dle. we have a linked to a -- link to a wordle of the president's speech. it blows up everything to how often they were in use. .

you use anything in the speech. click on 'am", and it continues this sentence. wordle.net. >> tomorrow during "washington journal," a chance for you to weigh and for the president's speech and reaction from capitol hill. jeb and selling from taxes -- hebserling from texas. we will take another couple of reporters. a republican from california and a democrat from california, all tomorrow on "washington

journal." up next, we want to rebroadcast the president's speech. it runs for one hour and 10 minutes from the house of representatives chamber. and then again the response from gov. bob mcdonnell. the sergeant at arms: madam speaker, the president of the united states.

the president: thank you, thank you, thank you. the speaker: members of congress i have the high privilege and distinct honor of presenting to you the president of the united states.

the president: thank you, thank you. thank you. thank you. thank you very much. thank you. thank you. thank you very much. thank you. thank you very much. thank you. thank you very much. thank you. please. madam speaker, vice president biden, memberses of -- members of congress distinguished guests and fellow americans our

constitution declares that from time to time the president shall give to congress information about the state of our union. for 220 years our leaders have fulfilled this duty. they've done so during periods of prosperity and trank quilt and they've done so in the midst of war and depression in moments of great strife and great struggle. it's it's tempting to look back on these moments and assume that our progress was inevitable that america was always destined to succeed. but when the union was turned back at bull run and the allies first landed at omaha beach victory was very much in doubt. when the market crashed on black tuesday and civil rights marches were beaten on bloody sunday,

the future was anything but certain. these were the times that tested the courage of our convictions and the strength of our union and despite all our dwegses and -- divisions you and disagreements, our hesitations and our fears, america prevailed because we chose to move forward as one nation as one people. again we are tested and again we must answer history's call. one year ago i took office amid two wars an economy rocked by a severe recession, a financial system on the verge of collapse and a government deeply in debt. experts from across the political spectrum warned that if we did not act we might face a second depression. so we acted immediately and

aggressively. and one year later the worst of the storm has passed. but the devastation remains. one in 10 americans still cannot find work many businesses have shuttered, home values have declined small towns and rural communities have been hit especially hard. and for those who had already known poverty life's become that much harder. this recession has also compounded the burdens that america's families have been dealing with for decades. the burden of working harder and longer for less. of being unable to safe enough to retire or help kids with college. so i know the anxieties that are out there right now. they're not new. these struggles are the reason i ran for president.

these struggles are what i've witnessed for years in places like elk heart indiana, gailsberg, illinois. i hear about them in letters that i read each night. the toughest to read are those written by children asking why they have to move from their homes, asking when their mom or dad will be able to go back to work. for these americans and so many others, change has not come fast enough. some are frustrated, some are angry. they don't understand why it seems like bad behavior on wall street is rewarded but hard work on main street i -- isn't. and why washington has been unable or unwilling to solve any of our problems. they're tired of the partisanship and the shouting and the pettiness. they know we can't afford it. not now.

we face big and difficult challenges. what the american people hope what they deserve, is for all of us, democrats and republicans, to work through our differences, to overcome the numbing weight of our politics. for while the people who sent us here have different backgrounds, different stories, different beliefs, the anxieties they face are the same. the aspirations they hold are shared. a job that pays the bills a chance to get ahead, moe of all the ability to give their children a better life. you know what else they share? they share a stubborn resilience in the face of adversity. after one of the most difficult years in our history, they remain busy, building cars and

teaching kids, starting businesses and going back to school. they're coaching little league and helping their neighbors. one woman wrote to me and said, we are strained but hopeful. struggling but encouraged. it's because of this spirit great decency and great strength, that i have never been more hopeful about america's future than i am tonight. despite our hardships, our union is strong. we do not give up.

we do not quit. we do not allow fear or division to break our spirit. in this new decade, it's time the american people get a government that matches their decency that embodies their strength. and tonight, tonight i'd like to talk about how, together we can deliver on that promise. it begins with our economy. our most urgent our most urgent task upon taking office was to shore up the same banks that helped cause this crisis. it was not easy to do. if there's one thing that has unified democrats and republicans and everybody in between, it's that we all hated the bank bailout. i hated it.

-- i hated it you hated it. it was about as popular as a root canal. when i ran for president, i promised i wouldn't just do what was popular. i would do what was necessary. if we had allowed the meltdown of the financial system unemployment might be double what it is today. more businesses would certainly have closed. more hope -- homes would have surely been lost. so i supported the last administration's efforts to create the financial rescue program. and when we took that program over we made it more transparent and more accountable, and as a result, the markets are now stabilized and we have recovered most of the money we spent on the banks.

most, but not all. to recover the rest i propose a fee on the biggest banks. now, i know wall street isn't keen on this idea. but if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescue them in their time of need. as we stabilize the financial system we also took steps to

get our economy growing again. save as many jobs as possible. and help americans who had become unemployed. that's why we extended or increased unemployment benefits for more than 18 million americans, made health insurance 65% cheaper for families who get coverage through cobra, and passed 25 different tax cuts. let me repeat. we cut taxes. we cut taxes for 95% of working families. we cut taxes for small businesses. we cut taxes for first-time home buyers. we cut taxes for parents trying to care for their children. we cut taxes for eight million americans paying for college. i thought i'd get some applause on that one.

as a result -- as a result, millions of americans had more to spend on gas and food and other necessities, all of which helped businesses keep more workers. and we haven't raised income taxes by a single dime on a single person. not a single dime. because of the steps we took, there are about two million americans working right now who would otherwise be unemployed.

200,000 work in construction and clean energy. 300,000 are teachers and other education workers. tens of thousands are cops firefighters, correctional officers, first responders. and we're on track to add another 1.5 million jobs to this total by the end of the year. the plan that has made all of this possible from the tax cuts to the jobs is the recovery act. that's right. the recovery act. also known as the stimulus bill. economists on the left and right say this bill has helped save jobs and avert disaster. but you don't have to take

their word for it. talk to the small business in phoenix that will triple its work force because of the recovery act. talk to the window manufacturer in philadelphia who said he used to be skeptical about the recovery act until he had to add two more work shifts because of the business it created. talk to the single teacher raising two kids who was told by a principal in the last week of school that because of the recovery act she wouldn't be laid off after all. there are stories like this all across america. after two years of recession, the economy is growing again. retirement funds have started to gain back some of their value. businesses are beginning to invest again and slowly some are starting to hire again. but i realize for every success story, there are other stories, of men and women who wake up with the anguish of not knowing

where their next paycheck will come from, who send out resumes week after week and hear nothing in response. that is why jobs must be our number one focus in 2010 and that's why i'm calling for a new jobs bill tonight. now, the true engine of job creation in this country will always be america's business.

the government can create the conditions necessary for businesses to expand and hire more workers. we should start where most new jobs do, in small businesses. companies that begin when -- companies that begin when an entrepreneur -- when an entrepreneur takes a chance on a dream or a worker decides it's time she became her own boss. through sheer grit and determination, these companies have weathered the recession and are ready to grow. when you talk to small business owners in allentown pennsylvania, or in ohio, you find out that even though banks on wall street are lending again, they're mostly lending to bigger companies. financing remains difficult for small business owners across the country. even those that are making a profit. so tonight i'm proposing that we take $30 billion of the

money wall street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. >> i'm also proposing a new small business tax credit, one that will go to over one million small businesses who hire new workers or raise wages. while we're at it let's also eliminate all capital gains taxes on maul business investments and provide a tax incentive for all large business and all small business to invest in new plants and equipment.

next we can put americans to work today building the infrastructure of tomorrow. from the first railroads to the interstate highway systems our nation has always been built to compete. there's no reason europe or china should have the fastest train or the new factories that manufacturer clean energy products. tomorrow, i'll visit tampa florida, where workers will soon break ground on a new high speed railroad funded by the recovery act. there are projects like that all across this country that will create jobs and help move our nation's goods, services and information.

