WASHINGTON (CNN)– The chief executive officers of eight of the nation's largest banks will defend the use of hundreds of billions of dollars in bailout money to lawmakers on Capitol Hill Wednesday.
The CEO's of Bank of America, JP Morgan Chase, Citigroup, Goldman Sachs, Wells Fargo, Morgan Stanley, Bank of New York and State Street Corp. recently came under scrutiny after being accused of using bailout money from the Troubled Asset Relief Program to fund bonuses and lavish vacations.
"American people are right to expect that we use funds responsibly, quickly and transparently to help American families, businesses and communities," Vikram Pandit, CEO of Citigroup is expected to say before the House Financial Services committee, according to prepared remarks. "They also have a right to expect a return on this investment."
Recently the ailing bank received $45 billion in government bailout money which Pandit will explain that $35.6 billion has gone toward new programs and "lending initiatives."
"We have every incentive to lend," Kenneth D. Lewis, Chairman and CEO of Bank of America is expected to say Wednesday. "And, despite recessionary headwinds, we are lending."
Bank of America is expected to make its first return to the Treasury next week of $400 million according to Lewis.
"We intend to pay all the TARP funds back as soon as possible," Lewis is expected to say.
Sharing a common theme as the new Obama administration, each of the executives plan to harp on accountability and transparency, while defending their use of the capital.
"We have not used [TARP funding] to pay compensation, nor did we use it to pay any dividends or lobbying costs," John J. Mack, Chairman and CEO of Morgan Stanley is expected to tell the committee.
Lloyd C. Blankfein, Chairman and CEO of Goldman Sachs, which received $10 billion of capitol is expected to say the company has already dedicated $13 billion in new financing since October 27.
"While the firm produced a profit of $2.2 billion in 2008, our revenues were down considerably," Blankfein is expected to say, according to prepared testimony. "Compensation across the firm, dictated by our policies and practices, reflected that. End of year bonuses were down on average 65 percent," with more senior members being down "approximately 75 percent."
The underlying message each executive will convey is the understanding of the "serious responsibilities" the banks undertook when they negotiated with the Treasury Department and their full cooperation and intent to repay each dollar.
This meeting comes a day after Treasury Secretary Tim Geithner announced a plan to overhaul TARP to in part tighten the terms of further aid to banks and demand greater accountability. Last week, the administration unveiled a plan to restrict CEO pay at firms receiving government assistance.
"CNN quoting people as saying something before they've actually said it is inappropriate," some English teacher in the U.S. is expected to say.
It's as plain as the nose on your face (or the ears on Obama's head). You can't nationalize banks in order to save the worse ones from failing. It's bad for two reasons- you are wasting billions to keep the bad ones alive, and preventing competition from spiking up when these losers are eliminated.
Investors are simply not going to put much capital in an enterprise under Congressional control. Congress can, and probably will, change the rules at any time.
OK so my question is where is the money? If it did not go out any of the doors mentioned above the only other place it could be is sitting in your banks collecting dust for a rainy day because it sure isn't coming out the LOAN DOOR.
Blah, Blah, Blah, said the rooster in the hen house.
OK, good, we finally came to an understanding - we Americans are also going to pay our credit card debts and home mortgage "as soon as possible."
Why do I not believe a word these people are saying? If you had the money to give those huge, and undeserved bonus billions, then you did not need a bail-out.
More smoke and mirrors! These banks and bankers are just hoping to lie their way out of being regulated... choices and consequences!
another rip off thanks to the idiot Bush.....
"We have every incentive to lend," Kenneth D. Lewis, Chairman and CEO of Bank of America , – just after we return from our "Fiji" team building seminar next week. Thanks America for supporting "Team Failure!"
They should have let the banks go under because it's going to
happen again and again and they will allway's have there hand
what happened to OUR money that WE already gave you??? why did you use so much of it by giving bonouses, fancy spa trips, vacations?? why did the HOME OWNERS not see any relief after WE GAVE you so much of OUR tax money??? WE WANT TO KNOW WHY???????
Show some proof of the loans that have been made!!
CNN PLEASE POST THIS, MY COMMENTS OF LATE HAVE HUNG SOMEWHERE IN OUTER SPACE WHILE "AWAITING MODERATION"
Can one tell the world when this poor show will be finally over?
Its unbelievable how the Media permanently providindg a platform for for "me, myself and I" . Outside the USA people believed that the time of ignorance and stupidity is over.
She's got enough to do at home, let her fulfill the job there and keep her away from any media.
Urs, a friend to the US
Why doesn't Congress defend their use of our money? It's a scary day when these clowns are organizing our finances. Why don't they reduce the 2008 tax rates? No pork! OBama, we do not want this incredibly ineffective stimulus package. Reduce our rates! Immediate impact. Government programs are not created. No room for pork and corruption. Easy to implement and administer. Give the taxpayer the trillion dollars directly if you are going to borrow another trillion and stick us with the tab.
Its nice to hear them say this, but are they producing any paper work to proof it.
