WASHINGTON -(Dow Jones)- U.S. lawmakers put banks on the defensive Thursday, chastising them for not using billions of dollars from the Treasury Department to lend to consumers and businesses and threatening to legislate if improvements aren't made.

"If you believe that you would be no worse off than you are today, then I invite you to return to the Treasury the billions of dollars in taxpayer investments, guarantees and discounts that you currently receive," Senate Banking Chairman Christopher Dodd, D-Conn., said at a hearing.

Sen. Sherrod Brown, D-Ohio, said lawmakers may need to rethink the terms of the $700 billion financial rescue plan passed by Congress and signed by President George W. Bush in October. Restrictions on executive compensation and real inducements to prevent foreclosures are necessary to make the current program work, he said.

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