we should put more americans to work building clean energy facilities and give rebates to americans who make their homes more energy efficient with support to clean energy jobs. and tone courage these and other businesses to stay within our borders, it is time to finally slash the tax breaks for companies that ship our jobs overseas and give those tax breaks to companies that create jobs right here in the united states of america. now the house has passed a jobs bill that includes some of these steps. as the first order of business this year, i urge the senate to do the same and i know they

will. people are out of work. they're hurting. they need our help. i want a jobs bill on my desk without delay. but the truth is these steps won't make up for the seven million jobs that we've lost over the last two years. the only way to move to full employment is to lay a new foundation for long-term economic growth and finally address the problems that america's families have confronted for years. we can't afford another so-called economic expansion like the one from the last decade. what some call the lost decade. where jobs grew more slowly than during any prior expansion

where the income of the average american household declined while the cost of health care and tuition reached record highs. where prosperity was built on a housing bubble and financial speculation. from the day i took office i've been told that addressing our larger challenges is too ambitious. such an effort would be too contentious. i've been told that our political system is too gridlocked and we should just put things on hold for a while. for those who make these claims i have one simple question, how long should we wait? how long should america put its future on hold? you see, washington has been telling us to wait for decades. even as the problems have grown worse.

meanwhile china's not waiting to revamp its economy germany's not waiting, india's not waiting. these nations -- they're not standing still these nations aren't playing for second place they're putting more emphasis on math and science, they're rebuilding their infrastructure they're making serious investments in clean energy because they want those jobs. well, i do not accept second place for the united states of america.

the president: as hard as it may be as uncomfortable and contentious as the debates may become, it's time to get serious about fixing the problems that are hampering our growth. now one place to start is serious financial reform. look, i'm not interested in punishing banks, i'm interested in protecting our economy. a strong healthy financial market makes it possible for businesses to act -- access credit and create new jobs it channels the savings of families with investments that raise incomes. but that can only happen if we guard against the same recklessness that nearly brought down our entire economy. we need to make sure consumers and middle class families have the information they need to make financial decisions. we can't allow financial institutions including those

that take your deposits, to take risks that threaten the whole economy. now the house has already passed financial reform with many of these changes. and -- and the lobbyists are trying to kill it. well, we cannot let them win this fight and if the bill that ends up on my desk does not meet the test of real reform, i will send it back until we get it right. we got to get it right. next, we need to encourage american innovation. last year we made the largest investment in basic research funding in history. an investment that could lead to the world's chief -- cheapest

owe slar -- solar cells or treatment that kills cancer cells but leaves healthy ones untouched. and no area is more ripe for such innovation than energy. you can see the results of last year's investments in clean energy in the north carolina company that will create 1,200 jobs nationwide helping to make advanced batteries, or in the california business that will put 1,000 people to work making solar panels. but to create more of these clean energy jobs we need more production, more efficiency, more incentives and that means building a new generation of safe, clean nuclear power plants in this country it means making tough decisions about opening

new offshore areas for oil and gas development it means continued investment in advanced biofuels and clean coal technologies and, yes, it means passing a comprehensive energy and climate bill with incentives that will finally make clean energy the profitable kind of energy in america. i'm grateful to the house for passing such a bill last year and this year -- this year i'm eager to help advance the bipartisan effort in the senate.

i know there have been questions about whether we can afford such changes in a tough economy. i know that there are those who disagree with the overwhelming scientific evidence on climate change. but here's the thing, even if you doubt the evidence providing incentives for energy efficiency and clean energy are the right thing to do for our future because the nation that leads the clean energy economy will be the nation that leads the global economy and america must be that nation. third, we need to export more of our goods.

because the more products we make and sell to other countries, the more jobs we support right here in america. so tonight we set a new governor doyle, we will double our exports -- set a new goal, we will double our exports to support two million jobs in america. to help meet this goal we're launching a national export initiative that will help farmers and small businesses increase their exports and reform export controls consistent with national security. we have to seek new markets aggressively just as our

competitors are. if america sits on the sidelines while other nations sign trade deals we will lose the chance to create jobs on our shores. but realizing those benefits also means enforcing those agreements so our trading partners play by the rules. and that's why we'll continue to shape a doha trade agreement that opens -- that opens markets and why we'll strengthen our trading with people in asia and other key areas like panama and colombia.

fourth, we need to invest in the skills and education of our people. now this year this year we've broken through the stale mate between left and right by launching a national competition to improve our schools. and the idea here is simple. instead of rewarding failure, we only reward success. instead of funding the status quo, we only invest in reform. reform that raises student achievement, inspiring students to compel in math and science, and turns around tailing -- failing school that steal the future of too many young americans from rural communities to the inner cities. in the 21st century the best anti-poverty program around is a world class education.

and in this country the success of our children cannot depend more on where they live than on their potential. when we renew the elementary and secondary education act, we will work with congress to expand these reforms to all 50 states. still, in this economy the high school paloma no longer guarantees a good job. that's why i urge the senate to follow the house and pass a bill that will revitalize our community colleges, which are a career pathway to the children of so many working families. to make college more affordable, this bill will finally end the

unwarranted taxpayer subsidies that go to bankser to student loans -- banks for student loans. instead, let's take that money and give families a $10,000 tax credit for four years of college and increase pell grants. and let's tell another one million students that when they graduate they will be required to pay only 10% of their income on student loans and all of their debt will be forgiven after 20 years and forgiven after 10 years if they choose a career in public service. because in the united states of america, no one should go broke because they chose to go to college. and by the way it's time for colleges and universities to get serious about cutting their own costs. because they, too, have a

responsibility to help solve this problem. now, the price of college to yousition just one of the burdens facing the middle class. that's why last year i asked vice president biden to chair a task force on middle class families. that's why we're nearly doubling the child care tax credit and making it it easier to save for retirement by giving access to every worker a retirement account and expanding the tax credit for those who start a nest egg. that's why we're working to lift the value of a family's single largest investment their home. the steps we took last year to shore up the housing market have allowed millions of americans to take out new loans and save an average of $1,500 on mortgage payments. this year we will step up refinancing so that homeowners can move in a more -- into more affordable mortgages. and it is precisely to relieve

the burden on middle class families that we still need health insurance reform. we do. now let's clear a few things up. i didn't choose to tackle this issue to get some legislative victory under my belt and by now it should be fairly obvious that i didn't take on health care because it was good politics. i took on health care because of

the stories i've heard from americans with pre-existing conditions whose lives depend on getting coverage patients who have been denied coverage families, even those with insurance, who are just one illness away from financial ruin. after nearly a century of trying democratic administrations, republican administrations, we are closer than ever to bringing more security to the lives of so many americans. the approach we've taken would protect every american from the worst practices of the insurance industry. it would give small businesses and uninsured americans a chance to choose an affordable health care plan in a competitive market. it would require every insurance plan to cover preventive care and by the way i want to acknowledge our first lady, michelle obama, who this year is creating a national movement to tackle the epidemic of childhood obesity and make kids healthier.

thank you. she gets embarrassed. our approach would preserve the right of americans who have insurance to keep their doctor and their plan. it would reduce costs and premiums for millions of families and businesses and according to the congressional budget office, the independent organization that both parties cited as the official scorekeeper for congress our approach would bring down the deficit by as much as $1 trillion over the next two decades.

still this is a complex issue and the longer it was debated, the more skeptical people became. i take my share of the blame for not explaining it more clearly to the american people. i know with all the lobbying and horse trading, the process left most americans wondering what's in it for me? but i also know this problem is not going away. by the time i'm finished speaking tonight more americans will have lost their health insurance. millions will lose it this year. our deaf silt will grow. premiums will go up. patients will be denied the care they need. small business owners will continue to drop coverage all together. i will not walk away from these americans and neither should the people in this chamber.

