By Ian Swanson - 01/13/10 03:18 PM EST
“There is no doubt that we as an entity made mistakes,” said John Mack, Morgan Stanley’s chairman.
Brian Moynihan, Bank of America’s new CEO, told the bipartisan Financial Crisis Inquiry Commission that it had become clear how business decisions made by his bank and other institutions hurt Main Street.
Goldman Sachs CEO Lloyd Blankfein and JP Morgan Chase CEO Jamie Dimon also appeared before the panel on Wednesday, and both took a conciliatory tone.
At the same time, Moynihan defended plans to offer higher compensation levels to bank employees than were provided last year as Bank of America and other institutions were bolstered by the government’s $700 billion bailout, the Troubled Asset Relief Program (TARP).
“We understand the anger,” said Moynihan, who noted that Bank of America had paid back $45 billion in loans from the federal government with interest. He said the vast majority of his bank’s employees played no role in the financial crisis and that the bank needed to pay valuable employees to keep them.
Mack took a slightly different line, noting that in 2009 he would not take a bonus for the third year.
But across Wall Street, banks are expected to provide high levels of compensation this year as they return to profitability. The plans have triggered anger in the U.S. and other countries, and many governments are plotting to recoup some of the bonuses with large taxes.
The Obama administration floated a fee this week that it said was intended to recoup the $120 billion or so it is estimated to lose on the TARP. Most of those losses are related to loans to automakers and insurer AIG, but the fee is expected to hit Wall Street banks.
Congress set up the Financial Crisis Inquiry Commission to examine the causes of the crisis. It includes panelists appointed by Democrats and Republicans, and is to report to President Barack Obama by Christmas.
Dimon highlighted several steps his bank had taken in response to the crisis. He said his institution provided $800 billion in capital to investor and corporate clients in 2009 to spark lending. JP Morgan Chase also worked to strengthen loans to small businesses, though he said this remains down from previous years.