WASHINGTON (AP) — Some of the nation's largest banks sharing in the $700 billion government bailout of the financial industry tried to assure lawmakers Thursday they are using the money to make more loans and help financially strapped homeowners avoid foreclosure.

Barry L. Zubrow, chief risk officer with JP Morgan Chase & Co., told the Senate Banking Committee that a portion of the $25 billion capital infusion it received from the Treasury Department was being deployed to "expand the flow of credit" and to assist with rewriting residential mortgages for up to 400,000 families.

Zubrow and executives with Goldman Sachs Group Inc., Bank of America Corp. and Wells Fargo & Co. told the committee that none of the $75 billion they have received collectively from the government is being used to pay salaries or bonuses.

"The committee has asked whether (bailout) funds would be spent on executive compensation," said Jon Campbell, regional banking president for Wells Fargo & Co. in his testimony. "The answer is no. Wells Fargo doesn't need the government investment to pay for bonuses or compensation."

Some of the executives said bonuses this year will be lower because of the economic downturn.

"Employee compensation will be dramatically affected by changes in the overall economic and financial environment and our performance for the full year, but it certainly will not increase as a result of receiving TARP (Troubled Asset Relief Program) funds," said Gregory Palm, general counsel for Goldman Sachs.

Bank of America's board has decided that this year's bonus compensation pool will be reduced by more than 50 percent, Anne Finucane, a marketing and corporate affairs executive, told the committee.

Finucane said Bank of America originated more than $50 billion in mortgage loans in the third quarter of 2008 but acknowledged that "we are lending less than we were a year ago."

Campbell said Wells Fargo's commercial real estate loans are 37 percent above a year ago.

Despite the reassuring words, lawmakers pressed hard for commitments to more lending.

"Let me say as clearly as I can," said committee chairman Sen. Christopher Dodd, D-Conn. "Hoarding capital and acquiring healthy banks are not — I repeat are not — reasons why Congress authorized $700 billion in emergency funding."

Sen. Charles Schumer, D-N.Y., said he and other lawmakers are looking at requiring banks to make more loans as a condition for taking part in the $350 billion second half of the bailout. Congress can block release of the second $350 billion. It also can rewrite the law to put new conditions on its use.

"Any new capital injections must come with tougher requirements," he said.

Treasury already has lent or committed $290 billion of the first half. Democrats are working on a bill they hope to pass next week that would devote another $25 billion to the beleaguered auto industry, with the specific intent of helping General Motors Corp. avoid bankruptcy.

The banking executives also were questioned about using bailout money to acquire other banks.

Sen. Sherrod Brown, D-Ohio, noted that Cleveland-based National City Bank was denied Treasury funds, only to be taken over by PNC Financial Services Group Inc. of Pittsburgh on the same day that PNC was approved for $7.7 billion in bailout money.

"The taxpayer funds that would have been allocated to National City were instead allotted to PNC," Brown said.

The executives said their banks have no new acquisitions planned beyond the spate of mergers that occurred before Congress passed the bailout bill.

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