e mae in september 2008. live now on c-span3. >> -- stabilization act. congress believed that the size of the program, $700 billion at the time last fall required the full time attention of skilled professionals to oversee and manage purchases made under the program. at first, some resisted the call to establish such an office. arguing that it would create a layer of bureaucracy within the treasury. but i and many of our colleagues including senator schumer was deeply involved in the formation of the program last fall believed it was a very important mechanism to provide transparency so the public could understand the government's decisions. now with 12 t.a.r.p. initiatives, the need for a dedicated office to ensure the proper management of their money, the public money, taxpayer money, is obviously clear. and proper competent management is what the t.a.r.p. program

desperately needs. we need strong, steady management to ensure that the core purposes that congress outlined with the emergency economic stabilization act, protecting home ownership, college funds, retirement accounts, life savings and jobs, are fulfilled by the t.a.r.p. t.a.r.p. funds must be used to get credit flowing again to family, to pay for homes, a car or college tuition, and to small businesses, to stock inventory and to meet payrolls. because with 10,000 foreclosures every day being filed and 20,000 layoffs occurring every day, families and small businesses still need our help desperately in this country. thankfully we have begun to see a sharp change in direction for the t.a.r.p. program, from the home ownership preservation program which draws upon the $75 billion in t.a.r.p. funds to more accountability from firms which received taxpayer assistance. but as the news this week, the general meters was filing for

bankruptcy reminds us, we're hardly out of the woods and i would add that this committee intends to hold another hearing next wednesday to examine the administration's plans to restructure gm and chrysler. @ @ @ @ @ @ @ @ @ @ h@ @ er. responsibility falls to you, to provide the kind of steady leadership our country needs to

navigate through the complexities of this economic crisis. with america's financial system continuing to hang in the balance, this office that you'll be heading needs a strong and vigilant manager, someone who can follow through on commitments made and maximize the return to taxpayers as well as keeping them well informed and understandable language as to what is occurring, why it is occurring, what our plans are, and where we're headed, where the short falls are, the pitfalls, what's not working as well as what is working in clear, clear language. this is difficult for the public and many members up here to understand on a daily basis how this all is unfolding, how it is working. we need someone who will listen, who is responsive to legitimate concerns, raised by the t.a.r.p. oversight bodies, makes course corrections when necessary, keeps a watchful eye to prevent any conflicts of interest that might arise and keeps this committee very well informed. we'll have to determine some way to do this, but almost on a

regular basis so we're knowledgeable about anything you see we ought to be aware of rather than just waiting for a hearing process to occur before we discover it or read about it in the newspapers. and we'll need someone who is judicious when it comes to committing the remaining t.a.r.p. funds as well. estimated at some $109 billion. someone that can ascertain which areas require assistance and which do not. above all, we need someone who can inspire confidence, who can articulate a clear vision to the public and policymakers regarding the role the t.a.r.p. program can and must play in helping our economy recover. mr. allison, you know as well as i that you face a difficult road ahead, as i'm sure you discovered during the last several months, overseeing fannie mae. there will be no parade on the national mall should you succeed, mind you. i hope you'll use your diverse professional background and the fields of finance, retirement services, and education to fulfill the core purposes that congress outlined with the

emergency economic stabilization act. you have an incredible background. it really is remarkable. when i looked over the experiences you've had in these areas of finance, of retirement issues, of education, you're tremendously well suited do this in my view. you had a distinguished academic career and served our country with great distinction. in the navy during the vietnam conflict, graduate of stanford and yale undergraduate degree. so you really have the tools and experience and the background, i think, to make a significant difference. and i personally want to say i'm excited about your nomination. i think this is going to be a great opportunity for us to get this right and to give the country that renewed sense of confidence about how this program is working, and why it is in their interest that we succeed with it. you and your family have epitomized the importance of public service. you know you now have a unique opportunity to affect the role that our financial markets and institutions play in the lives of literally virtually every american citizen. in many ways you'll hold the

keys to the future of housing, financial and economic crises that we're currently encountering. and you have a remarkable opportunity to make a difference for millions of americans and i know you're aware. i know you some family members here as well this morning. let's take a minute and introduce them as well. can we do that before we start? [ inaudible ]. >> my son. >> welcome. >> my brother, a captain in the u.s. navy. >> surface ships or submarines? thought you might have had experience in connecticut. let me turn to senator tester. >> thank you, mr. chairman. and those introductions cleared up a lot. when i came in, i met mr. allison in the back room and i walked out here and i saw his brother george and thought, wow, how did he get out here so quick? >> he's going to be good at this. >> exactly.

very, very good. thank you, chairman dodd. i want to thank you for calling this hearing and, of course, welcome mr. allison. i want to echo the chairman's comments on thanking you for your willingness to serve and your willingness to appear before the committee today. it was milton friedman that said nothing so permanent as a temporary government program. we need to make sure that t.a.r.p. does what it needs to do and then wind it down and get the taxpayers back as soon as possible. i know you feel that way. i want to commend you, mr. allison, for your willingness to serve and your efforts at fannie mae. i also want to be mindful of what i think we're going to need to do to get out of this economic recovery. we need to be mindful of the successes of this economic turn around will be driven by small business and middle class families. it is important, as i said earlier, to repay the tax payers as quickly as possible and not

to just reinvest the funds because we have them. i think this money was specifically put out for a specific reason and we need to keep that in mind as we move forward. and we also need to understand the community banks play a critical role in the life bloods of our small rural communities across this country and they really weren't the cost of the economic problem, at least from my perspective. and maybe most difficult is we need to deal with the too big to fail problem that comes out. and if you can help us in that, i think that the sooner we can deal with that, the better off this country is going to be in general. with that, mr. chairman, i look forward to the testimony of herb allison and i look forward to a quick confirmation. >> thank you. i just noticed the arrival of our colleague from colorado, senator bennet. i'm saying with some deliberation and give you a chance to get seated over there.

