Challenged by a skeptical special US commission, top Wall Street bankers apologized on Wednesday for risky behavior that led to the worst financial crisis since the Great Depression of the 1930s. But they still declared it seemed appropriate at the time.
The bankers — whose companies collectively received more than US$100 billion in taxpayer assistance to weather the crisis — offered no regrets for executive pay that is now likely to increase as a result of their survival. They did say they are correcting some compensation practices that could lead to excessive risk-taking.
The tension at the first hearing of the Financial Crisis Inquiry Commission was evident from the outset.
“People are angry,” commission Chairman Phil Angelides said.
Reports of “record profits and bonuses in the wake of receiving trillions of dollars in government assistance while so many families are struggling to stay afloat has only heightened the sense of confusion,” he said.
Lloyd Blankfein, the chief executive of Goldman Sachs, took the brunt of the questions, especially on his firm’s practice of selling mortgage-backed securities and then betting against them.
“I’m just going to be blunt with you,” Angelides told him. “It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars.”
Blankfein replied: “I do think the behavior is improper. We regret the consequence that people have lost money in it.”
Later, though, he defended the firm’s actions as “exercises in risk management.”
In a moment of self-analysis, Blankfein said the world of high-finance simply rationalized its way into risky transactions.
Summarizing the thinking in the industry at the time, he said: “Gosh, the world is getting wealthier. Technology has done things ... These businesses are going to do well.”
“You talked yourself into a place of complacency,” he concluded.
The panel began its yearlong inquiry amid rising public fury over bailouts and bankers’ pay.
“We understand the anger felt by many citizens,” said Brian Moynihan, chief executive and president of Bank of America. “We are grateful for the taxpayer assistance we have received.”
“Over the course of the crisis, we as an industry caused a lot of damage,” Moynihan said.
With Bank of America having repaid its bailout money, he said “the vast majority of our employees played no role in the economic crisis” and do not deserve to be penalized with lower compensation.
Moynihan said compensation levels will be higher next year than they were in 2008 — but not at levels reached before the financial meltdown.
Jamie Dimon, chief executive of JPMorgan Chase & Co, said most of his employees took “significant cuts in compensation” in 2008.
He said his company would continue to pay people in a “responsible and disciplined manner” to attract and retain top talent.
Still, Dimon said, “We did make mistakes and there were things we could have done better.”
John Mack, chairman of Morgan Stanley, said the crisis was “a powerful wake-up call for this firm.”
He said he didn’t take a bonus last year and his bank has overhauled compensation practices to discourage “excessive risk-taking.”
The other executives also said their companies had tightened bonus policies, including provisions to “claw back” some of the money when performance falters.
The four bankers represent institutions that collectively received more than US$90 billion in direct government assistance from the US$700 billion federal bank bailout and availed themselves of billions more from the Federal Reserve. Goldman Sachs received an additional US$12.9 billion in bailout money designated to rescue insurer American International Group.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS