[Senate Hearing 117-364]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 117-364

                 ANNUAL OVERSIGHT OF WALL STREET FIRMS

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

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

        EXAMINING HOW TO CHANGE THE WALL STREET SYSTEM, TO MAKE OUR
                       ECONOMY WORK FOR EVERYONE

                               ----------                              

                              MAY 26, 2021

                               ----------                              

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs


                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]











                                                        S. Hrg. 117-364


                 ANNUAL OVERSIGHT OF WALL STREET FIRMS

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

                                HEARING

                               before the

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

      EXAMINING HOW TO CHANGE THE WALL STREET SYSTEM, TO MAKE OUR
                      ECONOMY WORK FOR EVERYONE

                               __________

                              MAY 26, 2021

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs



                  [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                Available at: https: //www.govinfo.gov /




                               ______
                                

                 U.S. GOVERNMENT PUBLISHING OFFICE

48-562 PDF                WASHINGTON : 2022






            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana


                     Laura Swanson, Staff Director
                 Brad Grantz, Republican Staff Director

                       Elisha Tuku, Chief Counsel
                Corey Frayer, Professional Staff Member

                 Dan Sullivan, Republican Chief Counsel
                 John Crews, Republican Policy Director

                      Cameron Ricker, Chief Clerk
                      Shelvin Simmons, IT Director
                    Charles J. Moffat, Hearing Clerk


                                  (ii)













                            C O N T E N T S

                              ----------                              

                        WEDNESDAY, MAY 26, 2021

                                                                   Page

Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    57

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     4
        Prepared statement.......................................    59

                               WITNESSES

Charles W. Scharf, Chief Executive Officer and President, Wells 
  Fargo & Company................................................     6
    Prepared statement...........................................    60
    Responses to written questions of:
        Chairman Brown...........................................   184
        Senator Tester...........................................   197
        Senator Warren...........................................   201
        Senator Cortez Masto.....................................   204
        Senator Smith............................................   214
        Senator Warnock..........................................   216
        Senator Crapo............................................   218
David M. Solomon, Chairman and Chief Executive Officer, Goldman 
  Sachs..........................................................     8
    Prepared statement...........................................    71
    Responses to written questions of:
        Chairman Brown...........................................   219
        Senator Tester...........................................   226
        Senator Warren...........................................   230
        Senator Cortez Masto.....................................   231
        Senator Smith............................................   233
        Senator Warnock..........................................   234
Jane Fraser, Chief Executive Officer, Citigroup..................    10
    Prepared statement...........................................    85
    Responses to written questions of:
        Chairman Brown...........................................   235
        Senator Tester...........................................   248
        Senator Warren...........................................   251
        Senator Cortez Masto.....................................   253
        Senator Smith............................................   259
        Senator Warnock..........................................   261
        Senator Crapo............................................   263
Jamie Dimon, Chairman and Chief Executive Officer, JPMorgan Chase 
  & Co...........................................................    11
    Prepared statement...........................................    95
    Responses to written questions of:
        Chairman Brown...........................................   265
        Senator Tester...........................................   274
        Senator Warren...........................................   278
        Senator Cortez Masto.....................................   280
        Senator Smith............................................   285
        Senator Warnock..........................................   286
        Senator Crapo............................................   288

                                 (iii)

Brian Moynihan, Chairman and Chief Executive Officer, Bank of 
  America........................................................    13
    Prepared statement...........................................   101
    Responses to written questions of:
        Chairman Brown...........................................   289
        Senator Tester...........................................   302
        Senator Warren...........................................   305
        Senator Cortez Masto.....................................   307
        Senator Smith............................................   312
        Senator Warnock..........................................   313
        Senator Crapo............................................   315
James P. Gorman, Chairman and Chief Executive Officer, Morgan 
  Stanley........................................................    15
    Prepared statement...........................................   166
    Responses to written questions of:
        Chairman Brown...........................................   316
        Senator Tester...........................................   324
        Senator Warren...........................................   327
        Senator Cortez Masto.....................................   330
        Senator Smith............................................   333
        Senator Warnock..........................................   334
        Senator Crapo............................................   335

              Additional Material Supplied for the Record

Letter submitted in support of the Veterans and Consumers Fair 
  Credit Act.....................................................   336






 
                 ANNUAL OVERSIGHT OF WALL STREET FIRMS

                              ----------                              


                        WEDNESDAY, MAY 26, 2021

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., via Webex, Hon. Sherrod 
Brown, Chairman of the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Senate Committee on Banking, Housing, 
and Urban Affairs will come to order.
    This hearing is in the virtual format. A few reminders as 
we begin. Once you start speaking, there will be a slight delay 
before you are displayed on the screen. To minimize background 
noise, please click the mute button until it is your turn to 
speak or ask questions.
    You should all have one box on your screens labeled 
``Clock''. For witnesses, you will have 5 minutes for opening 
statements. For all Senators, the 5-minute clock still applies 
for questions. At 30 seconds remaining, you will hear a bell 
ring to remind you your time has almost expired. It rings again 
30 seconds later.
    If there is a tech issue, we will move to the next witness 
or Senator until it is resolved. And, finally, to simplify the 
speaking order process, Senator Toomey and I have agreed to go 
by seniority for this hearing.
    Today is the first time we have ever had the CEOs of the 
Nation's six largest banks together before the Committee.
    Over a century ago, Louis Brandeis wrote about the 
concentration of corporate power and how it distorts the 
market. He called his book ``Other People's Money and How the 
Bankers Use It''. It is a subject Americans continue to have a 
stake in: how you, the Nation's largest financial institutions, 
use other people's money.
    You are the six most powerful business leaders in this 
country. Your decisions affect the lives of millions of 
Americans--their paychecks, their opportunities, their 
retirement savings.
    And your power is so much greater than that of your 
predecessors 30, 40, 50 years ago.
    Look what has happened to our country during that time.
    Profits have gone up, stock prices have soared, your own 
compensation is stratospheric; but workers are getting a 
smaller and smaller share of the wealth they create, and they 
are working harder than ever.
    We have a racial wealth and income gap that has barely 
budged since we passed the Civil Rights Act.
    In the aftermath of the 2008 Great Recession where millions 
lost their jobs, Wall Street still made record profits.
    In a pandemic where half-a-million Americans died and we 
had the highest unemployment since the Great Depression, Wall 
Street still made record profits.
    I sense a pattern.
    Like most Americans, I want businesses to make money. I do 
not mind that bankers are rich. Some people are going to be 
wealthy, and that is fine with me.
    Here is the problem, though. Under the current system, Wall 
Street profits no matter what happens to workers, because those 
profits now come at the expense of workers.
    Your banks are the ones that largely built that system.
    We often hear about the ``invisible hand.'' But the economy 
is not physics. It is not governed by scientific laws outside 
our control. It is made up of people making choices about our 
values and about the society we want to live in.
    The ``invisible hand'' does not lay off workers. The 
``invisible hand'' did not invent credit default swaps. The 
``invisible hand'' does not decide to invest in private equity 
firms that buy up mobile home parks in Iowa and across the 
country and then jack up the rent.
    Your banks--your lobbyists, your fellow CEOs at some of the 
other largest companies in America--you make those choices that 
dictate how our economy works.
    Wall Street built this system. They did not build it for 
everyone. They built it for themselves.
    When companies lay people off, when they move jobs to low-
wage countries, when they cut paychecks, when they bust unions, 
when they subcontract work to lower-paying companies with fewer 
benefits, when all that is done, Wall Street analysts yell, 
Buy, buy, buy.''
    And what you do sends a signal to every other company. If 
businesses want investment, they emulate you. They know they 
will not attract investment unless they repurpose all their 
funds into short-term profits for shareholders.
    As you all know, when you started your businesses, it has 
not always been like this.
    When I was growing up, the CEO-to-median worker pay ratio 
was 20:1. That was pretty good money and a pretty good 
lifestyle for management, as it should have been.
    Today that ratio is closer to 320:1.
    From the mid-20th century through the early 1980s, the 
financial sector made up 10 to 15 percent of corporate profits. 
Today it is 25 percent, yet it makes up only 4 percent of jobs.
    A few decades ago, a majority of Wall Street capital funded 
the real economy--wages, machinery, research, new construction. 
Today much of that capital goes to stock buybacks, dividends, 
and complex financial instruments. Only about 15 percent goes 
to the real economy.
    Instead of investing in businesses that actually make 
things or provide useful services and that create real jobs in 
towns all over the country, companies spend billions buying 
back stocks and handing out CEO bonuses.
    Stock buybacks used to be illegal market manipulation. 
Today they are routine.
    Wall Street's interests and Main Street's interests no 
longer match up. The current system treats workers as a cost to 
be minimized instead of the engine behind our success.
    Look at what has happened to places like where I grew up, 
in Mansfield, Ohio.
    Jobs shipped overseas to countries where companies can pay 
workers less. Declining union membership--by design. Crumbling 
roads, shuttered storefronts, and workers forced to choose 
between a hometown they love, and leaving in search of 
opportunity.
    And that was before 2008. You know what happened to 
Americans then.
    And Congress and too many in Washington have been willing 
accomplices--tax break after tax break. Gutting consumer 
protections. Trade deals written by corporate lobbyists.
    So I come back to this. There is a reason towns across the 
country like Mansfield look the way they do. It is because our 
economy is no longer about workers and communities and real 
investment in both of these.
    The six of you before us today are the most powerful 
economic titans in our country.
    Your banks, and the systems they built and uphold, bear 
some responsibility.
    At the end of last month, we held our first-ever worker 
listening session. We heard from workers from all kinds of 
backgrounds, working all kinds of jobs--including as a former 
teller at one of your banks.
    They talked about wage theft, about being laid off during a 
pandemic with no severance, about how dangerous their 
workplaces could be, about how companies busted their unions.
    There was a common thread through their stories. Their hard 
work simply does not pay off--certainly not the way yours does.
    Pamela Garrison, a worker from West Virginia, said 
something that stuck with me. `` `Working poor,'' she said, 
``are two words that should not go together.''
    I know you cannot snap your fingers and fix all these 
workers' problems. But you also cannot tell me the decisions 
you make have no effect on the factors that determine their job 
opportunities and their wages.
    And yes, I know you work hard, too. We all do. Work is 
something that unites all of us. We are all trying to do 
something productive for our families, for our businesses, and, 
yes, for our communities and our country.
    Here is the difference, though. For most people, no matter 
how hard they work, if one thing goes wrong in their life--they 
get in a car accident, the plant where they work shuts down, 
their spouse gets sick--they are on their own.
    They do not get a taxpayer bailout. They all remember that 
Wall Street did.
    And it has not only been the bailouts. No one can deny that 
this Nation has been good to the financial industry--deposit 
insurance, the Federal payments system, the whole financial 
infrastructure you all rely on.
    But your banks have not held up your end of the deal.
    As far as I can tell, you have not at all rethought this 
Wall Street system built on short-term profits at the expense 
of long-term growth for everyone.
    In fact, you continue to perpetuate it.
    Wall Street gets second chance, after second chance, after 
second chance. Most workers do not even get one.
    It is past time for the financial industry to be as good to 
the American people as the Nation has been to you, the 
financial industry.
    The purpose of today's hearing is to show Americans their 
Government is finally looking out for them, that we understand 
this economic system has betrayed millions of workers, that it 
holds our country back.
    Here is what we want to hear from you today: What are you 
and the companies you run going to do--not just say, but 
actually do--to change?
    We want to hear what concrete actions you will take to 
change the incentives on Wall Street, to reward work instead of 
just rewarding wealth.
    To pay for and work to undo the damage that Wall Street has 
done, and continues to do, to communities of color.
    To stop investing in corporations that fuel climate change, 
threatening people's communities and livelihoods.
    To channel your vast resources into businesses that employ 
actual people in cities and towns, from my father's hometown of 
Mansfield, Ohio, to my mother's hometown of Mansfield, Georgia.
    To invest in our country's greatest asset: the American 
people.
    I have heard many of you argue that you do not need 
Government rules forcing you to make changes to your business 
model.
    So today start, show us some proof. Prove to us that you 
are going to use your positions to change the Wall Street 
system, to make our economy work for everyone--not just for 
CEOs and the wealthy.
    Senator Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman.
    Today's hearing is about the U.S. financial system, and 
this financial system proved to be remarkably resilient during 
COVID, but I am concerned about increasing pressure on banks to 
embrace ``wokeism'' and appease the far left's attacks on 
capitalism. And I worry that continuing down this path could 
lead to distorted credit allocation, activists seeking to make 
political change through the financial system instead of 
through the democratic process, and ultimately diminished 
prosperity for Americans.
    So, first, let us observe that the banking system did, in 
fact, prove to be very resilient. Last year, we had the worst 
pandemic in more than 100 years, the Government shut down 
almost the entire economy. We had the most severe recession 
since the Great Depression. And despite all that, banks 
remained stable, responded to their customers' needs for 
credit. Because they were so well capitalized, they were able 
to do so.
    In fact, one of the best decisions we made during COVID 
probably was administering the Paycheck Protection Program 
through the banking system because there was no other system 
that had the scale or agility to run this program, and banks 
leveraged their relationships to deliver hundreds of billions 
of PPP dollars to millions of small businesses so they could 
keep their workers employed.
    So the financial system's contributions to America's 
economic growth--before and during the pandemic--are really 
part of the larger success story of our capitalist system. No 
economic system has lifted more people out of poverty, created 
more opportunity, and produced a higher standard of living than 
democratic capitalism.
    Thanks to capitalism, life is better for the vast majority 
of Americans today than it has ever been. In fact, before 
COVID, just before COVID, we had the best economy of my 
lifetime--as measured by the very metrics that my Democratic 
colleagues believe are very important. We had the lowest 
unemployment rate in 50 years for all Americans. We had all-
time record low unemployment rates for African Americans and 
Hispanics. We had more jobs than people looking for work, and 
we had a record low poverty rate.
    And contrary to the characterizations we sometimes see, we 
had across-the-board wage growth, and the wage growth was 
growing fastest for the lowest income earners, so we were 
narrowing the income gap. In fact, the very system of economic 
freedom that my colleagues sometimes criticize was actually 
creating unprecedented and shared prosperity across America.
    That is why I am surprised and troubled to see some leaders 
of some banks taking actions that I think undermine the 
property rights that are at the very heart of our system and 
can lead to politicized lending. Some bank leaders have 
embraced so-called stakeholder capitalism, which really 
diminishes the primacy of shareholders in our economy and 
enables or encourages corporations to pursue a social agenda 
rather than prioritize its responsibilities to its owners.
    Now, it is a fact that a well-run business always benefit 
their stakeholders. That is the nature of business. But 
management's responsibility is to do so in service to 
shareholders, because they own the company. The people who own 
a company--whether it is through shares in their retirement 
accounts, pension plans, college savings accounts, or anything 
else--they rely on a firm's officers to look out for their 
financial interests.
    Making decisions based on social policy objectives--rather 
than profit maximization--deprives these shareholders of their 
rightful property. And worse yet, once shareholders' rights are 
reduced to the level of all other stakeholders, how does a 
company's management decide whose interest to prioritize?
    Now, some believe the Government should step in and make 
those decisions. For example, there are people who would favor 
a prohibition on stock buybacks. After all, if the 
shareholders' interest is no longer paramount, then the 
Government can determine that that capital would be more 
appropriately allocated to employees or the environment or some 
other special interest group.
    It is a fallacy to think that if you are seeking profits, 
you are not serving people. In fact, it is the exact opposite. 
A business can only profit when it satisfies its customers, and 
that can only be achieved with a satisfied workforce and good 
relationships with the community.
    Finally, let me close with just a suggested word of 
unsolicited advice. If there is an issue in the political realm 
that affects your bank, like taxes or regulatory policy, I 
would hope you would articulate your views on behalf of your 
shareholders. But if there is a highly charged social or 
political issue that involves balancing competing values, such 
as balancing access to voting with election security, both of 
which are important, sometimes competing values, that ought to 
be left to elected lawmakers. Those are the folks who were 
elected to make these difficult policy decisions, and most 
importantly, they are the people who are directly accountable 
to the American people who hire and fire them: the voters in 
their jurisdictions.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey.
    We have six witnesses today. I will introduce each now, 
then call on them in the order in which they have been 
introduced.
    Our witnesses are Mr. Charles Scharf, who worked for 
Salomon Smith Barney, Citigroup, Bank One, Visa, and Bank of 
New York Mellon before being named CEO of Wells Fargo in 
October 2019. Welcome, Mr. Scharf.
    Mr. David Solomon worked at Irving Trust Bank of New York 
Mellon, Drexel Burnham, and Bear Stearns before joining Goldman 
Sachs, where he has served as CEO since October of 2018. 
Welcome, Mr. Solomon.
    Ms. Jane Fraser worked in mergers and acquisitions at 
Goldman Sachs before joining Citi in 2004. She took over as CEO 
of Citigroup in March 2021. Welcome, Ms. Fraser.
    Mr. Jamie Dimon began his career at the stock brokerage 
Shearson, Hammill & Company and interned at Goldman Sachs 
before working in American Express and Citigroup. He served as 
CEO of Bank One until it merged with JPMorgan Chase where he 
has served as CEO since 2005. Welcome, Mr. Dimon.
    Mr. Brian Moynihan served at Fleet Boston Bank and as CEO 
of Merrill Lynch until it merged with Bank of America where he 
was named CEO in 2010. Welcome, Mr. Moynihan.
    And, finally, Mr. James Gorman worked as a bank consultant 
for McKinsey before joining Merrill Lynch. He went on to work 
for Morgan Stanley where he was named copresident in 2007. He 
has served as CEO since 2010. Welcome, Mr. Gorman.
    Mr. Scharf, you are recognized for 5 minutes. Thank you for 
joining us.

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

    Mr. Scharf. Chairman Brown, Ranking Member Toomey, Members 
of the Committee, good morning, and thank you for the 
opportunity to be here today.
    Just over a year ago, when I last appeared before Congress 
upon assuming my role as CEO, we were on the verge of a global 
pandemic. I cannot help but look back and think how little we 
understood then 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. Though 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 toward 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. I believe our country and communities benefit 
from a strong Wells Fargo, and 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 to 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 the more 
than $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 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 open safely.
    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 165,000 
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 offered paid time off to employees for vaccination 
appointments.
    For the communities we serve, we have continued to invest 
in the institutions critical to their success. While we are 
very encouraged to be seeing signs of improvement, we realize 
that not all of our communities are benefiting equally in the 
recovery. This 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- and 
moderate-income communities.
    For example, we are investing in Black-owned minority 
deposit institutions 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, just 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 and 
maintain the highest level of integrity and have an appropriate 
culture in place.
    Thank you again for having me, and I look forward to 
answering your questions.
    Chairman Brown. Thank you, Mr. Scharf.
    Mr. Solomon, you are recognized for 5 minutes.

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

    Mr. Solomon. Chairman Brown, Ranking Member Toomey, 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 very optimistic about our future. As more 
people are vaccinated, the U.S. is poised for a strong 
recovery. I would be remiss if I did not thank Moderna, Pfizer, 
Johnson & Johnson, and AstraZeneca for the amazing work they 
have done on life-saving vaccines.
    The banking industry performed well during the 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 our 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 postpandemic 
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 extra 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 $1.25 billion in capital to community 
development financial institutions 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 are 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 and investors, Launch With GS.
    I now want to focus on three other initiatives that are 
incredibly important to us.
    First, we have already achieved more than a fifth 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 own operations 
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 improving our diversity and 
inclusion. When I became CEO 2\1/2\ years ago, I said this 
would be one of my top priorities. Since I last testified 
before Congress, we have made progress. Our board will now have 
6 out of 13 directors who are women and will be 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 Black 
talent, our highest ever. However, I am not satisfied with 
this, and we continue to work to address this.
    Thank you. I would be happy to answer any questions that 
you have.
    Chairman Brown. Thank you, Mr. Solomon.
    Ms. Fraser, you are recognized for 5 minutes. Welcome.

  STATEMENT OF JANE FRASER, CHIEF EXECUTIVE OFFICER, CITIGROUP

    Ms. Fraser. Thank you very much, Chairman Brown, Ranking 
Member Toomey, and Members of the Committee, and thank you 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 first came to 
the U.S. in 1987, and I proudly became a U.S. citizen in 2001. 
My husband immigrated to the U.S. from Cuba when he was a young 
boy, and he is also a proud citizen of our country. So we feel 
very fortunate about the opportunities the U.S. has created for 
our family, and we believe we have an obligation to ensure that 
everyone can participate in the American dream.
    At Citi, we also recognize this has been a very challenging 
time for Americans, millions of whom we are very proud to call 
our customers.
    The origins of this global crisis are unlike the last one. 
This is a public health crisis with severe economic 
consequences, and through this pandemic, Citi has shown we are 
a very different bank than the one that entered the financial 
crisis more than a decade ago. We are smaller, we are safer, we 
are stronger, and we are far less complex. And we have had the 
financial resources to support our clients and communities 
through this crisis, and we are laser-focused on driving a 
sustainable and equitable recovery from the pandemic.
    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 also helped 
deliver this aid across many Government-sponsored programs, 
including the Paycheck Protection Program. And as a result of 
the tremendous need from small businesses, we went from being a 
pretty small SBA lender to so far funding more than $5 billion 
in PPP loans to the hardest-hit small businesses, with nearly 
80 percent of the loans going to businesses with ten or fewer 
employees. And we are donating all of the net profits that we 
have made from the program to further support vulnerable small 
businesses and communities in the United States.
    At the same time, we made our own people and their safety a 
priority and provided special compensation awards and many 
benefits to our many colleagues to help ease their financial 
burden and concerns.
    As the world's most global bank, we will continue to 
support many of the most iconic American businesses as they 
navigate the uncertainty of operating in markets abroad. 
Working in concert with Federal assistance programs, we will 
also continue to serve as a source of strength for our 
customers and communities here at home.
    We have a smaller branch footprint than many of our peers, 
but we will harness the full power of our bank's capabilities 
to extend our reach and 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 for affordable housing in the United States.
    In 2020 alone, we worked with State and local governments 
to finance over $27 billion in vital capital projects such as 
roads and 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 firmwide effort, including $1 
billion in strategic initiatives, to help close the racial 
wealth gap in the United States. We are not alone in our 
commitment to equity, but what distinguishes us is in how we 
hold ourselves accountable for results, and where we have more 
work to do, we are very up front about it. This transparency 
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. Helping our clients transition to a low-
carbon economy is going to be central to this work.
    I am determined for Citi to continue leading on these 
issues. They are central to our mission of enabling growth and 
progress. I want us to build a reputation for excellence in 
everything we do.
    I want to say thank you again for the opportunity to talk 
about Citi's efforts to be part of the solution and recovery to 
the pandemic.
    Chairman Brown. Thank you, Ms. Fraser.
    Mr. Dimon is recognized for 5 minutes. Mr. Dimon, you are 
recognized for 5 minutes.

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

    Mr. Dimon. Chairman Brown, Ranking Member Toomey, and 
distinguished Members of the Committee, I appreciate the 
invitation to appear before you to talk about JPMorgan Chase, 
the people, the businesses, and the communities we serve.
    We are living through unprecedented times, which history 
will judge leaders of Government and industry by the 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 
stability in our country and ongoing support for the ``real 
economy'': our customers, employees, and communities impacted 
by the global crisis.
    In 2020, we extended credit and raised capital totaling 
$2.3 trillion for consumers and businesses of all sizes, 
helping them meet payrolls, avoid layoffs, and support 
operations.
    We delayed payments for 2 million mortgage, auto, and 
credit card accounts and refunded $120 million in fees for more 
than 1 million customers--no questions asked.
    We funded over 400,000 Paycheck Protection Program 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 an additional $18 billion in 
new and renewed credit for small businesses.
    We committed $250 million in business and philanthropic 
initiatives with a particular focus on helping underserved 
small businesses and not-for-profits.
    And we supported our employees, especially our frontline 
workers who continued to show up to their jobs in branches, 
call centers, lock boxes, and for other roles that could not be 
performed at home. We gave special payments, provided 
additional paid time off, and continued to pay for their 
regularly scheduled hours, even if hours were reduced or zero.
    There is no doubt that the bold and swift actions taken by 
Congress, the Federal Reserve, and the Administrations over the 
past 15 months was instrumental in reversing the 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. That is why JPMorgan 
Chase recently committed an additional $30 billion over 5 years 
to address racial economic inequality, focusing on expanding 
affordable housing and ownership, 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 made solid progress since our announcement 
late last year and are on track for our 5-year commitment. We 
have already refinanced $2 billion in mortgages for Black and 
Latinx households and have funded investments and loans for an 
incremental 5,500 multifamily affordable housing units. We have 
funded over $60 million in investments in nine minority 
depository institutions, and we are building the foundation 
that will help us grow new relationships in communities of 
color to meet our mortgage and small business commitments.
    We opened Community Center branches in areas like Crenshaw, 
Chicago, Minneapolis, and Harlem, with many more coming in the 
next year.
    At JPMorgan Chase we consider our global workforce a 
competitive advantage and our people our greatest strength. Our 
160,000 U.S. employees work in offices and branches located in 
38, soon to be 48 States this summer. Thirty percent of the new 
branches opening in new markets are located in low- to 
moderate-income neighborhoods, and nearly one-third of all 
branches are minority census tracts.
    For the third time in 5 years, this year we increased 
entry-level wages to $16 to $20 an hour, and we provide annual 
benefit packages including medical and retirement of $13,000 
per person. Nearly 70 percent of the 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.
    We have 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 management accountable for their diversity and 
inclusion priorities through compensation and performance 
evaluations.
    Our country is poised for a strong economic rebound. But we 
must ensure that the economic recovery benefits all and that we 
address longstanding inequities that threaten the promise of 
America. Access to affordable health care, an education system 
failing too many of our children, crumbling infrastructure, 
climate change, and racial inequality are just some of the 
problems facing our great Nation. All of us--Government, 
business, and civic society--must work with a common purpose to 
address these challenges. The actions we take together will 
determine the future of our country for generations.
    I want to close by thanking our employees for their 
tireless work and singular focus on doing right by our 
customers. They have performed their jobs with integrity and 
commitment, often remotely, while navigating personal 
challenges.
    I look forward to working with all of you and look forward 
to helping our country. Thank you.
    Chairman Brown. Thank you, Mr. Dimon.
    Mr. Moynihan, you are recognized for 5 minutes. Thank you.

   STATEMENT OF BRIAN MOYNIHAN, CHAIRMAN AND CHIEF EXECUTIVE 
                    OFFICER, BANK OF AMERICA

    Mr. Moynihan. Thank you, Chairman Brown, Ranking Member 
Toomey, and distinguished Committee Members.
    Coming out of the financial crisis, my 200,000-plus 
teammates helped transform Bank of America into a strong, 
straightforward, client-centric company. We focus on what we 
call ``responsible growth.'' That positioned us well to be a 
source of strength when the health care crisis hit. We were 
able to help our clients and ultimately the U.S. economy 
through the worst economic shock in recent history, while at 
the same time increasing investments in support of our 
teammates and our communities.
    For our clients, that included financial assistance through 
our business as usual work and also helping deliver the timely 
Federal relief programs across the board. 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 those clients remained current on their 
payments, which is a good thing. We provided nearly half-a-
million PPP loans to small businesses; 83 percent of those 
loans have gone to businesses with ten or less 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 encourage them to apply, including 
targeted outreach to drive awareness to all communities.
    Apart from PPP, we remain the largest lender to small 
businesses, according to the FDIC. We have $35 billion in small 
business loan balances, and 60 percent of our small business 
lending is in LMI communities. We also processed more than $73 
billion in stimulus payments and took additional actions to 
help overdrawn clients access their full payment without 
offset. We deliver through our nationwide branch network, one-
third of which are in LMI neighborhoods, and also through our 
digital capabilities. In 2020, as a complement to our 
successful SafeBalance checking account, we launched Balance 
Assist, a low-cost, digital-only alternative to payday type 
loans, allowing clients to borrow up to $500 for a $5 flat fee.
    We also increased investments in our team during the 
pandemic. We expanded many of the 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 and take care of their 
children or their adult dependents during the crisis. We have 
funded more than 4 million days for our teammates.
    We implemented coronavirus testing and daily health 
screenings and installed more than 44,000 wellness barriers in 
our branches. We provided special compensation programs for 
teammates, including supplemental pay, enhanced overtime pay, 
as well as transportation and meal subsidies, and we had no 
layoffs in 2020.
    We ensured that all employees are compensated well. Last 
year, we increased our minimum hourly wage to $20, a year 
earlier than we had planned, and we will raise this to $25 an 
hour by 2025. Vendors within the U.S. also are required to 
provide wages at or about $15 per hour. To date, thousands of 
vendor employees have also 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 fourth year we have done so in a row.
    Maintaining our diverse and inclusive workplace continues 
to be a priority. Fifty percent of our management team and 50 
percent of our board is diverse. More than half our global 
workforce is 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. And, finally, over the 
last year, we increased our investment to support our 
communities in a time of stress. In June 2020, we accelerated 
our longstanding work to promote racial equality and economic 
opportunity to drive investments in jobs, small business, 
housing, and health care in local communities.
    We have committed $1.25 billion over 5 years and have 
already deployed $350 million of that, including equity capital 
investments in 17 MDIs and CDFIs, investments in 90 private 
equity funds run by majority-minority and women entrepreneurs, 
and focused on minority- and women-owned businesses, and 
donated 29 million masks and other PPE to underserved community 
centers.
    We increased our home ownership program to help more than 
60,000 Americans get into their homes in LMI neighborhoods. We 
raised that goal from $5 billion to $15 billion this year.
    We are also helping to accelerated the transition to a low-
carbon economy. We are committed at Bank of America to achieve 
net-zero greenhouse gas emissions before 2050. We are working 
alongside and supporting our clients in every industry to help 
them make that transition.
    We at Bank of America believe in capitalism, and it is the 
best way to solve the challenges that are facing society. We 
operate by delivering great returns for our shareholders and 
delivering for society. We call that responsible growth. Thank 
you.
    Chairman Brown. Thank you, Mr. Moynihan.
    Mr. Gorman, you are recognized for 5 minutes. Thank you for 
joining us.

