Bankers on the Hill

Rarely in the rich history of congressional stonings have the victims been so crisply-attired, so contrite, so deferential, and so tolerant of their grandstanding captors.

The chief executives of eight major banks on Wednesday confronted a nation's rage with their perceived greed, ineptitude, love affair with leverage and exploitation of taxpayer largess when they were hauled before the House Financial Services Committee led by brainy, rhetorically acidic Chairman Barney Frank (D-Mass.).

If Morgan Stanley boss John Mack didn't get a bonus, even in a good year, asked Frank, would he leave the office early each Wednesday, feeling underappreciated? Why does he need to be "bribed" by a bonus?

"If you gave me no bonus in the best year, I'd still be here," responded Mack, trying to underscore how much he loves his job. Of course, that now raises the question of why Morgan Stanley's (probably lapdog) executive compensation committee should ever give him a bonus. But it was a smart bit of public groveling by Mack.

"Let me be frank, my constituents in Illinois are angry and so am I," said Judy Biggert, a moderate Republican from the Chicago suburbs who touted herself in one campaign as a former car pool mom and assistant soccer coach. "We don't believe that taxpayer money has been spent wisely. We don't have the answers we need yet."

By the time they were all done, and job-loving Mack was liberated to head to Europe and Asia on business, it was fitting that precious few members of Frank's panel were still around. Ditto Rev. Jesse Jackson, the omnipresent Zelig of our public life, who snared himself a spectator's seat before he, too, could handle no more. The members, like the U.S. Treasury, seemed tapped-out, simultaneously frustrated and exhausted by the devilishly complex issues at hand, be they getting more loans to constituents; assuring fewer foreclosures; limiting the Earnest Eight's compensation; or discerning just exactly where all our billions have gone in recent months.

There were answers, even if not satisfying to Biggert and colleagues. They included perhaps the big surprise, namely the claims of the big bad bankers that they'd foreclosed on precious few homes. In addition, there was the inherently trickier-to-verify assertion that bailout funds had not been neatly transferred into compensation, dividends or the pay of their beloved Washington lobbyists, the wallet-sucking species which may actually be putting in full days now before heading to the Capital Grille, the Palm or Morton's.

For sure, the chief executives, who operate like kings in their monarchical corporate cultures, faced the inherently demeaning moments which are part and parcel of such congressional shows. Just ask, say, any tobacco or even Major League Baseball executive who's ever surfaced at a House or Senate hearing.

For example, California Democrat Brad Sherman, as if a Pre-K teacher with four-year-olds, asked for a show of hands on whether panel members owned or leased a company jet. Everyone did, except Lloyd Blankfein of Goldman Sachs Group Inc., who presumably suffers through the indignity of first class on commercial.

Perhaps it's coincidence that Sherman's district includes parts of Burbank, home of NBC, since there was a faux Sam Waterston Law and Order air to his interrogation. Playing amateur prosecutor, he requested both the amount of bailout funds each had received and their planned 2009 salary and bonus. Citigroup boss Vikram Pandit indicated he got $45 billion from taxpayers but would only take $1 in pay and no bonus this year (of course, given his performance, some critics would say he's overpaid).

Others panel members, such as California Democrat Maxine Waters, showered the bankers with passionate anecdotes about constituents seemingly screwed by increased interest rates on credit cards while the banks were getting bailout funds. She was honest enough to admit she'd always fought the banking industry on issues like redlining and predatory lending. But, Waters being Waters, she also asked a question which made absolutely no sense to the panelists, proceeding to take their semi-dumbfounded silence as affirmation of her particular conspiratorial thesis.

As for the matter of credit card rates, Bank of America's Kenneth Lewis was short of convincing in indicating he'd only raised them on nine percent of his customers last year.

Not a single executive conceded any significant error in their use of bailout funds, overseeing mortgages or dealing with credit card holders, though Mack did concede a strategic corporate stumble shared by many institutions, namely the stratospheric leverage he'd operated under (32 times assets) during the heady days of easy money.

