tv U.S. House of Representatives CSPAN January 27, 2010 1:00pm-5:00pm EST
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university of the virgin islands agricultural experimental station to support ongoing scientific research. the family which owns the majority of this property has been incredibly patient. the pressure to sell their land to developers has been overwhelming and has created some conflibt among family members, but they have held out because their first choice has always been that the ranch and assets be preserved which i agree with the best -- is the best for all concerned. the sole purpose of this bill is to protect and preserve the historic, cultural, and environmental assets and the opportunity for the people of the virgin islands and our fellow americans to continue to enjoy the area and preserve it for future generations. while it might cost almost $1,000 to get there on president's weekend, president's weekend is the most heavily traveled time of the year to any part of the caribbean and most times of the year the cost to get to st. croix is far less.
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. there is no final assessment of how much the study will cost. we do not know that the entire 2,900 acres will remain in the park and we expect to be the national historic site through donations, easements and possible through exchanges. there's no substantialive reason to oppose this reason. this is a beautiful and important natural resource that is in danger to be lost. if we do not move forward now without waiting for the final process to get the bill -- get the study here, after having heard from the national park service that it is indeed determined to have been appropriate for inclusion into the park, if we don't move forward today there's a real risk that when the study's formally transmitted to congress supporting the designation the land will already have been sold and condominium owners will be the only people to get the business to the area. in places such as the u.s. virgin islands there is always
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danger of development getting out of control and the balance between development and conservation being lost in favor of development. with development brings a risk of restricting local residents use of the area far more than park regulations would. there are examples as well as developments disregarding the relationship between the people of our community to the areas that they have purchased. bringing this ranch into the park service is the best way to allow those who purchased part of the appropriate or adjacent -- property or adjacent to the property least restrictive to all of my constituents. both the bush and obama administrations have supported this legislation every step of the way. the current administration is determined that the site meets the criteria set by the national park service to determine national significance, suitibility and feasibility. the designation is supported by my constituents, including those who originally questioned the expansion of the park. and as far as i'm aware, no one is challenging the inclusion of this study.
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the people of st. croix have long enjoyed the picturesque scenery for various activities. for years, virgin islanders have learned about the cultural, archaeological and marine resources found in the state capital. anyone who visits the property leaves with a deepened appreciation of our community's treasure and our place in american history. failure to act now will guarantee the area will be developed privately risking our historic and national jewels having them untold and lost to future generations. i want to take this opportunity to thank chairman rahall and subcommittee chairman grijalva and ushering this bill through the resources committee and to the floor. i want to thank those who wrote on support of it. madam speaker and my colleagues, i ask for a yes vote on h.r. 3726. this is timely and responsible legislation. i urge my colleagues to support it. i yield back the balance of my time. the speaker pro tempore: the gentleman from washington is
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recognized. mr. hastings: thank you, madam speaker. madam speaker, i am pleased to yield as much time as he may consume to the ranking member of the national park forest and national public land committee, mr. bishop. the speaker pro tempore: the gentleman from utah is recognized. mr. bishop: thank you, madam speaker. i thank the gentleman from washington for yielding me some time. it is with mixed emotions that i speak on this particular bill. this is not the worst bill that our committee has ever produced. we have produced some real stinkers that we've hidden in other pieces of legislation. however, it is symbolic of the problem that this administration and leaders of this congress have. we have a secretary of interior who every time we wish to use federal land to actually help improve the lives of americans or creating jobs will always yell that we have a process we have to do. we cannot commit a rush to judgment. and now when we have a piece of territory, land that will be taken off the tax rolls in a territory that is in deep financial problems today, this
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historic cattle ranch is now considered something that we must hustle through the system. we just passed a bill or voted on a bill to solve problems in the wilderness areas of idaho which if we had taken the time to see what was in there instead of rushing to create the most restrictive environment we can on this land in idaho we would not have needed the legislation. that is why this administration and this department of interior has said they want to wait until the study is completed and the process is done. if one of the arguments in favor of passing this bill is we don't really know how much land will ultimately -- we'll ultimately have and how much it will ultimately cost, that is a great argument to wait until the study is done and we find out how much land we really need and how much it will cost. but it is also symbolic of a deeper problem. this federal government already
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owns 650 million acres of land. 1/3 of this nation is owned by the federal government. now, think of that. one out of every three acres in this country is owned by the federal government. i have had three land transfer bills in the past few years here, and in each case the land that was controlled by the federal government was land they did not need, they did not use and in every case they did not even know they had the land until a land title search pointed out indeed it belonged to the federal government. sometimes you have to say enough is enough. the school -- the states with the biggest problem in funding their education system are found in states that have a predominance of public lands. it's a one-on-one relationship between states that have that problem. in my state of utah, only 18% of the state is in private property. the governor of utah controls 18%. the rest of the state is under the heavy hand of the secretary
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of interior and both my adjective and noun are appropriate. one of the issues we have here is we will be hearing that we should have a spending freeze on nondefense and nonentitlement programs. we'll hear that tonight. does it seem logical that we should spend up and then decide to freeze? does that indeed solve our problem? as i said before, this particular bill, which will probably cost $50 million, give or take $50 million, this particular bill is not necessarily bad in and of itself but it's symbolic of the problem that we have. that we do not have a large-scale picture of what this nation should control, should own, should do. and we are -- and we are moving in a slow process to try and add more and more acreage under the heavy hand of the federal government, and sometimes we should stand up and say enough is enough. 1/3 of this country owned by the federal government is enough. for that reason we should at
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least wait until the department of interior has finished their study and the process and they sign off and we actually know how much land and how much cost we are talking. i yield back. thank you, madam speaker. the speaker pro tempore: the gentleman yields back. the gentleman from west virginia is recognized. mr. rahall: i reserve the balance of my time, madam speaker. the speaker pro tempore: the gentleman reserves the balance of his time. the gentleman from washington is recognized. mr. hastings: thank you, madam speaker. madam speaker, i'm pleased to yield as much time as he may consume, a new member of the house resources committee, mr. chaffetz from utah. the speaker pro tempore: the gentleman from utah is recognized. mr. chaffetz: thank you. with all due respect to the great people of the virgin islands and my colleagues, i stand in opposition to this bill. no doubt the virgin islands is one of the most spectacular, beautiful places on the face of the planet. but this bill is about priorities on the united states of america. we are $12 trillion in debt. we're spending $600 million a
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day just in interest on that debt. this congress momentarilyly is going to have to raise -- moltary is going to have to raise the debt ceiling another $1 trillion. we don't have the money to do this. currently the national park service has an estimated $9 billion in backlog. $9 billion that they need to help with the national parks to preserve and to upgrade what we already have in our current holding. what the president will probably say in less than eight hours, create this air of oh, we have to be a little fiscally responsible. we ought to freeze a few things. for the second time in just over a week here we are going to come and look at this bill to acquire at the cost of $40 million to $50 million property with funds that we don't have. no longer can this government
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continue to use the government credit card -- decide to vote in favorite of this bill although it's just an authorization, although it's not an appropriation, are saying, yes, go buy some beach-front property. we don't have the money. think of all the other things we could do and should do and prioritize in this country. we have 1,500 people a day that die from cancer and we are not adequately funding for those. we have homeland security issues. but this government continues to acquire private property and put it into the federal treasury. i think it's fundamentally wrong. as was pointed out earlier, there is no report. the national park service does not recommend we make this transaction because they have not finished this study. why does this government spend hundreds of thousands of dollars on a study if it doesn't matter? maybe what we should have also
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done is add an amendment to stop the study, recover as much money in funds as we can. there is absolutely no reason if the democrats are going to move forward and push this thing through to actually do the study. i don't care if it's $2,000, let's save it. until this body has that type of attitude we will continue to have the systemic problems we have in this government. just yesterday the governor of the territory stood up before the people and said this. however, the global economic crisis has had a great impact on our economy. it has devastated our government funds where we are monthly deficit of $25 million and our tax revenues fell by over 30%. this means we had $in million fewer. $in million is almost half of the cost of salaries and benefits for our government workers for a full year. -- $234 million is almost the cost of the benefits for our government workers for a full
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year. it will put property off the tax rolls and -- why should the people of iowa or rhode island or long island or utah have to continue to pay and supplement the people there on st. croix for this property? i don't think it's fair. i don't think it's right. the $1 million a year it will take to maintain the facility. again, as we said, there are existing parks that need our help. $9 billion in backlog. if this was really such a great thing for the island and really wanted to do it, my suggestion is to do it locally. locally they can go and acquire it. it does not require the federal taxpayers to take on this burden. i think one of the arguments back to that is we can't afford it. well, neither can the federal taxpayers. neither can the united states of america. it's time we stand upped and say no to a bill -- up and say no to a bill like this. i yield back the balance of my
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time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from west virginia is recognized. mr. rahall: madam speaker, i reserve the balance of my time. the speaker pro tempore: the gentleman from washington is recognized. mr. hastings: thank you, madam speaker. madam speaker, i'm pleased to yield one minute to the gentleman from texas, another member of the natural resources committee. the speaker pro tempore: the gentleman from texas is recognized. mr. gohmert: thank you, madam speaker. i had the privilege of hearing the esteemed economist, art laffer, who is credited for bringing the united states out of the worse recession than we're in right now by overcoming double-digit inflation, double-digit unemployment and double-digit interest rates and he did it by cutting taxes. art laffer, and, of course, we know taxes are going to jump up like crazy a year from now, but what he said is, if you want to get this government out of the tremendous trouble we're in, quit buying things, quit buying land and things and start selling off some of the assets.
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that was what a regular family would do when they find themselves in debt. it's what i'm doing right now to pay off student loans. we're selling our house and going to downsize. why can't the government do that? let's quit spending like crazy. let's sell off some of our assets, pay down our debt and let america find jobs again. i yield back. the speaker pro tempore: the gentleman yields back. the gentleman from west virginia is recognized. mr. rahall: madam speaker, i reserve the balance of my time pending any further speakers on the minority side. mr. hastings: i understand the gentleman from west virginia is the final speaker on that side. with that i yield myself such time as i may consume. the speaker pro tempore: the gentleman from washington is recognized. mr. hastings: madam speaker, i again urge my colleagues to vote no on this. if you were listening to the debate here of the several speakers that we had on our side of the aisle, if you noticed, we were not criticizing the merits of this
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purchase. we are simply saying that there is a procedure that this congress set up. that procedure was a study. taxpayer dollars funded that study in order to see if this project actually merits congressional support. well, that study, madam speaker, is not made public. we have not seen the study. we don't know where -- if it's good or bad. it may be good, as the gentleman from utah, mr. bishop, said. in fact, he alluded that he's seen worse pieces of legislation rather than this one. for goodness sake, if we're spending taxpayer dollars on this study, why don't we use this to lead us in the right direction, as this bill would authorize, up to $50 million without really knowing the ramifications. our argument on this side, and i think an argument on this
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side probably resonates better with the american people due to the fiscal health of our country, i think this resonates very, very well today. especially as i alluded to in my earlier remarks, that the president is going to come and speak to a joint session of congress tonight on fiscal responsibility, this is our opportunity on that very day to show some fiscal responsibility by saying no to this bill and waiting for the study to come back. so, madam speaker, i urge my colleagues to vote no on this piece of legislation and i yield back the balance of my time. . the speaker pro tempore: the gentleman from west virginia is recognized. mr. rahall: i yield myself such time as i may consume. i would close this debate by making the following observations on the allegation that we have heard from the other side. with respect to the technicality that a new area study has not been sent to the congress, let
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me state that at a hearing before the park subcommittee held last november, the national park service testified on the record that the draft study is completed and finds that the site meets the n.p.s. criteria for addition to the national park system. the official agency testimony goes on for four pages describing the amazing natural, cultural, and historical resources found on the site. for example, that testimony states that, and i quote, enactment of h.r. 3726 would provide the opportunity to preserve and protect this outstanding caribbean cultural landscape and interpret the cotom era and related agricultural themes that have been instrumental in the development of st. croix and the virgin islands. it would also help protect five pre-colombian archaeological sites. i was not able to attend this hearing but i was informed that at no time did any member of the
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committee, even for a moment, question the conclusions or opinions that were expressed by the national park service. the formal findings contained in the study will be enormously valuable as the n.p.s. moves forward creating a management plan for this area and in future years as the congress contemplates appropriating funds for the site. for now i am satisfied that the n.p.s. has provided us more than ample information to move forward with the initial designation. the fact that the formal study had not been transmitted to the congress is a tent -- technicality, one that is either significant or not to the other side, the minority, depnding on what day it is. house republicans have supported designations within complete studies. house republicans have sported designation was no study at all. house republicans have opposed designations when the study was complete and fully supported designations. so this concern for n.p.s. studies by those on the other side of the aisle is newly discovered. their record on this is
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inconsistent and simply not credible. like the republican concern for following the recommendations of n.p.s. studies, this concern for the n.p.s. maintenance backlog is newfound as well. the n.p.s. maintenance backlog is real. no doubt about it. and needs to be addressed. and democrats are serious about addressing it. we continue to work closely with the agency to document the work that needs to be done to prioritize and provide the funding the people need to get the most pressing work done. but i completely disagree with the republican complain that the national park service, quote, can't take care of what it already owns, end quote. that kind of park bashing may score some points but it is nothing more than a low blow. millions of american families visit our national parks every year and come away feeling inspired, energized, and down right patriotic. the national park service could use more money but they are the very best in the world at what they do, and claims to the
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contrary are false. our national park service takes care of what they already own to the enormous satisfaction of most americans and they can take care of this new area of st. croix as well. i would ask american people to keep an eye on the issue. you watch, when the president smits his budget request for the next fiscal year, it will contain critical funding for the n.p.s., and democrats will support that request. and pass it. and many of the same republicans on this floor today expressing deep concern over the n.p.s. maintenance backlog will come to this floor and vote against the funding needed to address it. in fact, it was republicans who insisted on drastically underfunding and understaffing this agency that caused the maintenance backlog to increase on their watch. the future health and growth of our n.p.s. system should not be stunted must the republicans mismanaged it when they were in charge of government. democrats will correct the mistakes of the past. it will not be held hostage by them.
