by Frank James
Vikram Pandit, Citigroup's chief executive officer, is really, really sorry his company was going to buy that French-made private jet and it won't happen again.
Pandit told lawmakers at a House hearing today:
Mr. Chairman, the world is changing very fast and we need to acknowledge and embrace this new world very quickly. We understand that the old model no longer works and the old rules no longer apply.
I would also like to say something about the airplane that was in the news. We did not adjust quickly enough to this new world, and I take personal responsibility for that mistake. In the end, I cancelled delivery. We need to do a better job of acknowledging and embracing the new realities. Let me be clear with the committee: I get the new reality and I will make sure Citi gets it as well.
That was one of the clearest mea culpas delivered today by the eight chief executives of some of the nation's largest banks which have received federal bailout money. Besides Citibank, they included the CEOs of Bank of America, Wells Fargo, JP Morgan Chase, Morgan Stanley, Bank of New York Mellon, Goldman Sachs and State Street Corp.
The execs came to Capitol Hill by Amtrak and commercial flights (after the Detroit Three debacle, traveling like the masses is now de riguer for all CEOs whose companies get federal bailouts) to assure Congress and the American people that they get it, "it" being that there's much anger over bank officials finding ways to continue to draw huge incomes and cushy perks after their companies received taxpayer money but seemingly being unable to lend money.
Actually, according to the eight bank execs, their banks are making loans. Each in turn cited statistics as evidence of such. It was all those other banks out there that were gumming up the works.
John Stumpf, CEO of Wells Fargo, said the following:
MR. STUMPF: With respect to borrowers, in our company, frankly, we've been growing loans the last 18 months. As I mentioned in my testimony, many others have retrenched. And we think these are actually good times to make loans to credit worthy borrowers. We make money when we make loans. That's our business. We want to serve customers, help them educate children, buy homes, small businesses to, you know, develop products and services that they can sell and serve other customers.
In some cases, it's prudent, you have to cut back on a line. But we have not done a systemwide, it's been much individual one customer at a time working with them. And we want to stick with them if we possibly can. But also, you know, unfortunately, not every borrower who wants or needs money can afford it today. And we have to be prudent.
To the question of what they were doing with the portion of the $350 billion in Troubled Asset Relief Program or TARP funds they received, they also had answers for that.
Pandit said:
Last week we published this report. This describes exactly how we are using TARP funds to expand the flow of credit. We have posted the report online, and we will update it each quarter. In late December, utilizing TARP capital, we authorized our line businesses to provide $36.5 billion in new lending initiatives and new programs. These programs are expanding mortgages, personal loans and lines of credit for individuals, families and businesses and creating liquidity in the secondary markets. Our TARP report explains these efforts in detail, and I would ask to submit it as an addendum to this testimony.
The bank chieftains also said they were working to avoid foreclosures too:
Another excerpt from Pandit:
Since the start of the housing crisis in 2007, we have worked successfully with approximately 440,000 homeowners to help them avoid foreclosures. We also are adopting the FDIC's streamlined model for loan modification programs. In the last year, we have kept approximately four out of five distressed borrowers in their homes. We extended our foreclosure moratorium to help millions of other eligible homeowners whose mortgages we service. And we continue to reach out to homeowners who may be experiencing financial difficulty, despite being current on their payments.
A bunch of the chief executives also said they had done away with bonuses or severely reduced them. Citigroup's Pandit said he was only making a dollar until the financial giant turns a profit.
So, to hear them tell it, the financial institutions represented at today's hearing aren't part of the problem but part of the solution.
Considering the expressions of anger towards bankers from lawmakers in recent weeks, the hearing wasn't anywhere near as contentious as might have been expected. Rep. Maxine Waters of California was predictably confrontational accusing the banks of making fees off the TARP as was Rep Gary Ackerman of New York who asked the bankers if they had invested any new money of their own since investing in the TARP. Some had and some hadn't.
Rep. Barney Frank, chairman of the House Financial Service Commitee holding the hearing, can be pretty feisty when he wants to be but wasn't today. He merely beseeched the bank CEOs to cooperate with Washington policymakers. Frank said:
... In the interest of getting the system working again, I urge you strongly to cooperate with us -- not grudgingly, not doing the minimum, but understanding that there is a substantial public anger.
