companies and private companies, 
I am not going to spend my time here today telling you how to 
manage your day-to-day operations. Only you and your board of 
directors know how best to run your business on behalf of your 
clients, the shareholders, the regulators, and the larger 
communities that you participate in.
    I do want to share a few thoughts on what I have heard over 
the last couple of days, and make sure that your companies and 
your management teams are being thoughtful in how you respond. 
I want to spend my time to talk a little bit about the climate 
risk disclosure process that we have been debating here in the 
House Financial Services Committee. These are mandates on all 
public companies, and, in fact, some are contemplated for all 
private companies, as it relates to climate financial 
disclosure. And it is based on the Task Force on Climate-
Related Financial Disclosures (TCFD), which I have talked about 
in the past.
    Many of you have stated that you are complying with the 
Partnership for Carbon Accounting Financials (PCAF), which 
claims to help financial institutions assess and disclose 
greenhouse gas emissions from their loans and investments 
through GHG accounting, but this is precisely, I think, the 
challenge in making this a mandate.
    As I understand it, the PCAF is built off of the task 
force's recommendations, and yet that task force, chaired by 
former Mayor Mike Bloomberg, and staffed with several Biden 
Administration officials, states that disclosures have to be 
reliable, verifiable, timely, objective, and comparable across 
portfolios and across industries. And yet, this issue of GHG 
emissions, trying to come up with scope one, scope two, and 
scope three emissions, they say in the Bloomberg report, is 
very challenging and not doable right now. And, in fact, they 
offer not to use GHG and instead use something called a carbon 
intensity metric.
    My concern about these mandated disclosures is that we are 
not ready to do that in the financial industry in a way that 
will really provide value to investors. I believe you all 
echoed something to the effect in a question answering Senator 
Smith's question yesterday that there should be a standardized 
climate disclosure. That would be good sometime in the future, 
and I think that is possible after study and agreement, 
industry by industry. I think Mr. Barr covered that topic well.
    Let me turn to China and ask you, Ms. Fraser, how you are 
thinking about China as it has changed its economy since 2012 
and 2013 to be more aggressive in trying to displace the U.S. 
as an economic leader in the world and exerting its military? 
This is something we have never faced before, where we are 
trying to do business with a big country, and yet how do you 
assess the risk to your doing business in China?
    Ms. Fraser. We serve multinational companies from all over 
the world, many great American companies that are participating 
in the growth in China. We follow our clients to where they are 
doing business. Obviously, there are concerns around a number 
of different topics in China, from human rights and the 
military financing, and where we certainly would never finance 
any institution that is involved with the military in China and 
the financing of that. We see them playing an increasing role 
around the world, and, again, I think it is one of the reasons 
it is critical to have American banks playing a role globally.
    Mr. Hill. We appreciate American banks leading the charge 
on economic freedom at home here for that student who is 
getting out of an Historically Black College and University 
(HBCU), looking for a job, and buying a house, but also around 
the world. But I think risk management is putting your company 
at risk and your clients at risk because it is hard in that 
opaque system and the Belt and Road Initiative approach for you 
to be able to judge what is a good deal and a bad deal, and 
what is a compliant deal and what is not a compliant deal.
    Mr. Dimon, I want to welcome you. I want to just take a 
moment to thank you for coming to Arkansas, and I want to 
submit a question for the record about the Federal Reserve 
policy, and I will do that. Thank you, Madam Chairwoman. I 
yield back.
    Chairwoman Waters. Thank you very much, and we are going to 
take a 5-minute recess to see if we can't straighten out the 
little technological problem that we have. I do not want Mr. 
Dimon to miss his opportunities to share his thoughts with us. 
And so, we will be in recess for 5 minutes.
    [brief recess]
    Chairwoman Waters. The committee will come to order.
    The gentleman from California, Mr. Vargas, is now 
recognized for 5 minutes.
    Mr. Vargas. Thank you very much, Madam Chairwoman. Mr. 
Dimon was reminding me of the movie, ``Young Frankenstein.'' 
Every time they said, ``Frau Blucher,'' the horse would get 
scared. Every time they said, ``Jamie Dimon,'' it looks like 
the computers would get scared. Thank God we fixed that.
    One of the most remarkable things that I heard today was 
the first three people who spoke--and, again, thank you, all of 
you, for being here--with really some pride, I think, in being 
either sons of immigrants or immigrants themselves. I think, 
Mr. Dimon, you said that you were the grandson of Greek 
immigrants, and I think that, Ms. Fraser, you stated that you 
are an immigrant, and certainly your elegant English proved 
that. And then, Mr. Gordon, you stated that you were an 
immigrant, and your English proved that. And then, Mr. 
Moynihan, I was surprised that you broke the daisy chain with a 
name like, ``Moynihan.'' I knew Daniel Patrick Moynihan. He 
used to come to Fordham when Father Joe O'Hare was the 
president. I was a Jesuit Scholastic at the time, and they used 
to have great stories about being an Irishman.
    The reason I mention all that is around here, oftentimes 
you hear, sadly, ugly words like, ``illegal'' and ``anchor 
babies,'' and one Member even said, ``wetback,'' although he 
did walk it back, to be truthful. And I guess I look at 
immigrants the way that the Bible looks at immigrants. In 
Leviticus, if you recall, it says, ``When an alien lives among 
you, treat him as your native born because you, too, were 
immigrants in the land of Egypt,'' or in Matthew 25, ``When I 
was hungry, you gave me to eat. When I was thirsty, you gave me 
drink. When I was a stranger, you welcomed me.'' So once again, 
thank you for pointing that out, and thank you, again, Mr. 
Dimon. I think you said that hopefully, we will get back to 
public policy and do it right as Americans, and one of the 
things that you mentioned was immigration, and I hope that we 
do that right. So, thank you again.
    One of the things that I used to hear all the time about 
Dodd-Frank was how terrible it was. That was all the 
Republicans could talk about. They thought it was the spawn of 
Satan or something, and now, not a peep out of them. Now, we 
hear instead from the bankers saying, hey, it is working well. 
It worked well. We need to adjust it here and there on some of 
the leverage issues. I understand that, but it worked well. 
Now, of course, the spawn of Satan is environmental issues. And 
I believe deeply in ESG and that we have to have metrics, but 
now you hear them saying, oh, this is terrible, it is a 
horrible thing, but the reality is the environmental issue is 
important. So are the social and governance aspects. Now, it 
seems to me that you all do take them seriously. Why don't I 
ask, first, I believe, Mr. Moynihan, you take these things 
seriously in your bank, do you not?
    Mr. Moynihan. Yes, we do, and we publish an ESG report, 
like many of my colleagues do, and we have also, just to go 
into the metrics to measure, we have been working with the big 
four accounting firms, and 80 companies have signed on to 
voluntarily disclose what we think the relevant, constructive 
metrics are that take the best of what is out there and would 
make it simple so a company can actually do it. And that way, 
we can then stay with those oil companies to declare what they 
are going to do and help them make the transition that they 
would all declare.
    Mr. Vargas. Thank you. Does anyone think that environmental 
issues and ESG is not important? If you don't think it is 
important, speak up right now, please.
    [no response]
    Mr. Vargas. Let the record reflect that I didn't hear 
anyone speak up. See, the reality is that the climate is 
changing, and if you listen to some of the people, even 
Republicans--the leader of the World Food Program says there 
are 280 million people marching towards starvation. Why is 
this? Because of conflict and because of environmental change. 
Those are the two things. We have to take these things 
seriously, and I am glad that the banks are.
    I don't have a whole lot of time here, but I do want to 
talk about foreclosures. I am very concerned, because June 30th 
is when forbearance goes away as a Federal issue. And I heard 
some of your statements earlier, but I hope you do work with 
these customers because I think that the last time this 
happened, you didn't do a good job, and you got a black eye 
because of it, and you deserved it. But this time, I think you 
have an opportunity to work with people, because this wasn't 
their fault. This was a pandemic, for God's sakes. Work with 
these poor people to make sure that they can stay in their 
homes, and I think that this time you won't get that black eye. 
It will be just the opposite. You will get praised for it.
    So, again, my time is up. Thank you for, especially the 
immigration. Mr. Moynihan, do not break that daisy chain, for 
God's sakes. You should have continued it. Thank you.
    Chairwoman Waters. Thank you very much, Mr. Vargas. The 
gentleman from Ohio, Mr. Davidson, is now recognized for 5 
minutes.
    Mr. Davidson. I thank the chairwoman, I thank our 
colleagues, and I thank our witnesses. For our witnesses, I 
think, my, what an interesting time it must be to try to 
navigate these waters as CEOs of some of our nation's and, 
frankly, some of the globe's largest banks and financial 
institutions. What we have seen today is, essentially, the 
challenge of navigating this new woke heresy code. If you 
transgress it, you are forced to repent publicly. Who knows 
what remuneration or other penance you might be called to pay 
for the sins of people past, but be assured, there is no grace 
in this new woke heresy system that some of my colleagues are 
trying to foist upon our country.
    And the other challenge is you have a similar authoritarian 
regime in China, the next largest economy, trying to force 
their system on us. I will at least say that in China, they are 
completely hypocritical while they are engaged in horrendous 
acts against the Uyghurs. They act and pretend that there is a 
moral equivalence between China and the United States' conduct 
with respect to the treatment of ethnic minorities. Certainly, 
we can acknowledge sins of the past, but we should focus on the 
sins of the present. So, I appreciate the challenges that you 
all have to navigate so that you may be permitted to operate 
your businesses. The challenges are difficult just talking 
about the politics, but let's get to the actual policy.
    Mr. Scharf, in a recent stress test the Federal Reserve 
completed in December 2020, the large bank post-stress capital 
ratio was 9.6 percent, more than twice the regulatory minimum. 
Obviously, this is reassuring because it shows that large banks 
are adequately capitalized. However, do you think that it also 
shows that our current capital requirements may be out of 
balance and the Fed should revisit these issues? Do you believe 
that this approach could be impeding economic growth?
    Mr. Scharf. Congressman, I think there is no question that 
the banks have a substantial amount of excess capital at this 
point. The results that came out of the stress tests are 
obviously very idiosyncratic to what the individual assumptions 
are for that scenario as well as each of our positions, so I 
think it is hard to draw a conclusion from any one specific 
stress test. But I do think that when you look across the 
industry, there is an exceptional amount of capital in the 
system, also because of the restrictions that the G-SIBS have 
had more recently.
    Mr. Davidson. Thanks for your answer. I would love to spend 
more time on that, but I have a couple of other topics I want 
to get to. Mr. Dimon, last month, reports were circulating that 
JPMorgan was looking to offer a bitcoin fund for private wealth 
clients. I have been following your rhetoric on cryptocurrency. 
I have spoken to you in the past about cryptocurrency, but you 
have obviously walked back comments from saying bitcoin was a 
fraud to now saying it might not be your cup of tea, and that 
you do agree that regulations are needed, but you believe it is 
important for Congress to provide regulatory certainty so the 
firms, such as JPMorgan, can offer additional crypto products. 
Can you describe how your views have changed over the past few 
years on this important area and why Congress needs to provide 
regulatory clarity for this asset class?
    Mr. Dimon. Yes. They haven't changed that much, and put 
aside blockchain, and put aside stable coins, which is 
supported by assets. Something that is not supported by 
anything I do not believe has much value. My own personal 
advice to people is to stay away from it. That does not mean 
that clients don't want it, and it goes back to how you have to 
run a business. I don't smoke marijuana, but if you make it 
nationally legal, I am not going to stop our people from 
banking it, et cetera. I don't tell people how to spend their 
money, regardless of how I might personally feel about some of 
the items people might buy with their money.
    So we are debating, should we make it available in some 
way, in a safe way that people can buy and sell it and put it 
in the statement systems. But my own personal view is it is 
nothing like a fiat currency. It is nothing like gold. Buyer 
beware, and I do think that eventually the regulators who are a 
day late and a dollar short should be paying a lot more 
attention to the future, like payment for order flow, high-
frequency trading, cryptocurrency, and put a legal regulatory 
framework rather than a--
    Mr. Davidson. Thanks. Thank you so much. In the last few 
seconds I have, I would just ask that if any institutions 
represented here today have policies that prevent your donor-
advised fund donations to certain 501(c)(3) organizations based 
on political affiliation or causes they support, could you 
please coordinate with our office? We are trying to understand 
who is blocking people from using the donor-advised funds they 
established. And, frankly, my concerns aren't so much with the 
G-SIBS, though they are not abstinent. It is an issue broadly, 
and we will be working on a letter soon to address to the SEC. 
My time has expired, and I yield back.
    Chairwoman Waters. The gentleman from Illinois, Mr. Foster, 
is now recognized for 5 minutes.
    Mr. Foster. Thank you. Many of you were probably on shift 
10 years ago during the Tea Party default crisis of 2011 when 
the Federal debt suffered a ratings downgrade that was caused 
when newly-elected Republicans threatened to default on the 
U.S. debt by blocking an adjustment of the debt limit. The 
resulting panic cost the stock market over a trillion dollars 
and cost the average American over $10,000. It also delayed the 
economic recovery by somewhere between 6 months and a year.
    Normally, Treasury bonds are some of the safest instruments 
in the world because the U.S. has always paid its debts. Many 
other rates are pegged against U.S. Treasuries, including 
mortgage rates, which are fixed against the 10-year Treasury, 
and a default caused by failure to raise the debt ceiling would 
impact our housing market and hurt hardworking Americans in 
many ways. So, in the United States, we have this anomalous 
rule called the debt ceiling that does not occur in really any 
other advanced country and triggers an automatic default on 
Treasuries.
    There are troubling signs politically that we may be headed 
for another default crisis. And so my question to you is, how 
do you handle a default on U.S. Treasuries in your risk 
management and stress testing? Everyone always picks on you, 
Mr. Dimon, so I will let you go first. How do you manage such a 
risk, and what would you do the day after we defaulted on 
Treasuries?
    Mr. Dimon. I hope that we don't have to start doing a 
review of that again. It would be an unmitigated disaster. We 
spent about $50 million just investigating that issue, if I 
remember correctly, and I don't want to have to brush up on 
that. But there are some very complex questions which you shall 
have to answer. Do Treasuries cross default? Can the Federal 
Reserve buy defaulted Treasuries? What happens to defaulted 
Treasuries in pension plans, investment plans, bank accounts, 
accounting rules? It could cause, literally, a cascading 
catastrophe of unbelievable proportion and damage to America 
for 100 years.
    Mr. Foster. Thank you. I think that is a pretty good 
summary for just everyone who has looked at this. And, again, 
this is an instance where I think we need one of these red-flag 
rules that removes a gun from Congress' hands. And as you may 
be aware, there have been numerous proposals to permanently 
repeal this debt limit rule that triggers the automatic default 
by Members on both sides of the aisle, and, frankly, both 
parties have been guilty of weaponizing the default.
    When George Bush went and spent a lot of money on a war and 
then lowered taxes, the Democrats gave him a lot of grief over 
the necessity to raise the Federal debt when that happened, and 
the same thing has happened in a mirror image. And so, I think 
it is really important that people at this time, when it is not 
an emergency, just step back and say, yes, this is one of the 
good workmanlike fixes that we should put forward on a 
bipartisan basis, because the threat is so real and the 
benefits are near zero.
