>> that's true of the xm bank, too. >> have stha ever made a profit, and if they do, does it go into the treasury? does it go into the general fund? >> when the imf draws on the commitments we make, it pays us interest on the drawings. so yes, in that sense, it returns our commitment with interest. >> so these are programs creating stability in the economy, and obviously in the xm bank, creating exports and jobs and helping us bill the 2.5% to a higher percentage gdp. so it sounds like a good investment for the taxpayer. so i want to ask you, of all things, libya. last friday i was in libya with minority leader pelosi. we were meeting with the transitional government. and there was a great sense of unity. a great sense of purpose.

a great expectation for the elections taking place in june. and oil production is up, which is going to help the world economy. an they were very concerned about gadhafi, his family members and associates, the great wealth from this oil country was not going into the people or their infrastructure or investing in any way. so for 40 years, you really don't see inan vestment for the people of the country. so what happened to money? where is it? and the government said they wanted very much to work with you and the american government and the international community to try to regain and recapture those resources to help rebuild the counted and to help with the new democracy. are you working in any way? what steps are you take sing? what are you plans to help this

new emerging democracy? >> we worked very quickly with countries around the world to freeze the assets of gadhafi and his associates and the institutions they controlled very, very quickly. we're now working very closely with the libyan authorities and with the countries around the world to figure out how to recover, as much of that wealth that they essentially stole as possible. and it is -- what we do know is that there's no meaningful amount. after those assets in the united states. >> did they have any in the united states? >> i don't think there's any material amount in the u.s. but we believe we have frozen a substantial amount of resources and now we have to figure out a way to help them recover. >> about how much? hundreds of billions?

very substantial to the needs of the country. >> also i've been corresponding with your office and you on the challenges that americans living abroad -- i represent many americans working abroad, and they are reporting that they're having problems gaining access to bank accounts abroad. and you granted a meeting in april. i want to thank you for that publicly so that they can work out on why they're being denied these bank accounts. now you're office is saying there's no policy in the american government that denies america's citizens or makes it more difficult for them. but the testimonials tell a very different story. i support all your efforts to improve tax compliance and to determine the owner ship of u.s. assets of foreign accounts.

these should not impair or hurt law-abiding american citizens. my basic question is what are you doing to help accommodate american citizens so that they are able to access bank accounts abroad. it's becoming a growing problem across the country. particularly what we call it in shorthand. and we are working very closely to try to meet the congressional intent for making it harder for them to avoid taxes without putting undo burden on their ability to have a bank account, for example.

we're doing a lot of things to provide more times for banks and the world to adjust and to try to make sure that but a lot of americans live overseas, make a living overseas. it's legal and needs to be possible for them to have bank accounts oversees. >> thank you very muff. >> time of the gentle lady has expired. as you know, their losses are close to over $200 billion, and if the gentleman in front of me would step aside. and if the gentleman in front of me would step aside, thank you. i believe that number would be a

lot harder if it wasn't for the work that he has done. to push their own agendas and take moneys out. some are not so effective. and you announced that more may be under way. a month and a half ago the president said they would pay for other people's mortgages. and he released extensive reports about how taxpayer paid principle reductions would be a net loser for the gse. so my question is this. given the tremendous job mr.

demarco has done at the fha, what will the administration's reaction be or position be if decides and fails to adopt the new provisions because he believes that it has a tremendous cost to the taxpayers of this country? >> well, we've actually been working very closely with mr. de marco. he's been overwhelmingly supportive there's some areas where we disagree a bit. of course, what congress designed for the fha, the administration has no authority over the choices he makes in this area. but we believe it's best served by initiatives h the area. we'll work to encourage and adapt those as we have quite successfully for three years. on the issue of principle

reduction, there's a very strong economic and financial case to provide principle reduction in some circumstances where people are deeply underwater and face a hardship, like a loss of job. and that's why you're seeing banks and investors across the market doing principle reduction on a much larger scale in those ic do you have a counter part? can you spent us your analysis and how your numbers compare to those numbers? >> we're in it. so we want to make sure working off the same bases of facts. >> right. >> we look with a neutral independent view about where there's a case. >> can you provide the committee with the reports to document where you stand and where he

