>> in the report he issued yesterday he said although treasury has taken steps towards improving transparency and t.a.r.p. programs it is repeatedly failed to adopt recommendations that sigtarp believes are essential to providing transparency and fulfill treasury's commitment to implement t.a.r.p. with highest degree of transparency possible. now one of the recommendations is that the treasury should require all t.a.r.p. recipients to report on the actual use of t.a.r.p. bonds. treasury declined say that reporting would be meaningless and i've got to tell you my constituents probably don't think it's meaningless to know precisely where their taxpayer dollars are going so my question to do is will you actually adopt that particular recommendation? >> well, first of all we welcome the recommendations of the sigtarp of their bodies.

as i mentioned earlier in the testimony, we have adopted or have come very close with a few minor details to adopting about three-fourths of the recommendations we have received. >> well, there's only four recommendations. he says you haven't adopted any of them. i just want to get a clear answer. will you or will you not make public how the money that's been received by the banks in t.a.r.p. have been spent. >> let me first of all point out every month we provide comprehensive information on our website, financial stability.gov about the actual lending activities of all the banks in which we've invested. >> mr. allison with all due respect and asking a simple question and want a simple answer. either you are willing to do it or you are not willing to do it. >> we think the most important information -- >> yes or no, will you do it? >> we have looked at that

possibility. our concern, which we have mentioned, is that -- let me give you some examples. this is a capital purchase program. the intent is to provide capital to banks. we disclose all those activities. every capital transaction whether we invest or receive money back is post on the website within 48 hours. there is voluminous information about that. once the money has been invested and 80 basis the banks may be shifting their use of the funds, they are dynamic institutions. if they report one day the money has been used for this and another day it can be changing. furthermore because the money is placed in a cash account as it is received and money is fungible, while the bank may say that they have let's say put $50 million -- >> mr. allison i hate to interrupt you but my time is limited and you just used up

another two minutes. this is my request to you. mr. barofsky believes you can put this on a public place for public distribution. i'm asking you to work with him and find a way by which the taxpayers of this country are going to be able to access this information and know how the banks are spending their money. i want to know and i am really getting tired of many of the people in the administration and frankly some of my colleagues in congress protecting the banks. we should be protecting the taxpayers and the tax payers have every right to know how the t.a.r.p. money is being spent. >> the gentlelady's time is up and the next person we will recognize is mr. mchenry for five minutes. >> thank you for your testimony, mr. allison. i think to my colleague's point

money it's the $100 billion or $1 billion that this institution got the land here the whole deal. that's fair to say. is that correct? okay. now, the point i think many of us have is we are concerned what is happening on main street. how that money is actually being land. so to get more precisely at my colleague's question are you able to track lending standards for these various institutions? >> we post the actual information on lending by all these banks which we think is very important for the public to know. we are not the regulator for those banks. we don't oversee the bank's lending standards. our role has been under eesa to provide capital and promote the

stability of the banks, not to manage the banks or to regulate the banks. the regulation is -- >> obviously but in terms of exposure arguing that? >> we are not tracking the individual lending standards of each bank. i assume that the regulators are very much involved in monitoring the lending standards. >> yes but we are here before the congress about t.a.r.p. funds that are being went out or not be inclined out and the sigtarp report says that obviously this can be done to track lending standards, and so we will get to that on the next panel and with that i would like to yield the balance of my time to my colleague from new dork. >> that's kind of you. a quick question and it gets back to -- i've got to tell you the taxpayers in my district are very frustrated with what we are doing in washington and the concern over the debt we have in

this country. at the end of this year the projections are close to $2 trillion understand why i think it is positive news in the fact we have i believe you mentioned somewhere in the neighborhood of 70 billion being paid back. but overwhelmingly i hear from the constituents that we need to start paying down this debt rather than -- it sounds like what i heard from you today is we plan on keeping this program going out in perpetuity the next five years so dollars come back are being potentially reinject into the market and potentially going to places outside with their original purposes for stated or the potential to do so. is that a fair statement? >> let me be clear. under the eesa law the treasury would no longer make investments and institutions after the end of this year unless the treasury

secretary makes the determination that it is in the interest of the economy and the nation to extend this program until october of 2010. this is not an open ended and investment program. and in the investments themselves there are built-in incentives to pay back the money. the cost of the funds and many of these rises over time, and in some the program itself expires over a period of time. so we are very mindful of the need to protect the taxpayers' interest and get the highest possible return to be careful to words of the money and we also understand this program in terms of making investments will terminate in some point in the not distant future. nonetheless the government may still hold investments for a longer period of time and we are preparing for that eventuality to make sure we continue to have

the procedures and policies and personnel to be responsibly overseeing those investments. >> thank you. >> ra i yield back. >> the chairman recognizes mr. grace -- grayson. we will probably go five for seven minutes after the votes are called and recess and come back over after votes are concluded. you are recognized. >> thank you. on page three mr. allison uzi we have provided capital 357 institutions across 48 states including avert small community banks enabling banks to absorb losses from bad assets while continuing to lend to consumers and businesses we continue to invest in banks every week. in terms of the statement mr. allison i think of this myself as a distinction between good banks and bad things. good banks are banks that are

profitable and remain profitable through the economic disaster that we experienced the past year and a half are well-managed and can assess risk properly and are fundamentally different from the bad banks, the bad banks have basically taken bets with taxpayer provided money and government provided money and they've made bad decisions and unfortunately many of the people at those banks are still in charge making more bad decisions every day. now, it seems to me if you provide a dollar worth of capital to a good bank the bank might be the ultimate in dollars worth of loans. that is the reserve system we live under. if you provide a dollar's worth of capital to a bad bank that banks certainly isn't going to be able to do more than provide $10 worth and also will try to cover its losses may be paid out more money to its bad management and money to its shareholders

and not do what we are trying to do through this program. so why is it we do something like enable banks to absorb losses from bad assets in this program, why don't we invest in the good banks, not the bad banks? >> thank you. we are investing in banks deemed to be liable by the regulators and banks voluntarily come to us but they must be deemed to be viable banks. some viable banks have bad assets but those viable banks are still important to their communities and so as part of the financial stability effort we are helping banks recovered and stabilized so they can continue lending in their communities to businesses large and small and individuals to keep the economy going. >> following this line of questions would we be better off if we gave the same amount to good banks and functioning well so they could expand their operations and make more loans rather than propping up at banks that made mistakes that have cost all of us? >> these are viewed as good banks with assets and as banks

that can be viable and ongoing and continue to serve their communities. >> how to get to the point a good bank has a bad as it? seriously dustin that reflect bad choices on the part of the management whenever they have a bad asset? >> i think virtually every bank has bad loans on the books and what we have seen is because of prices of real estate decline so much, commercial as well as residential and number of companies have had to go out of business because of the declining economic activity loans that seem to be quite good when they were granted turn out to be also good in an extreme environment like today. >> yet we have had things that have made the right decision. are you familiar with the concept of moral hazard? >> yes, sir. >> aren't we inviting serious moral hazard by propping up bad banks rather than helping good banks expand and letting capitalism work? >> we have to keep in mind these

banks have to pay us back and we have been paid back just today by one of them and we are working making every effort to make sure that the taxpayers who made these investments obtain an appropriate return. that is our responsibility to work on their behalf. at the same time these bonds are going to help stabilize not just the banking system but the economy which benefits all americans and we have seen the banking condition has improved. we have seen home sales are starting to stabilize in many parts of the country to get the risk of financial system has declined which is good for everybody and we are hopeful that by continuing to provide the support as the banks need that we are going to have a strong underpinning to begin this recover their we are also anxious to see. >> but resources are limited even for the federal government. wouldn't we be able to accomplish all of that and more

if we detected the support to good banks rather than propping up at banks? >> again i believe many of these were good banks that were active in lending and their communities and we are now seeing a financial situation that this country has not experienced at least since the 1930's. this is an extremely serious decline in asset values that affected every american. we have to keep the economy going. the whole purpose of this program as enacted by congress last year was to inject capital into the banking system so it could not only survive but stabilize as soon as possible. >> i see my time is up but i would urge you mr. allison to give thought to the subject if you are continuing to invest in banks every week give some thoughts to investing on the good banks not the bad ones. >> thank you. i appreciate that. >> mr. paulson you are recognized for five minutes.

