inside the corporation, isn't one of the jobs of the ceo to look at performance and pay and set executive compensation as opposed to some independent board? >> yes. .. i would offer with respect to the idea reducing debt, linking

debt to pay i think three things are worth thinking about. first executive's ability to be rewarded on the upside would be limited the more you include debt in the mix. i also think he makes an assumption at least in the paper if he is absolutely correct the fact that there is a moral hazard of government bailouts means the debt tends to not be affected much when a bank's health is affected. i think that is an absolutely safe assumption. it's part of the reason debt holders don't police executives as much as they should put it also means if you to land debt to executives pay it means if the debt doesn't good on the pay doesn't go down so do limit the upside and also limit the downside. as with respect that's sort of the amplitude to get is very flat rather than upward and downward incentives i think as you add pay into the mix. >> okay. >> the gentleman from texas is

recognized. >> thank, mr. chairman. thank, members of the panel. i -- if i interrupt please forgive me. i don't mean to be rude, crude, and unrefined but i trying to make a point. let me start by asking about the executives in the u.k.. do they make more than executives in the united states? >> nope. >> executives in germany, today in the main make more than executives in the united states? >> nope. >> and executives and france, today in the name mike morgan executives in the united states? >> no. >> the question becomes to those who contend if we do anything to encroach upon the current system people will flee to other places and make inordinate amounts of money and other places leaving us with a brain drain. the question becomes where do they go?

>> they go to private equity and hedge funds. >> in the united states. >> within the united states. >> hold on just a minute. >> the percentage of private equity and hedge funds cannot accommodate the number of executives we are talking about. so, some may go but the truth be told the argument is that we are going to lose them to other countries. that's the argument that's being made and there is no other country that they are going to go to and fair as well as they are fearing that the united states of america. >> except that could change -- >> excuse me, it could change if the u.k. would change its law. it could, it could change if germany would change its law, if france would change its laws. that doesn't seem to be the case because they're leaning toward executive compensation. by the way i am not a proponent

of trying to stifle the free market. i want to see people make as much as they can, but i don't want to see people at aig driving company into the ground and then walk away with huge bonuses. there's something wrong with this and the american people know there's something wrong with it and they are going to chastise us if we don't do something about it. they really are. i appreciate the notion there are other places for people to go but they won't find what they find in the united states of america. and those who want the autoworkers and ford, chrysler and gm salaries comparable to nissan and toyota, they don't look at what the salaries of those ceos at nissan and 20 ruda are making. their salaries are not in line with the salaries of the american auto industry

executives in this country. they are not. and nobody that i have heard -- mabey av weeks i haven't heard -- i confess nobody has indicated in any way that we need to make sure that the salaries of the auto executives in this country are in line with although executives and other countries. it's just not being made. now at some point we have just got to fess up and say we've got business to take care of and take care of the business that we must take care of. if we don't do this, this is our our work, this is our moment, our time to do what's right. not to try to manage this. not to try to make sure we do this thing right but do the right thing. that's what we've got to try to do here. so i am not for taking control of the company. i don't want to see

stockholders, micromanage a company. i'm not interested in that. but i contend the chairman is right when he talks about how we have promoted excessive risk without consequences for the failure, nasiriyah personal consequences for the failure so we have got people trying to do all they can to make as much as they can understanding if i don't i will just take my bonus and golden parachute and fly out. that kind of behavior is what we are talking about as i see it, and i think -- i think that there is room for us to do something to try aig bayh but like to see it done in a bipartisan way by i can work with folks on the other side to come with a sensible center on this so that we can have bipartisan legislation, but i still contend that those workers who took a cut at gm and to our taking cuts, they didn't get bonuses cut.

