NEW YORK: The US economy is strong and Wall Street has reformed practices that contributed to the financial crisis a decade ago, chief executives of some of the largest US banks said in prepared testimony released by the House Financial Services Committee late on Monday.
But in discussing all the progress that has been made, there was also an acknowledgement that scars from the crisis linger, and that many consumers still have a negative perception of the financial industry.
“Confidence in US financial services and the American economy remains uncertain,” wrote Jamie Dimon, CEO of JPMorgan Chase & Co, the largest US bank.
Testimony from CEOs of Citigroup Inc, Goldman Sachs Group Inc, Morgan Stanley, Bank of New York Mellon , State Street Corp and Northern Trust also appeared.
Wednesday will mark the first time the largest US banks have appeared before Congress since the 2008 financial crisis, and will see the CEOs face off against Democratic Representative Maxine Waters and progressives including Alexandria Ocasio-Cortez, who have fiercely criticised Wall Street. Waters leads the committee which vets financial companies on behalf of the US lower house.
As the 2020 election race heats up, US Democrats driven by progressive firebrands like Senators Bernie Sanders and Elizabeth Warren see financial inclusion as a draw for voters.
In their testimonies, the chief executives emphasised a range of regulatory measures including stress tests and so-called “living wills” adopted since 2008 that have helped bolster capital levels and improve the safety and soundness of the US system, as well as other improvements to risk management and culture.
Some banks including Morgan Stanley also emphasised the contribution they make to the US economy through community lending, underwriting and green finance, while also acknowledging the industry needed to do better on liberal issues like diversity.
“We recognise that we have significant work to do to achieve our diversity goals, and that it requires efforts at every level of the firm to deliver results over the long term,” Morgan Stanley CEO James Gorman wrote in his testimony.
Citigroup said the biggest US banks are in a better position to handle an economic downturn at present than they were during the last crisis, adding that the bank has doubled its regulatory capital since the financial crisis despite shrinking its balance sheet by US$500 billion over the last decade.
“We recognise that rebuilding trust is harder than rebuilding your balance sheet,” said Citigroup Chief Executive Mike Corbat.
The executives also discussed cybersecurity, diversity initiatives, executive compensation and controversial arbitration clauses in consumer contracts, in response to questions asked by Waters, who invited them to appear.