Facing a disgusted American public and Congress, bank chief executives agreed with demands for greater accountability Wednesday in the first testimony on how they are spending money from the taxpayer-funded $700 billion bailout.
"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.
JP Morgan Chase & Co.'s Jamie Dimon added: "We stand ready to do our part going forward."
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 George W. 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.
"I urge you going forward to be ungrudgingly cooperative," said Rep. Barney Frank, chairman of the panel, said 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."
Frank also asked banks to impose a moratorium on mortgage foreclosures until Treasury Secretary Timothy Geithner comes up with a system-wide mortgage modification.
The panel's top Republican, Spencer Bachus said the bankers and Congress would have to do their part to sway people by "winning back their trust and their confidence."
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 more than $160b. in taxpayers' 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, a Democrat, the chief executives 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.