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just like other arguments offered today, the republican record on this issue is so inconsistent it simply cannot be taken seriously. finally, madam speaker, h.r. 32 -- 3726 does not spend one dime and every member of this floor knows it. the legislationing designates this area as a new unit but the bill contains no direct spending. any land acquisition will be studied. an acquisition of this legislation is the beginning of this process not the end. this is a once-in-a-lifetime opportunity and i support this bill. yes, the former republican majority went on an irresponsible spending spree that damaged this country and resulted in the largest increase in the deficit since world war ii. yes fixing the damage caused by those republican mistakes will be an enormous challenge for all of us going forward. but i believe democrats can do it. i believe we can get our fiscal house in order and when we do it, castle nugent should be a
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unit of the national park service so we can allocate funding to protect it and preserve it for generations to come. as for unemployment, unemployment rate on st. croix was 8.9% last november. if this private land is successfully transformed into a popular tourist destination, it will create jobs and help ease unemployment on the island. it will increase tourism, benefiting airlines, car rentals, travel agents, restaurants, hotels, and might even lead to hiring a few new park rangers. democrats support creating jobs by building things up, investing in the long-term growth and health of this nation. h.r. 3726 does just that. i conclude by pointing out the obvious. we as a nation have a responsibility to our territorial possessions. if we shirk from that duty, we would be nothing more than the european empires which once ruled over vast swaths of africa and the americas. the u.s. virgin islands are a unique and fascinating place.
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native people lived on these islands as far back as the stone age and some of the evidence of that can be found on the site protected in this bill. christopher columbus gave the islands early versions of the names we use today. isn'ta cruz, st. thomas, and san juan. as we move forward in this legislation, recognize that these islands were then occupied by foreign nations, england, holland, france, and denmark, a period that saw the native people enslaved and driven almost to extinction. remainings of these times can be found on the land protected in this bill as well. it is not only the history and culture found in the continental united states that matters, but st. croix is a part of these united states and we owe it to those who live there now and those who were there long before this nation came into being to value this history and to respect this culture. this legislation does that. this legislation deserves our support.
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i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. all time for debate has expired. pursuant to house resolution 1038, the previous question is ordered on the bill as amended. the question on engrossment and third reading of the bill. so many as are in favor say aye. those opposed, no. the ayes have it. third reading. the clerk: union calendar number 230, h.r. 3726, a bill to establish the castle nugent national historic site of st. croix, united states virgin islands, and for other purposes. the speaker pro tempore: the question is on passage of the bill. so so many as are in favor say aye. those opposed, no. in the opinion of the chair, the ayes have it. for what purpose does the gentleman from washington rise? mr. hastings: madam speaker, maybe -- madam speaker, i ask for the yeas and nays. the speaker pro tempore: the yeas and nays are requested. those in favor of a vote by the yeas and nays will rise. a sufficient number having
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arisen, the yeas and nays are ordered. pursuant to clause 8 of rule 20, further proceedings on this pursuant to clause 8 of rule 20, proceedings will resume on the questions previously postponed. votes will be taken in the following order. passage of h.r. 4474 and h.r. 3726, and motions to suspend the rules with regard to h.r. 4508 and house resolution 1020. in each case the -- by the yeas and nays. the first electronic vote will be conducted as a 15-minute vote. remaining votes will be conducted as a five-minute vote.
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the unfinished business is the vote on passage of h.r. 4474 on which the yeas and nays were ordered. the clerk will report the title of the bill. the clerk: h.r. 4474, a bill to authorize the continued use of certain water diversions located in national forest system land in the frank church river of no return willedersness and the sellway bitterroot wilderness in the state of idaho and for other purposes. the speaker pro tempore: yet is on pass afpblgt bill. members will record their votes by electronic device. this is a 15-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]
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which the yeas and nays were ordered. the clerk will report the title of the bill. the clerk: union calendar number 230, h.r. 3726, a bill to establish the castle nugent national historic site at st. croix, united states virgin islands, answer for other purposes. the speaker pro tempore: the question is on passage of the bill. members will record their votes by electronic device. this is a five-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]
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the speaker pro tempore: on this vote the yeas are 240 and the nays are 175. the bill is passed, and without objection the motion to reconsider is laid on the table. the unfinished business is the vote on the motion of the gentlewoman from new york, ms. velazquez, to suspend the rules and pass h.r. 4508, on which the yeas and nays were ordered. the clerk will report the title of the bill. the clerk: h.r. 4508, a bill to provide for an additional temporary extension of programs under the small business act and the small business investment act of 1958. and for other purposes. the speaker pro tempore: the question is will the house suspend the rules and pass the bill. members will record their votes by electronic device. this is a five-minute vote.
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the speaker pro tempore: on this vote the yeas are 410. the nays are four. 2/3 having responded in the affirmative, the rules are suspended, the bill is passed, and without objection the motion to reconsider is laid on the table. the unfinished business is the vote on the motion of the gentlewoman from the virgin islands, mrs. christensen, to suspend the rules and agree to h.r. 1020, on which the yeas and nays were ordered. the clerk will report the title of the resolution. the clerk: house resolution 1020, resolution honoring the 95th anniversary of the signing of the rocky mountain national park act. the speaker pro tempore: the question is will the house suspend the rules and agree to the resolution. members will record their votes by electronic device. this is a five-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned
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without objection, the 2/3 being in affirmation, the rules are suspended, the resolution is agreed to, and without objection the motion to reconsider is laid the motion to reconsider is laid upon the table. for what purpose does the gentleman from texas rise? >> by direction of the permanent select committee on intelligence, i present a privileged report to accompany house resolution 978 for filing under the rule. the speaker pro tempore: the clerk will report the title. the clerk: report to accompany house resolution 978, resolution requesting the president to transmit to the house of representatives all documents in the possession of the president relating to inventory and review of the intelligence related to
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the shooting at fort hood, texas, described by the president in a memorandum dated december 10, 2009. the speaker pro tempore: the title is referred to the house calendar and ordered printed. for what purpose does the gentleman from mississippi rise? >> by direction of the committee on homeland security, i file a privileged report to accompany house resolution 980. the speaker pro tempore: the clerk will report the title. the clerk: report to accompany house resolution 980, resolution of inquiry directing the secretary of homeland security to transmit to the house of representatives a copy of the transportation security administration's aviation security screening management standard operating procedures manual in effect on december 5, 2009, and any subsequent revisions of such manual in effect prior to the adoption of this resolution. the speaker pro tempore: the title will be referred to the
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house calendar and ordered printed. for what purpose does the gentleman from michigan rise? mr. conyers: by direction of the committee on judiciary, i send to the desk a privileged report for filing under the rule to accompany house resolution 994. the speaker pro tempore: the clerk will report the title. the clerk: report to accompany house resolution 994, a resolution directing the attorney general to transmit to the house of representatives all information in the attorney general's possession relating to the decision to dismiss united states versus new black panther party. the speaker pro tempore: that will be referred to the house will be referred to the house calendar and ordered printed.
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for what purpose does the gentleman from virginia rise? mr. cantor: mr. speaker, i ask to address the house for one minute for the prps of inquiring about next week's schedule. the speaker pro tempore: without objection, the gentleman is recognized for one minute. mr. cantor: i thank the speaker. i yield to the gentleman from maryland, the majority leader, for the purpose of announcing next week's schedule. mr. hoyer: i thank the gentleman for yielding. on monday the house is not in session. on tuesday the house will meet at 12:30 p.m. for morning hour debate, 2:00 p.m. for legislative business with votes postponed until 6:30 p.m. on wednesday and thursday the house will meet at 10:00 a.m. for legislative business. on friday, the house will be in pro forma session at 9:00 a.m. no votes are expected in the house on friday. we will consider several bills under suspension of the rules, a complete list of suspension bills will be announced by the close of business friday. in addition, we will consider h.r. 4061, the cybersecurity
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enhancement act of 2009, also a possible consideration of senate amendments to h.j.res. 45, to permit continued financing of government operations. yield back. mr. cantor: i thank the gentleman. mr. speaker, as this is the scheduling colloquy, i'd like to follow up with a few questions regarding the schedule. mr. speaker, i'd ask the majority leader if he could tell us what he expects to have on the floor the second week of february, the week before we head into the president's kay recess -- presidents' day recess. i yield. mr. hoyer: as the gentleman probably knows, there are some 260 bills we have sent from the house to the senate and we look forward to them sending some of those back to us. and my expectation is they will. in addition to that, we are considering a number of pieces of legislation, but they are not yet ripe, what i mean by that
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simply is the committee chairs have not signed off that they are ready to go. so we are still, frankly, working with the committees to see what legislation they will have ready to move forward. mr. cantor: i thank the gentleman. mr. speaker -- mr. hoyer: i know that wasn't very responsive. i wish i had a more responsive answer but that's the accurate answer. mr. cantor: i thank the gentleman for his accuracy. i would ask, mr. speaker, if the gentleman could tell us whether he believes there will be a vote on another health care bill prior to the presidents' day recess? i yield. mr. hoyer: it is possible, but, again, as the gentleman knows, given the differences between the two houses there's still the two houses there's still ongoing discussions as to
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following member on the part of the house to the board of trustees for the john c. stennis center for public service training and development for a term of six years. . the clerk: mr. travis childers of boonville, mississippi. the speaker pro tempore: before the house we have the following personal request. the clerk: leaves of be a requested for mr. abercrombie of hawaii for today and mr. ortiz of texas for today. the speaker pro tempore: without objection, the requests are granted. after consultation among the speaker and the majority and minority leaders and with their consent, the chair announces that when the two houses meet
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tonight in joint session to hear the address by the president of the united states, only the doors immediately opposite the speaker and those immediately to her left and right will be open. no one will be allowed on the floor of the house who does not have the privilege of the floor of the house. due to the large attendance that is anticipated, the rule regarding the privilege of the floor must be strictly enforced. children of members will not be permitted on the floor. the cooperation of all members is requested. the practice of reserving seats prior to the joint session by placarwill not be allowed. members may reserve their seats only by physical presence following the security sweep of the chamber.
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than normal preview of the secretary's upcoming schedule and take your questions. first a quick note on a couple of appointments he had this morning. secretary had breakfast on capitol hill with a few members of the house and senate armed services and foreign relations committees. he was part of a group of senior administration officials. they briefed congressional leaders on president obama's ambitious plans to dramatically reform our nation's outdated export control system. while the pentagon has traditionally been reluctant to really do anything but tinker with the existing rules and regulations, secretary gates is committed to working with the interagency and the congress to make meaningful and lasting changes to our export controls. he believes that it is imperative to keep our nation competitive in this global
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economy, as well as to keep our friends and allies to contribute in a meaningful way to global security. also today the secretary met with the norwegian minister of defense. they discussed a range of bilateral defense issues as well as alliance issues, including the nato strategy concept, headquarters reform, and of course ongoing military operations in afghanistan. secretary gates thanked the minister for the outstanding service and sacrifice of the approximately 500 norwegian troops in afghanistan who are leading a p.r.t. up in regional command north. later today secretary gates will meet with the president of the kurdish regional government, this is their third meeting. as some of you may know you have been along with us on trips to northern iraq, third meeting in seven months. it will serve as another opportunity for the secretary to reiterate u.s. support for the
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k.r.g. security and prosperity within a unified and stable iraq. to reconfirm america's commitment to a long-term strategy partnership with -- strategic partnership with iraq and offer our assistance in resolving outstanding disputes between the k.r.g. and government of iraq. finally later today he will attend the president's address to congress, the state of the union. on friday, secretary gates will travel to topeka, kansas, where he will be honored by native sons and daughters of kansas with the distinguished kansan of the year award. the secretary is excited to return to his home state humbled by this distinction and very much look forward to accepting this award before an audience full of family and friends. his remarks to those who are interested will of course be opened press. the next couple of weeks are shaping up to be very buzzy. on monday secretary gates will deliver the 2011 defense budget
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as well as the quadrennial defense review. tuesday he'll testify on the senator armed servicings committee on the budget and wednesday he'll appear on the house armed services committee on the same issues. as soon as the wednesday testimony is over he'll head straight to andrews where he will catch a flight to europe, actually istanbul, because he has to participate in the nato defense ministry that will be taking place there at the end of next week. over the weekend he'll conduct meetings with the leaders of the turkish government in anchora, and travel on to rome and paris where he'll discuss bilateral military issues with the italian -- with italian and french government officials respectively before returning to washington tuesday night, i think it is, february 9. with all that out of the way, early next week is busy, i dot you are going to get a briefing
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from up here. so now you at least know what we are going to be doing for the next couple weeks. ann? >> what role does defense secretary gates think that the u.s. should be playing in yemen? should the role be respected to i.s.r. planning assistance and the like, or is there room for more direct engagement to try to get out -- >> i think as a government we are obviously are strongly supportive, fully supportive of the efforts that the yemeni government has been making to deal with the terrorist threat within their midst. we support it. in many different ways. and we applaud them for their aggressive and forceful response to this growing terrorist threat in their country. i think -- i have gone from this podium through you with a litany of ways in which we are supportive, be it financially, be it training, be it advice, things of that nature.
