have not encountered any evidence that it considered the potential for systemic risk when you approve the merger of bank of america merrill lynch which only weeks later is too big to fail. now, chairman bernanke, did you really believe ken lewis's was a bargaining chip as you stated in an e-mail december 2008? >> i thought initially it might be. >> did his use of a bargaining chip help him obtain a deal he put into received had he asked for assistance from the government? >> as i said in the later e-mail after listening to him and having more discussions i came to the conclusion he was uncertain about what to do. we provided advice which he ultimately took and we took steps to prevent the destabilization of his company in the financial system.

>> mr. chairman i ask for one more minute. >> i yield the chairman one additional minute. >> let me direct your attention to hand written note from your first meeting on december 17, 2008. you reported restated the downside 50 billion doesn't sound big for bank of america. the 50 billion refers to aig merrill assets. the record clearly shows you did believe there would be systemic consequences if bankamerica took steps to back out of its deal with merrill lynch perspective when in court. so did the threat of mac which you believe would have serious consequences influence your willingness to give bankamerica's financial assistance when you didn't believe it needed to have it? >> we demonstrated if we saw a major institution about to fail and risk the stability of the financial system we would try to take steps to stabilize it so we would have done that in any

event. >> i just want to conclude with this point. mr. bernanke has testified he was concerned about systemic collapse. we all understand that. he's concerned about think of america, we understand that and he said bankamerica would hardly be a good thing for investors, that was your testimony but if the fed do merrill lynch was feeling before the shareholders voted, why did you not inform the sec? >> if they knew about it, if you knew about before you approved the merger why did you approve the merger? >> the $14 billion of losses that mr. lewis reported i don't believe, i am sure we didn't know about in november. >> the gentleman's time is expired. and i yield five minutes --

>> thank you mr. chairman. mr. dvorkin is going to be primary closing i just want to wrap up a couple things. as you know kneal cash cory appeared before this committee multiple times and another question in the one thing we found is he didn't know at that time how much he paid for things. he didn't know what they were worth, he didn't know how they valued then but he was going to get back and never did. i understand he's left the government, but with that told me because it occurred in real time, it occurred exactly when these things were going on that on a day-to-day basis you didn't know what assets were worth including these toxic assets. is that roughly correct? >> it's difficult to know what they're worth. >> i appreciate that and your service during the best you could in that situation but one thing my last question is when it came to the mac you said a moment ago it only could be invoked if in fact you had forward-looking lesser revenues that it wasn't material to the

balance sheet if i can paraphrase you but to the income statement. is that what i heard you say? >> that's what i understood the memorandum to say. >> but if that is true isn't it true you have to restate your income prospectively or retrospectively then by definition to go forward as reduced in other words if you never made as much as you felt you made because the assets materially degraded because they were never going to produce what you said in the past that in fact it is a mac event so losses accumulating could well have been a viable reason to predict the enterprise value going forward was less, what he's a doubles correct based on normal accounting? >> i shouldn't trust and securities law. the device of my attorneys was that mac would be unlikely to succeed and it was a sycophant probably it could cause a lot of disruption in the financial markets. >> we appreciate your effort. i'm going to turn the rest of

mr. jordan and thank you for everything you did and tried to do to help the country. >> thank you. >> mr. bernanke, when did you know that he would not be able to go in and by the toxic assets, the mortgage-backed securities? if you to remember back the whole package was sold to the united states congress based on what you told the members of congress, what mr. paulson told and i ask this question, you are a sharp guy in my economics mr. paulson as a smart guy and you convinced that congress could go in and put a value on these assets and clean them off the books and everything would be wonderful and yet ten days after we passed this, i didn't vote but ten days after we passed you bring the nine biggest banks, don't tell them what the meeting is about and use completely changed strategy so when did you know that you would not t.a.r.p. you know before congress voted or after congress voted on it when you would not be able to go in and purchase these securities and do when you told us he were going

to do? >> we knew after. one of the problems was -- >> this was a month-long -- i remember the first conference call we listened and september you had a whole month and get within ten days probably within a few days this strategy -- you have a month leading up to this convincing the congress you could do this and yet within ten days complete change and yet you are bringing nine biggest washington of telling what it's about or tick-tocks spearman, completely changed strategy and you look as we went through some of the things the pattern of some might say deception where the banks come to washington of knowing what the meeting is about. mr. angola does the letter saying we are going to steer merrill lynch and what is going on on this merger and what's happening with merrill lynch i think is a reasonable question to say when did you notice and if you didn't know until after october 3rd what took so long to figure out? you had a month and two weeks of debate in the congress.

