Large banks wandered interest rates on borrowers but not for savors, senators say

As interest rates rose, greater banks charged more borrowers for mortgage loans and auto loans, yet never increased payments to savors, despite telling legislators they would do so, two US senators said in letters to seven CEOs of directors who are exclusively shared with CBS News.

In March 2022, the Federal Reserve began raising the federal funding rate, with banks following hiking for mortgage loans, auto loans and credit cards. But these climbs were not matched with high interest payments on savings accounts at Banks, including Bank of America, Citibank, JPMorgan Chase, PNC Bank, Truist, US Bank and Wells Fargo, according to the legislators.

“This tactic – which charges more borrowers, pays savors a little and pocket rates that the Federal Reserve pays – has enabled US banks to rake a profit of $ 1 trillion and jpmorgan alone to earn a record surplus of $ 49.6 billion in 2023, “According to Sens. Elizabeth Warren (D-Massachusetts) and Jack Reed (D-Rhode Island), the authors of the letters. Meanwhile, “Savings have struggled to keep up with inflation,” they added.

JPMorgan CEO Jamie Dimon and his colleagues at half a dozen other financial institutions witnessed Before the Senate Bank Committee in September 2022, which their respective banks expected to increase the rates of savors, albeit at a slower pace. While the interest rate on the accounts JPMorgan holds Fed Rose from 3.15% to 4.65%, JPMorgan’s customers continue to earn 0.01% on their savings, the legislators said.

“These banks promised in front of the US Congress that they would meaningfully pass on higher savings rates to their customers after wandering the cost of loans to pad their profits. Families across the country are struggling with inflation – these CEOs have to keep their words , Not double-dip at the expense of their customers’ savings, “Warren told CBS News in an email declaration.

“Experts have called Megabanks’ current net interest income to a ‘Goldilocks situation’, in which banks have benefited from higher Federal Reserve interest and kept deposit prices low,” noted Warren and Reed in their letters calling on CEOs to explain which part of their compensation had been based on their banks’ interest rate, which was profit in the last two years. “

Wells Fargo refused to comment while none of the other six banks responded to requests for comment.