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What 8 Bailout CEOs Need to Explain
After handing out more than $350 billion to wayward companies, Congress has finally rediscovered its oversight role and summoned some of the Bailout CEOs to Washington. Let's hope that these poobahs of finance explain why they deserve money from the "Troubled Assets Relief Program," and how they'll spend it in a way that benefits the American public.
Here are some other questions the Bailout CEOs need to answer:
Vikram Pandit, CEO, Citigroup. The government has already invested $45 billion in your bank, and it still doesn't seem close to stable. Your stock is down 85 percent from a year ago, to less than $4. Investors obviously expect a lot more bad news. What is the total amount of federal aid you think Citigroup will ultimately need to regain its footing? If it turns out you're lowballing by more than 10 percent, we'd like all of our money back.
[See 15 companies that might not survive 2009.]
Ken Lewis, CEO, Bank of America. Please stop telling us you did America a favor by buying Merrill Lynch. You've coveted an investment bank for years, and you're supposed to be smart enough to tell if the one you finally end up buying is loaded with time bombs. You've been spending your own money to buy up your company's depressed stock - down 84 percent over the last year - to show how much confidence you have in Bank of America. But why should shareholders - and taxpayers - have confidence in you? Hasn't your judgment been pretty shaky?
Jamie Dimon, CEO, JPMorganChase. You've emerged as one of the "good bankers" whose firm appears to have avoided the worst excesses of greed and bad judgment. We also appreciate the wry humility you've shown by proclaiming that at JPMorgan, "we suck less." Pretty funny. So maybe you can answer this conundrum: How are banks - which got into trouble by gambling too much money on risky loans and securities - supposed to solve the "credit crunch" by lending even MORE money to businesses and individuals that are now more likely than ever to default on their loans?
[See what Miracle-on-the-Hudson pilot Sully Sullenberger can teach CEOs.]
Lloyd Blankfein, CEO, Goldman Sachs. Your firm has received $10 billion in government bailout funds. Why do you need it? Goldman lost money in the most recent quarter, but still earned $2.3 billion overall in 2008. One money-losing quarter, and you need the feds to come to the rescue? Shouldn't the barons of capitalism be able to nurse their own losses?
John Mack, CEO, Morgan Stanley. You too. $10 billion from the Treasury. A loss in the fourth quarter, but a net profit in 2008 of $1.7 billion. In your 2008 earnings release, you bragged about how Morgan Stanley strengthened its capital position in 2008, and earned record revenues from fixed incomes sales and equities and derivatives trading. Sounds like you're doing okay. So when do you plan to pay back the $10 billion?
[Read some tips for how to skirt taxes, while still landing a plum job.]
John Stumpf, CEO, Wells Fargo. We're all wondering if your bank is about to go down the drain, like Citigroup and Bank of America, or if you really did manage to steer around the huge sinkhole that's swallowing everybody who funded the phony U.S. housing boom. If anybody knows, it's you. So is Wells Fargo in the clear? Or are you sitting on yet another banking debacle? If Wells Fargo is healthy, wouldn't you prefer to return that $25 billion in taxpayer money, so you can party in Vegas without getting lectured by Washington? Besides, we could use the money back - we've got other problems that are costing a bit more than expected.
Stanley O'Neal former CEO, Merrill Lynch. (Not scheduled to testify.) Stan the man! Come on down! To Washington, DC, that is! We realize you're not running Merrill anymore and you're not scheduled to testify, but let's get together and reminisce about old times. Like those heady days in 2005 and 2006, when you oversaw deals that eventually saddled Merrill with more than $40 billion in losses, leaving the firm on the brink of collapse in 2008. We could also chat about that $160 million payout you got when you left Merrill in 2007. That might have seemed like reward for a job well done. Turns out the job wasn't quite done after all. Let's talk about that. Over a fancy lunch. You're buying.
[See how Wall Street continues to doom itself.]
Charles Prince, former CEO, Citigroup. (Not scheduled to testify.) We need some dancing lessons, Chuck. In 2007, you justified Citigroup's financing of dozens of go-go deals by pointing out that all of your competitors were doing it, too: "As long as the music is playing, you've got to get up and dance," you told the Financial Times. Did you expect the music to keep playing forever? Well, it didn't. Since you left Citigroup in 2007, the bank has lost nearly $20 billion and almost cratered, on account of deals you oversaw. Yet you earned a $105 million exit payment, on top of $53 million from your four years as CEO. Maybe you're still in a dancing mood, but we're not. So please, tell us why wrecking one of the world's biggest banks is a feat worth millions. We're all ears.