they send us home a few days and we came back and past -- >> i would be happy to answer that question. the drawback of the asset purchase plan as we discovered is that it took some time probably months to put an alteration. we thought that would be possible but unfortunately the banking situation deteriorated quickly and by columbus day we have a global banking crisis and the only way to stop the crisis from spreading and creating a huge problem was to inject capital to have guarantees and take the steps we took so this was the only way to do it as quickly as was needed given the way the situation changed so what changed was the financial situation between october 3rd and october 14th and we had no way to do the other approach because it would take too long. >> i'm going to completely change years. tell me if you can appreciate the money supply. i didn't get a chance to ask questions when you were in front of the budget committee and i

apologize. a lot of sharp people are very nervous about where we are with the amount of money in the system right now. talk to me briefly if you can about your concerns and how we are going to deal with what i think a lot of people believe it's been to be inflationary concerns. >> the money is not in the system in any real way. the money is electronic deposits from banks sitting in the federal reserve accounts of being used or loaned or circulating. the key issue is can we unwind this creation and low interest rates in time to head off inflation when the economy begins to recover? we have the tools we need and we believe we can do that and we will remove the stimulus in time and are committed to price stability and we will make sure that it happens. >> i thank the gentleman. i yield to the gentleman from ohio. >> unanimous consent, i asked to put into the record two sets of documents we received with subpoenas containing the e-mails

and excerpts of documents i referred to today. >> without objection so ordered. >> i yield to the gentleman from ohio, congress, captor. >> i thank the congress and for his endurance. i would like to insert into the record information and background on the relationship between bank of america, merrill lynch and black rock. >> without objection. >> i would like to ask churn and bernanke to submit from the fed how did bank of america and up owning 49% of black rock? in 2004 the fbi warned the public and the administration mortgage fraud was headed toward an epidemic level in our country. the fed did nothing. now the fed under your watch has hired black rock, a firm owned 49% by bank of america headed by a man who invented this up prime instrument when it first in boston and later at black rock

who treated billions of dollars of these securities to freddie mac and fannie mae over the last decade. i quote a sentence and we will place in the record from bloomberg news things when it first boston was largely the result of the creative work with mortgage-backed securities slicing and pulling mortgages and selling them as bonds and he took the concept to freddie mac where he sold the company's board on a billion dollar package. that was just the beginning. german bernanke what material can you provide the committee into the record that will explain how the fed will avoid conflicts of interest in self dealing by that firm and besio in the execution of contracts you have signed with black rock? >> we will provide you with the contracts explaining how it works. >> thank you. some lawyers have said rod or control fraud have characterized the mortgage securitization process. will you permit the fbi access to the mortgage instruments being managed by black rod as

the fed contracts are executed and fulfill? >> if there is a reason for the fbi to investigate and the fbi has a right to investigate we wouldn't stand a way of an appropriate investigation. >> um contracts has the fed assigned to handle freddie mac paper and fannie mae mortgage securities under your purview and how much will black rock be paid for those services? >> we have hired for asset managers to manage the mortgage-backed securities portfolio. black rock is one of them. i don't know how much we are paying them. >> will black rock be handling freddie mac paper? >> they will be managing gse guaranteed papers that would include freddie, fannie and johnny. >> i would urge your staff to go back and look at black rock and operations at first boston before he founded black rock in relation to what they transacted with freddie mac and when they

did that. >> the gentleman's time is expired. >> thank you. that we thank the chairman for his time and at the outset of this hearing, bayh said that it's time to shine some light on the events surrounding bank of america's acquisition of merrill lynch. at this point i would say we have got a peek, not much, but we don't have full sunshine yet. i would make three observations before we close. number one. there are significant inconsistencies between what we have been told today, what we were told to weeks ago by ken lewis, and what the fed's internal e-mails seem to say. it is still unclear whether bankamerica will forced by the federal government to go through with the merrill deal or whether the ken lewis's pool what might

have been the greatest shakedown in a long, long time. as a result of this hearing, we have learned the sec and the fdic played a role in this transaction as well. but as i indicated, we are going wherever the road leads us. so therefore let me say that we are going to talk to the sec and we are going to talk to the fdic. we are going to talk to former treasury, secretary hank paulson. he has agreed to appear before the committee in july and i look forward to that hearing. but we also need to hear from the fdic and sec so that we can better understand what happened during the dark days of last december so we will be hearing from them as well. so mr. chairman let me thank you again for your time and i might

have taken two minutes over by sorry. i apologize. thank you very much. therefore now the committee is adjourned. [inaudible conversations] [inaudible conversations]

