Round Up: The Post-Congressional Roasting Scuttlebutt Deems House Committee A Rather Pointless Public Flogging

In the 18th century there might have been a public flogging or a stint in the town square's pillory, but would the pre-credit-crunch world have condemned Wall Street leaders and members of Congress to the gallows?

In the 18th century there might have been a public flogging or a stint in the town square’s pillory, but would the pre-credit-crunch world have condemned Wall Street leaders and members of Congress to the gallows?

Both groups seem deserving of public scorn. Yesterday’s public humiliation took the form of a congressional hearing where the House Financial Services Committee roasted eight Wall Street CEOs on their lending and compensation practices. (Fair enough, really, since, what the heck, most of the firms represented did after all blow themselves up—or nearly so.) The event turned out to be a roughly six-hour (from 10 a.m. to around 5 p.m. with one break) public inquisition regarding their companies’ use of the $165 billion in federal aid. (Click here to see our coverage from yesterday). Congressmen were certainly playing to their home constituents, acting tough and outraged in their patented populist manner.

“This was a public relations gimmick to allow the public to see the big guys get beat up,” says Ladenburg Thalmann analyst Richard Bove. “It had no significance.”

Indeed, there is a lively debate around the merits of this type of hearing on Registered Rep.’s forum, where some readers found Congress a tad hypocritical, not to mention Bank of America CEO Ken Lewis a tad red and sweaty after being shut down by Representative Maxine Waters (D-Calif). Such were the takeaways from the constructive hearing.

Perhaps the more newsworthy event that unfolded yesterday was New York Attorney General Andrew Cuomo’s continued investigation into the $3.6 billion in bonuses Merrill Lynch executives received in late December, before Merrill was prepared to report a whopping $15 billion fourth-quarter loss, and days before Bank of America completed its purchase of the ailing brokerage firm. According to the A.P. story, in a letter sent to U.S. House Financial Services Chairman Barney Frank, Cuomo asserts that BOA knew of the bonuses, and, “Both Merrill and Bank of America could face charges of securities fraud in New York as the attorney general's office investigation unfolds.”

In other news, Goldman CEO Blankfein was apparently spooked as much as the market on Wednesday, the day after Treasury Secretary Tim Geithner unveiled his Financial Stability Plan (click here to read it). Enough so that he gathered 20 top hedge fund and private equity folks for some brainstorming Tuesday night, according to CNBC’s Charlie Gasparino. Goldman has since denied that the meeting was in response to Geithner’s plan, but a meeting planned for weeks.

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