Citigroup, JPMorgan Chiefs Summoned to Discuss TARP (Update1)

Feb. 2 (Bloomberg) -- Citigroup Inc., JPMorgan Chase & Co. and seven U.S. financial firms that got funding from the $700 billion bank-rescue package have been summoned to send their chief executive officers to testify before Congress next week.

The House Financial Services Committee scheduled a Feb. 11 hearing with top executives of the nine major banks and securities firms that got $125 billion in October from the Troubled Asset Relief Program, committee spokesman Steve Adamske said today.

U.S. Representative Barney Frank, the committee chairman and a Massachusetts Democrat, has criticized the banks for not using the funds to lend more to consumers and businesses.

Citigroup, JPMorgan Chase & Co. and Wells Fargo & Co. each sold $25 billion in preferred stock in the first round of government funding. Bank of America sold shares of $15 billion. Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley sold $10 billion. Bank of New York Mellon Corp. sold a $3 billion stake and State Street Corp. sold $2 billion, according to data released Oct. 29.

The Obama administration and top Democratic lawmakers are seeking to differentiate the next stage of the financial bailout to insulate against popular opposition to a Wall Street rescue. Lawmakers are questioning the effectiveness of TARP, saying the Bush administration’s decisions on spending the first $350 billion did little to stabilize the economy.

President Barack Obama plans to require U.S. banks to boost lending to consumers and companies in return for taxpayer aid from the bailout fund, in a departure from Bush administration policy, Frank said yesterday on ABC’s This Week program.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.

To contact the editor responsible for this story: Alec D.B. McCabe at amccabe@bloomberg.net