they got bread and butter cut and there's a difference and there's not a big to do about what's happening to them. thank, mr. chairman. i yield back the balance of my time after having the opportunity to speak for those who are not here to speak for themselves. thank. >> let the chair say amen. [laughter] >> we want thank the panel for the extraordinary time that you've given. and on less something -- unless additional members come in, the gentleman from florida will be the last questioner, or mr. sherman if he shall return. the gentleman from florida is recognized. >> thank, mr. chairman. we are trying to make policy on the basis of recent memory. for the past few months we've seen banks get abroad themselves to the brink throughout the whole u.s. economy to the brink

and what people see what is frustrating to them is they see nobody is being held accountable for that. no one has been punished for that. maybe the gravy train has slowed down for them but it is still growing and i think people find that frustrating and rightfully so. what i'm worried about is that proposals like this don't go far enough because what they do is say you don't get paid extra if you destroy your company. you don't get paid extra if you hand the taxpayers a 100 billion-dollar bills and what i want to hear is your best ideas how we should hold accountable the people who've already screwed up, the people who've already caused the structure of their own banks and cost taxpayers to have to give out billions upon billions of dollars and i want to know what we should do in the future about people like that. let's start with ms. minow. >> well, there is the limitation on facto law. it isn't much can do about what's already happened but i

would certainly strongly urge congress to make sure anyone involved can never serve on public company or officer of a public company ever again. >> let's be specific about this when you say everybody involved who would you include in that? >> i would include the executives and the boards of directors of all of the main t.a.r.p. companies participating the program. >> city would apply the same punishment although the sec frequently applies to people engaged in illegal trading? >> yes, i would. >> what about you, mr. turner, your best ideas? >> i totally agree with you about the frustration and that there needs to be accountability. i think the sec in their announcement just in the last week about countrywide going after them is exactly what we are looking for. i think there have also been cases filed with respect to fraudulent reporting by companies such as citicorp and i

think that doj and sec needs to work those through the courts in a diligent way and i would say some of the same question applies to fannie and freddie as well with some of their practices, and just as said those after due process people are found not to do the job to process is important in this country and we don't want to run into the justice but these people ought to be barred and the sec has the authority to bar those people from being an officer and director again and they haven't had a good track record of doing that in the past and they need to do it and if they don't than you guys ought to call sec appear and ask them why. >> you're talking about cases of fraud. i'm talking about something different. i'm talking of cases of gross mismanagement that literally to the destruction of a multibillion-dollar institution how should we treat people like that, not people who file false

statements with the government with the sec but people who destroy their companies and right now main control of the company's only at the benefit through the largess of the taxpayers, but should we do with those people? >> when you pass the servings oxley act gave the sec to the authority to find when they look at directors or officers and find they are substantially unfit to fulfill those roles they can borrow from ever serving in those roles and a public company. and i think in some of the instances of these companies we are going to find some of these directors are in fact substantially unfit to fulfill that role and haven't demonstrated the fitness ability and the sec should forever bar them from being an officer or director of another public company. >> mr. bebchuk, what you think we should do in a situation where a group of people have run the bank into ruin and handed the taxpayers a 100 billion-dollar bill. why should we do with those people?

>> i & the frustration but think that i am concerned about trying to change the rules of the games of the extent if you have someone who acted completely according to law i would try -- >> i'm asking what should the lobby. that is what we do around here. >> but the law that we have on the books after this point was the loans that didn't make it criminal as well as limited private options. when some of the >> right, mr. talabanization will to destroy the company and hand them a 100-dollar bill. we want to change that. what should we do? >> about people going forward. >> if you wish. >> going forward you can reconsider the legal rules right now that completely insulate someone from a legal liability

when they engage in growth negligence. so we could reconsider and open them to legal liability circumstances. >> my time is up. thank, mr. chairman. if any other members want to comment please feel free and white to me. >> the chair recognizes the gentleman from california. >> or better yet you could furnish your answer for the record and we could all know. >> thank. i would point out that criminal law can't be exposed facto, but as i believe mr. turner pointed out, we can ban some of these people from ever serving on the board of a publicly traded corporation again. we might also look at the civil ball to see whether those whose actions have cost perhaps $700 billion, perhaps less would be liable to the federal government. expos facto criminal laws are much more constrained by the