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

    Mr. Gorman. Thank you, Chairman Brown, Ranking Member 
Toomey, Members of the Committee. Thank you for having me here.
    Last year, none of us could have predicted the 
extraordinary public health crisis that would unfold around the 
world.
    We remain in the midst of this crisis, and it has caused 
incredible 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 the 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 for their stability. 
We raised over $50 billion of capital for the industry sectors 
most affected by the COVID crisis: the airline, the cruise, the 
travel industries. Our team also helped raise health care 
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 extreme volatility.
    Today Morgan Stanley, through its three businesses, 
provides a stable foundation of support in any market 
environment.
    In the institutional business, we are a financial advisor 
to companies. We help them raise equity and debt capital--from 
taking them public to helping them issue bonds so they can grow 
and create jobs. We help public sector entities raise municipal 
financing. We also help pension funds, mutual funds, and other 
financial institutions trade and manage their assets.
    In our other two businesses--wealth and asset management--
we are managing over $5.6 trillion of assets for households and 
institutions, including endowments and pension funds that 
manage the retirements of our teachers, our firefighters, and 
our public employees. For millions of U.S. households, our 
services help families save money--whether it is for college, 
retirement, or to put a downpayment down on their mortgage.
    Beyond our day-to-day core businesses, we also support the 
more vulnerable in our communities through philanthropy 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 over the past year 
include:
    Providing grants to minority depository institutions to 
bolster their loan loss reserves in the wake of the pandemic, 
and to assist minority- and women-owned businesses to ensure an 
equitable recovery.
    Most recently we started a program to provide 60 students 
with 4-year full-time scholarships to Howard University, 
Morehouse College, and Spelman College--three of America's 
leading historically Black colleges and universities.
    In addition, we are concerned that how we deal with climate 
risk over the next decades will have a profound socioeconomic 
effect on our communities. Morgan Stanley recognizes the threat 
that climate change poses, and we are working with all of our 
clients to find ways to mitigate its effect.
    Finally, early in the pandemic, we committed to making no 
reductions in our workforce through all of 2020, and we stuck 
with it. We thereby provided reassurance to our over 70,000 
employees in this most extraordinarily difficult time. I am 
proud of the commitment all our employees showed to their 
clients and to our firm to navigate this past year.
    Chairman Brown, in your letter dated May 7 of this year, 
you asked us to provide information on additional topics, and 
we have included that in the attached addendum. for brevity for 
this hearing.
    I now look forward to your questions.
    Chairman Brown. Thank you, Mr. Gorman. And thanks for 
answering that letter.
    All of you spoke about lending to small business over the 
past year, yet over the past year in the middle of the 
pandemic, when small businesses and families have been 
desperate for loans, the amount of loans that your banks made 
has dropped. Instead of lending, instead of putting money back 
into the economy, you have all said publicly you plan to spend 
billions on buybacks and dividends.
    My question starts with Mr. Moynihan. Your bank's lending 
fell 14 percent over the last year. You just announced $25 
billion in stock buybacks. Why not lend that money to small 
businesses and families?
    Mr. Moynihan. Well, the good news, Chair Brown, is that we 
can do both. We can return capital to our shareholders to help 
them enhance their returns at the same time lending to small 
business. For the month of May, we did $1 billion in the first 
3 weeks of May. We have done $1 billion in new commitments to 
small business. That is up 29 percent, not over 2020 but over 
2019. We have--we have a $35 billion small business portfolio, 
and remain the largest lender to small business, according to 
the FDIC, and we continue to work closely with small business. 
The reasons why loans fell in the crisis are businesses did not 
need the credit, but also remember the PPP had a tremendous 
impact on demand for our clients, and as we did $35 billion of 
PPP loans, that obviously caused less borrowing from our lines 
of credit to small business.
    Chairman Brown. Well, Mr. Moynihan, you say you can do 
both, but you have not done both. During the pandemic, 5,000 
community banks across the country, their lending went up 10 
percent. Your job is to spur innovation and create jobs. You 
supposedly employ some of the best economic experts in the 
country. You just cannot tell me you cannot find a better way 
to spend $25 billion. You could pay your workers more. You 
could do a variety of things to serve the community a little 
better than stock buybacks.
    Let me shift to Mr. Dimon. Mr. Dimon, at most of your 
banks, the CEO makes--for all of you, at most of your banks the 
CEO makes 800 or 900 times your lowest-paid worker. So, Mr. 
Dimon, help me understand this. I do not think any of us on 
this panel or any of the Senators asking questions thinks that 
you work 900 times harder than the tellers and customer service 
agents at JPMorgan Chase. So help me understand this. How did 
we end up here where CEOs are making 900 times what some of 
their workers are making?
    Mr. Dimon. We are very proud of the opportunity we give to 
all of our people here. Our starting wage is approximately 
$35,000 plus medical benefits, retirement benefits. We take 
very good care of our people in terms of training and all that.
    My compensation is set by the board. They look at multiple 
factors, and that is how it takes place.
    Chairman Brown. But these are workers that I fight for 
every day, the people that work at JPMorgan Chase in Columbus 
and around the country. But 900 times, there is just really no 
explanation.
    Let me ask it to each of you in another way. This will be a 
simple yes-or-no question. I appreciate many of you have raised 
wages. A number of you mentioned that. I appreciate when you 
raise your wages for contractors, too. But your essential 
workers also need a voice in the workplace, so my question, yes 
or no, will each of you set an example to every other company 
in America, companies that usually follow Wall Street's lead, 
by pledging to remain neutral if your employees want to form a 
union? Yes or no. Mr. Scharf, we will start with you.
    Mr. Scharf. Chairman, we would work with our employees to 
make sure that their voice is heard and do everything we can to 
ensure that that voice is loud and clear.
    Chairman Brown. Will you remain neutral if they want to 
form a union?
    Mr. Scharf. As I said, I think we'd want to engage with 
them and understand what their concerns are and have a deep 
understanding of that before we make any decision.
    Chairman Brown. Ms. Fraser, would you remain neutral if 
they want to form a union?
    Ms. Fraser. We would certainly be supportive of our 
employees having as many opportunities as they possibly can.
    Chairman Brown. Mr. Dimon.
    Mr. Dimon. No.
    Chairman Brown. Mr. Moynihan.
    Mr. Moynihan. No, we would allow them to have their voice 
heard and see what happens.
    Chairman Brown. Mr. Solomon.
    Mr. Solomon. We would allow their voice to be heard.
    Chairman Brown. Does that mean you would be neutral on 
forming a union?
    Mr. Solomon. We would allow their voice to be heard.
    Chairman Brown. Mr. Gorman.
    Mr. Gorman. Like the others, we listen to and respect what 
our employees want to do, and we would work with them on that.
    Chairman Brown. We know unions can do much to give women 
and people of color some power in the workplace. The decisions 
you make affect workers all over the country, workers whom your 
companies could not function without. You have acknowledged 
that. But the leaders make those decisions, do not reflect your 
workers, they do not reflect the country. A couple years ago, 
Congressman Al Green asked in a House hearing when your 
companies would be led by women and people of color. Your banks 
have clearly not made enough progress.
    Mr. Gorman, you are one of only two CEOs who did not 
believe there would be a woman or person of color leading your 
bank in the next decade. Don't you have a responsibility to do 
something about that?
    Mr. Gorman. Absolutely, but I was asked a question. I 
answered it truthfully. The senior leadership at that point in 
time happened to be men. But we have since installed a woman as 
our CFO, just last week. We have a woman who is cohead of 
banking; we have a woman cohead of Asia. We have a woman who is 
head of all of Europe, Middle East, and Africa. Our chief audit 
officer is a woman. Our vice chairman covering sustainability 
is a woman. And 6 of my 13 indirect reports are people of 
diversity. So I absolutely am committed to it, Chair, but I 
also happen to reflect the reality that this organization has 
been built over many decades, and it takes a long time for 
talent to rise to the top.
    Chairman Brown. So I will re-ask the question. In the next 
decade, will one of those women be the CEO?
    Mr. Gorman. I think there is a distinct possibility, but I 
cannot guarantee it. That is for the board. What I am doing is 
giving the board choices, not just who replaces me but who 
replaces that person.
    Chairman Brown. OK. Thank you. You all need to do more, and 
we want to see permanent change, of course, as the country--the 
diversity of this country needs to be reflected in the Senate, 
in board rooms, and in CEO job positions.
    Senator Toomey, you are recognized.
    Senator Toomey. Thank you, Mr. Chairman.
    So I would like to start with a simple direct question, and 
I hope you will understand in the interest of time, I would 
love to get a yes or no answer, although Mr. Moynihan already 
answered this question in the opening statement that he made, 
and he answered in the affirmative. The question is simply: Do 
you believe that capitalism is the best economic system for 
producing the most prosperity for the greatest number of 
people? Mr. Scharf.
    Mr. Scharf. Yes, I do.
    Senator Toomey. Thank you. Mr. Solomon.
    Mr. Solomon. Yes.
    Senator Toomey. Thank you. Ms. Fraser.
    Ms. Fraser. Yes, I do.
    Senator Toomey. Thank you. Mr. Dimon.
    Mr. Dimon. Absolutely.
    Senator Toomey. Thank you. And, Mr. Gorman.
    Mr. Gorman. Yes, I do.
    Senator Toomey. Great. And, of course, obviously I agree on 
this. I am concerned that sometimes rather than defending this 
principle of capitalism, some of you have embraced so-called 
stakeholder capitalism, which really is something different 
than true capitalism. And I would just ask you to reconsider 
this, because stakeholder capitalism is meant to diminish the 
importance of a company's obligation to shareholders relative 
to other stakeholders. And I think that is a contradiction of 
the fundamental aspect of capitalism.
    One of the reasons I am concerned about this is because the 
implied criticism of capitalism inherent in stakeholder 
capitalism also lends credence to these ongoing attacks that we 
hear. So, for example, in March, our Committee held a hearing 
entitled, ``Wall Street v. Workers: How the Financial System 
Hurts Workers and Widens the Racial Wealth Gap''. And we had a 
witness who argued to us--and I will quote--``Credit debt 
itself provides a channel through which wealth drains from 
marginalized communities toward more affluent entities. Its 
burdens are not equally distributed, which exacerbates the 
racialized and gendered wealth gap.''
    So I would like to ask each of you, but in the interest of 
time, I think I will just go to Mr. Dimon, if I could, and ask 
you to--I mean, is it your view that the credit that your 
institution provides drains wealth from marginalized 
communities and exacerbates the racialized and gendered wealth 
gap?
    Mr. Dimon. No, I think you have heard from all the CEOs 
here that we are making an enormous effort to try to get credit 
to marginalized, lower/middle-income, majority-minorities, 
Black small businesses, women of color, et cetera, and we are 
doing a good job. We could always do more. We can acknowledge 
there are some problems that need to be fixed, and I think we 
are all trying to do it the right way. But it absolutely was 
not caused by Wall Street taking credit from those communities.
    Senator Toomey. It seems to me, in fact, that access to 
credit is a necessary precondition for poor people to move up 
to the middle class, not the other way around.
    Let me move on to an issue that is really important in my 
State. As many of you probably know, Pennsylvania is now the 
second largest producer of natural gas among all 50 States. And 
I have heard directly from constituents in this field that they 
are finding it more difficult to finance their business as a 
result, they believe, of commitments that financial 
institutions have made to reduce greenhouse gas emissions.
    Now, this is particularly ironic because, of course, as we 
all know, natural gas is the reason that the United States has 
outperformed most of the rest of the world in reducing CO2 
emissions. But, nevertheless, they believe they are facing more 
difficulty getting finance than ever before.
    Also, no matter what one thinks about the eventual arrival 
of more widespread use of electric vehicles, the fact is 
piston-driven cars are going to be on the roads for quite a 
while, so we need a certain amount of oil.
    So let me start with Ms. Fraser. My understanding is that 
Citigroup is committed to ending all financing for thermal coal 
companies by 2030, and, frankly, there might still be a need 
for some thermal coal after that date. But my real question for 
you is: Have you established or do you plan to establish a 
similar policy prohibiting the financing of either oil or 
natural gas, aside from if the economics would dictate that you 
should not provide the financing?
    Ms. Fraser. Thank you for the question, Senator Toomey. Our 
goal is to support our clients responsibly and help them 
transition to cleaner energy, create jobs in the future. This 
is going to require investing in new technologies and helping 
them develop. So what we are looking at doing is working with 
our clients in the transition and to support them in doing so, 
so that we can balance the evolution----
    Senator Toomey. I understand all that, and that is--but 
that is separate from my question, which is: Do you now or do 
you plan to have anytime soon a prohibition against financing 
the development of oil or natural gas?
    Ms. Fraser. We do not plan to have a prohibition against 
this, no. We plan to help our clients in the transition to the 
cleaner carbon technologies.
    Senator Toomey. OK. Thank you. I think I am out of time.
    Chairman Brown. Thank you, Senator Toomey.
    Senator Reed from Rhode Island is recognized.
    Senator Reed. Thank you very much, Mr. Chairman. Let me 
welcome the panelists today and thank you for being with us 
today.
    In 2006, I was fortunate to work on a bipartisan basis to 
pass the Military Lending Act, which established a lending 
limit of 36 percent for all military personnel, and I had some 
firsthand experience since I commanded a paratrooper company 
and was appalled at how my troops were taken advantage of 
downtown in trying to buy vehicles and payday lending, et 
cetera. And this situation has been exacerbated by the 
pandemic. People have been laid off. I heard one story of a 
gentleman in his 40s who was laid off. He had to take care of 
his mother. He had to take care of his partner and her four 
children. And so he went out to a payday lender and got a loan 
which had an annualized interest rate of 528 percent.
    When I was a kid in Rhode Island, they did not call that 
``payday lending.'' They called it ``loan sharking.'' And the 
agents were particularly burly gentlemen with no last names. I 
think we have to stop this.
    And so Senator Brown and I have proposed legislation that 
would extend this protection to all Americans, and I do not 
believe any of your institutions even come close to 36 percent 
interest. But in the spirit of trying to help unbanked people--
and I believe your efforts are very sincere--would you support 
this effort on our behalf to extend the 36-percent limit?
    Let me begin with Mr. Scharf and go down the list, but I 
understand that Mr. Gorman does not have a retail operation, so 
I will excuse him from answering. Mr. Scharf, please.
    Mr. Scharf. Senator, it is something that we certainly 
would take a look at. I think it is important that we would 
want to understand the way specific legislation is written and 
how we would account for potential changes in rates, including 
material movements, but, most importantly, to understand that 
there is access to credit in a responsible way is not lost, 
because we are as an institution extremely focused on bringing 
the unbanked and the underbanked into the financial mainstream.
    Senator Reed. Mr. Solomon, please.
    Mr. Solomon. We have a relatively small consumer footprint, 
Senator. We would want to work with you in ensuring that in a 
materially different interest rate environment you are not 
closing off lending to anyone where you wanted to get lending. 
But, in principle, we think it is good to have this 
transparency and to look carefully at this.
    Senator Reed. Thank you. Ms. Fraser, please.
    Ms. Fraser. Let me start. We absolutely do not charge 
interest rates that high for our customer bases. We would like 
to have a look at the law just to make sure there are no 
unintended consequences to it, but we appreciate the spirit of 
it and the intent behind it.
    Senator Reed. And, Mr. Dimon, please.
    Mr. Dimon. Yes, supportive, subject to a detailed review.
    Senator Reed. Thank you. And, Mr. Moynihan.
    Mr. Moynihan. Like my colleagues, we would have to see the 
law itself, and, in fact, one of the reasons why we created the 
new product we created is to help our clients be able to borrow 
from us for no interest and a $5 fee on an emergency basis to 
avoid the payday lenders. So we understand the spirit of it.
    Senator Reed. Thank you very much. And a final question to 
the panel. We understand that the foreclosure protection is 
expiring June 21, this June, very soon. And there are about 2.1 
million people who are 90 days behind in their payments, and 
they will be at risk of foreclosure.
    What are each of you doing--and I have very brief time--to 
ensure that this forbearance continues or at least to make 
aware your borrowers of the rights they might have under the 
CARES Act for support? Let me begin with--since I did not call 
on Mr. Gorman, let me call on Mr. Gorman, and then go down the 
list.
    Mr. Gorman. Well, unfortunately, Senator, this is not a 
business that we are in.
    Senator Reed. All right. You are excused. Thank you, Mr. 
Gorman.
    Can we start with--we will go in reverse order. Mr. 
Moynihan, who I must confess is someone I have known for a 
while. Mr. Moynihan.
    Mr. Moynihan. Senator Reed, we will work with the clients 
like we have been working with them. The good news is the 
amount of deferrals is way down, and most of the clients have 
become current, and we continue to work with them every day. So 
irrespective of the deadline passing, we will continue to work 
with the few clients we have left to help them modify their 
loans, attach the payments on the back end, and go forward.
    Senator Reed. Thank you. Mr. Dimon, please.
    Mr. Dimon. I totally agree with Brian, Senator; obviously, 
no one wants to go into a foreclosure. It is a terrible thing. 
And we have extensive programs in place to help people that go 
beyond Government programs, and we will work with each and 
every one of them to try to avoid foreclosure.
    Senator Reed. Thank you. I believe I have extended past my 
time, Mr. Chairman.
    Chairman Brown. Thank you, Senator Reed.
    Senator Reed. Thank you.
    Chairman Brown. Senator Rounds from South Dakota is 
recognized. Thanks, Jack.
    Senator Rounds. Thank you, Mr. Chairman. I appreciate the 
opportunity here. I would like to take a moment just to point 
out that the largest banks in the world are not represented at 
the hearing here today. As it turns out, the four largest banks 
in the world are State-owned banks from China and the fifth 
largest by a small margin is Japanese. So before the Banking 
Committee ties itself up in knots about any of the 
controversial issues on the table today, I would encourage my 
colleagues to keep in mind that we are all Americans, as are 
the firms who are represented here. We have a collective and 
strategic national interest in having a team of banks that are 
globally active and international leaders, but who are above 
all American. The last thing that any of us should want, at 
least any of us should want to see is a global banking system 
that is run by the Chinese Government. That is the road we will 
be continuing traveling down if we keep disparaging these firms 
or unfairly gold plating international banking standards while 
China, Japan, and others run circles around us.
    Mr. Dimon, I would like to preface my first question to 
you, sir. As of last month, the consumer prices have been 
increasing by more than 4 percent year over year. This is a 
level of inflation that we have not seen in over a decade. I am 
concerned that the Government's role in this could only be 
making the problem worse. Can you share your thoughts on the 
outlook for inflation and what role public spending and 
monetary policy are having?
    Mr. Dimon. So, Senator, thank you for that. Also, thank you 
for your comment in support of America's large successful 
banks, which are a critical part of having a large successful 
economy. I will just add to what you said. There is no large 
successful economy that does not have large successful 
companies, and financial services is an extremely important 
part of that. Our competition, I am not talking about next year 
but for the next 30 years, is going to be Chinese, and thank 
you for pointing that out.
    We support what the Government did early in the crisis. We 
think it stopped a massive financial crisis and possibly a 
depression at one point. But now you are talking about 
unprecedented, continued fiscal and monetary policy kind of on 
autopilot. I think the good news is that we are going to have a 
very strong economy. We are going to have it this year. It can 
easily go into next year and maybe even 2023 as all that 
spending takes place. But, yes, it will raise inflation. I 
think there was nothing wrong with 1.6 percent. I would expect 
it to go considerably higher than that. Hopefully it will not 
be out of whack and the Federal Reserve will be able to tamp it 
down. But, you know, we always plan for things worse than that. 
So I do not know what the future portends. I hope it does not 
go there.
    I think the other very important part of this is, whatever 
money we spend, that we spend wisely. If that money is wasted 
and is not productively spent, we will have more inflation, 
less productivity, slower growth, and the American democracy 
will have lost even more credibility in the eyes of the world.
    Senator Rounds. Thank you, sir. In a few days, voters in 
Harrisburg School District in Lincoln County, South Dakota, 
will be going to the polls to decide whether or not to approve 
a $60 million bond to build a new school. If the voters choose 
to move forward, the Federal Reserve will not simply be cutting 
the folks in Harrisburg a $60 million check. It is a lot more 
complicated than that. The institutions represented before us 
here today are the plumbing in the global financial system that 
make it possible for, just as an example, a Japanese life 
insurance company to perhaps invest in safe American municipal 
securities like the ones offered by the Harrisburg, South 
Dakota, school district.
    Ms. Fraser, you not only have a footprint in South Dakota 
with Citibank, but you are one of the most globally active 
U.S.-based banks. Can you tell me about how institutions like 
yours help make public borrowing markets function?
    Ms. Fraser. Yes, thank you. Thank you for the question on 
this. As we have talked about, the American banks play a very 
critical role in the global financial markets, and we support 
multinational companies. We support investors around the world, 
providing core services for their operations, and part of that 
is now making sure that there are opportunities to invest in 
job-creating infrastructure in different projects around the 
world and here in America. And it would be a great shame if 
those jobs and that network were in other hands than in 
American banks.
    Senator Rounds. Thank you. I would like to thank all of our 
witnesses here before us today, and I just think it is really 
important that we focus on the fact that they are all in 
competition with one another, but they are also in competition 
with other major banks around the world. And the last thing in 
the world that we want to see is the influence of the United 
States become less and less because of regulatory attempts to 
regulate them that would interfere with their ability to be 
competitive with other major banks throughout the world.
    Thank you, Mr. Chairman. My time has expired.
    Chairman Brown. Thank you, Senator Rounds.
    Senator Menendez of New Jersey is recognized for 5 minutes.
    Senator Menendez. Well, thank you, Mr. Chairman, and 
welcome to all of our guests today. Thank you for your 
appearance.
    I would like to ask you each a simple yes-or-no question to 
start off with. Do you think the economy as a whole would be 
better off if low-income and underserved consumers were able to 
participate more fully in the formal financial system, for 
example, if consumers had a bank account, for example, rather 
than going to a check-cashing place or a pawnbroker?
    Mr. Gorman. Yes.
    Mr. Dimon. Yes.
    Mr. Moynihan. Yes.
    Ms. Fraser. Yes
    Mr. Solomon. I would say yes.
    Ms. Fraser. Yes.
    Senator Menendez. OK. So, Mr. Moynihan, Mr. Scharf, Ms. 
Fraser, Mr. Dimon, have you implemented any no-cost, no-fee 
initiatives to help unbanked consumers obtain bank accounts? A 
simple yes or no.
    Mr. Moynihan. Yes, we have.
    Ms. Fraser. Yes, we have.
    Mr. Scharf. Yes, we have.
    Senator Menendez. OK. What would those be? What would those 
be?
    Mr. Moynihan. Senator, we introduced a no-overdraft account 
a few years ago. It represents about 30 percent of our new 
sales, especially to young people. It provides no ability to 
overdraft, which saves consumers, helps them manage their 
finances. It is available for $5 a month as a flat fee, and for 
students and people under the age of 24, it is free. And, you 
know, that is the type of account consistent with the BankOn 
set of standards, we have about 2.5 million of those 
outstanding so far. And as I spoke earlier about, we have our 
Advantage borrowing product which allows $500 of emergency 
borrowing for a $5 fee with no interest.
    Senator Menendez. Ms. Fraser.
    Ms. Fraser. Yes, thank you, Senator. Similarly, back in 
2014 we introduced an account called the ``Access Account,'' 
which provides no overdraft fees. It is a very affordable 
savings and checking product. And we work with entities like 
the National Urban League to make sure that this gets driven 
into some of the underserved and unbanked communities and do a 
big push to make sure that there is awareness of this product.
    Senator Menendez. We will be happy to look at some of your 
programs because this is a critical element of getting a very 
large part of the American society to be able to be banked 
instead of going to the check-cashing place, the payday lender, 
or the pawnbroker.
    Mr. Scharf, Ms. Fraser, Mr. Dimon, do you have a small-
dollar loan product of $500 or less similar to Bank of America?
    Mr. Dimon. We do not.
    Mr. Scharf. I do not believe we have one, Senator.
    Ms. Fraser. We do not.
    Senator Menendez. This is one of the critical elements of 
being able--I share Senator Rounds' views that you are all 
important institutions, not only in our financial system but in 
our economy. I share that from my perspective also as the 
Chairman of the Senate Foreign Relations Committee. I know our 
global competition. But I think that all of you have both the 
ability and, in my view, a responsibility to bring more people 
into our financial system as a portal of entry instead of where 
they are, which relegates them to far lower opportunities in 
the future, and I hope you will do that.
    Let me ask you, I looked at the lending that you all did, 
and particularly as it relates to COVID-related. Are you taking 
any serious and comprehensive measures to expand your 
relationships with small businesses? Any of you.
    Mr. Dimon. I think we are, almost all of us, making 
extensive efforts, particularly making sure we open branches. I 
think most of us have 25 or 30 percent of our branches in LMI 
majority-minority neighborhoods. Most of us have small business 
programs with outreach on the part of the CDFIs. Most of us 
have put money into equity or loans into MDIs who are in those 
communities, so, yeah, we are all making extensive efforts and 
hope to do more.
    Senator Menendez. Well, I looked at your PPP lending, and, 
in fact, there is a disconnect between what I am being told and 
the number and distribution of PPP loans, especially as it 
relates to minority-owned small businesses. So I would like to 
call that all to your attention. Maybe you are not getting the 
right information internally.
    Let me ask you two final questions. I have been the biggest 
champion of diversity and disclosure. Do you all believe that 
it is necessary to seek diversity, particularly for the bottom 
line? From my perspective, study after study has shown that. 
And do you believe in the public disclosure of your companies 
in terms of diversity on corporate board and senior executive 
management? Yes or no would suffice.
    Mr. Gorman. Yes.
    Mr. Moynihan. Yes.
    Mr. Dimon. Yes.
    Ms. Fraser. Yes.
    Mr. Solomon. Yes.
    Mr. Scharf. Yes.
    Senator Menendez. And, finally, do you believe that 
comprehensive immigration reform would help us build a more 
robust, stronger economy?
    Mr. Dimon. Absolutely.
    Mr. Moynihan. Yes.
    Mr. Scharf. Absolutely, yes.
    Ms. Fraser. Yes.
    Senator Menendez. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Menendez. You got more 
questions in 5 minutes than I have ever seen any Member of this 
Committee get.
    Senator Tillis from North Carolina is recognized for 5 
minutes.
    Senator Tillis. Thank you, Mr. Chairman, and thank you all 
for being here today.
    I first want to thank you all for the mobilization effort 
for the Paycheck Protection loans. I think it was Herculean. I 
know that financial institutions across this country saved 
countless businesses and millions of jobs. So I thought it was 
particularly extraordinary that you did it and were 
underwriting or taking applications before you really even knew 
the full rules of the road. So thank you for doing your part 
and helping us bridge the gap with COVID-19.
    I would normally in these committees like to talk abut 
business issues like some of the Fed supervisory functions that 
I think are inherently unfair, where you are asked to--you are 
basically dealing with a Fed supervisor who is judge, jury, and 
executioner without any due process. That is something I took 
up with Chair Quarles yesterday. But today I want to talk about 
a subject that I would seldom bring up in these committees. 
Goldman Sachs, Bank of America, Citigroup, and Wells Fargo 
signed a political statement which ran in the newspapers. It 
read in part, ``We should feel a responsibility to defend the 
right to vote and oppose any discriminatory legislation or 
measures that restrict or prevent eligible voters from having 
an equal and fair opportunity to cast a vote.''
    I do not think the statement specifically referenced the 
Georgia law, but that was what was being talked about in the 
press at that time. It was roughly the same time we were having 
a debate about the validity of the arguments, and I think that 
there is a fair basis for saying that that characterization, if 
it related to the Georgia law, may have been unfair and more of 
a political statement than an empirical observation of the 
statute.
    Look, the right to participate in politics without 
Government reprisal is the cornerstone of an equal and fair 
opportunity to cast a ballot. Efforts to reduce political 
protections or allow a Government to stifle dissent certainly 
seem antithetical to your statement when it comes to some of 
your global operations.
    All six of your companies have significant presence in Hong 
Kong, yet over the years, the Chinese Communist Party has 
systematically chipped away at electoral rights for Hong Kong. 
Take, for instance, the national security law just passed last 
year under the direction of the Chinese Communist Party. Under 
this law, if an individual engaged in activities aimed at 
dividing China, subverting the State, or generally endangering 
national security, they face harsh penalties, often life in 
prison. This is enforced solely by the Community Party-aligned 
National Security Committee and does not allow a defendant to 
take their case through the regular judicial system, if there 
is such a thing in China.
    This law is meticulously designed to prevent equal and fair 
opportunity to cast a ballot in Hong Kong. Hundreds of 
thousands in Hong Kong took to the streets to protest this law, 
and correct me if I am wrong, but I have not seen any 
statements from your companies on this. It was announced last 
week that the first person will be charged under the national 
security law, and they are going to face a trial without a 
jury. Instead of the individual going before a jury trial, they 
are going to go before a three-judge tribunal under the 
direction of the National Security Committee, a shocking 
departure from the common law traditions of Hong Kong.
    I am curious if any of you would make a statement today 
defending the right of the accused to a fair trial by jury and 
not a politically suspect tribunal in Hong Kong. That national 
security law is clear that it applies to all residents of Hong 
Kong, including expatriates and foreign nationals.
    You have an obligation to defend your employees. So I 
wondered, if an employee found themselves charged under this 
law, would you speak up? Several of your companies are in the 
process of expanding operations in Hong Kong, even after the 
Communist Party has destroyed any semblance of democracy. Now 
the Hong Kong Legislature is working on bills to provide tax 
breaks, limit disclosure requirements, and eliminate taxes on 
carried interest. These measures are clear efforts by the 
Communist leaders to persuade businesses to remain in Hong Kong 
despite the political upheaval.
    The Hong Kong finance professor went so far as to say, ``To 
keep these people around, we have to give them a tax benefit.'' 
The Hong Kong lawmaker said, ``The signal to the business 
community is very simple: Stay out of politics.''
    This is the stance of the Communist Party and apparently 
the cost of doing business in China. Whatever our failings, the 
United States clear and unequivocally does not assert these 
costs to business who operate within our borders. The United 
States does not set up extrajudicial systems to deprive 
citizens of their right to engage in politics. And the United 
States does not seek to quash dissent; we protect it.
    I hope you all keep these undeniable facts in mind should 
you choose to weigh in on American political issues in the 
future. But if you do, I expect consistency across the global.
    Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Tillis.
    Senator Warren from Massachusetts is recognized for 5 
minutes
    Senator Warren. Thank you, Mr. Chairman.
    As the pandemic swept across our Nation, bank regulators 
worried about the health of our biggest banks. So the 
regulators were generous. They gave the banks all kinds of 
help. They delayed compliance for important regulations. They 
relaxed standards. They even allowed banks to avoid paying 
overdraft fees if their accounts at the Federal Reserve had a 
negative balance.
    Now, when asked why they were being so generous to the 
banks, the regulators explained that the banks would, in turn, 
help their customers. So how exactly did that work out?
    At the start of the pandemic, bank regulators issued joint 
guidance that recommended that banks waive overdraft fees for 
their own customers. In other words, if someone was laid off, 
for example, and bounced a check, the regulators recommended 
that the bank automatically waive the fees and let people get 
caught up without paying $35 every time they stumbled, the same 
way a bank could do at the Fed if it overdrew its account.
    So let me ask the CEOs of the four banks--Citibank, Bank of 
America, Chase, and Wells Fargo, the four banks that 
collectively managed tens of millions of checking accounts for 
customers. While you automatically and at no cost got complete 
protection from overdraft fees at the Federal Reserve, could 
you please raise your hand if you gave the same automatic 
protection to your customers and automatically waived all of 
their overdraft fees?
    OK. I am not seeing anyone raise a hand, and that is 
because none of you gave the same help to your customers that 
the bank regulators extended to you, help that the bank 
regulators recommended that you give.
    So let me focus in on this just a little bit here. Let me 
start with you, if I can, and ask the question about whether or 
not any of you--you did not automatically waive. I just want to 
take this on down. So let us take a look at who actually paid 
these fees. According to Pew Charitable Trusts, it is 
disproportionately working people making less than $50,000 a 
year, African Americans, Hispanics, people who are struggling 
to get by. And how much did they pay in overdraft fees? They 
paid a combined $4 billion.
    So let me start with you. Mr. Dimon, you are the star of 
the overdraft show. Your bank, JPMorgan, collects more than 
seven times as much money in overdraft fees per account than 
your competitors. So, Mr. Dimon, how much did JPMorgan collect 
in overdraft fees from their consumers in 2020?
    Mr. Dimon. Well, I think your numbers are totally 
inaccurate, but we will have to----sit down privately to go 
through that.
    Senator Warren. These are public numbers.
    Mr. Dimon. And I also want to point out----
    Senator Warren. Can you just answer my question? How much 
did JPMorgan collect----
    Mr. Dimon. We did not overdraft the Fed account, and at----
any request when someone said they needed COVID relief they got 
$120 million in COVID relief.
    Senator Warren. So whoever--I am sorry, Mr. Dimon.
    Mr. Dimon. They needed COVID relief----
    Senator Warren. That was--Mr. Dimon, that was not the 
question. Did you have an automatic protection--so I am asking, 
you were recommended, the regulators recommended you offer that 
same kind of protection to your customer.
    Mr. Dimon. And we did.
    Senator Warren. How much, in fact, did JPMorgan----
    Mr. Dimon. And we did.
    Senator Warren. ----collect in overdraft fees from their 
customers in 2020? Do you know the number?
    Mr. Dimon. I do not have the number in front of me, but----
    Senator Warren. Well, I actually have the number.
    Mr. Dimon. Upon request----
    Senator Warren. $1.463 billion. That is nearly $1.5 billion 
that you collected from your customers.
    Now, do you know how much JPMorgan's profit would have been 
in 2020 if you had followed the recommendation of the 
regulators and waived overdraft fees to help struggling 
consumers? In other words, without that overdraft money, would 
your bank have been in financial trouble?
    Mr. Dimon. We waived the fees for customers upon request if 
they were under stress because of COVID.
    Senator Warren. I appreciate that you want to duck this 
question. Do you know how much your profits would have been if 
you had actually waived all the fees, as the regulators 
recommended?
    Mr. Dimon. We waived the fees every time the customer 
asked----
    Senator Warren. The answer is your profits would have been 
$27.6 billion. I did the math for you.
    So here is the thing. You and your colleagues come in today 
to talk about how you stepped up and took care of customers 
during the pandemic, and it is a bunch of baloney. In fact, it 
is about $4 billion worth of baloney. But you can fix that 
right now.
    Mr. Dimon, will you commit right now to refund $1.5 billion 
you took from consumers during the pandemic?
    Mr. Dimon. No.
    Senator Warren. Right now.
    Mr. Dimon. No.
    Senator Warren. No. That is right. Over the past year, you 
could have passed on the breaks that you got from the Fed to 
your customers, but you did not do it.
    Everybody else here, those other three bankers, will any of 
you agree to refund the overdraft fees that you collected?
    [No response.]
    Senator Warren. I did not think so. So no matter how you 
try to spin it, this past year has shown that corporate profits 
are more important to your bank than offering just a little 
help to struggling families, even when we are in the middle of 
a worldwide crisis.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Warren.
    Senator Kennedy from Louisiana is recognized for 5 minutes.
    Senator Kennedy. Mr. Chairman? Mr. Chairman, can you hear 
me now?
    Chairman Brown. Yeah, we can hear you now, Senator Kennedy. 
Go for it. Thank you.
    Senator Kennedy. OK. Thank you, sir.
    Mr. Solomon, did Goldman Sachs underwrite Saudi Aramco's 
IPO?
    Mr. Solomon. We were one of the underwriters in Saudi 
Aramco's IPO. Yes, we were.
    Senator Kennedy. How much did you make?
    Mr. Solomon. I do not know off the top of my head what our 
underwriting fees are, but we can certainly come back to you. 
It would have been millions of dollars, but I do not know the 
precise number.
    Senator Kennedy. OK. Mr. Moynihan, was Bank of America one 
of the underwriters of the biggest oil and gas company in the 
world?
    Mr. Moynihan. Sir, I do not know off the top of my head, 
but like Mr. Solomon, we will get back to you with the details.
    Senator Kennedy. I think you were. I will save you some 
time.
    Mr. Scharf, Wells Fargo, were you one of the underwriters 
for Saudi Aramco?
    Mr. Scharf. I do not know the answer to the question, 
Senator.
    Senator Kennedy. You were. I will save you some time.
    Ms. Fraser, how about Citigroup? Do you know?
    Ms. Fraser. Yes, we were one of the underwriters, sir.
    Senator Kennedy. How much did you make, do you know?
    Ms. Fraser. I am afraid I do not know how much that was, 
sir.
    Senator Kennedy. OK. Mr. Dimon, was JPMorgan Chase one of 
the underwriters?
    Mr. Dimon. Yes, we were.
    Senator Kennedy. OK. How about, Mr. Gorman, Morgan Stanley?
    Mr. Gorman. Yes, we were.
    Senator Kennedy. OK. Thank you.
    I wanted to ask Mr. Dimon a question, if I could. I want to 
talk economics a second. Could we agree, Mr. Dimon, that firms 
ought to be taxed where they conduct their business and produce 
their profits as a general principle?
    Mr. Dimon. Well, global taxation is very complex, but, yes, 
as a general principle.
    Senator Kennedy. OK. And I am not holding you responsible, 
Mr. Dimon, but how do you account for the fact that today about 
63 percent of American multinationals' profits are booked in 
countries where they have only 15 percent of their employees?
    Mr. Dimon. I honestly do not know the number, so I cannot 
comment on it.
    Senator Kennedy. I am not trying to put words in your 
mouth, but obviously what is happening is that American 
multinational companies are shifting their profits to so-called 
tax havens to minimize their taxes. Do you think that is a 
sound economic principle?
    Mr. Dimon. I do not. I think that the last tax reform that 
was done actually stopped a lot of companies from doing that. I 
do not know what----
    Senator Kennedy. Yeah, except--I am sorry. Excuse me.
    Mr. Dimon. Except I do not know what year you are looking 
at, but it did change substantially after 2017.
    Senator Kennedy. Well, it did not change that 
substantially. I thought it did, too, Mr. Dimon, but I looked 
it up. Today, right now, if you take American multinational 
companies and take a look at their taxes, 63 percent of their 
profits, the big boys and girls, have booked profits in tax 
havens where they only have 15 percent of their employees. Does 
that make sense to you? Or is that----
    Mr. Dimon. I do not know the numbers. I will take your word 
for it. And I do not know if it makes sense. I would have to do 
a lot more analysis of that.
    Senator Kennedy. OK. Let me ask you this--I do not mean 
just to dwell on you. Let me ask Ms. Fraser. Ms. Fraser, as you 
know, the Tax Cuts and Jobs Act, we passed it in 2018, and we 
cut Federal income tax from 38 percent to, I believe, 21 
percent. Now, if you look at the Fortune 500 U.S. companies, 
the biggest companies in America, the top 500, of those that 
were profitable, what is their average tax rate?
    Ms. Fraser. I can only speak to our own tax rate, Senator. 
I am afraid I do not know the numbers for other multinationals.
    Senator Kennedy. What is your tax rate?
    Ms. Fraser. Our tax rate is about 19 percent globally.
    Senator Kennedy. All right. I looked it up, and the average 
tax rate in 2018--that is when the Tax Cuts and Jobs Act took 
effect. That was the first year. And, remember, the TCJA cut 
the Federal corporate tax rate from 35 percent to 21 percent. 
The average rate of the Fortune 500 companies that paid taxes 
was 11.3 percent. That surprised me. Does that surprise you?
    Ms. Fraser. Yes. I am not familiar with the numbers, so it 
does surprise me.
    Senator Kennedy. And in the tax subsidies in the bill, I 
looked this up, too. Twenty-five companies claimed one-half of 
all of the tax subsidies in the bill. Five companies claimed 22 
percent of all of the tax subsidies in the bill. I did not know 
this. Those five companies are Bank of America, JPMorgan Chase, 
Wells Fargo, Amazon, and Verizon. Does that surprise you?
    Ms. Fraser. I can only speak for my own company, sir.
    Senator Kennedy. I am way over time. Did you Citigroup take 
some of these subsidies?
    Ms. Fraser. I do not know. I will have to get back to you, 
sir.
    Senator Kennedy. Can I ask one more question, Mr. Chairman?
    Chairman Brown. Yeah.
    Senator Kennedy. Mr. Solomon, here is my question. Not will 
we--not will we--but should we in your opinion be using fossil 
fuels 20 years from now? Not will we, but in your opinion 
should we?
    Mr. Solomon. There is no question we have a transition 
going on with respect to companies trying to----
    Senator Kennedy. I know that, but I am going to run out of 
time, and our Chairman is being real generous. Not will we, in 
your opinion should we be using fossil fuels 20 years from now?
    Mr. Solomon. If the technology available to allow us to 
user fewer fossil fuels and make the planet greener and, 
therefore, safer for everyone, and we can through those 
technologies have businesses and power and energy that allows 
us to operate our economy efficiently, yes, that is something 
we should strive for. Whether or not we will get there 20 years 
from now, you know, I cannot predict.
    Senator Kennedy. Thank you, Mr. Chairman.
    Chairman Brown. Thanks, Senator Kennedy.
    Senator Van Hollen from Maryland is recognized for 5 
minutes.
    Senator Van Hollen. Thank you, Mr. Chairman.
    A number of you have been taking positive steps in a number 
of areas, and I want to see if we can use this hearing to 
encourage all of you and your banks to follow the best 
practices of some of the leaders. And I want to start with 
CDFIs and MDIs because all of you have made statements 
supportive of CDFIs and MDIs.
    We are hearing increasingly from those institutions that 
debt capital is much less useful to them than equity capital. 
And I know in the case of Wells Fargo that you recently 
announced equity investments in Harbor Bank in Baltimore. I 
just want to ask each of you whether you have recently made 
equity investments in CDFIs or MDIs, and if you have, the 
magnitude of that amount.
    Mr. Dimon. Speaking for JPMorgan, we have invested $70 
million into 9 of the 18 black MDIs. CDFIs are different 
because they do not have equity per se.
    Senator Van Hollen. All right.
    Mr. Moynihan. At Bank of America, we have taken 5 percent 
common equity positions, up to 5 percent in 17 MDIs, and we are 
in the process of going through the other ones to see if they 
need the money. And then on top of that, we have $120 million 
deposits with the MDIs that provide their capacity and $1.8 
billion balances into the CDFIs up from $1.5 billion a year-
and-a-half ago.
    Senator Van Hollen. OK.
    Mr. Scharf. At Wells Fargo, we have invested in 13 MDIs 
almost $50 million and have provided an extensive amount of 
financing to the CDFIs. We have committed $250 million of our 
Open for Business Fund from the PPP fees. Over $150 million of 
that has already been distributed, and they in turn can lever 
that up.
    Senator Van Hollen. OK.
    Ms. Fraser. And at Citigroup, we have invested $50 million 
in equity into MDIs, and we work with MDIs and CDFIs across the 
country in different protege programs provide technical support 
to them, marketing, and other talent-based investments as well.
    Senator Van Hollen. OK. There is no easy standardized way 
for, you know, the public to determine how much you all are 
investing in terms of equity in MDIs or other investments, 
loans to CDFIs. Would any of you object to reporting to our 
Committee on a regular basis--we can figure out what the 
interval would be--as to where you are in making the kind of 
investments we are talking about? Any objections to that?
    Mr. Solomon. No.
    Voices. No objection.
    Senator Van Hollen. So let me now turn quickly to the issue 
of stock buybacks. I know as we come to the end of this 
limitation period many of you are talking about instituting 
stock buybacks. My question relates to wages paid. You know, I 
think if you have the capacity and the profits to reward 
investors, I think at the very least we should also be making 
sure that all your employees are being fairly compensated. I 
know that Bank of America has pledged to raise their minimum 
hourly wage for all employees to $25 by the year 2025. I just 
want to ask the rest of you if you are willing to make that 
kind of commitment.
    Mr. Gorman. Well, speaking on behalf of Morgan Stanley, we 
are certainly going to take a look at it. I discovered last 
night for the first time we had one employee on minimum wage, 
one employee of 70,000, at $7.50. I promise you that person is 
getting a raise. But the vast majority of our employees are 
well above the minimum wage.
    Senator Van Hollen. I get that. I am just looking to see 
whether people will make a commitment to raise the minimum wage 
to $25 an hour by the year 2025. If we could just go down the 
list, let me know if you are prepared to do that or get back to 
us on it.
    Mr. Gorman. We are certainly prepared to look at it and get 
back to you.
    Mr. Solomon. Speaking for Goldman Sachs, Senator, we have 
relatively few employees who earn below $25 an hour today, but 
we are prepared to look at it and get back to you.
    Senator Van Hollen. Thank you.
    Ms. Fraser. Speaking for Citigroup, similarly, we want to 
make sure that our people are paid fairly and competitively, 
and I am happy to get back to you on that specific question.
    Senator Van Hollen. OK.
    Mr. Dimon. Speaking for JPMorgan, we take very good care of 
our employees with training and medical and pension and dental 
and health care and everything that they need, and we have done 
a pretty good job going our own way. We are not going to 
imitate anybody else. We will be competitive.
    Senator Van Hollen. OK. Well, listen, just again, you know, 
we are in this period where people are talking about major 
stock buybacks. It seems to me this is also an opportunity not 
just to demonstrate to your shareholders your ability to reward 
their investments, but also to show your employees that you 
value their service. And I think the $25 by 2025 is a very 
reasonable target for all of your institutions.
    Let me turn finally to the issue of climate change and 
investments. I want to commend Ms. Fraser on her decision soon 
after she took over to establish a new, important coal policy, 
stating that in terms of realizing Citi's net-zero commitment 
by 2050 that they will exit all financing for coal power by 
2030 in the OECD and EU and by 2040 in the rest of the world. 
If I could just ask all of the other CEOs here today whether 
you would be prepared to follow the lead that Citi's CEO has 
made in terms of protecting our climate. Mr. Dimon, if we could 
start with you?
    Mr. Dimon. I think we need really a mature conversation 
around climate. We need a carbon tax. We need industry policy. 
It is not just about banks stopping financing. We are going to 
need oil and gas for a long time. It could be made a lot 
cleaner. So the conversation should be about how we are going 
to accomplish this in the right way. We can either accomplish 
reducing CO2 dramatically at no cost to having a healthy 
economy. If we do it the wrong way, we will not reduce CO2 
going down because it will simply move elsewhere, and we can 
damage the economy.
    So I just beg you let us have a rational conversation, 
mature and thoughtful, how to go about it.
    Senator Van Hollen. Well, and we have been trying, I have 
been trying as one to have a rational conversation for 15 years 
on this, and until recently I have not heard the CEOs of major 
banks endorse the idea of a price on carbon. I know that has 
changed because of alternatives that are out there.
    So, look, I think all of us have a part to play here, and I 
just want to ask that your other colleagues up here if the kind 
of example that Citi made in this particular area--and I 
understand there is oil and gas and other areas, but with 
respect to coal, whether you are willing to make those kind of 
commitments.
    Chairman Brown. And please be very brief in your responses.
    Mr. Gorman. My response is I would like to see what the 
alternative sources of energy are, which are essential to the 
economy. We are all trying to get away from coal dependency. 
The simple question is timing and alternatives and the economy 
is not held up as a result of it.
    Mr. Moynihan. Senator, speaking for Bank of America, our 
policies are in the public domain on various types of coal and 
other types of things. But, importantly, I think what we are 
all saying is we are here standing ready to help our clients 
make this transition and bring trillions of dollars of 
financing across this group in a way that helps those clients 
that produce energy do what they need to do, and they have 
announced their plans to do so. So I think that is critically 
important. That is the value of these big banks stepping up to 
help all the clients, large, medium, and small, make the 
transition.
    Mr. Solomon. I would echo the comments made by the other 
CEOs. We are working with our clients on this transition. We 
have made commitments around our own carbon emissions that we 
have published publicly, and we continue to be focused on 
wanting to have a very constructive conversation about how we 
can improve emissions going forward.
    Mr. Scharf. And for Wells Fargo, I agree with everything 
that has been said and just stress it is all about assisting 
our clients on the transition that we know has to occur.
    Senator Van Hollen. Thank you, Mr. Chairman. I hope 
everyone will support the American Jobs Plan, which is working 
together to get it done. Thank you.
    Chairman Brown. Thanks, Senator Van Hollen.
    Senator Scott of South Carolina is recognized for 5 
minutes.
    Senator Scott. Thank you, Mr. Chairman, and I appreciate 
you recognizing me for the 5 minutes.
    Questions for the entire panel. I know that Senator Toomey 
had a question about capitalism versus stakeholders capitalism, 
and I would add to that woke capitalism that seems to be 
running amok throughout the financial institutions of our 
country. It seems like you all are very comfortable picking 
winners and losers, specifically those who signed the letter in 
opposition to Georgia. That would be Bank of America, Citi, 
Wells Fargo, and Goldman Sachs. Picking winners and losers in 
certain areas, especially in election law, I just want to 
understand your position on that very important law, because I 
as a Southerner and African American who has voted in the South 
all my life would hate any form of discrimination, anything 
that restricts voting rights.
    What part of the Georgia law restricted voting rights or 
was discriminatory? Any of the four that signed the letter.
    Mr. Moynihan. Senator Scott, our company signed a letter 
about the importance of voting rights based on the input from 
our ESG Committee and our teammates about how they felt when 
the law came in. In our view, as a company we believe that 
there ought to be a concerted effort to get a set of standards 
that we can all agree to because all of us, including what you 
just said, is the access for people who are eligible to vote is 
paramount to having a great democracy. So it came out of our 
committee, similar to how we have made a lot of these decisions 
in which we have had concern.
    Senator Scott. Let me just--because I understood what you 
said, Mr. Moynihan, and I appreciate you comments. But my 
question is: What part of the law was discriminatory? What part 
of the law restricted--if you are actually increasing the 
number of days of early voting, if you are actually codifying 
in law dropboxes that were not a part of the law, if you are 
actually making it easier to vote but harder to cheat, what 
part of that law was discriminatory or restricted access? I 
have been studying the law, and that is one of the reasons why 
I ask that question, because from my perspective and, frankly, 
from the words on the paper--20-pound may be not worth much, 
but those words are very powerful. It did not prevent anyone 
from voting and, frankly, made it easier to vote earlier. And I 
just am dumbfounded by what the answer to the question was: 
Yes, we support capitalism, but the stakeholder capitalism or 
the woke capitalism seems to be running amok. And I say that 
because I cannot find anyone who will answer the question 
specifically giving me any examples or specific provisions of 
the law that we do not support. But at the same time, we will 
discriminate, it seems, against industries that we do not like, 
and that is where that stakeholder capitalism comes into play, 
because banks benefit from a number of explicit and implicit 
Government protections and subsidies, all backed by U.S. 
taxpayers.
    So if it is legal and constitutionally protected, the 
Second Amendment, why would you refuse to bank companies that 
are in the industry? I do not fully understand. So it seems 
like picking winners and losers in companies and you are diving 
into choose which laws you want to uphold and which laws you 
find offensive, but you cannot articulate a position on why 
those things are offensive, it just seems confusing to me that 
one would say, ``I support capitalism, but I am doing these 
things that are inconsistent with the statement that I support 
capitalism, and that I cannot articulate a single reason why I 
oppose the law in Georgia or why I oppose funding or financing 
the oil industry or manufacturers of guns.'' I just find it to 
be disheartening as a former member of some of the 
institutions, as an account holder, and a member of others, why 
it is you all have taken such a strong, clear position but 
cannot or will not articulate the reason for that position.
    [No response.]
    Senator Scott. Well, Mr. Chairman, I thank you for the 
time, and have a good day.
    Chairman Brown. Thank you, Senator Scott.
    Senator Warner from Virginia is recognized for 5 minutes.
    Senator Warner. Well, thank you, Mr. Chairman. I do not 
want to litigate the Georgia law with my good friend Senator 
Scott from South Carolina who we have worked on a lot of 
projects together, but I would start with the fact that the 
Georgia law that makes it illegal for someone to voluntarily 
give somebody a glass of water if you are waiting for hours and 
hours in line to vote runs counter to any kind of basic notion 
of fairness in American democracy. You know, there are a host 
of issues why I think reasonable people, not just from civil 
rights organizations but from business organizations across the 
realm, have said, you know, in the era of 2021, cutting back on 
voting rights should not be how our country ought to be moving 
forward.
    I am going to pick up on some of the questions that Senator 
Van Hollen asked, and I have talked with most of you guys and 
know you. You know I am not--I do not come in with an immediate 
bias against you, but I think we have got to put up--you guys 
have got to help put up more than you have. The wealth gap in 
this country should scare the hell out of all of us. How you 
guys have come through COVID--and you and I would argue--part 
of that is due to some of the Dodd-Frank reforms. Well-
capitalized, you have come through well. We lost 440,000 Black 
businesses last year. We have seen huge swaths of Latino 
businesses go down, lots of small businesses in Appalachia as 
well.
    One of the areas that we have--and I have talked with most 
of you about this--is community development financial 
institutions, CDFIs. The Federal Government finally--and I have 
got to give former Secretary Mnuchin some credit for this and 
people like Senator Scott, who was a partner on this. We put up 
$12 billion to both help CDFIs who lend to disenfranchised 
communities and low- and moderate-income communities. We put up 
$12 billion--$3 billion in grants, $9 billion in Tier 1 
capital. With almost all my conversations with you guys or your 
folks underneath, you have always had some kind of regulatory 
reason why you cannot help CDFIs or cannot do more.
    I am going to need you to lean in on this issue going 
forward, not just with CDFIs. I see each of what you guys 
have--I read about almost each week your institutions in many 
of the daily political rags that come out talking about what 
your institution is doing to help the disadvantaged. What I do 
not see, though, is how do we get a quarterly update on those. 
I really think there is a moment in time right now where, 
whether it is working with CDFIs, whether it is a housing 
proposal that we have been working on, that I hope to get the 
Chairman on board with as well, that would actually create a 
20-year mortgage product for first-generation homebuyers that 
would double the rate of wealth accumulation. And we have tried 
to price this with an interest rate subsidy that would still 
make your $900 a month mortgage payment on a 30-year note, you 
would actually be getting it on a 20-year note. Trust me on the 
math on this. We are going to need you to lean in. We are going 
to need you to be much more participatory. And, again, no 
disrespect to the great ads that run about what each of your 
institutions are doing, but we have got to really, I think, up 
our game, and if there are regulatory changes that need to be 
able to make sure you are able to put some Tier 1 capital into 
some of these institutions, if there are other tools, I would 
love to work with you. But when we have seen the kind of 
disruption that takes place, that has taken place in our 
