February 11th, 2009
11:39 AM ET

Financial Dispatch: Bank bosses defend actions

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/images/01/21/art.frank1.gi.jpg caption="Rep. Barney Frank is chairman of the House Financial Services committee."]

Andrew Torgan
CNN Financial News Producer

The CEOs of many of the nation's largest banks are telling Congress they are continuing to lend money, even as they’ve come under severe scrutiny in recent weeks about their use of billions of dollars in government bailout money.

At a closely-watched hearing on Capitol Hill this morning, the top executives from such embattled firms as Citigroup and Bank of America are defending their actions since receiving $165 billion last fall, saying that without government assistance, credit would be even harder to obtain.

New York State Attorney General Andrew Cuomo is accusing Merrill Lynch of “secretly” doling out billions of dollars in bonuses before reporting a huge quarterly loss and being absorbed by Bank of America.

In a letter to Barney Frank, chairman of the House Financial Services Committee, Cuomo says Merrill’s decision to “secretly and prematurely award approximately $3.6 billion in bonuses, and Bank of America's apparent complicity in it, raise serious and disturbing questions.”

Cuomo says Merrill gave bonuses of at least $1 million each to 696 employees, with a combined $121 million going to the top four recipients.

Stocks on Wall Street opened modestly higher today with the focus on the banking sector as those executives testify before Congress. Stocks tumbled on Tuesday in reaction to Treasury Secretary Tim Geithner’s plan to revamp the $700 billion financial bailout, with investors concerned that the new plan appears to be both under funded and woefully short on details. As one of our colleagues at CNN put it, investors, “were expecting a blueprint and they got a sketch on a napkin."

The U.S. trade deficit narrowed in December to a six-year low as the ongoing recession cut into Americans' appetite for goods from overseas.

The Commerce Department says the gap between the nation's imports and exports fell 4% to just under $40 billion dollars in December, while the politically-sensitive deficit with China also shrank.

For all of 2008, the trade gap narrowed more than 3% - marking the second-straight year of shrinking annual trade deficits for the U.S.

As Congress appears closer to finalizing the economic recovery plan, CNNMoney.com has a look how the stimulus can help your wallet.

Gas prices rose 1.2 cents overnight to $1.940 a gallon. That’s the 14th consecutive increase. Eleven states have regular unleaded gas prices of $2 and higher. 39 states and the District of Columbia have regular unleaded gas prices below $2. The highest gas prices are in Alaska ($2.532). The cheapest gas prices are in Wyoming ($1.663).

Filed under: Andrew Torgan • Economy • Finance • Gas Prices • Oil • Wall St.
soundoff (9 Responses)
  1. Luis

    Earle of Florida

    Are you stupid?This country is driving me insane? Why are people so retarded?

    Do some research. CNN is lacking it.

    Barney Frank Received: $63,250 in contributions from the Banks he pretends to grill. JPMorgan Chase CEO James Dimon gave $36,200 to members of the 111th Congress in the 2008 election cycle, with 61 percent of his contributions going to Democrats.


    February 11, 2009 at 9:59 pm |
  2. earle,florida

    Rep. Barney Frank is perhaps the greatest contemporary legislator this country probably has ever had! This man,has always spoken,and stood up for the citizens of our country,wether they be a poor man,rich man, beggar man,thief! I am so proud to have him represent me in the "State of Massachusetts,...Bravo, Rep. Frank(: JMHO PS He never stops fighting for the people's best interest.

    February 11, 2009 at 2:52 pm |
  3. Planetsusie

    Again I ask... since WHEN did it become the government's responsibility to prop up, bail out or otherwise coddle banks or finaicial institutions?

    Hear this bankers: Remaining stubbornly unrepentant about the whys and hows for which you've allowed your bank budgets to be spent, is neither academic nor accountable, it's denial.

    Let your companies, and your overpaid executives weather the current storm. Every other industry is having to endure and re-create and adjust, why shouldn't you?

    Sink or swim! (Since the blog environment today is so full of arks and water and flooding...)

    Until someone can prove that the trickle down affect of some large banking institutions failures (and eventual reabsorption or restructure) will undoubtedly cause some irrecoverable recession, depression, or worse, there's no reason to believe that banks need, deserve, or should get any more government assistance.

    Yes, let us stop the proverbial stimulus bleeding before we go into shock, and let the market decide what happens to those who have so obvioulsy mismanaged their affairs.

    February 11, 2009 at 2:39 pm |
  4. Marga

    I wish I could leave a message with Barney Frank at this very moment.
    When asked about the letter sent to credit card customers on increased interest rates, "Chase Bank" did not raise their hand. I received a letter January 27th, 2009 with a notice of an increase " Prime rate PLUS 19.99% currently 23.99%. If we did not want to accept these increases we were asked to send a letter closing said accounts! Which I did...

    February 11, 2009 at 1:33 pm |
  5. Chris

    Can we get the cia or the fbi to lock these clowns up in quantamino, or are we goin to have to wait for Americans to boycot them to poverty. In all seriusness haven't they committed treason at some level, by putting the US in this finacual nightmare scenario? The people are livid, If it were sommer I imagin there would be more dramitic "civil" protests. The markets show the disapproval of how our federal or financual system operates. Time to freeze accounts and investigate, let the ceo's collect unimployment for awhile.

    February 11, 2009 at 1:13 pm |
  6. Michael "C" Lorton, Virginia

    When you lie with "pigs" you can't expect to come out smelling like a rose--–right Franks!

    February 11, 2009 at 12:38 pm |
  7. christa

    Here I am again, gettin mad with my TV, when I should be mad with all of these Bank CEO, who are crying because all they had were 25% bonuses instead of the usual %100. Like I said before, we and I mean the people who never had opportunities like these CEO's, could live with the 25% bonus for years and we would be able to pay for the small bungalows who have a mortage in full. This has been gone on for to long. They cry "wolf" and the Federal Goverment gives them billions. I would suggest, before we give them more money, to look out for usand not these banks. I wonder were all the money went, some one has to have it and are we holding these people responsible. If they got rich because of this, take it away, because the enrichment came, because of millions of people. But I also hold people responsible for their own credit, if it sound to good to be true, it is. But so many in the U.S.A. think they have an entitlement to all kind of luxury goods and not what their wallet really could afford.

    February 11, 2009 at 12:33 pm |
  8. Lee

    The banks claim to be lending money. More money than if they hadn't received TARP money.
    Who are they lending it to, and how much?
    How much to regular consumers needing mortgages?
    How much this month, last month, and so on?

    Why cant better track be kept and reported to consumers almost daily?
    Isn't this the type of transparency we want and need?

    If for 13 years, we have been able to track with accuracy the funds leaving the country by illegals sending money back to Mexico, in support of their families, to the point where we can account for the major item in Mexicos GNP, in the billions of dollars.

    Why can't our government tell us what has happened to all of the money spent right here?

    February 11, 2009 at 11:54 am |
  9. Michael C. McHugh

    Perhaps the time has come simply to direct the Federal Reserve to transfer funds to state and local governments facing bankruptcy. It could also infuse capital directly into a national development bank, various infrastructure and job creation projects, education, and so on. We could give state and local governments credit accounts from the Fed depending on their population.

    I realize the Federal Reserve was never intended to be this type of bank, bur possibly the time has come to change its mission. We may have to do this very fast as this depression deepens and more people need jobs and relief, and I'm not sure about the wisdom of continually going back to Congress for more money.

    February 11, 2009 at 11:47 am |