or the stimulus spending but i think people understand that we're spending much more before we got into this. and i think that's something mr. lewis is touching on that there's just a real concern. and i think that probably is a plus for democrats as well as for republicans. >> i would have you both explain to a generalist national audience the discussion about an omnibus bill. and with the elections coming, the federal fiscal calendar ends before the elections. so how, what are the concerns for people out there about federal spending and budgets and things being passed to get money to communities? >> it's not really that much more concerning this year than any year. congress has a pretty poor record for getting bills done on time. they've done it only maybe three or four times since 1974 where they had a law where they pubbed back by three months to get the spending bills done. they'll have a general feeling they'll have these resolutions. it makes it difficult in people for federal agencies to do

their budget twice a year, they do their budget and then they get the real numbers. >> the stop gap number freezes it. >> it makes great stuff for us to write about. and it does matter. however, go back to the politics of this. we just blew through this april 15 deadline for the budget resolution. i'm not sure polls suddenly moved up or down. i don't think anybody knew. the same thing with these appropriations bills. they're supposed to be done by october 1. i suspect most voters couldn't tell you what an appropriation is let alone an authorization. but, and here's what's important. and this isn't my original thought. deficit spending bills, process, are all surrogates for government isn't right. something doesn't work. and for congressman lewis to go back to his district and start explaining they didn't pass a budgeted resolution, no. but if he explains, i'm trying to work with congressman x, y, z, and they won't talk to me.

that matters to people. and that's what i think is going to help drive the election. >> but what if they don't get the budget passed in time even though the minusha doesn't resonate, does it underscore congress can't get its work done? >> to a certain degree the budget resolution, that's sort of different because they have been able to get that done at least in the past couple of years. and budget resolutions basically an internal blueprint it doesn't become law. so it's more a factor of not being able to get that done signals that other things won't get done. >> in massachusetts for january for the election, i was amazed how you would walk into diners and people would say, why did the senate vote on smateevep at 7:00 in the morning on health care? why did they include millions of dollars for nebraska for medicaid? what? people are talking about this? yeah. people may not understand the nuances but to them government is broken and the budgets is a huge piece of that in their

minds. >> that was the health care example. that certainly matters to people, time will tell as the year progresses. thank you very much to both of you for being here. kerry young, first visit to "newsmakers." please come back again. and david, always good to see you. >> irning there's a huge lack of knowledge how congress works. >> you just have to do that yourself. >> tonight, award winning his storions richard norton smith and douglas brinkley will talk

about their work, books, and profession. tonight on c-span. >> this past thursday, president obama discussed the need for tougher financial regulations during a speech from new york city. he outlined the prosenate. a procedural vote is set. from cooper union college in new york, this is about 25 minutes. >> thank you. thank you very much. >> well, thank you. it is good to be back.

we've got some special guests here that i want to acknowledge. congresswoman mall ownie is here in the house. [applause] governor david patsen is here. attorney general quomeo. state comptroller is here. the mayor of new york city, michael bloomberg. the president of cooper union. and all the citywide elected officials who are here, thank

you very much for your attendance. it is wonderful to be back in cooper union where generations of leaders and citizens have come to defend their ideas and contest their differences. it's also good to be back in lower manhattan. a few blocks from wall street. it really is good to be back because wall street is the heart of our nation's financial sector. now, since i last spoke here two years ago, our country has been through a terrible trial. more than 8 million people have lost their jobs. countless small businesses have had to shut their doors. trillions of dollars in savings have been lost. forcing seniors to put off retirement, young people to post pone college. entrepreneurs to give up on the dream of starting a company. and as a nation, we were forced

to take unprecedented steps to rescue the financial system and the broader economy. as a result of the decisions we made, some of which, let's face it, were very unpopular, we are seeing hopeful science. a little more than one year ago, we were losing an average of 750,000 jobs each month. today, america is adding jobs again. one year ago, the economy was shrinking rapidly. today, the economy is growing. in fact, we've seen the fastest turn around in growth in nearly three decades. but you're here and i'm here because we've got more work to do. until this progress is felt not just on wall street but on main street, we can't be satisfied. until the millions of our neighbors who are looking for work can find a job, and wages

are growing at a meaningful pace, we may be able to claim a technical recovery but we will not have truly recovered. and even as we seek to revive this economy, it's also incumbent on us to rebuild it stronger than before. we don't want an economy that has the same weaknesses that led to this crisis. and that means addressing some of the underlying problems that led to this turmoil and devastation in the first place. now, one of the most significant contributors to this recession was a financial crisis as dire as any we've known in generations, at least since the 30s. and that crisis was borne of a failure of responsibility. from wall street all the way to washington. that brought down many of the world's largest financial firms and nearly dragged our economy into a second great depression. it was that failure of

responsibility that i spoke about when i came to new york more than two years ago. before the worst of the crisis had unfolded. this was back in 2007. and i take no satisfaction in noting that my comments then have largely been borne out by the events that followed. but i repeat what i said then because it is essential that we learn the lessons from this crisis so we don't doom ourselves to repeat it. make no mistake, that is exactly what will happen if we allow this moment to pass. and that's an outcome that is unacceptable to me and it's unacceptable to you, the american people. [applause] ññññññ as i said two years ago, i believe in the power of the free market.