>> mr. allison mentioned in your testimony that you couldn't comment on some of the existing negotiations and discussions you are having with some of the banks given their buying back some of the warrants they have the are outstanding and i have some questions come back from some of these folks with interacted with on different rules that don't apply to them but you mentioned in your testimony of the treasury and these firms or banks cannot agree on a fair market value for these warrants that they would be sold by treasury on a public auction, correct? >> yes, sir. >> is there a time line when that would be or a timeframe that would be put in place when the auction would actually take place or are there guidelines or stipulation you can share more about? >> yes, sir. we are working hard on those guidelines now. they are not yet completed. when they are we will provide more information. we want this to be as transparent process as possible but we have had to give very careful fought since this

amendment to the act was put into place on how we might best do this in a way that protects the interest of the taxpayers. >> knowing that it's in the interest of protecting taxpayers as he had said and repaying and unwinding of this that has taken place you don't foresee this is going to be like another year? >> no sir. >> i also want to mention from your estimation of the work you've done on this issue do you think the t.a.r.p. funds have been equitably reaching the small financial restitution? >> welcome most of the institutions that have received the t.a.r.p. funds are small and we have increased 300 quite small and community banks and other smaller institutions who've received these funds. nonetheless we are concerned about making sure small banks which are so vital to the local communities and account for an outsize portion of small-business lending are able to continue lending so that is

why we reopened the cp program in may i think it was, to make it possible for these banks to if they needed to happen to the cp p facility and we had a number every week coming to us for that funding and giving us their preferred stock. we are looking at other ways of assisting and we may have some announcements to make about that before long. >> this was a question i was going to ask for the next panel but it seems i'm hearing differently from the smaller financial and institutions about their inaccessibility of some of the opportunities for these funds and i curious if you might have a perspective why i might be hearing that perspective. >> well, first of all i would like to know the names of those banks if you can provide them we will get in touch with them as soon as possible. they also should be talking with their regulator. we make investments on the regulation of the banks and

regulators. so the first stop should be the regulator. and then we will consider the investment. >> thank you. >> thank you. >> mr. marchant from texas, you are recognized for five minutes, sir. >> thank you. could you just quickly discuss the concept of head room that you were talking about earlier? you've got a 700 million-dollar basically cap on the amount of money can put out at any given time. >> yes, sir. >> now that we are far into this program you have an inflow of money, you have kind of a revolving fund. so is it public how much the goldman sachs transaction is

worth today? >> let me make clear when money is repaid it is put in the general account of the u.s. treasury. and so the head room is the difference between the amount that we have budgeted and the amount of the total limit which is $700 billion. plus the amount that has been rebuilt its we have budget and abroad for injured billion but we have repaid and when you add three payments to the difference between the 643, 700 balad and you end up with about $128 billion at this point in this economic crisis in case banks and find that they need additional funding in order to maintain their activities and preserve their financial strength. >> but, we need to fund a budget

you mean those are funds you already committed for? >> these are firms we have allocated and we might use for certain purposes. let me point out that at this moment, we have invested about $360 billion. so it is the difference between the 360 and 643i believe it is is what we have more or less earmarked for additional use. >> when you say allocated, it might be an asset type of allocation but not a specific obligation to fund a bank? >> as far as the cpp program goes that is correct, yes, sir. >> so, if the congress reauthorize is the extension to october, 2010; is that correct? >> would be the treasury secretary that has the authority

to extend until 2010. >> of the treasury secretary authorizes the extention to 2010, this whole dynamic process of head room and inflow and outflow remains the same? you've got a pretty well fixed in the way that you are going to do that. >> yes, sir. >> in 2010 is there a possibility to extend beyond that on the part of the secretary or would that be a congressional act? >> i believe that the treasury's authority, the secretary of the treasury's authority extends through 2010 to extend that. >> and then that's to disperse and then the repayment follows. >> the payments could continue for some time. >> but then there is no longer any outflow. it is all inflow at that point. >> that's my understanding, yes,

sir. >> and as far as what if you end up with a situation where you had in excess of the 700 because the repayment of the t.a.r.p. and the warrants and the redemption on the preferred and interest paid? >> do you mean we would not be above, we would be well below. >> you already forecasted -- >> there's a limit on the amount we can have outstanding on any one time on behalf of the public. >> so the money basically -- >> we may not exceed that number. >> so it goes in the treasury in a general fund but we have already raised the debt to include that appropriation; correct? >> you are getting beyond my expertise. >> is there a snap back provision in the bill that says as the money comes back and the

treasury than the money is paid down on the debt or do we not already have through by raising the budget isn't the money captured in the federal government? >> i will get back to you on that but it's my understanding as the money comes in that reduces the national debt as it comes in, but let me give you a more definitive answer s soon as possible. >> thank you. >> i thank the gentleman and i but at this time thank you mr. allison you are excused. i invite the second panel to sit down. we have a few minutes before votes are called and we will go as long as we can. >> mr. chairman i would like to introduce into the record the special inspector general's report on the banks use of money which does show 83% of them told the sigtarp they had used it for

lending. even the 4% -- >> they have or had not used it? >> had so that does indicate some evidence of the u.s. banks are accused the t.a.r.p. funds to increase lending. some of it did it to maintain capital levels and stay in business and keep the door open. >> without objection will be received in the record. >> thank you, mr. allison. at this time i invite the second panel to be seated and i am pleased to introduce the second panel for this afternoon's hearing for this panel we will start with and welcome back mr. barofsky the director of the sigtarp. next we are glad to have with us again professor e. elizabeth warren share of the oversight panel and finally we will hear testimony from mr. tom mccool, director of the economics at the government accountability office. thank you all for being here and

without objection you're written statement will be a part of the record. he will be each recognized and i think votes are just now being called. we can take the first witness and he will be recognized five minute statement summarizing your testimony. inspector general barofsky, you are recognized five minutes, sir. >> it is an honor to be back before this committee and it's also an honor to be sitting next to to of the most important oversight partners of course professor warren from the congressional oversight panel and mr. mccool from gao. this week we've introduced and presented our most recent quarterly report in the oversight that we've been conducting the past quarter and so much of that oversight is the result of the coordination that we have had with our oversight partners and one of the things we strive for of course is to coordinate the oversight. t.a.r.p. has gone from 700 billion-dollar program which is large enough in its own right to not being expanded with

activity at the federal reserve and the fdic to almost 3 trillion-dollar program and this is more than any one of the three of us in our organizations could ever cover alone and we strive to coordinate that working with gao on an important audit to cover as much as possible and we are recently putting forward a joint audit program, were first on corporate governance utilizing the experience and activity of both agencies and we recently this month did a coordinated project with professor warren and the oversight panel and i thought there excellent evaluation report and july report of the conclusions. we are going to be using that as context for an audit into the purchase process. basically in our report that we have just delivered this week i will very briefly describe what is contained. section two we do a brief overview of what's happened the

last three months and there's been a lot of activity from the bankruptcy of the auto companies from repurchase of more than $70 billion of capital purchase program from the selection of the nine asset managers and commitment of approximately $30 billion of taxpayer money in the public private investment program. section three we attempt to put that in context by giving detailed surrounding approximately 50 other programs and so often a particular t.a.r.p. recipient only access is the t.a.r.p. that accesses of their parts of the financial bailout from the government whether a loan guarantee from fdic or borrowing money from the federal reserve and we will be tempted to do is bring transparency to that by setting out approximately 50 of the programs most significant programs that have been implemented were discussed and described since the onset of this crisis. section five of the report we get our recommendations. we go over the past

recommendations and issue several new recommendations one of which was discussed with mr. allison was the continued recommendation the treasury required t.a.r.p. recipients to provide information on their use of funds as was also discussed we recently finished our audits completed and made public this monday and we've demonstrated notwithstanding the inherent from ability of money banks can and should be required to report on the use of funds. contrary to mr. allison's we've demonstrated this is a meaningful task and we ask the banks what they did with the money they were able to tell us some of the things ranking member bachus, then you described just moments ago that they were able to explain how they were able to increase lending or at least stop the hemorrhaging, of which further reduction. banks told us they would come to a standstill if not for the funds but they were able to exploit and other uses of funds,

how the investing money, how they were able to maintain cushions to withstand future losses. this is vitally important data and vital and transparency. i understand the orthodoxy and concept of capital accounts and i understand perhaps that is why the treasury initially was so reluctant to adopt our recommendation but now we have to prove, now that banks when asked have said we can report how we are using the funds and we believe these excuses and explanations for lack of transparency should no longer be in we believe the treasury should and in order to meet its promised goal of bringing transparency through to the program must adopt this recommendation. we also make other recommendations in the report relating to other aspects of transparency including the public private investment program as well as other transparency recommendations that have been kicking around some months including the basic one the treasury report to the american people what the value

is of their investment. the treasury receives monthly reports from its asset managers with estimates with the portfolio is and we believe basic transparency would require the treasury to make information public. thank you, mr. chairman. >> thank you, mr. barofsky. boats have been called. there is ten minutes left for votes. we can have one more, mr. warren and then we will reconvene and hear from mr. mccool and have questions later. >> actually mr. chairman if she takes even six minutes i think we are in good shape. [laughter] >> you must know how fast i talk. thank you very much, chairman and ranking member. it is an honor to be here again, today in front of this committee. ate your inviting us. i want to say, as i always dorks unlike the gentleman from my

left and right, i am part of a panel, so when i'm here, i'm not scripted, which means i speak for myself. i do my best to represent my panel but i represent only my view whence i open my mouth. our job is to review the current state of financial markets and the financial regulatory@@@@@@r our contribution a statutory mandate is a fact space analysis designed to raise issues about the operation and direction of the t.a.r.p. and about the broader effort to restore stability to the economic system. we call that asking whether or not t.a.r.p. is operating to benefit in the american family in the american economy.