    Does anyone else have any specific comments, because the 
odds are not zero? You can see threats already happening from 
the other side of the aisle. Oh boy, we are going to go cause 
trouble over the debt ceiling. Do you actually have planning 
sessions where you say, what do we do, or is it just one of 
these things like planning for a nuclear war that is so bad, 
that you can't really realistically plan for it? Can any of you 
just indicate that actually this is part of your normal 
planning, dealing with a Federal default?
    Mr. Moynihan. We take a look at lots of tail scenarios, and 
this is one of them. But I think, as Mr. Dimon said, it is 
imponderable to think that we would get in the position, and I 
think the market often takes great comfort at the time this 
comes to fore when bipartisan people say it won't happen. But I 
think it is something to be very careful about, so we take it 
into account as a tail risk, and it would be very bad.
    Mr. Foster. Okay. Unfortunately, I think you should start 
taking the possibility more seriously, and maybe think about 
using some of your political muscle to encourage Members on 
both sides of the aisle to hold hands and jump on this, and 
just take this disaster scenario that really provides no 
benefit to our country, to just take it off the table once and 
for all. That was the point I wanted to make, and with that, I 
will yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Tennessee, Mr. Kustoff, is now recognized for 5 minutes.
    Mr. Kustoff. Thank you, Madam Chairwoman. Thank you for 
convening today's hearing, and I do thank the witnesses for 
appearing. Mr. Moynihan, there was a story that posted within 
the past few hours to the Wall Street Journal website, and I 
would like to read the headline, ``Biden Budget Set to Assume 
Capital Gains Tax Rate Increase Started in Late April.'' In 
other words, it would be retroactive, and it says Congress must 
still approve any rate changes and retroactive effective dates. 
My question, Mr. Moynihan, to you is, if a retroactive capital 
gains tax rate increase were to become a reality, would that 
have a negative effect on the economy? And if so, how?
    Mr. Moynihan. I think if you think about it from two sets 
of people, general investors, and the capital gains rate 
affects all investors, many investors invest even through 
mutual funds, et cetera, and capital gains that get reported 
out to them at a higher rate would affect them. But, 
importantly, for businesses, small businesses trading hands, 
retroactivity is sort of never in anybody's mindset, and I 
think it would have a bigger effect if, ``retroactive'' then 
could be planned for in the future. But in any case, those 
businesses are very worried about it, as we said earlier.
    Mr. Kustoff. Thank you, Mr. Moynihan. Ms. Fraser, could I 
ask you those same two questions as it relates to that Wall 
Street Journal story?
    Ms. Fraser. Thank you. I very much agree with Mr. Moynihan 
that retroactivity creates a lot of confusion, and I think 
unnecessary consternation for investors and for companies 
involved that should ideally be avoided. We are in a very low-
rate environment at the moment. We are seeing a lot of sabers, 
which includes retirees and pension funds and others, moving to 
longer-dated assets, and, therefore, a change in these bulls 
would have an impact on that at a time when the returns on 
people's savings are already low.
    Mr. Kustoff. Thank you, Ms. Fraser. Mr. Solomon, could I 
ask you those same two questions? Assuming that story is true 
and it became a reality, would it have a negative effect on the 
economy, and if so, how?
    Mr. Solomon. I think both of my colleagues have commented 
on this. Uncertainty obviously dampens growth and dampens 
activity, and so anything that is retroactive creates extra 
anxiety and extra uncertainty, and that would just slow down 
economic activity. And so, I think retroactivity is something 
to be very, very cautious about. And I do think a chilling of 
investment activity through higher capital gains tax is 
something to also think through carefully.
    Mr. Kustoff. Thank you very much. Mr. Dimon, could I ask 
you those same two questions?
    Mr. Dimon. I can't add anything of substance to what my 
colleagues have already said.
    Mr. Kustoff. If I could take it one step further, there has 
been talk of other tax hikes. In this hearing today, we have 
talked about a possible increase in corporate tax rates. If 
there were any tax rate increase this year as it relates to any 
taxes and they were retroactive--this relates to any tax 
increase--would that be negative as it relates to the economy?
    Mr. Dimon. Yes, but pretty much like my colleagues already 
described, even more so as it relates to business.
    Mr. Kustoff. Thank you. Mr. Gorman, could I ask you, 
please, those same two questions. Assuming that story is true, 
assuming that Congress were to enact retroactive capital gains 
tax rate hikes, would that be negative to the economy, and, if 
so, how?
    Mr. Gorman. Yes, because every business and every 
individual deserves to know what the tax regime is when they 
are making their decisions. So, by definition, in my view, any 
retroactive tax is unfair and not good for confidence and 
sentiment.
    Mr. Kustoff. Thank you, Mr. Gorman. Mr. Scharf, if I could 
ask you those same two questions in my remaining time?
    Mr. Scharf. I agree with what everyone has said, and I 
would just stress what Mr. Gorman just said. People make 
decisions based upon a set of rules that they believe are in 
place, and if you change that, it calls into question any 
future decisions that people make and could be quite harmful.
    Mr. Kustoff. Thank you, Mr. Scharf. Madam Chairwoman, with 
my remaining 16 seconds, I yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
New Jersey, Mr. Gottheimer, is now recognized for 5 minutes.
    Mr. Gottheimer. Thank you, Madam Chairwoman, and to our 
witnesses for being here today. I am very grateful. Nearly 50 
million Americans don't have a credit score and are left out of 
the traditional banking system. According to the Consumer 
Financial Protection Bureau (CFPB), Black and Hispanic adults 
are the most likely to lack credit scores. This absence of 
credit history limits opportunities to qualify for student 
loans, a small business credit line, or a mortgage to buy a 
home.
    Mr. Dimon, if I can start with you, sir, your bank utilizes 
information on your customers' banking activity to extend 
credit. Has it been successful in providing access to credit 
for more customers who may not otherwise be eligible, and what 
are some of the benefits and risks your institution has had to 
navigate in utilizing the source of information?
    Mr. Dimon. Yes. We have been using alternative sources of 
information to provide credit. It is a great way we all can 
work together. I don't know if you saw the article that all the 
banks are now sharing banking data with each other in a way to 
extend more credit to those who need it. And I think it is a 
great way we can all accomplish some of the same goals we all 
want.
    Mr. Gottheimer. It has been sort of reported of your bank's 
participation in Project REACh, the OCC program to increase 
access to credit for underserved communities, as you were 
referencing. JPMorgan will be working with other banks to 
exchange data to further identify creditworthy customers. What 
more do you think we can be doing to expand credit access for 
underserved communities?
    Mr. Dimon. We are going to be using a lot of alternative 
data, like do you pay your rent on time, to, I am almost going 
to call it reverse discrimination, seek out those with good 
credit who are not in the normal credit system, including 
immigrants who are here, who have credit histories in their 
home countries. And so, there are a lot of ways to do this, and 
we completely applaud Project REACh.
    Mr. Gottheimer. Thank you, sir. Mr. Moynihan, your bank has 
more than 23,000 employees in New York City and New Jersey. 
Every day, we are hearing more and more about families fleeing 
from New York and New Jersey, especially because of 
affordability, therefore, moving to low-cost States like Texas 
and Florida. Do you support making it more affordable to live 
and work in New Jersey and New York or reinstating the State 
and Local Tax (SALT) deduction?
    Mr. Moynihan. I think the SALT has had an impact that has 
been well-written. I think our job as banks is to continue to 
support the people who are in those communities. Interestingly 
enough, if you start to see the fact that, alone, we are 
bringing back probably 6,000 kids who have never really resided 
in New York City over the last 3 years, who are now coming back 
to work, I think you will see a lot of positive momentum in 
some of the housing in New York just in terms of filling up 
those apartments that were empty. So, we have to do it through 
our lending. We have to do it through our employment. But also 
it would be helpful, I think, if the tax rates were more 
normalized.
    Mr. Gottheimer. Thank you, sir. Mr. Solomon, I know that 
Goldman Sachs does not have debts that are actually involved 
with trading cryptocurrencies, and I know your bank can't own 
or trade cryptocurrencies for regulatory reasons, but you have 
many clients who are coming to you for advice on investing 
digital assets. How do you help them navigate the risks of 
cryptocurrencies like bitcoin?
    Mr. Solomon. I appreciate the question, Congressman. You 
heard a little bit from Jamie on this. There is a lot here, and 
it is complex. There is no question that both institutions and 
individuals are looking for exposure to bitcoin. We are trying 
to provide information to them around the potential asset 
class. Like Jamie, when you talk about cryptocurrencies, like 
bitcoin, specifically, I am extremely cautious. There is no 
question that if lots of people believe in something, it can 
sustain value for a period of time, but the use cases are 
relatively unclear, and the regulatory and government oversight 
is still relatively unclear. And so, there is a lot of work to 
do around this.
    I think, ``buyer beware'' is absolutely the right thing to 
think about, but there is no question there is significant 
interest, and so we are trying to help our clients and track it 
accordingly.
    Mr. Gottheimer. Thank you so much. Madam Chairwoman, I 
yield back. Thank you so much.
    Chairwoman Waters. Thank you very much. The gentleman from 
North Carolina, Mr. Budd, is now recognized for 5 minutes.
    Mr. Budd. I thank the Chair, and I thank, again, our guests 
for being here. I have long supported the services that banks 
provide to our communities, and the great work that you all did 
during the pandemic supporting consumers and small businesses 
is a prime example.
    That is why it concerns me when I see financial 
institutions really shift their focus and move to carrying out 
political and social agendas instead of just providing capital 
and liquidity to consumers and to businesses. As an industry, I 
really believe that you should be focused on being a good 
neighbor by providing greater value to your consumers and your 
shareholders.
    I want to ask you all a ``yes'' or ``no'' question, and I 
will go around. As your banks begin to shift your business 
decisions and include more or environmental, social, and 
governance (ESG) goals, are any of you concerned that this may 
cause affected industries, and as a Federal Firearms Licensee 
(FFL), I think of legal firearms, and I want to add coal, oil, 
et cetera, that have thousands and hundreds of thousands of 
jobs in this country. Are you concerned that with more ESG in 
banking, that they can lose investors, forcing these businesses 
to move operations overseas, or even close and create job 
losses here in the United States? And, Mr. Moynihan, as a North 
Carolinian, I will start with you.
    Mr. Moynihan. Mr. Budd, I think a perfect example is what 
we did with Duke Power in our backyard there. We basically, 
because of their commitments to provide more clean power and 
our commitments to buy more clean power, we put up a large 
installation, which now other people can purchase from. I think 
these commitments are consistent with good business and growth 
in the companies. And Duke Power, a major company that has all 
sorts of sources in their environment, can help make a contract 
come to life. It is a great business opportunity, and I think 
we all have to have judgment at the pace of the transition to 
make this happen.
    Mr. Budd. Thank you. And I want to just make sure we 
understand the question as I continue. Do you think focusing 
not just on providing capital to businesses, but including ESG, 
can hurt certain businesses, ultimately causing job losses in 
the U.S., Ms. Fraser?
    Ms. Fraser. I think we are seeing some industries which are 
reducing down in size, for sure. We are seeing a reduction in 
the size of the coal sector, for example, as other industries 
in the energy sector grow, so I think that will be part of the 
natural transition. The important piece, which I think we have 
all talked about, is that we support our clients in making the 
transition, making sure that there is a good balance between 
that energy policy and the move to greener and decarbonized 
technologies, and that most important piece is we get that 
balance right.
    Mr. Budd. Thank you. Mr. Solomon?
    Mr. Solomon. I think there is no question that as capital 
cases, new opportunities, it has an effect on some legacy 
businesses. I do think the important thing to recognize is, as 
we direct capital toward new technologies, there are jobs that 
are created with that, and that is one place America has always 
led. And I am sure we will lead here when you look at the 
transition that so many companies and so many different 
industry are focused on.
    So, I think there is an enormous job creation opportunity 
in that also. It is obviously a balance. It is a transition. It 
is not going to happen tomorrow. It is going to take a long 
time. In my opinion, we will be financing oil and gas for quite 
a long time, but there are new technologies that will have an 
impact. They will create jobs, and that is a great opportunity 
for us, too.
    Mr. Budd. Mr. Gorman, I am going to give you a quick pass 
so I can use my time on a different subject.
    Mr. Moynihan, back to you. Like many of my colleagues, and 
Mr. Gottheimer from New Jersey mentioned this earlier, I am 
concerned that we are ceding our position as the world leader 
in global digital finance to countries like China. America has 
always been quick to embrace technology and innovation in the 
banking space, but recently, due to a lack of regulatory 
clarity around digital assets, we are seeing innovation go 
offshore to Singapore, Switzerland, and Japan.
    One area of innovation I am particularly interested in is 
decentralized finance (DeFi). Your bank issued a report earlier 
this year talking about that. But as DeFi innovation continues 
to build, how can banks engage with this technology to offer 
better products and services to their customers?
    Mr. Moynihan. The report you are probably talking about is 
from a research group, which is independent of what we tell 
them to do. As we operate the bank, we have, I think, 60 
patents on blockchain. We are heavily involved in figuring out 
that technology and whether it really has a purpose. More than 
60 percent of our consumer activity goes digital today. We are 
driving digital usage. When you get to the new types of things, 
like FTEs and things like that, we will study them and look at 
them. When you get to the question my colleagues answered about 
holding digital assets, our clients are asking us, trying to 
figure out how to facilitate their decision to buy digital 
assets, especially on the institutional side. Those are debates 
going on. But all that is part of, as you said, the ingenuity, 
and I think this country is the most innovative country in the 
world, and has been and will continue to be, and our industries 
are driving it.
    Mr. Budd. Thank you. I yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Florida, Mr. Lawson, is now recognized for 5 minutes.
    Mr. Lawson. Thank you, Madam Chairwoman. I would like to 
welcome all of you all to the committee.
    Mr. Dimon, I would like to thank you for your response to 
Congressman Green's concern, because it is very hard to make up 
for some of the sins of the past. But to meet with Congressman 
Green to talk about these issues is just tremendous.
    I would like to say to Mr. Moynihan that 43 years ago, I 
got a $10,000 loan from what was then NationsBank to go into 
business. And like Mr. Williams from Texas, I have been in 
business ever since then. And that is the importance of having 
a good relationship.
    Now, to the panel, there are many people in this country 
who struggle to access financial services in areas without 
significant access to bank branches, for example, Gaston 
County, one of the areas that I represent in Florida. And 
Gaston was deemed deeply affected, meaning that the County had 
10 fewer branches in 2012, and lost at least 50 of them by 
2017. Rural communities are deeply affected by branch closures, 
and typically have higher poverty rates, lower median income, 
and higher shares of their population with less than a high 
school degree, and higher shares of their population who are 
African American, relative to all rural counties. Can each of 
you please provide a quick overview of what your bank strategy 
is to increase access to financial services and branch presence 
in rural communities such as Gaston, one of the communities 
that I represent?
