Jane Fraser Opening Statement Senate Banking, Housing and Urban Affairs Committee

As Prepared for Delivery

Chairman Brown, Ranking Member Scott and esteemed members of the committee: Good morning and thank you for this opportunity to speak with you today on behalf of Citi. 

As CEO, I have the opportunity to lead a 211-year-old institution that supports clients in nearly 160 markets around the world. Through decades of geopolitical shifts and technological advances, we have seen how the U.S. banking system is truly unmatched. 

The isolated bank failures of the spring may have tested some of the confidence that people have in our industry. But I am proud of how our industry — including my peers sitting beside me today — came together and worked with our government to affirm the underlying strength and stability of our financial system. As we chart a path forward, we need to make sure we don’t inadvertently upend the unique system we have. 

Our financial system is the envy of others because it’s underpinned by the most competitive banking sector and the deepest capital markets. We’re home to banks of all sizes, each with an important role to play. Collectively, our banks serve as engines of growth, supporting businesses and households and promoting access to financial services in hard-to-reach communities.

For American multinationals, global banks such as ours offer the size and scale to help them compete overseas, without having to rely on a mix of foreign banks. We finance supply chains and partner with America’s top companies to bring products and services to American consumers at affordable prices. We use our robust balance sheets to fund transformational projects.

Last year alone, Citi worked with state and local governments to raise or refinance nearly $31 billion in infrastructure investment. That included financing 35,000 affordable housing units across 32 states — our 13th year in a row as the country’s number one affordable housing lender.

In addition, we provide a variety of products to drive financial inclusion and work with CDFIs and MDIs to reach the underserved.  As a proud participant of the OCC’s Project Reach, we are co-leading the workstream that’s focused on strengthening MDIs. We are also engaged in initiatives to increase access to credit and reduce the number of Americans who are “credit invisible.” 

The strength of our financial system becomes most critical when the outlook for our economy weakens. Although we certainly don’t see a drastic downturn on the horizon, history suggests a recession is likely, given the macroeconomic factors at play. That includes persistent inflation in services, rising debt and a slowdown in global growth, as well as two major conflicts in Europe and the Middle East. 

We also are beginning to see some concerning signs in the lower-FICO score segment of our customers. This is unfortunately the same group that feels any tightening of credit first. 

Raising capital requirements by as much as 20 percent — on an industry that all parties believe to be well capitalized — is a bad idea in any environment. But it becomes even more problematic with economic uncertainty ahead. 

Almost every element of the Basel III Endgame proposal would make lending and other financial activities more expensive, especially for smaller companies and consumers. The most likely result of increasing the costs for banks to offer a variety of products is that it would move more activity into the less regulated non-bank sector — which carries its own risks for consumers and the stability of the financial system. It would also diminish our industry’s ability to compete internationally, especially with our European counterparts.

I raise these concerns as I know we all share the same goal of maintaining a strong and competitive banking system that supports a resilient economy. 

Thank you, and I look forward to answering your questions today.