Executives are now admitting to mistakes that were made on their behalf that contributed to the financial crisis our country is in. The government panel assigned for this investigation had the chance to question some of the top executives from leading financial institutes such Goldman Sachs Group Inc. Chairman-CEO Lloyd Blankfein, JPMorgan Chase CEO James Dimon, Morgan Stanley Chairman John Mack and Bank of American Corp. CEO-President Brian Moynihan.
They agreed they made mistakes, but refuse to agree they had created the initial stages of the market downturn. Blankfein said “There’s no doubt we as an industry made mistakes”. Taking too much risk and not considering the fact that housing prices would not continue rising or stay at that level were a few of the other mistakes they admitted to. Blankfein also stated “We didn’t realize early enough that risk was being misprice.”
They were approving people left and right and his explanation was they did not realize in time what this action would lead to. Lenders and consumers are to blame for underwater mortgages and the market. Consumers were borrowing what they knew they could not afford and lenders were approving them knowingly taking a risk. Lending regulations and standards were not enforced, which is part of the reason for the defaulted loans and debt our economy is in.
The CEOs were also questioned about the bonuses disbursed through their companies. Moynihan stated he is grateful for the $45 billion in bailout money and understands that the public would be angry about any bonuses paid. He later responded that his firm has paid the entire amount back, with an additional $3 billion in dividends and other payments. JPMorgan Chase, Morgan Stanley and Goldman Sachs Group Inc. had also paid back the bailout funds given to them.
The public is angry and they are voicing their strong opinions about the generous bonuses bank executives are receiving. Government officials have also taken this matter into consideration and have included this in their investigations. Later this month Representative Barney Frank, chairman of the House Financial Services Committee, will schedule hearings regarding the compensation of bank executives and possibly taxing those earnings.
December 15, 2010 will be the day the commissioners will have to provide answers to congress about the investigation they are conducting.
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