>> host: david frost at c-span also with al jazeera in english

and his program frost over the world and of course made famous by the "frost/nixon" movie produced by ron howard. >> guest: great to be here. >> host: let me begin by asking the latest from the nixon tapes of 1973. we will hear an excerpt in a moment but any reaction what you've heard from richard nixon and his dealings in the 1970's? >> guest: in fact i don't think that there has been any major revelation and the last 30 years that has contradicted anything in the interviews but there was this interesting stuff coming out and i missed some of it on the plane over here yesterday it's amazing that it is still coming out and it's an indication which i guess the movie was even more indication impersonation and richard nixon because he was such an enigma, difficult to read, so difficult to understand. he's the most fascinating president we have had really for all those reasons.

>> host: that we share with you and the audience when of the excerpts of the conversation from january of 1973. >> we are not to have any advanced information. the message is not to be from your, is that clear? my name is not to be mentioned. there is no appreciation. there is to be no response to anything he says singing glad this is over. on what no responses to anybody in that sort, either individually or government of the, is that absolutely clear? if it isn't, i will fire the whole state department. >> very clear. >> okay. good luck. >> guest: what were they talking about? >> host: that was a conversation with henry kissinger, national security adviser on the situation in hanoi and my question is the relationship between mr. kissinger. >> i noticed this during the next and interviews and in two years later when i did an in

depth thing with henry kissinger on his memoir and that was that richard nixon and henry kissinger both wanted to credit for the things that went right in foreign policy and they didn't want debit for the things that went wrong. they wanted to grab all the credit as far as they could from themselves and they couldn't talk because the judgment of history nixon and kissinger would have an umbilical cord, so what happened was nixon making his bid for the maximum credit would say in the interviews things like henry, henry kissinger is just a brilliant mind, brilliant mind. like most intellectuals of course unreliable sometimes and doesn't follow through with things so he would be saying he's very intellectual and in order to say that it needed a father figure, had a figure when

he was weak or changed his mind. meanwhile henry's line on that was to say president nixon was one of the greatest presidents we have ever had above all he was a great delegator and he delegated all of the important things to me. so they both had this sort of trying to claim the credit they couldn't knock the opponent directly because they were jointly judged by history. >> host: we will continue calls and comments in a moment but from the interviews you conducted in 77 also from the movie, "frost/nixon," here's part of the exchange that continues to get a lot of interest and that is getting something beyond an admission from nixon on watergate. >> they think there are three things since you asked me i would like to hear you say, i think the american people would like to hear you say.

one is there was probably more than mistakes. there was wrongdoing. secondly, i did and i am singing this without question, i did abuse the power i had as president. and third, i put the american people through two years of meatless agony and i apologize. and i know how difficult it is for anyone and most of all, you, but i think people need to hear it and i think unless you're going to be haunted for the rest of your life. >> david frost? >> guest: that was one of the most dramatic moments of our life because i had said to him once you go further than mistakes it is not enough for people to understand and i was expecting him obviously to

decline. he wasn't -- any time he would ever be again. and so i knew when he said well what would you express that was when i knew i had to phrase because he was vulnerable as well to get three points clearly on the table as we saw and before i did that in order to indicate to him this wasn't a sort of prepared thing, this was absolutely a moment i chucked the clipboard on the floor to indicate this is especially between us and the amazing thing was the next 20 minutes he responded to all of those questions in the up by what do i think about the american people, i let down the whole system, the hopes and dreams of all those young people who think politics are corrupt, i have to live with this for the rest of my life, etc.. so, the three points he answered them all over the next 20

