Frank, one of the smartest members of Congress, was not much more sympathetic when he convened the hearing in which eight banking CEOs testified about how they spent the TARP money. In his opening remarks, Frank urged the heads of Citigroup Inc. (NYSE: C), Bank of America Corp. (NYSE: BAC), Goldman Sachs Group Inc. (NYSE:GS), Morgan Stanley (NYSE: MS), JPMorgan Chase & Co. (NYSE: JPM), State Street Corp. (NYSE: STT), Wells Fargo & Co. (NYSE: WFC) and Bank of New York Mellon (NYSE:BK) to be "ungrudingy cooperative."
Vikram Pandit, the Citigroup CEO, took a stab at being apologetic, taking personal responsibility for the public relations fiasco surrounding the purchase of a corporate jet soon after receiving government funds. Citigroup canceled the order following the uproar Bank of America CEO Kenneth Lewis joked that he felt like he was "corporal of the universe" instead of "master of the universe." The hearing was lacking in humor otherwise.
In response to a question by Rep. Mike Castle (D-DE), Pandit mentioned that Citigroup that half the foreclosures the bank has done were from homeowners who have never contacted the bank. Other CEOs touted their mortgage mitigation efforts as well. They also backed the creation of a systemic risk regulator.
Executives also discussed their lending practices. Citigroup's Pandit deflected criticism for raising rates on credit cards, saying "wee did not raise rates on cards for two years,
Further complicating the hearing was the continued controversy over the bonuses paid by Merrill Lynch before its takeover by Bank of America. New York Attorney General Andrew Cuomo claims the New York-based bank paid $3.6 billion in bonuses ahead of the acquisition. In response to a question on the probe by Rep. Carolyn Maloney (D-NY), Lewis said Bank of America urged Merrill to reduce bonuses "substantially" but since the company was independent "we had no authority to tell them what to do." He stressed that Bank of America's top executives do not have similar deals.
The final shape of the TARP program will compliment the $2 trillion stimulus package which may be passed as early as Friday, according to Reuters.
In the end, Frank did not get Wall Street to scream "uncle." The masters of the universe, though, are starting to seem a little less mighty.
