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.
You bank big shots pay out $18 billion in bonuses to your executives and I can't get a construction loan on prime real estate property that me and my family own free and clear? Do me, my family and the American people a favor–put down the crack pipe, step away from the vault, spend whatever you have left on a good drug rehab program and then go get a real job that requires manual labor such as a ditch digger! You guys REALLY need to check yourselves before you wreck yourselves-and the country!
Banks stepping up with justifications and explanations is the best PR they can do to be part of the solution in raising people's confidence in them. But What hurts them right now and what hurts the economy is when people hear over and over again how people with good credit rating are being turned away and not necessarily with justifications and respectful explanations.
As the old saying goes-"Put-up or shut-up."
They may have not used the ACTUAL TARP monies but if it weren't for the TARP they could not have given the bonuses, who do they think we are? Have they ever played the 3 shell gave, were is the pea? Why don't they go on another junket with Barney Frank.
The revival of the economy is sooooooooo simple! Just give every TAXPAYING American $100,000 tax free dollars and the economy will take care of itself in a hurry! Case closed!!
They may have not used the ACTUAL TARP monies but if it weren't for the TARP they could not have given the bonuses, who do they think we are? Have they ever played the 3 shell game, were is the pea? Why don't they go on another junket with Barney Frank.
Who do these people represent certainly not the people.
So basically Repubs handed these Banks $165 Bil and told them to enjoy! This is more than appalling! Now the same Repubs suddenly have a Giant conscience and large sense of restraint concerning how the Stimulus PLan $'s are spent! HYPOCRISY and Politics at it's Worst! Repubs need to get off the Pulpit and into the Confessional Box!
ISN'T BARNEY FRANK, CHRIS DODD, AND A HOST OF OTHER DO GOODERS, RESPONSIBLE FOR THE FANNIE MAE LOANS THAT HAVE BURST THE HOUSING BUBBLE, HUMMMM? WHY YES THEY WERE SHAZAM WHO DA THUNK THE ROAD TO HELL WAS PAVED WITH GOOD INTENTIONS AND SHORT SIGHTEDNESS. THEY MAKE ME A FISCAL CONSERVATIVE DEMOCRAT WANT TO JUST DUMP THESE BUMBS, YA THINK.
These people should be questioned on thier actions too. They sure don't listen to the people!
A plan to overhaul TARP is right on the money. For too long, the CEOs have been riding the greenbacks of American citizens and living the life of their own world of milk and honey. I say, it's about time to do something about the irresponsibility of the CEOs when American children, parents, seniors, and many others are struggling financially in a nation of free to be free!
How much Tarp funds were used as donations to politicians or political parties? Any of those donations go to anyone on the committee?
This ought to be good...
As a banker whose employer received TARP money it is important for everyone to understand that participating banks must pay the Treasury a 5% dividend every year on the funds they received. If the money is not fully repaid by five years, this dividend increases to 9%. We cannot afford to just sit on this money and pay those dividends. We have to lend it out or use it in another sensible fashion to obtain a return ideally larger than the 5% we are spending to use the money. Its like paying 5% for a five year CD to get the funds in, so we need to lend it for 7% just to get a 2% return. So..... all we need to do is find someone financially healthy enough to lend to that will accept a 7% loan rate. Easier said than done. None the less, we are participating because we believe that is how we can play our part to help stimulate the economy. Our objective it to pay all the money back at the end of three years, and try to make a margin on the funds while we have it. Again, easier said than done.
All of this must the couched with the understanding that our bank did not make any "sub-prime loans" or do any of the things that have unstabilized the financial system. We are an old fashioned community bank that serves our customers in a partnership. We have impecible financials (5 stars according to bauerfinancial.com) and didn't need the funds to shore up our books. We are participating to help the economy. So don't paint all banks the same color.
They don't get it. If the government gives you 1 billion, then you take 1 million from another account to pay for vacations, retreats and bonuses for CEO's, it does'nt matter. They still blew the money.
I think for CNN to sit there and raise questions about President Obama staff severance pay and compare it to the Bank Officials spending is in poor taste and it sets the tone of distrust to the administration. These banks are recieving taxpayers money for bail out and spending like there is not a crisis. At times I just step away from CNN and your reporting tactics. and this seems like its going to be another time where I take a break from you...
guess the Dummy decide that the company was to heavy for her.