so, as temperatures cool i want everyone to take another look at the plan we proposed. there's a reason why many doctors, nurses and health care experts who know our system best consider this approach a vast improvement over the status quo. but, if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen medicare for seniors and stop insurance company abuses, let me know. let me know.

i'm eager to see it. here's what i ask congress, though. don't walk away from reform. not now. not when we are so close. let us find a way to come together and finish the job for the american people. let's get it done. let's get it done. now, even if health care reform would reduce our deficit, it's not enough to dig us out of a massive fiscal hole in which we find ourselves. it's a challenge that makes all others that much harder to solve and one that's been subject to a lot of political posturing.

so let me start the discussion of government spending by setting the record straight. at the beginning of the last decade the year 2000 america had a budget surplus of over $200 billion. by the time i took office, we had a one-year deficit of over $1 trillion and projected deficits of $8 trillion over the next decade. most of this was the result of not paying for two wars, two tax cuts, and an expensive prescription drug program. on top of that, the effects of the recession put a $3 trillion hole in our budget. all this was before i walked in the door. now -- now just stating the

facts. now, if we had taken office in ordinary times, i would have liked nothing more than to start bringing down the deficit. but we took office amid a crisis. our efforts to prevent a second depression have added another $1 trillion to our national debt that, too, is a fact. i'm absolutely convinced that was the right thing to do. but, families across the country are tightening their belts and making tough decisions. the federal government should do the same.

so tonight i'm proposing specific steps to pay for the trillion dollars that it took to rescue the economy last year. starting in 2011, we are prepared to freeze government spending for three years. spending related to our national security, medicare, medicaid, and social security will not be affected. but all other discretionary government programs will. like any cash-strapped family, we'll work within a budget to invest in what we need and sacrifice what we don't. if i have to enforce this discipline by veto i will.

we will continue to go through the budget line by line page by page to eliminate programs we can't afford and don't want. we've already identified $20 billion in savings for next year. to help working families we'll extend our middle class tax cuts but at a time of record deficits, we will not continue tax cuts for oil companies investment fund managers and for those making over $250,000 a year. we just can't afford it. now, even after paying for what we spent on my watch, we'll still face the massive deficit we had when i took office. more importantly, the cost of medicare medicaid and social security will continue to skyrocket. that's why i've called for a bipartisan fiscal commission modeled on a proposal by

republican judd gregg and democrat tim conrad. this can't be one of those gimmicks that lets us pretend we saw the problem. -- pretend we solve the problem. they will have to present solutions by a certain date. yesterday, the senate blocked this bill. so i will issue an executive order that will let this bill go forward because i refuse to pass this problem on to another generation. and, when the vote comes tomorrow, the senate should restore the pay as you go law that was a big reason for why we had record surpluses in the 1990's.

now, i know some in my own party will argue we can't address the deficit or freeze government spending when so many are still hurting. i agree. which is why this freeze won't take effect until next year when the economy is stronger. that's how budgeting works. but understand understand if we don't take meaningful steps to rein in our debt, it could damage our markets, increase the cost of borrowing and jeopardize our recovery, all of which would have a worse effect on job growth and family incomes. from some on the right, i expect we'll hear a different argument. if we make fewer sacrifices for

our people maintain the status quo on health care, our deficits will go away. the problem is that's what we did for eight years. that's what helped us into this crisis. that's what helped lead to these deficits. we can't do it again. rather than fight the same tired battles that have dominated washington for decades, it's time to try something new. let's invest in our people without leaving them a mountain of debt. let's meet our responsibility to the citizens who sent us here. let's try common sense. a novel concept. to do that we have to

recognize that we face marne deficit of dollars right now -- face more than a deficit of dollars right now we face a deficit of trust. deep and corrosive doubts about how washington works that have been growing for years. to close that credibility gap, we have to take action on both ends of pennsylvania avenue. to end the influence of lobbyist, do our work openly to give our people the government they deserve. now that's what i came to washington to do. that's why for the first time in history my administration posts on our white house visit -- posts all our white house visitors online. that's why we excluded lobbyists from policymaking jobs. but we can't stop there. it's time to require lobbyists

to disclose each contact they make on behalf of a client with my administration or with congress. it's time to put strict limits on the contributions the lobbyists give to candidates for federal office. with all due deference to separation of pewers, last week the supreme court reversed a century of law that i believe will open the flood gates for special interests including foreign corporations, to spend without limit in our elections. i don't think american elections should be bankrolled by america's most powerful interests or worse, by foreign entities. they should be decided by the american people and i urge democrats and republicans to pass the bill that helps

correct some of these problems. i'm also calling on congress continue down the path of earmark reform. democrats and republicans. democrats and republicans. you've trimmed smoft spending, embraced some meaningful change but restoring the public trust demands more. for example some members of congress post some earmark requests online. tonight i'm calling on congress to publish all earmark requests on a single website before there's a vote so that the american people can see how their money is being spent.

of course, none of these reforms will even happen if we don't also reform how we work with one another. now, i'm not naive. i never thought that the mere fact of my election would usher in peace and harmony and some post-partisan era. i knew that both parties had divisions that are deeply entrenched. on some issues that are simply philosophical differences that will always cause us to part ways. these disagreements about the role of government in our lives, about our national powers and our national security, they've been taking place for over 200 year they're the very essence of our democracy. but what frustrates the american people is a washington where every day is election day. we can't wage a perpetual

campaign where the only goal is to see who can get the most embarrassing headlines about the other side. a belief that if you lose i win. neither party should delay or obstruct every single bill just because they can. the confirmation of -- i'm speaking to both parties now. the confirmation of well qualified public servants shouldn't be held hostage to the pet projects or grudges of a few individual senators. washington may think that saying anything about the other side, no matter how false no matter how malicious, is just part of the game. but it's precisely such politics that has stopped either party

from helping the american people. worse yet, worse yet it's stalling further division among our citizens, further distrust in our government. so, no, i will not give up on trying to change the tone of our politics. i know it's an election year and after last week it's clear that campaign fever has come even earlier than usual. but we still need to govern. to democrats, i would remind that you we still have the largest majority in decades and the people expect to us solve problems not run for the hills. and if the republican leadership is going to insist that 60 votes

in the senate are required to do any business at all in this town, a super majority then the responsibility to govern is now yours as well. just saying no to everything may be good short-term politics but it's not leadership. we were sent here to serve our citizens, not our ambitions. so let's show the american people that we can do it together. this week this week i'll be addressing a meeting of the house republicans. i'd like to begin monthly meetings with both democratic and republican leadership. you i know you can't wait -- i know you can't wait. now throughout our history, no

issue has united this country more than our security. sadly, some of the unity we felt after 9/11 have dissipated. we can argue all we want about who's to blame for this, but i'm not interested in relitigating the past. i know that all of us love this country, all of us are committed to its defense so let's put aside the schoolyard taunts about who's tough, let's reject the false choice between protecting our people and upholding our values, let's leave behind the fear and division and do what it takes to defend our nation and forge a more hopeful future for america and for the world.

that's the work we began last year. since the day i took office we've renewed our focus on the terrorists who threatened our nation, week of made substantial investments in our homeland security and disrupted plots that threatened to take american lives. we are filling unacceptable gaps revealed by the failed christmas attack with better airline security and switcher action on our intelligence. we prohibited torture and strengthened partners from the pacific to south asia to the arabian peninsula. and in the last year hundreds of al qaeda fighters and affiliate it's, including many senior leaders, have been captured or killed. far more than in 2008. and in afghanistan we're increasing our troops and training afghan security forces so they can begin to take the lead in july of 2011 and our

troops can begin to come home. we will reward the governance work to reduce corruption and support the rights of all afghans, men and women alike. allies and partners have increased their own commitments and who will come together tomorrow in london to reaffirm our common purpose. they -- there will be difficult days ahead but i am absolutely confident we will succeed. as we take the fight to al qaeda we are responsibly leaving iraq to its people. as a candidate, i promised that i would end this war and that is what i'm doing as president. we will have all of our combat troops out of iraq by the end of this august.