    Chairwoman Waters. Who is your question directed to, Mr. 
Lawson?
    Mr. Lawson. To everyone on the panel. My time is running 
out, and I have another question, so I want to make sure--
    Chairwoman Waters. Who do you want to start with?
    Mr. Lawson. Okay.
    Chairwoman Waters. Start with one of them.
    Mr. Lawson. Okay. I will start with Mr. Dimon.
    Mr. Dimon. We are always adjusting our fleet of branches. 
It is a normal thing to do. We always make sure we are serving 
communities. About 25 or 30 percent of our branches are in LMI 
neighborhoods, and of all the new branches, and we are opening 
branches all the time, including maybe 500 or 600 in just the 
last couple of years alone, about 25 or 30 percent will be in 
LMI or majority-minority neighborhoods. And rural, we are not 
very big in rural. We are looking at what we can do there. We 
are going to study some versions of how we can extend into 
rural banks, and some of the banks here do more than we do in 
the rural communities. Digital will also help fix that problem.
    Mr. Lawson. Okay. Let me go to Bank of America [inaudible].
    Mr. Moynihan. Congressman Lawson, yes, similar. We continue 
to fine-tune our branches. So, as we move branches around, we 
basically make sure that about 30 percent are in LMI 
neighborhoods, and that has been true all the way through time. 
Interestingly enough, when we looked at the rural areas at the 
beginning of the decade--2010, 2011--we sold 500 or 600 
branches to small community banks to make them stronger, and so 
on the idea that we may not want to have them open, but yet we 
sold the deposits to those companies and they consolidated them 
in areas that we didn't think we could serve as effectively as 
them, so we made those companies stronger.
    And, again, I challenge our team like Jamie has. We touch, 
within a reasonable distance, about 80-plus percent of the U.S. 
population. We have challenged them to how we get coverage to 
other parts, and the digital platform is very capable of doing 
that. We have 400,000 customers in States in which we don't 
even have branches, so it is doable.
    Mr. Lawson. Okay. Thank you, and I am going to try to get 
this other question in. Yesterday, it was suggested that short-
term lenders should not be allowed to provide their products 
which help working people, and I get a lot of them. And I 
believe that banks have moved away from serving that market, 
which includes many of my constituents. For proof, all we need 
to do is look at the FDIC's Small Dollar Loan Pilot Program, 
saying that we can do these small loans, which charge 36 
percent or less. What has happened? Anyone who would like to 
comment on that, because it affects small lending. Can anyone 
comment on that?
    [no response]
    Chairwoman Waters. The time has expired. We are going to 
move on. If you have an answer, please send it in writing to 
Mr. Lawson.
    The gentleman from Ohio, Mr. Gonzalez, is now recognized 
for 5 minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman, and 
thank you to our CEOs for being on today, and, quickly, a big 
thank you for all that you did to help us weather the storm 
during the pandemic. I think it was all-hands-on-deck across 
the country, and you all certainly pulled your weight. And I 
know we are all appreciative.
    I am going to stay on the Special Purpose Acquisition 
Company (SPAC) retail investor topic, and, Mr. Solomon, I am 
going to focus primarily on questions to you, because we have 
chatted about this. We had a hearing earlier this week on the 
initial public offering (IPO) market, traditional direct 
listing SPACs. Obviously, we have seen a lot come public in the 
last year, and I think that is good for two reasons: one, it 
means retail investors have access to more investment options; 
and two, the fact that we have three solid options for 
companies to come public, and it creates important options and 
competition for these companies to raise money in the public 
markets. I think these are good. Of course, none of these 
vehicles are perfect, and SPACs, in particular, I believe could 
benefit from clear disclosures so retailers can better 
understand the incentives of the sponsor, IPO investors, and 
pipe participants as these facts go through their life cycle. 
SEC Chair Gensler yesterday suggested that this is an area the 
SEC is looking at, which I think is appropriate.
    My question to you, Mr. Solomon, is, in your view, where do 
you believe the disclosure regime with respect to SPACs could 
be improved such that retail investors have the right 
information to understand what is necessary to make a fully-
informed investment decision?
    Mr. Solomon. I appreciate the question, Congressman, and 
you and I have talked a little bit about this. I think there is 
an opportunity for more plain language disclosure so that 
investors really understand the sponsorship economics in plain, 
clear language, and they also understand the process. There are 
also differences around the use of projections of the De-
SPACing process. As private capital funds the De-SPACing for a 
number of these, I think there are also opportunities there to 
think carefully about how disclosure works in the typical IPO 
process, and how the liability structure works in those 
processes versus how it might work in a SPAC process. And so, 
there is a lot of discussion about that.
    I know that Chairman Gensler is giving it attention, and I 
assume that there will continue to be evolution around this, to 
support the continuing use of SPACs as a capital markets 
innovation.
    Mr. Gonzalez of Ohio. Thank you. And then, specifically, do 
you think that it should be disclosed if the sponsor syndicates 
the risk capital, because I know that is happening, but it is 
not currently disclosed. Do you think that is something we 
should be disclosing?
    Mr. Solomon. It would depend on how and when it is done, 
but, yes, particularly if it is done up front. More 
transparency rather than less transparency in the context of 
something like that, I think is correct and important. And 
especially if it is being done up front or it is committed to, 
I think it should be disclosed.
    Mr. Gonzalez of Ohio. Great. And then I am going to shift 
to Archegos and total return swaps. As you know, Archegos had 
greater than 10 percent exposure to the economics of various 
firms, but was able to avoid the disclosures because they 
acquired via total return swaps, meaning they didn't own the 
shares outright. That damage was largely contained that day, 
but I think it does beg the question, two things I think it 
really focuses on.
    First, how many other firms are out there running similar 
strategies in your view? Do you think that is sort of a 
systemic problem? And second, do you think we should adjust the 
disclosure regime with respect to swaps and other instruments 
that allow clones, in essence, to mask the percent exposure and 
the leverage that they have on their balance sheet?
    Mr. Solomon. I think there are certainly lots of 
significant institutional players that have exposure to 
equities through total return swaps. I think what was unusual 
here was the concentration levels, particularly in certain 
securities where the market cap of those securities was moving 
very, very quickly for a variety of other ancillary reasons. I 
do think, and I touched on this a little bit earlier, that a 
more modern disclosure structure around total return swaps and 
other forms of equity ownership is something that I know people 
are looking at, and I would advocate that some focus there is 
probably a good thing for us to think about as we go forward.
    Mr. Gonzalez of Ohio. Great. I am going to switch to 
infrastructure for a quick second. The debate we are talking 
about is largely about, how do we pay for the infrastructure, 
and what kind of infrastructure? One thing that I think we 
should be entertaining in a serious way is the notion of an 
infrastructure bank similar what has happened in Australia and 
the EU and parts of Canada. Just a quick question for Mr. 
Solomon and Mr. Dimon, do you believe there would be an 
appetite from institutional clients to help fund American 
infrastructure via a well-structured infrastructure bank or 
similar mechanism?
    Mr. Solomon. I will go first, and then Jamie can certainly 
comment. There is an enormous amount of private capital that is 
in a position to be dedicated toward infrastructure. Thinking 
about ways, whether through an infrastructure bank or other 
public and private partnerships, to unleash that would be quite 
productive.
    Mr. Gonzalez of Ohio. Thank you. I see my time is up. 
Maybe, we will get your answer in writing, Mr. Dimon, and thank 
you. And I yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Guam, Mr. San Nicholas, is now recognized for 5 minutes.
    Mr. San Nicolas. Thank you, Madam Chairwoman, and thank you 
to all of our guests on the panel. Our Pacific Territories are 
America's gateway to our Asian markets. Our Atlantic 
Territories are America's gateway to our Latin American 
markets. Our combined GDP in our Territories is greater than 13 
U.S. States. Our combined population in our Territories is 
greater than 20 U.S. States. And yet, we have no meaningful 
presence from any of the G-SIBs on this panel in any of our 
Territories.
    And so, while we listen to all of this effort to expand 
access to our banking system, to expand American influence in 
international arenas, and as I hear $30 billion over 5 years, 
$1.25 billion over 5 years, $50 million to MDIs, $150 million 
to CDFIs, as I listen to quotes such as an obligation to ensure 
that everyone can participate in the American Dream, or that we 
have a collective interest in opportunity for all, I sit here 
as a Representative of our Territories witnessing a lack of G-
SIB investment in our Territories, and a lack in exploring the 
opportunities that our Territories present for our very strong 
financial system to use our Territorial capacities to reach out 
into our international markets.
    I wanted to very specifically ask all of the members of the 
panel if they can share what their vision is for expanding into 
our Territories, establishing a meaningful presence, and 
capitalizing on the opportunities that we can bring to this 
country? Let's go ahead and start with you, Mr. Dimon.
    Mr. Dimon. I think you raise a very important subject. This 
may be an area where the extra capital liquidity and other 
costs of being a G-SIB make it prohibitive to want to do that, 
but I am sympathetic to your concern. We certainly will look at 
what you are talking about and see if we can be helpful in any 
way. It may be something that is better done by a community 
bank, but we would be happy to sit down with you and discuss 
it.
    Mr. San Nicolas. On that subject, I have G-SIBs at the 
table who have very strong investments in international markets 
like Hong Kong or Singapore, even exploring Taiwan now that the 
Hong Kong option is kind of questionable. And yet, I don't hear 
of any efforts to really explore Guam, for example, as an 
option when we are literally 3 to 5 hours away from every major 
metropolitan area in Asia. And that is why I think that there 
is a lack of awareness perhaps, but definitely a lack of 
investment, and I wanted to definitely put that on the table 
today.
    Ms. Fraser, can you share some insight?
    Ms. Fraser. Yes, we do serve, not in a huge way, but we do 
serve clients in many of the Territories, and Puerto Rico is an 
example of one where we have an important presence and are a 
major bank there. And that is both for corporates primarily 
that we work with and commercial banking clients. But through 
digital capabilities now, the ability to serve customers in the 
Territories will be in an opportunity going forward, and we are 
very happy to spend some time exploring that further with your 
office.
    Mr. San Nicolas. I just wanted to share that Citibank 
closed its branch at the earlier part of the century, so that 
is something that I would very much like to have revisited.
    Mr. Gorman?
    Mr. Gorman. We are predominantly a capital markets and 
wealth asset management business, so we are in places like Hong 
Kong because we serve enormous capital markets range of clients 
across of all of Asia. So, Guam is probably not at the scale 
where we would put operations, just being completely honest 
about it, for those kinds of businesses that we're in. We are 
not in the traditional retail branch-based banking businesses 
or the credit card or much of the consumer lending businesses.
    Mr. San Nicolas. But your businesses that you do in Hong 
Kong, that is not just strictly limited to Hong Kong proper, 
correct? Hong Kong is a staging point for Asia proper, yes?
    Mr. Gorman. That is right. Hong Kong, New York, Tokyo, and 
London are the major staging points around the world.
    Mr. San Nicolas. And so, Guam may not necessarily have the 
population per se within its vicinity to be a market, but 
definitely as a staging point, similar to Hong Kong, it is 
something that should be looked at.
    Mr. Moynihan?
    Mr. Moynihan. Representative San Nicolas, I think you asked 
us this question in 2019, with a pandemic focus. But like the 
others, I think we should take a look and see what is doable in 
the context of business that we conduct, and also, is there a 
way to do it in partnership with other people to help build 
them up to supply local services better than we could? So, you 
asked the question before, and we will take a look at it.
    Mr. San Nicolas. Thank you very much. I have the same 
question for Mr. Scharf and Mr. Solomon, but my time is running 
out. But I would like to just reiterate that the reason why I 
am on this committee is to make sure our Territories are not 
forgotten in the largest financial system in the world, that is 
a part of our country. Thank you so much, Madam Chairwoman, and 
I yield back.
    Chairwoman Waters. You are welcome. Thank you. The 
gentleman from Tennessee, Mr. Rose, is now recognized for 5 
minutes.
    Mr. Rose. Thank you, Madam Chairwoman, and Ranking Member 
McHenry, and thank you to our witnesses for being here and for 
staying engaged throughout this hearing. Before I get into my 
questioning, I do want to thank you for the work that you, and 
all of our financial institutions did throughout the last 15 
months to ensure that families stayed in their homes and 
businesses kept their doors open. The swift rollout of the 
Paycheck Protection Program is further proof that our private 
sector remains more efficient than our Federal Government.
    However, today, I want to discuss something several of my 
other colleagues have touched on, which is capitalism versus 
stakeholder or woke capitalism. I find it unfortunate that each 
of your firms feel comfortable picking winners and losers based 
on a political litmus test. A topic we continue to debate in 
this committee is that of equity versus equality. I am of the 
belief that everyone deserves an equal opportunity for success, 
but it is not the place of government nor of private industry 
to guarantee an equally-successful outcome.
    As I have read through your testimonies, and the reporting 
documents of your companies, ``equity'' continues to be a 
popular word. In fact, Mr. Solomon, you are quoted as saying, 
``We must stand up and support organizations dedicated to the 
fight for a more just and equitable society; not equal, but 
equitable.'' In just a few words, Mr. Solomon, how does Goldman 
Sachs define, ``equity?''
    Mr. Solomon. I appreciate the question, Congressman. It is 
a very broad question, and I am not sure that I understand in 
exactly what context you are asking it. But I, too, like you, 
am an American who believes deeply that everyone deserves an 
opportunity to have success, and I think one of the things that 
we can do with our business is to help create opportunities. 
When I think about our 10,000 Small Businesses Program and the 
commitment we have made over the last 12 years to invest in 
small businesses, provide education, and provide capital and 
resources, all of that is helping small businesses to bootstrap 
up, and employees to grow and have success.
    And so, when we serve a lot of big companies and big 
institutions around the world, there are ways that we can use 
our expertise and our platform to help others come along and 
share more in the context of opportunity. A society that, as 
you state, gives great opportunity to all, is a society that we 
certainly want to be a part of.
    Mr. Rose. Thank you. I appreciate that. And speaking of 
winners and losers, several of my colleagues have talked about 
this today, but I cannot stress enough the importance of 
providing access to capital for all legal businesses. Mr. 
Dimon, you, for instance, are on the record saying that you 
have no interest in bitcoin, but JPMorgan Chase will allow 
clients to invest in bitcoin because, in your words, you, 
``don't tell clients what to do.'' What if your client wants to 
invest in a fossil fuel company or a private prison?
    Mr. Dimon. We don't tell the clients what to do. We do make 
our own decisions about what we want to do based upon our risk 
assessments and things like that. So, our clients are 
completely free to buy bonds of a private prison. We do not 
tell them what to do. But even cryptocurrencies, we want to set 
it up in a way we think is safe and proper for them, and we are 
still working on that.
    Mr. Rose. So what I am hearing, I think, is that you have 
no problem investing in or seeing your clients invest in 
cryptocurrencies that are not only volatile, but currently 
being abused by cybercriminals, but legal businesses, such as 
fossil fuel companies, is where you decided to draw the line.