we hit three repeating themes and that is the need for transparency, the need for accountability and the need for a clearly articulated program by treasury year of record may closely with the gao and special inspector general mr. barofsky identify the are coordinated effort which were very pleased to participate in and it's important part of the report we just issued on a warrant evaluation. remember baucus identified the key to what awards talk about and understand the risks were. when congress allocated the potential $700 billion into t.a.r.p.. this is the american taxpayers one opportunity to participate in the upside. our statutory mandate is to look at the choices treasury is making and that really involves not just our july report but our june report. our june report was on the stress tests. the question about repayment in

the first instance and whether the stress test or stressful enough, we then move to our july report was the decision is made it, take money back from the financial institutions and what should be the pricing on the warrants. in order to do the warrant valuation we thought it would be helpful in terms of oversight to do in independent elevation to ask on is that others might dow u.s. economic expertise within the panel but also able -- aided by nobel laureate robert martin, a professor daniel burke stressor and professor victoria, all are from the harvard business school. all advice is independent without consulting with each other and help us review our models, help us review our inputs and ultimately we did all of the calculations internally to the panel and that's how we came up with the numbers we came up with. now are finding with the price paid in the first war and sold

for about 66 percent of what our valuation which show was the current market value. if treasury got only 66 percent of current valuation, as it went forward, that would be a loss to the american taxpayer or about $2.7 billion. we are very careful in this report to point out some key features, the first is only a tiny proportion of the warrants have been sold and there are very small banks in the first sales. with a knowledge and there may be differences about what are they prepared liquidity discounts to put into the evaluation. we also a knowledge that there may be considerations other than maximizing their return to the taxpayer. for example, trying to get out of this business of holding warrants as quickly as possible and those could affect the evaluation. i will say however, that since we issued our report 12 days ago, chase has decided it wants to go to auction.

goldman sachs has just wrapped a deal today which addresses would rise in the value of their stock prices over the last 12 days, almost precisely and our estimate evaluation. and i heard treasury announced in this hearing that they will be revealing more information about their negotiations over stock price warrants. i think that means oversight works. and so i am pleased to be here today to give you our report coming to answer your questions in any way that we can, into talk about alternative approaches to value in these warrants. again, i appreciate the invitation to be here and am glad to take questions. >> thank you for your testimony. we are going to stand in recess until after votes and would ask members to come back immediately so we can reconvene and will finish up with the testimony of mr. mccool in have questions by

the members. thank you and i apologize for this interruption of our hearing, but we do have the votes. thank you very much, see you in a little bit. [inaudible conversations] [inaudible conversations] the hearing will reconvene. i thank you for the witnesses for staying around and for the hearing and we got back here just as quickly as we could. mr. mccool, you're recognized for five minutes. >> thank you mr. chairman. ranking member, and members of the subcommittee am pleased to be here to discuss our work on

the troubled assets relief program. the economic -- this before that who authorized t.a.r.p. requires gao to report every 60 days on findings resulting for our oversight and the status of actions taken in the program. my statement is based on our with mandated report issued on june 17th which follows up on our previous recommendations and cover the actions taken as part of t.a.r.p. through june 12th 2009. our oversight work under the act is ongoing and our next report will be issued in the next few days and will focus on t.a.r.p. loan modification. specifically this statement focuses on the nature and purpose of activities initiated under t.a.r.p. including repurchase of preferred shares and warrants and treasurys evaristus abbas management structure for t.a.r.p.. as of july 10th, 2009 treasury disperse about three and a 61 billion of the roughly 700 billion in t.a.r.p. funds, most of the fund's 204 billion

went to purchase preferred shares and support ventures of over six and a 50 ledger of institutions under the cap will purchase program. this continues to be office of financial stability is primary vehicle for stabilizing financial markets. the same time it continues to purchase preferred shares institutions that have paid over 70 billion to repurchase shares. as of july 10th, 12 and 33 french institutions repurchase their preferred shares had also repurchase their warrants and three others repurchased their one preferred stock treasury and in aggregate's return of about $80 million per lb although the office of financial stability and the regulators have established criteria for setting the applications, the regulators criteria for determining when institutions can repurchase preferred stock from treasury lack adequate transparency and this may recommendation in our report for the treasury in coordination with the pressure

regulators to ensure consistent criteria and consideration of repurchases. while treasury has provided some limited information about the one to evaluation process and has had to provide transparency that would address questions about whether that a permit is getting the best price for taxpayers and this is another area which iraq when the treasury provide transparency in the process of publicly disclosing more detailed information about one prices and i was pleased to hear mr. allyson suggests the treasury seems to be moving toward in that effort. although it is unclear whether any institutions will choose to participate in the capital assistance plan the federal reserve to conduct stress has a large as 19 bank holding companies to see how they would withstand arduous than expected economic conditions. while the federal reserve disclosed the stress test results and had no plans to disclose information about the institutions going for it. what information is as close will be left to the discretion of the affected institutions

raising concerns including the institutions could disclose inconsistent selected information. over the federal reserve had not developed a mechanism to share information with the office of financial stability about the condition of living: companies that that continue to participate in ping programs and for this reason we made a recommendation to disclose to the public information on the company's against whichever scenario on going forward basis. while the office has been made progress and establish management infrastructure continued detention to hiring remains important because especially within the office of the chief risk compliance officer and home ownership group, those are where they has not been up to what they themselves say other requirements. we still have a number of vacancies in that need to be filled as rapidly as they can. treasury has continued to build a network of contractors of financial aid is to support t.a.r.p. administration that have been a key efforts to develop and administer the

t.a.r.p. programs. treasury provided information to the public on procurement contracts and agreements but has not included bring down accosted him by each entity as a result and has this opportunity to provide additional transparency to its t.a.r.p. operations in which we made recommendations to treasury to improve transparency. mr. chairman, one that concludes my statement and i am happy to answer questions can i thank you, mr. mccool, i will recognize myself for five minutes of questions. once people have had a chance to analyze the transaction to you have any sense that 1.1 billion bid by goldman sachs will be enough for taxpayers and do nothing but harass the market went to a public auction? are there other policy issues and should be considered? >> i think that -- thank you, i think it is a good question. using the valuation hundred metric that we laid out in our

reports, the goldman the price comes in almost precisely at what we had recommended. i believe the gold and prices 1.1 billion in using our valuation it would have been 1.08 billion, so we are within rounding error on that. and that certainly increases our confidence that treasury is using a strong valuation approach here peridot i do think -- i do want to say though that there are other issues that lurk in that the sales process and it is hard to find a substitute for the benefit is of a public sale. public sale reassures everyone that this is the market price, but i certainly understand congressman bacchus point that there are times when we decided that we don't want to delay in

want to be able to ed mou -- move faster in an oldsmobile policy choices not just for treasury but for congress to weigh in on. we think as your oversight panel the best we can to is outlined its and give this independent valuation as we have done and put the factors in front of you which we've tried to do. >> the mr. barofsky command you have different thoughts about that or do you agree? >> i definitely defer to prof. warren. her reports that her study and think was comprehensive and very constructive. we haven't done in similar efforts. we do have an ongoing audit that will address seven issues, but i was really deferred to prof. warren and the panel on this. >> mr. barofsky, i notice in addition to your corley reports issued this week also concluded the use of funds on it that you conducted, what did you learn from that audit and what steps should treasury to increase accountability in the t.a.r.p. program? >> i think the most important thing we learned is i think we

definitively proved that bennett and inherent one's ability of money banks can report on how they're using their funds and then they can provide a great degree of transparency in is two that question. we saw the banks of the treasury as mr. allyson added that is provided lending snapshots of each month that isn't the only thing banks do with their t.a.r.p. funds. according to the banks themselves the user to maintain capital cushions, insurance for a rainy day, for future losses, they use it to acquire other financial institutions, used to invest in securities and all sorts of seven things that our survey helps provide necessary level of transparency but as only part of our survey, a snapshot as of february and don't have the resources to do this on a regular basis and it was voluntary so my recommendations that treasury finally require financial institutions of receiving t.a.r.p. funds to report on a periodic basis on how they're

using the money. >> thank you. prof. warren, did you find connections for the sigtarp use of funds audits and when they learned when reviewing the lending practices and how the defense american families and small businesses? >> yes, mr. chairman. we did in our field hearings and earlier reports we have documented the construction and small-business lending and the inadequacy of the tools that have been used thus far by eight treasury to try to stimulate small business lending. we think this is entirely consistent what we have done and reported on with what it is with mr. barofsky in reported there a different mechanism. >> my time is up and then this time i will yield a two questions from mrs. bigger, the ranking chair. >> thank you mr. chairman. mr. barofsky, in talking about

the audits of what the warrant and evaluation and sales, when can we expect to see this? >> we are basically evaluating the timing, when we first launched it was unclear when the larger institutions are going to be either purchasing or going through the auction process and now that we're seeing some of these repurchases and they want to take a look and see with the auction process or to be the most useful audit we like to see that process be used before we project and end date. >> an can you ensure that the audit will not compromise the treasury department to negotiate the best possible price for taxpayers? do you think there's any chance of that happening in the audit is out and negotiating? >> with everything that we to including this an endeavor on its and our recommendations is inherent upon us, it is important for us to take into