economy over the last year, I think you guys can definitely be 
part of the solution.
    I appreciate some of the programs you have put up, but I am 
asking on a generic basis to be willing to engage with me and 
others who care about trying to do something on a systemic 
basis both on the wealth gap in this country and on the access 
to capital issues. As we showed with PPP, well-intentioned 
program, but the number of minority- or women-owned businesses 
that got those first rounds because they did not have prior 
banking relationships was huge. I know my time is about up, but 
I will be back to all of you on an individual basis and want to 
continue this conversation.
    The last thing I want to raise, though, I think I have--I 
am trying desperately look for the clock here. I think I have 
got one--what has not been raised yet I think from any of our 
colleagues is the questions around cyber. The country finally 
saw with the Colonial Pipeline ransomware attack what a 
challenge cyber can be. Think about the fact that the Russians 
were in 18,000 companies with the SolarWinds attack. If the 
Russians had decided to launch that kind of attack through 
SolarWinds rather than the one-off ransomware, it would have 
brought our economy to an end.
    You guys in the financial sector have done a pretty good 
job, but we are going to need you again both weighing in on, I 
believe, the need for mandatory reporting requirements so that 
the public and private sector can sort through this. The 
finance sector has got some of that. And we are also going to 
need to--and I know many of you have started looking at this--
look at the challenges around cryptocurrencies, because as we 
all know, that is the ransomware payment methodology of choice. 
We work with all of you and Senator Brown did leadership, and 
Senator Crapo, on the issue of the anti- money-laundering/
beneficial ownership bill we put in place last year, again, 
with your help. But we are going to need to partner together on 
this issue around crypto and the issue around cyber.
    And since I cannot see, Chair, is my time up or can I get 
in another comment.
    Chairman Brown. Your time has expired.
    Senator Warner. All right. I will be back to you. Thank you 
so much, and I look forward to visiting with the leaders.
    Chairman Brown. Thank you, Senator Warner.
    Senator Shelby from Alabama is recognized for 5 minutes.
    Senator Shelby. Thank you, Mr. Chairman.
    In recent years, activists and others have applied 
increasing pressure on our Nation's largest banks to withhold 
offering banking services to certain types of businesses, 
including energy companies and gun manufacturers, among others, 
for political reasons. Many banks have responded by restricting 
credit and financing to those businesses. However, restricting 
access to capital for law-abiding companies results in higher 
costs for consumers and slower economic growth.
    My question to the panel: Do you believe that political 
pressure or political motivation should influence a bank's 
decision to provide an entity access to capital? Or should a 
bank's decision to approve or deny credit or services be based 
on an impartial and risk-based analysis? Mr. Dimon, I will call 
on you.
    Mr. Dimon. I think most of the decisions we make are based 
upon risk-based analysis and whether we think financing an 
industry would be bad for our company, not based upon the risk 
that we take on. So we do have to make decisions, and all of us 
make different decisions. I think if the Government passes a 
law, we follow the law.
    Senator Shelby. Anybody else? No other comments?
    Well, I am getting to another area that we all better be 
concerned with, and that is the Federal debt. The Federal debt 
is currently over $28 trillion. The Congressional Budget Office 
projects debt to reach 102 percent of GDP by the end of this 
year and 200 percent--yes, 200 percent of GDP--by 2051 under 
current policies unless there are changes.
    Are you concerned about the Nation's growing Federal debt? 
And what impact does an unsustainable level of debt have on our 
economy as well as on your banking system or our banking 
system? Mr. Dimon, do you want to take that?
    Mr. Dimon. I do not want to, but----
    Senator Shelby. I know that.
    Mr. Dimon. You know, it is not an immediate concern, the 
102 percent. The country has enough wealth, enough income, but 
we do need to grow. We need rational policy. It will become an 
issue at one point when you have that dramatic growth sometime 
in 2030 to 2040. And so I think it is much better to try to 
deal with that issue today than it is to deal with the issue 
down the road.
    Senator Shelby. Mr. Gorman, are you still with us?
    Mr. Gorman. Yes, sir.
    Senator Shelby. Have you got a feeling on that?
    Mr. Gorman. I do not like debt, so that is my primary 
feeling. And I do not like the debt when it gets over 100 
percent.
    Listen, there are a lot of ways to solve this. You can 
reduce your spending, you can raise the taxes, or you can make 
corporations more profitable so they generate more taxes. And 
finding that balance--and that is, you know, the artful job our 
legislators have to help us work for, but, yes, I am concerned 
about it. I think there is a limit at which you cannot rely 
upon the good will and largesse of the rest of the world to buy 
that debt. And that starts becoming a strategic issue for the 
country eventually. We are not there. Jamie is, in my opinion, 
dead right. But I would not like to see this play out for 
another decade like this.
    Senator Shelby. Could that have an impact on the concept of 
the U.S.' currency as the number one trading currency in the 
world? China is looking at all this.
    Mr. Gorman. I think it will take a long time for that to 
happen. You know, in general, when you see the world get in 
trouble, the U.S. dollar becomes the flight of security where 
people go for safety and soundness. I think it is going to be a 
very long time--the U.S. economy is nearly a $20 trillion 
economy and has a tremendous system of law, so I think that is 
a very long time away. But that does not forgive us taking the 
lack of discipline simply because, as I said, taking that for 
granted.
    Senator Shelby. I know you guys are not on the Fed, but 
price stability is important to all of us. That is one of the 
top mandates of central banks, is price stability, including 
our own. As we continue to pile on the debt and pay interest on 
the debt, pay nothing down, do not bring it down, it has got to 
have serious consequences in the road ahead. Mr. Gorman, do you 
disagree?
    Mr. Gorman. Well, no, I agree with you there is a level of 
debt that is unsustainable. Right now, though, what we need to 
do is get this economy back to its primacy, which it is on the 
way for. The low interest rates, some of the fiscal stimulus is 
obviously helping that. But it is not an unlimited pool that we 
can draw on. It is a pool in a time of crisis.
    Senator Shelby. I thank all of you.
    Chairman Brown. Thank you, Senator Shelby.
    Senator Cortez Masto from Nevada is recognized for 5 
minutes.
    Senator Cortez Masto. Chairman, thank you so much. Thank 
you to the panel members. I appreciate some of you I had the 
opportunity to talk with the last couple of weeks. Thank you 
for taking the time.
    Let me start on an issue that I do not think has been 
addressed yet, and that is foreclosure prevention. Let me ask 
you, you know, there are about 2 million families who are at 
least 90 days delinquent on paying their mortgage. Millions of 
people's jobs disappeared overnight because of the pandemic, 
and that is more so in Nevada than anywhere in the country. At 
one point in time, we had the highest unemployment rate because 
of this pandemic.
    Four percent of borrowers have not been able to pay their 
mortgage, so for the bankers, what are you doing to work with 
them to keep them in their homes? Can you talk a little bit 
about what you are doing to address and help them when they are 
bumping up against foreclosure? And I do not know who wants to 
start. Wells Fargo?
    Mr. Scharf. Sure, Senator. So, first of all, for the loans 
that we own, we have extended our moratoriums for foreclosures 
and evictions until the end of the year. We have also come out 
and supported publicly the CFPB's proposal to extend those 
moratoriums to apply to the whole industry, which for us would 
impact the loans that we service. And we certainly encourage 
other agencies to align to those policies.
    For those that are exiting forbearance, I would say, you 
know, the most important thing is we have very aggressive 
outreach through all communication channels. We have many 
modification programs that are available for customers in need, 
and what we need to do is be in as close contact to them before 
they get there as we possibly can. So we are doing it 
ourselves, and we are working with outside groups as well. 
Certainly, if customers can resume payments, that is terrific. 
But if they cannot resume them, we have a significant number of 
modification options to work with them.
    Senator Cortez Masto. Thank you.
    Mr. Moynihan.
    Mr. Moynihan. Similar themes to Mr. Scharf's comments in 
terms of we contact the borrowers before they reached in, 
worked to modify them, to add on to the back of loans, and, you 
know, there is a suspension of all foreclosures, obviously, 
through the end of the quarter here. But we work with those 
clients. The good news is, quite frankly, the number of people 
who are still in our company is down dramatically, like by 90 
percent. So we are working with the remaining ones. Many were 
current, even though they asked for deferrals, and so we will 
continue to work with every one of our clients. You know, as 
Mr. Dimon said earlier, taking someone through the foreclosure 
process is not what we want--it is what we want to avoid at all 
costs.
    Senator Cortez Masto. Thank you. I appreciate that.
    Mr. Dimon.
    Mr. Dimon. I would just repeat what they said. First of 
all, it is down about 90 percent, and we have several 
modification programs. And anyone who is getting close to 
foreclosure, we work with--where we own the loan--we do not 
necessarily control it if we do not own the loan. We work with 
them to try to find many programs to defer payments, to help 
them through their tough time.
    Senator Cortez Masto. Well, I appreciate that, and really, 
coming from Nevada, I was Attorney General at the time working 
with many of you to address the foreclosure crisis we saw. We 
have opportunities and services in the State of Nevada that I 
hope you are also taking advantage of to help homeowners. But 
the good news, yes, they are down 90 percent, but there are 
still several homeowners in Nevada, because of this pandemic, 
that are still struggling and not back to work yet because of 
the nature of the hospitality and travel industry. So I am 
hoping, please, that you are working with them and the various 
community organizations that are out there as well.
    I do not have much time, so let me jump to another issue 
that is important in my State. I believe Senator Van Hollen 
talked a little bit about this, and I appreciate the 
investments your banks are making in minority depository 
institutions and community development financial institutions. 
However, I am aware that these entities exist unevenly across 
the Nation. Nevada has no MDI headquartered in the State. There 
is only one certified CDFI in Nevada. In the past 30 years, we 
have only had eight awards to a Nevada-based CDFI. We are the 
only State with a single-digit award amount. By contrast, 22 
States with a smaller population than we have in Nevada have 
received many more CDFI awards.
    So my question to all of you is: How can you ensure and 
work to ensure that States and communities without a robust 
network of minority depository institutions and community 
development financial institutions benefit from the racial 
equity investments that we have made and that you have 
promised? And that is open to all of you, and I do not know if 
somebody wants to start. Ms. Fraser.
    Ms. Fraser. Yes, I think one of the obvious areas that we 
have talking about is affordable housing and the commitments in 
terms of closing the racial wealth gap. Housing is going to be 
a very important part of that. Seeing the PAPs programs getting 
extended would make a big difference in making sure that that 
market and those programs can reach as many people as possible, 
and that would remove one of the constraints at the moment.
    Senator Cortez Masto. Anyone else?
    Mr. Solomon. I would comment, Senator, that I think your 
comments here that we need to work to strengthen this across 
the country, you know, are appropriate. They are uneven across 
the country. We continue to work to partner broadly with CDFIs 
in our new initiative, where we have committed $10 billion to 
close the racial wealth gap for Black women in this country. We 
are making investments across the United States through all 50 
States. But we would be happy to work with you to find ways 
that we could have a larger benefit.
    Senator Cortez Masto. Thank you. I know my time is up. I 
will submit the rest of the questions for the record.
    Thank you, everyone. Thank you, Mr. Chair.
    Chairman Brown. Thanks, Senator Cortez Masto.
    Senator Hagerty from Tennessee is recognized for 5 minutes.
    Senator Hagerty. Chairman Brown, Ranking Member Toomey, 
thank you for holding this hearing.
    During the pandemic our financial sector, including large 
banks, community banks, credit unions, farm credit lenders, 
fintechs, and all of their employees, showed by the private 
sector, are often much more efficient than the Government in 
solving bipartisan problems.
    For example, the PPP we have talked about mobilized our 
Nation's private lenders last year that shifted over $300 
billion to save small businesses, and they did it in just 14 
days. Compare that with the 4-plus months that Biden 
administration has taken on the Shuttered Venue Operators Grant 
Fund. They still have not distributed a dime to save struggling 
small businesses in my home State of Tennessee.
    America's financial sector is the envy of the world. It is 
the most robust, it is the most efficient. It delivers the 
greatest liquidity in financing at the lowest cost of capital 
anywhere. But our financial sector will not remain the envy of 
the world if American businesses and employees have to pass a 
political litmus test in order to secure the capital necessary 
for growth. We did not develop the greatest capital markets and 
financial system in the world by letting extreme social 
ideologies dictate business decisions.
    What we are seeing today is the debanking of financially 
sound, legal American businesses that support millions of 
American workers. This is happening simply because these 
companies are in industries that are politically unfashionable 
in some places. This debanking will either force those 
companies and their jobs to other countries or, worse, it will 
put those American companies and their workers permanently out 
of business. In the long run, this is going to be very 
detrimental to American workers, American businesses, and our 
markets.
    Private corporations that you all run can make their own 
decisions, but you should expect heavy scrutiny when leaders 
use politics as the driver for business decisions that may harm 
American businesses and American workers. I hope that our 
largest financial institutions will set the standard for 
nondiscriminatory business practices and keep politics out of 
finance.
    For my first question, I would like to turn to Ms. Fraser. 
I want to follow up on something that Senator Warner started 
on. You and I have actually talked about this in the past, but 
I want to come back to the cyberattack on SolarWinds, the 
ransomware attacks on our Colonial Pipeline, and also one of 
the largest U.S. insurance companies recently, a cyberattack. 
These are highly serious cybersecurity vulnerabilities that 
have been exposed in our infrastructure. We are also seeing a 
lot of fraud and hacking in the cryptocurrency area. You and I 
talked about that as well a few months ago. And Citi is a very 
global bank. It has got operations and customer interactions 
increasingly moving into the digital space. I want to be sure 
that all of you are laser-focused on these risks.
    Ms. Fraser, what are some of the biggest cybersecurity 
risks that you are seeing around the globe? And, second, how 
can we improve Government coordination with the private sector 
to address this?
    Ms. Fraser. Thank you for the question. I think it is one 
that keeps all of us at night as one of the greatest risks to 
the financial system right now. This can be perpetrated by 
Government actors, by organized crime, and a whole variety of 
institutions and individuals trying to cause some harm. It gets 
very critical that we continue sharing intelligence about what 
is going on, making sure that there are plenty of forums in 
which we can share intelligence about what is happening and why 
so that we are able to protect our institutions, that we 
continue making major investments--our own firm invests almost 
close to $1 billion a year in cyberprotection--and that the 
intelligence that the U.S. has is something that we use to 
defend against attacks on American companies and the financial 
institution worldwide is absolutely critical.
    Senator Hagerty. As Senator Warner mentioned, and I do as 
well, we share great concerns about the vulnerable of our 
financial services system on cybersecurity, and we also are 
watching very closely what is happening in the cryptocurrency 
markets. And as Senator Warner said, he wants to work with all 
of you in addressing this. I do as well. So you have got 
bipartisan support here in the U.S. Senate to address this 
significant problem. And I think with our largest banks, we can 
make significant progress and set the standard, frankly, for 
the entire financial system. So I look forward to working with 
all of you in this regard.
    Mr. Chairman, thank you. Mr. Chairman, I yield back.
    Chairman Brown. Thank you. The thing froze. Sorry about 
that. Thank you, Senator Hagerty.
    Senator Smith from Minnesota is recognized for 5 minutes.
    Senator Smith. Thank you, Mr. Chair, and thanks to all of 
you for being with us today. I appreciate it.
    I would like to dive in a little bit on this issue of 
climate risk disclosure. So in February, when Fed Chair Jay 
Powell testified before our Committee, in response to a 
question that I asked, he said, ``Clearly we ought to be going 
to more of a template and more standardized'' template for 
climate risk disclosure. And, you know, for most people, what 
this would mean is an SEC rule requiring public companies to 
disclose their climate-related risk in some sort of a standard 
and comparable way so that people can see across--you know, see 
what that risk is across different organizations. And I know 
that your firms consistently assess risk, including climate 
risk. So let me just ask each one of you, if you would, yes or 
no, and if no, why not, do you think that the SEC should issue 
a rule setting out some sort of standardized climate risk 
disclosure framework? I will start with Mr. Scharf.
    Mr. Scharf. Senator, first of all, I am proud of the steps 
that we are taking on disclosure. I actually do not know enough 
about different industries to know whether--that that is the 
best approach or not. We have been very focused on developing 
our own sets of disclosures and understanding how we are going 
to measure different aspects. And it is certainly something we 
can think more about and come back and talk to you about.
    Senator Smith. OK. Well, I will come back to that.
    Mr. Solomon.
    Mr. Solomon. Yes, I appreciate the question, Senator, and 
it is something that we would be open to. But I think it is 
very important that you are very specific about the form it 
takes and, in particular, the consistency across regimes. This 
consistency issue is, I think, a very, very big issue. That 
will be very, very important. We would be happy to discuss that 
further with you.
    Senator Smith. I agree. I think that is right. The point 
here is that you would have some sort of assessment of what 
material is and that that can be clear so that it is not 
everybody picking their own idea of what material is.
    Ms. Fraser.
    Ms. Fraser. Thank you very much. We voluntarily made a 
large amount of disclosures on this. I would defer to the SEC 
as to what they believe the details of it should be. And as Mr. 
Solomon said, there is great benefit from consistency.
    I think we also have to recognize there is not a lot of 
data out yet, and so whatever system is put in will evolve over 
time as we get better-quality data and better understanding of 
this going forward.
    Senator Smith. But having a standardized rule so that it 
could be comparable across platforms makes sense to you?
    Ms. Fraser. The consistency element is critical, yes.
    Senator Smith. Mr. Dimon.
    Mr. Dimon. Well, you have to put this in perspective a 
little bit, because we make a tremendous amount of disclosures 
already in ESG, so we are not against it. We are in favor of 
that kind of thing. And very often we have to make more 
disclosures. Our 10K is already 400 pages long, and most people 
do not read that.
    So, yeah, I am in favor of it, but you have got to be very, 
very thoughtful about what it is, what you are trying to 
accomplish, and how it is not just done for banks but is done 
for other critical industries in the right way to accomplish 
the goals you actually want to have.
    Senator Smith. Right. But the point that there would be 
something that would be standard and consistent that would 
allow companies, you know, to disclose consistently would make 
sense to you?
    Ms. Fraser. Yes, but you would not be able to do that 
immediately.
    Senator Smith. OK. In the interest of time, I want to just 
skip to one other thing that I would really like to talk about, 
because I think it gets to this question that has been coming 
up from some of my colleagues on the other side about this so-
called wokeism. So here we go.
    Last year, the Department of Labor issued a rule under the 
Trump administration Department of Labor that sharply limited 
the circumstances in which pensions, 401(k) plans, could 
consider environmental or social or governance factors in their 
investment decisions, which meant that, in effect, most 401(k) 
plans would not even be able to offer workers the option of 
keeping their investments away from companies that discriminate 
against their workers or support polluting industries, for 
example. So to me, this seemed like a politically motivated 
rule, and it has also imposed a difficult, unnecessary burden 
on plans.
    Now, I have introduced legislation that would undo this 
Trump rule. In fact, the Biden administration has moved forward 
administratively on this. My question to you--and I will just 
maybe go to the two that I did not have a chance to hear from 
before--is: Do you think that the Trump administration was 
right to repeal that rule? Or do you think it is reasonable to 
have a standard for allowing plans to consider ESG factors if 
that is what their investors are asking for? Mr. Moynihan.
    Mr. Moynihan. Well, Senator Smith, I will tie this back to 
the last question, which is public companies have worked 
together with the Big Four accounting firms to come up with a 
set of metrics and standards that 80-plus companies have signed 
onto. The key is to standardize this, and the key is to bring 
these metrics together, and that would allow people to be 
judged across industries and across investments on the ESG 
factors. That is out there. We have disclosed it. Eighty other 
companies have signed up to disclose it. And I think that feeds 
into the question, with the demand of the investors to 
understand these factors, a consistent, straightforward, 
simplified set of disclosures that crosses industries is 
needed, and that would then not require rules about what to 
think about because the investors could actually see and make 
choices.
    Senator Smith. Thank you.
    Mr. Chair, I know I am out of time. I just want to observe 
that I just disagree with my Republican colleagues on this 
broader issue. This is not about being woke. This is about 
providing individual investors with the information that they 
want in a clear and understandable way, and I think that that 
is a good thing for stability and a good thing for the markets 
and a good thing for people. Thank you.
    Chairman Brown. Thank you. Thank you, Senator Smith.
    Senator Cramer from North Dakota is recognized for 5 
minutes.
    Senator Cramer. Thank you, Mr. Chairman, and thank you to 
our panel. A special thanks to the five of you that reached out 
and that I was able to meet with in the last few weeks. Mr. 
Gorman, I am looking forward to doing that in the future with 
you. I found the meetings to be productive, frank, and even 
encouraging. So thank you all for that.
    You have answered a lot of questions today about your ESG 
policies. I think there has been some clarification. I am going 
to try to ask some real specific questions that might help 
inform me a little more.
    The first question I would have for all of you is: Do you 
think U.S. energy investment--or do you think that reliable 
energy, reliable electricity is important to the United States 
economy? And you only have to answer if you say no. Is reliable 
energy important to our economy?
    [No audible response.]
    Senator Cramer. So let me ask this: Do you think global 
energy demand is going down? Does anybody think global energy 
demand is going down?
    [No audible response.]
    Senator Cramer. Let me ask this specific question to you, 
Ms. Fraser. Does Citigroup have a coal reduction policy or do 
you have a carbon reduction policy?
    Ms. Fraser. We have a policy which is reflective of a risk-
based assessment on the coal sector. We see declining demand. 
We also take into account reputation and other risk factors 
when we make a decision as to where we are going to be 
financing and not. We have a focus on helping to support our 
clients decarbonize, but are very mindful there is a very 
important balance here between energy policy and the economy 
and making sure that that transition achieves both goals.
    Senator Cramer. I always like the word ``transition.'' I 
believe that the United States of America is the solution in 
the transition. In fact, I would submit to you that there is 
global demand that is increasing, and that many of the policies 
that my friends on the left want to promote simply transfer 
their climate guilt to other countries. And I just would submit 
that investing in the fossil energy sector in the United States 
of America is the single best way to lower carbon emissions 
globally, while working with the innovators in those industries 
to reduce it.
    So words matter. When the policy says, you know, we will 
not invest anymore in anybody that uses more than 5 percent 
coal-generated electricity, I would say, well, what if that 
coal-generated electricity actually has zero emissions, you 
know, 10 years from now because of technology? So I just want 
you to know that the words actually do matter, as you are 
learning today.
    I also know that the voices in your ears are the left. It 
is the woke crowd or it is the environmental extremist crowd 
that is speaking through proxies or speaking through their 
institutional investors. And I just want you to know that I am 
going to be, you know, another voice in your ear pointing out 
some other things.
    Let me ask, any one of you, I guess, can answer this. When 
you consider, for example, the risk of investing in a large 
server farm, let us just say Amazon comes to you and says, ``We 
are going to build a large server farm in a city where you have 
a big bank, and we would like to borrow $300 million for that 
server farm,'' do you consider whether or not that server farm 
is going to have 24-hour-a-day, 7-day-a-week electricity, 
redundant and reliable electricity? Mr. Solomon, would that be 
a consideration in an investment like that?
    Mr. Solomon. Senator, I appreciate the question. I think 
when we look at any transaction with any company, the people 
that evaluate credit and risk think about a broad, broad array 
of risks. And so in looking at something like that, certainly 
they would be thinking about power source and how that worked 
in terms of making a credit decision. It would be one of many, 
many factors that would be considered. The biggest factor, if 
you are doing something for Amazon, would simply be the 
overriding credit of Amazon as, you know, the largest company, 
one of the largest companies in the United States.
    Senator Cramer. Certainly, and I use Amazon because they 
are large and because they do have large server farms, and 
server farms require a lot of electricity, but they cannot have 
the lights go out. And regardless of what the fuel source is, I 
would submit to you that you just cannot have the lights go 
out.
    My point is--and maybe, Mr. Dimon, you could wrap up with 
me on this. My point is that I think we have this tendency 
suddenly in our culture today, for whatever reason, to think 
that energy is an industry sector over here and we can just 
sort of set that aside over there and just manufacturing, 
transportation, you know, infrastructure, the tech industry, 
all of that we can still deal with over here. And we simply 
cannot.
    So here is my question to you all. I want to help you be 
part of the solution to this transition that we talk about of 
lower emissions, and I would say that is going to involve a lot 
of investment in the United States of America's energy sector, 
including fossil energy.
    Chairman Brown. Thank you, Senator Cramer.
    Senator Tester from Montana is recognized for 5 minutes.
    Senator Tester. Thank you, Chairman Brown. I want to thank 
all the folks who are here as witnesses today.
    I want to talk about housing from a little bit different 
angle, OK? I have always talked about availability and 
affordability. It is a problem and continues to be a problem. 
It was a problem before the pandemic. It is a bigger problem 
now because we are seeing prices go up. We are seeing people 
paying premium prices, sight unseen, cash on the barrelhead and 
all that stuff to buy a house. Some of them are going through 
you guys to buy it, but there is one thing for certain. Demand 
is outpacing supply, and the result of that is we are seeing 
housing prices in States like Montana go through the roof. I 
mean, we are talking 20, 30, 40, even 50 percent increases over 
the last 15 months.
    So what I would like to know is: Is this a bubble? Are you 
folks concerned about this? And if it is a bubble and that 
bubble pops--and I was around here in 2009, 2008, whenever it 
popped last time, and there was a lot of uncertainty. So the 
question is: If it is a bubble and if that bubble pops, are you 
guys in good enough shape to handle that? And I assume you are 
going to say yes. Tell me why. And if you say no, thank God for 
your honesty. So I think we will start with Mr. Scharf, and we 
will just go right down the line.
    Mr. Scharf. Well, I think the answer to the first part of 
your question is you have to look market by market. I think our 
assessment when we look at the markets which have seen material 
appreciation are because of changes in trends. As far as how we 
feel, we have been, I think, relatively conservative in terms 
of how we have underwritten and how we continue to underwrite, 
and between our loan loss reserves and the amount of capital 
that we have, we think we will be just fine.
    Senator Tester. OK. Mr. Solomon.
    Mr. Solomon. Unlike a number of the banks here, we have a 
very, very small, tiny mortgage lending book, so, you know, 
broadly speaking, I think you do have to look at what is going 
on from a monetary fiscal policy perspective, how it is 
accelerating asset prices, how it is affecting prices of homes 
as we go forward. But in terms of our institution, it is a 
very, very small risk in our business platform.
    Senator Tester. But if we were to have the bubble pop, it 
would have impacts on you whether you have a small part of it 
or no. Do you see it as a bubble?
    Mr. Solomon. I do not see it as a bubble, but I think there 
is a lot going on that is inflating asset prices, and I think 
we have to continue to watch asset prices, watch inflation, 
watch monetary and fiscal policy, and hopefully the Fed will 
get the right balance. And if they do get the right balance, 
then it will turn out that there was not a bubble. And if we do 
not get the balance right, there will be issues. And, of 
course, we will have--there will be secondary or tertiary 
impacts to all this that will affect all these institutions, 
but we are very well capitalized and I think very well 
positioned as an industry to withstand that and continue to 
participate constructively at that time.
    Senator Tester. All right. Ms. Fraser.
    Ms. Fraser. I think similar to Mr. Solomon, this has to be 
monitored very closely, and I think it is too soon to call 
whether it is or not. Housing is absolutely critical. We can 
support it through mortgages as well as affordable housing 
finance, and many of us have talked about the importance of 
support in that arena. We are speaking for Citigroup. We have a 
lot of reserves on our balance sheet, and we believe that we 
are in strong financial health, and we are hoping that with the 
recovery those reserves will not be----
    Senator Tester. Mr. Dimon.
    Mr. Dimon. Senator, to give you a little comfort, while 
there is a little bit of a bubble in housing prices and stuff 
like that, unlike 2008 and 2009, there, there was tremendous 
leverage and bad mortgage underwriting. Here there is not much 
leverage and much better mortgage underwriting. So it would not 
have the same effect on the financial system as it had last 
time, and I think all these banks--I mean, our capital runneth 
over. We have enough capital to withstand multiple crises, as 
we did in 2008, as we did in the pandemic. We run 120 stress 
tests a week, some of them far more severe than the Federal 
Reserve severe adverse test, and we can handle all of that 
rather easily.
    Senator Tester. Thank you.
    Mr. Moynihan.
    Mr. Moynihan. I think the last point that Mr. Dimon made is 
a key point. The stress test which assumes housing prices drop 
by 60 percent, assume there is a downfall in housing, and you 
see the banks all pass the stress test for that.
    Second, I think that Mr. Scharf's points about the 
underwriting has been much better done, frankly, in the last 15 
years since the last housing crisis, and so the amount of 
leverage at the consumer level is much different. So I think 
that portends that they would be able to make it through better 
also.
    Senator Tester. Thank you.
    Finally, Mr. Gorman.
    Mr. Gorman. Not a bubble nationally. Certainly some suburbs 
look very frothy. The banks are extremely well capitalized to 
absorb should this be a downturn, and we are in, as my 
colleague said, a very different position from 10 years ago.
    Senator Tester. Thank you all very, very much.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Tester.
    Senator Daines, also from Montana, is recognized for 5 
minutes.
    Senator Daines. All right. Mr. Chairman, thank you. And a 
big thank you to our witnesses for being here. And I have got 
to say thank you for helping our economy recover over the past 
15 months. A heartfelt thank you.
    Shifting gears, I recently read a quote that was actually 
from the ACLU, and he was referring to Harvard when he said 
this, when he defined ``diversity.'' He says, ``Diversity at 
Harvard is where everybody looks different but thinks alike.'' 
That stuck out to me, and I think it rings true and crosses 
over several sectors of our society, including banking.
    Mr. Scharf, what noneconomic criteria would Wells Fargo 
take into account when making loans? And I think also think of 
this in the context of the shareholders' personal or political 
beliefs taken into account.
    Mr. Scharf. Well, Senator, thank you for the question. I 
think our approach to underwriting starts with a risk-based 
approach in its entirety, and so we look at all of the risks 
that something could pose, and we look at the returns relative 
to the risk that we take. And so that could be credit risk; it 
could be market risk; it could be operational risk; it could be 
reputation risk.
    And, you know, we also think about our shareholders and 
what their points of view are over time, not for a specific 
credit per se but about, you know, their views on just our 
institution.
    Senator Daines. So I was struck as I looked at what 
happened, the situation with CoreCivic, in terms of what 
criteria was applied when you made a decision in 2019 to stop 
lending to CoreCivic, and really more specifically was that 
response driven by any reports or shareholder activist 
proposals?
    Mr. Scharf. Senator, that decision was made before I 
arrived at the company, so I really cannot speak to it.
    Senator Daines. OK. I will move on.
    Mr. Moynihan, in the Bank of America's 2021 proxy 
statement, a shareholder proposal stated, and I quote, ``Bank 
of America's charitable contributions are not fully aligned 
with its public statements. Bank of America has donated to 
police foundations in New York, Atlanta, and Los Angeles.''
    In response to pressure from shareholders and the fear of 
escalating shareholder activism, have either you or Bank of 
America halted or reduced giving to police foundations?
    Mr. Moynihan. Senator, thank you for the question. We have 
not changed the way we gave in the past based on any 
shareholder resolution that I am aware.
    Senator Daines. And specifically to anything law 
enforcement or police foundations?
    Mr. Moynihan. Exactly.
    Senator Daines. Thank you. A follow-up to that. How do your 
ESG initiatives and your guidelines impact your clients' 
selection and lending criteria?
    Mr. Moynihan. I think it is similar to what Mr. Scharf was 
saying. You have a series of risks that you are assessing in 
any transaction, and those risks are off the spread sheet, off 
the--you have a balance sheet and income statement, off-the-
market opportunity, off the brand of the underlying companies, 
and that is all taken into account by our team, as they look at 
client selection and each individual case. Those committees 
have business representatives, risk representatives, legal 
representatives, compliance representatives from all over the 
company that make the decision.
    Senator Daines. Looking through your 2020 proxy statement, 
you discuss commitment to achieve net-zero greenhouse gas 
emissions in your financing activities. Do you anticipate 
refusing to provide banking services to any oil, gas, coal, 
farms, or ranchers that would have emissions?
    Mr. Moynihan. No, Senator. That commitment--and you have 
heard us all talk about it earlier--these commitments--our 
clients have committed to their own transitions, and our job is 
to help them finance that transition because that is what banks 
do. And just in 2020 alone, we did about $60 billion in 
environmental financing to help clients make the transition. So 
we are working with the oil companies, with gas companies, and 
others to help them finance the transition, including using our 
purchase power to help make that happen. So, for example, with 
the providers of electricity to us in the Carolinas, we help 
them get the kind of contracts a company like ours can give to 
help them build a solar facility, to help them--and they can 
select other people. So we can do it through how we underwrite, 
how we support those clients making the transition, and also 
how we use our purchasing services for electricity in 
particular to help a utility make a change.
    Senator Daines. Great. Thank you.
    Mr. Dimon, could you explain to what extent--as you look at 
your risk models and you factor in any controversy risk and how 
that might play into an assessment of perhaps lending to 
whether it is a firearms manufacturer or a natural gas project?
    Mr. Dimon. So a little bit, but not as much as people 
think. So when it comes to energy, it is really carbon 
intensity we look at, and we have been working with the auto 
and oil and gas companies, all of whom are trying to get their 
carbon intensity down, I think actually quite successfully, and 
the American public will be happy with it.
    When we look at risk away from just financial risk, it is 
usually legal and regulatory, and it is usually the cost of 
underwriting and doing due diligence that we look at, which 
might say there is no reason we are going to do A, B, or C, 
because the legal and regulatory costs down the road would be 
just too high.
    Senator Daines. All right. Thank you. I am out of time. 
Thanks for being here today. Appreciate it.
    Chairman Brown. Thank you, Senator Daines.
    Senator Sinema from Arizona is recognized for 5 minutes.
    Senator Sinema. Well, thank you, Mr. Chairman, and thank 
you to our witnesses for being here today.
    Each of these financial institutions played an outsized 
role in the economic response to COVID-19. Ms. Fraser, it is 
good to see you again. Let us talk about the Paycheck 
Protection Program. We effectively transformer the traditional 
loan origination process into what we hoped would be fast 
emergency cash-flow for small businesses across the country. We 
saw that the PPP saved countless jobs, but we are also seeing 
concerning instances of fraud and abuse that need to be held to 
account. Defrauding American taxpayers is unacceptable, and 
strong oversight and investigations into Paycheck Protection 
Program fraud must continue.
    How do you think Citi and other banks did in implementing 
the PPP? And excluding the technical issues with the SBA, what 
was the biggest challenge that banks faced in terms of 
execution?
    Ms. Fraser. Yes, I think the goal of all of us, certainly 
at Citigroup, was to get as much money into the hands of those 
who needed it as quickly as possible. So some of the challenges 
were building out digital platforms to be able to disburse and 
facilitate the applications and similarly for the forgiveness 
programs that are currently underway. And the biggest challenge 
was speed of getting that money into the right people's hands 
and making sure that we were doing so in a way that was not 
allowing fraud into the system and was protecting the intent of 
the taxholder's money in supporting people who needed it the 
most.
    Senator Sinema. Thank you. And do you believe that 
repurposing the loan origination process is the optimal 
solution to help small businesses in a future pandemic? Or 
knowing what we know now, do you think we could design 
something better?
    Ms. Fraser. I certainly think that it will be a well 
worthwhile investment to make sure that we do have a technology 
platform at the SBA or any of the other relevant institutions 
helping this to be able to disburse money as effectively as 
possible. There were many lessons learned on these last couple 
of rounds, and they need to be applied and investments made in 
the technology systems for sure, Senator.
    Senator Sinema. Thank you.
    Next I will turn to Mr. Solomon. It is good to speak with 
you again. I want to build off of Ms. Fraser's observations and 
think about the future pandemic response. You know, this 
pandemic really taught us how fragile the economy can be if the 
right shock comes along. For the first times in our lifetimes 
last spring, businesses, both large and small, were staring 
into the abyss. And we had a Congress that was willing to act, 
but Government lacked an effective mechanism to deliver 
economic relief quickly to everyone.
    Now, our office helped thousands of Arizonans who struggled 
to navigate Government bureaucracy to access unemployment 
insurance, PPP loans, stimulus checks, and we are still helping 
some of those businesses today.
    Now, we chose as a country to move quickly and move 
together as a Congress. I am glad we took action. But we owe it 
to ourselves to take a hard look at the pandemic response and 
assess what we did, what we spent, and whether or not it worked 
as intended.
    Now, it can be tempting to pretend that another pandemic is 
not possible and that this is a problem better left to the next 
generation. But I think we owe it to the people of this country 
to have a better plan in place for the next time this happens, 
which could be sooner than we think, and that is why my team 
and I are starting a bipartisan working group on risk sharing 
and pandemics. Right now we are working with a diverse group of 
stakeholders, think tanks, and other Senate offices to identify 
a smarter and more fiscally responsible solution for businesses 
that leverages the power of insurance in the event of a 
pandemic.
    What do you think about this type of public-private 
partnership? And do you believe it would promote growth and 
make our economy more resilient?
    Mr. Solomon. So I appreciate the question, Senator, and I 
think it is great that you are advocating for us all, thinking 
about the lessons we have learned and thinking about 
preparedness. Certainly there have been many pandemics before, 
and we certainly will see pandemics in the future.
    As you think about these issues, I think you need to come 
up with an appropriate risk-based system that can price and 
distribute that insurance appropriately. We would certainly 
support the idea of thinking about this and finding ways that 
the private sector can partner with you to potentially allow us 
to be better prepared from an insurance perspective, and we 
would be delighted to work with you and your staff.
    Senator Sinema. Well, thank you. You know, we have a lot of 
businesses who could not access the relief they needed during 
this crisis. Some were too big; some were too small. Others 
just simply could not navigate the bureaucracy, and many of 
these businesses failed. Many of these were Main Street 
businesses. And the bankruptcies and defaults during the 
pandemic threatened nearly $2 trillion in commercial real 
estate loans held largely by big banks. This threat forced some 
banks to set aside capital to cover potential loan losses, and 
it tightened credit across the board when businesses need it 
most.
    So, Mr. Solomon, do you believe that averting some of these 
bankruptcies and defaults through a risk-sharing mechanism like 
the one our group is contemplating would reduce losses and make 
credit more available to businesses in these tough economic 
times?
    Mr. Solomon. Well, again, you know, I think it is very, 
very important to set up an appropriate risk-based structure. I 
think these are complex issues, but I think it is something we 
should focus on and think about. We would be delighted to spend 
some time bringing resource to bear on that discussion.
    Senator Sinema. I appreciate it.
    Mr. Chairman, I see my time has expired. I yield back and 
thank you.
    Chairman Brown. Thank you, Senator Sinema.
    Senator Ossoff from Georgia is recognized for 5 minutes.
    Senator Ossoff. Thank you, Mr. Chairman, and thank you to 
our witnesses today.
    Ms. Fraser, the American Society of Civil Engineers has 
rated the state of U.S. infrastructure at a C-minus and 
estimated that the capital expenditure necessary to close the 
gap to get to a B level, which they define as a ``State of good 
repair,'' is approximately $2.6 trillion.
    Now, not all of that investment has to be public 
investment. So my question for you is two-fold. First, do you 
agree that having state-of-the-art, world-class infrastructure 
in the United States is essential not just to quality of life 
but also to economic competitiveness and sustained growth? And 
how can Congress take action to make it easier for private 
sector entities with significant capital at their disposal to 
invest in necessary infrastructure improvements and 
construction?
    Ms. Fraser. Thank you very much indeed, Senator. It is a 
really important question. Yes, I do agree that America having 
a far stronger infrastructure than it has today will be 
important both in terms of competitiveness of the country as 
well as an important source of jobs and growth going forward.
    The public-private partnership has been shown to be a very 
successful one in this area where the Government can step in 
and provide credits and other areas where there are gaps in a 
capital structure or help absorb some of the risks in it to 
enable future investors to come in and participate in the 
investments is going to be a very important area, and it is 
one, I think I can speak for myself, we would be delighted to 
work with your office on going forward.
    Senator Ossoff. Thank you, Ms. Fraser. And would you 
similarly commit to working with this Committee and my office 
to explore mechanisms that could make it easier for private 
capital to support the development of clean energy production 
capacity here in the United States? I know that your bank has 
made some significant commitments in terms of emission 
reduction.
    Ms. Fraser. Yes, we would be delighted to do so. I think 
the development, as we have heard today, of new technologies in 
sequestration or in carbon capture and others will be 
absolutely essential in the transition ahead. We would be 
delighted to do so.
    Senator Ossoff. Thank you. I look forward to those 
discussions.
    Mr. Solomon, I would like now to turn to you. Could you 
please lend your perspective? What are the impediments and what 
are the opportunities for improvement to public policy to 
unlock more private capital for capital investments, 
improvements, construction, necessary infrastructure in the 
United States?
    Mr. Solomon. So I appreciate the question, Senator, and I 
think that it is important for us to try to unleash a lot of 
the private capital that exists or is earmarked toward 
infrastructure. I think there is over $200 billion of private 
capital earmarked for investment in infrastructure in this 
country. I think that finding ways to collaborate from a 
public-private partnership perspective has always been a 
successful path to take. I think there are things that we can 
do to potentially expand activities by making certain tax-
exempt financing easier, potentially for rural broadband or 
housing infrastructure more broadly. I think those are areas 
that would be worth exploring.
    Senator Ossoff. Thank you, Mr. Solomon. I appreciate that.
    Mr. Dimon, I would like to offer you the opportunity to 
respond to the same question, perhaps comment on the statements 
made by some of your colleagues.
    Mr. Dimon. You know, I agree with everything they said, and 
I would just add that infrastructure is critical, but I would 
beg you, the Senate, to focus on the output, not the input. Too 
much time is spent on how much we are going to spend on stuff. 
Too little time is spent on who is responsible, what is it 
going to cost, what is it worth. And also you need to fix 
regulations. I have given this example many times. You go 
through the examples around the country. To rebuild a broken 
bridge between New Jersey and Staten Island, it took 10 years 
to get the 49 permits, which they had to get sequentially. You 
know, if it is going to take 10 years to rebuild a broken 
bridge, to get those permits, the cost is higher, the risk is 
higher, private capital will not come in. And so you have to do 
those things together, and, you know, cost to what outputs, how 
many bridges, and then you will get full support of everybody 
if we know it is going to be effectively spent.
    This country spends lots of money completely ineffectively, 
and that would be a very bad idea.
    Senator Ossoff. Thank you, Mr. Dimon. I appreciate that 
contribution to the discussion.
    Mr. Moynihan, when we discuss some of the potential 
investments in infrastructure, for example, transit and 
transportation, clean energy, the energy grid, can you comment 
as well, please, on the opportunities and the challenges faced 
by private capital interested in supporting these vital 
national [inaudible]?
    Mr. Moynihan. Well, I think my colleagues have outlined a 
lot of the questions and issues, so to speak. There is just a 
lot of money ready to be invested. It will take some effort on 
the permitting and other types of processes to speed those 
projects along. But the money is there, and, in fact, it is 
being invested as we speak. So I think I would encourage a 
holistic view of this from the amount of money that the 
Government can help to move projects faster, the amount of 
money that the private sector has, and, importantly the 
atmosphere on getting the project done which is required to 
speed these things along.
    Senator Ossoff. Thank you all.
    Thank you, Mr. Chairman. I yield.
    Chairman Brown. Thank you, Senator Ossoff.
    Senator Warnock from Georgia is recognized for 5 minutes.
    Senator Warnock. Thank you so very much, Mr. Chairman.
    The country's biggest banks often set the pace for the rest 
of our economy, which is why I think it is important for banks, 
especially the biggest banks, to be good corporate citizens and 
to model good corporate behavior that benefits our broader 
community. I think, frankly, that that is good for capitalism. 
That means you use your power to stand up for climate so that 
we have sustainable solutions for our democracy, which creates 
the context for capitalism, for voting rights, for the least 
among us, including our brothers and sisters who face 
discrimination at the hands of our financial system and 
sometimes at the hands of our own Government.
    I will just give one example. This past weekend, I was 
honored to be in Fort Valley, Georgia, along with Agriculture 
Secretary Vilsack for the rollout of the Debt Relief for 
Socially Disadvantaged Farmers Program I fought to secure in 
the American Rescue Plan. Leading up to this event, honestly I 
was quite disappointed to see this letter from several banking 
associations, including the American Bankers Association, an 
organization that all of your banks belong to, sent to the 
USDA. The letter actually complained that the relief program 
will cut into the banks' profits and argued that USDA should 
deviate from its congressional mandate to quickly implement the 
debt relief for eligible farmers who have faced decades of 
discrimination at the hands of the Federal Government. The 
letter suggested that somehow paying the prepayment penalty 
which the USDA has already indicated it will pay, somehow that 
is not enough.
    And so I want to give each of you a chance to clear the air 
and distance yourselves and your banks from the ABA's 
concerning position I would like one by one if you would tell 
me do you agree with the position taken in the letter, which 
would either hinder the relief or slow down the relief farmers 
would receive, or somehow suggest that the American taxpayers 
ought to do more than pay the prepayment penalty, which they 
are already doing. I would like a brief yes-or-no answer since 
I have a few more questions and limited time. Mr. Scharf, do 
you agree with the letter?
    Mr. Scharf. Senator, this is not an issue that we are 
involved in.
    Senator Warnock. Pardon?
    Mr. Scharf. This is not an issue that we are involved in.
    Senator Warnock. Do you agree with the letter? Yes or no.
    Mr. Scharf. Again, this is not our--I have not read the 
letter, but it is not our issue, and we are a significant 
lender in the agricultural sector.
    Senator Warnock. Minority, do you agree with the letter? 
Like Mr. Scharf, your bank is also a member of the ABA.
    Mr. Solomon. So it is not an issue we are involved in, 
Senator. We do not always agree with the ABA. We made a $130 
million commitment to Hope Enterprise Corp., which is a 
significant depository institution in that area, but it is not 
an issue we are involved in specifically.
    Senator Warnock. Ms. Fraser.
    Ms. Fraser. I think similar to my colleagues, Senator, I am 
afraid I have not read the letter. This is not an area that we 
are involved in, and as Mr. Solomon said, you know, we do not 
agree with everything that the ABA says.
    Senator Warnock. Do you agree with this? Do you agree with 
that letter?
    Ms. Fraser. I am afraid I have not read the letter, so I do 
not know, sir.
    Senator Warnock. Mr. Dimon, do you agree with the letter? 
Do you think that we should deviate from the congressional 
mandate and slow-walk the payments that these farmers have been 
waiting on or that the American taxpayers ought to do more than 
pay the prepayment penalty, which is part of the provisions of 
the law?
    Mr. Dimon. We did not fundamentally agree with the letter, 
and that was really our smaller-bank brethren. They do have 
some legitimate issue, but we did not fundamentally agree with 
the letter.
    Senator Warnock. OK. Thank you.
    Mr. Moynihan.
    Mr. Moynihan. Senator, it is not an issue that our company 
was involved in, and I think it is an issue for the smaller 
banks, and I think it would be better to hear their point of 
view on it. But it is not an issue we engaged in or had 
anything to do with.
    Senator Warnock. Mr. Gorman.
    Mr. Gorman. I have not read the letter. It is not our 
issue. But I certainly do not agree with discriminating against 
farmers.
    Senator Warnock. All right. Thank you so much.
    Listen, I want to touch on a different issue in my 
remaining time. As we know, the financial crisis, while painful 
for everyone, has been particularly devastating for Black and 
Brown homeowners. Some of you may have seen recent media 
reports about Black and Brown homeowners receiving valuations 
significantly undervalued compared to White homeowners. One 
story in Indianapolis is particularly heartbreaking.
    Mr. Scharf and Mr. Dimon, as the top two bank mortgage 
lenders in this country, when you consider the wealth gap and 
how that has exacerbated in the real estate market where most 
people have most of their wealth in their homes, will you each 
commit your banks to take action to help address racial 
disparities within the home appraisals market?
    Mr. Dimon. Absolutely.
    Mr. Scharf. I agree, Senator.
    Senator Warnock. Thank you so much. I think this is a 
critical issue, and it is the reason I am introducing the Real 
Estate Valuation Fairness and Improvement Act along with 
Senator Klobuchar to help remedy these appraisal disparities 
which increase the racial wealth gap.
    Thank you so much.
    Chairman Brown. Thank you, Senator Warnock.
    We are reaching the end of the hearing. Senator Toomey 
would like some closing remarks, as I will, and we will have 
you out as mostly promised by 1 o'clock, so thank you.
    Senator Toomey.
    Senator Toomey. Thank you, Mr. Chairman, and thank you very 
much to all of our witnesses for attending and for your 
patience and for being here.
    Listen, I cannot help but reflect on the fact that I think 
this hearing really demonstrated the very points that I was 
trying to make in my opening statement. What we just saw over 
the course of the morning was where stakeholder capitalism 
takes you. This morning, you all have been criticized for 
distributing capital to the owners of the institutions when you 
buy back stocks. You have been criticized for charging fees for 
providing financial services. You have been criticized for not 
supporting efforts to unionize your workforce. You have been 
criticized for serving lawful businesses like fossil energy 
companies. And my point is that if you concede the premise that 
shareholders do not rank above other stakeholders, then it is 
hard to explain in principle why those criticisms are wrong.
    I think there is a principle to explain why they are wrong, 
and that is that your primary responsibility is to maximize 
value for your shareholders. And I have got to point out, when 
you were asked to endorse a proposal for Government-imposed 
price controls on credit, you did not object. In fact, some of 
you seemed to express support, at least in principle, and this 
is an antimarket proposal. And nobody stepped up and defended 
this fundamental principle of capitalism that we use markets to 
discover prices, not Government edicts.
    So, again, I just want to close by urging you please defend 
the capitalist system that has worked so well for so many for 
so long.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey.
    I again thank you all for your patience and for being here. 
I look forward to doing this more in the future. We have heard 
a lot today about how much you value your employees, and yet 
not one of you agreed to remain neutral if your workers want to 
unionize. You said you would allow their voices to be heard, 
but that is not what remaining neutral really means, not using 
your vast power to intimidate your employees.
    You say you have focused on lending to small businesses and 
growing the economy, but I look at your actions, not your 
words. Instead, we see all of you spending billions on stock 
buybacks. You say that climate change is a threat to the entire 
economy, but you drag your feet when it comes to investing in 
new technology and the jobs of the future.
    I am glad you raised wages. I appreciate your doing that. I 
am glad you made some investments in minority depository 
institutions and started to increase diversity in your senior 
leadership, in several cases leading right up to this hearing. 
I hope you all continue to do that throughout the year and not 
just before a Senate hearing.
    It is also not even close to enough when you are the most 
powerful economic actors in the country. As I said, the six 
most important business people in this country are on this 
screen right now. The signals your companies send influence 
workers at companies all over the country, not just your own 
employees. Before the pandemic, Bank of America downgraded 
Chipotle's stock because an analyst decided the company pays 
its workers too much. As a result, the company's share price 
declined by 3 percent.
    When American Airlines announced pay raises for its pilots 
and flight attendants, Wall Street punished the company, 
dropping its stock price 5 percent.
    A Citibank analyst actually wrote, ``This is frustrating. 
Labor is being paid first again. Shareholders get leftovers.''
    ``Leftovers.'' We might have thought that after the 
pandemic things might start to change a bit. No one could deny 
how much essential workers contribute, how our economy is 
supposed to reward people whose talents are in high demand. 
That is what we are all taught, and that is what corporate 
leaders always tell us, right? But this year, after Amazon 
defeated the Alabama workers' union-organizing efforts, the 
company's stock climbed. Just a few weeks ago, Wall Street sent 
Uber and Lyft and DoorDash stocks down when Labor Secretary 
Walsh said gig workers should be classified as employees. This 
sends a pretty clear message: the more you pay your employees, 
the worse you are going to do on Wall Street. The less power 
you give workers, the better you will do.
    This view that American workers are a cost to cut instead 
of a valuable asset to invest in is what is wrong with this 
system. So-called analysts on Wall Street, often at your banks, 
make decisions for people in Ohio and Pennsylvania and across 
the country, decisions about whether workers they have never 
met in towns they have never been to are a good investment.
    I hope you will make progress not only within your own 
institutions but in thinking about the role your banks play in 
leading the system and leading this economy.
    Thanks to all six of you for being here today. Thanks for 
your patience and for 3 hours of answering questions.
    For Senators who wish to submit questions for the record, 
they are due 1 week from today, Wednesday, June 2nd.
    To the witnesses, we ask you to respond within 45 days.
    Thank you again. With that, this hearing is adjourned. 
Thank you all.
    [Whereupon, at 12:55 p.m., the hearing was adjourned.]
    [Prepared statements, responses to written questions, and 
additional material supplied for the record follow:]

