Democratic Senator Elizabeth Warren slammed Jamie Dimon Wednesday for the $1.5 billion in overdraft fees that JPMorgan Chase collected from consumers last year during the pandemic.
“Mr. Dimon, you are the star of the overdraft show,” Warren said during a Senate hearing.
The Massachusetts senator said JPMorgan collects seven times more in overdraft fees per account than its competitors.
“I think your numbers are totally inaccurate,” Dimon said.
A JPMorgan spokesperson called Warren’s comparisons “false,” noting the senator is likely comparing the bank to much smaller retail lenders.
Warren noted that regulators issued guidance in early 2020 recommending banks automatically waive overdraft fees for customers hurt by the twin health and economic crises. However, the joint guidance Warren’s office linked to later on Wednesday does not say the overdraft fees should be “automatically” waived, only that banks should be “responsive to the needs” of impacted customers.
“We waived the fees for customers upon request if they were under stress because of Covid,” Dimon said.
Warren pointed out that overdraft fees are disproportionately paid by Americans making less than $50,000 a year and minorities. And she said JPMorgan would have still made nearly $28 billion last year if it had not charged overdraft fees.
Asked if he would commit to refunding those fees, Dimon simply said, “No.”
“You and your colleagues came in today to talk about how you stepped up and took care of customers during a pandemic,” Warren said, “and it’s a bunch of baloney.”
Update: A JPMorgan spokesperson told CNN Business: “Last year, when customers said they were struggling, we waived fees on over 1 million deposit accounts, including overdraft fees – no questions asked.”
JPMorgan also noted that it does not charge overdraft fees when customers are less than $5 overdrawn at the end of the day or the transaction is for less than $5. The bank added that it offers an account that doesn’t have overdraft fees.
Wall Street closed Wednesday’s session modestly higher: The S&P 500 finished up 0.2% and the Nasdaq Composite ended 0.6% higher. The Dow, which turned 125 today, was flat.
Walgreens (WBA) was one of the worst-performing stocks of the day, closing down 4%, following a report that Amazon (AMZN) is mulling physical pharmacies.
In a major climate milestone, at least two ExxonMobil directors were ousted Wednesday following a bruising battle with activist investor Engine No. 1.
Exxon said Engine No. 1 won two of the four board seats it was seeking – and the two additional board seats are still too close to call.
The hedge fund argued Exxon is dragging its feet on the climate crisis and also pointed to the company’s poor financial performance.
The proxy battle was the first at a major US company in which the case for directorial change is being built around the shift away from fossil fuels.
The labor market is heating up with the broader economy. More people are looking to go back to work and change careers. That’s good news for online jobs site ZipRecruiter (ZIP).
The company went public Wednesday via a direct listing of its shares, and the stock popped nearly 16% from its reference price of $18 following its debut. At a price of just under $21 in midday trading, ZipRecruiter is worth $2.8 billion.
ZipRecruiter joins a growing list of high-profile companies that have recently chosen to list existing shares on Wall Street instead of selling new stock via a more traditional initial public offering or through a merger with a blank check firm known as a special purpose acquisition company, or SPAC.
So far in 2021, popular online gaming platform Roblox (RBLX), Coinbase (COIN) and web hosting firm Squarespace (SQSP) have all gone public through direct listings. Spotify (SPOT) and Palantir (PLTR) have also done direct listings in recent years.
ZipRecruiter faces a lot of competition from the likes of CareerBuilder and Indeed, Microsoft’s (MSFT) LinkedIn, as well as Monster Worldwide, which is now owned by Dutch HR giant Randstad (RANJY). But ZipRecruiter is profitable, having earned $86 million last year and another $13.4 million in the first quarter of 2021.
The issue of Bitcoin’s carbon footprint is the big topic of discussion everywhere, not least because everyone’s favorite cryptocurrency “expert” Elon Musk (TSLA) has only recently become aware of it.
In essence: it takes a huge amount of energy to fuel the computing power necessary to mine new Bitcoin, and that’s not very green.
To be sure, not all cryptocurrencies are mined in the same way and suck up that much energy.
Green stocks could be the next bubble, but don’t worry, we’re not talking about the circa- 2008-housing-market kind of bubble.
Usually investors start worrying about bubbles just as they’re about to burst (i.e. way too late) but there are lots of investing opportunities while they’re forming, said Jeffrey Kleintop, chief global investment strategist at Charles Schwab (SCHW) on CNN Business’ digital live show Markets Now.
With the Biden administration intending to spent big on green infrastructure, Europe following along and China looking to clean up the quality of its own economic growth, companies with a “green” label could do very well.
Elsewhere, Kleintop believes investors should be in cyclical stocks to be well positioned for the post-pandemic economy.
“We like financials and it has to do with many different aspects of their businesses but it’s also that their valuations are pretty low,” he said. Loan demand is returning, asset prices on their balances are improving and that’s a positive in the longer term.
The used car market has been on fire for months as consumers acted on the urge to have more mobility during the pandemic.