constitution. i would think that wall street itself would keep some of these people off the board except i could see some of them singing these folks didn't show remarkably bad financial judgment. they showed tremendous political skill. they separated the taxpayers from $700 billion of assets. now, mr. verret, you've been talking about how we need to keep talent motivated. but i think it has been pretty well illustrated by the gentleman from texas nobody is moving to london loan tokyo to make more money or very few are. is there any economic theory that would say if 10% of the executives who work for publicly traded banks then found themselves at the hedge funds that that would mean diminished in in the quality of financial

management in this country? with a slight change in talent moving from the publicly traded sector to them not publicly traded sector, has anybody proven that would hurt us? >> i'm not an economist specifically. >> are you aware of any such study? >> thank. professor, i'm going to mispronounced your name -- bebchuk. i don't believe that we are going to control or should control compensation for a company that accept its publicly traded in which case we want to make sure the shareholders are in power systemically it puts the country at risk or is governmentally subsidized, a short etc. and this leaves the hedge funds where it's my understanding that for the most part you do have an

incentive to take enormous risks. that is to say i mean there's a lot of talk about while if the investment boswell the management should do well, if the investment as poorly the management should do poorly. i know of no hedge funds that are structured that if they lose money the management rights h. heck out of their own pocket -- is the typical structure of a hedge fund one that encourages excess risk by typical structure i mean one where the management puts and none of its own money, shares only in the profits, has no real compensation except the profits and in some cases doesn't share until fifer 10% rate of return is achieved. and if so, are some of these hedge funds a systemic risk to the country? >> i agree with you that the government should not constrained the choices that are

made in the arrangements made between hedge fund managers and their investors but i also will agree with you that it's part of the reconciliation that is now taking place. investors in hedge funds should take a serious look at those arrangements because i do not share your sentiment that the same shorter focus problems that we have now witnessed with trading company's existing hedge fund area, so what we have is there are many hedge funds where usually the arrangement is they don't give back money. but there are those high water marks and therefore right now there is a situation which we might not be able to get extra funds which creates distortions because either the work was a high priority incentives i think it would be a good idea for

investors to reconsider -- stopguard investor's given enough information about a management compensation in hedge funds? >> yeah, those are the arrangements that are negotiated with a small number of investors and they are disclosed. >> my next question is is a fight between management and insurgent shareholders a fair fight or is it more like an election in venezuela? do the minority shareholders have any access to corporate funds and is management allowed to use corporate funds as they will to call propagandize? i see this minow may have an answer. >> i think i'm the only one on the panel who has tried to do this and so i can tell you that management will spend every last dime of your money against you

and i'm not saying it needs to be a level playing field but right now it is pretty perpendicular. >> so much for shareholder democracy. i yield back. >> i have just one question. mortgage stanley has instituted the squall back provision. are you familiar with it? where if after the fact if a ceo has jeopardized the company, they would then repossess any bonuses or special compensation. is that something that you think would be applicable for legislation this committee will consider? >> and morgan stanley it's not even just the ceo. it's any executive they determine has caused harm. i would have gone further and say even if you didn't cause harm if you got money you shouldn't have gotten you should get it back. but that's the role of good corporate governance and

compensation policy, not the role of government regulation. >> on the other hand the executives raised their base pay to make up for the additional risk they are taking on so i don't approve of that. >> of course it would be government business if we put it in the legislation. >> i understand that. >> thank. >> why do supported -- i do support when investors have operated in a reckless or fraudulent way. i do support giving investors the right to go for that clawback and even in that manner they can ask for the clawback or the shareholders can because someone ought to get that money back. >> i think this goes to the disclosure issue in the sec's dvorkin 2006 and chairman shapiro's work in this area and i think the white issue is the right question is did the board go for a pullback? if not it should have to explain why to the shareholders.