i believe in a strong financial sector that helps people to raise capital and get loans and invest their savings. that's part of what has made america what it is. but a free market was never meant to be a free license to take whatever you can get however you can get it. that's wheand too often leading up to this crisis. some, not all, but some on wall street forgot that behind every dollar traded or leveraged there's a family looking to buy a house or pay for an education. open a business. save for retirement. what happens on wall street has real consequences across the country, across our economy. i've also spoken before about the need to build a new foundation for economic growth in the 21st century. and given the importance of the financial sector, wall street reform is an absolutely

essential part of that foundation. without it, our house will continue to sit on fence and our families, businesses and the global economy will be vulnerable to future crises. that's why i feel so strongly that we need to enact a set of updated common sense rules to ensure accountability on wall street and to protect consumers in our financial system. [applause] ñññññññññññññññññññññññññññññññ now, here's the good news. a comprehensive reform has already passed the house of representatives. a senate version is currently being debated, drawing on ideas from democrats and republicans, both bills represent significant improvement on the

flawed rules that we have in place today. despite the furious effort of industry lobbyists to shape this legislation to their special interests. and for those of you in the financial sector, i'm sure that some of these lobbyists work for you and they're doing what they are being paid to do. but i'm here today specifically when i speak to the titans of industry, because i want to urge you to join us instead of fighting us in this effort. i am here -- [applause] i'm here because i believe that these reforms are in the end not only in the best interest of our country, but in the best interest of the financial sector. and i'm here to explain what reform will look like and why it matters. now, first, the bill being considered in the senate would create what we did not have

before. and that is a way to protect the financial system and the broader economy and american taxpayers in the event that a large financial firm begins to fail. if there's a leemance or an a.i.g., how can we respond in a way that doesn't force taxpayers to pick up the tab? or, alternatively, could bring down the whole system. in an ordinary local bank, when it approaches insolvesy, we've got a process, an orderly process through the fdic that ensures that depstors are protected, maintains confidence in the banking system, and it works. customers and taxpayers are protected and owners and management lose their equity. but we don't have that kind of process designed to contain the failure of a lehman brothers or any of the largest and most interconnected financial firms in our country. that's why when this crisis

began crucial decisions about what would happen to some of the world's biggest companies, companies employing tens of thousands of people and holding hundreds of billions of dollars in assets had to take place in hurried discussions in the middle of the night. and that's why to save the entire economy from an even worse cat tacefi we had to deploy taxpayer dollars. now, much of that money has been paid back and my administration has proposed a fee to be paid by large firm firms to recover all the money, every dime. because the american people should never have been put in that position in the first place. [applause] but this is why we need a system to shut these firms down with the least amount of collateral damage to innocent people, and innocent businesses. from the start, i've insisted that the financial industry, not taxpayers, shoulder the

cost in the event that a large financial company should falter. the goal is to make certain that taxpayers are never again on the hook because a firm is deemed too big to fail. now, there's a legitimate debate taking place about how best to ensure taxpayers are held harmless in this process. and that's a legitimate debate and i encourage that debate. but what's not legitimate is to suggest that somehow the legislation being proposed is going to encourage future taxpayer bailouts as some have claimed. that makes for a good sound byte but it's not factually accurate. it is not true. in fact, the system as -- [applause] the system as it stands is what led to a series of massive costly taxpayer bailouts and

it's only with reform that we can avoid a similar outcome in the future. in other words, a vote for reform is a vote to put a stop to taxpayer funded bailouts. that's the truth. end of story. and nobody should be fooled in this debate. by the way, these changes have the added benefit of creating incentives within the industry to ensure that no one company can ever threaten to bring down the whole economy. to that end, the bill would also enact what's known as the voker rule and there's a tall guy sitting in the front row called voker who we named it after. and i it does something very simple. it places 2 limits on the size of banks and the kinds of rimbings that banking institutions will take. and this will not only safe guard our system against crises. this will also make our system stronger and more competitive by instilling confidence here at home and across the globe.

markets depend on that confidence. part of what led to the turmoil of the past two years is that in the absence of clear rules and sound practices, people didn't trust that our system was one in which it was safe to invest or lend. and as we've seen, that harms all of us. so by enacting these reforms, will help ensure that our financial system and our economy continues to be the envy of the world. so that's the first thing. making sure that we can wind down one firm if it gets into trouble without bringing the whole system down or forcing taxpayers to fund a bailout. number two, reform would bring new transparency to many financial markets. as you know, part of what led to this crisis was firms like a.i.g. and others who were making huge and risky bets using derivatives and other complicated financial instruments in ways that defied accountability or even common

sense. in fact, many practices were so opaque, so confusing, so complex that the people inside the firms didn't understand them. much less those who were charged with overseeing them. they weren't fully aware of the massive bets that were being placed. that's what led warren buff tote describe derivatives that were bot and sold with little oversight as financial weapons of mass destruction. that's what he called them. and that's why reform will rein in excess and ensure that these kinds of transactions take place in the light of day. now, there's been a greath deal of concern about these changes so i want to reiterate. there is a legitimate role for these financial instruments in our economy. they can help allay risk and there are a lot of companies to that legitimate end.