consideration the points you just raised and we would never make a disclosure midway through negotiation and anything that could possibly impact in negative light on the taxpayer's return of our job is to protect the taxpayer interests and very sensitive to these types of issues and protecting confidential and permission to dig santa may impact or be a detriment to the taxpayer. >> thank you. prof. warren, the july report issued by cops states that the best manner to sell these is on open market, however and as my colleague mr. hensarling said in his additional abuse today choosing a one side -- one-size-fits-all does not seem to be the most appropriate method to values these warrants. given that each repurchase negotiation will have different circumstances. don't need flexibility in the process to help determine the best value of getting the taxpayers at of the business

that only bank stocks are warrants? >> i actually think the report says exactly that that there should be flexibility, we talk about it manages to an open market process, but we acknowledged there are circumstances that may differ on and i assume that it is part of the reason congressman hensarling noted for that report. we had a 50 quote on the valuation king and the additional use? >> in which i think he cited the report extensively. >> in determining fair market value to you use financial models or is it just a one-size-fits-all? like black shoals? have you taken that to consideration? >> of course,, actually are a financial models are laid out in many pages in our report and as i said in my testimony they were independently reviewed in the models by three highly renounced

specialists in modeling all from the harvard business school. >> three members of the panel rep. hensarling and i think senator sununu and which should mean in moist air support read a administration and treasury stated objective to exit warren holdings as soon as practical. after banks repay the preferred stock. it didn't seem like at this point it was stressed at all in the july report too. >> well, i think that it is like so many things and depends on a cost. there is always a judgment to be made and exiting in the fastest possible way in return forgetting the lowest cost to the tax payer may not be ultimately beneficial. on the other hand, i certainly understand the point about not hanging on to the warrants for

10 years and a political as well as economic implications of that so i think the main point in their report was there are advantages and disadvantages to speed and to go into the market in order to try to sell these warrants. ultimately though we didn't emphasize the point be that when there is a market based auction no taxpayer needs to wonder what happened behind closed doors and weather -- >> my point is is a mine that was the majority and was a really stress in the report or they said and next to the panel's press release for the july report contained the headline so far treasury has sold warrants packin 66% of panels best assessment of their report it value and i think that the headline seem to misleading since of the banks have all redeemed their warrants. the banks that have redeemed

their warrants represent less than 1 percent of the value of the warrants outstanding in seven by their 66% to amend the press release reads that point but let's keep in mind that when that press release was issued the immediate response was that she said we will go to a public auction, goldman 11 days later said the wheat will sell by the panels recommended price and treasury said it will release more information about our sales process. if the consequence of this report is to encourage those shores of responses then i am very happy about that. >> i yield back. >> thank-you and it chairman recognizes the congresswoman please. >> thank you mr. chairman. i want to thank you to view as being true public servants and incredible guardians of the

american taxpayer. having said that, i find this discussion a very interesting because, on the one hand, that some of my colleagues often call upon us to think about small businesses in lending to small businesses and the fact we haven't had enough lending and yet we can't seem to get access to information for the banks as to whether or not that are lending and when we want to know that. isn't that what our job is about? now i think we've got to be practical here. this is an arm's-length transaction that goes on between the financial institutions and the u.s. government and these wines have valued. now, i think timing has everything to do with our success and maximizing the amount of money we get back to the taxpayers and is very clear to me that there are some of these arrangements that are going to be profitable. aig comes to mind as one in particular. so it is important to us i think to maximize profits, to

compensate for the ones a better clearly be under water for ever. and i am hoping that is two continue to evaluate, if you believe we should be holding these assets, these ones that we should hold those. it is an arm's-length transaction of the banks are coming in and say we want you to exercise the option on the wanted where to redeem the warrants, they are saying that because they know they're on the road to recovery and it's only going to increase in value. so if it behooves us to be smart investors right now and i would like your opinions on whether or not there is something to be gained by holding on to because they say they want 17 doesn't mean we have to act and redeem them. are a person only goal should be maximizing the profits for the taxpayers.

>> i thank you put your finger on it also policy questions here. if that is the only goal and that is what treasury should be doing then treasury should act like any other investor in your right to take this market when appropriate, when the made the judgment that would be better off to hold the. there are those who believe alternative considerations and those are deeply concerned about the notion the government holds warrants. the meal ultimately believe that is the policy choice. there is a difference of opinion on which is the right way to go with these warrants. in that my strong view on this is that we lay this out in our report and ultimately congress should devise treasury about what it thinks is the right way to go here. i think we do this to this hearing process. we want to say that if what they're trying to do is maximize

value we can point out ways that we think that is best accomplished. if they have other considerations the let me be blunt and they should articulate what those alternative considerations are and evaluate how much is left on the table in line to accommodate them. >> mr. barofsky? >> i couldn't agree more. that is precisely right in the report brought transparency to the issue, decision needs to be made and i think the really strong point that the professor makes a can't agree with more is that we need to be up front in articulating what the policy is and be up front of the american taxpayer that we think there's good reason to liquidate the ones now because whatever the reasons are was for the benefit of the bank's and the financial institutions, whether the justification is but be upfront and honest about what is happening so i agree with professor warren on this. >> mr. mccool? >> again i would agree as well.

there are tradeoffs here and i think as long as you are transparent about the trade-offs everybody should be involved in thinking about this trade offs in the decisionmaking process and that is the way it should work. >> mr. chairman, i like to point out that there are people who want to see the t.a.r.p. fail, they want to be a blue say i told you so so there are people i believe that are going to make us try and take action that are not necessarily in the best interests of the public because they want to say at the end of the the process that we should never have done in the first place so i hope that we keep our eye on what is most important here and that is the american taxpayer. i yield back. >> and think the gentle lady for her questions and the witnesses for their responses and now i next recognize the distinguished ranking member of the full committee mr. baucus. >> thank you.

i think the same here could be that overside worked. i mean, it worked very well. and i think that is always true accountability or transparency. it normally has a very positive approach and i think that one of the confirmations we got to that i think of the panel can be proud of is the goldman pride, exactly as the same. it was time to 20 million more than you have said so that maybe can pay for the panel. [laughter] a panel that actually will end up making the taxpayers some money and often in the consumer or the taxpayer is not at the table. and i think they're worth two this panel. it's interesting the history is that this was originally a three

page bill without any accountability. then i think the congress took about because we put that in there, we put that accountability in their. which was the board and and think it worked very well. one thing that we voice if we can look in the future and see where the markets and economy are going and be pretty easy to make a call on whether we ought to hold as although i personally don't think that the u.s. ought to be investing were speculating in the market which to a certain extent if you can get a good pair price you take it. in now, it is the market dropping six other points to nine and 300 the next day i would say hold on to them probably, and that is a policy decision that i think the administration probably will have to make. it will have the, there will be

10 years we could probably tell what we should have done. one thing that does strike me and i heard in 45 months ago from a banker in alabama that he went to a seminar in georgia and there was a bank there in georgia saying if you are for sale we want to buy a. and never going to do with their t.a.r.p. money so you did have 4 percent that made acquisitions. a would be interesting to go back and take a closer look at that. and that mr. barofsky i think they will tell the truth because you have a right to prosecute. and you have that reputation that you're a very good prosecutor so i think that. , there will be some i'm sure and that number that actually the fdic or other people said this is a failing bank and probably i wouldn't assume that the 4% was a bad thing.

i think the treasury has to understand what we have to understand as a member of congress and that is a this is the people's money so there needs to be accountability. this wasn't, this isn't just a private business or you're wanting to know about some proprietary thing, this was money that was taxpayer money. so i think that sometimes i thank you can't justify some sorts of getting information, but i thank you can hear and i thank you denigrate job. let me change gears prof. warren. i wrote a letter to you on june 24th and i have looked to some of the questions and some on not sure there are a little hot harder to interpret and sometime maybe in august if you could respond to some of those i'd appreciate, but i'm not going to ask about them now.

the other thing i just -- >> except my apology i can't respond to my there is a much going on. >> please accept my apology. >> i don't think they are doing because i don't think it is sufficient time for you to respond because the questions are really, they aren't going to take a little time. but i just wanted to direct. one thing i wanted to show and at some point you might give me an answer. talking about one paid to disclosures and this is actually 15 pages on a card agreement and some of these are just part of the pace but that is what the law requires right now. so you have quite a job because you're going to have to almost say we are not quench your car this anymore or maybe some of this you decide to put in small but it does show you the town as

you face. if you get your agency so thank you. >> thank you. in next the chair recognizes -- >> i usually ask questions, that is rare for me not to do that but there were no questions because i thought the questions were answered. >> thank you. it the chair next recognizes congressman gilroy for five minutes and. >> thank you mr. chairman, appreciated and thanks all of you for your work. and helping to look of the taxpayers and to make sure that the values of transparency and accountability are the values that we don't forget to as we move further away from the initial indications of a t.a.r.p. money in each one of you in your testimony emphasized the abhorrence of transparency.

and i was certainly agree with do and i think sunshine is a great thing to have it in the public sector. but i also think that in this instance that transparency can assist the taxpayer in getting maximum value, a maximum return on their investments that they made with the congressional oversight report said treasury would be more likely to maximize taxpayer returns if it sold the warrants through options and it would cause of the warrants to be allocated to the buyers willing to pay the highest price. and competitive pressures and the big process may push this out. t you agree with that statement? >> i do congresswoman.

