Pandit, other top US bankers to defend use of bailout funds

February 11th, 2009 - 10:14 pm ICT by IANS  

Washington, Feb 11 (IANS) Vikram Pandit, Indian American chief executive of CitiBank, and the heads of seven other major American banks will defend the use of hundreds of billions of dollars in bailout money to lawmakers on Capitol Hill Wednesday.

“American people are right to expect that we use funds responsibly, quickly and transparently to help American families, businesses and communities,” Pandit is expected to say before the House Financial Services committee, according to prepared remarks. “They also have a right to expect a return on this investment.”

Recently the ailing bank received $45 billion in government bailout money under the Troubled Asset Relief Programme (TARP). Pandit will explain that $35.6 billion of this has gone toward new programmes and “lending initiatives”.

Along with Pandit, the CEO of Bank of America, JP Morgan Chase, Goldman Sachs, Wells Fargo, Morgan Stanley, Bank of New York and State Street Corp. recently came under scrutiny after being accused of using bailout money from TARP to fund bonuses and lavish vacations.

Bank of America is expected to make its first return to the Treasury next week of $400 million according to its chairman and CEO Kenneth D. Lewis.

Lloyd C. Blankfein, chairman and CEO of Goldman Sachs, which received $10 billion of bailout funds, is expected to say the company has already dedicated $13 billion in new financing since Oct 27.

“While the firm produced a profit of $2.2 billion in 2008, our revenues were down considerably,” Blankfein is expected to say.

Sharing a common theme with the new Obama administration, each of the executives plan to harp on accountability and transparency, while defending their use of the capital, according to CNN.

The underlying message each executive will convey is the understanding of the “serious responsibilities” the banks undertook when they negotiated with the Treasury Department and their full cooperation and intent to repay each dollar.

The meeting comes a day after Treasury Secretary Tim Geithner announced a plan to overhaul TARP to in part tighten the terms of further aid to banks and demand greater accountability.

Last week, the administration unveiled a plan to restrict CEO pay at firms receiving government assistance.

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