April 29, 2019
The leaders of the biggest banks spent a few hours getting grilled by Congress recently, with their salaries among one of the hot topics discussed.
The top banking industry's leaders were grilled by Congress at a recent hearing, with topics including sky-high salaries.
The CEOs of the biggest banks in the country recently spent a good deal of time being grilled by House Democrats, despite the banking leaders arguing that the banking industry is now healthier and more robust than it was over a decade earlier when the financial crisis plagued the nation.
Included in the testimony was the CEOs salaries.
Many banks, including Citi, have streamlined their operations in an effort to focus more on specific areas of business. The bankers claimed to be safer and more resilient than they were before the financial debacle.
The last time such a hearing took place, the US was still struggling to climb back out of the Great Recession. But these days, the banking industry has been able to make a comeback with record profits.
Congress put the chief executives through the wringer, pounding them on several topics, such as their overdraft fees, their organizations' level of diversity, their policies with gun manufacturers, industry regulation rollbacks, and their earnings compared to what the average bank employee makes.
Since the Democrats took over the House after the 2018 midterm election, scrutiny over the nation's biggest banks has amplified, and the recent hearing was a culmination of such heavy examination.
The leaders of the banks spent the lengthy hearing defending their efforts and accolades since bailing out of the financial crisis years ago, as well as voicing their concerns over continued risks to the industry as a result of skyrocketing corporate debt levels and cybersecurity issues.
There were also questions raised about the salaries of the heads of the banks; more specifically, regarding the disparity between what they earn and what the banks' employees earn. In fact, Congress spent a lot of time mulling over their salaries throughout the hearing.
JPMorgan Chase's CEO, Michael Dimon, may be the top-earning banking CEO, but his salary pales in comparison to NBA earnings leader LeBron James.
Citigroup's CEO Michael Corbat’s $24 million 2018 salary, for instance, was compared to the bank's front-end staff median salary, being a whopping 486 times higher.
Yet despite such a disparity and the high earnings of bank leaders, they still earn 62 percent less than the top-earning NBA players.
James Dimon, CEO of JP Morgan Chase (JPM), pulled in $31 million in 2018, making him the top earner among banking CEOs. But as high as that salary might seem, it pales in comparison to what the top NBA earner makes.
LeBron James earned nearly three times what Dimon earned last year at an astounding $89 million.
Overall, CEOs at the six biggest banks in the US earned over $152 million in 2018. Compare that to $334 million made by the top five NBA players.
A clear takeaway from the recent hearing pitting bankers against Congress is that the House is seemingly anti-bank, arguing many points despite indisputable evidence that banks are the healthiest that they have been since before the recession.
Amidst Congress' scrutiny over the banking industry, bankers would be well-advised to solidify their loan portfolios and promote robust balance sheets that can withstand continued pressure.
Teaming up with seasoned loan sale advisors at Garnet Capital can help lenders and bankers ensure they are attracting the right types of clients and making more room for high-performing assets through cost-effective tactics.
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