With White House in their sights, Democrats challenge Wall Street

CEOs of America’s biggest banks were summoned for the first time since the 2008 crisis by a congressional committee on Wednesday, raising their hands as they swore their oaths ahead of their testimony.

It was a powerful image that underscored the recent change in control of the House of Representatives, which came under Democratic control in January after eight years of Republican rule.

“This is a new way and it’s a new day,” said Maxine Waters, the first woman and first African American to chair the powerful House Financial Services Committee.

Tim Sloan, the former CEO of Wells Fargo, testified at a previous hearing in March.

This time, it was the turn of the heads of Citigroup, JP Morgan Chase & Co, Morgan Stanley, Bank of America, State Street Corporation, BNY Mellon and Goldman Sachs.

Waters had previously tangled with some of them at the peak of the crisis, when the global financial system was imperiled.

The current round of cross-examinations has less to do with the stabilization of the financial system and more the social impact of Wall Street.

“You, captains of the universe, are smart enough and creative enough and understand this business enough to see what you can do about these citizens, these young people,” said Waters.

Some of the Democrats on the committee have focused on spotlighting the gap between these executives, all male, white and fabulously wealthy, and the rest of society — a tactic criticized by the panel’s ranking Republican as headline-seeking.

In one probing exchange, Nydia Velazquez, a Democrat of New York, pressed Citigroup Chief Executive Michael Corbat to justify his 2018 pay of $24.2 million, an estimated 486 times that of the average employee.

Corbat said his pay was set by the board of directors and that, if he were an average employee who observed the yawning gap, “I would be hopeful that there’s the opportunity to continue to advance.”

“This is why people who live in a bubble and in an ivory tower cannot understand the anger out there, especially among millennials,” Velasquez shot back.

– Counter-attack –

It is this groundswell of anger, despite sold growth figures and plentiful employment, that Democrats are hoping to tap not only to keep their House majority in 2020 but also to seize the Senate — and the White House.

Wall Street and its big bosses are already a key part the of the presidential campaigns of several candidates vying for the Democratic nomination, spearheaded by ultra-progressives Bernie Sanders and Elizabeth Warren.

“Our campaign is about taking on the powerful special interests that dominate our economic and political life,” vowed Sanders, a socialist.

The independent senator from Vermont — who votes with the Democrats — introduced a bill in October “to break up the nation’s biggest banks.”

Ten years ago, Warren was deeply involved in the rescue and reforms that took place after the financial crisis, making regulation of Wall Street her defining issue.

She has already inked out detailed proposals for dismantling tech giants, raising taxes on huge companies and tightening financial regulations.

Warren is already a powerful voice for these issues in the Senate, though her party remains in opposition there.

But she is delighted to see her colleagues in the House on the offensive.

“The Republicans have been trying as hard as they can to reduce oversight over the biggest banks and the Democrats are now fighting back,” she told AFP.

“The too big to fail banks are bigger than ever and they are up to their old ways of trying to hide risks on their balance sheets and at least some of them have been caught repeatedly cheating their own customers.

“That’s how we got into a big mess in 2008 that nearly broke the worldwide economy and that’s why they should be better regulated today.”