How much were banks to blame for the financial collapse?
FROM CNN's Jack Cafferty:
Congress is trying to get to the bottom of the financial meltdown that practically brought the country to its knees.
[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2010/images/01/13/art.lloyd.sachs.jpg caption="Goldman Sachs CEO Lloyd Blankfein testifies during the first public hearing of the Financial Crisis Inquiry Commission on Capitol Hill."]
There were some tense exchanges on Capitol Hill today... with a bipartisan commission grilling the heads of Wall Street's top banks about who was to blame for the biggest downturn since the Great Depression.
The bank chiefs testified under oath about their institutions' mistakes that led to the crisis... things like the housing bubble, "new and poorly underwritten mortgage products" and "excessive speculation."
These banks bundled mortgages and sold them as investments. But when people began to default on the mortgages because they couldn't afford them in the first place, the bottom fell out.
At one point - Goldman Sachs CEO Lloyd Blankfein compared parts of the financial crisis to an earthquake and similar acts of God. Nice try. The commission's chairman - Democrat Phil Angelides - immediately pointed out: "These were acts of men and women."
The heads of three other big banks - JPMorgan Chase, Morgan Stanley and Bank of America - also testified. They all tried to walk the fine line of owning up to what happened... while pushing back against potential government reforms that they think would go too far.
There's a lot of anger out there directed at Wall Street. Since the start of the downturn, seven million Americans have lost their jobs and more than two million families have lost their homes to foreclosure.
But the banks were given hundreds of billions of dollars in taxpayer money to keep them afloat, and to this day they continue to pay out record bonuses. And they are making profits like they've never made before.
Here’s my question to you: How much were the banks to blame for the financial collapse?
Tune in to the Situation Room at 5pm to see if Jack reads your answer on air.
And, we love to know where you’re writing from, so please include your city and state with your comment.
Time for another tea party?
There is a chill wind blowing across this land of ours. People are losing faith in their ability to realize the American dream. While AIG pays out $165 million in bonuses to people who arguably contributed to the need for the federal government to hand them $170 billion of our money, and while politicians lie about who crafted the language that allowed this kind of stuff to happen (Are you listening Chris Dodd?), the average American is seeing his future disintegrate in front of his eyes.
Here are some numbers that suggest we are losing hope:
A CNN-Opinion Research Corp. poll shows 39 percent of those surveyed say they're very confident they'll be able to keep up their quality of life. That's down from 45 percent a year ago.
Fifty percent of homeowners with a mortgage say they're very confident they can keep making their house payments. Again, that's down from 58 percent a year ago.
Also down are the percentages of Americans who are confident they can pay their other debts, things like credit cards and car loans.
When it comes to saving for long-term goals, it's even worse.
To read Jack's entire CNN.com commentary, click here
AIG bonuses damaging to Obama's agenda?
Protesters demonstrate outside an AIG office in Washington, DC.(PHOTO CREDIT: WIN McNAMEE/GETTY IMAGES)
FROM CNN's Jack Cafferty:
There's a chance the public outcry over those AIG bonuses winds up hurting President Obama's ambitious agenda.
Critics of the administration are now armed with new ammo in the form of public outrage that they can use to block Mr. Obama's efforts - particularly when it comes to his economic agenda - like the budget.
Republicans keep hammering away that Treasury Secretary Geithner and the White House should have known about the $165 million in bonuses sooner - and acted quicker. They're also using the AIG scandal to show why Congress shouldn't pass any more bailouts.
One Republican strategist tells Bloomberg News, "The real target for the Republicans is to bring Obama back down to earth." You can bet they'll be watching his poll numbers.
Also, all the time spent debating and passing new legislation on bonuses, holding hearings on AIG, etc. is time taken away from other issues on Mr. Obama's agenda - health care, education, you name it...
And the president isn't the only politician who may be affected by the AIG saga. In a story that broke right here on CNN: Democratic Senator Chris Dodd initially denied that he had anything to do with adding language to the stimulus bill that protected bonuses at companies getting bailout money.