I am a Democrat all the way through, but I have to say that the use of the TARP funds the way they have been told has caused me great concern. Our country is in such a difficult situation and now that we really need an economic boost, no one trusts the government to do the right thing. The oversight with the TARP plan was never put in place and greed once again caused the American people great distress. I am skeptical with another bail out plan, but trust Obama and most economists. I do not trust the CEOs of the banking industry though. No oversight caused them to play with too much money and take gambles that never came back to hurt them, but caused huge damage for the rest of us.
crooks, thieves, liars.
Just don't pay. Just stop paying the banks. Eventually the people will win and these fat kats will starve.
25% ... that's the interest rate on my credit card ... I have paid off every penny I have ever owed with only a few late payments. "Bad credit" is a lie and a scam. Don't borrow.
Dear Mr President Barack Obama
I am Wyeth employee. I supported your compain and was hopeful that we will come out of this critical financial situation the county is in. I can understand that it takes sometime to get things better. But I think we have to stop doing the same thing over and over again and expect different results.
What so ever, I am greatly disappointed with certain things. One way you are telling to create jobs and on the other hand you are supporting cutting off good scientific jobs – Its just beyond my comprehension and logic. I am employee at Wyeth Research in NY and there are talks for acquisition of Wyeth by Pfizer. This thing as I said is beyong my comprehension and logic. Pfizer is a FAILED company and has not been able to come out with a single product in the last 10 years, and now it comes and buys Wyeth for its products and lays-off the good scientists at Wyeth. Pfizer has been doing the same thing and this is the 3rd acquisition in the last 10 years, including Warner Lambert in 2000 and Pharmacia in 2003. Pfizer acquires good companies and then destroys/lay-offs the good employee's.
This time the American government is using my/our tax money to bail-out these banks and banks are lending money to Pfizer to buy Wyeth. In a way, I am funding my own lay-off, which is supported by President of United States. So again, Pfizer (a failed company) wins, this time supported by American government. All the top management, who basically are good for nothing are making millions of dollars from this deal and letting thousands for people without jobs.
What good is your stimulus package which will provide us $500 once and then we can be on the streets. When we buy our house our credit scores, history etc are checked. How can a failed company like Pfizer get billions of dollars from the banks ??? What's Pfizer's credibility ??? Can they make drugs – the answer is NO...then how and why are they getting these billions of dollars. And that too from our tax.
Would the Goverment provide me 1 million dollar in case I am forced to leave my home with my family. If Pfizer is eligible to get my money...what's wrong me and other people of United States getting money to survive.
I STRONGLY URGE YOU TO PLEASE STOP this Pfizer Wyeth deal and save a good company from getting destroyed and saving the jobs of good productive scientists. We and our future generations need medications and healthcare.
I want to remain anonymous but this is the pain Wyeth Employee or employee from other companies are going through.
Thank you and hoping you will use your power for good of our and the country.
I hope that when the CEOs of these HUGE banks sit before the finance and banking commitee that they have their collective feet held to the fire. Rememeber the auto dealers!!!!! Except if records are correct they collectively have taken far more in BILLIONS and yet now they are unhappy with the way Geitner is laying out plans.
These people obviously live in an alternate universe. While they were giving themselves BONUSES and pats on the back, people like Henrietta Hughes and elderly woman in Fort Myers is living in her car due to foreclosure, This goes beyond inhumane.
The banks need to become held accountable like all Americans and if they cannot meet the test let them fail. They have already been given 350 billion. Just think what good use that could have gone to in this country in the right hands....
Suz, Western NY
very sad, they say, we have such an important job, try to fill our shoes with another, O.K. we should try, cause these CEOs are why we are in such a mess
Where was the republican opposition, outrage and obstructionism they applied towards the stimulus bill when they wholeheartedly supported the bank bailout??
There is the pride and joy and crook of the Democrap party Bonnie Fwank.......Thanks for killing our country Bonnie
These people are going to sit there and do a song and dance and fly away with our hard taxed money and you know it and they know it.
They are not going to give any transparency–thats why some of that money ends up in the politicians pockets!!!!
Will this musical come out on Broadway sometime soon or are they going to over budget this song and dance by another 350 Billion dollars?
Stay tuned for more.......