Warren, Reed Call Out Big Banks for Pocketing Extra Interest Rate Returns on Customers’ Savings Accounts
While customers are struggling with inflation, big banks are charging them high rates and collectively raking in $1 trillion in record profits
Washington, D.C. – U.S. Senator Elizabeth Warren (D-Mass.), Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, and Jack Reed (D-R.I.), member of the Senate Committee on Banking, Housing, and Urban Affairs, wrote to the heads of Wells Fargo, JPMorgan Chase, Bank of America, Citibank, US Bank, Truist, and PNC Bank regarding their profiteering from high interest rates. This letter follows up on a November 2022 letter led by Senator Reed about the windfall obtained by banks as the Fed raised interest rates.
In March 2022, the Federal Reserve (Fed) began raising the federal funds rate. The banks followed suit by raising rates for borrowers for mortgages, auto loans, and credit cards, but they did not match those increases with higher interest rate payouts on savings accounts.
JPMorgan CEO Jamie Dimon, along with the CEOs of these other banks, testified before the Senate Banking Committee in 2022 that the bank expected to increase rates for savers as well, but at a slower pace. More than two years later, JPMorgan’s interest rates for savers have not changed. While interest rates on the accounts JPMorgan keeps at the Fed rose from 3.15% to 4.65%, JPMorgan’s customers continue to earn a negligible .01% on their savings. This tactic—charging borrowers more, paying savers a little, and pocketing interest paid by the Federal Reserve—has enabled U.S. banks to rake in record profits of $1 trillion and JPMorgan alone to make record profits of $49.6 billion in 2023.
Research by Federal Reserve staff confirms that big banks like JPMC have not meaningfully passed through savings from recent interest rate drops to depositors. Deposit rates for savers always lag behind the federal funds rate, but this gap is larger for customers of big banks than for regional and community banks. Historically, there has been a closer relationship between the Fed’s interest rates and big banks’ interest rates.The senators requested answers about how the banks’ yields from higher interest rates, their decisions to adjust yields in response to changing interest rates, and how much executives and shareholders benefited from profits derived from higher interest rates by February 14, 2025.
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