they are managing exspoketsure to fluctwutting prices, or currencies,. for example, a bidge might hedge against rising oil prices by buying a financial product to ensure stable cost. o so an airline might have an interest in locking in a stable price. the problem is these markets operated in the shadow of our economy, invisible to regulators and the public. so reckless practices were rampant. risks accrued until they threatened our entire financial system. that's why these reforms are designed to respect legitimate activities but prevent reckless risk taking. that's why we want to ensure that financial products like standardized derivatives are traded out in the open in the fullview of businesses, investors and those charged with oversight. and i was encouraged to see a republican senator join with democrats this week in moving forward on this issue.

that's a good sign. [applause] that's a guide sign. for without action we'll see what continues to highly leveraged, loosely monitored gambling, putting the economy in jeopardy. and the only people who ought to fear the kind of oversight and transparency we're proposing are those whose conduct will fail this scrutiny. third, this plan would enact the strongest consumer financial protections ever. and that's absolutely neffsrifplt because -- [applause] because this financial crisis wasn't just the result of decisions made in the executive suites on wall street. it was also the result of decisions made across kitchen tables across america. by folks who took on mortgages and credit cards and auto

loans. and while it's true that men americans took on financial obligations that they knew or should have known that they could not have afforded, millions of others were, frankly, duped. they were misled by deceptive terms and conditions very deep in the fine print. and while a few companies made out like bandits by exploiting their customers, our entire economy was made more vulnerable. millions of people have now lost their homes. tens of millions more have lost value in their homes. just about er sector of our economy has felt the pain, whether you're a paving driveways in arizona or selling houses in ohio, or you're doing home repairs in california or you're using your home equity to start a small business in florida. that's why we need to give consumers more protection and more power in our financial system. this is not about stifling competition, stifling innovation. it's about the opposite.

with a dedicated agency, setting ground rules and looking out for ordinary people in our financial system, we will empower consumers with clear and concise information when they're making financial decisions. so instead of competing to offer confusing products, companies will compete the old-fashioned way, by offering better products. and that will mean more choices for consumers, more opportunities for businesses, and more stability in our financial system. and unless your business model depends on bilking people, there's little to fear from these new rules. [applause] so number four. last key component of reform. these wall street reforms will give shareholders new power in the financial system. they will get what we call a

say on pay. a voice with respect to the salaries and bonuses awarded to top executives. and the s.e.c. will have the authority to give shareholders more say in corporate elections. so that investors and pension holders have a stronger role in determining who manages the company in which they've placed their savings. now, americans don't begrudge anybody for success when that success is earned. but when we read in the past and sometimes in the present about enormous executive bonuses at firms, even as they're relying on assistance from taxpayers or they're taking huge risks that threaten the system as a whole, or their company is doing badly, it offends our fundamental values. not only that, some of the salaries and bonus that is

we've seen creates per verse incentives to take reckless risks that contributed to the crisis. that's what helped lead to a relentless focus on a company's next quarter to the detriment of its next year or its next decade. and it led to a situation in which folks with the most to lose stock in pension and holders, had the least to say in the process and that has to change. [applause] let me close by saying this. i have laid out a set of wall street reforms. these are reforms that will put an end to taxpayer bailouts, that will bring complex financial dealings out of the shadows, that would protect consumers, and that would give share holders more power in the financial system. but let's face it. we also need reform in washington. and the debate over these changes -- [applause]

the debate over these changes is a perfect example. i mean, we have seen ballot lns of financial industry lobbyists descending on capitol hill. firms spending millionstor influence the outcome of this debate. we have seen misleading arguments and attacks that are designed not to improve the bill but to weaken or to kill it. we've seen a bipartisan process buckle under the weight of these withering forces. even as we've produced a proposal that by all accounts is a common sense reasonable nonidea logical approach to target the root problems that led to the turmoil in our financial sector and ultimately in our entire economy. so we've seen business as usual in washington. but i believe we can and must put this kind of cynical politics aside.

we've got to put an end to it. that's why i'm here today. [applause] that's why i'm here today. [applause] and for those of you who are in the financial sect, let me say this. we will not always see eye to eye. we will not always agree. but that doesn't mean that we've got to choose between two extremes. we do not have to choose between markets that are unfettered by even modest protections against crisis, or markets that are sometimied by onerous rules that suppress enterprise and innovation. that is a false choice. we need no more proof than the crisis we've just been through. you see, there has always been a tension between the desire to allow markets to function without interference and the absolute necessity of rules to prevent markets from falling out of kilter.

but managing that tension, one that we've debated since the founding of this nation, is what has allowed our country to keep up with a changing world. for, in taking up this debate and figuring out how to apply well worn principles with each new age, we ensure that we don't tip too far one way or the other, that our democracy remains as dynamic and our economy remains as dynamic as it has in the past. so, yes, this debate can be contentious, it can be heated. but in the end, it serves only to make our country stronger. it has allowed us to adapt and to thrive. and i read a report recently that i think fairly illustrates this point. it's from time magazine. i'm going to quote. through the great banking houses of manhattan last week ran wild eyed alarm. big bankers stared at one another in anger and