we will support -- we will support the iraqi government we will support the iraqi government as they hold elections and we will continue to partner with the iraqi people to promote regional peace and prosperity. but make no mistake, this war is ending and all of our troops are coming home. tonight all of our men and women in uniform in iraq, in afghanistan, and around the world, this testify to know that we, that they have our respect, our gratitude, our full support and just as they must have the resources they need in war, we

all have a responsibility to support them when they come home. that's why we made the largest increase in investments for veterans in decades. last year. that's why we're building a 21st century v.a. and that's why michelle has joined with joe biden to fornl a national commitment to support military -- forge a national commitment to support military families.

even as we prosecute two wars, we're also confronting perhaps the greatest danger to the american people, the threat of nuclear weapons. i've embraced the vision of john f. kennedy and ronald reagan through a strategy that reverses the spread of these weapons and seeks a world without them. to reduce our stockpiles and launchers, while ensuring our deterrent, the united states and russia are completing negotiations on the farthest reachings arms control treaty in nearly two decades. and at april's nuclear security summit, we will bring 44 nations here together here in washington, d.c., behind a clear goal, securing all vulnerable nuclear materials around the world in four years so that they never fall into the hands of

terrorists. now these diplomatic efforts have also strengthened our hand in dealing with those nations that insist on violating international agreements in pursuit of nuclear weapons. that's why north korea now faces increased isolation and stronger sanctions, sanctions that are being vigorously enforced. that's why the international community is more united and the islamic republic of iran is more isolated and as iran's leaders continue to ignore their obligations, there should be no doubt they too will face growing consequences. that is a promise. that's the leadership we are

providing, engagement that advances the common security and prosperity of all people. we're working through the g-20 to sustain a lasting global recovery we're working with muslim communities around the world to promote science and education and innovation. we have gone from a bistandard to a leader in climate change. we're helping developing countries to feed themselves and continuing the fight against hiv-aids. and we are launching a new initiative that will give us the capacity to respond faster and more effectively to bioterrorism or infectious disease, a plan that will counter threats at home and strengthen public health abroad. as we have for over 60 years america takes these actions because our destiny is connected to those beyond our shores. but we also do it because it is right. that's why as we meet here

tonight over 10,000 americans are working with many nations to help the people of haiti recover and rebuild. that's why we stand with the girl who yearns to go to school in afghanistan, why we support the human rights of the women marching through the streets of iran, why we advocate for the young man denied a job by corruption in guinea. for america must always stand on the side of freedom and human dignity. always.

abroad america's greatest source of strength has always been our ideals. the same is true at home. we find unity in our incredible diversity, drawing on the promise enshrined in our constitution. the notion that we're all created equal, that no matter who are you or what you look like, if you abide by the law, you should be protected by it. if you adhere to our common values, you should be treated no different than anyone else. we must continually renew this promise. my administration has a civil rights division that is once again prosecuting civil rights violations and employment discrimination. we finally strengthed -- strengthened -- we finally strengthened our laws to protect against crimes driven by hate. this year -- this year i will

work with congress and our military to finally repeal the law that denies gay americans the right to serve the country they love because of who they are. it's the right thing to do. we're going to crack down on violations of equal pay laws so that women get equal pay for an equal day's work. and we should continue the work of figuring our broken immigration system, to secure our borders and enforce our laws and ensure that everyone who place by the -- plays by the rules can contribute to our economy and enrich our nation.

in the end it's our ideals, our values, that built america. values that allowed to us forge a nation made up of immigrants from every corner of the globe. values that drive our citizens still. every day americans meet their responsibilities to their families and their employers, time and again they lend a hand to their neighbors and give back to their country. they take pride in their labor and are generous in spirit. these aren't republican values or democratic values that they're living by, business values or labor values, they're american values. unfortunately, too many of our

citizens have lost faith that our biggest institutions, our corporations our media and yes, our government still reflect these same values. each of these institutions are full of honorable men and women doing important work that help ours country prosper. but each time a c.e.o. rewards himself for failure or a banker puts the rest of us at risk for his own selfish gain people's doubts grow. each time lobbyists game the system or politicians tear each other down instead of lifting this country up, we lose faith. the more that tv pundits redeuce serious debates to silly arguments, big issues into sound bites, our citizens turn away. no wonder there's so much cynicism out there.

no wonder there's so much disappointment. i campaigned on the promise of change. change we can believe in, the slogan went. right now i know there are many americans who aren't sure if they still believe we can change. or that i can deliver. but remember this. i never suggested that change would be easy. or that i could do it alone. democracy in a nation of 300 million people can be noisy and messy and complicated. when you try to do big things and make big changes it stirs passions and controversy. that's just how it is. those of us in public office can respond to this reality by playing it safe. and avoid telling hard truths. and pointing fingers.

we can do what's necessary to keep our poll numbers high and get through the next election. instead of doing what's best for the next generation. but i also know this. the people that made that decision 50 years ago, or 100 years ago, or 200 years ago we -- if people had made that decision 50 years ago, or 100 years ago or 200 years ago we wouldn't be here. the only reason we're here is because generations of americans were unafraid to do what was hard to do what was needed even when success was uncertain. to do what it took to keep the dream of this nation alive for their children and grandchildren. our administration has had some political setbacks this year. some of them were deserved. but i wake up every day knowing

that they are nothing compared to the setbacks that families all across this country have faced this year. what keeps me going, what keeps me fighting is that despite all these setbacks that spirit of determination and optimism that fundamental decency that has always been at the core of the american people, that lives on. it lives on in the struggling small business owners who -- owner who wrote to me of his company, none of us, he said, are willing to consider even slightly that we might fail. it lives on in the woman who said that even though she and her neighbors have felt the pain of recession -- we are strong we are resilient, we are americans.

it lives on in the 8-year-old boy in louisiana who just sent me his allowance and asked if i would give it to the people of haiti. and it lives on in all the americans who dropped everything to go someplace they've never been and pull people they've never known from the rubble. prompting chants of u.s.a. u.s.a., u.s.a. when another life was saved. the spirit that has sustained this nation for more than two sergeries lives on in -- more than two centuries lives on in you, its people. we have finished a difficult year. we have come through a difficult decade. but a new year has come. a new decade stretches before us. we don't quit. i don't quit. let's seize this moment to

start anew to carry the dream forward and strengthen our union once more. thank you. god bless you. and god bless the united states of america. thank you.

