[Senate Hearing 117-751]
[From the U.S. Government Publishing Office]






                                                        S. Hrg. 117-751 

             ANNUAL OVERSIGHT OF THE NATION'S LARGEST BANKS

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

                                HEARING

                               before the

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

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                                   ON

           EXAMINING OVERSIGHT OF THE NATION'S LARGEST BANKS

                               ----------                              

                           SEPTEMBER 22, 2022

                               ----------                              

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








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                                                S. Hrg. 117-751


             ANNUAL OVERSIGHT OF THE NATION'S LARGEST BANKS

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

                                HEARING

                               before the

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

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             SECOND SESSION

                                   ON

           EXAMINING OVERSIGHT OF THE NATION'S LARGEST BANKS

                               __________

                           SEPTEMBER 22, 2022
                               __________

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



[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




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






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                 U.S. GOVERNMENT PUBLISHING OFFICE
                 
53-677 PDF               WASHINGTON : 2023 



























            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

                 Dan Sullivan, Republican Chief Counsel

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                        Pat Lally, Hearing Clerk

                                  (ii)






























                            C O N T E N T S

                              ----------                              

                      THURSDAY, SEPTEMBER 22, 2022

                                                                   Page

Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    58

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

                               WITNESSES

Charles W. Scharf, CEO and President, Wells Fargo & Company......     7
    Prepared statement...........................................    62
    Responses to written questions of:
        Chairman Brown...........................................   211
        Senator Cortez Masto.....................................   215
        Senator Cramer...........................................   218
        Senator Menendez.........................................   220
        Senator Sinema...........................................   226
        Senator Warnock..........................................   228
        Senator Warren...........................................   234
Brian Thomas Moynihan, Chairman and CEO, Bank of America.........     8
    Prepared statement...........................................    83
    Responses to written questions of:
        Chairman Brown...........................................   240
        Senator Cortez Masto.....................................   249
        Senator Cramer...........................................   251
        Senator Daines...........................................   253
        Senator Menendez.........................................   254
        Senator Sinema...........................................   256
        Senator Warnock..........................................   257
        Senator Warren...........................................   261
        Senator Scott............................................   267
Jamie Dimon, Chairman and CEO, JPMorgan Chase & Co...............    10
    Prepared statement...........................................   107
    Responses to written questions of:
        Chairman Brown...........................................   270
        Senator Toomey...........................................   276
        Senator Cortez Masto.....................................   282
        Senator Cramer...........................................   284
        Senator Daines...........................................   285
        Senator Menendez.........................................   286
        Senator Sinema...........................................   287
        Senator Warnock..........................................   289
        Senator Warren...........................................   291

                                 (iii)

Jane Fraser, CEO, Citigroup......................................    11
    Prepared statement...........................................   121
    Responses to written questions of:
        Chairman Brown...........................................   298
        Senator Cortez Masto.....................................   303
        Senator Cramer...........................................   304
        Senator Daines...........................................   305
        Senator Menendez.........................................   306
        Senator Sinema...........................................   307
        Senator Warnock..........................................   308
        Senator Warren...........................................   309
William H. Rogers, Jr., Chairman and CEO, Truist Financial 
  Corporation....................................................    13
    Prepared statement...........................................   134
    Responses to written questions of:
        Chairman Brown...........................................   312
        Senator Cortez Masto.....................................   319
        Senator Cramer...........................................   321
        Senator Menendez.........................................   323
        Senator Sinema...........................................   325
        Senator Warnock..........................................   327
        Senator Warren...........................................   330
Andy Cecere, Chairman, President, and CEO, U.S. Bancorp..........    14
    Prepared statement...........................................   166
    Responses to written questions of:
        Chairman Brown...........................................   373
        Senator Warren...........................................   379
        Senator Menendez.........................................   381
        Senator Cortez Masto.....................................   382
        Senator Sinema...........................................   384
        Senator Warnock..........................................   385
        Senator Cramer...........................................   386
William S. Demchak, Chairman, President, and CEO, The PNC 
  Financial Services Group.......................................    16
    Prepared statement...........................................   187
    Responses to written questions of:
        Chairman Brown...........................................   387
        Senator Cortez Masto.....................................   394
        Senator Cramer...........................................   396
        Senator Daines...........................................   398
        Senator Menendez.........................................   399
        Senator Sinema...........................................   400
        Senator Warnock..........................................   402
        Senator Warren...........................................   404

              Additional Material Supplied for the Record

CEO-To-Worker Pay Ratios at the Nation's Largest Banks...........   462
Forced Arbitration and Big Banks: When Consumers Pay To Be Ripped 
  Off............................................................   463
Letter Submitted by National Committee for Religious Freedom.....   470


 
             ANNUAL OVERSIGHT OF THE NATION'S LARGEST BANKS

                              ----------                              


                      THURSDAY, SEPTEMBER 22, 2022

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., in room 216, Hart Senate 
Office Building, Hon. Sherrod Brown, Chairman of the Committee, 
presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The Committee on Banking, Housing, and 
Urban Affairs will come to order. Today's hearing is a hybrid 
format. Witnesses are in person. Thank you to all seven of you 
for joining us, and I know yesterday was a long, grueling day. 
Today will be shorter, if nothing else, so thank you for giving 
us your time.
    Members have the option, however, to appear either in 
person or virtually. There will be good turnout on both sides, 
and I assume most of our colleagues in both parties will be 
here in person.
    For too long, everyone called this Committee simply Senate 
Banking, because it always delivered for Wall Street. We 
changed that, as the Senate Banking, Housing, and Urban Affairs 
Committee. We put the Main Street economy, and the workers who 
power it, at the center of everything we do.
    Part of that commitment is to hear directly from the 
biggest banks that hold so much power in this economy. It is 
our job to hold them accountable to their workers, to their 
customers, and to the American people. Today, we will continue 
a tradition we started last year, and hear from the CEOs of the 
Nation's seven biggest retail banks.
    After years of consolidation and concentration, through 
banking crises and rubber-stamped mergers, your banks dominate 
the banking industry. Together, you have over $13 trillion--$13 
thousand billion--in assets. That is half the Nation's GDP. You 
have hundreds of millions of customers.
    You also have the benefit of a Federal back, a safety net, 
something that your customers do not have. Your decisions 
affect millions of peoples' lives--whether they can get their 
paycheck, how much it will cost to use their hard-earned money, 
whether they can save for retirement or their children's 
education, whether they can buy a house or make their rent 
payment. And you profit from all those transactions to the tune 
of hundreds of billions of dollars. With those profits, and 
with the taxpayer support you get, come a responsibility to 
actually serve your customers and the larger economy.
    And I think you know you do not always hold up your end of 
the bargain. All of your banks have promoted, for example, 
Zelle, the payment app that most of you own. You pushed this on 
customers, but you have not taken responsibility for the fraud 
that it has perpetuated.
    We all know about Wells Fargo's fake account scandal. And 
we have learned that Wells was not alone. In the never-ending 
quest for short-term profits, it turns out that other banks 
pressured their employees to open false checking and credit 
card accounts.
    Customers who trust you to look out for them ended up with 
unjustified fees, damaged credit reports, and accounts they did 
not want, or in many cases did not even know about.
    It is even worse for Black and Brown borrowers. Too often 
they walk into many of your banks not knowing if their check 
will be cashed or if they will be able to open an account. When 
mortgage rates were at record lows, many of you were more 
likely to deny mortgages for Black and Brown borrowers, making 
it even harder for these families to build wealth through 
homeownership.
    You focus on loans to wealthy clients with massive stock 
portfolios, and at least one of you has complained about the 
paperwork on mortgages or small business loans for Main Street.
    And when consumers try to hold you accountable for cheating 
them out of their money, you subject far too many of them to 
forced arbitration. You take away people's choice on how to 
pursue justice because as we all know if there is one thing 
Wall Street hates, it is real consequences.
    And it is not just the outright scams and fraud that damage 
our economy. It is your entire business model, with short-term, 
quarterly profits as the Holy Grail.
    I have talked with workers in Ohio and across the country, 
in places that so often get passed over for investment. They 
tell me about the challenges they have with the banking system. 
They have watched your banks let them down, time and time 
again.
    It is why so many people do not trust the financial system. 
They have been burned over and over by second-chance accounts, 
foreclosures, late fees, overdraft fees. They have been turned 
down for loans. They have seen branches close. They have been 
scammed out of their money.
    Yesterday, I spoke to an Ohioan whose accounts were 
illegally frozen by one of your banks. She had zero access to 
her funds for a whole week, and the bank intended to take $442 
out of her account, leaving her with nothing.
    So it is not surprising that more and more Americans turn 
to shady payday lenders or risky crypto apps. They feel like 
they do not have any other choice when they have bills piling 
up and need to come up with the money.
    Over a third--and you have heard this number--over a third 
of Americans report they would not be able to cover a $400 
expense in an emergency--think of that, if their car breaks 
down, if they lose their job, if their child needs surgery or 
something.
    All of you make tens of millions of dollars a year--150 to 
900 times what your median employee makes. You do not think 
twice about $400. That is not a luxury that most Americans 
have. They do not get the same breaks you do. During the 
pandemic, the Federal Reserve waived overdraft fees for you, 
for banks, yet none of you waived those fees for your customers 
in 2020.
    And it is not just your customers who have to make tough 
choices because of decisions that you make. It is also your 
workers.
    You spend your billions in profits on exorbitant executive 
pay and stock buybacks instead of investing in your workers, 
your customers, your communities. You say that you provide your 
workers with good pay and benefits, but how does it feel as a 
worker to be pressured to open fake accounts, or to deny 
services to someone who walks in the door who does not look 
like you--hardly a culture promoting the dignity of work.
    Do not take it from me. Listen to what bank workers have 
said.
    From one Wells Fargo worker: ``We want the customer base to 
know we are forming a union really for them. We are tired of 
having our name dragged through the mud at Wells Fargo because 
of things that we have asked to have more control over, but the 
company refuses to give us that control.''
    But it is not just Well Fargo. Another worker said, ``They 
keep telling us we no longer have sales goals but we are given 
expectations as far as loan volume, new accounts, day-one 
mobile activations. Not meeting these expectations will result 
in disciplinary action.'' They added, ``But the loyalty and 
responsibility I feel for my customers keeps me fighting every 
day.''
    Just trust us, you say. We are making changes. We do not 
need Government watchdogs. We do not need regulations.
    But trust goes both ways. With crisis after crisis, with 
scandal after scandal, the biggest Wall Street banks have lost 
the trust of the American people. And as super regional banks 
get bigger and more complex, they are starting to look more and 
more like Wall Street.
    I expect all of your banks to buildup capital, and use it 
to invest in communities, not just your shareholders, not just 
your own compensation, and we expect you to treat your 
customers fairly. We expect you to take steps to make banking 
work better for your customers and your workers. Steps like 
eliminating overdraft and excessive fees, lowering the costs of 
basic bank accounts, ending forced arbitration, offering 
affordable home loans to all eligible borrowers in all 
communities. It means paying your workers, including 
contractors who feed you, contractors who clean your offices, 
contractors who keep your banks and offices safe, paying them a 
living wage.
    Some of your banks have taken positive steps to eliminate 
some fees and give consumers more power and choice over their 
own money. We thank you for that. Some of your banks have made 
commitments to increase your workers' wages. We thank you for 
that. That is a good start. These positive steps need to be 
part of a real commitment for changing how Wall Street does 
business, not just one-offs.
    You are among the most powerful people in this country, in 
our economy. Your entire industry and its substantial safety 
net are supported by American taxpayers. It is past time for 
the financial industry to be as good to the American people as 
the country has been to each you.
    We will continue to hold you to the highest standards so 
that Americans can keep more of their hard-earned money.
    Ranking Member Toomey.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman. Welcome back to 
many of the witnesses. Welcome for the first time to some.
    Today's hearing presents an opportunity to discuss the role 
of the Nation's largest banks. At the outset, let me 
acknowledge what should be obvious: banks are essential for 
supporting the economy and advancing American competitiveness.
    Their core functions of taking deposits, making loans, and 
processing payments, and in several cases, underwriting and 
making markets in securities, these all help to safeguard 
savings and provide credit, which enables economic growth. With 
nearly $13 trillion in combined assets and operations ranging 
from mortgage banking to small business lending, the banks here 
today make vital contributions to the Nation's prosperity.
    But where I see a system at the heart of free enterprise, I 
worry other policymakers see opportunity for social 
engineering. There are activist regulators and some of my 
colleagues who see banks as a tool by which they can advance 
their social policy.
    Unfortunately, there is a growing trend among some banks--
several of whom are represented here today--of inserting 
themselves into highly charged social and political issues 
really unrelated to their businesses. Banks' willingness to 
help liberal policymakers achieve their goals makes it very 
difficult to mount a principled defense against such 
politicization.
    Some of my colleagues are pressuring banks to use both 
their balance sheets and their influence to address issues 
wholly unrelated to banking, such as global warming, gun 
control, voter rights, even abortion. Several large banks have 
been too willing to acquiesce to these demands by embracing an 
ESG agenda that is harmful to America.
    Nearly every bank at this hearing has pledged to meet a 
``net zero'' greenhouse gas emission goal by 2050, with several 
making even more specific commitments. But absent some major 
technological breakthrough, carrying through on such pledges 
will eventually lead these banks to artificially restrict, 
reduce, or even cutoff funding for traditional energy projects.
    Despite statements to the contrary, none of this really has 
much to do with borrowers' credit quality or so-called 
transition risk. It is because activists have made the 
traditional energy sector politically disfavored.
    We are witnessing the folly of such policy right now in 
Europe, which strangled its own fossil energy sector and now 
finds itself deeply reliant on Russia for gas. Does anyone 
really believe that as the U.S. experiences 40-year high 
inflation we should exacerbate the problem by reducing oil and 
natural gas production and increasing energy prices? But that 
is exactly what will happen if banks follow through with their 
``net zero'' pledges and ESG agenda, as environmental activist 
groups have urged them to do.
    When you combine that with the SEC's proposed climate 
disclosure rule, these ``net zero'' pledges are setting up 
banks for lawsuits and legal liability. Apparently some banks 
may be starting to acknowledge this reality.
    A report in the Financial Times this week says some banks 
are considering leaving the so-called ``Net-Zero Banking 
Alliance,'' a UN-sponsored group that intends to name and shame 
banks that do not meet net zero pledges. In my view, it was a 
mistake to join this group in the first place, but for the sake 
of shareholders and the U.S. economy, banks distancing 
themselves now would be a welcome step.
    In addition, banks have inserted themselves into 
contentious social issues, and in some cases, even made 
business decisions based on these factors. For example, several 
banks responded to pressure from Democrats in the wake of the 
Supreme Court's Dobbs decision by very publicly pledging to pay 
for the costs of their employees to travel to have abortions. 
This decision is certainly an individual bank's choice, but it 
does raise a number of questions, including, have these same 
banks also committed to pay the costs for their female 
employees facing unplanned pregnancies to place their children 
up for adoption?
    Notably, when it comes to the right to keep and bear arms, 
which is an actual constitutional right, some banks have gone 
out of their way to make it harder for law-abiding Americans to 
exercise this right, from stopping the financing of 
manufacturers of so-called military-style firearms for civilian 
use to de-banking retailers that sell firearms to customers 
under 21 years of age, even when such sales are lawful.
    I cannot help but observe that when banks do choose to 
weigh in on these highly charged social and political issues, 
they always seem to always come down on the liberal side of the 
political spectrum.
    Beyond the examples I have already given, there are others. 
Banks that have opined on abortion, but not religious liberty. 
Banks that have expressed support for voting access, but are 
silent on voting security. Banks that have expressed support 
for DACA, but I have not heard much about border security.
    So in my view it is bad business to alienate roughly half 
the country, but you are private companies and are free to 
opine as you see fit. But it is no wonder that there has been a 
backlash from policymakers in States like Texas, West Virginia, 
and Florida.
    If banks do not cease and desist from weighing in on social 
and cultural issues, do not be shocked if Republicans, once 
back in power nationally, seek to pressure banks to advance 
their goals. Now I would oppose such efforts, just as I oppose 
similar efforts by liberals. But once the precedent is set, the 
potential for future abuse is limitless.
    Throughout this Congress, I have repeatedly warned about 
the politicization of our financial regulators and our central 
bank. I have emphasized that addressing political issues 
requires difficult decisions involving tradeoffs. In a 
democratic society, those tradeoffs must be made by elected 
representatives who are accountable to the American people.
    Today, I am raising similar concerns about the 
politicization of our Nation's banks. Just as regulators and 
central bankers are not elected by the American people, neither 
are bank CEOs.
    So banks are currently at a critical crossroads: accept the 
role that some liberals prefer which is to have your 
institutions implement social policy on behalf of the State, or 
embrace your history as drivers and promoters of free 
enterprise and stay out of highly charged social and political 
issues.
    I strongly suggest you choose the latter path, and I 
suggest that if you do not, you do risk being treated as public 
utilities, by both parties, in the future.
    Chairman Brown. Thank you, Senator Toomey.
    Let me introduce the seven witnesses, starting with Mr. 
Scharf.
    Mr. Charles Scharf has been CEO of Wells Fargo since 
October of 2019. Welcome, Mr. Scharf.
    Brian Moynihan has been CEO of Bank of America since 2010. 
Mr. Moynihan, welcome.
    Jamie Dimon has been CEO of JPMorgan Chase since 2005. Mr. 
Dimon, welcome.
    Jane Fraser was named CEO of Citigroup in September 2020. 
Ms. Fraser, welcome.
    William Rogers, the CEO of SunTrust since January 2012, was 
named CEO of Truist in September 2021, following the merger of 
BB&T and SunTrust. Welcome, Mr. Rogers.
    Mr. Andy Cecere has had a long career at U.S. Bank, joining 
U.S. Bank in 1985, becoming CEO in 2017. Welcome, Mr. Cecere.
    And William Demchak worked at JPMorgan Chase before joining 
PNC in 2022, when he was named CEO several years later. Mr. 
Demchak, welcome.
    I would like each of you, if I could, if you would, stand 
and take an oath. Raise your right hands, please.
    Do you swear or affirm that the testimony that you are 
about to give is the truth, the whole truth, and nothing but 
the truth, so help you God?
    Mr. Scharf. I do.
    Mr. Moynihan. I do.
    Mr. Dimon. I do.
    Ms. Fraser. I do.
    Mr. Rogers. I do.
    Mr. Cecere. I do.
    Mr. Demchak. I do.
    Chairman Brown. Thank you very much.
    Mr. Scharf, is Wells Fargo too broken to fix?
    Senator Reed. Do they not have statements?
    Chairman Brown. Oh, I am sorry. You did not do the 
statements yet. I apologize. Thank you, Jack.
    Senator Reed. I think they know the first question.
    Chairman Brown. I guess you know the first question.
    Mr. Scharf, you begin, please.

