Wall Street chief executive officers took another beating from Congress on Wednesday for misusing billions in taxpayer dollars intended as emergency bailout aid, with one prominent Democrat calling on all of them to resign.
Corporate executives will need to be ungrudgingly cooperative with Congress if they expect any more financial help for their ailing sector, House Financial Services Chairman Barney Frank (D-Mass.) grumbled during a hearing on how financial firms have spent the bulk of $350 billion in federal bailout funds.
Given that many of the CEOs have come under fire for personally profiting as Wall Street continues to sink, House Democratic Caucus Chairman John Larson (Conn.) was less forgiving.
It is time for them to go, he said in a statement. We need CEOs that dont spend obscene amounts of money on personal luxuries and bonuses while millions of Americans are losing their homes, their jobs and their health care. … There was nothing the CEOs said today that proved themselves worthy of Americans trust.
During the hearing, which featured the eight CEOs of the nations largest banks, Democrats ripped into the panel of executives for increasing fees and credit card rates on their constituents while they continue to give themselves millions of dollars in salaries.
You come to us today on your bicycles after buying Girl Scout cookies and helping out Mother Teresa telling us, Were sorry. We didnt mean it. We wont do it again, said Rep. Mike Capuano (D-Mass.), referring to CEOs reluctantly agreeing to cut their pay as part of an agreement to receive federal bailout funds.
I have some people in my constituency that actually robbed some of your banks, Capuano said. They say the same thing. Do you understand that this is a little difficult for most of my constituents to take? That you learned your lesson?
Rep. Brad Sherman (D-Calif.) criticized executives whose firms are still paying dividends to shareholders instead of using available capital to repay the federal government. In addition, he blasted the corporate arrogance of those who still own or lease private planes.
For their part, the CEOs defended their use of taxpayer money, which they say has led to more lending, and touted the personal sacrifices that they have made.
I didnt get a year-end bonus in 2007 [or] 2008, and I never received a cash bonus under Morgan Stanley. My interests are aligned with shareholders, Morgan Stanley CEO John Mack said.
Citigroup CEO Vikram Pandit said his salary is now $1 a year, and he pledged to take no bonus until this is resolved.
But Frank suggested it was in bad taste for the CEOs to portray giving up millions in bonuses as a major concession.
At your level, why do you need bonuses? Cant you just give yourself a good salary? Frank asked. What part of your job would you not do? Leave early on Wednesdays? Longer lunches?