US bank bosses face congressional firing squad

Agence France-Presse

Posted at Feb 12 2009 12:09 AM | Updated as of Feb 12 2009 08:10 AM

WASHINGTON - US bank chief executives paraded before lawmakers Wednesday to express remorse about public fury over their use of government bailout money, but insisted they had not lined their own pockets.

The heads of Bank of America, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo braced for a political firing squad at a hearing in the House of Representatives.

Underlining the sour mood, House Financial Services Committee chairman Barney Frank issued a stern warning at the hearing's start against public disruptions.

"There's a great deal of anger in the country, much of it justified," the Democrat said.

In their written testimony, the chief executives said they had not used money from the 700-billion-dollar Troubled Asset Relief Program (TARP) to pay out bonuses and were in fact taking salary cuts.

"It is abundantly clear that we are here amidst broad public anger at our industry," Goldman Sachs boss Lloyd Blankfein told the House Financial Services Committee.

"In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public," he said.

"Many people believe -- and, in many cases, justifiably so -- that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system's stability."

A similar mea culpa came from Morgan Stanley CEO John Mack.

In his testimony, Mack said Morgan Stanley had maintained its capital cushion and delivered positive results in 2008 despite the financial crisis.

"But we didn't do everything right. Far from it. And make no mistake: as the head of this firm, I take responsibility for our performance," he said.

"I believe that both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," Mack said, echoing the other CEOs in pledging to pay the government back quickly.

President Barack Obama and members of Congress have expressed deep anger over how the first half of TARP money was used, especially over hefty executive bonuses that continued to be paid out on Wall Street.

Treasury Secretary Timothy Geithner Tuesday outlined a new bank bailout potentially worth up to two trillion dollars, but lawmakers are grumbling that Wall Street has yet to show it is mending its ways.