STATEMENT OF CHARLES W. SCHARF, CEO AND PRESIDENT, WELLS FARGO 
                           & COMPANY

    Mr. Scharf. Thank you, Chairman Brown, Ranking Member 
Toomey, and Members of the Committee. Good morning and thank 
you for the opportunity to be here today.
    Since October of 2019, I have had the privilege of leading 
Wells Fargo. I reflect on my time at the company. I am 
incredibly proud of how we used our financial strength during 
difficult times to support our customers, employees, and 
communities we serve while we have worked to transform the 
company at the same time.
    I believe that our Nation benefits from a strong Wells 
Fargo, and it has never been more true than today. The last 
time I appeared before this Committee the country was in the 
middle of a pandemic, and my testimony and many of your 
question focused on what banks were doing to support the 
communities in which we operate. Those were important questions 
then and they are equally important today, given the 
complexities of the high inflationary environment.
    Since 2020, Wells Fargo has provided billions of dollars in 
emergency lending to America's small businesses. We donated 
approximately $420 million in fees from that lending to small 
business owners who struggled during the pandemic through our 
Open For Business Fund. These funds are estimated to have 
reached more than 150,000 business owners nationally, and 
preserve approximately 250,000 jobs.
    Last year alone, we helped more than half-a-million 
homeowners with new, low-rate loans to purchase a home or 
refinance an existing mortgage, and we closed billions of 
dollars in new commitments for affordable housing.
    Between 2017 and 2021, we increased average wages for our 
U.S. hourly employees by nearly 25 percent, and increased 
investments in our U.S. employee benefits by 20 percent, and we 
launched a unique special purpose credit program, committing 
$150 million to help eligible Black homeowners lower their 
interest rates and reduce their monthly payments.
    In addition, we issued a second sustainability bond in the 
amount of $2 billion that will finance projects and programs 
supporting housing affordability, economic opportunity, 
renewable energy, and clean transportation.
    Our work is bolstered by our Banking Inclusion Initiative, 
a 10-year program to help unbanked individuals gain access to 
affordable, mainstream, digitally enabled accounts.
    Though our work is not complete, Wells Fargo approaches 
issues differently and is a better company than when I arrived. 
We have driven a tremendous amount of change and established a 
much stronger foundation for the long term, with a clear sense 
of urgency on building our risk and control infrastructure.
    We have changed our operating structure, simplified our 
businesses, and have a new leadership team in place with the 
necessary skills and experience to transform Wells Fargo. 
Almost 70 percent of our company's Operating Committee is new 
since I joined. Additionally, well over half of the senior-most 
people in the company, meaning those one level below the 
Operating Committee, are new to their roles. We have also 
meaningfully improved diversity in our senior ranks.
    Additionally, last week we announced that we will 
commission an external, third-party racial equity audit. The 
assessment will focus on elements of Wells Fargo's efforts to 
serve diverse communities and promote a diverse workforce. 
Commissioning this work is a critical next step in reinforcing 
our commitment to racial equity and helping close the wealth 
gap in this country.
    Looking forward, I recognize that the country may be facing 
uncertain economic times for months to come. I can assure you 
that Wells Fargo is keeping a close eye on consumer spending 
and credit trends and that we will continue to be a 
constructive partner in forging an inclusive recovery. We 
recognize that COVID-19 has left many people still in need, and 
the current inflationary environment has added stress. As a 
company we will continue to provide support to our customers, 
employees, and communities we serve over the long term.
    In conclusion, I want to express my sincere gratitude to 
everyone at Wells Fargo who has continued to serve our 
customers and each other as well as our communities through 
these challenging times. I appreciate their dedication and 
resiliency as we have worked to make Wells Fargo better. While 
we still have much work to do, our foundation is stronger, our 
business is more focused, we are driving cultural change, and 
the changes we have made to the company are making a positive 
impact. I am confident that we have the management team in 
place to complete the work ahead.
    Thank you, and I welcome your questions.
    Chairman Brown. Thank you, Mr. Scharf.
    Mr. Moynihan, welcome.

 STATEMENT OF BRIAN THOMAS MOYNIHAN, CHAIRMAN AND CEO, BANK OF 
                            AMERICA

    Mr. Moynihan. Thank you, Chairman Brown, Ranking Member 
Toomey, and distinguished Members of the Committee. Good 
morning to all of you. It is an honor to be here to represent 
my 210,000-plus teammates at Bank of America and talk to you 
about how we deliver Responsible Growth.
    This is how we run our company. We deliver for our clients, 
our teammates, our communities, and our shareholders. We are 
delivering both profits and purpose. That includes being a 
great place to work, with a core tenet of Responsible Growth. 
We invest heavily in our teammates and their families.
    This year we raised our minimum hourly wage to $22 an hour, 
and are on track to increase it to $25 an hour by 2025. We also 
made an across-the-board pay adjustment to all U.S. employees 
who earn less than $100,000, increasing their wages by 3 to 7 
percent based on the years of service. This is above and beyond 
the business-as-usual pay cycle.
    For the fifth time this year we delivered special 
compensation awards to our teammates worth $1 billion, that 
went to 97 percent of our employees. We did not raise medical 
premiums for teammates who earned under $50,000, the 12th year 
in a row we have done that. Our global workforce is 50 percent 
women, and 49 percent of our teammates are people of color. Our 
management team is 55 percent diverse, including 32 percent 
women. Our board is 53 diverse, including 33 percent women.
    We continue to help our clients manage their financial 
lives. Over the past year alone, our lending to individuals and 
families grew by 9 percent, our loans to small businesses grew 
by 8 percent, and our small business line of business we have 
$22 billion in outstanding loans today.
    Our brand and customer scores are the best sustained shape 
we have ever seen. We support our clients, with $1 trillion in 
loans, and we hold $1.9 trillion in their deposits, all to help 
them live their financial lives.
    Ninety-five percent of our PPP loans have been paid off or 
forgiven. We continue to expand our nationwide network of 
financial centers and invest heavily in our industry-leading 
and award-winning digital capabilities. Through both, we 
deliver transparent, easy-to-use products that serve to help 
our customers save, spend, and borrow.
    As an example, beginning in 2009, we began to take steps to 
empower our clients to reduce overdraft usage. We first 
eliminated overdraft fees for clients when using debit cards at 
the point of sale, and have not allowed opt-in for over a dozen 
years. We also created no-overdraft-fee accounts, and now have 
4 million of those accounts. We have since eliminated fees for 
nonsufficient funds in our consumer deposit accounts. We 
reduced overdraft fees from $35 to $10 per occurrence, and we 
removed the ability to overdraft at the ATM.
    The second quarter call reports by the regulators show our 
nonsufficient funds and overdraft fees are down 66 percent from 
last year's second quarter, and they will continue to fall as 
the rest of the program is put in during the quarter.
    Responsive growth also shows where we have an impact in the 
communities where we live and work. In 2021, we continued our 
long record with $375 million in charitable giving. My 
teammates reported 1.6 million volunteer hours across our 
franchise.
    We continue to be a lender in support of small businesses 
and entrepreneurs in our communities. We provide more than $2 
billion to CDFIs to finance affordable housing, community 
facilities, and small businesses. We invested in the common 
equity of dozens of minority depository institutions, and we 
have over $100 million in deposits for those institutions.
    We committed $350 million to 100 private equity funds. 
Those funds are operated by minority and woman entrepreneurs, 
and they providing funding to minority- and women-operated 
companies. Nearly 1,000 companies have been invested in by 
those funds.
    Responsible Growth requires the support of clients of every 
size and every sector to support a just transition to a 
sustainable future and energy security for the U.S. and around 
the world. We believe that capitalism remains the best way, and 
the only way, to tackle the challenges facing society and the 
transition to a secure energy environment. The private sector 
simply has the funding, the scale, the long-term thinking to 
help these toughest issues.
    In 2021, we had $250 billion in loans and other support to 
clients in the area of sustainable finance. This includes $150 
billion focused on clean energy transition. We work with 
companies in all sectors, including oil and gas clients who are 
investing to help drive clean energy. I joined Senator Cramer 
in North Dakota to talk about carbon capture, and we are 
investing in a company we met there.
    Responsible Growth also means delivering for our 
shareholders. We delivered strong profitability, returned 
billions of dollars to our shareholders in dividend stock 
repurchase. This is Responsible Growth. This is capitalism in 
action.
    Thank you, and we look forward to our discussion.
    Chairman Brown. Thank you, Mr. Moynihan.
    Mr. Dimon, you are recognized.

 STATEMENT OF JAMIE DIMON, CHAIRMAN AND CEO, JPMORGAN CHASE & 
                              CO.

    Mr. Dimon. Chairman Brown, Ranking Member Toomey, and 
Members of the Committee, I appreciate the opportunity to talk 
about JPMorgan Chase, the role of America's largest banks as a 
force for good for the country, its citizens, and the global 
economy.
    We live in the greatest country in the world, built on 
foundational principles of freedom of speech, freedom of 
religion, freedom of enterprise, the sanctity of the 
individual, and the promise of equality and opportunity for 
all. These core values are the fabric that binds us Americans, 
where the best of what we are shines through, especially in 
times of adversity.
    This system has created what is still the most prosperous 
and innovative economy the world has ever seen, one that 
nurtures vibrant businesses, large and small, and is a 
welcoming environment for innovation, science, and technology. 
My enduring faith in the strength of the country remains as 
strong as ever.
    The free flow of credit and investments is key to our 
Nation's global competitiveness. Free enterprise is the 
flywheel of the economy as capital seeks out investments, 
individuals, and ideas that drive growth and innovation. And 
free enterprise celebrates and is inseparable from human 
freedom and innovation, which ultimately are the stimulus for 
all human progress.
    The secret sauce of free enterprise is not the free 
movement of capital but importantly the value of knowledge and 
free people exercising their rights. What this country needs 
most is free enterprise, extraordinarily competent Government 
and policies, and more civic-minded companies and citizens.
    The work we do at JPMorgan Chase matters in good times but 
particularly in tough times. We provide critical financing to 
nearly every sector, including manufacturing, service, energy, 
real estate, and transportation. We finance Federal, State, 
local governments for infrastructure projects and we finance 
schools, bridges, hospitals, and universities.
    We have long championed the central role of banking in a 
community as potential for bringing people together, to enable 
companies and individuals to reach for their dreams, and for 
being a source of strength in difficult times. We finance 
America's ambitions with loans for homes, autos, and growing a 
small business, and provide value, products, and services to 
more than half of American households. We know that our 
business is only as strong as our communities so we are focused 
in lifting up traditionally underserved communities by 
increasing home ownership, expanding affordable rental housing, 
and growing small business.
    The last few volatile years have brought stress and 
disruption to many, as the world grapples with war in Ukraine, 
economic volatility and inflation, economic insecurity, climate 
change, and a pandemic. It has also shown what great companies 
of the size and scale of JPMorgan Chase can do as a source of 
strength for the economy. Because we have a strong and healthy 
company, we can consistently serve and finance American 
households and businesses while building our communities and 
protecting America and the American economy.
    As guardians of the financial system, we support our 
Government and national security efforts to combat financial 
crimes and to carry out complex sanctions. Each year we 
practically identify Nation State and cyber-criminal threats 
and work closely with the Government to help protect critical 
infrastructure, and we fuel good American jobs. The businesses 
we finance collectively employ hundreds of millions of 
Americans, and as a large employer ourselves, we employ people 
in every State in the country with starting wages that far 
exceed any Government minimum wage, plus full benefits, 
retirement, job training, and career opportunities.
    I want to close by thanking the more than 280,000 employees 
of JPMorgan Chase. I want the public to know how proud I am of 
all of you who work in every State in this country, the work 
that you do tirelessly for our customers with a singular focus 
of doing the right thing. You work on behalf of our 
shareholders, real people in our communities including 
teachers, law enforcement, health care workers, and people 
saving for retirement.
    Many of you have faced personal challenges through the 
pandemic, whether it was your own health or the health of a 
loved one, or managing your children's education and child care 
needs. At the same time, our work has never been more important 
or more difficult than the last several years. You continued to 
persevere with the grace and fortitude that makes me 
extraordinarily proud.
    I have been particularly moved by our essential worker 
population, the tens of thousands of you who continued to come 
to work during the height of the pandemic to serve our 
customers when they needed you the most. You have my deep 
gratitude, and for all JPMorgan Chase employees who performed 
your jobs with integrity and excellence every day, you embody 
the best of American values and make your country proud.
    Thank you, Members of the Committee, for the work you do 
for our country. I look forward to working with all of you to 
solve the challenges facing our country and help grow and 
safeguard the economy.
    Chairman Brown. Thank you, Mr. Dimon.
    Ms. Fraser, you are recognized.

            STATEMENT OF JANE FRASER, CEO, CITIGROUP

    Ms. Fraser. Thank you very much, Chairman Brown, Ranking 
Member Toomey, and Members of the Committee. Good morning and 
thank you very much for the honor of representing Citigroup 
today.
    When a similar group convened with this Committee last 
year, we shared how our banks supported the economy during the 
global pandemic. Today, while the worst of COVID may be behind 
us, the economic challenges we are facing are no less daunting. 
The reforms you put in place and the work we have done since 
the financial crisis to strengthen our banks' financial 
foundation have enabled us to continue to be a source of 
stability.
    While today I am a proud American citizen, as someone who 
grew up in the U.K. I can attest to the strength and the fact 
that the banking system in the USA and the capital markets here 
in the States, they are the envy of the world. Our financial 
institutions and our financial markets are essential to 
American competitiveness, both abroad and here in the U.S., and 
they are the reason why the U.S. is such a top destination for 
foreign direct investment.
    As living expenses for Americans increase and concerns 
about the economy grow, we remain focused on our role as a bank 
in job and in wealth creation. Through Citi's extensive global 
network and footprint we partner with the most iconic American 
institutions and businesses as well as the Federal Government 
to help them navigate the global economy. We have been 
supporting our clients so that they build resiliency, they 
reconfigure supply chains, and they adapt to inflationary 
pressures. And we help these institutions invest in projects 
that put them in a position to succeed in the 21st century, and 
these investments put a lot of people to work here in the 
States.
    The private sector clients we serve are where millions of 
Americans proudly earn their living, and those clients rely on 
vendors and suppliers that, in turn, employ millions more. And 
at Citi, we employ 70,000 people here in the U.S., working in 
cities across the country such as Sioux Falls, Tucson, and 
Newark.
    The work we do with our public sector partners is a prime 
example of how we put our balance sheet to work to benefit 
local communities. In 2021 alone, we partnered with State and 
local governments to catalyze more than $27 billion in 
infrastructure investment such as schools, hospitals, and 
roads. And many of these large projects would not have been 
possible without a bank of Citi's scale to back them. We 
financed more than $5.6 billion in affordable housing projects 
last year in communities across 32 States, from California to 
Ohio to New York, and this total made us the number one 
affordable housing lender in the U.S. for the 12th year in a 
row.
    Breaking down barriers to banking is also a top priority 
for us. In fact, this past summer we became the first of the 
largest U.S. banks to completely eliminate overdraft fees and 
returned item fees for our customers, and earlier this year we 
launched a first of its kind Diverse Financial Institutions 
Group to lead our engagement with minority depository 
institutions and diverse broker-dealers and asset managers. 
This group is focused on helping these diverse institutions 
scale and expand into new markets, and includes a 
groundbreaking rotational program that embeds Citi executives 
within the MDIs, and that is for up to a year.
    So bottom line, my Citi colleagues and I understand and 
embrace the responsibility that banks play in advancing 
economic empowerment and mobility. I hope my pride in Citi's 
story has come through, but I also want to be clear about 
recognizing the need to continue improving, as we strive to 
build a safer and sounder bank for the future.
    Thank you for the opportunity to speak with you about the 
work that we are doing to support American consumers and 
businesses, and I look forward to your questions. Thank you.
    Chairman Brown. Thank you, Ms. Fraser.
    Mr. Rogers, you are recognized for 5 minutes. Thank you.

 STATEMENT OF WILLIAM H. ROGERS, JR., CHAIRMAN AND CEO, TRUIST 
                     FINANCIAL CORPORATION

    Mr. Rogers. Thank you, Chairman Brown, Ranking Member 
Toomey, and Members of the Committee. Good morning. I am Bill 
Rogers. I am the Chairman and CEO of Truist, and I am proud to 
be here today on behalf of our 50,000 teammates. Thank you for 
this opportunity to testify today.
    Truist is a purpose-driven company, and that purpose is to 
inspire and build better lives and communities. This drives 
Truist's mission for our teammates, for our clients, and the 
many communities and stakeholders that we serve.
    For our teammates, our mission is to create an inclusive 
and energizing environment that empowers teammates to learn, 
grow, and have meaningful careers. Truist's minimum starting 
pay rate of $22 an hour is among the highest in the industry. 
Our career development programs provide a pathway to 
professional growth. They include offerings at the Truist 
Leadership Institute as well as tuition reimbursement for 
education that supports career advancement.
    We also accelerated career development for Truist leaders 
from diverse backgrounds, which has helped us meet our goal of 
15 percent diverse representation in leadership roles a year 
ahead of our original goal.
    To help ensure our teammates' financial security extends 
into retirement, we offer eligible teammates both a defined 
benefit pension plan and a 401(k) match, at perhaps the highest 
levels in the industry.
    For our clients, our mission is to provide distinctive, 
secure, and successful client experience through touch and 
technology. We recently launched Truist One Banking, which 
includes two new deposit accounts with no overdraft fees as 
well as other features to accelerate our clients' journey 
toward financial well-being.
    Today, 87 percent of our clients interact with us 
digitally. We are evolving our products and services to help 
ensure we continue to offer a best-in-class client experience 
that is intuitive, efficient, and secure. Client security is a 
Truist priority, and my written testimony outlines actions we 
are taking to protect our clients. We welcome opportunities to 
work more closely with law enforcement and policymakers at 
every level to help protect our banking system from organized 
and sophisticated criminal attacks.
    Even when most client interactions occur digitally, 
exceptional client service often requires the personal touch 
that our Truist teammates provide. Personal touch made the 
difference for many of our clients navigating the PPP process. 
At the outset of the pandemic and in the middle of our merger, 
thousands of teammates worked directly with their business 
clients to meet their fast-changing financial needs. I am 
extremely proud and appreciative of the client letter we 
received, thanking our teammates for helping secure PPP loans 
that kept their small businesses open and their employees 
employed.
    For the many other stakeholders we serve our mission is to 
optimize long-term value through safe, sound, and ethnical 
practices. Truist is a Main Street bank. Our teammates serve 
our clients at more than 2,000 branches in 17 States and 
Washington, DC. We are committed to being a good neighbor and 
contributing back to the communities where we do business. In 
2019, we committed to a $60 billion Community Benefits Plan, 
which included mortgage lending for low- and middle-income 
borrowers, commitments to small businesses, and community 
development lending, community development grants, as well as 
the establishment of 15 new branches in LMI communities.
    I am pleased to report through August 2022, we estimate 
that our combined lending, investing, and philanthropic 
financing activities have already exceeded this commitment, and 
we will open 16 new branches in LMI or majority-minority 
communities by the end of this year.
    In addition, Truist has been a strong supporter of MDIs and 
CDFIs. In 2020, a $40 million Truist donation helped establish 
CornerSquare, a new nonprofit that provides capital to racially 
and ethnically diverse small business owners. In 2021, Truist 
committed $50 million to serve as an anchor investor, along 
with Microsoft, on the FDIC's Mission Driven Institution 
investment fund. And in June, Truist committed an additional 
$120 million to strengthen and support small businesses with a 
focus on Black, Latine, and women-owned businesses.
    In conclusion, I want to thank all of our Truist teammates 
for the purposeful way that they serve our clients and our 
communities and each other. They inspire me every day, and I am 
honored to lead this company.
    Thank you for this opportunity to share our purpose 
journey, and I look forward to answering your questions.
    Chairman Brown. Thank you, Mr. Rogers.
    Mr. Cecere, welcome.

 STATEMENT OF ANDY CECERE, CHAIRMAN, PRESIDENT, AND CEO, U.S. 
                            BANCORP

    Mr. Cecere. Good morning, Chairman Brown, Ranking Member 
Toomey, and distinguished Members of the Committee. Thank you 
for inviting me to speak with you today.
    U.S. Bank is based in Minneapolis, Minnesota, and holds one 
of the longest active banking charters in the United States. We 
have spent nearly 160 years serving individuals, families, 
businesses, and communities, and striving to be a responsible 
and innovative leader in the financial services industry.
    At U.S. Bank we operate a simple, straightforward company, 
with four core businesses: consumer and business banking, 
corporate and commercial banking, payment services, and wealth 
management and investment services. We have earned a reputation 
for being well-managed, financially sound, and responsible in 
our approaches to underwriting and risk, and this is reflected 
in our high debt ratings.
    These achievements are possible only because of our 70,000 
exceptional team members. We work hard to take care of their 
needs and invest in their career growth and development. This 
commitment has been further reflected in our newly expanded 
leave benefits and our recently announced increase in entry-
level pay.
    Thanks to our incredible team, we provide exceptional 
banking experience to our customers. Our retail banking 
services are accessible when, where, and how our customers 
prefer, whether virtually or in-person in one of our retail 
branches, which we operate in 26 States.
    There are a few areas of our retail banking business that I 
want to highlight today. First, we have pioneered several 
digital enhancements. In addition to our award-winning mobile 
app we created a tool for our bankers to co-browse remotely 
with their customers on video. This solution helps customers 
feel heard and understood when they need help making important 
financial transactions.
    Second, we made it easier for individual customers and 
small businesses to access credit. I know policymakers on this 
Committee have been seeking a short-term, low-cost, small-
dollar solution for people who have emergency cash needs. Four 
years ago we provided a solution for our customers. Our simple 
loan product allows customers to receive a loan of up to $1,000 
in a matter of minutes on our mobile app.
    We have similarly streamlined our services for small 
businesses. We now can process and fund a small business loan 
in less than 15 minutes.
    Third, we are working to make home ownership a reality for 
more Americans across both rural communities and in our 
country's cities. One such initiative we have launched is 
Access Home, a program designed to increase Black home 
ownership by engaging with community partners. We continue to 
provide mortgage servicing to local housing finance authorities 
as we did throughout the pandemic, and we are a leading FHA 
lender.
    Our commitment to serving the financial needs of Americans 
truly includes all Americans. We recognize that being a good 
corporate citizen goes well beyond providing world-class 
financial services. In 2021, we developed Access Commitment, a 
multi-dimensional initiative to work to close the racial wealth 
gap across communities.
    Fulfilling these commitments is important to me, and we 
have made substantial progress. Last year, we provided nearly 
$200 million in capital to Black-owned or led businesses and 
organizations. We made $305 million in loan commitments to 
CDFIs, and we have made supplier diversity a priority, and we 
are spending nearly $500 million annually in that area.
    Still, we have pledged to do more. In addition to our 
commitment to close the racial wealth gap, U.S. Bank is also 
committed to promoting diversity. This commitment starts with 
me, and I have seen first-hand the benefits of championing 
diversity at U.S. Bank. Diversity strengthens our businesses, 
attracts talent, and allows us to better serve our customers. 
Our efforts in this area have been recognized. Earlier this 
year, DiversityInc named U.S. Bank to its top 50 companies for 
diversity for the fourth year in a row.
    In closing, we believe relationships are a key 
differentiator for our bank. That is why we are taking the best 
of our person-to-person interactions and enhancing them with 
new digital capabilities to connect our customers with their 
trusted partners and advisors. Today, as always, our focus is 
on serving people. Relationships are the center of our business 
and the core of the communities we serve, and that commitment 
will never change.
    With that, thank you for your time and for the work you do 
for your country. I look forward to your questions.
    Chairman Brown. Thank you, Mr. Cecere.
    Mr. Demchak, welcome.

