well. chairman bernanke, i just want to ask about your legal authority, the fed's legal authority. so the fed can purchase sovereign debt of the united states. and has. does the fed have legal authority to purchase other countries' sovereign debt? >> it does for the purposes of reserve holdings. and we currently hold a small amount relatively small amount of debt of very high quality. i think it's french, germany, japan. but we are not engaging in purchasing debt of troubled countries. >> but that could be considered? >> we are not considering it. >> okay. >> congress made clear in earlier discussions, some decades ago when this issue came up that the purpose of this authority was to maintain foreign exchange reserves. i don't think that it was the

intent of congress that we get involved in you know, sovereign debt issues and it's not our intent to do so. >> well, beyond that, does the fed accept as collateral for foreign debt sovereign debt of foreign countries? >> well, some of the debt we simply own as part of our foreign exchange reserves. in other cases, we have various kinds of short-term repurchase agreements and other kinds of arrangements where we do take collateral for a short period and again, we are making sre that we have sufficient haircuts and so on to make sure that we're comfortable with the safety of those short-term arrangements. >> okay. thank you. secretary geithner, i've got a few questions about the international monetary fund. and within treasury, you have a designee who serves on the 24-member executive committee of the imf.

in terms of the actions taken with the recent imf loan to greece, were you involved in that process? was that a discussion you were engaged in? >> absolutely. you know, we're the largest shareholder in the imf. we so we pay a lot of attention to any meaningful decision the imf makes in that context. >> looking at that, looking at that, would the -- is the treasure ril --is know you've mentioned this before but i just want to raise the issue again. is the treasure ril, are you considering additional contributions to the special imf european bailout fund. >> no, we're not. our judgment is the imf already has $400 billion of available resources it can use if necessary to help support the needs of its members.

europe, of course, has very substantial financial capacity to put behind their strategy to resolve this crisis and therefore, we do not see the case for coming to congress and asking for more authority in this context. >> okay. is the treasury considering being involved in the imf's nab, the new arrangement to borrow facility? >>. >> we are in that already. congress authorized us to participate in that so yes, when the imf draws on the new arrangements to borrow like a supplement.pool of resources then yes, like when the imf draws on its quarter resources we do participate in those drawings. we will have 60 years of experience was how the imf equips itself in that context and the record supports our judgment that there is ves substantial strong financial safeguards that protect the interests of the u.s. taxpayers in that context. >> under dodd frank and i know you've been supportive of this, but a number of provisions in

there is, one in particular dealing with imf. when our designee, your designee and our country's designee to the imf engages in a decision to loan money to a country that has great greater debt, they have to present congress with an understanding why they made this decision and what the credit risk is. is that being done? >> absolutely. of course, there's a rich history, long history of congressional mandates on the votes we can cast on the institution. that's one of the more recent once. we'll meet the test of that provision. >> it's a 30-daypro vision so we would expect that within the next three or four weeks. in front of congress, the decision making thering? >> and the way that provision is structured as you said, in some circumstances where the existing level of debt in the country is high, there's a higher burden on

all of us to make sure that the reforms that come with this assistance give us a reasonable prospect that it's going to be improving the path to sustainability. >> we look forward to that report. >> just to clarify for the record if i heard correctly, the imf doesn't maintain a whole pile of money but the ability to draw by the members based on an allocation. so for the american people to understand, you're not coming to us for new money but there will be distributions at times within the current limit that just occur as a result, a trigger so that they don't sit there with all our money but the tact is, they will be taking our money. is that correct? >> you're exactly right. the way the law of the land is structured, we can't lend money to the imf without the authorization of the congress of the united states. congress authorizes the scale of the financial commitments we can make. and what happens is as members ask the imf for resources if they meet the imf's conditions and can draw on those resources, then we provide a part of those

resources. again, the exposure we take is backed by not just a substantial amount of imf gold but a set of other other of financial safeguards so our interests are protect. gentleman from virginia, mrmr. mr. connolly. >> come to both our guests this morning. mr. geithner you noted in your testimony that will ireland and spain ran large fiscal surpluses, yet they were victims of financial crisis con taken on. you know theed that spain reduces its deficit since the austerity measures since the on set of the crisis. do you believe that there's some lesson in that? i would have guessed that in order to have this kind of crisis, both ireland and spain would be deeply in the hole of debt. how did that work? >> you're right. i think the popular perception is that the crisis in europe is overwhelmingly the result of decades of fiscal provefully