. What 8 Bailout CEOs Need to Explain
- <LI class=byline>Rick Newman
- Tuesday February 10, 2009, 8:49 am EST
After handing out more than $350 billion to wayward companies, Congress has finally rediscovered its oversight role and summoned some of the Bailout CEOs to Washington. Let's hope that these poobahs of finance explain why they deserve money from the "Troubled Assets Relief Program," and how they'll spend it in a way that benefits the American public.
Here are some other questions the Bailout CEOs need to answer:
Vikram Pandit, CEO, Citigroup. The government has already invested $45 billion in your bank, and it still doesn't seem close to stable. Your stock is down 85 percent from a year ago, to less than $4. Investors obviously expect a lot more bad news. What is the total amount of federal aid you think Citigroup will ultimately need to regain its footing? If it turns out you're lowballing by more than 10 percent, we'd like all of our money back.
[See 15 companies that might not survive 2009.]
Ken Lewis, CEO, Bank of America. Please stop telling us you did America a favor by buying Merrill Lynch. You've coveted an investment bank for years, and you're supposed to be smart enough to tell if the one you finally end up buying is loaded with time bombs. You've been spending your own money to buy up your company's depressed stock - down 84 percent over the last year - to show how much confidence you have in Bank of America. But why should shareholders - and taxpayers - have confidence in you? Hasn't your judgment been pretty shaky?
Jamie Dimon, CEO, JPMorganChase. You've emerged as one of the "good bankers" whose firm appears to have avoided the worst excesses of greed and bad judgment. We also appreciate the wry humility you've shown by proclaiming that at JPMorgan, "we suck less." Pretty funny. So maybe you can answer this conundrum: How are banks - which got into trouble by gambling too much money on risky loans and securities - supposed to solve the "credit crunch" by lending even MORE money to businesses and individuals that are now more likely than ever to default on their loans?
[See what Miracle-on-the-Hudson pilot Sully Sullenberger can teach CEOs.]
Lloyd Blankfein, CEO, Goldman Sachs. Your firm has received $10 billion in government bailout funds. Why do you need it? Goldman lost money in the most recent quarter, but still earned $2.3 billion overall in 2008. One money-losing quarter, and you need the feds to come to the rescue? Shouldn't the barons of capitalism be able to nurse their own losses?
John Mack, CEO, Morgan Stanley. You too. $10 billion from the Treasury. A loss in the fourth quarter, but a net profit in 2008 of $1.7 billion. In your 2008 earnings release, you bragged about how Morgan Stanley strengthened its capital position in 2008, and earned record revenues from fixed incomes sales and equities and derivatives trading. Sounds like you're doing okay. So when do you plan to pay back the $10 billion?
[Read some tips for how to skirt taxes, while still landing a plum job.]
John Stumpf, CEO, Wells Fargo. We're all wondering if your bank is about to go down the drain, like Citigroup and Bank of America, or if you really did manage to steer around the huge sinkhole that's swallowing everybody who funded the phony U.S. housing boom. If anybody knows, it's you. So is Wells Fargo in the clear? Or are you sitting on yet another banking debacle? If Wells Fargo is healthy, wouldn't you prefer to return that $25 billion in taxpayer money, so you can party in Vegas without getting lectured by Washington? Besides, we could use the money back - we've got other problems that are costing a bit more than expected.
Stanley O'Neal former CEO, Merrill Lynch. (Not scheduled to testify.) Stan the man! Come on down! To Washington, DC, that is! We realize you're not running Merrill anymore and you're not scheduled to testify, but let's get together and reminisce about old times. Like those heady days in 2005 and 2006, when you oversaw deals that eventually saddled Merrill with more than $40 billion in losses, leaving the firm on the brink of collapse in 2008. We could also chat about that $160 million payout you got when you left Merrill in 2007. That might have seemed like reward for a job well done. Turns out the job wasn't quite done after all. Let's talk about that. Over a fancy lunch. You're buying.
[See how Wall Street continues to doom itself.]
Charles Prince, former CEO, Citigroup. (Not scheduled to testify.) We need some dancing lessons, Chuck. In 2007, you justified Citigroup's financing of dozens of go-go deals by pointing out that all of your competitors were doing it, too: "As long as the music is playing, you've got to get up and dance," you told the Financial Times. Did you expect the music to keep playing forever? Well, it didn't. Since you left Citigroup in 2007, the bank has lost nearly $20 billion and almost cratered, on account of deals you oversaw. Yet you earned a $105 million exit payment, on top of $53 million from your four years as CEO. Maybe you're still in a dancing mood, but we're not. So please, tell us why wrecking one of the world's biggest banks is a feat worth millions. We're all ears.