>> we will get reaction from those blogin tonight and some of the stories as they have been posted. now the republican response. here is the virginia governor,

bob macdonald. >> i am standing here in the virginia house. this building was designed by the thomas jefferson. i am joined by republicans to address the challenges. we were encouraged to hear president obama speak about the need to create jobs.

all americans should be able to find and keep meaningful work. many of us here tonight and many of you watching have family or friends that have lost jobs. in fact, one in 10 americans is unemployed. that is unacceptable. we face the highest compliment rate in years. bringing new jobs is a top priority. we must enact policies that

innovation so america can better compete with the world. what government should not do is pile on more taxes. it was thomas jefferson who called for a wise and frugal government the. the federal government is trying to do too much. we were told that massive new spending would create more jobs immediately and hold unemployment below 8%. in the past year, more than 3 million people have lost their jobs. the amount of debt is on pace to triple in 10 years.

it is now over $100,000 per household. this is unsustainable. the president's a freeze on spending is a laudable step but a small one. the circumstances of our time demand that we reconsider and restored the proper limited role of government at every level. [applause] without reform, the excessive growth of government threatens our liberty and prosperity. the american people have made clear that they want leaders to listen and then act on the issues most important.

we want action, not partisanship. [applause] there is much common ground. all americans agree that we need health care that is accessible and high quality. most americans do not want to turn over that to the federal government. we will implement common sense reforms. we will let people buy health insurance across state lines and and frivolous lawsuits -- and andend of frivolous lawsuits. we will make sure that our

proposals are available on-line. we welcome your ideas. all americans agree that this nation must become more energy independence and secure. we are blessed with a vast national resources and we must use them all. advances in technology can unleash more natural gas and that will lower your utility bills. in virginia, we have the opportunity to become the first date on the east coast to explore and produce natural gas offshore. [applause]

this administration's policies are delaine offshore production, and during nuclear energy and threatening job killing taxes. now is the time to adopt energy policies that create jobs and lower energy prices. [applause] all americans agree that a young person needs a world-class education to compete in the global economy. as a young child, my father told me if you want a good job, you need an education.

a child's education should be determined by the intellect and work ethic not by said code. -- by zip code. [applause] all americans agree that we must maintain a strong national defense. the kurds and success of our armed forces as allowing us to draw down troop levels in iraq as the government is increasingly able to step up. my oldest daughter is an army platoon leader. i am personally grateful for the service and sacrifice of all of our men and women in uniform and a grateful nation thanks them.

[applause] we applaud president obama decision to deploy 30,000 more troops to afghanistan. we agreed that a victory there is imperative for national security. we have serious concerns over the recent steps the administration has taken regarding suspected terrorists. the foreign terror suspect was given rights and any stopped giving information. we should be spending taxpayer dollars to defeat terrorists, not to protect them. [applause]

here at home, government must help to foster society in which all of our people can use their god-given talents and liberty to pursue their dreams. republicans know that government cannot guarantee individual outcomes. we strongly believe that it must guarantee equality of opportunity for all. that exist in a society that promotes individual achievement free-market, strong families. many people are concerned about exerting greater control over banks, car companies, health care. this will not create more employment. overtaxing investors will not spur more investment. top-down decision making should not replace the decisions of free people in a free market or

undermine the proper role of state and local governments. as our founder stated government closest to the people governs best. [applause] no government program can ever replace the actions of caring americans freely choosing to help one another. the scriptures say too much is given, much will be required. as the most generous and prosperous nation on earth, it is heartwarming to see americans giving time and money to the people of haiti. thank you for your ongoing compassion. [applause]

some people say they are afraid that the americans is not the great land of promise that it has been. it must always be a land where the dirty and fell you are respected an innocent human life are protected. government should have this clear goal where opportunity is absent, we should created and if it is limited, we must expand it if in this unequal, we must make it open to everyone. [applause]

our founders pledged their lives, their fortunes, and their sacred honor to create this great nation. we should pledge as democrats republicans, and independence americans all to work together to lead this nation to a better place than we founded. god bless you and god bless this great land of america. thank you very much. [applause] >> less than two weeks ago bob macdonald was sworn in as the 71st governor. he delivered the republican response. with that, we want to get your reaction from what you heard from the president and the republicans. here are the numbers.

we are getting a call from mineral wells, texas. caller: if you wanted to actually get to the response of the american people, you should run at the airing of the speech and then give time for people to respond. now that i got through and i am a mckinney supporter. i did not vote for him, i voted for obama. -- i am a mccain supporter. i agree with the speech that he gave. as far as gov. macdonald, when he was talking about his kids and his daughters, i would rather that he address those people who did not have their children in front of them because they died in the

war. >> thank you for that comment. senator mccain said that during his first year in office, the president and congress have amassed a four trillion dollar deficit. he says this is growing each day. he went after congressional earmarks. next is april from missouri. we will go to betty from illinois. caller: i think that to the president did a wonderful speech. i'm glad he will continue with the health insurance. my daughter fell on christmas and she thought that she had just broken her ankle but it turned out that she had fractured it. >> she thought that she had sprained her ankle but it turned out she had fraction it.

no one would like to put a cast on her because she does not have insurance. that is why i hope the president continues to talk about and get this passed. as far as the people, i think i counted three african-americans in the whole audience for the gop. >> thank you for the call. antonio joining us from indiana. good evening. caller: public like to give my respect to the president and to the republicans and the democrats. i think for those who are educated those in the small towns and areas of our country they should be able to come out and speak their differences of

opinion. i am ready to take a stand. if you need me, i am here. but in order for me to get there, i need to know where to go. everyone should have a great amount of access to be able to reach out and help. >> tomorrow, we will continue the discussion and get reaction from a number of members of congress including a democrat from california who is the house share of the house democratic caucus. also we will get commentary from congressman frank of new jersey. also congressman phil row of tennessee. brad sherman of california. also dan lundgren.

>> i voted for mccain, i am a republican. i thought that he gave an excellent speech. hopefully, we will all be on the right track now. >> san jose, california. caller: i think the president did a great job. i've spent the last year working very hard to keep my people employed and not lay anyone off. i'm gratified to hear the president say that they will start releasing assets and to keep my people employed. the governor of virginia needs to remember that this is a great country. it is companies like mine that will keep the country going. i will tell you that there is no better country than america to be in. i was relieved and honored to

hear the president said that we are one people. thank you. >> one of the stories that has been talked about for the past hour has been posted on the politico's. justice alito mouth the words "not true" when the president criticized the decision of the supreme court. >> it is time to for strict limits on the contributions that are given for campaign food federal office. with all due deference to the separation of powers, last week,

the supreme court allowed corporations to spend without limit. [applause] [no audii don't think that american elections should be bankrolled by america's most powerful interests. or even worse, by foreign entities. >> justice alito mouthing the words "not true." they're trying to find a way to legislate a round that decision. they expect to release a plan that would impose new restrictions. back to your phone calls.

we are being joined from honolulu. >>caller: well, i think it is the same old show we have been watching for the past year. does he seem like he is still campaigning? to me, it does. on just thinking that we don't need any more of that. i just want to do the right thing. we are still spending money. this thing about the freeze, that is kind of a farce. >> ok, thank you. when this network began 30 years ago, your reaction was giving us a phone call. a lot of this began to change with the advent of things like facebook and twitter. we are keeping track of some of this.

>> i want to show you what is happening on facebook. if you go to our website, you can click to our facebook page and become a fan. we already have nearly 500 people who have commented in our open to read. -- in our (thread. we are aggregating tweets by senators and u.s. house members. you can follow our lists. some of them have been doing this all might including connie mack. his last plot was that obama suggesting that the people were not listening on health care was the reason for his failure. from senator gillibrand, she said that she is happy that

president obama proposed a small business tax credit. that is the best way to spur the economy. jim dementint said that he appreciated that the president focused on unemployment and debt. to lieberman said that to the president changed the subject from health care to the economy fiscal responsibility, and the need for more bipartisanship. senator lieberman just joined twitter today. he put out a statement today. if you want to contribute your comments we have a tag that you can use. it is #cspansotu.

