Bankers vow to reform

WASHINGTON (AP) — Facing a disgusted public and Congress, bank CEOs agreed with demands for greater accountability Wednesday in the first testimony on how they’re 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.

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

The eight top bankers appearing before the panel were generally 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, which was conceived last year under President Bush and now is in the hands of President Barack Obama.

“I urge you going forward to be ungrudgingly cooperative,” Rep. Barney Frank, chairman of the panel, told the CEOs 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.”

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

Over more than four hours, the CEOs were met with deep skepticism from lawmakers who aggressively quizzed them on how they have used more than $160 billion 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.

“You created the mess we’re in,” scolded Michael Capuano, D-Mass. “And now you’re saying ‘Sorry. Trust us.’ ... America doesn’t trust you anymore.”

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.

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.

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 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.

Citigroup CEO Vikram Pandit said his salary would be set at $1 with no bonus until the company makes money again.