AOC's tense exchange with a Wall Street CEO is a glimpse of a plan to completely redefine how banks operate

Tom Porter
Updated

  • Representative Alexandra Ocasio-Cortez grilled Wells Fargo CEO Tim Sloan in a tense exchange at the US House Financial Services Committee meeting on Wednesday.

  • "Why was the bank involved in the caging of children and financing the caging of children to begin with?" the freshman representative from New York asked the banking chief.

  • She went on to demand that the company help foot the bill for environmental damage caused by energy companies the bank lends to.

  • Ocasio-Cortez has pledged to use her membership of the panel to raise questions about the financial sector's connection to broader social ills.

The US House Financial Services Committee used to be seen as a cosy spot for lawmakers seeking big donations checks from financial giants — but things have changed with the appointment of several new Democrats to the panel.

Among them, New York Representative Alexandra Ocasio-Cortez — who didn't hold back on Wednesday during a tense cross-examination of Wells Fargo CEO Tim Sloan. He was before the committee to answer questions about widespread fraudulent misconduct by Wells Fargo employees.

But Ocasio-Cortez asked why Wells Fargo had financed the companies who built immigration detention centers in which children were separated from their parents. "Why was the bank involved in the caging of children and financing the caging of children to begin with?" The freshman representative from New York fired off at the executive, who for a moment seemed nonplussed.

"I don't know how to answer that question, because we weren’t,” responded Sloan.

Ocasio Cortez justified her questioning with reference to a Guardian opinion piece tying the bank to loans to "for-profit immigrant detention centres," which she alleged held children separated from their undocumented migrant parents as part of US President Donald Trump’s hardline anti-immigration policy. (One of the companies she named, CoreCivic, denied detaining children unaccompanied by their parents in a statement to Fox News.)

“For a period of time, we were involved in financing one of the firms. We aren’t anymore. I’m not familiar with the specific assertions that you’re making, but we weren’t directly involved in that,” said Sloan.

“OK, so these companies run private detention facilities run by ICE, which is involved in caging children, but I’ll move on,” she said, then quickly pivoted to a new line of attack: the bank’s funding for the controversial Dakota Access pipeline.

“So hypothetically, if there was a leak from the Dakota Access Pipeline, why shouldn’t Wells Fargo pay for the cleanup of it, since it paid for the construction of the pipeline itself?” she asked.

Sloan responded that the bank did not operate the pipeline, adding “our team reviewed the environmental impact and we concluded that it was a risk that we were willing to take,” before the line of questioning moved on.

Ocasio-Cortez secured a seat on the powerful oversight panel in January, when it came under the leadership of California Democrat Maxine Waters. She quickly pledged to use her new role to place financial giants under aggressive oversight on a range of issues.

But how does she want banks to change? Her lines of questioning on Wednesday indicate that she's seeking a radical shakeup of the concept of corporate responsibility, with lenders in some cases footing the bill for environmental catastrophes caused by customers.

She has also spoken in favor of reviving the Glass-Steagall Act, seperating commercial and investment banking activities, and investigating the student loan crisis.

On Twitter, critics were quick to highlight problems with the approach.

“I have a Wells Fargo auto loan, are they responsible if I crash my car, wrote one highly rated critic on CSPAN's website.

Ocasio-Cortez believes her role is about provoking people to ask questions about what kind of banking sector they want — and shaking up a panel that used to be dubbed the "juice committee."

She is one of several lawmakers on the panel who have pledged not to take donations from corporate PACS.

She told Reuters in January that her appointment and that of other progressives “sends a very powerful message” to the financial industry, and she wanted to pursue aggressive oversight and expose financial corporations’ role in broader social ills.

“We can leap back in and say, what does a responsible financial sector looks like?” She told the agency.

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