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we have done that over the years. if that is something that the yemeni government continues to find helpful, we'll look for ways to continue to do that if not broaden it. but this is obviously a sensitive issue for the yemeni government, and we are mindful of their sovereignty and we are working with them as cooperatively as possible to deal with this threat that is not just -- poses a risk to them and their people but to us obviously as well as evidenced by the christmas day attempted attack as well as the connections between yemeni-based cleric and the fort hood shooter. >> since you are not going to really address that question, then, could we talk about the bilateral meetings in -- >> i have addressed the question. >> can you say whether or not the u.s. would consider more of a direct role in countering the terrorist? >> i don't think it's
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appropriate for us from this podium to be considering future operations or future alternative methods of being supportive to the yemeni efforts to combat terrorism in their country. i don't think that's helpful to the yemenis or helpful to us. i don't think it's appropriate from here. >> can you talk about the bilateral meetings in paris and rome? is there a goal that gates has? what would those discussions entail? >> frankly i think that although he meets with his counterparts in those countries with great frequency, with -- because of these quarterly, nearly quarterly nato min steerials as well as their quite frequent trips to washington, most of those discussions have been focused on afghanistan. and we have -- much wider ranging relationship with those countries in the military realm
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than just afghanistan. and so he wants -- it's been a while since he's visited european capitals. there's others he hoped to hit up on this trip we are not going to be able to due to scheduling conflicts of the you'll likely see us returning in the not-too-distant future to visit other capitals. i think he feels the need to do nurturing on other nonafghanistan -- non-afghanistan bilateral defense issues. that said, obviously afghanistan will also be a part of these conversations. i think this is -- it's been at least a couple years since he's been to europe. for a nonministerial visit. i think this is overdue. yeah, mike. >> has the white house given the secretary and department clear guidance about how long significant military assets will be needed for the operation in
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haiti? >> i think that is a question that we are -- that the u.s. government is wrestling with right now. and we are -- the secretary i think had a discussion with the president about this yesterday. i think it's taking place at levels bow low that as well. certainly a discussion in the interagency as to how does this mission evolve. now a couple weeks into it we clearly have enormous assets on the ground now. nearly 15,000 forces. 23 ships, probably averaging about 100 flights a day in and out of haiti. i think that everybody would say by now that the aid is flowing in a very productive and helpful
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fashion, but the question now becomes, now that this immediate relief has been provided, what do we want to do from here? what can we do from here? clearly there's been a commitment made by the united states government and by general keen on the ground there in port-au-prince that we has a government and military are committed to seeing this through and helping the haitian people get back on their feet after this horrific natural disaster. but what precisely that means and how many forces are there doing what kinds of things for how long and at what kind of expense are precisely the discussion that is are being had within this building and within the administration right now. so i can't give you clarity on decisions on this. we are still wrestling with it at this point. >> capitol hill, don't-ask, don't-tell. do you expect the president tonight to say something that will move the ball forward significantly? is the department prepared for
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that? >> i would urge you to talk to my counterpart at the white house for any previews they wish to offer on the state of the union. i'm just not in a position to do it from here. barbara. >> i want to ask you different on the don't tell, don't ask. on haiti first, you said, i understand the aid is flowing productively. what i do want to ask you on that is we also have video today of u.n. troops being compelled to pepper spray haitians who are trying to get food. so they haven't had any food in three days. clearly there's still pockets. if military forces are forced to pepper spray hungry people, there are still pockets where aid is not flowing. i'm wondering as you look at this now as it enters its third week, are you really satisfied that people are getting at least food, water, and shelter? >> i am not in a position to take issue though i'm inclined
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to on this notion there are pockets where it's not flowing. as far as i know there is aid flowing to those who need it. obviously there is a large population there. it's been displaced from their homes. some of it has made an exodus from port-au-prince out to the countryside and so forth. so we are going to have to continue to sort of reach out beyond port-au-prince to support those as they leave the metropolitan areas. what i would say generally about the security situation if you are using that as an anecdote for it being unstable is, yes, the security situation is right now as we judge it to be stable but fragile. and as evidenced by some of these scenes you have seen on television where there have been groups that become wrestless as aid is distributed to -- restless as aid is distributed to them, it shows that aid
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distribution is still very much a challenge. and that we have to be mindful of the security climate there. we have to provide the kind of security that is -- that will facilitate a safe, secure flow of food, water, medicine, whatever it may be. so our forces are trying to help the n.g.o.'s do that. force from around the world are contributing to that effort and we will continue to do so as long as we are needed. >> let me ask you on don't-ask, don't-tell, back in july i believe the secretary said he was going to ask -- he was asking the general counsel for recommendation within the department on how to more, i think his words were, humanely implement the policy. we have heard very little -- >> i don't have an update ton that. >> let me ask very specifically, it's been six months at least, has there been any progress on the secretary's request to the general counsel for
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recommendations, have there been any recommendations or nothing happened on that? >> i would certainly not say that there has not been able that has happened. they have been working on it. i believe they continue to work on it. i don't have for you an update on where it stands right now. >> the joint staff, the chairman, or any of the officials in this department for their advice and consent on changing the don't-ask, don't-tell law? >> not to my knowledge at this point. i would just say this that i would urge everybody -- i talked to my colleagues across the river about this. there is a larger issue. we at this point the only thing i would say is what we have been saying to you for some time is we continue to work this problem. i'm not going to get into it with any more spess physicality than that. >> it's probably been hit hardest by export control restrictions over the last 10
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years. do you know if the secretary supports any changes that would affect the satellite industry? >> you are asking moo to devil into it in a far more microlevel than i'm prepared to at this point. what i can say to you is that he believes this is what is required here is not tinkering around the edges of what is a rather cumbersome, antiquated, outdated, bureaucratic set of rules and regulations governing the export of technology. we believe you need to conduct a wholesale reform of export controls. really starting with a blank sheet of paper this is not his initiative. this is an initiative the president has proposed. it's being led by the department of commerce, but one that he fully supports and is willing to go to bat for. that's what you saw this morning up on the hill.
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i think that's what you'll continue to see in the days and weeks to come. >> you described i think from the podium this annex to the fort hood investigation report is classified. >> i have not. i'm happy to. >> but from what i understand it's not classified. it's for official use only which legally is not classified. my question is why, number one why would the department describe it as classified if it's not? and will you make it available to the public? one would think it's not -- >> frankly i think these questions have been asked and answered. as far as i know, brian, it is classified. we can certainly look to whether it -- whether as a whole it is -- there are parts of it that are -- whether there are differences in classifications throughout the annex. i can tell you this, there are
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things there that deals specifically with the suspect in the fort hood shooting and therefore if they were shared in the public domain could undermine his chances of getting a fair trial. and the prosecution's chances of getting a conviction of a person they believe perpetrated these crimes. that's the first and foremost reason. i think additionally there is probably stuff in there, again i have not read the annex, but described to me, i think there's stuff in there that deals with accountability in terms of lapses in accountability of those who supervised the suspect in the shooting. and whether there were red flags that should have been noticed and dealt with sooner to avoid such a tragic outcome. so -- the reasoning as i understand it but we can certainly check with regards to how it's specifically classified. i think whatever the classification seems to me there is a very good rationale for why
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at this point at least it is not being shared with the public as we are in the midst of preparing to prosecute the suspect in the shooting. and perhaps discipline others who failed in their supervision of him. yes. >> the reconciliation is a phrase we are hearing a lot. after the secretary said last week, some pakistani press and foreign press that the secretary left messages on that trip. one hand the taliban are not to be dealt with and another one saying they are part of a political fabric. kind of expand or clarify, especially the troops fighting this fight, are they fighting to win against the taliban or fighting for troops to help bring some taliban possibly not others into the fold many off future -- some future solution? >> i think you go back in history.
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most conflicts, particularly modern conflicts, have ultimately ended with some sort of political resolution to what was a military confrontation. that's what we are seeing unfold in iraq. it's what we believe to be the solution ultimately to the situation in afghanistan. what our role in that is setting the conditions by which that can take place. clearly the conditions are tenuous right now for such a thing to take place because the perception is at least that the taliban enjoys the momentum in this fight. so-so long as they are feeling emboldened by their successes, it is not likely that they are going to lay down their arms, recognize the democratically elected government in kabul, pledge allegiance to it, and support it. so we clearly need to reverse the momentum. that's what our 30,000 additional forces are there to do. that's what the additional
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coalition forces are there to do. we are confident that hopefully in the next several months that we will bring about that change in climate that would lead to more and more taliban reassessing their allegiances. we have spoken to this time and time again that it is the assessment of the intelligence community, our military commanders, certain secretary gates' belief that the vast majority of taliban foot soldiers are doing it out of either -- for economic reasons, they need a job, or because they are intimidated into doing so. we are clearly those are the ones, the ones who are not ideologically wed to the warped view of the world that the taliban has who we think are most ripe to perhaps set down their weapons and take a job in civilian sector, private sector, and support the government.
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the taliban leadership, this is where i think there is a distinction between what gates was saying, the taliban leadership is clearly our bad guys. who it is highly unlikely are reconcilible. i couldn't know they are ready to sign up and support car sky. -- karzai. there is a distinction between the foot soldier and the leaders who gave a safe hache to osama bin laden and al qaeda from which they launched attacks on this country on 9/11. so he sees the distinction. i don't think it should be lost on you. i think we can look at think with some subtlety between these two. and go after the foot soldiers and try to win them over. and ultimately figure out what to do with the hierarchy as we go up the ladder.
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now, omar is probably the extreme, the foot soldiers are the other extreme. question is what happens to the others? can they be won over? can they become a part of the political fabric that gates spoke of? and that's i think what we are all trying to figure out. i don't know that we have an answer yet. >> at what point does the 30,000 new troops, the department set up to begin accepting converts, from the taliban, reconciliation sectors, like south america. >> it's not an issue for the department. this is an issue for the government of afghanistan. clearly just reading president karzai's comments in the press, particularly in the lead up to this conference in london, it is their desire to work more aggressively towards a reintegration, at the very least a reintegration plan and ultimately perhaps a reconciliation plan.
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we have always been supportive of that notion. and that's why we are committing additional resources to try to change the dynamic on the ground to lead toward that possibility. and that's why i think financially there's support from us and other countries to try to figure out what we can do in a nonmilitary sense to provide an alternative for these foot soldiers. jobs, etc. >> i have a question about blackwater. just to have you clarify the secretary's remarks about blackwater. was he getting -- >> you were there and still confused? >> i'm still confused. was he getting confused -- >> i think you have been reading too much of the pakistani press. >> was he getting confused between c.i.a. operations of blackwater in pakistan, is that why he said -- >> first of all i wouldn't know what the c.i.a. operation it is there are any operations, i wouldn't speak to them even if i did know them. i don't think he was confused at
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all. i think he got a rather convoluted question which asked a number of different things in the most generic sense it asked whether security for a company in afghanistan working for us, have rules and regulations governing their behavior. he answered in the affirmative. in between there they threw in as examples dyncorps and blackwater. i don't think the secretary knows who the state department hires to be their security. i don't know -- i don't know he knows all the contractors that are working for us. subsequent to that i think he was crystal clear in the next day in the roundtable where he made it clear we do not have blackwater working for us in afghanistan. .
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clearly he has asked the general council to look into short of changing the law, can we apply it more humanely. if he is satisfied with the pace in which they have examined this question -- >> whether the joint chiefs of staff as to how this might be implemented. >> i have not heard him say that. i heard him say we get loud and clear what the president's directive is on this. he wants to see a change and if there i a change, when there is a change. we will do what we need to do to
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facilitate that change. i think you have heard him say publicly the fact that this would have to be a very careful process. and so -- this there is no update for you. we'll have to see. >> you said -- you didn't answer your own question, was he satisfied with the general council's activity? >> i haven't heard him express any dissatisfaction. >> when you talked about omar about re-integration you said he was at one end of the extreme. very precisely, is the united states willing and will continue to support afghanistan if omar and karzai have come to some reconciliation. you have a bounty on oma rmp's head. would you be willing to have him come back in and is that
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acceptable to the united states? >> it is most appropriate to ask that question of the white house. that is a big question. we have stated and you have heard secretary gates state before that omar is a bridge too far. he has the blood of thousands of americans on his hands. but those kinds of decisions will be made between the government of afghanistan in consultation with the president of the united states. i'm not in a position to elaborate on it from here. >> the united nations removed five senior taliban people from its terrorist list including a former foreign minister. are those the type of people you are talking about. was the department involved in vetting those folks? >> i don't know. i haven't talked to the u.n. about it. >> back on don't ask don't tell.