would you care to make any opening comments at all on the case of our nominee? >> i think -- thank you, mr. chairman. i would just like to thank you, mr. allison, for being here, thank you for your willingness to serve. i unfortunately have an agriculture committee hearing i have to go to. but i want to stress as i was coming in, i heard senator tester say this, how important small business and community banks are to this recovery effort. we have had a number of conversations here with treasury secretary on that subject. we have a case of our own in colorado relating to a bank failure of one of our agricultural banks that is -- that is under review by the treasury department. and my perspective is the same as senator tester's, which is that until we begin to see this involvement beginning to take place at the local level, our public is still going to wonder how we're spending our taxpayers' money. i want to underscore that for you.

i'm sure you know that and i look forward to hearing your thoughts about that and to working with you as a member of this committee. >> thank you, senator. >> thank you, mr. chairman. >> thank you, senator, very much. and mr. allison, welcome, again, to the committee and we'll be happy to hear your opening comments. >> thank you very much, chairman dodd and other members of the committee. i'm honored to be before you today. first, wasn't to thank presidi t obama and treasury geithner to asking know serve. and the staff and your time for acquainting me with your perspectives on the crisis and the measures to address it. before i review my background and my plans for the office of financial stability if confirmed, i want to thank my wife, again, of 35 years and my sons john and andrew for their steadfast support support over those years. i began my career as the chairman said as an officer in the u.s. navy, spending four years in active duty including a year in vietnam. after attending business school, i joined merrill lynch and spent

28 years leaving as president in 1999. the merrill i held many positions in finance, human resources and investment banking and capital markets and general management. in 1998 i played a central role in unwinding long-term capital management, the hedge fund that a decade ago presented a systemic risk to our banking system. i learned from my experiences at merrill that the long-term success of financial institutions includes sound corporate governances including independent checks and balances, tight control over risk and executive compensation geared to long-term performance on behalf of clients as well as shareholders. at merrill lynch i contributed to strengthening the governance practices in the 1990s. since leaving merrill lynch a decade ago i've led two other major financial institutions through transitions necessary for their long-term success. in 2002 i became chairman and ceo of tiaa-creff, a leading

retirement and asset management service. we adapted t ed ed the company changing climates. as a result, tiaa-cref is one of very few financial companies that carry aaa ratings. and during my tenure, the company became the first company in the fortune 100 to allow its stakeholders an advisory role on executive compensation. in september of 2008 i was named ceo of the federal national mortgage association, as that company was placed into government conservatorship. the crisis that devastated fannie mae's liquidity and capital base also threatened millions of american homeowners with foreclosure. new management had to shift the company's focus from maximizing profit and market share to helping hard-pressed american families stay in their homes. as a result fannie mae is the agent for the president's home affordable refinance and modification programs which

offer financial relief to millions of americans. members of the committee, the financial stability program is essential to president obama's and secretary geithner's plans for recovery. our economy declined sharply last year, in part because credit stopped flowing. without access to credit, small businesses cannot buy the new equipment, raw materials and inventory that they need to expand. and larger businesses need well-functioning credit markets as they adjust to the changing nature of the global marketplace. if confirmed, i will keep in mind that the financial crisis isn't mainly about banks. it's about alleviating the real hardships americans are facing every day. i will strive to be a prudent investor on behalf of the american people. to protect the taxpayers who have entrusted us with so much of their money. so, let me tell you what my top priorities will be if you decide to confirm me.

first, i will carefully review the controls over managing the taxpayers' money. giving special attention to compliance with laws and directives, managing risks, and internal audits. i will work closely with the special inspector general, the government accountability office, the financial stability oversight board, the congressional oversight panel and the committees of congress to ensure the accountability and oversight that the american people demand. second, under the direction of secretary geithner, i will continually strive to maximize the effectiveness of financial stability programs, restoring soundness to financial institutions and liquidity to our markets. and, finally, as secretary geithner has directed, i will emphasize transparency and interaction with congress so that you and the american people will know what we're doing with their money, why we're doing it, and how it's making a difference to our economy. members of the committee, let me

close by thanking you for considering my nomination as assistant secretary of the treasury for financial stability. i was raised by a family that has always valued public service. my father spent much of his career as a special agent in the fbi. my dad's father worked in the u.s. department of agriculture here in washington, d.c. my mother's father was sheriff of sioux falls, south dakota, and my brother, george allison, with me today, retired with the rank of captain after 28 years in the u.s. navy. having started my own career in the navy, i'm honored and inspired by the opportunity to return to public service. thank you very much. >> thank you very, very much. in our conversation i didn't know that your dad had been in the fbi. my father was an fbi. >> really, really? >> in fact, his first post was in sioux falls, south dakota. long before i was born, by the way. i might have been raised there. over the years. thank you. we are joined by mark warner,

senator warner of virginia. mark, do you have any opening comments you'd like to make? >> senator tester told me since i was late i had to reserve my comments. >> well, john runs the show around here, so we appreciate it. let me start with some questions. i'm going to leave the clock off. i'll invite my colleagues sings there are three or four of us here to have a more informal conversation. if i start a line of questioning and you have a thought along the same line, jump right in here, so we make this in a way more cohesive in that sense. so many places to start. let me start with this. since t.a.r.p.'s inception the program's scope, size and complexity have dramatically increased. i made note of this in my opening comments when i noted the 12 separate initiatives under t.a.r.p. today. some of these interact with the federal reserve, some with the fdic, some obviously with private investors as we discussed as well. i