Comments
Citi is honoring it's $400 million commitment to name the new ballpark of the NY Mets.
http://www.bloomberg.com/apps/news?pid=20601103&sid=augCmG_lGD7w&refer=us
Just how widely are we defining "toxic assets?"
Posted by: Kenny Bunkport ☯ | February 11, 2009 4:17 PM
If anything...bankers don't have a clue. First they disregard good business practice in lending....then when the "poop" hits the fan....instead of finding the smart way out....they decline and go for the ill-concieved notion that foreclosure was the way to go. If they are lucky...they are recieving 20-30% value of the home at auction. With them borrowing at basically 0% they could have renegotiated these "toxic" loans and come out way ahead.
Posted by: bill r. | February 11, 2009 4:43 PM
While Americans suffer the loss of their homes and jobs, guess whose getting very rich?
The big banks, thats who, with help from their friends on capitol hill.
Under George Bush, the US Treasury Dept. gave power and authority to the Federal Reserve Bank, a privately owned banking system, to basically run our economy. Over a trillion dollars in loans and bailouts went to these same banks, supposedly to loosten up credit, which it did not. A lot went to bailing out foreign investors and shoring up bank revenues and not to energize our economy. Hank Paulson was given sole discretionary powers over a tremedous sum of our money.
Next came the toxic sub prime mortgages and here's where things get curious: according to a news story from cnbc.com:
http://www.cnbc.com/id/28898377
Why are the banks holding onto 70% of foreclosures when they have claimed this debt is causing instability? Whats really the story here.
The banks created these products, requiring PMI for under 20% downpayment from borrowers. If there is a default, the banks make a claim on the private mortgage insurance company (PMI), get paid for the origional value of the loan and they get the house back, too. Meanwhile, the banks claim the origional mortgage as an asset to make themselves seem more stable so they can get in on bailout # 2 and have the government buy up their toxic debt at inflated prices.
This is called double dipping.Make no mistake,
there's big money in them sub prime mortgages. Meanwhile, they're not about to loosen up credit because they know fully well they may not get out of this mess they created next time, since this country is broke for all practical purposes.
Posted by: Writer Of Wrongs | February 11, 2009 6:15 PM
While Americans suffer the loss of their homes and jobs, guess whose getting very rich?
The big banks, thats who, with help from their friends on capitol hill.
Under George Bush, the US Treasury Dept. gave power and authority to the Federal Reserve Bank, a privately owned banking system, to basically run our economy. Over a trillion dollars in loans and bailouts went to these same banks, supposedly to loosten up credit, which it did not. A lot went to bailing out foreign investors and shoring up bank revenues and not to energize our economy. Hank Paulson was given sole discretionary powers over a tremedous sum of our money.
Next came the toxic sub prime mortgages and here's where things get curious: according to a news story from cnbc.com:
http://www.cnbc.com/id/28898377
Why are the banks holding onto 70% of foreclosures when they have claimed this debt is causing instability? Whats really the story here.
The banks created these products, requiring PMI for under 20% downpayment from borrowers. If there is a default, the banks make a claim on the private mortgage insurance company (PMI), get paid for the origional value of the loan and they get the house back, too. Meanwhile, the banks claim the origional mortgage as an asset to make themselves seem more stable so they can get in on bailout # 2 and have the government buy up their toxic debt at inflated prices.
This is called double dipping.Make no mistake,
there's big money in them sub prime mortgages. Meanwhile, they're not about to loosen up credit because they know fully well they may not get out of this mess they created next time, since this country is broke for all practical purposes.
Posted by: Writer Of Wrongs | February 11, 2009 6:15 PM
While Americans suffer the loss of their homes and jobs, guess whose getting very rich?
The big banks, thats who, with help from their friends on capitol hill.
Under George Bush, the US Treasury Dept. gave power and authority to the Federal Reserve Bank, a privately owned banking system, to basically run our economy. Over a trillion dollars in loans and bailouts went to these same banks, supposedly to loosten up credit, which it did not. A lot went to bailing out foreign investors and shoring up bank revenues and not to energize our economy. Hank Paulson was given sole discretionary powers over a tremedous sum of our money.