STATEMENT OF WILLIAM S. DEMCHAK, CHAIRMAN, PRESIDENT, AND CEO, 
                THE PNC FINANCIAL SERVICES GROUP

    Mr. Demchak. Thank you, Chairman Brown, Ranking Member 
Toomey, and the distinguished Members of the Committee. I am 
pleased to be here today on behalf of PNC.
    PNC is a Main Street bank. We are not a Wall Street bank. 
My office is on Fifth Avenue, but Fifth Avenue in Pittsburgh. 
We are essentially in the same business as we have been in for 
170 years since we founded the bank. We help customers save 
money, borrow money, and move money.
    We are a large bank by historical standards but we are just 
one-sixth the size of some of the institutions represented on 
this table. We have limited capital markets, derivate and 
foreign operations. PNC is not a global, systemically important 
bank.
    What we are is a financially strong and resilient bank that 
is committed to serving our consumers in a fair and transparent 
way. I am proud that PNC was the first large bank to modify its 
overdraft practices. Since the rollout of what we call Low Cash 
Mode, our overdraft fees have dropped by nearly 50 percent and 
continue to fall.
    We have also made it easier for consumers to send and 
receive payments. PNC, along with other owner banks of Early 
Warning Services developed and rolled out Zelle, a real-time 
P2P payment platform. Zelle provides consumers with a free and 
convenient way to send money to individuals and businesses. And 
despite the headlines, disputes within the Zelle network make 
up less than 10 basis points of all transactions. This is not 
true of other regulated P2P platforms. In one instance, one of 
those platforms has 13 times, at least in the case of PNC, 13 
times the amount of disputes as the Zelle network.
    Better, however, is not good enough, and scams, in 
particular, continue to grow across our financial ecosystem. 
Scams are different than fraud, traditional fraud, in that a 
bad actor gets a consumer to initiate the transaction 
themselves. These scams are growing daily, and the industry 
regulators and legislators need to respond. It is not enough to 
apportion the blame after the fact. We need to stop fraud and 
scams before they occur.
    Secure networks like Zelle, Real-Time payments and 
potentially FedNow allow for direct authentication with a host 
bank. They also allow members of the network to identify, 
close, and police against scam accounts. This is not the case 
with nonbank networks. These networks are not held to the same 
security standards as banks. When a scam occurs, banks like PNC 
have zero visibility into where the money went, we have zero 
visibility to get the money back, and we have zero ability to 
close those bad accounts.
    Banks follow the standards set under Gramm-Leach-Bliley, 
and we are regularly, if not continually, examined for 
compliance. Nonbank data aggregators are not subject to 
examination and supervision. Instead, they hold the financial 
data of tens of millions of U.S. consumers, and rely on 
something called ``screen scraping'' to gather and sell that 
consumer information.
    Twelve years ago, the CFPB was given authority based on 
1033 of Dodd-Frank to end screen scraping, to secure data, and 
to stop the reselling of confidential consumer data through the 
fintech ecosystem. Essentially, they were given the authority 
to stop scams before they occur. This has not happened, and 
consumers are paying the price.
    PNC has had a social purpose since the day it was founded. 
As a service organization, we believe our success is directly 
tied to the success of our customers and communities. We 
succeed when our customers and communities thrive and when our 
employees feel valued and are rewarded for helping fulfill our 
purpose.
    Our commitment to our communities is reflected in PNC's 
outstanding rating under the Community Reinvestment Act, a 
rating that we have enjoyed since that was enacted 40 years 
ago.
    We also succeed by being diverse and inclusive, which 
starts at the top of the organization. Half of our independent 
directors and half of my direct reports are women or people of 
color.
    I am honored to be here today and represent the 60,000 
employees who work hard every day to serve our customers and 
deliver for our communities. It is a fairly safe assumption 
that all of our constituents are as divided on their views of 
today's challenges as everybody else in our country. Our job as 
a bank, and my job as a leader, is not to arbitrate on who is 
right or wrong, but rather to find common ground and to deliver 
on our promise to serve customers, to keep them safe, and to 
provide capital to our great economy so that everyone may 
prosper.
    Thank you, and I welcome any questions you may have.
    Chairman Brown. Thank you, Mr. Demchak.
    Mr. Scharf, is Wells Fargo too broken to fix?
    Mr. Scharf. Chairman Brown, I am very confident that we 
have made changes which will enable us to put all of our 
historical problems behind us. As I mentioned in my testimony, 
we are an entirely different company today. We have a new 
management team. We have changed our processes. The plans that 
we have in place, across all of the identified historical 
issues, are being executed upon. And the team that we have 
working on this has the experience and the knowledge to get the 
work done.
    Chairman Brown. Thank you. It just seems to a lot of us, 
CEO after CEO, year after year, scandal after scandal, nothing 
at Wells Fargo seems to improve.
    Let me go down the line. I will ask a series of yes-or-no 
questions. You all have a legal and moral responsibility to do 
right by your workers and your customers and expand access to 
affordable banking to everyone. Yet ordinary Americans still 
are denied basic access that all of us here take for granted. 
Ensuring fair access to banking requires your management teams 
to make it a central focus. I am going to ask questions with 
that in mind, how you can better serve your customers and 
workers. And please answer yes or no.
    Starting again with Mr. Scharf, will you eliminate all 
forced arbitration clauses which take away a consumer's choice 
on how best to pursue justice with a bank? Yes or no.
    Mr. Scharf. No.
    Chairman Brown. Mr. Moynihan.
    Mr. Moynihan. For bank products we eliminated it many years 
ago.
    Chairman Brown. Mr. Dimon.
    Mr. Dimon. No.
    Chairman Brown. Ms. Fraser.
    Ms. Fraser. No.
    Chairman Brown. Mr. Rogers.
    Mr. Rogers. We allow consumers of our new products to opt 
out of arbitration.
    Chairman Brown. Mr. Cerere.
    Mr. Cecere. No.
    Chairman Brown. Mr. Demchak.
    Mr. Demchak. We allow consumers to opt out.
    Chairman Brown. Raise your hands if you are committed to 
fighting against discrimination?
    [Show of hands.]
    Chairman Brown. Thank you. Thus, therefore, I think I can 
count on your support, right, for the Fair Access to Financial 
Services Act, which would prohibit banks and other financial 
institutions from discriminating on the basis of race, color, 
religion, national origin, or sex, the Fair access to Financial 
Services Act. Mr. Scharf, will you support it?
    Mr. Scharf. I do not know the specifics of it, but the 
things you mentioned, absolutely.
    Chairman Brown. Mr. Moynihan?
    Mr. Moynihan. The principles we already regulate to but I 
do not know the specifics of the act.
    Chairman Brown. Mr. Dimon?
    Mr. Dimon. Exactly the same position.
    Chairman Brown. Ms. Fraser?
    Ms. Fraser. Yes, the same position. We do not know the 
specifics but we endorse the principles.
    Chairman Brown. Mr. Rogers?
    Mr. Rogers. We endorse the principles you just outlined, 
but I am not aware of the specifics of that act.
    Mr. Cecere. Consistent, Chairman. We endorse the principles 
as well, and I do not know the specifics.
    Chairman Brown. Mr. Demchak?
    Mr. Demchak. The same. Thank you.
    Chairman Brown. OK. I think you all have really good staff, 
and I would have thought you would know more about a bill like 
that before you come in front of the Committee, but we will 
follow up.
    Next question. I will start from the right, Mr. Scharf, so 
you do not have to start this time.
    Mr. Denchak, is your bank opening unauthorized bank 
accounts?
    Mr. Demchak. I am sorry. Can you repeat that?
    Chairman Brown. Is your bank opening unauthorized bank 
accounts?
    Mr. Demchak. No.
    Chairman Brown. Mr. Cecere?
    Mr. Cecere. Chairman Brown, we regret, and I take full 
responsibility that we did open up unauthorized bank accounts. 
It is going back to 2010. It is unacceptable. It is 
inconsistent with our principles and procedures as well as our 
ethics. We identified 342 accounts over that time, and that is 
against a population of 40 million opened accounts. We took 
remediation, we took care of the customers, we corrected the 
credit polls, and we reimbursed any fees. We also made sure 
that we strengthen our policies and procedures back in 2016, 
and that plan is what we are consistently going to continue to 
do on a go-forward basis.
    Chairman Brown. And you will no longer open unauthorized 
accounts, I assume, for that answer?
    Mr. Cecere. That is not tolerated.
    Chairman Brown. Thank you. Mr. Rogers?
    Mr. Rogers. We do not tolerate the opening of unauthorized 
accounts, and we have extensive training policies with our 
teammates.
    Chairman Brown. Ms. Fraser?
    Ms. Fraser. We do not believe that we have opened any 
unauthorized accounts. Thank you.
    Chairman Brown. Mr. Dimon?
    Mr. Dimon. I certainly hope that we do not. We have 
procedures in place to stop it, and if someone violated those 
procedures they probably would not be at the company.
    Chairman Brown. Mr. Moynihan?
    Mr. Moynihan. We have procedures. There was a massive 
review done of all our banks in the mid-2010 to 2020 decade, 
and we run those procedures every day.
    Chairman Brown. Mr. Scharf?
    Mr. Scharf. We have made a host of changes from process to 
control to cultural changes to do everything to ensure that 
that does not happen.
    Chairman Brown. Thank you. Starting again with Mr. Denchak, 
will you commit today to fight fraud in the Zelle platform by 
giving your customers their money back? Yes or no.
    Mr. Demchak. We return money today for fraud. Scam is a 
different issue, and the Zelle network and the owners are 
working to improve--to get all customers' monies back.
    Chairman Brown. Mr. Cecere?
    Mr. Cecere. We also reimburse for fraud and unauthorized 
transactions, and we are working hard to work with our 
customers to educate them on scam issues.
    Chairman Brown. Understanding that people listening that 
with the exception of one of you, you are the owners of Zelle. 
Mr. Rogers?
    Mr. Rogers. We reimburse for unauthorized, and we will work 
together, and we do a lot of education for our clients to help 
avoid criminal activity.
    Chairman Brown. Ms. Fraser?
    Ms. Fraser. Fraud is obviously a top concern for us. We 
take it seriously. We reimburse the unauthorized transactions.
    Chairman Brown. Mr. Dimon?
    Mr. Dimon. We reimburse unauthorized, and we take a lot of 
activities to make sure that authorized transactions are not 
scams.
    Chairman Brown. Mr. Moynihan?
    Mr. Moynihan. We reimburse today for unauthorized 
transactions, and like Mr. Dimon said, we send out notices and 
everything to avoid----
    Chairman Brown. Mr. Scharf?
    Mr. Scharf. We also reimburse for unauthorized 
transactions, and we, as a company, and certainly across EWS, 
we are all working toward reducing scam, to try and drive it 
out of the systems.
    Chairman Brown. OK. Last question in my remaining 20 
seconds or so. Yes-or-no question. I asked this question last 
year. Will you remain neutral if your employees try to 
unionize? Mr. Scharf?
    Mr. Scharf. We believe that we should have a direct 
relationship with our employees. No.
    Chairman Brown. Mr. Moynihan?
    Mr. Moynihan. We will operate as far as shareholders, our 
customers, and employees within what the law allows us to do.
    Chairman Brown. Mr. Dimon?
    Mr. Dimon. No.
    Chairman Brown. Ms. Fraser?
    Ms. Fraser. We will not commit to being neutral.
    Chairman Brown. Mr. Rogers?
    Mr. Rogers. We will not obstruct any activity, but we 
cannot be neutral to the benefits of Truist and what we offer.
    Chairman Brown. Mr. Cecere?
    Mr. Cecere. We will not retaliate. We will continue and 
expect to be close to our employees, but we will abide by the 
law.
    Chairman Brown. Mr. Demchak, from the union town of 
Pittsburgh?
    [Laughter.]
    Chairman Brown. That was a little bit of dig----
    Mr. Demchak. No, we would not obstruct, but of course, I 
would be in conversations with our customers about it. So yes, 
we would be involved.
    Chairman Brown. And the last statement. I will ask you, if 
I had more time, about supporting the child tax credit. You 
have often come in front of us talking about tax reform, and 
the child tax credit meant a lot of money for those 6 months, 
those payments of the families of 2 million children in my 
State alone. It meant a lot of money in your accounts. And I 
would ask you, not in a question now, but to support the 
extension of the child tax credit and what it means.
    Senator Toomey.
    Senator Toomey. Thank you, Mr. Chairman. Mr. Dimon, I 
suppose you have been dealing with bank regulators for most of 
your adult life. Do you believe that the U.S. banking 
regulators have the statutory authority to determine how 
quickly America transitions to a low-carbon economy?
    Mr. Dimon. I do not.
    Senator Toomey. I do not either.
    Mr. Dimon. That is your authority.
    Senator Toomey. That is the way I see it. But here is one 
of my concerns. I am concerned about the enormous power that 
some of the regulators have, especially the Fed, and power that 
is exercised in an opaque fashion. And so my question is, I am 
not accusing anybody at the Fed of anything, but do they, as a 
practical matter, have the power that if they wanted to they 
could effectively pressure financial institutions into 
directing capital where they want it?
    Mr. Dimon. So speaking for myself, they are my judge, my 
jury, and my hangman. They pretty much can do what they want 
unless constrained by you. So yeah, if they wanted to come up 
with ways to do some of those things they could easily do that.
    Senator Toomey. Yeah. So one of the concerns that I have is 
the interest that some have to use the financial regulators, 
especially in the climate space. In Europe, of course, the ECB 
has broader authority than our Fed has, and they are pursuing 
this very aggressively.
    I worry that the Fed's decision to join the Network of 
Central Banks and Supervisors for Greening the Financial System 
and the ongoing development of these climate risk scenario 
analyses are a precursor to regulatory edicts, or at least 
pressure to de-bank energy companies, and that would be 
exercising a power that they do not legally have.
    Let me move on to the issue of some of America's largest 
money managers. We know that these managers routinely vote the 
shares that they hold, including the shares they hold on behalf 
of their customers, and they do that including for those shares 
invested in passive index funds. With $22 trillion in assets 
and an average of 25 percent of the votes at S&P 500 company 
shareholder meetings, a handful of asset managers can have, it 
seems to me, a huge impact on companies' decisions.
    Mr. Rogers, let me ask you, do you agree that the largest 
asset managers are capable of exercising significant influence 
over public companies?
    Mr. Rogers. Ranking Member, thank you for that question, 
and we want to engage with all of our shareholders. We want to 
engage with them individually, the largest and the smallest 
shareholder today. And certainly those who own more shares have 
more influence.
    Senator Toomey. Well, so one of my concerns is that the 
largest asset managers in the country have joined the Net Zero 
Asset Managers Initiative, that explicitly states as its goal a 
``stewardship and engagement strategy with a clear escalation 
and voting policy that is consistent with our ambition for all 
assets under management to achieve net zero emissions by 2050, 
or sooner.''
    Here is the problem. These large asset managers have 
enormous sway by virtue of the volume of votes they can cast, 
even though they do not even really own many of those shares. 
And, of course, control, if that sway goes to the level of 
control, then there are significant ramifications, legal and 
regulatory, especially if that control is exercised over 
financial institutions. So I have my staff looking into this 
issue with the intent of producing a report on this later.
    Mr. Denchak, there are folks, including prominent 
regulators, who seem to believe that large regional banks, 
although not as big as G-SIBs, are already too big to be 
resolved in the event of a crisis, and therefore, they just 
have to be sold to one of the other banks represented at this 
table.
    Correct me if I am wrong. Is it true that your bank is 
required to submit a resolution plan to the Fed and the FDIC 
every 3 years?
    Mr. Demchak. Yes. We have done so for 10 years.
    Senator Toomey. OK. Did any of those plans that you 
submitted contemplate, as the sole resolution, a Government 
bailout or the wholesale sale to one of these other banks?
    Mr. Demchak. No. It is pretty easy to draw circles around 
our regions and sell them.
    Senator Toomey. Now the regulators are fully authorized to 
reject a submitted plan if they thought it was not credible or 
otherwise deficient. Have the regulators ever rejected your 
plan?
    Mr. Demchak. No.
    Senator Toomey. So it seems to me that the approval of your 
plan is at least a tacit admission that there is a credible 
resolution plan----
    Mr. Demchak. Yes.
    Senator Toomey. ----that has been articulated.
    And so let me make a final point here. Some seem to think 
that additional regulation and added capital requirements, 
there is no cost, so why not? It seems to me that there is a 
cost of adding unnecessary capital requirements on already 
well-capitalized institutions. Could you share with us your 
perspective on what is the downside of having unnecessarily 
high capital requirements?
    Mr. Demchak. Well, in this instance it would crowd out 
other financings that are needed in the market. It is also 
making it more expensive and difficult for us to lend at a time 
when our country needs it. The cost of capital went up. Funds 
are being used for something other than supporting our economy. 
It does not make sense to me.
    Senator Toomey. Thank you. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey.
    Senator Reed, from Rhode Island, is recognized.
    Senator Reed. Thank you very much, and I want to thank the 
panel for your excellent testimony.
    Yesterday the Federal Reserve announced another three-and-
a-quarter percent increase in the interest rate to 3.25 
percent, and with these higher interest rates obviously the 
industry has collected--all right. I will get closer.
    All right. Let us begin again. Thank you for being here.
    Interest rates are going up. I will cut to the chase. 
Interest rates are going up, but deposit rates, what you pay 
for your deposits are rarely stagnant, very, very low. And it 
raises the question, making a substantial amount of money on 
these increased rates, why are you not beginning to raise 
interest rates on deposits? And I will start with Mr. Scharf 
and go down.
    Mr. Scharf. Senator, thank you for the question. We are 
beginning to raise rates. We have products that have a range of 
alternatives, I think up to a peak of 1.5 percent as of the 
other day. And as rates continue to rise we would expect to 
continue to increase the rates that we pay our customers.
    Senator Reed. Mr. Moynihan?
    Mr. Moynihan. The rates are already increasing on deposit 
accounts, and that will take place as the rate structure 
settles in. You can look back in history and see it. And then 
on top of that, remember that for corporates and affluent 
clients, they will go and buy treasures and other things 
direct, so their money is moving outside the system. And so if 
you spot-judge it now you will see a low rate structure. It 
will increase over time. And then people forget zero-interest 
checking accounts, or zero-interest, in any rate, environment, 
that is what changes the rate calculation that many people 
cite.
    Senator Reed. Mr. Dimon?
    Mr. Dimon. Exactly the same as my two colleagues here.
    Senator Reed. Thank you. Ms. Fraser?
    Ms. Fraser. Yes. We have a broad range of different deposit 
products, and we are anticipating a continued rise in the 
deposit rate.
    Senator Reed. Mr. Rogers?
    Mr. Rogers. We are anticipating that we would have an 
increase in our rates on our deposit products. We have a wide 
range of products, and we also offer a lot of services other 
than rate paid to our clients. We want to make sure that we 
continue to focus on those as well.
    Mr. Cecere. Consistent with that answer, Senator, we offer 
a wide range of rates, and I would expect them to increase in 
the future.
    Senator Reed. And finally, Mr. Demchak?
    Mr. Demchak. Senator, it is an incredibly competitive 
market. We have raised rates. Rates will continue to go up in 
line with what the Fed is doing.
    Senator Reed. Well thank you. I want to go back to 
something that we talked about last year, and that is the 
legislation that Chairman Brown and I submitted that would 
establish a nationwide 36 percent interest rate cap. Our goal 
is, frankly, to eliminate, if we can, predatory lending. I 
think even in this rising interest rate environment you have 
been able to make substantial profits without even approaching 
36 percent interest rate. So I think the number is a valid one.
    As you know, we already have that protection for service 
men and women through the Defense Department and the efforts we 
have done with the Military Lending Act.
    Last year, when I brought up the issue, there was a 
consideration that the principle was sound but you had to look 
at it. You have had a year to look at it, so would you be able 
to operate successfully under a 36 percent interest rate, and 
as such, would you support this legislation? And I will begin 
with Mr. Scharf.
    Mr. Scharf. Senator, we still continue to believe that what 
you are trying to solve for is something that we should be 
supportive of, and we would just want to make sure that in 
whatever legislation was prepared there was contemplation of 
all the rate scenarios, to ensure that this did not result in 
the reduction of credit in any way for the population you are 
trying to help.
    Senator Reed. Mr. Moynihan?
    Mr. Moynihan. Senator, similar to my colleague, at the end 
of the day this is really relevant to our company in terms of 
rate structure and things. But I would always caution to be 
careful what you wish for. If you do this outside our industry 
and other places, does it constrain credit? And I think that is 
a judgment that you all have to make. But in terms of just a 
simple number, you know, it is not relevant to us. We do not 
have anything like that.
    Mr. Dimon. Yeah, Senator, I totally applaud the effort to 
stop payday lenders, and I think we should try to do things 
like that. And I think in certain products and services, 36 
percent absolutely works.
    I just want to give you one example. If we modify it, you 
can make it work. A lot of you want to do small loans for 3 
months, 4 months. So a $400 loan, for 4 months, 3 months, it 
will cost us $40 just to process the loan, no interest rate. 