gassy. that's not really quite right. it was certainly true in greece where following the advent of monitoring the european union, greece dollars substantially expand the size of its borrowing and the government grew to unsustainable levels. there's other countries what you saw was a very large rise in private borrowing in the banking system and by the private sector, huge rise in private debt as a share of the economy and a damaging loss in the relative competitiveness of their byes relative to germany in that context. and when the crisis hit and confidence eroded, their fiscal positions did deteriorate dramatically but the fundamental cause of the crisis was not a long period of extreme fiscal provelygacy. >> mr. bernanke, one of the medicines recommended here

obviously is draconian fiscal austerity measures. we have a new budget out yesterday that certainly subscribes to that philosophy. many european countries actually adopted that policy in terms of austerity measures. did those economies grow faster or slower than the united states since 2009? >> well, the economies of europe with the exception of germany to some extent have grown significantly slower than the united states over this period of time. for probably for the reasons you said. their crisis was more acute than ours. they're in an earlier stage of adjusting to it. they reacted more tentatively and with less overall force than we did in the united states, and for those reasons and the scale of the challenges they faced beforehand, growth has been weaker in that context. i think the basic lesson in this context is yes, you want to be very careful to try to balance the imperatives of restoring fiscal sustainability with the recognition that ultimately both

long-term fiscal sustainability, not just the immediate health of your economy depends on your ability to get the economy growing again. >> one of the comparisons that often is decided by some even here in this body is that the united states if it's not careful given its debt posture and lack of fiscal discipline is going to look alarmingly like greece. i personally find the comparison invidious and upon any examination lacking in any serious comparison given the fact i refer, for example, to michael lewis' book on the european crisis. it is shocking what went on in greece. they didn't have macro economic data that was reliable. they actually engaged in outright deception when eu officials came to examine the books. they didn't know how much debt they had. they didn't have any kind of central control over their own economy at all, unlike the united states. and but i'd like each of you if you'd care to comment on that

comparison. is the united states headed toward going down the road of greece? >> congressman, it's certainly truly that situations are not directly comparable. first greece's debt trajectory looks a lot worse than ours or that of other industrial countries. secondly, the economy is a smallest diversified less strong economy in general, less competitive. and you know, their short term issues cannot be ameliorated by a policy since they're part of theyer zone. that being said, i think we all understand that there are long-term fiscal sustainability issues in the united states and what we need to do is find a strategy that will credibly and convincingly put us on a path towards lo sustainability

without doing undue daniel to the recovery. >> thank you. >> secretary geithner. >> no basis for comparisons with greece. important for people to recognize our long-term fiscal position is actually we're in a much stronger position than the continent as a whole. it's partly because our economy is will grow past faster than europe's over time. probably because we're a younger country. probably because the commitments we've made to health care and retirement security even if you know sustainable are much less generous than is true in europe as a whole. those factors and the one the chairman meant mean we're in a fundamentally different position and more comfortable position. but, of course, in, the united states as well our deficits are unsustainable over the long run. we have a little more time in how we address those. very important as we address them and we need to address them, we can't put them off

indefinitely, we do this in a way that achieves the necessary balance to help the country recover from an economic crisis but still restoring us some gravity to our long-term fiscal position. >> gentleman's time has expired. mr. gowdy is recognized for five minutes. >> mr. chairman, is there as interconnectivity between cost of energy and economic recovery? >> yes, there is. particularly when there is a supplyside element which there appears to be given some reductions in available supply and tensions in iran and so on. higher energy prices create at least short-term inflation pressures and moreover, they act as a tax on household purchasing power and reduce consumption spending and that also is a drag on the economy. so yes, higher oil prices, higher energy prices are a concern.

>> i think the price per gallon in europe is about double if not more than what it is in the united states? >> yes, because of much higher taxes. >> so can you imagine any scenario under which someone would advocate for boosting our price per gallon to european levels? >> well, there are a lot of policy issues related to that. >> i mean an economic reason, not environmental. economic. >> well, the question is whether or not there are other goals that are served, environmental goals, congestion goals and the like. >> i'm just asking from an economic standpoint. >> from a purely you know gdp growth perspective, i think you know, i think higher energy prices would probably slow growth at least in the short run. >> well, what word would you use to describe it if our price per gallon talismanically doubled? >> that would have a cat

tooffic -- >> i wouldn't say catastrophic. it would have obviously a very negative effect on consumers, consumer confidence, real incomes at the same time that it would push up inflation. >> thank you. mr. secretary,ing what is our debt as a percentage of gdp currently? >> i can give you the precise numbers in writing. but as we measure it. >> i'm not going to hold you to a precise number, just something round that a lawyer can understand. >> as we measure it, which is debt held by the public and we try to measure it net of financial assets which is the appropriate way to do it financially, our debt to gdp ratio is somewhere between 60 and 70% of gdp today. >> since i have been here, there has been one request for an increase in the debt ceiling. i understand there's another one coming. i don't know whether it will come before the first tuesday in november or after the first tuesday in november. i want you to assume, again, i'm

