The House Committee on Financial Services is now holding its hearing on Tarp Accountability. Eight CEOs of the biggest banks that received TARP money have been called to testify, including Llyod Blankfein of Goldman, Jamie Dimon of JPMorgan and Ken Lewis of Bank of America. For the CEOs it is a chance to go an an "image offensive" and make the case that their institutions have been lending far more in recent months than they would have in absence of TARP funds. For Committee Chair Barney Frank it is an opportunity to call the bankers to the carpet for doing tacky things with taxpayer dollars. Seems like there is a high likelihood of conflict. For instance, in his opening remarks Ken Lewis claims that:
Bank of America has for years been the most financially efficient bank with our
business mix in the country. We have a hard-earned reputation for frugality, not
And sure, the long arc of BofA history might curve toward frugality. But last week we learned that the bank spent millions sponsoring a "Super Bowl Fun Fest," which was described as "a five day carnival-like affair just outside the Super Bowl stadium":
The event -- known as the NFL Experience -- was 850,000 square feet of sports games and interactive entertainment attractions for football fans and was blanketed in Bank of America logos and marketing calls to sign up for football-themed banking products.
Ten of the 13 big beneficiaries of the Treasury Department's Troubled Asset Relief Program, or TARP, saw their outstanding loan balances decline by a total of about $46 billion, or 1.4%, between the third and fourth quarters of 2008, according to a Wall Street Journal analysis of banks that recently announced their quarterly results.
Although it's worth keeping in mind that even though lending declined since TARP, it is hard to know whether lending would have declined more in the absence of TARP.