In Capitol Hill hearing, bankers remain torn on their role in crisis
Thursday, January 14, 2010
A year after the financial system nearly went over the brink, the congressional commission investigating the roots of the crisis confronted four of the world's most powerful bankers on Wednesday and challenged them to take more responsibility for their role in upending the global economy.
But under questioning from the chairman of the bipartisan commission, Philip Angelides, the bankers quickly made clear that they view this dark episode through a very different lens, describing themselves in large part as victims of circumstance. The bankers, representing four of the country's largest financial firms, acknowledged that their companies took excessive risks in the years leading up to the crisis but said they could not have anticipated the events that precipitated the meltdown.
When Lloyd C. Blankfein, chief executive of the storied Wall Street firm Goldman Sachs, likened the financial crisis to the fluke of four hurricanes hitting the East Coast in a single year, Angelides shot back that the crisis was not caused by "acts of God."
"These were acts of men and women," Angelides said. "These were controllable."
As the commission sought to extract an explanation for the turmoil, the White House was preparing to propose a tax on financial firms to recoup some of the cost for rescuing them. The new levy on borrowing, set to be announced Thursday, would seek to curtail excessive risk-taking.
That move, along with an ongoing push for answers, highlights the lingering tension between a Washington still looking to place blame and a Wall Street eager to pick up and move on.
On Capitol Hill, Angelides pressed Blankfein about whether Wall Street firms have surveyed the damage caused by the outsize risks they took, and whether they have a genuine appreciation for the unprecedented aid they received from American taxpayers.
Earlier in the hearing, Blankfein said that he had "felt good" about Goldman's financial health even during the darkest days of the crisis, adding that he was not sure if the company needed to be rescued. "We had access to the capital markets, and we could have made it more. And we weren't relying on that government help," he said.
That prompted Angelides to say later, "I'm troubled by your inability to accept the probability or certainty that your firm would not have made it through the storm but for the vast array of federal assistance."
This clash of views came amid a hearing that in tone was largely amicable. Though combative at times, the session produced less heat than some previous congressional hearings. Angelides, a former California state treasurer, and his colleagues on the Financial Crisis Inquiry Commission have described their year-long mission as an effort to write the official history of the financial meltdown.
Angelides told a packed Capitol Hill hearing room that the 10-member commission acts as "a proxy for the American people" and that he intends "to conduct a full and fair inquiry into what brought America's financial system to its knees. We're after the truth, the hard facts."
Wednesday's hearing was the first held by the commission, and it featured the testimony of Jamie Dimon of J.P. Morgan Chase, John J. Mack of Morgan Stanley and Brian T. Moynihan of Bank of America in addition to Blankfein. But it was Blankfein who faced the brunt of the questions.