Indeed, Wells Fargo & Co's John Stumpf, who arguably runs the best bank of the lot, parried the inherent suggestions of taxpayers being shorted by offering impressive detail on his lending in the last 18 months, underscoring how it far exceeds the bailout funds he promises to repay.

Still, none provided a very convincing answer as to a central quandary of the economic crisis, namely how they and the government will deal with the so-called "toxic" assets on the books of many. What actually is the market for them? The tension inherent in Treasury Secretary Tim Geithner's desired private-public partnership on that score was readily apparent

Also apparent was that the bankers' lobbyists and public relations entourages were lucky boys and gals on this day.

For starters, the bankers had an easy act to follow, given the public relations disasters of Detroit's auto chieftains, America's most recent designated corporate villains. Second, there is the implicit understanding that they may be part of the problem, but they are critical to the solution, too. Third, they were assured of less media attention than they deserved since the spotlight was really on bargaining to reconcile differences in the House and Senate stimulus bills.

But it was still not an easy hurdle, as one was reminded if watching coverage on Bloomberg TV. When Bank of America Lewis began, the screen flashed these relevant facts: "In '07 Made $16.4 million...$45 billion in govt loans."

"We understand taxpayers are angry," he said, quickly offering up data on what he said were $110 billion in loans his bank gave in the fourth quarter of 2008. He assured one and all that BOA has used its bailout booty well. It was much the same for Goldman Sachs Group Inc.'s Blankfein, who took home $70 million in 2007 and conceded a "need to regain public trust."

Amid the posturing by their interrogators, the bankers, whose well-starched shirts did not seem to wilt during the daylong session, did engender a smidgen of sympathy. It can happen during a collective crisis.

"We're in this together," said one Indiana congressman, adding that the country depends on the bankers' good judgment.

There was even a plaintive call to not necessarily help all his constituents from one Texas congressman.

"Please, if you don't think they can repay it, don't loan," he told the Earnest Eight.

Amid all the complexity and confusion, his counsel seemed so disarmingly simple.

Comments

[pfrogger]

how useless are these politicians.
no real surprise to anyone paying attention, but they seemed powerless, impotent, and essentially useless.

it was all a charade. poor players acting out their part.
the politicians "diligently" questioning the banking powers.
the bankers acting meek and pretending to care, acting as if they are working with the people.
in the end, absolutely nothing was resolved!

were credit card rates adjusted for these times or set to more manageable levels - NO!
here's a clue genius - if a person is having trouble paying back the principle, raising the rate won't help, it will actually hurt - many will go into bankruptcy (who knows maybe that's what they want, to squeeze the last dime out of everyone while they have their jackboots pressed painfully against our necks

I will never put money in a major bank - go for credit unions, they in general fared much better and they actually care about their community

[corkonian]

Why doesn't Congress just demand that they give the money BACK?

[MakeAWish]

What has changed after this public flogging? Nothing!!

[DLBSR]

I must say I am vert encouraged with the posts on this board. It seems many on Main Street have finally come to the realization the current crisis really is a bipartisan issue, not a democrat OR republican issue. Our memebers of conress from BOTH SIDES OF THE AISLE are more responsible than most for destroying the once most robust economy on the face of the earth. The destruction did not happen overnight. The seeds in the "GARDEN OF DESTRUCTION" were sown years ago, some decades ago, with insane legislation that largely served the desires of special interest groups. More recent Presidents and Congresses have fertilized the garden with miracle grow, steroids, and a daily dose of BS from the partisan media, watering the garden often with the sweat from our brows and the spittle spewed from our oral orfices as we espoused the fiery and divisive partisan rhetoric our Congress owns the patent on.
You are right to assign a large amout of culpability for this crisis to those responsible, Democrats AND republicans. It is the necessart first step to making this country a better place for all of us and will assist in this country's struggle to subsist. I believe most of the solutions needed to resolve our demoralizing economic woes will be offered by Main Street, not from inside the beltway.