The supply of additional vehicles, additional stimulus checks that helped bolster Americans’ wallets, as well as chip issues for new cars weighing on the new car market were all reasons that demand for used cars went through the roof, said Bill Nash, president and CEO of CarMax (KMX), America’s biggest used car retailer.
“Our inventory is down and it’s more a reflection of our production capability versus demand,” Nash said on the CNN Business digital live show Markets Now.
So will prices keep rising? Maybe so, but there’s a natural ceiling.
“At some point the used car prices bump up against the new car prices,” Nash said, who said the market is “pretty self-correcting.”
So as long as there’s a gap there used car retailers will continue to do well.
Tech stocks are not dead, according to Lo Toney, founding managing partner at Plexo Capital.
“Overall, long-term we continue to be bullish on the future of technology,” Toney told Alison Kosik on the CNN Business digital live show Markets Now. “We like the opportunities that are going to present themselves as consumers begin to spend more and travel more.”
Even as the industry is experiencing some turbulence and investors reposition for an economy that’s emerging from the pandemic, there’s still reason to be excited about the tech space.
“We’re continuing to see positive numbers come out,” he said with regards to recent economic reports. “I think that’s spurring a lot of optimism.”
Jitters concerning higher inflation also seem to be subsiding today, he said.
Jamie Dimon acknowledged the housing boom may be getting out of hand, but the JPMorgan Chase CEO isn’t worried about a repeat of the Great Recession.
Dimon acknowledged during a Senate hearing on Wednesday that there “is a little bit of a bubble in housing prices.” But, he added, “unlike in ’08 and ’09, when there was tremendous leverage and bad mortgage underwriting, there is not much leverage and much better mortgage underwriting.”
His comments came in response to a question from Senator Jon Tester asking if there is a housing bubble. Dimon was the only big bank CEO to outright say there is a bubble, but he stressed the financial system is better positioned this time because banks have stocked up on loss-absorbing capital.
Goldman Sachs CEO David Solomon said he doesn’t see a bubble, though he urged the Federal Reserve to “get the right balance” in policy to keep booming asset prices in check.
Morgan Stanley CEO James Gorman said while housing is not in a bubble nationally, some markets “look very frothy.”
“This has to be monitored very closely,” Citigroup CEO Jane Fraser said. “It’s too soon to call whether it is [a bubble] or not.”
Republican Senator Tim Scott criticized big bank CEOs for signing a statement last month that opposes voting restrictions.
“Woke capitalism seems to be running amok,” Scott, who represents South Carolina, said at Wednesday’s Senate hearing on Wall Street oversight.
Hundreds of companies — including Bank of America, Goldman Sachs and Wells Fargo — signed an advertisement in the New York Times pledging to defend the right to vote and to oppose discriminatory election legislation. The ad ran during the height of the controversy around Georgia’s hotly debated voting law.
At the hearing Scott asked the bank CEOs who signed the letter which specific parts of the Georgia voting law they took issue with. Scott said he was “dumfounded” after none of them cited specific elements of the law.
Bank of America CEO Brian Moynihan explained the company signed the statement based on “input” from employees and its ESG committee.
America’s largest oil company, Exxon, is facing a credible challenge from an activist investor. Hedge fund Engine No. 1 is upset with Exxon’s financial performance and its foot-dragging on climate, and now it’s seeking to oust four directors at the company’s annual shareholder meeting.
Exxon (XOM) is holding its annual shareholder meeting Wednesday, but after about an hour, it took a recess to address a variety of concerns, including the vote on its directors. Almost immediately, it received backlash from Engine No. 1.
In a statement sent via email to CNN Business, the hedge fund accused Exxon of “seeking to delay” the closing of the polls and “using corporate machinery for its own purpose rather than that of shareholders and avoiding the election of individuals with the transformative energy experience required to position the Company for long-term success in a changing world.”
Engine No. 1 added, “Shareholders should not be fooled by ExxonMobil’s last-ditch attempt to stave off much-needed board change in response to significant shareholder pressure and the prospect of losing a proxy contest. Shareholders have spoken. ExxonMobil should accept the result, take the vote and move forward.”
The vote resumed at 12:15pm ET.
JPMorgan Chase CEO Jamie Dimon struck a cautious note on inflation given the massive stimulus being provided by Washington.
“You’re talking about unprecedented continued fiscal and monetary policy, kind of on autopilot,” Dimon said at Wednesday’s Senate hearing.
The good news is “we’re going to have a very strong economy,” he said, not only this year but perhaps extending into 2023.
But Dimon said the policies from the Federal Reserve and Congress “will raise inflation.”
There is “nothing wrong with 1.6%,” he said, likely referring to the year-over-year increase in core consumer prices experienced in March.
“I would expect it to go considerably higher than that,” Dimon said. “Hopefully, it won’t be out of whack and the Federal Reserve will be able to tamp it down. But we always plan for things worse than that.”
The JPMorgan exec warned that wasteful spending going forward will only lead to more inflation, slower growth and less trust in democracy.
