The heads of eight major banks that received $125 billion in taxpayer bailout funds were largely unapologetic for their role in helping to create the worst financial crisis since the Great Depression as they testified before Congress this morning.
The CEOs said they are trying to lend out more money and pledged to return to profit, be more transparent and repay taxpayers as soon as possible.
Yet they warned that there was still much work to do and that it would take time for the financial system to right itself.
"We are doing our best to balance the interests of customers, shareholders and taxpayers," said Bank of America CEO Kenneth D. Lewis. "There is simply no ready substitute for government support of this size, and so in its absence, our only choice would be to lend less and thereby shrink our balance sheet."
Citigroup CEO Vikram Pandit echoed those comments, saying: "The American people are right to expect that we use TARP funds responsibly, quickly and transparently to help American families, businesses and communities."
But for the most part, the CEOs in their prepared testimony shrugged off recent criticism about the high level of pay within their firms, the use of luxury jets and posh trips to Las Vegas or Monte Carlo.
Lewis said that he knows the public will not always agree with his decisions, adding that some questionable expenses are good for the long-term growth of his company.
"There has been no shortage of examples of executives or companies spending money in ways that did not have a direct benefit to the business," Lewis said. "In other instances, I think banks have been criticized for activities that, in fact, have very serious, and very effective, business purposes. Marketing activities, which drive sales and business growth, are just one example."
He then reminded the committee that the investors who will profit from Bank of America's growth now include the American taxpayer.
Bank of America took heat recently for sponsoring a five-day carnival-like affair outside the Super Bowl. The event -- known as the "NFL experience" -- included 850,000 square feet of sports games and interactive entertainment attractions for football fans and was blanketed in Bank of America logos and marketing calls to sign up for football-themed banking products.
Perhaps the most contrite CEO in today's testimony was Morgan Stanley's John J. Mack.
"We didn't do everything right. Far from it," Mack said. "And make no mistake, as the head of this firm, I take responsibility for our performance."
"I believe that both our firm and our industry have far to go to regain the trust of taxpayers, investors and public officials," he said.
Mack recognized that the American public is "outraged" by some compensation practices on Wall Street.
"I can understand why," he said. "At Morgan Stanley, the most senior members of the firm, including myself, didn't receive any year-end bonus in 2008. I didn't receive a bonus in 2007 either."
True, Mack didn't get a bonus in either year. But in 2007 he did get a cash salary of $800,000 and was awarded stock options worth $40.2 million.
Today's hearing was called by House Financial Services Committee chairman Barney Frank, D-Mass.
"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 said.
Goldman Sachs CEO Lloyd C. Blankfien acknowledged the "broad public anger" directed at the financial industry.
"In my 26 years at Goldman Sachs, I have never seen a wider gulf between the financial services industry and the public," Blankfien said. "Many people believe -- and, in many cases, justifiably so -- that Wall Street lost sight of its larger public obligations and allowed certain trends and practices to undermine the financial system's stability."
Blankfien said in prepared remarks that the entire industry is suffering right along with Main Street.
"The fact is that all of us are contending with the consequences of a deteriorating economy; lost jobs, lost orders, and lost confidence," he said.
JP Morgan Chase CEO Jamie Dimon praised the government for taking "bold and necessary steps" to keep the crisis from becoming something "none of us would want to imagine."
Dimon also said that a "fragmented and overly complex" government regulation system is partly to blame for the crisis.
"Long-term recovery will elude the financial industry unless we modernize our financial regulatory system and address the regulatory weaknesses that recent events have uncovered," Dimon said.
The CEOs did provide some details about how they used the TARP money, particularly how it was loaned out. JP Morgan, for instance, increased its consumer loan balances by 2.1 percent in the forth quarter. Dimon noted this happened at a time when consumer are spending less.
Last week, Citi published a report detailing how it used the TARP funds to date. It promised to update the report each quarter. Other banks pledged to make similar information publicly available.
Other CEOs present were from Wells Fargo, Bank of New York Mellon and State Street. The eight financial firms received a combined total of $125 billion since October through the Troubled Asset Relief Program, commonly referred to as TARP.
Lawmakers have expressed outrage that the funds are not fulfilling their purpose of increasing the flow of credit to consumers. They point to a report released last month by the New York state comptroller that said Wall Street firms had handed out $18 billion in bonuses last year.
That news led President Obama to impose new restrictions on executive compensation for banks that receive money through the TARP in the future.
After news broke that Wells Fargo was planning an annual trip for many of its top employees in Las Vegas, the company cancelled the outing.