astonishment. a bill just passed. wut rivet upon their institutions what they considered a mons citrus such a system they felt would not only rob them of their pride of profession but would reduce all u.s. banking to its lowest level. that appeared in time magazine in june of 19 33. [applause] the system that caused so much can consternation, so much concern was the federal deposit insurance corporation. also known as the fdic. an institution that has successfully secured the deposits of generations of america. in the end, our system only works, our markets are only

free when there are basic safeguard that prevent abuse, that check excesses, that ensure that it is more profitable to play by the rules than to game the system. that is what the reforms we've been proposing are designed to achieve. no more, no less. and because that is how we will ensure that our economy works for consumers, that it works for investors, and that it works for financial institutions, in other words, that it works for all of us, that's why we're working so hard to get this stuff passed. this is a central lesson not only in this crisis but in our history. it's what i said when i spoke here two years ago. because ultimately there is no dividing line between main street and wall street. we will rise or we will fall together. as one nation. [applause]

and that is why irge all of you to join me. i urge all of you to join me. to join those who are seeking to pass these common-sense reforms. and for those of you in the financial industry, i urge you to join me not only because it is in the interest of your industry, because f but also because it's in the interest of your country thank you so much. god bless you. and god bless the united states of america. [cheers and applause] thank you. >> senate minority leader mitch mcconnell of kentucky also discussed the pending legislation concerning financial regulations on the senate floor this week. this is about 10 minutes.

. . with. the presiding officer: without objection. mr. mcconnell: in the fall of 2008 i reluctantly voted for a bill that sent money to wall street banks that should have paid for their own mistakes. we were told it was needed in order to avert a global calamity. so i did it. and then i went back to my constituents and vowed never again. never again should taxpayers be on the hook for recklessness on wall street, and no financial institution should be considered too big to fail. so when the financial regulatory bill the majority was about to so when the financial regulatory bill the majority was about to bring to still contained a number of loopholes allowing future bailouts, i raised the alarm. i wasn't about to take democratic assurance that is this bill protected taxpayers. i wanted them to prove it. and that's really what this debate is all about.

it's about proving to my constituents and to the rest of the country that we actually do what we say we're going to do around here. because if you haven't noticed, there's a serious trust deficit out there. public confidence in government is at one of the lowest points in half a century. nearly eight in ten americans now say they don't trust the government and have little faith that it can solve america's ills. and it's no wonder. over the past year the american people have been told again and again that government was doing one thing when it was doing another. just think about some of the things americans have been told. as a senator, the current president rallied against deficits and debt. he said america had a debt problem and that it was a failure of leadership not to address it. yet, last year his administration released a budget that doubles the debt in five years and triples it in ten.

the debt has increased over $2 trillion since he took office. in february, the federal government ran the largest monthly deficit in the history of the united states. how about bailouts? the president has said he didn't come into office so he could take over companies. but whether or not that's the case, americans can't help but notice that some people did better than others. when it came to bailing out the car companies, the unions fared a lot better than anyone else. what about jobs? last year the white house rushed a stimulus bill through congress because it said we needed to create jobs. they said we needed to borrow the $1 trillion it cost the taxpayers to keep unemployment from rising above 8%. more than a year later unemployment is hovering around 10%. all told, we've lost nearly 4 million jobs since the president

was sworn in. then there was health care. i'll leave aside the substance for a moment and just talk about the process. americans were told the process would be completely transparent. all the negotiations would be broadcast live on c-span. instead they got a partisan backroom deal that was rammed through congress during a blizzard on christmas eve. this is the context for the debate we're currently in. so it should come as no surprise to anyone that when we're talking about a giant regulatory reform bill, the american people aren't all that inclined to take our word for it when we say it doesn't allow for bailouts.or tr that it won't enable the administration to pick winners or losers. they've heard all that before. and they've been burned. this time they want us to prove

it. the first thing they want us to prove is that this bill ends bailouts. that was the one thing this bill was supposed to do, the one thing it was supposed to do. and if this bill didn't do anything but that, a lot of people would be satisfied. the administration said it wants to end bailouts. i say to them, prove it. some of us have pointed out concerns that this bill would give the administration the authority to use taxpayer funds to support financial institutions at a time of crisis. yes, the bill says taxpayers get the money back later, but that sounds awfully familiar. isn't that exactly what we did with the first bailout fund? a bailout fund americans were promised would be repaid but which democrats are now trying to raid in order to pay for everything else under the sun. if a future administration thinks there is a crisis that requires using taxpayer funds,

then they should have to get permission from the taxpayers first. get permission from the taxpayers first. it isn't enough for someone in the administration to say it's so. they need to come to congress before they write the check. if this bill isn't like the first bailout, prove it. as i said, we've seen another bailout -- we've seen in other bailouts that some are treated better than others. in allows the fdic to treat creditors with equal claims differently. if the proponents of this bill think this bill does not allow the administration to pick winners and losers, they need to prove it. this bill also contains a number of provisions that threaten the ability of small business to hire new workers. other provision pz would send jobs overseas, and just this morning "the wall street

journal" pointed out a provision that would put new regulatory burdens on start-up businesses that would make it harder for them to get off the ground. if this bill doesn't create burdensome new regulation thaldz make it harder for americans to dig themselves out of this recession, then prove t prove t it. every indication is that the chairman and rank member are making progress in their discussions and in this bill will have needed improvements, and that's good. some of the concerns i've just raised are among the topics being discussed. but in the end, americans aren't rooting for some deal. thethey've asked us for clarity- they've asked us for clarity. they're asking us not for verbal assurances but for concrete proof. because at the understand of the day i neend to look my constituents in the eye and prove to them that this bill does not allow any bailout. i need to prove to them that this bill doesn't treat some

