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Bank CEOs defend their use of taxpayer money

They tried to reassure Congress and regain the trust of an angry public on Wednesday.

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CEOs of large financial institutions testified before the House Financial Services Committee Feb. 11. They are (from left) Goldman Sachs' Lloyd Blankfein, JPMorgan Chase's Jamie Dimon, Bank of America's Ken Lewis, State Street's Ronald Logue, and Morgan Stanley's John Mack.

Larry Downing/Reuters

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America’s top bank executives faced an intense grilling on Capitol Hill Wednesday, a sign that the future of their industry has become unusually tethered to Washington politics.

The banks are in financial trouble. Now that they are on the public dole, they are answerable to a frustrated Congress, and their survival could depend on further support.

In many ways, the capital of American finance is now Washington, not Wall Street.

For the economy’s sake, the federal government must make sure that the banking system survives as it confronts a historic wave of credit losses. It’s the government that has the deep pockets needed to conduct that rescue.

Playing defense

All this put bankers on the defensive Wednesday, as lawmakers asked what they’re doing with that government help.

The shift of financial power to Washington also puts pressure on policymakers themselves. It will take Congress, the Obama administration, and private-sector players to dig out of the credit crisis.

In that light, the CEO hearing was partly a dialogue aimed at reconciliation and setting the stage for future cooperation.

“We have to regain the public’s trust and do everything we can to help mend our financial system to restore stability and vitality,” Lloyd Blankfein, CEO of Goldman Sachs, told the House Financial Services Committee.

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