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president obama has said repealing don't ask, don't tell is an issue of leadership and a matter of someone figuring out how to do it and figuring out what the issuesr that has to come from this building. >> i'm not going to get into all of this. if you want to talk to the white house about it and see if they have anything for you. i don't have anything for you. >> you didn't hear my question. >> i'm not going to delve further into this subject. i have nothing to add. i really don't. finish your question. >> the secretary -- i mean, one of the things is responsibility for leadership. he has fired numerous department and service heads. if this is an issue of leadership, i don't understand why he doesn't feel either more pressure or more the need to move this along faster if the president has specifically said
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the reason it hasn't been repealed is because of an issue of leadership. >> i would direct your question to the white house. >> i want to ask you about the possibility of further taiwan arms sales. can you give us a picture of where the -- with the 2001 taiwan pledge stands and whether it has been fulfilled. there was a 2008 notification to congress that amounted to about $5 billion or $6 billion. is there more coming and what discussions are you having with congress on that at this point? >> couple of things. i don't know where we stand in the inventory of things that were slated to be sold. as for your second question, is there anything pending, we don't talk about future arms sales. there is a process by which we
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notify congress if there are sales that we wish to proceed with. at that point, it -- there is a public notification component through the defense security cooperation agency and they'll post it on their website. i don't believe there is anything posted on that website, but if you are interested in this subject to go look there. and finally, any and all arms sales with taiwan are done in accordance with the taiwan relations act. the united states makes available to talk to taiwan defense articles necessary for taiwan to maintain a sufficient self-defense capability. >> i would like you to comment on china. >> how will this hypothetical --
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i mean i don't want to get into what is or isn't pending. i don't know what is or isn't pending. with regards to the importance of military-to-military relations and the prospect of those being adversely impacted if hypothetically there were such a sale. you have heard it from secretary gates that this relationship is too important to go through the fits and starts we have had over the years where every little bump in the road results in a breaking of communication. and a suspension of dialogue. and a hiatus in the direct military-to-military relations. this relationship has to be important enough to both of us, not just us, to continue to focus on this and do the hard work it requires top continue to engage even when times get tough. so we are fully committed to
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continuing this dialogue and believe it's important for both of us to do so. >> there have been a series of strikes in yemen over the past couple of weeks. what is the department's assessment of how serious the al qaeda affiliate threat is in yemen is after those strikes? >> i don't think i'm going to give you an intelligence assessment of where al qaeda stands in the wake of some of the efforts that have been made lately by the yemeni government to go after that other than to say that that kind of action is precisely what we believe is needed. we applaud it. we continue to support it. and we either remain vigilant and aggressive in going after this -- these terrorists that operate in and around yemen. >> on the defense side, to the yemeni government, is that still training some intell sharing and
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drone-related data but not u.s. combat troops on the ground taking -- >> i have talked with you with the support we provide, financial, training, advice and so forth, but operation neal, i wouldn't speak to anything else. yes? >> secretary just came back from india, pakistan and afghanistan -- >> no, he didn't. india and pakistan. we did not stop in afghanistan. >> [unintelligible question]
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>> i refer you to a transcript of his press conference we conducted in dell high last week and it's on our website. but we did discuss afghanistan with the government in delhi and discussed the need for the indian government to be as transparent as they can be with the pakistani government about their activities in afghanistan. they clearly have contributed much in a monetary sense, financial support to the government in afghanistan and that is greatly appreciated by us, by the afghans and by the international community. but beyond that, i think you saw him speak to this -- there was this talk of perhaps the indians providing training to afghan forces and that is not something
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that we -- that i think anybody is pursuing at this point. >> do you believe that osama bin laden is still directing his people against innocent citizens around the globe? >> in an operational sense? i urge you to talk to the d.n.i. or somebody about that. i'm no expert on that. but clearly he is an inspiration to terrorists around the world and his communications only fuel that. and so he clearly must be dealt with and we are doing everything we can to firnede him and capture -- to find him and capture or kill him. he seems to be somewhere.
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>> do you have a specific schedule of the cabinet trip to tokyo and what is the goal of this trip and do you expect any development? >> i understand he's going to tokyo i think today, arriving tomorrow and will be there until mid next week. there are two things that he's doing. one hand in tokyo, i think he's participating in the s.s.c. which is what again? >> something -- all right. security consulting committee. so he will participate in that and he is going to be in japan to continue discussions with the officials about realignment and
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so forth. that's the agenda for that particular trip. >> do you want to talk about japan? i didn't think so. >> he announced he would reject any new base construction -- u.s. government keep its position with the current plan? and japanese government is looking for a new location. so i'm wondering if u.s. government is ready -- [unintelligible] >> i would just say in aen eric
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sense that we have heard the prime minister and understand his timetable to address this between now and may. we continue to work with the japanese government in the interim on that issue as well as a range of others. our relationship extends well beyond just the replacement. it is of importance to both of us that we continue to have a strong bilateral relationship particularly on the security side. it is to both of our benefits and to the region's benefit. we deal on a host of other issues. any sense of pre-occupation and we are paralyzed by it and the relationship is frozen as a result of it is overblown. we continue to talk about a number of other things and we continue to work. it's an important one and fundamental issue on the base
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realignment. we understand the timetable that the prime minister is working under and we respect it and we'll work with it. but we still do believe fundamentally that the road map is the best plan for reducing the burden on the island as it has been constructed. we continue to wrk on our friends in japan. >> i would like to ask about the latest attacks in baghdad. do you agree with the general that the insurgency is using new tactics? >> first of all, the attacks are deplorable and republic hence i believe and they -- and our
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heart goes out to those who lost their lives over the last couple of days. it fits into a pattern that we have seen develop since august where roughly every six to nine weeks these terrorist organizations are able to husband enough personnel, money, ammunition, explosives, devise a plan and perpetrate a high-pro tile -- high-profile attack. i think what you heard from the general was that this is a sign that this has morphed into a terrorist organization. this is the work of terrorists, not of insurgents. and despite clearly the fact that they have been able to
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wreak damage and death on this six to nine-week cycle, it has not resulted in what they clearly wish it to, and that is, first and foremost, resparking the sectarian violence which nearly destroyed that country several years ago. nor has it resulted in an undermining of the confidence of the iraqi people in their government or security forces. the blame for these attacks as far as the iraqi people are concerned is directed at the perpetrators, at the terrorists. and finally, it has not served to derail the march elections, which has to be one of the goals here. so as awful as they are and as much as we sympathesize with those who have lost loved ones, these terrorists have not been able to achieve their goals other than to get us talking
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about it. >> do you expect that the iraqi government will ask washington or the department of defense to send u.s. troops inside the cities if the trend of these attacks continue? >> you know, i have no indication, joe, that that is something that is being considered by the iraqi government. obviously, we still have a significant force in iraq, but it is a definedling force. so as -- definedling force. so our he ability to perform these are limited. we have forces on the ground. shortly after the elections, there will be a steep dropoff to get six brigades, under 50,000 forces. that said, we're there to help. and if the iraqi government, if the iraqi security forces need our help, we'll do what we can
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to support them. right now in the aftermath of these bombings, we are providing them with the kinds of forensics expertise to analyze the crime that took place and figure out who perpetrated it so they can go out and get them. and i don't know if it's ironic or just deliberate that what was targeted yesterday was the forensics facility for the iraqi security forces. >> i know you talked about haiti. who is in charge of haiti? what is the main charge of the military forces? >> from the u.s. government perspective, usaid and we are there to provide a, foam comfort and assistance to the people of haiti. we are an enneighborler for the
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government effort and n.g.o. effort to provide relief to the haitian people. truth is, no one can provide the kinds of assistance we can and we are happy to be doing it. it is great to provide that assistance to the people in need. it shows the world that we aren't a one-dim enshonal force. and we are trying to provide assistance to those who need it around the world, not just in combat zones, but disaster relief, humanitarian assistance. we have answered this call throughout our history and happy to be doing it again. it's unfortunate that under these circumstances, but if you ask those troops on the ground, those 15,000 and those on ships, there is no other place they would rather be than helping the
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haitian people. right now, i don't think we are at the point of considering withdrawing troops. there are still forces flowing towards haiti, not away from haiti. there are many thousands of additional forces that are in the pipeline to be going towards haiti. so we envision there will be a role for the united states military for some time to come. the question is, wheven does it change. what is the tipping point by which it transitions into less of the military role, more perhaps of a facilitator in terms of security, transportation, logistics, that kind of thing. some of the forces that have been deployed to haiti were forces that were destined to do other things. it is going to be the theater reserve in centcom and the haiti
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disaster caused us to cancel training exercises. but that's not the end of the world. we can make up that training at other times with those partners. and right now, they are focused dealing with haiti. so far, it has not impacted anything in operation enduring freedom, nothing that was destinned to be going to afghanistan has been impacted by the operations in haiti. but we are well aware that the president's priority is to make sure we get a rapid, expedited surge of forces into afghanistan to change the momentum. and so we have got to be mindful of that. and we are constantly looking at does anything we are doing in haiti perhaps adversely impact what we need to do in operation enduring freedom. as of right now, it doesn't, but
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we are going to be vigilant about watching that, and not to mention we are being mindful of the cost. this is an extraordinary expensive undertaking. and a necessary undertaking. you know, i think we're still working that. but we've got 24 ships out there. you have 15,000 personnel. you've got flights. this is a very expensive operation. we have committed enormous capabilities towards this mission and the meter is running. so i don't know that we've gotten arms around quite how much, but probably hundreds of millions of dollars. >> are people being evacuated from haiti and coming to the
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u.s.? >> you have seen some american citizens that have been brought back to the united states. you have seen the stories of these haitian orphans who have been brought back to be adopted by american parents. but i know of no exodus of haitians that are being brought back to the united states or anywhere else. that is not in the works. our focus is providing enough resources to make life more beerable, lifble on the island of haiti than anywhere else. that is the most appropriate way of trying to be helpful. [unintelligible question]
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>> well, we're aware of those reports and first and foremost, i direct you to the republic of korea. they are probably best able and most appropriate to respond to it. i would say this. that although this is a bilateral issue fundamentally between the north and the south, we clearly are discouraging of any further acts of aggression which in anyway would increase the tensions across this historically disputed boundary area. so we want to see everybody exercise restraint as they deal with this issue. >> is there any evidence to the six-party talks? >> it's always difficult to interpret the intentions behind
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north korea's actions. and we have made it very clear that there is a path open to the north koreans and in the prame work of the six-party talks. so actions such as those that we saw yesterday are clearly not part of that pattern. >> just a couple more and then we're going to go. >> was secretary gates ever asked if abdullah should be taken to the d.o.d. rather than the federal court system? >> i don't believe he was asked. i have seen the reports as you have. i'm basing this on what i've read and this was handled by the justice department. >> so he was never consulted
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ahead of reading him his miranda rights? >> i don't believe so. >> do you believe there was any information lost or any opportunity to gain valuable information may have been lost? >> i have not heard him say that. i don't know it to be the case. anything else? >> that's it. >> should we expect any sweeping changes on monday in the areas of particular interest that you may be able to point out? >> we have been leading a trail of bread crumbs over the past several years in terms of where the secretary was heading in terms of reforming the defense budget. you saw it in dramatic fashion
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last april when he announced the fy 10 budget proposals and i think you will see fy 11 continue to build upon the reforms and the rebalancing that was put forth in the 2010 budget. but i would urge you to stay tuned until monday afternoon. we'll have a full schedule for you. i think you will see him in the early afternoon with the chairman and likely the comp. controller to talk about the q. d.r. but i don't think there will be any surprises in terms of where philosophically we are headed. this is very much upon building upon the progress that was made in the fiscal year 2010 budget and continuing the rebalancing so there is focus on our forces
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and families and greater commitment necessary to win the wars we are currently fighting, while at the same time doing the prudent kind of planning for detering or if necessary fighting future perhaps conventional conflicts. that's the trajectory we have been on and will continue to head on. obviously, we are dealing with a fiscally constrained environment. and so every dollar we spend has to be dedicated to something we really do need. there have been hard choices made. there are things that will be cut, things that will be added to to achieve the proper balance that the secretary believes we must have. >> does secretary gates pressing for a single agency to deal with controls in the future?
