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Politics | 02/11/2009 9:40 am

Congress Grills Bank Heads on Bailout Fund, Bonus Baloney

By The Staff at wowOwow.com
© Shutterstock

Embattled Wall Street executives are in the hot seat today as irate lawmakers look to blame someone for Wall Street’s near demise.

The heads of the nation’s eight largest banks are testifying before the House Financial Services Committee Wednesday morning. Combined, they received $165 billion of the $700 billion federal bank bailout. Keenly aware that they’re in trouble, some CEOs may try to preempt the inevitable tongue-lashing by proposing their own solutions to the economic meltdown.

For example, Goldman Sachs CEO Lloyd Blankfein this week urged tougher regulation of the financial sector and tighter limits on lavish compensation for executives. Wall Street’s main lobbying association earlier also called for expanded oversight and regulation of the industry. The executives also will tell Congress they are lending money out in a responsible fashion, thanks to the government’s help through the TARP program.

Bank of America’s Kenneth Lewis said taxpayers deserve to know "what return they are making on their investment, and when it will be paid back," and that Bank of America intends "to pay all the TARP funds back as soon as possible."

But that likely won’t soften the blow coming over lavish bonuses and spending around the time taxpayers were asked to bail out the banks.

The Daily News learned that four top executives at Merrill Lynch took home $121 million in bonuses just before they got the $45 billion in taxpayer money to merge with Bank of America. New York Attorney General Andrew Cuomo has been investigating the highly coincidental timing of the bonus handouts; each executive got anywhere from $18 million to $39 million. Merrill doled out $3.6 billion in total bonuses just days before the Bank of America deal. 

"One disturbing question that must be answered is whether Merrill Lynch and Bank of America timed the bonuses in such a way as to force taxpayers to pay for them through the deal funding," Cuomo wrote to House Financial Services Committee Chairman Barney Frank, D-MA.