24 hours later, the senator changed his tune, admitting he was responsible. Chris Dodd lied; and the voters in Connecticut probably won't forget it next time he's up for re-election.
Here’s my question to you: How much damage will the AIG bonuses do to President Obama's agenda?
Interested to know which ones made it on air?
Washington to blame for AIG bonus scandal?
FROM CNN's Jack Cafferty:
As outrage over AIG bonuses reaches a fever pitch, many are now wondering why our leaders in Washington didn't do more to prevent the situation in the first place. The Obama administration says that it didn't know until a couple of weeks ago that AIG executives were set to receive $165 million in bonuses.
Cafferty: Why didn’t our leaders in D.C. do more to prevent this situation?
They say that Treasury Secretary Tim Geithner found out last Tuesday; and the president learned of all this on Thursday, just a day before the controversial retention payments went through. But Geithner was running the New York Federal Reserve Bank last fall when AIG got a high-interest loan of 85 billion dollars to help prevent collapse - along with its first installment of federal bailout money.
And none of these folks must watch CNN because in late January, Mary Snow did a story on this very program about the insurance giant paying hundreds of millions of dollars in bonuses to its financial products unit.
And then there's Congress... When some lawmakers tried to prevent bonuses in the stimulus bill last month they actually made an exception for pre-existing contracts. Democrat Chris Dodd - who proposed the executive compensation provision - insists that he did not include that exemption clause. He says he doesn't know how it got there; as do several other Democratic sources.
Dodd and then candidate-Barack Obama were the top recipients of AIG political contributions in 2008 - each getting more than $100,000.
And there's more... The Senate had passed a bipartisan amendment that would have taxed bonuses on any company getting federal bailout money if the company didn't pay back the bonus money to the government; but that was stripped from the stimulus bill during closed-door meetings. This is bordering on insanity.
Here’s my question to you: How much is Washington to blame for the AIG bonus scandal?
Interested to know which ones made it on air?
Should Europe help General Motors?
From CNN's Jack Cafferty:
General Motors is looking for a handout once again - but not here. This time GM is hoping that Europe will drop a few coins in the collection plate.
GM says its European divisions could collapse within weeks.
The struggling American auto company says its European divisions could collapse within weeks, unless governments across the pond step in to make sure it doesn't run out of money.
The company wants Europe to give them about $4.2 billion,saying the countries who host its car factories should share the "burden."
GM has had talks with the governments of Germany, the UK, Spain and Poland among others to ask for the money. They say if they don't get the aid - it could mean the loss of up to 300,000 jobs in Europe.
This all comes after GM asked the U.S. government for an additional $16.6 billion dollars in bailout money last month. That's on top of the billions it had previously received. As part of its restructuring plan - GM said it would lay off 47,000 people globally and close 14 plants in North America by 2012. The company also talked about reducing the number of brands in half, leaving only Chevrolet, Buick Cadillac and GMC.
Here’s my question to you: Should European countries come to the aid of General Motors?
Interested to know which ones made it on air?
Bank that got bailout $ throws lavish parties?
From CNN's Jack Cafferty:
A bank that got $1.6 billion dollars in government bailout money sponsored a series of "lavish parties" during a golf tournament in Los Angeles last weekend.
Northern Trust Bank sponsored a series of “lavish parties” in Los Angeles last weekend.
Chicago-based Northern Trust bank spent millions of dollars sponsoring the tournament and associated client events. The website TMZ reports that this included dinners, concerts by Sheryl Crow and Earth,Wind and Fire, a private party at the House of Blues and gift bags from Tiffany. Also, hundreds of people were flown in and put up in luxury hotels.
A Northern Trust official confirms to CNN that the bank sponsored the events, but not on the taxpayers' dime. He said the bank is healthy and didn't ask for TARP money, but entered the program at the request of the government. He added that their "normal cash flow" - and not TARP funds - paid for the event.
But the bank's explanation may not be enough for some. Congressman Barney Frank is writing a letter to Northern Trust calling on it to pay back the money it spent on these events. Frank says this behavior demonstrates "extraordinary levels of irresponsibility and arrogance." And in the Senate, John Kerry says he'll introduce a bill this week to end what he calls the "extravagant spending practices" of banks getting taxpayer money. Under his legislation – banks wouldn't be able to host, sponsor or pay for conferences, or holiday or entertainment events in the year they get government funds.