              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN

    Today is the first time we have ever had the CEOs of the Nation's 
six largest banks together before the Committee.
    Over a century ago, Louis Brandeis wrote about the concentration of 
corporate power and how it distorts the market. He called the book, 
``Other People's Money-and How the Bankers Use It''. It's a subject 
Americans continue to have a stake in: how you, the Nation's largest 
financial institutions, use other people's money.
    You are the six most powerful business leaders in this country. 
Your decisions affect the lives of millions of people--their paychecks, 
their job opportunities, their retirement savings.
    And your power is so much greater than that of your predecessors 
30, 40, 50 years ago.
    Look what has happened to our country during that time.
    Profits have gone up, stock prices have soared, your own 
compensation is stratospheric--but workers get a smaller and smaller 
share of the wealth they create and they're working harder than ever.
    We have a racial wealth and income gap that has barely budged since 
we passed the Civil Rights Act.
    In the aftermath of the 2008 Great Recession where millions lost 
their jobs, Wall Street still made record profits.
    In a pandemic where half-a-million Americans died and we had the 
highest unemployment since the Great Depression, Wall Street still made 
record profits.
    I sense a pattern.
    Like most Americans, I want businesses to make money, and I don't 
mind that bankers are rich. Some people are going to be wealthy, and 
that's fine.
    Here's the problem: under the current system, Wall Street profits 
no matter what happens to workers, because those profits now come at 
the expense of workers.
    And your banks are the ones that largely built that system.
    We often hear about the ``invisible hand.'' But the economy isn't 
physics--it's not governed by scientific laws outside our control. It's 
made up of people making choices about our values and the society we 
want to live in.
    The ``invisible hand'' doesn't lay off workers. The ``invisible 
hand'' didn't invent credit default swaps. The ``invisible hand'' 
doesn't decide to invest in private equity firms that buy up mobile 
home parks in Iowa and across the country, and jack up the rent.
    Your banks--your lobbyists, and your fellow CEOs at some of the 
other largest companies--you all make those choices that dictate how 
our economy works.
    Wall Street built this system, and they didn't build it for 
everyone--they built it for themselves.
    When companies lay people off, when they move jobs to low-wage 
countries, when they cut paychecks, when they bust unions, when they 
subcontract work to lower-paying companies with fewer benefits, Wall 
Street analysts yell ``buy.buy.buy.''
    And what you do sends a signal to every other company. If 
businesses want investment, they emulate you. They know they won't 
attract investment unless they repurpose all their funds into short-
term profits for shareholders.
    It hasn't always been like this.
    When I was growing up, the CEO-to-median worker pay ratio was 20-
to-1. That was good money.
    Today, that ratio is 320-to-1.
    From the mid-20th century through the early 80s, the financial 
sector made up 10 to 15 percent of corporate profits. Today it's 25 
percent--yet it makes up only four percent of jobs.
    A few decades ago, a majority of Wall Street capital funded the 
real economy--wages, machinery, research, new construction. Today, much 
of that capital goes to stock buybacks, dividends, and complex 
financial instruments--only about 15 percent goes to the real economy. 
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    Instead of investing in businesses that actually make things or 
provide useful services, and that create real jobs in towns all over 
the country, companies spend billions buying back stocks and handing 
out CEO bonuses.
    Stock buy-backs used to be illegal market manipulation. Today, 
they're routine.
    Wall Street's interests and Main Street's interests no longer match 
up. The current system treats workers as a cost to be minimized--
instead of the engine behind our success.
    Look at what's happened to places like where I grew up, in 
Mansfield, Ohio.
    Jobs shipped overseas to countries where companies can pay workers 
less. Declining union membership--by design. Crumbling roads, shuttered 
storefronts, and workers forced to choose between a hometown they love, 
and leaving in search of opportunity.
    And that was all before 2008. You all know what happened to 
Americans then.
    And Congress and too many in Washington have been willing 
accomplices--tax break after tax break. Gutting consumer protections. 
Trade deals written by corporate lobbyists.
    So I come back to this. There's a reason towns across the country 
like Mansfield look the way they do. It's because our economy is no 
longer about workers and communities, and real investment in both of 
those.
    And the six of you before us today are the most powerful economic 
titans in the country.
    Your banks, and the system they built and uphold, bear some 
responsibility.
    At the end of last month, we held our first-ever worker listening 
session. We heard from workers from all kinds of backgrounds, working 
all kinds of jobs--including as a former teller at one of your banks.
    They talked about wage theft, about being laid off during a 
pandemic with no severance, about how dangerous their workplaces could 
be, about how companies busted their unions.
    There was a common thread through all of their stories. Their hard 
work doesn't pay off--certainly not the ways yours does.
    Pamela Garrison, a worker from West Virginia, said something that 
stuck with me--`` `working poor' are two words that shouldn't go 
together.''
    I know you can't snap your fingers and fix all these workers' 
problems. But you also can't tell me the decisions you make have no 
effect on the factors that determine their job opportunities and their 
wages.
    And yes, I know you work hard too. We all do--work is something 
that unites all of us. We're ALL trying to do something productive for 
our families, our businesses, our communities, our country.
    Here's the difference: for most people, no matter how hard they 
work, if one thing goes wrong in their life--they get in a car 
accident, the plant where they work shuts down, their spouse gets 
sick--they're on their own.
    They don't get a taxpayer bailout. And they all remember that Wall 
Street did.
    And it hasn't only been the bailouts. No one can deny that the 
Nation has been good to the financial industry--deposit insurance, the 
Federal payments system, the whole financial infrastructure you rely 
on.
    But your banks have not held up your end of the deal.
    As far as I can tell, you haven't at all rethought this Wall Street 
system built on short-term profits, at the expense of long-term growth 
for everyone.
    In fact, you continue to perpetuate it.
    Wall Street gets second chance, after second chance, after second 
chance. Most workers don't even get one.
    It's past time for the financial industry to be as good to the 
American people as the Nation has been to you.
    The purpose of today's hearing is to show Americans that their 
Government is finally looking out for them. That we understand this 
economic system has betrayed millions of workers, that it holds our 
country back.
    Here's what we want to hear from you today: what are you and the 
companies you run going to do--not just say, but actually do--to 
change.
    We want to hear what concrete actions you will take to change the 
incentives on Wall Street, to reward work instead of wealth.
    To pay for and work to undo the damage Wall Street has done, and 
continues to do, to communities of color.
    To stop investing in corporations that fuel climate change, 
threatening people's communities and livelihoods.
    To channel your vast resources into businesses that employ actual 
people in cities and towns, from Mansfield, Ohio, to Mansfield, 
Georgia.
    To invest in our country's greatest asset--the American people.
    I have heard many of you argue that you don't need Government rules 
forcing you to make any changes to your business model.
    So show us some proof--prove to us that you are going to use your 
positions to change the Wall Street system, make our economy work for 
everyone--not just CEOs and the wealthy.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Thank you, Mr. Chairman.
    Today's hearing is about the U.S. financial system. The financial 
system proved to be remarkably resilient during COVID, but I am 
concerned about increasing pressure on banks to embrace ``wokeism'' and 
appease the far Left's attacks on capitalism. I worry that continuing 
down this path may lead to distorted credit allocation, activists 
seeking to make political change through the financial system instead 
of the democratic process, and ultimately, diminished prosperity for 
Americans.
    First, let's observe that the banking system proved to be extremely 
resilient during COVID. Last year, we had the worst pandemic in more 
than 100 years, the Government shutting down almost the entire economy, 
and the most severe recession since the Great Depression. Despite all 
this, banks remained stable and responded to their customers' needs for 
credit, because they were so well capitalized.
    In fact, one of the best decisions we made during COVID was 
administering the Paycheck Protection Program (PPP) through the banking 
system. No other system had the scale or agility to run this program, 
and banks leveraged their relationships to deliver hundreds of billions 
of PPP dollars to millions of small businesses so they could keep their 
workers employed.
    The financial system's contributions to America's economic growth--
before and during the pandemic--are part of the larger success story of 
capitalism. No economic system has lifted more people out of poverty, 
created more opportunity, and produced a higher standard of living than 
democratic capitalism.
    Thanks to capitalism, life is better for the vast majority of 
Americans today than it's ever been. In fact, before COVID, we had the 
best economy of my lifetime--as measured by the very metrics that my 
Democratic friends say are important. We had the lowest unemployment 
rate in 50 years for all Americans, record low unemployment rates for 
blacks and Hispanics, more jobs than people looking for work, and a 
record low poverty rate.
    Contrary to the mischaracterizations of some of my Democratic 
colleagues, we saw across-the-board wage growth, and growing fastest 
for the lowest income earners, and a narrowing of the income gap. In 
fact, the very system of economic freedom that my colleagues condemn 
was creating unprecedented and shared prosperity across America.
    That's why I've been surprised and troubled to see some banks 
taking actions that undermine the property rights at the heart of our 
system and politicize lending. Some bank leaders have embraced so-
called ``stakeholder capitalism''--which diminishes the primacy of 
shareholders in our economy and enables corporations to pursue a 
liberal social agenda rather than prioritize its responsibilities to 
its owners.
    Well-run businesses always benefit their stakeholders, but 
management's responsibility is to do so in service to shareholders, who 
own the company. The people who own a company--through shares in their 
retirement accounts, pensions, college savings accounts, or otherwise--
rely on a firm's officers to look out for their financial interests.
    Making decisions based on social policy objectives--rather than 
profit maximization--deprives these shareholders of their rightful 
property. Worse yet, once the shareholders' rights are reduced to the 
level of all other stakeholders, how does a company's management decide 
whose interest to prioritize?
    Some would invite the Government to step in and make those 
decisions--for example, those who would favor a prohibition on stock 
buybacks. After all, if the shareholders' interest is no longer 
paramount, the Government may determine that this capital would be more 
appropriately allocated to employees or the environment or other 
special interest groups.
    It is a fallacy to think that if you are seeking profits, you are 
not serving people. In fact it's the exact opposite. Business can only 
profit when they satisfy customers and that can only be achieved with a 
satisfied workforce and good relationships with the community.
    Finally, let me suggest a word of unsolicited advice. If there is 
an issue in the political realm that affects your bank, like taxes or 
regulatory policy, I would hope you would articulate your views on 
behalf of your shareholders. But, if there is a highly charged social 
or political issue that involves balancing competing values, such as 
balancing access to voting with election security: leave that to 
elected lawmakers. They were elected to make these difficult policy 
decisions and are directly accountable to the people who hire and fire 
them: the voters in their jurisdictions.
                                 ______
                                 
                PREPARED STATEMENT OF CHARLES W. SCHARF
      Chief Executive Officer and President, Wells Fargo & Company
                              May 26, 2021
Introduction
    Chairman Brown, Ranking Member Toomey, Members of the Committee: 
good morning, and thank you for the opportunity to be here today.
    Just over a year ago, when I last appeared before Congress upon 
assuming my role as CEO, we were on the verge of a global pandemic. I 
cannot help but look back and think how little we understood then 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. Though the process was not perfect, we, the 
Government, and others worked together to help our fellow citizens. 
Banks were a part of the solution to beat back the economic impacts of 
a global pandemic, and now we must continue to work together to ensure 
a fair and equitable recovery.
    As we begin taking steps toward a healthier economy, I am proud of 
all that Wells Fargo has done to support our customers, our employees, 
and the communities we serve-all while continuing to transform our 
organization. There is much more work to do, but Wells Fargo wants to 
be a constructive partner to forge an inclusive recovery for all.
Our Response to the COVID-19 Pandemic
    Throughout the pandemic, our focus has been on providing high 
levels of support for our customers and the broader communities we 
serve.
    Support for Customers During the Pandemic. We deferred payments and 
waived fees for more than 3.7 million consumer and small business 
accounts to help people during these challenging times. We provided 
more than one million mortgage forbearances and suspended residential 
property foreclosures and evictions to keep people in their homes. And 
we processed approximately $80 billion in Federal stimulus payments. 
Further, we paused for 60 days the collection of negative balances 
existing at the time when Federal stimulus payments are deposited to 
customers, \1\ and we cashed Federal stimulus payment checks for 
noncustomers in our branches--with no fees charged. Additionally, 
during the pandemic, the number of overdraft-related fees collected 
dropped by more than 35 percent.
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     \1\ Where Wells Fargo has acted as garnishee and received third-
party garnishment orders with respect to stimulus payments, our 
practice has been to follow Federal and State guidance.
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    We donated $225 million through the Wells Fargo Foundation to 
support economic recovery for communities and vulnerable populations 
affected by COVID-19. We helped more than 200,000 renters and 
homeowners stay in their homes through grants to nonprofits offering 
eviction and foreclosure prevention assistance, rental assistance, and 
financial counseling. We also undertook extensive efforts to keep at 
least 70 percent of our branches safely open, and we supported millions 
of customers through digital and mobile banking during the pandemic.
    Paycheck Protection Program and Other Federal Stimulus Programs. We 
were also one of the leading lenders in the Paycheck Protection Program 
(PPP). To date, we have funded more than 275,000 loans, totaling over 
$13.7 billion to small businesses throughout the country, with an 
average loan size of approximately $50,000, making us an industry 
leader in providing support to the smallest businesses in need. This 
lending has supported more than 1.7 million jobs, and more than 40 
percent of our loans were made to businesses in either low- and 
moderate-income (LMI) or majority-minority census tracts.
    As part of our PPP commitment, we created the Open for Business 
Fund to donate more than $400 million we earned from PPP program fees 
in 2020. The Open for Business Fund shares the same goal as the PPP 
itself: to help small businesses survive the pandemic and navigate its 
impact. The fund will donate roughly $250 million to Community 
Development Financial Institutions (CDFIs) to help expand access to 
capital, $50 million to nonprofits focused on technical training and 
services for diverse entrepreneurs, and more than $100 million for 
long-term resiliency and other programs to strengthen the small 
business sector. We have already distributed more than $158 million to 
CDFIs around the country, which is projected to help more than 26,000 
small businesses maintain an estimated 75,000 jobs nationwide.
    Additionally, through the Federal Reserve's Main Street Lending 
program, Wells Fargo has originated $279 million in loans, helping more 
borrowers than any other large financial institution.
Our Company and Its Transformation
    Our Company. In 1852, our founders, Henry Wells and William Fargo, 
built an innovative start-up to help customers build businesses and 
manage money in a rapidly changing world. A lot has changed since then, 
but through prosperity, depression, and war, customers have turned to 
us to help them through any challenge. And we're committed to 
continuing the Wells Fargo legacy of looking forward by finding 
solutions and removing barriers to help our customers.
    Today, with approximately $1.9 trillion in assets, we proudly serve 
one in three U.S. households and more than 10 percent of all middle-
market companies in the country. We have more than 65 million customers 
and over 260,000 employees, and we are an industry leader in affordable 
housing, retail mortgage, and commercial real estate lending. We have 
also recently been recognized as being among the best corporate 
citizens in the U.S., a top company for philanthropy, and one of the 
most generous companies in America.
    We are well-capitalized and have been a source of strength for our 
customers and the financial system throughout the pandemic and beyond. 
\2\ Despite the challenging environment brought on by the COVID-19 
pandemic, the strength of our balance sheet was evident throughout last 
year. Our capital and liquidity levels remained well above regulatory 
minimums, and the results of two Federal Reserve stress tests confirmed 
our strong capital position. Given the economic uncertainty, we took 
appropriate measures to maintain strong capital by voluntarily 
suspending stock buybacks in March of 2020 for the balance of the year 
and subsequently reduced our dividend to comply with the temporary 
restrictions imposed by the Federal Reserve. These actions contributed 
to a $9 billion increase in our capital since March of 2020.
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     \2\ Information regarding Wells Fargo's capital and leverage 
ratios as well as the annual amount of share buybacks and dividend 
payments for the past 10 years can be found in Appendix A and in our 
annual reports. (See, e.g., Wells Fargo 2020 Annual Report (Feb. 19, 
2021), available at https://www08.wellsfargomedia.com/assets/pdf/about/
investor-relations/annual-reports/2020-annual-report.pdf).
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    More broadly, we have generally maintained large amounts of excess 
capital and have taken a number of measures since the financial crisis 
to reduce our complexity, enhance our risk management framework, and 
change our culture, particularly over the last year-and-half as part of 
our ongoing transformation. As a result, we are a safer, sounder 
institution today, and we are confident that our company presents 
minimal risk to the Government and taxpayers. We also believe we have 
contributed positively to the economy over the past 10 years.
    We further recognize that, like so many companies and individuals, 
we benefit from our Nation's strong central banking system and the 
support provided by various Federal programs, facilities, and public 
financial infrastructure. And we are proud to support our customers and 
the American economy as a whole. For instance, even during the height 
of the COVID-19 crisis, we were able to extend significant credit to 
our clients. In fact, in March 2020 alone, our commercial customers 
utilized over $80 billion of their committed loan facilities.
    Today, we provide a diversified set of banking, investment, and 
mortgage products and services, as well as consumer and commercial 
finance, through our four reportable operating segments: Consumer 
Banking and Lending; Commercial Banking; Corporate and Investment 
Banking; \3\ and Wealth and Investment Management.
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     \3\ Corporate & Investment Banking delivers a comprehensive suite 
of advisory, capital markets, banking, and financial products and 
services to corporate, institutional, and Government clients around the 
globe. The division includes a commercial real estate finance and 
capital markets platform, as well as investment banking, leveraged 
finance, mergers and acquisitions, equity and fixed income sales, 
trading, and research solutions for large and middle market companies.
    With respect to Archegos, Wells Fargo had a cash prime brokerage 
relationship with the firm. We were well collateralized at all times in 
late March and no longer have any exposure as of March 30, 2021. We did 
not experience losses related to closing out our exposure.
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    We believe these businesses, working together, form a 
differentiated platform that benefits all stakeholders. This vision has 
not always been realized in recent years, but we know our potential and 
have a roadmap to achieve it. We are committed to building the 
necessary foundation for a bank of our size and complexity; we 
recognize our responsibility; and we are committed to completing the 
work of making substantial changes in how we operate.
    Our Transformation. Since I became CEO in October 2019, much has 
changed at Wells Fargo. While working to effectively serve our 
customers throughout the challenges of the last year, we have also been 
committed to advancing our regulatory work and implementing 
organizational and cultural change. 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 level of integrity, and have an appropriate culture in place.
    We have new leadership. In particular, we made significant changes 
to our management team by elevating strong internal talent while 
bringing in people with the experience and skills necessary for our 
success. Since the fourth quarter of 2019, we have replaced more than 
50 percent of our Operating and Management Committees and added at 
least 30 senior strategic hires in risk management, operational 
excellence, and other key areas across the company-including a new 
Chief Operating Officer; Chief Financial Officer; Chief Compliance 
Officer; General Counsel; Head of Sales Practices; Head of Operations; 
Head of Wealth Management; Head of Consumer Lending; Head of Home 
Lending; Head of Credit Cards; and Head of Diverse Segments, 
Representation, and Inclusion; among many others. Our broader group of 
senior leaders is also a new team. Over 40 percent of our top leaders 
are new to the company or their roles from the start of 2020. Our Board 
of Directors also appointed a new chairman and elected a new member to 
add additional financial services experience and support our 
transformation.
    We have also implemented a flatter organizational structure. One of 
my early observations when I joined Wells Fargo was that we were not 
managing the Company at the level of granularity necessary. As a 
result, we made changes to the management structure, most notably 
having more of our businesses report directly to me.
    We now have five principal lines of business--that operate within 
the aforementioned operating segments--to ensure clear authority, 
accountability, and responsibility. All of those line of business 
leaders now report directly to me and sit on our Operating Committee. 
These changes have created the right structure to build our businesses 
over the long term and increase our ability to successfully execute our 
top priority, which is our risk, regulatory, and control work. I am 
confident that this organizational model and our strengthened risk and 
control foundation has brought greater focus and accountability to the 
company. \4\
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     \4\ Our leaders are also held accountable by the Company's 
compensation policies. The Human Resources Committee of Wells Fargo's 
Board made a number of enhancements to our executive compensation 
program for 2020, including the adoption of a new clawback and 
forfeiture policy that significantly strengthens the Company's ability 
to hold certain senior executives and other employees accountable for 
misconduct or risk events though forfeiture or recovery of 
compensation. Our most recent compensation policies are discussed in 
detail in our 2021 proxy statement. (See Notice of Annual Meeting and 
Proxy Statement (Mar. 16, 2021), available at: https://
www08.wellsfargomedia.com/assets/pdf/about/investor-relations/annual-
reports/2021-proxy-statement.pdf.)
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    We are also simplifying the company. We identified certain 
businesses that aren't core to our mission and decided to exit them, 
opting to focus on our customers and our core, scaled businesses. In 
the past months, we have announced sales of or our intention to exit 
the student loan business, international wealth management, asset 
management, corporate trust, and direct equipment finance in Canada.
    During my short tenure, our focus on these changes has begun to 
yield results. In January of this year, the OCC terminated an open 
consent order from 2015 related to our Bank Secrecy Act and anti- money 
laundering compliance program. This is a positive step, but I recognize 
that we still have multiple consent orders and regulatory matters that 
continue to require our urgent attention. \5\ And we are continuing to 
commit significant resources to addressing them.
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     \5\ Since my testimony in March 2020, Wells Fargo has agreed to 
pay $20 million to settle claims by the Maryland Attorney General 
regarding residential mortgage-backed securities between 2005 and 2009. 
The Company also agreed to pay $7.8 million to resolve an inquiry by 
the U.S. Department of Labor into certain hiring practices at 
particular Wells Fargo locations between 2010 and 2018.
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    We are focused on making long-term, sustainable changes. And we 
know there is still much more to be done. As I've said before, this is 
a multiyear journey. As we execute on our commitments, we may have 
setbacks, but we believe we are doing what is necessary to move forward 
and satisfy our obligations.
    Ultimately our regulators will decide when we have fulfilled our 
obligations. My commitment to them is that we are continuing to 
approach this work with the greatest sense of urgency, and we are 
intent on committing all necessary resources to diligently do what is 
necessary, issue by issue.
Our Commitment to Customers
    Doing what is right for customers must be at the center of 
everything we do, and we acknowledge that we have fallen short of that 
standard in the past. We have been taking dramatic steps to embed a 
customer-centric approach in all of our decisions that impact 
customers. This extends from product design and pricing, to our 
coverage and service models, to how we approach complaints and 
remediation.
    While we have more work to do, we are making strides. In 2020, we 
rolled out a new set of company expectations with ``Do What's Right'' 
as one of six core pillars. It sounds simple--but that is the point. 
These new expectations are clear and straightforward and guide how we 
lead ourselves, collaborate with colleagues, and make decisions; they 
apply to everyone at the company and are directly linked to how we 
evaluate performance.
    Additionally, we deployed a new customer feedback program and 
complaints management platform to collect and react to customer 
feedback and improve the customer experience. We also built our Sales 
Practices Management and Oversight program, designed to make sales 
practices monitoring and reporting more robust and consistent across 
the company. And lastly, we just recently announced the launch of an 
Office of Consumer Practices, a consumer-focused advisory group that 
will partner with our businesses on consumer product development, 
policies, procedures, training and other areas. All of these efforts 
are designed to keep the customer front and center and embed that 
perspective into our decision making. They are also a critical part of 
strengthening our risk and control infrastructure.
    We firmly believe that Wells Fargo is uniquely positioned to serve 
customers throughout the country. We operate at a local level, 
supporting consumers as well as small and larger businesses. We also 
actively support the communities where we do business. The quality, 
depth, and breadth of what we can offer customers are matched by few, 
and we continue to invest in a robust customer experience both 
digitally and through in-person interactions in our branches.
    Branch Network. Our branch network provides local, in-person 
financial advice and planning. At the end of the first quarter of 2021, 
Wells Fargo had 4,944 branches \6\ with more than 25 percent of those 
branches located in LMI census tracts. We have branches in 36 States 
and the District of Columbia and serve more markets than other major 
banks. Our branches are in 25 of the largest 30 markets in the U.S. and 
27 of the 30 fastest growing markets in the country. And a Wells Fargo 
branch or ATM is within two miles of over half of the U.S. census 
households and small businesses in our footprint.
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     \6\ At year-end 2010, Wells Fargo had approximately 6,310 
branches. At year-end 2000, Wells Fargo had approximately 5,500 
branches. Please note, however, that the year-end 2000 number is a 
rough estimate, as the timeframe predates Wells Fargo's merger with 
Wachovia. A map of Wells Fargo's branches at year-end 2020 is included 
as Appendix B.
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    Financial Inclusion. In addition to our branches, Wells Fargo 
provides multiple choices for customers, including those who are not 
digitally connected, to conveniently access financial services and 
advice. We have an extensive ATM network and offer no-fee access for 
customers at approximately 13,000 ATMs for various banking services 
including withdrawing cash, transferring funds, checking account 
balances, and making deposits. Wells Fargo ATMs offer banking in 
English, Spanish, Chinese, Hmong, French, Korean, Russian, or 
Vietnamese and meet the Americans with Disabilities Act requirements. 
In addition, we offer free access to our ATM network for customers of 
our Minority Depository Institution (MDI) partners and make our ATM 
network available to noncustomers to pay their wireless bill with 
Visible, a Verizon subsidiary.
    We provide 24/7, multilingual customer service over the telephone 
through our automated system as well as through our customer service 
representatives. This allows customers to get assistance with common 
needs, including asking questions about account balances and 
transaction history or initiating transactions like account transfers 
or stop payments. We also serve 32 million digital (mobile and online) 
active customers.
    Wells Fargo further offers and continues to develop products and 
services to advance inclusion in the financial system. We are the 
number one mortgage lender in lower-income neighborhoods and to Black 
borrowers compared to other depositories. And we have made commitments 
to reduce the Black and Latino home ownership gap. For example, in 
2015, we announced our support of the goals of the National Association 
of Hispanic Real Estate Professionals' Hispanic Wealth Project, which 
seeks to triple Hispanic household wealth by 2025.
    In addition, we offer our Dream.Plan.Home. low-downpayment mortgage 
and closing cost assistance program for LMI borrowers with affirmative 
outreach to LMI communities and communities of color, and we provide 
significant grants in connection with the NeighborWorks LMI downpayment 
assistance program, NeighborhoodLIFT. Since 2012, Wells Fargo has 
invested $521 million in NeighborhoodLIFT and other LIFT programs to 
help more than 24,700 individuals and families buy homes through 80 
program launches by providing homebuyer education and downpayment 
assistance. These efforts collectively seek to close the home ownership 
gap in key markets.
    Wells Fargo also actively participates in the OCC's Roundtable for 
Economic Access and Change (Project REACh), which focuses on removing 
barriers to financial inclusion and providing greater access to credit 
and capital. We chair the REACh Homeownership Working Group.
    We are committed to bringing the unbanked into the financial 
mainstream. For example, last week, we announced the Banking Inclusion 
Initiative, a 10-year commitment to help unbanked individuals gain 
access to affordable, mainstream, digitally enabled transactional 
accounts, a meaningful entry point to fully participating in the 
economy and achieving financial stability. It also will assist those 
who are underbanked or underserved--individuals who may have a bank 
account yet continue to use high cost, nonbank services and have 
similar needs. Overall, the initiative will focus in three areas: (i) 
access to affordable products and digital solutions; (ii) financial 
education and advice; and (iii) the launching of a National Unbanked 
Advisory Task Force that will feature representatives from leading 
organizations, including the League of United Latin American Citizens, 
the National Association for the Advancement of Colored People, the 
National Bankers Association, the National Congress of American 
Indians, UnidosUS, the National Urban League, and Hope Enterprise 
Corporation.
    Additionally, we accept a range of alternative identification for 
account openings, including several consular cards, and we offer 
affordable and responsible products, such as Clear Access Banking, a 
checkless checking account with no overdraft or nonsufficient funds 
fees. The account is certified by BankOn, an organization led by the 
Cities for Financial Empowerment fund that works to ensure everyone has 
access to a safe, affordable transactional banking account. We also 
offer Everyday Checking, a full-service account for a $10 monthly fee 
that is waived if the customer is under 25 years old or maintains 
certain minimum balance or direct deposit amounts. The Everyday 
Checking account is equipped with our Overdraft Rewind feature, which 
automatically reverses overdraft fees assessed on prior business day 
transactions if the customer has a covering direct deposit credited to 
their account.
    Arbitration. With respect to arbitration, we are in the process of 
removing confidentiality restrictions in all types of customer 
arbitration agreements that have them, thereby increasing the 
transparency of the arbitration process. Moreover, we will be updating 
all consumer arbitration agreements to provide for reimbursement of 
filing fees where the customer prevails. This is designed to ensure the 
costs of filing for arbitration do not prevent consumers from bringing 
justified disputes to the Bank's attention. These changes follow our 
decision last year to end the use of mandatory arbitration for future 
employee claims of sexual harassment. We are committed to maintaining a 
thoughtful approach to resolving disputes fairly and efficiently.
Our Commitment to Employees
    To our employees: I am proud of the work you've done over the past 
year to support our customers and our communities during these 
uncertain times. We have prioritized safety and well being, and my 
deepest gratitude goes out to our frontline workers, who made it 
possible to keep branches safely open. I am also thankful for the more 
than 200,000 employees who efficiently adapted to a new and challenging 
remote work environment.
    For those employees who continue to work in person, we have taken 
significant actions to support their safety, including mandating social 
distancing, enhancing cleaning protocols, increasing sanitation 
supplies, and requiring employee self-screening. We are providing 
safety kits to all employees working onsite in branches and offices, 
and we launched temporary onsite nursing services at 56 of our largest 
U.S. sites. We also offer free, voluntary onsite or self-administered 
COVID-19 testing for employees currently working in-office at a Wells 
Fargo location in the U.S. as well as additional paid time off for 
COVID-19 vaccine appointments.
    We also made a cash award to the approximately 165,000 employees 
who make less than $100,000 per year and an additional special payment 
to those working on the front lines as a way of recognizing their 
unique contributions.
    To support eligible employees who faced challenges with childcare, 
we granted additional days off to arrange for childcare and provided a 
$100 per day reimbursement for eligible employees seeking childcare 
through their own personal networks during the early phase of the 
pandemic. More than 22,000 employees benefited from this assistance. We 
also made a $25 million grant to the We Care Employee Relief Fund, 
which is available to employees affected by COVID-19 and who have 
limited resources. The fund helped more than 23,000 employees in 2020.
    Compensation and Benefits. In addition to our pandemic-related 
efforts, in 2020, we raised minimum hourly pay levels in a majority of 
U.S. markets from $15 to $20 based on employee location. And we saw a 
nearly 13 percent increase in median employee pay for the year. \7\
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     \7\ Median employee pay for 2020 was $74,416, up from $65,931 in 
2019--a 12.9 percent increase. Wells Fargo's ratio of CEO to median 
employee annual total compensation for 2020 was 274:1.
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    We provide a 401(k) plan to help employees save for retirement, and 
we match employee contributions, dollar for dollar, up to 6 percent of 
their eligible pay on an annual basis, after they complete 1 year of 
service. Additionally, in 2020, we announced a new base contribution of 
one percent of certified compensation that will be made to the 401(k) 
plan accounts for eligible employees whose annual compensation is less 
than $75,000, which is in addition to the matching contribution. These 
and additional benefits and opportunities are outlined in our recently 
published commitment to our employees. \8\
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     \8\ See Wells Fargo: Our Commitment to Employees (May 6, 2021), 
available at https://stories.wf.com/wells-fargo-our-commitment-to-
employees.
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Our Commitment to Diversity, Equity, and Inclusion
    Our efforts to strengthen and improve Wells Fargo would be 
incomplete without a sustained commitment to diversity, equity, and 
inclusion, both for our customers and for our employees. These ideals 
are essential to our future and personally very important to me. I 
recognize that, as a bank and an industry, we can and must do better in 
this regard, and I am committed to making sure that we continue to make 
progress.
    We have made significant strides to diversify our senior 
leadership, increase the pipeline of diverse talent inside Wells Fargo, 
and use our market position to increase the share of diverse suppliers 
and diverse asset managers. We also maintain sustained partnerships 
with third party stakeholders to drive positive outcomes for diverse 
communities. \9\
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     \9\ See ``Elevating Diversity, Equity, and Inclusion'', 2020 
Social Impact and Sustainability Highlights, at 13-26 (Apr. 2021), 
available at https://www08.wellsfargomedia.com/assets/pdf/about/
corporate-responsibility/social-impact-sustainability-highlights.pdf.
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    I am pleased that, in my short tenure, we have added three diverse 
executives to our Operating Committee, including our Head of Diverse 
Segments, Representation, and Inclusion, who reports directly to me. 
Additional new diverse leaders include our Head of Operations; Head of 
Strategy, Digital and Innovations; and CEO of Home Lending.
    Among our U.S. employees, approximately 56.1 percent are female, 
and 44.6 percent are racially diverse. Our Operating Committee is 
currently 23.5 percent female and 17.6 percent racially diverse. And 
our Board of Directors is 25 percent female and 25 percent racially 
diverse.
    Beyond particular roles, we are accountable for continuing to 
attract diverse candidates to all levels of our organization, including 
leadership. As part of the year-end evaluation process, Operating 
Committee members will be evaluated based on, among other performance 
metrics, their progress in improving diverse representation and 
inclusion in their area of responsibility. These evaluations will have 
a direct impact on year-end compensation decisions. Additionally, for 
the hiring of many senior roles, we have implemented guidelines that 
require a diverse slate of candidates (at least 50 percent) and a 
diverse interview panel.
    We also continue to focus on early talent recruitment by working 
with historically Black colleges and universities (HBCUs), Hispanic 
serving institutions (HSIs), and other national partners to identify 
talent and build engagement. HBCUs and HSIs are national treasures that 
have been leading the way for generations in producing minority leaders 
in a variety of fields. We have deep and longstanding relationships 
with these institutions and related auxiliary groups. For example, 
since 2007, we have provided more than $38 million to support 
programming and scholarships for the Hispanic Scholarship Fund, the 
Thurgood Marshall College Fund, and the United Negro College Fund.
Our Commitment to the Communities We Serve
    For the communities we serve, we have continued to invest in the 
institutions critical to their success. While we are encouraged to see 
signs of improvement, we realize that not all 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 LMI 
communities.
    Investments in CDFIs and MDIs. We are a proud investor in CDFIs and 
MDIs. In total, we have provided more than $2.4 billion in funding to 
support CDFIs and more than $40 million to support MDIs from January 
2011 to May 2021.
    Within the last year, we made approximately $50 million of equity 
investments in Black-owned MDIs across the country. \10\ Relatedly, we 
recently launched the Black Economic Alliance Entrepreneurs Fund, along 
with the Black Economic Alliance Foundation, to accelerate the growth 
of Black entrepreneurs and business owners. The $50 million evergreen 
fund will provide seed, start-up, and early-stage capital to businesses 
founded and led by Black entrepreneurs.
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     \10\ As part of its $50 million equity investment commitment, 
Wells Fargo has invested in the following MDIs: Broadway Federal Bank 
(Los Angeles, California, and Washington District of Columbia); Carver 
Federal Savings Bank (New York, New York); Carver State Bank (Savannah, 
Georgia); Citizens Savings Bank & Trust (Nashville, Tennessee); 
Citizens Trust (Atlanta, Georgia); Commonwealth National Bank (Mobile, 
Alabama); First Independence (Detroit, Michigan); Harbor Bank 
(Baltimore, Maryland); Industrial Bank (Washington, District of 
Columbia); Liberty Bank & Trust (New Orleans, Louisiana); M&F Bank 
(Durham, North Carolina); Optus Bank (Columbia, South Carolina); and 
Unity National Bank (Houston, Texas).
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    Additionally, through our Open for Business Fund, we have given 
more than $150 million over the past year to CDFIs around the country, 
which are providing grants to hard-hit small businesses with a focus on 
diverse-owned organizations. Our Diverse Community Capital (DCC) 
program has dedicated $175 million to CDFIs over 5 years to provide 
capital and technical assistance for diverse small business owners in 
the United States. The DCC program has enabled CDFIs to lend nearly 
$350 million to Black small business owners across the country since 
the program launched in 2015, according to Opportunity Finance Network. 
And on March 30, 2021, Wells Fargo closed on a $5 million patient 
capital loan to Hope Enterprise Corporation, a 501(c)(3) and certified 
CDFI that is dedicated to strengthening communities, building assets, 
and improving lives in the Delta and other economically distressed 
areas of the Deep South.
    Investments in Underserved Communities. In the communities we 
serve, we focus on building a sustainable, inclusive future for all by 
supporting housing affordability, small business growth, financial 
health, and a low-carbon economy. For instance, last week, we announced 
the issuance of a $1 billion Inclusive Communities and Climate Bond, 
our first Sustainability Bond, designed to drive both social and 
environmental impact. The bond will fund projects and programs that 
support housing affordability, socioeconomic opportunity, and renewable 
energy. And diverse underwriting firms will receive the bulk of fees 
from the bond.
    I am also proud to share that Wells Fargo received a rating of 
``Outstanding'' in its most recent Community Reinvestment Act 
performance evaluation, which covers the years 2012 to 2018. This 
rating reflects Wells Fargo's strong performance on the exam's 
components and the company's proven commitment to serving LMI 
communities.
    These commitments and investments complement a host of additional 
initiatives we have undertaken in recent years that aim to support all 
of our customers and communities. For example, we committed $1 billion 
through 2025 to help address the U.S. housing affordability crisis. 
Additionally, in the 10 years spanning 2009 to 2018, Wells Fargo was 
the number one financier of home loans to Black individuals and 
originated more mortgages to help Black home buyers purchase homes than 
the four other largest bank lenders combined. Similarly, in 2017, we 
pledged to create 250,000 Black homeowners by 2027 through lending $60 
billion for home purchases, increasing the diversity of the sales team, 
and supporting homebuyer education and counseling. In the first 3 years 
of the commitment, 60,527 Black homeowners have been supported with 
$15.2 billion in financing.
    Our Approach to Risk and Societal Engagement. Beyond our 
investments, we know that in order to be a trusted partner in the 
communities where we operate and contribute in meaningful ways to the 
growth of the U.S., we must be guided by delivering for our customers 
every day in a manner that will make us, our employees, our customers, 
and our communities proud. Now more than ever, there is a renewed 
desire for businesses to operate with all stakeholders in mind.
    In 2020, we launched a new Social Impact and Sustainability 
strategy designed to make a greater impact in communities by more 
effectively combining our financial resources and business expertise. 
In the communities we serve, the company focuses its social impact on 
building a sustainable, inclusive future for all by supporting housing 
affordability, small business growth, financial health, and a low-
carbon economy. Through our businesses and the Wells Fargo Foundation, 
we are using our resources, business expertise, ingenuity, and 
collaborations with public and private sector organizations to help 
solve complex problems. A major near-term focus is fostering an 
inclusive recovery from the COVID-19 pandemic and strengthening 
communities that have been disproportionately impacted.
    Also last year, we began an effort to be more transparent and 
comprehensive in nonfinancial reporting and disclosures. The company 
moved from a single, annual corporate responsibility report to a suite 
of disclosures that more completely addresses our approach to 
environmental, social, and governance (ESG) risks and opportunities, 
and performance on related measures. Our inaugural ESG Report details 
how the company is working to create solutions for stronger communities 
through diversity and inclusion, economic empowerment, and 
environmental sustainability. \11\
---------------------------------------------------------------------------
     \11\ Environmental, Social, and Governance Report (Aug. 2020), 
available at https://www08.wellsfargomedia.com/assets/pdf/about/
corporate-responsibility/environmental-social-governance-report.pdf.
---------------------------------------------------------------------------
    Likewise, we recognize that our business decisions and those of our 
customers have the potential to impact communities and the environment. 
We believe it is important to evaluate and consider the environmental, 
social, and human rights impacts of our lending and investments along 
with the traditional financial risk. Our Environmental and Social Risk 
Management framework and policies are tied to our due diligence 
requirements, and they help us identify, evaluate, and manage the 
environmental and social risks associated with our lending and 
investments. \12\ Similarly, in February 2021, we released our first 
Task Force for Climate-Related Financial Disclosures Report, which 
provides an update on the company's progress managing climate-related 
risks and opportunities. \13\
---------------------------------------------------------------------------
     \12\ Environmental and Social Risk Management Framework (June 
2018), available at https://www08.wellsfargomedia.com/assets/pdf/about/
corporate-responsibility/esrm-framework.pdf.
     \13\ Task Force for Climate-Related Financial Disclosures Report 
(Feb. 2021), available at https://www08.wellsfargomedia.com/assets/pdf/
about/corporate-responsibility/climate-disclosure.pdf.
---------------------------------------------------------------------------
    Recently, we made a significant announcement regarding our ongoing 
efforts to support the transition to a low-carbon economy. Climate 
change is one of the most urgent environmental and social issues of our 
time, and we are committed to helping transition to a net-zero carbon 
economy.
    The risks of not taking action are too great to ignore, and 
collective action is needed to avoid significant impacts on our most 
vulnerable communities.
    Accordingly, we set a target to achieve net-zero greenhouse gas 
emissions--including our financed emissions--by 2050. We will also 
launch an Institute for Sustainable Finance to manage the deployment of 
$500 billion of financing to sustainable businesses and projects by 
2030, as well as support science-based research on low-carbon solutions 
and advocate for policies that enable client transitions. Our aim is to 
support our customers as they work to transform their businesses for 
success in a low-carbon economy and to support our communities as they 
work to adapt to and mitigate the impacts of climate change.
    These goals build on efforts already ongoing. We recently surpassed 
$10 billion in tax-equity investments in the wind, solar, and fuel cell 
industries, having invested in more than 500 projects, helping to 
finance 12 percent of all wind and solar energy capacity in the U.S. 
over the past 10 years.
    As we move forward, we will continue to approach critical issues 
such as these with the care and diligence they deserve.
Our Commitment to Cybersecurity, Privacy, and Responsible Technology
    We recognize that cybersecurity is an area where we must remain 
ever vigilant to meet evolving threats. We invest heavily in 
cyberthreat management and controls aimed at preventing and preparing 
for cyberattacks, and we maintain tools to quickly detect and respond 
to adverse events, limiting their impact. Relatedly, we prioritize 
personal data privacy and support transparency in our information 
collection and use practices.
    Finally, we believe safe and responsible use of emerging technology 
has great promise for our industry. Artificial Intelligence (AI), for 
example, has the potential to help detect and prevent harm from bad 
actors and greatly enhance customer experience and financial inclusion. 
Responsible use of AI at banks carries with it fundamental value 
propositions including making better business decisions, driving leaner 
and faster operations, enhancing customer experience, and detecting 
patterns or irregularities in data.
    We have been involved in research and development in the area of 
distributed ledger technology (DLT) to facilitate next-generation 
settlement services in a variety of areas, including announcing a pilot 
that will begin soon. It will be an internal settlement service which 
will run on our internal DLT platform and allow us to complete internal 
book transfers of cross-border payments within our global branch 
network.
    Finally, we continue to closely and actively follow developments 
around cryptocurrencies, which have emerged as alternative investments 
products, though their status as a currency and mechanism of payment 
remains fluid.
Conclusion
    Last year was a challenging one for all, but I am proud of what 
Wells Fargo has done to support our customers, our country, and our 
communities throughout an incredibly difficult time. Even in the face 
of a global pandemic, we made progress in transforming our company, and 
we will continue to approach the work ahead with urgency.
    Thank you, again, for the opportunity to testify. I look forward to 
answering your questions.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                 ______
                                 