Anyone can say any thing but would like to see proof.
Also are they going to request proof of citizens for these loans?
This is to help the economy and to help America
Call me crazy, but wouldn't it be better to give the actual quotes AFTER they happen instead of relaying what someone is "expected to say?" I'm sure they have planned remarks and there is a lot of pressure to be the first to report a story, but it's a bit ridiculous to report what someone might say in the future.
That said, I hope our lawmakers have learned from this. Obviously, you can't just trust the so called grown-ups in positions of power and money on Wall Street to do the right and honorable thing, so you must legislate and regulate it.
Wrong. Go back to when the 1st day they recieved the money and check their ledgers. They used the T.A.R.P. $ any way they saw fit.
Hopefully this will all be brought out to the light.
The CEO's need to be replaced.Maybe with folks that have lost their job/house/veh..........there is a thought.
It started with the CEO's Jets/holidays/fun parties/buying "good" banks.........it did NOT start with them helping anyone excpet themselves.
The corporation has evolved into a very efficient mechanism for inventing new products, producing goods and services, and providing employment. The highly balleyhooed mechanism of free market competition does shape corporate behavior so that it is more efficient. However, what inevitably happens in a highly competitive environment in which lots of smart players are competing for highly desirable rewards is cheating.
Look at pro-sports. There are millions of athletes, all in superb physical condition, all wanting very much to WIN. They all train very hard. What makes the difference between winning and losing is often cheating – using illegal and dangerous drugs.
Corporations are in the same kind of environment. They all draw employees from the same labor pool. Labor is pretty much interchangeable, most employees are average, most corporate training is skimpy at best (saving costs). Corporations cannot outperform each other by hiring smart executives; they ALL have smart executives. They hire each other's executives all the time. How about making better products? Nope, they all hire the same scientists and product designers, and there is really very little difference between Wells Fargo and Chase, or between T-Mobile and Sprint. So how does a corporation defeat a competitor who has the same abilities?
Cook the books, bribe the legislature, exploit cheap labor in the third world, cut costs by cutting salaries and benefits, hire a marketing agency to smear its competitors' reputations by portraying them as hapless losers, make a profit on bad loans and sell those loans the losers that will be holding them when the housing bubble pops, and doing lots of other things that produce undesirable collateral damage to our society, our economy, and our culture.
Government must play the role of referee, making sure the game is fairly played.
OH PLEASE!! 2.2 billion in profit in 2008 and they STILL need TARP funds, give me a break. How could our government even allow these banks who show this much of a profit get these funds. Did ANYBODY perform due dilligence in just handing over these funds. Bank of America claims they are lending, HA! I am a small business owner with excellent personal and business credit who is being affected by this economic flush down the toilet and I still cannot get a loan. So CEO's, COO's and others don't blow smoke up our rears. Start loaning to the people who need a loan, not a hand out as you have received and help the small business owner get back on track!
Let the banks fail!
Considering how they have been bilking the American people in outrageous bank fees/charges over the years and offering mere pennies for interest on savings in return, why should we feel any sympathy for their plight?
And why have Barney Frank not been investigated and indicted for his roll in Fannie-mae/Freddie-mac which led to the economic meltdown?
They need to get back to their lending.......but the people that need it the most are people that have lost their jobs or houses and need to get the money to either find another home or re-educate themselves so they can find other jobs........who is going to lend money to people with out a job? We don't want the banks to get back into BAD LENDING PRACTICE but these are the people that need help the most........so where do we go from here..........all I can say is that the Bush years took away the prosperity of a lot of people and put them at or below poverty levels..........and now the Republicans don't want to help those that they put in this mess.......get rid of everyone one of these GOP lossers.........
Shame... Greed has put this country in a desparate situation. I bet they can explain. But we will never see the money. Anyone can make it look like they lended. Would like for the people who received the funds to step up and say so. Theses crooks should be arrested along with the stupid people who lent the money without requiring any accountability.
Answer to Barry Frank and Nancy Pelosi? You've got to be kidding. Isn't she the same person who tried to add so much pork to the stimulus package. Sort of like the pot calling the kettle black.
And isn't Frank the person who told the banks they had to lend to the "questionable" mortgagees starting this whole crisis in the first place? Easy to point fingers especially when you can convince people it was the CEO's and not them. How gullible do they think we are.
They're worse than the CEO's and people need to vote against both of them come next election whether you vote democratic or republican, vote for the change you want which is no more Pelosi, Frank or Reid. They are bad for America.
Time to tighten your belts little piggy's, the Bush inspired feeding frency for bank CEO's has come to an end. I bet these idiots are longing for the days of Bush.
BARNEY FRANK NEEDS TO RESIGN, HE IS A MAJOR PLAYER IN THE ECONMIC MESS WE ARE IN, BY NOT OVERSIGHTING THE MORTGAGE COMPAINES AND THE BANKING INDUSTRIES.
*******HE DROPPED THE BALL BIG TIME********************