Wall Street execs make nice with Congress, but are they really sorry?
It was supposed to be a grilling, a chance for lawmakers to vent on behalf of Americans furious at Wall Street bankers for accepting $176 billion in government money to unfreeze credit and then spending it on bonuses, company retreats and office decor.
And there was some of that. As South Carolina's Republican Rep. J. Gresham Barrett put it:
Gentlemen, normally, I would strongly oppose the very nature of this hearing. There are few things more dangerous to me than letting the government run our banks or having a bunch of politicians dictate your business decisions. But now that you’ve received hard-earned taxpayer money, you owe my constituents some explanations about how you’ve gotten yourselves in this position and how you've spent their money.
Like other states, South Carolina is struggling, and too many people are losing their jobs due to your decisions, which have driven our economy into the ground. Small businesses back home, people I know, friends I go to church with are closing their doors, losing their jobs, and they’re not getting bailed out. And my constituents simply haven’t seen the evidence that the money that we have given you is working and making things better.
But the hearing, called by Rep. Barney Frank, the Massachusetts Democrat who chairs the House Financial Services Committee, was remarkably civil.
The eight bank executives, mindful of the bad impression that automobile executives left on Capitol Hill last year when they flew into Washington on corporate jets, took pains not to offend sensibilities at today's hearing. Bank of America CEO Kenneth Lewis even went so far as to take an eight-hour train ride from his bank’s headquarters in Charlotte, N.C.
And, as if coached by top public relations pros, they all sounded a note of contrition, the I-accept-full-responsibility thing.
"It is abundantly clear that we are here amidst broad public anger at our industry," said Goldman Sachs boss Lloyd Blankfein. "In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public. Many people believe -- and, in many cases, justifiably so -- that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system's stability."
Morgan Stanley's CEO, John Mack, echoed the thought, arguing that his firm had posted positive results in 2008 despite the economic meltdown. "But we didn't do everything right. Far from it. And make no mistake: As the head of this firm, I take responsibility for our performance. I believe that both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials."
But behind the attempt to defuse public anger, the executives more or less said that they'd done nothing wrong. They were in fact lending money. They were working to pay taxpayers back as quickly as possible. They had cut back on bonuses. And besides, the government more or less forced them to accept the funds.
"We lent more even as customers cut back on their spending," said J.P. Morgan Chase & Co.'s Jamie Dimon, who argued that more government regulation is not the answer. Still, he added, "we stand ready to do our part going forward."
Here's the prepared testimony of the eight executives as they made their case.
-- Johanna Neuman
Credit: Associated Press