not going to hold you to the number. you don't need to go research it. you're smart enough. i've seen you testify before enough to know you probably will be able to answer this question off the top of your head. if this were the last that ceiling increase you could ask for, the final one, and you had to make it large enough for all currenten an future obligations, what would the request need to be? >> well, i don't know how to answer that question. let me answer it slightly differently. it makes no sense for the country since congress controls how much we can borrow every year, we have no independent authority to spend beyond what congress authorizes for congress to put itself and its members in the position every six months or every year to hold a politically difficult vote whether they should continue to authorize us to do things they've already authorized us to do. you're talking about the future. the best way toy. >> well, the last debt ceiling increase was for how long and for how much? >> well, understand the deal we

reached last august, we set up a mechanism i believe where congress imposed on itself three votes over a 15-month period. >> what will be the amount of the increase in november or december? >> well, it depends. congress makes this choice and the congress has to make the choice based on how much time they want to give them. >> but you've seen the numbers. in fact, i laid a note. you used the exact same word that chairman ryan uses. i hope they don't run any ads showing you pushing a senior citizen off a cliff in a windchill for using that word. you just used the word unsustainable. my question to you is, if we had one more chance to borrow all the money that we need, assuming current variables, how big would going that number have to be? >> i don't know how to answer that. i think that if you -- let me try this a little differently. you'll have to decide as a member of congress how much time you want to give congress before

you have to vote on it again. larger number you create -- again, the debt limit doesn't decide how much we can borrow. you decide how much we can borrow because every year you decide -- >> how much debt would we need to meet current and future obligations assuming the status quo indefinitely? >> that i'd be happy to give new writing. >> how about a round number? >> no idea. i just can't do it in writing. if your question is if congress authorized no additional increase in spending or revenues forever. >> right. >> how much we have to borrow? i can doing that question in math. >> $20 trillion. >> i can't do it in my head. >> $50 trillion? >> i don't know. i've seen you work before. you're smart, you're quick. >> not smart enough. >> a lot? can we agree it would be a lot? >> would be a lot, it would make you uncomfortable. >> thanks, thank you mr. chairman. >> it would make you uncomfortable. interesting transition. miss holmes norton is recognized for five minutes. >> thank you, mr. chairman.

and thank you, sect geithner and chairman bernanke for being here. every country and every culture, of course, is very different and it's very risky to go looking at cultures whether it's greece or some cultural country that you perhaps admire. i want to -- i do want to ask you about germany. we are -- there are some in the congress who believe that the way out of our present recession and dilemma is to impose draconian cuts repeatedly. even forsaking the budget deal, that was very difficult to reach was reached at a huge sacrifice, the loss of our aaa rating. the -- i look to europe. this was a worldwide recession. and look at the difference among

the various countries. the british seem to have adopted something of that approach. approach to emphasize retrenchment over growth. i'm intrigued by germany. everybody's favorite example of the strongest economy in europe, perhaps the strongest in the world today. and do not understand and believe we need to come to grips with the theory that they have embraced during this recession. they are one of the few countries in europe not to cut the budget deficit. i take it wasn't terribly out of control but i don't know. i'm going to ask you. and in fact, they've added to their deficit certainly in 2009 and 2010. one of the few countries in europe to do so. i'm truly intrigued by a country

that did not abandon its working class, did not abandon its clas net, has a national policy that has maintained keeping unemployment low. i know they have some things that are culturally oriented to them, like work sharing and the rest. they also, of course, subsidize employers to keep people on the job. we do that in a scattered fashion. i believe we have to come to grips with why this country continues -- it's a country we identify with so closely. we need to come to grips with their model and how they do it. i have to ask you, how has germany maintain ed and continud to grow without cutting its budget deficit.

>> let me take a first stab at that. germany has achieved quite a bit. when they had reunification a couple of decades ago, there were significant problems with the efficiency of their industries, trying to integrate parts of germany together and so on. and they made a very sustained and successful effort to increase the productivity of their industry, which is all to their credit. in addition, though, as part of the eurozone, they have benefited quite a bit from that arrangement. first because they they have sort of an export market that they have easy access to. and, secondly, because the euro, which is an average of the -- reflects an average of the economic strength of the different parts of the eurozone is probably weaker than a deutsch mark would be, which means they have something of a currency advantage, to some extent, in their ability to

export. >> just like we have a currency advantage? >> i don't know about that. >> not today. all right. >> yeah. >> certainly we had -- >> this is more permanent, i think. they had work sharing policies, which in this particular case is a question whether that's a good strategy in general. sometimes it could promote inefficiency, because there's not moving of workers -- >> of course, no one claims that they're inefficient. go ahead. >> they avoided some of the sharp layoffs we saw in the united states and their unemployment rate remained lower. in fact, it's lower today than it was before the crisis. that, in turn, meant that their fiscal stresses haven't been as great as the united states or other countries. they've had a number of things supporting their economy and certainly deserve credit for their improved competitiveness. but it is a -- it is the case that not every country in the world could be a major exporter.

