Rep. Capuano Scorches Big Bankers
3:18 P.M. UPDATE:
Rep. Michael Capuano (D-Mass.) evidently did not accept John Mack's apology, rendered earlier this afternoon.
Capuano waged a withering attack on the eight bankers arrayed before the House Financial Services committee right now. The eight bankers testifying now head the first big eight banks to take bailout money.
"You come here today on your bicycles after buying Girl Scout cookies and helping out Mother Teresa," Capuano winded up. "You're saying, 'We're sorry. We didn't mean it. We won't do it again. Trust us.' I have some people in my constituency who have robbed some of your banks and they say the same thing."
Capuano blamed the bankers for creating off-balance-sheet instruments that often allow companies to hide losses.
"I think they're illegal," he said. "I can't believe no one's prosecuted you on this. How can any regulated bank have something on it's books that's totally unregulated?" he asked, probably rhetorically.
"It's my hope you'll be answering those questions in court some day," he said.
Capuano concluded by saying that he doesn't have "one single penny" of his money in any of the banks run by the bankers before him.
Morgan Stanley Chief Apologizes On Behalf Of Entire Industry
1:49 P.M.: Morgan Stanley chief executive John Mack appears to have just apologized for the entire financial services sector at the House Financial Services hearing underway.
It may have been the mea culpa many were seeking from these bankers today. These men head the first eight large banks to get bailout money.
Rep. Gregory Meeks (D-N.Y.) asked the eight assembled bankers: "Do you feel you in the industry have anything to apologize to the American people for, because we didn't catch this?" Meeks asked, referring to the growing sub-prime and credit problems. "Anyone?"
Mack stepped forward and said: "It's a tough question. As an industry, clearly we made mistakes. Whether it was leverage -- at one point, we had 32-times leverage -- whether in loans we shouldn't have made, whether it was in some of the complex instruments.
"So, I think from Morgan Stanley's point of view, if you could play the clock over again, we'd definitely" do things differently. "We are sorry for it. I am especially sorry fro what's happened to shareholders" and more broadly, to all Americans, he said.
"Clearly, as an industry, we have accountability and we're taking responsibility," Mack said. "I'll take responsibility for my firm."
Evidently, the other seven big bankers believed Mack spoke sufficiently for the entire industry and remained silent.
Send Your Chase Credit Card Problems To Jamie Dimon
12:18 P.M.: If you've got a problem with your Chase credit card, send it personally to JP Morgan Chase chief executive Jamie Dimon and he'll deal with it.
At least, that's what he said moments ago at the House Financial services committee grilling of the first eight big bankers who took federal bailout money.
Questioned by lawmakers as to why some of the bankers were raising credit card rates, Citigroup's Vikram Pandit said his company did not raise rates for two years but was forced to last year, as the credit market dried up.
Dimon said his bank has raised rates on some customers but lowered them on others.
If his bank mistakenly raised rates on a customer, he wants to hear about it.
"If we did the wrong thing, send it to me," Dimon said. "Send them all to me and we'll deal with them one-by-one."
Dimon can be reached at:
Chief executive, JP Morgan Chase & Co.
270 Park Avenue
New York, NY 10017-2070
If his e-mail follows the JP Morgan format, it would be either:
Big Bankers Call For Big Regulation
12:01 P.M. Two of the nation's most prominent bankers called moments ago for a new "super-regulator" that would oversee their banks and the larger financial system.
"We need to have a coordinated super-regulator for the financial services sector, and I do urge all of you to pursue that," said Morgan Stanley chief executive John Mack, pointing out that many of the regulations currently governing his sector were written right after the Great Depression.
Jamie Dimon, chief executive of JP Morgan Chase, said, "we have a Byzantine, alphabet-soup of regulators," adding that it would be of "tremendous benefit to have one regulator looking at anything that could cause systemic risk. It should be a U.S. system that is globally coordinated," he said.
Dimon said a more muscular Fed Reserve could be the sole regulator.
Rep. Waters Attacks Big Bankers
11:47 A.M.: Rep. Maxine Waters (D-Calif.) became the first to lay into the bankers.
"To the captains of the universe sitting here before all of us," Waters began, "all of my political life I have been in disagreement with the banking industry."
Waters asked how many of the bankers raised interest rates on their credit card holders after getting bailout money.
Bank of America chief executive Ken Lewis tried to open with a little levity, and was shot down by Waters: "I feel like a corporal of the universe," he said, before allowing that his bank raised interest rates on 9 percent of its customers in 2008.
Citigroup chief executive Vikram Pandit and Wells Fargo chief executive John Stumpf raised their hands in response to Waters's question.
Then, Waters went after the banks's overseas employees, asking Lewis if he has employees working in loss-mitigation working off-shore.
