they used to make at $19 per hour. they have homeland security agents in the parking lot to keep them from coming on the property to check their id. host: we will have to leave it there. tomorrow we will have a discussion about politics with kevin madden and steve mcmamhon. we will talk about health care in the economy with tom price. and we will have an economic writer from the new york times. he will talk about the state of the u.s. economy. that is tomorrow starting at 7:00. we will see you then. .

race and the american criminal justice system, with sandra day o'connor and how furred law professor a 24 louis gates jr.. later today on suspense america and the boards. on newsmakers, james cliburn get

his thoughts on the rest of harvard professor louis gates jr.. >> we can be no more or less what our heritage allow us to be. the police officer in this was responding to a call. if this was a neighbor calling what was the neighbors role in all of this? the neighbor have been -- may have been overreacting. the police officers seem to have a record that was admirable and it seems to me to be a good guy.

there have been times when i have overreacted. it is just human nature. >> you can see this entire interview on newsmakers, sunday at 6:00 p.m. eastern on c-span. >> congressman john conyers democrat of michigan, spoke yesterday at the press club. this is 45 minutes.

good afternoon and welcome to the national press club. we are the leading professional organization for journalists. for more information please visit our website. on behalf of our 3500 members worldwide, i would like to welcome our speaker and our guests in the audience today. i would like to also welcomed hoot -- those of you who are watching on c-span. we are looking forward to today's speech. please hold your applause during the speech so we can have time for as many questions as possible. for our broadcast audience, i would like to explain that if you hear applause it may be from

the guests and members of the general public who attend our luncheon and not necessarily from the working press. i would like to introduce our head table guests. from your right john peterson, senior vice president of alco worldwide and former washington correspondent for the detroit news. larry nivens dr. patricia burgh, dale dixon -- gail dixon and a guest of congressman

conyers. deborah pryce of the detroit news, and herb chatman of bloomer radio. >> washington post journalist jack anderson once called our guest today a junkyard dog investigator watching out for taxpayers' dollars by rooting out fraud waste and abuse.

there has been no shortage of that in the 40 plus years that representative john conyers jr. has served in the house of representatives. congressman conyers is the second longest serving house member. he served as an aide to the longest serving congressman john dingell, also of michigan. that means he has spent we elected 22 times. [applause] along the way, there have been great achievements and some great controversies. among his claims of fame he is a founding member of the congressional black caucus. he is an original enemy on president nixon's enemies list and he introduced the first bill in congress to make martin luther king day a national holiday.

congressman conyers now chairs the powerful house judiciary committee where he has been an outspoken critic including terrorism, and has not hesitated to use the committee's power to pursue investigations. he is also frost and -- front and center in the health insurance debate, as a long-time advocate of the single payer system. we look forward to hearing his take on the health care bill. please join me in welcoming to the national press club congressman john conyers. [applause] >> thank you for a well-prepared

introduction. you delivered it remarkably well. to everyone here many of my friends, i am happy to see you out here today. some of you from a way, way back. and the few friends that i have invited, my staff and all of you here. this is a great time to have a discussion for a few minutes as to where i think we are.

i have always ask my staff to over prepare me. they did not let me down. we have 29 pages plus some books and things that i asked there were five things i wanted to squeeze into 15 or 20 minutes. eric holder must appoint a special counsel to review the bush administration's abuses of

power and misconduct. he has to do that. that is why i love being at the press club, to hear about this. i do not have to call anywhere. number two, i have of bill that calls for a blue ribbon panel about the same thing. y. chairman, do you need both? because a special counsel will not work in the public. they have to work confidentially. we need a 9/11 type -- no congressman on at i wouldn't

even put ex-members on it. weekend publicly go into what we talked about doing. i have to say i was surprised as i was looking over my notes. it said we had 55 hearings on the subject matter. this administration its abuse of power, its misconduct. i said 55? may i see them, may i see the titles? they went back to 2007, and started off with all of these. i have them available for anyone who would like to get a copy of them.

we need also to enforce the subpoena as -- subpoenas that i have issued to my friends in the other administrations for declining in joining us in the rayburn room for a few dozen friendly questions, under oath at risk of perjury. we have to get the process working. congress's role has been diminished as the president executive role has been increased. when you get around to saying everybody says, i can't come

because its executive privilege. i can't tell you i work in at the white house. i cannot answer these questions. we tried to counter with, wait a minute, you don't know what questions we are going to ask. besides, if we ask one that you think deserves to be challenged, we will set it aside and see if we can work something out. but the blanket anybody near the white house doesn't have to come to a hearing, that doesn't wash. we are in the process but of enforcing the subpoenas against gary myers -- harriet myers

joshua bolton, bolton was the chief of staff. of the bread crumbs as we call them go right to the white house. it is not hard to figure out. the firings of the u.s. attorney's politicizing the one branch of the administration that should be as free of politics as possible. then we are trying to get hate crimes somebody wanted to add the death penalty to the hate crimes act in the senate. thanks, guys. nothing like cooperation with the other body.

then in a way to a subject that has commanded so much of my time is the universal health care bill. i started with this so long ago not as a leader, but when hillary clinton called us universal, a single payers into the white house we had 101. we had eight -- we have 85 now. which is the most popular health care bill in congress. yet, there is an effort to block it in the drawer, and let's talk about it as little as possible.

the one that most americans have been told they want, this reaches everybody. i universal health care policy, from the moment you are born from the time you go to heaven is what we need in this country. most industrial company -- countries already have it in some form or another. we have spent an enormous amount of time with other organizations democrats who are progressive democrats in america, churches, community groups. i will be speaking sunday night

with the national medical association, their organization was supporting this when i first redoubt -- first started out. that is the general gist of where i am coming from. we want to lay down some guideposts because one of the problems in this democratic process of ours is that if you don't, it is assumed that it is ok you did it under the past administration and there were the usual liberal critics. it has been done, this president. -- presidenrecedent.

we are laying down guidelines. and yet when we have honest disagreements, we want to talk about them. that is what it is all about. when we were in the white house of all the important things you said, i told president obama the thing i want to thank you for right now is you said you wanted all the people that supported you to keep advising you. i said my friend, you didn't have to tell me that. i was going to keep revising you even if you haven't said it.

what made me proud was the fact that you did say it, and you encourage people. no president has ever done that before. none. you get elected, thanks so much. now i have my administration, my staff, my counselors. stay in touch. but he said, keep me advised. i think that is what we have to do. in the spirit of keeping him devise -- keeping him advised i want to just take a moment and discuss with you the circumstances that i think we

find ourselves in on this 24th day of july in terms of health care and the political system itself. where are we? first, the health care bill is unfortunately in trouble. i heard the president this morning being quoted from chicago, first of all we have to do it right, and then we have to get it done. yes. but, i don't think it is being done right. not that it is not single-payer.

although -- he could not have been a single pair, but he was a single pair he made some great speeches about it. now he has an evaluation that if we were starting off again we would start with single payer but we are not starting all over again. please as they say, give me a break. of course we are starting all over. but we should be. we ought to scrap this system, and somewhere along the lines people in congress inside the beltway will do what most people already want to. they want a system where it doesn't turn on which of 1200 insurance policies you have not

that anybody has ever read the fine print on it. and did you understand it after you read it? i love these members who get up and say, read the bill. what good is reading the bill if it is 1000 pages, and you don't have to days and two lawyers to find out what it means after you read the bill? what i am saying is that too much is the same. we are not making enough changes. we are not covering everybody. it is not really universal. creating two classes buying insurance that failed in massachusetts -- massachusetts. barney frank comes here on monday. we need a serious bill.

the fundamental question is health-care a constitutional right? do you have our right to health care? we believe that people do. we are introducing a constitutional amendment just to make it clear. what we think we have is something. look at the other body. don't look at the other body.

how can you have -- i keep thinking that if this business that i am in wasn't so serious it would make a great comedy if you took out the names, and not embarrass the people -- we just got around agreeing that climate change is something we caused, and -- we finally admitted that. we are finally agreeing to it. we are saying -- and this is the phrase that either. dross tears or a smile to my face -- we want to provide everybody in america with affordable health care.

how can somebody who cannot pay his rent, lost his job coming in bankruptcy how can he get affordable insurance? well, we will buy it for him chairman. we will? that will be the most second class health insurance policy anybody ever saw. then to make it really difficult, we have the question of a public auction. i am so proud first of all of dennis kucinich, who in one committee introduced an amendment that would allow -- to be waived, and for any state who wanted to try universal single payer health care, they would be able to do it.

and it got back through. do not hold your breath on how long this will stay in. at least we will now find out who does not want it in there. at least give us a public auction that is worth altering the term. already, we have had a number of senators that a party said, public option or not, we are not giving the american people the choice between private insurance and a public plan which would not have to advertise the costs, profit- taking would be down 3% 44% over medicare -- 4% over medicare.

they said taking it out. we don't want it. we don't want any at all. we have a problem. what president'spresence? what a nice guy. there are so many people even in my group that say look, let's stop being so nice. we have the votes. let's take them out. but he doesn't do that. he says please, come to the

table. have a drink with me on friday evenings at the white house. let's talk negotiate because once you start swinging back the media like you guys will be saying, there they go again. it's all the same. and obama is all about making it not the same. that is why he is doing that. that's why i take exception to some of my friends who want to punch back and all that sort of thing. i close with my observations about the political situation. it's funny.

here is an old respected, a political party self-destruct thing right in front of our eyes. in every way. every day they call 18, two dozen roll-call votes on everything they can think of, motions to adjourn all over the place. the minority leader had a fund- raiser so he made them read the entire bill, 55 pages for two or three hours. that was yesterday. what will they do today that will either make you laugh or cry? it goes on and on.

as a supporter of the sarah palin for taking over the republican party, i am one of her great advocates. what an attractive young neil conservative reactionary. there has never been one like her. she attracts crowds. she will write a book. she is so busy she doesn't have time to govern in alaska. let's get ready for the big one when we go back and to take on obama. i want to encourage her on that. then there is my former colleague, speaker of the house newt gingrich. newt has at -- at least three

times, there are at least three editions of gingrich. he has a book coming out. put me on everything. of course, with the vice president, there are groups in the democratic party who have been accused of helping him get time on at. as a guy who couldn't get above 15% popularity when he wasn't hiding somewhere and claiming he is not in the administration this is our kind of guy. don't forget michael steele, the chairman of the republican party, who has not gotten one

consistent speech since he became the chairman. i don't know who's left around here. with an organization going down the drain and with these kinds of leaders coming forward to regain control we have a couple of family values man that got caught i won't mention their names are what they did. you know that already. they were going to become presidential candidates. now they are trying to take a hike out of the senate. we live in exciting, important times. what you do in the media is so important. is not always easy.

many of you do it. are you giving me the hook? many of you have been the ones to cause many of the things that we are investigating to happen. i commend you for it. i thank you for your patience and attention to my remarks this afternoon. [applause] can you explain to us a little more about the politics of the healthcare bill? >> what are the democrats disagreeing about? what will take to bring them together? what will it take to get a republican buy-in? >> if i knew an answer to that, i would go straight to the

speaker's office and make her the beneficiary of this wisdom. here are some of the problems. we have majorities, but in some sense, they are paper majorities. we have 60 in the senate. i would not want to bet your house on that. we have 60 in name. we have 60 something blue dogs and the house. then we have a number of men and women who are freshmen from

districts that are normally republican and they don't want any votes at all. these are the problems that you are confronted with. we have a strong, public option in the house. the senate, some do and some don't. and you have a senator like max baucus helping us make the decisions on reform of the health care bill, you are in trouble. it is not easy at all. the president says no it is the time. he called us into the summit the first health care summit, so

that everybody will get busy. now we know that he cannot wait for the spirit if he is waiting for us to serve him up with a health care reform bill, he knows that he has to get into it to expend some capital, and he is doing that. the overarching problem is, how will you pay for it? will this put us into more debt? the answer is the universal single payer, and you end up with less debt. but we don't have universal single payer. as long as the insurance companies are there as long as pre-existing illnesses is a way to disqualify anybody that has something that will cost them money after all this is a business -- the way you make

profits in the health-care business is don't insure the people who are likely to be sick. and the ones that are, get rid of them if you can by any means necessary. that is how you make a profit. >> why do you want to scrap the health-care system when it is reported that 70% of americans are generally happy with their health care program? >> that is not an accurate statement. the majority of americans want single payer. i have to be will polls to buy up. they are willing many of them, to pay for it. now the medical community has come around. when i first started out i was invited to an end -- a.m. a

conference once now more doctors support our plan then any other plan. you know the nurses are all over this plan. they support it. the people support it. the union's support it. community leaders support it. telling me -- 50 million people don't even have a plan. they don't have any insurance at all. >> out influential of the big farmers and big insurance? should to send back your campaign contributions from these groups? boris how could anybody have gone the notion that pharmaceuticals and the health insurance companies were giving campaign car -- contributions to the independent-minded

members of the house and senate? where did anyone ever get that notion? if you were in a group and the chief executive was making millions of dollars a year and wasn't even a doctor and you have quarters -- you have questions about how much money did you make? how are the stocks doing? of course, they are the ones blocking it. why would they want a single pair from the have 12 other insurance, mr. fuller around with right now and compete with each other? i see billboards of a hospital, come to this hospital and

another billboard five blocks away from the first. we are hiring specially -- specialists. they are competing. until we take that incredible soft -- costs for advertising the administration and overhead is driving some practitioners out of a business. they cannot afford all of the administrative help that they need. >> would you oppose a health care plan without a public option? for >> no. i should say heck, no. i could say something else. of course not. is all i can do to zurich and to

support universal health care. that movement will hopefully help a lot of people in the legislature realize that a public auction -- a real public auction -- option -- they can write public options that are not worth the paper is written on. i am talking about a real public option not something a guy dreams of between martinis and since it down to us for an act. >> you want single payer. president obama does not. why do you want it and why doesn't obama? >> i want it because it is the best plan.

i can remember when obama agreed with me. he wants it because of the rahm emanuel factor. i am glad you asked me. the rahm emanuel factor to quote him is, "we want success and we are willing to make a deal about anything." does that make you feel comfortable about health care? that is the whole idea, it is that he wants a bill. he wants to win a in the off- year elections. he wants our president reelected

the next time he comes up. but i don't want anything to stand as reform and let it go at that. this will not hold down costs it will not cover everybody, it will not take away the mystery of hundreds of thousands of people. we have so many horror stories of people filing for bankruptcy. we are having a healing not -- a hearing at next week in the judiciary. the maze -- major cost of bankruptcy is hospital and doctor bills and the tragedy of people not being able to continue to pay rent or get their pharmaceuticals.

can we just take a couple more questions? >> no. >> thank you all very much. forgive me for doing this. maybe i will come on again when i have more time.

