Why Democrats Are Angry With Wall Street
Senator Sherrod Brown, D-Ohio, has not forgotten the Great Recession.
In the first half of 2007, Brown recalls, there were more foreclosures in his hometown than anywhere else in the country. It was a period that led to the global financial crisis: millions of Americans lost their homes, while banks and other corporate sectors were rescued by billions of dollars in bailouts.
Over a decade later, Democrats control the White House, the US Senate, and the US House of Representatives, along with Brown and other populists like Senator Elizabeth Warren, D-Mass., And Representative Maxine Waters, D-Calif., Are in powerful perches to watch over the big banks.
And Brown, like many of these top Democrats, thinks too many Americans still have the small end of the stick.
“They are never bailed out,” Brown said in an interview with NPR. “They never get a second chance. They just aren’t in a position in an economy like this, where Wall Street makes the rules, where they can move forward.”
That anger was magnified at a time when banks saw their profits soar during the pandemic, in part thanks to strong actions by the Federal Reserve to support markets.
And top Democrats believe they are justified in pushing for change at the big banks.
They want to push the biggest financial institutions in the country to be agents of social change. And they have specific goals, like expanding access to loans and charging lower fees for average Americans, or better reaching unbanked and underserved communities.
“They behaved very well during the pandemic,” Brown notes of the banks. “We have seen stratospheric compensation levels. We are seeing share buybacks and dividend payouts. Yet wages across our economy are essentially flat.”
Brown is the chairman of the Senate Banking, Housing and Urban Affairs Committee, which also includes Warren, another Democrat known to be tough on Wall Street.
The Massachusetts senator was instrumental in establishing the Consumer Financial Protection Bureau (CFPB) in the aftermath of the global financial crisis.
“You know, most people think of Congress in terms of legislation, and yes, that’s part of the job,” she told NPR. “But the other part of the job is surveillance.”
This was in evidence when Brown’s committee last week invited CEOs of the nation’s six largest banks to interview them as part of an annual watch.
During that hearing, Warren asked Jamie Dimon, the chairman and CEO of JPMorgan Chase, about the overdraft fees the bank charged its customers during the pandemic, which she estimated to be nearly $ 1.5 billion. dollars.
The heated exchange ended when Warren asked Dimon if he would volunteer to return that money. He refused.
Warren isn’t shy about pushing banks to do more given their role as critical institutions in society.
Bank executives, says Warren, “have a responsibility to make their banks part of the solution to our economic and racial problems across this country.”
But Republican lawmakers disagree with that very premise. They criticize executives for their comments – on voting rights, in particular, and they criticize companies that make business decisions based on environmental considerations.
“That should be left to elected lawmakers,” says Sen. Pat Toomey, R-Penn., The Rank Republican on the Senate Banking Committee.
Bankers are not naive about the politics at stake. Democrats have a small majority in the House of Representatives and a tiny majority in the Senate. And the midterm elections are less than two years away.
But even with a shift in power in Congress, analysts warn banks may face continued pressure from Democrats – and society – on key aspects of their operations, to which they lend money there. where they invest.
“Banks have no choice but to tackle these issues because it impacts their communities, their customers and their employees,” said Mike Mayo, banking analyst at Wells Fargo Securities. “You have to live in the real world, and the real world has these problems in the course of banking operations.”
This message was clearly expressed by Waters, a California lawmaker well positioned to influence banks as chairman of the House Financial Services Committee.
“You know, what I discovered about the banking community is that they’ve had a way of operating traditionally, historically, and they don’t change easily,” Waters told NPR.
But Waters adds that she will always demand changes on Wall Street.
“I think a lot of them have come to understand that I can be treated, but I can’t be fooled. I can’t be fooled,” she said. “And I do not accept to be undermined.”
An earlier version of this story incorrectly stated that Democrats controlled all three branches of government. In fact, they control the White House and Congress.