                 PREPARED STATEMENT OF DAVID M. SOLOMON
          Chairman and Chief Executive Officer, Goldman Sachs
                              May 26, 2021
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee, I appreciate the opportunity to testify before you today.
    Overview of Goldman Sachs Goldman Sachs is a leading global 
financial institution that delivers a broad range of financial services 
across investment banking, securities, investment management and 
consumer banking. Our clients include pension plans and retirement 
funds, endowments and foundations, large and small businesses, 
financial institutions, Governments, start-ups, charities, nonprofits, 
and individuals. Founded in 1869, we are headquartered in New York and 
maintain offices in all major financial centers around the world. Over 
the course of more than 150 years we have evolved considerably from a 
small enterprise to a global institution.
    At Goldman Sachs our purpose is to advance sustainable economic 
growth and financial opportunity. Specifically, as an investment bank, 
we advise companies on raising capital including through initial public 
offerings or lending, managing risks, and seeing opportunities for them 
to innovate and grow through acquisitions or divestitures. We also help 
local and State governments finance their operations so they can invest 
in infrastructure such as schools, hospitals and roads. As a market 
maker, we help our corporate or institutional clients (such as pension 
funds and other asset managers) manage risk in all key financial 
markets (including equities, bonds, currencies and commodities) and 
help ensure markets are liquid and efficient. We are also an asset 
manager preserving and investing assets for institutions, including 
mutual funds, pension funds, and foundations. We invest capital in 
private companies to help them grow their business and increase 
employment. And we act as a private wealth manager, providing advisory 
solutions, including financial planning and counseling, and managing 
assets for individuals.
    In 2016, we launched a retail banking franchise that, while 
relatively small, has been recognized for its consumer-centric 
approach. Through our consumer banking digital platform, Marcus by 
Goldman Sachs, we offer personal loans, savings and CDs, investing 
services, free financial tools and trackers, and through associated 
partnerships like Apple Card, we issue credit cards to consumers.
    As of the end of April 2021, we had 40,300 employees, with 51 
percent based in the United States. We have offices in over 50 cities 
in the United States and in over 35 countries around the world. Our 
primary bank subsidiary, GS Bank USA, is headquartered in New York 
City. The Bank operates two domestic branches, which are located in 
Salt Lake City, Utah and Draper, Utah. The Bank also has a foreign 
branch in London. Given its small size, our branch network has not 
meaningfully changed over time.
Goldman Sachs Remains Well-Capitalized
    As a result of Dodd-Frank, Basel capital and liquidity and other 
market reforms, today the U.S. financial system is substantially safer 
and more resilient against failure or disruptions in critical services 
than it was prior to the financial crisis. The largest financial 
institutions, including Goldman Sachs, are more able to withstand 
stress events and are also ultimately more resolvable without 
threatening the financial system or needing Government support, 
consistent with Dodd-Frank's resolution plan requirements. We have 
significantly more capital and usable total loss-absorbing capacity 
(TLAC), which could be converted to equity in the event that our equity 
capital falls below the regulatory required minimums. We have also 
reduced the percentage of our liabilities that consist of short-term 
wholesale funding, while at the same time significantly increasing the 
percentage of our assets consisting of cash and other high quality 
liquid assets since prior to the enactment of these reforms.
    Goldman Sachs was well capitalized before and throughout this 
COVID-19 pandemic period. Our capital levels have allowed us to serve 
our clients and provide support for the economy (as described below), 
and the last two rigorous stress tests conducted by the Federal Reserve 
in 2020 attest to that fact.
    Moreover, there has been a significant change to the firm's balance 
sheet and risk profile since the financial crisis, reflecting decreased 
risk and complexity. Specifically, at Goldman Sachs, since the end of 
2007:

    Our common equity has more than doubled in absolute terms 
        (from $40 billion to $88 billion); as of 1Q21, our common 
        equity tier 1 ratio exceeded 14 percent under the Standardized 
        approach and exceeded 13 percent under the Advanced approach

    Our gross leverage has decreased by 49 percent

    Our TLAC (i.e., loss-absorbing long-term debt and equity 
        instruments) was 40.7 percent of our risk-weighted assets as of 
        1Q21, exceeding our minimum requirement of 22.0 percent

    Our average liquidity pool has more than quadrupled in 
        absolute terms (from $64 billion to $299 billion) and increased 
        4x as a percentage of our average total assets (from 6 percent 
        to 24 percent)

    Our deposit funding has increased approximately 19x (from 
        $15 billion to $286 billion) and increased 10x as a percentage 
        of our funding sources (from 3 percent to 33 percent)

    Our Level 3 assets, which are illiquid, have decreased by 
        more than 50 percent (they were only 2.1 percent of our balance 
        sheet as of 1Q21)

Goldman Sachs Has Reduced Its Complexity
    Since 2009, we have devoted substantial resources across our firm 
to not only improve the resilience and resolvability of Goldman Sachs, 
but also to reduce complexity in our structure and make our firm more 
efficient. Additionally, we believe that resolution plans have become 
considerably more sophisticated as they have evolved over the past 
decade to effectively safeguard taxpayers from the failure of the 
largest U.S. banks, as we meet our internal requirement and demonstrate 
to our regulators that we have robust capabilities, an appropriate 
legal structure, and sufficient levels of capital and liquidity to 
facilitate an orderly wind-down.
    As of today, we have taken several key actions since the financial 
crisis that have reduced our complexity:

    We reduced the total number of our legal entities

    We simplified our ownership structure and funding lines to 
        our material operating subsidiaries, separated the ownership 
        for our core and noncore legal entities and aligned staff, 
        technology and other resources with the entities they serve

    We simplified the management of businesses by merging 
        certain businesses together into our Asset Management Division 
        and moving our consumer banking business and wealth management 
        business into one combined division

    We realigned business segments to more closely align with 
        how we manage the firm with clear lines of management 
        responsibility and leadership over each segment, which also 
        allows us to be more transparent, including about how we track 
        our lending and financing activities across businesses

      We sold several noncore businesses and activities 
        including:

      Our Americas reinsurance and European insurance 
        businesses

      Our hedge fund administration business

      Our mortgage servicing business

    Our investments in several commodities-related businesses 
        that hold physical commodities, including a metals warehouse, a 
        coal extraction facility, and power generation plants

    We sold our investment in the Industrial and Commercial 
        Bank of China

    Pursuant to Volcker Rule requirements, and before the final 
        rule went into effect, we exited all of our proprietary trading 
        businesses

    Moreover, in accordance with good risk management practices as well 
as the spirit of Dodd-Frank's Section 165 resolution plan requirements, 
when we have sought to enter new businesses or make acquisitions, we 
subject all decisions to our Firmwide New Activity Committee and other 
processes to ensure that the new business or acquisition would be 
properly capitalized, have sufficient funding support and would not 
unduly impede our resolution strategy.
Investing in Our People
    As the pandemic hit, we transitioned our workforce to be 98 percent 
remote. To help our people during the pandemic, we added to and 
extended their benefits, including mental health support and an 
additional 10 days of COVID-19 family leave to allow time to care for 
family members or childcare needs, including homeschooling. In 
introducing telemedicine access to U.S. employees and covered 
dependents, we waived all costs of urgent-care visits, including COVID-
19 consultations, and we provided virtual mental health counseling and 
fitness sessions. Most recently, we offered employees a half day of 
paid time off for each dose of the vaccine.
    Throughout the pandemic, we have partnered with health care experts 
to develop policies and protocols that prioritized the health and 
safety of our people. Our comprehensive protocols have included regular 
testing (via either onsite testing or through at-home testing), mask 
usage, daily health attestations, temperature checks at arrival, and 
physical distancing.
    Additionally, we have a lot of people who support our organization 
and operations through contracted and vendor services, including in our 
mail room, our cafeteria, our security guards, and our janitorial 
staff. We extended our support to onsite vendor staff to ensure they 
were paid during the pandemic, whether they worked or not. For those 
who came into work, we reimbursed transportation costs and provided in-
office meals. Most recently, we paid a bonus to nearly 3,000 vendor 
staff who supported us in the office and enabled the continuity of our 
operations through the lockdowns that took place around the world.
Investing in Our Retail Customers
    Goldman Sachs entered the consumer financial services market in 
2016. We launched our digital consumer platform called Marcus by 
Goldman Sachs because we saw an opportunity to serve consumers through 
consumer-centric products that are simple and transparent and on the 
side of the consumer. We set out to build our consumer business from a 
clean sheet of paper. In designing Marcus, we spoke with more than 
10,000 people across the country to understand their banking needs and 
have since spoken to more than 100,000 consumers. Value, simplicity and 
transparency are at the core of our consumer products, which is based 
on this feedback.
    We have two primary channels through which we acquire and serve 
customers: through our consumer business Marcus by Goldman Sachs and 
through partnerships with large brands. Because we are not operating 
with an expensive branch infrastructure, we are able to deliver more 
value to the customer when compared to other traditional banks.
    Through Marcus, we offer:

    Personal loans with fixed rates, customizable payment 
        options and no fees. These loans range from $3,500 to $40,000, 
        and because we fund our personal loans from our own balance 
        sheet, we can provide more flexibility to consumers, allowing 
        them to select from various monthly payment and loan length 
        options

    Savings accounts/CDs that pay consumers a relatively higher 
        interest rate on their savings than traditional banks offer, 
        with no minimum balance and no fees (including no monthly fees, 
        no transaction fees and no overdraft fees)

    Invest, which offers individuals the ability to invest as 
        little as $1,000. This product combines the accessibility, 
        simplicity and transparency of our Marcus platform with our 
        firm's leading advisory capabilities

    Free financial tools and trackers that help customers 
        aggregate their various accounts, track spending, and get a 
        more holistic picture of their finances.

    Although we are working to launch digital checking accounts in the 
United States, we do not currently offer consumer checking accounts.
    Additionally, through our partnership with Apple via Apple Card, we 
are providing innovative financial services to millions of customers 
that help them to understand their spending and payment options better 
and seamlessly earn and redeem rewards.
    Marcus was created to help millions of Americans take control of 
their financial lives with products that offer value, transparency and 
simplicity. That approach positions Marcus to meet the financial 
services needs of a broad range of consumers, including low-to-moderate 
income (LMI) consumers. Moreover, Marcus is a digital platform. 
Customers do not need to walk into a branch to open an account; they 
can do it directly from their mobile phone or call one of our Marcus 
Specialists. We believe that digital banking can be leveraged to be 
more inclusive, particularly with regard to communities that are 
underbanked. That being said, we understand that digital connectivity 
is a prerequisite to inclusion in the digital banking ecosystem. That 
is why we have incorporated digital connectivity as one of our key 
impact areas in our One Million Black Women initiative (described 
below). We are currently exploring ways to invest in increasing 
affordable high-speed internet access and to close the digital divide.
    While still new to consumer businesses, we substantially increased 
our support for consumers during the pandemic across all of our major 
consumer products. For example, our consumer loans, credit card lines, 
and deposits each increased approximately 20 percent in 2020 during the 
pandemic, not decreased, including to those in LMI communities.
    We also continued to invest in our consumer bank products and serve 
our Marcus clients throughout the pandemic. For example, we launched 
our Customer Assistance Program to help customers navigate through the 
pandemic, including by giving customers the flexibility to defer Marcus 
loan payments for four months or Apple card payments for 6 months at no 
cost, no interest accrued during the deferral period and no impact to 
their credit score. Moreover, Marcus customers were able to access 
funds in high-yield certificates of deposit early without a penalty. We 
focused on offering seamless digital enrollment, because customers 
should be able to get help quickly and easily when they need it. Around 
10 percent of our customers enrolled in the program, and we are proud 
we were able to be there for them during a difficult time.
Investing in Our Clients and the Broader Economy
    We have made a significant contribution to the annual growth of the 
nonfinancial economy by helping U.S. companies raise capital over the 
last decade. Additionally, over this same period, we have significantly 
increased the amount of financing provided through direct lending from 
our balance sheet to the real economy. As an underwriter, over the past 
10 years, we have raised debt financing of over $850 billion for U.S. 
companies, and we have raised nearly $350 billion of equity capital for 
U.S. corporations during that time period. As a direct lender, our 
corporate loan book has more than quadrupled over the last decade, 
growing to nearly $50 billion as of 1Q21, with loans primarily held by 
U.S. clients.
    This financing is in addition to the significant financing 
commitments that we have made as part of our investments in our 
communities and small businesses and our sustainability initiatives, as 
described below.
    At the beginning of the pandemic, our economy plunged into the 
steepest economic decline since the Great Depression. However, there is 
no question that we would have had an even more severe recession had 
the Congress, the Treasury, and the Federal Reserve not taken swift, 
bipartisan action to support our economy through the CARES Act and 
related programs and subsequent actions.
    We believe that our strong financial position allowed us to 
continue to provide financing to our clients throughout the pandemic, 
including during the peak of the market volatility and economic 
uncertainty last March, to our clients and the broader economy. We were 
also able to continue to support deep and liquid capital markets, while 
maintaining resilient operations without any major outages despite an 
unprecedented working environment. During the first six months of 2020, 
when uncertainty over the economic impact of COVID 19 was at its 
highest, we experienced historically elevated levels of client demand 
for access to equity and debt capital.
    Over the first half of 2020, we raised approximately $180 billion 
of financing for our corporate clients, with two thirds of the activity 
in the United States. We led the largest capital markets offering for 
the cruise industry, and we worked with large U.S. airlines on 
significant financing transactions and led the first insurance deals 
post the start of COVID volatility last year. We also provided 
approximately $1 billion of lending commitments across the investment 
grade energy sector to provide them with additional liquidity during 
the pandemic.
    As debt markets were largely closed to most borrowers in March and 
April 2020, we developed creative solutions to support clients who were 
most in need of immediate financial assistance, including by lending 
directly to clients from our own balance sheet. For example, from March 
through June 2020, we provided $20 billion of nonacquisition financing 
related credit to more than 200 clients. Of this financing, we provided 
$13 billion of direct financing that was specifically aimed at 
providing additional liquidity to clients in hard hit sectors to help 
them weather COVID-related stresses to their businesses, including to 
airlines, cruise lines, automobile companies, and the hospitality and 
entertainment sector.
    In addition to corporate financing, we also supported pandemic 
relief efforts by underwriting nearly $66 billion in financings for 
sovereigns and multilateral institutions, designed to help alleviate 
the economic and social impact of the pandemic. These included a $2 
billion sustainable development bond for the World Bank tied to 
addressing the United Nations Sustainable Development Goals, and a 
COVID-19 response bond for the New Development Bank, also for $2 
billion.
    Our financing and assistance helped enable businesses across the 
country and around the globe to pay their workers, operate their 
businesses and meet funding needs. We remain committed to continuing 
our support for American businesses and the broader economy to help 
build a robust, inclusive, and sustainable economic recovery.
Investing in Our Communities and Small Businesses
    We started investing in underserved areas in 2001, well before we 
had a regulatory obligation to do so, because we strongly believed it 
made sense to invest in areas that others had overlooked and deploy our 
capital to make a real difference in these communities.
    Our Urban Investment Group (UIG)'s entire purpose is to make 
investments and loans that benefit underserved people and places. The 
team has a comprehensive approach to closing opportunity gaps, 
predominantly by making direct investments, rather than investing in 
funds. This approach allows us to engage directly with community 
leaders and stakeholders impacted by our investments.
    Specifically, through UIG, we finance the creation of affordable 
housing, space for educational and health facilities, and grocery 
stores in food deserts. To date, UIG has committed more than $9.8 
billion to benefit underserved people, places, and small businesses. 
Since UIG was founded, our investments have spanned 101 cities in 33 
States across the country, bringing affordable housing, quality 
schools, new jobs, and growth capital for small businesses to 
neighborhoods in need. Approximately 70 percent of UIG's investments 
are located in or serve minority communities.
    Goldman Sachs has deployed over $200 million in capital to support 
Black-led Minority Depository Institutions (MDIs), starting with our 
investment in Carver Bancorp, one of the largest African-American 
operated banks in the United States, in 2011. Our partnerships with and 
investment in MDIs has continued to evolve since then and, most 
recently, we announced a $130 million commitment to Hope Enterprise 
Corporation, a leading Black-led MDI and Community Development 
Financial Institution (CDFI) in the South, to establish the ``Deep 
South Economic Mobility Collaborative'', a public-private partnership 
with seven cities and nine historically Black colleges and universities 
across the South. This Collaborative will provide credit and support 
services to entrepreneurs of color, particularly Black women 
entrepreneurs, in historically disadvantaged neighborhoods.
    Most recently, UIG stood up a loan program in partnership with the 
City of New York which will provide funding to support staffing New 
York City's safety-net hospitals related to the COVID-19 vaccination 
process and potential additional COVID-19 patient care throughout the 
remainder of 2021. The program aims to support safety-net hospitals, 
all of which are located in low-income neighborhoods and treat the 
City's poorest and most vulnerable patients. As we know, COVID-19 has 
disproportionately impacted Black communities.
Goldman Sachs Partnerships With CDFIs and MDIs
    We also provide access to capital to small businesses and high-
achieving low-income students by partnering with CDFIs, MDIs and other 
types of mission-driven lenders. Given their long track record of 
serving small businesses in low-income and minority communities, 
partnering with and helping build infrastructure for CDFIs has been 
core to our small business lending efforts for the last 10 years. 
Importantly, since the beginning of this pandemic, our response efforts 
have been guided by our belief in partnership and collaboration, and 
our ability to respond quickly and creatively and remain nimble in the 
face of evolving challenges.
    Unlike most of the banks appearing before the Committee, our bank 
is not an approved Small Business Administration (SBA) lender and 
therefore did not have the systems in place to comply with the SBA 
rules under which Paycheck Protection Program (PPP) loans were made. 
Rather than participating directly in the PPP, we felt that we could 
provide the greatest value most quickly by committing $1.25 billion in 
capital to CDFIs and mission-driven lenders to facilitate emergency 
lending, including PPP loans, to underserved and minority-owned small 
businesses. We recognize lending capital is not the only need facing 
the small business ecosystem, so we paired that lending capital with 
$25 million in philanthropic support to CDFIs and community-based 
organizations that were on the frontlines helping businesses navigate 
the unprecedented crisis.
    As a result of this intentional, local-partnership approach, our 
small business lending capital deployed during the pandemic reached 
very small businesses. To date, the current median employee count among 
recipients is around two and our average loan size is $43,000. The 
program reached businesses that serve underserved communities. Nearly 
half (approximately 45 percent) of the capital was deployed to 
businesses located in minority communities.
    In addition to our $1.25 billion CDFI commitment, we recently 
committed an additional $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 moved 
expeditiously to ensure these applicants were able to have their loans 
processed and approved before the PPP funds were exhausted. The 
commitment to Lendistry, one of the most active SBA Community Advantage 
lenders in the country, will be the largest ever to a Black-led CDFI 
and will provide much-needed capital to underserved small businesses, 
especially Black-run small businesses and communities, who have been 
disproportionately impacted by the massive economic, health, and social 
disruption over the last 16 months.
    To amplify the reach and impact of our capital, we engaged with 
stakeholders in the public sector to identify opportunities to partner 
to support the efforts that were already undertaken to support small 
businesses hit the hardest in the early days of the pandemic. As a 
result, we were able to support emergency funds with New York City and 
Chicago, which has served as a model for other relief funds across the 
country. Additionally, to ensure the furthest reach of this capital to 
underserved small businesses, we partnered with organizations such as 
the National Urban League, the U.S. Hispanic Chamber of Commerce, and 
the New Voices Foundation to deploy capital, critically important 
information, and technical assistance, to small businesses owned by 
entrepreneurs of color.
    We applaud Congress's move to expand PPP late last year by 
injecting additional funding into the program so that the hardest hit 
businesses could get a second PPP loan, and importantly, the decision 
to provide for a $15 billion set aside for CDFIs and community-based 
lenders, which is something we advocated for from the very beginning. 
As a result of this expansion of the program, we expanded our 
commitment by providing an additional $500 million to our CDFI partners 
to fund PPP loans in 2021, bringing our total commitment to $1.25 
billion.
10,000 Small Businesses Program
    Through our 10,000 Small Businesses program, launched in 2010, we 
deliver a comprehensive business education to small businesses by 
partnering with more than 100 community colleges and business support 
service providers. To date, we have graduated 10,800 small business 
owners, with 73 percent of graduates reporting revenue increases and 54 
percent adding jobs within 30 months of graduation. I am particularly 
proud that Goldman Sachs is one of the largest private contributors to 
community colleges in the United States.
    Additionally, our commitment to and investments in CDFIs and MDIs 
is at the core of our strategy to facilitate access to capital and 
technical assistance to underserved small businesses and a key pillar 
of our 10,000 Small Businesses program. At the launch of this program, 
we committed $300 million in lending capital and grant support for 
CDFIs, MDIs and other mission-driven lenders. Through this investment 
and partnerships, we have been able to build the capacity of CDFIs 
across the country, including enabling them to expand to new markets, 
launch new lending programs and develop the tech infrastructure that 
many of them were able to leverage during the pandemic to deliver 
capital and technical assistance to small businesses at scale at a 
critical time.
    In 2020, we announced an additional $250 million commitment to the 
program to serve 10,000 more entrepreneurs.
One Million Black Women
    Building on our history of investing significant capital in Black 
communities through our 10,000 Small Businesses program and our Urban 
Investment Group, we recently launched a new investment initiative, One 
Million Black Women. In partnership with Black women-led organizations 
and other partners, we will commit $10 billion in direct investment 
capital and $100 million in philanthropic support to address the dual 
disproportionate gender and racial biases that Black women have faced 
for generations, which have only been exacerbated by the pandemic.
    One Million Black Women has, in part, been shaped through research, 
including a new report, Black Womenomics, published by Goldman Sachs 
Investment Research. The research shows that Black women are one of the 
most marginalized groups in the country, and if we can reduce the 
earnings gap for Black women we would see U.S. GDP increase by $300 
billion a year. We believe if we can narrow opportunity gaps for Black 
women, we will narrow opportunity gaps for all groups and drive 
economic progress for the country as a whole.
    Our investments will focus on increasing opportunity at key moments 
in Black women's lives, whether by expanding access to quality health 
care, modernizing daycare and primary school facilities in Black 
communities, or providing access to capital to grow a business, among 
other things. For example, the New York City safety-net hospital loan, 
described above, is part of this initiative and we expect thousands of 
Black female health care workers and patients will benefit from the GS 
loan.
    To date, we have announced that we will provide investment capital 
and philanthropic grants to 12 organizations nationwide, as listed in 
the Appendix.
    This effort cannot succeed without advice and counsel from the 
broadest range of Black voices possible, so we have created a new 
advisory council of prominent Black leaders from a wide range of fields 
including Dr. Ruth Simmons (President, Prairie View A&M University), 
former Secretary of State Condoleezza Rice, Dr. Valerie Montgomery Rice 
(President and Dean, Morehouse School of Medicine) and Rosalind G. 
Brewer (CEO of Walgreens) and Darren Walker (President, Ford 
Foundation). There has never been an investment of this size focused on 
Black women, and we are proud to bring people together in this historic 
effort.
Launch With GS
    Three years ago, we developed Launch With GS, a $500 million 
investment strategy that aims to increase access to capital and 
facilitate connections for women, Black, Latinx, and other diverse 
entrepreneurs and investors. Since its inception, Launch With GS has 
deployed more than $500 million globally to companies and funds with 
diverse management teams. In early 2021, we announced an additional 
$500 million commitment to Launch With GS, for a total of $1 billion 
toward investing in these entrepreneurs and funds.
    Launch With GS is grounded in our belief that diverse leadership 
teams outperform if they are given access to capital and the resources 
to drive their businesses forward. In addition to deploying capital, we 
are fostering a global ecosystem of founders, investors and clients. In 
early 2020, Launch With GS announced Goldman Sachs's first Black and 
Latinx Entrepreneur Cohort, comprising a group of high-growth start-ups 
from across the United States. Beyond access to capital, these 
businesses participate in a customized 6-week virtual experience--
including one-on-one and sector-specific workshops with our research, 
banking and investment teams, and interaction with start-up experts 
across key areas, including legal services, capitalization, marketing, 
and branding.
Philanthropic Initiatives
    A dedication to service and a commitment to using our expertise and 
convening power to help address broader issues has long been a core 
element of our culture. Moreover, since the onset of the pandemic, we 
have been focused on how we can help communities around the world, 
including those where we live and work.
    As a key element of the firm's overall impact investing platform, 
we established our Goldman Sachs Gives program to coordinate, 
facilitate and encourage global philanthropy by our most senior 
leaders--partners. GS Gives is committed to fostering innovative ideas, 
solving economic and social issues, and enabling progress in 
underserved communities globally. Since 2010, GS Gives has granted more 
than $1.8 billion to over 8,000 nonprofits in 100 countries around the 
world. In 2020, GS Gives deployed nearly $200 million in grants to 
support pioneering nonprofit organizations and firm initiatives such as 
the COVID-19 Relief Fund and the Fund for Racial Equity.
    The Goldman Sachs COVID-19 Relief Fund was designed to address the 
most pressing challenges brought on by the pandemic in the world's 
hardest-hit communities. Grants deployed provided assistance for health 
care providers on the front lines, aid for the most vulnerable 
populations, including underserved children and families, economic 
relief for reduced and lost work, and support for accelerated medical 
research. The fund has deployed a total of $42 million to date, 
supporting 305 nonprofits working directly on COVID-19 relief and 
response efforts in more than 30 countries around the world.
    Additionally, in response to the COVID-19 pandemic, we facilitated 
the donation of more than 2.5 million surgical masks and 700,000 N95 
masks to hospitals worldwide. In New York, we connected Mount Sinai 
Hospital with our ground transportation partner and donated cleaning 
supplies to help the dedicated car service safely transport health care 
workers to and from three local hospitals.
    Most recently, we announced an additional $10 million commitment to 
support relief and recovery efforts in India, which is home to three 
Goldman Sachs offices and thousands of our people. Our funding will be 
deployed to support frontline health facilities that are leading the 
fight against COVID-19, including ongoing vaccination efforts. It will 
also be used to support initiatives promoting mental health in several 
cities across India and to support communities with economic recovery.
    In addition to our COVID-19 relief and recovery efforts, last June 
we created a $10 million fund, the Goldman Sachs Fund for Racial 
Equity. Through GS Gives, the fund supports the vital work of leading 
organizations addressing racial injustice, structural inequity, and 
economic disparity. To date, the fund has donated to (among others) the 
NAACP Legal Defense Fund, the Black Economic Alliance Foundation, the 
United Negro College Fund, Equal Justice Initiative, Black Girls Code, 
and the Innocence Project.
Investing in Diversity and Inclusion
    Improving our diversity and inclusion efforts in every aspect of 
the work we do at the firm is a top priority. Since becoming CEO, I 
have been vocal about the importance of advancing our firm's diversity, 
including with respect to gender, race, sexual orientation, gender 
identity, veterans, and disability or whatever contributes to who we 
are. Effectively serving a broad and diverse set of clients means 
having an appreciation and understanding of their different 
experiences, interests, and values, and we are committed to building a 
team capable of that critical work. I believe a core part of my tenure 
as CEO will be defined by our progress on this front. I believe that we 
should have a company that looks like the regions and communities we 
serve.
    We are focused on driving accountability and transparency as it 
relates to these efforts and ensuring we have impact not only on the 
people of Goldman Sachs but also on the communities where we operate. 
For the first time, we published in April our inaugural People Strategy 
Report, which provides a comprehensive overview of our approach to 
attracting, developing, retaining, and rewarding diverse talent. The 
Report also discusses how we hold managers and senior leadership 
accountable for our diversity and inclusion commitments, including by 
our global, regional, and divisional committees.
Board Diversity
    We have been, and will continue to be, committed to diversity on 
our Board, and in recent years, have maintained a particular focus in 
our director searches on diverse candidates. Our Governance Committee 
aims to develop a Board that, as a whole, reflects diverse viewpoints, 
backgrounds, skills, experiences, and expertise.
    As of July 1, 2021, our five most recently appointed independent 
directors will be women: Kimberley Harris, Jessica Uhl, Dr. Drew Faust, 
Vice Admiral Jan Tighe (Ret. U.S. Navy) and Ellen Kullman. Of our 13 
directors who will be in place on July 1, our Board will include: six 
directors who are women, two directors who are Black, including our 
Lead Director and our newest director Kim Harris, one director who is 
of Indian descent, one director with career service in the military and 
three directors who are non-U.S. or dual citizens. Overall, our Board 
will be 62 percent diverse by race, gender, or sexual orientation.
Diversity of Senior Leaders
    Having a diverse Board is not enough to achieve where we want to be 
on our diversity efforts. Our most recent partner class had the highest 
percentage of women (27 percent, up 4 percent from 2016) and Black 
partners (7 percent, up 3 percent from 2016) in our history. We also 
recently added two women and one ethnically diverse leader to the 
Management Committee, bringing the total on the committee to seven 
women and four non-White leaders out of 28 committee members.
    Most recently, I announced a number of new leadership positions 
within our firm--many of whom are women. These include the Chief Legal 
Officer and General Counsel, the Global Co-Head of our Consumer and 
Wealth Management Division, the Head of Investor Relations, the Chief 
Operating Officer for our Asset Management Division, and our Deputy 
Chief of Staff for the firm. I have also recently promoted a number of 
Black professionals into leadership seats in the last year, including 
our Chief Strategy Officer, our Global Head of Corporate and Workplace 
Solutions, our Co-Head of Investment Banking in Asia (ex-Japan), our 
Global Chief Operating Officer of Global Investment Research and our 
Private Wealth Management New York Region Head.
    However, more work needs to be done to enhance the diversity of our 
senior leaders across the firm, and we are working to improve these 
efforts.
Increasing Diverse Representation
    Increasing the diversity of our people is a business imperative and 
is essential to our ability to serve our clients, generate long-term 
value for our shareholders and contribute to our broader communities. 
In 2019, we set forth ambitious aspirational goals and a comprehensive 
action plan to increase diverse representation at all levels and create 
an even stronger culture of inclusion for all of our people. We are 
aiming to achieve representation in entry-level hiring of 50 percent 
women globally, 11 percent Black professionals and 14 percent Hispanic/
Latino professionals in the Americas, and 9 percent Black professionals 
in the U.K.
    With consistent and persistent focus, we have attracted more 
diverse talent to Goldman Sachs than ever before. In our 2020 campus 
analyst class in the Americas, 55 percent were women, Black talent made 
up 11 percent of the class, Hispanic/Latinx talent made up 17 percent, 
and Asian talent made up 31 percent. The positive results we have 
achieved demonstrate the power of setting aspirational goals and 
holding ourselves accountable.
    In addition to setting clear aspirational goals, we continue to 
find innovative ways to democratize access to the people, opportunities 
and culture of the firm through our various diversity recruiting 
programs. Building upon our long-standing commitment to developing and 
recruiting students from HBCUs, we launched a $25 million commitment to 
HBCUs over the next 5 years. The commitment is tied to the Market 
Madness: HBCU Possibilities Program, a 4-month training in finance 
fundamentals. Students receive in-depth training, mentorship from 
Goldman Sachs professionals, a $10,000 stipend, and the ability to 
participate in a final case study competition with grand prizes ranging 
from $250,000 to $1 million in grants for their institutions. Our goal 
is to double the number of campus analysts that the firm recruits from 
HBCUs by 2025, and over time we believe that this expansion in our 
long-term investment in HBCUs will help us better serve our clients and 
contribute to a more inclusive and dynamic economy and society.
    But we know it is not enough to recruit talent; we also need to 
make sure they can realize their potential, so we've set additional 
representation goals to hold ourselves accountable and do so 
transparently in the public domain. By 2025, we aim for 7 percent of 
our vice presidents in both the Americas and the U.K. to be Black, 9 
percent of our vice presidents in the Americas to be Hispanic/Latinx, 
and 40 percent of our vice presidents across the globe to be women. By 
increasing the diversity of our vice president population, we pave the 
way to increase the representation of our most senior roles at the 
firm.
    We have also embraced our responsibility as a leader in our 
industry to promote change. In July 2020, we began a new policy to only 
underwrite initial public offerings for companies domiciled in Western 
Europe and the United States that have at least one diverse board 
member. The feedback we've received from clients and investors has been 
overwhelmingly positive, and in July 2021 we will raise that figure to 
two.
Promoting the Use of Diverse Contractors and Vendors
    Our firm has a long history of working with small and diverse 
businesses as part of our vendor diversity program, which began in 2000 
and seeks to drive opportunities with small, minority and women 
business owners. We continue to discover and partner with exceptional 
businesses through the program in our efforts to achieve a supply chain 
that reflects the diversity of our people and clients. For example, 
when constructing our global headquarters in New York, which opened in 
2009, we spent more than $300 million with minority- and women-owned 
businesses, which was the most successful project in the history of New 
York State's Minority- and Women-Owned Business Enterprise Program at 
the time.
    Moreover, we actively encourage our sourcing teams to include small 
and diverse businesses in competitive bids and encourage our larger, 
nondiverse vendors to do the same. Our Vendor Code of Conduct, which 
all of our vendors must acknowledge, also states the expectation we 
have of our vendors to provide diverse companies with the opportunity 
to compete on a fair and equal basis for business. In 2020, in an 
effort to minimize barriers to entry, we built a new website to 
increase transparency on doing business with Goldman Sachs and 
simplified our online application form to encourage more prospective 
diverse vendors to submit their details as to expertise and experience, 
which is then shared with our strategic sourcing teams.
    In recent years, we have further expanded our program globally and 
firmwide. In addition, we continue to partner with our 10,000 Small 
Businesses program, 10,000 Women program, Launch With GS and One 
Million Black Women initiatives, among others, to identify diverse 
vendors for upcoming sourcing opportunities.
    This year, for the first time, we publicly reported our spend with 
small and diverse businesses. In 2020, we bought goods and services 
worth over $265 million from small and diverse vendors globally. 
Seventy percent was with minority-women-owned businesses and 30 percent 
with small businesses. Twenty-eight percent was subcontracted through 
our nondiverse prime vendors to multiple smaller diverse vendors.
    Over the course of 2021, we are further enhancing our reporting 
capabilities and we remain committed to holding ourselves and our 
vendors accountable in our efforts to increase activity with small and 
diverse businesses from our 2020 baseline by 50 percent by 2025.
Use of Diverse Asset Managers
    Our asset management business works with nearly 40 external asset 
managers that are majority women-owned or ethnically diverse-owned 
firms. This number has almost doubled over the last 2 years due to a 
focused effort to increase our pipeline and onboard more diverse 
managers. These firms manage equity, fixed income, hedge fund and 
private equity assets for Goldman Sachs institutional and private 
clients.
    In addition, we are continuing to refine and enhance our diverse 
manager sourcing across all asset classes to further increase the 
number of diverse-owned managers on the platform. We are increasing the 
training of our manager selection team on diversity, equity, and 
inclusion and will be hiring additional professionals with experience 
in sourcing diverse managers. We also plan to partner with diverse 
industry trade organizations to connect to smaller diverse-owned 
managers and have partnered with organizations focused on creating an 
asset management investor pipeline.
Use of Diverse Broker-Dealers
    Goldman Sachs is one of the largest issuers of corporate bonds in 
the investment grade capital markets, and we have had an established 
diverse broker-dealer program for many years. Specifically, in the last 
10 years, we have employed a range of diverse firms on every new 
syndicated USD benchmark and preferred financing we have issued for 
ourselves, representing over $156 billion of aggregate issuance. We 
have endeavored to be inclusive across all diverse firm types with 
strong representation from Black, Hispanic, disabled veteran and women 
owned and operated firms.
    The majority of these transactions have included four diverse 
firms, with some including as many as 12. Over this period, we have 
asked 23 different diverse firms to join our underwriting syndicate, 
and we are proud to support these firms and their underwriting and 
distribution businesses. We manage our relationships with diverse firms 
on a continuous basis and regularly review our partner firms based on 
numerous criteria, including the commitment each makes to their 
community, the proportion of their employees that are diverse and 
representative of their demographic, and their distribution 
capabilities.
    Moreover, in 2020, our Federal Instruments Fund--designed to direct 
the bulk of its trading to diverse broker-dealers--raised $3.1 billion, 
more than twice the prior year. This stands as the leader among all 
diversity and inclusion-related money market fund flows during 2020. 
Despite that significant inflow, the fund maintained 61.8 percent of 
purchases with diverse-, women-, or veteran-owned broker-dealers who 
benefited from the increased trading volumes.
Investing in Sustainability and a Transition to a Green Economy
    At Goldman Sachs, we have a long-standing commitment to 
sustainability. We view climate transition and inclusive growth as 
drivers of risk and opportunity for us and our clients.
    I am proud of our established track record of focusing on 
environmental matters. We were the first major U.S. bank to come 
forward in 2005 with a comprehensive Environmental Policy Framework, 
where we acknowledged the scientific consensus that climate change is 
real and that it is one of the most significant environmental 
challenges of the 21st century. In 2015, we updated that Framework to 
underscore our commitment to leveraging our people, capital and ideas 
to find solutions to address climate change, including by developing a 
target to finance and invest $150 billion in clean energy by 2025.
    In 2019, we developed a sustainable finance framework to put 
climate transition and inclusive growth at the forefront of our work 
with clients. We have set clear targets and remain committed to 
reporting and providing transparency on our progress. For example, as 
part of our commitment, we announced that we would target $750 billion 
in financing, investing, and advisory activity on our sustainability 
priorities by 2030. In the first year, we far surpassed what we thought 
possible, reaching $156 billion in commercial activity, which includes 
$93 billion dedicated to climate transition.
    We have been carbon neutral across our own operations and business 
travel since 2015, 5 years earlier than our goal, and we recently 
extended that carbon neutral commitment to include our supply chain, 
targeting net-zero greenhouse gas emissions by 2030. This commitment 
aligns our financing activities with a net-zero-by-2050 transition 
pathway, in line with the goals of the Paris Agreement.
    And, because we cannot possibly confront the challenges of climate 
change and structural inequity on our own, we have gone beyond our 
commercial work to partner with our peers and other organizations to 
effect real change. For instance, we are working with the Bloomberg-
sponsored Climate Finance Leadership Initiative to help attract more 
private capital to sustainable infrastructure projects in emerging 
markets.
    Increasingly, we advise corporates seeking to integrate ESG or 
related principles into their strategy and help them identify 
sustainability-related risks and opportunities as levers of growth. 
This includes financing opportunities that fund investment in our 
clients' transition to a lower-carbon-intensity business model, 
participating in the scaling of sustainable finance in equity capital 
markets, and facilitating M&A opportunities to accelerate climate 
transition and inclusive growth.
    For example, in August 2020, we brought to market Alphabet's first-
ever sustainability bond issuance and the largest-ever such bond issued 
by a corporate. Proceeds will be targeted toward sustainability 
projects, including clean energy and transport, circular economy and 
design, energy efficiency, and affordable housing. Additionally, we 
launched in February 2021 our inaugural sustainability bond issuance. 
This $800 million commitment is aligned with our sustainable finance 
framework for future issuances and further demonstrates our belief that 
building a low-carbon, inclusive economy is a business imperative.
    These initiatives are very much market driven, good for business 
and a way for us to help our clients transition to a low carbon future, 
and we are staying the course.