[applause] >> my apologies that we are ending early. i will make a few announcements about our future speakers. on july 27th, monday, congressman barney frank will join us. on july 29th, senator john kerry of massachusetts will join us. and coming up in the fall on september 29th, ken burns the documentary filmmaker will be here to talk about his newest documentary. on september 12th, the national press club will host the 12th annual five k run and auction. for more information please go to our website. now would be the time to sign up

for that. i would like to thank you all for coming today i would like to think the staff members malinda cook, pat nelson joanne and howard for organizing today's launch. thanks to the national press club's library. the video archive of today's lunch are broadcast from the operations center. our events are available for download on itunes as well as on our website. for more intermission about the national press club, please go to our website. thank you very much. we are adjourn.

ed. >> coming up to look at how the health care debate stands at the end of the week with remarks from house republicans and

democrats. then a hearing on oversight of the troubled assets relief program. tonight, funeral services for walter cronkite. friends and colleagues play tribute -- pay tribute at st. bartholomew's church in new york city. that is tonight at 8:20 p.m. on c-span. >> q and a sunday, susan dey -- susan jacoby on the fascination with the espionage trial of alger hiss. at 8:00 p.m. eastern and this -- eastern and pacific. >> republicans told reporters at a health care bill would not pass if pelosi brings its straight to the floor.

joe barton spoken stay on capitol hill. this is 40 minutes. >> welcome. i am congressman barton from texas the primary committee for health-care jurisdictions in the house. we share that jurisdictions with the education and work force committee. everybody knows that the energy and commerce committee was supposed to mark up the president's health care bill. i think everybody knows this is the week that wasn't. it did not happen. there are rumors that it is not going to happen next week the the speaker will take the bill away from chairman waxman and bring it directly to the floor. i predict that if that happens that the bill will fail on a

rule vote. i don't believe that the democrats on the energy and commerce committee and the blue dog democrats would vote to bypass the committee of primary jurisdiction. in the chance that there is a mark up next week in the energy and commerce committee we wanted to hold this press conference to talk about what are republican prescription for healthy america. if you'll look beside me, you'll see two boxes. there are 15 other boxes. there are 17 boxes of republican amendments that are at the desk over in the committee room in the rayburn building of republican amendments to help put together a healthy america in terms of the health care plan. when the democrats say that we don't have a plan, this is

congressman -- another congressman's line, who says they can get out plan out of committee, where is their plan? among the amendments, and i will just go through them briefly first, we agree with president obama that if you have insurance that you like you should be able to keep it. the current plan does not allow that. it requires mandates that make plans will not be able to me. most americans in five-eight years, if they have a plan they like they will not be allowed to continue. any system that is based on a free market needs transparency. i think it is telling that the president, mr. waxman and blue dogs people went crazy in

opposing it because they are afraid that in addition to taking it to congress, that board is going to insist upon transparency. people that have information about health care choices and costs are going to make a better decision about where to put their health care dollars. we believe that senior citizens should be able to have choice of what kind of medicare package a have. we will have an amendment on that. we believe that low income families that are eligible for s-chip needs insurance. there will be an amendment on that. the amendment no. 5 on our list access to health insurance is really the issue, i think there is an accessed issue and a cost issue. if access is the issue, we don't

need all these bureaucracies or mandates. we need a national plan that covers pre-existing conditions for people that have chronic conditions. we need to create a national plan. we have an amendment that does that, and we have a number of amendments on pooling arrangement. there is a bipartisan men -- bipartisan arrangement being worked on that solves that need. suffice it to say that republicans on the energy and commerce committee are prepared to work every day next week if necessary from 10 in the morning until 12 at night, we think there should be a marked up in the energy and commerce committee. we think we should adopt some of these amendments. the only true negotiations that

have been held between republicans and democrats on a house on the health-care package have been done and the open market process. last week, and a little bit this week about a day and the energy and commerce committee. we think there should be transparency and legislation and not just transparency and a bill not going into effect. we hope they will let them be a mark up. with that, i would like to introduce a deputy ranking member of the committee and the chairman of the air -- healthcare solutions working group. >> let me make a couple of points here as a follow up to what the current ranking member has to say. first of all we want to reform

the system. republicans have been working hard for six months. the solution group has been working hard, we put principles out long ago. those principles are outlined in the amendments that we hope to be able to offer. the principles are what is really important. our principles to reform the system. we are consist they have the right impact on costs. one of these principles is a more competitive marketplace. we had a hearing yesterday that pulled people from canada and the united kingdom doctors from the u.k.'s said competition plus a choice equal quality. he also said competition plus choice it will lower prices.

even if you like what you have, you should have more choices than you have now. there are easier ways to put more marketplace dynamics into the system. there is an article today that references the national observations about how to get more choice, more competition into the system. we may not agree on every issue, but on marketplace expansion we do agree. how do we get cost savings? the president's plan, and the

president seemed woefully unfamiliar with his plan in the last two days. everybody agrees is saves no money. what we need to do within the system to save money? we would look at medical liability reform. what do people charge and what kind of results do they get? none of those things are in the plan that the democrats are offering if there is a plan. there are about three different bills out there right now. every time you see the bill, is 100 pages bigger than the last one that you saw. if anyone here believes that there is a bill that a democrat knows what is in it, i am sure this is not true. if you watch the president the last to the dual days as he was asked questions about his plan, he did not have answers. our plan, more competition, more

choice put forces together in a way that will drive prices down. make the current system work better for consumers, and also made the current system work better at the point of health care itself. those two principles over and over again if they are reiterated in day -- in defeat 17 boxes of amendments sent to the commerce committee waiting to be offered if they will ever have a hearing. you cannot offer your ideas if there is not a legislative form to offer your ideas. you cannot combat their offers if the changes by 100 pages every time you walk into the room. we are eager to have this discussion. we have been up to the edge of pounding on the door for six months. we have been calling the white house chief of staff, talk to the president, sending letters saying that we want to work with

you on this to make the current system better, and no one is responding to that. i visit they are not responding is because they don't have an idea that beats any standard that meets the goals that we should be working towards in health care. our committee, the member that over the last decade has been more engaged in this than anybody else day in and day of duty -- they out is nathan deal. >> let me put our schedule in perspective. most of us believe that the decision as to major reform as to how americans get their health care in this country deserve at least as much time and deliberation as it would take to select a puppy to reside at the white house. it took the president six months

to decide how long which puppy he would have, and to expect congress to do something on major health care reform in six days is totally irresponsible. let me talk about a couple of areas that we are concerned about. as you have heard, we believe that the current system needs some reform. . .

they are not going to be using their tax dollars to pay for people who are illegally in this country those things i think that resonate with my constituents in most people across the country. i am afraid that we're not going to have the opportunity to offer those kinds of progressive reforms not only to the current system but also to the proposal that the democrats have on the table. >> let me echo what they have indicated.

the president has not read the bill themselves. i am going to have a very simple amendment. nothing in this division shall prevent or limit individuals from keeping their current health benefit plans. that sounds pretty simple. the president has said publicly that if you like your doctor, you will be able to keep your doctor. if you let your healthcare plan, you'll be able to keep that health care plan. that is his statement. he saw my amendment. what does the bill say? i have a copy for anyone who is interested. on page 17, after five years, it says the commission with him and the exchange mandates that all health-care plans in america must meet a qualified health benefit plan including the central benefit package, under a certain section.

what that means is all of the plans will have to do be confirmed -- conformed or they will be eliminated. the president wants everyone to have their own choice of doctor or health care plan. they will not have the right to choose. on page 17 of this bill, its allies specifically after five years all plans will be mandated to comply to the government's health-care position or be eliminated or terminated. maybe the president needs to revise this page 17, because what he says this not comply. i do not think he has read the section. >> we want people to know what is in this bill. that is the reason for bringing all of our amendments to you today so that you will see which we are offering for the committee to consider.

we want to make sure that health care workers for americans. some female business owners came to capitol hill to express their concern. are they concerned about cost? absolutely. they know that, need to be addressed. are they concerned about accountability for insurance companies? yes. they agree with us as you have heard one person mentioned this morning. some of those issues portability issues. pre-existing conditions and accountability needs to be addressed. we have an amendment that does that. we look forward to the opportunity to present that to congress and the american people. we want to make certain that people have transparency in the options that are there. people need to own their health

insurance and their health records. these are some of the highlights from the conference we had this morning with the female business owners. they are going to work hard with us if we continue to push through the next few weeks to look at what happens here before we go out on recess to look at the opportunities that exist. as we talk to business owners in constituents and health care consumers, we want to make sure they understand our commitment to stand with them to preserve their access to affordable health care in our own community. >> thank you. i am from the third district of arizona. health care reform has been a passion of mine since i have been here. i worked on patients' bill of rights of reforms. i have written a comprehensive health-care reform bill every year i have been here.

i have written legislation to enable people to buy health insurance across state lines so they can get it at an affordable rate. let me make it clear the things we have agreed upon. republicans believe and support legislation to fix the problem of people with pre-existing conditions and chronic conditions. those people ought to be able to buy health care at the same cost as every single one of us. this is not just talk. we passed legislation to encourage states to do that at least four years ago. there is agreement on this issue. we like to go further and make that a national program that covers everybody. covering all americans -- many republicans working on health care reform including myself and others have offered legislation

that covers every single american. we would get every single american a refundable advance of all tax credit to cover each one of them. let us talk about where we do not agree. it is an outrage to say to american businesses you can buy health insurance with precast dollars but everyone else has to be responsible and buy it or we are going to smack you down. that is the law in america today. if anyone of you sitting here do not have employer-based health insurance, and you want to buy it on your own, if you have to buy it with after-tax dollars. that is unfair. republicans want to fix that problem and empower people. the democrats want a top down bureaucracy driven punishment

that -- punishment-driven mandate coverage by individuals in punish them if they do not comply. i want to empower you to be able to buy your own health insurance plan. the democrats talk about abuse and plans to cancel people. your employer by the plan and he has a motive not to look out for you as carefully as you look out for you. you cannot quit that plan. if you could pick out the plan, you would not accept the terms your employer picks. you would make sure they cannot cancel you. that is what we want for you. we want you to buy a plant that cannot cancel you. we want to empower people.

>> a year ago you would not have asked the government to pick out what kind of car to buy. maybe now, you would. [laughter] the government is taking over the financial sector, the automobile industry, and now health insurance. liability reform has lowered practice rates and brought doctors back into practice in texas. we have addressed some technical problems that the chairman has brought up. on the issue of if you are denied by one of these boards

should not the patient have the opportunity to come back and have a hearing and protest the denial of care? we asked our insurance companies to do that seven years ago. we should ask the public plan to do the same thing. we should ensure that patients with medicaid have access to a doctor. we have to do that by making sure that every state will reimburse physicians at a rate that is no less than 75% of the state rate plan rate. we were not allowed to offer those amendments because the committee has been in recess all week. i hope we have the opportunity to give back and settle this. we want to get there and to the business of writing legislation to help the american people. >> my colleague from georgia spoke a second ago about what

the white house would have ended up with if they had rushed that through a set of taking a few months to come up with that portuguese water pool. they would ended up with a junkyard dog if they would have rush it through, just like with this health care situation. we want affordable accessible, and universal health care to everybody. instead, we rush it through and we get universal nightmare. we can do this right. you heard some of us talk about republican legislation. so much for all of this bull about republicans have no bill. we definitely do. we have all these amendments that you just heard about. let me mention one that i have submitted along with others.

if this public plan, if that option is so good, let's sign up immediately the president and vice-president in every member of congress should be on the public option. but your money where your mouth is. if you are going to talk the talk, walk the walk. that would be a great message to the american people to say that yes, this plan is good. we members of congress -- if we will get denied coverage and rationing of care, let us put up or shut up. i think we have some great plans. i am proud to be here with my fellow members of energy and commerce. i yield to the podium to my next guest. >> i am from indiana. this is my 17th year in congress. i have had a lot of experience dealing with the military and

the veteran affairs and private system. as i look over the years republicans working with conservative democrats we have worked on the prevention side of health care and address portability issues. which i maintain that which is right in the private system and work on that which is wrong. the advocates today of the government auction of health care calling it reform, are the individuals did things against what we tried to do when republicans controlled which was associated health plans, of being able to allow businesses to get together and spread the risk and lower the premiums. we love the initiatives does say labette would you do for automobile insurance. you can buy it across state lines. we should be able to do that with health care. if you are a good driver, you

get the driver discount. if you are responsible and how you take care of your body -- you exercise, you watch your cholesterol levels, you do not smoke or drink should you get a premium discount? we think you should. it is called a wellness programs and trying to encourage people to take a greater incentive in the personal bomas. i tried to work with some democrats. i have an amendment that i am working on. the president talked about some of these companies that are doing this well as programs and now they are singing they do not want to do that. it is very clear that the government option is their plan. they are calling it health reform but it is all about government control. it is very disturbing.

i am going to yield now. >> last week i was pleased to offer ways to eliminate wasteful government spending in our programs. my amendment gave the blue dogs the amendment -- the ability to show that they are willing to work in a bipartisan way to eliminate government inefficiency and red tape in our health-care plans. shortly after my amendment was adopted, the committee process was shut down. house republicans agree that health care is too expensive and too many families are struggling with the rising cost of health care. we are ready to reform the system to control costs make health care coverage more affordable regardless of pre- existing conditions. we need to reform the system,

but it should not come at the expense of the small businesses and strain the doctor-patient relationship. barack obama has been on tv a lot. he has been stressing that he wants to get rid of waste, but then he talks about expanding the government program even more. if his plan was so good for america, why would the biggest majority of the energy and commerce committee why cannot they passed this bill? the american people cannot stand it. that is why. i do not know anyone who thinks this is a good plan. they tell me not to support that government-run plan. thank you.

