require they treat a nomination. secondly, i agree agree we have taxpayer exposure to europe. it's called nato. in 1949 when it was founded and since then hundreds and billions of dollars. it made a lot of sense. it doesn't make any sense today. if we equalize defense expenditures, the situation would be better. on the imf, i must say that given the danger that exists for our economy, if the situation does not continue to be somewhat stable, the notion that we should try to discourage them from participating is hard for me to understand. but i think there's a misunderstanding about the extension in which we have a taxpayer exposure.

i'm going to ask you to give us a list of how much our contribution to the imf have cost us in over the years. the last time they increased it to the imf, do you know what the cost was according to the budget office? >> well, we've had 60 plus years of experience through a rich variety of crises. and we have never lost a penny during the crisis. substantial intervegss in the crisis in the '90s by the imf? >> about the debt crisis of the '80s, the '90s and this crisis. >> so it's not had a negative impact on the taxpayer? >> no. we are careful in terms of what the imf does.

>> we would be increasing the risk to our economy and no savings to the american taxpayer. >> i agree. it would be much worse than that. if the imf were unable to play a role in this context, then we would face much weaker growth, much more risk to the financial system and the u.s. task force would be weaker. i hi we should increase it. it makes a great deal of sense. we buy a lot of stoblt. now, i do want to be honest, the swap between the federal reserve and bank that was referred, it did have an impact on the american taxpayer. would you explain what the impact was? >> well, they are all returned to the taxpayer. i don't know the return on the swap lines. >> but it was a profit? >> in a very substantial profit. >> so as a result of the swap, mr. bernanke sent you a check?

>> yes. >> thank him for it. let me ask you now. e i said before. we had a comparison of the economy towards this advantage. in terms of growth over the last couple of years, what's the comparison between the american and european? even the german are the best. what's the general comparative view? zbr u.s. growth is averaging in the early years of recovery roughly 2.5%. probablily twice the rate in growth as a whole. and significantly stronger than japan. so it is fair to say that we're far ahead of europe in dealing with the united states. and our economy is looking better on really every measure. than certainly the average. >> last question. there's been a lot of concern about american banks exposure to european financial institutions with credit default swaps, et

cetera. if the financial reform bill that was signed in law in 2010 had been signed in law two years earlier, would that have had the effect of lessening the concern we might have today? >> absolutely. absolutely. if they were in place three or five years before, the crisis was less much severe and much better position to manage the effects of the crisis on the economy. but today because of the reforms and the actions we took to restructure them in the financial crisis. u.s. banks are in a much stronger position. hold much more capital against the risk they take around the world. that's a good thing for the united states. >> chair recognizes the gentleman from california. >> the question was asked on the 2010 krsh committee quota. we've had some responses. will they seek authority to

transfer funds from the nabb to the u.s. quota? >> yes, we will. >> so you'll be asking to do it in that fashion? >> that's right. in your testimony you say the reforms will take time and won't work without the ability to borrow. according to the wall street journal they say it could impair the able of h countries to sell the bonds. how could they borrow when they can't sell the bonds? >> you're right. a lot of europeans have expressed concern about the risk. and those are some among the many comments that the fed and rule writers have received about the initial draft proposed rule. the fed is in the process of examing the comments. this plays a coordinating role in the broader design of the rules. we're going to take a close look at how to investigate the

concerns. and my view is we'll have the ability to do that. >> that's a glaring comment. i appreciate your honesty. the honesty alone sends a true message that there's a serious problem with the rule if it has this time of impact when we're looking at trying to assist europe with the imf as far as technical expertise, knowing that we do something like this, that could really set them back, so i hope it will be a significant effort to look at that. it appears the jurisdiction will adopt rules comparable. they had any regulatory task? that will occur in the country. if it will have a huge impact on the monetary system of the financial sector system of this country and globally, that's got to cost us jobs in the country. >> i dot not believe despite the concerns expressed by governments and central banks that the rule presents a

