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Facing a disgusted public and Congress, bank CEOs agreed with demands for greater accountability Wednesday in the first testimony on how they're spending money from the taxpayer-funded $700 billion bailout.
"Both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," John J. Mack, head of Morgan Stanley, told the House Financial Institutions Committee.
Added JP Morgan Chase & Co.'s Jamie Dimon: "We stand ready to do our part going forward."
In general, the eight top bankers appearing before the panel were contrite and conceded they have work to do to win over a bitter public and an exasperated Congress. They had little choice but to acknowledge as much, given intense anger and anxiety as the troubled financial system continues to spiral downward in an ever-worsening recession.
Taxpayers are furious with big banks that benefited from the federal bailout designed to get credit moving again, but which also spent lavishly on executive bonuses, company retreats and office redecorating. Lawmakers also are feeling the heat for signing off on the bailout package plan last year.
Republicans and Democrats alike have been smarting over the implementation of the financial package, which started under President Bush and now is in the hands of the Obama administration. The lingering suspicions present one of President Barack Obama's biggest obstacles as he attempts the dual challenge of prodding the financial sector to ease credit while aiming to create jobs with an economic stimulus package.
"I urge you going forward to be ungrudgingly cooperative," said Rep. Barney Frank, chairman of the panel, said as the hearing opened. "There has to be a sense of the American people that you understand their anger ... and that you're willing to make some sacrifices to get this working."
Frank also asked banks to impose a moratorium on mortgage foreclosures until Treasury Secretary Timothy Geithner comes up with a systemwide mortgage modification.
The panel's top Republican, Spencer Bachus of Alabama, said the bankers and Congress will have to do their part to sway people by "winning back their trust and their confidence."
Sitting in a row at a long table, the CEOs were met with deep skepticism from lawmakers who aggressively quizzed them on how they have used more than $160 billion in taxpayers' money.
Bankers are hardly sympathetic figures to Congress.
The initial spending of the bailout money was secretive, lacking strict requirements that the banks account publicly for how they were using it. Banks weren't helped by reports that Wall Street firms doled out more than $18 billion in bonuses to their employees last year or that Goldman Sachs and Wells Fargo had planned conferences in Las Vegas. Goldman Sachs moved its three-day event to San Francisco; Wells Fargo canceled its employee recognition retreat.
Most of these bankers didn't beg for their money. They were selected because they were relative healthy banks that could spur more banking activity and eliminate the stigma of taking taxpayer money for other financial institutions.
One by one, the CEOs brought a message of accommodation and gratitude. They applauded the program for making more loans available and promised to pay their share of the money back to the Treasury over time. Several asserted that none of the government's money went to bonuses or dividends.
"We are frugal," said Wells Fargo's John Stumpf.
Citigroup CEO Vikram Pandit testified that he has told his board of directors to set his salary at $1 with no bonus until the company makes money again.
He also struck an apologetic tone for letting the bank consider buying a private jet plane after receiving some $45 billion in bailout money. The bank ultimately scrapped the plan under pressure from Obama.
"We did not adjust quickly enough to this new world," Pandit said. "I get the new reality and I will make sure Citi gets it as well."
Most, if not all, were contrite.
"We understand taxpayers are angry" and they are right in demanding that institutions receiving their money take a "conservative, sober and frugal" approach to using it, said Kenneth D. Lewis of Bank of America.
Added Lloyd C. Blankfein of the Goldman Sachs Group, Inc.: "We have to regain the public's trust and do everything we can to help mend our financial system to restore stability and vitality."
Robert P. Kelly of The Bank of New York Mellon promised "a very good return on the investment for taxpayers" and acknowledged "we still have a long way to go" to jump start the U.S. credit market.
Hearings on the bailout were taking place across the Capitol, with the CEOs appearing in the House while Neil Barofsky, the watchdog of the government's Wall Street rescue package, testified before the Senate Judiciary Committee.
FBI Deputy Director John Pistole told that Senate panel that there are 530 active corporate fraud investigations, and 38 of them involve corporate fraud and financial institution matters directly related to the economic crisis.
Meanwhile, New York Attorney General Andrew Cuomo accused Merrill Lynch & Co. executives of corporate irresponsibility by secretly and prematurely awarding $3.6 billion in bonuses as taxpayers were bailing out the industry.
Cuomo made the claims in a letter to Frank, D-Mass., saying that instead of disclosing its bonus plan in a transparent manner designed to assure the payments were warranted, Merrill Lynch moved the date of bonuses to richly reward "failed executives." Cuomo says Bank of America, which acquired Merrill last fall, was apparently complicit in the move to award bonuses before Merrill's dismal fourth quarter earnings were announced.
Pressed about the report at the House hearing, Lewis said Bank of America urged Merrill to reduce the bonuses "substantially" as it prepared to take over the failing company but couldn't force it to make changes until the takeover was completed.