>> i certainly do as well and i think that the markets and public auctions or certainly very valid way for setting a price. we have heard today a lot of talk about goldman ended the value that was received to the negotiation process with goldman. but not to be too pessimistic were too cynical, there are reports that say the initial offer from goldman was made several weeks ago and the initial offer was $650 million and that was followed up by a counter offered by treasury of some $900 million and then followed up some time after that by the release of coleman's statement indicating how much

money they had made. certainly in part because of the infusion of money the taxpayers gave them. and as the moment stock prices go up and to agree that the value of those warrants that the taxpayers were holding would also go up? >> yes. >> so it certainly may not be surprising that goldman increase its offer to the taxpayer? an offer to pay $1.1 billion for the warrants? do you agree with that? >> yes. >> but would you also agree that perhaps if we allow it to go to markets that others who might see the same report about goldman that recent earnings might think that a holding goldman's warrants which could be used by them to purchase that over a lengthy time might be to

them worth more than $1.1 million and they might make a higher offer than that at public auction? >> that is certainly possible congresswoman. >> so would you agree that the market has a great deal of experience in this experience of setting prices and that treasury has experience in terms of conducting public office? >> yes, congresswoman. >> and then going back to all three of you in your statements with respect to maximizing value for the taxpayer and being transparent would you agree that a public auction would be an excellent way to combine and achieve those two goals? maximizing profits and being transparent? >> yes, congresswoman. >> anybody on the panel have a different view or disagree?

>> i think a particular address is the transparency concerns and a lot of the allegations that may be made and then a close our process. >> and the goal of restoring public confidence in the market and having public confidence in our government officials are important and worthwhile goal i think. thank you, i yield back. >> i think the gentle lady. the chair recognizes congressman henry prime minister. >> thank you all for testifying ensign for the length of the day for all of us. obviously mr. barofsky i heard from yesterday in front of the oversight committee which i am a member of a. ms. warren, in terms of your panel congressional oversight panel, what is your budget? >> i can tell you how much we spend but we actually --

>> is there a budget allocation? >> no. >> how much have you spend? >> 2.7 million -- you can tell the world i have been dealing in canaccord to that money come from? is it out of t.a.r.p. or treasury? >> no, it comes from the senate and house, it comes from new. >> okay, how does that allocated? basically you spend what ever you want to send the bill to congress? how is that allocated? >> well, we go to the process of hiring and getting your approval. >> how many people can you hire? >> we can hire as many as we needed. >> i think this shows we don't have it -- there isn't a clear budgets. mr. mccool, is that a fair assessment, there hasn't been an appropriations for this committee? >> i don't really know him that

this is quite a challenge to. mr. barofsky. >> congressman, we have the t.a.r.p. to look after, we haven't been looking at the funding of the congressional oversight panel. >> the inspector general offices in appropriations. mr. mccool, in terms of your panel meetings -- i'm sorry, prof. warren. >> i'm sorry, a loss to you were talking to. >> i don't have much time. prof. warren, is it true of regular panel meetings? can i guess we did. >> are those publicly disclose? >> the lack we have the meetings yes. >> no, the panel meetings. >> we have business working meetings that are not public meetings. >> so you have a panel of how many members? >> we had a five member panel and senator it sununu has

resigned and we have a four-member panel. >> will you meet in session for the purposes of transacting business, is that open to the public? >> we have working my meetings that are not can i do have minutes of that meeting? >> i don't have a transcript bart minutes. >> is a transcript -- >> is reported by the sense, recording office but no i have not seen as transcript. >> is a transcript available for your meetings? >> publicly? >> members of congress, is that available? >> not available publicly, no. >> i am a member of congress, am i able to get a copy of the transcript of your meetings? >> i believe our transcripts are held an office and if you want to see them dashed. >> would that be available? >> i believe you would be able to if you wish to commend so you'll make that available. >> if you wish to come to our

office. >> why are the transcripts not available to the public? kim and these are working meetings of the panel and we discuss the great deal of confidential information. and so they were never public from the beginning. i should remind do we do hold public hearings. >> is this an executive session? this is what is interesting. you are an oversight panel yet you don't disclose your meetings and what happens and what transpires in these meetings and the decisions you make further votes taken at these meetings? so we don't even know what the votes are much less how this report was created with this panel said is no disclosure from the oversight panel. you think that is perplexing were strange? >> we have working meetings when we discuss confidential information and issue a public report every 30 days in a report on that vote is made public

every 30 days and each of the members is untitled part of that process to add additional views if they wish to do some. >> i think it is quite perplexing that an oversight panel would disclose their meetings and even read that confidential information in your capacity which is done throughout government but it seems like this is a very removed from the public and pretty non transparent for a board that is demanded transparency from t.a.r.p. funds and the treasury in general -- to find the problematic? >> what i would find the. >> and she could finish. >> i would find it quite problematic if we discussed sensitive information about the t.a.r.p. recipients, about the increase that to be were

pursuing an that were a matter of public speculation as soon as we finished saying its. my sense is we need an opportunity to work together and that is what we try to do, but issue public reports every 30 days and hold public hearings at least once a month. >> thank you for the questions, mr. mchenry and next the chair will recognize mr. christopher lee for five minutes. >> thank you mr. chairman. mr. barofsky come out like to ask a question and yield some of my time, but just a follow-up on the discussion on the first panel with mr. allyson is conventions some companies have been getting mixed signals and answers in terms of what is coming out of treasury and requirements paying back the payments were purchasing the warrants with regulations are stipulations and frustration and the work that your office has

done have you found the government has been very clear in terms of what is demanded repayment of the funds or have been foggy? >> with respect to the warrants on it is pending an ongoing so i am not prepared at this time to give a a conclusion that would come out of that audited so it is premature for me to in answer that question. i also have heard from some of the small business committees about the with the stimulus for the t.a.r.p. funds have been distributed. the committee had a hearing yesterday on the whole issue too big to fail the whole committee and one of the things we think we miss is the whole too small to save many banks or small business with impact and the majority of the funds the larger institutions but after about six months the administration has started finally to talk about actually looking at the small business and go and focusing in that direction which is smart and prudence and as you know and the first boy around we have the

amendment before this committee that would have added authorizing legislation that would require you to report on small business activity as part of inspector general obligations. is that something you thank you to look at your next report to some measures on small business participation of the t.a.r.p.? >> i think it would be when we could do is the information we already have it perhaps from a survey and what banks are doing with respect to what they're saying. we don't really have the resources are mechanism to do exactly what to resign and falls on treasury barrett that as a basic part of treasury's obligations under the concept of transparency. they should be doing that assessment and making that information available and goes to the heart of our transparency recommendation by use of funds and how the institutions using the funds with respect to small

businesses and reporting in the trans -- reports but steps they're taking for small businesses. we have to work with your staff and if we can think of some other ways where we could contribute to that transparency we're open to suggestions and look for to following up with you on that. >> i do want to commend you for your work and you have been helpful and i to yield the balance to mr. mechanic. >> i think my colleague, prof. warren, just to follow up the fact that there is an unknown budget that has been allocated in to my knowledge from the legislative branch appropriations there wasn't a line item for that. and i would ask gao to end it sigtarp if you all could take a look at that and perhaps answer how that actually works if the chair does not know. i know you don't have purview.

>> i am prohibited by statute by doing that. >> is late in the day is so obviously i am missing the things here, but prof. warren, you have testified before this committee about the consumer financial protection agency, last month, right? >> yes, congressman. >> and i saw you to video and a few thousand other sought as well in your advocacy of prayer is the fda can i guess congressman. >> is that part of your official role as head of the congressional oversight panel? to make as part of my role at harvard law school to madison to your official resources at harvard. >> as for my personal resources, i wrote a check for it. >> youtube is actually pretty cheap. >> i wrote a check whether out of pocket expenses to produce

the video. >> you have a producer? and that is good. it is youtube, i understand and there is a lot of conjecture you'd be head of the cfpa of congress does pass that. but no official resources of the congressional oversight panel has been used our staff has been used in your advocacy? >> note can i good to know and i yield back. >> thank you. chair recognizes mr. lee for five minutes. >> thank you. before i start and you want to thank everybody for the support of french origin to do to protect the taxpayers, it is very commendable. i will start off with mr. barofsky, we have a chance to meet in the past and i appreciate what you have been doing a one thing that scares me is the plant that on their oversight and risk i heard between 2.3 to $2.8 trillion and

that the total potential support government my response to the crisis could reach close to 24 trillion. those numbers are fairly accurate. >> that explains the 24 trillion to put in context what we did in a report in section three we give a summary of about 50 different support programs outside of the t.a.r.p. and for each of those calculated how much is currently outstanding with a high water mark since the inception and then what the maximum amount of the government has said it would commit to the programs so the amount outstanding 3 trillion, high water mark for .7 and the 23.7 trillion represents everything was max out is not likely that would ever occur but i want to put that on their. >> as kerry number. >> it is absolutely inaccurate number of what the government is

