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Bank CEOs Grilled on Capitol Hill

"At the board level it was never discussed ... It was never discussed and never thought about," said Mack, who is Morgan's chairman, and had been CEO until the start of this year.

JPMorgan Chase's (JPM) Jamie Dimon sung his familiar tune about the concept of "too big to fail." He said once again that regulators should let banks grow as large as they'd like and not break them up or limit their size. Instead, the government should protect the system and consumers from the ripple effects of large bank failures.

"We need a regulatory system that provides for even the biggest banks to be allowed to fail, but in a way that does not put taxpayers or the broader economy at risk," Dimon said.

He also noted, shrewdly, that the market had never priced large bank securities as though the companies couldn't fail - even when the government said explicitly last spring that it would not allow them to. Instead, stocks plunged to subterranean levels in March, and the cost of insuring against bank bond defaults skyrocketed.

Dimon also defended JPMorgan's pay practices, though his comment might have shown how out of touch high-paid bankers are with average Americans and their average wages.

He noted that JPMorgan has 235,000 employees at many different levels, from traders to tellers to technicians, and that it strives to "pay everyone fairly." He later added in a televised interview that outsiders should wait to judge the firm until its revised pay practices are unveiled in a couple of months.

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