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                   PREPARED STATEMENT OF JANE FRASER
                   Chief Executive Officer, Citigroup
                              May 26, 2021
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee: I would like to thank you for this opportunity to represent 
Citi here today. I am Jane Fraser and I have been Chief Executive 
Officer of Citi since March.
    Citi believes deeply in its mission of responsibly providing 
financial services that enable growth and economic progress. We believe 
banking is the foundation of economic empowerment and mobility and we 
are committed to expanding access to financial services for all 
communities. The past year, and all the challenges it has brought, has 
been an opportunity for us to walk the walk. As the world's most global 
bank, we continue to support many of the most iconic American 
businesses as they navigate the uncertainty of markets abroad. And 
working in concert with Federal assistance programs, we continue to 
serve as a source of strength for our customers and communities here at 
home. We are laser-focused on driving a sustainable and equitable 
recovery to the pandemic.
Who We Are as a Bank
    The origins of this global crisis are very different to the last 
one: this is not a financial crisis, but a public health crisis with 
severe economic consequences. Likewise, Citi has shown during the 
pandemic that we are a very different bank than the one that entered 
the financial crisis more than a decade ago.
Right-Sizing the Bank To Increase Our Impact
    As my predecessor, Mike Corbat, shared with you in 2019, since the 
financial crisis Citi has worked to become a smaller, safer, stronger, 
and far less complex institution. We have gone back to basics as a bank 
and today we have two primary lines of business: our Global Consumer 
Bank and our Institutional Clients Group. An ongoing effort to simplify 
our structure has resulted in us shedding over 70 businesses and 
divesting more than $800 billion of noncore assets.
    By divesting these noncore assets, we increased the efficiency in 
our use of capital and reduced our deferred tax assets by more than 
half, generating $7 billion of regulatory capital in the process. Even 
as we continue to meet the needs of our customers and communities 
during the pandemic, we remain well capitalized. We ended 2020 with a 
Common Equity Tier 1 Capital ratio of 11.7 percent and a supplementary 
leverage ratio of 7 percent. This allowed us to resume the repurchase 
of common stock this year, which we had voluntarily paused at the onset 
of the pandemic. (See Appendix for more information.)
    Like our peers, Citi has benefited from Government programs and 
facilities, including FDIC insurance and access to the Federal 
Reserve's Discount Window. But in turn, we provide a tremendous benefit 
to the Government and the broader economy through the services we 
offer. We also support the Federal Government in much of its financial 
activity overseas.
    Over the past four decades, Citi is proud to have financed more of 
America's public infrastructure than any other bank. Last year alone, 
we spurred the investment of more than $27 billion across the U.S. in 
projects including bridges, hospitals, airports, water, and public 
power, on behalf of a wide range of municipal and nonprofit clients. 
Many of these large projects would not be possible without the heft of 
a balance sheet like Citi's to finance them. In fact, over the past 10 
years, Citi has been the source of $508 billion in financing for local 
governments, nonprofit health care institutions, public works, 
affordable housing and other anchors necessary for strong communities. 
Combined with the $77 billion we lend on average each year to companies 
in industries outside of the financial sector such as manufacturing, 
agriculture, retail and energy, Citi aspires to be an essential 
catalyst for growth and progress throughout American life.
Our Core Franchises
    The U.S. economy needs banks of all sizes, scaled to support a full 
range of businesses and households. Today, Citi is right-sized to serve 
clients wherever they do business. Our Global Consumer Bank serves 
roughly 70 million customers in the U.S., where we operate just under 
700 retail branches concentrated in the six metropolitan areas of New 
York, Washington, DC, Miami, Chicago, San Francisco, and Los Angeles. 
Our current branch count, while fewer than the approximately 1,000 
branches we had 10 years ago, is greater than the 450 we operated at 
the turn of the millennium. Roughly 29 percent of our branches are in 
low- and moderate-income census tracts, which is commensurate with our 
peers. And through investments in our digital capabilities, new and 
expanded partnerships and our role as the world's largest credit card 
issuer, we have been able to extend our reach beyond our core, physical 
footprint to serve communities across the country and deepen customer 
relationships.
    Our Institutional Clients Group serves clients across more than 160 
markets and jurisdictions, and has a physical presence in nearly 100 of 
them. We provide a full range of wholesale banking products and 
services to our clients via six main business lines including banking, 
capital markets and advisory; commercial banking; global markets; 
securities services; treasury and trade solutions; and wealth 
management and private banking. Working together, our Institutional 
Clients Group provides solutions to meet the needs of corporations, 
financial institutions, public sector entities, investment managers and 
high-net worth individuals and families. \1\
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     \1\ Citi does not have a trading or prime brokerage relationship 
with Archegos, nor did we have any exposure to Archegos in our private 
bank.
---------------------------------------------------------------------------
    We are the leading financer of affordable housing in the country--
and have been for 11 consecutive years. Our commercial bank serves many 
mid-sized American companies, including numerous firms looking to 
expand and grow across the country and the globe. We also help many 
State and local governments finance critical infrastructure, such as 
schools and health facilities. We endeavor to provide stellar execution 
to lead transformation for our clients as they navigate evolving global 
factors including environmental, social and corporate governance (ESG) 
issues, wellness, mobility and fintech. Our network-driven strategy and 
global presence allow us to provide products and services to clients 
who value a partner that can help them grow in any country they do 
business. This includes multinationals who are expanding globally, 
particularly in emerging markets, and emerging markets companies who 
are growing beyond their home market or region. We also assist 90 
percent of global Fortune 500 companies in their daily operations and 
help them to hire, grow, and succeed.
Serving as a Source of Strength During COVID-19
    Because of the steps we have taken to invest in our resilience and 
improve our safety and soundness, we are on a strong footing from a 
liquidity and capital perspective to support our customers, colleagues, 
and communities through this pandemic. The prudent decisions we made in 
the wake of the last crisis have proved their full value in this one.
    At the onset of the pandemic, Citi quickly took action through a 
comprehensive, approach to provide immediate, on-the-ground relief. We 
were one of the first banks to announce temporary assistance measures. 
To date, we have provided assistance to 2.7 million consumers and small 
businesses in the U.S. who have suffered the impacts of the pandemic, 
and we significantly ramped up our capital support for corporate 
clients in the hardest-hit sectors such as retail and the airline 
industry.
    Our credit card customers last year were eligible for waivers on 
late fees and could defer minimum payments for 2 months, with the 
option to re-enroll if necessary. There was no negative credit bureau 
reporting during the waiver period for accounts that were previously 
not delinquent. For retail bank customers adversely affected by the 
pandemic, we refunded certain banking fees, including penalties for 
early CD withdrawal and monthly account maintenance fees, upon request. 
In addition, we allowed free cash withdrawals at other banks' ATMs.
    For our small business customers, we offered waivers on monthly 
service fees and remote deposit capture fees, as well as penalty 
waivers for early Certificate of Deposit withdrawals. Citi exited the 
direct mortgage servicing business in 2019, however, our mortgage 
subservicer, Cenlar FSB, continues to offer forbearance, loss 
mitigation, foreclosure, and eviction practices in compliance with the 
CARES Act, GSE, and other governmental pronouncements.
    We are also proud to be the 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 Small Business Administration's Paycheck Protection 
Program. To date, we have funded more than $5.1 billion in loans to 
small businesses in the hardest-hit sectors and in the hardest-hit 
areas of the country. Businesses such as Dinah's Chicken in Glendale, 
California, and the Maryland Youth Ballet survived partly on the help 
Congress enabled and banks like ours delivered. The average size of 
loans we disbursed was $100,711, and nearly 80 percent of those loans 
have gone to small businesses with 10 or fewer employees.
    Earlier this year, we launched a series of PPP webinars, including 
one in Spanish, to help small businesses in communities across the 
country complete the PPP application and loan forgiveness process. We 
have also shared the webinars with 180 community-based organizations 
and promoted them on our social media channels. To provide further 
support, we are donating all net profits from our participation in the 
PPP to Community Development Financial Institutions (CDFIs) and small 
businesses. To date, we have contributed, or are in the process of 
contributing, $50 million in net profits, with at least another $40 
million expected over the coming year. \2\
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     \2\ Citi participated in the Main Street Lending Program (MSLP), 
opening the program to existing customers on July 20, 2020. Only two 
customers, totaling $86.3 million, met all conditions for MSLP approval 
and were successfully funded prior to the program's cessation. Citi's 
fees were $650,000.
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    Mindful of the ever-changing COVID-19 landscape and its impact on 
our customers, Citi deployed protocols to enable consumers to receive 
full access to stimulus dollars, including applying temporary 
provisional credits so that customers can access deposited stimulus 
funds. Overdraft fees in 2020 were less than 0.1 percent of our total 
revenue and fees were down 18 percent compared to 2019.
    We also expanded access to check cashing services for noncustomers, 
eliminated surcharges for prepaid debit cards issued for stimulus 
payments and adjusted policies and procedures covering the garnishment 
of customer stimulus payments. For internal matters (i.e., where a 
customer owes funds to Citi), Citi continues to prohibit levying on any 
CARES Act or stimulus payments identified by the bank. For third-party 
garnishment orders, Citi complies with applicable State and Federal 
laws and acts in conjunction with regulatory guidelines.
Our Priorities Going Forward
    As CEO, I have set several priorities for our firm, including 
continuing to support our customers and communities through the 
pandemic and recovery, establishing a standard of excellence in the way 
we manage risk and ensuring we are best positioned to deliver for our 
customers in the digital era.
    1. Building on Our Record of Financial Inclusion To Support an 
Inclusive Recovery
    We are already seeing the shoots of a K-shaped recovery in which 
some will do better and others will struggle. Unfortunately, those who 
will struggle have been economically disadvantaged historically, and 
they will need special attention from our industry. At Citi, we have a 
strong record of breaking down barriers impeding access to financial 
services and helping direct the flow of capital into communities that 
have traditionally lacked it. Our partnerships with CDFIs and Minority 
Depository Institutions (MDIs) are emblematic of this work.
    In the face of a broader consolidation of the banking industry, 
there is an important role for institutions of all sizes. Indeed, we 
are focused on ways we can support smaller banks, such as CDFIs and 
MDIs, because they often can serve communities in more effective and 
enduring ways than we can on our own or through our branch footprint. 
CDFIs level the playing field for underserved communities and 
populations, especially communities of color. That's why, in the last 5 
years, Citi and the Citi Foundation have provided $173 million in 
capital and $79 million in philanthropic funding to more than 80 CDFIs 
across the U.S. in support of their small business and community 
development efforts. As noted earlier, we also are donating net profits 
from the PPP to CDFIs to provide further support to small businesses 
and households hit hard by the pandemic.
    MDIs also are critical to the financial services ecosystem in 
diverse communities and are important partners of Citi. We are a 
founding partner bank for the Department of Treasury's Financial Agent 
Mentor-Protege program, in which we are currently mentoring nine MDIs. 
Last year, Citi announced a partnership with the National Bankers 
Association, through which Citi created a purchasing facility to assume 
up to $50 million in PPP loans from MDIs. To date, five MDIs have taken 
part in the program, allowing them to free up capital that can be used 
for other lending activities. In addition, as part of Citi's Action for 
Racial Equity initiative to close the racial wealth gap, we have 
committed $100 million in support of MDI growth and revenue generation, 
allocating nearly $50 million in growth capital to MDIs to strengthen 
their ability to serve racially diverse and underserved households and 
entrepreneurs.
    At Citi, we are also harnessing our capabilities in other ways to 
expand financial inclusion and make a direct impact on communities. 
Although we have a smaller branch footprint compared to some of our 
peer banks, across the Nation Citibank customers have access to more 
than 65,000 fee-free ATM locations, including ATMs at Costco, CVS 
Pharmacy, Duane Reade, Target, Rite Aid, and most Walgreens. In 
addition, our Citi ATM Community Network program helps eliminate one of 
the biggest barriers to banking by removing surcharge fees at Citibank 
ATMs for more than 440,000 customers of 28 minority-owned banks and 
credit unions.
    One of Citi's fastest growing products is our Access Account, an 
FDIC-insured checkless account with low or avoidable monthly charges 
and no overdraft fees, launched in 2014. We recently partnered with the 
National Urban League to promote this account in additional underserved 
communities. Additionally, 10 years ago, we began working with the City 
of San Francisco to establish the Nation's first universal, publicly 
funded college savings account program for every family in that city's 
public school system. We are now expanding the program to San Jose and 
Los Angeles. \3\
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     \3\ For additional details on our work with CDFIs, MDIs, and 
support for the unbanked and underbanked, please see Helping Advance 
Racial Equity in the Financial Services Industry and pp. 72-80 in 
Citi's 2020 ESG Report.
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    We are especially proud of our role as the country's leading 
affordable housing lender. In 2020 alone, we worked with State and 
local governments across the country to provide more than $7 billion in 
financing for affordable rental housing projects. That includes the 
financing to renovate six developments in Cambridge, Massachusetts, for 
lower-income seniors and disabled residents and a brand new 480-unit 
housing complex reserved for low-income families and seniors in Las 
Vegas.
    2. Achieving Excellence in Our Risk and Control Environment
    The pandemic is irrevocably changing many things about banking, 
including accelerating customers' adoption of digital channels. At 
Citi, we are embracing this opportunity to transform our business and 
achieve a state of excellence in how we operate and in our ability to 
serve our customers. A major part of this agenda is improving our risk 
and controls infrastructure. In 2020, compared to 2019, we invested an 
additional $1 billion towards modernizing our technology, simplifying 
our processes and improving and automating controls. We also hired our 
first chief administration officer to oversee these efforts.
    We understand a world-class risk and controls infrastructure is 
critical to our ability to handle the volumes and scale of the new 
digital era and reaffirm the trust and faith our customers put in us. 
These efforts are also addressing the issues identified in consent 
orders by the OCC and Federal Reserve in October 2020 and are intended 
to reduce the risks that have led to other enforcement actions. We take 
pride in our role as a global leader in financial services and are 
fully committed to addressing the issues identified by our regulators. 
(Please see the appendix for additional information on public actions 
taken since Citi last testified in 2019.)
    3. Delivering for Our Customers in the Digital Era
    From financing the first transatlantic cable to developing the 
first mobile banking app from a major U.S. bank, Citi prides itself on 
both financing emerging technologies to enable progress and leveraging 
them responsibly to better serve our customers. In our approach to 
today's newer technologies, we remain guided by a focus on risk and 
controls. We were one of the world's first companies to develop our own 
set of ethical principles for artificial intelligence, which aim to 
ensure effective governance, risk management and responsible innovation 
in our use of AI. We recently launched an AI Center of Excellence to 
share and drive adherence to best practices across the firm.
    Similarly, before we engage with cryptocurrencies, we see it as our 
responsibility to ensure we have clear governance and controls in 
place. Citi is focusing resources and efforts to understand changes in 
the digital asset space and the use of distributed ledger technology, 
including demand and interest by our clients, regulatory developments 
and technology advancements. These developments and important risk and 
control considerations are guiding our measured approach.
    With the proliferation of new technologies, the use of mobile and 
cloud and managed services to conduct financial transactions, and the 
increasing sophistication of threat actors, prominent financial 
institutions such as Citi have been and will continue to be subject to 
cyberincidents. Recognizing the significance of these risks, Citi 
employs a threat-focused, data-driven strategy to protect against, 
detect, respond to and recover from cyberattacks. We actively 
participate in industry, Government and cross-sector knowledge-sharing 
groups to enhance our resilience. We also devote significant resources 
to implement, maintain, monitor, and regularly upgrade our systems and 
networks. In addition, to protect Citi's and our customers' assets and 
information, we have implemented multiple layers of controls, including 
intrusion detection and prevention, endpoint detection and response, as 
well as various other prevention, detection, and response processes. 
\4\
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     \4\ For more information about Citi's cybersecurity efforts, see 
pp. 55-56 and 116 of Citi's 2020 Annual Report.
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    We invest in advanced technology to safeguard data and customer 
information. For instance, the Citi Virtual Card Account provides a 
secure, business-to-business digital solution for large workflows 
through the generation of one-time account numbers. The virtual card 
technology enables real-time transactions that are automated and 
secure, safeguarding against fraud and potential misuse. The account 
eliminates the need for paper-based payments but still leaves an 
electronic trace, which allows for easy reconciliation and reporting. 
In addition, our Citi Payment Outlier Detection solution uses 
analytics, artificial intelligence, and machine learning to find 
transactions that do not align with typical patterns of activity. These 
outliers are then investigated to determine whether they indicate 
fraud. Each year, we provide our employees with training on how to 
properly handle and maintain the security and privacy of Citi's and our 
customers' information.
Bringing Our Mission to Life
    The events of this past year are a stark reminder that companies 
like ours have a role to play in helping tackle the world's toughest 
problems. Citi's mission of enabling growth and economic progress is 
not just a nicety we put up on our website; it is something we take 
very seriously and bring to life through our day-to-day work across all 
parts of our business and our philanthropy.
    Over the past decade, Citi and the Citi Foundation have provided 
more than $870 million to hundreds of community partners across the 
U.S. to support vibrant and equitable local economies in the 
communities where we do business. In addition to our financial support, 
we harness the passion and expertise of our employees to enhance our 
impact and engagement, with an average of 450,000 in total volunteering 
hours in the U.S. each year.
    To illuminate the challenges affecting communities and to inform 
solutions, we have underwritten critical research including the 
groundbreaking U.S. Financial Diaries project, which tracked the 
financial lives of hundreds of low-income families over a year, and the 
annual Menino Survey of Mayors, the only nationally representative 
survey of U.S. mayors. We have also collaborated with leading national 
civil rights and advocacy organizations on policy developments that 
support financial inclusion and wealth creation in low-income 
communities of color.
    1. Sustainability
    Citi manages and mitigates credit and reputational risk through a 
number of internal initiatives, including Citi's Environmental and 
Social Risk Management (ESRM) Policy. The ESRM Policy provides the 
framework for how Citi identifies, mitigates and manages the potential 
environmental and social risks associated with customers' activities 
that could lead to credit or reputational risks to the company. \5\
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     \5\ See Citi's 2021 Proxy Statement for more information.
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    Climate change presents risks to Citi and its clients that will 
only increase over time. We are committed to helping our clients 
mitigate these risks and transition to cleaner energy. For instance, we 
have worked with oil and gas clients to support next-generation carbon 
capture and sequestration technology, and we have partnered with others 
on innovative loans that are linked to their sustainability 
performance.
    The market continues to drive demand for sustainable finance, an 
area in which Citi has long been a leader. We helped create the Equator 
Principles in 2003 and the Green Bond Principles in 2014, both 
establishing important industry standards. In 2018, Citi became the 
first U.S. bank to report on our efforts to implement the Taskforce on 
Climate-related Financial Disclosures framework, providing transparency 
about the impact climate change has from a risk management perspective. 
And knowing how important it is to manage our own footprint, last year 
we fulfilled a goal of sourcing 100 percent renewable electricity for 
our facilities globally.
    We recently committed to financing $500 billion in environmental 
projects and activities by 2030. This is a tenfold increase over our 
first environmental financing commitment made back in 2007. And on my 
first day as CEO in March, we committed Citi to net zero emissions by 
2050. We know that to truly address the risks of climate change, we 
need to help our clients--which include many of the world's biggest 
multinationals, as well as investors and even countries--responsibly 
transition to net zero. \6\
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     \6\ For more information about Citi's sustainability agenda, see 
pp. 24-58 in Citi's 2020 ESG Report.
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    2. Equity
    The global pandemic has laid bare the systemic inequities that have 
impeded communities from reaching their full potential, and we cannot 
ignore the role our own industry has played in contributing to these 
disparities. In the aftermath of George Floyd's death in Minneapolis, 
as calls for racial justice intensified across the U.S., we launched 
Action for Racial Equity, more than $1 billion in strategic initiatives 
to help close the racial wealth gap and increase economic mobility. As 
part of this initiative, we are tackling the home ownership crisis in 
communities of color and are in the final stages of committing $200 
million of equity to the preservation of affordable and workforce 
housing projects that will be comanaged by five Black investment 
managers.
    We have set a target of directing $1 billion annually by 2023 to 
diverse suppliers to help more minority and women-owned entrepreneurs 
get the financing they need to start and grow their businesses. As part 
of that effort, 27 percent of third-party broker fees paid in 2020 went 
to minority- and women-owned firms. Our new, globally unified wealth 
business will increase the number of minority-owned third-party asset 
managers investing in minority-owned businesses offered to Citi 
clients, with a target of onboarding 5-15 diverse fund managers and 
seeking $200 million of capital investment into these funds by the end 
of 2023. These are investments that promise to pay tremendous 
dividends: recent research by Citi found that if key racial gaps for 
Black Americans had been closed 20 years ago, U.S. GDP could have 
increased by an estimated $16 trillion. \7\
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     \7\ ``Citi GPS Report: Closing the Racial Wealth Gaps--The 
Economic Cost of Black Inequality in the U.S.'', September 2020.
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    3. Diversity
    We are also making sure we maintain a culture that embraces the 
diversity of our people and the communities we serve. Today, our board 
of directors is 50 percent women and 19 percent minority. I am proud to 
be the first woman to run a global financial institution, and equally 
proud that we have one of the most senior Black executives in our 
industry, Mark Mason, as our CFO. Of my U.S.-based direct reports, five 
are women, one is Black, one is Hispanic and three are members of the 
AAPI community.
    We are notable in our industry for recognizing the importance of 
transparency and accountability to our diversity efforts. In 2018, Citi 
was the first major U.S. financial institution to publicly release the 
results of a pay equity review comparing compensation of women to men 
and U.S. minorities to U.S. nonminorities. To close these gaps, we have 
set goals to increase our representation at senior levels of our firm. 
We are focused on increasing female representation to at least 40 
percent globally, up from 37 percent when we established our goals in 
2018, and to boost the representation of Black employees in those same 
roles in the U.S. to at least 8 percent, up from the 2018 baseline of 6 
percent.
    To help us recruit more racially diverse talent, we have 
established pipelines from historically Black colleges and universities 
and have expanded the diverse slates of candidates we interview for 
open roles. To help solve the two-pronged issues of representation and 
pay equity, we must have more women and minorities in senior, high-
paying roles. Career development is one of our top priorities, and we 
promote from within to continue developing our existing talent. In 
2020, 33 percent of open positions at Citi were filled with internal 
candidates. \8\
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     \8\ For more information on Citi's diversity and racial equity 
efforts, see pp. 60-91 in Citi's 2020 ESG Report.
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    4. Human Rights
    We are committed to identifying, preventing, and disrupting human 
rights wherever we do business, regardless of a Government's human 
rights record. As part of this effort, we engage human rights experts, 
clients and peers in line with the U.N. Guiding Principles on Business 
and Human Rights, a global framework for preventing and addressing the 
risk of adverse impacts on human rights linked to business activity.
    We regularly initiate investigations concerning illicit activity 
related to sexual exploitation and human trafficking. Red flags may be 
the result of information received from law enforcement, NGOs or 
various global public-private partnerships that track activity 
suggesting human trafficking and child sexual exploitation. In 
addition, Citi was one of the first financial institutions to engage 
with the U.N. on their Survivor Inclusion Initiative, in which we 
provide financial services to survivors to help them transition back 
into society. \9\
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     \9\ For more information on Citi's work regarding human rights, 
see pp. 118-124 in Citi's 2020 ESG Report.
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    I thank you for the opportunity to respond to your questions and to 
discuss our support for our customers, clients, and the communities hit 
by the crisis.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
                   PREPARED STATEMENT OF JAMIE DIMON
       Chairman and Chief Executive Officer, JPMorgan Chase & Co.
                              May 26, 2021
    Chairman Brown, Ranking Member Toomey, and distinguished Members of 
the Committee, I appreciate the invitation to appear before you to talk 
about JPMorgan Chase, the strength and resilience of the U.S. financial 
system, and the people, businesses, and communities we serve.
    JPMorgan Chase is a global financial services firm with assets of 
$3.4 trillion and operations worldwide. We are a leader in investment 
banking, financial services for consumers and small businesses, 
commercial banking, financial transaction processing, and asset 
management. We serve millions of customers in the United States and 
many of the world's most prominent corporate, institutional, and 
Government clients. More information about our financial performance 
and shareholder information can be found in our 2021 Annual Proxy 
Statement, and in previous annual filings.
    Banks play an essential role in a community, with the potential of 
bringing people together, enabling companies and individuals to reach 
their dreams, and being a source of strength in difficult times. Our 
160,000 U.S. employees serve over 63 million households including more 
than 4 million small businesses. Over the last 20 years, we have grown 
our branch footprint through both organic growth and mergers with other 
banks. Today from nearly 4,900 branches located in 38 States and the 
District of Columbia, and through mobile and digital banking platforms, 
we serve customers with deposit products, wealth management, mortgages, 
auto loans, and credit cards. Since 2017, we have expanded our branch 
footprint from only 23 States, and will be in all 48 contiguous States 
by this summer. We open 30 percent of our new branches in low- to 
moderate-income neighborhoods. Today, nearly one-third of all our 
branches are in communities of color, and one-third of our small 
business banking customers are in majority-minority census tracts. We 
have about 150 branches in the Southwest Border region, and nearly 100 
branches in rural communities, with more to come as we expand into our 
new markets.
Our Support for the Real Economy Through the Pandemic
    We are living through extraordinary times, for which history will 
judge the leaders of Government and industry by the actions we take to 
address the health crisis, support the people and businesses suffering 
from the devastating economic impacts of the pandemic, and address 
longstanding structural inequities and racial economic inequality.
    At JPMorgan Chase, our focus has been on what we, as a company, 
could do to serve. We entered this crisis from a position of strength, 
and leveraged our size and scale to contribute to stability in our 
country and ongoing support for the ``real economy''--our customers, 
clients, employees, and communities impacted by the global crisis:

    In 2020, we extended credit and raised capital totaling 
        $2.3 trillion for consumers and businesses of all sizes, 
        helping them meet payroll, avoid layoffs, and support 
        operations.

    We have delayed payments and extended forbearance options 
        for about 2 million mortgage, auto, and credit card accounts, 
        and refunded $120 million in fees on consumer deposit accounts, 
        including overdraft fees, for over 1 million customers--all 
        with no questions asked.

    Under the SBA's Paycheck Protection Program, we funded well 
        over 400,000 loans to small businesses supporting over 3 
        million jobs, for more than $40 billion in total funding. About 
        80 percent went to businesses with fewer than 10 employees, and 
        90 percent to those with fewer than 20. Around one-third of 
        Chase-facilitated loans went to businesses in communities of 
        color.

    Outside of the PPP program, we provided $18 billion in new 
        and renewed credit for U.S. small businesses in 2020. We 
        delayed payments for 21,000 loans and refunded $24 million in 
        deposit fees for more than 130,000 small businesses hit hard by 
        the crisis.

    We took steps to make sure those in need, including those 
        without access to traditional banking services, received each 
        round of stimulus payments quickly. We deposited funds into our 
        customers' accounts immediately after receiving them from the 
        IRS, and temporarily credited any overdrawn accounts so 
        customers could use the full value of their relief. We also 
        cashed noncustomer stimulus checks at our branches and waived 
        the check cashing fee. We did not garnish checks unless 
        compelled to by law.

    We provided more than $70 million in loan relief for owners 
        of multifamily properties housing more than 27,000 tenants, 
        offering these landlord borrowers periods of interest-only 
        payments and mortgage deferrals so they could more easily offer 
        rental payment relief to their tenants.

    We committed $250 million in business and philanthropic 
        initiatives with a focus on helping underserved small 
        businesses and nonprofits access low-cost capital.

    And we supported our own employees--especially our own 
        frontline workers who continued to show up to their jobs in 
        branches, call centers, lock boxes, and for other roles that 
        could not be performed at home. We gave special payments, 
        provided additional paid time off to manage personal challenges 
        at home and additional paid time off for illness or 
        precautionary situations. We continued to pay branch employees 
        for their regularly scheduled hours, even if hours were reduced 
        or branches temporarily closed, and offered additional 
        childcare support, including additional days of back-up 
        childcare, discounts for childcare and subsidized full-service 
        childcare in our 14 U.S. childcare centers.

    There is no doubt that the bold and swift action taken by Congress, 
the Federal Reserve, and the Administrations over the last 15 months 
was instrumental in reversing financial panic, avoiding a deep and 
lasting economic crisis, and providing vital emergency aid directly to 
individuals and small businesses. While real damage was done, 
particularly for those at the lowest ends of the economic spectrum, the 
size and scope of the programs mitigated further economic deterioration 
and put this country on a path for a healthy economic recovery. We were 
proud to have participated in various Federal Reserve emergency 
programs, such as the Paycheck Protection Program, Primary Dealer 
Credit Facility, Commercial Paper Funding Facility, Money Market Mutual 
Fund Liquidity Facility and the Secondary Market Corporate Credit 
Facility, among others. We are very appreciative of the partnership 
with the Small Business Administration on PPP and proud of our 
thousands of bankers who worked around the clock to get funds to 
businesses as quickly as possible.
Our Commitment To Advancing Racial Equality
    Events of the last year highlighted and exacerbated longstanding 
inequality, particularly among Black and Latinx families, increasing 
barriers to wealth creation and holding us back as a country. We 
believe it's our collective responsibility to address this, and why 
JPMorgan Chase recently committed an additional $30 billion over 5 
years to advance racial equity, building on our past investments. Our 
commitment includes:

    Promoting and expanding affordable housing and home 
        ownership for communities of color by committing to originate 
        $8 billion in mortgages and up to $4 billion in refinancing 
        loans for Black and Latinx households, and financing $14 
        billion for an additional 100,000 affordable rental units.

    Growing Black and Latinx owned businesses by delivering $2 
        billion in loans to small businesses in majority Black and 
        Latinx communities, and by spending an additional $750 million 
        with new and existing Black and Latinx owned suppliers to the 
        firm.

    Improving financial health and access to banking in 
        underserved communities--including helping 1 million people 
        open low-cost accounts--by opening new Community Center 
        branches, hiring local Community Managers, and investing at 
        least $50 million in Minority Depository Institutions to help 
        them better serve their communities.

    Building a more equitable and representative workforce 
        through recruiting, development, and retention efforts, holding 
        senior managers accountable for diversity and inclusion 
        priorities, and providing our employees with access to the 
        skills training they need to advance their careers.

    These are new business commitments that will help to drive real 
change. We have made solid progress since our announcement late last 
year and are on track for our 5-year commitment. We have already 
refinanced over $2 billion in mortgages for Black and Latinx households 
and have funded equity investments and loans for construction or 
rehabilitation of an incremental 5,500 multifamily affordable housing 
units. We have funded over $60 million in investments in nine Minority 
Depository Institutions, already exceeding our initial 5-year goal.
    At the same time, we are building the foundation that will help us 
grow new relationships in communities of color to meet our aggressive 
commitments. We expanded our Homebuyer Grant program to up to $5,500 to 
help more customers with closing costs and a downpayment when buying a 
home in more than 6,700 minority communities nationwide. We opened our 
first Community Center branch in New York's Harlem community, and have 
replicated that model in minority communities around the country, 
including Chicago, Minneapolis, New Orleans, Dallas, and the Crenshaw 
neighborhood in Los Angeles, with many more coming in the next year. We 
have hired Community Managers, Home Lending Advisors and small business 
bankers in these communities, with many more to come.
    We have also made other notable announcements in recent months that 
will materially and expeditiously contribute to addressing the racial 
wealth gap:

    Bringing visibility to credit invisibles: We recently 
        announced that we are building a new utility in partnership 
        with the OCC's Project REACh that will begin to address the 50 
        million Americans who are ``credit invisible'' and cannot 
        access affordable loans. Working with Early Warning Systems and 
        the three credit bureaus, a number of banks will soon pilot the 
        utility that allows lenders to use deposit data to improve 
        their ability to assess the creditworthiness for customers with 
        no credit history or score. We expect a short-term impact on 
        hundreds of thousands of Americans with no credit file, and 
        that is just the beginning of new opportunities for more 
        Americans to access the credit that is essential to building 
        wealth.

    Investing in midsized entrepreneurs of color: JPMorgan 
        Chase is coinvesting up to $200 million alongside Ariel 
        Investments to create an entirely new class of middle market 
        Black and Latinx entrepreneurs that are positioned to scale 
        their businesses.

    Diverse venture capital funds: We launched a new initiative 
        aimed at providing capital to funds managed by diverse, 
        emerging asset managers, including minority-led and women-led 
        venture capital funds and other private funds. Called ``Project 
        Spark'', we invested an initial $25 million in five funds 
        managed by diverse senior executives across JPMorgan Asset 
        Management.

