Unapologetic CEOs: What Did the Banks Do With Your Cash?

Lawmakers Angry at Banks

Lawmakers have expressed outrage that the funds are not fulfilling their purpose of increasing the flow of credit to consumers. They point to a report released last month by the New York state comptroller that said Wall Street firms had handed out $18 billion in bonuses last year.

From right, Wells Fargo & Co. President and Chief Executive Officer John Spumpf; Citigroup Chief...

From right, Wells Fargo & Co. President and Chief Executive Officer John Spumpf; Citigroup Chief Executive Officer Vikram Pandit; Morgan Stanley Chairman and Chief Executive Officer John Mack; State Street Corporation Chairman and Chief Executive Officer Ronald E. Logue; Bank of America Chairman and Chief Executive Officer Ken Lewis; Bank of New York Mellon Chairman and Chief Executive Officer Robert P. Kelly; and JPMorgan Chase & Co. Chief Executive Officer James Dimon, and testify on Capitol Hill in Washington, today before the House Financial Services Committee.

(Manuel Balce Ceneta/AP Photo)

That news led President Obama to impose new restrictions on executive compensation for banks that receive money through the TARP in the future.

In the face of pressure from Washington, Citigroup recently scrapped plans to purchase a $50 million luxury jet.

After news broke that Wells Fargo was planning an annual trip for many of its top employees in Las Vegas, the company cancelled the outing.

"These financial institutions on the brink of extinction come to the American taxpayer for hundreds and billions of dollars," McCaskill said. "At the very same time, they think they're going to buy a $50 million corporate jet. They're going to pay out $18 billion in bonuses. They paid an average of $2.6 million to every executive at the first 116 banks that got taxpayer money under TARP."

Government Conflict of Interest?

But just as lawmakers have questions for the executives, there are also questions for lawmakers to answer.

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Lend First and Ask Questions Later

In the 2008 election cycle, House Financial Services Committee members received more than $26 million in campaign donations from the finance, insurance, and real estate sector, including $5.3 million from the securities and investment industry and $3.3 million from commercial banking, according to the non-partisan Center for Responsive Politics.

Part of that $26 million is $984,148 that Frank received, including $224,000 from the securities and investment industry and $110,000 from commercial banks. Almost $2 million that the committee members received came from the very eight banks represented at the hearing, the center states.

Their report states that these financial institutions gave a total of $1.8 million to committee lawmakers in the 2008 election cycle.

The chairman himself, Frank, received $63,250 from these banks. Ranking member Rep. Spencer Bachus, R-Ala., almost doubled that sum, having collected $116,950.

Over time, one bank alone, JP Morgan, has given Bachus more than $96,000. Frank has received more funds from JP Morgan than any other company, union, or organization since 1989.

But Bachus and Frank are not alone in their dealings with these companies. A total of 18 committee lawmakers have their own personal funds invested in the eight banks at the hearing.

In all, the 111th Congress had between $12.7 million and $25.8 million invested in these firms in 2007.

When policymakers were designing the TARP bill, Frank intervened to secure money for a home-state bank, OneUnited Bank in Boston, the Wall Street Journal reported.

"At no point did I ask federal officials or bank regulators for any relaxation in the oversight of the banks or withhold any decision given the bank's activities," Frank said in a statement. "I continue to believe that the existence of minority owned banks is an important social goal and our communities will suffer without them."