The recovery is chugging along but that doesn’t mean improvements will come at the same pace as they have in recent months.
As of April, America is still down more than 8 million jobs compared with February 2020, before the pandemic hit.
The persistent slack in the labor market will also put the brakes on wage inflation, according to Fitch, because companies won’t have to raise wages to attract workers.
That’s a little at odds with the trends we’ve been seeing: Under Armour (UA), Amazon (AMZN), Walmart (WMT) and others have announced raises to their minimum wages to compete for workers.
“Recent reports of labor market shortages are more reflective of sector-specific dynamics and the pace of reopening, and are likely to be fairly short-lived,” according to Fitch.
“It will take quite a while for the labor market to regain balance,” said the ratings agency’s economists.
While the jobs recovery is boosted by the reopening and stimulus measures, the pace of improvements in unemployment metrics will be dampened as more people returning to the labor force to look for a job. That could temporarily prop up the unemployment rate.
Republican Senator Pat Toomey warned big bank CEOs Wednesday to stay out of highly charged social and political issues.
“I am concerned about increasing pressure on banks to embrace ‘wokeism’ and appease the far left’s attacks on capitalism,” Toomey, the top Republican on the Senate Banking Committee, said during prepared remarks at a hearing on Wall Street oversight.
His comments come after the leaders of JPMorgan Chase, Bank of America and other big banks have spoken up about voting rights, social justice and other matters.
The Pennsylvania senator thinks this could lead to “distorted” credit allocation and “activists seeking to make political change through the financial system instead of the democratic process.”
Toomey said he’s been “surprised and troubled” to see banks taking actions to “politicize lending” and undermine property rights, He added that embracing stakeholder capitalism “enables corporations to pursue a liberal social agenda rather than prioritize its responsibilities to its owners.”
Banks should speak up on behalf of their shareholders about issues like taxes and regulation, he said.
“But if there is a highly charged social or political issue that involves balancing competing values, such as balancing access to voting with election security: leave that to elected lawmakers,” Toomey said.
Democrat Sherrod Brown slammed Wall Street on Wednesday for building an economic system that allows big banks to mint money even during times of severe stress on Main Street.
Brown, the chairman of the Senate Banking Committee, called out the record profits that big banks hauled in, both following the Great Recession and at the end of the Covid-19 pandemic.
“I sense a pattern,” Brown told big bank CEOs at a Senate hearing. “Under the current system, Wall Street profits no matter what happens, because those profits now come at the expense of workers. And your banks are the ones that largely built that system.”
The Ohio Senator called out Wall Street analysts that yell “buy, buy, buy” when companies lay off workers, offshore jobs to low-wage nations, bust unions and cut paychecks.
Brown said Wall Street built a system that “betrayed millions of workers” by rewarding short-term profits.
“Wall Street gets second chance after second chance after second chance,” Brown said. “Most workers don’t even get one.”
JPMorgan Chase CEO Jamie Dimon warned Wednesday that cyberattacks are growing in number and sophistication across all sectors and called on Washington to do more to protect critical infrastructure.
“This is a serious national security concern that requires partnership and collaboration to address,” Dimon wrote in prepared remarks to be delivered at a Senate hearing on Wall Street oversight.
The JPMorgan boss said companies have invested significantly in cybersecurity to analyze and mitigate risks to the financial system.
“We need the government to meet us halfway and provide dedicated national security resources to collaborate with critical infrastructure companies and defend the national interest from cyberattacks,” Dimon wrote.
Citing the massive SolarWinds intrusion of the federal government, Dimon said “we need appropriate reforms to ensure the data that is held by financial regulators is properly secured and that policies are in place to guide timely and meaningful notification and response to impacted firs when a breach does occur.”
So much for a green start to the day… About half an hour into the trading session, the Dow and the S&P 500 both gave back their modest gains. They are both flat now.
Walgreens (WBA) is the worst performer in both indexes, down nearly 5%. Shares of CVS (CVS), a S&P component, are also down more than 3%. Shares of the drug store chains got a beating following reports that Amazon (AMZN) is considering opening physical pharmacies.
US stocks rose at Wednesday’s market open. It’s another quiet day on Wall Street, with little on the economic calendar and Treasury yields flat. The 10-year US government bond yielded 1.56% around the time of the opening bell.
The Chinese yuan climbed to its highest level since 2018 against the US dollar.
The greenback last bought 6.39 yuan, down 0.3%.
“A recovering economy, positive real interest rates and gradual opening of the domestic financial markets are all, in theory, positive for currency in the medium term,” wrote Chong Wee Khoon, senior market strategist for the Asia Pacific region for BNY Mellon, in a note to clients.
But don’t get too excited about the currency’s move. The yuan is mostly stronger because of a broadly weaker dollar, Khoon said.
“There is no premium nor discount being priced into yuan at present,” he added. So while the medium- to long-term trend of the Chinese currency is up, investors shouldn’t necessarily race to put all their eggs in the yuan-dollar basket right now.
