Bankers Face Congressional Criticism Over Bailout
RENEE MONTAGNE, Host:
NPR's John Ydstie reports.
JOHN YDSTIE: Amid complaints from businesses and consumers that they can't get loans and stories about Wall Street bonuses and corporate jets, members of the House Financial Services Committee were angry. Among the most peeved was Michael Capuano, a Democrat from Massachusetts.
MICHAEL CAPUANO: Basically you come to us today on your bicycles after buying Girl Scout cookies and helping out Mother Theresa, telling us we're sorry, we didn't mean it, we won't do it again; trust us. Well, get our money out on the street.
YDSTIE: But all of the eight CEOs at the witness table, including John Stumpf of Wells Fargo and Ken Lewis of Bank of America, argued they were recycling the TARP money back into the economy.
JOHN STUMPF: Last quarter alone we made 22 billion in new loan commitments and $50 billion in new mortgages.
KEN LEWIS: In the fourth quarter, alone, we made more than $115 billion in new loans to consumers and businesses.
YDSTIE: So, if that's the case, asked New York Democrat Gary Ackerman, why is the story different in the world of his constituents?
GARY A: Where people can't get loans, where people can't refinance their homes, where people can't buy automobiles, can't send their children to college. It seems to me, and to some of us, that this money hasn't reached the street, that you're not loaning it out. How do you explain that?
YDSTIE: The reason, said Jamie Dimon, CEO of JPMorgan Chase, is not that banks aren't lending, it's that other parts of the financial system have pulled back credit, and that's what consumers are experiencing.
JAMIE DIMON: There is a huge amount of non-bank lending which has disappeared: finance companies, car finance companies, mortgage companies, money funds, bond funds that did withdraw money from the system and make it much harder in the system. That created some of this crisis we have.
YDSTIE: Congressman Brad Sherman, a Democrat from California, focused on another sore point - a report from the TARP oversight board last week that found the value of the shares the government had received from the banks getting TARP funds was more than $70 billion less than the government had invested. Sherman targeted Vikram Pandit, CEO of Citigroup to answer.
BRAD SHERMAN: So, why are you unwilling to issue additional securities to make the taxpayers fully compensated?
VIKRAM PANDIT: Congressman, I haven't looked at this analysis. I don't know where all these numbers come from. But I will tell you...
SHERMAN: That comes from the Congressional Oversight Panel and the hearings of last week.
PANDIT: I appreciate it. Ultimately, my goal is to make this an extremely profitable investment for the U.S. government. I plan to pay it back. In the meantime we're paying $3.4 billion annually as dividends on this investment.
YDSTIE: All of the CEOs said that in light of the economic situation and the government aid, they had taken no bonuses for 2008. But Pandit and Citigroup went even further.
PANDIT: We will hold ourselves accountable, and that starts with me. I told my board of directors that my salary should be $1 per year with no bonus until we return to profitability.
YDSTIE: John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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