>> all of us up here agree that our health care system needs to be reformed. you do not blow out the best medical care system in the world to fix the problems that exist. we strongly oppose the government takeover with the rising cost in the massive increases in taxes that go along with it. you can see from the large number of alternatives that we are offering to the chairman, many of which he may not let see the light of day that we have a lot of good ideas that share bipartisan support. we hope these ideas did brought forward. if you judge by the last few weeks, -- you may not have known about something because the chairman through the public out of the meeting. it through the media out. what we heard were things that they do not want the public to hear.

one person talk about the rising talk -- rising costs. all of the savings we hear about do not exist in the bill that was filed. one of the president's pledges was that nobody making less than two and a $50,000 which the taxes go up. -- $250,000 goalwould see their taxes go up. that may not be the case with this bill. they admit that millions of people will still be and a shirt with this bill. they have a 2.5% tax on individuals that do not have health insurance after this bill passes. an uninsured person today -- millions of americans will still be uninsured if there bill passes. they will tax those americans with $29 billion in new taxes on

americans who are uninsured after the bill passes. most of those people would be people who make less than $250,000 a year. it would allow someone to ration care and literally interfere with the relationship between you and your doctor. their approach is the wrong approach. we have a lot of alternatives. we are willing to stay as late as we need to and allowed to bring these alternatives up. we need to have a healthy discussion with all of the american people seeing the details of the bill instead of their approach of ramming this reckless proposal before anyone gets a chance to see it. >> i think america deserves the opportunity to have this amendment debated and voted on. we have progressed from the chairman telling the democrats

and the committee to defeat our amendments to not being able to offer it them now. there are rumors that are strong that it will go straight to the floor weather is next week or in september, up by passing our committee. if any of us think we will have a way to introduce these things, you are crazy. america is not going to see these amendments. that is their agenda. what are some of the amendments america will never see? one says all white house and members of congress have to for dissipate in the public option plan -- have to participate in the public option plan. we have hospitals that are run

by religious organizations that are very concerned about the contras' cause. that is one of the amendment drafted that are road -- wrote. we will not be able to debate the conscious clause, banning taxpayer money of abortions through these policies in the exchange. that is not going to be debated. the opportunity for the taxpayer to be protected with their tax dollars now depending on what the commissioner would roll in -- rule -- there are many people in america that oppose that. we are not. you have that debate. that is what is being left behind. that is the atrocity of these decisions made by the chairman and speaker nancy pelosi.

those are just a few ideas that i have co-authored. i am angry that we are not want to have that opportunity. >> before we take questions the only two of our members who do not need a help -- care cuts are these. [laughter] we are willing to take your questions now. >> can you leverage on the chances that the bill may be defeated? >> i do nothing speaker policy will do that. every democrat on the committee -- it would be a direct slap in

the face of all democrats such as chairman waxman and others. they would be predisposed. i think the blue dogs would vote no because they would not be allowed to continue their negotiations. i think a number of the progressive democrats that have concerns about the timing of the bill would also be predisposed to vote no. this bill in its current configuration is very flawed. i do not see the votes of being there to get a role to get it on the floor. we have 86 more mms to offer. they are not -- 86 more amendments to offer.

i do nothing we will get to offer them. >> do you support a certain proposal? >> it would depend on what the use of the research is used for. we do not want to be used for a rationing of health care. >> will in the little bit of markup and had several amendments it addressed that issue combat regarding -- issue regarding what they can have. one amendment was rejected.

they could not make the final decision between a doctor and patient. we are for this. we are for comparative research that shows best practices for different diseases and what works best and to make sure that all positions are well informed about that. there is something called the art of medicine and the hipper credit both -- kemper crack both -- hit a crackhypocratic oath. our senior citizens may reach a certain age such as 85 and could not have gotten the knee

replaced as she needed under the provisions of this bill. >> is this the republican bill? >> we have a lot of amendments. we have a republican substitute that would be a comprehensive substitute for the democrat bill. it would encompass most of it. >> many of us have offered publicly republican bills. i introduced one with a number of members with many co- sponsors.

one person has been working on a comprehensive bill. at the right time, we would offer that legislation. it does have many of the things we were talking about. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] more of the health kill bill -- more on the health care bill. this is a little over 10 minutes. 2009. i yield back. mr. cantor: i thank you mr. speaker. i did not hear the gentleman speak of the prospects of the house considering the health care bill, an i would ask the gentleman the status of that discussion and whether this house will be delivering on the speaker's commitment that this

house was going to vote on her health care bill, and i yield. mr. hoyer: i thank the gentleman for yielding. the status of the health bill as i think the gentleman knows is it's still in the energy and commerce committee. the energy and commerce committee has not reported out that bill. i don't know the speaker's commitment, but certainly the speaker and i both had the hope that we would be able to pass the health care bill by the time we left here on the 31st of july. my view is that this point in time that may not be possible. however, that does not mean necessarily that we won't be here perhaps longer. i hope that's not the case, but if it proves to be necessary, we may be here a either longer, either on a saturday or the third or the fourth. i don't want anybody to be planning on that at this point in time, but currently the status of the bill is it's still in the energy and

commerce committee. mr. cantor: i thank the gentleman. mr. speaker, i'd ask the gentleman again for some clarification. did i just hear the gentleman say that we will not be considering the health care bill this week? and i yield. mr. hoyer: i didn't say it in so many words, but i have indicated and the speaker's indicated that we will do 48 hours' notice, as required or at least we would hope to do. this is a very important bill. it is a bill that has great consequence to all americans. and we -- we're going to meet that -- those targets of notice. so in that context in light of the fact the bill is still in the committee, it may be impossible to meet that commitment and get the bill on the floor on the 31st. as a result, my view is the probability of doing that bill by the 31st is very small. mr. cantor: i thank the gentleman. so to reiterate, i will say that i heard the gentleman say

the probability of doing taking up the health care bill by the 31st is very small and i suspect that is due to what we have read in the news reports for successive days now about the difficulty that your side is having in gaining a majority in support of the bill. and we have said all along mr. speaker, there is a reason that there's a bipartisan majority against the health care bill being proposed by the speaker. . people are unsure about the direction a government health care program would take them. we stand ready and willing to work together to try and effect reform for the american people. we on the republican side of the aisle do not accept the status quo.

we want to see a health care reform bill that works for the american people, mapets choice and quality, reduces costs so more folks can have access to coverage. and that's not the bill before us, at least that which is being reported. and so i would ask the gentleman if there is a very little probability that this bill would come up prior to the 31 and given that he and i have had discussion about the schedule, how long will we be in session beyond the 31? and i yield to the gentleman. mr. hoyer: i thank the gentleman for yielding and we think the bill that is pending, we're not sure that your premise correct. we think your premise not correct. we think the majority people on this floor want to vote for a health care reform bill and they will vote on the bill as it becomes more perfected. i don't accept your premise that

there aren't majority of votes for the bill that is being considered in this house. having said that, however, my point was that we want to give appropriate notice. if we can't give appropriate notice by the 31 of july, it is possible -- i'm not saying we will be doing this -- but it is possible that we would move onto it they are saturday the 1 or monday and tuesday the 3 and 4 if need be. and if that was appropriate. it may or may not be. i don't want to say at this point in time, but i do want to give members some notice that that is a possibility. mr. cantor: i thank the gentleman. and obviously, if the process had worked differently, if i would suggest to the gentleman if we were allowed to try and put forward the kind of proposals that we are attempting to do and there was reception on

your side to allow for some of the quote free market principles and cost control suggestions that have been made, according to a member on your side, mr. minnick, a few days ago, maybe we would be on a better course. in the same way, i think -- a colleague from the gentleman's state, mr. kratovil said, the bill isn't out of the committees and we are already talking about voting on this. we feel the same way, that there has been very will willingness to work together to try and get a health care plan right. and mr. speaker, the way that i believe we get it right is to tell the people of this country exactly what would be in store for them by the insistence that there be a government plan involved in their health care. so i would tell the gentleman we obviously stand ready to work

with him and the speaker to perfect a plan that could get much larger than just probably the small majority that he'll be able to produce, given the news reports that we're hearing. and with that, mr. speaker, i would like to ask the gentleman about his anticipation of next week's appropriations bill, the d.o.d. bill. and he and i, as the gentleman knows, have had a long-standing discussion on the rules. we on this side of the aisle have been extremely upset, as he knows, about the change in precedence of this house, that somehow it was ok for this house to leave the precedence of rules and to insist that we not be able to hold open discussions on issues surrounding the

constitutional obligation of this body to spend taxpayer funds. so i would ask even after the good faith attempt that we have made to open up rules and have been rebuffed at each turn, is it his hope, his intention that perhaps on the d.o.d. bill, whether we could see that happen. and i yield. mr. hoyer: certainly going to have good faith on our side as you have had all along. on the defense appropriation bill, it's my understanding there are well over 100 amendments that have been filed. clearly if we did that under an open rule and allowed all 100 amendments, which ks by the way are by one member, we would never finish the bill if we stayed through august. having said that, i have talked to the chair woman and it's my belief that mr. flake has filed over 100 amendments, will be

given a.m.le opportunity to choose which amendments he wants to offer. i don't know the other amendments. notice has been filed. i don't know the other amendments and don't know what the rules committee is going to do. i will tell the gentleman that the bill will come under a rule we believe that this side of the aisle has had most of the amendments that have been offered clearly and mr. flake and others, mr. hensarling were given the opportunity to offer a number of their amendments on earmarks, which i know are of great concern to both sides of the aisle. so i say to the gentleman, we expect to take the defense bill up under a rule similar to those under which we've operated, which are facilitated by the way, as the gentleman knows, all 11 of the 12 appropriation bills having passed and while i was not sure of what was going to

happen on the health care bill, we will achieve our objective of passing all 12 appropriation bills in a timely fashion. i yield back. mr. cantor: the gentleman does speak to the point i'm making, we are trying to get things right here. and spending billions of dollars is not the goal here and i know he agrees with me on that. that we are trying to effect the most prudent expenditure of taxpayer dollars in this difficult economic time. as the gentleman knows, we voted on a pay-go bill this week and frankly, the spirit behind that pay-go bill was to attempt to restrain the type of spending that we've seen this congress conduct. in fact, this week in one of the reports, one of the authors of an opinion column said, frankly we're spending -- the spending

pay-go bill that was passed this week was full of loopholes. and again, we know that the pay-go bill that was passed was that it wasn't a hole is particular pay-go bill and wasn't something that will do much to address the runaway spending. and so we still sit here, mr. speaker, and want to have an open process so we can contribute to holding back the runaway spending in this town. and so i would say to the gentleman just as he has said to me, we ought to be looking to try and open up this process again. and we were not allowed to do so on the pay-go debate and address the number one concern of this government right now, which is the runaway spending. we have not been allowed to do so on any of the appropriation bills. and if we're going to be here through the weekend, as the gentleman has suggested why

isn't we couldn't take that time to debate the d.o.d. bill in an open and full transparent manner? i yield. hoyer hoyer as i said, i think we will have a -- mr. hoyer: as i said i think we will have a rule as we did in the previous 11. as i said, i believe we will be considering the defense bill under rules similar to those which have led to the passage of the 11 other bills. i yield back. mr. cantor: i say to the gentleman, obviously with much disappointment and i think really reflecting the disappointment on the part of the american people that we should be having a much morrow bus debate on these issues. certainly if we are going to be addressing the issue of health care and the gentleman says his side is insisting on rushing

that to the floor and insisting on some political deadline and i don't understand why it is we couldn't have an open debate on some of the other issues if we all want to vote for health care reform. we think we will pass a very good health care reform bill. we made very significant progress last night.

one person moderated and solicited the opinions of members on the medicare reimbursement rates. the regional -- -- the regional differences, some are very animated about that. there are real differences as you would expect on an issue of this magnitude. i am pleased to report to you that last night they reached a consensus appeared this morning they met with the leadership and went over the language. we have a full agreement. i like to congratulate this person on a very significant step forward we continue to work towards consensus. we believe that the energy and

commerce will continue its work in the regular order and we are looking forward to marking up the bill in energy and commerce. that will proceed next week. we are committed to passing a health care reform bill and we are energized by the progress we made last night and the progress that we are making today. the leadership is committed to that end. i believe we are committed to that end. we have every intention of passing a health care reform bill and sending it to president obama for his signature by the fall. >> you were expressing doubt as to whether this can happen next week. will you require that this go to congress or by half its.