favored groups better than others. i need to prove to them that this strengthens the economy, that it doesn't make it worse. people need to be convinced that we're doing what we're saying we're doing. this time they want proof, and >> on monday, the senate has a key vote on increasing consumer oversight and increasing supervision of the derivatives market. here is a quick look at the president and senator majority leader -- minority leader mitch mcconnell speaking about the bill this week. >> a comprehensive plan has already passed the house of representatives. this is the good news. a senate version is currently being debated, truck -- drawing

on ideas from democrats and republicans. both bills represent significant improvement on the flawed roles we have in place today. despite the furious effort of industry lobbyists to shape this legislation to their special interests. for those of you in the financial sector, i am sure some of these lobbyists work for you. they are doing what they are being paid to do, but i am here today specifically, when i speak to the titans of industry, because i want to urge you to join us instead of fighting as. >> the administration says it wants to end the bailouts. i say to them -- prove it. some of us have pointed out the concerns that the administration it would use -- have an authority to support financial

institutions and the time of crisis. taxpayers get their money back later, but that sounds familiar. isn't that exactly what we did with the first bailout fund? a bailout fund that americans were promised would be repaid by which democrats are trying to raid in order to pay for everything else under the sun. courts to begin debating the financial regulation still, senate democrats needed one republican vote to move forward. watch live coverage of that on c-span 2 and at c-span.org. the house returns on monday at 12:30 p.m.. and at 2:00 for legislative business. on wednesday, there will take a bill for the defense department contract. live coverage as always on c- span. >> the international monetary fund and world bank are holding their spring meetings this week in washington. imf officials held a briefing on saturday to discuss the global

economic outlook. this is about 35 minutes. >> good afternoon, everybody, and welcome. following a meeting of the imf and financial committee of the board of governors of the imf, i have to my right, the first step. managing director of the imf -- the first deputy managing director of the imf. and bouhe will now begin a press conference. it is live and on the record. it is also very timely, which is the first for a long time. >> thank you. good afternoon, all of you we have just concluded the 21st meeting of the imf. we have surveyed many issues.

first and foremost, the global economy it seems to be recovering. the worst is definitely behind us. we are not out of the woods yet. we see a strengthening of economic recovery, but we also see an on even as in this recovery, and even this -- unevenness among countries and between countries. in some instances, we found the recovery was not yet sustainable and still dependent on fiscal measures, for which there was little scope for reducing the fiscal stimuli. other countries are beginning to show some sense of generating momentum, on it -- and are beginning fiscal retrenchment. there are weaknesses.

in other cases, emerging market economies, the recovery is strong. definitely well established, most are beginning to retrench on the various fiscal stimuli, and the picture there is much more encouraging, much more solid. we looked at the financial sector. of course, you will recall, the crisis originated in the financial sector. a lot of measures have been taken. a lot of strengthening of financial regulations have been taken. we discussed a number of rules and regulations that needed to be developed further, but we are not out of the woods yet. there are weaknesses. there are vulnerabilities. and they were required continue development -- vigilance. it will require more measures of strength for strengthening the

financial sector in many countries. we also discussed issues of market confidence. we see that market confidence has come back, but it is very a volatile. the slightest incident creates all sorts of jobs in various indicators. we have also noted that a number of sovereign's are under pressure, and the membership urged, and the fund's staff and management to cooperate in assisting a number of sovereign to are experiencing -- who are experiencing debt difficulties. we discussed in important issue, in fact, one that has inflamed many of discussion, namely the reform of the imf. the reform of quota and voice representation.

everybody reaffirmed our commitment to make sure that we get through the government reform and by january, 2011, and the quota and voice reform by that date. we have spoken a process used to bring this forward, a compact to bring this forward. ideas have been put forward. we will be very busy in the coming months. in coordination with the managing director, i will try to find consensus whereby we can put something forward by the time the leaders meet sometime in the fall. of course, low income countries were very much on the radar. 2010 net will seat 65 million people -- will see 65 million people added to the lines of party. eighty-nine's other -- million of them are in upon -- 80

million of them are in africa. all the members agreed that this is inadmissible we want to push for support within the imf and other international organizations so that this is enacted as quickly and early as possible. are emerging markets seem to be performing better, but they have much further to go. therefore, their performance will not dent the figures i have just suggested. overall, the discussions were constructive. we have initiated -- initiated for the first time, the joint sessions with this g-20 and we are discussing this energy that can come from, and work -- from common work. let me ask the managing director for a few comments. thank you. >> good afternoon.

