WASHINGTON, D.C.— Dennis M. Kelleher, Co-founder, President, and CEO of Better Markets issued the following statement in response to the testimony of Wall Street’s CEOs today before the Senate Banking Committee.
“Wall Street’s CEOs testified before the Senate Banking Committee today as if they were the chief employment and economic growth officers for the United States and that all they care about are Main Street jobs, economic growth, small business, minorities, and low-income people. They never mention that (1) they made $1 trillion in profits over the last ten years, (2) the four largest banks reported about $30 billion in profits in the third quarter of this year which was 45% of the total profits of the entire banking industry, (3) they paid themselves hundreds of billions of dollars in bonuses, (4) the four largest banks paid out $629 billion of their net income to shareholders in buybacks and dividends since 2013, which was 80% of their net income over that period, (5) more capital is good for everyone except Wall Street CEOs, and (6) the Wall Street threat to Main Street is not over-capitalized banks, but undercapitalized banks.
“What the CEOs really care about is maximizing their profits, revenues, and bonuses, which is their right if not their duty in our capitalist system. As a result, everything else is subordinate to or in service of those priorities, but they can’t say that, so they talk Main Street jobs, the economy, small business, minorities, and low-income people. That’s why they claim more capital will hurt Main Street, even though it really protects Main Street families from Wall Street most high risk, dangerous activities, claim to worry about mortgage lending even though the bank share of mortgage lending has steadily declined for decades, and claim concerns about small business lending even though the largest banks make the smallest amount of small business loans relative to their asset size. It is also noteworthy that the banks’ default assumption is that any increased cost to them must be entirely passed on to borrowers and bank customers, but that isn’t true. That is the choice the banks make. They could just as easily reduce their huge buybacks, dividends, and bonuses just a little, which would avoid cost increases to customers.
“Wall Street banks have been screaming that every rule proposed since the 1930s would grievously hurt the economy, financial system, and the American people and today regrettably was no different, as Senator Mark Warner pointed out. This reflexive practice of attacking every rule and deploying an army of lobbyists and lawyers to kill them discredits and overshadows meritorious input on how the rules could actually be improved. Banks have the ability if not the duty to provide input on rules that impact the critically important products and services they provide to the American people. That can and should be done without indiscriminately attacking rules and regulators. They need to recognize that policymakers are required to regulate their banks to prioritize and protect the public interest while ensuring that they don’t externalize the cost of their most high risk and dangerous activities. Yes, there’s a balance that’s difficult to achieve and reasonable people can disagree about how to strike that balance. Less reflexive attacks, fake outrage, and exaggerated claims would be more likely to get that balance right, which is what will really help Main Street jobs, economic growth, small business, minorities, and low-income people.”
A Fact Sheet on these issues is here, a Fact Sheet on Wall Street’s ten top false claims about capital is here, an Op Ed on how higher capital protects Main Street but lowers Wall Street’s bonuses is here, and a Report on the importance of capital to protecting Main Street Americans is here.
Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.