Read more about: congress, Economy, News, U.S., Wall Street

76 Reader Comments (so far…) Sign In or Register to comment

Susan B
I just read all the preceding posts, and despite our political differences, we are all in accord on this. So you gotta wonder, why aren’t these sleezeballs being taken down? Money. None of this should come as a surprise.
By Susan B on 02/11/2009 11:20 am
Rhonda C.
And very good friends on Capitol Hill….what theatre!
By Rhonda C. on 02/12/2009 4:16 am
phyllis Doyle Pepe
The first twenty minutes of this evening’s news covered incredibly wealthy investment bankers responsible for costing the American taxpayers a trillion dollars, corporate executives responsible for purposely marketing salmonella-tainted peanut butter that killed children, and Mr. and Mrs. Madoff who cheated investors of $50 billion dollars. What did this unrelated cast of characters have in common? They all benefited from the tax cuts and deregulation policies of George W. Bush. Seldom have chickens come home to roost so quickly after the chicken farmer left for the ranch. Courtesy of Gary Hart who knows about chickens coming home to roost.
By phyllis Doyle Pepe on 02/12/2009 9:26 am
Susan B
Phyllis, last evening’s news filled me with anger and frustration. It seems, no matter the type of government, the rich and privileged are always protected from punishment for their wrongdoing. And when punishment does manage to come to the elite, it is usually brought to bear upon scapegoated figureheads as a symbolic gesture for the masses — Nicholas II and Louis XVI come immediately to mind — while the real skunks find a way to escape courtesy of their money and connections.
By Susan B on 02/12/2009 10:49 am
Roger from Ohio
Just out of curiosity…. how many of these bank CEOs ….. those with their “hat in hand” asking for money….. “fiscally responsible” ….huge bonus receivers…… how many of them are Democrats?
By Roger from Ohio on 02/11/2009 11:36 am
f p
Well Roger that’d probably be a giant goose egg. :-) Oh yes one of them said they accepted partial responsibility for the disaster—damned big of them isn’t it.
By f p on 02/11/2009 11:43 am
DeBúrca obj
Here is a good start… reduce the funding for our military industrial complex and put it into the economy where it can help: “The United States is facing an economic crisis unlike any it has seen 80 years. Already trillions have been spent on the bailout by the Federal Reserve and FDIC. Now the Congress is about to approve an economic stimulus that will cost more than $800 billion. The national debt is over $10 trillion and the annual deficit is over $1 trillion. How is the United States going to pay for it? How is it going to fund the new energy economy, schools, education, health care and other urgent needs? One solution: Cut the wasteful and bloated military budget. Send a letter to your congressman, senators and the president urging a 25% cut in military spending as a first step to reigning in military spending. The Obama administration is working on the budget right now and will complete it within the month. Neocons and Hawks are urging an increase in military spending, despite a 60% increase since 2001. When you include the two wars, the war on terror, the Pentagon and military spending in other federal agencies the war budget totals more than $1 trillion annually. But, in Washington, DC for the first time in more than a decade, there is serious discussion about cutting the military budget - not just the wars but the DoD budget: In November, the Defense Business Board, an internal management oversight body in DoD told Obama that major systemic cuts were absolutely necessary because the current budget was not sustainable. Obama’s Chief of Staff, Rahm Emanuel, said on Meet the Press in January that “in the defense area … On an annual basis we have about $300 billion in cost overruns. That must be addressed, and we will be addressing it.” The Chairman of the Financial Services Committee, Barney Frank, has called for a 25% cut in military spending (10% from ending the Iraq War) and describes the Iraq war as the biggest spending bill in history. He said “If we are going to get the deficit under control without slashing every domestic program, this is a necessity.” A March 2005 poll of Americans, “The Federal Budget: the Public’s Priorities” conducted by the Program on International Policy Attitudes found that Americans from across the political spectrum, on average, said they would cut the military budget by 31%. Two thirds of Americans want to see the military budget cut. The cost of weapons has gotten out of control. The cost of F-35 Fighter Program will equal the combined outlays for fighting the Korean and Vietnam Wars — $1 trillion. And, one Nimitz-class aircraft carrier costs $6.2 billion, our tenth such ship, the USS George H. W. Bush, was launched in January 2009. A simple navy combat ship costs $1.4 billion each. And, of course, ending the two wars and occupations in Iraq and Afghanistan would save at least $162 billion this year alone. Further, if the U.S. were to close military bases around the world, $130 billion could be saved. Finally, investing in weapons is not a good way to create jobs. A report, “The U.S. Employment Effects of Military and Domestic Spending Priorities,” found that investing public dollars in military jobs at home in the United States produces fewer and lower-paying jobs for the U.S. economy than does public investment in healthcare, education, mass transit, or home construction. And, wouldn’t building subways or high speed rail be more useful to most Americans? So, take action today - join us in urging a 25% cut in military spending. Click here to write the Congress, Senate and President Obama. And, we urge you to meet with your representatives when they return home. Sincerely, Kevin B. Zeese Executive Director Voters For Peace
By DeBúrca obj on 02/11/2009 11:54 am
C Hardy
DeB, please explain exactly where you Military spending should be cut…read the article and Yes maybe we didnt need another war ship, but if we cut Military spending on weapons, wont that hurt us? Dont we need weapons? He’s not suggesting we cut our Military personal again? So should we sell some of what we already have? Shed some light please. Thanks
By C Hardy on 02/11/2009 12:52 pm
Zera Lee
I’d start by prying Daddy Warbucks away from the trough. Insider deals and for-profit back-scratching place military procurement among the most wasteful segments of the bureaucracy.
By Zera Lee on 02/11/2009 1:39 pm
DeBúrca obj
We are overspending on our military industrial complex now. There is plenty of room to cut back.
By DeBúrca obj on 02/11/2009 4:13 pm
Roger from Ohio
That is actually a really good question C. Hardy When one says “cut military spending” it sounds like that would make us less safe……. Military spending is at the top of the budget, and also on the top of the waste list. There are a lot of articles about “wasteful military spending” google that and pick out your own article to read. Here is one that I found. http://www.progress.org/2005/tcs182.htm No one wants us less safe….. but we should be spending out money wiser.
By Roger from Ohio on 02/11/2009 4:14 pm
DeBúrca obj
C Hardy, Here is an article that pertains to your question, or you can just google something like “America supporting military industrial complex” Also, You should read Naomi Klein’s book “The Shock Doctrine”… that will tell you a lot. http://www.alternet.org/workplace/124881/america_is_completely_broke,_an…
By DeBúrca obj on 02/11/2009 4:22 pm
f p
De read this: http://tpmmuckraker.talkingpointsmemo.com/2009/02/morgan_stanley_exec_an… These cretins need to be bitch-lapped from one end of the country to the other and then back again.
By f p on 02/11/2009 2:11 pm
DeBúrca obj
These people deserve life in prison. If they were in China they’d get the death penalty.
By DeBúrca obj on 02/11/2009 4:14 pm
alex harvey
Obama voted on the last bailout for the banks. As a president elect, he should have grown some cojones stepped in and helped the situation. He did nothing. Thats a great idea, cut the military while terrorists are cutting the heads off Americans. There are people in this world that want us dead, not because of Bush, because we live in America. Maybe they’re jealous of what we have, you’re jealous of Sarah Palin for what she has. Rahm Emanuel is a crook from Chicago. Him and Obama care about one, and one thing only, a second term. Speaking of Chicago, the news said some teachers in Chicago beat their students with belts, and staplers. Isn’t this the same school system Obama helped? Another pitiful story, coming from a pitiful city. I love it.
By alex harvey on 02/11/2009 4:10 pm