WASHINGTON, February 11 – Amid growing public outrage over Wall Street recklessness, Congress today held hearings into how giant financial institutions are using taxpayer bailout funds.
At a Senate Budget Committee hearing, Senator Bernie Sanders (I-Vt.) challenged Treasury Secretary Timothy Geithner on why Wall Street chief executives, such as Goldman Sachs CEO Lloyd Blankfein, have been allowed to keep their jobs.
“You have a person who made hundreds of millions for himself and he led his institution and helped cause a great financial crisis. We have put as taxpayers $10 billion to bail him out and we have no say as to whether or not he will stay on the job?” Sanders asked Geithner.
“There will be circumstances…where the government intervention will have to come with very tough conditions including changes in management leadership of institutions,” the new treasury secretary said. “Where we believe that makes sense, we will do that."
Sanders pressed: “I just asked you if you believe that’s the case with Goldman Sachs?”
In that case, Geithner said, he would leave the decision up to the Goldman Sachs board of directors.
“We’re not going to fire the leadership?” an incredulous Sanders persisted. "We’re going to keep these same guys who caused the crisis in power and who made huge sums of money?
“I think the American people -- if they’re going to pour hundreds of billions of dollars into these institutions -- want a new slate of leadership.”
The Goldman Sachs CEO was the highest paid executive on Wall Street in 2006 and 2007, when he made more than $125 million in total compensation. While millions of Americans have lost their homes, Blankfein owns a $48 million estate and a $26 million penthouse apartment on Park Avenue in New York City.
Because of risky investments, Goldman now has over $168 billion in total outstanding debt, it lost over $2 billion in the fourth quarter of 2008, its stock has plummeted, and Goldman announced that it will lay off more than 10 percent of its workforce. Late last year, the financial situation at Goldman was so dire that the Treasury Department provided the firm with a $10 billion taxpayer bailout.
Meanwhile, the Goldman CEO who Sanders asked Geithner about was on Capitol Hill today being grilled at a House hearing.
Testifying before the House Financial Services Committee, Blankfein and the heads of seven other major banks that received $125 billion in taxpayer bailout funds were mostly unapologetic for their role in helping to create the worst financial crisis since the Great Depression.