it is because of his real skill in chairing meetings that we are here on time. it does not happen so often. i think these two days of meetings, the breakfast this morning, and the early morning exercises, all this has been a great lesson of multilateralism. and that will be, for me, the main lesson of this spring meeting. clearly, we are entering the fourth phase. the first phase was after lehman brothers in and during some months when everywhere in the international community you had some panic, facing the downturn

and the policies. after april, in london, we have a second phase of action, where most countries had acquired stimulus. the resources of the imf were increased. the lending instrument was change. when you look at all the figures, especially some kind of spreads, you see that that is the moment where things have changed. then after fall, you have a third phase, which was a kind of relief. in most countries, the idea that the crisis was behind us and that finally recover it was just at the corner of history. it was accepted by too many. even if we were -- sure that the recovery was there and that was good news, but that we should not become -- should not lose

any kind of quotient. we should take into account the downside risks. any kind of double dip -- some tail risks were important and we should take them into consideration. i think we are entering a fourth phase in which all the ministers, the governors, are clearly aware that the recovery is here faster in some parts of the world, namely asia, morse luggage and other parts of the world, especially -- more sluggish in the european union and japan, but even if recovery is there, we have to take into consideration the different down sizes that may arise. the two most important ones in

which we have been asked to work for the coming months are unemployment which is still rising in many of the advanced economies and the heavy burden of debt, especially also, in advanced economies but not only, and then the third problem, which has been discussed a lot, being a question of capital flows and inflows in emerging countries with the risks of bubbles. this fourth phase is clearly the phase of rebuilding. rebuilding the international institution and trying to make them more effective to be able to prevent and decrease the likelihood of any crisis in future. this covers three main areas, which have been already mentioned bty youssef.

the first guests to do with the financial sector reform. -- the first having to do the financial sector reform. the rule of the game has to be almost the same everywhere, or if not the same, at least it has to be consistent. the good example is a discussion on taxation, where some countries want to implement some texans -- set -- taxation on the financial sector. everyone agrees that this has to be done in a coordinated way. it does not mean that the same kind of policy has to be implemented everywhere. the structure of the industry, the integrations are not the same, but when something is done, we have to look only at the effect of what is done for the country, but also the kind of consequences it may have on the rest of the world to avoid

any kind of regulatory arbitrage or a thing like this. it is interesting to notice that as far as taxation of the financial sector is concerned, the countries likely to implement something, are those with a problem with the regulatory system. the others say, we are immune. maybe it is shortsighted. so, i am not sure that this kind of instrument, but for strong regulation, should not be applied everywhere. what is important from my point of view is a strong sense of the needs, of stronger demand for coordination and for working

together. we have been asked to prepare a report assessing the state of the regulatory reforms, and the resilience of the system. we will prepare this for our next meeting. the second to be area has to do with this new exercise at the imf by the leaders and pittsburgh, where we delivered the first draft, which is the so-called middle assessment program. -- mitchell assessment program. the interesting thing in the first run of this different forecast of different countries is that it shows a reasonable optimism coming from different countries. they are rather consistent but optimistic. in our view, maybe a little too

optimistic. if the right policy is in place to reach the targets, without the right policy and change in policy, there is little chance that what is assessed by different countries and put together by the imf will materialize. but it is possible to do it. that is the target. we have to try to do it. the result may be much more interesting and much better than the one that we have . then we come to the second phase of this process, which is to provide the leaders meeting in toronto on mainly two sectors, two questions -- unemployment and debt -- to be able to raise the growth potential and make it possible to reach something that would be close to what the global

exercise has shown. and then th thirdirhird area whe multilateralism has been strong as the government's issue. the commitment of this morning in the g-20 -- the strength of a commitment this morning by the imf to complete the shift in quota but also the government's reforms by the end of this year is something that i find very important, because, as i are the stated many times, this question has obviously some technical part, but is mostly a political question. -- it is mostly a political question. we will not receive the government reform, including the

size of the board, the selection of the managing director, long list of questions, we will not achieve this on the basis of technical considerations alone, but from all political world. in my view this morning, in the imfc, the political will was stronger, which is third proof of the confidence in multilateralism. the point i made at the beginning, i think these spring meetings for the imf and for the world bank, because they achieved a shifting quote also, i will not talk of behalf of bob zelnick, -- bob zoellick, this spring meeting has been -- the worry we may have had during the

last months, that with the recovery the momentum for multilateralism would decrease, this worry has decreased a little. i think more -- i am more confident than i was a few weeks ago. the different countries want to go on working together. that is probably the best news we could expect for the quote -- global economy. >> thank you very much. please identify yourself and your news organization with a question. thank you. >> i am from the associated press. my question is, in your talks today with the greek foreign minister, did he suggest that greece might need a larger amount from the imf and is currently being contemplated, and do you believe the imf package will be available by may 19, the time of the deadline for the next greek bond payment? >> i spoke with a great minister

today. thof the agreement that we have will be available at the end of the negotiation. >> thank you. let me see if we have other questions here, please. >> one question about greece. we know they are not seeking -- now seeking aid from the imf. how would you aid the country to ensure it to help of the ball and of its long-term finances and the eurocurrency? >> that is a very interesting question. i am sure you'll find the answer to your questions when the program with greece will be public after the end of the negotiations. >> i think we are probably going to have our repetition of those, maybe in the back there. hoping it is on a broader topic. >> greece. maybe the last one.

