By LOUISE STORY
Published: February 11, 2009

WASHINGTON - James D'Agostino craned his neck to get a view of the Morgan Stanley chief executive John J. Mack in the hope that the Wall Street titan would be subjected to a firestorm of criticism in a reckoning before Congress.
Barney Frank, head of the financial services committee, said that the only way to get credit flowing again was to work with existing financial institutions.
After participating in a protest last weekend at Mr. Mack's home in Rye, N.Y., Mr. D'Agostino said he was eager to see lawmakers "go after him. And the others, too."
But inside the House chamber where Mr. Mack sat shoulder to shoulder with Vikram S. Pandit, Kenneth D. Lewis, and the heads of five other too-big-to-fail banks leaning on government support, lawmakers instead delivered the equivalent of a slow burn.
"There is in the country a great deal of anger about the financial institutions, including those represented here," Barney Frank, the chairman of the House Financial Services Committee said, gazing at the row of executives. But, Mr. Frank continued, it would be impractical to scrap the entire financial system and start anew. "We have no option if we are to get credit flowing in this country other than to work with the existing institutions," he said.
Bank of America. Citigroup. Goldman Sachs. Morgan Stanley. These are the among the banks that the public blames for creating the mess that ravaged financial markets and ripped into the economy.
They and others that have taken in billions of dollars in hard-earned taxpayer dollars are widely perceived not to be returning the favor to the nation. Some say they are curbing lending while continuing to dish out millions in executive pay. But they are also the giants of the banking world that lawmakers are counting on to haul the economy back onto its feet.
This "dilemma," as Mr. Frank described it, led some lawmakers to walk a finer line with the bankers than had been the case with the heads of the Big Three automakers, who have also sought billions in support to shore up their teetering industry.
So, at the first hearing to call banking chiefs to account for how they have spent a collective $165 billion in taxpayer money, the pitchforks were tabled - for the most part.
"You once lived behind a one-way mirror, unaccountable to the public at large," said Representative Paul E. Kanjorksi, a Democrat from Pennsylvania. "When you took taxpayer money you moved into a fishbowl."
The love-hate relationship with Wall Street dates back to the days when the financial district was settled by the Dutch. But the 1930s holds the greatest echoes to today. Back then, lawmakers were looking for answers behind the 1929 stock market crash, and for years they hauled bankers into contentious hearings.
The sessions led to a large-scale makeover of financial regulation and left the reputation of the industry scarred for decades.
The issues are different this time, but the accusations are similar. Wall Street has been accused of letting greed blind its leaders to responsibility - and some of the chiefs acknowledged as much.
Mr. Mack offered a full-throated mea culpa for the bank's role in fueling the crisis ("We are sorry for it," he said). Mr. Pandit, the head of Citigroup, pledged to cut his salary to $1 a year until the bank returned to profitability and took personal responsibility for the "mistake" of even thinking about buying a new $50 million private jet after getting government financing. "I get the new reality, and I will make sure Citi gets it as well," he declared.
Lloyd C. Blankfein, Goldman's chief executive, acknowledged "public anger at our industry." Mr. Lewis of Bank of America, who occasionally grew testy and red-faced at questions about lending, told lawmakers that his bank had "every incentive to lend."
But that was about where the contrition stopped.
For the most part, the bankers focused the lawmakers' attention on an armory of data and figures they hoped would show, contrary to public perception, that they had increased lending despite a worsening economy, and modified tens of thousands of mortgages for troubled homeowners since receiving injections of capital from the government last autumn.
Until recently, none of the banks had disclosed any information on their use of taxpayer money, and they were not required to do so when it was given to them. But in recent weeks, reports of multibillion-dollar bonus pools for bank employees, Super Bowl parties and decked-out corporate jets fueled public outrage about what some view as the government's largesse.
One lawmaker from Florida, Alan Grayson, said he had received 500 e-mail messages from residents of his district in anticipation of the hearing. One woman suggested that Wall Street bonuses should be used to build new schools. Another said the chiefs of Wall Street should go to jail.
The bankers said they could track the flow of government money through their companies and pledged that no taxpayer funds were being used for such luxuries.
But no one questioned the chiefs on the bonuses they paid to their rank and file. The New York comptroller has estimated that the industry paid employees about $18 billion in bonuses.
Instead, lawmakers mainly struck hard on the lending issue, describing situations in which their constituents could not get loans. Several asked the bankers why there seemed to be a disconnect between their lending figures and the hundreds of ordinary people who continue to line up for loans.
Jamie Dimon, the chief of JPMorgan Chase, said that much of the perceived pullback in credit was in fact traceable to money pulled out of the financial system by nonbank sources like hedge funds and money market funds, a claim that some in the money market industry contest.
Some lawmakers asked Citigroup and other banks with big credit card businesses why they had raised credit card rates in recent months, even as many of their customers were struggling to make ends meet in the tough economy. Mr. Pandit said Citigroup had not raised rates for two years, and only did so recently because its cost of financing had gone up.
Other lawmakers homed in on the foreclosure crisis. Representative David Scott, a Democrat from Georgia, convinced the panelists to agree that they would not foreclose on any owner-occupied homes for three weeks to give regulators time to roll out their new plans.
Much of the hearing was also focused on parsing how the financial situations of the banks vary. Some are still in desperate straits and others are turning a profit. But as lawmakers repeatedly stated, all of the chiefs and their banks will face greater scrutiny now that they are taxpayer-backed institutions.
The Rev. Jesse Jackson, who nabbed one of the few public seats in the hearing room, put it simply: "They've never had to be accountable before," he said.
Louann Prosack, a retiree from Jessup, Md., said she traveled to Washington to understand why Wall Street workers were being paid so much, even as their companies foundered.
"It's coming out of other people's pockets, the money," Ms. Prosack said. "And they say they can't live on their $150,000 salary. That's more than I ever made in a year, and I managed."