CEOs in Attendance
Lloyd Blankfein, CEO of Goldman Sachs
James Dimon, CEO of JP Morgan Chase
Robert Kelly, CEO of Bank of New York Mellon
Ken Lewis, CEO of Bank of America
Ronald Logue, CEO of State Street Corporation
John Mack, CEO of Morgan Stanley
Vikram Pandit, CEO of Citigroup
John Stumpf, CEO of Wells Fargo
1.Rep. Michael Capuano (D-MA): "America doesn't trust you any more... I don't have one single penny in any of your banks."
Although Mr. Capuano may not have his money in any of the aforementioned institutions, unfortunately the converse does not hold:
| Capuano Campaign Donor | Career Amount Donated |
| Citigroup PAC | $2,000 |
| JP Morgan PAC | $1,000 |
| Goldman Sachs PAC | $2,000 |
| Wells Fargo PAC | $1,000 |
| State Street Corp. PAC | $6,000 |
| Bank of America PAC | $8,000 |
| Bank of NY Mellon PAC | $10,000 |
| Morgan Stanley PAc | $0 |
| American Bankers Assoc. PAC* | $13,000 |
* Political Action Committee contributed to by 7 of the 8 represented institutions
Data from the Federal Election Commission.
2. Rep. Randy Neugebauer (R-TX): "I think we can call this a shareholders meeting."
In the words of Harry Markopolos, "Truer words were never spoken." What is not clear is why the hearing had such a hostile atmosphere considering the spectacular returns that the shareholders have realized:
| Shareholder | Total Federal 2007-2008 PAC Contributions | TARP Funds Received | Return On Investment (%) |
| Bank of America | $926,821 | $33,000,000,000 | 3,560,558 |
| JP Morgan | $800,977 | $25,000,000,000 | 3,121,188 |
| Morgan Stanley | $585,300 | $10,000,000,000 | 1,708,525 |
| Citigroup | $688,100 | $50,000,000,000 | 7,266,385 |
| Wells Fargo | $767,250 | $25,000,000,000 | 3,258,390 |
| Goldman Sachs | $656,500 | $10,000,000,000 | 1,523,229 |
| State Street Corp. | $22,500 | $2,000,000,000 | 8,888,888 |
| Bank of NY Mellon | $172,000 | $3,000,000,000 | 1,744,186 |
To be fair, the proceeds received by TARP institutions are not supposed to be gifts or even loans, for that matter. Instead, preferred stock, with an initial yield of 5%, was purchased by the Treasury, in order to inflate the recipient's capitalization ratios. However, the Treasury's equity far exceeds the common stock capitalization of some recipients, so it is difficult to envision institutions like Citigroup or Bank of America ever attempting redemption. Moreover, a failure to pay dividends won't trigger a default, like real debt, so when the preferred shares ramp up to a dividend rate of 9% in three years, the institutions will likely be allowed a quiet foregiveness--or at least the institutions who've stayed current on their campaign contributions.
While the Madoff and TARP hearings had a certain entertainment value, they were little more than the Theater of Self Interest. In both cases, there wasn't a Congressperson present that wasn't bought and paid for by the banking, securities, or insurance industry. I'm often confused as to why there is any debate regarding the primary cause of our current depression. It's quite simple: The legalization of bribery in the form of campaign contributions has rendered our government entirely subservient to corporate interests. Corporate interests purchased disastrous monetary policies, legislative complicity, and regulatory laxness and they did so at a deep discount. In my opinion, this depression was not only predictable, it was inevitable.
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The politicians could have been asking the bank CEO's what would be the best solutions and how they and the government could work together to solve this crisis, since the bankers have the unique perspective and understanding to actually solve the problems.
ReplyDeleteInstead we heard "outrage"and posturing by people who have jobs with little accountability excepting the need for raising campaign contributions so they can keep their jobs/egos inflated. They appeared to have no clue about how to solve the banking crisis.