"If we have [loss-mitigation employees] offshore, I do not know about it," he said. Waters responded, "You do have them offshore."
Finally, Waters went after fees that she said the banks paid themselves for processing the bailout money.
"I don't know what you're talking about," Lewis said.
"Do any of you understand what I'm talking about?" she asked.
Pandit offered that what Waters was talking about was "underwriting fees" paid to a "number of underwriters," including Citigroup.
"You absolutely collect fees," Waters concluded, as her time ran out.
Rep. Bachus: Friend Of Big Bankers
11:20 A.M.: Rep. Spencer Bachus (R-Ala.), the committee's ranking member, just gave an "attaboy" to the bankers before him.
"You gave taxpayers an equity share in your businesses at depressed prices," Bachus said. "You kept millions of Americans in their homes. You [took over] failing institutions at the urging of regulators."
Will be curious to see how this plays.
Bankers To Congress: We're Lending Money You Gave Us
11:05 A.M.: The bankers have concluded their opening statements.
The closest any of the bankers has come to apologizing so far is Citigroup's Vikram Pandit, who said: "We understand the old model doesn't work. We did not adjust quickly enough to this new world. Let me be clear to the committee: I get the new reality."
-- Lloyd Blankfein, chief executive of Goldman Sachs, said: "While the firm produced a profit of $2.2 billion in 2008, our revenues were down considerably. Compensation across the firm, dictated by our policies and practices, reflected that. End of year bonuses were down on average 65 percent. Our most senior people -- the firm’s approximately 417 partners -- were down approximately 75 percent."
Goldman is considered by some the top bank on Wall Street, and is the alma mater to former Treasury Secretary Hank Paulson and Neel Kashkari, the man in charge of doling out the bailout.
-- Jamie Dimon, chief executive of JP Morgan Chase, said his bank is still lending and is modifying mortgages, even those that haven't yet failed. He said there are "significant deficiencies in the current regulatory system" overseeing banks.
Dimon is seen as a golden boy on Wall Street and as early as 2006 warned his bank to get out of the sub-prime market.
-- Bob Kelly, chief executive of Bank of New York Mellon, said his bank does not do retail banking, does not make mortgages or issue credit cards or make auto loans. "We are a bank for banks," he said.
-- Ken Lewis, chief executive of Bank of America, said his bank will make its first dividend payment to the Treasury next week of $400 million -- it's first repayment of bailout money. "We play a supporting role in the economy" now, Lewis said, "not a leading one."
Lewis is considered by some to be on the hot seat at B of A following its swallowing of troubled brokerage Merrill Lynch last year. It looks like Merrill was in much worse shape than Lewis though, leading to B of A having to digest -- with government money, it should be added -- billions more in debt than it expected. Also, Lewis clashed with former Merrill chief executive John Thain, whom Lewis recently fired.
-- Ron Logue, chief executive of State Street, said, "Following our commitment to participate in the [bailout], I set a goal with our Asset and Liability Committee to deploy this additional capacity by increasing our credit and liquidity facilities to our customers by $2 billion. Since mid-October, we have approved more than $1.5 billion of these new facilities, and, given our strong pipeline, we expect to reach the $2 billion goal soon."
-- John Mack, chief executive of Morgan Stanley, said his bank is not using bailout money to pay compensation. Mack said he's never received a cash bonus, getting his bonuses in Morgan Stanley stock only. He said the banks need "systemic" regulation.
-- Vikram Pandit, chief executive of CItigroup, said his bank will pay the government $3.4 billion in annual dividends and is working back toward profitability.
Among the eight, Pandit is on the hottest seat. His bank has received $45 billion so far in taxpayer money simply to stay in business. Here is Citigroup's report on how it has spent the money so far.
-- John Stumpf, president of Wells Fargo, "we're Americans first and bankers second." He said in the fourth quarter of 2008, his bank had double-digit loan growth in may areas, including student and agricultural loans. He said 93 out of 100 Wells Fargo mortgage customers are on-time on their payments.
Kanjorksi To Bankers: Pay Us Back. Now.
10:18 A.M.: Rep. Paul Kanjorski (D-Penn.) just got in the first jab of the hearing, noting that some of the bankers have said they didn't want to take the bailout money but were forced to by former Treasury Secretary Hank Paulson.
"If you got money you didn’t want," Kanjorksi said, "Please find a way to return that money to the Treasury before you leave town."
Rep. Maxine Waters (D-Calif.) promised to reveal today that the bankers used the bailout money to make more money for the banks.
February 11, 2009; 12:18 PM ET
Categories: The Ticker | Tags: Goldman Sachs, Jamie Dimon, John Mack, John Stumpf, Maxine Waters, Paul Kanjorski, Vikram Pandit, bailout, bankers
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