>> all we expect the committee to be able to work it will. we hope our expectation -- will look for to the energy and commerce doing its work. i had pledged and the speaker had pledged to give it sits -- significant time for members to review the product of the committee. what i said on the floor was because the committee process has taken longer than originally anticipated we made real progress last night. these are difficult issues. they are working on them. it will be difficult to meet the time requirements by this coming friday. i do not believe that this will

occur by this friday. perhaps saturday or another day. we will see how it progresses. whatever we do, we intend to keep working on this very hard. that is between now and when we come back. we expect -- we have three bills. three of the leaders are members. the education and labor committee have reported bills. then they will be put together. we will be working on that as we move forward. >> [unintelligible] >> this man can speak for

himself. i think what we want to see happen, and we are making progress, and want to stress how optimistic we are by the fact that we have had such progress last night. there are different opinions with a bill of this magnitude. sometimes your opinions differ substantially. we are making progress on a great victory last night and this morning. i congratulate all of the people who worked on it. it is my expectation that we will continue to move forward. we are in discussions with the white house. they want us to make progress. it will take time to bring the bills together.

we are working on that through august. >> what about the contention stirred up among the blue dog? >> as you know i am close to the blue dogs and henry waxman. i never known him for 45 years. they are close friends of mine. during the legislative process sometimes people get animated about their position. this is a critical bill for the american public. we want to make sure that every american has access to that care. i am confident that the blue dogs of all told me they want to vote for health care reform.

they have certain opinions as to what that will look like. mr. waxman month a health care reform bill. we can do that with everyone accomplishing the objective. >> i know you were confident. mike ross said he did not see how we can do it. you talked about the agreement. none of that happened. >> let me say that he is to be congratulated. he does an excellent member of congress. there were very strong feelings in that room. you saw those expressed to you from time to time regarding the

rates that medicare paid. they were resolved. i think we can resolve these differences we can get to a bill that can go up to the floor. i think your premise is incorrect. the agreement that was reached is helpful to the blue dogs. what they were seeking, i know that other issues that they are interested in as well. the agreement that was reached -- i think it was a positive step for the blue dogs.

>> are you going to work until the bill is done? >> yes. we are not going to stop working. [unintelligible] aand >> house democratic

representative james club born -- clive vernonyburn will be speaking. >> i think here is a place holder. that is recognizing the role of the congress. a lot of people said he could do more. maybe he could. i want to see what he has done. i think so much of what the problem is asked to deal with the regional differences that we have within our caucus. they are pretty much on the same page for this reimbursement rates. you let other people low are

doing pretty good. they do not want to have any changes big as they feel that it will bring our dates -- rates down. how do you determine where the rates of? i do not think you can get that kind of result from the president. that has to be done by those people in the congressional districts. we have to figure that out. >> you can see the entire interview on "newsmakers." 10:00 a.m. eastern and 6:00 p.m. eastern on sunday. >> they are considering a bill under the suspension of the rules. defense spending for fiscal year 2010, executive compensation will also be discussed. this starts monday at 2:00 p.m. eastern on c-span.

the senate is back monday for work on energy and water spending. live senate coverage starts at 2:00 p.m. eastern on monday at cbn -- on c-span2. coming up, a couple of oversight hearings. the troubled asset relief program is first. later from the communicators bill bradford from fox news media. >> grace and the american criminal justice system. later today on "america and the court's."

>> now we will discuss the tarp program. we will hear from special inspector general and elizabeth warren of the congressional oversight panel. then we will hear from the subcommittee. this is 2.5 hours. the chair advises members given this is scheduled, in the unanswered question can be followed up in writing.

i recognize myself for an opening statement. the treasury department used billions of dollars to help banks to stabilize. when congress enacted apart last year we requested that firms receiving the funds would issue warrants. these warrants give us the right to buy shares in the company to like a employee stock option. a number of policy issues arise

that have to be dealt with. i am committed to doing all we can to ensure taxpayers are fully repaid. goals became the first bank to pay back funds. they buy it -- they spend money to buy back these warrants. this transaction was analyze very closely. treasury was off by several dollars. $5 million may not look like a lot of money. this money quickly as up to a big potential return for american taxpayers.

they are acting to protect the taxpayers investments. investments in the firms by maximizing returns on the warrants. i carbon copied others an entwo weeks later and received a joint letter from special inspector and officer warren. they noted a coordinated effort between comp and cigtarp to investigate whether it's fair value to taxpayers. early this month, i was glad to see a report entirely focused on repayment including repurchase of warrants. similar to the analysis by the professor, they found in the first 11 bank that is repurchased the warrants treasury receiving 66% of what they could have received for taxpayers. comp notes that the small banks from a fraction of all 1% of warrants issued but if the trend continues, taxpayers could miss

out on $2.7 million on the returns of investment but the same day we received good news when "wall street journal" reported that there were repurchasing of jpmorgan chase and frustrated with the treasury department for demanding too high a price for the warrants. i'm glad that treasury department's holding a tough line, especially against the largest of the recipients and today goldman sacks announced to pay $1.1 million to redeem the warrants representing a return of 23% for u.s. taxpayers. that sounds pretty good but is it enough? i'll keep pushing to make sure every single t.a.r.p. dollar is fully repaid so that our children and grandchildren not left with the tab. i look forward to hearing from the witnesses, especially the new administrator and assistant secretary. he has one of the toughest jobs in the country and i look forward to the viewpoint of weighing the decisions to stabilize the financial sector and protecting taxpayers and a strong oversight congress put in

place when we created t.a.r.p. publishes thousands of pages of oversight reports free and available online examining the angle and aspect of t.a.r.p. there's a third quarterly report. i look forward to hearing the testimony today. i now recognize for five minutes the ranking member of the subcommittee, colleague and friend from illinois ranking member julie baker. >> thank you, mr. chairman for holding this hearing today. the hearing in which -- which is intended to focus on a specific aspect of the t.a.r.p. program, warrant repurchases and protecting taxpayers. it is in the taxpayers' best interest as soon as possible the federal government get out of the trillion dollar bailout business and out of the practice of owning and running private businesses. this is shotgun that the administration also supports. how soon can we withdraw taxpayer money and end the practice of propping up

industries? they must commune kate to the markets and taxpayers the exit strategy and the timeline for it. we need to put an end to the federal government picking winners and losers in the marketplace which has facilitated unfair i think we will hear some criticism from some of our witnesses today they are shorting taxpayers on the investment. this may be true and it may not. the accusations may be more for headlines than it is true. the best model a methodology to value warrants has to be determined. taxpayers must be assured treasury is using the best means to recapture the money of taxpayers. i hope that our guest will give us some assurance on this today. taxpayers deserve transparency. that is with regard to warrants end to what are the recipients are doing with the

money. . regard to what t.a.r.p. recipients are doing with taxpayer money. at the same time i want assurances from today's witnesses that as they work to improve transparency and still active, they will not jeopardize treasury and taxpayers' negotiating position to secure the best return on their investment. it is also vital that we prevent any individual federal entity or business involved in t.a.r.p. from making a profit based on insider information, especially when it is at the expense of the taxpayer. that's unacceptable and i want to know what is being done to prevent this. finally, i'm disappointed with legislation that would siphon off returns when we don't have a guarantee that t.a.r.p. will provide a return or loss for taxpayer and at a time of record deficits and unemployment reaching 10% nationwide. any profit on this tremendous risk should first and foremost go towards paying down the deficit. with that i would like to yield the balance of my time to the

ranking member of the financial services committee. >> thank you and thank you mr. moore for convening today's important subcommittee hearing. on the oversight of the t.a.r.p. program and also like to recognize ranking member biggert's fine service. she's been particularly i think helpful on the issues involving the sec and the cftc. i thank you. last fall congress required recipients of assistance under the capital purchase program to issue warrants to the treasury. i have a particular interest in this program because i first prosupposed it or something like it on september the 18th. and felt like by setting, you know a dividend or at least a

repayment at a certain percent i felt like we would be best assured of receiving a fair return. as opposed to a more fluid definition definition. for instance, when you buy toxic assets and i said that in the very first meeting with secretary paulson and chairman bernanke, you know what do we price these at? if you price them too low, it doesn't help the banks with their capital. if you price it -- if you pay too much for them, it's a bad deal for the taxpayers so i've always thought that this was our best opportunity of safeguarding the taxpayers and yet coming to the aid of the banks and i think time has shown that to be correct. and i -- chairman frank and i and others worked on a

bipartisan way on this. along with representative roy blunt. and this was done so that the american taxpayer would have the opportunity to benefit the warrants particularly from any upside as these companies return to financial health. and although we were hoping that was the case now some of them have had a spectacular return and you saw today with goldman sachs paying back the money, it was a 23% analyzed return. that's going to be unusual, i think, but it's good news for the taxpayers. however, many questions do remain about how to properly value these warrants to ensure that taxpayers receive a proper return on their investment. and i know miss warren or professor warren or dr. warren

you had proposed that they be placed on the open market for sale to the highest bidder. and certainly that is a -- you know one option that you -- you know has some appeal. particularly if the treasury and the party cannot come to some agreement. i think that's probably the only valid option. and normally i'd be in favor of letting the market decide asset values in all cases. and i do think that the oversight panel's formula for setting the auction price could result in a holding of -- the government having to hold the warrants for an extended period of time and then you have the risk of another economic downturn so you're -- if you knew that the economy was going to continue to recover, or the companies prospects, i'd say, yes. but you look at the commercial mortgage market and others and

it's really a -- it's a somewhat speculation and i've advocated trying to particularly if the treasury sets a price and it is accepted let the taxpayers get their money back. go ahead and get that money back in the treasury where it can be used to pay down the deficit. in july report on additional views, my colleague mr. hensling explained the valuation of the warrants is a highly complex analysis and that one size fits all approach may not yield the best results for the american taxpayer. you know i agree that that's true. while the july report seems to paint a picture that some money may be left on the table, if it's -- if it's valuation formula is not used i believe that a fair better result for the american taxpayers i said is to go ahead and as soon as

possible get the federal government out of the business of holding stocks and warrants. of the financial institutions. and treasury's indicated thas also their policy so to get just the government's investment back as soon as possible. let me conclude by saying mr. chairman, as institutions begin to pay back their t.a.r.p. assistance and really capital purchase program moneys we need to end bailouts return the money to the taxpayers, not recycle the funds back into more bailout bailouts. part of that will be regulatory reform to ensure that we don't have anymore bailouts and i think protection of consumers is a part of that. and although my approach differs from chairman frank, i believe that what we ought to be doing is saying to the regulatory agencies which have the skill and the means and the resources

to enforce consumer protection that we give them the charge to do it. and tell us how they're going to do it. and if -- if over the period of six months to a year we see that's not working, then we could address it in a more novel way. but let's be clear about another fact. although the capital purchase program may earn a profit the t.a.r.p. program overall will not. so for that reason i believe that all these dividend payments ought to be given back to the treasury as soon as possible. mr. chairman thank you for your indulgence in my opening statement. >> thank you as well mr. chairman. i recognize mr. klein for two minutes. >> thank you, mr. chairman, for holding this important hearing and this is one of the hearings we should have a lot more press coverage and more attention to the fact that we're having a pleasant discussion about the t.a.r.p. and the scenario where

not only are large banks that were probably put in a more solid position after what happened in september, but the consideration now is not only paying back the initial capital, but what's going to happen with the bonus. that's the warrants. and for those people not familiar with warrants that's an upside we have been talking about all along so there's a very positive discussion going on here today and i'm glad that members of both sides of the aisle can recognize that. that doesn't mean that things are good for everyone. but this is a little bit of silver lining to the fact that the taxpayers of the united states who put all this money on the table are going to get not only the money paid back but share on the upside. that being said i want to in my opinion and i appreciate the witnesses today and had a chance to meet with many of you and talk to you about the specifics and i thank you for the service and part of the oversight is making sure that the taxpayers receive the maximum return for the risk they took.

not everybody wanted to along with this but we did what we had to do and those people who said we didn't need to do this that's a matter of history to judge but at the present time we want to wish our businesses and banks in the united states success. we want them to succeed and lend more. and as a strong message to the banks that the t.a.r.p. recipients and start lending, start moving along. we have a liquidity issue in the united states out there and whether or not you're paying back the money or the warrants are exchanged in some form or fashion, we need you to be a part of a recovery. that being said the fairness part of this is makingure we get the maximum bang for the buck and whether it's on an auction, or whether there's a wait or not a wait again, i'll leave that to some of the professionals who can help us realize that we get the maximum bit of value back from the banks that end up taking this money. some of them are now recording historic profits which, again, we wish them all well.