stands on numbers. i'll be happy to show you where there's a good case for it. >> switching gears completely. with regard to the $25 billion settlement agreement that's come up recently one of the parties not at the table were the investo investors. so why were they not at the table? should they have been at the table, and are they really a party to the action, because those are the ones that will be hit by? >> good question. the architects of this agreement, which i was not one, did spend time thinking about whether they should include those investors at the same time. they decided to do it in stages. you're right that they and others were left out of the initial process. that's still to come. >> what does that mean? >> well, there's a variety of efforts under way about to

provide the spral exclaims? thisld investors. the 401(k) plans, the endowments, what have you, which may represent our parents, our grandparents, they were not at the table, but those investors, those individuals who have already been affected as the banks get the opportunity or are compelled to write down those mortgages. >> you're asking have their interests beened a verily affected by the fact they weren't part of it? >> yes. >> i don't believe so. i will be happy to talk about it and give you a basis for the judgment. >> the chair now recognizes the gentleman from new york, mr. meeks. >> thank you. mr. secretary, good to see you again.me pick up where my

colleague left off briefly. xm banks. there's a conversation going on in the senate about the reshorgs at a high level. i was wondering if you could describe how they help american companies in providing for exports in countries that have less developed capital markets. >> countries around the world subsidize exports. we do it in a way that's very careful, protects the taxpayer, by forcing them to charge companies for the subsidy they get. that's why it's true there's been no record of loss to the programs. if we don't do it, other countries will steal business from american countries. an you'll see few exports, less jobs, that would be a miss take for the u.s. economy. if we stop, they'll keep doing

it. it's not just europe, it's china, very aggressively. brazil. all sorts of countries do it. so it makes no sense. it's not rational for us to unilaterally disarm, and in the hopes by doing that somehow the world will stop. i don't think there's a case for that. >> thank you. let me jump to greece real quick. we know greece has a negative 9% growth rate and significant unemployment. we know there has to be os terty mentioned. but austerity alone does not do it. can you discuss, as you did, i believe in your testimony, some of the kinds of reforms that would allow competitiveness in the greek economy as opposed to reducing spending? >> excellent question. it's very important that people recognize there's three basic problems facing the economy.

almost really uniquely in greece they just let their government get too big, too generous for a huge amount of money to support that. they and almost all the rest of them faced a real loss of competitiveness relative to germany because they make it very hard to start a business. very hard to use the talent of the country more carefully. and they have financial systems that, you know, we had a terrible crisis in the united states, but the other systems were much more risky than even what happened in the united states. and so those three challenges of fiscal reforms over time, growth enhancing economic reforms so it's easier to start a business, and financial systems that are brought down to earth, you know, what is ttle more gravity in re necessary. and it's going to be a very tough, very long hard road. and it's important for people to recognize, as you did, that these reforms, which can work against growth in the near term,

have to be supported, not just by some conditional financial assistance, but those countries in a position for more growth will do that. that would make it easier to resolve and less risky for them in the world. >> now, i'm trying to combine two questions in the little time i have left. one has deal with greece again about the -- how it relates to or the impact it would have on the economy if greece was to default and abandon the e secondly, a different question about greece but also italy. given that the government of th talked about they no longer believe they need to allow the currency to depreciate, which means china is going back. what impact would the artificially low currency has on europe's ability to especially in italy and greece, to be competitive internationally with respects to exports?

>> excellent question. good questions. greece itself is not large enough to have -- to cause a lot of damage to the united states. greece matters a lot, though, because greece's crisis hurt europe and caused much of the rest of them to fall into a recession. and if europe can contain the risk of the greek crisis from spreading, europe's crisis is likely to be much less damaging to us in the world. they have the ability to do that. on the chinese question, chinese currency is up 14%. real term against the dollar since the summer of 2010. 40% over the last five years. but they have some ways to go. i think by most measures they're still undervalued, and you're right to remind people that by holding their currency too low,

they're making it harder for the other trading partners to grow. including in europe. >> time of the gentleman has expired. we now recognize the gentleman from new mexico. >> thank you. as i listen to the language, the lingo being used here, it sounds vaguely familiar to the time in 2008 when we're mooifing down the road to bail them out. if we ensure 100% we never have to ensure any of it. and now europe probably is in the category too big to fail, and american consumers will have toy pay the bill. i'm fascinated with the conversation about the imf not ever having failed. and just a couple weeks ago we had christine lagard, the head of the imf in the room, and she confirmed that maybe we did