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>> i think he is embracing the notion of whole sale reform. i don't think he goes into it with preconceived notions of how it should be done other than we need to reassess this from top to bottom. this is not an effort that is being led by this department but being led by the department of commerce. but this department -- i had a call on louie and let me end with you. >> you said the secretary's budget is focused on the white house issue and pay raise will be 1.4%, which is the lowest in
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the all-volunteer force. and what is the rational behind it? was the secretary informed last night when these activities occurred? >> i frankly don't know, but i doubt it. there are a lot of things that happen that he is ultimately informed of but i don't know what hour that happened and whether or not that would have required an emergency phone call. i doubt it. your question about the pay raise. happens to be something that the white house has already spoken to with the first lady. let me put it in some context for you. providing the appropriate level of compensation to the men and women in uniform is a high proirt for this department. we need that in order for us to recruit and retain quality people. but the context here would be
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that between 2001 and 2008 basic pay raise 37% in the united states military compared to a 28% rise in the private sector. so pay raises have now -- we have now fully closed the gap that had been identified by the ninth quadrennial review of military compensation between the military and the private sector. that has been closed. we are at a point now when compared to civilians with equivalent education -- [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >> tonight, president obama delivers his first state of the union address to congress and plans to deal with issues of unemployment, health care and the wars in iraq and afghanistan. state of the union address tonight at 8:00 p.m. here on c-span and listen to the president's address live with your i phone.
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>> this weekend on c-span 2 book tv, growth of the muslim middle class to end religious extremism, then the political cartoons of dr. seuss published during the war years and then the knee o'delnch cons and presidential foreign policy. find the entire weekend schedule at book tv.org. >> the associated press writing that treasury secretary timothy geithner denied that he was withholding information that sent deals to big banks. he testified before a house panel. here's a look at part of this hearing. it's about two and a half hours. >> the hearing will come to
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order. the committee will come to order. good morning. on september 16, 2008, the wall street giant a.i.g. faced immediate bankruptcy. a.i.g. was saved from collapse when the american people came to their rescue with an $85 billion bailout. less than two months later, the american taxpayer was again forced to pay the bill when the federal reserve direct the a.i.g. to hand out billions of dollars to counterparties that included the biggest names on wall street and affected taxpayers were proposing up the hollow shells of a.i.g. by stuffing it with money and the rest of wall street came by and looted the corpse.
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the circumstances surrounding the payments to the counterparties has created an air of suspicion and distrust among the american people, starting with the new york feds' initial refusal to name the counterparties. the new york fed argued that disclosing these counterparties would somehow injury a.i.g. in fact, when the information was finally released under pressure from congress, nothing happened. in an absolutely no effect on a.i.g.'s business or financial condition, but it did have an effect on the credibility of the federal reserve and it called into question the fed's pen chant foresee crest si. we need to change the culture on wall street and the culture among the regulators from the secrecy from transparency,
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recognizing that only true confidential competitive or consumer information should be protected. as we sit here, a year and a half later, after a.i.g. handed out billions in taxpayer dollars because of this secrecy we don't know how or why the decision to rescue a.i.g. was made or who made the decision to offer a.i.g.'s trading partners 100 cents on the dollar in the so-called counterparty payments. every day in the business world when a company is having financial problems, its creditors have to take less money than they are owed. otherwise they risk not getting any money at all. they call this a hair cut. in the case of a.i.g., nobody
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got a hair cut. instead, they were given a piggy bank full of taxpayers' dollars and said help yourself. let me just say plainly that i think just about every american would say the government should have forced a.i.g.'s counterparties to take less money. evidently, major decisions were made by combination of the federal reserve, the federal reserve bank of new york and the bush treasury department. today we will hear from witnesses who were involved in making these decisions. and we hope they can shed light on a murky set of facts. under subpoena, the committee obtained more than 250,000 pages of documents from the new york fed detailing its handling of the a.i.g. counterparties. particularly disturbing is the
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fact that these emails indicate that a.i.g. proposed to disclose to the s.e.c. and the public the names of the counterparties and the payments but it was the new york fed that directed a.i.g. to withhold this information. as one new york fed staffer put it, any public disclosure by a.i.g. is still subject to fed approval. at least two things are clear here. the entire financial regulatory system was broken and there shouldn't be any more bailouts. the light lack of transparency we have seen in the double bailout of a.i.g. leads to distrust, which leads to anger. the question that looms overall of this, how do we prevent a repeat of the financial crisis in the future.
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unless the congress adopts financial services reform, it will be only a matter of time before we see another a.i.g., another bear stearns, another le hman brothers and the next bank would be too big to fail and the taxpayers would be footing the bill again and again and again. i ask my republican colleagues to join with me in fixing the system. blame is about yesterday. fixing the system is about today and the future. in the a.i.g. case, we can talk all we want to about complicated business deals, but this all boils down to a simple concept. when people were losing their homes and jobs, the same big banks that caused the problems
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got every dollar back courtesy of the american taxpayer. and the federal reserve tried to keep important information a secret. secrecy leads to distrust. and the american people now distrust what happened in these bailouts. congress has the right to know how and why that happened. and the american people have the right to know how and why that happened. i hope that today we can get answers to these and other important questions. i now yield to our ranking member, the gentleman from california, congressman darrel issa for his opening statement. >> thank you, mr. chairman and you have our promise this will be a bipartisan oversight of these and all the issues related to the fed's current and future authority. mr. chairman, i would like to ask unanimous consent pursuant to our rules that spencer bachus, the ranking member on financial services committee,
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kevin brady of texas, ranking house republican on the joint economic committee, roy blunt, the former majority whip, ron paul whose credentials on this are well understood and representative stearns be allowed to sit in. >> without objection. >> i would ask at this time to submit for the record schedule a, which is, in fact, the agreements since they will be referred to in questioning and we want to make sure they are in the record. >> reserving the right to object. >> additionally, mr. chairman, i would ask unanimous consent that the eight letters previously sent to secretary geithner and as of today not responded to also be placed into the record at this time, although they will not be reviewed further during this hearing. >> reserve the right to object. >> thank you, mr. chairman.
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thank you for all of this and more. working together with you on the subpoena documents has caused both the majority and minority to glean considerable new information. in recent weeks, this committee receiving these documents have caused us to better understand the new york fed's pressure to a.i.g. to abort negotiations designed to obtain a hair cut, as it was called, from its counterparties and keep the details of the counterparties' payments from appearing on forms -- the firm's forms at the s.e.c. today, one of the questions we will ask is, should the american people be kept from knowing until 2018 the details of who were the ultimate beneficiaries of this bailout. as i have said before, i consider this a backdoor bailout. the people giving us testimony today will tell us that they felt that this was essential and
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necessary. mr. chairman, as you can recall, a.i.g.'s founder, hank greenberg has previously testified along with a.i.g.'s c.e.o., and he made it clear that he believed that, one, hedging should have occurred sooner and two, bankruptcy would have been a cleaner way to resolve a company in which he is the largest stockholder. i'm proud to say after that hearing, a.i.g. has re-engaged their founder to help maximize the value of a company that is currently 80% owned by the american people. not to say that there's a lot of good news at a.i.g. mr. chairman, it's clear that the money paid and it being kept secret may ultimately cause the american people never to be repaid these dollars. can you hear me ok now? you can't?
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i will focus on this microphone. usually the problem is i'm too well heard, right, mr. chairman? >> generally. >> today we will have the opportunity to ask questions and the american people will have the right and i believe will receive straightforward answers. so far, mr. chairman, this is what we know. we know that some of today's witnesses played a central role in the decision to bail out a.i.g. rather than allow the normal bankruptcy procedures to run their course. we know that one of today's witnesses made the decision to pay a.i.g. counterparties at 100 cents on the dollar. we know that one of today's witnesses was the primary arc text of the a.i.g. trust agreement whereby the taxpayers' investment is managed not in the interest of the u.s. taxpayers, but of the united states treasury department. that was from previous testimony and we rely on that to say that
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perhaps that is not the right answer. we know that the new york fed sought to cover the counterparty payments made possible by the taxpayers' money. we now better understand that the new york fed transferred their earlier responsibility to the american people after tarp was passed. we know that the new york fed succeeded in getting the s.e.c. to continue the coverup until 2018, 10 years from the date the bailout began and we know that the full amount paid to a.i.g.'s counterparties will likely never be repaid to the american people. some facts, mr. chairman, remain unknown or uncertain. secretary geithner has claimed publicly that he recused himself from the day-to-day management when the coverup occurred. in fact, he has asserted complete ignorance of the fed's efforts to cover up the bailout details. many people, including members of this committee, have a hard
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time believing that secretary geithner entered into an absolute code of silence for those of us old enough to remember what that was, on the day his nomination was announced. where was secretary geithner for the months and months that back-door bailouts were being questioned in the media? did he ever wonder why his decision to pay a.i.g.'s counterparty was kept secret torso long in these are the questions that the american people deserve. i would ask unanimous consent that the remainder of my opening statement be placed in the record at this time. >> without objection, so ordered. at this time, i would like to turn to our first witness, treasure secretary geithner. it is committed policy that all witnesses are sworn in. mr. secretary, if you would stand and raise your right hand. do you solemnly swear to tell the truth, the whole truth and
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nothing but the truth. >> i do. >> let the record reflect he answered in the affirmative. you may be seated. >> chairman towns, ranking member issa and members of the committee, thank you for the opportunity to testify before you today. i welcome the committee's attention to this issue. and we will continue to work closely with this committee, with all other oversight bodies -- >> mr. secretary, pull the mic a little closer. >> i'm almost eating it. i don't think i could make it any closer. i want to make sure that the american people have a comprehensive view of the actions we took to end this financial crisis. deciding to support a.i.g. was one of the most difficult choices i have ever been involved in in over 20 years of public service.
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the steps that were taken were motivated solely by what we believed to be in the public interest. we did not act because a.i.g. asked for help. we did not act to protect individual institutions. we acted because the consequences of a.i.g. failing would have been catastrophic for our economy and for american families and businesses. more than a year removed from that terrible week of september, 2008, i believe that the government strategy and it was the government strategy, was the best of the available options and will ultimately cost the taxpayer far less than many feared and far less than many alternatives many people suggest today would have been better. and importantly, if you join with the president in adopting his proposed financial responsibility fee, the american taxpayers will not have to pay one cent for the actions we took in a.i.g. or the actions we took
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with the authority that congress gave the administration to stabilize this financial crisis. a.i.g.'s problems became acute just a few days before lehman declared bankruptcy. our financial system and our economy stood at the brimbing of collapse. the banks and financial institutions that americans rely on to protect their savings to help finance their children's education, to help pay their bills were at risks in which few americans had ever experienced. the banks and the financial markets that businesses rely on to meet payroll, to build inventory, create new jobs, were threatened like at no time since the great depression. across the country, across the united states of america, people were rapidly losing confidence in our financial system and in the government's ability to safeguard their economic security. in the midst of this storm,
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a.i.g. posed a much greater threat than lemman. a.i.g. was much larger and spread across the globe and failure would have been far worse. a.i.g. was one of the largest life and health insurance companies in the country, one of the largest property and casualty insurers, providing insurance to 180,000 small businesses and other corporate entities which together employed about 100 million people. a.i.g. had sold products to protect local and city governments, pension funds and thousands of public and private companies through guaranteed investment contracts and protection of 401k's. and as prop attic, a.i.g. had engaged in a broad range of financial activities that strayed well beyond traditional insurance business. using a credit rating based on the strength and profitability of its insurance companies, it
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had become one of the largest providers of comley indicated financial products in the world. it made hundreds of billions of dollars of financial commitments without the resources to back up those commitments. a.i.g. should never have been allowed to take those risks. but it was. its insurance regulators in 20 different states. the regulators in other countries responsible for overseeing their international activities and its holding company superviseors did not act to constrain the risks a.i.g. was taking. important to recall that the federal reserve was given no responsibility and no authority to contain risks that a.i.g. was taking. no one acted to constrain risks being taken by a.i.g. and none of those regulators in the moment of crisis had any ability to respond to its failure.