committed to support the financial system. >> in june the cbo scored in any loss of a 160 billion, we are writing off billions to gm, chrysler isn't clear what we're doing it with the funds being repaid by the t.a.r.p. recipients and letters to the secretary of the treasury and the president which two my knowledge have gone unanswered many of us on this panel led by my colleague mr. mccarthy and of california have advocated for this to be used specifically to reduce the national debt. yet others want to recycle these funds and use them for other programs some of which are brand new and am curious from your perspective to believe it's in the best interests of the taxpayer to take t.a.r.p. repayments? >> our respect is a legal one minute thing legally treasury's chairman of taking to the interest or dividends or profits and to rent the reduction of

national debt is clearly was compelled by law under eesa, the treasury is consistent with hola and i have the option to relent that money out of to maximum of $700 billion. >> as long as eesa is permitted to do so which is to the end of the year. >> the part that i keep hearing from people taxpayers is take the money and then throw it out there and keep adding more bisque and eventually the debt obligation that we have is staggering. i'm curious from your point you have been an advocate on perhaps -- perhaps behalf of the taxpayers and i'm curious whether they're better served by paying down the debt or spending t.a.r.p. for other purposes? >> i think congressman, this is really the policy choice that congress should be making. in the legislation is ambiguous

on this point and treasury has made its position clear that it is going to use the headroom analogy that mr. allyson talked about so if congress wants something different then congress will how to have legislation i think to change that chemically that i'm going to yield back. >> ms. bachman, your upper questions, please. >> mr. chairman, thank you and i agree, thank you for being here. it is a long day but to have been very responsive and we appreciate the great information you may available to us. i was listening to the previous one of questioning on meetings and did i understand correctly and i guess this would be prof. warren, you mentioned that a member of congress requested a transcript of one of these meetings of the panel we could get it? maybe i did not understand.

>> congresswoman, i was surprised by the question so let me reticulate are clearly -- we don't have official transcripts. unlike your circumstances where there are published as cubs, members of back and correct the language and identify who spoke and who did not, we have not verified transcript, we have no official chance cramps. we have typing that comes back from someone who listen to our tape was not part of our panel. not part of this process and no one has verified the accuracy of any part of it to banks of the meeting said to have that are not brit is the forum members now was five members, when the five members meet our when the four members meet are those recorded? >> we have working meetings that have been recorded to banks of those meetings are reported, so are they transcribe were

recorded from? >> they are in recorded form and as i understand there is a transcription service can and so we can get those transcribe it possible for us to have the transcription of those meetings? >> i actually had not consider this because no one had asked and i am a little hesitant to commit might come panelists to a process when the sun verify transcripts. that is something that should lead to someone who is not there and never been a very fine to make that is something that would want to know as a member of congress if the panel is meeting as a panel whether the final of the four and of the meetings are recorded it seems to me that they could be transcribed and i don't know what the verification processes. the reason i'm asking is island yesterday that to requests were made to access to those

transcriptions and those requests were not honored and i have no reason to doubt the calls for transparency and the treasury department wants to be transparent, i have no reason to doubt that at all but it seems that is in conflict were on one hand the treasury is and they want to be transparent and, on the other hand, why can't we as members of congress at least receive it transcribed copies or even if we members of congress can't receive a copy of the end of the members of a panel that's it on the panel to receive the copies of the transcribed recorded meetings? >> congresswoman, he may be aware this is a matter to some discussion with the panel and the panelists themselves have and reviews on this and those views are currently in discussion. we have been trying to work out something that is congenial to all but i have to emphasize

these are working meetings where we discuss lines of inquiry. >> i understand that and i understand it is possible to read that material and one thing i wanted and i guess is the point but does the congressional oversight panel have a phone number? >> i believe we do. >> you do, very good and can we get it? >> certainly. >> so we would be able to: make that request for the chance scribers -- the recordings of the transcriptions? potentially. >> as i said to congressman kendrick, i believe it would be the case and i really must add the qualification, as i said before i am not the entire panel. >> so no decision has been made about the transparency of those hearings -- we know that are put upon the public for record, but no decision -- is seems to me on

the that if the commitment is transparency that we wouldn't be able to receive those hearings both made in those meetings. >> as i said it is our working meetings and perhaps the correct analogy would be. >> working meetings and any other meeting, what is the difference? >> public meetings where we do not discuss matters that should not be in the public domain. >> but on these public meetings? camerino that are not to command their meetings of the committee can and there are formal meetings of the committee members. >> these are working meetings, i don't know what formal means king and the gentleman's time has expired and i will advise to the members that they have additional questions or other questions or like to pursue you have a right to submit that in writing and without objection the hearing will remain open for 30 days to submit written questions and have their responses on the questions for the record. >> mr. chairman, if i may just

clarify a with the witness said in answer to my question verses' congresswoman bachman and i want to make sure that i have a correct understanding. >> we have another meeting scheduled at 530 so i will deny the gentleman's request. >> said an inquiry? >> they will be answered within 30 days to my parliamentary inquiry? is there -- at what point will a transcript of this meeting be available? >> i don't know that we have a transcript of this meeting? >> there will be one -- of the gentleman yield to me -- we have a pretty hard working staff since we've had a lot of hearings but i was a rather than wait for a whole transcript if there is a particular piece that the gentleman is concerned about we could have a this and i refer is prepare that piece for him. >> thank you. >> in whole transcript may take awhile, but a particular piece

we could bring out so if he would designate to the staff which you want to look as though you can formulate based on that and get it tomorrow king and thank you mr. chairman. >> i want to thank all of the witnesses for the testimony and this gives a better understanding of how the t.a.r.p. process works and we need to continue to keep pressing for taxpayer protection press t.a.r.p. and look for to working with republicans and democrats. these issues should not be partisan, we're all in this together. as well as the treasury department, the hearing is concluded. [inaudible conversations] [inaudible conversations]

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overcome a filibuster. this portion of the debate is a little more than two hours. >> mr. president. >> senator from south dakota is recognized. >> this is a very simple amendment to allowing the tools to protect themselves while at the same time protecting states' rights. my amendment would allow an individual to conceal a firearm across state lines if they

either have a valid permit or if under their state of residence they are legally entitled to do so. my amendment does not create a national concealed permit carry system or standard. my amendment does not allow and vegetables to conceal and carry within states that do not allow their own citizens to do so. my amendment does not allow citizens to circumvent their home state's concealed permit law. if an individual is prohibited from carrying firearm under federal law my amendment would continue to prohibit them from doing so. when an individual with a valid concealed and carry permit from their home state travels to another state it allows their citizens to conceal and carry the visitor must comply with restrictions of the state that they are in. it is carefully tailored amendment would ensure a states border is not a limit to an individual's fundamental right and will allow law-abiding individuals to travel without complication throughout the 40 states that currently permit some form of concealing and

carry. law-abiding individuals have the right to self-defense especially because the supreme court found police have no constitutional obligation to protect individuals from other individuals. the seventh circuit explain it is most simply in the 1982 that was versus tepito decision and i. quote there is no constitutional right to be protected by the state against being murdered by criminals or mad men, end of quote. responsible colin ownership by law-abiding individuals provides a constitutional means by which individuals may do so and responsibly conceal realtors have repeatedly proven they are effective in protecting themselves and those around them. reliable empirical research shows states with concealed carry all enjoy lower crime and violent crime rates than those that do not for example for every year a state has a concealed carry all the murder rate declines by three per cent, rape by 2% and robbery by 2%.

additionally research shows minorities and women tend to be the ones with most to gain from being allowed to protect themselves. the benefits of concealing and carry extent to more than just the individuals that carry the firearms. since criminals or on able to tell me is and who is not carrying a firearm by looking at a victim they are less likely to commit the crime when they feel they might come in direct contact with an individual who is armed. this deterrent mr. president still strong a department of justice study found 40% of felons hadn't committed crimes because they feared the perspective dictums were armed. additionally research shows nonrestrictive conceal and carry laws are passed only does it benefit those who are armed but also others are around them like children. in addition to the empirical evidence there are anecdotal stories as well. recently a truck driver from south dakota, a long-haul trucker ten years ago on a trip

to atlanta stopped at a truck stop in georgia. he shared this story recently. it's a more dated story but a man suddenly jump on the hood of his truck, shows a gun and start demanding all the cash this driver has three working on instinct he pulled out a firearm he always keeps and showed the gun to the perpetrator who jumped off and ran away as soon as he saw it. that story while one that may not make it to the crime statistics or the newspapers is the type of story individuals my amendment will help law-abiding individuals to travel from state to state either for work or pleasure and so it is straight forward mr. president, the amendment as i said simply allows those who have concealed carry permits in the state of residence to carry firearms across state lines respectful of the law that pertains there are

individuals precluded from having guns he'll carry and in those states this amendment would not apply. obviously we are as i said before respectful of the states' rights and state law that have been enacted with regard to this particular issue. but i might say we have a national reciprocity understanding national reciprocity concealed carry understanding with all the other states in the country and so the other 47 states were a fan concealed carry any of those residents of those states who have concealed carry permits can carry in the state of south dakota. there's ten other states who also fit into the category and i believe if you check the records and look at the data it is pretty clear that the states of enacted national concealed carry reciprocity agreements have not seen as has been suggested by opponents of this amendment any increase in crime rates. this is something that i believe

mr. president is consistent with the constitutional right citizens in this country have to keep and bear firearms, and we have as i said 40 states currently today who have some form of a concealed carry law that allows other individuals and states residents of their states to carry. this simply extends the constitutional right across state lines recognizing that their right to defend oneself and the right to exercise that basic second amendment constitutional right does not and at state borders or state lines and so mr. president i hope that my colleagues here in the senate will adopt this amendment. it is a common sense approach to allow more people across the country to have the opportunity to protect themselves when they are threatened and as i said before the statistics bear out fact when that is the case, when people have that opportunity and states that have enacted concealed carry laws have seen crime rates particularly violent crime rates go down.