somebody has to buy. so, that model is not necessarily exportable in itself to every country in europe. >> gentlemen lady's time has expired. gentlemen from ohio, mr. turner, is recognized for five minutes. >> thank you, mr. chairman. secretary geithner, the title of this hearing is europe sovereign debt crisis, causes, consequences and lessons learned. focusing on the lessons learned, an issue from europe which stems from my concern of the bailout process that has gone through in the united states. and largely, as we look to what occurred in the u.s. with bailouts, i think many people, like me, have a significant concern of conflicts of interest, issues of lack of transparency and a lack of

openness. mr. secretary, as we look to the auto bailouts, you served in three different roles. you served as secretary of the treasury, looking at issues of the taxpayers' dollars and exercising the ownership interest by the united states to the extent that the united states became an owner, frequently, in the auto bailouts. you served as co-chair of the auto task force and board member of the guarantee corporation. you were simultaneously leading all the agencies on every side of the deal in one whole role or another. throughout these processes, you've refused and treasury has refused to answer questions. you provided unredacted documents, disclosed relative information that people have asked to hold accountable the treasury to find out what has occurred, where the tax dollars has gone. delphi retirees, 20,000 people across this country lost a portion of their profits as the three roles of the treasury,

pension benefit guarantee corporation and auto task force picked winners and losers and they were ones that were picked as losers. tens of thousands of retirees left in the wake of gm bailout and then you have concern as to how do we look to the european crisis and whether or not similar conflicts of interests, taxpayers' dollars and a lack of openness or transparency. as you know, as the delphi retirees have tried to get information as to what happened, how they lost their pensions, the three roles of yourself, both in treasury, ppgc and the task force have been closed. documents have not been provided. redacted documents have been provided, if at all. and, most recently, we have the ppgc acknowledging your role in the decision to terminate the

delphi pensions. yet there's a sense of how do we have a system through bailouts where a person like yourself would have the three roles that conflic conflicts exist and yet congress has no ability for oversight. individuals lost their pensions, don't have an ability to hold you or treasury accountable. and seeking additional information. this comes at a significant price. $1.3 billion loss on the chrysler deal, 25 or so billion at risk in the gm bailout. if we look to the european issue, how can we be assured, looking at the performance of what occurred in the prior bailouts, that we're not going to have this issue of conflicts of interest, of lack of trance parns y, that there will be some openness, that people involved in this will have access to information. i sit here as a member of congress, knowing that treasury and -- is not answering the

basic questions about decision making that occurred with the delphi salaried employees losing their pensions and wondering how, then, can we perhaps look at the european issue and not know whether or not our own government is going to be willing to tell us the decisions that are being made and the basic financial underpinnings of the decisions that occur. secretary? >> good question. let me try to be responsive. our financial crisis caused enormous damage across the country. not just in the case of delphi. but that's a good example of how much damage caused by -- led to this crisis. this committee and every other congressional committee in making sure we're as responsive as possible for request for your information and we'll continue to do that. >> does that mean you would be willing to release unredacted versions of the documents? you say you've tried. if you send us documents that are redacted or in litigation that's pending send redacted

documents, you're not being forthcoming. that's not the here's what your government did. >> of course, i disagree with you on that. we'll try to be as forthcoming as we can. every action we took has been four separate independent bodies oversight, established by congress to oversee our actions. all the actions we took in the auto context were reviewed and validated by the courts. checks and balances in our country. >> no, sir. the one with the delphi employees is still pending. >> the secretary can summarize his answer. >> i just want to point out that we have provided an incredible level of transparency over every decision we made with the taxpayers' money that context. rules you described to me are rules congress gave me and my predecessors. there is no conflict in those rules. we have checks and balances, appropriately so, in this country that gives you the authority and the right to oversee everything we've done in this context and i respect and

honor that process. >> gentleman's time has expired. >> i would like to welcome ben bernanke and secretary giethnei. we are so proud of you and thank you, chairman bernanke. i would like to follow up on my good friend's questioning. if we had not invested -- he uses the term bailout, but if we had not invested in the american auto industry, we would have totally lost it. lost it! i don't know about my colleagues on the other side of the aisle, but it's hard for me to imagine an america that doesn't make its own cars. i would prefer to see more things made in america with american jobs. and it was at a hearing at this committee where gm testified they're now the in