we want that success to filter out to others as well. but we want to make sure that the taxpayers in this country who literally went on the line to make sure the recovery was going to begin and it seems to be beginning now, that we can put some of this money back in the till and those banks that need additional help and others around the united states may get that help and we get the maximum dollars back. thank you, mr. chairman. >> thank you. the chair recognizes miss mary joe killroy for two minutes. >> thank you, mr. chairman. thank you for conducting this hearing. although i was not part of the 110th congress and voted no on the house plan to release more money from the troubled asset relief program, i understand the american taxpayer took on some risk working to bill out the banks. many of whom made decisions that hurt ohio's families and economy. in fact hurt our country's

economy. now as main street still awaits the economic recovery and the jobs that it deserves some banks are back to making record profits again. after receiving our help. and i think that it's appropriate that the american public receives a return on the investment that they made with the t.a.r.p. money. i find it unacceptable that the downturn hurt main street hardest. yet, the recovery seems to be benefiting corporate america first. this issue, the repayment of the taxpayers and the upside of warrants is one situation where the taxpayers deserve to reap the full benefits in an open and transparent process. according to the reports that we have received from dr. warren from mr. barouski banks are negotiating the repayment of the debt, the purchase and sale of these warrants behind closed doors. instead of allowing the transfer

and the trading to happen on the open market and allow the market to set the price. we do not know of the current process producing the benefits we are owed. however, dr. warren has found that we are getting about 66 cents on the dollar for our investment and of the total shortfall to the constituents could be as much as $2.7 million. a market based approach removes the secrecy and maximize the return on taxpayers' investment. that is why i introduced with six of my colleagues what we call the profit act. this logical and common sense bill would maximize profits for the taxpayers and ensure transparency requiring an open process, illuminating the loophole allowing banks to negotiate behind closed doors with treasury. the public auction would be such a transparent open market and i think that one of our witnesses, assistant secretary alison

stated earlier this year in his testimony that in relation to toxic assets on bank balance sheets, quote, we have our theories but in the last analysis that's why you have financial markets. you have to have liquid interchanges and then the truth will come out as to what assets are actually worth. quote. i look forward to today's testimony. and i suggest to the panel and to my colleagues that now is the time to act to close this loophole. according to the congressional oversight panel which dr. warren heads, less than 1% of the warrants, those stock options for the american people have been sold. this is the time to push treasury to open the process with transparency and to make sure americans get the deal that they deserve. thank you. i yield back. >> thank you, miss kilroy for our statement and it is now my pleasure to introduce herbert

mr. allison jr. at the u.s. department of the treasury. he is responsible for developing and coordinating treasury's policies on less lative and regulatory issues including administering t.a.r.p. mr. alison served as president and ceo of fannie mae and the chairman, president and ceo of tia-aa kraft and held senior positions at merrill lynch, time warner and new york stock exchange. he also spent four years as an officer in the united states navy including a year in vietnam. without objection, your written statement will be made part of the record. mr. secretary, assistant secretary, you're recognized for five minutes for a brief summary of your statement. >> chairman moore and members of the committee, thank you for the opportunity to discuss the nation's financial system. in response to the major crisis

in our nation's financial system and housing markets, congress passed the emergency economic stabilization act last october establishing the troubled assets relief program or t.r.a.p. and giving the tools and flexibility to stabilize the system and restore the flow of credit to consumers and business. our mandate is two fold. to stabilize the financial system while protecting the taxpayers. today, i want to update you on our progress. in just ten months treasury invested more than $200 billion in 657 financial institutions of all sizes and 48 states. including over 300 small and community banks through the capital purchase program. we reopened the capital purchase program recently for small and community banks recognizing the critical role these banks play in our communities. we provided support to three

systematically important institutions and launched a housing program to help millions of homeowners. we assisted with restructuring of general motors and chrysler through the bankruptcy process and as a result both companies are better able to compete today. we helped to restart the securitization markets, a key source of credit to consumers and businesses. we launched the public and private investment program to help remove legacy assets from the balance sheets of financial institutions so they can redeploy their capital to support lending. and we issued regulations guiding executive compensation at all firms receiving t.a.r.p. funds. we have allocated about $643 billion to our programs. we have actually invested $362.6 billion of that amount to date. we have also received over $700 billion in cpp payments from 34 institutions, and $6 billion in dividend repayment. from participants in aulgt

t.a.r.p. programs and finally we're beginning to receive proceeds from the sale of warrants through the ccp and as was noted today we received $1.1 billion from gold man sacks representing a return of 21.53% on the taxpayers' money. as you can see, treasury has accomplished a great dealful all about building a new office of financial stability, however, we have much more to do. as described later in my testimony. i would like to briefly discuss treasury's process for selling the warrants received through the cpp. i have attached the policy statement and frequently asked questions on the subject with my testimony for the record. treasury has communicated its consistent and clear process for valuing warrants in a manner that protects taxpayers. we apply the same process consistently for all banks, large and small. treasury is committed to getting fair value for the taxpayers for these warpts and we've made that

process public on our website. when the publicly traded institution repays treasury's investment under the cpp, it has the contractual right to repurchase its warrants at fair market value, through an independent valuation process, directly from treasury. one source of complexity in valuing warrants is that the warpts do not trade on any market so they don't have observable market prices. models by themselves cannot give us reliable estimates of the realizable price in the marketplace. so we're using a comprehensive approach to estimating the values. which involves a variety of inputs including financial models. we counseled with numerous experts, market makers and industry participants. there shall ri also consults with third market participants as to what they would be willing to pay for the warrants and

valuations from outside investment managers. treasury decided to sell the warrants within several months after the eligible for sale. rather than hold them for a substantial period. our guiding principle is the president's belief that the extraordinary government interventions necessitated by the crisis should be unwound as quickly as is consistent with treasury's mandate to restore liquidity and stability to the financial system while protecting the interests of taxpayers. as with all aspects of the programs treasury welcomes the recognize dagss and comments of others, as we continually strive for improvement, transparency and accountability in all of our programs. earlier this month, treasury announced its selection of nine asset managers for the legacy securities public/private investment program to remove legacy assets from the balance sheets of financial institutions. it is a critical element of

treasury's financial stability plan and designed to support market functioning and price discovery. and the important asset-backed securities markets allowing banks and other financial institutions to redeploy capital and extend new credit to households and businesses. treasury took a number of comprehensive measures to enhance the proil of this program and to prothe tekt taxpayer. we consulted closely with a frame work for compliance, governance and controlling conflicts of interest and congress -- women and veteran owned businesses that represent the communities. the t.a.r.p. has been key to stabilizing the financial system and preventing greater deterioration in the availability of credit to households businesses an communities. amid signs of recovery in the markets in the first half we've seen improvement in spreads, that is the measure of risk in

the financial system we've also seen the issuance of corporate debt and signs that the economy is beginning to mend. consumer confidence increased significantly. housing starts moved higher and housing purchases are picking up but the economy remains vulnerable. even with the modest improvement in conditions unemployment and the level of home foreclosures remains high. strains in the commercial real estate market continue to build. this is why treasury must remain vigilant and press ahead with the efforts. upon taking office president obama committed to increased transparency accountability and oversnigt our government's approach to stabilizing the financial system. secretary geithner further underscored treasury's commitment to transparency in all of our programs. one of our priorities to ensure that we enhance and provide

transparency as the activities evolve. i will regularly update congress on our progress. we have productive working relationships with our four oversight bodies the special inspector general of the t.a.r.p. the government accountability office congressional oversight panel and the financial stability oversight board. treasury has accepted a great majority of the recommendations of those bodies. where we conclude that a recommendation is impractical, we find other means to achieve the same goal. treasury shares the concerns of congress and our oversight body that is we see an increase in lending by banks. and we've required banks receiving a treasury investment to report their lending activities regularly. in january, treasury launched an important initiative to help the public easily assess the lending activities of banks participating, starting with the top 21 banks since they account for over 50% of lending in our communities.

then in march, we expanded the survey to include all banks in the ccp and published three lending reports with data from over 500 banks. because we believe these reports are critical to helping the public understand the lending environment during this crisis, we have asked ten large banks that repaid the investment to continue participating in the survey through the end of this year and they have agreed an we appreciate their voluntary cooperation. treasury is working urgently to maximize the importance of stabilization and must allow sometime for these programs to have their full effect. we recognize that we have much work ahead to restore the flow of credit to consumers and businesses and alleviate the real hardships that americans face every day. as my colleagues and i work on this important financial stability effort we will strive to be prudent investors on behalf of the american people and protect the taxpayers who have entrusted us with so much

of their money. here are the top priorities of the office of financial stability. first, we'll carefully review the controls over taxpayers' money giving special attention to compliance with laws and directives governing risk and internal audits and work closely with congress and the oversight bodies. second, strive to maximize the effectiveness of financial stability programs restoring soundness to institutions and liquidity to the markets and finally, we will emphasize transparency and interaction with congress so that the american people will know what we're doing with their money, why we're doing it and how it's helping the financial system the economy and their lives. thank you very much and i look rward to answering your questions. >> thank you, for your testimony, mr. alison. i now recognize myself for five minutes for questions. mr. alyisonalison as you know gold man sacks announced they're buying back their warrants for $1.1

billion from the treasury. jpmorgan is going to a public auction because according to news reports there's a feeling you're driving too hard of a bargain which i'm frankly glad to hear. is $1.1 billion enough for goldman's warrants? would taxpayers have received more if they went to a public auction? >> thank you, mr. chairman moore, for your question. it's a question that we ask ourselves all the time. we have even though we're contractually obligated to go through this process of independent valuation with the bank if it chooses to do so if the bank decides it would rather auction the warrants we are willing to go that route. we have modeled both approaches. of course, as i mentioned in my earlier testimony, a month or so ago, we can't tell for sure how the market will value warrants. we try our best if the process is going to be the independent valuation approach mandated by contracts, to get market-based

information, nonetheless. and so that's why we go out and we ask market participants to give us quotes on these warrants. we are satisfyied based on the quotes based on analysis of asset managers and based upon our own use of models similar to that used by the cop that this is a very fair price for taxpayers. we are comfortable with that. and although i still can't tell you that we would do better or worse out in the open market. nonetheless, based on a system we use for every bank and have since the beginning, we are very pleased with this outcome. >> thank you. mr. alison what is your response to the paper from the professor on old national as well as comps reports saying that treasury could miss out on a potential $2.7 billion of returns for taxpayers? what policy issues does treasury consider when reviewing the warrant repurchases? i have heard some say they

should be held after auctions. when will treasury hold these auctions? >> in response to our view of the process of the cop, first of all, we use a similar mod toll the c.o.p. we respect their approach. we have had discussions about theirs and ours. there are as the c.o.p. report pointed out small differences in the assumptions that go into a model, especially when you're valuing warrants as long as ten years could have a major impact on the result of the valuation. and in this case one of the assumptions has to do whether there should be a discount considering the price baked in because small banks have much smaller warrant positions that we hold and there's less likely to be demand and less price. we factor in a discount for small banks for the lack of

liquidity of those warrants. so that's one reason why there could be a difference between the model outcome of the c.o.p. and ours. i would also ask that you look at the comments of various c.o.p. members adependndadepended to the c.o.p. report pointing out these issues. while we are all trying to do our best to value the warrants we have to respect the uncertainty of a model and why we use alternative approaches such as asking participant what is they think the warrants are worth. >> and my final question mr. alison, you have been on the job for a month but have you given thought to a t.a.r.p. exit strategy? the law creating t.a.r.p. requires after five years the president must submit a legislative proposal to congress of how the industry will pay for any remaining outstanding losses on the program.

since we're nearing the one-year anniversary of the law, do you expect losses on the program in four years? do you have any -- >> yes, sir. the esa legislation provides that at the end of the year we might end making investments in companies. however, the secretary of the treasury can make a determination as to whether the program should be extended. that is for making investments until october of next year. the secretary will be deliberating that matter in the fall and will reach a decision. i should point out that the features of these investments either contained expiration dates for the investments or increasing costs to the bank in which we're investing so there are incentives built into the program for banks to repay treasury as rapidly as their financial condition allows. >> thank you sir.

my time is up. at this time i recognize miss biggert for any questions she may have for you, sir. >> thank you, mr. chairman. sort of similar but, pli alisten soy, you know the treasury's been criticized for not securing the best possible return on its investment. in fact i think in the congressional oversight panel's c.o.p. recent report they accuse the treasury of reselling the warrants back to the banks at two thirds of their actual value. is this true? >> thank you for your question, congresswoman biggert. this is a question many people are asking as a result of that report. we have as i said taken various approaches to valuing the reports. the same as gold man sacks warrants and we determined based

on this approach we were receiving a very fair value from those smaller banks. and that's why we accepted those bids. and we will eventually be disclosing more information that lay behind those bids and our decision. and we look forward to making that information available down the road. >> is there a difference because of the small banks have probably less liquidity than the larger banks? >> yes, that is true. in fact we did as i mentioned apply a liquidity discount in the model. that was also by the way, reflected in the market indication that is we received. we did not apply liquidity discount in the case of gold man sacks and would not in the case of other larger banks because they're likely to enjoy a liquid market if auctioned. >> okay. can you give the taxpayer -- the american taxpayers assurances

that treasury is using the very best means to recapture the taxpayers' money? >> i can assure you that we're making every effort. and this is our obligation to the american public to receive the appropriate and ample return for the taxpayer. we know they're the ones that put the money as risk and we feel a great obligation as responsible stewards of their money. >> well, you received a fair value but was it -- is there a difference in the best value? >> we believe that this -- in each of these cases these were ample values and we have applied the same standards to all. so we examine each method and the results that it produces and then we determine what is an appropriate price that we should demand from each bank and we stick to that price. >> as i mentioned in my opening statement, it's vital that you

know we prevent any individual or fiduciary entity or individual in making a profit based on insider information. especially when it's at the expense of the taxpayer. what's the treasury doing to prevent and track this? >> well we have had many close consultations with the cig t.a.r.p. we have also invited the staff to meet with us and the candidates to be asset managements on the program, for example. i think we have had a robust dialogue with inspector general barowski and his team about this. we have charged with promoting financial stability while protecting the taxpayers. our mandate and the reason for the law is to build and implement program that is are going to eventually help the

american public and the financial system. and so with that in mind we have decided on an approach where we and the cig t.a.r.p. will have the access to trading ada that across each of the fund managers that we're hiring daily so we and the cig t.a.r.p. can check trading in the various funds of each of these fund managers to see whether, in fact there are any questionable trades that might cause us to wonder whether we are getting full value for the taxpayers' money, whether a manager is trying to take advantage of our investments at the benefit of one of their other investments. we are getting certifications from the managements of these funds. we are prohibiting fund complexes from having one fund trade with our fund as another control so we have we think very

robust controls to protect the taxpayers. >> in the quarterly report which was released yesterday, it highlights the fact that treasury declined to institute barriers to prevent conflict of interest with the managers of the program. maybe this was before you worked something out with him, but thinks that this could have serious consequences related to money laundering door lead to increasing in government's exposure to losses. with no corresponding increase of profits s. this accurate? >> well we carefully considered the recommendation. i may say that the cig t.a.r.p. suggested dozens of ideas to us and we have accepted or -- and in a way very similar accepted the cig t.a.r.p. recommendations. about three fourths of the time.