"We had no authority to tell them what to do, just urge them what to do," Lewis said. That said, he added: "Major changes will be made."
"Both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," John J. Mack, head of Morgan Stanley, told the House Financial Institutions Committee.
Added JP Morgan Chase & Co.'s Jamie Dimon: "We stand ready to do our part going forward."
In general, the eight top bankers appearing before the panel were contrite and conceded they have work to do to win over a bitter public and an exasperated Congress. They had little choice but to acknowledge as much, given intense anger and anxiety as the troubled financial system continues to spiral downward in an ever-worsening recession.
Taxpayers are furious with big banks that benefited from the federal bailout designed to get credit moving again, but which also spent lavishly on executive bonuses, company retreats and office redecorating. Lawmakers also are feeling the heat for signing off on the bailout package plan last year.
Republicans and Democrats alike have been smarting over the implementation of the financial package, which started under President Bush and now is in the hands of the Obama administration. The lingering suspicions present one of President Barack Obama's biggest obstacles as he attempts the dual challenge of prodding the financial sector to ease credit while aiming to create jobs with an economic stimulus package.
"I urge you going forward to be ungrudgingly cooperative," said Rep. Barney Frank, chairman of the panel, said as the hearing opened. "There has to be a sense of the American people that you understand their anger ... and that you're willing to make some sacrifices to get this working."
Frank also asked banks to impose a moratorium on mortgage foreclosures until Treasury Secretary Timothy Geithner comes up with a systemwide mortgage modification.
The panel's top Republican, Spencer Bachus of Alabama, said the bankers and Congress will have to do their part to sway people by "winning back their trust and their confidence."
Sitting in a row at a long table, the CEOs were met with deep skepticism from lawmakers who aggressively quizzed them on how they have used more than $160 billion in taxpayers' money.
Bankers are hardly sympathetic figures to Congress.
The initial spending of the bailout money was secretive, lacking strict requirements that the banks account publicly for how they were using it. Banks weren't helped by reports that Wall Street firms doled out more than $18 billion in bonuses to their employees last year or that Goldman Sachs and Wells Fargo had planned conferences in Las Vegas. Goldman Sachs moved its three-day event to San Francisco; Wells Fargo canceled its employee recognition retreat.
Most of these bankers didn't beg for their money. They were selected because they were relative healthy banks that could spur more banking activity and eliminate the stigma of taking taxpayer money for other financial institutions.
One by one, the CEOs brought a message of accommodation and gratitude. They applauded the program for making more loans available and promised to pay their share of the money back to the Treasury over time. Several asserted that none of the government's money went to bonuses or dividends.
"We are frugal," said Wells Fargo's John Stumpf.
Citigroup CEO Vikram Pandit testified that he has told his board of directors to set his salary at $1 with no bonus until the company makes money again.
He also struck an apologetic tone for letting the bank consider buying a private jet plane after receiving some $45 billion in bailout money. The bank ultimately scrapped the plan under pressure from Obama.
"We did not adjust quickly enough to this new world," Pandit said. "I get the new reality and I will make sure Citi gets it as well."
Most, if not all, were contrite.
"We understand taxpayers are angry" and they are right in demanding that institutions receiving their money take a "conservative, sober and frugal" approach to using it, said Kenneth D. Lewis of Bank of America.
Added Lloyd C. Blankfein of the Goldman Sachs Group, Inc.: "We have to regain the public's trust and do everything we can to help mend our financial system to restore stability and vitality."
Robert P. Kelly of The Bank of New York Mellon promised "a very good return on the investment for taxpayers" and acknowledged "we still have a long way to go" to jump start the U.S. credit market.
Hearings on the bailout were taking place across the Capitol, with the CEOs appearing in the House while Neil Barofsky, the watchdog of the government's Wall Street rescue package, testified before the Senate Judiciary Committee.
FBI Deputy Director John Pistole told that Senate panel that there are 530 active corporate fraud investigations, and 38 of them involve corporate fraud and financial institution matters directly related to the economic crisis.
Meanwhile, New York Attorney General Andrew Cuomo accused Merrill Lynch & Co. executives of corporate irresponsibility by secretly and prematurely awarding $3.6 billion in bonuses as taxpayers were bailing out the industry.
Cuomo made the claims in a letter to Frank, D-Mass., saying that instead of disclosing its bonus plan in a transparent manner designed to assure the payments were warranted, Merrill Lynch moved the date of bonuses to richly reward "failed executives." Cuomo says Bank of America, which acquired Merrill last fall, was apparently complicit in the move to award bonuses before Merrill's dismal fourth quarter earnings were announced.
Pressed about the report at the House hearing, Lewis said Bank of America urged Merrill to reduce the bonuses "substantially" as it prepared to take over the failing company but couldn't force it to make changes until the takeover was completed.
"We had no authority to tell them what to do, just urge them what to do," Lewis said. That said, he added: "Major changes will be made."
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