change loan terms. maybe we changed the terms of the loans to prevent defaults in the past, and so maybe that idea that we've never suffered a penny lost is a little bit of a rig game. but we'll leave it the way it is. basically, i'm just seeing that the american taxpayers -- i mean, ireland has already bailed out the banking system,u, bk 11 comment that when we gives the guarantees it encourages investors to believe they're going to bail out bad actions and makes them take risks that maybe they shouldn't be taking. so i'm wondering if we're going to bail out all of jurp, while they're going to take risks. he says in greece it's a birthright not to pay your taxes. why would the american consumer be stuck paying the the bill where it's a birthright not to

pay taxes? >> we're not going to put the american taxpayer or american consumer in that position. if they were in the same rules as loan to the small independent payments to mesh. or would the banks holding those be put on a special category? >> oh, no comparison between those. again because of the record. the imf is not just backed by a lot of gold, it's backed by any loan the imf makes is senior to any creditor. >> still, we put loans in rears. we changed terms. we extend mature maturity dates. >> not a penny of loss to the american taxpayer in more than six years of history if we

guarantee 100% that we would never have to pay a single dime. that's his guarantee in this congress in 2008. >> i doubt he said that. but the situations are not comparable anyway. >> i know it's just the american consumer is going to get stuck again. >> no. >> it won't happen in this context. there's documented over 100,000 people working for the federal government that haven't paid their taxes. it's about a billion dollars. have they done one thing to start collecting ha? >> i would be happy to provide in writing the range. >> can we get a list of people who haven't paid? i think the american people would like to have the information. because tl a category of people in this country who believe they're beyond paying taxes, just like in greece. i noticed in your testimony you

talked about saudi arabia increasing the output. why is the u.s. not increasing its output? in other words the president's going to my district tomorrow to talk about oil and gas production in the very three county area of where the fish and wildlife service overturned a collaborative effort to protect the lizard as an endangered species, that has the potential of killing all the oil and gas production in that area which drove the surplus. we were at a deficit last year in that three-county area drove the surplus, why would the president be shutting down production in this country when he's asking saudi arabia to increase production? >> u.s. production across the country of oil and gas is expanding dramatically, and will continue to do so, and that is a good thing for the country. but, of course, we have to follow the laws of the land in what congress has passed and the requirements congress has passed to make sure that production expiration -- >> i'll take my time back, i've only got about 11 seconds. the science that was used was

steadfastly disproved, even the b.o.m. said this was a slap in the face, what the fish and wildlife service did. i'd be happy to continue the conversation on that. >> can i say one thing, mr. chairman. this is very brief and important question. you raised the concern, congressman, that when the imf or europeans provide assistance to the nations of europe that it's going to encourage further in the future. understandable concern, but i would just draw your attention how incredibly tough the conditions are that are coming with that assistance. if you look at what greece, ireland, portugal have done as a condition for those reforms and think about what italy and spain are doing now for similar objectives, they are very, very tough reforms. it offsets the risk they all have. if they put money on the table, that's going to reduce the incentive for those things. >> chair now recognizes gentlemen from massachusetts. >> thank you, mr. chairman.

i'd like to yield to the ranking member for a few minutes. >> i feel compelled to be bipartisan and come to the defense of the bush administration. there was a previous comment that secretary paulson that when congress accommodated his request finally after we came to power to give him the authority to put fannie and freddie in conservatorship, he never did any such thing. he said if we pass the legislation, it would greatly diminish that likelihood. it was not able to undo past mistakes, and it is the case since 2008 we have not lost any money, but that's not what he said. he hoped this would stave off the losses but never gave anything remotely close to such a guarantee. >> reclaiming my time, mr. chairman. after that eloquent defense of the bush administration, i'm thrown off my game a little bit. many secretary, i thought today's discussion was supposed to be about the international financial system.

