Top bankers face grilling by dubious Congress

WASHINGTON - Washington versus Wall Street.

The gaping divide between the nation's political and financial capitals showed starkly Wednesday when lawmakers hammered eight of Wall Street's most influential chief executives about how they have so far spent billions of taxpayer money.

Angry Congressmen wanted to know why their constituents cannot get loans for cars, homes and businesses even though the banks received $160 billion so far to help thaw frozen credit.

"I urge you going forward to be ungrudgingly cooperative," said Rep. Barney Frank, chairman of the panel, as the hearing opened. "There has to be a sense of the American people that you understand their anger ... and that you're willing to make some sacrifices to get this working."

The bankers insisted they have been lending. "Make no mistake: We are still lending," said Bank of America Corp. Chief Executive Kenneth Lewis.

The panel's top Republican, Spencer Bachus of Alabama, said the bankers and Congress will have to do their part to sway people by "winning back their trust and their confidence."

"Both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," John J. Mack, head of Morgan Stanley, told the House Financial Institutions Committee.

Added JP Morgan Chase & Co.'s Jamie Dimon: "We stand ready to do our part going forward."

Sitting in a row at a long table, the CEOs were met with deep skepticism from lawmakers who aggressively quizzed them on how they have used the money.

Repeatedly, lawmakers were scornful and treated the financial heavyweights almost like naughty schoolchildren, ordering them to raise their hands to indicate their responses to blanket questions about their own use of perks and any policy changes made since accepting the bailout money.

At one point, under questioning from Rep. Dennis Moore, D-Kan., the CEOs went down the line disclosing how much bailout money their institutions received last year and how much they personally made. Their salaries ranged from $600,000 to $1.5 million annually, without bonuses.

In general, the eight top bankers appearing before the panel were contrite and conceded they have work to do to win over a bitter public and an exasperated Congress. They had little choice but to acknowledge as much, given intense anger and anxiety as the troubled financial system continues to spiral downward in an ever-worsening recession.

Taxpayers are furious with big banks that benefited from the federal bailout designed to get credit moving again, but which also spent lavishly on executive bonuses, company retreats and office redecorating. Lawmakers also are feeling the heat for signing off on the bailout package plan last year.

Republicans and Democrats alike have been smarting over the implementation of the financial package, which started under President Bush and now is in the hands of the Obama administration. The lingering suspicions present one of President Barack Obama's biggest obstacles as he attempts the dual challenge of prodding the financial sector to ease credit while aiming to create jobs with an economic stimulus package.

Frank also asked banks to impose a moratorium on mortgage foreclosures until Treasury Secretary Timothy Geithner comes up with a systemwide mortgage modification.

Video   Bank CEO's questioned over bailout funds Feb. 11: CEO's from eight of the largest U.S. banks to take federal money are facing tough questions from lawmakers over their use of taxpayer funds. NBC's Mike Viqueira reports. MSNBC

Bankers are hardly sympathetic figures to Congress.

The initial spending of the bailout money was secretive, lacking strict requirements that the banks account publicly for how they were using it. Banks weren't helped by reports that Wall Street firms doled out more than $18 billion in bonuses to their employees last year or that Goldman Sachs and Wells Fargo had planned conferences in Las Vegas. Goldman Sachs moved its three-day event to San Francisco; Wells Fargo canceled its employee recognition retreat.

Most of these bankers didn't beg for their money. They were selected because they were relative healthy banks that could spur more banking activity and eliminate the stigma of taking taxpayer money for other financial institutions.

One by one, the CEOs brought a message of accommodation and gratitude. They applauded the program for making more loans available and promised to pay their share of the money back to the Treasury over time. Several asserted that none of the government's money went to bonuses or dividends.

"We are frugal," said Wells Fargo's John Stumpf.

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