Barons of Wall Street testify to crisis panel

WASHINGTON (Reuters) - The chiefs of Wall Street's biggest firms defended the lucrative pay practices and huge size of their businesses, but conceded regulatory changes are needed at the first hearing of a congressional commission investigating the 2008 global financial crisis.

With U.S. unemployment near a 26-year-high after the worst recession in decades, public fury is growing over the crisis, taxpayer bailouts and huge bonuses for bankers.

Raising their right hands Wednesday to be sworn in before reading prepared statements, Goldman Sachs Chief Executive Lloyd Blankfein, JPMorgan Chase CEO Jamie Dimon and other executives braced for sharp questions from the panel.

"People are angry. They have a right to be," Angelides said, citing Wall Street's bonuses and profits.

Blankfein said his firm reaped rewards from government support during the financial meltdown.

"We believe that the government action was critical and we benefited from it," he said. "The system clearly needs to be structured so that private capital, rather than government capital, is used to stabilize troubled firms promptly before a crisis metastasizes."

Dimon told the commission that there may be legitimate concerns that bonuses contributed to excessive risk taking, but he defended JPMorgan's pay practices, saying "they have been and remain appropriate."

The commission's hearing could fuel popular resentment of the banks and at the government's role in rescuing a powerful industry seen by many Americans as greedy and irresponsible.

The basic causes of the crisis are well known. From a real estate bubble and subprime mortgages, to runaway securitization and exotic debt instruments, the financial system failed spectacularly in the final months of the Bush administration.

Continue reading - Barons of Wall Street testify to crisis panel