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"Senators Accuse Top U.S. Banks of $1T Profiteering, Keeping Savers' Rates Low"

Coin WorldFriday, Jan 31, 2025 9:28 pm ET

1min read

Seven of the largest U.S. banks by total assets, including JPMorgan Chase, Bank of America, Wells Fargo, Citibank, US Bank, PNC, and Truist, are facing accusations of "profiteering" from two U.S. senators. The lawmakers allege that these banks have been raking in record profits of $1 trillion while paying savers minimal interest rates.

The senators, Elizabeth Warren (D-Mass.) and Jack Reed (D-R.I.), both members of the Senate Committee on Banking, Housing, and Urban Affairs, sent a letter to the CEOs of the seven banks, accusing them of increasing interest rates for borrowers while keeping rates for savers low. The senators argue that the banks have not passed on the benefits of a high-interest rate environment to their customers, with deposit rates for savers lagging behind the federal funds rate.

The senators point out that the gap between the interest rates charged to borrowers and those paid to savers is larger for customers of these big banks compared to regional and community banks. They claim that the banks have been making record profits by "charging borrowers more, paying savers a little, and pocketing interest paid by the Federal Reserve."

The senators specifically call out Jamie Dimon, the CEO of JPMorgan Chase, for not following through on his promise to increase interest rates for savers. Despite raising interest rates for borrowers in response to the Federal Reserve's rate hikes, JPMorgan Chase has not increased the rates it pays to savers. The bank continues to pay customers a negligible 0.01% on demand deposit accounts, while earning 3.15% to 4.4% on its own Federal Reserve balances.

The senators also accuse the heads of Wells Fargo, Bank of America, and Truist of keeping interest rates for their savings account holders at a negligible 0.01%, despite generating between 3.15% to 4.4% on their Federal Reserve balances. The CEOs of PNC, Citi, and US Bank are accused of keeping interest rates on savings accounts at 0.02%, 0.03%, and 0.05%, respectively, while earning more than three-hundredfold from their bank balances with the Fed.

The senators are calling on the banks to explain why they have not passed on the benefits of higher

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