Harvard's Heineman agrees that some employees did deserve bonuses, and firms need to spend money to draw in new business. But it was foolish to make such expenditures or receive deliveries of corporate jets paid for in years past, he says, without any explanation. He also believes many of the compensation issues legislators are railing about today are merely for show. Even the Obama camp's proposal that top-level pay be limited at $500,000 has a loophole: If it can be proven that the executive didn't take "excessive risk," he can receive more.

"They can't change contracts and deals from the past that are already made, and executives will easily get out from under these caps. They're what I call soft caps," says Heineman. He adds that the hearings and stipulations are "much more about process than substance. It's a lot more bark than bite."

Another hot topic on Wednesday was whether the banks are using TARP funds to help the economy, a question each banker answered with his own resounding yes.

All of the CEOS said their firms are lending more than they would have without the capital injections. Goldman doled out more than $13 billion since receiving funds, up from $4.5 billion in the previous quarter. Morgan Stanley has issued $10.6 billion in commercial loans and $650 million worth of consumer loans. Bank of New York Mellon ( BK) has already used all of its $3 billion in TARP funds to buy debt securities and foster interbank lending.

An analysis by Ladenburg Thalmann analyst Richard Bove found that the country's 12 biggest banks boosted lending in the fourth quarter by anywhere from 0.1% to 15.6%, when adjusting for loan-loss provisions and amortization. (The analysis excludes Bank of New York Mellon, whose results were skewed by Lehman Brothers' bankruptcy.)

The results are impressive when considering weakened demand for loans in the struggling economy, and the fact that many of those still seeking loans do not necessarily have stellar credit. If a bank lends irresponsibly, it will not help its financial state, its credit ratings, its solvency, or the broader economy. All of those factors can compete with the demands of regulators and legislators.

" T he fact is," says BofA's Lewis, "it is in all our interests that we lend as much as we responsibly can -- maximizing credit while minimizing future losses."

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