    Mr. Dimon. No, you are totally wrong. We have been quite 
clear that there will be fossil fuel companies for decades to 
come, and we finance them and we are proud of it, and we are 
working with them on trying to reduce their CO2. We have 
certainly not cut back on that, and we have a very good 
relationship with them. We have cut back in certain areas 
because we think the risk, legal or regulatory, is too high to 
do the business there.
    Mr. Rose. And finally, Mr. Dimon, earlier you pointed out, 
in Mr. Luetkemeyer's questioning, about dealing with China, 
that when it comes to investing overseas, you will follow the 
laws of the United States, and that if the U.S. does not allow 
certain investments, JPMorgan would certainly follow the law. I 
think it is interesting that when it comes to investing in 
China, JPMorgan is very interested in following the law, but 
here in the U.S., you are going well above and beyond to not do 
services with legally-operating businesses. With that, Madam 
Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much. The gentlewoman 
from Iowa, Mrs. Axne, is now recognized for 5 minutes.
    Mrs. Axne. Thank you, Madam Chairwoman, and thank you to 
the witnesses for being here. I want to change course a bit 
here and talk about housing. We all know that housing demand 
has been very strong, and prices have gone up a lot this past 
year. The concern here is that is exacerbating the problem that 
we had before, which was that homeowners who normally had 
higher incomes already were doing well, had their home, higher 
incomes, but younger people and those with less income and less 
wealth opportunity weren't able to get into a home that they 
could afford.
    And I will tell you what, I hear from businesses that have 
trouble attracting employees because of this. Just last week, I 
was down visiting a local manufacturer, Wellman Dynamics, which 
has people driving 70 miles to work because there is no housing 
in that community, and we know this hurts the economy. 
Productivity is certainly affected as well. Mr. Scharf, I want 
to thank you for having 14,000 of your employees living in my 
district, and I am wondering what your opinion is on agreeing 
or disagreeing that affordable housing can help us create 
growth?
    Mr. Scharf. Congresswoman, there's no question that 
affordable housing--first of all, I think it is something we 
should all be concerned with, and we should all be figuring out 
what we can do to provide more financing and more opportunity, 
which is what really we all can do, and you can do that in a 
variety of ways. You can do it by making sure you are lending 
into lower-dollar loans. You can help people with down payment 
dollar amounts. You can help them with closing costs. Those are 
things that we are all very, very focused on. And I think the 
more leverage you create in that, in terms of all of us 
participating in programs like that, the bigger impact we can 
have.
    Mrs. Axne. Thank you for that, and I couldn't agree with 
you more. That leads me to my next question. It's good to see 
you, Mr. Dimon, and I am just wondering what you think may be 
some of the ways that we could address these shortages with 
inequality in housing, both in terms of policy that we can be 
taking here in Congress, but, of course, as Mr. Scharf 
mentioned, the banks can be taking to decrease that inequity?
    Mr. Dimon. The first thing you can do is, if you speak to 
builders, local zoning laws and regulations hold them back and 
make things more costly. But the other thing that Congress 
could do, which I think is bipartisan, is that the mortgage 
laws for underwriting mortgages got so strict and so 
restrictive for origination and servicing, that if they were 
simplified without creating any additional risk, it would 
reduce the cost of mortgages and make far more affordable 
mortgages available to people, particularly between $200,000 
and $300,000, and I have been talking about that for years. It 
has not been done. It is one of those things that needs to be 
recalibrated. The sooner you do it, I think it would be a huge 
boost to the American economy, and to lower-paid individuals, 
and smaller homes.
    Mrs. Axne. That is perfect. I will talk to the committee 
about that. What are some of the things the banks can be doing 
differently?
    Mr. Dimon. Most of these banks have already doubled down on 
their affordable housing, and are trying to get the loans out 
there, and are working with more CDFIs. And CDFIs, a lot of 
them do a great job on this, by the way, and you all have 
already given them a lot more money, which they need to deploy 
now, and we can help them deploy it.
    Mrs. Axne. Okay. I would be curious to talk about that. You 
mentioned homes in the $200,000 to $300,000 range. Even in 
Iowa, though, that is above our affordable housing. And 
unfortunately, between 2009 and 2019, the amount of mortgages 
that were made for $150,000 or less dropped by 25 percent, and 
those over $150,000 grew by nearly 70 percent. I appreciate you 
bringing up the $200,000 to $300,000 because for a lot of 
markets in this country, that is entry-level. Can we get more 
support from banks? We need more support to help us get to 
these lower, smaller-dollar mortgages. And we can work on the 
paperwork thing, but can we get some support so that we know 
you can be there for us to help with this?
    Mr. Dimon. I think I should have said, it is all lower 
mortgages, including under $100,000. Those costs are 
astronomical, and more clarity around FHA. A lot of the banks 
are very coarse in FHA because of the legal and regulatory 
risk, and they would be doing a lot more of it, which is very 
good for that segment, if those things were clarified.
    Mrs. Axne. Okay. Any other comments? Mr. Moynihan, do you 
have any thoughts on how we might address this?
    Mr. Moynihan. Chairwoman Waters asked us this question, and 
we all responded to her, and there is a falloff. I think the 
FHA/VA rules and regulations in the last crisis, as a company 
that had to deal with that, we have all restricted our 
activities, point blank, in that area, and I think it would be 
helpful if those rules were clarified and simplified so that it 
would be attractive enough to do. Right now, it is not very 
attractive.
    Chairwoman Waters. Thank you very much.
    Mrs. Axne. Well, we have our marching orders. Thank you.
    Chairwoman Waters. The gentlelady's time has expired. The 
gentleman from Indiana, Mr. Hollingsworth, is now recognized 
for 5 minutes.
    Mr. Hollingsworth. Good afternoon. I appreciate everyone 
being here. I think a lot has been said about what banks can 
do, but I want to talk a little bit about what banks have done 
throughout the course of this pandemic and the lifeline that 
they have served to countless businesses and American families. 
Banks have helped raise $2.2 trillion in corporate bonds and 
$339 billion in equity in the last year. Large banks have 
modified $330 billion in loans, about 6 percent of all 
commercial loan balances in this country, including payment 
deferrals, fee waivers, and forbearances. Banks deployed almost 
$539 billion in commercial loans during March of 2020 alone at 
a time when the Federal Government had not yet stood up its 
coronavirus response, facilities or programs, or financial 
support. Those are really big numbers, and they made a big 
difference to a lot of those businesses that are operating 
across this country because of that.
    But I also want to talk about other numbers that made a big 
difference: 720,000 employees is what I calculated between each 
of your firms, and I know figuratively, not literally, sitting 
behind you are those hundreds of thousands of employees who 
showed up every single day to help American businesses, and to 
help American families get through this crisis.
    I remember last March and April in D.C., when a lot of 
people were talking about, if bank branches shut down, would 
there be runs on banks? If capital raises stopped, how would 
businesses be able to get through this? If loan processing 
ceased because we couldn't get people into call centers, how 
would mortgages still function? None of that came to pass. None 
of that happened because 720,000 Americans showed up every 
single day. They got up and they went to work, whether that was 
going to work at a branch, whether it was going to work at a 
call center, or, frankly, going to work at their kitchen table. 
Your employees, like millions of other Americans who work in 
financial services, made sure that they showed up for America.
    This didn't become a financial crisis because when 
Americans called those bank employees, they picked up the 
phone. When Americans were at a drive-through, those bank 
employees were on the other side of the glass. When Americans 
opened their apps, those apps connected, and when Americans 
needed a loan, bank employees were willing to email them the 
paperwork to help get that started. Millions of businesses are 
alive today because of your frontline employees, millions of 
Americans can put food on the table because of your employees, 
and America's economy is growing robustly in part because of 
your employees.
    So, to the tens of thousands of those employees who work in 
Indiana's 9th District, and the millions of Americans who work 
in financial services all across this country, I want you to 
know you were not found wanting in this crisis. We are deeply 
grateful that America's economy is recovering and was able to 
function throughout the crisis because of the work you did 
every single day.
    All that being said, I want to turn our attention to a few 
questions. I want to ask about the divergent trends we see 
between deposits and loan growth. Commercial deposits have been 
blowing into financial institutions since last year. Between 
February 2020 and February 2021, commercial deposits grew by 
$3.2 trillion compared with just, and I use that very 
generously, ``just'' $800 billion in growth over the previous 
12-month period.
    I wanted to talk to Mr. Moynihan about this. Holding excess 
bank deposits in a weak lending environment can accompany some 
negative impacts, especially in terms of the regulatory 
requirements that you face. I was hoping that you might speak a 
little bit to the Supplementary Leverage Ration (SLR) and your 
decisions related to deposits, and whether you think the SLR 
capital requirements are at the right levels going into this 
period, and if there any changes that you think should be made 
to SLR to accommodate an environment where bank deposits seem 
to be growing robustly, but loan demand seems to be very tepid.
    Mr. Moynihan. Thank you, number one, for recognizing all of 
the teammates that we all represent who did go to work every 
day, and opened those branches, and kept the economy going, and 
did such a great job. So, thank you for recognizing that.
    On the question of SLR, the industry has made many 
suggestions over the years that completely riskless assets may 
not have a place. And what happened was when the deposits took 
off and we went out and bought Treasuries and left overnight 
cash in the Fed, we probably went from $100 billion to $300 or 
$400 billion overnight in the Fed. You were still holding 
capital against that, and that doesn't quite make sense and can 
work against the idea of injecting monetary support into the 
economy. So, we raised the questions, and then the Fed made an 
accommodation which, frankly, didn't make a difference. We were 
above the levels for our company, but they made an 
accommodation to help ease conditions. But now, after the 
crisis, I think it is important to look at it again and make 
sure to calibrate it correctly because it has a governing 
effect on the ability to do what you are saying.
    Mr. Hollingsworth. Great. Thank you so much. My time is up, 
so I will yield back, Madam Chairwoman.
    Chairwoman Waters. Thank you very much. The gentleman from 
Illinois, Mr. Casten, is now recognized for 5 minutes.
    Mr. Casten. Thank you, Madam Chairwoman. And thank you to 
our witnesses. I want to start by apologizing to our witnesses. 
I am awfully troubled that some of my colleagues across the 
aisle, who are so outspoken in their opposition to socialism 
and the Belt and Road Initiative seem to be so predisposed to 
policies that would direct our banks to invest in politically-
preferred industries or else. I apologize. I encourage you all 
to get copies of, ``The Wealth of Nations'' and send it to them 
if they get those letters, and remind them how capitalism 
works.
    Mr. Scharf, the last time you were here, we spoke about 
your exposure to the oil and gas sector and potential write-
offs. You subsequently posted your first quarterly loss since 
2008, and I think some of the reports I have seen suggest that 
over half of the past due loans were in the fossil fuel sector. 
Just, ``yes'' or ``no,'' is your total exposure to the fossil 
fuel sector bigger or smaller than it was when we spoke a year 
ago?
    Mr. Scharf. Congressman, I am not sure of the answer. I 
would be surprised if it were that different.
    Mr. Casten. Okay. So if it has been written down, would 
that imply that you have, because there is the total value, 
right, and then there is the total value of the initial 
holdings?
    Mr. Scharf. Yes, but there is a difference between adding 
losses and actually writing it down. It is certainly something 
we can get back to you on.
    Mr. Casten. Okay. I would be interested in understanding 
that.
    Mr. Gorman, you said in your prepared testimony that 
climate change considerations are integrated into the firm's 
risk management and governance processes. You have advanced 
diligence process [inaudible] sectors. Are you satisfied that 
you have a consistent methodology for calculating the carbon 
impact of your investments that is used by all the portfolio 
companies and businesses you invest in and by your competitors 
so that you have a consistent reporting standard?
    Mr. Gorman. No, I think, clearly, this is a space that is 
evolving. It is still in its infancy. Various government 
bodies, international bodies, and banks are trying to sort out 
the right methodology. Clearly, the Sustainability Accounting 
Standards Board (SASB) is involved in this. So, no, we are in 
the early days.
    Mr. Casten. Okay. As you put these processes that you have, 
however imperfect they are, in place, have you ever written up 
or down your carbon exposure as you would with a piece of debt? 
If the utilization factor changes in ways that you look at the 
security from a financial perspective, have you ever changed 
it, or is that just at the point of investment you do that 
diligence?
    Mr. Gorman. I don't think we have. To the best of my 
knowledge, we have not. If I am wrong on that, I will certainly 
let you know.
    Mr. Casten. Okay. Mr. Solomon, you made similar statements 
that you have been carbon-neutral since 2015, will be net zero, 
and I think these statements are terrific. I am not saying it 
as criticism. The same questions as Mr. Gorman, are you 
satisfied that you have a consistent methodology, and have you 
ever written up or down the greenhouse gas exposure?
    Mr. Solomon. With respect to carbon-neutral, that is in our 
buildings, that is taking our buildings. I am not aware of any 
material up and down, and I would echo what Mr. Gorman said 
just about the process. The process is new. It is not 
consistent, it is not clear, and so it is still an evolving 
space.
    Mr. Casten. Okay. Mr. Dimon, you said in your opening 
remarks that abandoning fossil fuels is not an option right 
now. Over the suite of the investments you have in the fossil 
fuel space, you have senior debt, you have various levels of 
subordinated debt, and presumably some equity. Setting aside 
the total exposure, have you taken any steps to shift the risk 
exposure in your portfolio to the space? In other words, have 
you shifted more towards more senior secured vehicles?
    Mr. Dimon. I do not believe so, no.
    Mr. Casten. Is it reasonable to assume that if you saw a 
risk coming, you might take measures to protect your investment 
and move to a more senior position?
    Mr. Dimon. You certainly should assume that.
    Mr. Casten. Mr. Moynihan, your bank is one of the largest 
financers of fossil energy, I believe, of the folks here. Same 
question as Mr. Dimon, are you changing your risk exposure?
    Mr. Moynihan. We look at individual credits based on their 
prospects, and so we have not, to my knowledge, changed any 
material exposure in our risk today. But in terms of the 
discussion, we continue to look at the portfolios and figure 
out how you can measure the types of things you are talking 
about, and that work has been going on.
    Mr. Casten. Okay. I am about out of time, but today, I 
introduced the Climate Change Financial Risk Act with Senator 
Schatz, that is designed to do the scenario testing in our 
financial sector. In my view, you all are crazily smart. You 
are extremely sophisticated. I have high confidence that your 
banks are probably going to be fine because you are the most 
sophisticated, and when you see these risks coming, you will 
find ways to offload them to other people in the financial 
sector who are not. We have an obligation on this committee, to 
our prudential regulators, of making sure that as cash moves 
around the system, as we transition to a cleaner economy, we 
are protected, and I hope you will support us in our efforts to 
make sure that we maintain a robust financial system. Thank 
you, and I yield back.
    Chairwoman Waters. Thank you. The gentleman from Wisconsin, 
Mr. Steil, is now recognized for 5 minutes.
    Mr. Steil. Thank you, Madam Chairwoman. I think we all look 
forward to the day where we are back in person taking advantage 
of the axis of vaccines. It has been a long time staring at 
Webex. I think it has been for most of us on this, but let's 
dive right in, if I can.
