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Congress grills big bank CEOs on compliance, diversity, and the economy

Yahoo Finance's Alexandra Semenova breaks down what to expect from the big bank CEOs' congressional testimonies.

Video Transcript

[AUDIO LOGO]

JULIE HYMAN: Jamie Dimon, Jane Fraser, and other bank CEOs currently on Capitol Hill for their annual grilling by lawmakers. It's funny that's happening in the same day as FOMC day. On deck for today, discussions on the economy, consumer protection, fossil fuels, firearms, and more. Yahoo Finance's Alexandra Semenova is watching closely. I don't think it usually happens on the same day.

ALEXANDRA SEMENOVA: Yeah, I mean, today's hearing certainly fell into the shadow a bit with all eyes on the Fed. But this is still a big event, with the leaders of some of the biggest banks in the US set to be grilled by congressional leaders. Now, typically, the purpose of these testimonies is to discuss topics like consumer protection, compliance, racial inequality, and those things will certainly be addressed. But given the macroeconomic backdrop, it is inevitable that we'll be getting a lot of remarks on the economy and on inflation.

Now, the hearings are getting underway right now, but the testimonies are pre-written. And I read through some of them. Based on those notes, Jamie Dimon is slated to discuss conflicting trends in the economy and make his usual storm warning. He's going to talk about the irony of strong consumer spending and a robust labor market against the backdrop of historic inflation, quantitative tightening, and the war in Ukraine. And, you know, he's going to mention strong consumer balance sheets and how these are headwinds, while the economy is also facing many tailwinds.

Citibank CEO Jane Fraser will also echo that tune on the economy. She's going to call today's conditions "no less daunting than the start of the pandemic." And then also on the regulatory front, Dimon will complain about higher capital requirements for banks. That is the amount, of course, of liquid capital that financial institutions are required to hold to ensure that they don't have too many investments and risk default. And Wells Fargo CEO Charlie Scharf is set to ask Congress for patience as Wells Fargo works to meet their regulatory expectations.

BRAD SMITH: Now, on the topic of bank compliance, Morgan Stanley, they had a bit of a snafu protecting its customers. What happened there?

ALEXANDRA SEMENOVA: Yeah, a bit interesting the timing of this. Morgan Stanley CEO James Gorman will actually not be at the hearings today. But yesterday, Morgan Stanley agreed to pay a $35 million fine to the SEC after the bank allegedly failed to keep personal information from millions of customers safe. According to the SEC, Morgan Stanley improperly disposed of devices containing sensitive information and repeatedly hired moving and storage companies that did not know how to properly dispose of this information. And they just paid the fine. They did not resist it.

BRAD SMITH: Wow. Yahoo Finance's own Alexandra Semenova, thanks for tracking, of course, the hearings taking place, as well as--

ALEXANDRA SEMENOVA: Yeah, we'll be listening to those all day.

BRAD SMITH: --the latest in the sector. Definitely. Appreciate it.