the thing that is the most popular right now are the wo rdles we have created. the entire speech is represented did. government mcdonald said government opportunity americans, must, jobs, energy, more than any other words. you can find president obama's. you can find those for the president's last two speeches before congress. >> we will check back with you and you can tell us what this is

like. joe lieberman in interviews indicated that he would be willing to join the republican party. he is up for reelection in 2012. we're getting our call from a rock wall, texas. caller: i am not a democrat or a republican. i don't agree with what obama said. i don't believe his speech. i don't believe the republican response. there's not really a parsonperson that i agree with. we need people who want to protect our national security protect the constitution. >> the president travels to tampa, fla. to mark. he will be joined by vice president joe biden. then he will be joined by

charlie crist. after that, he will go to new hampshire. what did you think of this speech? caller: i thought that he gave an excellent presentation. i like the other state of the unions with president bush even with gov. mcdonald. he was very precise. when he mentioned the jobs and income and employment and housing and security, he mentioned he was very precise and open. you have to look at the point. he said he had two wars, he had a fiasco in wall street, he

almost had a collapse of the economy. this is like going and purchasing a house that just burned down and he has to rebuild it. i think he is a very good leader and i think that if he continues, we should have a country. >> was there a phrase or something in this speech that struck a chord with you? >> well, i like the idea that about generations. even in a time of success or failure, you can still get ahead in america. we are at a time now that americans are disillusioned with the the leadership. i think that they are trying to solve his problems and i think

that we can work together and try to achieve our interests. we can solve these problems. >> i will stop you there because we have others waiting. the democratic line, you are next. caller: i believe that he has the interest of the country at heart. >> go ahead. caller: i felt that the president's speech was more of the same. i cannot see all of the promises he made. i listened to the rebuttal of

the president's speech. the man was a soft-spoken very much to the point. he was not partisan. i still sense the partisanship in the president's speech. i was there disappointed. i voted for this man in the primaries because i did not want another clinton and administration. >> he spoke for about an hour and 10 minutes was this the right flank? >> it should havecaller: it should have been shorter. i think that he said too many things. it was another campaign speech with too many promises. all i can see is how are you going to manage cutting down this deficit and having a frieze and making all of the same promises that you were not able to deliver in the first place. you are doing this again

again, and again. >> the entire speech is available on-line at our web site. caller: i think tonight it was a typical obama speech. i think that this is the same old same old. all of his speeches sound the same. i think that his arrogance is amazing. he is still trying to get the health care bill. he did not get the message from massachusetts. i think the republicans at the beginning of this year out some pretty good bills. >> on friday, the president will travel to baltimore to speak to the republican conference. the president talk about common

sense between the two parties. can they get there? >>caller: absolutely. he should have been doing this from the get go. the republican party is trying to shove this down our throat. >> we are getting a call from portland, oregon. your comments. caller: i apologize, i think that there is a little bit of a delay. i am proud of c-span for allowing the people to speak. i am extremely discouraged. i am a new citizen. a lot of the citizens in this country did not hear his voice speaking out for the fact that

we are a nation made out of some of the other nations and backgrounds. right now we are a leader. he does not want the u.s. to follow. also to address the fact that there will be issues said everyone has to share. i am proud of living in oregon. there is a tax which texas corporations that make over two parted $50,000 a year. >> where are you from its originally? caller: columbia, south america. >> let's go to huntsville, alabama. >>caller: the speech tonight with all due respect to president obama, i felt like it

was a speech full of manipulation from the president. one instance was when he would be talking about being bipartisan with the congress. then he would turn around and blast the republican party. oni think it is another time that he is manipulating and telling lies why he is speaking boss while he is speaking. >> what-- while he is speaking. >> what about his criticism of the supreme court? caller: i think that there was no tact. >> herald from pennsylvania.

caller: obama is a great speaker. i don't believe him. the only good part i saw was the fact that when he talked about creating energy and he talked about oil and nuclear power. republicans stood up and clapped for that. i don't know if you remember o'reilly's interview. in that interview, he was talking about nuclear. >> what about tax cuts? >>caller: i think they are good. you have to do it. the things that he said in the past he has not done. i want to bring up the governor. someone called and said that the

governor's daughter served in the military. she was in iraq as a leader. she could have gotten killed. i find that very disrespectful to the governor. i thought the governor was very professional very professional. very true of what he was saying. >> thank you for the call. the governor delivered his remarks from the house of delegates in richmond, virginia. we were keeping track on what was on facebook. >> we have links to our facebook page where you can become a fan. also twitter. we have a ton of stuff. we have video text of speeches going back to harry truman. just to check in.

i will go to three tweets. joseph nobles said obama did not change the subject contrary to what joe lieberman said. there was all talk, no substance. finally, we have the state of the union encourage congress to work together to solve problems. it was a good speech. >> we will get more and more followers on this from the "washington journal." how many followers to we have lunch with her? >> we have about 20,700. that has gone up in the last 30

minutes. >> i am sure it has. thank you. we're joined from brooklyn, new york on the democratic line. your reaction. caller: i just wanted to say that i did not get on the phone with you guys . obama is not doing anything to help anyone. there is not a big deal when he became president. everyone was screaming through the windows and was jumping on cars and going crazy. everyone was happy. we have a black president. there are many people out there with no jobs.

>> your comments, please. caller: president obama is a good president. he has a positive view. the he was talking about the war going on, stuff in haiti. he has a hard job. it is a hard job and it takes time. >> allen from los angeles. caller: you cannot talk the talk, you can walk the walk.

it is not enough that you say you will work with the republicans and create jobs that does not get people with jobs. if you tax the banks, what happens to their interest rates that they charge on credit cards? . . .

caller: the funny part that i got out a bit i turned it to msnbc and listen to chris matthews and it is funny how both sides see it so differently. i think it is really important that we don't get caught up in the personalities of news channels. host: that is why we're here, so you can express your point of view. caller: we have to remember that the country has three branches of government. the people that make this happen on the congress and the senate. and until nancy pelosi and harry reid are talking out of the leadership, we will not get much change, folks. that is the way that it is. host: thank you for all of your

calls and twitter comments. we will see you tomorrow again on "washington journal." thank you for joining us for c- span's state of the union coverage. >> coming up next, timothy geithner testifies at a committee hearing. then an international conference on fighting international terrorism in yemen. on tomorrows "washington journal," members of congress to give their reaction to tonight's state of the union address. reaction from editorial page writers from across the country. "washington journal" is live beginning at 7:00 a.m. eastern time here on c-span. after washington journal we go to capitol hearing -- i capitol hill hearing on haiti relief.

our live coverage begins at 10:00 a.m. eastern. >> treasury secretary tim geithner told a congressional palianel that he paid no role in the decision to bail out aig. he was president of the year -- of the new york federal reserve bank. it is part of the day-long hearing on aig. later, you will hear from hank paulson. the committee will come to order. the committee will come to order. good morning. on september the 16 2008 the wall street giant aig faced immediate bankruptcy. aig was saved from collapse when

the american people came to the rescue with an $85 billion bailout. less than two moss later, the american taxpayer was again forced to pay the bill when the federal reserve directed aig to hand out billions of dollars to counterparties, that inclupded the biggest names on wall street. in effect the taxpayers were propping up the hollow shells of aig. by stuffing it with money, and the rest of wall street came by and looted the corpse. 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 injure aig. in fact when the information was finally released under pressure from congress, nothing happened. in an absolutely no affect on aig's business or financial condition, but it did have an affect on the credibility of the federal reserve and it called into question the fed's pension for secrecy. we need to change the culture on wall street and the culture among the regulators from the secrecy of transparency recognizing that only true confidential competitive or consumer information should be protected. as we sit here a year and a half later, fdig handed out billions in taxpayer dollars because of this secrecy. we still don't know how or why

the decision to rescue aig was made or who made the decision to author aig'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 haircut. in the case of aig, nobody got a haircut. 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 aig'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 gept. today definite. today we will hear from witnesses who were involved in making these decisions and we hope they can shed like on a murky set of facts. under subpoena the committee obtained more than 250,000 pages of documents from the new york fed tell detailing its handling of the aig counterparties. particularly disturbing is the fact that these e-mails indicate that aig proposed to disclose to the sec and the public the names of the counterparties and the payments but it was the new york feds that directed aig to withhold this information. as one new york fed staffer put

it any public disclosure by aig is still subject to fed approval. at least two things are clear here. the entire financial regulatory was broken and there shouldn't be any more bailouts. the lack of transparency we have seen in the double bailout of aig leads to distrust which leads to anger. the question that looms over all of this how do we prevent a repeat of the financial crisis in the future? unless the congress adopts ss genuine financial services reform, it will be only a matter of time before we see another aig, bear stearns, another lehman brothers and the next big bank will be too big to fail and the taxpayers will wind up