    Supplier diversity: The firm is working to increase 
        business with certified diverse businesses. By working to 
        increase diversity within our supply chain, we are both 
        creating a supply chain that reflects the diversity of our 
        customers and driving growth in communities where we do 
        business. Our commitment to spend an additional $750 million on 
        Black and Latinx businesses will fuel this priority.

    Affordable housing: We recently launched a program to 
        provide our new and existing multifamily clients an interest 
        rate discount on their loan if they commit to not increasing 
        rents in a portion of their property. The more affordable the 
        property, the greater the discount. To date, this program has 
        financed nearly 20,000 multifamily units, and our goal is to 
        finance $10 billion or 100,000 units over the next 5 years. 
        Additionally, early next month, we look forward to sharing 
        additional steps and a new commitment we are making to promote 
        affordable housing and home ownership. We have also begun 
        expanding FHA lending at a hopeful and measured pace in key 
        markets, and want to continue to expand, but further FHA 
        reforms--including servicing reforms, employment and valuation 
        relief, waivers for face-to-face meetings, and addressing 
        appraisal bias--are still needed.

    While our investment commitment is significant, we know there's 
more work to do. We are actively tracking our investments over time to 
evaluate their impact and partnering with outside experts to assess our 
performance and hold our business accountable so we can better 
understand trends and contributing factors that could hold us back.
Our Employees
    At JPMorgan Chase, we consider our global workforce a competitive 
advantage, and our 260,000 employees our greatest strength.

    Increasing wages. We have been increasing starting-salary 
        wages for thousands of employees. In early 2021, for the third 
        time in the last 5 years, we increased our internal minimum 
        wage to between $16 and $20 an hour, up from $12 to $16 in 
        2017, while providing an annual benefits package worth about 
        $13,000. Career mobility from entry level roles is also 
        critical, which we promote by offering 300 skills and education 
        programs. Nearly 70 percent of employees who started at JPMC 
        before 2017 with salary of less than $40k are still at the 
        company and have experienced an average increase of 40 percent 
        since that time.

    Women at JPMorgan Chase. Globally, women are paid 99 
        percent of what men are paid at our firm, considering factors 
        such as role, tenure, seniority, and geography. We conduct 
        periodic reviews of compensation and, for business segments 
        where women are paid less than expected, we proactively address 
        it where appropriate. And unlike in other sectors, we did not 
        see increased attrition by women--in fact, this improved in 
        2020. Women make up nearly half of the firm's Operating 
        Committee.

    Improving ethnic diversity. We also know that attracting 
        the best talent can only be achieved through a dedicated focus 
        on inclusive recruiting and internal advancement opportunities. 
        We have made progress in this area with programs such as 
        Advancing Black Pathways, a program focused specifically on 
        increased hiring, retention, and development of Black talent. 
        In year two of the program, we are currently at 63 percent of 
        our 5-year goal to hire 4,000 Black students. Over the past 5 
        years, we have increased the number of Black professionals in 
        our most senior ranks, with the number of Black Managing 
        Directors and Executive Directors up by more than 50 percent. 
        We have more work to do in increasing diversity in our most 
        senior ranks and will be aggressive in pursuing our goals.

    Transparency in reporting diversity. We believe being 
        transparent about our workforce data will help drive progress. 
        Since 2010, we have publicly shared Equal Employment 
        Opportunity Commission information about our workforce on our 
        website. Starting in 2019, we began publishing global workforce 
        data for our employees and Board of Directors, with 
        demographics that include the LGBTQ+ community, veterans, and 
        people with disabilities. Starting this year, we will publish 
        our consolidated EEOC reports on our public website for the 
        first time.

    Accountability in executive compensation. We have an 
        equitable and well-governed approach to compensation, including 
        pay practices that attract and retain top talent and encourage 
        a shared success culture in support of our business principles. 
        Our executive compensation program is designed to hold our 
        senior leaders accountable for long term business performance 
        and, starting last year, for diversity and inclusion efforts 
        and outcomes. Executives are also held accountable, when 
        appropriate, for meaningful actions and issues that negatively 
        impact business performance in current or future years. We 
        comply with SEC rules and disclose our CEO Pay ratio annually 
        in our Proxy Statement.

    Second Chance Initiative. We have also expanded 
        opportunities for individuals with a criminal background. In 
        2020, we hired about 2,100 people who have paid their debt to 
        society--representing roughly 10 percent of all new hires in 
        the United States. We recently expanded our efforts by 
        enhancing our recruiting strategy, which started in Chicago in 
        collaboration with local community organizations, into 
        Columbus, Ohio, to build a hiring pipeline in the city. 
        JPMorgan also joined a group of 29 major employers and national 
        organizations to launch the Second Chance Business Coalition 
        that will expand opportunities for more people to reenter the 
        workforce.

Risk Management--How We Do Business
    We have unwavering principles that are not just about a fortress 
balance sheet, but also about risk management and culture. We must 
manage over two dozen capital and liquidity requirements while serving 
our clients. To do this, we have $202 billion in tangible common equity 
and $1.43 trillion in liquid assets, both of which have increased 
dramatically in recent years. While we are still awaiting the 2021 
results, we agree with the Federal Reserve's conclusion following last 
year's stress tests that ``the banking system has been a source of 
strength during the past year and stress test results confirm that 
large banks could continue to lend to households and businesses even 
during a sharply adverse future turn in the economy.'' Our capital and 
liquidity requirements have increased dramatically in recent years, and 
notably in 2020 when a combination of monetary and fiscal stimulus 
swelled bank balance sheets by $10 trillion, largely in low- to no-risk 
assets. We continued to meet the borrowing needs of our clients--
households, businesses, and municipalities--providing more than $1 
trillion in credit in 2020, despite low loan demand.
    We devote specialized attention to compliance with the laws and 
regulations governing anti- money laundering and terrorist financing, 
economic sanctions and anticorruption efforts. We have robust Know Your 
Customer and Anti- Money Laundering controls, processes, and 
technology, with thousands of employees dedicated to this important 
function. We applaud the work of Congress to reform AML oversight, and 
believe the AML Act, including a new centralized beneficial ownership 
directory and the improved use of artificial intelligence, will improve 
law enforcement's ability to identify and stop criminal activity.
    Cybersecurity is also an incredibly important priority for us, and 
for America--a priority I cannot overemphasize. At JPMorgan Chase, we 
invest over $700 million annually and dedicate thousands of employees 
to maintain our defenses and enhance our resilience to this ever-
increasing threat. But attacks are increasing in number and 
sophistication across all sectors, including Government, utilities, 
technology companies, electrical grids, and others. This is a serious 
national security concern that requires partnership and collaboration 
to address. To this end, designated critical infrastructure from 
Financial Services and the Electricity sectors have invested 
significant resources to create a collaborative organization for the 
analysis of cyber risk to the financial system. We need the Government 
to meet us halfway and provide dedicated national security resources to 
collaborate with critical infrastructure companies and defend the 
national interest from cyberattacks. Also, as evidenced by the 
SolarWinds incident, we need appropriate reforms to ensure the data 
that is held by financial regulators is properly secured and that 
policies are in place to guide timely and meaningful notification and 
response to impacted firms when a breach does occur.
    Climate change is also one of the defining issues of our time. 
JPMorgan Chase first announced its Paris-aligned financing commitment 
in October 2020, which includes establishing carbon reduction targets 
for 2030 for some of the most carbon-intense sectors. We have created 
the Center for Carbon Transition to help our clients invest in lower-
carbon solutions, and help them set a path for achieving net-zero 
emissions by 2050. We also recently targeted $2.5 trillion over 10 
years to advance long-term solutions that address climate change and 
contribute to sustainable development. And we have publicly advocated 
for market-based, carbon policy solutions, including a price on carbon, 
and investments in innovative technology to help companies transition 
to a cleaner future. The bottom line is this: Abandoning fossil fuels 
is not an option right now. Instead, we must work together, across 
public and private sectors, in a bipartisan fashion, to manage risk and 
invest in new solutions and technologies.
    We have robust processes in place and are constantly evaluating 
with whom we do business, taking into consideration many factors when 
we make our decisions. In line with regulatory expectations, we use 
risk-based frameworks to determine our tolerance for a client's level 
of legal, credit, or regulatory risk. We serve businesses that can 
demonstrate adherence to the law, whatever the industry.
    JPMorgan Chase has invested significantly in artificial 
intelligence and machine learning capabilities. We already use AI 
successfully in fraud and risk, marketing, prospecting, idea 
generation, operations, trading and other areas, but are still at the 
beginning of this journey.
    Over the years, when we have faced legal and regulatory issues, we 
consistently acknowledged our mistakes, often self-identified them, and 
improved our controls where necessary. Where inappropriate behaviors 
have been identified, either by us or by our regulators, we have taken 
action to address them. In the last 2 years, there have been two 
regulatory resolutions of legacy issues. One of these matters related 
to past misconduct by certain former employees that occurred prior to 
2016 relating to market manipulation. Their conduct was unacceptable, 
and we took action, including termination and canceling millions in 
compensation. We also recently settled a matter with the OCC related to 
past deficiencies that were identified in our internal controls and 
audit over certain fiduciary activities. By the time the settlement was 
announced, we had already enhanced our controls to address the 
deficiencies. Over the years, we have meaningfully improved our control 
environment and simplified our business, which the Department of 
Justice and the OCC noted in their recent announcements in connection 
with these resolutions.
Policy Recommendations
    America is poised for a strong economic rebound. But we must ensure 
that the economic recovery benefits all, and that we address 
longstanding inequities that threaten the promise of America. Access to 
affordable health care, an education system failing too many of our 
children, crumbling infrastructure, climate change, and racial economic 
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. We must unleash the 
extraordinary vibrancy of the American economy.
    Economic growth will give us the wherewithal to deal with the 
issues stemming from inequality in ways that are sustainable. The 
actions we take today will determine the future of our country for 
generations.
    Earlier this year, JPMorgan Chase released a set of data-driven 
policy recommendations informed by research from the JPMorgan Chase 
Institute and the work of the JPMorgan Chase Policy Center to provide 
immediate support to those most impacted, as well as longer-term 
policies to increase the financial health and stability of households 
and small businesses. Solutions that address longstanding racial and 
economic inequities will require efforts by all of us, including in 
these areas:

    Households and the Social Safety Net: There are large 
        racial gaps in take-home income and liquid assets that persist 
        across age, income, gender, and geography. This 
        disproportionately impacts Black and Latinx families who, when 
        faced with a negative income shock such as job loss, must cut 
        their spending and consumption more than other groups. To 
        address racial disparities in income and wealth and reduce 
        household financial volatility, we support Federal policies 
        that boost earnings, improve job-quality, and increase access 
        to good jobs, as well as reduce expenses that 
        disproportionately burden Black and Latinx families. This 
        includes increasing the Federal minimum wage; reforming the 
        Earned Income Tax Credit (EITC) by raising the maximum credit 
        and income limit, extending the credit to childless adults, and 
        eliminating the age cap; supporting side car savings accounts; 
        ensuring workplace benefits and protections such as paid sick 
        and family leave are available to as many working Americans as 
        possible, as well as piloting portable benefits tied to and 
        that move with the worker regardless of employer; and reducing 
        barriers to employment for individuals with criminal 
        backgrounds--one in three working-age adults--to expand 
        economic opportunity to millions of Americans, which is part of 
        JPMorgan Chase's Second Chance initiative.

    Small Businesses: Minority- and women-owned small 
        businesses have faced historical barriers to accessing credit, 
        and the COVID-19 pandemic only exacerbated it. Although Federal 
        law requires fair lending, many hurdles remain for both 
        minority and women entrepreneurs. We must better align Federal 
        programs to meet the needs of the most vulnerable small 
        businesses, enhance access to capital for minority and women 
        entrepreneurs, and support an inclusive economic recovery in 
        communities. This includes increasing resources for the Small 
        Business Administration (SBA) Microloan program; making 
        permanent the SBA Community Advantage program; increasing the 
        Department of Treasury's Community Development Financial 
        Institution Fund to $1 billion with a set-aside for Black-led 
        CDFIs; and improving Government procurement programs and 
        policies to provide greater opportunity for underserved small 
        business owners to secure Government contracts.

    Affordable Housing: Many Black and Latinx households face a 
        housing affordability crisis. Home ownership rates are lowest 
        for Black families--30 points lower than for white families. As 
        COVID-19 created more financial instability, Black and Latinx 
        households are more likely to be cost-burdened than White 
        households and are at the highest risk for eviction. We must 
        work together to reform Federal programs to expand affordable 
        housing and home ownership for underserved communities and 
        provide the support needed to weather economic uncertainty. 
        This includes considering additional rental assistance funding 
        to stabilize families facing continued economic hardship; 
        ensuring all homeowners have access to mortgage forbearance; 
        supporting comprehensive housing reforms such as modernizing 
        the Federal Housing Administration (FHA) to increase access to 
        sustainable home ownership; and increasing Federal funding for 
        affordable housing programs such as Low-Income Housing Tax 
        Credit, Housing Trust Fund, Emergency Solutions Grants, 
        Community Development Block Grants, and HOME.

    I want to close by thanking our employees for the tireless work, 
ingenuity, and singular focus on doing right by our customers. Over the 
last year, they performed their jobs with integrity and excellence, 
often remotely, while also navigating personal challenges. By working 
together and focusing on our mission, we proudly served our customers, 
communities, and our country through an extraordinary year.
    I look forward to working with all of you to solve big challenges 
and foster healthy and inclusive economic growth. There will be areas 
where we disagree, but we all share a common purpose of creating a more 
perfect union. We have proven repeatedly that when we work together--
Government, business, and civic society--we can solve seemingly 
intractable problems and ensure we are a country of unlimited 
opportunity for all.
    Thank you for your time, and the work you do for our country. I 
welcome any questions that you may have.
                                 ______
                                 
                  PREPARED STATEMENT OF BRIAN MOYNIHAN
         Chairman and Chief Executive Officer, Bank of America
                              May 26, 2021
    Chairman Brown, Ranking Member Toomey, and Members of the 
Committee:
    On behalf of all of us at Bank of America, I am grateful for your 
consideration of this written statement, and I look forward to 
discussing these matters with you during my appearance before the 
Committee.
    Beginning in 2020, the U.S.--and countries around the world--have 
faced challenges without modern precedent caused by a global health and 
humanitarian crisis. In response, Bank of America has taken many steps 
that will be discussed in this statement to help our clients, the 
communities we serve--and ultimately the U.S. economy--through the 
pandemic-driven economic crisis and recovery. We made additional 
investments to address the needs of our teammates and their families, 
to support our communities and to help deliver progress on important 
issues facing society, with a particular focus on racial equality and 
economic opportunity.
    When the crisis hit, we were well-positioned to be a source of 
strength and stability. That reflects our decade-plus focus on driving 
Responsible Growth.
2010-2020: A Decade of Transformation
    I assumed the role of CEO on January 1, 2010. Over the past decade, 
my teammates and I have transformed Bank of America into a strong, 
straightforward, stable, transparent, and client-centric company.
    Our approach to how we run the company is shared and commonly 
understood by our team at Bank of America. We call this Responsible 
Growth, and it has four straightforward tenets:

  1.  We must grow in the market;

  2.  We must grow with a customer focus;

  3.  We must grow within our risk framework; and

  4.  And we must grow in a sustainable manner.

    I'll discuss each of these tenets in greater detail later in this 
statement.
    Coming out of the financial crisis, we adopted a straightforward 
strategy, serving three groups of customers--people, companies of all 
sizes, and institutional investors--through eight lines of business. 
All of those lines of business operate within the United States. 
Outside the United States, we operate those lines of business serving 
companies and institutional investors.
    We also took significant steps to reduce the scope and complexity 
of our company, as envisioned in the Dodd-Frank Wall Street Reform and 
Consumer Protection Act (Dodd-Frank). We divested more than $80 billion 
of noncore activities and businesses, including private equity 
holdings, an insurance company, an asset management company, equity 
positions in non-U.S. financial institutions, and businesses outside 
the United States that served consumers and retail investors. We 
consolidated our capital to support the U.S. consumer, small and mid-
sized companies, corporate clients and institutional investors we 
serve.
    We also improved our risk management framework, again consistent 
with the principles embodied by Dodd-Frank and in alignment with a 
business model that emphasizes deepening relationships with core 
clients.
    Another central element of our company's transformation since the 
financial crisis is how we have strengthened our capital and liquidity. 
Since the end of 2009, we have increased our tangible common equity \1\ 
from $112 billion to $180 billion. Over the same period, our average 
global liquidity sources have increased from $214 billion to over $1 
trillion. Our capital and liquidity levels give us the financial 
strength and flexibility to support our clients, regardless of the 
economic environment.
---------------------------------------------------------------------------
     \1\ Represents a non-GAAP financial measure. Tangible common 
equity is calculated as common shareholders' equity of $249.7 billion 
and $207.2 billion for the first quarter of 2021 and the fourth quarter 
of 2009, which has been reduced by goodwill of $69.0 billion and $86.3 
billion for the first quarter of 2021 and the fourth quarter of 2009 
and intangible assets (excluding mortgage servicing rights) of $2.1 
billion and 12.0 billion, net of related deferred tax liabilities of 
$0.9 billion and $3.5 billion for the first quarter of 2021 and the 
fourth quarter of 2009.
---------------------------------------------------------------------------
    In addition, we have managed our loan portfolio to a more balanced 
credit profile, making it consistent with our risk framework.
    As a result of these improvements, the Federal Reserve has modeled 
Bank of America's loan loss rate in its annual Comprehensive Capital 
Analysis and Review (CCAR) stress tests to be the lowest among peers in 
seven of the last 8 years. Bank of America also had the lowest loan 
loss rate (6.1 percent) in the additional December 2020 CCAR stress 
test, which was prompted by macroeconomic uncertainties caused by the 
global pandemic.
    Subject to Federal bank regulations, we have remained committed to 
returning excess capital to shareholders, absent what is needed to 
support economic growth, deliver for customers and communities, reward 
our teammates through shared success, invest in our future and sustain 
strength and stability. From the beginning of 2011 through the end of 
the first quarter of 2021, we returned almost $115 billion through 
share repurchases and dividends, and ended that period with $35 billion 
in excess capital above our required minimum as well as record 
liquidity. And while we have continued to repurchase shares over the 
past decade, the number of shares currently outstanding is still nearly 
double the amount outstanding before the 2008 financial crisis, due to 
capital raised in the wake of the financial crisis. Table 1 in the 
Appendix shows end-of-year capital and leverage ratios as well as 
capital distributions over the past 10 years.
    Thanks to the efforts of our team to transform the company over the 
past decade, and their ongoing focus on Responsible Growth, our company 
has been well-positioned to be a source of strength for all of our 
stakeholders during the health, economic, and social crises of the past 
year.
Delivering for Clients, Teammates, and Communities
Supporting Our Clients When and Where They Needed Us
    For over a decade, we have invested heavily in our capabilities to 
be able to serve all of our clients where, when and how they choose. 
That includes investment in technology; from 2009 to 2011 we doubled 
our new technology initiative spending budget to roughly $3 billion and 
it has remained at that level or higher every year since then. This 
strong and consistent level of investment enabled us to rapidly respond 
to evolving client needs in 2020--and to be there for them when they 
needed us most.
Client Support Programs
    Our support for clients included far-ranging measures to assist 
those impacted by the health and ensuing economic crisis, through our 
own relief programs and through Government relief programs.
    Client Assistance Program
    Through our Client Assistance Program, we helped nearly 2 million 
consumers and small businesses defer payments on credit cards, vehicle 
loans, and home loans as they managed their finances through the 
pandemic. Even with a deferral, the vast majority of those clients 
remained current on their payments. A small percentage have needed 
extended assistance, and we continue to work with them individually to 
help them get back on track. For example, for clients with mortgages 
originated by us, we are adding deferred payments to the end of the 
loan term so they aren't making a lump-sum payment up front.
    At peak, we deferred roughly $55 billion in client loans through 
our Client Assistance Program. Today, due in part to Government 
stimulus efforts, clients are better positioned to manage through the 
pandemic and deferrals are less than $7 billion.
    Paycheck Protection Program
    Beginning in late March 2020, thousands of Bank of America 
teammates worked to design, develop, and deliver a digital platform to 
support clients through the Paycheck Protection Program (PPP). We began 
accepting PPP applications the day after the program details were 
announced in early April--the first major bank to do so. And in 2020, 
we provided PPP loans to more small businesses than any other financial 
institution.
    To support that work, we dedicated more than 3,000 employees by the 
first week of the program to assist small business customers with PPP 
applications. We did not prioritize among client applicants when 
processing or submitting completed applications to the Small Business 
Administration (SBA) based on the amount of the customer's loan request 
or any broader client relationship.
    To date, we have provided PPP loans to nearly 500,000 small 
businesses--reflecting more than $35 billion in funding. Of all PPP 
loans provided to Bank of America clients, 83 percent have gone to 
businesses with 10 or fewer employees; nearly 40 percent have gone to 
businesses in majority-minority communities; and 24 percent have gone 
to low- to moderate-income (LMI) communities. We sent millions of 
emails to help clients understand the program, and encourage them to 
apply if eligible, including targeted outreach to drive awareness in 
LMI and majority-minority communities.
    We also took immediate measures to implement SBA guidance related 
to some of the smallest businesses--sole proprietors, independent 
contractors and single-member LLCs--allowing them to use gross income, 
instead of net profit, in the PPP application process and potentially 
benefit from a higher loan amount. We have provided PPP loans to more 
than 10,000 of these small businesses, with an average loan amount of 
under $20,000.
    Bank of America's process for the PPP allowed any business client 
with an existing credit relationship, or a business client that had no 
credit relationship with Bank of America or another bank, to apply 
online for a PPP loan, because we could provide financial assistance 
more quickly to those with whom we already had a relationship. To 
assist businesses in underserved communities that weren't Bank of 
America clients, we partnered with dozens of community development 
financial institutions (CDFIs) to assist them in providing PPP loans to 
more than 10,000 small businesses in the communities they serve.
    In August 2020, we launched our digital portal to help clients 
apply for forgiveness on their PPP loan. We have since updated our 
portal to support the SBA's simplified application processes. To date 
we have helped more than 220,000 clients receive loan forgiveness and 
we continue to work closely with clients to help them in the PPP 
forgiveness process.
    We expect to receive fees from our participation in the PPP 
consistent with the rules and formulas set forth in applicable laws, 
and will have a final assessment of total fees received once all loans 
have been processed. In 2020, we announced that any net proceeds 
related to PPP fees will be dedicated to support small businesses and 
the communities and nonprofits we serve.
    Stimulus Payments
    Since the start of the pandemic, we have supported clients and 
nonclients through three Federal stimulus programs as well as two State 
programs and one local program. Through these efforts, we have 
processed over 43 million stimulus transactions totaling $73 billion.
    We took steps to ensure all clients were able to access their funds 
immediately. Additionally, we provided overdraft credits to help those 
with a negative balance on their account access the full payment 
amount. If a client had a negative balance on their account when they 
received a stimulus payment, we provided a temporary credit to their 
account--for at least 30 days--equal to the amount of the negative 
balance. Through this expanded support, we have helped more than 1 
million clients access the full amount of their stimulus payment.
    To help nonclients access the full amount of their payment, we 
waived nonclient check cashing fees for stimulus checks.
    We continue to process stimulus payments pursuant to all applicable 
Federal and State regulations on garnishments, including Executive 
orders on garnishments issued in several States during the pandemic.
    Unemployment Insurance
    Bank of America has supported 12 State government unemployment 
agencies (Arizona, California, Iowa, Kansas, Kentucky, Maryland, 
Massachusetts, Michigan, Nevada, New Jersey, North Carolina, and South 
Carolina) with the distribution of unemployment benefits during the 
pandemic.
    Those States have contracted with Bank of America to help 
distribute unemployment funds using prepaid debit cards. Since March 1, 
2020, we have experienced a more than six-fold increase in cards 
issued, compared with the rate of issuance prior to the pandemic, and 
loaded over $195 billion in unemployment payments to more than 24.7 
million recipients, with California representing the largest share of 
active prepaid cards and aggregate funds.
    The delivery of unemployment benefit payments is a collaborative 
effort between State agencies and the bank they select to administer 
the delivery of payments, with each having different responsibilities. 
Unemployment claimants submit an application for unemployment benefits 
to the State agency, online, via email, or by phone. The State agency 
determines both eligibility and benefit amount, then transmits a file 
with benefits recipient and payment information to the bank. The bank 
creates and mails a card, and loads funds into an account associated 
with that card. Once the benefits account is opened, the bank is 
responsible for routine card servicing issues relating to account 
access, lost or stolen cards, personal identification numbers, as well 
as account transaction claims and disputes. The State agency is also 
responsible for addressing ongoing questions regarding benefit 
recipient eligibility status.
    The vast majority of State unemployment funds have been delivered 
to recipients as intended during the period of heightened activity 
brought about by the pandemic. However, Bank of America and the 
relevant State agencies have also seen unprecedented levels of criminal 
fraudulent activity in the form of eligibility and identity fraud. We 
have faced these challenges in all 12 States, although the scale of 
fraudulent activity related to California's program has been uniquely 
large.
    A spike in criminal activity occurred in the third quarter of 2020, 
resulting in heavy volumes in our call centers and claims departments. 
In response, we took a number of actions with authorities in order to 
reduce fraud, including freezing suspicious cards, while also 
implementing measures to improve the experience for valid recipients. 
These steps, in connection with additional measures being taken by 
States, have led to a meaningful reduction in fraudulent activity and 
improved processes for legitimate recipients. We continue to monitor 
and adjust our response as needed to support these important State 
programs.
Supporting Clients' Day-to-Day Financial Needs
    Our services are essential to our clients and to the economy. 
Throughout the past year, our team has redoubled its efforts to support 
the everyday financial needs of our clients--in person and through 
digital channels--in all of the communities we serve.
    Ongoing Support Through Our Financial Centers
    From the beginning of the health crisis, we've taken additional 
health and safety measures within our financial centers to protect our 
teammates, clients, and communities. That includes implementing 
enhanced deep cleanings and temperature checks, and installing more 
than 44,000 wellness barriers. Like many businesses, we've had to 
continuously adjust our local operations in response to the spread of 
coronavirus, State regulations, and local ordinances.
    Through it all, our financial center teammates have been there for 
our clients--and our entire company is grateful for their efforts. I 
will talk more about how we have supported our teammates in financial 
centers later in this testimony.
    Staying Connected Through Digital Platforms
    For more than a decade, we've invested heavily to develop a secure, 
user-friendly digital platform that supports the full range of client 
needs. These industry-leading digital capabilities have allowed us to 
remain connected to our clients and deliver essential products and 
services without interruption during the health crisis.
    In 2020, more than 9 billion out of 10 billion total client 
interactions with Bank of America came through digital channels. As 
clients navigated lockdowns and quarantines, we saw 84 percent of 
deposits come through our automated channels (mobile, online, and 
ATMs), up from 78 percent the prior year. This includes a record 160 
million checks--many of them Government stimulus checks--deposited 
using our mobile banking app in 2020.
    As the health crisis hit, we saw a spike in digital adoption among 
older clients, who needed a safe and reliable way to continue banking. 
As one client shared with us in the spring of 2020:

        I'm a 75-year old senior in New York, currently sheltering in 
        place at home. I received a few checks that I needed to deposit 
        so I could pay my bills. I had heard about a way to deposit 
        using my iPhone, so I decided the time had come to learn how to 
        do it.

    At a time when clients' schedules were pressured, our digital 
capabilities made it easier to connect with our teammates for support 
and guidance. In 2020, clients used digital tools to arrange a record 
2.6 million in-person and virtual appointments. Our Bank by Appointment 
capabilities were responsible for more than 20 percent of account sales 
and service interactions in our financial centers, up from 13 percent 
in 2019.
    The strength of our digital platforms enabled us to be responsive 
to rapidly changing needs of our clients during the crisis. For 
example, Erica, our AI-based financial assistant located in our mobile 
app, learned 60,000 new pandemic-related intents--for example, ``Erica, 
tell me about coronavirus relief options''--in a matter of days to 
support our clients and connect them with the information and resources 
they needed. And our CashPro platform allowed our commercial clients--
including those pivoting to remote work--to continue managing payments 
and cash flow uninterrupted.
    Supporting Underserved Communities
    We are committed to ensuring everyone has access to the products 
and services they need to achieve their financial goals, regardless of 
where they live and what they earn.
    Throughout 2020, we continued to use our network of financial 
centers--including financial centers in LMI communities and our 
designated community financial centers, which I describe in greater 
detail later in this testimony--as well as our digital capabilities, to 
support financial needs within underserved communities. To complement 
these channels and to ensure these communities have access to capital, 
we continue to invest heavily in alternative channels of funding, 
including CDFIs.
    Bank of America is the Nation's largest lender to CDFIs, which 
provide affordable, responsible lending, and support to low-income and 
other disadvantaged clients and communities. By funding CDFIs, 
including our support for PPP lending described above, we help make it 
possible for credit to flow to needs we might otherwise be unable to 
serve through direct lending.
    Currently, we provide $1.8 billion to finance affordable housing, 
community facilities, and small businesses through 256 CDFIs in all 50 
U.S. States and the District of Columbia. More than $510 million of 
that total has been focused on small businesses.
    In addition to funding CDFIs directly, Bank of America connects 
CDFIs with other sources of flexible capital. For example, Bank of 
America has facilitated CDFIs accessing more than $750 million in loan 
capital under the Federal Reserve's PPP Liquidity Facility.
    Sustained Outreach and Engagement
    Throughout the health crisis, our teams have continued to reach out 
to clients across all businesses in order to support their financial 
needs and help them navigate the current environment.

    We sent tens of millions of emails and placed outbound 
        phone calls to Consumer & Small Business clients;

    We held thousands of calls, meetings, and broadcasts to 
        actively advise and connect with our Wealth Management clients; 
        and

    We issued guidance and market insight from our BofA Global 
        Research and Investment Insights teams through multiple 
        channels, including virtual investor conferences.

    While each outreach to clients varied in content, the overarching 
message was always the same: Bank of America is here to support you.
Taking Care of Our Teammates and Their Families
    Our teammates' health and safety is always our top priority. Since 
the beginning of the health crisis, we have taken many broad ranging 
steps to protect our more than 200,000 teammates and to support their 
families.
    First, we transitioned about 85 percent of our employees, including 
any teammate who identified as high-risk, to work from home. Many high-
risk employees have been redeployed to roles they can perform remotely.
    We also expanded many of our benefits and resources, including 
additional support for mental health, free virtual medical 
consultations and no-cost coronavirus testing. And we delivered face 
coverings to all employees and contractors to help them stay safe, in 
line with guidance of medical experts, health officials, and the U.S. 
Centers for Disease Control and Prevention.
    As the pandemic hit, we knew our teammates were going to be under 
pressure at home. For most of them, their home became their workplace. 
For our 40,000 teammates with children, home was often also a school or 
daycare. For many teammates with aging parents, home became an assisted 
living space as well. Our teammates needed help. We offered them $100 
per day to hire that help and, to date, we've funded more than 4 
million days of care. And we continue to expand our childcare benefit 
programs to support our teammates with children. Beginning in July, we 
will provide childcare reimbursement up to $275 per month, per child, 
for U.S. employees earning up to $100,000 in cash compensation.
    We took additional actions to support the health of teammates 
working daily in our offices, and to recognize their efforts to serve 
our clients and help the economy move forward. In our financial 
centers, we implemented onsite coronavirus testing, temperature checks, 
daily health screenings, physical distancing markings, and wellness 
barriers to keep teammates and clients safe. And we provided these 
teammates with special compensation programs, including supplemental 
pay and enhanced overtime pay, as well as transportation and meal 
subsidies.
    We expanded our dedicated team of Life Event Services specialists--
which was established in 2014 to assist teammates through disasters and 
other times of crisis--to provide personalized support to teammates 
impacted by the coronavirus. And we continue to offer 24/7 confidential 
counseling through our Employee Assistance Program for teammates and 
their immediate family members.
    More than 1 year into this health crisis, we recognize that COVID-
19 vaccines are key to returning to a more normal way of life--for our 
company and for the world. We continue to share extensive information 
and resources, including local tip sheets, to help our teammates learn 
more about vaccines and find out where they can get one. And we are 
providing all employees up to two half-days of paid time off to 
complete vaccination appointments in 2021.
Helping Our Communities Move Forward
    Last year, as we confronted overlapping crises, we invested heavily 
to support the communities in which we work and live and, at the same 
time, help deliver progress on important issues impacting us all.
    Promoting Local Health and Safety
    In response to the health and humanitarian crisis, our teams 
immediately set to work providing important resources to our local 
communities--including those hardest hit by the impacts of the 
coronavirus. We pledged $100 million toward medical supplies, food 
security, and other vital support, and an additional $250 million to 
CDFIs to provide more companies and not-for-profits access to important 
capital.
    Our support also included the donation of personal protective 
equipment (PPE) to communities across the country. To date, we have 
delivered roughly 29 million face coverings, more than 5 million gloves 
and more than 28,000 cases of sanitizer to communities in need.
    In May of 2020, we also launched a $1 billion corporate social 
bond, the first issued by a U.S. commercial bank to focus exclusively 
on fighting the pandemic.
    Racial Equality and Economic Opportunity
    Last year, we saw intensified passion to address the obstacles to 
true racial equality in the United States and around the world. In June 
of 2020, we accelerated our longstanding work to promote racial 
equality and economic opportunity for all underrepresented groups with 
a $1 billion, 4-year commitment. We recently expanded that to $1.25 
billion over 5 years.
    We are delivering our commitment in our local communities through 
targeted investments in four key areas: jobs, small businesses, 
housing, and health care. Since June 2020, we have already deployed 
more than $350 million of the money into our communities, including:

    MDIs and CDFIs--We have completed equity capital 
        investments in 17 minority depository institutions (MDIs) and 
        CDFIs as part of a $50 million commitment made in 2020. As part 
        of this commitment, we have acquired up to 4.9 percent of 
        common equity in MDIs and CDFI banks facilitating benefits in 
        the communities that these institutions serve through lending, 
        housing, neighborhood revitalization, and other banking 
        services. These equity investments are in addition to 
        approximately $100 million in deposits from Bank of America in 
        MDIs as well as our $1.8 billion CDFI portfolio, discussed 
        earlier in this testimony.

    Private equity funds--We recently increased our target for 
        equity investment in minority-focused funds to $350 million, 
        and have already committed more than $250 million to 90 private 
        equity funds across the United States. These funds provide 
        capital to Black, Hispanic-Latino, Asian, Native American, 
        other underrepresented minority and women entrepreneurs to help 
        them establish and grow their businesses. These investments 
        help advance racial equality and economic opportunity on 
        several levels. The investments we make in the funds themselves 
        provide capital to underrepresented minority and women 
        investors who own and manage the funds. These investors, in 
        turn, are helping fund minority-owned businesses, and we 
        anticipate the private equity funds investments we have already 
        made will lead to more than 2,000 minority-owned operating 
        companies getting the investments they need to hire employees, 
        including, of course, underrepresented minorities and women.

    Higher education institutions--Through our partnerships 
        with 21 historically Black colleges and universities (HBCU) and 
        Hispanic-serving institutions (HSI), we have worked to enhance 
        up-skilling and reskilling for Black and Hispanic-Latino 
        students and create pathways to long-term career success.

    For example, in February, we partnered with the Black 
        Economic Alliance Foundation, Morehouse College, and Spelman 
        College to launch the Center for Black Entrepreneurship (CBE), 
        the first-ever academic center of its kind. Our $10 million 
        anchor funding will support the development of an academic 
        curriculum, faculty recruitment, cocurricular programming, 
        modernization of existing facilities, and the development of 
        new physical space. The CBE will be located on the campuses of 
        Spelman College and Morehouse College in southwest Atlanta.

    In 2020, we also issued an industry-first $2 billion equality 
progress sustainability bond designed to advance racial equality, 
economic opportunity, and environmental sustainability.
    Affordable Housing
    During 2020, we continued to address the affordable housing 
shortage for individuals, families, students, veterans, the formerly 
homeless, those with special needs, and other at-risk groups.
    We recently tripled our affordable home ownership commitment to $15 
billion by 2025. By providing grants for downpayments and closing costs 
through this program, we aim to help more than 60,000 individuals and 
families in low- and moderate-income communities purchase homes and, 
importantly, build wealth through the power of home ownership. And we 
have expanded our funding and long standing partnerships with 
nonprofits like Neighborhood Assistance Corporation of America (NACA) 
for the same reasons.
    Additionally, in 2020, we provided a record $5.87 billion in loans, 
tax credit equity investments, and other real estate development 
solutions, and deployed $3.62 billion in debt commitments and $2.25 
billion in investments to help build strong, sustainable communities by 
financing affordable housing and economic development across the 
country. Between 2005 and 2020, we financed more than 215,000 
affordable housing units.
    In April 2021, we committed $60 million-$30 million in loans and 
$30 million in equity financing--to support Enterprise Community 
Partners' Equitable Path Forward, a 5-year initiative to help 
facilitate racial equality in housing. The investment will increase 
access to capital and career opportunities for diverse leaders 
developing multifamily, affordable and supportive housing across the 
country. Through this initiative, we will help provide much-needed Low 
Income Housing Tax Credit capital and debt financing to directly 
source, structure and close deals with diverse developers, especially 
emerging developers seeking both flexible capital and technical 
assistance.
Responsible Growth
    Our company's purpose is to make financial lives better. 
Responsible Growth is how we deliver on that purpose. By driving 
Responsible Growth, we create value for our shareholders as well as our 
clients, our teammates, our communities and, at the same time, help 
deliver progress on important issues facing society.
    Our decade-long focus on Responsible Growth prepared us well for 
the current health crisis. It positioned us to continue serving our 
clients through the worst economic shock in recent history, while at 
the same time increasing investments to support the needs of our 
teammates and our communities.
    To reiterate what I described at the beginning of my statement, 
there are four tenets to Responsible Growth. First, like every 
business, we must grow to be successful. Second, we must grow with a 
customer focus. Third, we must grow within our risk framework. Fourth, 
we must grow in a sustainable manner.
1. Grow in the Market
    To be successful, we have to grow in the market--and that growth 
has to be consistent with our principles and risk framework, and 
beneficial for our stakeholders.
    In 2020, we saw a surge in client activity due to the health 
crisis. As a result of our planning and investments over the past 
decade, and the tireless efforts of our global team, we were there to 
support our clients' evolving needs--including those consumers and 
small businesses hardest hit by the impacts of the coronavirus.
    We supported our clients with our various customer assistance 
programs. We supported small businesses with PPP loans. We supported 
wealth management clients with advice, expertise, and execution in 
volatile markets. We supported commercial clients with our strong 
balance sheet: providing more than $70 billion in loans in a few-week 
period, and raising $772 billion in capital for clients over the course 
of 2020. We supported institutional investors by providing market 
expertise and insights, trading capabilities, and access to help them 
navigate through the uncertainty.
    And we leveraged our digital capabilities to help all of our 
clients--from retail clients to CFOs to institutional investors--manage 
their finances wherever and whenever they needed.
    All of this, and more, allowed us to continue to serve clients 
through the pandemic, even as volumes surged. We played our part, with 
our industry colleagues, in helping ensure economies around the world, 
and here in the U.S., recover more quickly. In the end, that is the 
role of the bank.
    Our diverse set of businesses allowed us to respond to and support 
the financial needs of all clients, and our results for 2020 reflected 
the trust clients placed in us to do so.
    In 2020, average deposits at our bank increased 18 percent year-
over-year to approximately $1.6 trillion.
    In Consumer Banking, we added $115 billion in average deposits 
during the year.
    During 2020, we added roughly 22,000 Merrill and 1,800 Private Bank 
relationships, and ended the year with client balances at all-time 
highs of $3.3 trillion.
    Apart from the role we played as one of the largest PPP lenders, we 
remained the largest small business lender in the country overall, 
ending 2020 with more than $32 billion in small business loan balances.
    We supported our commercial clients in their rush to borrow as they 
sought liquidity in February, March and April of 2020--reaching a high 
of $585 billion in commercial loans during the year. As conditions 
stabilized, we helped provide market access for these clients to raise 
needed and permanent capital.
    Through a dynamic market environment, we remained a source of 
strength and stability for our clients. And we grew as a result.
    Benefits Provided by the U.S. Federal Government
    Bank of America benefits from its status as a nationally chartered 
financial institution as well as from Government support for, and 
assistance in, the safeguarding of our physical and digital security. 
Prudently enacted fiscal and monetary policy fosters a strong national 
economy and the well-being of our population. We are fortunate to play 
a part in a robust U.S. banking system, and our ongoing success as a 
business relies on a strong, stable and predictable U.S. regulatory 
environment coupled with appropriate and rigorous oversight and 
supervision.
    The U.S. regulatory framework in place prior to the health crisis 
put Bank of America and the industry on a strong footing, and we 
applaud the swift and comprehensive actions that Congress, Treasury 
Department, Federal Reserve and other U.S. Federal Government agencies 
took to mitigate the economic impact of the coronavirus. Those 
actions--quantitative easing, stimulus programs, financing facilities, 
and preemptive regulatory relief--combined to ensure the continued 
health of our citizens, our markets and our economy. Overall, the 
Government's robust response bolstered confidence and ensured the 
health crisis did not evolve into a financial one.
    Adjustments to U.S. financial regulations in response to the 
pandemic were sensible given the heightened uncertainty, and would have 
been even more meaningful to provide stability to the sector if the 
financial impacts of the crisis been more severe:

    Temporarily excluding U.S. Treasuries and central bank 
        reserves from the consolidated Supplementary Leverage Ratio 
        (SLR) made sense, given the uncertain amount of bank balance 
        sheet expansion that quantitative easing could have caused. 
        While that exclusion has now sunset--with no firm having 
        breached its minimums--it will be important for regulators to 
        revisit that requirement, since the relationship between low-
        risk assets and risk assets has changed meaningfully since the 
        leverage backstops were calibrated. While the temporary 
        exclusions increased Bank of America's SLR, as of the first 
        quarter of 2021, our company's more binding constraint was the 
        common equity tier 1 capital ratio. Excluding the temporary 
        relief, our SLR at the end of the first quarter 2021 was in 
        excess of the minimum 5 percent requirement.