[Ensentium3]

Barney Frank is so cool!

http://news.aol.com/newsbloggers/2007/08/31/so-how-come-barney-franks-still-in-office/3

[AnnfromCA]

Yes, the bankers did quite well. Moreover, it was really very interesting, since obviously Paulson chose well in distributing the initial TARP funds. I got a kick out of watching them handle the insults deftly. Frank's committee was clearly out of its league.

[DLBSR]

More aptly, Frank's committee was trying to show they were not playing ball with the bankers. Tough duty when you hepled to write the league rules, stripe the field, and set the bases. Frank's attempts at calling balls and strikes was an utter failure.

[Ensentium3]

Did anyone see Barney Frank lambasting the Bankers for having bonuses as part of their pay structure? I think the way he put it was something like this "what part of your job would you not do? Would you take extra long lunches or leave on wednesday instead of work through the week? Why do you need to be bribed for working for your employer?"

Wow, is Barney Frank (whose gay lover was running a gay brothel from his apartment.­...but Barney didn't know!!) now suggesting that any american with a bonus is essentially being bribbed? I currently have a bonus plan with my organization and it only makes me work that much harder. I know that is a foreign concept to you "equality-­rules-no-m­atter-how-­hard-you-w­ork-libera­ls."

Good Bye America...­.our Freedoms are slowly being stripped away one liberal policy after another.

[Rog49Thomas]

Yep, the freedom to dream that you too could get a $150mm bonus.

[Rog49Thomas]

Ah the dreaded Congressional "tongue lashing".

Many a recipient has been known to have remained a broken man or woman for the rest of his or her life after such an encounter.

It's definitely worse that waterboarding.

And if we are really honest, than hooding and electrodes.

Luckily as one wise Associate Justice of the Supreme Court has pointed out "cruel and unusual" only applies to "punishment" and not to "interrogation".

Compassionate conservative that I am - I am taking up a collection for the Big 8 so that they can get proper post trauma counseling and repair their shattered lives.

I hope many of you out there were as touched by their plight as I was and will send in contributions.

[magibrotherhood]

arrest them on financial te.rrorism charges---

[stargazer13]

seems the big boys are holding America hos tage

we are being punished because we did not do what they wanted

all I can say is how dare you take our money hand over fist and then raise our interest rates

[brandnewstuff]

Like words from Congressmen hurts- how about freezing assets on those mob bankers? Do something for real I dare Congress to step up and have a Big Time Party

[Republicrats]

None of them "get it" Not the congress, not the bankers, not the administration!

REVOLT, DO NOT PAY ANY BILLS FOR ONE WEEK SOLID, NEXT WEEK IN HONOR OF GEORGE WASHINGTON!

REVOLT!

[ratcityreprobate]

Asked how they spend a typical day the bankers replied that investing in derivatives takes up only a small part of their workday. Many of their waking hours go to other chores, like bidding on Bordeaux futures, doing lines of coke off a supermodel's thigh and overpaying for Manhattan real estate.

(Credit Steve Clifford for these lines which I have mauled.)

[DLBSR]

I'm a fan of Steve Clifford!

[MacQ]

THis is rich: Barney Frank grilling bankers.
Bankers were told they had to give bad loans. (google community reinvestment act).

IN 2001, the administration warned of problems with Fannie and Freddie. Barney said they're fine (his boyfriendd was in charge). Again in 2003. And 18 more times during the past 8 years. ONly to be told by Barney and friends that there was no problem.

Our heads should all be exploding, but apparently some people think this is ok.

[Republicrats]

Please people of Mass, get rid of this clown!

[DLBSR]

PLEASE....­..people of AMERICA! Get rid of ALL these clowns.

[Republicrats]

The Congress are clueless! congressman #1, "why are you not lending money? " Conman #2 "why did you make all those bad loans?" Conwoman #3, "why do you charge interest?"

Clueless!!!