US politicians strike stimulus deal

Breakthrough comes as Wall Street bankers face grilling over spending of bailout funds.

    Wall Street executives have faced criticism over
    their use of bailout funds [EPA]

    "I want to thank the Democrats and Republicans in Congress who came together around a hard-fought compromise that will save or create more than 3.5 million jobs and get our economy back on track," Obama said in a statement.

    Al Jazeera's Rob Reynolds, reporting from Washington DC, said the move was a "major political victory" for Obama who has battled with Republicans to push the stimulus package through.

    Bankers questioned

    The move came as the heads of several leading US banks appeared before congress to defend their use of money from last year's $700bn financial bailout.

    Citigroup executives were among those
    being questioned [GALLO/GETTY] 
    Eight chief executive officers from banks such as Merrill Lynch and Goldman Sachs testified before the House Financial Services Committee on Wednesday over their handling of more than $160bn of US taxpayers' money.

    Lloyd Blankfein, from Goldman Sachs, acknowledged to the committee that the banks faced "broad public anger" and that they had to "regain the public's trust and do everything we can to help mend our financial system to restore stability and vitality".

    Barney Frank, chairman of the committee, said the banks had to show they were "willing to make some sacrifices to get this [economy] working".

    Republicans and Democrats are angry for what they see as a lack of transparency over the handling of the bailout, passed under the administration of George Bush, the former president.

    Critics are angry that big banks that benefited from the federal bailout, designed to encourage banks to lend money to consumers and small businesses, instead spent the money lavishly, including granting enormous salaries and bonuses to those appearing before the committee.

    'Frugality, not extravagance'

    Those testifying were Jamie Dimon from JP Morgan Chase, John Mack from Morgan Stanley, John Stumpf from Wells Fargo, Ken Lewis from the Bank of America, Vikram Pandit from Citigroup, Ronald Logue from State Street, Lloyd Blankfein from Goldman Sachs, and Robert Kelly from the Bank of New York Mellon Corporation.

    The executives told legislators that the billions of dollars in taxpayer money had been used to boost lending, not to pay executives, lobbyists or shareholder dividends.

    "We have a hard-earned reputation for frugality, not extravagance," said Ken Lewis, chief executive officer for Bank of America.

    "Taxpayers have invested in our company and they deserve to know what return they are making on their investment and when it will be paid back."

    SOURCE: Al Jazeera and agencies


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