there are some cases where we have determined that in the interest of financial stability and because we can find other ways of protecting the taxpayer that we -- we declined to implement and one of these cases has been the creation of a wall. now, in many cases, and here i draw upon 35 years' experience in the financial services industry, in many cases it makes great sense to have a wall to separate asset managers in one area from asset managers in another. in the case of the asset managers we are hiring on behalf of the taxpayer we want to have their best talent working for the american taxpayer in the fund. and but these managers in these fund complexes are already committed to other funds that they manage. the fund cannot take them away from those in order to focus on ours. conversely allowing the best managers to stay with the other

fun, we have to have them hire other managers without the track records and the reason why we hired the fund complexes so we have instead of having a wall we provide transparency. the ultimate test and i worked with walls, a wall can be defeated by people that determined to collude. they can leave the workplace. they can go out in the street and talk to each other. they can use cell phones to talk to each other. even if you have a wall you have to make sure the wall is working. that's why we're insisting on these managers making available their trades across the whole fund complex every day so we have the ability to get total transparency on what they're doing, pin them down right then and there if we see suspicious trading activity to protect the taxpayer. >> thank you. >> thank you. with all respect, i have to advise the members and the witnesses that we have -- we'll just be advised we have votes being called in next 15 to 30

minutes. there's six votes i anticipate to take about an hour so i'd like to move along here and advise members an the witness, too, that they'll have an opportunity to submit additional information for the record written responses if they would, please. miss kilroy you are recognized for five minutes. >> thank you, mr. chairman. mr. allison, thank you for being here this afternoon. it's my understanding that the t.a.r.p. statutes initially permitted treasury to convert a warrant to cash or exercise that when treasury decided it allowed the public reasonable gain and that the market was optimal for such assets. and that the goal of that was to maximize the value for taxpayers. is that correct? is that your understanding? >> yes, yes, congresswoman. in fact the law has changed several times since the esa law was enacted.

and recently we've been given the ability, again, the flexibility, to sell the warrants a the a time of our choosing. when we think it's in the best interest of the taxpayers. >> do you believe that it is still the despite the changes in the law the goal to maximize returns for the taxpayer? >> we believe that selling the warrants relatively soon after we're repaid by the bank for its preferred stock investment that it is appropriate for us to sell the warrants in a way that will benefit the taxpayers. and the reason for this one of the reasons is that a warrant value is based on a stock value that incorporates the market's expectations regarding the future performance of the stock so even if we sell the warrants over the near term we are not forfeiting the upside potential of the warrant. we also find if we hold the warrant for a longer period of time and here it gets a little

bit technical, the value of the warrant declines. and we are not in the business of being long-term investors conducting market-time and trying to find the right time to sell the stock. and frankly, there never will be agreement of the right time to sell. >> separate and apart from the timing issue, is there an issue in terms of protecting the taxpayer and protecting taxpayer confidence in the process of the methodology by which the warrants are sold or converted to cash? >> well we -- again, where we are going to be disposing of the warrants, we first have to follow a contractual process where the bank that issued the warrants has the ability to bid to buy back its warrants. we don't warrants. we don't have to accept theired by. in fact in most cases we have not. we will let them reed by, if they wish.

if they decide to no longered by then we have the ability to go out and auction those warrants in the open market. >> would you agree the contractual process gives banks more authority for setting out the methodology for the sale of the warrants? >> actually congressman, i think it puts the treasury in a very good position to represent the taxpayers. we do not communicate what to us is the price that we require in order to sell in that process. the bank has toed by. we will not accept until there's aed by that reaches our considered price, and at that point, if they reach that price and some don't, we will sell and we think at that point, we are

capturing ample value for the taxpayer. let me also add that -- i know there's concern and you voiced it about whether we're doing this in a closed room. we are going to be disclosing information about the methodology and the actual calculations that we used in arriving at the appropriate warrant price. i mentioned at the appropriate time, right now we're engaged with discussions with a number of large banks. we think it's in the taxpayers interest that we defer that disclosure until a later date. >> would bit your understanding that they would not enter into contracts with the banks other than the t.a.r.p. money that flowed from the statute that set up that program in the first place. >> i'm aware in the office of

financial stability are carrying out the law. >> and that would include the obligation to protect the taxpayer interest first and to use the phrase from esa, to maximize the return for the taxpayer? >> absolutely. >> thank you. yield back. >> thank you, mr. chairman. unanimous consent to allow two members of the general financial services committee but not the subcommittee to participate today. mr. brad sherman of california and mr. kenny mar chant of texas. >> congressman bauchus, you're recognized first. >> mr. allison, the act we passed back on october 1, the it

says troubled assets and revenues from dividends surrender war rabbits shall be paid in the general fund of the republican debt. and of course, that's part of the bargain in passing that act. tt treasury has determined that in the most recent report you interpret the maximum amount of funding is $299 billion. so as long as you don't have that much funding out, that you can replenish the fund as opposed to returning it to the general fund. is that correct? >> the limit that was set on the amount of investments

outstanding at any one time is $700 billion. >> yeah. okay. >> as i mentioned currently, that number is a little over $360 billion. >> okay. >> we have budgeted to spend about $643 billion to date. however, we have also received repayments as you know of over $70 billion so far, and that together creates head room under the $700 billion outstanding at any one time of about $128 billion to date. >> so you've interpreted that as this -- when you get these dividend payments that you don't have to -- they don't have to be returned to the general fund? >> all the monies that we received are returned to the general fund. and then under the essa law, we may make additional investments, so long as we do not exceed $700

billion outstanding at any one time. >> so just deposited in the fund and it's drawn -- >> then there's a new decision and a new allocation. >> okay, all right. i'm sure you're aware, chairman frank has introduced t.a.r.p. for main street. >> yes, sir. >> which is legislation to use the dividend payments and i guess the warrant payments too. i'm not sure about that to fund several public housing initiatives. instead of the money being returned to the treasury. was this type of use of t.a.r.p. in your opinion ever envisioned by the treasury department? a oo >> let me first say the treasury is carefully looking at chairman frank's proposals and we also however, believe that it's

important to maintain the head room that we have today, keeping in mind that while conditions have improved a great deal there's still strains in the financial system. banks are still facing pressures. but let me go back and say that we are carefully analyzing chairman frank's proposals and we will be coming back to chairman frank with our thoughts. >> do you have any initial concerns with, you know, legislation that draws out of that fund for purposes other than what was authorized in the essa? >> i think we need to have more conversations about exactly what form that would take before i could draw a conclusion. >> really sounds to me like you're not taken any hard approach that you're not going to reach into that fund for all sorts of new ideas. >> i would not presume at this point to speak on whether we might or might not be funding

some of those initiatives out of the t.a.r.p. funds. >> sure. >> but we are considering it very carefully. >> would you have conversations with the minority, as you move forward? >> i look forward to meeting with each member of the committee and i would be glad to respond or discuss any questions you have for us. >> one last quick question. rahm emanuel has said ott bama administration has rescued the economy. do you agree with that assess? ment? >> i would say that the essa law has played a very important role in improving the financial markets and the soundness of the financial industry in the united states. chp -- which has had huge

benefits for the american people. >> i'm not sure we're ready to claim victory. another president did that and it came back to bite him. >> as this president has said, it's going toe take time to heal this economy and to heal the financial system. >> thank you. >> you're recognized for five minutes. >> thank you for joining us this afternoon. i have been listening to the discussion. >> the inspector general was before another committee yesterday and he was very clear that no one in treasury has come over tom review the surveys that he has received from every one of the banks in terms of how

they're using t.a.r.p. money. and i find that absolutely unbelievable and irresponsible that one agency of government has been able to access information, has the information, and nobody from treasury has looked at it. no one from your shop has locked at it. and i want to know why not? >> well thank you for your question, congresswoman. first let me compliment inspector general borovsky. i'm happy to meet with him about this. >> so you're going to meet with the inspector general and review the material he has developed in the survey of 360 banks? >> i will be very pleased to meet with him. >> great. >> in his report that he issued

yesterday, he said although treasury has taken some steps toward transparency and t.a.r.p. programs it repeatedly failed to adopt remt recommendations that sigt.a.r.p. believes implements t.a.r.p. with the highest degree of accountability and transparency possible. now, one of their recommendations is that treasury should require all t.a.r.p. recipients to report on the actual use of t.a.r.p. funds. treasury has declined saying that reporting would be meaningless. and i've got to tell you that my constituents probably don't think it's meaningless to know precisely where their taxpayer dollars are going. so my question to you is will you actually adopt that particular recommendation? >> well first of all we welcome the recommendation of the sig t.a. prvmt and the other joovr

oversight bodies. we have adopted or come close to adopting about three fourths of the recommendations that we have received. >> well, there's only four recommendations here and 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 these banks in t.a.r.p. have been spent. >> every month we have comprehensive information on our website, financialstability.gov about the actual lending activities of all the banks in which we have invested. >> but mr. allison, with all due respect. i'm asking a very simple question and i just want a simple answer. either you're willing to do it or you're not willing to do it. >> well we think the most important information for the public -- >> either 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. its intent is to provide capital to banks. we disclose all those activities. every capital transaction, whether we invest or whether we receive monies bank is posted on our website within 48 hours. there's voluminous information about that. once the money has been invested, on a daily basis, the banks may be shifting the use of the funds. they're dynamic institutions. if they report one day the money has been used for this, another day it can being. -- it can be changing. further more because it's placed in a cash account when it's received, while the bank may say that they have -- let's say put $50 million in -- >> mr. allison, i hate to interrupt you, but my time is very limited and you've just used up another two minutes.

mr. borovsky believes you can put this on a public place for public distribution. i'm asking you to work with him and find a way the tax payers of this country are going to be able to access the information and know how the banks are spending the money. i'm 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 taxpayers have every right to know how the t.a.r.p. money is being spent. >> thank you mr. chairman. and thank you for your testimony, mr. allison. i think to my colleague's point here you know money is obvious obviously fungible right? it would be hard for you to say

it's dlrt 100 billion or $1 billion that this institution got that they lent here the whole deal. is that fair to say? >> yes, sir. >> now, the point many of us have is the concern on main street, how that money is actually being lent. so to get more precisely at my colleague's question are you able to track lending standards for their various institutions? >> well we post the act kmul information on lending by all those banks which we think is very important for the public to know. we do not oversee the lending standards. we provide capital for the stability of the banks. not to manage the banks or regulate the banks.

that's handled by other regulatory agent spips. >> in terms of disclosures and tracking those lending standards, are you doing that? >> we are not tracking the individual lending standards of each bank. >> okay. >> yes, but we have you before the congress about t.a.r.p. funds being lent out or not being lent out. and the sig t.a.r.p. report says this can be done to track lending standards. i would like to yield the balance of my time to mr. lee. >> that's very kind of you, sir. thank you. >> thanks. >> quick question. and it gets back. i've got to tell you, the taxpayers in my district are very frustrated with the -- what we are doing in washington and the concern over the debt that we have in this country. at the end of this year the

projections are close to $2 trillion. and understandably, i think it is very positive news the fact that we have somewhere in the neighborhood of $70 billion being paid back. but overwhelmingly, i hear from my constituents that we need to start paying down this debt. dollars come back are being potentially reinjected in the market and outside what their original purposes were stated or the potential to do so. is that a fair statement? >> let me make clear congressman. and thank you for that. it give mess an opportunity to clarify that concern. under the essa law, the treasury would no longer make investments in institutions after the end of this year unless the treasury secretary makes the determination that it is in the interest of the economy and of the nation to extend this

program until october of 2010. this is not an open-ended unending investment program. and in the investments themselves, there are built-in incentives to pay back the money. the cost of the funds in many of these programs rises over time. in some, the program itself expires over a period of time. we need to get the highest return we can, be careful stewards of the money and this program will terminate at some point in the not too distant future. nonetheless, the government may still hold investments for longer period of time. and we are preparing for that eventually to make sure we continue to have the procedures the policies and the personnel to be responsibly overseeing those vems.