meaningful risk. it's very important we do that. more broadly, of course, you're right to point out that in all the rules we have to find a right balance. we also have to make sure we do so in a way that doesn't unduly damage the broader health of the american economy. and i am very confident that we're getting that balance right. and we're going to be careful to continue to make sure as we take in comments on draft rules that there's a case for adjusting what we do that. >> but you used a good word in there. meaningful risk. and you're in a tough position. i understand that. you're trying to balance many apples at the same time. but when you acknowledge a meaningful risk, and we go to say that the euro zone will be

impacted in their capability to borrow in some fashion because of the rule. >> i don't think there is a meaningful risk. but we're careful people, so we'll look at concerns by u.s. financial institution and u.s. businesses as well as foreign governments as we look at the comments. but i don't think there is that risk, but if there is, we'll address it. >> how do you address the wall street journal's comments when you say it could compare similar bonds, and youing a knowledge that in some fashion? >> no, i don't. i don't think there is that risk. the way the law is structured, there's a set of safeguards to from firms taking risks with a sifty net finance proprietary trading activities. the law is also designed to protect market making and hedging. so the exemptions the law requires us to design exemptions for those activities for good

reasons. but when you design exemptions, you have to be sure they don't swallow the rule. >> but let's go back to the financial services sector. if we're saying that they're going to be under the guidelines requirement to the voca rule and all the other countries are saying we're not going to do that because that would put us at a disadvantage. so we have to acknowledge that they would be at a disadvantage. so that would be ha meaningful risk to the financial services sector. >> i don't think so. but it's a good point. we got the balance in the u.s. wrong. so we need to toughenry forms. if we move reforms up here and the world stays here, we have a problem. >> and they're staying there? >> no. so generally we're trying to pull the world up to our standards. they have different systems of ours. and it might be different in some cases. if you're right to stay if they

stay beneath us the risk will just shift. then we'll be in a race to the bottom and get in a big mess again. it's a difficult balance to strike. but in general, it's not quite right to say that the europeans aren't adapting a similar basic framework. they have different systems. the british are doing a much more radical separation of retail from whole sale financial activity. much more radical. and of course -- >> i wish we had more time, but on this one, this is a significant issue. thank you. >> thank you, mr. chairman. i appreciate the opportunity. i apologize for not being here on your opening statement. but i did read it. recently the european acted to restrict the service of secure financial messaging to the iranian banks that have been sanctioned by the eu. vul the society of worldwide interbank telecommunications was

swift and to be very honest with you, you're going to need to explain that. a lot of people don't know what swift actually is. just continue to service these banks. i do appreciate what you've been doing to encourage the eu and the swift to act in this manner. what do you believe the impact will be? >> the combined effect of the latest sanctions both to encourage them and to mike it much, much harder for countries to pay for their oil from iran and to pay for other activity. the combined impact is very substantial. europe has come a long way to matching the much tougher reforms we've had in place for some time. and their support has been very critical.

we can't do it on our own. you're seeing japan, south korea, china. countries around the world really moving with us to tighten up. we're going to keep looking at ways to bring in more pressure. we're going to look at the most effective balance. but i think we're making substantial progress. and the hope is, of course, that it will alter iran's calculations about their interest in pursuing a nuclear capability. >> thank you. europe is the biggest trading partner that we have in the united states. and the area counts for almost 15% of u.s. goods and services, exports. the national initiative has set an ambitious goal of doubling exports by 2015, which is right around the corner. if economic growth in the euro area declines, so will the demand for u.s. products and

services. how will we continue on a path to achieving the goal with absent or reduced european need? i think people really don't understand how important it is for us in the united states, for our small businesses, certainly on long island, we do an awful lot of exporting. so how do you see that future coming to? >> you're right that europe has a big impact on the united states. if they grow more slowly or fall into recession, then the drek demand is reduced. that hurts us directly. the effects go significantly beyond that. because when europe slows, the rest of the world slows, too. that means growth outside of europe is weaker.