But because the $40 cost goes into the APR, that would come out 
as 40 percent. So if we changed it to the marginal cost of 
processing a loan plus 12 percent, we would definitely be 
willing to do something like that to help customers.
    Senator Reed. Thank you. Ma'am?
    Ms. Fraser. Similarly, we do not charge 36 percent interest 
rates and completely agree with the principle of the 
legislation. As my colleague said, the details matter, and we 
want to make sure that there are not areas that would 
inadvertently constrain credit, particularly to the more LMI 
borrowers. And I am always very happy to work with your office 
to help achieve the spirit of the legislation.
    Senator Reed. And my time has expired, so a very short 
answer.
    Mr. Rogers. We would certainly look at the legislation, and 
I would have the same concerns about small-dollar lending, to 
make sure that stays within the banking system. And anything 
that discourages it, to leave the banking system, we would be 
against.
    Mr. Cecere. Short-term cash needs are an important 
priority. Four years ago, working with our regulators, we 
developed our simple loan product, which offers the structure 
that is well below $50 for the average loan versus $350 for 
payday lenders.
    Mr. Demchak. I do not have anything new to add.
    Senator Reed. Thank you very much. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Reed.
    Senator Scott, of South Carolina, is recognized.
    Senator Scott. Thank you, Mr. Chairman.
    I will perhaps start with Mr. Dimon, a question on 
inflation. For the last 17 months we have seen inflation higher 
than wage growth, which means that the average person's 
spending power is going down, not up. In the last 6 months we 
have seen inflation over 8 percent.
    Fast-forwarding another 6 to 12 months, where are we and 
why?
    Mr. Dimon. The economy is facing some very tough things, 
OK. We have a strong U.S. consumer. They are spending money. 
Still 10 percent over last year, 35 percent over the prior 
year. Their checking accounts are in better shape. Their 
balance sheets are in better shape. Their debt service ratio is 
actually almost at historical lows. Obviously it is being 
eroded by inflation, and that is kind of current.
    Now future, not that far away, you have QT, rising rates, 
you know, more inflation, war in Ukraine which is deteriorating 
oil price, which I still think are kind of precarious, and 
yeah, those things have the potential to put the country and 
the world into a recession, which will obviously help inflation 
but it is not the preferred way to get there.
    The worst outcome is stagflation, so conquering inflation 
is a very important thing to do.
    Senator Scott. So when I look at the credit card balances, 
they are going up, not down. The challenges for small 
businesses finding employees is worse, not better. The truth is 
that in many ways our economy is looking at some really strong 
headwinds. We would hope that the worst is in the rear-view 
mirror, but truly perhaps it is in the windshield.
    And I just wonder, as we think about the stress tests and 
trying to break this down for the average person at home, 
listening to a banking hearing--I am not sure why they would be 
listening, but just in case they are--the question I ask myself 
is, we have these conversations about capital requirements 
going up, which means that loans will go down and inflation 
still is heading in the wrong direction. Finding employees is 
harder than it was. Having been a small business owner, that 
formula looks like a first-time business owner, minority 
business owners, are going to have a harder time getting the 
credit they need to grow and strengthen the economy in their 
neighborhoods. Am I wrong when you add all that together?
    Mr. Dimon. I think there are capital requirements which are 
causing us to reduce lending right now to buildup capital 
because of a recent stress test, which I thought was completely 
unnecessary. So you are not wrong.
    Senator Scott. The stress test actually proved that you all 
are in a healthier position than you have ever been in. 
Therefore, increasing the capital requirements that reduces 
loans might have the unintended, perverse consequence for small 
business owners trying to figure out how to bring more 
opportunities to their communities. Is that accurate, Ms. 
Fraser?
    Mr. Dimon. Seems abnormal to me, yeah.
    Ms. Fraser. Yes, that seems a possible outcome.
    Senator Scott. Does anyone disagree with that?
    So me it seems like, and the solution is if our stress test 
and the challenges that we are putting our banks through in 
order to make sure that they are healthy enough to endure a 
pandemic or 2008, should suggest if we want more lending for 
more business startups then we would be heading, according to 
Vice Chairman Barr's comments, we would be heading in the wrong 
direction. Thoughts?
    I love when you guys are silent. It says so much.
    Mr. Demchak. Senator, if I may, there are two things that 
have changed over the last few years. One is the CECL 
accounting standard, which causes banks to have to reserve for 
the life of the loan potential losses. As we go into a slower 
economic period, which I believe we are going to go into, it is 
going to cause banks to reserve and pull money off the table, 
at the same time as we are raising capital requirements which 
is also going to pull money off the table. So effectively we 
are procyclical in the potential downturn that we are going to 
face here from those two effects.
    Senator Scott. And let me just wrap up my thoughts so that 
we can go on to another colleague with this simple synopsis. 
All that we have talked about makes it harder for the average 
person in our country to grow their confidence in our 
institutions, number one. Number two, there is probably, 
according to the numbers, about 5.4 percent of 7 million 
Americans who are unbanked. The whole concept of financial 
inclusion gets harder, not easier. In the current environment 
as we go through weathering more storms, those unbanked may not 
look positively on a system that they do not understand anyway 
in that the rates are going up and the loans are going down.
    I think this is a very frustrating time for Americans who 
are looking for a chance to achieve the American dream, to 
achieve that dream. I just wonder if we are not doing more harm 
than good as it relates to the environment that is not 
consistent with the average person wanting to lean into 
opportunity in a time that we need more people getting capital 
off the sidelines and into the market.
    Chairman Brown. Thank you, Senator Scott.
    Senator Menendez, of New Jersey, is recognized.
    Senator Menendez. Thank you, Mr. Chairman.
    A 2021 report by the Financial Health Network found that 
nearly 60 percent of all overdraft fees in 2020 were paid by 
low- and moderate-income households, and about 25 percent were 
paid by Latino households specifically.
    Mr. Moynihan, Mr. Scharf, Mr. Dimon, your banks each 
charged over $1 billion in overdraft fees last year, and while 
each of your banks have recently reduced or modified the fees, 
your customers, particularly your low-income and minority 
customers, are still at risk of incurring an overdraft fee 
every time they make a payment from one of your banks.
    So can you commit to us today that before we see you next 
year your institutions will fully eliminate overdraft fees?
    Mr. Scharf. Senator, we have an account that has no 
overdraft fees available for our customers, and we believe that 
the customer should have a choice of the way they want their 
services and the way they want to pay for them at the company.
    Mr. Moynihan. Senator, if you look at the last quarter call 
report you will see that the overdraft fees in our company 
dropped 66 percent from last year. Recently we announced that 
they will drop further because during that quarter we made some 
of these changes.
    We do not believe the full elimination of them is actually 
a good result, but the amount of overdraft fees we will collect 
we have told people will be down 90 percent. That is a 12- to 
13-year commitment that we have been able to live up to because 
we are big and because we have the operating costs and because 
we are allowed to do mergers and put together a great 
franchise. It allows us to pass those benefits through to the 
customers.
    So eliminating, I think, has attributes which are different 
than people say, which the rep payment could be rejected, but 
we reduced the cost to $10 on those instances. We also have 4 
million people in a no-overdraft account, and it is open to 25, 
30 percent of all of the new accounts. So I think you have to 
look at----
    Senator Menendez. That requires certain standards to have a 
no-overdraft account.
    Mr. Moynihan. No. Five dollars a month. I mean, anybody can 
open it that has an ID, yes.
    Senator Menendez. Mr. Dimon?
    Mr. Dimon. Yeah, we also offer it, which I think is the 
right thing to do. Twenty-three percent opt in, so it is not 
like everyone wants it, but those who want it, sometimes it is 
abused. But there are two sides to this, which are very 
critical. First, I have faith in the American public to make 
their own choices. When people use it, remember there are a lot 
of occasions where if it is not used they will be charged a 
higher fee on the other side. That includes parking tickets, 
rent, mortgages, or you need pharmacies immediately and you get 
bounced.
    So people want it for those reasons, and it can often 
reduce the cost on the other side and stop them from going to 
payday lenders. So that is why we are trying to navigate this.
    I do agree with the concept. It does get overused, and we 
try to do things like financial counseling, and on occasion 
just turn it off for someone because we think they just use it 
too much.
    Senator Menendez. I have faith in the American people as 
you do, Mr. Dimon. I do not think that their choice is to end 
up in overdrafts. Your banks made $64 billion, collectively, 
last quarter--$64 billion. So it is clear to me that there is 
no reasonable explanation to continue to charge overdraft fees 
on working families. You just had a conversation with my 
colleague and friend, Senator Scott.
    One of the reasons so many Americans are still hesitant to 
enter the formal financial system is this issue. I hope you 
will give more consideration to how you deal with this 
overdraft issue. I think it would inure to everybody's benefit.
    I have heard story after story from New Jersey constituents 
who have fallen victim to scams and frauds in Zelle, and in 
many instances the banks have denied their customers relief. 
That is why in July I led a letter, with some of my colleagues, 
to seven of the banks that created and jointly own Zelle, which 
includes most of you.
    I found several of your responses really inadequate. In 
particular the responses from JPMorgan Chase and PNC did not 
address the fundamental questions we asked regarding the number 
of frauds and scams reported by your customers as well as 
information regarding refunds and referrals to law enforcement.
    So Mr. Dimon and Mr. Demchak, will you commit to making the 
information we asked available to me and my staff as your other 
colleagues have?
    Mr. Dimon. Absolutely, and I am sorry we did not meet it 
the first time.
    Mr. Demchak. Yes, the same. I am sorry we did not send it 
in the first instance.
    Senator Menendez. I appreciate it because that information 
helps us as we are trying to figure out that consumers are 
slipping through the cracks of Regulation E, and detailed 
information will help us figure out what we do with it.
    Finally, Mr. Scharf, in March Bloomberg reported that Wells 
Fargo disproportionately rejected refinancing applications from 
African American and Hispanic homeowners. You and I had an 
opportunity, and I appreciate your visit. One of the things 
that you told me in response to my questions was this was 
partially due to the fact that Wells encourages more minority 
borrowers to go through the full application process, while 
some of your competitors turn them away at an earlier stage. Is 
that correct?
    Mr. Scharf. Just one clarification, is we encourage all 
borrowers, not just minority borrowers.
    Senator Menendez. OK. But that would include the whole 
universe of minority borrowers, therefore. Why do not the rest 
of you do the same, encourage them to go through the full 
application process?
    OK. The silence is----
    Mr. Demchak. To be fair, I just do not know if we do or do 
not, but we will look at that.
    Senator Menendez. Would you respond to us for the record 
please? Because look, the Latino community has a $2 trillion 
domestic marketplace impact already. It will grow 
exponentially. But it needs to be treated fairly in the 
process.
    And Ms. Fraser, it is good to see you because this is about 
the only diversity we have in this industry. Thank you.
    Chairman Brown. Thank you, Senator Menendez.
    Senator Kennedy, from Louisiana, is recognized.
    Senator Kennedy. Thank you, Mr. Chairman.
    You are all American companies, and I am very proud of 
that. And I thank you for that and I congratulate you on your 
success. It seems to me that your institutions are a lot like 
America. You are not perfect but you are good.
    Capitalism works. That is why America has the strongest 
economy in all of human history. Capitalism has done more to 
lift people out of poverty than all the social programs put 
together.
    The poverty rate in our country is 3 percent. Now the 
Census Bureau will tell you it is 12 percent, but the Census 
Bureau only counts cash payments, not in-kind payments. The 
Census Bureau does not count Medicaid. It does not count food 
stamps. It does not count the earned income tax credit. If you 
count all of those, all those programs, our poverty rate is 3 
percent. And that money to help our neighbors who are less 
fortunate than we are did not come from leprechauns. It came 
from the American people and their generosity, and they have 
that money because of capitalism.
    Number two. I am not going to ask you to comment on this. 
Senator Toomey touched on it. You will never win, never, the 
uber-woke sweepstakes. I understand that the pressure to run 
that race is fierce. You will never win it. Nothing you do will 
ever be enough. The uber-woke people in positions of power in 
this town think America was evil when it was founded and it is 
even more evil today. You are not going to convince them 
otherwise. I believe that you are not free if you cannot say 
what you think. I encourage you to do that. I believe that you 
are not free if you cannot express yourself. You have your 
opinion. Be candid. Do not try to win the uber-woke 
sweepstakes.
    Number three. I do not like to brag about the expensive 
places I have been, but the night before last I went to the 
grocery store. Inflation is gutting the American people like a 
fish. Now we know what our Federal Reserve is doing on the 
monetary side. I want to ask you what you think we should do--
``we'' meaning the Federal Government--on the fiscal side. And 
if you could just give me direct answers because I only have 
about a minute and a quarter, though I might ask for a little 
extra time with the indulgence of the Chairman.
    Ms. Fraser, tell me what you think we should do on the 
fiscal side to help curtail inflation?
    Ms. Fraser. There is a considerable amount of savings still 
in the system. We do not believe that we need more additional 
stimulus being put through into the economy, and therefore 
making sure that we are supporting those that are suffering 
from the high prices and what is likely to be a very 
challenging year ahead, but that support is directed to them.
    Senator Kennedy. Mr. Dimon?
    Mr. Dimon. Yeah, I think a little less fiscal spending 
would be good because we had 30 percent of GDP spent over a 2-
year period, which is literally unprecedented. But I also think 
on the supply side, taxation, immigration, regulation, health 
care, infrastructure, this permitting bill, if you did some of 
those things you will help grow the economy to reduce 
inflation.
    Senator Kennedy. Would a tax cut be out of the question for 
you?
    Mr. Dimon. I would say calibrate taxes so that you create 
more growth.
    Senator Kennedy. How about get a little Government off the 
backs of the American people in terms of regulation?
    Mr. Dimon. That would be helpful, I think, particularly for 
small business. I do not want to sit here and complain about 
big companies, but I urge everyone to take ten small businesses 
out to lunch and ask them what it like to live through Federal, 
State, and local regulations, even if they have one store, and 
that could help a lot.
    Senator Kennedy. I am sorry we do not have more time. Thank 
you all for being here.
    Chairman Brown. Thank you, Senator Kennedy.
    Senator Tester, of Montana, is recognized.
    Senator Tester. Yeah. Thank you, Mr. Chairman. It is always 
good following Senator Kennedy. It is always a pleasure. You 
are right. Capitalism works if there is competition, and in the 
meat industry right now there is not any competition, and the 
reason you got hooked going to the grocery store is because 
those packers are making bank--no pun intended. And so I look 
forward to your----
    Senator Kennedy. I am with you, Senator. We both love meat.
    Senator Tester. All right. Right on, baby.
    Senator Kennedy. Right on.
    [Laughter.]
    Senator Tester. My special investigator bill to enforce the 
Packers and Stockyards Act, but I am here to talk to you guys, 
and ma'am, and I want to thank you all for being here, and I 
want to thank you for your testimony.
    I come from a very rural area in a very rural State, and as 
you guys know better than anybody, access to capital is 
critical important if you are going to have business expansion 
and employment and economic growth.
    It was a few years ago in my small town of 600, the bank, 
one of your banks actually, decided to pull out. Fortunately we 
had a community bank come in and they are doing a great job. 
But that potential pullout and that access to that brick-and-
mortar facility could have really raised heck with my little, 
small town, where post offices are still important and schools 
are still important and banks are still important.
    So this question is for all of you. Are you guys committed 
to brick-and-mortar facilities in rural America, and if you are 
not, why not?
    We can start with you, Mr. Scharf.
    Mr. Scharf. Senator, thank you. I think you know this. We 
are, I think, the biggest of the banks here in terms of our 
presence in rural America. We very much are committed to 
continuing that.
    To the extent that we have exited a location we have tried 
to be very, very conscious of ensuring that we are not leaving 
the town unbanked, whether that be through having another bank 
there or working with another bank to take over our facility. 
But we do view the fact that we are so big in rural America as 
something that is important, and we need to make sure we 
continue.
    Senator Tester. Go ahead. Just go right down the line. Mr. 
Moynihan.
    Mr. Moynihan. Our branches are in the market, 90-odd 
markets we serve, plus extended beyond that, 150 to 200 
markets, and we will continue to be there.
    I would tell you that back earlier in 2011 or 2012, we sold 
a bunch of our branches to smaller community banks to make them 
stronger, 400 branches in the rural areas we served--we were 
not in your State but in other States--with that exact idea in 
mind, which is the town or city needed banking, and if you sold 
the deposits to another community bank it would be helpful.
    Senator Tester. OK. Mr. Dimon.
    Mr. Dimon. I am so proud that we are now in 48 States. We 
have opened branches in North Dakota, South Dakota, Wyoming, 
North Carolina, South Carolina, Montana, Billings, Bozeman. I 
think we are doing Ennis, and we will take a look at your 
little town.
    Senator Tester. OK.
    Ms. Fraser. Thank you for the question, Senator. We are a 
bank that has a smaller retail footprint in the States. We have 
a larger focus on corporate clients than on the retail clients. 
I would certainly commit that we will be doing our best to 
support the Montana enterprises.
    Mr. Rogers. We have long been committee to rural markets. I 
believe our bank as a percent of branches has the most in rural 
markets. But in additional to rural markets also important, 
they are also digital deserts. So we are also committed to 
focusing on areas such as broadband to make sure that we can 
serve those markets, not only physically but equally digitally.
    Mr. Cecere. Senator, as you know we are a large player in 
rural markets, North and South Dakota as well as Montana, and 
most cities in Montana. We also have large operation centers in 
some of those rural markets to provide jobs.
    Senator Tester. OK. Mr. Demchak.
    Mr. Demchak. We have grown our presence in rural markets 
over the last several years and we have augmented that with a 
fleet of mobile branches that can cover multiple small towns in 
the same day.
    Senator Tester. OK. I have got limited time, and this is a 
more complex question, but you guys all know the threats of 
cyber out there. You know that you are probably being attacked 
as we speak right now by a cyberattack of some sort. We need to 
continue to adapt and work to combat these evil threats.
    And so I am just going to pick Mr. Rogers and Mr. Dimon. 
How do your companies ensure that you are devoting adequate 
resources to cyber threats?
    Mr. Rogers. One of the reasons, Senator, we merged was to 
create more capacity to protect our clients and our company 
against cyber threats. So we do a variety of things. One of the 
things we do is we bring in third parties to help us. We bring 
in third parties to look at our systems, attack our systems, to 
do horizontal reviews about where we are relative to others, to 
make sure that our defense are as strong as they can be, to 
secure our clients' data.
    And then we also participate in all the efforts that our 
regulatory bodies undertake as it relates to cybersecurity.
    Senator Tester. Mr. Dimon?
    Mr. Dimon. Yeah, we spend several million a year. 
Everything we do goes through cyber reviews and cyber checks. 
We do oversight on third parties. Every time you access our 
systems it is running through multiple cyber type of things. We 
have worked with the Federal Government, the Governments in 
Europe. It is a nonstop battle. My board reviews it. We will do 
anything we can. I put this way up there, right behind 
competition with China and this war in Ukraine. Cyber risks are 
extraordinary.
    Senator Tester. Yeah. Thank you all for being here. Thank 
you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Tester.
    Senator Lummis, of Wyoming, is recognized.
    Senator Lummis. Thank you, Mr. Chairman. Thank you all for 
being here. This a bit of a flogging element to what is 
happening today, but there is also an opportunity for us to 
learn from each other, so I hope that you will provide that 
when I ask questions of you.
    And I want to thank Senator Kennedy for pointing out that 
America is the leader in world financial services. But that 
said, it is a privilege, and there are other countries that are 
working at a transformative pace in innovation. So having China 
come up at the conclusion of Mr. Tester's conversations with 
you, I want to start with that issue.
    Mr. Dimon, I want to ask you about a comment you made last 
month. You said, ``China looks at America and they say, `you 