footing the bill again and again and again. i ask my republican colleagues on this committee to join with me in fixing the system. blame is about yesterday. fixing this system is about today and the future. in the aig case we can talk all we want to about complicated business deals, but this all boils down to a simple concept. when average people are losing their homes and jobs the same big banks that caused the problems 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 darrell issa for his opening statement. >> thank you, mr. chairman and you have our promise that this has been and will continue to be a bipartisan oversight of these and all the issues related to the feds current and future authority. mr. chairman i'd like to ask unanimous consent pursuant to our rules that spencer bachus the ranking member on financial services committee, kevin brady of texas, the ranking house republican on the joint economic committee, roy blount the former majority whip, ron paul whose credentials on this are well understood and cliff sterns of florida be allowed to sit in today and in time ask questioning pursuant to the rules. >> without objection. >> additionally i would ask at

this time to submit for the record schedule a, which is, in fact, the shortfall agreements between products since referred to in questions and we want to make sure they're officially in the record. >> observing the right to object. >> okay. 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 in the record at this time although they will not be reviewed further during this hearing. >> is there a -- observe to right to object. >> thank you mr. chairman. for all of this and more working together with you on the subpoena documents has caused both majority and minority toy glean considerable new information. in recent weeks, this committee receiving these documents have causes to better understand the new york fed's pressured aig to abort negotiations designed to

obtain a haircut, as it was called from its counterparties and keep the details of counterparties payments from appearing on forms, the firms forms at the sec. today, among the questions we'll ask is should the american people were kept from knowing until 2018 the details who were the ultimate beneficiaries of this bailout? as i've said before i consider this a back-door bailout. the people giving us testimony today will tell us that they felt that this was essential and necessary. mr. chairman as you can recall aig's founder, hank greenberg, has previously testified along with the i ago ceo edward liddy. that that testimony hank greenberg made is very clear that he believed that one hedging should have occur sooner and, two, bankruptcy would have been a cleaner way to rolph

resolve a company in which she the largest stockholder. after that hearing, they re-engaged think founder to help a company 80% owned by the american people. not to say that there's a lot of good news at aig. 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. i'll try to--did you hear me okay now? you can't? okay. now -- okay. i will focus on this microphone this time. usually the problem is i'm too well heard. right, mr. chairman? >> generally. >> today we will have an 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 aig rather than allow the normal bankruptcy procedures to run their course. we know that one of today's witnesses made the decision to pay aig counterparties at 100 cents on the dollar. we know that one of today's witnesses was the primary architect of the aig trust agreement, whereby, the taxpayers investment in aig is managed not in the interests of the u.s. taxpayers, but of the united states treasury department. that was from previous testimony, and we rely on that to say, perhaps that is not the right answer. we know that the new york feds 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 t.a.r.p. was passed. we know that the new york feds succeeding in getting the --

succeeded in getting the sec to continue the cover-up until 2018, ten years from the da @h eb in fact, he has asserted complete ignorance of the details. many people have a hard time believing that secretary geithner entered into an absolute come of silence on the day that his nomination was announced. where was secretary geithner for the months and months that the back door bailouts were being questioned in the media? aig's

counterparty was kept secret for so long? these are the questions the american people deserve. mr. chairman i would ask unanimous consent the remainder of my opens statement be placed in the record at this time. >> without objection. so yielded. >> i yield back. >> thank you. at this time we would like to turn to our first witness, treasury secretary geithner. it is committee policy that all witnesses are sworn in. so, mr. secretary, if you would stand and raise your right hand. do you slum heolemnly swear to tell the truth, the whole truth and nothing but the truth? >> yes, sir. >> let the record so mr. geithner has been duly sworn. >> chairman towns, ranking member issa members of the committee, thank you for the opportunity to temperature 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 mike just a little closer. we're having a little trouble hearing you. >> i'm almost eating it. how's that sound? >> our sound system isn't that good around here. >> i don't think i can 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 aig was one of the most difficult choices i've ever been involved in in over 20 years of public service. the steps that were taken were motivated solely by what we believed to be in the public interests. we did not act because aig asked for help. we did not act to protect individual institutions. we acted because the consequences of aig 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 cause the taxpayer far less than many fears and far less than many alternatives many people suggest today would have been bet are. and importantly, if you join with the president in adopting his proposed financial responsibility fee, american taxpayers will not have to pay one cent for the actions we took on aig or the actions we took with the authority congress gave the administration to stabilize this financial crisis. aig's problems became acute just a few days before lehman declared bankruptcy. at that time, our financial system and our economy stood at the brink 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, to fund new investments, to 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, aig posed a much greater threat to lehman. aig was much larger it was spread across the globe and its failure would have been far worse, hitting americans in ways lehman could not. aig 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. aig had sold products to protect local and city governments, pension funds, and thousands of public and private companies. through guaranteed investment contracts and protection for 401(k)s and as problematic, aig engaged in a broad range of financial activities that strayed well beyond traditional insurance businesses. using a credit rating based on the strength and profitability of its insurance companies, it had become one of the largest providers of complicated financial products in the world. it made hundreds of billions of dollars of financial commitments without the resources to back up those commitments. aig should have never 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 supervisors, the office of supervision did not act to constrain the risks aig was taking. important to recall that the federal reserve was given no responsibility and no authority to contain risks that aig was taking. no one acted to constrain risk taking by aig and none of those regulators in the moment of crisis had any ability to respond to its failure. the government of the united states did not have the ability to seize aig and wind it down in an orderly way as the fdic can and does for banks. neither the bankruptcy code nor insolvency procedures for insurance companies could have handled the job, and there was no way to draw a line around aig and prevent its failure from wreaking havoc across the system.

the federal reserve was at the center of response to the crisis, because it was the only fire station operating. the federal reserve faced a terrible choice, to support aig, butting billions of taxpayer money at risk or let aig fail and cause catastrophic damage to the economy. we were not willing to accept such a catastrophe. so just four days after aig was drawn into that crisis the aig crisis, we extended aig a line of credit secured by its insurance businesses. in return, the taxpayer took about an 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 aig faced and given the force the storm moving across the global financial system, it was not enough. and we had to work very quickly,

almost from the beginning, to design and implement a broader, more permanent restructuring. aig needed capital, not just a line of credit. and aig's vulnerability to future losses to the bleeding of cash had to be reduced. on november 10th, the federal reserve and the department of the treasury jointly announced a series of steps designed to stabilized company. the treasury invested $40 billion of preferred capital under the authority congress provided the executive branch under the t.a.r.p. and the federal reserve helped establish and fund two entities called maiden lane two and three to purchase a range of assets from the company that were threatening aig's financial solvency. maiden length free in particular has been subject appropriately of a range of questions about how we treated firms that had brought these insurance -- bought these contracts from aig. i want to make this very clear,

in this effort our objective was, as always to get what was, to get the best deal for the american taxpayer and we faced a number of options. if we had let aig default on the contracts, aig would have gone into bankruptcy triggering all the disastrous economy consequences we had feared since september that led the government to act initially. if we continuesed to lend aig money to meet these obligation its growing debt would have led to a credit rating downgrade, bringing down the firm itself. and putting more taxpayer dollars at risk. if we had tried to force counterparties to accept less than they were legally entitled to market participants would have lost confidence in aig leading to the company's collapse. the counterparties could have refused, could have kept the billions of collateral already taken. taken the securitieses they already had and sued aig for breach of contract. we did not have the luxury of time, could not engage in

protracted negotiations. aig's financial position was deteriorating rapidly day by day. the prospect of failure was imminent. so 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 aig, we expected this transaction, the one at the heart of so much controversy, to be paid off in full with interest generating some profit for the american taxpayer. now on november 24th, after president obama announced his intention to nominate me for secretary of the treasury and after broad consultation with the chairman of the federal reserve and others i decided to stay on as president of the new york fed on an interim basis but 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 24th in making decisions regarding what to disclose about the specific financial terms of maiden lane two and three and payments to aig counterparties. mr. chairman the broad strategy in a the government adopted to attain this financial crisis has been remarkably effective at stemming the crisis breaking the momentum of the crisis and repairing the damage. and this has been achieved at much lower cost in taxpayer resources than many people anticipated. confidence in the basic stability of the american financial system is much stronger today. borrowing costs for american businesses and consumers for households for municipal and state governments have fallen dramatically. the economy is now growing. the support we provided to aig in the context of the broad strategy to put out this financial fire was essential to achieving this early beginning of healing and recovery.