    Mr. Solomon, many people in our community are deeply 
concerned about rising inflation, and last month, we recorded 
inflation rates at nearly a 13-year high at 4.2 percent. 
Families across the country, in particular, in places like 
Janesville or Kenosha, Wisconsin, are seeing and feeling the 
effects of rising costs every day. Food, gas, vehicles, 
everything seems to be getting more expensive. Some of that is 
tied to the supply chain issues we are seeing. Some of it is 
probably tied to inflationary pressures. A member of your 
research team recently described price data from the last few 
weeks as, ``pretty alarming from an inflation perspective.'' 
And among other things, he pointed to some of Washington's 
fiscal choices as a major driver of recent inflation. In fact, 
we spent trillions of dollars, and some are looking to spend 
even more in a fiscal blowout. And while some of these fiscal 
effects are time-limited, some will have a persistent impact, I 
believe, on our economy, in part, by shifting the public 
inflation expectation. Your research team has also expressed 
concerns about falling into this, ``self-perpetuating cycle.''
    Your research department published a report earlier this 
year titled, ``Fiscal Policy: The Next Round,'' which correctly 
noted that much of the COVID-era spending and the current Biden 
spending proposals weren't fully paid for, so what we are 
looking at is elevated spending and more debt. Would you agree 
that the spending imposes an inflationary risk, and, following 
on that, what would you be doing with your firm to prepare 
yourself for a potential inflationary environment?
    Mr. Solomon. I appreciate the question. There is certainly 
a lot of focus on inflation, and I am finding it a topic of 
discussion with most CEOs. As I talk to people and make my way 
around, there is no question that the current combination of 
monetary policy and fiscal spending, combined with a re-
acceleration of the economy coming out of the pandemic, is 
leading to some inflation. As we discussed earlier in the 
hearing, there is a big debate about how much of it is 
transitory or how much of it will be sticky and will last. I 
think it is hard to tell.
    I certainly think that we have spent a lot of time thinking 
about it from a risk management perspective, always focused on 
safety and soundness, and managing the institution, just being 
more aware of that scenario where suddenly monetary policy to 
slow down and overheating economy raises interest rates more 
quickly than market participants expect, is certainly something 
that is more possible than we might have expected pre-pandemic. 
And so, we obviously think about that and focus on the risk and 
the implications that would have on asset prices and markets.
    But I think this is very fluid, and I think we all have to 
continue to monitor closely, and obviously, decisions we make 
as we go forward will have an impact on all this, and the pace 
of the economic recovery will have an impact on all this.
    Mr. Steil. Thank you. Thank you very much, Mr. Solomon. If 
I can jump over to you, Mr. Dimon, with a similar question, 
knowing your significant retail operation, how potential 
inflationary pressures would impact your consumers. Could you 
comment on that?
    Mr. Dimon. Sure. The consumer, fortunately, is in great 
shape. They have a lot of cash and capability. Their jobs are 
coming back. Their asset prices are good. Their home prices are 
good. And the good news is loans are down because they have 
money. They are not down because of a normal thing where they 
are trying to pay off debt in a recession. Inflation, I think, 
is coming. The only question is, how much and how quickly? We 
have never seen fiscal stimulus like this, other than World War 
II, and half of that money was spent on the war.
    And also, in 2008 and 2009, there was huge de-leveraging in 
the years after 2008 and 2009, fundamentally different. If 
there is real inflation, the people who get hurt the most are 
the lower paid, and because it is gas and it is food, and that 
causes certain social disruption, and that, we should be very, 
very conscious about.
    Inflation is not a good thing. It was at 1.6 percent. I 
don't know what was so bad about that. If it goes to 2.5 
percent, I don't think it is that important. It is more than 
that today, but if it hits 4 percent on a sustained basis, it 
will cause disruption for the lower-paid individuals in 
America.
    Mr. Steil. I appreciate you sharing that because I 
completely agree with you. The mismatch of both the fiscal 
policy and our monetary policy, I have significant concerns 
that we are going to see inflationary pressure, and it will 
function like a tax on all Americans, in particular, some of 
the lower-income earners as they see real cost increases and a 
decrease in their standard of living. I appreciate everyone's 
time here today. In observance of the clock, Madam Chairwoman, 
I yield back.
    Chairwoman Waters. The gentlewoman from Massachusetts, Ms. 
Pressley, is now recognized for 5 minutes.
    Ms. Pressley. Thank you, Madam Chairwoman. Panelists, as 
industry experts, I want to ask your opinion on several 
hypothetical questions to help me better understand how your 
bank gathers information and assesses risk before extending a 
loan. Mr. Moynihan, if my friend Joe started a business, would 
Bank of America provide him with a loan? Please answer with, 
``yes,'' ``no,'' or, ``I would need more information.''
    Mr. Moynihan. I would need more information to underwrite 
credit.
    Ms. Pressley. Let's assume his financials are in good 
order, Mr. Moynihan. Would your bank then make the loan, or are 
there other risk factors that you would need to take into 
consideration? ``Yes,'' ``no,'' or, ``I would need more 
information.''
    Mr. Moynihan. We look at a series of risk factors, 
including the person, their credit, if it is a small business 
loan, and the person who is starting a business. It is probably 
going to be based more on the individual. Credit score is 
another factor, as we talked about earlier.
    Ms. Pressley. Reclaiming my time, I will take that as you 
need more information. So, Mr. Moynihan, please answer with, 
``yes,'' ``no,'' or, ``I would need more information'' for the 
following two questions. Imagine a former employee of the 
company told you that Joe dismissed more than half of his 
workforce, including the CFO, for misconduct. Would your bank 
lend to Joe? ``Yes,'' ``no,'' or, ``I would need more 
information.''
    Mr. Moynihan. We would need more information to understand 
the situation.
    Ms. Pressley. Thank you. Imagine you heard from a customer 
that Joe lost sensitive data and 75 percent of his company's 
earnings due to a cybersecurity breach. Would your bank lend to 
Joe if you heard this rumor?
    Mr. Moynihan. We would need more information. If you are 
referring to a specific case, we can talk about that.
    Ms. Pressley. Thank you. Mr. Moynihan, you just expressed 
to me that you will not put your bank's money on the line if 
you were made aware of these red flags or if you are kept in 
the dark about these risk factors. The hypocrisy I see here is 
unbelievable. While you expect consumers and businesses to 
disclose this important information about risk when they apply 
for a loan, you withhold the same information about your 
megabank from the public and from Congress. The Federal 
Government and the public provide you with many benefits 
despite the systemic risks your institutions pose and the 
limited information you all share with us on a voluntary basis. 
This must end. This is unacceptable.
    My bill, the Greater Supervision in Banking Act of 2021, 
would fix this by requiring your companies to publicly disclose 
cases of misconduct, your approach to protecting consumer data, 
climate risk, employee compensation, and support for CDFIs and 
MDIs. Allowing the public to make informed decisions and 
Congress to conduct oversight cannot be optional or 
inconsistent. Thank you, Chairwoman Waters, for holding this 
hearing and continuing to prioritize our role in oversight 
here. I yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Texas, Mr. Gooden, is now recognized for 5 minutes.
    [no response]
    Chairwoman Waters. Is Mr. Gooden on the platform?
    [no response]
    Chairwoman Waters. If not, the gentleman from South 
Carolina, Mr. Timmons, is now recognized for 5 minutes.
    Mr. Timmons. Thank you, Madam Chairwoman, and I want to 
thank each of the witnesses for taking time out of their busy 
schedules to come before the committee today and answer our 
questions.
    Yesterday, in the Senate Banking Committee, you all said 
you believe capitalism is the economic system that produces the 
best economic outcomes. ``Capitalism'' is defined essentially 
as conducting business in such a way as to earn a return on 
invested capital. But my question is, can your banks process a 
$500 loan for a term of 90 days for a new customer for a $45 
fee? That is the amount of revenue that would be earned on such 
a loan at 36 percent APR. And obviously, if one such loan 
defaults, it would wipe out all of the revenue for 10 other 
such loans that are being paid when due. So, tell me how 
financial services operators could feasibly provide this kind 
of short-term, small-dollar loan on a sustainable basis?
    Mr. Dimon, you said yesterday that you would support a 36 
percent cap on all loans pending a review. If such lending 
cannot be done profitably, what is the sustainable source of 
access to credit for the millions of customers who require this 
kind of short-term, small-dollar loan?
    Mr. Dimon. You are asking a great question. It does cost 
money to produce a loan and underwrite it, and if that cost 
goes into APR and you include that in the 36 percent, it is 
impossible to do loans like that and make a profit. That is 
precisely why we don't do it, and there is no safe harbor. It 
doesn't affect us, so I am not going to fight that bill, but I 
do think it does push out some institutions. There are a lot of 
non-banks, and shadow banks, and payday lenders, and all who do 
that business, but they don't bear the legal and regulatory 
risk that we do.
    Mr. Timmons. Sure, and I appreciate that answer. Ms. 
Fraser, you said yesterday that you supported the spirit of the 
proposal, but want to make sure that there are no unintended 
consequences. I think it is fairly obvious there will be many 
unintended consequences for short-term, small-dollar loans. In 
your opinion, would these types of loans be possible with a 
blanket 36 percent APR rate cap?
    Ms. Fraser. As we said yesterday, we certainly don't charge 
a customer 36 percent, but I worry about the imposition of flat 
caps. They often have unintended consequences. I have seen this 
in many other countries where they have limitations on access 
to credit, and they actually end up almost hurting the 
customers they are trying to help more than they aid them. So, 
I think these types of rules require very careful consideration 
because of those factors. We have seen it elsewhere. You have 
to be very careful.
    Mr. Timmons. Thank you, Ms. Fraser. Mr. Moynihan, 
companies, including your firm, face increasing risk of 
cybersecurity attacks. In addition, banking agencies recognize 
that cybersecurity risk from third-party vendors is also 
increasing, and Federal banking agencies recently provided 
guidance with respect to practices that banks can utilize to 
reduce vendor risk and improve operations. Can you please speak 
to how your firm approaches cybersecurity risk management, and 
discuss any improvements you have made or plan to make to your 
risk management frameworks, both in general and, in particular, 
with respect to vendor risk management?
    Mr. Moynihan. If you go back and think about the last 
decade or so, this issue has gone from something that was 
relatively contained to something that we spend a billion 
dollars a year on, and have 2,500 to 3,000 people working on 
every day. They are very good. We also work with the industry, 
so over the last three Administrations, we have worked closely 
with industry to create industry-sharing networks, ``The Ark,'' 
it is called. FSAIC, I think, is the acronym. These are all 
institutions to share information.
    So, we work very hard on this. There is a White Paper 
coming out from a group called Business, which studies this 
across all industries, and that White Paper is something that 
we would propose represents the interests of the financial 
services sector about what more can be done. So, we work very 
hard at making sure we manage this risk well, and we continue 
to learn more about it every day, and we continue to make 
suggestions and improve the practices.
    Mr. Timmons. Sure. I really appreciate that. I actually 
graduated from NYU with a Master's in cybersecurity just last 
week, and many of your firms had some of your executives or 
team members in that program. So, I just appreciate you all 
making it a priority to learn from the past and make sure that 
you are doing everything you can to secure our data. And with 
that, Madam Chairwoman, I yield back. Thank you.
    Chairwoman Waters. Thank you very much. This committee will 
stand in recess for 5 minutes.
    [brief recess]
    Chairwoman Waters. The committee will come to order. The 
gentleman from New York, Mr. Torres, is now recognized for 5 
minutes.
    Mr. Torres. Thank you, Madam Chairwoman. I have a question 
for the CEO of Morgan Stanley. How much did you sustain in 
losses from the collapse of Archegos?
    Mr. Gorman. $911 million.
    Mr. Torres. And Bill Hwang, the head of Archegos, pleaded 
guilty to insider trading about a decade ago. Were you aware of 
his history of insider trading before entering into a credit 
swap contract with him?
    Mr. Gorman. I was not personally, but as a company, we were 
aware of that.
    Mr. Torres. Were you aware of all of the other credit swap 
contracts he had any entered into, and the lack of 
diversification in those contracts, and the extent of his 
overleveraging?
    Mr. Gorman. No, there was not clarity and transparency 
around his positions across the street.
    Mr. Torres. So, given the lack of transparency and clarity 
surrounding the credit risk of Archegos, would you support an 
SEC rule requiring disclosure of a significant economic 
interest in a company, regardless of the form that interest 
might take?
    Mr. Gorman. I think it is in everybody's best interest for 
adequate disclosure. I know Chairman Gensler is going to be 
looking at this, and I would certainly work with him on it.
    Mr. Torres. Is that a ``yes?'' I am not clear on the 
answer.
    Mr. Gorman. Clearly, the lack of disclosure here hurt. 
Fortunately, it didn't hurt taxpayers. It didn't hurt 
investors. It hurt Hwang and his family office, and it hurt the 
banks that were prime brokers to him. But generally, yes, I 
think this is something that should be figured out and the SEC 
is focused on it.
    Mr. Torres. The largest banks are earning more and more 
profits than ever before, but appear to be making fewer and 
fewer loans to consumers and small businesses. Citi had record 
profits in the first quarter, yet lending is down by 10 
percent. Bank of America saw doubling of profits in the first 
quarter, yet lending is down by 14 percent. My questions are 
specifically for the CEOs of Bank of America and Citi. Can you 
briefly explain to me the dramatic decline in lending in the 
midst of record quarterly profits?
    Mr. Moynihan. Why don't I start? Our loans are down largely 
through a series of factors. One of them was obviously for 
small business loans, $35 billion of PPP loans that replaced 
loan credit. For middle-market companies, they are borrowing a 
percentage of their revolvers, 1 through 30, 5/30, 7 percent to 
27 percent. That is tens of billions of dollars of loans. And 
then, consumers paid off their credit cards. We had $90 billion 
of credit cards before the crisis, and we would still want all 
of those loans obviously, because that is the business were in. 
So, it was demand-side driven by the markets.
    The good news is, as the economy has healed and as final 
demands come back in, and spending by consumers and businesses 
is growing, you have seen the loan balances start to grow this 
quarter, and we will see where we end up. That has been a 
hopeful sign. But when you think about it, to give you just a 
snapshot, in May of 2021, we committed $1.1 billion in 
commercial lines of credit for small businesses. That is up 30 
percent from where it was in May 2019. And you will see loan 
balances grow as companies reopen and need the lines of credit 
and start to access their lines.
    Mr. Torres. I am going to actually move on just in the 
interest of time. I have a question specifically about New York 
City. The government of New York City draws more than half of 
its revenues from real estate, particularly commercial real 
estate, and the vitality of the New York City economy, as well 
as the viability of New York City transit, depends heavily on 
foot traffic from those commuting to and from the office. My 
question to each of the CEOs is, do you plan to send most or 
all of your employees back to the office 5 days a week, and, if 
so, when? Please provide an exact timeline. Let's start with 
JPMorgan.
