Sep 21, 2022 - Economy

JPMorgan CEO hits student debt forgiveness plan during congressional hearing

The chief executives of the nation's seven largest banks testify at a hearing on Wednesday. Photo: Alex Wong via Getty Images

JPMorgan Chase CEO Jamie Dimon called the White House's student loan forgiveness plan "badly done" during a congressional hearing on Wednesday, and added the Biden administration's move doesn't go far enough to fix the problem with student lending.

Why it matters: As one of the country's most high-profile CEOs, Dimon's musings on a range of issues are closely watched. Dimon offered the most critical response, at least publicly, of the debt forgiveness program from corporate America yet.

Catch up quick: The Biden administration last month announced a sweeping plan to cancel $10,000 worth of student loan debt for individual borrowers who make under $125,000 per year. For Pell grant recipients, the administration will wipe up to $20,000 in student debt.

  • The plan also caps monthly payments at 5% of a borrower's monthly income. And after 10 years, individuals with loan balances below $12,000 will see that debt wiped.

What he's saying: “We basically put a Band-Aid on, spent a lot of money and didn't fix the problem which will now be ongoing. So please, give it a fix," Dimon said. He said the plan does not address the cost of college or the procedures that determine who can afford loans.

  • Dimon also told lawmakers: "I wish they had targeted the people who actually needed help."
  • The White House has said that "nearly 90% of relief dollars" will go to those who earn less than $75,000 each year.

The big picture: Dimon made the comments alongside six other CEOs of the nation's largest commercial banks, including U.S. Bank, Citigroup, Bank of America, Wells Fargo, PNC Financial and Truist.

  • At a hearing that lasted over six hours (including brief breaks), lawmakers pushed the chief executives on a broad range of other issues, including the state of the economy, overdraft fees, ties with Russian firms and fossil fuel financing.

In one notable exchange, Rep. Rashida Tlaib (D-Mich.) asked Dimon whether JPMorgan had a policy against funding new oil-and-gas development in order to combat climate change. Dimon replied:  "Absolutely not, and that would be the road to hell for America."

On the economy, all of the CEOs generally agreed that the consumer remained in good shape — though they warned about what may lie ahead as the Fed aggressively raises interest rates to beat back inflation. “We’re going to be in for tougher times ahead,” Citi CEO Jane Fraser said.

  • As the hearing stretched on, the Fed announced it would raise interest rates by 0.75 percentage points for the third consecutive time.
  • All of the CEOs said they had confidence in the Fed's determination to slow the pace of price increases.

What to watch: Democratic lawmakers pressed bank CEOs about diversity efforts at their own institutions.

  • The chief executives testifying were all white. (And, with the exception of Fraser, they were all male.)
  • Rep. Al Green (D, Texas) asked the panel of CEOs whether their institutions would be led by a person of color in the next decade. One raised their hand: Truist CEO William Rogers, who took the helm last year.
  • Green asked posed a similar question to a group of Wall Street CEOs testifying before Congress in 2019. Then, none raised their hands when asked whether their likely successor would be a woman or person of color.

What's next: The CEOs will testify before the Senate Banking Committee on Thursday.

Editor’s note: Axios’ Ben Geman contributed to reporting.

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