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Friday, 13 February 2009

US$1 for Citi CEO

WASHINGTON: Facing a committee of pitchfork-wielding congressmen, Citigroup's chief executive Vikram Pandit announced he would take a token salary of US$1 (S$1.50) and no bonus until the ailing banking giant returns to profitability.

'I get the new reality and I will make sure Citi gets it as well,' Mr Pandit said on Wednesday as the top executives from eight of America's largest banks, humbled by the financial meltdown, were hauled before Congress for the first time to face the rage of a nation.

'We will hold ourselves accountable for what we do, and that starts with me,' said Mr Pandit, who collected a salary of US$1 million last year.

Citigroup has received US$45 billion in bailout money and lost more than US$20 billion in the last five quarters.

Besides Citibank, the CEOs of Bank of America, Wells Fargo, JPMorgan Chase, Morgan Stanley, Bank of New York Mellon, Goldman Sachs and State Street Corp were grilled by lawmakers from the US House Financial Services Committee about their apparent lack of willingness to lend despite collectively receiving US$165 billion in bailout money.

The CEOs went to Capitol Hill by train and commercial flights (travelling like the masses is now de rigueur for all CEOs whose companies receive federal bailouts) to assure Congress and the American people that they get it - 'it' being public anger over bank officials continuing to draw huge incomes and cushy perks after their companies received taxpayer money but were seemingly unable to lend money.

Lined up in a row at a nationally televised hearing, the eight were pounded with questions from lawmakers demanding to know whether the firms were misusing taxpayer dollars.

By turns apologetic and defensive, the executives tried to reassure the committee that they were using the bailout money to increase lending to consumers and to convince the public that they understood the depth of anger over the crisis.

The seven-hour hearing was not just a public pillorying of the executives, it was also a trial for the government's initial US$700 billion (S$1 trillion) bailout just as the Obama administration tries to win support for its vision of how to stabilise the financial system.

None of the chief executives told the panel they needed more government funds. Seven said they did not expect to request more federal money, with only Mr Pandit saying it would depend on the details of the plan. Several executives said they never wanted even the first instalment of the bailout money.

'For anyone who contends that you do not need the money and that you did not ask for it, please find a way to return that money to the Treasury before you leave town,' said exasperated congressman Paul Kanjorski.

None of the executives took him up on the offer.

BLOOMBERG NEWS, WASHINGTON POST

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