    Mr. Dimon. Congressman, I would say we don't have a long-
term plan, but we are aiming for everyone to be in half of the 
time starting around mid-July, and we are asking people to come 
in now, and get comfortable. It is very safe. No one is being 
forced to do anything. We want everyone to be vaccinated. We 
are not requiring that yet. It is quite safe. And a lot of us 
have been coming in every day since last June.
    Mr. Torres. Bank of America?
    Mr. Moynihan. Yes. We have started to bring vaccinated 
employees back. We collected the information voluntarily from 
them. We have about 50,000 teammates who put the information in 
and gave us the ability to call them back and have them work. 
In New York City, in particular, that is starting to take 
place. The top levels will be back in the office effective June 
1st, and our goal is, by after Labor Day, to effectively be 
back to sort of where we were in January of 2020.
    Mr. Torres. Citigroup?
    Ms. Fraser. Thank you. I am in the office in New York 
myself today. We are expecting to get 30 percent of our people 
back in the office in America by early July, with a view of 50 
percent being back in September. And we are going to take it 
from there, depending on the guidance of social distancing and 
other factors.
    Mr. Torres. I see my time has expired.
    Chairwoman Waters. Thank you very much. The gentleman from 
Texas, Mr. Taylor, is now recognized for 5 minutes.
    Mr. Taylor. Thank you, Madam Chairwoman. I appreciate you 
calling this hearing. And I appreciate the witnesses taking the 
time to be here with us. I wanted to talk about inflation and 
overheating. We have had a couple of allusions to that, and as 
I go around Texas' 3rd Congressional District, I talk to auto 
dealers that have 10 percent of the new cars they usually have 
on the lot. I talked to a steel manufacturer who has watched 
steel prices go from $500 a ton to $1,600 a ton. Gas prices 
from 1 year ago are up 70 percent. Lumber prices are up from 1 
year ago, 300 percent, coffee up 45 percent, cotton prices up 
43 percent, sugar prices up 54 percent, and propane prices up 
20 percent.
    Do any of you CEOs--and if you believe this, just put your 
hand in the air, and I would be happy to call on you--think the 
economy is not overheating? If you disagree with the statement, 
``the economy is overheating,'' just put your hand in the air. 
We would love to hear your thoughts on that because you all, 
collectively, are overseeing trillions of dollars of the U.S. 
economy. Yes, Mr. Gorman, please?
    Mr. Gorman. I don't think the economy is overheating. The 
economy is obviously making a dramatic recovery from a very 
depressed state a year-and-a-quarter ago. We have record-low 
interest rates and record-high fiscal stimulus. But I don't see 
that yet as saying the economy is overheating. I just think it 
is growing faster than it was, and it is a function of the 
recovery we are under.
    Mr. Taylor. Okay. And, Mr. Gorman, thank you for 
volunteering that. I appreciate that perspective. Do you think 
in Washington, Congress should dump a couple more trillion 
dollars into the economy and government spending to kind of get 
things back where they need to be?
    Mr. Gorman. No, and that is obviously a separate question 
of where are we right now and where are we heading. Clearly, 
with the global economic recovery and the amount of stimulus so 
far, I would be very cautious about further elevated levels of 
stimulus. At some point, the combination of low interest rates, 
extra stimulus, and synchronized recovery becomes a problem. We 
are not there yet, which is why I said, ``no'' to the 
overheating.
    Mr. Taylor. Okay. And Mr. Solomon, I think we have spoken 
about this, talking about some research that your bank did on 
Goldman Sachs, and I actually referenced it in a previous 
hearing, talking about fiscal stimulus as a percentage of slack 
in the economy. I think your bank's analysis, Goldman's 
analysis, was that last year, the Federal Government spent 4 
times slack. Already this year, we have spent 6 times slack. Do 
you think the prescription for Washington is to dump a few more 
trillion dollars in the economy to get things going?
    Mr. Solomon. My response to that would be very similar to 
Mr. Gorman's response. I think at some point, the loose 
monetary policy and the fiscal stimulus, combined with an 
accelerated recovery, will create issues. I don't think we are 
overheating yet, I agree with that, but I would be very 
cautious about putting additional stimulus in at this point in 
time.
    Mr. Taylor. Mr. Dimon, I saw you nodding your head. What 
are your thoughts?
    Mr. Dimon. I am right with them, and using Mr. Gorman's 
heating analogy, we are heating up. We are not boiling yet, but 
we are putting a lot more fuel on the fire, and my own view is 
we will get to the boiling point. And I don't know that for a 
fact. I am not betting that, but I just think with $6 trillion 
in stimulus, all the QE recovery from the pandemic, the balance 
sheets, which are raring to go, I think there is a good chance 
to see overheating sometime in 2022.
    Mr. Taylor. And, Mr. Dimon, earlier you mentioned that you 
were concerned about inflation. I think you were very sure that 
inflation was coming. Are you changing the composition of your 
balance sheet in anticipation of inflation coming?
    Mr. Dimon. We protect ourselves against multiple scenarios, 
and that is one of the scenarios, yes.
    Mr. Taylor. Okay. So you are anticipating that, and then 
financially putting your money where your mouth is in terms of 
changing your asset-liability composition in anticipation.
    Mr. Dimon. I will refer to the 10-Q, but it shows you that 
we have done some of that, yes.
    Mr. Taylor. Okay. I don't mean to put you on the spot, sir. 
I appreciate that. And then, Mr. Moynihan, do you want to 
comment on reacting to inflation?
    Mr. Moynihan. Sure. If you look at it straightforwardly, as 
my colleagues said, the economy this quarter is expected to be 
as big as it was in 2019 before the pandemic. The growth rate 
projected forward is 7 percent, 3 times the rate the economy is 
projected to grow, and the interest rate environment is much 
more accommodative. That sets up a robust growth in the second 
half and beyond, as we all spoke about, and also the very tough 
discussion about whether it is inflation or not and whether 
that will be permanent. So, I think we have to be very vigilant 
right now or else we can find ourselves past the point of 
pulling back.
    Mr. Taylor. Thank you, Mr. Moynihan. And I would just 
caution my colleagues to think about next steps for Washington 
to not dump trillions of dollars into the economy 
unnecessarily. I yield back.
    Chairwoman Waters. Thank you very much. The gentlewoman 
from Michigan, Ms. Tlaib, is now recognized for 5 minutes.
    Ms. Tlaib. Thank you, Madam Chairwoman. Thank you so much 
for this hearing. I just want to ask my own yes-or-no question. 
Are you all familiar with the term, ``environmental racism?'' I 
will start with Chase Bank.
    Mr. Dimon. Vaguely.
    Ms. Tlaib. Are you familiar with environmental racism?
    Mr. Dimon. I said vaguely, yes.
    Ms. Tlaib. Vaguely. Okay. How about you, Citigroup? Ms. 
Fraser?
    Ms. Fraser. The same, only vaguely. I don't know the 
specific definition of it.
    Ms. Tlaib. That is fine. And how about you, Mr. Gorman?
    Mr. Gorman. No, I am not.
    Ms. Tlaib. Morgan Stanley isn't familiar. Okay. How about 
Bank of America? Are you all familiar with the term, 
``environmental racism?''
    Mr. Moynihan. Vaguely familiar.
    Ms. Tlaib. Yes. Wells Fargo, do you know what environmental 
racism is, yes or no?
    Mr. Scharf. I am not familiar, Congresswoman.
    Ms. Tlaib. That is unfortunate. How about you, Mr. Solomon, 
Goldman Sachs?
    Mr. Solomon. Vaguely familiar, but not specifically.
    Ms. Tlaib. I want you all to know that environmental racism 
showed its face in a deadly way during the pandemic in my 
district, where more of my Black neighbors died at a higher 
rate from COVID than any other community in Michigan, even 
though our Black population in Michigan is less than 15 
percent, due to the preexisting health conditions that come 
from living in the backyard of corporate polluters financed by 
your banks. When it comes to racial justice, I see many of you 
having these commitments to diversify your executive ranks. 
Good. But I think the American people really, truly want to 
know, what about the actions that are needed to invest in our 
communities, like mine, that you all profited off of, that left 
us with more pollution, decay, and poverty?
    You all should know and be familiar with the term, 
``environmental racism,'' because for generations, Black, 
Brown, and Indigenous communities have seen the fossil fuel 
corporations use your banks to finance and construct oil and 
gas refineries, petrochemical plants, and pipeline projects. 
These polluting projects haven't been built in wealthy 
neighborhoods, as you all know. They have been built on land in 
frontline communities of color, and have contaminated our air, 
and polluted our water for generations to come.
    JPMorgan Chase, Citibank, Wells Fargo, and Bank of America, 
all of you collectively financed $977 billion worth of fossil 
fuel projects and infrastructure since the Paris Agreement. 
That includes financing Marathon Petroleum right in my 
backyard. All of your institutions financed Marathon, but Mr 
Scharf, Wells Fargo led the pack, providing nearly $7.2 billion 
in financing Marathon over the past 5 years.
    I want you all to know that Marathon has fought to 
dismantle fuel efficiency standards tooth and nail, and their 
refineries pollute frontline communities in my district and 
across the country: 48217, the neighborhood I represent with 
Marathon there, is the most polluted ZIP Code in the State of 
Michigan, and it is a majority Black community. It has left us 
with high rates of asthma and cancer. Countless families have 
lost their loved ones too soon because they were forced to 
breathe the polluted air your banks financed.
    So, I want to ask you all, one by one, starting with Chase 
Bank, Mr. Dimon, do you live near a refinery? Yes or no, do you 
live near an oil refinery?
    Mr. Dimon. I do not.
    Ms. Tlaib. How about you, Ms. Fraser? Do you live near an 
oil refinery?
    Ms. Fraser. No, I do not.
    Ms. Tlaib. Mr. Gorman, do you live near an oil refinery?
    Mr. Gorman. No.
    Ms. Tlaib. Mr. Moynihan, do you live near a refinery?
    Mr. Moynihan. I do not.
    Ms. Tlaib. How about you, Mr. Scharf? Do you have a 
Marathon oil refinery in your backyard?
    Mr. Scharf. No, I don't.
    Ms. Tlaib. How about you, Mr. Solomon?
    Mr. Solomon. No, I don't.
    Ms. Tlaib. So, I need all of you to address racial equity. 
What that means is understanding environmental racism and 
reversing decades of it, and halting the damage that you all 
continue to invest in. Please, I dare you all to come to my 
district. I offer this even to my fellow Members of Congress. 
Come and smell what my neighbors smell, breathe what they 
breathe. Tell me then whether or not you will continue 
financing for oil refineries, because right now, it is morally 
unacceptable. If you truly believe in racial justice, then you 
would make sure that you and your team understand environmental 
racism in our country. That has been a term used by Black and 
Brown communities since the 1970s and 1980s.
    So with that, I just ask, again, Chairwoman Waters, let's 
please follow up and make sure these folks have the information 
they need to understand this term. That is critically important 
to communities they are directly impacting in a negative way. 
And with that, I yield back.
    Chairwoman Waters. Thank you very much, Ms. Tlaib. The 
gentleman from Georgia, Mr. Loudermilk, is now recognized for 5 
minutes.
    Mr. Loudermilk. Thank you, Madam Chairwoman. When all of 
you testified to this committee in 2019, I asked questions 
about cybersecurity. Since we had that hearing, we have 
experienced the Colonial Pipeline data breach, which everyone 
realizes shut down the gasoline supply for much of the country 
for several days, and yet we have had another major Federal 
Government data breach since that time as well called the 
SolarWinds hack. Mr. Dimon, what is the latest on the 
cybersecurity front, and is your bank using artificial 
intelligence to help protect and address cybersecurity threats?
    Mr. Dimon. I think all of the banks here have spent a 
tremendous amount of time and money. In the financial services, 
we have been worried. This is not new. Maybe the pipeline 
problem is going to open other people's eyes. It is not opening 
ours. As Brian Moynihan mentioned, we have a financial services 
group that works with utilities to focus on this. We spend, 
directly, $600 million or $700 million on cyber. I think the 
financial companies are close to the defense companies. We are 
probably way ahead a lot of other people. And also, someone had 
mentioned before third parties. Most of us do a lot of 
oversight of third parties and demand a lot from them about how 
they run their affairs to try to minimize this.
    Having said that, it is a huge risk to the system. Outside 
nuclear proliferation, this is the biggest risk to the system. 
It is not just what we do. It is what government entities do. 
It is what we get exchanges to do. It is what communication 
companies do, which I think are pretty good at it. It is what 
the utilities do, which I think some are pretty good at it. And 
it is what the government, and when Secretary Mnuchin was 
there, he did an excellent job getting all of the government 
together, from the security groups, the military, Homeland 
Security, working with the banks and the regulators to have a 
common view, and make sure we are partnering the way we can. 
And there is still a lot more you can do with the government.
    Mr. Loudermilk. What about artificial intelligence (AI)? Is 
there any advancement made in using AI to address these issues?
    Mr. Dimon. We use an extensive amount of AI, risk of fraud, 
and outside vendors to capture as much as we can. As you know, 
most of these companies will get attacked a million times a 
day, but they have not been able to break through in any 
material way. But honestly, the fear of that is very high.
    Mr. Loudermilk. We appreciate the efforts there, and I 
think the fear of it being high is what is going to keep us a 
little more vigilant. But I do think Congress must enact 
national data security and breach notification standard to help 
address this problem across a multiple States and Territories.
    Another issue is that demand for loans is incredibly weak 
right now. In fact, the amount of loans as a share of deposits 
across the banking industry is at record lows. Our economy is 
expanding after an extreme contraction, so you would think 
there would be a robust demand for credit. But the way I see 
it, and several others do, is that the one of the main reasons 
for the weak demand for loans is that we have put trillions of 
dollars of taxpayers' money in stimulus payments into people's 
pockets. So, everyday Americans are getting funds from the 
government instead of through loans from the private sector.
    Mr. Moynihan, why is the demand for loans so low, and what 
needs to be done to return lending to the markets to normal?
    Mr. Moynihan. I think when you look at the small 
businesses, the PPP program, which was done well by the 
government and by institutions on the screen here by delivering 
$500 billion, $600 billion of what the total was, was very 
important, but that also squeezed out private sector loan 
demand, as you are saying. When you think about middle-market 
companies--one of your colleagues earlier talked about the auto 
dealers having 10 cars on the lot--we have auto dealer clients. 
Their lines of credit are way down because they just don't have 
cars to put on the lot.
    So, I think there is a lot of demand there. It is building. 
I think you will see the loan balances start to grow in this 
part of the cycle. But because of the uniqueness of the 
situation, I don't think we can equate it to other down drafts, 
because the shutdown of the economy stopped all of the loan 
demand overnight for a whole bunch of types of businesses. It 
is now coming back, and I think as you see those move in the 
second half of the year, you will see that start to come back 
through. And the amount of cash was multiples of it before, so 
the deposits went up faster.
    Using the loan deposit balance, I think, is a marker from a 
different era right now. It was handled completely differently, 
but I think it will start to come back and sync over time.
    Mr. Loudermilk. Okay. I think so as well, and I would like 
to see the economy grow itself organically and get back to 
where the free market is doing this and not dumping trillions 
more dollars into the economy, just to shore up and to let it 
grow.