the majority of the great public is in demonizing the imf and they think things will be worse. what is your message for the greek public? >> they are not the only ones in demonizing the imf. the greeks and others should see the imf as it is today. the imf is a cooperative organization were all the councils of the world come together to help those in trouble. today, greece, tomorrow, maybe another one. what is the imf doing? trying to advise on behalf of the entire international community, providing resources to help on behalf of the entire community. the greeks citizens should not fear the imf. we are trying to help them. >> let me intervene. we have dealt with two issues

throughout the last two years and it was obvious that a number of countries it needed the help of the imf. there was an issue of stigma, coming from the late 1980's to the late 1990's. clearly the direction he has given to the institution, even before the crisis, let me remind you -- he was the first to call for an increase in fiscal spending, before the crisis was a full-blown catastrophe in the world economy. the logic with which the imf now approaches issues is more akin to that you were approached in a developing country, in an emerging market -- market counttry where you have

issues -- where the balance of payment was the overarching concern at the cost of anything or anybody. i must emphasize, and if you can pass this message to the greek people, it is a different institution. emerging market economies have a more of a say in how the institution is run. this is how we reached the point of saying we want a change in quota. all these changes are beginning to come to fruition. this should give the institution the benefit of the doubt. >> the lady in red. >> thank you. i am from the egyptian newspaper. i want you to elaborate a little bit more about countries that are likely to have taxes on the financial sector. my second question is, why january, 2011, to discuss these

increases of developing countries, quotas? why postponing this issue? it should have been discussed with in this meeting. >> on the first question, we have been asked this report how to design a fair contribution of the financial sector. it seems clear to me that the many countries, including u.s., u.k., france, and other european countries, are keen to do something. some are in the process, as in the case of the u.s. others are thinking about it. i think a handful of countries will do something. some other countries believe they do not need this, probably because their financial sector has not been hit so hard.

the whole economy has been hit, but not especially the banks or the financial sector, so they did not need to find public money to rescue the bank. they do not see the necessity of implementing something that will create a possible resolution for the future. we will see. maybe you were there when they made in opening press conference. i said what we are proposing does not stand alone. if you want to decrease the likelihood of this, if you want to curb the behavior, you need to have the regulatory tools. we are not arguing in any way that the taxation of the financial sector should be done instead of, in place of the regulations. it goes together. it depends upon the country. in some countries, you may have a stronger regulation. in others, you do not need the taxation. some other countries, you might

prefer less regulation but complemented by something on the tax side. our main point, is that all of this has to be coordinated to avoid any kind of regulatory arbitrage. my second point was, why 2011? well, you know, in pittsburgh, the point was made by the leaders that we should do this before january, 2011. i could have stood up and said, you guys are too cautious. we can do it more rapidly. probably it would not be a good idea, because we had already a change in quota in 2008. this time it was eight turn of the world bank. they had to do a-. it. it was a good idea to do it in the world bank and then to go on with the imf.

the development committee will confirm this tomorrow. at the same time, they will confirm the capital increase of the world bank. this is a very welcome. the world bank has solved its problem. and then we will go back to our own problem in the deal with the change in quota. >> do you want to add anything on the quotas? >> there is a verys tron strongh by emerging market economies that they be recognized in the international institution. the reason why was it 2011, we could not get 2010. we could not get 2009. >> what is the obstacle? >> it is getting everyone to agree. there's 186 countries.

some will have to give up some of their quota. >> i have something to add. i forgot something. >> the negotiations will take place on the basis of gdp data. we need to have the complete data. will be 2008 data that is not yet ready that will be in the next month. we will be able to start discussing in concrete terms on the basis of the actual data that will serve as the basis for discussion. >> thank you. yes? >> did the imf ever -- the meeting suggest any specific programs to its members and that they can emulate in their countries that -- to address the problem of unemployment?

second is, are you able to reform financial sectors while president obama is in a fight with wall street right now? >> i will answer the first question. and youssef will answer the second. >> on employment, with or without a program, we give them advice. most of the questions are one of the two questions i mentioned -- unemployment, and sustained -- that sustainability. on both questions and we gave some policy advice, including redirecting the stimulus which has been put in place toward job generation and a lowering the costs of the labor market.

we do this with country programs or non-country programs. it is a large part of what we're doing that most of the people do not know is that the last part of our resources -- our human- resources are used for this kind of technical assistance we provide to many countries, which do not need financial support, but do need technical assistance. on the other question, what -- president obama [inaudible] i have 186 members. i will not make a comment on all their policies. what is sure is that the crisis originated in the united states. we have identified 18 months

ago a report on the first lesson on the crisis. maybe you remember this report. the reason why this crisis has started. among other causes, the main one had to do with lack of regulation and bad supervision. it's right to address this problem. of course, there is no single solution. you can address this problem in different ways, in different countries. different parts of the world will address it in different ways. the main point is the consistency. with the input of the imf and of our institutions, what we are trying to set up is a system of rules that not everybody will totally fall. that is part of the problem. we are pushing for everybody to follow exactly the same roles. even if they do not, they have

to follow rules that are consistent. that is the point. i am confident that we are pressing a enough for new regulation to take place. it could go faster. that is probably one of the reasons we have been made to at -- past to make this report -- asked to make this report. it takes a long time to set up new standards. it is a difficult tasks. i am not playing -- not trying to get explanation for the imf itself, which is contributing to the effort of the fsb. i can see how difficult it is for the bankers, accounting, insurance and others to do these things. it takes time. on one hand, it is understandable that the citizens

are asking for more or response. on the other hand, as john just showed to me, the basal 3. basal 2 took 12 years. fsb is working for a little more than one year. it is no surprise they did not totally complete their work. even so, we need to start implementing these things. we are not going to wait four years. that is why you have differences in different countries. if we are -- people do listen to the imf enough, and take into account the warning that we are trying to make, they will try to avoid any kind of a real strong inconsistency in what they are doing with what our neighbors are doing. >> thank you.