mr. president, i reserve the balance of my time. >> the senator from illinois. >> mr. president i rise in opposition to the food amendment. the senator from south dakota tells us this is a very simple amendment read he tells his amendment is consistent with self-defense and the reduction of crime. the senator from south dakota cannot explain why 400 mayors, the international association of chiefs police, the major cities, police chiefs association and bipartisan association on a state legislators against illegal guns oppose the so-called very simple amendment. here's why they oppose it. the film amendment provides if the state gives a person a permit to carry concealed weapons that person is free to carry concealed weapons and 47 other states and the district of columbia. those other states would be

required to let this visitor carry a concealed loaded weapon in their state even if their laws in the state wouldn't allow a person to carry a gun. let's be clear about the effect of this amendment. there are 36 states with laws governing who can carry concealed weapons in the state including which out-of-state permits the state will accept if any. the states already have laws under the thuna amendment those laws can be ignored so if the thuna amendment becomes all people who are currently prohibited from carrying concealed guns and the office 36 states are free to it is absurd we are considering this amendment. today we know nothing about the impact this amendment is actually going to have across america. how many senators from the 36 states that already have laws governing concealed carry have

had a chance to talk to the state law enforcement officials about this amendment and what it means? apparently those who support this amendment want to move a very quickly. we had scheduled a hearing supposed to take place tomorrow on this amendment before the senate judiciary subcommittee on crime. but the senator from south dakota didn't want to hear from a hearing for the committee. he asked the senate to take up this measure today before the hearing date. now here are some of the reasons this amendment is so troubling. as my colleagues know, we system. a government in washington and a national government and in each state and the district of columbia, state government and local control states have adopted different standards in their state with regard to the state will permit to carry concealed weapons. each state has considered this

issue and decide what is safe for their residents. elected representatives elected by the people have made the decision state-by-state. some states have very rigorous standards of you want to carry a concealed weapon for example a number of states will allow you to if you were an abuser of alcohol, if you've been convicted of certain misdemeanor crimes or if you have not completed a training course to show the you know how to use a gun the states have established that standard. if you want to go back into these states you better not be a habitual drunkard or in a position where you've committed these misdemeanor crimes and have to prove by test and sometimes on the range you can safely use this gun than you want to carry. an iowa you can't have a permit to carry a weapon if you are addicted to alcohol or if you have a history of repeated acts of violence. in pennsylvania individuals convicted of certain misdemeanor crimes such as impersonating a

police officer cannot have a concealed carry permit. south carolina and the person who's a member of a subversive organization or habitual shocker cannot carry a handgun. california, you can't carry a firearm for ten years after being convicted of misdemeanors including assault, battery, stalking, threatening a judge, dictum or witness. other states in contrast have minimal or no concealed carry standards beyond the baseline of the federal law which applies to all states. for example and number of states including georgia do not require any firearms training for a concealed carry permit. in 2008 a spokesman for the georgia bureau of investigation told the newspaper, quote, a blind person can get a permit in georgia. since all you have to do is pass a background check, and if quote. two states, alaska and vermont do not even require a permit to

carry a concealed weapon. those states like anyone carry a concealed weapon under the thuna amendment people from those states with virtually no standard for concealed carry those people could visit states where they established standards from the safety of their residence and under the thuna amendment legally carry a gun. in other words, the visitors can ignore the law of the state, that the elected representatives and people in that state have enacted. some states do little oversight of the concealed carry permits they've issued. in the year 2007, south florida sun sentinel newspaper found 1400 people in florida have active concealed carry licenses even though they have received sentences, criminal sentences for major crimes including assault, sexual battery, child

abuse and manslaughter. so even in the states with its established standards for concealed carry many of them are not keeping an eye on it. there is no oversight and as a consequence, people may be illegally carrying in one state which has lacked standards and of attaining the permit and no review virtually when it comes to the people who end up with the permits and that person can travel to another state which is established standards for safety of their own citizens and under the film amendment legally carry a gun. if the thuna amendment is enacted, states with carefully crafted concealed carry laws must allow concealed carry by out-of-state visitors who may not meet their own state standards who may even have sexual battery, child abuse or manslaughter convictions. is that going to make us safer? do we want in my state, well, a lawyer would be exception, we

are one of two states that don't but for the other states do we really want people travelling across the border who don't meet the basic requirements of knowing how to use a fire arm? don't meet the basic requirements in terms of their own criminal background? is so important everybody carrying a gun everywhere or do we want to respect state rights? states' rights to determine what is safe in their own state. what we want to overrun a state standard to protect questionable concealed permit to carry folders with lower standards or tolino standards. it's not necessary for us to pass this amendment. to give individual states the ability to recognize each other's concealed carry permits the senator from south dakota said his state welcomes all people who have concealed carry permits but that was their decision. they made that decision in their state. states are free to form concealed carry reciprocity agreements with other states. 12 states already have decided

to honor a concealed carry permits issued by every other state obviously including south dakota. however, 25 other states look carefully at each of the other states and make this decision selectively. they've decided that some states have acceptable standards and some do not. 11 states in the district of columbia have chosen not to grant concealed carry reciprocity to any other state. they want their own a law to govern the protection of their own people. the thuna amendment is a direct assault on those states that have chosen not to allow reciprocity. they are california, connecticut, hawaii, iowa, maryland, massachusetts, nebraska, new jersey, new york, oregon, rhode island. overall the thuna amendment would override a selective reciprocity or no reciprocity laws of each of the 36 states i've mentioned. there are good reasons the state

might want to be careful who they allowed to carry concealed weapons within their borders. let me just tell you succeed as. of what has happened with concealed carry. washington state president clinton granger of today concealed carry permit despite his history of drug addiction and schizophrenia. in may 2008, granger was enough light at a public festival, fired a shot that one person and the fate, second in the rest and then lodged in a third persons leg. cincinnati resident geraldine be easily obtained and ohio concealed carry permit even though she had been previously fined for unlawful transportation of a firearm. in august 2007 she shot and killed a panhandler who asked for 25 cents at a gas station. in moscow idaho, president and arian nation member jason hamilton was given a concealed carry permit even though he had a domestic violence conviction.

and may 2007, hamilton went on a shooting spree killing his wife, police officer and a church and wounding three others. according to the violence policy center from may 2008 to april 2009, at least seven law enforcement officers were shot and killed by concealed carry permit holders. these are law enforcement officers and concealed carry permit holders were engaged or pardon me, charged in the shooting deaths of at least 43 private citizens during that time. in light of incidents like these it's perfectly reasonable for states to decide what the standards will be for concealed carry. the thune amendment would override this authority in the states and basically say visitors from states with a concealed carry law don't have to meet the state standards where they are visiting. the thune amendment is troubling because it leaves law enforcement agencies in the dark about the concealed carry

population on the area and many states law enforcement plays a key gatekeeper role and oversight role of the concealed carry population. under the thune amendment that's impossible. the first person who drives them out of state under the thune amendment may carry a gun and the law enforcement officials wouldn't even have knowledge of it. when you look at the thune amendment along with the amendment offered this year by center in san the repeals the d.c. government's local gun law received disturbing trend we see members from that side of the aisle leading an organized effort to strip state and local governments of their ability to keep their own communities safe. there is no justification for this. the supreme court decision in heller made it clear although the second amendment right is to be respected in terms of rights of individuals that there was still authority to deal with this issue concealed carry. justice scalia and the heller opinion specifically discussed

bill lawfulness and prohibitions on carrying concealed weapons. congress should not require one state law to trumpet another. new york shouldn't have to let visitors on its city streets, be governed by the law of alaska when it comes to carrying guns and it should be up to the state to decide who will carry weapons within their borders. this is not a good amendment. america won't be safer if the thune amendment passes. it hasn't gone through a hearing in the senate. the senator decided to call the day before the hearing was set. i got state law in 36 states and you leave law enforcement with no knowledge of who is carrying concealed weapons in their states' it puts guns in the hands of dangerous people can easily miss use them. this amendment is opposed by law enforcement organizations, mayors and state elected officials. i've received letters in opposition to what senator phil calls a very simple amendment from the international association of chiefs of police,

major cities please state associations, u.s. conference of mayors, collection of 400 mayors called mayors against illegal guns, chicago mayor richard daley, a group of state attorneys general including my own, a bipartisan association of state legislators against illegal guns and many others. the amendment has been criticized and many newspapers including usa today, miami herald, philadelphia inquirer, "new york times," "washington post" and "baltimore sun." this amendment should be defeated. i urge my colleagues to reject it. >> senator from south dakota. >> let me just if i might point out some of the statistics and i will also add in response to the comments from my colleague from illinois that the amendment does not apply to the district columbia. and with respect to the issue of federalism i think it's important to know back in 2003,