"These financial institutions on the brink of extinction come to the American taxpayer for hundreds and billions of dollars," McCaskill said. "At the very same time, they think they're going to buy a $50 million corporate jet. They're going to pay out $18 billion in bonuses. They paid an average of $2.6 million to every executive at the first 116 banks that got taxpayer money under TARP."
But just as lawmakers have questions for the executives, there are also questions for lawmakers to answer.
In the 2008 election cycle, House Financial Services Committee members received more than $26 million in campaign donations from the finance, insurance, and real estate sector, including $5.3 million from the securities and investment industry and $3.3 million from commercial banking, according to the non-partisan Center for Responsive Politics.
Part of that $26 million is $984,148 that Frank received, including $224,000 from the securities and investment industry and $110,000 from commercial banks. Almost $2 million that the committee members received came from the very eight banks represented at the hearing, the center states.
Their report states that these financial institutions gave a total of $1.8 million to committee lawmakers in the 2008 election cycle.
The chairman himself, Frank, received $63,250 from these banks. Ranking member Rep. Spencer Bachus, R-Ala., almost doubled that sum, having collected $116,950.
Over time, one bank alone, JP Morgan, has given Bachus more than $96,000. Frank has received more funds from JP Morgan than any other company, union, or organization since 1989.
But Bachus and Frank are not alone in their dealings with these companies. A total of 18 committee lawmakers have their own personal funds invested in the eight banks at the hearing.
In all, the 111th Congress had between $12.7 million and $25.8 million invested in these firms in 2007.
When policymakers were designing the TARP bill, Frank intervened to secure money for a home-state bank, OneUnited Bank in Boston, the Wall Street Journal reported.
"At no point did I ask federal officials or bank regulators for any relaxation in the oversight of the banks or withhold any decision given the bank's activities," Frank said in a statement. "I continue to believe that the existence of minority owned banks is an important social goal and our communities will suffer without them."
The Center for Responsive Politics also found that the companies receiving TARP funds had spent a total of $114 million last year in an effort to curry federal favor. The government watchdog group's report showed these companies spent $77 million on lobbying and $37 million on federal campaign contributions and later received $295 billion from the TARP.
"Even in the best economic times, you won't find an investment with a greater payoff than what these companies have been getting," said Sheila Krumholz, executive director at the center.
According to the report, JP MorganChase spent about $10.1 million combined on lobbying and campaign contributions, Citigroup approximately $12.4 million, and Bank of America about $14.5 million, including data for Merrill Lynch, which it acquired last year.
New Treasury Secretary Timothy Geithner recently said that in the future, companies that receive TARP funds won't be allowed to lobby the government.
But Geithner has also come in for criticism as he seeks to revive the embattled program launched under his predecessor Henry Paulson.
Sen. Jim Bunning, R-Ky., questioned whether the former chairman of the Federal Reserve in New York can improve the program because he "had a seat at the table when all this original TARP was designed."
"The American people are screaming because they think that the TARP money was designed for one reason -- to relieve the credit crunch -- and it was being used to take care completely of friends and others on Wall Street," Bunning said last week at a Senate Banking Committee hearing.
Geithner's chief of staff, Mark Patterson, comes to the Treasury Department after years as a lobbyist for Goldman Sachs.
When the executives come to Congress, they will be the latest in a long line of industry leaders called to Capitol Hill in times of trouble.
In an infamous 1994 hearing, tobacco executives testified that nicotine was not addictive.
Last spring, oil executives were grilled for answers on how their companies were raking in record-high profits while consumers paid record-high prices at the pump.
In November, auto executives came under fire for requesting billons of government aid even as they flew to Washington in private jets.
Even before coming to Washington, some executives have already launched public relations campaigns, with some deciding to forgo bonuses this year.
Goldman Sachs has announced that seven executives, including CEO Lloyd Blankfein, will not get a bonus.
JP Morgan Chase CEO James Dimon has said he will not seek a bonus.
Morgan Stanley CEO John Mack and two other two top executives will also not receive bonuses, although that did not stop an angry group of protesters from demonstrating outside his New York home Monday morning.
Just days before the hearing, Wells Fargo CEO John Stumpf took out full-page ads in Sunday's New York Times and Washington Post to argue that media reports of their planned trip to Las Vegas were "deliberately misleading."
Stumpf said that the Vegas event was not a junket, but rather a weekend to recognize employee performance.
Citigroup and Bank of America took similar approaches, also unveiling full-page ads in the newspapers to state that they were "taking the trust and faith that America has put in us and getting to work -- by lending and investing."
Citigroup's CEO Vikram Pandit and Bank of America's CEO Ken Lewis have waived their bonuses this year, but Stumpf has not. According to a Wells Fargo official, bonus decisions are up to the board of directors and those decisions are typically made in February.