Wall Street CEOs humble before lawmakers

WASHINGTON (Reuters) - Wall Street bank executives submitted to a public scolding in the Congress on Wednesday over how they used $176 billion in bailout money without making a noticeable impact on the anemic economy.

But there were only flashes of anger in the first hours of a congressional hearing on the troubled bailout plan as the CEO's struck a contrite tone.

"I feel more like corporal of the universe, not captain of the universe at this moment," Ken Lewis, CEO of Bank of America, as he came under intense questioning from California Democratic Rep. Maxine Waters.

Lawmakers' opening statements reflected public outrage over the economic crisis but the questioning stayed mostly civil in contrast to a grilling last week by many of the same lawmakers of securities regulators over Bernard Madoff's alleged fraud.

Questions abound about what the banks have done with the bailout money, given an ongoing credit crisis that has added to the country's deteriorating economy.

Wednesday's hearing came a day after Treasury Secretary Timothy Geithner failed to inspire market confidence over the government's financial bailout plans and sent stocks tumbling.

Democratic Rep. Barney Frank, chairman of the House of Representatives Financial Services Committee, opened the proceedings by telling the CEOs they needed to understand Americans' anger and frustration and cooperate with lawmakers willingly, "not grudgingly, not doing the minimum."

"I want to know where the money has gone," said Democratic Rep. Paul Kanjorski of Pennsylvania. He told the executives that if their banks did not use the money, "Please find a way to return that money before you leave town."

South Carolina Republican Rep. Gresham Barrett said: "My folks simply have not seen the evidence that the money you were given is working or making their lives better."

BONUS IRE

Bankers assured lawmakers the billions of dollars in taxpayer money had been used to boost lending, not to pay executives, lobbyists or shareholder dividends.

"I didn't receive a year-end bonus," said John Mack of Morgan Stanley.

Vikram Pandit of Citigroup Inc said: "I've told my board of directors that my salary should be $1 per year with no bonus until we return to profitability."

"We will hold ourselves accountable and that starts with me," he said.

All the talk about bonuses triggered Frank's ire, prompting him to demand why they needed bonuses at all when a good salary would do. New York state officials say financial companies doled out $18.4 billion in bonuses last year.

"At your level, why do you need bonuses?" Frank demanded. "This notion that you need some special incentive to do the right thing troubles people."

"It's complicated," Mack replied, citing the risks involved, the global nature of the banking business and the size of the companies. "If you gave me no bonus for the best year, I'd still be here."

The chief executives argued that their institutions used taxpayer funds responsibly.

They said they have increased lending since the bailout began, and that they are embracing some reforms being proposed for the badly crippled U.S. financial system.

Outside the House office building where the hearing took place, about a dozen protesters taunted Bank of America's Lewis. "Hey, Ken Lewis feel our pain," they chanted.

TAMING RISK

Jamie Dimon, head of JPMorgan Chase & Co, said he is endorsing a proposal to create a systemic risk regulator to help oversee U.S. markets.

"This would allow us to begin to address some of the underlying weaknesses in our system and fill the gaps in regulation that contributed to the current situation," he said. "We stand ready to work with you on the range of issues confronting the financial services sector and our economy."

The United States is struggling with its worst financial crisis in generations, brought on in large part by the bursting of a massive debt bubble fueled by financial institutions.

"It is abundantly clear that we are here amidst broad public anger at our industry," said Lloyd Blankfein, CEO of Goldman Sachs Group Inc.

Others testifying included Robert Kelly of Bank of New York Mellon Corp, Ronald Logue of State Street Corp and John Stumpf of Wells Fargo & Co.

"The American people are right to expect that we use (bailout) funds responsibly, quickly and transparently," Pandit said.

(Additional reporting by John Poirier, Karey Wutkowski, Rachelle Younglai and Julie Vorman; Editing by Tim Dobbyn)