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the government of the united states did not have the ability to seize a.i.g. and wind it down in an orderly way as the fdic can and does for banks. neither the bankruptcy code nor insolvency procedures could have handled the job. and there was no way to draw a line around a.i.g. and prevent its failures from wreaking havoc across the system. the federal reserve was at the center in response to the crisis because it was the only fire station operating. the federal reserve faced a terrible choice to support a.i.g. putting billions of dollars of taxpayer resources at risk or let a.i.g. fail and accept potentially catastrophic damage to the economy. we weren't willing to accept such a catastrophe. so just four days after a.i.g. was drawn into that crisis, we extended a.i.g. a line of credit, secured by its insurance businesses. in return, the taxpayer took
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about 80% stake in the company and began the process of restructuring management and the board and the firm itself. that initial action helped stem the bleeding for a time, but given the massive losses that a.i.g. faced and given the force of the storm moving across the global financial system, it was not enough. and we had to work very clearly, almost have the beginning to design and implement a broader, more permanent restructuring. a.i.g. needed capital, not just a line of credit and a.i.g.'s vulnerability to future losses had to be reduced. on november 10, the federal reserve and the department of treasury jointly announced a series of steps to stabilize the company. the treasury invested $40 billion of preferred capital under the authority congress provided the executive branch under the tarp. and the federal reserve helped establish and fund two entities
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to purchase a range of assets from the company that were threat yng a.i.g.'s financial solvency. it has been the subject of a range of questions about how we treated firms that had bought these insurance contracts from a.i.g. and in this effort and i want to make this clear, in this effort, our objective was, as always, to get the best yield for the american taxpayer and we faced a number of options. if we had let a.i.g. default on the contracts, a.i.g. would have gone into bankruptcy, all the disastrous consequences that we had feared since september. if we continued to lend a.i.g. money to meet these obligations, its growing debt would have led to a downgrade bringing down the firm itself and putting more taxpayer dollars at risk. if we had tried to force
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counterparties to accept less, market participants would have lost confidence in a.i.g. leading to the company's collapse. the counterparties could have refused and kept the billions in collateral, kept the billions in securities they already had and could have sued a.i.g. for breach of contract. we could not engage in protracted negotiations. a.i.g.'s financial position was deteriorating rapidly day by day. and the prospect of failure was imminent. we restructured those contracts to stop the bleeding and potentially recover some value for the taxpayer in the future. now although the government still faces the risk of substantial losses in its overall exposure to a.i.g., we expect that this particular transaction, the very one that is the heart of so much controversy will be paid off in full with interest generating some profit for the american taxpayer. now, on november 24, after president obama announced his
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intention to nominate me as secretary of the treasury and after consultation with others, i decided to stay on as president of the new york fed on an interim basis but i withdrew from monetary policy decisions, policies involving individual financial institutions and day-to-day management of the new york fed. i had no role before or after november 24 in making decisions regarding what to disclose about the specific transactions and payments to a.i.g. counterparties. the broad strategy that the government adopted to contain this financial crisis has been remarkably affected at stemming the crisis, breaking the momentum of the crisis and repairing the damage. and this has been achieved at much lower costs in taxpayer resources than many people anticipated. confidence in the basicst stability of the american -- basic financial system for
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consumers, house holds and municipal state governments. the economy is now growing. the support we provided to a.i.g. in the context of the broad strategy to put out this fire was essential to achieving this early beginning of healing and recovery. banks have already repaid 2/3 of the tarp investments that my predecessor appropriately made. the only support this administration has provided to banks since i took office, to banks, was $7 billion to regional small community banks. more than 75% of the emergency government guarantees that i inherited when i took office have now been shut down and closed at a profit to taxpayers. over the last year, the expected costs of stabilizing the financial system has fallen by over $400li real resources that can use to meet the many other
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challenges we face as a country. if congress joins with us in adopting the president's proposal for a financial responsibility fee, the american taxpayer will recoup every penny of potential losses under the tarp. now this economy is still in crisis, but because of the government's actions, the american financial system is now in a position where it can provide the credit necessary for economic growth. and that is essential to lay the foundation for long-term economic prosperity. let me close by saying this, if you were outraged by a.i.g., and you should be, if you are outraged by what happened with a.i.g., then you should be deeply committed to financial reform. the united states of america should never have let institutions like a.i.g. take on a level of risk that could threaten the financial system and the government of the united states should never have been in
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a position going into the crisis without the basic tools able to contain the damage and protect the taxpayer. i hope you will join us in working to put in place a strong package of financial reforms that will protect consumers, protect investors, protect the taxpayer and our economy from excessive risk taking by financial institutions. mr. chairman, one final thought, the public servants involved in making these decisions acted solely in the public interest, acted solely in the interest of the american taxpayer. they are dedicated americans who cling to government service, enormous experience and the highest integrity. i would never and they would never be part of any public decision intended for private benefit and not the public interest. the decisions we made together regarding a.i.g. were enormously consequential and terribly difficult and subject of extraordinary controversy within each of the institutions
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responsible and for that reason they were subject to enormous care and deliberation. i believe a fair reading of history, a careful fair reading of history of all the judgments we made will demonstrate that the actions we took, and i was there, were essential to preventing catastrophe and the solutions we took reduced the ultimate cost to the american taxpayer and the american economy is much stronger today as a result. thank you very much. . again.
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i personally played no role before the 24th or after in making those decisions, but you asked whether any employees of the new york fed did, of course, they did. >> when you were the president of the federal reserve bank of new york, when did you recuse yourself from matters involving specific companies and why did you recuse yourself? >> on november 24th, the president announced his intention to nominate me at secretary to the treasury. that forced me to make a set of decisions about what was appropriate for me to do given the unique circumstances of that time. and after consulting with the chairman of the federal reserve,
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with the chairman of my board, with my general counsel, and with a range of other officials, collectively we decided that it was in the best interests of the fed and the incoming administration for me to remove myself from day-to-day involvement in the fed's policy issues, to leave that responsibility to my colleagues at the new york fed led by the executive of the first vice president of the new york fed, but not to step down as president. and we made that decision, because we wanted to make sure we were protectinged independents of the fed and i was going to be spending, my necessity, a huge part of my time in helping shape the president's economic agenda and i was not going to be able to give the care and effort needed to carry on running the fed on a day-to-day basis. our judgment was that was the best decision at the time. i'm confident of that in retrospect. it was unique. it was unique, but i don't think there was a better alternative
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available. >> secretary geithner, i don't think aig's counterparties should have been paid 100 cents on the dollar, because in this e-mail we have here it's on the screen as well, you had some interests in how much the counterparties were owed. please tell the committee what impact the counterparties exposure had on your decision to pay 100 cents on the dollar. >> mr. chairman, i played no role in that decision. as i said in my opening statements, as i testified before, we had to make a difficult choice about what was going to prevent the failure of the firm at least cost to the taxpayer. if we had broken those contracts, if aig had not paid them in full, if we had threatened default, if we had imposed haircuts, if we had selectively imposed haircuts
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that would have brought about a downgraded in its rating. the firm not able to operate and it would have collapsed. it was because of those choice wes took the path we did, to restructure the contracts and leave the taxpayer with some of the potential upside in securities. now, judging what is systemic, and why, and a failure of aig is a difficult judgment to make. there's no black and white choice in that context. but our judgment was, as i said in my testimony, that aig's collapse would have dramatically magnified all of the effects you saw in the immediate aftermath of lehman's failure and in some ways more consequential, because they would have spread to a set of insurance businesses and that would have been much worse for the country. we were guided by a simple but terrible choice. how best to prevent default, at least cost to the taxpayer.
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>> thank you very much, mr. secretary. i now yield to the gentleman from california, ranking member congressman issa. >> thank you, mr. chairman and i'm going to pick up where you left off pretty much. secretary geithner, i think -- pardon me? i think you've answered that you played no role in the decision to not disclose the full payment, the 100% payment to the counterparties. that were you not part of what some of us called a cover-up. is that right? >> absolutely. >> okay. let me follow-up, then. if after november 24th you were not involved in any activity, then one more just to be clear, did you ever become involved with the federal reserve's disclosure decision with respect to counterparty claims after
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your nomination as treasury secretary? in other words, have you ever participated or questioned or stayed involved with that? >> no, i did not. >> well, from what we were given by the fed, can we put up slide one. this e-mail from you says -- to william dudley, your replacement, on march of 2009, and it -- where's the line to read here? okay. it's easier to read on the screen. where are you on the aig counterparty disclosure issue? long after you left, you made this e-mail. what was it about and what was the answer? >> well, congressman, as you know, this question of disclosure was the subject of huge amount of controversy. and most people -- >> you think?
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>> yeah. that's what my son says, and ai glee with you. most people feel, as you do, they said, why shouldn't it be disclosed? and as you know, in march, which i think, if i'm not mistaken -- >> march 15th. >> the time of this e-mail -- it had been subject to testimony by the vice chairman of the federal reserve and the federal reserve was facing a huge amount of pressure are and attention over what it disclosed. so i assume as you might expect in that context in asking them, where were they? were they going to change their position jthts okay. following up on your continued involvement, and looking at them, where are you on this? do you believe that there should be full disclosure, at the president has said, these kinds of instruments should be public, essentially like any other instrument, the details of which should be available broadly? >> congressman, i am, i believe deeply that trust and confidence in the financial system requires
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disclosure and transparency. i believe that trust and confidence in the government requires that our actions be subject to full exposure and review by careful, independent analysis and i have been very, very supportive since i came into office and before to making sure we were bringing an unprecedented level of disclosure to the transparency around the actions ever the government. i'll give awe few examples. when i came into office we put the financial terms of all of the transactions we undertook under the t.a.r.p. in the public domain for everyone to see. one of the reasons our financial strategy has been successful in bringing measured stability back to our system is we compelled the largest institutions in the country to subject their balance sheets to -- >> well, secretary, i appreciate what you're been doing as treasury secretary, but i have in front of me from the fed, marked confidential, the details of who benefited, who got these
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benefits, and currently it's locked up until 2018 by an order that wasn't negotiated and final until may of this year, may of last year, long after you were obviously able to be involved that locks up the public knowing be, and these are assets the american people paid for in full. right? do you believe we should know about these? >> congressman, that's an issue that should be directed to the new york fed and sec. you asked me a question, i didn't quite get a chance to answer before, which is, you said what was my view in effect. >> yes. >> what the fed ultimately did. it's very important to recognize that the fed did in march of 2009 fully release information that counterparties and the details of that transaction, and based on what i know, i thought it was appropriate then. i know a lot of people said should that have come sooner? reasonably, people could come to that judgment, but i did not
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stand in their shoes at the time. >> now, as a member and the head of the new york fed and also i guess broadly a member ever the board generally, until you were sworn in. >> until time expired. >> finish up this question quickly, mr. chairman. >> you were aware that chairman bernanke in fact had in front, from the staff, a report that said, aig should be allowed to go bankrupt, which was then held back on september 16th based on his decision on september 15th not to disclose this for a broad vote of the board, weren't you? >> i don't -- i'm not aware of the e-mail you're rearing to but aware the following. >> witness answer the question and then we'll move on to it next questioner. >> thank you. every decision we made in the days before september 16th and afterwards were enormously controversial -- >> no, no. the gentleman's time's expired. recognize mr. kanjorski k. i ask
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unanimous consent to get an answer to the question. >> each member that five minutes. we'll, without objection, the witness can answer the question. we're going to -- >> the only question we want, were you aware of that, if you weren't, do you think you should have been aware of that for a vote on september 16th. 2459s all. >> i was aware there was enormous concern both in the new york fed and at the federal reserve board about the choices we were confronted. as i said, there was nothing more controversial an difficult than i think anything we faced in this context and i think it should be reassuring and no surprise that those actions and the records will show that those actions were the subject of enormous debate. and they were made before the 16th and afterwards and every time we faced the possibility of having to do more, we all stepped back and said, do we really need to do that? does that make sense? and that is a good thing for the country. you had people willi >> thank you. the chair recognizes mr. kanjorski. >> thank you, mr. chairman. mr. speaker, there's a famous
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expression, we have come to bury see sar, not to praise him. i hope you appreciate the role of see sar that you're playing today. -- of caesar. it made me think, last sunday, i watched a ballgame and in the closing moments of the ballgame, the quarterback made a tremendous decision to pass the football and got intercepted. vulls, the opposing team took the ball downfield, kicked a field goal and won the game. i convened several meetings in new york after that game and met extensively on monday and tuesday and we have concluded that he just did the absolute worst thing he could have done, every one of us at those meetings would have made the correct decision after the fact. i think the point i'm trying to make is i do share some of the sympathy with you because i was
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on the committee, the task force that was working with the secretary, the chairman of the federal reserve, when the crisis occurred. and i caution some of the members, i think even of this committee, were able for the votes that we needed to authorize the saving of the american economy. as i've heard your testimony, you have come to the conclusion that if the rescue package had not been passed by the congress of the united states authorizing the secretary and the president to take ex-troird -- extraordinary action and commit hundreds of billions of dollars of taxpayers' money we wouldn't be sitting in this room today, we probably wouldn't be operating under the constitution that was saved as a result of that precipitous action taken. is that relatively correct? >> i completely agree and those
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members of congress on both sides of the aisle that voted to authorize that action did the right and the necessary and the courageous thing. and they made it possible for my predecessor and the federal reserve to start to stabilize this thing. and it would not have been possible without that authority and without that legislation. >> i appreciate that. i sometimes, as a matter of fact, i took that argument to the white house at that time, if you remember, the president was not as outspoken and i always was convinced that in a democracy such as ours, transparency, both in bad news and dangerous news must be shared with people. and part of the problem at that time, we didn't share that news. and even today, most people in this audience and most people throughout america have no idea how close we came to total anilings and disaster. is that correct? >> that is my view. i think for the first time