banks have already repaid two-thirds of the t.a.r.p. 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 into 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 $400 billion. that is real resources that we can use to meet the many other challenges we face as a country. and if congress joins with us in adopting the president's professional for a financial responsibility fee, the american taxpayer will recoup every penny of potential losses under the t.a.r.p. 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 job growth and long-term economic prosperity. now, let me close by saying this -- if you are outraged by aig and you should be if you are outraged by what happened with aig, then you should be deeply committed to financial reform. the united states of america should never have let institutions like aig take on a leff of risk that could threaten the stability of the financial system. and the government of the united states should never have been in the position going into a crisis of this severity without the basic tools able to contain the damage and protect the taxpayer. so 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 protect our economy from excessive risktaking by financial institutions and mr. chairman, one final thought.

the public servants involved in making these decisions acted solely in the public interest. acted solely in the interests of the american taxpayer. they are dedicated americans who cling bring to government service enormous experience and the highest integrity. i would never and they would never be involved in a benefit for private benefit and not the public's interest. the decisions we made together regarding aig was enormously consequential, terribly difficult and with controversy with each of the institutions responsible, and for that reason they were subject to enormous care and deliberation but i believe a fair reading of history, a careful, fair reading of history of all the we made will it was essential to preventing a broader catastrophe and reduced the ultimate cost to the american taxpayer, and the

american economy as much from her today as a result. thank you very much. >> let me begin by asking you a couple of questions. were you involved in any discussions with aig or your staff involved were you discussed what aig shooter should not disclose to the public? >> as i said, i had no role in making those decisions. but as the record shows a large number of people at the federal reserve bank of new york and the federal reserve board in washington played a very active role in thinking through these difficult decisions. >> i am not sure that i got the answer there. >> i personally played no role in making those decisions. u.s. get 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, 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 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 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. >> 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 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? >> 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 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 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 transabcction, 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 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 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 willing to debate that and argue it enforcibly. >> thank you. the chair recognizes mr. kanjorski. >> thank you very much. mr. secretary, there's a famous expression, i think it um cans from one of the fine poets of our era -- we have come to bury caesar, not to praise him, and i hope you appreciate the role of caesar that you play today. but it made me think about the fact that last sunday i watched a ball game and in the closing

moments of the ball game the quarterback made a tremendous decision to pass the football and it got intercepted, and as a result, the opposing team took the ball down the field, kicked a field goal and won the game. and 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 that he could have done. everyone 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 simp theirympathyies with you because i was on the committee and the task force and woshing 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 ever the votes we needed to authorize the

saving of the american economy. as i've heard your testimony, you 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 extraordinary action and commit hundreds of billions of dollars are 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 you had taken in a very short period of time. is that relative think correct? >> i completely agree, and those members of congress on both sides 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. appreciate that.

i sometimes, as a matter of fact i took that argument to the white house. if i remember the president was not as outspoken and i was convinced that in a democracy such as ours both in bad news and dangerous news must be shared with the people. part of the problem -- we didn't share that news. even through today, most people in this audience and throughout america have no idea how close we came to total annihilation and disaster. is that correct? >> that is my view. for the first time since the great depression you were seeing a full-scale run and people were taking their savings out of banks and wondered whether a dollar was a dollar and whether it won worth a dollar. it was a basic break down in the fabric of our system.

no recovery would have been possible without starting to stabilize the system and stem the bleeding and that was @@@@@ m@ h @ h @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ @ s , @ @ @ @ @ if we did not take precipitous action to make sure that the economic markets of the united states were secure? >> i was not in the executive branch at that time, but it would not surprise me. this was the greatest crisis we had seen since the great depression. it was not going to solve itself. many thought to have let it burn itself out but that would have been cast traffic -- catastrophic for the economy. damage and the wreckage. the scale we face as an economy

are rooted in that crisis and they illustrate the force of the pressure and the momentum that was already living with in august of that summer. >> all decisions made in those fateful two weeks were not correct. >> congressman, i think every day about things we could have done differently and early. i think a great strength of the country is that people in the congress and independent oversight and financial crisis were all going to take a cold hard look at everything that was done. >> time expired. you may continue with your answer. >> that will give us a basis for fixing this mess and preventing it from happening again. we'll cooperate fully in all that effort. >> thank you. >> thank you, gentlemen. chair recognizes mr. burton.

>> one of your counsels james bergen said on march 12th i don't know if there is any way to manage this so congress doesn't ask for it and won't release it. does he work for you or did he? >> yes, he did. >> does your legal counsel have authority to make comments and decisions without your knowledge? >> of course, but -- >> regarding something of this importance? >> as president and ceo of the new york fed i was ultimately responsible. it's not a long answer. >> i want to know, do they have the authority to make these comment comments and 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 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 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 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 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. >> 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. 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 435 members. you tell us if you had not taken action how might it affect students in my district or businesses or whatever. can you tell us that? i don't think that is getting through. >> thousands of more factories were to close their doors. millions more americans would have lost their jobs. the value of america's houses and savings would have fallen either further. 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. if people wonder if that was true, all they have to do is look back at what happened in the fall of 2008. you saw the value of american savings fall by almost 40%. trillions of dollars in lost wealth and millions left their homes. thousands and thousands of businesses had to close. that's what happens when you let a crisis get out of control. government should never let that happen. if they don't act and this is important for people to understand. people think it's unfair for the government to act to rescue a financial system. you cannot help an economy recover and create jobs. you 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 is the counter

parties. they are looking into the whole issue. there have been comments that the counter parties 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 to aig and posed direct losses on the major banks. those losses were not the issue. 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 to the system as a whole. you would see the crisis spread to insurance companies around the world and seen investors that would have brought a

collapse in all financial values. >> my time is running out. real quick, when the public has so much invested isn't it better to err on the side of transparency as opposed to keeping things secret? >> of course. of course. >> what would push the decision to not be as transparent? what would cause that? >> there very few cases where it is necessary for there to be a lag in disclosure or a gap. i'm not sure the best way to explain it but like in national security or law enforcement -- >> time z expired. >> like in the supervisory information, but there some areas in which you need to be careful about how you manage it. that's a discussion you should have at the fed.

we would not want to disclose information that would be bad or harder for the taxpayer to recoup investment. i completely agree that they are essential. the american people deserve it and we have been very effective in bringing an unprecedented level of security. the level of transparency and disclosure. # it's kind of interesting the way you framed your testimony and your involvement and the decisions before the committee today. you tried to give the impression that huh to do what huh to do because of the financial situation. that's pretty much what you said, right? >> absolutely.

>> then he said that we make decisions together and and dividing line when you were going to be nominated for treasury secretary? >> that is when the announcement was made. >> he tried to distance yourself from decisions made before that -- >> no, i take pride and full responsibility. for all of those decisions. >> ok, and you also were aware when the new york federal reserve ultimately selected on november 3 2008 to purchase the underlying assets? >> absolutely. and i take pride in that. >> and you had no knowledge of any cover-up