Originally featured in Bloomberg
To the Editor:
Your recent story “Banks Reaping $21 Billion Tax Windfall Cut Staff, Ease Off Loans” (February 6, 2019), represents an inaccurate portrayal of large banks’ actions in the wake of recent tax reform with assertions that are not supported by the reporter’s own facts. America’s largest banks strongly support their employees, the economy, and communities.
The author rightly notes that a number of large banks raised their minimum wage to $15 per hour – more than twice the federal minimum wage – or more and provided bonuses to hundreds of thousands of employees in the wake of the recent tax cuts. Bank of America has awarded more than $1 billion in two special bonuses, to 90 percent and 95 percent of employees in 2017 and 2018, respectively, since the passage of the Tax Cuts and Jobs Act.
But, pointing to a few anecdotes of announced layoffs and trying to extrapolate trends in U.S. hiring based on global workforce data, the reporter concludes bank employees have gotten a bad break. In fact, as the author noted, a number of banks are hiring. Some examples: Goldman Sachs has increased its workforce by 9 percent in the past year, creating thousands of quality, well-paying jobs for Americans across the country. JPMorgan Chase is hiring 4,000 new employees in part to staff 400 new branches across the country, many in low- and moderate-income areas.
The author also questioned if trends in bank lending suggested the tax cuts weren’t being redeployed in the economy. But the reporter’s own data showed a recent increase in commercial and industrial lending, the only sector on which the author focused. For the record, total lending by the eight largest, most diversified financial institutions was up 2.1 percent in the third quarter of 2018 from a year earlier, fueled by large increases in loans to small businesses, commercial and industrial companies, and other financial institutions, including community banks.
Finally, the reporter said the biggest winners of the tax cuts were shareholders, given an increase in dividends and buybacks last year. What he fails to note is who those shareholders are. More than half of all Americans own stocks, according to the Federal Reserve, and money returned to them recirculates throughout the economy. Additionally, buybacks complement – not replace – investments businesses make in workers, capital, and R&D and they mean that the U.S. economy is healthy and companies are growing.
America’s largest banks are critical to our large economy. We support our employees, lend to businesses and households, and assist communities across our country. Those are the facts that should not be ignored.
President and CEO, Financial Services Forum, which represents the eight largest, most diversified U.S. banking institutions