KEY POINTS:
It took legislators three hours to hear the word that the United States public has
been demanding for months, but it came first out of the mouth of John Mack, the chief executive of Morgan Stanley.
"If we could play the clock over again, we would do it differently," he said.
"I'm especially sorry for what has happened to shareholders, and as a knock-on effect of that, what has happened to the American people. I take that responsibility for my firm."
Mack and seven other of the most powerful men on Wall St had been summoned to Washington to face legislators who,
channelling public fury, assailed them over their bonuses and the recklessness that melted the financial system.
What exactly, Republicans and Democrats alike demanded, did the US taxpayer have to show for the US$176 billion in bailout money that had been pumped into their eight firms since last October, without causing a notable increase in lending and alleviating the squeeze on businesses and consumers needing credit?
Barney Frank, the chairman of the financial services committee, said last week that public patience with Wall St bailouts had worn thin. "As I've said to a couple of the bankers, 'Here's this problem: people really hate you, and they're starting to hate us because we're hanging out with you'."
Yesterday he urged them to be "co-operative, not grudgingly, not doing the minimum" as the US Government seeks to impose a new culture of responsibility on an industry known for its enormous pay packets, corporate jets and lavish junkets.
"Understanding that there is substantial public anger and alleviating that not with mumbo jumbo but with reality is essential if we're going to have the support in the country to take the right steps," Frank said.
Public anger boiled over last month when it was revealed that the total amount of bonuses paid out to staff for 2008 was US$18.4 billion - a figure that prompted President Barack Obama to impose a pay cap of US$500,000 on executives of banks that need more emergency cash.
"It is abundantly clear that we are here amidst broad public anger at our industry," Lloyd Blankfein, the head of Goldman Sachs, said.
The chief executives included Vikram Pandit, the head of Citigroup, which received Government guarantees of more than US$300 billion in December. Pandit made US$216 million when Citigroup bought his hedge fund business and paid him bonuses to sign on as chief
executive in 2007. "I've told my board of directors that my salary should be US$1 per year with no bonus until we return to profitability."
Outside the House of Representatives office building where the hearing took place, about a dozen protesters taunted Bank of America's Ken Lewis. "Hey, Ken Lewis, feel our pain," they chanted.
Also present were JPMorgan's James Dimon, Bank of New York's Robert Kelly, State Street Corporation's Ronald Logue and Wells Fargo's John Stumpf.
A Massachusetts congressman said that he wondered why the bank bosses had not been prosecuted. "I have some constituents who have robbed your banks, and they say the same thing, they say they are sorry, they didn't mean it, they won't do it again if you'll only let me out."
One by one the executives said they did not take a bonus for 2008 and would not be having a salary increase this year. Among them, the eight earned around US$400 million ($760 million) in 2007, the last year for which figures were published.
Frank said: "This notion that you need some special incentive to do the right thing troubles people."
"It's complicated," Mack replied, citing the risks involved, the global nature of the banking business and the size of the companies. "If you gave me no bonus for the best year, I'd still be here."
South Carolina Republican Gresham Barrett said: "My folks simply have not seen the evidence that the money you were given is working or making their lives better."
- INDEPENDENT