have been incompetent and lazy.' '' And then you said, ``There 
is some truth to that.''
    So I too am concerned that too many in the financial 
services industry have been lazy, and they do not see the 
transformative pace at which the rest of the world is 
innovating. Payments technology, for example, is far too slow 
and costly. So your bank is currently testing JPM coin, it is a 
type of stablecoin, for faster settlement. Could you talk a 
little bit about our duty to responsibly innovate, to stay a 
world leader? Same question to Mr. Cecere.
    Mr. Dimon. Yeah. America already is the world innovator and 
world leader, and China is a serious competitive, strategic 
issue we all have to deal with. And so I totally agree with 
that.
    I do not think Americans should be embarrassed. I mean, we 
still have the most prosperous Nation on the plant, all the 
food and energy we need, free enterprise, the gifts of God, the 
gifts of our Founding Fathers. They have autocracy, not enough 
food or energy. They need 15 million barrels of oil a day. They 
get 4 for themselves or their immediate neighbors, stuff like 
that. We are in very good shape.
    The lazy part, talking about policy, is things we got wrong 
where we could have done better--immigration, taxation, 
regulation, health care, litigation, all those things. I think 
it has slowed down America, and I think we should all be 
focusing more on how can we grow more and create more, 
wealthier, afford more in the military, et cetera, et cetera.
    And innovation and cryptocurrency, they are probably ahead 
in a couple of areas, and I think we should recognize that and 
combat that. I am not really worried about it as long as we get 
our act together.
    Senator Lummis. Mr. Cecere?
    Mr. Cecere. I agree. I think one particular area of 
innovation that is critically important is money movement and 
payments activity, and I think the banks are working together 
with each other as well as our regulators on activities like 
real-time payments, Zelle, even FedNow. All those things I 
think will position us well for future payments activity.
    Senator Lummis. Anyone else want to weigh in on this?
    Mr. Moynihan. I think our colleague spoke to it, but the 
real-time payment system, the ability to get a 24/7 wire system 
at the Fed would be critical to it, and their new real-time 
system ought to provide that.
    But one of the disadvantages in payment system technology 
is the ability to pay on the weekends and move a substantial 
amount of money that actually clears. T-plus-zero security 
settlement would be doable if you actually could have the money 
move during the night.
    So I think we are all aware of that. We have connected our 
real-time payment system. We are connecting it to other parts 
of the world that we have put together through the clearing 
house. That ought to enable money to move real-time. You 
connect that with Zelle and things, you can move it with no 
cost to another banking client, as long as someone does not 
step in and say, oh, that is not sufficient to have sent to 
there in Spain. You do the KYC so we can rely on it.
    We need some enabling things, and I think if we do that 
right you will see the innovation that is already set up and 
already moving. And by the way, we move trillions and trillions 
and trillions of dollars a day very efficiently. So I think 
people's view of what is inefficient is kind of interesting, 
but you have to look at what really moves.
    Senator Lummis. Well, we are aware that money was 
transferred in cryptocurrency as donations to Ukraine. They 
were spending it the next day. And if it had been transferred 
in U.S. dollars it would have taken about 10 days for it to 
reach--I see some of you shaking your heads. Disagree, Mr. 
Dimon?
    Mr. Dimon. Right now we are moving $10 trillion around the 
world, zipping and zapping through AML systems, OFAC systems, 
regulations, AI systems, cyber system, safely and immediately. 
A lot of is real time. You are talking about retail payments.
    Senator Lummis. Yes, I am.
    Mr. Dimon. Yes, and I agree with that. That is a thing that 
we all can work on and fix. But that is a very small thing 
relative to the other.
    Senator Lummis. Thank you for being here. I yield back.
    Chairman Brown. Thank you, Senator Lummis.
    Senator Warner, from Virginia, is recognized.
    Senator Warner. Well thank you, Mr. Chairman. It is good to 
see all of you. I am reflecting back on the fact that I first 
got here in the middle of the meltdown in 2009, and I think Mr. 
Dimon and Mr. Moynihan were on the panel. Everybody else has 
changed. So maybe your turnover rate is even higher than the 
turnover rate on the panel up on this side. I am not sure what 
it says about Brian and Jamie.
    The first question I want to get to CDFIs, MDIs, something 
I have talked to you all about over the years. Clearly during 
COVID we saw, as effective as some of our programs were, 
minority, low-income businesses got left out. I am very proud 
of the fact that we worked in a bipartisan way with a lot of 
Members on this Committee. I want to give a shout-out to Mike 
Crapo, where we got $12 billion to CDFIs and MDIs, $3 billion 
in loan, and I was just on the line yesterday with the Vice 
President, about $9 billion in tier one capital.
    My concern, though, is we have got to do more. There was a 
public-private initiative that some of you are participating 
in, Economic Opportunity Council, to try to shore up access to 
capital issues for LMI borrowers.
    So I am going to start, as one of the new guys on the 
panel, Mr. Rogers. What can we do--what can you all do, as the 
largest institutions in the country, to help shore up CDFIs and 
MDIs? Clearly the Community Reinvestment Act reforms, in fact, 
I have got some ideas about nudging you to get some CRA credit 
to help CDFIs and MDIs, but I would like you to speak to that.
    Mr. Rogers. Thank you, Senator, and thank you for your 
focus on CDFIs. I think the private and public cooperation has 
put a lot of capital into CDFIs and I think that is actually 
great, great for the country and great for the expansion of our 
economy.
    In spending a lot of time with CDFIs and spending a lot of 
time with the recipients of the CDFIs, I think they are now 
starting to prioritize revenue versus capital, as how can you 
help us get business. So I think the areas where we can support 
CDFIs more are the areas that we do in things like supplier 
diversity. Let us make sure that we are including more people 
in the diversity. Let us make sure that they are getting 
revenue to go along with that capital so they can use that 
capital and deploy it efficiently. I think we can play an 
important role that.
    Senator Warner. I have got a second question. Does anybody 
else want to lean in on this, because I am going to be back to 
you with specific requests in this space.
    I am going to say, for Mr. Dimon and Ms. Fraser, I got the 
next question. But does anybody want to weigh in here on CDFIs 
and MDIs?
    Mr. Moynihan. I think, Senator, just generally, this group 
of banks has done a lot with the CDFIs and MDIs, sometimes a 
little different flavor of ice cream but we all have major 
deposits with them. A lot of put equity into to them. Some put 
preferred stock into them. But there are cooperating 
agreements, ATM access, et cetera, that allows them to have 
access to our scale in different ways.
    And beyond that we just did an innovative program where we 
gave them a certain amount of money just to go to community 
medical centers, to extend medical centers. So I think we are 
all getting very creative in asking them what they need from 
us, and I think you have seen the----
    Senator Warner. I do think we need some additional help in 
terms of back-office operations.
    Mr. Moynihan. Yeah, I think there are elements like that.
    Senator Warner. Let me get to my next question. I mentioned 
the fact that my first time up here with you guys was in the 
midst of the financial crisis in 2009. We had seen an 
overheated real estate market. We had seen a series of things 
that had kind of gone unobserved. Yet we are now, I fear, at 
times we have got a whole section of a nonbanked, nonregulated 
financial market, and this will sound like a little bit of a 
lay-up to you all. But the percentage of mortgages being 
originated on a non-banked basis. We are talking about a number 
of consumer products. I think some of the old ideas around OCC 
charters or CFPB charters, I think they may need a new look.
    And I will start with Ms. Fraser and Mr. Dimon, and I will 
be anxious to hear, Mr. Dimon, your comments because you made 
these comments against regulations, so you think it is a good 
idea that this whole non-banked sector competes with you guys 
with no regulatory oversight at all?
    Mr. Dimon. I have never been against regulations. I think 
we need proper and properly calibrated regulations. You can 
always improve and enhance. You know, sometimes they go too far 
and sometimes it was not enough. That is totally true, and I 
have given credit to parts of Dodd-Frank. You know, Lehman 
Brothers would not happen again.
    But if you look at some of these things--and this is an 
honest assessment, not a complaint--there are a lot of these 
folks that do not have social requirements, FDIC requirements, 
transparency requirements, they do not have regulatory type 
requirements, AML requirements, BSA requirements, same kind of 
cyber requirements. That is your decision. We will deal with 
whatever you all and the regulators decide.
    And so it has driven a lot of stuff outside of banking, 
which is fine. We can deal with it. I am not sure it is the 
right policy for the United States, particularly around 
mortgages.
    Senator Warner. Although I would also quickly say, you 
know, and I think some of us on my side of the aisle need to 
maybe revisit this in terms of concerns about watered-down 
charters versus no regulatory oversight at all. I think we have 
got to figure out how we pick our poison here. Ms. Fraser?
    Ms. Fraser. The balance is very important. The U.S. 
financial system is one of the great assets of the country. It 
is the envy of the world, and strong financial institutions is 
important. Part of that is a rigorous and fair and effective 
regulatory structure and framework, and one in which the same 
activity has the same regulation as opposed to the entity being 
regulated. I think the strength of the system here in the 
States should be around the same activity having the same 
regulation.
    Senator Warner. I do think we are going to need them, 
particularly, Mr. Chairman, on some of these innovative new 
financial products, because most customers do not care whether 
it is a bank or another entity. We are going to need some 
consumer protections.
    Thank you, Mr. Chairman.
    Chairman Brown. Senator Tillis is next.
    Senator Cramer, from North Dakota, is recognized. Thank 
you, Senator Warner.
    Senator Cramer. Thank you, Mr. Chairman and Ranking Member 
Toomey, and all of our panelists.
    First of all, I want to apologize for Senator Scott's 
implication that this is not interesting to all Americans. I 
think it is a pay-per-view event. This has been very good, 
particularly when Senator Kennedy started asking questions.
    That said, I also want to thank you all, and by the way, 
all of your colleagues at every level of banking, for 
delivering so well during the pandemic. We were building an 
airplane while flying it, and I think that you all did very 
well in delivering the services and the products at a time when 
American desperately needed it. Frankly, I think it built the 
foundation that is saving us today, so thank you for that.
    But I also want to join Senator Kennedy in this admonition. 
Please resist the impulse to respond to the very loud noise in 
your left ears. I am happy to be the loud noise in your right 
ear. When it comes to being one of the cool crowd I know the 
pressure that you feel, and I am sorry that sometimes those of 
us on the conservative side are not as activist oriented. But I 
want to help you.
    And this has not come up so I am going to bring it up. Last 
evening I led a letter, that was signed by nearly all of the 
Republicans on this dais, to the Bank Policy Institute, and you 
are all, of course, members, regarding this new merchant 
category code that is for gun and ammunition stores.
    And I want to be clear about who did this. You know, the 
credit card companies are taking a lot of heat, but it is the 
ISO that did it. It is the International Organization for 
Standardization, and they did it against the wishes of the 
credit card companies, who opposed it in the beginning, they 
voted against it on the advisory committee, their opposition 
was upheld, and then ISO did it anyway. And they did it at the 
urging of a very liberal, activist bank, Amalgamated Bank.
    And so I want to ask each of you, as the carriers, the 
acquirers, as the facilitators that are providing the capital, 
will you commit to me, can you commit in front of this 
Committee and the pay-per-view audience that is listening and 
watching, that your bank will process all transactions for the 
purchase of legal goods and services, and I might add, 
constitutionally protected goods?
    We will start with you, Mr. Scharf.
    Mr. Scharf. Senator, we are going to implement the rule 
that has to be implemented as a member of the network, and we 
are going to continue to process transactions as we do today.
    Mr. Moynihan. I agree with my colleague's comments. It will 
not change anything we do.
    Mr. Dimon. No, I totally agree, and we cannot be involved 
in telling the American citizens how their money will be used. 
That is not our job.
    Ms. Fraser. Similarly, Senator, we do not intend to use the 
code to limit or restrict the purchase of firearms by our 
customer base.
    Mr. Rogers. Senator, we do not intend to have any 
restrictions.
    Mr. Cecere. I agree with the comments. We will abide by the 
rule, but no restrictions.
    Mr. Demchak. We will not have restrictions.
    Senator Cramer. Thank you all. Good answers from all of 
you.
    I do want to come back to you, Ms. Fraser, just a little 
bit, because Citibank has, in particular, given me some pause, 
when your bank has voluntarily committed to restrict lending to 
firearm retail clients unless they meet your specific criteria, 
which in many cases exceeds the law. And I want just extra 
assurances that law-abiding gun purchasers across the country 
will not be discriminated against, using this merchant category 
code as a means to an end.
    Ms. Fraser. Senator, thank you for the question. We respect 
the Second Amendment. As I said, we do not intend to use the 
code to restrict or limit any purchases of firearm sales by our 
credit card customers. We do not do so today. We do believe in 
best practices, best practices for the retail sale of firearms, 
and that is the policy that we have had for a while now. Most 
retailers follow those best practices.
    Senator Cramer. I would say most gun owners do as well. The 
vast majority of them are very good people.
    Ms. Fraser. Indeed.
    Senator Cramer. So thank you for that.
    I am just going to wrap up by just inviting you all to 
follow in the footsteps of Mr. Moynihan. Come to North Dakota. 
I want to show you real progress in transitioning to a cleaner 
energy economy that utilizes not regulation but rather 
innovation and the great riches that God has given us, below, 
on top, and above the Earth.
    And with that I thank you and yield.
    Chairman Brown. Thank you, Senator Cramer.
    Senator Warren, of Massachusetts, is recognized.
    Senator Warren. Thank you, Mr. Chairman.
    So six of the seven banks who are here today--Wells Fargo, 
Bank of America, JPMorgan Chase, Truist, U.S. Bank, and PNC--
jointly created and own the Nation's most popular peer-to-peer 
payment platform, Zelle. The banks market Zelle as, quote, 
``fast, safe, and an easy way to spend money,'' end quote.
    That is only partly true. It is definitely fast--Zelle is 
fast--Zelle is easy, and they increase bank profit margins, but 
Zelle is not safe. Last year alone, Zelle users were defrauded 
out of about half-a-billion dollars, that we know of.
    Now you built the system, you profit from every transaction 
on the system, and you tell people that it is safe. But when 
someone is defrauded you claim that is the customer's problem.
    We do oversight on the Banking Committee, so I want to know 
exactly how big this problem is. In July, other Senators and I 
wrote to ask you how many fraudulent Zelle transactions your 
customers have reported since 2018. Only Mr. Rogers, of Truist, 
provided the data, 52,000 claims of fraud totaling $46 million. 
Thank you, Mr. Rogers, for being transparent.
    But the rest of you stonewalled. So today I get to ask you 
in person. Do I have any volunteers who want to go first and 
share the numbers that I asked for in July, or will I just pick 
volunteers?
    OK, Mr. Dimon, you represent the largest bank here today so 
let me start with you. You did not provide any of the 
information that we requested in our letter, none of it. So 
what I want to know is, is that because you do not keep track 
when your customers report fraudulent Zelle transactions, or is 
it because you do keep track and you know exactly how many 
fraudulent transactions have been reported and you want to keep 
that report a secret?
    Mr. Dimon. I deeply apologize that we did not give you the 
numbers you asked for. I am sure we responded. And we pay--
anything that is unauthorized we do cover. So you are really 
talking about authorized transactions that we have an enormous 
amount of systems to stop, and the amount of fraud relatively 
is very small for this free-of-charge service.
    Senator Warren. I very much appreciate that you are going 
to give the commercial for Zelle, but if I do not have the 
numbers I do not have any way to verify that.
    Mr. Dimon. You are going to get them immediately, OK?
    Senator Warren. Do you want to give me a ballpark right 
now?
    Mr. Dimon. I do not have the number in front of me.
    Senator Warren. Do you know generally? This is a serious 
problem that has been going on in this bank.
    Mr. Dimon. I will get you the number immediately. I do not 
want to make it up.
    Senator Warren. Well, I do not want you to make it up 
either, but I do not want you to wait another two-and-a-half 
months before I get to see--it is very simple data.
    Mr. Dimon. I promise you by the end of the day today you 
will get it.
    Senator Warren. Terrific. All right. We will get it by the 
end of the day, once nobody is here to talk about it.
    How about you, Mr. Scharf? Do you have numbers?
    Mr. Scharf. I do not here. I apologize for not getting to 
you, but we will get it to you immediately.
    Senator Warren. Does anybody here have numbers?
    Yes, Mr. Cecere. Good.
    Mr. Cecere. I apologize that we did not get you the 
numbers. We transact about $1.1 billion a month, 3 million 
transactions, 0.07 percent have fraud involved.
    Senator Warren. OK. I am sorry but that is not the number I 
asked for. The number I asked for is how many customer fraud 
claims have you received. Mr. Dimon wanted to say, well, we, 
the bank, are going to determine what we think is a fraud claim 
that we think should be reimbursed. What I need to see is I 
need to see the number coming in on the front end, and that is 
how many customers held up their hand, called the bank, and 
said, ``I have a fraud complaint with Zelle.'' It is not hard. 
I presume you guys collect this information.
    Mr. Cecere. We do.
    Senator Warren. What is your number.
    Mr. Cecere. 0.07 on fraud, 0.05 on customers raising their 
hand.
    Senator Warren. I am sorry. I just need a real number. How 
many customer complaints have you received to fraud on Zelle 
system since 2018?
    Mr. Cecere. I do not have that number in front of me but I 
will get it to you by the end of the day.
    Senator Warren. Anybody else? Mr. Demchak?
    Mr. Demchak. I know the percentages, 6 basis points of 
scams and fraud. Fraud is much less.
    Senator Warren. And you define it, right?
    Mr. Demchak. Total disputes are six basis points.
    Senator Warren. You know, what troubles me here is the one 
person who gave us numbers, the numbers are pretty alarming, 
and the overall numbers are enormous. We know of at least half-
a-billion dollars in transactions. It may not seem like a lot 
of money to you, but to the person who just lost $450 it is a 
lot of money to them.
    So let me ask this the other way around. This would not be 
the same kind of problem if the banks stood behind the product. 
After all, you are the ones who invented it. You are the ones 
who made it work. You are the ones who profit off it. And then, 
when customers say, ``I have got a problem,'' you say, ``I am 
only going to reimburse a narrow slice of those who hold up 
their hands and say that they have been defrauded on the 
system.''
    But we could fix that problem right now, in this Committee, 
if you would all be willing to say, or any of you would be 
willing to say if a customer is defrauded on Zelle and they 
come and complain to the bank, then the bank will make it good. 
Let us do this one by a show of hands. Who is willing to make 
that commitment to your customers?
    Mr. Demchak. Senator, we are working--the owners of EWS are 
actually working. We are a closed network owned by banks, so 
you are exactly correct that we have an ability to make a 
difference here, and we are working on answer to your question. 
We are in the throes of figuring it out.
    Now let me continue, please. Zelle is one of the P2P 
networks that you highlight. The others have 15 times the 
number of disputes coming in to our company that we have no 
ability to have insight----
    Chairman Brown. Senator Warren----
    Senator Warren. Mr. Demchak----
    Chairman Brown. ----your time has expired.
    Senator Warren. Let me just finish here, if I can please. I 
just want to say on this, you tell me you are so much better 
than the others, and yet you have had two-and-a-half months to 
bring the data forward, and you have not produced any numbers 
on this. I am sorry, your credibility right now is riding at 
zero.
    Mr. Demchak. We will----
    Chairman Brown. Senator Rounds----
    Senator Warren. You created the perfect----
    Chairman Brown. Senator Rounds----
    Senator Warren. ----weapon for criminals----
    Chairman Brown. Senator Warren----
    Senator Warren. ----to use, and they have used it, and you 
have not stood behind your customers.
    Look, you are inviting----
    Chairman Brown. Senator Warren, your time has expired.
    Senator Warren. ----come in and regulate this.
    Chairman Brown. Senator Rounds is recognized.
    Senator Rounds. Thank you, Mr. Chairman.
    I would like to follow up a little bit, the responses, or 
the discussion that has just attempted to be completed, and I 
would like to give each of you the opportunity here to perhaps 
clarify the situation. I think we are talking about Regulation 
E, which has to do with whether or not you have a fraudulent 
activity in which currently, under Regulation E, there are 
certain types in which your banks clearly would have a 
liability exposure.
    But the CFPB has suggested, and I think what Senator Warren 
was getting at, was to promote the need for CFPB or some other 
Government organization to get actively involved in demanding 
that you pick up additional liability exposures on what we call 
rather than a person-to-person but rather a me-to-me 
transactions, where someone is defrauded by a criminal who is 
