Banks are under increasing pressure from investors, lawmakers and regulators to change various business practices in an effort to fight climate change and inequality, but one outspoken industry leader pushed back forcefully on Thursday.
In remarks at an industry conference, PNC Financial Services Group CEO Bill Demchak argued that it’s inappropriate to rely on critiques of Wall Street rather than making broader policy choices on social and environmental issues.
“The political football that has become banking, as a way to somehow cause social change, because our politicians don't have the backbone to actually do what they want to do, or be out loud about it, is bulls---,” Demchak said.
“The rest of the people who want to throw rocks ought to look in the mirror and figure out how good they are before they come throwing rocks at the banking industry,” he added.
Demchak’s comments, which he made in response to a question about whether banks can improve their environmental, social and governance scores with investors, come amid a debate over how far banks should go to cut off financing to the fossil-fuel industry, and whether financial regulators
Climate activists this year
In pushing back Thursday against the pressure, Demchak took particular aim at new Securities and Exchange Commission requirements around disclosures and other agencies’ climate stress tests, saying that bigger proposals on the issue are gathering dust.
“For the banking system, it's a real climate change issue for the country that we need to transition, but our policies to do that are terrible,” Demchak said in remarks at the Bernstein Strategic Decisions Conference in New York.
“Trying to shame people out of certain exposures for social reasons without a plan, without a formidable plan on the other side to actually cause changes, is nuts.”
After Demchak’s remarks, a PNC spokesperson did not respond to questions about whether the bank will direct political donations away from certain lawmakers who have held up broader plans to tackle climate change.
The $541 billion-asset bank, for instance, donated funds to the campaign for Rep. Barry Loudermilk, R-Georgia, who in the past has supported bills to abolish the Environmental Protection Agency, and has backed former President Donald Trump’s decision to withdraw from the Paris climate accord.
Demchak also defended PNC’s record on social issues, noting that the Pittsburgh bank was one of several to
In addition, Demchak pointed to PNC’s $88 billion
On economic issues, Demchak warned about the risks facing consumer-focused lenders, saying that Americans may now be pinched from stubbornly high inflation and the potential of a recession.
“I think there's going to be a problem,” Demchak said. “On the consumer side, we've had a whole bunch of startups, they still rely on securitization and untested underwriting, and a bunch of those will blow up.”
Other banking executives this week have tried to forecast potential problem areas in a scenario where the economy teeters into a recession.
John Turner, CEO of the $164 billion-asset Regions Financial, said at another industry conference Wednesday that the Birmingham, Alabama, bank has decreased its book of loans to energy companies, and is allowing its portfolio of restaurant loans to run off.
“We are keeping a close eye on senior housing, close eye on the office space, retail,” Turner added. “But again, those things seem to be performing well enough, and we feel OK with them.”
Turner said he doubted that a recession was inevitable, based on a review of the bank’s portfolios for any signs of trouble that have historically been precursors to a slowdown.
Demchak, however, cautioned that there is likely to be “some turmoil and depressed prices on credit as defaults increase and workouts happen.”
“History repeats itself. It's not a question of whether it'll happen,” Demchak said. “It'll happen.”