minutes. >> host: did you ever talk to him after the interviews were concluded? >> there was one in the restaurant, but after the interviews were done we edited and to had erred and two were about to air and i went to take my leave and think and as we were leaving and that was an extraordinary experience you never hear that richard nixon was carefree. that was never the word but it that day for 20 minutes all the screens he had, screens to block off the rest of the world, a block of intimacy with people were up for 20 minutes and that was an extraordinary experience and he said the man, david. david, he hadn't said david fer of a month and then he said to my girlfriend,,, i will show you are not the house, that is where brezhnev's left, you know, he was a great soldier, the russian army and for 20 minutes one did see a different nixon and just

at the end the prospect for all came around him again and just for 20 minutes of carefree which was extraordinary, but other than that no further. >> host: debbie is on the phone from west palm beach florida. >> caller: good morning and thank you for c-span. mr. frost, obviously you are well known for your interview with nixon and that was fantastic and i want to thank you for that but my questions today are on two points. the first being what are your thoughts on the retroactive immunity for the wiretapping under the bush administration and the cell phone company having immunity and the second point is your famous interview with benazir bhutto for those listening she was the former pakistani prime minister, and she was looking to return to pakistan and you interviewed her

in november 07 and in that interview now oliver youtube she had mentioned she knew osama bin laden had been killed and in retrospect or hindsight do you regret not picking that point up and running with that? that could have been quite a coup. >> host: thank you, debbie. >> guest: thank you very much, debbie. my view at that moment a was just a slip of the town because in the context what she was saying that point it really made no sense at all and so i took that to be needy have been right or wrong but i took that to be a slip of the town and she didn't mean osama bin laden but she meant somebody else who's name i knew that day and today it's slightly faded, but so that was why i didn't, but you are quite right i did that interview in november with benazir bhutto after the attempted assassination on october 18th and she had announced on the program she was going to run. this was on al jazeera english,

frost over the world and then we did an interview tragically and sadly on december 27, which was the last interview she ever gave when she was just planning to return. december 27 by should say is the day of the assassination, the interview was early december but it was the last interview she ever did and she was talking in dubai where her family were and so on and talking about how her family wanted to go back to fight for democracy and freedom in pakistan. the children were urging her and wanted her to go on even though they knew the risks she was taking so at times it was controversy all allegations and she was a very brave idealistic woman and she knew the risks she was taking when she went back and of course unfortunately that came to pass on december 27, 2007. >> host: where in england are you from? >> guest: all over because my father was a methodist minister.

he used posters outside the church to get people into the church on sunday so i remember one september he put up a sign that said come to church next sunday and avoid the christmas rush. we lived about 50 miles from london, seóul northeast, south always about 50 miles, so my accent always referred to -- my accent is 50 miles out of london in all directions. that is my accent. >> host: waukee daniel inouye with sir david frost. good morning. >> caller: i heard on another tv station that nixon said he would agree to abortion if the child was conceived by an interracial couple. did you know anything about that? >> host: is that also from the latest recordings released by the national archives? >> guest: i was staggered by that. there were two nixon's of course, there was a good nixon

and bad nixon and that nixon in the end went out but the thing that surprised me of course he did use sort of controversy words for italians and other people in the tapes and off the record things we had. the only thing that surprises me about that which obviously i'm sure it's true and that was a sign of nixon, but in fact his record of the enough on race was better than several presidents after him, which is rarely realized that if you go back on the progress he made but i think he had a fairly primitive view of race. i is sent -- the main thing about nixon that brought him down was his paranoia, nothing to do with race that his panel yet. >> host: this is from february, 1973, a conversation with then chairman of the republican party, george herbert walker bush.

>> for fault occurred to me when i spoke to the south carolina legislature i noticed a couple of very attractive women, both of them republicans in the legislature, one good looking and so forth, he came to see me the other day and i said [inaudible] it will be to get some of these, i don't want to go through but i want you to be sure to emphasize to the people let's look for some because -- i think a woman might win one day. >> i will certainly keep in mind. >> if you talk to hillary about it they will tell you how they found these women but these were

to in the state legislature, good looking and white and they told me a democrat who is the speaker said they are to of the best members of the house. >> that's terrific. disco terrific. >> host: that's george herbert walker bush. >> guest: what was the date? >> host: february 1973. >> guest: is there any plan when they released these things and so on? >> host: there are another 1400 hours they are set to release over the next couple of years. >> guest: it is an abiding fascination because he reached such an event not, went from one extreme to another as we heard there would always be fascination on till another in edna comes along but other presidents straightforward compared to the complexity of nixon and nixon is this man who never had any small talk. he was a great politician, never had any small talk but always