THE TELEGRAPH: Wall Street’s top bankers have apologised for their starring role in provoking the global financial crisis as they brace themselves for details of a looming $120bn (£73bn) tax on profits.
The new tax , due to be announced on Thursday by the Obama administration, is designed to calm an angry American public and help fill the black-hole left by the US’s $700bn bail-out of the banking industry.
The heads of Goldman Sachs, JP Morgan Chase, Morgan Stanley and Bank of America on Wednesday faced detailed questioning before the Financial Crisis Inquiry Commission – the body set up by US Congress to establish the banks’ role in triggering the worst recession since the Great Depression.
John Mack, Morgan Stanley’s chairman, confessed the investment bank ate its “own cooking, and we choked on it,” while Jamie Dimon, his opposite number at JP Morgan Chase, admitted the bank did “make mistakes” – as the quartet gave a penitent performance, admitting several mistakes.
Phil Angelides, the Commission’s chairman, questioned Goldman chairman Lloyd Blankfein over the ethicacy [sic] of creating derivative instruments containing sub-prime mortgages for clients, while simultaneously profiting by betting against them.
“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,” Mr Angelides said. Mr Blankfein downplayed Goldman’s role, arguing such products remain popular today.
Exorbitant pay and bonuses also raised hackles, with Mr Angelides likening banker’s remuneration to playing at a black jack table thanks to the significant potential upside from putting little capital down. >>> James Quinn, US Business Editor | Wednesday, January 13, 2010
