The chief executives of banks that have received federal-government aid testified Wednesday before the House Financial Services Committee, including, from left: Lloyd Blankfein of Goldman Sachs, James Dimon of J.P. Morgan Chase, Robert Kelly of Bank of New York Mellon, Kenneth Lewis of Bank of America, Ronald Logue of State Street, John Mack of Morgan Stanley, Vikram Pandit of Citigroup and John Stumpf of Wells Fargo.
These guys got grilled, and deservedly so. And about time that bankers heard the wrath of the people.
Chief executives at eight banks and securities firms that have gotten $165 billion in federal aid were barraged by U.S. lawmakers, who showed little patience for a charm offensive aimed at defusing ire over pay and lending. During Wednesday's seven-hour hearing before the House Financial Services Committee, Rep. Maxine Waters (D., Calif.) referred to the CEOs, sitting in alphabetical order at a long table, as "captains of the universe."When Bank of America Corp. Chairman and CEO Kenneth Lewis responded, "corporals of the universe," Rep. Waters looked at him blankly. "Did you raise your credit-card rates?" she demanded.
I am not often impressed with Representative Waters, but she was spot on this time.
It was a typical moment in a hearing that underscored how big-bank CEOs have become lightning rods for the anger and misery fueled by falling home prices, rising unemployment and the deepening recession. From Goldman Sachs Group Inc. Chief Executive Lloyd Blankfein to John Stumpf of Wells Fargo & Co., the eight executives endured relentless questions that included being forced to recite their salary, bonus and stock compensation in a hearing meant to assess the Troubled Asset Relief Program.
Bad, bad boys.
In 2006 and 2007, the eight executives got total compensation of $401 million, according to securities filings. The combined stock-market value of their companies has plunged 69% since the Dow Jones Industrial Average peaked in October 2007.
Wealthy bad boys.
Anticipating tough questions about pay and perks, James Dimon, chairman and chief executive of J.P. Morgan Chase & Co., took the Acela, Amtrak's high-speed train, and stayed overnight at Washington's Park Hyatt hotel. He bumped into Bank of New York Mellon Corp. CEO Robert Kelly at breakfast. Mr. Blankfein and John Mack, Morgan Stanley's chief executive, flew commercial flights, but Mr. Blankfein stayed at a Ritz-Carlton hotel. Mr. Pandit spent hours cramming for the hearing.
Well, at least they realized that taking a corporate jet would have been a bad move. A room in the Hyatt goes for $439 - $499 (an Ambassador suite goes for about $3,800). The Ritz Carlton advertises itself as a luxury hotel. Its rates start at $549. Guess Lloyd still doesn't think he's gotta slum it.
"You come to us today on your bicycles, after buying Girl Scout cookies and helping out Mother Teresa, telling us: 'We're sorry. We won't do it again,' "said Rep. Michael Capuano (D., Mass.). "America doesn't trust you anymore."
Good line. Trust? You kiddin'?