Next came the toxic sub prime mortgages and here's where things get curious: according to a news story from cnbc.com:
http://www.cnbc.com/id/28898377
Why are the banks holding onto 70% of foreclosures when they have claimed this debt is causing instability? Whats really the story here.
The banks created these products, requiring PMI for under 20% downpayment from borrowers. If there is a default, the banks make a claim on the private mortgage insurance company (PMI), get paid for the origional value of the loan and they get the house back, too. Meanwhile, the banks claim the origional mortgage as an asset to make themselves seem more stable so they can get in on bailout # 2 and have the government buy up their toxic debt at inflated prices.
This is called double dipping.Make no mistake,
there's big money in them sub prime mortgages. Meanwhile, they're not about to loosen up credit because they know fully well they may not get out of this mess they created next time, since this country is broke for all practical purposes.
Posted by: Writer Of Wrongs | February 11, 2009 6:15 PM
UNITED STATES HOUSE OF REPRESENTATIVES COMMITTEE ON FINANCIAL SERVICES
WASHINGTON DC--February 11, 2009
FOR IMMEDIATE RELEASE
CHAIRMAN FRANK ANNOUNCES SURPRISE PANEL OF INDUSTRY EXPERTS TO HELP FLOG WALL STREET EXECUTIVES
Excerpts from today's hearing:
CHAIRMAN BERNIE FRANK: Hello, my name is Congressman Bernie Frank. I am the Chairman of this Committee and don't you forget it. Today we will be
addressing a matter of grave importance, the lack of accountability on Wall Street vis-a-vis the TARP I Bailout. You are all familiar with
the detailed reporting requirements that we neglected to include in the TARP enabling legislation that fateful weekend (or was it a week or two weeks?) last
September. Given that feeble drafting skills of the Committee Staff, the Wall Street guile of Mr. Paulsen's crew of Goldman hacks led by Kneel Cash N Carry, the unlimited greed and
diabolical machinations of Wall Street executives and the paucity of brain power on this Committee, it should be no surprise that we are gathered here today
without one inkling of where the billions and billions of TARP taxpayer dollars have gone. Rather than ruminating over these sad and shameful facts, I decided that it
would be more fun to haul a bunch of Wall Street CEOs into this hearing room for a verbal caning (in the parlance of Singapore's Temasek Holdings). The culprits called for today's skewering are well known: Ken "Screwless Lewis" of BadBankAmerica, Vikram Bandit of CITIBadBank, Lloyd Landmein of Goldman Bank & Trust me, Jamie Diamonds of JPMorgan and John Pay it Back of Morgan Stanley Bank & Trust me. Given Mr. Diamonds relatively good behavior compared to the rest of these rascals, I have decided to let Mr Diamond examine himself. Mr Diamond there is a powder mirror in my office.
To assist the Committee in these important matters I have invited a special panel of industry experts to examine the witnesses directly and indirectly. The Special Panel consists of the following luminaries: John Thain, a corporate governance expert with hands on experience in the investment banking industry most recently with Merrill Lynch; Barney Madoff whom you will all recall was good enough to testify at the Marco Polo hearing last week (I would like to thank the United States Marshall Service for allowing Bernie to stay in Washington over the weekend as a guest in my home); Ms. Kristen Davis, better known as the Manhattan Madam; Mr. Ralph "unsafe at any speed" Nader a well known expert on greed and corruption in corporate America and the magician Michael Blaine who is an expert at misdirection.
I don't know about you folks, I sure can't wait to misdirect attention away from my own incompetencies and culpability in this grand fiasco. So without further Ken Lay, excuse me, "delay" I turn the floor first to Mr. Madoff who will be returning to his Park Avenue incarceration cell later this morning.
One more small housekeeping item, will the industry witnesses please submit their AMTRAK ticket stubs for verification by the Sergeant at Arms.
BARNEY MADOFF: Got you again Bernie/Barney. Gentleman, we are all familiar with the near viral growth curve of the Ponzinomial expansion as a paradigm for modern global finance. As I have said on many occasions, the insights of Charles Ponzi some 100 years ago have adapted well to our business of financial innovation. Some critical ingredients: opacity, incomprehensibility, breach of trust and plain old fashioned hutzpha! Ponzinomics adaptes well to politics as well. I regret that I have not mastered certain facets of the art as well as yourselves. My first question is directed to Mr. Landmein of Goldman Bank & Trust me. Mr Landmein, do you believe that the basic Ponzinomic model is broken or, inasmuch as it is embedded in the Goldman model, will it survive the current upheaval?