    On another topic, the new FDIC Chief Information Officer 
recently stated that the best way to bank the underbanked is 
through technology, and I agree with that, and I believe 
policymakers should embrace FinTech. Ms. Fraser, what does 
FinTech provide to consumers and businesses within credit 
files? I am out of time, so I will just submit some questions 
for the record, and with that, Madam Chairwoman, I yield back.
    Chairwoman Waters. Thank you very much. The gentlewoman 
from North Carolina, Ms. Adams, is now recognized for 5 
minutes.
    [no response]
    Chairwoman Waters. Ms. Adams, can you hear me?
    [no response]
    Chairwoman Waters. Okay. We are going to move on. The 
gentleman from Massachusetts, Mr. Lynch, is now recognized for 
5 minutes.
    [no response]
    Chairwoman Waters. If not, the gentlewoman from 
Pennsylvania, Ms. Dean, is now recognized for 5 minutes.
    Ms. Dean. Thank you, Madam Chairwoman. Are you able to hear 
me?
    Chairwoman Waters. Yes, I can hear you very well.
    Ms. Dean. Thank you very, very much. I, too, want to say to 
all of the leaders here today testifying, thank you for your 
work during this pandemic. And when I say that, I really 
recognize as well your officers, your lenders, and your 
employees, who worked tirelessly in partnership with us and the 
legislation that we passed in the first year in a bipartisan 
way, to make sure that we got capital and relief out to 
customers, to businesses, to small businesses, and beyond. So, 
I do thank you. I am particularly thinking of a lender in my 
area, who was working around the clock to make sure that people 
were getting PPP.
    I would like to pivot to an area that I care desperately 
about, and I bet all of you do, too. This year has started once 
again with tragically heartbreaking and unacceptable amounts of 
gun violence in our country. Reported by the New York Times, 
there have been 232 mass shootings between January the 1st and 
May 26th of this year, over 100 more than that same period in 
2020. Yesterday, as you all saw, nine more dead in a mass 
shooting in San Jose, California.
    Financial institutions, your banks, are in the business of 
profits, as you should be, for yourselves and for your 
shareholders, but you are also in the business of managing 
risk, so I would like to ask you a few questions about how your 
banks are managing high-risk industries like gun manufacturers 
and companies that are a threat to your reputation, to your 
shareholders, to your investors, and to your customers and 
employees.
    First, let me commend Citigroup and Bank of America for 
recognizing that ending gun violence in this country is, I 
would suggest, a decision, but also a command of corporate 
social responsibility.
    Ms. Fraser, Citigroup's U.S. commercial firearms policy 
requires retail sector clients to abide by several best 
practices. Can you describe them briefly to us and what 
difference your corporate policy has made in terms of your 
corporate responsibility toward ending gun violence in our 
country?
    Ms. Fraser. Thank you very much. It was informed because a 
number of our employees were directly affected by a number of 
instances, including Parkland, and I spoke myself to 11 
families of our employees who had children in the school there. 
And so, we decided to put a part of our environmental and 
social unrest policy. We asked the retail clients, the 
retailers, to follow best practices in their sales practices 
for selling guns. They are widely-followed practices, but they 
include making sure that a background check is there at the 
point of sale, that there are no sales to anyone under 21 
without training, and there are no sales of bump stocks. We 
felt very comfortable that those practices were ones that would 
help keep guns out of the wrong hands, and that was the 
thinking behind it.
    Ms. Dean. I commend you for that, and I ask you to consider 
other policies that Citi could enlist that would have an even 
greater impact, but thank you for being a leader there.
    Mr. Dimon, in our hearing in 2019, I remember you telling 
Congresswoman Maloney that JPMorgan would consider a similar 
policy to Citigroup and Bank of America, but I don't think any 
such change has been made. What is your organization doing to 
prevent gun violence?
    Mr. Dimon. I don't think it is that different, to tell you 
the truth, and I would have to go through the detail to go 
through it. But obviously, any retailer who sells a gun has to 
follow the law of the land, ATF, local laws, filing. They have 
to file them when someone buys a gun, so we try to do all of 
those same things. We do not finance manufacturers of military-
style weapons for civilian use, though we do finance that for 
military use, because we obviously support and love the 
American military. So, I don't think it is that different. I 
would submit to you that there are a lot of laws that are on 
the books, and there are a lot of laws that could be changed 
that are on the books that could immediately fix this 
situation.
    Ms. Dean. I would call upon you and JPMorgan to call upon 
the Senate to pass the two bills that we have sent over for 
universal background checks for the closing of the Charleston 
loophole, and maybe you, JPMorgan, could message your strong 
commitment to ending gun violence in our country.
    Mr. Scharf, Wells Fargo is the National Rifle Association's 
(NRA's) bank, a relationship you said in April of 2022 to 
investors was declining. What is the status of that 
relationship, and when you say, ``declining,'' that is rather 
passive. Have you considered actively severing that 
relationship? And I would ask, Madam Chairwoman, if the 
gentleman would be able to briefly answer?
    Chairwoman Waters. The question has been directed to you, 
Mr. Scharf.
    Mr. Scharf. I actually have to see where we are with the 
NRA. I believe we have exited it--if not in total, we are very 
close to the end, but I can certainly get back to you.
    Chairwoman Waters. Please get back to Ms. Dean with that 
information.
    Thank you very much. The gentleman from Minnesota, Mr. 
Emmer, is now recognized for 5 minutes.
    Mr. Emmer. Thank you, Madam Chairwoman. I appreciate it. In 
the past year, urgently-expanding access to credit was more 
important than ever, especially for the unbanked, underbanked, 
and those living in the margins. As Americans moved out of 
urban areas, and government-mandated shutdowns forced people 
into their homes, financial technology companies were able to 
extend financial services to any and all Americans with a cell 
phone, which increased financial inclusion and further 
democratized access to credit.
    Mr. Scharf, briefly, how did Wells Fargo partner with 
FinTech companies to prepare for and to adapt to the digital 
migration we have experienced in the past year, and how did you 
extend your services to those previously unreached, the 
unbanked?
    Mr. Scharf. Congressman, we partner with FinTechs on a 
whole range of things that are predominantly our digital 
offerings these days. When the pandemic hit, and we tried to 
keep as many branches open as we possibly could, we kept at 
least 70 percent of them open, but there was a significant 
migration on the service side, especially to use our digital 
offerings. It is something that we certainly talk very actively 
to our customers about because we thought it was a smart and 
safe way for them to continue to do business with us. We saw 
the digital activity depending on the month during the pandemic 
either be up 50 percent or be double what it was in prior 
periods. And so, the adoption has grown significantly, and a 
series of those underlying services are built with some of the 
power of FinTechs in the background.
    Mr. Emmer. Great. I would like to open this question up to 
the other two witnesses and ask you to briefly describe what 
activities related to cryptocurrency your firms are engaged in. 
Why don't I start with Mr. Solomon?
    Mr. Solomon. Thank you, Congressman. We are restricted by 
the regulatory structure to act as a principal trader or to own 
most cryptocurrencies. We do clear bitcoin futures. We provide 
advice to clients, particularly institutions and high-net-worth 
individuals that have an interest in gaining exposure, although 
often they go to other places to gain those exposures.
    Mr. Emmer. Great. Mr. Dimon?
    Mr. Dimon. Exactly where Mr. Solomon is, and I don't give 
personal financial advice, but if you did ask me, in this case, 
I would tell you to stay clear of bitcoin.
    [laughter]
    Mr. Emmer. Mr. Gorman?
    Mr. Gorman. Same position, and we allow clients to invest 
in funds that are focused on crypto.
    Mr. Emmer. Great. Ms. Fraser?
    Ms. Fraser. Similarly. We are proceeding with great caution 
here and are taking some tentative steps.
    Mr. Emmer. Mr. Moynihan, it's good to see you.
    Mr. Moynihan. It's good to see you, too. We clear futures, 
and we are looking at some of the other things my colleagues 
do, but that is basically all we do is clear futures at this 
point.
    Mr. Emmer. Okay. Now that I have gone through the group, 
Mr. Scharf, how about you?
    Mr. Scharf. We are looking at a whole series of things and 
proceeding very, very cautiously.
    Mr. Emmer. That seems to be a theme. Again, thank you all 
for being here. I am going to make it brief because I know you 
have been here for a long time today. Madam Chairwoman, I will 
yield back.
    Chairwoman Waters. Thank you very much. The gentleman from 
Illinois, Mr. Garcia, is now recognized for 5 minutes.
    Mr. Garcia of Illinois. Thank you, Madam Chairwoman, and to 
all of our panelists. I am in Chicago, and I represent a 
working-class district, and many of my constituents are Latino 
immigrants, as am I. In neighborhoods like mine, it is very 
clear that environmental justice and racial justice are linked. 
Black and Latino communities suffer disproportionately from 
polluted air and dirty water, and we are barely consulted about 
issues and projects in our communities. All too often, 
Indigenous communities face the exact same issues, as pipelines 
are being built on their historic land despite their 
opposition.
    Mr. Dimon, your bank has made a public commitment to racial 
justice and to reaching net zero carbon emissions by 2050, 
which is commendable, a target that would require no new oil 
and gas fields. Yet, JPMorgan Chase continues to do business 
with Enbridge, which is building its Line 3 pipeline over 
significant opposition from Indigenous communities. Will your 
bank commit to respecting treaty rights and protecting our 
climate by committing to stop funding Enbridge and the Line 3 
pipeline?
    Mr. Dimon. First of all, we did not commit to net zero like 
you just said. We are trying to be a rational player here. Oil 
and gas is not going to go away. You can actually get to net 
zero and still produce some oil and gas, just have it offset 
with other technologies, et cetera, and I think that is the 
more likely outcome, even by 2050. And I don't know about 
Enbridge, in particular. I would have to get back to you on 
that.
    Mr. Garcia of Illinois. I would appreciate it, sir. And my 
follow-up question is, how do you square your commitment to 
oppose racism and reach net zero emissions, but we can pick 
that up when you provide that answer.
    Following up with Mr. Scharf, this January the OCC lifted 
one of its consent orders regarding Wells Fargo's compliance 
with anti-money laundering and the Bank Secrecy Act 
requirements. Many of the bank's legal issues boil down to a 
toxic, high-pressure culture that blamed frontline workers for 
decisions that senior management made. Since you became CEO, 
what new measures has Wells Fargo adopted to ensure that 
frontline bank workers do not fear retaliation for reporting 
inappropriate or unethical conduct by management?
    Mr. Scharf. Congressman, we have made a significant number 
of changes to the company in both our processes and our 
procedures, but also in our culture. Just to give you a sense, 
from the senior management, we have hired 11 people from the 
outside of the company to fill seats on our 18-member operating 
committee. Almost 100 hundred of the top 200 people are new to 
the company. We have put in a substantial amount of 
infrastructure around customer feedback, and employee feedback. 
Independent investigations occur, and there has been a dramatic 
series of changes inside the company as well as the cultural 
change that is necessary for these things to really take root.
    In addition, we have changed compensation plans. 
Significant numbers of people--management people, that is--have 
exited the company. And so, while there is still more work to 
do--there is always more work to do on these things--it is a 
very different company today than it was.
    Mr. Garcia of Illinois. And since you are not a unionized 
workplace, without union representation or just-cause 
protections, how can you reassure frontline employees and 
regulators that bank workers can do their jobs without fear?
    Mr. Scharf. We have a no-retribution policy. If people 
believe that there is retribution, those things are looked at. 
We have multiple ways for employees to provide feedback, 
including a new process we are in the process of rolling out to 
the entire company. This information is reviewed by the 
operating committee on a regular basis and by the board of 
directors.
    Mr. Garcia of Illinois. Okay. Thank you very much, Madam 
Chairwoman. I yield back.
    Chairwoman Waters. Thank you very much. The gentlewoman 
from North Carolina, Ms. Adams, is now recognized for 5 
minutes.
    Ms. Adams. Thank you, Madam Chairwoman. Can you hear me?
    Chairwoman Waters. Yes, I can hear you.
    Ms. Adams. Okay. I apologize for the problem I had before. 
But let me thank you for convening the hearing, and I want to 
welcome Ms. Fraser as the first woman ever to lead one of our 
megabanks, and hopefully, one day, we will truly have diversity 
that represents our country. But for all of the witnesses, 
many, if not all of you, have probably made public commitments 
and pledges to diversity, equity, and inclusion (DEI). You have 
made statements about the importance of cultivating, 
recruiting, and hiring, and promoting diverse talent in your 
companies. So, in particular, I want to focus on how you are 
cultivating diverse talent for your corporate officers in the 
C-suite. As you may know, I am a firm believer that 
Historically Black Colleges and Universities (HBCUs) must be a 
part of any corporation's DEI strategy. So, can each of you 
tell me as succinctly as possible what you have done recently, 
within the past week, month, or year to support, to invest in, 
and to cultivate talent at HBCUs, and specifically, how do 
HBCUs and their graduates play a direct role in your DEI 
strategies? That is for each of the witnesses.
    Mr. Dimon. I will go first. This is Jamie Dimon, JPMorgan 
Chase. I have been going to Howard and Spelman for the better 
part of 30 years. We hire--I know the Howard number is more 
than 20 kids every single year, and I think we recruited at 15 
HBCUs. So, we are bringing in a lot more people at the bottom 
level, and providing a lot more training. We have special 
programs. We just started a program to hire and train 300 Black 
financial advisors, to increase representation in financial 
advisors, and we have a lot of senior Black executives. We are 
up 40 or 50 percent in Black executive directors and managing 
directors in the last 3 years.
    And unfortunately, we lost one of our top--part of my 
management team, top female Black leaders of the company, but 
it is bittersweet because we lost a wonderful shining light. 
She became CEO of another company, so we are also very proud of 
her, and we are making a lot of progress, and we are doing a 
lot.
    Ms. Adams. Okay. Thank you, Mr. Dimon.
    Mr. Gorman. I am happy to go next, Congresswoman. We 
actually recently initiated a program of scholarships for 60, 
4-year, full-time scholarships specifically for college kids at 
Spelman, Morehouse, and Howard, and combined with the 
scholarship is training for entering the workforce, dealing 
with recruiting interviews, and the like. So, very recently, 
that was initiated.
    Mr. Scharf. Congresswoman, I will go next. This is Charlie 
Scharf with Wells Fargo. One of the things that we have come to 
recognize is that there are many HBCUs in this country that 
have wonderful talent at them. Since 2007, we have actually 
provided almost $40 million through scholarship funds. Most 
recently, in Charlotte, we announced a series of community 
grants, including one to Johnson C. Smith University, which 
included a million-dollar grant for minority scholarships. And 
so, we are very, very firm believers in what HBCUs do for this 
country, and we will continue to support them.
    Mr. Solomon. Congressman, this is David Solomon. We recruit 
from over 100 HBCUs. We have set a goal to double the number of 
people that we actually bring in over the course of the next 5 
years. We just committed $25 million to a program we call HBCU 
Market Madness. It is a case study training program, a 
competition that provides scholarship aid that we think is 
highly successful. It includes eight HBCUs, including North 
Carolina A&T State University, and so we continue to invest in 
that program and expand it.
