Senior U.S. regulators, including outspoken Federal Deposit Insurance Corp Chairman Sheila Bair, will tell their side of the story on Thursday to a commission examining the origins of the 2008 financial crisis.

The 10-member panel, in its first public hearing, heard a tale of misjudgments and regret from top Wall Street bankers on Wednesday, but did not get an outright apology or any new explanations for the debacle that shook world markets.

Four of Wall Street's top bankers acknowledged taking on too much risk and having choked on their own financial cooking in the subprime mortgage market, but they defended their pay packages and the huge size of their businesses.

The Financial Crisis Inquiry Commission, created by Congress and charged with issuing a report by December 15, will get a different view from Bair, Securities and Exchange Commission Chairman Mary Schapiro and U.S. Attorney General Eric Holder.

Holder will tell the panel that the Justice Department's goal is not just to hold accountable those whose conduct may have contributed to the last meltdown, but to deter such future conduct as well, according to excerpts provided to Reuters.

The Federal Bureau of Investigation is investigating more than 2,800 mortgage fraud cases.

Both Bair and Schapiro are the leaders of agencies that were deeply involved in the run-up to the crisis that peaked in late 2008 after the collapse of former investment banking giant Lehman Brothers.

Bair made waves this week with an FDIC proposal to tie banker pay to deposit insurance fees. The idea, opposed by other bank regulators, calls for banks with risky compensation schemes to pay higher levels of deposit insurance premiums.

It reflects Bair's readiness to experiment with using the FDIC's policy levers to influence bank behavior in ways that transcend the agency's main job of insuring deposits.

Bair was an early critic of subprime mortgage market excesses that helped inflate a historic housing price bubble well into 2007. When it broke, the aftershocks paralyzed capital markets and panicked the Bush administration.

Multibillion-dollar taxpayer bailouts and the deepest recession since the 1930s followed, saddling President Barack Obama with profound economic challenges and a political backlash that is still far from over.

The commission, chaired by former California State Treasurer Phil Angelides, is beginning its work amid rising public fury over the crisis, its aftermath and what to do to prevent something like it from happening again.

We have a lot of digging to do, and I believe our work will illuminate what happened, Angelides said after Wednesday's session. It will be the last and best chance for the American people to examine these issues.

Schapiro, whose agency has been widely criticized for failing to detect problems such as the massive Bernard Madoff investment scam, said on Wednesday that the SEC was giving its enforcement staff more tools to root out financial fraud.

Also slated to testify on Thursday are state and local law enforcement officials from Illinois, Colorado, Texas and Florida.

The Angelides panel is modeled after the Pecora Commission, which probed the 1929 Wall Street crash. Its findings helped lead to the creation of the SEC and other reforms. Whether the new commission will be as substantive remains to be seen.

Its work coincides with efforts in Congress to overhaul financial regulation, a process now more than a year old and in which Bair has emerged as a key innovator.

The House of Representatives last month approved a sweeping reform bill over the objections of Republicans and lobbyists for banks, including the ones whose executives testified to the commission on Wednesday.

The Senate Banking Committee is in sensitive negotiations over its own bill. Analysts expect the Senate will act on a final measure in the coming months.

By summer, a compromise House-Senate bill could reach President Barack Obama, who has been pushing Congress for months to complete its work.

(Reporting by Kevin Drawbaugh and Karey Wutkowski; Editing by Tim Dobbyn and Lisa Von Ahn)