    Allowing an optional extended phase-in of the regulatory 
        capital impact of the Current Expected Credit Loss (CECL) 
        accounting standard helped ensure capital was available for 
        customers and markets.

    Permitting banks to offer forbearance to borrowers without 
        causing those loans to be characterized as troubled debt 
        restructurings helped preserve capital for those who needed it.

    Additionally, the U.S. Federal Government's relief measures were 
beneficial to markets generally, and to consumers including our 
clients.

    While quantitative and monetary easing pressured our net 
        interest income due to lower interest rates, we saw high 
        deposit inflows as liquidity flooded into the system.

    The funding facilities for various types of assets helped 
        stabilize the markets for those assets (although Bank of 
        America did not need to access these facilities).

    As a major facilitator of PPP lending, discussed earlier in 
        this testimony, we saw first-hand how PPP loans helped 
        businesses across the country weather the storm and continue 
        paying their workers.

    Stimulus checks and supplemental unemployment payments 
        helped keep our clients current on their loan payments, even if 
        temporarily displaced from the workforce.

    Finally, Bank of America's clients also benefit from protections, 
such as deposit insurance, that safeguard depositor assets and increase 
consumer confidence in the banking system. Bank of America pays into 
the Federal Deposit Insurance Corporation (FDIC) Deposit Insurance 
Fund, which is used to protect the depositors of insured banks and to 
resolve failed banks. We paid approximately $585 million in premiums to 
the FDIC in 2020, and nearly $13 billion over the past decade.
2. Grow With a Customer Focus
    To drive Responsible Growth, we must grow with a customer focus. 
And by focusing on the needs of our customers and clients in 2020--
through the extraordinary pandemic-related efforts described above and 
across the full range of our high-touch and high-tech capabilities--we 
made a meaningful difference in their lives. How do we know? In 2020, 
our client satisfaction scores were the highest in company history.
    Our company has developed over many decades to one which now serves 
cities and towns across America. Our nationwide coverage, combined with 
our industry leading digital platforms, gives us the scale and breadth 
to address the individual financial needs of our roughly 66 million 
clients--with whom we interact tens of millions of times each day.
    Our Branch Network
    Our network of financial centers is an important high-touch way we 
connect with our clients, work with them to achieve their financial 
goals, and support the economic well being of our communities.
    Today, Bank of America's nationwide network consists of 
approximately 4,300 financial centers and 17,000 ATMs across 38 States 
and the District of Columbia. Over the past two decades, the size and 
footprint of our network has evolved to help us more effectively serve 
clients where they are. In 1999, we had had approximately 4,500 banking 
centers. Over the following years, the number of financial centers 
increased during a period of acquisitions to a high of 6,149 at the end 
of 2007.
    Since 2008, we have opened approximately 650 financial centers to 
help provide local access to more clients and communities. During this 
period, we expanded our physical footprint into 5 new States (Colorado, 
Minnesota, Ohio, Utah, and Kentucky). And we've continued to invest in 
renovations across our financial center network to help us more 
effectively support the financial needs of our clients. We completed 
more than 1,500 renovations in the past 3 years alone.
    We continuously monitor client behavior, including digital 
engagement and traffic patterns and make adjustments to our financial 
center footprint to most effectively serve them. This includes 
selectively consolidating financial centers, primarily in areas in 
which we have overlapping coverage.
    In 2010, we reviewed our branch network and identified a number of 
locations that we felt could be better served by more local financial 
institutions. We sold more than 350 branches to nearly 30 other 
financial service institutions. That gave these local providers the 
opportunity to strengthen their local networks while preserving access 
to those branches for the people they serve.
    Supporting LMI Communities. As our network has evolved, we have 
made significant investments in LMI communities to ensure that they 
have better access to the full range of high-quality financial services 
and products that we offer. Since 2008, the portion of our financial 
centers in LMI communities has remained steady at approximately one-
third. At the same time, the portion of centers in majority-minority 
communities has increased from 33 percent to 36 percent.
    All our financial centers are staffed with professionals who can 
readily assist clients with any financial need. Each center provides 
free Wi-Fi for our clients' convenience, giving them the opportunity to 
connect to our leading digital and mobile resources and tools. At the 
same time, 72 percent of our financial centers are multilingual, 
reflecting the communities we serve.
    Seven hundred of our financial centers are designated community 
financial centers focused on meeting clients' and communities' unique 
needs by connecting them to products and services, jobs and capital 
that will increase financial resilience and help our local communities 
thrive. Many community financial centers also include enhancements such 
as local art and cultural exhibits prominently featured in the lobby; 
kiosks with interactive, self-guided financial education content; and 
conference rooms where clients can attend Better Money Habits financial 
education seminars in English and Spanish. Many clients have 
appreciated the additional resources and support our community 
financial centers provide, and client satisfaction rates in these 
centers is at an all-time high.
    Our efforts to lend, invest and provide services in LMI communities 
are subject to the Community Reinvestment Act (CRA) and are currently 
rated outstanding.
    Digital Banking
    Complementing our high-touch offerings, our high-tech digital 
capabilities help us serve clients when and where they need us. Today, 
we have more than 40 million digital customers. In the first quarter of 
2021 alone, these clients made 2.6 billion digital logins. In the first 
quarter, approximately 70 percent of Consumer & Small Business 
households actively used digital platforms and roughly half of all 
Consumer Banking sales came through digital channels. Of those clients, 
61 percent are now fully paperless.
    Digital is transforming how our clients send and receive money. Our 
13.5 million Zelle active users, including Small Businesses, sent and 
received 170 million transfers worth $49 billion in the first quarter 
alone, that's up 66 percent and 83 percent, respectively, over 2019 
levels.
    On the commercial side, our CashPro platform continues to enable 
businesses and corporations to efficiently manage their finances from 
the office, home, or somewhere in between. CashPro sign-ins were up 37 
percent in the first quarter of 2021 compared to 1 year earlier.
    Our wealth management advisors also used our digital capabilities 
to support the needs of our Merrill Lynch and Private Bank clients in a 
virtual setting. Digital engagement for both businesses hit records 
highs in the first quarter of 2021.
    We deliver a wealth of services through our digital platforms for 
all customers and clients, across all lines of business. These benefits 
are equally accessible and applicable across all demographics. And we 
are constantly exploring ways to expand and interconnect these tools to 
deliver a more seamless, personalized experience for each client that 
spans and supports their entire relationship with us.
    Emerging Technologies
    Artificial Intelligence. One of the ways we improve the overall 
client experience and better serve their financial needs across our 
platforms is by the thoughtful and responsible application of 
artificial intelligence (AI).
    In evaluating the potential uses of AI, we first we look at the 
customer needs and how our potential AI-driven solution might benefit 
them and fit into our overall business process. We treat AI like every 
other technology: If it can improve the client experience, we will 
consider including it. If it does not, we won't.
    While there are many new applications of AI available today, the 
building blocks of this technology--data science, predictive modeling, 
testing, and training--have been around for over half-a-century. As 
with all technologies we use, we have rigorous policies and procedures 
in place for how we develop capabilities using AI.
    Importantly, we take measures to ensure we have a diverse team in 
place to build, test and refine our AI capabilities. This helps remove 
the potential bias in algorithms. Ultimately, we understand that 
members of our team must be held accountable for the output of our AI. 
Human oversight is a critical factor in AI success.
    We do not utilize the type of AI commonly associated with 
explainability challenges to decision outcomes for lending or hiring.
    One of our most prominent applications of AI is Erica, our AI-based 
virtual financial assistant located in our mobile app. More than 20 
million of our digital clients use Erica to do everything from checking 
their balances to paying their bills, and 99 percent of our clients who 
engage with Erica are able to find the information they need without 
calling a contact center. Additionally, Erica's personalized, proactive 
insights and guidance can help clients manage cash flow and optimize 
savings. For example, even if a client has not directly engaged the 
Erica financial assistant, Erica will reach out to help if a client's 
balance is at risk of going below $0 in the next week, or if a merchant 
charges them twice.
    Erica continues to gain new capabilities and learn new ways to 
support our clients. This, in turn, has driven increased client 
engagement. In the first 3 months of 2021, clients interacted with 
Erica 100 million times, whereas it took 18 months for Erica to reach 
the first 100 million interactions.
    Distributed Ledger Technology and Blockchain. We continue to 
evaluate applications of new technologies that have the potential to 
deliver value to our customer and clients, including distributed ledger 
technology (DLT) and blockchain. While Bank of America holds more than 
60 blockchain patents, we still have not found a use case at scale.
    In 2019, we joined the Marco Polo trade finance network that 
leverages Corda DLT to provide transformative solutions to global trade 
participants. Through the network, we will be able to offer clients 
access to innovative risk mitigation solutions such as receivables 
discounting, payment commitment and payables finance programs, 
providing them greater transparency and making traditionally paper-
based processes more efficient.
    Cryptocurrency. We continue to evaluate the opportunities, risks, 
and client demand for products and services related to cryptocurrency. 
Currently, we do not lend against cryptocurrencies and do not bank 
companies whose primary business is cryptocurrency or the facilitation 
of cryptocurrency trading and investment.
    Data Privacy
    Bank of America does not sell personally identifiable customer data 
to third parties, nor do we allow third parties to conduct research for 
their own purposes using personally identifiable customer data that the 
bank has collected in the normal course of business. If any of our 
vendors receive customer data in the course of performing a function 
for us, Bank of America requires that the vendor meet our privacy and 
data protection standards and that the data be protected by the bank's 
strict information security controls. No further use of that data can 
be made without Bank of America's express approval.
    Consumer-Focused Products and Services
    Early in the financial crisis, it became clear to us that customers 
in all income groups wanted clarity, consistency, transparency, and 
simplicity in their financial products and services. As part of our 
transformation over the past decade, we've embedded these principles 
into our existing portfolio of products and services.
    For example, we have cut the number of credit cards we offer from 
25 to 6 today, and condensed 22 checking accounts into 1 operating 
account.
    We also continue to add to our series of fair and affordable 
banking solutions to help clients budget, save, spend, and borrow with 
confidence as well as attract the unbanked into the mainstream of 
available financial services.
    In 2020, we added Balance Assist, a short-term, low-cost, and 
digital-only lending solution. An alternative to payday lenders, 
Balance Assist allows clients to borrow up to $500 (in $100 increments) 
for a $5 flat fee, regardless of the amount advanced to their account. 
Clients repay the loan in three equal monthly installments over a 90-
day period.
    In 2014, we introduced Advantage SafeBalance Banking, a full-
featured bank account with no overdraft or nonsufficient fund fees. The 
low monthly fees for the account are waived for students under 24 and 
members of our Preferred Rewards program. Today, about 2.5 million 
clients use SafeBalance accounts to manage their everyday finances.
    For clients who want to establish, strengthen, or rebuild their 
credit, we offer Bank of America Secured Card. Clients can apply for an 
account with a security deposit of $300. With responsible credit 
behavior, clients can improve their credit score and, over time, may 
qualify for credit without the security deposit. More than 830,000 
households currently use a Bank of America Secured credit card.
    Our digital platforms help us deliver these products and services 
to our clients, and extend our reach further into our communities. 
Today, 64 percent of underserved clients use our mobile app to actively 
manage their accounts as well as to access information and resources to 
help them achieve their financial goals.
    In September 2020, we launched LifePlan, which gives clients the 
power to select what's most important to them, selecting from items 
like ``improve credit,'' ``pay off student loans,'' and ``budget and 
start saving.'' Clients then receive personalized insights to help them 
achieve their goals, through both high-tech and high-touch 
interactions. By the end of the first quarter of 2021, our clients had 
created more than 3 million plans, one of the fastest product rollouts 
in our history.
    In 2013, we launched Better Money Habits, a free financial 
education program that helps people build financial know-how, with 
tools and resources in English and Spanish. For Bank of America 
customers, the platform is embedded in our online and mobile 
offerings--including LifePlan--and is enhanced by our Spending and 
Budgeting Tool, which puts timely information at clients' fingertips to 
help them improve their financial outcomes. Last year, consumers 
accessed financial education information on the Better Money Habits 
website 7 million times, reflecting a 12 percent year-over-year 
increase in traffic to our English site and a 133 percent increase in 
traffic to our Spanish site.
    The impact of Better Money Habits has been significant. Among 
clients who use both Better Money Habits and our Spending and Budgeting 
Tool, about one in four grew savings by 20 percent or more, while about 
one in three grew their checking balance by 20 percent or more.
    Mandatory Arbitration. Bank of America avoids relying on mandatory 
arbitration clauses in nearly all cases. Since 2009, Bank of America 
has not used mandatory arbitration in banking disputes with individual 
customers regarding consumer credit cards; auto, recreational vehicle 
and marine loans; and deposit accounts. Bank of America eliminated 
mandatory arbitration in its mortgage and home equity agreements 
several years before that, other than in a limited number of 
jurisdictions, where we have customized loan agreements with high net 
worth borrowers that contain mandatory arbitration provisions.
    Bank of America, along with other securities industry firms, also 
uses arbitration clauses in our client agreements when establishing a 
brokerage or investment advisory account relationship. FINRA provides 
the forum and sets the rules for these arbitrations, subject to 
oversight and approval of the Securities and Exchange Commission.
    Additionally, Bank of America does not include mandatory 
arbitration clauses in our offer letters to employees and thus, 
employees we hire are not required to arbitrate discrimination and 
harassment claims (though employees registered with FINRA are required 
to arbitrate nondiscrimination employment claims as result of industry 
requirements and we have a mutual arbitration clause with a managed 
service provider for contract employees).
    Supporting Small Businesses
    Small businesses are the backbone of the U.S. economy and key to 
the economic well being of our communities. Bank of America serves 13 
million business owner clients nationwide who rely on us for their 
financial needs, both business and personal. More than 3 million of 
those business owners have their business banking relationship with us, 
and our team of more than 2,000 dedicated small business bankers work 
within our communities to help address their everyday needs.
    According to the FDIC, Bank of America maintained its position as 
the Nation's top small business lender at the end of 2020, with $50.3 
billion in total outstanding small business loans (defined as business 
loans in original amounts of $1 million and under).
    The success of the small businesses we serve helps support the well 
being of their communities through economic growth, development and job 
creation. Currently, 60 percent of our small business lending is to LMI 
clients or communities. Approximately 40 percent of our small business 
clients are women and 13 percent of our small business clients are 
Hispanic, in-line with the nationwide averages for small business 
ownership. We serve over 1 million Hispanic business owners, making us 
a market share leader according to Deloitte.
    Capital Markets Activity
    Our capital markets businesses include Global Banking and Global 
Markets.
    Global Banking, which includes Global Corporate Banking, Global 
Commercial Banking, Business Banking and Global Investment Banking, 
serves middle-market and large corporate clients. We help clients raise 
capital and hedge risks. When markets are volatile and clients are 
trying to manage their business, they turn to us for help. When markets 
are stable and there is less client activity or volatility, our 
revenues may be lower.
    In 2020, we were the number three investment banking firm in the 
world with total investment banking fees of $7.2 billion, up 27 percent 
from the prior year primarily driven by higher equity issuance and 
underwriting fees as we provided clients access to markets.
    Our Global Markets business offers sales and trading services and 
research services to institutional clients across fixed-income, credit, 
currency, commodity, and equity businesses. Global Markets' product 
coverage includes securities and derivative products in both the 
primary and secondary markets.
    Since the financial crisis, we have positioned this business to 
deliver steady and sustainable returns across the range of market 
conditions, while taking less risk. Over the years, our performance 
bears that out. Over the past 5 years and with all of the volatility in 
markets and trading activities during that period, Global Markets has 
delivered annual sales and trading revenue within a range of $12.9 
billion and $15.2 billion. The average over that period was $13.6 
billion. This relative stability reflects our leadership positions 
across multiple products and our ability to maintain the appropriate 
business mix during market shifts.
    Our Global Markets business generated a 22 percent return on 
capital in the first quarter of 2021. This helped offset other segments 
that were more negatively impacted by the health crisis, reflecting the 
value of our diverse and complementary lines of business.
    Our goal for our Global Markets business is to be large enough to 
serve customers and clients in every major market around the world but 
not so large, risky, or volatile as to ever--even in the worst of 
times--hamper our ability to serve all our customers across every line 
of business.
    Through our focus on Responsible Growth, we manage our Global 
Markets business through a well-established risk framework and 
oversight. This naturally limits activities that are highly leveraged 
and concentrated. As one example of the impact of these strategies, 
Bank of America did not have any exposure to recent events involving 
Archegos Capital Management.
3. Grow Within Our Risk Framework
    Growing within our established risk framework is integral to how we 
drive Responsible Growth. Our principled approach to risk management 
allowed us to continue supporting our customers and clients against the 
backdrop of one of the worst economic declines in U.S. history, driven 
by the global pandemic.
    Our risk management begins with the board of directors. The 
directors set the risk appetite for the company. That cascades through 
the company and defines the risk we take in credit risk, operational 
risk, trading, or otherwise. The Enterprise Risk Committee of the board 
reviews dashboards quarterly to review compliance with the risk 
appetite.
    The risk function is an independent control function that is 
outside the lines of business hierarchies. The 7,000-plus teammates in 
the Risk & Compliance group report to the Chief Risk Officer, who has a 
reporting relationship to the Chief Executive Officer and to the 
Enterprise Risk Committee of the board. Other control functions, also 
outside the lines of business and reporting to the CEO, include the 
1,100 person audit team that reports to the Chief Auditor (who reports 
to the Audit Committee of the board), the Chief Financial Officer, the 
head of Global Human Resources, the Global General Counsel, and the 
Chief Technology and Operations Officer.
    We drive a culture of compliance and risk management deep into our 
company. To ensure that all employees across all levels are managing 
risk effectively, we conduct educational sessions and mandatory 
training on key risk types facing our company, including strategic 
risk, credit risk, market risk, liquidity risk, operational risk, 
compliance risk, and reputational risk. We also sustain an open 
environment in which employees are encouraged to identify, escalate, 
and debate potential issues.
    As a global systemically important bank, Bank of America's business 
operations, resiliency and financial strength have the potential to 
both bolster and affect the stability of the financial system and the 
economy as whole, as the current health crisis demonstrated. Managing 
systemic risk is a priority for Bank of America, as it is for our 
regulators. It important to both external stakeholders and the 
company's core business strategy. To avoid passing these risks onto the 
Government and taxpayers, Bank of America maintains billions of dollars 
in additional capital; plans extensively for the possibility of 
economic, financial or market stress; and expends substantial resources 
to meet heightened supervisory expectations for risk governance. As our 
balance sheet and external testing reflects, we are much stronger than 
we were 10 years ago, having transformed the company in the wake of the 
financial crisis: We reduced scope and complexity, improved risk 
management, and are fully committed to growing responsibly.
    Cybersecurity
    Cyberthreats are evolving and pervasive, and we continue to invest 
heavily in our cybersecurity capabilities to protect our clients and 
our company. That begins with the strength of our team, and over the 
past decade, we have doubled the size of our Global Information 
Security (GIS) team to nearly 3,000 teammates.
    Our cybersecurity framework is designed to prepare, prevent, 
detect, mitigate, respond to, and recover from cyberthreats. We 
maintain strong, ongoing relationships with Government partners, 
including the Department of Homeland Security, the Department of the 
Treasury, law enforcement, and the intelligence community. Coordination 
within our industry and across other industries is also critical to 
mitigating and managing today's cyber challenges. We continue to invest 
in partnerships to build a trusted community for cyberthreat 
information sharing, and are leading efforts across the financial 
services industry to define resilience and recovery in today's 
marketplace.
    We helped drive the creation of the first financial sector 
organization focused specifically on systemic risk and analysis, the 
Analysis and Resilience Center for Systemic Risk (ARC, formerly the 
Financial Systemic Analysis & Resilience Center). We hold or have held 
leadership/board positions in financial sector organizations working to 
improve the security and resilience of the sector. These include the 
ARC, FS-ISAC, FSSCC, and Sheltered Harbor.
    We also participate in industrywide exercises, along with 
Government partners, to test the resilience of our crisis management 
plans and response to threats and incidents. We are leveraging our 
leadership role to help ensure that the financial sector is truly 
resilient. We are also working with partners in the electricity and 
communications sectors on these topics, given our mutual dependencies 
with them.
    Compliance Commitment
    Since 2019, Bank of America has continued to take steps to improve 
compliance and prevent violations of laws and regulations. We have made 
important progress, and our work continues. Based on readily accessible 
public information, we entered into three settlements with Government 
regulators valued at greater than $1 million since the last hearing: 
(1) in June 2019 Merrill Lynch Commodities Inc. agreed to pay $36.5 
million to the U.S. Department of Justice and the Commodity Futures 
Trading Commission to resolve allegations that former precious metals 
traders misled the market for precious metals futures contracts; (2) in 
September 2019, Bank of America agreed to pay $4.2 million in back 
wages and interest to resolve allegations of hiring discrimination 
violations between 2008 and 2013 at six branches, as identified by the 
U.S. Department of Labor's Office of Federal Contract Compliance 
Programs; and (3) in December 2020, Merrill Lynch paid $2 million to 
the New Hampshire Bureau of Securities Regulation, and $24.3 million to 
an affected investor to resolve claims of unauthorized and excessive 
trading by a former financial advisor. To the extent a settlement 
included restitution to investors or consumers, the relevant terms are 
set forth in the respective settlement agreement. Two Foreign Exchange 
Consent Orders, one issued by the Office of the Comptroller of the 
Currency (OCC) and one by the Federal Reserve Board (FRB), were 
terminated in April and December of 2019, respectively.
4. Grow in a Sustainable Manner
    To drive Responsible Growth, we must ensure that our growth is 
sustainable. There are three complementary and interdependent tenets to 
how we approach sustainable growth: driving operational excellence, 
being a great place for teammates to work and sharing our success with 
our communities.
    Driving Operational Excellence
    Operational excellence is key to ensuring our growth is sustainable 
and instrumental to our success. It describes the ways in which we 
drive continuous improvement, reduce operational risk and seek to find 
faster, simpler, and more efficient ways of working and serving our 
clients. We then reinvest savings back into our team, our capabilities, 
our client experience, our communities and our shareholders.
    In 2015, we had $57 billion in expenses. In 2020, we had $55 
billion, including roughly $1.5 billion in net coronavirus-related 
costs. Compared with 2015, we have more customers and clients and more 
transactions--so more work. Yet compared with 2015, costs are down and 
client satisfaction is up. And over the same period, we invested about 
$18 billion in technology initiatives, provided companywide 
supplemental bonuses, increased our minimum hourly rate of pay for U.S. 
employees, opened 300 financial centers and refurbished 2,000 more. 
That's the power of operational excellence.
    This work is fueled by the ingenuity and creativity of our 
teammates, who continuously look for ways we can do things better. In 
total, we've approved nearly 8,600 of their ideas, which commit to 
delivering billions in expense savings. In 2020 alone, our team 
generated more than 1,700 ideas that helped us define commitments to 
save nearly $1 billion.
    Being a Great Place To Work
    Attracting and retaining the best talent is key to driving 
Responsible Growth and one of our top priorities. It helps us manage 
our operations, provide the best service for our clients, and support 
our communities.
    We strive to make Bank of America a great place to work for all 
teammates. And we fulfill this commitment by being a diverse and 
inclusive workplace, attracting and developing talent, recognizing and 
rewarding performance and supporting teammates' physical, emotional, 
and financial wellness. For additional information on these topics, 
including detailed metrics on workforce diversity, please see our 2020 
Human Capital Management Report, which is included with this testimony.
    In 2020, one of the most important ways we made our company a great 
place to work was by supporting the health and safety of our teammates 
during the health crisis, described earlier in this testimony.
    Diversity and Inclusion. Another way we make our company a great 
place to work is by fostering a diverse and inclusive workplace. We 
want our workforce to reflect the communities we serve across all 
dimensions. As highlighted in our 2020 Human Capital Management Report, 
we have continued to make progress in our goal to ensure diverse 
representation at all levels of our company. That begins with our 
board, which is 50 percent diverse and one of only a handful of S&P 100 
boards with six or more women. Looking across our company, 50 percent 
of our management team is diverse, more than half of our global 
workforce is women, and 45 percent of our U.S.-based teammates are 
people of color. And over the past decade, the number of people of 
color we hire in the U.S. from universities has increased by 50 
percent.
    In 2018, we made a 5-year commitment to hire and train 10,000 
employees from LMI communities through our Pathways program, a program 
designed to provide the opportunity for long-term careers. To date, 
we've already hired more than 11,000 teammates through the program--
well ahead of our commitment to do so by 2023.
    We also surpassed our 5-year pledge in 2014 to hire 10,000 
veterans, National Guard and reservists, and continue to maintain that 
hiring momentum today by attracting, developing, and retaining military 
talent.
    At the same time, we are focused on creating a culture of inclusion 
in which every employee can be their best. We currently have 11 
Employee Networks with over 340 local chapters across the globe. More 
than 90,000 of our teammates participate in at least one network, and 
our participation rate grew from 38.2 percent in 2019 to 42.7 percent 
in 2020. Additionally, our Courageous Conversations series helps us 
break down barriers, while driving greater accountability and action. 
Last year, we reached more than 165,000 employees through conversations 
with civil rights, social justice, and inclusion leaders focused on 
racial, social, and economic injustices.
    A Diverse and Inclusive Supply Chain. In addition to our focus on 
workplace diversity, we recognize the value of having and promoting 
diversity in our supply chain, and actively seek to do business with 
certified diverse businesses either directly or indirectly through our 
Supplier Diversity Program. Examples of diverse vendors include 
companies owned by minorities, individuals with disabilities, veterans, 
women, and lesbian, gay, bi-sexual, or transgender individuals. We also 
encourage supplier diversity by mentoring and developing certified 
diverse-owned businesses so that they can become qualified to provide 
products and services that meet our requirements.
    As part of our vendor Code of Conduct, we expect vendors to 
actively promote a diverse and inclusive environment through specific 
programs and initiatives to recruit, develop, and retain diverse talent 
of all types. We also expect vendors to measure and report on the 
success of their workplace diversity programs and initiatives. 
Additionally, we expect our vendors to have policies and procedures to 
drive, and report on, inclusion of certified diverse owned businesses 
in their own supply chains.
    We have taken additional steps to promote diversity and inclusion 
in the policies and practices of those with whom we do business, and 
throughout the broader economy. For example, our Chief Investment 
Office (CIO) has introduced initiatives to promote the representation 
of women and people of color among asset managers on our wealth 
management platform and across the industry. The CIO is now 
incorporating diversity analysis into the review and selection of all 
existing and new asset managers who are available to Merrill and Bank 
of America Private Bank clients.
    In 2020, the CIO Due Diligence team enhanced its investment process 
to evaluate all asset managers' policies and practices on diversity and 
inclusion at both their organizational and investment team levels. 
Going forward, this analysis will be used in the CIO team's overall 
investment assessments and factor into their level of conviction in 
investment strategies. In addition, this team will collaborate with 
asset managers and industry groups who are focused on developing 
investment solutions that serve to (1) aggregate and direct capital to 
diverse managers, and (2) provide capital to diverse-owned businesses 
and populations as part of their underlying investment mandates.
    Competitive Wages and Benefits. We want teammates who are invested 
in our company and our clients, and want to enjoy long careers with 
Bank of America.
    To do so, we provide competitive starting wage and benefits, and 
then continue to invest in our teams over time. This includes a 
progressive compensation model. Each year, teammates with lower 
salaries, on average, receive higher compensation increases as a 
percentage of salary when compared to employees with higher salaries, 
with the highest increases going to those teammates earning less than 
$50,000. You can see our average compensation growth rates broken down 
by salary in Chart 1 in the Appendix. This illustrates, for example, 
how a teammate who joined our company in 2010 at a salary below $50,000 
has, on average, seen a 7 percent increase in his/her comp each year 
since.
    In 2020, we moved our minimum hourly rate of pay for U.S. teammates 
to $20--roughly $42,000 per year--one year earlier than planned. And we 
recently committed to raising our U.S. minimum hourly wage to $25 by 
2025. Additionally, for teammates earning lower salaries, we provide 
higher company subsidies for medical premiums. For the tenth 
consecutive year, in 2022 there will be no increase in medical premiums 
for teammates earning less than $50,000.
    The employees of our vendors are also integral to our ability to 
serve and deliver for our customers. We have been working with vendors 
to ensure all of their employees within the U.S. who are working 
exclusively on our account receive competitive wages. All of our U.S. 
vendors are now required to pay their employees dedicated to the bank 
at or above $15 per hour. Today, over 99 percent of our more than 2,000 
U.S. vendor firms and 43,000 vendor employees are at or above the $15 
per hour rate, as a result of the implementation of this policy.
    We offer ongoing training and resources to support our teammates' 
continuous development. That includes providing up to $7,500 (up to 
$5,250 tax-free) tuition reimbursement per year for eligible 
undergraduate or graduate courses and discounts at a number of 
universities--plus free, unlimited individual academic advisory 
services. These resources help our teammates grow and thrive within our 
organization and, in 2020 alone, we helped more than 18,000 employees 
find new roles within the company.
    The many steps we took in 2020 to support our teammates helped them 
individually, and contributed to an even stronger company culture. In 
the most recent companywide survey, our employee engagement scores were 
at an all-time high. At the same time, by increasing our support for 
our teammates, we enabled them to better serve our clients and deliver 
for our communities.
    Compensation Policies. At Bank of America, we are committed to 
ensuring that all employees are compensated equitably and competitively 
based on market rates for their roles and their job performance. We 
regularly benchmark compensation against other companies, both within 
and outside our industry, to ensure that our pay is competitive with 
comparable roles in the market.
    This commitment to fair compensation has benefited all our 
employees, regardless of their position in the company. That includes 
our move to a minimum hourly rate of pay for U.S. teammates of $20, as 
described above, and our planned move to $25 per hour by 2025.
    For our senior-level employees, we have developed a strong pay-for-
performance governance framework that rewards long-term, sustainable 
results that are aligned with stockholder interests. And, for 2020, we 
recognized approximately 97 percent of our teammates globally with 
special compensation awards--the fourth year in a row we've done so.
    Consistent with the principles embedded in Dodd-Frank, including a 
requirement for an annual shareholder ``Say on Pay'' vote, the 
company's CEO is compensated through base salary, cash-settled 
restricted stock units, performance-restricted stock units and time-
based restricted stock units. From 2013 to 2020, CEO base salary was 
$1.5 million, while from 2010 to 2012 base salary was $950,000. The 
vast majority of CEO compensation (93.9 percent in 2020) was variable 
and directly linked to company performance. As has been the case since 
2010, all variable compensation was awarded in equity-based awards. 
Each year, the CEO pay structure is put before shareholders for an 
advisory Say on Pay vote. In our most recent annual shareholder meeting 
(2021), 94.4 percent of the 6.4 billion votes cast voted in favor of 
the structure. Since 2011, the shareholder vote in support of the 
company's compensation plan has averaged 94.2 percent.
    The CEO's direct reports receive a portion of their total 
compensation as base salary and the remainder as variable pay--a 
majority of which is delivered as deferred equity-based awards. 
Finally, the Board of Directors' Compensation and Human Capital 
Committee oversees all compensation plans and practices with periodic 
input from the Chief Risk Officer. Additionally, compensation plans are 
reviewed and certified annually by our risk management team and 
Management Compensation Committee of which the Chief Risk Officer is a 
member, and all variable pay awards are subject to clawback policies.
    In 2009, we made equity-based awards to executive officers and 
other key risk-takers subject to a performance-based clawback to 
encourage sustainable profitability over the vesting period. If losses 
occur during the vesting period, awards may be canceled in whole or in 
part. Also beginning in 2009, equity awards have been subject to a 
detrimental conduct clawback to encourage compliance with policies and 
appropriate behaviors. If an executive officer engages in detrimental 
conduct, unvested awards can be canceled and previously vested awards 
can be recouped. An additional recoupment policy, instituted in 2007, 
permits the Board to require reimbursement of any incentive 
compensation paid to an executive officer whose fraud or intentional 
misconduct caused the company to restate its financial statements.
    Our Corporate Governance Guidelines require the CEO to hold at 
least 500,000 shares of common stock, and for executive officers other 
than the CEO to hold at least 300,000 shares of our common stock. The 
Guidelines also require that (i) our CEO retain at least 50 percent of 
the net after-tax shares from future equity awards until 1 year after 
retirement and (ii) our other executive officers retain at least 50 
percent of the net after-tax shares until retirement. This ensures that 
executive officers have a significant and long-term financial stake in 
the company.
    Furthermore, since 2011, certain executive officers have received a 
portion of their incentive compensation in the form of performance 
restricted stock units (PRSUs). Our performance-based awards continue 
to use a re-earn approach, meaning 100 percent of the award is the 
maximum that can be earned, and vest only if performance standards are 
met over a 3-year period. Future performance below these standards will 
decrease the amount paid, and no PRSUs will be re-earned if results are 
below the minimum standards. As has been consistent practice, the 
Committee does not exercise discretion to change payouts.
    In 2016, our Incentive Compensation Forfeiture & Recoupment 
Disclosure Policy became effective. Pursuant to this Policy, we will 
disclose publicly the incentive forfeitures or clawbacks recovered from 
certain senior executives in the aggregate pursuant to our Detrimental 
Conduct and Incentive Compensation Recoupment policies, subject to 
certain privacy, privilege, and regulatory limitations.
    Bank of America is committed to equal pay for equal work through 
our pay-for-performance philosophy. We maintain robust policies and 
practices that reinforce equal pay for equal work, including reviews 
with oversight from our Board and senior leaders. We have a standard 
U.S. practice that restricts the solicitation of compensation 
information from candidates during our hiring process. This helps 
ensure that we consider new hires for their individual qualifications 
and roles, rather than how they may have been previously compensated. 
For over 15 years, we have conducted rigorous analysis with outside 
experts to examine individual employee pay before year-end compensation 
decisions are finalized, and we adjust compensation where appropriate. 
Results of our most recent review of employee compensation at Bank of 
America showed that compensation received by women is on average 
greater than 99 percent of that received by men, and compensation 
received by people of color is on average greater than 99 percent of 
non- people of color teammates, as validated by third-party analysis.
    In 2020, the CEO to median employee pay ratio was 274:1.
    Our compensation policies reflect the principles and requirements 
of Dodd-Frank. Transparent, equitable, competitive compensation is 
central to being a great place to work, which, in turn, is a 
fundamental element of Responsible Growth.
    Sharing Our Success With Our Communities
    One of the ways we ensure our growth is sustainable is by sharing 
our success with the communities in which we work and live and, at the 
same time, doing our part to deliver progress against society's biggest 
challenges. Last year, we significantly increased investments to do 
both.
    Our support for our communities begins with $250 million in annual 
corporate philanthropy. In 2020, as discussed previously, we added 
another $100 million to increase access to food and medical supplies. 
Individual giving by my teammates, combined with matching gifts from 
Bank of America, amounted to more than $65 million in additional 
philanthropic support in 2020. To maximize the impact of each employee 
gift, we lowered the employee matching gift minimum to $1 and doubled 
our match for employee donations to 17 organizations whose work aligns 
to our commitment to racial equality and economic opportunity, through 
2020.
    Beyond corporate philanthropy, as important as that is, we commit 
all of our resources and capabilities to help create positive change. 
We commit our operations, our human resources practices, our client 
financing capabilities and the guidance we provide to investor clients. 
We bring our $2.8 trillion balance sheet, our $55 billion expense base 
and the trillions of dollars we raise each year for our clients to the 
task. And we leverage the considerable ingenuity, innovation, and 
passion of our team.
    Our work to promote racial equality and economic opportunity, 
discussed earlier in this testimony, demonstrates how we align all of 
our resources to help drive tangible progress on major societal 
issues--and we take a similar approach in addressing the issue of 
climate change.
    The Path to a Low-Carbon, Sustainable Economy. We are committed to 
achieving net zero greenhouse gas emissions in our financing 
activities, operations, and supply chain before 2050. This is a focus 
that began many years ago at Bank of America. To accelerate the 
transition to a low-carbon, sustainable economy, we aim to deploy and 
mobilize $1 trillion by 2030 through our recently expanded 
Environmental Business Initiative to help our clients make a just 
transition. This opportunity is made possible by commitments that 
clients themselves are making, and our ability to help finance their 
commitments. This is part of a broader $1.5 trillion sustainable 
finance goal aligned to addressing the United Nation's Sustainable 
Development Goals (SDGs).
    To achieve our environmental targets and drive progress on this 
important issue, we take a ``whole of bank'' approach.
    First, we drive environmental sustainability in our own operations. 
We are carbon neutral today and continuously look for opportunities to 
reduce emissions across our global footprint.
    Second, we provide financing and our team's wealth of expertise to 
help small- and medium-sized companies refit their own operations to 
become more sustainable.
    Third, we help our larger corporate clients raise capital to fund 
the restructuring of their operations, new facilities and clean energy. 
That includes helping fossil fuel companies--and others with business 
activities related to ``brown energy''--make their own transition. We 
are a top underwriter in Environmental, Social and Governance (ESG) 
capital markets globally and a leading underwriter of green bonds. We 
have supported the sustainable business needs of more than 225 clients 
by raising in excess of $300 billion through more than 400 ESG-themed 
bond offerings--including green, social and sustainability bonds. We 
also raise equity for innovative new companies to fund their 
technologies and growth.
    Fourth, our Global Research team helps show investors the path 
toward companies that prioritize sustainability and other ESG 
priorities in their operations, supporting the flow of capital to those 
companies driving progress. And through our investment platform of over 
$3 trillion in customer assets, we bring capital from individual 
investors, from whom demand for ESG funds or similar investments is 
growing.
    All of these steps will help society's transition to a low-carbon 
economy, and we firmly believe the private sector is key to driving 
that transition. As more and our more of our customers and clients make 
their own environmental commitments, we are committed to helping them 
make this important change.
    Driving Profits and Purpose. The principles of stakeholder 
capitalism--a concept created by the World Economic Forum (WEF) half-a-
century ago, and discussed anew today by groups like the U.S. Business 
Roundtable--are embedded in Responsible Growth. We must deliver for our 
shareholders, our clients, our teammates, our communities and, at the 
same time, help deliver progress on important issues facing society. 
More details about our company's commitment to the principles of 
stakeholder capitalism are available in my 2020 Letter to Shareholders, 
which is included with this testimony.
    As a financial institution, our success has always been tied to the 
success of the communities and markets we serve. And we know from our 
own research that companies that focus on ESG issues tend to perform 
better over time than companies that do not. Our commitments to 
society's priorities are therefore complementary to the commitments we 
have to our shareholders.
    We know what society's priorities are: The countries of the world 
identified them in 2015, when nearly 200 countries agreed to the SDGs. 
The SDGs reflect 17 categories of societal priorities that address 
equality of opportunity, affordable housing, prosperity, access to 
clean water, renewable energy, and other priorities, with specific 
goals to be met. Leaders in each country agreed these goals are the 
ones we need to address to build a sustainable future and create 
opportunity and prosperity for all.
    Last year, the WEF's International Business Council, which I have 
the privilege to chair--working with the accounting firms Deloitte, EY, 
KPMG, and PwC--developed a set of Stakeholder Capitalism Metrics (SCM) 
aligned to the SDGs. These metrics create a consistent way of measuring 
companies' long-term value, across industries. This, in turn, helps 
direct investment toward high performers and align capital to progress 
on the SDG and ultimately defines stakeholder capitalism. It also 
aligns capitalism's innovation, its entrepreneurship and its massive 
resources to the progress, which won't be made without the private 
sector.
    To date, nearly 80 global corporations have agreed to implement 
reporting on the SCMs. Bank of America is one of those companies, and 
we published select SCMs in our 2020 Annual Report for the first time. 
We believe disclosing our progress against the SDGs creates public 
transparency and accountability in how we deliver for society.
    We embrace our dual responsibility to drive both profits and 
purpose.

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                                 ______
                                 
                 PREPARED STATEMENT OF JAMES P. GORMAN
          Chairman and Chief Executive Officer, Morgan Stanley
                              May 26, 2021
    Chairman Brown and Members of the Committee, thank you for having 
me here. Last year, none of us could have predicted the extraordinary 
public health crisis that would unfold around the world.
    We remain in the midst of this 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--
        airline, cruise, and travel. Our team also helped raise health 
        care 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 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 and help them raise equity and debt capital--from 
        taking a company public to helping it issue bonds so that it 
        can grow and create jobs. We help public sector entities raise 
        municipal financing. We also help pension funds, mutual funds, 
        and other financial institutions trade and manage their assets.

    In our other two businesses--Wealth and Asset Management--
        we are managing 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 employees. For millions of U.S. households, our services 
        help families save money--whether for college, retirement, or 
        to put a downpayment on their mortgages.

    Beyond our day-to-day core businesses, we also support the more 
vulnerable in our communities through philanthropy 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 over the past year include:

    Providing grants to Minority Depository Institutions to 
        bolster their loan loss reserves in the wake of the pandemic, 
        and to assist minority- and women-owned businesses to ensure an 
        equitable recovery; and

    Starting 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.

    In addition, we are concerned that how we deal with climate risk 
over the next decades will have a profound socioeconomic effect on our 
communities. Morgan Stanley recognizes the threat that climate change 
poses--and we are working with our clients to find ways to mitigate its 
effect.
    Finally, early in the pandemic, we committed to making no 
reductions in our workforce through 2020, thereby providing reassurance 
to our 70,000+ employees in a very difficult time. I am proud of the 
commitment they have shown to our clients and to Morgan Stanley in the 
extraordinary circumstances of the past year.
    Chairman Brown, in your letter dated May 7, 2021, you asked me to 
provide information on additional topics, which are included in the 
attached addendum.
    I now look forward to your questions.

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              Additional Material Supplied for the Record

 LETTER SUBMITTED IN SUPPORT OF THE VETERANS AND CONSUMERS FAIR CREDIT 
                                  ACT

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