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jpmorgan chase
Wall Street Banks Accused of Trying to Sabotage Key Consumer Protection Rule
"The CFPB must stop this ploy by the biggest banks to keep us trapped under their thumbs."
Nov 15, 2024
Consumer advocates applauded last month as the Consumer Financial Protection Bureau finalized a rule aimed at making it easier for people to switch financial institutions if they're unhappy with a bank's service, without the bank retaining their personal data—but on Thursday, more than a dozen groups warned the CFPB that major Wall Street firms are trying to stop Americans from benefiting from the rule.
Several advocacy groups, led by the Demand Progress Education Fund, wrote to CFPB director Rohit Chopra warning that major banks—including JP Morgan Chase, Bank of America, Citi, TD Bank, and Wells Fargo—sit on the board of the Financial Data Exchange (FDX), which has applied to the bureau for standard-setting body (SSB) status, which would give it authority over what is commonly known as the "open banking rule."
Standard-setting authority for the banks would present a major conflict of interest, said the groups.
The banks are also on the board of the Bank Policy Institute, which promptly filed what the consumer advocates called a "frivolous lawsuit" to block the open banking rule when it was introduced last month, claiming it will keep banks from protecting customer data.
At a panel discussion this week, Bank of America CEO Brian Moynihan also said the open banking rule, by requiring financial firms to unlock a consumer's financial data and transfer it to another provider for free, would cause "chaos" and amplify concerns over fraud.
"The American people are fed up with Wall Street controlling every aspect of their lives and the open banking rule is an opportunity to give all of us some financial freedom."
The groups wrote on Thursday that big banks want to continue to "maintain their dominance by making it unduly difficult for consumers to switch institutions."
"The presence of these organizations on both the FDX and BPI boards undermines the credibility of FDX and presents various concerns relating to conflict of interest, interlocking directorate, and antitrust law," they wrote.
Upon introducing the finalized rule last month, Chopra said the action would "give people more power to get better rates and service on bank accounts, credit cards, and more" and help those who are "stuck in financial products with lousy rates and service."
The coalition of consumer advocacy groups—including Public Citizen, the American Economic Liberties Project, and Americans for Financial Reform—urged Chopra to reject FDX's application for standard-setting authority so long as the banks remain on its board.
“It would be a flagrant conflict of interest for the same banks who are suing to block the open banking rule because it threatens their market dominance to also be in charge of implementing it," said Demand Progress Education Fund corporate power director Emily Peterson-Cassin. "The American people are fed up with Wall Street controlling every aspect of their lives and the open banking rule is an opportunity to give all of us some financial freedom. The CFPB must stop this ploy by the biggest banks to keep us trapped under their thumbs."
The groups called the open banking rule "a historic step forward for the cause of giving consumers true freedom intheir financial lives."
"For this reason, it is imperative that SSB status not be granted to an organization whose board members are, either directly or through a trade association they are participating in, suing the CFPB to stop the rules from taking effect, particularly when such members may be ethically conflicted from such dual participation," said the groups. "By rejecting SSB status for FDX or any other organization with similar conflicts of interest pertaining to Section 1033, the CFPB will help prevent big banks from sabotaging open banking rules."
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'Laggards': Top 6 Wall Street Banks Failing on Net-Zero Climate Pledges
"Wall Street banks need to walk the walk, and their regulators, clients, and shareholders need to do more to hold them accountable."
Oct 09, 2024
Sierra Club on Wednesday issued a report showing that the United States' six largest banks lag behind in efforts to meet 2030 and 2050 climate emissions targets they've set, as they continue to pour billions of dollars into fossil fuel financing every year.
The 29-page report, Leaders or Laggards: Analyzing Major U.S. Banks' Net-Zero Commitments, assesses the progress of JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley on efforts to meet 2030 targets, exclusion policies, and climate disclosure policies—the overall aim is to track their progress toward net-zero across their portfolios by 2050, which each has pledged to do.
"The role of major banks is critical for ensuring a sustainable and prosperous future," Ben Cushing, director of the Sierra Club's Fossil-Free Finance campaign, said in a statement.
"We cannot solve the climate crisis if they continue with business as usual," he added. "While the largest U.S. banks have committed to reaching net-zero emissions by 2050, they are evidently not yet on track to make it happen."
"Wall Street banks need to walk the walk, and their regulators, clients, and shareholders need to do more to hold them accountable," he concluded.
Major US banks @Chase @BankofAmerica @Citi @WellsFargo @GoldmanSachs @MorganStanley could actually make progress toward net-zero by:
1️⃣ Improving 2030 targets
2️⃣ Strengthening exclusion policies
3️⃣ Enhancing transparencyhttps://t.co/CcZzTCrGKi pic.twitter.com/PpPDXTApfQ
— Sierra Club (@SierraClub) October 9, 2024
The report's titular question is answered in the concluding section. "In general, the targets and exclusion policies of the major U.S. banks fall far behind international best practices and what is required in order to achieve their own climate commitments," it says.
"[They] have serious improvements to make in order to ensure their 2030 targets and financing policies are truly aligned with the goal of reaching net-zero by 2050," it also says.
The report provides detailed standards that banks must uphold if they want their net-zero policies to be "robust," and lays out examples of how each bank is failing to meet them.
The six banks are "relatively equal" in terms of their progress toward net zero, but there are some differences between them, the report says.
