Loans Everywhere on Capitol Hill!

The first half of the highly anticipated bank chief skewering by legislators is over, and the show so far is most notable for its calm and civility. No fireworks, no visible protesters, only a few loud rants, no pleading the Fifth and, not surprisingly, no apologies.

It takes just one sentence to sum up the first part of this hearing: Bank chiefs say they are lending, and legislators say their constituents can't get loans.

Chief executives from Goldman Sachs, Citigroup, Bank of America, Morgan Stanley, Wells Fargo, Bank of New York Mellon, and State Street are sitting before the House Financial Services Committee today to answer questions about how they are spending the TARP money they've received and how they plan to get out of this current mess.

Executive compensation, being the topic du jour after President Obama's proposal to cap pay for employees of the banks at $500,000, came up several times. Citigroup's Vikram Pandit said he will take a symbolic $1 salary until the bank returns to profitability. (Let's hope he's got lots of savings or a high-earning spouse.) Morgan Stanley's John Mack insists he'd still be in this job even if he made no bonus during the very best years (easier said than done). He hasn't taken a bonus since 2006.

Goldman Sachs' Lloyd Blankfein wants to pay back the TARP money so he can keep rewarding his people with huge bonuses. Rep. Barney Frank, chairman of the committee, has invited all banks to do so if they wish.

Bank of America's Ken Lewis distanced himself from the allegations of huge bonuses paid out to Merrill Lynch employees last year, blaming it on Merrill.

The bankers all touted the good deeds they've done to help out the millions of struggling Americans they call customers. They largely agree that the government should be entitled to question their use of the money, and they all insisted repeatedly that the loan market looks hunky-dory from their end. None of the frustrated legislators could understand why their people can't get loans, and there were many requests for written follow-up answers from the bankers.

The final question before the break came from Rep. Gary Ackerman, who made a name for himself by ripping on representatives from the SEC during a recent hearing on the Bernie Madoff scandal. Outraged that the banks hadn't increased lending with TARP money (despite the fact that some say they have), Ackerman wanted to know which of chief executives have bought more shares of their banks since receiving the money. Three said they had bought new shares, the rest didn't.

It wasn't clear what Ackerman's point was. I want you to get paid a lot less but invest more of your own money in your banks?

The bank chiefs all clearly can't wait for this day to end, but they've still got hours of questioning ahead of them. Stay tuned.

by Megan Barnett