>> thank. i appreciate all the time you have spent with us today and the ranking member has a question. >> professor verret, the treasury yesterday released a statement on executive compensation that supported the passage of say on pay. will say on page affected in your opinion? >> well, i think one of the problems that have -- i hope i get across is what we've seen in britain is that concentration of the proxy and pfizer reaffirms has caused a sort of one-size-fits-all solution to take hold and i think it's better to have a flexible approach, compensation committees should have the flexibility to design compensation as appropriate for their own businesses. i also worry about the possibility that say on paper at minimize the ability to change compensation as required by major changes in markets and

events in midstream between the annual ad buys revokes and say on pay. i also worry about the effect on say on pay and severance packages and ability to negotiate so-called golden handshake to facilitate an emergency acquisition even if you do a vote sometimes negotiations happen overnight with respect to negotiating acquisitions and i think those agreements are very important. sometimes they have to be approved quickly, not in time to do a shareholder advisory vote. >> thank. >> the chair notes some members have additional questions for the panel which they may wish to submit in writing. without objection the hearing record will remain open 30 days for members to support written questions and to place their response in the record. this is the end of this hearing. we thank you for participating

file sharing has wreaked havoc on the business. one of the goals of my industry is to have isp take more responsibility for the surface of the are providing and make sure that they are not just providing a huge, you know, entrée to the intellectual property for free. following the communicators

president of baala today announced new efficiency standards for light bulbs which he says could save consumers billions of dollars every year. the president also praised the climate change in energy bill passed last friday by the house of representatives.

this is about ten minutes. >> good afternoon, everybody since taking the office my administration has mounted a sustained response to a historic economic crisis. but even as we take decisive action to repair the damage to our economy we are also working to build a new foundation for a sustained and lasting economic growth we know this won't be easy, but this is a moment where we have been called upon to cast off the old ways of doing business and act boldly to reclaim america's future. nowhere is this more important than in building a new clean energy economy. ending our dependence on foreign oil and limiting the dangerous pollutants that threaten our health and the health of the planet. that is precisely what we have begun to do.

thanks to broad coalitions ranging from business to labor and investors to on trippi worse, democrats and republicans from cold states and coastal states and all who are willing to take on this challenge we've come together to achieve more in the past few months to create a new clean energy economy than we have in decades. we began with historic investments and the recovery act and the federal budget that will help create hundreds of dolphins of jobs during the work of doubling the country's supply of renewable energy. we are talking about jobs building wind turbines and solar panels. jobs developing next-generation solutions for next-generation cars. jobs of greeting the power grid so it can carry clean and renewable energy from the far-flung areas the harness to the big cities that use them. banks to a remarkable partnership between automakers, autoworkers, environmental advocates and states we created incentives for companies to

develop clean more efficient vehicles and for americans to drive them. we set in motion a national policy aimed at both increase in gas mileage and decreasing greenhouse gas pollution for all its cars and trucks sold in the united states and as a result we will save 1.8 billion barrels of oil over the lifetime of the vehicles sold in the next five years. the projected equivalent of taking 58 million cars off the road for an entire year. we know that even as we seek solutions to the energy problems at home, the solution to global climate change requires american leadership abroad. that's why i've appointed a climate on the way to help lead the real engagement with the international community as we find sustainable ways to transition to a global low carbon economy. and, now just last friday the house of representatives came together to pass an extraordinary piece of legislation that will finally open the door to decreasing

dependence on foreign oil, preventing the worst consequences of climate change and making a clean energy the profitable kind of energy. thanks to members of congress willing to place america's progress before the usual washington politics, this bill will create new businesses, new industries, and millions of new jobs. all without imposing an attainable new burdens on the american people or america's business. in the months to come the senate will take up its version of the energy bill and all i am confident day, too, will choose to move the country forward. so we have gotten a lot done on the energy front over the last six months. but even as we are changing the ways we are producing energy we are also changing the ways we use energy. in fact one of the fastest, easiest and cheapest ways to make the economy stronger and cleaner is to make our economy more energy efficient and that's somethinat