“We need long-term change, not just one-time investments, to root out racial injustice in the banking industry.”

In August, Pressley Wrote to Bank CEOs Requesting Audits on Commitments to Address Racial Wealth Gap After George Floyd’s Murder

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WASHINGTON — Today, in a House Financial Services Committee hearing, Congresswoman Ayanna Pressley (MA-07) discussed the letters she sent to the CEOs of the five largest banks in America requesting a detailed update on the banks’ racial equity commitments, and called for institutional policy changes to address racial inequity in the financial industry and close the racial wealth gap. Rep. Pressley has received responses from all five banks.

During the hearing, Rep. Pressley questioned Treasury Secretary Janet Yellen about the threat posed by racism and racial inequity to the financial system and highlighted the need for banks to make policy changes such as eliminating overdraft fees, expanding language access, opening physical branches in Black communities, and diversifying bank leadership.

In August, Rep. Pressley sent letters to the CEOs of the five largest banks in the United States – J.P. Morgan Chase, Bank of America, U.S. Bank, Wells Fargo, and Citi – outlining the glaring racial disparities perpetuated by the financial industry and requesting a financial audit report detailing the current status of their pledges.

Footage of Rep. Pressley’s exchange with Secretary Yellen can be found here, and a transcript is below.

Transcript: Pressley Gets Answers from Banks on Racial Equity Pledges, Calls for Institutional Changes to Address Inequity, Close Wealth Gap

House Financial Services Committee.

February 6, 2024

REP. PRESSLEY: Thank you for joining us Secretary Yellen. On August 23rd of last year, I sent letters to the CEOs of the five largest banks in the United States: JP Morgan Chase, Bank of America, U.S. Bank, Wells Fargo, and Citi.

I sought detailed information on the status of the pledges they announced in response to the global movement for Black lives in 2020 following the murder of George Floyd.

Collectively, the five banks pledged more than $32.5 billion toward investing in racial equity. Although the racial wealth gap is over $10 trillion, it was encouraging to see the banks take this step.

For generations, there has been the intentional refusal of mortgages to Black residents, the systemic denial of loans to Black entrepreneurs, and the wholesale redlining of Black neighborhoods.

I truly believe that the banking industry has long contributed to the problem and must now work toward the solution.

When I told this to the CEOs and requested an audit, I received a response from each of the five banks. For months, my team poured over hundreds of documents. And it’s clear that the banks have made progress to fulfilling their racial equity promises in many areas.

Unfortunately, there has been little-to-no progress in the category of institutional policy changes. This category is focused on the internal policies of a bank, not just the external investments. It includes things like eliminating overdraft fees, expanding language access, opening physical branches in Black communities, and promoting Black people to the highest leadership levels of the bank.

Our final analysis is that steps have been taken but not enough. We need long-term change, not just one-time investments, to root out racial injustice in the banking industry.

Secretary Yellen, when financial institutions perpetuate and benefit from racism, discrimination, and the exploitation of Black communities, they exacerbate systemic risk in our financial system.

The FSOC Analytic Framework for Financial Stability Risks published last November pointed out that risks to low-income, minority, and underserved communities can become serious enough to pose a threat to financial stability. For example, in the 2007 to 2009 financial crisis, we saw how decades of redlining made Black communities more vulnerable targets for subprime mortgages.

In light of this, and I hope this is a simple yes or no answer, Secretary Yellen, is do you agree that racism and racial inequity is a threat to the financial system?

SEC. YELLEN: Well, it could be, and it is one of the factors that Dodd-Frank told us to take into account in considering designations.

REP. PRESSLEY: I’ll take that as a yes. Very good. And to follow up on that: what steps is FSOC taking to monitor and mitigate the threat that racist practices and policies perpetuated by banks can pose to the financial system?

SEC. YELLEN: Well, individual supervisors of banks are responsible for ensuring, for example, that CRA requirements are met by banks, and the CFPB has authority to make sure that our fair lending and other laws are obeyed.

REP. PRESSLEY: Alright. Okay. Well, just as I close here, Chair McHenry, in previous Congresses, this committee held hearings with the largest financial institutions in order to allow members to directly ask them questions on the record. This, of course, is in recognition of the bank’s outsized role in our economy and our congressional responsibility for proper oversight for the American public. Mr. Chair, will you convene a hearing with the CEOs of the largest banks?

CHAIR MCHENRY: Will the Gentlelady restate her question?

REP. PRESSLEY: Yes.I wanted to ask if you would follow the esteemed tradition and efforts of Ranking Member Waters and do a hearing with the largest banks so that we could ask them questions on the record and conduct proper oversight given the outsized role they play in the economy.

CHAIR MCHENRY: It was the Chair’s decision that it was easier just to watch the Senate do that hearing rather than hear the second day of the same testimony. So that’s why the Chair did not do that this year.

REP. PRESSLEY: Alright. Okay, welp, that’s my time. Thank you, and I yield back.

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