Leaders of the country's biggest banks defended themselves against accusations of greed, saying they have used all of the $165 billion worth of taxpayer funds granted to their institutions appropriately.
Still, the CEOs took pains to outline sharp cuts in bonuses, salary freezes, or forfeiture of compensation. Some also insisted that TARP funds were going for the intended purpose -- lending to other banks, businesses and consumers -- not for bonuses, dividends or acquisitions. And while JPMorgan bigwig Jamie Dimon didn't earn any cash, stock or option bonuses in 2008, he asserted that pay for other employees was "appropriate," based on performance of the individual, business unit and overall firm. Firms may have altered compensation structures, and corporate culture may have shifted from a mood of celebration to one of somber regret, but recent missteps have still come to light. In a letter to House Financial Services Committee Chairman Barney Frank on Tuesday regarding his investigation of Merrill Lynch's bonuses last year, New York Attorney General Andrew Cuomo characterized the awards as "a surprising fit of corporate irresponsibility." He also pointed out the "apparent complicity" of the firm's acquirer, Bank of America. Robert Goldberg, a former Wall Street investment banker and adjunct professor at Adelphi University, is not surprised by such displays of corporate greed, and says Congress will have a tough time imposing regulations without hampering firms' competitiveness. The government has a right to demand that firms limit compensation, perks and opulent events, and foster responsible lending for creditworthy borrowers, he says. But micromanaging every expense and pushing indiscriminate lending practices could just make matters worse. "This is the problem when you try to marry capitalism and socialism," says Goldberg. "You can't have it both ways, and we're trying to have it both ways. So either leave the banks alone and let the weak ones go under and deal with the consequences, or, if you're going to lend money to them, you need to put some restrictions in, but understand you're changing the nature of the beast."