    Mr. Moynihan. Go ahead, Jane.
    Ms. Fraser. Oh, thanks, Brian. From the Citi end, our CFO 
is a proud graduate of Howard, and he is the vice chair there, 
and he has been a wonderful advocate for the work that we are 
doing, similar to the other banks, with the HBCUs. We fund 
them, we recruit there, and we are very active around it. And 
they are such talented people. It is exciting to have them as 
part of the firm.
    Mr. Moynihan. I would just add a couple of things. Number 
one, happy birthday. But number two, one of the perceptions we 
had as we all expand our efforts to HBCUs is that they needed 
more help on their career development, career pathways work. 
So, we gave a grant to 11 of them in the last year of a million 
dollars each so they could expand their capacity of graduates 
into all of the programs, especially outside the financial 
services industry.
    The other neat thing that I think we did is we started an 
entrepreneurship center between Spelman and Morehouse with the 
Black Executive Alliance that will create an entrepreneur 
center, which would be the first of its kind among HBCU 
universities. And also, like Mr. Scharf and Wells Fargo, we are 
working with Mayor Lyles on trying to figure out the future 
role of Johnson C. Smith University in Charlotte, and have made 
grants, and are trying to support that HBCU and its progress 
forward.
    Chairwoman Waters. Thank you very much. The gentlewoman's 
time has expired. Now, we will hear from the gentlewoman from 
Georgia, Ms. Williams. You are recognized for 5 minutes.
    Ms. Williams of Georgia. Thank you, Madam Chairwoman. To 
build an inclusive economy where everyone has a chance at 
success, we all need access to responsible financial services. 
Unfortunately, today, as we have discussed, we see disparities 
in assessing even the most fundamental of financial services. 
For instance, according to a 2019 FDIC survey, 13.8 percent of 
Black households were unbanked, while only 2.5 percent of White 
households were. We have to break down these barriers to 
banking, especially for those who are most marginalized.
    According to the 2019 FDIC survey I referenced, nearly half 
of the unbanked said that they didn't have enough money to 
start a bank account. I would like to pose the following, 
``yes'' or ``no'' question to the group: Has your institution 
adopted any policy changes in the last year that have made it 
easier or more affordable for individuals with low bank 
balances to maintain bank accounts? Mr. Dimon?
    Mr. Dimon. Yes, we have a great product, I don't know if it 
was in the last year, called the Secure Account. It is $4.95 a 
month, but you get bill pay online, direct deposit, access to 
ATMs, access to branches, no overdraft, et cetera. We hope to 
do a million more, so that can reach out to a lot more of the 
unbanked.
    Ms. Williams of Georgia. Thank you, Mr. Dimon. Ms. Fraser?
    Ms. Fraser. Thank you very much. Yes, we have a product 
called the Access Account that we launched back in 2014. It is 
now about 20 percent of our accounts in America. It is no fee. 
There is no overdraft. It is very easy to use and digitally 
available as part of it. We also provide our ATMs to 28 
different partners and community banks and give them free 
access to the ATM machines to, again, drive access into areas 
that we don't have a presence in. And that has been successful 
in reaching more of the unbanked and making it easier for them 
to bank.
    Ms. Williams of Georgia. Thank you, Ms. Fraser. Mr. 
Moynihan?
    Mr. Moynihan. Yes, as was stated earlier, the SafeBalance 
account, which is a Bank On product, which a lot of us have, 
and Jamie talked about his and Jane talked about hers, now has 
about 2\1/2\ accounts in it, about 30 percent of new sales. It 
is $5 a month, no overdraft, et cetera, and if someone has 
direct deposits of more than $250 a month, we offer it free. 
And it is also offered free to people under the age of 24, 
college kids and high school kids, et cetera, and that is a 
growing product. And I think you will find out from this group, 
along with the VPI, which is the 25 banks, has really been 
driving this Bank On product really in conjunction with the 
FDIC, I think, starting 5, 7 years ago. So, you are going to 
find all of the core banks here doing the same thing and trying 
to push that unbanked number down. And you have seen it fall in 
the last few surveys.
    Ms. Williams of Georgia. And Mr. Scharf?
    Mr. Scharf. Yes, we as well have announced a Bank On 
product called Clear Access with the same features that you 
have heard. I think many of us on the call, if not all of us, 
have invested in MDIs, which is another source of serving the 
unbanked or underbanked population. And we, and, again, I know 
others as well, have started a financial inclusion initiative--
ours is over 10 years--to really try and get to the unbanked 
population in multiple ways.
    Ms. Williams of Georgia. Thank you. And in the same survey, 
about one-third of the unbanked cited both high bank fees, 
which we have addressed, and unpredictable bank fees as 
barriers to getting banked. I would like to ask the same 
witnesses another, ``yes'' or ``no'' question. We are running 
out of time. Has your institution adopted any policy changes in 
the past year to eliminate, lower, or give customers more 
warning in the banking fees that you assess? Mr. Dimon, yes or 
no?
    Mr. Dimon. Yes, that product does exactly that.
    Ms. Williams of Georgia. Thank you. Ms. Fraser, yes or no?
    Ms. Fraser. Yes.
    Ms. Williams of Georgia. Mr. Moynihan?
    Mr. Moynihan. Yes.
    Ms. Williams of Georgia. And Mr. Scharf?
    Mr. Scharf. Yes.
    Ms. Williams of Georgia. And I would ask that each of you 
please follow up and give me more details on what those notices 
are so that we are more aware as we are talking with our 
constituents and trying to do more in our communities.
    And last, we have heard a little bit about what you have 
done, and now I would like each of you to share just one goal 
that you have to address barriers to getting individuals of 
diverse demographic and economic backgrounds banked. What are 
your plans for the future to continue to reduce this number? 
And we are running out of time, so, Madam Chairwoman, I would 
ask that this information be followed up with me so that I have 
the additional details on what we are looking towards for the 
future to continue to reduce this disparity in the unbanked 
numbers in the Black community.
    Chairwoman Waters. Thank you very much, Ms. Williams, and I 
think that our witnesses heard what you said, and we would 
expect them to get that information to you. With that, I now 
recognize the gentleman from Massachusetts, Mr. Auchincloss, 
for 5 minutes.
    Mr. Auchincloss. Thank you, Madam Chairwoman, for 
organizing this hearing. I have found this conversation to be 
edifying, and I took only a small leave of absence, and that 
was to meet with the Black Economic Council of Massachusetts 
(BECMA) formed 6 years ago to help support Black entrepreneurs 
and Black-owned businesses in Massachusetts. They have made 
tremendous progress, and we talked about the work that they are 
doing to advance their mission now really throughout the 
Commonwealth. According to the Kauffman Foundation, about 
three-quarters of new businesses struggle to find financing to 
fund their businesses, and the rate of small business startups, 
as opposed to high-tech growth startups, has actually fallen 
off precipitously in the last 25 years, leading to a less 
dynamic economy with greater concentrations of power amongst 
big business.
    We also know that according to the Federal Reserve Bank of 
Boston, Black and Latino entrepreneurs hire residents in local 
communities at much higher rates than non-minority-owned 
businesses do. So, investing in Black entrepreneurs and Black-
owned businesses is good for small businesses and gateway 
cities generally, as well as for the communities in which they 
work.
    Mr. Moynihan, I have had the opportunity to speak with the 
president of your Massachusetts operation, who is a constituent 
of mine, about the great work that Bank of America has been 
doing in Massachusetts to support Black-owned businesses. I 
wonder if you would be willing to commit to working with me and 
with BECMA to advance the work that they are doing, whether it 
is a public bank or other options, to support Black 
entrepreneurs and Black-owned businesses?
    Mr. Moynihan. Congressman, I would be happy to have Miceal 
Chamberlain, whom you are referring to, meet and figure out if 
we can help. We have invested a lot of private equity funds in 
Massachusetts recently, along with other parts of the country, 
to help bridge that capital gap, which then makes the companies 
have the kind of equity that gets them into the mainstream 
lending practices of the local competitive banks. So, we would 
be happy to work you.
    Mr. Auchincloss. That is great to hear. I am looking 
forward to working with you and with BECMA on this important 
mission. And they are my constituents, so I will know where to 
find you.
    I would like to change gears here from small businesses to 
the ultra-wealthy, and talk about a bill that I co-sponsored, 
along with Representative Ro Khanna, the Stop CHEATERS Act. And 
this is about addressing the fact that the IRS has calculated 
that the tax gap, which is the expected gap between revenue and 
actual tax revenue, is about $400 billion a year. And the 
proposal at its core on the Stop CHEATERS Act is to require 
banks, for individuals who make more than $400,000 a year, to 
issue adjusted 1099s, functionally, that tracks the income in 
and the withdrawals out so that the IRS can better verify 
people's actual income, and to close that tax gap and ensure 
that everybody is paying their fair share of taxes.
    There has been some pushback from the banking community 
about this bill. If directed by Congress, and, Mr. Dimon, I 
will start with you here, could your banks produce these new 
1099 forms to help the IRS verify income?
    Mr. Dimon. Yes, it would take about 18 months, but I urge 
you, if you're going to do it, do it right. Banks are worried 
about the litigation, the cost, and also you would have to 
include, to be fair, cryptocurrency, investment accounts, all 
of the other people who hold and move money.
    Mr. Auchincloss. Thank you.
    Mr. Dimon. Otherwise, you are just putting the burden on 
one industry and not the rest.
    Mr. Auchincloss. Mr. Moynihan?
    Mr. Moynihan. I think, for the same cautions that Jamie 
spoke about. If it is the law of the land, we will implement 
it. It will take time to get it right, but I think the caution 
would be to make sure that you think through squeezing money 
out of the core financial system into other parts of the 
economy, as one of the things that has happened traditionally 
when only one part of the industry is asked to do something.
    Mr. Auchincloss. To be respectful of time, I will just ask 
if any of the other CEOs disagree with the statements made by 
these two previous ones, to just raise your hand. Otherwise, I 
will assume it is in the same vein.
    [no response]
    Mr. Auchincloss. Seeing no other hands raised, Madam 
Chairwoman, I will yield back the remainder of my time.
    Chairwoman Waters. Thank you very much. The gentlewoman 
from New York, Ms. Ocasio-Cortez, is now recognized for 5 
minutes.
    Ms. Ocasio-Cortez. Thank you so much, Chairwoman Waters, 
and thank you to all of our witnesses who are here today for 
sharing your experience and expertise. I wanted to take today 
to focus in on an issue that I think it is concerning to 
everyone, and that is climate change. And I really want to kind 
of narrow in a little bit more on how we can take a collective 
approach to making sure that we get to where we need to be on 
carbon emissions.
    And so for each of you, I just kind of want to start off 
and recognize that each of your firms have made a commitment to 
achieve net zero financed emissions by 2050, which is a key 
milestone for the Paris Climate Agreement. Just last week, the 
International Energy Agency (IEA) announced that all new fossil 
fuel projects must be stopped immediately in order to meet the 
Paris goal of limiting warming to 1.5 degrees Centigrade. I 
just wanted to pose a couple of questions to kind of discern a 
little bit about the details of each of your firm's 
commitments. So, for each of you, if we could just kind of go 
down the line and get a, ``yes'' or a ``no.'' Are each of your 
firms still financing new oil and gas production? And we can 
start with Ms. Fraser.
    Ms. Fraser. Yes, we also are financing some new ones.
    Ms. Ocasio-Cortez. Okay. And for Mr. Moynihan?
    Mr. Moynihan. We finance oil companies, and we will 
continue to do so to help them make the transition that we have 
all talked about. And at the end of the day, we will get there 
with a private sector-driven innovation and investing in some 
new technologies. And some of these companies have intellectual 
property that is superior for carbon capture storage, things 
that we are going to need to make this happen. And so, we will 
continue to work with it.
    Ms. Ocasio-Cortez. Is anyone who has not answered, not 
financing new oil and gas production?
    [no response]
    Ms. Ocasio-Cortez. Okay. I will take that as a, ``no.'' 
Let's move on. Are any of the banks represented here today 
cutting their bank's financed emissions in half by 2030?
    [no response]
    Ms. Ocasio-Cortez. Okay. None. Have any of you set specific 
targets or significant reductions in financed emissions in 
absolute terms in terms of carbon emissions?
    Mr. Dimon. We are working with clients to have targets for 
absolute returns in emissions, and we are doing it by industry. 
We haven't done all of the industries yet. We have done oil, 
utility, auto, but there are other industries, of course, pulp, 
paper, a whole bunch of other ones, and it is going to take a 
lot of hard work to do it. The clients actually want to do it.
    Mr. Moynihan. Yes, we are doing the same. I think that 
everybody here has a similar thing. We have made commitments 
now where you are literally going industry by industry to 
figure out those participants in that industry, what you can do 
to help them make the transition and what is their rational 
timeframe. And then behind, with the small and medium-sized 
clients, we are out educating them about what, ``net zero'' 
means, how they are going to have to commit to it, because 
their customers, their people who are their vendors, too, and 
others are making similar commitments.
    So, the whole infrastructure has to come in line, and that 
takes education. All of these banks have tremendous capacity to 
educate their clients and help the small and medium-sized 
business make the same transition that these large companies 
have to make. And we are literally going industry by industry 
to figure it out. That is where the hard work is going on.
    Ms. Ocasio-Cortez. Thank you so much, Mr. Moynihan. And, 
Mr. Dimon, you said that effort has been put in in defining 
absolute emission targets. Have those been released yet, or are 
those currently underway, and if so, is there an estimated time 
in which we can see those absolute commitments?
    Mr. Dimon. They are not public yet, and we are also working 
with the clients on it, and I don't remember the exact 
timeframe, but that is not a 2050 number. It much earlier than 
that. I don't remember if it is 10 years or 15 years, et 
cetera.
    Ms. Ocasio-Cortez. Okay. Wonderful. And I believe that 
those are all of my questions today, so thank you so much, 
Madam Chairwoman. I yield back.
    Chairwoman Waters. Thank you very much. Let me take this 
moment to thank all of our distinguished witnesses for their 
testimony today, and I would like to thank all of the Members 
for the questions that they raised, and for the research that 
they have done to help engage our witnesses here today.
    We at the Financial Services Committee take our 
responsibilities seriously, and we want to make sure that there 
are available banking services for everybody, and that those 
services are fair. And we want to make sure that people of 
color and women are not excluded from jobs and career 
opportunities in the banking community. And you can see from 
some of the questions you were asked today that we have Members 
who are very serious about this responsibility.
    So, again, I am very pleased that you were all able to 
spend time with us today. I know it has been 2 days, on the 
Senate side and on this side, and knowing that you would be 
grilled in some areas. We had a lot of areas of concern that we 
were able to talk with you about today, and we are going to be 
doing serious follow-up.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    Again, my sincere thanks to you. This hearing is now 
adjourned.
    [Whereupon, at 5:11 p.m., the hearing was adjourned.]

                            A P P E N D I X



                              May 27, 2021
                              
                              
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