Bankers defend bailout record

The expected grilling amounted to a light toasting Tuesday as executives of some of the nation’s biggest banks came before a House panel angry over the results to date from the government’s $700 billion Wall Street bailout.

Top officers of Goldman Sachs Groups, Citigroup, Bank of America and other top financial firms faced some uncomfortable moments but staunchly defended the way they used the over $165 billion in taxpayer money they received from the Treasury Department’s Troubled Asset Relief Program, or TARP.

“We didn’t do everything right, far from it,” John J. Mack, chairman and chief executive officer of Morgan Stanley, told a packed hearing of the House Financial Services Committee.

“I believe that both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials. […] It’s our goal and our desire to repay the taxpayers in full as soon as possible,” Mr. Mack said.

Lawmakers of both parties expressed frustration that the disconnect between the bankers’ claim they had used the TARP money to make new consumer and business loans and the flood of calls from constituents complaining of foreclosed mortgages, canceled credit lines and higher credit card and consumer loans rates and fees.

“It’s as if there were two different worlds,” said Rep. Gary Ackerman, New York Democrat. “We hear words, words, words and no answers.”

Said Rep. Michael Capuano, Massachusetts Democrat, “You come here on your bicycles selling Girl Scout cookies to help Mother Theresa and tell us, ‘Sorry. Trust us.”

Committee Chairman Barney Frank, Massachusetts Democrat, warned the bankers to be “ungrudgingly cooperative” in the face of public fury over the perceived lack of results from the bailout to date, and questioned why senior executives needed year-end bonuses to do their work.

“If you weren’t getting a bonus, what would you do?” he asked. “Would you leave early on Wednesday?”

But all eight bankers told the panel they had not received a bonus above their base salary in 2008 and all said they hoped to repay the TARP money they received before 2012. The eight firms represented were Goldman Sachs, Bank of America, Citigroup, J.P Morgan Chase, State Street Bank, Bank of New York, Wells Fargo and Morgan Stanley.

Citigroup Chief Executive Officer Vikram Pandit did apologize for belatedly canceling an order for a $50 million corporate jet last month.

“We did not adjust as quickly enough to the new world. It was my mistake,” Mr. Pandit said. “I get the new reality and I will make sure Citicorp gets it as well.”

Avoiding a public relations disaster that befell the heads of the Big Three automakers when they sought a taxpayer bailout last fall, the eight executives either drove or flew by commercial airline to Washington for their command performance.

John Stumpf, president and chief executive officer of Wells Fargo & Co., was one of a number of bank executives who insisted they used the TARP money to make new loans, despite reports to the contrary.

“Last quarter, we made $22 billion in new loan commitments and $50 billion in mortgages [-] a total of $72 billion in new loans. That’s almost three times what the U.S. Treasury invested in Wells Fargo,” he said.

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