out to get their money and they voluntarily decide that they 
are going to transact or move money from one location to 
another.
    Now based on that, if my assumption is correct, could I 
just quickly move down the line, and I will just start with Mr. 
Scharf. Is it your responsibility to make the decision or to 
reimburse an individual who voluntarily, even though it is 
under a scam, is it your responsibility to repay or to get in 
the middle of that transaction and make someone whole again?
    Mr. Scharf. Senator, I way I will answer the question is I 
think what one of my colleagues was trying to say, which is 
there a tremendous amount that we can do as owners of the 
network to drive down the ability for thieves to take advantage 
of the network. That is what we are working on. That is what we 
have to do, and at the same time we do that the education that 
we do with our customers, so that they do not put themselves in 
harm's way. And those two things should lead to the elimination 
of almost all of this fraud that exists.
    Senator Rounds. Thank you. Mr. Moynihan?
    Mr. Moynihan. Thank you, Senator, for clarifying that. On 
unauthorized transactions, you heard earlier that all of us 
reimburse. And then the rate of fraud claims, the broad claims, 
is in the low single digits basis points, which is lower than--
the same as it is for check. But when a person authorizes a 
transaction to a third party----
    Senator Rounds. When you say that a lot of folks have to 
say, ``What are they talking about, low basis points?'' You are 
talking about a very small percent, less than 1 percent----
    Mr. Moynihan. It is 99.98 I think would be the right math.
    Senator Rounds. 99.98 of clean transactions.
    Mr. Moynihan. There are no claims.
    Senator Rounds. OK.
    Mr. Moynihan. Now the other thing that you talked about is 
unauthorized we take care of. If a person sends money to 
someone--I think last quarter or month we sent out $800 million 
notices, ``Do you know this person that you are sending Zelle 
to?'' to try to stop what my colleague, Mr. Scharf, talked 
about, and we are all doing the same thing. And then the person 
still sends money to the person that promises to send them 
something. That is a difficult case. But we are working to make 
sure the receiver of that is disciplined and kept out of the 
system, and for that we have had multiple institutions who will 
not police their customer base not able to continue on Zelle.
    That is what we are working on. But if somebody says, ``I 
never authorized this,'' we take care of it.
    Senator Rounds. Thank you. Mr. Dimon?
    Mr. Dimon. Totally the same answer. We would love to solve 
this problem. I am sympathetic. No one wants these criminals 
and crooks. We would like to get them in jail. Keep in mind if 
you simply said that if you authorize a transaction, no matter 
what you would be repaid if you claim it is a scam, think of 
the problem of that, and that is why you cannot go all the way 
the other way either.
    Senator Rounds. Thank you. Ms. Fraser?
    Ms. Fraser. Thank you very much for the question. I think 
what you are hearing from all of us is that we take fraud very, 
very seriously. We do not want our customers to be defrauded. 
We will repay when there is an unauthorized transaction, and we 
put a lot of investment, all of us, into the tools and the 
capabilities to try and stop and prevent the fraud from 
happening in the first place, and to protect our customers. And 
it is a responsibility we all take very seriously.
    Senator Rounds. Thank you. Mr. Rogers.
    Mr. Rogers. Senator, thank you for your focus on this 
important issue, and similar to the others on this panel we do 
reimburse according to Regulation E. We reimburse way beyond 
that and focus in on our clients and try to take care of the 
challenges that they are facing.
    But as I said in my testimony, we also all need to focus on 
working together, a partnership--law enforcement, regulatory 
agencies--to actually catch the criminals who are perpetuating 
this fraud against our consumers.
    Senator Rounds. Thank you. Mr. Cecere?
    Mr. Cecere. I agree with everything that was said, and I 
think I would also say we are all working together to inform, 
educate, and help our customers in situations that may be fraud 
to help them understand those situations.
    Senator Rounds. Thank you. Mr. Demchak?
    Mr. Demchak. Thank you, Senator. I am sorry the other 
Senator left the room and did not hear the answers. We are 
focused on Zelle. Zelle is this big in terms of the fraud, and 
we need to fix it. The banks own it. These unregulated networks 
are this big, and that is where you need to help. We cannot do 
anything about that. We will fix Zelle.
    Senator Rounds. Thank you. Thank you, Mr. Chairman. My time 
has expired.
    Chairman Brown. You are not wrong about that, Mr. Demchak.
    Senator Van Hollen, of Maryland, is recognized.
    Senator Van Hollen. Thank you, Mr. Chairman. Thank all of 
you for being here.
    I want to pick up a little bit on some of Senator Warner's 
question with respect to CDFIs and MDIs. As all of you know, 
the Congress, on a bipartisan basis, made a major commitment to 
these institutions back in December 2000, as part of the 
omnibus there. In fact, yesterday the Treasury Department just 
announced $86 million coming to Maryland institutions, CDFIs 
and MDIs.
    And I want to focus on some of the banks represented here 
that have the biggest footprint in the State of Maryland, and I 
am familiar, from our conversations, Mr. Moynihan, Mr. Rogers, 
and Mr. Scharf, with what your banks are doing with respect to 
CDFIs and MDIs.
    I would just like to ask each of you for your continued 
commitment to these efforts in the State of Maryland, and 
beyond, but in the State of Maryland because I do think they 
play a vital role in economic empowerment. If I could just ask 
each of you to commit to continuing to work with us in 
Maryland.
    Mr. Scharf. Absolutely, Senator.
    Mr. Moynihan. You have our commitment, Senator.
    Mr. Rogers. Senator, thank you for your leadership on this, 
and we absolutely commit to continuing to support.
    Senator Van Hollen. Thank you. And I know Citi has also 
made some investments in CDFIs in Prince George's County, and 
others have too.
    Mr. Demchak, on PNC, we have not had a chance to talk about 
this. Could you talk a little bit, briefly, about what you are 
doing in Maryland with respect to CDFIs and MDIs?
    Mr. Demchak. In Maryland and across the country in markets 
we have been contributing capital, expertise, opening up ATM 
networks to MDIs, technology expertise, and we have been 
sending perhaps the most important thing as part of our 
Community Benefits Plan is we have been sending dedicated 
mortgage officers into the CDFIs to help support low-income 
housing.
    Senator Van Hollen. Thank you. No, I understand the broad 
efforts. I was looking at some of the banks that have a 
footprint, bigger footprint in Maryland, than some of the 
other.
    Mr. Demchak. We do as well, and we are there, and we put 
money into the CDFIs, and we support them.
    Senator Van Hollen. And we appreciate that. If you could 
just give me some information--not now--on what you are doing 
in Maryland.
    Mr. Demchak. Will do.
    Senator Van Hollen. Thank you.
    Let me get to the issue of overdraft fees. This seems to be 
an area where I know Citi announced in June that they are going 
to end their overdraft fees. Am I right about that?
    Ms. Fraser. Yes. We have eliminated our overdraft fees and 
NSFs.
    Senator Van Hollen. But you still do provide customers with 
some flexibility with respect to their payments?
    Ms. Fraser. Yes, we do. We provide the ability to 
overdraft, and we give them plenty of warning if they are going 
to be doing so, and the tools to manage their financial health 
and well-being.
    Senator Van Hollen. Got it. So I would just like to ask, I 
have been trying to review the policies with respect to 
overdrafts. I know everybody has been trying to make efforts 
here. I did notice that Wells Fargo generated $1.4 billion in 
overdraft revenue in 2021, JPMorgan Chase $1.2 billion. If I 
could just ask each of you whether you have plans to try to 
phaseout revenue from overdraft fees or whether this is an 
important part of your business model as you see it.
    Mr. Dimon?
    Mr. Dimon. You know, those fees are coming down 
dramatically because change was already implemented. Like you 
have got to go negative 50 before it gets charged. You have 24-
hour recovery and grace period, advanced deposits and 
paychecks, et cetera.
    We think it is a service that clients want. So many people 
opt in. Seventy percent of the time they do not pay a fee at 
all. We do an overdraft and we simply do not charge a fee 
because it is in those parameters I was telling you about. I 
also am reminding people that if you do not overdraft they 
could pay an awful lot on the other side, including municipal 
bills, tax bills----
    Senator Van Hollen. No, I----
    Mr. Dimon. OK. It is not that simple.
    Senator Van Hollen. ----I am fully aware of that, Mr. 
Dimon. I did notice, and we can get into some differences 
later, that Citi--and it just happens to be the case in this 
instance--was able to provide that kind of flexibility, 
apparently, while eliminating revenue going forward from 
overdrafts.
    Look, I think everybody knows that we are talking about 
lower-income people, paycheck to paycheck. We are talking about 
billions of dollars in losses. I mean, this is an example of 
why it is expensive to be poor in the United States.
    Mr. Scharf, can you comment briefly on what you are 
thinking with respect to the future on overdraft payments?
    Mr. Scharf. Yes, Senator. So one of the things we should 
point out is we have made a series of changes, the last of 
which was just implemented recently. So we would also expect to 
see our overdraft fees decline. We have an account that has no 
overdraft fees in it, and so we give our customers the choice, 
and we are doing everything we can to make sure that those that 
do overdraft and pay the fees in these other accounts 
understand that there are other options for them. And we are 
going to continue to look at the fee structures that we have 
and ensure that we are competitive out in the marketplace.
    Senator Van Hollen. I appreciate it. Look, I think part of 
the answer here is the FedNow's real-time payment system, which 
I have been a strong proponent, pushing them to really 
accelerate the deployment. I have also introduced today, with 
colleagues from the House and the Senate, the Payment 
Modernization Act, which would essentially require institutions 
to make deposits available as soon as they are deposited. 
Because people living paycheck to paycheck, nobody should be 
making money off of them, in my view. They have the ongoing 
revenue. It is just that their check is deposited. One day they 
cannot access it? That makes no sense. As you know, many other 
countries have already gone to real-time payment systems, so we 
are going to be pushing that.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Van Hollen.
    Senator Tillis, of North Carolina, is recognized.
    Senator Tillis. Thank you, Mr. Chairman, and thank you all 
for being here.
    I want to echo what Senator Cramer said about the 
miraculous work you did for Paycheck Protection Program. I 
mean, back when I was advising banking clients, I am not sure I 
would have put my foot on the accelerator as much as you all 
did, given that you were trying to figure out the rules of the 
road, when the Treasury Secretary was giving you updates on 
facts. I mean, if people really understand the risks that you 
took ahead of the curve, everybody in Congress should be 
thankful that you did it, because I think it could save the 
economy.
    As a matter of fact, we had several bipartisan bills. We 
were reacting to something none of us had ever seen. We had not 
seen a pandemic in 100 years. And those bipartisan bills, I 
think, made the difference between what I think could have been 
a fiscal disaster and helped us weather the storm.
    But now I want to talk about what has happened over the 
last year-and-a-half. We went from a series of bipartisan 
bills, that we spent more than any one of us would have wanted 
to, into a series of partisan bills that I think are at least 
in part one of the reasons why we have the problems that we do 
today. Two-and-a-half trillion dollars on a purely partisan 
basis, flooding the zone with more liquidity than we probably 
needed.
    Under President Biden, we are authorizing 80,000 more IRS 
agents, we are going to retire student loan debt which is going 
to be more stimulus into the system, $201 billion in additional 
regulatory costs, 131 million hours of net new paperwork. The 
President has signed 77 Executive orders, the highest since 
President Ford, 40 times more than President Trump in the same 
time period, and three times more than President Obama.
    Last week, I had the occasion to go to Jacksonville, 
Florida. I always make time to drive 15 minutes away from it to 
visit the trailer park that I grew up in. At that time it was 
about a plot of land about 10 acres with six or seven trailers 
on it. Now it has got 100, and all but 6 are permanent 
residences.
    One of the reasons I do that--and I will be going to the 
trailer park I grew up in, in Nashville, next month--one of the 
reasons I go through there is just to have a chance 
conversation with somebody who is there like me, a 19-year-old 
kid. I moved from Waikiki Boulevard, which was called Hawaiian 
Village, where my parents lived, to Sugar Cane Lane, in the 
same trailer park, putting myself through community college.
    I like that chance opportunity to go to people and say, 
``Where you are today, it is not where you can be.'' But I did 
not go to that trailer park on Friday, and I will not go to the 
one next month and have the same sort of optimism.
    In Chair Powell's speech from Jackson Hole, he has clearly 
indicated to me that we are into tough sledding next year. The 
rates are going to get up to 4 to 4.25 percent, and I do not 
see how it is possible--in his words he is talking about we are 
going to have to have a period of below trend growth. To a 
layperson, what I would tell that person in the trailer park is 
we are headed for a recession, and it is probably going to 
happen sometimes in the second half of next year.
    And I know also Chair Powell said, perception is reality, 
so let us not think that we are going into a recession because 
that could actually hasten it. I get that. But this is ``go'' 
time. Then is when people need to start planning. And I think 
it is almost unavoidable that those people that are growing up 
in the same circumstances that I have are going to suffer from 
the policies coming from this body, not what you all are doing. 
And we have to recognize that and we have to prepare people for 
that.
    I do have one question, and I may have a few other 
comments. I actually believe the stakeholder feedback and 
engagement has been foundational to what you banks have done 
since you were founded. You invest in the community. I just 
spoke to the President of the North Carolina bank for Bank of 
America. You have got a pilot in five cities now, trying to go 
into some of the most distressed neighborhoods and encourage 
business and growth. You take stakeholders' input into account.
    But I have just got one simple question, if you can raise 
your hands if you agree with this. At the end of the day, is it 
still shareholder promises that ultimately drives your decision 
process? At the end of the day, the people who have invested in 
your banks, the people who have risk in it? Just a show of 
hands. At the end of the day, when you have to make a decision, 
you take the input from stakeholders but then you make a 
decision.
    [Show of hands.]
    Senator Tillis. Thank you. Did I not see a show of hand 
over there? OK. Thank you. So I think we need to get away from 
the woke and everything else.
    The only other question I have for you. There are people 
talking about stakeholder capitalism is going to cause you all 
to make a strategic decision to unbank the energy industry, 
particularly fossil fuels. Are any of you planning to get out 
of that business?
    OK. So I, for one, think that we need fewer regulations in 
this space, and just to something that Senator Kennedy made, 
and I will finish here, he said that you all need to speak up. 
But how on earth can you speak up if you are fulfilling your 
fiduciary responsibility to shareholders, when you have got 
somebody out of control at the CFPB, the FDIC is a shambles, 
and the SEC. How can you possibly do that and fulfill your 
fiduciary responsibility to your shareholders because they will 
rain down hell on you?
    So I, for one, think that, Mr. Dimon, many others have 
alluded to it, if we want to avoid the bad story that I have 
got to tell those folks in the trailer park I will go visit 
next month in Nashville, we better get our act together, stop 
spending, stop taxing, right-size regulations, because we can 
do more to avoid a fiscal crisis next year, a recession next 
year, than anything you all could possibly do.
    Thank you, Mr. Chair.
    Chairman Brown. Thank you, Senator Tillis.
    Senator Smith, of Minnesota, is recognized.
    Senator Smith. Thank you, Mr. Chair and Ranking Member, and 
thank you to all of you for being with us today.
    Earlier this year, the Minneapolis Fed published a paper 
examining the role that race plays in mortgage denials. You may 
know that the Minneapolis metropolitan area has the largest 
Black-White home ownership gap in the entire country. And so 
while the Minneapolis Fed's findings were not surprising, the 
pervasiveness of this issue is really dramatic.
    In the Twin Cities, people of color are up to three times 
more likely to be denied a conventional 30-year mortgage than 
White applicants. And we understand there are lots of issues at 
play, of course, but this study specifically focused on low-
risk borrowers. And even when controlling for difference in 
income and credit scores and even where a home is located, 
Black and Latino and Asian borrowers continued to be denied at 
high rates.
    I want to ask Mr. Scharf and Mr. Dimon first. Your two 
banks are the two largest mortgage loan originators last year. 
Could you tell us briefly what steps you are taking to address 
this issue and how policymakers can assist and support the 
efforts that need to be taken here?
    Mr. Scharf. Yes, Senator. Thank you for that. First of all, 
I think we are all deeply committed to increasing the amount of 
lending that we do to the minority community. I can speak to at 
our company we believe that our underwriting practices are 
applied equally, regardless of race, but there are a series of 
things that make it more complex and harder for certainly 
ethnic minorities to achieve an approval on a loan.
    We have been working with the Government agencies on 
special purpose lending facilities, to be able to target those 
most in need, and we have found the agencies to be very willing 
and able to do that. We know that things like FICO score are 
something which we all rely on and certainly is one of the 
things in the GSE underwriting criteria, and it does not 
appropriately account for things such as rent, some utilities, 
phone bills, and things like that. And certainly for those that 
are not homeowners, those payments are extremely important.
    So the more that we can do to work to bring those things 
into credit scoring I think would be extremely useful.
    Senator Smith. Mr. Dimon, would you like to add, please?
    Mr. Dimon. We also use these special credit facilities like 
looking at rent, utilities, et cetera. We have community 
branches. We opened a branch not far from where George Floyd 
was murdered. We are putting more loan offices in there.
    I agree there are problems with appraisals, there are 
problems with how you look at income, and we are trying to work 
on all of that. That is what we are doing. I also think the 
Government can do some things to reduce the cost of 
origination, servicing, securitization, and would make smaller 
mortgages--so think of a mortgage of $100,000 to $200,000--much 
more affordable, and that obviously would help lower-income 
individuals. So there is a lot that can be done to improve upon 
this.
    Senator Smith. Thank you.
    Mr. Cecere, U.S. Bank is headquartered in Minnesota. I 
believe your address is Nicollet Avenue, not Wall Street. And I 
know from our conversations that you and U.S. Bank have 
wrestled with this, particularly in the wake of the murder of 
George Floyd, which happened in both of our hometowns. It is 
impossible to look away from the systemic racism that we see in 
our community, and in all communities, I believe.
    So could you discuss how you and U.S. Bank is approaching 
this issue and addressing this disparity in our hometown?
    Mr. Cecere. Certainly. I think one of the things we all 
realize is how complicated and complex the mortgage process can 
be, and one of the areas we are focused on, like one of my 
colleagues said, is putting loan officers in those low- and 
moderate-income communities that look just like the person 
applying for the mortgage and helping them through that complex 
progress.
    That, coupled with some of the other thing we talked about 
with rent payments and utilities as being part of the 
underwriting process, I think all these things help the 
origination process be smoother, easier, and more successful 
for those individuals.
    Senator Smith. And are you at U.S. Bank looking at ways to 
sort of track your progress on this?
    Mr. Cecere. We are. In fact, after that study came out I 
personally met with the Fed leadership to talk about the data 
that they provided, some ideas we had, and we actually have a 
joint team working on it.
    Senator Smith. Thank you very much.
    I want to also just associated myself with the comments 
from Senator Warner and Senator Van Hollen about the power of 
CDFIs to help expand access to capital in communities, and I 
appreciate the comments of many of you on that topic.
    I will yield back, Mr. Chair.
    Senator Warnock [presiding]. Thank you so much, Senator 
Smith.
    Senator Hagerty.
    Senator Hagerty. Thank you, Mr. Chair, and I would like to 
turn to a topic that disturbs me greatly. That is the trends in 
so-called ESG. I am going to ask a series of simple questions 
and would appreciate a yes or no answer from each of you. 
thanks.
    Mr. Rogers, by and large, when someone buys shares of your 
company they get to vote on company directors and management in 
proportion to their ownership share and their class of stock. 
Is that correct?
    Mr. Rogers. That is correct, Senator.
    Senator Hagerty. Thank you.
    Mr. Moynihan, when hard-working Americans plan ahead by 
investing in a retirement fund, for example, a BlackRock or a 
Vanguard fund that tracks the S&P 500, they are effectively 
buying a small share of each company in the index, including 
your companies. Is that correct?
    Mr. Moynihan. Yes, sir, that is correct.
    Senator Hagerty. Thank you.
    Mr. Cecere, when retirement investors buy shares in your 
companies through a fund managed by one of the major index fund 
providers most of these votes are not cast by the shareholders. 
Instead, companies like BlackRock or so-called proxy advisors, 
effectively make the voting determination for them. Correct?
    Mr. Cecere. That is correct.
    Senator Hagerty. And how does BlackRock or Vanguard decide 
how to vote the average American's shares? They have what is 
