Wall Street bank executives felt the rage of Democrats and Republicans in the US Congress on Wednesday over how they used $176 billion in bailout money without making a noticeable impact on the economy. Lawmakers seized the opportunity presented by a congressional hearing to grill eight bank CEOs and vent rising public anger over the economic crisis.
Questions abound about what the banks have done with the money. The hearing came a day after Treasury secretary Timothy Geithner failed to inspire market confidence over the governments financial bailout plans and sent stock markets plunging. Democratic Barney Frank,chairman of the House of Representatives Financial Services Committee,set the tone for the hearing by telling the CEOs they need to understand Americans anger and frustration and cooperate with lawmakers willingly,not grudgingly,not doing the minimum. Randy Neugebauer,a Republican,referred to the bankers as TSEs or taxpayer-supported entities. I think we can call this a shareholders meeting, he said.
Bankers sought to be contrite,assuring that the taxpayer money had been used to boost lending,not to pay executives,lobbyists or shareholder dividends. We have a hard-earned reputation for frugality,not extravagance, said Bank of America CEO Ken Lewis. Taxpayers have invested in our company,and they deserve to know what return they are making on their investment and when it will be paid back.
Toward that end,Lewis said,he and other top bank managers went without bonuses for 2008,while less-senior executives had their 2008 incentive payments cut by an average of 80 per cent. The chief executives each read a prepared statement arguing that their institutions used taxpayer funds responsibly. They said they have increased lending since the bailout began,and that they are embracing some reforms being proposed for the badly crippled financial system.