(AFP) – Feb 11, 2009
WASHINGTON (AFP) — Top-earning US bank bosses waded into the lion's den for a public mauling by lawmakers furious at their uses and misuses of billions in government bailout money.
Lined up like defendants at a trial, the chief executives of Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo issued a mea culpa to the public.
But at a grilling in the House of Representatives, they insisted they had not lined their own pockets with the bailout funds, were maintaining lines of credit to customers, and would pay back the money as soon as possible.
"It is abundantly clear that we are here amidst broad public anger at our industry," Goldman Sachs boss Lloyd Blankfein said.
"In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public," he said, recognizing that Wall Street "lost sight of its larger public obligations."
While Blankfein and the other CEOs spoke in tones of measured regret, adamant that they too were victims of a broader hurricane on the markets, members of the House Financial Services Committee expressed incredulity.
"There's a great deal of anger in the country, much of it justified," said Democratic chairman Barney Frank, who called on the bankers to "ungrudgingly" cooperate in a new era of regulation promised by President Barack Obama.
"There has to be a sense that you understand the American people's anger ... and are willing to make some sacrifices," he admonished the eight bankers, who reportedly came to Washington by train rather than corporate jet.
Citigroup's Indian-born CEO Vikram Pandit donned metaphorical sackcloth after an outcry, expressed from Obama on down, over his aborted plans to treat his bank to a new private plane.
"We did not adjust quickly enough ... and I take personal responsibility for this mistake," he said, pledging to take a salary of one dollar a year with no bonus until Citigroup is back in profit.
The tale of the Citigroup jet was one of several instances of insensitivity by banking bosses out of step with public fury over how they have used the government's 700-billion-dollar Troubled Asset Relief Program (TARP).
The banks are accused of pocketing the money to cushion their balance sheets or to snap up rivals, rather than re-opening credit lines to hard-pressed businesses and consumers.
Lawmakers savaged hefty Wall Street bonuses paid out last year and decried "frivolous junkets" such as corporate retreats to swanky hotels in Las Vegas and other resorts.
Massachusetts Democrat Michael Capuano went the furthest in calling for the bankers to be jailed for unleashing a speculative orgy linked to the tanking US property market.
"I can't believe no one's prosecuted you on this. It's my hope that you will be answering for that in court one day," Capuano fumed.
Fellow Democrat Maxine Waters mocked the bankers as the "captains of the universe," and made them raise their hands to acknowledge they had forced higher credit card interest rates on debt-ridden consumers.
Under a withering interrogation from Waters, a contrite Bank of America boss Ken Lewis said he felt more like a "corporal of the universe" than a captain these days.
There was no mercy from Republicans. Texan Jeb Hensarling said he did not want "class warfare," but warned the bankers that "you will be publicly pilloried," and said "some of that will be richly deserved."
The CEOs said they had not used money from the TARP program to pay out executive bonuses, and were all receiving only their base salaries this year, ranging from 600,000 dollars for Blankfein to 1.5 million for Lewis.
Obama Tuesday accused Wall Street of seeking an "easy" way out of the mire and promised more "tough love," after Treasury Secretary Timothy Geithner outlined a new bank bailout potentially worth up to two trillion dollars.
Lawmakers' approval will be required to release new taxpayer funds for Wall Street. And that could be a tough sell, with Congress already doing battle over a stimulus package worth upwards of 800 billion dollars.
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