>> the chair now recognizes mr. grayson for five minutes? >> thank you. i will remind everybody in the room that votes are about to be call sod we'll probably go another five to seven minutes after votes are called and then recess the hearing and then come back after votes are concluded. >> you're recognized, sir. >> thank you. we have provided capital to 657 institutions across 48 state ins colluding over 300 small and 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 that statement, mr. allison, i think of this myself as a distinction between good banks and bad banks.

they're different from the bad banks. they have taken bad bets with government-provided money. they made bad decisions and unfortunately for all of us many of the people at those banks are still in charge of the banks making more bad decisions every day. it seems to me you provide a dollar of capital to a good bank, they might make $10 worth of ploens if you provide $1 worth of capital to a bad bank that bank certainly is not going to be able to do more than provide $10 worth of ploens it also will try to cover its losses, maybe pay out more money to its bad management and its shareholders and not do what we're trying to do through this program. why is it we 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 for the question. we are investing in banks deemed to be viable 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 very important to their communities. and so as part of the financial stability effort we're helping banks to recover, stabilize so that they can continue lending in their communities to businesses, large and small, and to individuals to keep the economy going. >> following this line of questions, wouldn't it be better off if we gave the same amount of money to good banks, banks functioning well so they could expand their operations and make more loans rather than propping up bad banks that have made mistakes that have cost all of us? >> these are viewed as good banks with some bad assets. and as banks that can be viable and ongoing and continue to

serve their communities. >> how do we get to a point where a good bank has bad assets? assets? doesn't that reflect on the management? >> every bank has bad loans on its books. what we've seen is because prices of real estate have declined so much commercial as well as residential, a number of companies have had to go out of business because of declining economic activity. loans that seemed to be quite good when they were granted turn out to be not so good in an extreme environment like today. >> are you familiar with the concept of moral hazard? >> yes, sir. >> aren't we inviting serious moral hazard not letting capitalism work? >> these banks have to pay us back and we've been well paid back just today by one of them.

and we're working at making every effort to make sure that the tax payers who made these investments obtain an appropriate return. these funds go to help stabilize a banking system but also the economy, which benefits all americans. and we have seen the banking condition has improved. we have seen that home sales are starting to stabilize in many parts of the country. the risk of the financial system has declined, which is good for everybody. and we're hopeful that by continuing to provide the support as the banks needed that we're going to have a strong underpinning to begin this recovery that we're all so anxious to see. >> but resources are always limited, even for the federal government. wouldn't we be able to accomplish all of that and more if we directed our support to good banks, rather than to

propping up bad banks? >> well again, i believe that many of these were good banks that were active in lending in their communities and we're now seeing a financial situation that this country hasn't experienced since at least the 1930s. this has been an extremely serious decline in asset values that's 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 that 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 some thought to the subject. if you are continuing to invest in banks every week give thought to investing in the good banks not the bad ones. >> thank you for your advice. i appreciate it. >> mr. paulson, you're recognized for five minutes. >> mr. allison, you mentioned in your testimony that you could

not comment on some of the existing negotiations and discussions you're having with some of the banks given that they're trying to buy back soft of the warrants they have outstanding. i have questions about another set of rules that apply to them. but you also mentioned in your testimony that if treasury or the firms can not agree on a fair market value for these warrants that the warrants would be sold in a public auction, correct? >> yes, sir. >> is there a time line on that public auction of when that would be? is there a time frame that would be put in place when the auction would actually take place? are there guidelines or stipulations you can share? >> yes, sir. thank you for the question. we're working hard own those guidelines now. they're not yet completed. when they are, we will provide more information. we want this to be as transparent a process as possible, but we've had to give very careful thought since this aelt to the act was put into place on how we might best to this in a way that protects the

interests of tax payers. >> and just knowing it's in the interest of protecting taxpayers and repaying and kind of reunwinding all of this that has taken place, you don't foresee this as another year? >> no, sir. >> from your estimation all the work you've done on this issue, do you think the t.a.r.p. funds have been equitably reaching the smaller financial institutions? >> well most of the institutions that received t.a.r.p. funds are small. and we have at least 300 quite small and community banks and other small institutions who have received these funds. nonetheless, we are concerned about making sure that small bank banks which are so vital to communities are able to continue lending. that's why we reopened the cpp

program in may, i think it was, to make it possible for these banks if they needed to tap into the cpp facility. and we've had a number every week who are coming to us for that funding and giving us their preferred stock. we're also looking at other ways of assisting small business. and we may have some announcements to make about that before long. >> at least i'm hearing from some of the smaller financial institutions about their inaccessibility about some of their opportunities after these funds. i'm just curious if you have a perspective about why i might be hearing that perspective? we make investments on recommendation of the bank's regulator. the first stop should be the regulator regulator.

>> you're recognized for five minutes, sir. >> could you just real quickly discuss the concept of head room that you were talking about earlier. you've got a $700 million basically cap on the amount of money that you can put out at any given time. now that we're pretty far into this program, you also have an in flow of money. you have a kind of revolving fund. >> let me make clear that when

money is repaid to us it is put in the general account of the u.s. treasury. >> okay. 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's been repaid. we have budgeted dr 643 billion but we also have repaid money. when you add the repayments between the 643 and the 700 billion, you end up with about $128 billion of head room which we think is important to have at this point in this economic crisis in case banks find that they need additional funding in order to maintain their activities and preserve their financial standing. >> when you define budget those are funds you already committed that have not been -- >> these are funds that we have

allocated and we may use for certain purposes. let me point out at this moment that we have invested about $360 billion. >> this is 643. >> if you extend to october 2010, is that correct? >> it would be the treasury secretary who has the authority to extend the program.

the head room in flow and outflow remains the same. you've got that pretty well fixed in the way you're going to do that. is there a possibility to extend beyond that or would that be a congressional act? >> i believe the treasury's authority, the secretary treasury authority extends through 2010 to extend that. and that's do disbers. and the repayment follows that? >> repayments could continue for some time. >> but then there's no longer any outflow. it's all in-flow at that point? >> that's my understanding of how it works, yes, sir. >> and as far as -- what if you ended up with a situation where

you had in excess of the 700 because of the repayment of the t.a.r.p. and the sale of the warrants and the redemption and the interest paid? >> we would not be above $700 being, we would be well below it. >> you've already forecast -- >> there's a limit on the amount we have outstanding at any one time. that's $700 billion. we may not exceed that number. >> so it goes into the treasury in the general fund but we've already raised the debt ceiling to include that appropriation, correct. >> sir, you're getting beyond my expertise. >> is there a snap back provision in the bill that says as the money comes back in the treasury the money is paid down on the debt? or do we not already have

through the -- by raising the -- isn't the money really captured in the federal government offers? >> my understanding is as the money comes in that reduces the national debt as it comes in. but let me give you a more definitive answer on that as soon as possible. >> we have just a very few minutes before votes are called. >> i would just like to introduce into the record the special inspector general's report on the banks' use of money which does show that 83% of them told the sig that they had used it for ending.

>> they had or had not used it? >> had. so it does i think, indicate at least some evidence that the u.s. banks are using the t.a.r.p. funds to increase lending. some of them did it to maintain thei,@#@ @ @ @ @ @ @ @ @ @ @ @ @ ss) >> i invite the second panel to be seated. i am pleased to introduce the second panel. for this panel, we will start with and welcome back the chairman from sig-tarp. we have the professor and chair of the congressional oversight channel. mills said the director for the center of economic and government accountability office. thank you all for being here. without objection your witness statements will be made a part of the record. i think those are just now being called. i think we can begin to take the first witness. he will each be recognized for 5

minute statement summarizing i think we'll take the first witness. you'll each be recognized for five minutes summarizing the testimony. inspector general barofsky you're recognized. >> thank you. it's an honor to be sitting next to two of our oversight partners. this week, we've introduced and presented our most recent quarterly report and the oversight we've been conducting over the past quarter. and so much of that is the result of the coordination that we've had with our oversight partners. one of the things we strive for is to coordinate the oversight. it's now being extended with activity of the federal reserve.

we've strived to coordinate that oversight, working with gao, our important audit partner, trying to cover as much of this terrain as possible and we're putting forward a joint audit profit utilizing the experience and activities. we did a coordinated project of the congressional oversight panel. the first part was their excellent evaluation report and their july report. we're going to be using that as context. basically in our report that we've just delivered this week just very briefly describe what's contained in there. in section two we do a brief overview of what's happened in the last three months in the t.a.r.p.

there's been a lot of activity from repurchase of more than $70 billion in the capital purchase program to asset managers and the commitment of approximately $30 billion of taxpayer money in the public-private investor program. >> we attempt to put that in context by giving details surrounding the 50 other programs. soften a particular t.a.r.p. recipient not only accesses the t.a.r.p. but other, whether it's a loan guarantee or borrowing money from the federal reserve. what we attempt to do is bring transparency by setting out approximately 50 of the programs, most significant programs that have been implemented or discussed and described since the onset of this crisis. in section five we give our recommendations. we have issued several new recommendations. one of them which was discussed

was our 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 auditddudit which was completed. and we demonstrated notwithstanding the inherent fungibility of money the banks should report on the use of funds. we have demonstrated that this is a meaningful task. when we asked the banks what they did with the money, they were able to tell us. they were able to tell us some of the things, ranking member baucus, how they were able to increase lending or at least stop the hemorrhaging. they are also able to explain other uses of funds, how they were able to maintain capital cushions to withstand future

losses. this is important data from our perspective. i understand the orthodoxcy and the concept of capital accounts and i understand perhaps that's why treasury was initially so reluctant to adopt our recommendation. but now that we have the proof, now that banks when asked, the banks themselveses have said we can report on how we're using the funds, we believe these excuses and explanations for lack of transparency should no longer be countenanced. we believe treasury should and in order to meet its promised goals of bringing transparency to this 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 some other transparency recommendations that have been kicking around for some months including the basic one that treasury report to the american people what the value is of their investment. treasury receives monthly reports from its asset managers

with estimates of what the t.a.r. portfolio is and we believe basic transparency would require treasury to make that public. >> there's ten minutes left to vote. we'll ask you to do a five-minute presentation or less so we can get over and vote and then we will reconvene and then have questions of the witnesses afterwards. >> if she takes even six minutes i think we're in good shape. >> i think you know how fast i talk. >> thank you very much. thank you, chairman moore. thank you, ranking member. it is an honor to be here again today in front of this committee. i appreciate 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 system and to report to congress every 30 days. we have also had nine hearings. we've been out in the field on your behalf. we will have our tenth hearing next monday. our contribution our statutory mandate is is a fact-based analysis designed to raise issues about the operation and direction of t.a.r.p. and about the broader effort to restore stability into the economic system. we call that asking whether or not t.a.r.p. is operating to benefit the american family and the american economy. we hit three repeating themes

and this is the need for transparency, the need for accountability and the need for articulated programs by treasury. we coordinate with the gao own mr. barofsky identified our coordinated effort, which we were very pleased to anticipate participate in and that was an important part of what we participated in. remember congress allocated the $700 billion to t.a.r.p. this is the american taxpayer's 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 also our june report. our june report was on stress tests. the question about repayment in the first instance and whether the stress tests were stressful

enough we then moved to our july report once the decision is made to take money back from the financial institutions, which should be the pricing on the war rabbit. in order to do the warrant valuation, we thought it would be helpful in terms of oversight to do an indptependent valuation to ask how it is others might value this our own expertise within the panel, but also we were aided by robert merton and professor rick tor yeah ivashina. all are from the har sard business school. all advised us independently without consulting with each other. they help the us review our model and input and that's how we came up with the numbers we came up with. now, our finding was the price paid were about 66% of what our valuation would show with the current market value.

if treasury got only 66% of current valuation as it went forward, that would be a loss to the american taxpayer over about $2.7 billion. the first is only a tiny proportion of these warrants have been sold and they are in very small banks. we've acknowledged there may be differences about what are the appropriate liquidity discounts to put into the valuation. we also acknowledge that there may be considerations other than maximizing the return to the taxpayer. for example, trying to get out of this business of holding warrants as quickly as possible and those could affect evaluation. chase has decided it wants to go to auction. goldman sachs just struck a deal

today which adjusts for the rise in the value of their stock prices over the last 12 days. i heard treasury nouns in this hearing administrator information about the negotiations of their overstocked price warrants. i am pleased to answer your questions in any way we can. i i'm glad to take your questions. >> we are going to stand in recess. m

>> you are recognized for five minutes, sir. >> thank you, mr. chairman. members of the subcommittee, i am pleased to be here to discuss our work on the troubled assets relief program.

the emerging economic stabilization act that enabled tarp requires us to report every 60 days. this will follow up on our previous findings. oversight under the act is ongoing. our next report report will be issued over the next few days and will be focusing on the chart modification program. days and will focus on t.a.r.p.'s loan modification program. specifically my statement today focuses on the nature and purpose of activities that have been initiated under t.a.r.p. including repurchase of preferred shares and warrants. as of july 10th 2009 treasury had dispersed about $361 billion of the roughly 700 billion in t.a.r.p. funds.