so i'd like to get to that a little bit. i've heard from some other members that they think that europe is basically handling their problems better than we are handling our problems. and i guess that's one opinion and that's fine. but i'd like to ask in the european problems that they've had, have any of the major european countries significantly reduced their tax burden in the last three, four, five years? >> i do not believe so. and i think most of them are going rapidly in the other direction. >> i'm under the same impression, but i thought i'd ask you, i better than i. because -- and i'd like to offer for the record a little table i got from the organization of economic cooperation and development, which is a 50-year-old organization that represents 34 countries, mostly 24 of them are european. and in that -- it's a simple table that simply compares the tax burden as a percentage of gdp. and it shows the united states of these 34 countries actually

ranks 32 of 34. and it shows that one of the countries that allegedly is somehow more competitive than higher than the r tax burden is united states tax burden. that's the oecd, not me. and the united kingdom, another country that a few weeks ago this committee who is debating they're somehow stealing all our ipos, they have a 42% higher tax burden than the united states. greece has a tax burden of 25% higher than the united states, even turkey's tax burden is higher than ours. the only two countries that have a lower tax burden than ours is chile and mexico on this particular list. so i'd like to submit that for the record. and i ask this, mr. secretary because we've heard that if europe is somehow doing a good job dealing with their issues and all they're doing is one side of the ledger, which is the austerity measures -- which is fine, am i wrong to think the u.s. has made significant cuts

in the last few years to budgets? >> yes. congress reached an agreement last summer to cut more than $1 trillion in spending over the next ten years. and if you look at what cbo said, for example, about what the impact of what the president's proposed policies were on the budget, they would reduce our deficits dramatically to a level where the debt would stop growing as a share of the economy. we are making progress on those fronts, but we want to be careful to do it in a way that doesn't hurt growth. >> a balanced approach. my goodness, how unique. i guess i'd like to ask as a side note, those cuts that we've had, did they somehow exempt the irs from those cuts? are they exempted from cuts? >> well, congress has been reducing the resources available to the irs for a customer service and enforcement, thus hurting by all independent measures the irs capacity to collect taxes. >> so while we are cutting the irs, we are now demanding that

they collect taxes owed to us, which i think is a good thing. in my former life when i thought making money was a good thing, i was a tax attorney, and i was always happy to see the irs cut because my clients had less concern. and that was fine by me. so while we're saying cut the irs, we're saying, but they should collect more somehow from tax delinquents. at some point someone will educate me as to how that works. but back to the european model. has anybody suggested that you know of, any serious suggestion to increase u.s. taxes to the german model increase across the board? >> we would not support that, no one's proposed that. >> has anyone suggested that that you know of that's thoughtful and significant person? >> not that i'm aware of. even with the president's proposals on tax reform, which as you know would raise the tax burden on the top 2% of americans, the effective tax rates on those americans would still be very, very low compared to those that prevail any country. >> well, my time is running out,

mr. secretary, thank you. and i'd like to thank the gentleman from the other side who suggested by implication that we should adopt the european model and double our taxes. it's amazing to me that -- >> time of the gentleman has expired. the chair recognizes the gentleman from georgia. >> thank you, mr. chairman. and mr. secretary thank you for being here. i can't imagine what it's like to get up three or four days a month and know you're going to have to come up to the hill and get a little bit grilled. so i do admire you for the courage. and the stamina that you've got. while we're talking about taxes, you had said previous that being an american is a privilege. and that wealthy americans should pay more just for being an american. do you still believe that? >> i believe as does the president, there is no plausible way for us to address the many

economic challenges facing the country, including our unsustainable fiscal deficits without asking those most fortunate few to pay a modestly higher percentage of their income in taxes, i do believe that. and i think that's very important. i don't see how we make any progress on these set of things without that. >> so you think that anybody that doesn't want to pay taxes or pay more taxes would be more un-american than -- >> no, no -- >> than somebody that's stepping up to volunteer but doesn't pay? >> no, i wouldn't say. nobody wants to pay more taxes, no one wants to ask them to pay more taxes, but the problem we face, of course, is that if we don't do that, then what are we going to do? because we can't go borrow $1 trillion to afford those tax cuts. and if we ask somebody to pay higher taxes to afford them, that would not be fair. >> well, but -- if you look at, you know, being governed, i guess, or living in this country, half of the people in this country don't really pay any taxes.

>> well, that's not really fair. because, congressman, because as you know, it doesn't capture the taxes they pay for social security and medicare. so when people say that share of americans don't pay income, it's not quite true because social security and medicare are -- all americans pay a portion of their income to cover the partial of the cost of those programs. >> but not in regular taxes. >> well, every week their paychecks are deducted as a share of income, a tax to cover the cost -- >> but at the end of the day they pay no income tax. >> well, it is true that a small fraction of the poorest americans, this congress has decided it and there's been a bipartisan consensus for a long period of time. >> so it's not true -- so you're saying it is not true that half of the americans are not paying taxes. >> the only way that's true is if you say somehow the tax we char