JOHN THAIN: Thank you Chairman Madoff, I mean Frank. My first question is to Mr. Screwless. Ken, is it not true that I hand delivered to you numerous limited edition Currier & Ives Christmas cards detailing: 1. The size of the mega trading losses incurred by Merrill nit wits after the Merger Agreement was signed; 2. My plan to spend billions of TARP dollars enriching spoiled and incompetent Merrill bankers in order to save the Bull franchise; 3. My intention to sell all of my faux French furniture on Ebay before year end; and 4. Requesting your approval of my Christmas vacation schedule?
MADAM DAVIS: First, I would like to know which of you will finance the cost of my website as well as the distribution cost of my "Tell All" book. A favorable answer will avoid my having to submit this Black Trading Book as evidence in this hearing. Second, will one of you please explain the difference between screwing around for cash and screwing around with credit card invoices?
MR NADER: Mr Bandit, despite adequate warning signals and contrary to good business sense, the automotive industry opted to exploit a seemingly unlimited resource and failed to adapt a prudent business model that would withstand the risks associated with shifts in the global markets. Why should the US government bail your sorry asses in view of this hubristic display of greed filled evil corporate buffoonery? (Mr. Frank: Ralph we are talking about Wall Street not Detroit) I stand by my question, just change "automotive" to "banking" and assume the unlimited resource is cheap leverage instead of oil. If you've seen one bailout you've seen em all.
DAVID BLAINE: I have studied the business practices of the global finance industry. I would analogize it the old bent card and card board box. I am speaking of course about Three Card Monty, that quaint street game that is familiar to all native New Yorkers. By the time someone screams about the bent Red Queen, the cards and the card board box are flying in the air and Mr. Monty (together with the money) is long gone before the SEC cops arrive. I have a question for all of you. What is the difference between a Three Card Monty artist and a Wall Street Banker?
FOR MORE INFORMATION: The WilliamBanzai7 Blog
Posted by: williambanzai7 | February 11, 2009 10:39 PM
Without a shadow of a doubt, I absolutely believe that Citi does not "get it." I have been a Citibank cardholder for many years. I maintain a credit score of 800+. I received a letter from Citi advising me that the interest rate was being increased from 15.24% to 19.99%. When I contacted their customer service dept, their rep preceeded to tell me that my interest rate had not been increased for 2 years (silly me...I always thought that if you had a high credit score, you would be eligible for low credit card rates.) & the state of the economy! I reminded the rep that Citi created a lot of the mess that the economy was going through and had to draw several billions of dollars from the American taxpayers just to stay afloat! So...in conclusion, I told the rep I was going to opt-out of the fabulous interest rate increase offer and allow the account to close. (Thank God for credit unions!)
Posted by: Cowboy John | February 11, 2009 11:07 PM
Barney is playing with fire.
Will there be more billions in bonuses for bozos?
If so, this time it will clearly be Barney's fault (and Nancy's and Harry's).
Bandit, Blankfein & Co. "get it" in the sense that "it" is all the $$$ that won't be accounted for one it is shoveled out the windows at the Treasury. They can't wait to get their greedy hands on "it".
It is 10 p.m., Congress. Do you know where your Swiss bank account it?
If Congress really wanted to help individuals, it would restore provisions to the Bankruptcy Code which the Replicans took away.
Cram down power to re write mortgages. Get rid of the restrictions on dischargeability.
The only "expert" who has surfaced who offers any help to the people who are really suffering is:
Suze Orman.
(Actually, she's a pretty good investment advisor, too. She called the current debacle about 2 years or more ago. She's up about 20% while most people are down about 45%.)
Posted by: ornery | February 12, 2009 7:34 AM
Would you like to try a college education?
Own your landlord's house, take the family on vacation?
Eva and her blessed fund can make your dreams come true
Here's all you have to do my friends
Write your name and your dream on a card or a pad or a ticket
Throw it high in the air and should our lady pick it
She will change your way of life for a week or even two
Name me anyone who cares as much as Eva Peron
Posted by: nader paul kucinich gravel | February 13, 2009 3:13 PM