most of the funds went to purchase preferred shares in subordinated ventures of over 650 financial institutions under the capital purchase program. this program continue to be office of sustainability for markets. at the same time it continues to purchase preferred shares. as of july 10th 12 of the 33 financial institutions that repurchased their referred shares from treasury also repurchased their warrant and three others repurchased their three warrants from treasury at an aggregate of $8 million. although the office of stability have established criteria for accepting applications the regular lay tors criteria for when institutions can repurchase preferred stock from treasury lack adequate transparency. this is an area where we made

our recommendation with the primary regulators. while treasury has provided limited information about the warrant process it has yet to provide the level of transparency at the transaction level that would address questions about whether the department is getting the best price for taxpayers. this is another area that the treasury provides such transparency in the process by disclosing more detailed information. i was pleased to hear mr. alison suggest earlier treasury seems to be moving forward with that effort. the federal reserve conducted stress tests of the 19 largest holding companies to see how they would with stand economic conditions. while the federal reserve disclosed the stress test results it had no plans to disclose information about the institutions going forward. what information if any is disclosed will be left to the discretion of the affected

institutions raising a number of concerns including that the institutions could disclose selected information. over the federal reserve, had not developed a mechanism to share information with the office of financial stability about the ongoing condition of the bank holding companies that continue to participate in t.a.r.p. programs. we made a recommendation to the federal reserve to disclose to the public on the companies of an adverse scenario on a going forward basis. while the office of financial stability has made progress continued attention to hiring remains important. especially within the office of the chief risk compliance officer and home ownership group, areas where their hiring has not been what they themselves are saying are their requirements. they still have a number of vacancies and need to fill them as rapidly as can. treasury has built a network of contractors that have been key to the efforts of develop and

administering the t.a.r.p. programs. as a result treasury has missed an opportunity to provide additional transparency to its t.a.r.p. operations. that's another area in which we made a recommendation to treasury time prove transparency. mr. chairman, that concludes my statement. i'm happy to answer my questions. >> thank you, mr. mccool. this time i'll recognize myself for five minutes of questions. mr. warren once people have a chance to analyze the transaction, do you think we could have received if more if goldman went through a public auction? are there other policy issues that should be considered? >> i think it's a good question. using the valuation metrics that we laid out in our report the

goldman price comes in almost precisely at what we had recommended, i believe the goldman price is $1.1 billion and using our valuation, it would have been 1.08 billion. so we're within rounding error on that. and that certainly increases our confidence that treesasury is using a strong valuation approach. i do want to say, though there are other issues that lurk in the sale process and it's hard to find a substitute for the benefit of a public sale. public sale reassures everyone that this is the market price. but i certainly understand, congressman bachus' point there

are times when we decide we don't want to delay, we want to move faster there are costs and benefits and ultimately policy choices not just for treasury but for congress to weigh in. we think your oversight panel we can outline it give you this independent evaluation and put it in front of you. >> do you agree with what professor warren said? >> i defer to professor warren. her report and her study was comprehensive and very instructive. we have done a similar effort. we do have an ongoing audit that will address different issues but i would defer to professor warren and the panel on this. >> i notice in addition to your court ordered reports you included the use of funds audit that you conducted. what did you learn from that audit and what steps should treasury take in accounting to t.a.r.p. program and i want to ask you that sir. >> the most important thing we

learned is we have proved that despite the inherent amount of money, banks can when asked report on how they are using their funds and they can provide a great degree of transparency and answer that question. we saw that banks did -- although treasure as mr. alison noted does provide lending snapshots of each month that's not the only thing banks do with their t.a.r.p. funds. according to the banks themselves they use it to maintain capital cushions insurance for a rainy day for future losses they use to it acquire other financial institutions they use it to investment securities. all sorts of different things that our survey helped provide a necessary level of transparency but only part. our survey was a snapshot as of february. we don't have the resources to do it on a regular basis. our survey was voluntary. i urge treasury accept our recommendation and to report on

a periodic basis on how banks are using t.a.r.p. money. >> due find use of funds audit and what's learned when reviewing the lending practice and how it affects families and small businesses? >> yes, mr. chairman we did, in our field hearings and our earlier report. we have documented the constriction in small business lending and inadequacy of the tools used thus far by treasury to try to stimulate small business lending. we think this is entirely consistent with what we've found and reported on through a different mechanism. >> my time is up and at this time i'll yield to questions from mrs. bigger, please, the ranking chair. >> thank you, mr. chairman.

in talking about the audit of the warrant and valuation and sales when can we expect to see this audit? >> mere evaluating the timing. when we launched the audit it was unclear when the larger institutions were going to be either repurchasing or going through the auction process. now that we're seeing some of these repurchases i think we want to take a look and see what the auction process or to be the most useful audit we want to see that process used before we project an ends date. >> can you ensure that the audit will not compromise the treasury department's ability to negotiate the best possible price for taxpayers? do you think there's any chance of that happening if there's the audit out and they are negotiating. >> with everything we do in any of our audits and recommendations it's inherent upon us very important for us

to take into consideration the point that you just raised. we would never make a disclosure midway through a negotiation. anything that could possibly impact in a negative way on the taxpayers' return. our job is to protect the taxpayers' interest and we're very very sensitive to these types of usuals and protecting confidential information to the extent it may impact or be a detriment to the taxpayer. >> thank you. then professor warren the july report issued states the best manner to sell these warrants is on the open market. however as my colleague stated in his additional views to that report choosing a one size fits all method done seem to be the most appropriate method to value these warrants given that each repurchase in negotiation will have different circumstances. don't we need flexibility in the process to help determine the best value while getting the taxpayers out of the business of

owning bank stocks or warrants? >> congresswoman, actually i think the report says exactly that that there should be flexibility. we talk about the advantages to an open market process, but we acknowledge that there are circumstances that may differ and i assume that is part of the reason that congressman voted for that report. we had a 5:00-0 vote. >> but the additional -- there's always additional views. >> in which i think he cited the report extensionively. >> in determining like fair market value, do you use financial models or is it just the one size fits all, or do you take that into consideration? >> of course our financial models are laid out in many many pages, in our report and as i said in my teimony, they were independently reviewed the models were independently

reviewed by three highly renowned specialists in models all from the harvard business school. >> okay. three members of the panel voiced their support for the administration's and treasury stated objective to exit warrant holdings as soon as practical after banks repay the preferred stock. it didn't seem like this point was stressed at all in the july report. >> well i think that it's like so many thing, it depends on the cost. there is always a judgment to be made and exiting into the fastest possible way in return for getting the lowest cost for taxpayer may not be ultimately beneficial. on the on the other hand i certainly understand the point about not hanging on to the

warrants for ten years and political and economic implications of that. so i think the main point in the report was that there are advantages and disadvantages to speed, and to going to the market in order to try to sell these warrants. ultimately though we did emphasize the point that when there is a market based auction, no taxpayer needs to wonder what happened behind closed doors or whether the appropriate -- >> i guess my point is that it seemed like that was the majority and there wasn't really stressed in the report what they said. and next the panel's press release for the july report contained the headline so far treasury has sold warrants back at 66% of panel's best estimate of fair market value. and, i think that the headline seemed misleading since the banks have redeemed their

warrants banks that have redeemed their warrants represent less than 1% of the value of all the warrants outstanding, sounds like 66%. >> i believe the press release makes that point. let's keep in mind that when that press release was issued the immediate response was that chase said we'll go to a public auction. goldman, 11 days later said we'll sell at the panel's recommended price and treasury said we'll release more information about our sales process. if the consequence of this report is to encourage those sorts of responses, then i'm very happy about that. >> yield back. >> thank you. and chairman next recognizes senator spear. snool i want to thank each of you for being public vaernts and

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

compensate for the ones that are clearly going to be under water forever, and i'm hoping that as you continue to evaluate if you believe that we should be holding these asset, these warrants that we should hold those. it's an arm's length transaction. if the banks are coming to us now and saying we want you to exercise the option on the warrant or to redeem the warrant, they are saying that because they know that they are on the road to recovery and it's only going to increase in value. so 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 it. just because they say they want them redeemed don't mean we have to a and redeem them. our first and only goal should be at maximizing the profits for the taxpayers. your comments.

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

value we can point out ways that we think that is best accomplished. if they have other considerations then let me be blunt, then they should articulate what those alternate considerations are and evaluate how much money is left on the table to accommodate them. >> thank you. >> i could not agree with professor warren more. the report brought transparency to the issue. decision needs to be made and i think that the really strong point that professor warren makes that i can't agree with more need to be up front in articulating what the policy decision is. be upfront with the american taxpayer that we think there's good reasons to liquidate these wrapts now for whatever the reasons are, for the benefits of the banks, let the financial institutions off the hook whatever the justification s but be upfront and honest on what's happening so i agree with professor warren on this.

>> mr. mccool? >> i would agree as well. there are tradeoffs here and i think as long as your transparent about the tradeoffs then everybody should be involved in thinking about those tradeoffs as a decision making process and that's the way it should work. >> all right. mr. chairman i would just like to point out, there are people who want to see the t.a.r.p. fail. they want to be able to say i told you so. so there are people i believe, that will make us try and take action that are not necessarily in the best interests of the public, because they want to be able to say at the end look the process we should never have done it in the first place. so, i hope we keep our eye on what's most important here and that is the american taxpayer. i yield back. >> i thank the gentlelady for her questions and the witnesses for their response. i next recognize the distinguished ranking member of

the full committee mr. bachus. >> thank you. i think the saying can be here that oversight worked. it worked very well. and i think that's always true of accountability or transparency. it normally has a very positive approach. and i think that one of the confirmations we got today, i think that the panel can be proud of is the goldman prize. it was exactly, you know as you say. it was actually 20 million more than you said and so that maybe can pay for the panel. so this is a panel that actually is going to end up making the taxpayer some money. you know, often the consumer or the taxpayer is not at the table. you know. and i think they were through this panel. it's interesting the history is that this was originally a

three-page bill without any accountability that i think congress can take a bow because we put that in there. we put that accountability in there. i think it worked very well. let's see. one thing -- if we can look in the future and see where the markets and economy are going it would be easy to make a call on whether we should hold it although i personally don't think the u.s. ought to be investing or speculating in the market which to a certain extent, if you can get a good fair price you take it. now, you know if the market drops 600 points tomorrow 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.

and, you know it will be with -- you know in ten years we can tell what we should have done. you know one thing that did strike me and i heard four or five months ago from a banker in alabama he went to a seminar in georgia and there was a bank there in georgia wanting to buy -- saying if you're for sale we want to buy you. they were going to do with it their t.a.r.p. money. so you did have 4% that made ac acquisitions. it would be interesting to go back and take a closer look at that. i think they will tell you the truth because you have a bright prosecutor. and you have that reputation that you're a very good prosecutor. so i think that -- now there will be some i'm sure in that number that actually were you know the fdic or other people said this is a failing bank and they probably -- i wouldn't assume that that 4% was a bad thing.

you know not in of itself. i think the treasury has to understand what we have to understand as a member of congress and that's this is the people's money. so there needs to be accountability. this wasn't you know this isn't just a private business where you're wanting to know about some private thing. this was taxpayer money. sometimes i think you can justify, you know some sorts of getting information but i think you can here. i think you've done a great job. let me change gears, professor warren. i wrote a letter to you on june 24th. i've looked at some of those questions. some of those, you know i'm not sure they are hard to interpret. sometime maybe in august if you can kind of respond to some of those i would appreciate but i'm not going to ask you about them

now. but the other thing i just thought -- >> would you accept my apology that you don't have a response. >> i wouldn't expect -- there's too much going on you know with us in session. >> please accept my apology. >> i actually don't even think they are due because i don't think it's sufficient time for you to respond because the questions are really you know they are kind of -- they are going take a little time. but i just want to direct -- one thing i want to show you and kind of at some point, you might give me an answer you know we're talking about one-page disclosures and this is actually 15 pages on a card agreement. now some of these aren't you know they are just part of the page but that's what the law requires right now. so you got quite a job. because you're going to have to almost say well we're not going require this any more or maybe some of this you're going decide to put in small print.

i want shows you the challenges you face. if you get your agency fixed. thank you. >> thank you. >> thank you, sir. next the chair recognizes -- >> usually ask questions. very rare for me not to do that. but there were no questions because i thought the questions were answered. >> chair next recognizes congressman kilroy for five minutes. >> thank you, mr. chairman, i appreciate it. thanks to all of you for helping to look out for taxpayers and making sure there's transparency and accountability that they are values we don't forget as we move further away from the initial infusions of the t.a.r.p. money. each one of you have in your testimony, emphasized the importance of transparency.

and i would certainly agree with you, certainly sunshine is a great thing to have in the public sector. but i also think that in this instance that transparency can assist the taxpayers in getting maximum value, maximum return on the investment that they made. and i think the oversight panel report back set up it says treasury would be more likely to maximize taxpayer returns if it sold the warrants through auction. reason is straightforward. an auction would cause the warrants to be allocated to the buyers willing to pay the highest price and competitive pressures in the bidding process may push bids up. do you agree with that statement? >> i do congresswoman. >> well i certainly do as well

and i think that the markets and public auctions are certainly a very valid way for setting a price. we've heard today a lot of talk about goldman and the value that was received through the negotiation process with goldman, but not to be -- not to be too pessimistic or cynical, there are reports today that 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 offer by treasury of some $900 million. and then followed up sometime after that by the release of goldman's statements indicating

how much money they had made certainly in part because of the infusion of monies the taxpayers gave them. and as goldman's stock prices go up would you agree that the value of those warrants that the taxpayers were holding would also be going up? >> yes. >> so then it certainly may not be surprising that goldman increased this offer to the taxpayers? and offered to pay $1.1 billion for the warrants? due do you agree with that? do you also agree that perhaps if we allowed it to go to market that others who might see the same report about goldman's recent earnings might think that holding goldman's warrants which could be used by them to purchase stock over a pretty lengthy period of time might

be to them worth more than $1.1 billion and they might make a higher offer than that at public auction? >> that's certainly possible congresswoman. >> so, you know would you agree that the market has a great deal of experience in this issue of setting prices and that treasury has also experience in terms of conducting public auctions? >> yes, congresswoman. >> and, again, 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 -- those two goals, maximizing profits and being transparent? >> yes, congresswoman. >> anybody on the panel have a different view? disagree?

>> i think in particular it address as lot of the a transparency concern and allegations that may be made when it is a closed door process. >> and, that the goal of restoring confidence in the public markets and having confidence in our government officials is an important worthwhile goal as well i would think. >> yes. >> thank you. i yield back. >> thank the gentlelady. chair now recognizes congressman henry for five minutes. >> thank you all for testifying and sorry for the length of the day. it's long for all of us. obviously, mr. barosky i heard from you yesterday. miss warren in terms of your panel, the congressional oversight panel, what's your budget? >> i can tell you how much we've spent but we actually --

>> is there a budget allocation? >> no we don't have a budget allocation. >> how much have you spend? >> we spent 2.7 billion -- million. you can tell the world i'm dealing in. >> where did that money come out of? out of t.a.r.p. or out of treasury? >> it comes from the senate and from house to. it comes from you. >> okay. how that allocated? >> i'm sorry. >> basically you spend whatever you want and send the bill to congress? how is that allocated? >> well we go through the process, for example of hiring and getting your approval. >> how many can you hire or authorized to hire >> we can hire as many as we need. >> that's enough. i think it just shows we don't have -- there isn't a clear budget. mr. mccool is that a fair assessment there's not been an appropriations for this committee? >> i don't believe