called an investment stewardship team that makes those 
decisions for them. This is at the heart of a troubling trend 
in the financial markets of weaponizing unsuspecting Americans' 
voting rights in the name of the radical environmental, social, 
and governance, or ESG, agenda.
    What these activists have figured out is that any radical 
policy that they cannot get enacted through Government can be 
advanced through corporate America by hijacking the trillions 
of dollars in voting rights from everyday Americans' retirement 
accounts. So a retired schoolteacher in Tennessee, like my mom, 
without her knowledge, is having the control that she paid for 
in her retirement accounts being wielded to push woke policies 
on corporations that she, and a vast majority of Americans, 
would find quite disturbing.
    Just last week I spoke with the CEO of a publicly traded 
company who was given marching orders by a young man from the 
Shareholder Stewardship Department of a large index fund 
provider. This young man was 2 years removed from college. In 
fact, the young man advised the CEO to divest his core business 
in the name of ESG.
    Why did this kid feel emboldened to do so? Well, because as 
an asset manager he controlled a significant portion of his 
company's shares, voting rights that were essentially robbed 
from American shareholders.
    And this year's proxy season was particularly egregious. 
Most of your banks had to fight off activist proposals 
including so-called racial equity audits and the forced de-
banking of oil and gas companies.
    Mr. Dimon, I would like to turn to you. Do you believe that 
these activist shareholder stewards are accurately representing 
the views of the individual investors who actually own these 
shares?
    Mr. Dimon. Yeah, so all of those investors have a fiduciary 
responsibility to do their homework and vote. I personally 
think it is a disgrace when they rely on proxy advisors, and I 
think the proxy advisors are terrible. I am probably one of the 
few people who says that.
    I think it is a little bit worse than what you are saying 
because we have gone from 7,000 public companies to 4,000 
operating companies over the last 20 years or so, and that is a 
problem. We are driving them private. This is part of the 
reason.
    And one thing I want to add, they are starting to do this 
passthrough proxy voting so that your mother can vote her 
shares. I am kind of in favor of that. But the way shares get 
voted today, if the person does not vote it counts as a yes 
vote on all those proxies you are talking about. You have got 
to change that. It has got to be a quorum of all those who 
vote.
    Senator Hagerty. Senator Sullivan is working on legislation 
to address this right now, and I support that legislation.
    Mr. Dimon, can I stay with you for just a moment longer. As 
an industry that is trying to refute claims from both sides of 
the aisle with being partisan, do you think that this trend in 
so-called shareholder activism actually complicates your 
ability to serve your clients or to yield value for your 
shareholders, more broadly?
    Mr. Dimon. Well, I am going to do the right thing, 
regardless of all that. But it is causing a lot of 
consternation in corporate America.
    Senator Hagerty. I would like to take a minute to go to a 
topic that Senator Toomey has already touched on, and that is 
bank capital. Capital requirements are designed to be 
countercyclical, meaning banks buildup capital during good 
economic times so that they can absorb losses and still deploy 
capital during economic downturns. That allows them to lend to 
consumers and small businesses when access to credit is most 
needed.
    Fed Vice Chair Michael Barr all but indicated during a 
recent speech at the Brookings Institution that he intends to 
increase capital requirements for a large number of U.S. 
financial institutions, even as our economy has suffered two 
consecutive quarters of negative growth. That is the technical 
definition of a recession.
    So as our economy is in the midst of a serious weakening, 
do any of you believe that increases in capital requirements 
now will not have a negative impact on economic growth or on 
your ability to lend to growing businesses?
    I did not think so.
    Thank you, Mr. Chair.
    Senator Warnock. Senator Cortez Masto.
    Senator Cortez Masto. Thank you. Thank you, Mr. Chair. 
Thank you to the panel members for being here. Let me talk 
about an issue that is important in my State to help lower 
costs, which is affordable housing. And I want to thank both 
Mr. Scharf and Ms. Fraser. We have had this conversation.
    I just recently toured Decatur Commons. It is a $110 
million affordable housing rental development in Las Vegas. It 
is a beautiful, multi-family apartment development. It has 480 
new units, 240 units for low-income families and 240 units for 
low-income seniors. Citi and Wells Fargo helped provide the 
financing to build this with Nevada HAND in Nevada.
    Mr. Scharf, in the past 2 years Wells Fargo provided $128 
million to finance six affordable rental housing projects, 
providing nearly 1,000 new affordable units in Nevada. For 
those six developments, and in affordable housing just in 
general, your bank cannot just finance the entire cost of a 
large development. Is that not correct? In other words, you 
look to other complex financing that may come from low-income 
housing tax credits, the housing trust funds, vouchers, and 
other funds to make the deal pencil out. Is that right?
    Mr. Scharf. That is generally correct, yes.
    Senator Cortez Masto. And Ms. Fraser, in your testimony you 
shared that Citi has also provided $5.6 billion in 32 States to 
build affordable housing. Can you also share how Federal funds 
work with the housing developments Citi finances?
    Ms. Fraser. I think similar to how you described it. The 
low tax credits are an absolutely critical component to be able 
to bring together the different elements of a financing for the 
affordable housing projects, and we would certainly be 
encouraging the expansion of those credits so we can bring more 
and more capital into this critical need.
    Senator Cortez Masto. Thank you, because I do think it is 
important. I have listened to my colleagues. We all agree that 
we have got to lower costs around affordable housing. There is 
a role for Congress to play here. There is legislation that is 
out there that I support, and some of my colleagues do, that we 
should be passing to address this, to bring back the 
opportunity for families, first-time home buyers, for seniors, 
for low-income families, and so many, to be able to afford 
housing in this country. So I thank you for that.
    Let me give an opportunity to the other panelists. I am 
curious, with your banks, the work that you are doing around 
affordable housing as well. And I do not know, Mr. Moynihan, if 
you want to start.
    Mr. Moynihan. A couple of things, Senator. One, we compete 
for those projects and so we are all among the largest people 
who invest in low-income tax credit-driven transactions, and I 
think we have 2,700 properties around the country we invest in.
    One of the things I would raise with you to think about is 
in the Federal Advisory Committee you will see some reference, 
and we were asked by the Fed what could you do. So I think 
things like permitting, I think making sure that these tax 
credits are not lost if the OECD 15 percent tax rate is 
approved, because at the end of the day it drives the activity, 
and that is at risk if that gets approved, and that is up to 
you.
    I think the other thing is to continue to be inventive, a 
little bit like you did with the MDIs and CDFIs, with equity to 
developers to enhance the equity part, because we can only lend 
lenders something underneath us and you need both the expertise 
of development but also the equity. But it is a critical issue, 
and we all work on it every day. I mean, we have got literally 
$5 billion we did last year. We will do another $5 or $6 
billion this year. It is not something we are not familiar 
with. And I would encourage you to sit with our experts, and 
they can give you 8,000 things that could make it easier.
    Senator Cortez Masto. Thank you. Anyone else?
    Mr. Rogers. Thank you for your leadership on this, Senator. 
We have about $5 billion invested in affordable projects and 
about $1 billion last year, about 19,000 individual units.
    The only thing I could add to the discussion, I think 
opportunities to fast-track those projects in certain 
communities. As we talk to our builders they are often having 
times getting the approvals to get started. And I think if we 
could get affordable housing to the front of the line in 
communities it would be really helpful.
    Senator Cortez Masto. OK.
    Mr. Cecere. We have similar numbers, Senator, and I would 
also say, as you mentioned, the banks not only play a role in 
the low-income housing tax credit but it is collecting capital 
from all sources and making sure that the project is successful 
and is subjective. And I think that is a key component of our 
focus as well.
    Senator Cortez Masto. OK. Thank you.
    Mr. Demchak. We are obviously large in the business as 
well. I would just point out that this is one of the most 
successful private-public partnerships that I think we could 
point to in terms of having the intended outcome. And we should 
expand it and we should do more things like it.
    Senator Cortez Masto. Thank you. Thank you to the 
panelists. I appreciate it. Thank you, Mr. Chairman.
    Senator Warnock. Thank you so very much, Senator Cortez 
Masto. Senator Daines.
    Senator Daines. Senator Warnock, thank you.
    As we sit here today, inflation is up 8.3 percent from a 
year ago. It is barely below 40-year highs that we reached 
earlier this year. Food prices, shelter, new cars, medical 
services all increased by nearly a percentage point from last 
month. It is not surprising that we are seeing inflation. Those 
of us on this side of the aisle were warning the Administration 
back in March of 2021 about pushing forward here with these 
massive stimulus bills, when there was $1 trillion of unspent 
COVID funds sitting out there in December of 2020.
    Unfortunately, that was just the start of the spending for 
this Administration. In fact, an analysis from the Committee 
for Responsible Federal Budget estimates the Biden 
administration has approved $4.8 trillion in new borrowing 
through 2031, in the form of executive actions and enacted 
legislation. The student debt cancellation announced last month 
could cost as much as $1 trillion if you ask the folks over at 
Penn Wharton.
    It is amazing to me the Biden administration can say, with 
a straight face, that we are working to get inflation under 
control. While they have approved $4.8 trillion in additional 
borrowing, the so-called Inflation Reduction Act will reduce 
deficits by only $238 billion, leaving about $4.6 trillion in 
inflation creation.
    And, of course, this inflation comes at real consequences 
for Montanans and all American workers. We are seeing the 
decreases now in real wages of about 2.8 percent over the last 
year.
    I want to start, Mr. Dimon, President Biden recently said, 
during a ``60 Minutes'' interview, that inflation, quote, 
``needs to be put in perspective'' and that the monthly 
inflation rate had, and I quote, ``hardly risen.'' My question 
is, do you agree with that assessment and with the President's 
implication that we are overreacting to the inflation that we 
are seeing in this economy?
    Mr. Dimon. I am not going to comment on what the President 
said, but it is high. It is likely to come down a little bit 
because some of those things could go away. But pieces are more 
embedded, like wages, housing, which are not going to go that 
quickly. And a lot of that stimulus is not spent yet. So rising 
rates may have to go higher than what people expect, and of 
course, if you have a global recession for whatever reason, it 
would help ameliorate that, but that is the bad reason.
    The most important thing is to avoid stagflation. 
Stagflation is the most damaging to every part of society, 
every industry, all income levels, and, therefore, I think it 
is important to get our hands around inflation as quickly as 
possible.
    Senator Daines. Mr. Scharf, what are your thoughts there on 
the inflation battle?
    Mr. Scharf. I would agree with Mr. Dimon.
    Senator Daines. All right. Thank you.
    I want to shift gears for a moment and talk about board 
composition. I am very concerned as we look across corporate 
America. You know, I spent a good part of my private sector 
career working for a Fortune 50 company, to ensure that we have 
boards that have, I will just call it balanced ideological 
tension, for lack of a better phrase.
    We have seen what has happened with journalism, has gone 
left. Entertainment has gone left. I do not want to see 
corporate America tip the teeter-totter, frankly, one way or 
the other, as they work every day to take care of their 
shareholders.
    Mr. Moynihan, I know as we think about diversity I know you 
believe that is important, of course.
    Mr. Moynihan. Yeah.
    Senator Daines. And the question is ideological diversity. 
I heard somebody describe diversity at Harvard is where 
everybody looks really different but thinks exactly the same.
    The question is, I have looked at the Bank of America's 
board. It contains twice as many Democrat donors as Republican 
donors. And I am not asking that you tip the teeter-totter to 
the right, but how do you maintain ideological diversity as it 
relates to board composition?
    Mr. Moynihan. Honestly, I do not know what our board does 
for political contributions. It is not part of what we look at. 
Our company gives to candidates on both sides of the aisle--not 
our company but our PAC does, which is independent of me. I do 
not make decisions.
    But I think if you look at our board members, the thing you 
will find with consistency is executives have been in very 
senior roles, like you, in big companies, because of the 
complexity. So former CEOs, former bankers. It is a great board 
and they do a great job. But that experience base of making 
decisions in a big, complex company, is what we look for. I 
have never asked a director how they vote, honestly. I have 
asked them about their experiences and what they could do to 
help our company be better.
    Senator Daines. Ms. Fraser, I question on energy. We are 
seeing, of course, energy prices going up dramatically. Europe 
is a case study of what not to do at the moment. It is going to 
be a really tough winter over in Europe because of very poor 
choices made, starting with the Germans and others, in terms of 
taking out baseload power.
    You stated back in April of 2020, that you would not 
finance Arctic drilling in Alaska. However, Citi has had no 
problems doing business with Russian oil companies, and was the 
last to announce a pullout from Russia. In fact, Citigroup did 
not even stop soliciting clients in Russia for 3 weeks after 
the February 24th invasion.
    My question is, why would you be using market share to put 
pressure on a shut-down American energy when the world's energy 
supply is in great need of more made-in-America energy? Of 
course, energy demand is going to increase 50 percent in the 
next 25 years, for the world, so we need more energy, not less, 
and coal, oil, and gas should be part of it.
    Senator Warnock. I just want to note that the gentleman is 
50 seconds over already.
    Senator Daines. All right. I will let her respond.
    Ms. Fraser. Thank you for the question. Very briefly, I 
think there is a very important balance to be attained over the 
next few decades, the balance between energy security and 
energy supply, as well as a transition to cleaner energy 
sources, and that is going to be an important balance. We will 
play an important role in both.
    Senator Daines. Yeah. The Europeans lost sight of balance, 
let the record state. Thank you.
    Senator Warnock. Thank you, Mr. Daines.
    I will now acknowledge myself for questions. When it comes 
to the costs for families, the country's biggest banks often 
set the pace for the rest of the country. This is why it is so 
important for us to hold the biggest banks accountable for the 
services they provide. Smaller banks imitate policies that you 
set for your banks throughout the Nation. This is especially 
true for the fees you charge your customers.
    And in a recent report, the CFPB detailed the crippling 
effects of overdraft fees and the impact that this is 
continuing to have on families. These penalties fall on a small 
number of folks who carry most of the fees, with banks charging 
80 percent of fees to only 9 percent of account holders--80 
percent of fees to 9 percent of account holders. Typically 
these lower-income folks are already struggling financially. 
These fees make conditions worse and can keep them trapped in a 
cycle of debt.
    I do want to recognize that some of the banks present, such 
Citi and Bank of America, have eliminated or taken strides to 
reduce their fees. Mr. Rogers, earlier this year Truist 
announced a new account type with no overdraft fees. How do 
these accounts affect customers' overall financial health? What 
are you seeing, especially for those who frequently overdraft 
and lower-income folks?
    Mr. Rogers. Thanks, Senator. Specifically as to Truist One, 
this is an account with no overdraft fees. But the other 
feature that I think is almost more important is it has a 
negative $100 buffer. So in addition to not charging a fee, we 
did a lot of study and a lot of work about how much clients 
typically overdraw in terms of an amount. So this $100 negative 
buffer is afforded to every client and allows them to continue 
to transact. So not only not have fees but able to pay the 
daycare bill, pay the rental bill. And the activity we have 
seen in that is really important.
    And then also we have another account called the Truist 
Confidence Account. And I think in that case we have seen, and 
we have tried to do some studies around this to learn more, we 
have actually seen new entrants into the banking system. So 
someone who was previously unbanked who may have not come to 
Truist for some of our other account capabilities came into our 
system with these types of accounts.
    So I think in addition to providing the buffers, I think we 
are affording more entrants into the banking system, which I 
believe has got to be a goal for us.
    Senator Warnock. Well thank you. And some of the banks that 
are testifying today still have restrictive policies in place 
that make it difficult for hard-working families to meet their 
basic needs. So I would like to ask each of you, will you 
commit today to work to eliminate onerous fees? A simple yes or 
no would suffice, and you can elaborate in writing after the 
hearing.
    I will begin with Mr. Scharf. Will you work to eliminate 
onerous fees?
    Mr. Scharf. Senator, we have an account that does----
    Senator Warnock. A simple yes or no.
    Mr. Scharf. ----well, we have an account that does not have 
fees, so the customer has the option, and we are going to 
continue to look at our fee structures.
    Senator Warnock. Mr. Dimon?
    Mr. Dimon. I would say the same thing, that we have already 
made a lot of changes since that report, which I would love to 
share with you, and we have the same type of ways to make it 
easier for people. I do think giving people a choice and 
letting them opt in or out is the proper thing to do, and it 
actually saves them from far worse pain and suffering. They do 
not bounce a check or something. And a lot of people, they get 
charged much more on the other side. So when we looked at this 
we said it is more respectful.
    I agree with the fact it gets misused sometimes, and we 
have got to do a better job of counseling, closing, et cetera, 
for those where it is just too much.
    Senator Warnock. So you are committed to doing a better 
job?
    Mr. Dimon. Yes.
    Senator Warnock. Mr. Cecere?
    Mr. Cecere. Senator, we also have an account that provides 
no overdraft fees.
    I think an important component of this, as well, though, is 
education and alerts to the customers when they are entering a 
situation that they may overdraft, and help them in advance 
with other alternatives, and that is something we are also 
focused on.
    Senator Warnock. Mr. Demchak?
    Mr. Demchak. Senator, we led the charge to drop overdraft 
fees. We have two accounts with no fees. We have a unique 
product that actually allows the client to choose in the moment 
if they want to return the item or pay the item. And we will 
continue to look on how to improve that.
    Senator Warnock. I have seen, personally, as a Senator, as 
a pastor, the impact that these fees have on ordinary folks who 
are just struggling, trying to make ends meet. So this is an 
important issue, one that I will stay on.
    Now I am concerned with part of what is happening in this 
moment. According to the FDIC Quarterly Banking Profile, the 
banking sector's profits declined 8.5 percent year over year in 
the second quarter of 2022. And here is my concern, is that as 
you are dealing with that large economic reality I imagine that 
you have discussed ways to find new revenue streams or to cut 
costs.
    Mr. Moynihan, has Bank of America discussed opening up 
other revenue streams or reintroducing financial products to 
offset these losses?
    Mr. Moynihan. No, sir.
    Senator Warnock. Have you considered looking back at the 
changes your bank has made to reduce fees over the past year?
    Mr. Moynihan. No, sir.
    Senator Warnock. Ms. Fraser, same question.
    Ms. Fraser. We are perpetually looking at what we can do to 
make our fees more customer friendly and what we can do to make 
sure we provide access to those who do not have ready access to 
banking services. So it is a perpetual move that we make.
    Senator Warnock. So you are committed to not balancing your 
budget on the banks of the most marginalized customers.
    Ms. Fraser. Yes. We absolutely are committed to that.
    Senator Warnock. Thank you so very much, Mr. Chair. The 
distinguished Senator from Georgia.
    Senator Ossoff. I remember when you were all the way down 
here with me. I do not know what happened.
    [Laughter.]
    Senator Ossoff. OK. Thank you all for being here. I am 
going to try to get through a lot as efficiently as possible. I 
want to begin, Mr. Scharf, by talking about housing supply and 
affordable housing. I recently wrote to you and several other 
mortgage lenders about accessory dwelling units, so basement or 
backyard apartments, in-lawsuites. There are some regulatory 
changes that the FHFA related to agencies that may allow more 
lending to capitalize the construction of accessory dwelling 
units.
    I would just like your commitment that you are going to 
respond to my letter thoughtfully and consider how you can 
capitalize more of that construction to bring more housing 
supply online and help more families afford housing.
    Mr. Scharf. Absolutely, Senator. We will.
    Senator Ossoff. Thank you, Mr. Scharf.
    Ms. Fraser, I would like to ask you about language access 
to banking services for prospective homeowners, for 
entrepreneurs. Accessing credit, accessing depository services 
in languages other than English is important for many of my 
constituents. I noted that Citigroup now offers the Citi Mobile 
app entirely in Spanish. That is a step that I applaud.
    Just in brief, can you talk about other opportunities to 
expand access to banking services for Spanish speakers, Korean 