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since the great depression you were seeing a full-scale run on the financial system. people were taking their savings out of banks. they wondered whether a collar dollar was a cla, -- was a dollar, they wonderered if a dollar lent to a triple-a company would be worth a dollar. it was a calamitous breakdown in the fabric of our system. no recovery would be possible without stabilizing the system and stemming the bleeding and that was something that could not happen without the authority, many people in this room and many people on both sides of the aisle, voted to approve. >> aim correct that there were discussions held at the highest echelons of the united states government and the congress at that very time as to whether or not law and order could be secured in the united states if we did not take precipitous action to assure people that the economic markets of the united states and the world would be held secure? >> i was not in the executive branch at that time, so i
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cannot speak to that, but it would not surprise me. again, this was the gravest crisis we'd seen since the great depression, it was not going to solve itself. many people advocated letting it burn itself out but that would have been catastrophic for the economy. we're still living with the damage and the wreckage. the scale of challenges we're facing today is rooted in that crisis and illustrate the force and the pressure and the momentum that was already, we were living with in august of that summer. >> all decisions made in those fateful two weeks weren't the correct decisions, were they? >> congressman, i think every day about things we could have done differently and done early and i think a great strength of this country is that people in the congress and independent oversight bodies and the financial crisis inquiry commission are all going to take a cold, hard look at
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everything done. that will give us -- that will give us a better basis for fixing this mess and preventing it from happening again and we will cooperate fully in all that effort. >> thank you, mr. chairman. >> the chair recognizes mr. burton. >> thank you, mr. chairman. your counsel, one of your counsels, james bergen, said on march 12, i don't know if there's any way to manage it so that congress won't ask for it, or if they do, won't release it. does he work for you? or did he work for you? >> yes, he did. >> does your legal counsel have the authority to make comments and decisions without your knowledge? >> of course, but --
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>> regarding something of this import? >> well, president ant c.e.o. of the new york fed -- >> this doesn't require a dissertation. i only want to know do, they have the authority to make decisions without you knowing about it? >> of course. >> what's the date on there? on november 11th, when you were still at the fed, an internal memo said as a matter of course, we do not want to disclose that the concession is at par unless absolutely necessary. are you familiar with that memo? >> not with that e-mail. as i said, i was not involved about decisions about what to disclose about the transactions
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or the names of counter parties. i have enormous trust and confidence in the integrity and judgment of people who were. >> on march 15th, after that we had up on the board there a few minutes ago the e-mail to mr. dudley. he said where are you on the counter party disclosure? he said my understanding is it could come out as early as today. are you familiar with that? >> i don't recall his response and i don't recall my unit making fun of him, but now i see it. >> you don't remember? >> no,i don't, but at the time there was enormous building pressure to disclose and they did disclose. >> do you maintain you weren't involved in any of this? >> absolutely. >> were you aware that all of these organizations around the world, society, goldman sacks, do i have bank, ubs were all
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getting 100 cents on the dollar. >> absolutely. >> you were aware of that? why wasn't this disclosed back in november when you were the head of the fed? >> again, that is a question you need to direct to the people responsible for that judgment. >> you were the head of the fed? >> i was the head of the fed of new york until i was confirmed for this job. >> why wouldn't this have been disclosed back then? what was this, a group? >> i don't know how to say it differently, but when the president announced his intention to nominate me, i withdrew appropriately from a range of institutions in part to protect the fed so i could do my job of helping the president prepare for how to fix the mess we inherited. because of that, i was not
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involved in the decisions, but the people who made those decisions did so -- >> this happened on november 11th before you withdrew. >> what happened? >> this knowledge. >> mr. chairman, as i inside my testimony -- >> why wasn't it disclosed back then? >> we didn't face that choice then. i was directly involved in the judgments we made. >> you didn't face the choice back then? >> no, we didn't. the choice i was deeply involved in fully supports and the decision to restructure the contracts in way that was better for the taxpayer. i was supportive and fully aware of that. >> it stretches for us to believe you had no role and didn't know anything about this when your attorneys and people who worked for you were sending e-mails around the place and you were the head of the fed and didn't know about it. it doesn't make sense to me. a lot of my colleagues feel the
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same way. >> we were involved in an extraordinarily complicated range of things. the choices around disclosure that understandably were the focus of so much attention. >> do you think there should be an audit of the fed. >> you may answer the question. >> i am supportive as part of financial reform of making sure the fed is subject to a level of transparency and disclosure and oversight and the chairman of the federal reserve worked with many members in helping to shape reforms to achieve that outcome. >> i will take that as a yes. >> i want to be protecting the policy issues. it would be a deep mistake for the country to threaten that independence.
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>> the chair recognizes mr. cummings. >> secretary geithner, i don't know if you realize that, but the democrats asked for this hearing. i asked for this hearing. did you know that? >> i believe i did. >> when i asked for the hearing, i must tell you that i was extremely concerned and i was questioning whether you had acted appropriately. i think anyone who read headlines when this hearing was requested would have come to at least the question mark. you score you would tell the truth, is that correct? >> i did. >> i assume your written statement is a statement in which you would also swear to? >> absolutely.
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i'm trying to figure out as far as the initial getting involve and what you did, i don't know what anybody else would have done. i don't think we had a choice. or did you have a choice? let me say that i think we did the right thing there. this is where it gets sticky. we also have a situation, secretary geithner, where the american people are concerned that a lot is being done for wall street, but not enough being done for main street. you understand that? >> absolutely. >> one of the interesting things is you talked about how you had not taken the action from the beginning and how it might have affected main street. the constituents of all can you tell us, you hadn't taken action, how it might have affected students in my district or businesses or whatever, can you tell us that?
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i don't think that's getting through. >> thousands more factories would have closed their doors, millions more americans would have lost their jobs. the value of america's houses and savings would have fallen even further than they did at that time. people would have rushed to take their money out of banks. it would have brought about utter collapse. i don't know a better way to say it than that and if people wonder whether that was true, i think all they have to do is look back at what actually happened in the fall of 2008 you saw the value of american savings fall by almost 40%, trillions of dollars in lost wealth, millions of americans lost their homes, thousands and thousands of businesses had to close. that's what happens when you let a financial crisis get out of control. governments should never let that happen. but if they don't act, and this is an important thing for people to understand, people think it's unfair for the
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government to act to rescue a financial system. but you cannot help an economy recover, you can't create jobs, can't preserve the value of people's savings, without a functioning financial system. >> another moment when we requested the hearing that i was concerned about was the counterparties. as you probably know, i, along with 26 other members, requested that baroski look into that whole issue. there have been comments at the capitol level that the counterparties were tenuous and had they not been paid in full, they risked collapse. was this a real possibility? >> in my judgment, that was not the most important risk posed by a.i.g. a.i.g.'s failure would have posed some direct lossdzes on those major banks but those losses themselves were not the issue.
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they would not have been significant. the threat to the system, and this was a threat to all institutions operating, was the threat of collapse of the system as a whole. if a.i.g. had failed, you would have seen a crisis spread to insurance companies around the world and seen investors, depositors pull back from every financial institution in the world and that would have brought a much more precipitous collapse in all financial values. >> my time is running out, just real quibbling, when the public has so much invested in a company, isn't it better to err on the side of transparency, secretary, as opposed to keeping things secret? >> of course. of course. >> so what would push the decision to not be as transparent? what would cause that? >> there are very few cases where it is necessary for there to be either a lag in disclosure or some gap.
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i'm not sure the best way to explain this, but like in national security, like in law enforcement -- >> the gentleman's time has expired, but you can continue. >> like in supervisor information, there's some areas in which you need to be careful how you manage that. that's a discussion you should have with my colleagues at the fed, they're in a better position to answer it. we would not want to disclose information that would be bad for the taxpayer, make it harder for the taxpayer to recoup our investments, but in general, congressman, i completely agree. the transparency and disclosure are essential. the american people deserve it. we have been very effective in bringing an unprecedented level of security to all the basic actions we took in this financial crisis, an unprecedented level of transparency and disclosure. >> the chair recognizes mr. mica. >> thank you, mr. chairman. mr. speaker, it's kind of interesting the -- mr. secretary, it's interesting the
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way you framed your testimony and involvement in some of these decisions before the committee today. i think you've tried to give the impression that you had to do what you had to do because of the financial situation, that's pretty much what you've said, right? >> absolutely. >> and then, you -- you used the term you kept using the term, made decisions together. then you said a dividing line of november 24, that was -- that's when you received word you would be nominated for treasury secretary? >> that's when the announcement was made. >> so you've tried to distance yourself from decisions made before that, but in fact, -- >> no i have not tried to distance -- i take pride and full responsibility for all those decisions. >> and you also were aware when
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the new york federal reserve board ultimately selected on november 3, 2008 to purchase the underlying assets? >> absolutely. >> you were. >> again, as i said, i take pride -- >> also, you had no knowledge of any coverup, right? or intent not to give full information and disclosure? >> of course not. >> of course not. 10 you took credit for the decision but not the coverup? >> no, no -- >> you've distanced yourself from any coverup before november 24, and of course you were out of the picture from november 24 forward, is that correct? >> congressman, i'm not trying to distance myself from anything. i will take complete responsibility for decisions i played a role in shaping, including all decisions up to think 24th in this case. i'm happy to take
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responsibility for all decisions i've made since then. >> you were aware of the 100 cents on the dollar -- >> absolutely. >> and the risk that was posed by that offer. so you knew about that but you weren't attempting to cover up, that's your testimony? >> of course not. >> so i believe either you made a bad decision there, or in fact there was the attempt to cover up one of the biggest bailouts, back door bailouts in history. now you've tried to frame it as we did it because -- you did it in the interest of the people and the failure of the system. i'm telling you, i believe these are lame excuses. either you were in charge and did the wrong, wrong thing, or you participated in the wrong thing. this -- to me it appears like, when you were being confirmed, a lot of controversy surrounded
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you not paying your taxes. you gave lame excuses then -- you're giving lame excuses now. my final question is, why shouldn't we ask for your resignation as secretary of the treasury? i didn't think you should have been secretary of the treasury when it was disclosed you didn't pay your taxes because that's the highest financial responsible position in the united states government. why shouldn't you step down now? >> that is your right to that opinion. i have worked in public service all my life, never been a politician, i have served my country as carefully and ably as a i can and it's a great privilege to me to work with this president to help repair the damage that was here when we took office and i will do so as long as he asks me to do so, to the best of my ability, with great pride in this country and in him him. >> again, i think you're punting the blame. i think you're trying to
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position yourself as the -- >> you don't know me very well. >> and yet -- >> i will take -- >> we're not getting the whole story, we're getting a lame story in a monumental back door decision of bailout for which the american taxpayers will stay on the hook for huge amounts of money, even by estimates of the treasury department, there will be billions of dollars from this deal which either you should have been overseeing and you said you had knowledge of and you failed to take some steps to further protect the taxpayer interest, you were either incompetent on the job or you were not doing your job and knew what was taking place and tried to conceal it. i think that's grounds for your removal. >> congressman, i was there. i know what i was responsible for. i take full responsibility and i take great pride in those judgments. >> the gentleman's time has
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expired, the secretary may answer the question. >> he takes great pride in those judgments. >> i do. people have a right to disagree with them and have a right to go back and look at them with great care and analysis. i hope you give the same care and judgment to looking at those decisions in relate ro spect with the benefit of hindsight that we gave in making those decisions at that time. >> i thank the gentleman. it's my time to ask questions and i'm yielding myself five minutes. mr. geithner, the new york fed agreed to goldman sachs demands for billions to settle its counterparty claims with a.i.g., 100 cents on the dollar. but for more than a year before that, goldman and a.i.g. had en loc into a disputever thatoney g adman believed it would lose up to $2.5 billion if a.i.g. defaulted. did you know at the time that goldman sachs had concluded it
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would not receive 100 cents on the dollar from a.i.g. in the event of default. >> i did not and i don't know if that's true or not. >> goldman sachs said they didn't need the government's money. committee investigators learned that goldman's supplemental insurance policy would not pay in the event the u.s. government bailed out a.i.g. goldman's protection would pay only in the event a.i.g. defaulted. goldman had not anticipated the goldman bailout and had not put that contingency in the terms of its contract that put goldman at risk of losing the entire amount of disputed money once the government rescued a.i.g. did you have any knowledge at the time, did anyone at goldman ever admit to you or anyone working under you that goldman was not fully hatched if the government took over the risk
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and that goldman was at risk of losing $2.4 billion if the government build out a.i.g. and imposed less than 100 cents on the dollar. >> i'm not aware and i don't see how i could have been aware of the precise details of the hedging strategies of those firms. we made a careful effort to try to assess, working with the supervisors of all the institutions that had exposure to a.i.g. what their ex-pe shower would be. >> have you talked to lloyd blangfein, for example? >> in the goldman sachs case, in particular, i did ask them directly what their exposure was and asked them to show me what their internal information system showed about that exposure. >> we're going to -- the committee, if i may is going to have a series of questions to
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submit to you in writing so you'll be given an opportunity to have extensive answers. >> i'd be happy to answer those. >> once the government stepped in, there was only one way for goldman sachs to get a piece of the $2.5 billion that was if the new york fed voluntarily agreed to give it to them. if the new york fed had fought for taxpayers, goldman would have lost money it didn't have any hope of recovering, in spite of public statements to the contrary, the new york fed had a lot of leverage, a lot of leverage to negotiate a reduction which would have saved taxpayers billions. instead the new york fed took goldman sachs position in its dispute with a.i.g. and settled it fully with taxpayer money. mr. geithner, under 2340r78al circumstances, goldman sachs would have had to sue a.i.g. in court to receive the $2.5 million and settled for less than that.
