Bankers will defend bailout spending at House hearing

If Treasury Secretary Timothy Geithner could get an earful of skepticism over the government's financial bailout plans, the nation's top bankers, recipients of billions of taxpayer dollars, can expect no less when they make their maiden voyage to Congress Wednesday.

Eight chief executives will sit behind a witness table in the Rayburn House Office Building on Wednesday morning to face a battery of questions about how they have used more than $160 billion in taxpayers' money.

In prepared testimony, the CEOs applauded the program for making more loans available and promised to pay their share of the money back to the Treasury. Anticipating confrontations over their own compensation, several asserted that none of the government's money went to bonuses or dividends.

But members of both political parties have been smarting over the implementation of the $700 billion financial package, which started under President Bush and now is in the hands of the Obama administration. The lingering suspicions present one of President Obama's biggest obstacles as he attempts the dual challenge of prodding the financial sector to ease credit while aiming to create jobs with an economic stimulus package.

Sen. Richard Shelby of Alabama, the top Republican on the Banking Committee, assailed the administration Wednesday for what he said was a lack of details on the new bailout plan that would leverage more than $2 trillion into the shaky financial system.

Speaking of Geithner's briefing for the panel Tuesday, Shelby groused: "He had nothing really to say ... He basically admitted this. He wasted about three or four hours of the Senate's time, and we want to know where the specifics are and he doesn't have them."

Shelby said on CBS's "The Early Show" that he understands the administration is in unfamiliar territory. But he also said it must "do better than this."

As for the financial institution leaders, at least one banker sounded almost contrite about the industry's grave problems.

"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," said Lloyd Blankfein, chairman and CEO of Goldman Sachs Group gs.

Geithner's highly awaited overhaul of the rescue program would also impose stricter accountability standards on banks and their executives. But it wasn't enough to dispel Wall Street anxieties or silence congressional doubters.

After spending more than three hours Tuesday afternoon explaining his proposal to the Senate's banking committee, Geithner left many senators wishing for more. And by the time he had finished with their questions, the stock market had delivered its own verdict: The Dow Jones industrials had tumbled 380 points.

"I have to be honest with you," Sen. Robert Menendez, D-N.J., told him. "A lot of questions still remain unanswered. A lot of details are necessary before I can give it my support."

Those doubts are sure to arise Wednesday when Blankfein and the CEOs of Bank of America bac, Citigroup c, JP Morgan Chase jpm, Wells Fargo wfc, Morgan Stanley ms, State Street stt and the Bank of New York Mellon bk appear before the House Financial Services Committee.

  • 1
  • |
  • 2
Join the Discussion
blog comments powered by Disqus
You Might Also Like...