The titans of the U.S. banking industry faced tough questioning from the public representatives Wednesday, as the chief executives of the eight largest banking firms were asked how they were spending taxpayers' dollars to lend in this difficult economic environment.

The hearings, held by the House Financial Services Committee, were to ask the executives, which received billions in direct government aid from the $700 billion TARP program, were lending during this economic crisis. 

The eight executives, JPMorgan Chase’s (JPM) Jamie Dimon, Goldman Sachs’ (GS) Lloyd Blankfein, Citigroup’s (C) Vikram Pandit, Morgan Stanley’s (MS) John Mack, among others, all testified that they are actively trying to lend out money.

While the banking chiefs repeatedly said they are trying to lend in this recessionary economy, the problems in the broader credit markets have impaired many banks' abilities to lend--even with government funds. 

“In short, banks like JPMorgan Chase are continuing to lend in this environment,” JPMorgan’s Dimon said in his testimony. “The significant tightening of credit that we have all seen over the last several months must be understood in the wider context of the overall credit markets.”

One problem addressed by several executives was the issue of the pricing of some of these more toxic assets that are hindering banks' balance sheets. Citigroup's Pandit said that direct capital injections were the right move because it was helping grease the halted credit markets and the bank is trying to lend as much as it can.

"We will continue our lending activities throughout 2009, in a responsible and disciplined manner," Pandit said.

While all the major banks said they were actively trying to use the government’s investments to lend, Representatives seemed less than enthusiastic about the recent performance of the banks.

“I urge you to be ungrudgingly cooperative with us,” said Rep. Barney Frank, D-Mass., the Chairman of the House Financial Services Committee. “There has to be a sense you understand the American people’s anger and frustration and that you’re willing to make some sacrifices.”

"You come to us saying that you've learned your lesson," said Rep. Michael Capuano, D-Mass. "But the problem I have honestly, none of us, America doesn't trust you."

Not all representatives saw the TARP money as money for lending. Rep. Patrick McHenry, R-N.C., said he believed the money was used for "safety and soundness" and not for directly lending to the American public.

Also under criticism is the billions in bonuses many bankers and managers received last year as well as the use of private aircraft by these companies long after they received public funds. All eight chief executives arrived in Washington via commercial flights or by train. 

Several CEOs, including Morgan Stanley's Mack, said their firms have not paid bonuses with the TARP funds they have received. 

"I know the American people are outraged about some compensation practices on Wall Street," Mack said. Mack went on to say that his management team works in this industry not for the massive bonuses, but because he enjoys the work. "If you paid me no bonus for rest of my tenure, I'd still be here."

Citigroup's Pandit, whose firm has been under criticism for purchasing a $50 million jet during a period when the company was using taxpayer money, said Citi "did not adjust well to this new world."

"I now get this new reality and I will make sure Citi gets it as well," Pandit said.