speakers, other non-English language speakers?
    Ms. Fraser. Well first of all I agree with you. The 
importance of making this very accessible, having it in a 
language one understands is an important element of providing 
access to banking services. The other efforts are also on the 
digital technologies that have evolved. Making sure that those 
are readily available for those populations that have not been 
used to working with a bank and may be intimidated walking into 
a bank branch or asking for assistance is also an important 
step forward.
    So I think both the app and also working with our different 
partners in various communities, making sure that we are 
providing webinars or other areas. So it is a friendliness 
toward the bank to build trust and understanding and comfort, 
with using the many services we have available.
    Senator Ossoff. Thank you, Ms. Fraser, and let us remain in 
touch about how the industry can better serve linguistically 
diverse communities.
    Mr. Moynihan, I would like to ask you a question about the 
vulnerability of various communities to fraud. There has been 
some discussion of Zelle here. I am particularly worried about 
scams and fraud that we have seen in Georgia, targeting 
veterans, targeting new mothers. I would like for you to just 
commit to following up with my office, your staff can follow up 
with my office, about the steps that you are taking and that 
you recommend based upon what you have seen is effective to 
protect veterans and new mothers and families in Georgia and 
across the country from fraud. Will you do that, please?
    Mr. Moynihan. Sure, Senator. I think you may have missed it 
earlier but we had a fairly robust discussion about all the 
commitments, with all of my colleagues and ourselves, to 
continue to work on the fraud side of this.
    Senator Ossoff. I did not miss it. I followed it closely. 
But I would just like to hear from your team on how we can work 
together to continue to crack down on fraud. Thank you so much.
    Mr. Scharf, a question for you about rural bank closures. 
Many rural counties in Georgia--Hancock County, Wheeler County, 
Dooly County--have lost branches. What steps can banks take--
and I have just got a-minute-and-a-half left, so more ground to 
cover--but in a nutshell, to sustain the availability of credit 
and banking services in rural communities?
    Mr. Scharf. First of all I think banks should be very, very 
sensitive, and I think we are, about not leaving the community 
unbanked. And so if we are looking at closing facilities we 
should think twice about it if there is no other banking 
service there. And that could mean us staying or working with a 
community bank or selling those deposits and customers to 
someone else there.
    That, in addition to some innovative solutions that we are 
all working through, such as mobile banking--I mean, physical 
mobile banking, which comes to different communities at 
different points in the week--is also an interesting solution.
    Senator Ossoff. Mr. Scharf, a follow-up for you. Obviously, 
as lenders you have obligations, fiduciary obligations, 
shareholder obligations, regulatory obligations, to assess the 
credit-worthiness of borrowers, and that is part of your job. 
How can credit-worthiness be accurately assessed without using 
methodologies with unintended consequences that might, for 
example, discriminate on race or other lines?
    Mr. Scharf. Well, I think, you know, one of the things that 
we talked about earlier is the need to continue to try and 
refine FICO scores, which I think we are all doing work on. A 
lot of it is being led by the OCC, but we all have our 
individual efforts as well, to look at things like rent 
payments, utilities, phone bills, and things like that, because 
those very often are the consistent payments that more diverse 
people wind up building their credit upon and are not always 
reflected in a FICO score.
    Senator Ossoff. Thank you. With the Chairman's indulgence, 
one final question.
    Chairman Brown [presiding]. Sure.
    Senator Ossoff. It is a compound question. You will forgive 
me, I hope.
    Mr. Dimon, this is a good one to close on. Dodd-Frank, what 
is working? What is not? And is financial regulation fragmented 
across too many agencies with overlapping jurisdiction? Let us 
see. Maybe the Chairman will give you a minute to answer that 
one.
    Chairman Brown. Mr. Dimon, try to answer it in 60 seconds.
    Mr. Dimon. What worked is to resolution recovery capital 
liquidity. That was all good. There are a lot of things in 
there that had nothing to do with all that. Lehman Brothers 
simply would not happen today. Too much capital, too much 
vulnerable debt, too much liquidity, et cetera.
    Regulation needs to be calibrated, so the things that do 
not work--as I mentioned yesterday, we are going to have a 
trillion dollars of cash at one point, unable to deploy it to 
help clients because you are going to run into these red lines 
of various capital.
    My request is people should just thoughtfully look at the 
effect of these things, and the regulatory system also made it 
very hard for regulators. So we talk about housing here. There 
are seven people with independent authority on mortgages, so it 
is almost impossible to change them in a way that would benefit 
America. And I wish one day we would fix that problem. We have 
Balkan-ized the system.
    Chairman Brown. Thank you. Thank you, Mr. Dimon. Thank you, 
Senator Ossoff.
    That concludes the hearing. Anyone listening today heard a 
lot from you about the strength of your industry, how well-
capitalized your banks are, how well you weathered the 
pandemic, how well your depositors did, how generously your 
banks have changed your overdraft fee schedule.
    But let us be clear. You are well-capitalized and you 
thrived throughout the pandemic because of the capital 
requirements and safety and soundness measures that we passed 
in Dodd-Frank, which you lobbied against, I would add. Your 
depositors had more money in their accounts because we put 
money in their pockets with the CARES Act and the American 
Rescue Plan and the child tax credit. You reformed your 
overdraft practices after years of pressure from this 
Committee. Most of what you boasted about today came about 
either because of laws this Committee and the Senate passed or 
because of pressure we placed on your industry, often despite 
some of your very expensive and very often effective lobbying 
efforts.
    Like most big corporations, big banks have repeatedly shown 
you will not do the right thing without strong laws, without 
accountability, without public pressure, without oversight. 
That is the job of this Committee.
    I say that, and I also say that as Chair I look for places 
of agreement, places we can work together. Today, not 
surprisingly, we found some. I listened to you about regulating 
what we should do about regulating fintech. I particularly 
appreciate the chair of PNC, and even when he did this, 
especially, [indicating] and how that, I think, really reached 
people on this Committee that were listening or watching, that 
we need to make sure that the growing part of the economy, the 
fintechs, what we need to do with ILCs, how we cannot count on 
them to do the right thing out of the goodness of their hearts, 
and they need strong rules too.
    Thank you again to the witnesses. For Senators who wish to 
submit questions, those questions are due 1 week from today, 
Thursday, September 29th. To all of the seven of you, again 
thanks for your cooperation. You have 45 days to respond to any 
of those questions.
    Thank you again. Senator Toomey, thank you. The Committee 
is adjourned.
    [Whereupon, at 12:20 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
    For too long, everyone called this Committee Senate Banking--
because it always delivered for Wall Street.
    We changed that, at the Senate Banking, Housing, and Urban Affairs 
Committee. We put the Main Street economy--and the workers who power 
it--at the center of everything we do.
    Part of that commitment is to hear directly from the biggest banks 
that hold so much power in the economy. It's our job to hold them 
accountable to their workers, to their customers, and to the American 
people.
    Today, we will continue a tradition we started last year, and hear 
from the CEOs of the Nation's seven biggest retail banks.
    After years of consolidation and concentration--through banking 
crises and rubber-stamped mergers--your banks dominate the banking 
industry.
    Together, you have over $13 trillion in assets--that's half the 
Nation's GDP. You have hundreds of millions of customers. You also have 
the benefit of a Federal backstop--a safety net--something that your 
customers don't have.
    Your decisions affect millions of peoples' lives--whether they can 
get their paycheck, how much it will cost to use their hard-earned 
money, whether they can save for retirement or their kids' education, 
whether they can buy a house or make rent.
    And you profit from all those transactions--to the tune of hundreds 
of billions of dollars. With those profits--and with the taxpayer 
support you get--come a responsibility to actually serve your customers 
and the larger economy.
    And I think you know you don't always hold up your end of the 
bargain:
    All of your banks have promoted Zelle, the payment app that most of 
you own. You pushed this on customers--but you haven't taken 
responsibility for the fraud that it's perpetuated.
    We all know about Wells Fargo's fake account scandal. And we've 
learned that Wells wasn't alone. In the never-ending quest for short-
term profits, it turns out that other banks pressured their employees 
to open fake checking and credit card accounts.
    Customers who trust you to look out for them ended up with 
unjustified fees, damaged credit reports, and accounts they did not 
want.or even know about.
    It's even worse for Black and Brown consumers. Too often they walk 
into many of your banks not knowing if their check will be cashed or if 
they'll be able to open an account.
    When mortgage rates were at record lows, many of you were more 
likely to deny mortgages for Black and Latino borrowers, making it even 
harder for these families to build wealth through home ownership.
    You focus on loans to wealthy clients who have massive stock 
portfolios. And at least one of you has complained about the paperwork 
on mortgages or small business loans for Main Street.
    And when consumers try to hold you accountable for cheating them 
out of their money, you subject them to forced arbitration.
    You take away people's choice on how to pursue justice--because as 
we all know, if there's one thing Wall Street hates, it's real 
consequences.
    And it isn't just the outright scams and fraud that damage our 
economy. It's your entire business model, with short-term, quarterly 
profits as the Holy Grail.
    I have talked with workers in Ohio and across the country--in 
places that so often get passed over for investment. They tell me about 
the challenges they have with the banking system. They've watched your 
banks let them down, time and time again.
    It's why so many people don't trust the financial system.
    They've been burned over and over by second-chance accounts, 
foreclosures, late fees, overdraft fees. They've been turned down for 
loans.
    They've seen branches close. They've been scammed out of their 
money.
    Yesterday, I spoke to an Ohioan whose accounts were illegally 
frozen by one of your banks. She had zero access to her funds for a 
whole week, and the bank intended to take $442 out of her account, 
leaving her with nothing.
    So it's not surprising that more and more Americans turn to shady 
payday lenders or risky crypto apps. They feel like they don't have any 
other choice, when they have bills piling up and need to come up with 
the money.
    Over a third of Americans report they wouldn't be able to cover a 
$400 expense in an emergency--if their car breaks down, if they lose 
their job, if their child needs surgery.
    All of you make tens of millions of dollars a year--150 to 900 
times what your median employee makes. You probably don't think twice 
about $400.
    That's not a luxury that most Americans have.
    They don't get the same breaks you do. During the pandemic, the 
Federal Reserve waived overdraft fees for banks--yet none of you waived 
those fees for your customers in 2020.
    And it's not just your customers who have to make tough choices 
because of decisions that you make.
    It's also your workers.
    You spend your billions in profits on exorbitant executive pay and 
stock buybacks--instead of investing in your workers, your customers, 
your communities.
    You say that you provide your workers with good pay and benefits, 
but how does it feel as a worker to be pressured to open fake accounts, 
to deny services to someone who walks in the door who doesn't look like 
you--hardly a culture promoting the dignity of work.
    Don't take it from me. Listen to what bank workers have said:
    From one Wells Fargo worker: ``We want the customer base to know 
we're forming a union really for them. We're tired of having our name 
dragged through the mud at Wells Fargo because of things that we've 
asked to have more control over, but the company refuses to give us 
that control.''
    Another worker said, ``They keep telling us we no longer have sales 
goals but we are given expectations as far as loan volume, new 
accounts, day-one mobile activations. Not meeting these expectations 
will result in disciplinary action.''
    They added, ``But the loyalty and responsibility I feel for my 
customers keeps me fighting every day.''
    Just trust us, you say. We're making changes, we don't need 
Government watchdogs, we don't need regulations.
    But trust goes both ways. And with crisis after crisis, and scandal 
after scandal, the biggest Wall Street banks have lost the trust of the 
American people.
    And as super regional banks get bigger and more complex, they're 
starting to look more and more like Wall Street.
    I expect all of your banks to build up capital, and use it to 
invest in communities--not just your shareholders, not just your own 
compensation.
    I expect you to treat all your customers fairly.
    And I expect you to take steps to make banking work better for your 
customers and your workers.
    Steps like: eliminating overdraft and excessive fees, lowering the 
costs of basic bank accounts, ending forced arbitration, offering 
affordable home loans to all eligible borrowers in all communities. It 
means paying your workers--including contractors who feed you, who 
clean your office, who keep your banks and offices safe--a living wage.
    Some of your banks have taken positive steps to eliminate some fees 
and give consumers more power and choice over their own money.
    Some of your banks have made commitments to increase your workers' 
wages. That's a good start.
    These positive steps need to be part of a real commitment to 
changing how Wall Street does business--not just one-offs.
    You are among the most powerful actors in our economy. Your entire 
industry, and its substantial safety net are supported by American 
taxpayers.
    It's past time for the financial industry to be as good to the 
American people as the country has been to you.
    We will continue to hold you to the highest standards, so that 
Americans can keep more of their hard-earned money.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Today's hearing presents an opportunity to discuss the role of the 
Nation's largest banks. At the outset, let me acknowledge what should 
be obvious: banks are essential for supporting the economy and 
advancing American competiveness.
    Their core functions--taking deposits, making loans, and processing 
payments, and, in several cases, underwriting and making markets in 
securities--help to safeguard savings and provide credit, which enables 
economic growth. With nearly $13 trillion in combined assets and 
operations ranging from mortgage banking to small business lending, the 
banks here today make vital contributions to the Nation's prosperity.
    But where I see a system at the heart of free enterprise, I worry 
other policymakers see opportunity for social engineering. Activist 
regulators and some of my colleagues see banks as a tool by which they 
can advance their social policy.
    Unfortunately, there's a growing trend of banks--several of them 
are represented here today--inserting themselves into highly charged 
social and political issues unrelated to their businesses. Banks' 
willingness to help liberal policymakers achieve their liberal goals 
makes it very difficult to mount a principled defense against such 
politicization.
    Some of my colleagues are pressuring banks to use both their 
balance sheets and their influence to address issues wholly unrelated 
to banking, such as global warming, gun control, voter rights, and 
abortion. Several large banks have been far too willing to acquiesce to 
these demands by embracing a liberal ESG agenda that harms America.
    Nearly every bank at this hearing has pledged to meet a ``net 
zero'' greenhouse gas emission goal by 2050, with several making even 
more specific commitments. Carrying through on such pledges will 
eventually lead these banks to artificially restrict, reduce, or cut-
off funding for traditional energy projects.
    Despite statements to the contrary, none of this has much to do 
with borrowers' credit quality or so-called transition risk. It's 
because activists have made the traditional energy sector politically 
disfavored.
    We're witnessing the folly of such policy right now in Europe, 
which strangled its own fossil energy sector and now finds itself 
deeply reliant on Russian gas. Does anyone really believe that as the 
U.S. experiences 40-year high inflation we should exacerbate the 
problem by reducing oil and natural gas production and increasing 
energy prices? But that's exactly what will happen if banks follow 
through with their ``net zero'' pledges and ESG agenda, as 
environmental activist groups have urged.
    When combined with the SEC's proposed climate disclosure rule, 
these ``net zero'' pledges are setting up banks for lawsuits and legal 
liability. Apparently some banks are starting to acknowledge this 
reality.
    A report in the Financial Times this week says some banks are 
considering leaving the so-called ``Net-Zero Banking Alliance''--a UN-
sponsored group that intends to name and shame banks that don't meet 
net zero pledges. It was a mistake to join this group in the first 
place, but, for the sake of shareholders and the U.S. economy, banks 
distancing themselves now would be a welcome step.
    In addition, banks have inserted themselves into contentious social 
issues, and, in some cases, even made business decisions based on these 
factors. For example, several banks responded to pressure from 
Democrats in the wake of the Supreme Court's Dobbs' decision by very 
publicly pledging to pay for the costs of their employees to travel to 
have abortions. This decision is an individual bank's choice, but it 
raises a number of questions, such as: Have these same banks also 
committed to pay the costs for their female employees facing unplanned 
pregnancies to place their children for adoption?
    Notably, when it comes to the right to keep and bear arms--which is 
an actual constitutional right--some banks have gone out of their way 
to make it harder for law-abiding Americans to exercise this right, 
from stopping the financing of manufacturers of so-called military-
style firearms for civilian use, to de-banking retailers that sell 
firearms to customers under 21 years of age, even when such sales are 
lawful.
    I can't help but observe that when banks do weigh-in on highly 
charged social and political issues, they seem to always come down on 
the liberal side. Beyond the examples I've already given, there are 
others.
    Banks have opined on abortion, but not religious liberty. Banks 
have expressed support for voting access, but are silent on voting 
security. Banks have expressed support for DACA, but I've heard nothing 
about border security.
    My view is it's bad business to alienate roughly half the country, 
but you are private companies and are free to opine as you see fit. 
However, it's no wonder there's been a strong backlash from 
policymakers in States like Texas, West Virginia, and Florida.
    If banks don't cease and desist from weighing in on social and 
cultural issues, don't be shocked if Republicans, once back in power 
nationally, seek to pressure banks to advance their goals. Could banks 
be forced to explicitly de-bank corporate customers that engage in woke 
policy debates, like Disney did in Florida? Or will banks be 
incentivized to subsidize oil and gas financing? Or explicitly reject 
ESG?
    I would oppose such efforts, just as I oppose similar efforts by 
liberals. But once the precedent is set, the potential for future abuse 
is limitless.
    Throughout this Congress, I've repeatedly warned about the 
politicization of our financial regulators and our central bank. I've 
emphasized that addressing political issues requires difficult 
decisions involving tradeoffs. In a democratic society, those tradeoffs 
must be made by elected representatives, who are accountable to the 
American people.
    Today, I'm raising similar concerns about the politicization of our 
Nation's banks. Just as regulators and central bankers are not elected 
by the American people, neither are bank CEOs.
    Banks are currently at a critical crossroads: Accept the role that 
some liberals prefer which is to have your institutions implement 
social policy on behalf of the State, or embrace your history as 
drivers and promoters of free enterprise and stay out of highly charged 
social and political issues.
    I strongly suggest you choose the latter path. If you don't, you 
risk being treated as public utilities--by both parties--in the future.
                PREPARED STATEMENT OF CHARLES W. SCHARF
                CEO and President, Wells Fargo & Company
                           September 22, 2022  
                           
                           
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              PREPARED STATEMENT OF BRIAN THOMAS MOYNIHAN
                   Chairman and CEO, Bank of America
                           September 22, 2022

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                   PREPARED STATEMENT OF JAMIE DIMON
                 Chairman and CEO, JPMorgan Chase & Co.
                           September 22, 2022

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                   PREPARED STATEMENT OF JANE FRASER
                             CEO, Citigroup
                           September 22, 2022

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              PREPARED STATEMENT OF WILLIAM H. ROGERS, JR.
             Chairman and CEO, Truist Financial Corporation
                           September 22, 2022

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                   PREPARED STATEMENT OF ANDY CECERE
               Chairman, President, and CEO, U.S. Bancorp
                           September 22, 2022

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                PREPARED STATEMENT OF WILLIAM S. DEMCHAK
     Chairman, President, and CEO, The PNC Financial Services Group
                           September 22, 2022

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      LETTER SUBMITTED BY NATIONAL COMMITTEE FOR RELIGIOUS FREEDOM

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