For example, only Citigroup and Wells Fargo have committed to reduce absolute emissions in the oil and gas sector—a key standard. The other four banks have merely set "emissions intensity" targets. Wells Fargo is the only one of the six to declare that its carbon accounting for 2030 won't include offsets or removal.
Bank of America, for its part, has backtracked on earlier climate pledges. Previously, the bank promised not to directly fund oil and gas drilling in the Arctic, but in December it announced it would simply apply "enhanced due diligence" to such projects.
One key standard that banks should employ is separating their emissions bookkeeping for lending and underwriting, the report says. Underwriting accounts for roughly half of banks' fossil fuel financing but is harder for the public to track than lending.
"Some banks limit their sectoral targets to cover lending, but exclude underwriting, creating a massive loophole through which billions of dollars can still be poured into heavily emitting sectors and projects," the report says.
In general, the report urges more standardization of climate accounting methods along with improved transparency and disclosure policies.
Four of the six banks are in fact in the top five on the list of global banks financing the fossil fuel industry since the Paris agreement was signed, according to the latest Banking on Climate Chaosreport, released in May. And when only financing for companies expanding oil and gas projects are considered, rather than just continuing to extract from existing reserves, the U.S. banks remain at the top.
"By far the most essential action that banks must take to reach their net-zero goals is to commit to ending support for expansion of fossil fuel production," the Sierra Club report says, citing Banking on Climate Chaos.
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Shady Loan Deals With JPMorgan Chase Put Chicago Schools in a Financial Vice
Big banks like Chase have repeatedly targeted communities, taxpayers, and even our schools with predatory debt. It's time to fight back.
Sep 16, 2024
Chicago’s school year kicked off amid a looming budget crisis that jeopardizes stability for both students and teachers. At the heart of the issue is a silent killer of public education: predatory bank loans, particularly from JPMorgan Chase.
During a bargaining session with the Chicago Teachers Union (CTU), I urged Chicago Public Schools (CPS) to stop allowing big banks to hold Chicago students hostage. Instead of delaying contract negotiations with teachers and risking program cuts that harm students, CPS and state officials should take legal action to recover the funds lost due to these toxic bank deals.
CPS has a deficit projection of over half a billion dollars, perpetuated by the several hundred million dollars in predatory loans from banks like JPMorgan Chase taken out nearly a decade ago. These loans have strangled CPS finances and prevented the district from providing the high-quality education Chicago's children deserve.
Predatory loans are a familiar problem for families in Chicago and around the country. These risky loans are hawked as a short-term solution to fill a gap in finances–with a steep interest rate buried in the fine print that balloons over time.
Chicago Public Schools should hold banks like Chase accountable for the harm they’ve caused Chicago’s schoolchildren.
Chase has repeatedly targeted communities, taxpayers, and even our schools with predatory debt. Chase and its predecessor banks pushed Black and brown Chicagoans into the predatory subprime mortgages that caused the 2008 financial crisis, leading to a tsunami of foreclosures that resulted in a massive loss of household wealth in communities of color.
And nearly 10 years ago, Chase closed a predatory deal with CPS that has haunted our finances ever since.
CPS was already reeling from drastic cuts to special education services in 2016, prompted by the immediate payment of $234 million in termination fees for bad deals they entered into a decade prior. An unfair school funding formula forced 50 schools to shutter three years earlier and continued to destabilize the same South and West side neighborhoods.
A twin set of threats were on the horizon: a potential takeover of schools by Governor Bruce Rauner, a Republican who was hellbent on making Illinois more like Texas, and a threat by Mayor Rahm Emanuel to lay off 6,000 teachers to close a budget gap caused by structural underfunding.
The school district desperately needed funds to pay for projects like lead abatement. Rather than face a takeover or mass layoffs, they decided to issue bonds in order to pay the termination fee. But because CPS’s credit rating had been downgraded to “junk” just a few months prior, financial giants like Chase and Nuveen exploited the opportunity.
Banks purchased the bonds from CPS at a lowball price but then sold them to other investors just months later for a much higher payoff. Over a span of two months, Chase bank made a 9.5% profit on $150 million in bonds through this arbitrage scheme, an annualized profit of 82%. This calls into question whether Chase met its legal obligation to give CPS a fair price for the bonds. Our schools are still impacted by these bad deals, paying $200 million annually for loans taken out during this moment of crisis.
CPS was also the victim of toxic interest rate swaps deals that cost the district, Chicago, and the state of Illinois hundreds of millions of dollars in the early 2000s. Banks had marketed swaps as a way for cash-strapped governments to save money, but they were laden with hidden risks that materialized as a result of the 2008 financial crisis, causing payments to skyrocket and costing taxpayers a fortune.
As with Chicago’s parking meter and Skyway deals, future generations of taxpayers were stuck holding the bag. From 2012 to 2016, the City of Chicago handed over $145 million to Chase Bank alone to terminate these toxic swaps.
CPS should hold banks like Chase accountable for the harm they’ve caused Chicago’s schoolchildren. There is strong reason to believe the banks that trapped CPS into these predatory deals violated their legal responsibilities to the district. While the district has improved its financial health since 2016, recovering the millions lost to predatory lending would help build on their progress.
Decades of underfunding and predatory banking have swallowed the district’s reserves. Now, faced with a federal reduction that could slash funding by $800 per student, the district has reached an inflection point: Will CPS hold banks accountable and fund the programs, resources, and staff that students deserve—or will they make cuts that set kids back?
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