The House Financial Services Committee grilled a group of bankers who received money from the financial bailout over how they had been using the money.
The panel defended their use of funds from the Troubled Asset Relief Program on Wednesday and claimed that they had increased lending at their banks. Bank of America chairman and CEO Ken Lewis, for example, said that his bank had extended $59 billion in commercial loans in the fourth quarter, nearly $7 billion in commercial real estate loans, $45 billion in mortgages, and nearly $1 billion in new credit to more than 47,000 small business customers.
“We are actively putting our capital to work,” said Goldman Sachs CEO Lloyd Blankfein (pictured).
However, committee members criticized the banks for spending the TARP money on bonuses, dividends and acquisitions of smaller banks, while ratcheting up credit card rates and fees, and not doing enough to modify mortgages for homeowners threatened by foreclosure.
“There is a great deal of anger about the financial institutions here,” said Chairman Barney Frank, D-Mass.
Another congressman challenged the bankers who claimed that they had been pressured into accepting the TARP funds. “If you got money you didn’t want, please find a way to return that money to the Treasury before you leave town,” said Paul Kanjorksi, D-Penn.
The Congressional Oversight Panel issued a report last Friday that found that the Treasury overpaid for many of the assets it purchased under the TARP program. The report estimated that the Treasury paid $254 billion for assets worth approximately $176 billion, a shortfall of $78 billion.
Treasury Secretary Timothy Geithner announced a new plan on Tuesday for how the second half of the $700 billion allocated under the financial bailout bill would be spent, but he also indicated that trillions more dollars might be needed (see Geithner Outlines Financial Stability Plan). Wall Street panned the plan for not containing enough details, and the Dow Jones Industrial Average fell 381.99 on Tuesday.
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