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isn't it true that the new york fed gave goldman sachs a better deal than they could have expected from a.i.g. or any other market player at any other time? >> congressman if we had the ability, like we have for normal companies to put them through bankruptcy, if we had the ability like we had for banks to put them in a wind down process, we could have done many things. but under the laws of the land, we did not have the ability. so we faced a very simple choice. let a.i.g. default or prevent it. and there was no way financial, legal, or otherwise, we could have impoised haircuts, selectively default on any of those institutions, without the risk of downgrade and default. that is the only reason -- >> i just want to say, mr. secretary, when does saving the system require the taxpayers to give a better deal than the
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market would deliver? that's what the new york fed did. the government gave goldman sachs more than goldman sachs had any right to expect, while at the same time giving no financial relief whatever to millions of americans facing a foreclosure crisis. if that doesn't illustrate what the new york fed thought it was working for, or who it was working for, i don't know what does. you may respond and then my time is expired. >> cookman that is not true. it is unfair to the public servant -- >> what's not true? >> what you just said. >> what is not true? >> it's not true that the actions we took on a.i.g. were for the benefit of anybody but the millions of americans who at that point were suffering from the worst financial crisis since the great depression. the only way to help reduce that damage, protect that damage, was to fix the system and prevent catastrophic failure that would have made that crisis worse. that is the only motive that underpinned those actions.
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>> i thank the gentleman. my time is expired. mr. duncan. >> mr. secretary, you talked about looking at these events with hindsight and two men who did a researcher at the london school of economics -- >> could the gentleman speak closer to the mike so we can hear? >> simon johnson a professor at m.i.t. sloane school of management. they wrote in "the new republic" magazine on the september 23 issue, the fed may have mitigated our current crisis by tsaoing the seeds for the next one and shea -- and they said the fed exacerbated the possibility of another similar, larger crisis, as they say, quote, as a result, unless real reform happens soon, we face another bailout psych that will will be worse than what we just went through.
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i assume you know the american people are mad about the bailouts and the bonuses and salaries that have only about through this, what most people say see as a big government, big business duoply and they feel this big government, big business duoply has been manipulated to allow just mind-boggling salaries and bonuses and allowed very few elitists at the top to come out like robber barrens or to an extent not known in american history. because of big government, through the federal reserve system, our free market system was not allows to -- allowed to operate. it seems to most of us, it's not capitalism to -- when government uses billions and billions of taxpayer money to prop up a very few, well-connected firms. that leads me to two questions. one, has the treasury informed
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any of these financial giants we will not follow too big to fail policies in the future, and second, do you think we should limit these salaries, these ridiculously excessive salaries and bonuses being talked about even today in any of these firms that got taxpayer bailout funds? >> congressman, that was a very thoughtful question you asked exactly the right question. in a financial crisis you face a tragic choice. you can let it try to burn itself out and let the damage spread to all sorts of innocent victims, or you can act to prevent it. knowing that acting to prevent it will create the risk that in the future, investors will expect the government to step in and save firms from the consequences of failure. that is a dilemma at the heart of strategy and financial crisis. to stand back and let it burn, is irresponsible.
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it's what happened in the great depression. it happened -- it almost happened to this country. the moral, just, pragmatic, fair choice and this should be true if you're a republican or a democrat is to act to protect the innocent. but, as you said, wisely, by definition that creates a risk we tsao the seeds for future crises. that's why in the financial reform problem we all plan -- we all have a huge stake in trying to make sure we not just limit risk taking in the future but that investors and equity holders and creditors and managers and executives do not run these firms with the expectations the government will be there again. and that's why it's so important. we put in place types of bankruptcy mechanisms we have now for banks but we do not have for institutions like a.i.g. now, absolutely, we have made clear in public, in crystal clear terms in reform proposals moving through the congress that we need to thend
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expectation of too big to fail and government assistance. if you look at what we have done since we came to office, we have moved aggressively to pull the government out of these institutions to make sure we are not in these institutions a day longer than is necessary to replace the public capital with private capital and we've done that by forcing disclosure and forcing firms to recapitalize with private money, precisely because we want to limit the scale of the government's involvement and end this exceptional period as quickly as we could. that strategy has been very, very effective in ways that people on the right and the left should welcome. on the right, it means that the government is out much more quickly than anybody expected. on the left, people should know with confidence now we have far more resources now available to help address the long-term challenges we face as a country to reduce our long-term deficits and try to meet the things we need to do to fix what is broken in this country. you asked a very good question and i agree very much with the
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thrust of the concern. >> that was a good answer to my first question but the second question was do you think bonuses and salaries should be limited in any way in the firms that did receive government bailout money? >> the gentleman's time has expired but please answer the question. >> i think w457ped to compensation across this country and in the financial system was terribly catastrophic. it was a huge increase of income inequality over the united states over decades, in the financial system it was much worse and more consequential because it encouraged a level of risk taking that brought the system to the edge of collapse. it is deeply important that congress legislate reforms that will change how bankers are paid. government can't do it alone, though. shareholders and their representatives on the boards of these firms have to bring about much tougher limits now. i think that's very important
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to do and i hope we have the support from the congress to make sure we have a basis for doing that. >> the chair recognizes mr. lynch of massachusetts. that. >> chair recognizes mr. lynch of massachusetts. >> thank you. mr. secretary, i'm well aware of your family's commitment to public service. it makes it more difficult in a sense, but to ask these question, but i feel that the conduct of yourself and mr. paulson were not consistently on the side of the american taxpayer. i will explain why and give you two examples. we had the situation with bear stearns. the world is on the brink. we have a disaster. we are worried the about the system melting down. with your support and mr. paulson and mr. bernanke, we forced bear sterps's shareholders from a position i think that was a high of $172 a
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share in january, we forced them down to $2 a share because the american taxpayer money was in the bailout. that was something we supported by the fed, by the treasury because we felt that because the taxpayer was bailing them out that the shareholders should not be held harmless. you have a different situation here. slightly different. we have aig going under. these are credit default swaps. the money is going out to the counter parties. this is a pass through. the folks on the other side are goldman sacks. largely that's a principal beneficiary of all this. we don't negotiate a nickel, not a cent off of what they are
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getting. you are in the same position, supposed to be negotiating on behalf of the american people. you are saying oh, the regulations were different. let me tell you something. we were changing the rules every single day. we were taking action with the fed on the extraordinary circumstances. you had every opportunity, every opportunity to weigh in on behalf of the american people and make these people take a new deal. make them take a cut. you scalped the folks on bear stearns two cents on a dollar they got. the folks at goldman sax got 100 cents on a dollar. that is unacceptable. totally unacceptable. you had the opportunity and i think it was a terrible decision on your part and also on mr. paulson's part and he is up later. we will talk to him. how do you expect to -- look. the thing about changing over to the obama administration, you
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have the same people who will rely on you. when you are in one job and the american taxpayer is relying on the other job. i don't see a conflict. i really don't. you could have done the right thing by the american taxpayer because their money was being put into this deal. it stinks to the high heaven happened here and i don't like it. to top it off, the disclosure was not there. at the proper time to tell the american people and the congress what was going on. that is inexcusable and makes me doubt your commitment to the american people. it makes me doubt mr. paulson's commitment to the american people. i think the commitment to goldman sacks trumped the responsibility to the american people. >> i respect your opinion. i know you hold this opinion strongly, but i completely disagree.
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the american taxpayer would not be better off if the government made it possible to get more money. the american taxpayer would not have been better off if we had let aig default. none of us did anything. >> there is a difference between giving them 100 cents on a dollar and letting them default. you are creating new situations every week. we are letting the folks go to the discount window and changing the rules day by day and had the banks at a position where we could have exercised a lot of leverage and you chose not to do it. >> i disagree with you and i try to -- >> doesn't mean we have to pay them 100 cents on a dollar or let them fail. there increments here and you never used that leverage. >> not this n this case. >> in this case exactly. under 13-3, we could have taken different steps.
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>> 13-3 was for people to understand. it was authority given to the federal reserve to protect the financial system from broad based runs to lend against collateral to make sure they could fund. we did that because of the catastrophic damage caused by decades of previous financial crisis. we used that authority because we thought there was no other choice and -- >> when hank paulson said you are taking bailout money, he could have done the same thing. i yield back. >> if it would have been possible, we would have done it. why would i want to be sitting here before you today having to defend actions that look like
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they could have been avoided. there was nobody part of that decision. that would have been impossible. i try to be as careful as i can in explaining the reasons why it was not possible, but it comes down to the choice, if you are prepared to default, you can impose haircuts. if you can't accept the consequences of default, you do not have any leverage. it would have been vastly more expensive to the tax bill and much more damaging to people you and i care about and wake up every day warning about if you let that firm fail. there was no choice between default and the restructuring of those contracts. they left the taxpayer. >> there was no shared sacrifice for goldman sacks and the american people. >> the gentlemen's time has expired and call on mr. turner from ohio. >> thank you, mr. chairman. mr. geithner, an answer to one
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of my colleagues, you previously stated that you had never been a politician. i want to assure you from your answers that you are absolutely a politician. let me tell you -- >> do you mean that as a compliment? i can't tell. >> one of the answers that trouble me about the issue in your written testimony of the team would be catastrophic. you go on to talk about the insurance arms of aig. this is not the first hearing they had or other committees and you know we are aware of the independence of the insurance arms of aig. we have morris greenburg and the ceo of aig said the problems that came to a head did not originate in the businesses whichry main fundamentally strong. they had the head of the new york state insurance department, superintendent eric daenalo said this.
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before i go further, i would like to make one critical point. it is important for everyone and especially policy holders in the insurance companies to understand that the insurance companies which are regulated by new york and other states are solvent and have the funds to pay any policy holder claims. they had reserves and you did not bailout the insurance companies of aig, correct? >> yes, but if the parent had defaulted -- >> we go through your answer that if aig had failed, the catastrophic effect of all of the insurance companies that were on edge, they weren't bailed out. >> that's not true. maybe this is helpful to go back a little bit. when aig came to us that weekend, remember the fed is not there regularly. they had no responsibility of authority over how they ran their business. that was the province of other
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regulators. it was inconceivable to me that this was a problem we would have to try to solve. we have all the people we could including the commissioner and his staff and other people could look at. >> did you bail out the life insurance part of aig? did you bail out the life insurance arms of aig? >> i wouldn't use that term. the actions we heard. >> did you bail out the health insurance part? >> the actions protected those companies from the risk of failure. >> the testimony we received previously from those looking at those arms was that they were substantially sound and the catastrophic effects that you list, we would have all been concerned about. >> i disagree kpleemtly. people can come to different judgments, but the people who are responsible had no idea and you could note sprayed those
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companies from the companies that had taken risk. the tragic thing in the structure is they were so closely linked, they couldn't separate them. why would we not. if it was possible to separate the place that was taking the firm down to separate that cleanly, we would have done that in a second. much of what the management is trying to do today still 15 months later is designed to achieve that objective. they were tightly connected and the insurance supervisors who were responsible did not know the extent to which the financial basis of the insurance companies was so connected to the >> mr. secretary, as you were going through the bailouts and as we look to the counterparties and funds received, one of the biggest concerns i've had through all of this is i believe when it all becomes public, and it hasn't all become public yet,
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that this may turn out to be the largest theft in history, that there were parties participating in -- through mortgage-backed securities and through other credit default swaps to the de-frauding mr. and mrs. american citizen on main street who was receiving a loan on their ohm negative in loan to value ratio and had a greater risk than was being reported as the mortgage-backed securities and credit default swaps were passed up the chain. do you have any information of a.i.g. knowing that the loan-to-value ratios were inflailted and that the risks were being understated? because i truly believe that for -- throughout this system, that brought down the systematic mortgage crisis system in the process, that there was a significant amount of defrauding going on and that people need to be held accountable. i don't think in your system, where you're bailing out,
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you're taking into consideration those that were bad actors. >> i completely agree that this country allowed, under the laws of the land a terrible erosion in underwriting standards a terrible amount of predation and abusive practices in mortgage lending and consumer finance. we should never have let that happened. i hope you'll join with us in preventing that happen. >> let me just say something to all the members. you know, right now, we have 30-something members that still have not had an opportunity to question so we are going to have to stick to the time so i want you to respect that. i notice that a couple of situations where you're going over, but when the red light comes on, that's it system of i want you to know, we're now moving to mr. quigley of ohio.
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of illinois, i'm sorry. mr. quigley of illinois. is he here? ms. kaptur of ohio. >> thank you, mr. chairman. mr. secretary, welcome. can you provide for the record a copy of the recusal agreement you signed at the new york fed? >> i did not sign an agreement. i withdrew from day-to-day management at the fed and my colleagues both in washington and new york can attest to that. >> there was no formal agreement? >> no, i withdrew from and this was very important to do, again, no precedent for this, as sitting president of the new york fed to be nominated to be secretary of the treasury. i withdrew from involvement in monetary policy decision, i did not go to the meeting in december and i withdrew from all decisions about these individual cases involving the financial system and from day-to-day management. that was the right thing to do
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