How Dare You Hand Me $25 Billion Dollars!
There was a House hearing with CEOs of the top banks today, where the banksters took a mostly conciliatory tone.
The banking executives said they were aware of the ill will that surrounded them.
“It is abundantly clear that we are here amidst broad public anger at our industry,” said Lloyd C. Blankfein, the chief of Goldman Sachs. “Many people believe — and, in many cases, justifiably so — that Wall Street lost sight of its larger public obligations.”
Lawmakers brought up the overarching question of the day. “What did you do with the new money?” asked Gary L. Ackerman, Democrat of New York, who said it seemed to him that the banks were not loaning out the funds they received from government.
Each of the bankers outlined the ways in which they had used the government capital. Goldman, for instance, increased its financing to clients like Sallie Mae and Verizon Wireless. Morgan Stanley said it had made $10.6 billion in new commercial loans and $650 million in loan commitments to consumers.
And the bankers were emphatic that they were continuing to make loans.
“We have every incentive to lend,” said Kenneth D. Lewis, the chief executive of Bank of America. “And despite the recessionary headwinds, we are lending.”
The claim is that the credit crunch is the fault of the secondary market and not the banks, which is actually plausible. But this is the part that gets me.
At the House Financial Services Committee hearing minutes ago, Rep. Joe Baca (D-CA-43) asked the following question:
"How do you feel about the bailout? Do you feel that the bailout was necessary?"
I thought that was just about the biggest softball I'd ever heard. Imagine my surprise!
Lloyd Blankfein, CEO, Goldman Sachs:
"I don't necessarily think it was necessary at the time, but -- and this was said at the time -- they were looking ahead at an emerging recession that was going to get worse, and for prudential reasons, it was necessary for the systemic safety and soundness. And as subsequent events have borne out, I think it has provided safety and soundness, and taken some of the risk away from the system."
Ken Lewis, CEO, Bank of America:
"I actually agree. I know at the time we did not feel like we needed the 15 billion. But I think in light of the severity of the recession, and in light of the speed at which the economy deteriorated, I think we have lent more money because we had the TARP funds and that level of capital."
Like we did these people a favor for paying them off after they nearly sunk the global economy. And this isn't the first time the banksters have grumbled about all that money they were being handed. In fact, today's New York Times quotes executives who want to return the money and get the government off their backs:
Even before the government announced its latest efforts to fix the troubled banking industry on Tuesday, executives at Goldman Sachs and Morgan Stanley said they wanted to repay the money quickly. Both banks received $10 billion under the first rescue plan last fall.
Paying back all those funds would be difficult in this tough economic environment. But banking executives worry that the government may intrude further into their businesses as long as they are beholden to Washington.
“We just think that operating our business without the government capital would be an easier thing to do,” said David A. Viniar, the chief financial officer of Goldman. “We’d be under less scrutiny, and under less pressure. Not that we’d be out of the public eye; we’re still going to be in the public eye.”
Please. There is no way a bunch of insolvent banks can even make it without government help. If there was, the loans would be repaid tomorrow. They can't raise the equity that needs to be offered to taxpayers in place of their money. And let's get to what this is really about - banksters want to save their precious bonuses, the ones they've been handing out to their employees without even hesitating, despite playing with taxpayer money. The claim in the House session today was that TARP money didn't go toward bonuses, which makes no sense whatsoever since money in the hands of the bank is money in the hands of the bank no matter where it came from. They and their friends in the Republican caucus are indignant that they can be told how much to earn (Republicans had no problem telling union auto workers how much they could earn, by the way). They want to be free to reward their friends and colleagues with bonuses... I mean retention payments:
Two Wall Street firms that received at least $60 billion in government bailout funds will be rewarding their financial advisers with controversial retention payments, the terms of which one senior executive described as "very generous" in audio obtained by the Huffington Post.
The soon-to-be-merged financial giants -- Morgan Stanley and Citigroup's Smith Barney -- announced the payments during an internal conference call last week, but warned advisers against describing them in terms that would cause PR headaches.
"There will be a retention award. Please do not call it a bonus," said James Gorman, co-president of Morgan Stanley. "It is not a bonus. It is an award. And it recognizes the importance of keeping our team in place as we go through this integration."
Banksters are indignant that they actually have to be accountable to anyone. They'd rather have to lay off entire floors of office workers than have to give back their precious penthouses.
UPDATE: MoveOn did a nice action on the Hill today, seeking answers and accountability from the banksters. Good luck with that.