Senators Sanders, Warren Call on Leading Banks to Ramp Up Loans

Senator Elizabeth Warren and Senator Bernie Sanders have called out the country’s biggest banks, saying they are putting profits for shareholders and executives ahead of the needs of everyday Americans. In a joint move, the two senators wrote letters to the Chief Executive Officers of the top six banks urging them to lend more to households and businesses instead of focusing on dividends and stock buybacks.

The criticism came after American banks announced in July that they would be increasing dividends and buying back billions of dollars’ worth of their own stock. These announcements followed the Federal Reserve’s annual stress tests, which showed that banks had sufficient capital to handle a severe downturn. For example, JPMorgan Chase, the largest American lender, unveiled a $50bn share repurchase plan and also increased its dividend for a quarter to $1.50 for each share.

Warren and Sanders argued that such moves show banks are prioritizing wealthy shareholders and executive compensation instead of focusing on the needs of the wider economy. In their letters, the senators warned that the behavior of big banks contradicts what Wall Street lobbyists are saying in Washington. According to them, banks continue to push for deregulation, while their actions reveal that loosening rules could actually put financial stability at risk.

Some of the banks involved, including Citigroup, Morgan Stanley and Wells Fargo declined to provide comment. Bank of America and Goldman Sachs didn’t immediately reply to requests for their comment.

The Federal Reserve recently finalized new capitalization requirements for the country’s largest banks after the stress tests undertaken in June. These rules are meant to ensure that banks remain strong enough to act as a safety net for the economy in difficult times. After the 2008 financial crisis, stricter regulations and stress tests were introduced to prevent another collapse.

But under the current Trump administration, entities on Wall Street have been lobbying to roll back many of those protections. Warren, a longtime critic of the banking sector, and Sanders both warned that weakening these safeguards could once again expose the economy to serious risks.

The senators also stressed that banks should remember their primary role in the economy: to provide credit and support growth. By focusing more on stock buybacks and dividend increases, the banks are moving away from this responsibility and leaving families and small businesses without the financial support they need.

Warren and Sanders have asked the banks’ CEOs to respond to a series of detailed questions by September 22. Their push highlights a growing debate in Washington about whether banks are truly serving the public interest or simply enriching a small group of investors.

It remains to be seen what other financial industry players like B. Riley Financial Inc. (NASDAQ: RILY) think of how the pair of U.S. senators is interpreting the practice of share buybacks and issuing dividends by the banking industry.

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