The Big Banks in the US would certainly like to pretend it is Banking as usual.Â As President Barack Obama pointed out on ABC Nightline there is a Banking Crisis: We Can’t “Prolong The Agony”.Â Â He pointed out that a rip-off-the-bandaid approach will be necessary in the process of restoring financial normalcy.Â It will require some hard choices and introspection on Wall Street
At a closely-watched hearing before the House Financial Services Committee, CEOs from such embattled firms as Citigroup and Bank of America defended their actions since taking hold of $165 billion last fall, adding that without government assistance, credit would be even harder to obtain.
Bank of America Chairman and CEO Ken Lewis, whose firm has received $45 billion in government assistance from the Troubled Asset Relief Program, or TARP, told lawmakers that his company extended more than $115 billion in new credit to consumers and businesses during the fourth quarter.Â This message was echoed by the seven other CEOs testifying Wednesday, including JPMorgan Chase’s, and Jamie Dimon and John Stumpf of Wells Fargo.
Public resentment for these banks has soared in recent weeks amid concerns that some financial institutions have used taxpayer money for purposes other than lending, at a time when taxpayers are struggling to stay in their homes or losing their jobs.
This apparent unawareness of the US bankers to the realities they face is matched by what is going on in the UK.Â Andy Hornby, former chief executive of HBOS, gave what has been described as a sorry excuse for an apology.
Nice apologies, chaps, but, sorry, all that stuff about how the seizure of the wholesale funding markets could have overwhelmed any humble banker doesn’t tell the full story. Andy Hornby revealed the limited character of the bankers’ apologies at yesterday’s UK Treasury select committee when he said: “I don’t think I am particularly personally culpable.”
Hornby, Lord Stevenson, Sir Fred Goodwin and Sir Tom McKillop seemed to have forgotten why they were in the “bad boys” group of bankers appearing before the committee. It is because their banks were on the brink of collapse and had to be rescued by the taxpayer.
Banking / business as usual.Â It cannot be allowed to happen.