Rep. Sherman Questions Wall Street CEOs

Press Release

Rep. Sherman Questions Wall Street CEOs

· 7 out of 8 of the companies own or lease private planes.
· Most will continue to pay dividends instead of repaying taxpayers.
· None will compensate taxpayers for $78 billion shortchanging.

During a House Financial Services Committee today, Congressman Brad Sherman (D-CA) questioned the chief executive officers of eight major banks who received taxpayer bailout funds under the Troubled Asset Relief Program (TARP) and was given three very interesting sets of answers.

Concerning the issue of luxury corporate jets, which many American taxpayers view as emblematic of Wall Street corporate arrogance, seven out of the eight CEOs testified that their firms will continue to own or lease private planes. The sole exception was Goldman Sachs.

"Will you institute a policy to not pay your shareholders dividends until you have repaid taxpayer funds?" Sherman asked. Less than half of the witnesses expressed the intent to follow such a policy.

Most testified that their firms would continue to pay dividends to common shareholders, rather than use available capital to repay the federal government. The exceptions were Bank of America, Citigroup, and State Street Corporation.

"The taxpayers have been undercompensated to the tune of $78 billion dollars, but these companies are unwilling to provide the taxpayers with fair value for the cash that they received," said Sherman, pointing to a now famous chart on page 27 of the Congressional Oversight Panel's February 6th report (copy attached), showing the panel's finding that the federal government was shortchanged by $78 billion, 31% of the amount invested. The report indicates that of the $254 billion initially invested by the Treasury, the Treasury received only $176 billion worth of preferred stock and warrants from the Wall Street firms.

At the time the TARP funds were initially granted, both the Treasury and the companies receiving the funds announced that the taxpayers would receive securities (preferred stock and warrants) worth the full amount that the taxpayers were providing. It is now clear that taxpayers received $78 billion less in securities than we should have. Nonetheless, all eight CEO's testified that they would not issue additional preferred stock or warrants to the Treasury to make up for the $78 billion shortfall.

The eight CEOs testifying were Lloyd C. Blankfein of Goldman Sachs & Co., James Dimon of JPMorgan Chase & Co, Robert P. Kelly of Bank of New York Mellon, Ken Lewis of Bank of America, Ronald E. Logue of State Street Corporation, John J. Mack of Morgan Stanley, Vikram Pandit of Citigroup, and John Stumpf of Wells Fargo & Co.

Source