In December – Northern Trust announced plans to cut 450 jobs this year.
Here’s my question to you: What message does it send when a bank that got $1.6 billion in bailout money throws lavish dinners, parties, and concerts?
Interested to know which ones made it on air?
What are the signs of bailout fatigue?
From CNN's Jack Cafferty:
Have you noticed it's become nearly impossible to wake up in the morning without hearing about another big-time bailout by the federal government?
The stock market takes a hit every time the government announces a new initiative.
President Obama recently signed the almost $790 billion economic stimulus bill. His Treasury Secretary Tim Geithner unveiled the bank bailout plan that could mean another trillion dollars spent on bailing out our nation's drowning financial institutions. That's on top of the $700 billion financial bailout package from last fall.
Then there are the auto companies – they were back in Washington this week wanting another $21.6 billion of your money, on top of the more than $17 billion they got last fall. Then there's the administration's $275 billion plan to help up to 9 million struggling homeowners refinance or modify their mortgages so they don't lose their homes.
If these dizzying numbers aren't enough to give you a headache, how about the fact that the stock market keeps tanking every time the government announces a new initiative? Yesterday the Dow closed at its lowest level in more than 6 years and today it took another big hit. Investors are nervous that the government won't be able to right our economic ship, despite the trillions of dollars it's pouring in.
All of which has probably left millions of Americans either pulling their hair out or reaching for the Jack Daniels.
Here’s my question to you: What are the signs you’re suffering from bailout fatigue?
Interested to know which ones made it on air?
How would you live on $500,000 a year?
Wall Street and financial firms argue that limiting executive pay to $500,000 is unfair. (PHOTO CREDIT:GETTY IMAGES)
From CNN's Jack Cafferty:
So this week President Obama said executives at companies that get bailout money will not be allowed to earn more than $500,000 per year. Poor things. And if the companies want to pay them more than that, it has to be in the form of stock that cannot be sold until the loans are repaid to the federal government.
The Wall Street and financial firms argue that is unfair. They say talented executives will leave for greener pastures and fatter paychecks at companies that don't take bailout money. Maybe. We'll have to see how many of those are still around if and when this stimulus package gets through Congress. And at this moment that's far from a sure thing either.
But I digress. Back to how to make it on $500 grand a year. Cancel the country club membership? Sell the yacht and the vacation home - homes. Maybe have junior apply somewhere besides the Ivy League where college goes for upwards of $60 grand a year. List the Hummer and the all-terrain vehicles on E-Bay. Maybe check into the cost of a membership in Costco. It's not going to be easy.
Here’s my question to you: How would your life change if you were forced to live on $500,000 a year?
Interested to know which ones made it on air?
Should government limit executive pay?
From CNN's Jack Cafferty:
President Obama is promising to take "the air out of golden parachutes” by capping how much executives whose companies are getting bailout money can earn.
The president wants to cap how much executives whose companies received bailout money can earn.
The president set a $500,000 cap on senior executive pay at those institutions that are in the worst shape and get money from the government in the future.
Mr. Obama highlighted last year's handout of $18 billion in Wall Street bonuses – something he called "shameful"... saying that's the kind of disregard that brought about our current crisis.
Under his plan, companies that want to pay their executives more will have to do it through shares of stock that can't be sold until the companies pay back the government.
There's more. The new rules also require that shareholders have more say about how much the executives get paid. And, companies will have to show more transparency when it comes to costs for things like holiday parties and office renovations. The president also promised more reforms to come, as his administration cracks down on a quote "reckless culture."
This all is starting to sound a bit like socialism. We either have a "free enterprise" system or we don't. Granted abuses by certain CEOs have invited this, but where are we going when the government starts dictating how much people are allowed to earn?
Here’s my question to you: Should the government dictate executive compensation at companies that get bailout money?
Interested to know which ones made it on air?
@jackcafferty on Twitter
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