you see stock prices fall around the world. that's damaging to confidence around the world. and the typical pattern has been when europe has been in crisis, this is a good sign of confidence in the united states, but the dollar has risen relative to the euro. so that's another effect on the united states in this context. not the only factor, but an important factor. if they're stronger in the future, it will be stronger for us. that's why it's important that we encourage them and work with them to help them get their arms around the problem. >> i think that's what the american people need to understand because, you know, go back home and everybody says why are we giving away all this money overseas? but it's actually for our benefit in being that we do take money in on both project imf export. it's actually money coming back into our pockets. >> and no risk to the taxpayer

in that assistance. because again, as does the fed have very careful safeguards tested over a difficult period of time. they are working carefully in the imf and what the fed is doing to help them manage the crisis. >> thank you. my time is up. >> chair now recognizes the gentle lady from illinois for five minutes. >> thank you, mr. chairman. and welcome, secretary geithner. title five of the dodd-frank act created the federal insurance office, the treasury, and in conjunction with the trade representatives, one of the most important missions is to strengthen the international competitiveness of the u.s. insurers and reininsurers. and to represent the the united states international forums and

increase influence in the development of international standards. in your opinion, does it have the adequate staffing and other resources to successfully carry out this international mission? >> i believe so. if that were not the case, we would fix it. we have listened carefully to concerns that they have. i'm personally committed to making sure that office has the resources it needs. >> they were required to submit two supports in september, one in january. they're late. when will we see the reports? >> they're coming. i apologize that they're behind. that's not really a resource question. they just want to do it carefully. >> okay. then i would like to go back to mr. miller was talking about the rule.

regarding how it's prohibiting pro pry tear trading presumptions, it seems like they're saying it's inconsistent with explicit congressional intent to allow useful activity. could you dreats that? >> again, there's been a lot of concerns expressed about the initial rule. when the law was passed, congress required the treasury department to put guidance out about how the rules should be designed. that guidance we proposed was met by really quite a lot of support on all sides of the political spectrum. but when the rule came out as drafted by those four regulators, as you've seen, there's been a broad set of concern on both sides. too tight, too loose, to weak, too complex. it's the strength of our system. the way the system of congress is designed, we're required to put the rules out for public

comment. and the regulators get to learn from the rules. in my view it's been the stakes are very high. we should take the time to get the rules right. and i think that's certainly the case in this context. so i'm sure the fed and fdic are going to carefully evaluate those comments, and i am very confident they have the ability to address those concerns within the way the law is drafted. >> thank you. then one last question. china stands as one of the few major markets to impose substantial barriers to entry for american business, including financial services firm. and though you have stated publicly the the u.s. needs to level the playing field with china, they continue to have the most restrictive market. for financial services in the g-20. and the the newly released development research center, the state council, world bank, newly

called china 2030 reported greece and calls on significant changes to the chinese domestic financial system, as they become more active internationally. as the chinese financial services firm expand to the u.s., what steps are you taking to ensure that u.s. financial firms have the same access to china. >> very important point to us. thank you for highlighting the world bank report, because it's a very sweeping constructive set of suggestions for reform in china, including opening a financial sector. i think it's very important china move further to expand the opportunities in china it's necessary to be more fair to us. so we're going to keep encouraging them to move further. we made some recent progress. even just the last three months in opening up parts of the insurance sector in china. but we have ways to go. and we're going to keep at it.

>> thank you. yield back. >> chair now recognizes jebt jept l lady from florida. >> thank you. i would like to thank you for being here today. in your testimony you said that the european financial crisis has already caused significant damage to economic growth in the united states and around the world, and we have a strong interest in a successful resolution of the crisis, and i absolutely agree with you. having said that, let me commend you and the feds for the work that you have done on this extremely important issue and crisis. you've been involved in unprecedented policy, consultations, coordination and information sharing between political leaders, central banks, and international organizations, and i think that you have conducted and represented this country very, very well. there are two policy initiatives

that some of my friends on the opposite side of the aisle have criticized you about. i disagree with them. they were alluded to when you were speaking to barney frank. that's swipe lines and the agreement to borrow. the feds made a little money on the swap lines. but why those two initiatives are very, very important. what it does in terms of providing liquidity to the central banks and why we stand to be served well by the two initiatives. >> thank you, for those questions. let me first say europe has a much larger banking system than the united states. european banks borrowed a lot of money in dollars before the

