What happened
The House Financial Services Committee on Wednesday heard testimony from eight CEOs of major banks that had received a combined $176 billion in federal bailout money. The CEOs faced accusations that they had failed to pass money to the taxpayer by increasing lending. They also faced questions over generous salaries and bonuses and corporate jets. (Reuters)
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In fact, the CEOs “largely rejected the premise” that they are not putting bailout money “on the street,” said The Wall Street Journal in an editorial. JP Morgan and Wells Fargo, for instance, said they’d upped consumer lending last quarter. Apparently, politicians don’t know that nonbank lending is the “missing ingredient in our markets”—commercial banks “provide little more than 20 percent of credit in the economy.”
Still, don’t buy the CEOs’ testimony, said David Weidner in MarketWatch. Their banks aren’t lending at “anywhere close to the pace” they were before “credit standards got silly.” How can they? Big corporate lending has dried up, and IPOs and mergers are few and rare, so there’s “no work” and thus “no income” on Wall Street. That means no lending.
The House has every right to look into how public bailout money is being used, said Caroline Baum in Bloomberg, but the “finger-pointing and grand-standing” at these “show trials” seems a little rich. Just imagine if the tables were reversed. If the bank CEOs were asking the questions, there would be some pretty hard ones for, say, Chairman Barney Frank, whose backing of Fannie Mae and Freddie Mac probably contributed to today’s crisis.
Actually, Frank was “remarkably civil,” said Johanna Neuman in the Los Angeles Times online, especially since the CEOs—apparently all “coached by top public relations pros”—basically said they had done nothing wrong. So much for venting on behalf of a “furious” public.