there were 70 co-sponsors in the senate for a piece of legislation that allowed retired law enforcement officers and current law officers to carry across state lines. obviously an infringement on the notion of federal laws of the senator from illinois has raised and i also would point out we do know the impact so we don't what the impact of this is going to be any suggestion about what impact could occur are very hypothetical. we do know is there are a number of states that have already enacted national concealed carry reciprocity agreements and in those states we also know what the impacts have been in the impacts have been there's been less crime rather than more. studies have shown there is more the things it done use by victim's than crimes committed with firearms in fact researchers have estimated that there is as many as 2.5 million defensive use of firearms in the united states each year a lot of

those go unreported because no shots are fired there's lots of examples and i've got a list of them here i can go through anecdotally, too and these are those reported by the press where the defense if use of firearms with a concealed carry permit has actually helped prevent crime. there are countless examples of those that have been documented and reported by the press not to mention the estimated 2.5 million defensive use of firearms in the united states each year. now, there are estimated to be about 5 million concealed carry permit holders and the united states today. assuming every instance reported by gun control groups of improper firearm use by individuals with a concealed carrying permit is true, something that can be debated but assuming it is true over an entire year for every 140-20-0857 permit holders there would be one and proper use of a firearm.

put it another way concealed carry permit holders would be 15 times less, 15 times less likely the rest of the public to commit murder. now there are some states who have in large states frankly of issued concealed carry permits and probably one of the largest states is the state of florida. they've had a concealed carry permit law in effect on the stand for going back to 1987 and yet if you look at the 1.57 million concealed carry permits people have invested florida carefully than 167 of those revoked. that's less than one-tenth of 1%. as of 2008 utah which allows both residents and non-residents to acquire concealed carry permits the and 134,398 active concealed handgun permits over the past year they've had 12 revocations 4.009% because of some type of violent crime but

none of those crimes incidentally mr. president involved the use of a gun. during the 1990's and through the decade of the 2,000 so far independent researchers have found 11 cases where a permit holder committed murder with a gun. so i would simply point out to my colleagues, mr. president, the points being made by the senator from illinois they are largely speculative if you go back to 1991 the number of privately owned guns has risen by about 90 million to an all-time high over the same time frame the nation's murder rate has decreased 46% to a 43 year low and title defeat could total violent crime rate has decreased to 35 year low. it is at a time as i said since 1991 the number of privately owned guns is increased by about 90 million to an all-time high and also as i said before, the number of permits issued across the country is about 5 million nationally and mice to the south dakota has about 40,000 but it's

a small percentage of the overall number of americans who could access or could get a concealed carry permit who do and most of them have a reason. most of them will be people like truck drivers going across state lines and some examples i just mentioned there are lots of people who travel. i can think of for example as another perhaps case and which i have two daughters in college. my oldest will graduate next year currently she is on the safe confines of a college campus but it's currently where she attends call for it to the college several states away from iowa state of south dakota. when she's out of college next year i fully expected we've discussed this she may get a concealed carry permit in the state which she presides and have a firearm in order to protect herself as i think a lot of women in the country do particularly those living large cities and she would be living in a large city. when she comes to south dakota she of course trebles several states and during the course she

crosses two states where she would be illegal to have a firearm in her position in her car to protect her as she travels those fastest across several states. and so there are lots of examples i think of people who for law-abiding citizens for purposes of self-defense simply want the opportunity in a legal way to transport the firearm and they have concealed carry permits. they've gone through their states' background check and by the way, all but three states and to issue concealed carry permits require background checks. so the same thing in order to buy a firearm. the suggestion that all these people are going to be able to get firearms the federal law prevents some of the very its symbols of the center for malae mentioned from having access to firearms in the first place and of course the background checks with exception of those states as a practical matter those states which are the hampshire, rhode island and delaware go for the background checks.

they don't have it as a requirement to get a permit but the background checks will be conducted and background checks will be conducted you're going to find of this criminal behavior in the background mental illness, all those things which under federal law would prevent that person from possessing a firearm in the first place. so i would come as i -- i reserve the balance of my time. the senator from louisiana is here but i assume mr. president you want to recognize someone from the other side. >> mr. president. >> senator from illinois. >> i yield six minutes to the senator from new york. >> the center of new york is recognized. >> some would recognize a permit to conceal a gun in one state should provide authority for a valid concealment in another state. i strongly believe what a gun laws are right for new york are not necessarily right for south dakota and vice versa. states should be able to make decisions and pass reasonable constitutional safety standards based on their public safety

requirements, traditions, population, crime rates and geography. it's wrong for the federal government to overrule a state's ability to enact reasonable constitutional gumballs designed to prevent alcoholics, criminals, domestic abusers, those with documented grave mental illness and other potentially violent and dangerous people from carrying guns and our cities. in fact senator phil's amendment creates a double standard in recognition of states rights with regard to conceal. laws. by allowing exemptions and said that validates the laws of states that ban concealed weapons but then strikes down the laws of a state like new york that maintain basic safety standards for a concealed carry permit. at an animal, new york should be allowed to opt out and have an exception. this standard would disagree concealed carry permitting standards moving to a new national lowest common denominator.

this bill would even allow individuals ineligible to obtain a permit in their own state the means to shop around for a lower standard and other states that offer permits to out-of-state residents. undercutting laws that would otherwise render the applicant and eligible. a study by the brady center to prevent gun violence using fbi crime standards statistics demonstrates relaxing conceal and carry laws may have an adverse affect on a state's crime rate. between 1992 and 1998 the violent crime rate in states which kept strict conceal and carry laws fell by average of 30 per cent whereas violent crime rates dropped by only 15% in states with weak concealed carry laws. a second concern is lack of acceptable safety standards in all states. according to "the washington post" and at least two-thirds of states, some form of safety training is required to receive a permit. abusers of alcohol prohibit from getting a permit and those

convicted of certain misdemeanors are prohibited. in many states statutory requirements are minimal and do not go much beyond the federal brady law requirements for purchasing firearms meeting some people get conceal and carry permits despite criminal convictions for violent or drug-related misdemeanors assault or even stocking. it is not completely evident what a national overrule state conceal and carry laws blight due to local crime rates but trends and the national crime suggest state and local governments understand what works in protecting their citizens. our cities and put people at risk by enabling anyone with an out-of-state permit, including gun trearvetion to carry multiple handguns whereever they go. new york's strict requirements as to who can carry a weapon have stricted to the city's unparalleled safety.

our efforts, our entire mission, would be severely undercut by this bill. in a city where 0% of all guns used in crime come from out of state, it is easy to see how senate bill 845 would pose a danger to new yorkers by greatly increasing the availability of illegal handguns for purchase. illegal handguns for purchase. new york is have the lowest crime rate of the 25 largest cities in the country and of the tudors 61 cities with more than a hundred thousand residents york's crime rate banks to a 46. mayor bloomberg such a bid this to using innovative policing strategies and focus in on keeping guns out of the hands of criminals. this with the washing impose added that similar success in reducing crime in big cities across the country is sitting york committees in los angeles on trial earlier killings this year than in the last four decades of. this is part of a larger share and in many big cities across

the country. our local and state elected officials of long prison officers face across the country such as the international association of chiefs of police and major cities to association are speaking out in opposition to this amendment. mayors against illegal guns, a bipartisan coalition of 450 mayors including mayors of our cities like new york city, albany, rochester representing 56 million americans have also sent is strong opposition to this amendment. i stand here today with law enforcement and the cities and states across this country. they know what is best in keeping their communities safe. common-sense gun laws focus on training, keeping guns out of the hands of criminals and other dangerous people reducing crime and we should be supported their efforts, not taking the standards. i strongly believe in our constitution and the second amendment americans tried to defend themselves, however i

also strongly supports this is his city's rise to provide basic constitutional and reasonable regulation of firearms. i urge my colleagues in the senate to set up for our local communities and the common-sense down save a loss. >> to yield the time? >> mr. president, i yield to the senator from louisiana as much time as he may consume to memphis senator from louisiana is recognized. >> mr. president, i rise in strong support of the seventh amendment 1618ma craddock co-sponsored by senator sam along with dozens of other senators on a bipartisan basis and i urge all of my colleagues to support this amendment. this second amendment is a valued constitutional right and they got course particularly in recent years have expressly recognized that. of course, the supreme court in the landmark keller decision role that the individual rights,

the individual rights and possess and carry weapons in case of confrontation is a protected fundamental constitutional right. even the very liberal ninth circuit court base in california ruled that this item right to keep and bear arms is deeply rooted in this nation's history and traditions. and has long been regarded as two palladium of liberty. and also said that nothing less than the security of the nation, the defense against both external and internal threats stress on the provision. not that is why this amendment is of particular. as a fundamental right and what does that mean every day terms? it means to the ability of citizens particularly those moral level in our society like women to protect themselves.

people like to fontanel in louisiana who told me when my family and i go out at night it makes me feel safer just knowing i am able to have a my concealed