crisis to lend around the world, and when the crisis hit because of concerns about the stability of europe, they lost the ability to borrow in dollars. of course, the european central bank does not run a dollar-based currency system. that's what we do in the united states. and so faced with that loss, the european banks had to cut lending sharply around the world. even in the united states. and so the swap lines, by providing access to funding, significantly reduce the need and the pressure on europe's institutions to cut lending in the united states and in emerging markets around the world, where u.s. companies have big stakes, and where growth matters to us. so the swap lines were very effective in helping to soften the impact of the crisis on us and on countries around the world. and it would have been much worse for us without those lines. and the feds are in positive returns on the swap lines.

the role is equally important. and what congress did in 2009 in authorizing the imf was absolutely critical to getting trade around the world restarted, providing financing for countries to borrow so they could buy american products. we would have been in much worse shape and our economy much weaker without those two steps. >> well, i appreciate that. and as you have indicated, it's certainly in our best interest to help solve this crisis. and i believe is that that in addition to the corporation that has been taking place by all of those interest to parties that this is not a bailout. and for those who term these intishives as bailouts don't understand how important these two initiatives are to help to

stabilize the international economy. so i want to thank you for the work that you've done. and i think what you have explained literally helps us to understand, and i would hope helps the other side to understand why this cannot be termed bailout, but rather cooperation and assistance to make sure to stabilize the economy. i yield back. >> thank you, mr. chairman. mr. secretary, it's good to see you. i think you're on the record as saying the u.s. contributions to the imf are secure. the united states has never experienced a loss on any commitments. the american taxpayers never lost a per cent from the imf program. mr. secretary, if you go back and look at testimony before this committee and this congress

over the years, those were the same comments made about freddie and fannie, fha. and the list goes on and on. so i think these were unprecedented times that we were in. and we never thought the u.s. government would have taken the actions that it took in 2008. so i think to say the additional fundings have not risk free. would you agree? >> i would have never made the comments you refer to on fannie and freddie and fha. and you're right, people have said all sorts of things but as i've said we have six decades of experience that were tested and how did we do so i'm i think it

would be riskier for the u.s. economy to try to pull the imf back from the needs of the members, whether in europe or elsewhere. they did a value risk adjusted and said that the cost would be $5 billion. what would be the response to that? and i do not agree with it and do not share it. you can think of that assen extreme precautionary balance in that context and doesn't change my basic view that the structure of the imf's financial foundation provides very strong protections for the american taxpayer. would we be better off as a country if the imf could not act? i think we would be much worse

off. you anyway, i think a lot of us think it's the tip of the iceberg and not the end of the iceberg, and obviously if imf makes additional commitments to that, increases the risk. >> well, it's a good way to think about the question. i agree that one should be very realistic about the challenges europe faces. a lot of risk is ahead for them and for us. the question with face is what can we guest do to protect american interest in that context? and the things that we are supporting, very prudent costs for supporting will make us safer. and for us not to take the action. it would make it more risky not just for europe but for the american companies. >> i would to follow up with

previous. you're responsible for sfog. the chair of that. you put out some rules. you'll be considering what significantly financial institutions that can cause financial risk to the system, and to your credit, i think you put forth some fairly transparent rules, but when we look at the international community right now they're going through a process where they're not being as transparent. and a lot of the entities that are domestic companies looking at complying or determining where they stand with you the international community is not as long. is that process out of whack, and do we need to make sure that -- you know, you've heard me talk about harmonization.

>> we are really ahead of europe in designing the bafg framework for oversight transparency or derivatives market. the fact that they're behind us creates a problem. we want to be converged to the basically similar standards. and that's one of the reasons why they've been a lut bit slower than the deadlines established by congress. and that context, like in my others where they're a little behind because they want the make sure to maximize the chance for alignment. but very important question. we're concerned about it, too, and we want to make sure that we bring them along, so we don't put u.s. markets at a disadvantage and have the risk shift. >> the chair now recognizes the gentle lady from new york, miss maloney. >> thank you, mr. secretary for your service.