the gentleman in the middle there. >> our report for the guardian in nigeria. i want to know what nigerians should expect from this meeting. we have a lot of infrastructure problems, electricity, for instance. >> for nigeria? >> secondly, sorry, quickly. what is africa need to expect from the imf? >> i would rather answer the second question than the first, because this kind of meeting is not dedicated to one country or another country, especially a country in crisis,. there is some kind of crisis in nigeria, but not as strong as the crisis in greece, for example. the nigerian problem is a problem of most of the economies in the world. if niger has specific problems

or projects, it is more with the world bank to discuss than with imf. when you talk about africa as a whole, that becomes a very important question, because i am just back from a trip of one week in africa. my third trip in africa since i am in this position. africa is really, really one of the most important challenges. more than one year ago, we did a big conference to take stock of what has been done in the past -- the good reserves, the bad things, the mistakes, discussions with authorities, discussions with the private sectors. all this discussion ended with a new mandate, a new partnership between the imf and african countries. since then, i think we delivered. at least that is what the

africans are telling me, not only the governments, the central bankers, but also the ngo's, the unions, the business unions. i will not argue that everything we are doing our is perfect. of course not. we changed a lot the way we work with african countries, helping them cope with the crisis. as a result, the african countries did come up rather well with the crisis. they are recovering at -- at the same speed as the rest of the world. after other recessions, african countries recovered with some delay compared to other countries. it is partly because of this new involvement of the fund, new facilities, is your interest loans we put in place. in 2009, we have lent to africa four times more then we did in

2008. -- and that interest rates that are now zero. it changes a lot. money is part of the story. so africa can expect a lot. your question was, what can it african countries expect? african countries are right in believing out that they can expect a lot from the imf. >> thank you. one more question. back there. thank you. >> how are lessons from previous imf support promes influencing the fun -- support programs influencing the response to the greek problem? >> all programs are for us lessons. we learn from all our programs. the answer is that all of the previous programs in the fund since 1944 are helping us to

build the next program. to the second question, the answer, again, will be given when we define the program, because the program has to be adapted to the particular circumstances in the country. those circumstances are what we are discussing with authorities today. >> thank you all very much. this is the end of the press conference. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> today, a memorial service for the 29 miners who died earlier this month at the upper big branch mine in west virginia. remarks by president obama, vice president biden. you can see the ceremony later today starting at 3:30 p.m. eastern on c-span. >> i think there is a huge lack of knowledge about how this town works, how congress works. >> when you are doing research, you have to do that yourself.

>> tonight, award winning historians will talk about their work, their books and the profession, and revisit their first appearances on our network. "q&a" on c-span tonight. >> the house financial-services committee tuesday lurked at the 2008 failure of lehman brothers, -- looked at the 2000 failure of lehman brothers. we begin with the testimony of the former ceo of lehman brothers, as well as a whistle- blower who was fired. later you will hear from the treasury secretary and the federal reserve chairman ben bernanke as well as the head of the securities and exchange commission. this portion is just over two hours. >> our first panelist is mr.

fuld. >> mr. chairman, members of the house committee -- >> turn on your microphone. is there a light on? >> that better? i apologize. mr. chairman, members of the house committee on financial services, you have invited me to address a number of public policy issues raised by the lehman brothers bankruptcy reports filed by the examiner. singh september, 2008, i have given much thought to the financial country -- financial crisis that forced lehman brothers into bankruptcy. the idea of a super regulator is a good one. in this new regulator should have actual experience and a true understanding of the

business of financial institutions and capital markets and risk-management. the new regulator should have access on a real-time basis to all information and data, from all market participants regarding all transactions and positions and have clear standards for capital requirements, liquidity, and other risk-management metrics. the job of the new regulator can only be done with the creation and utilization of a master mark to market capability that has the responsibility for determining evaluations and capital here cuts on all assets -- haircuts -- out all structures. officials from the fed and sec were monitoring and reviewing our daily activities of liquidity, risk-management, and marked to market processes. after extended investigation into the bankruptcy, the examiner published a lengthy report stating his views.

despite popular misconceptions about lehman brother's asset valuations, liquidity, and risk- management, the examiner found no breach of duty by anyone at lehman brothers with respect to any of these. the examiner took issue with lehman brother's repo 105 sale transactions. i believe the report distorted the regular -- relevant facts. the result is that lehman brothers and his people have been unfairly vilified. let me start by saying that i have no recollection whatsoever of hearing anything about or seeing documents related to repo 105 transactions while i was ceo. what i will say about those transactions is based upon what i have recently learned. as ceo, i oversaw a global organization of more than 28,000 people with hundreds of business

lines and products and with operations in more than 40 countries spread over five continents. my responsibility was to create an infrastructure of people, systems, and processing is designed to ensure that the firm's businesses was properly conducted in compliance with the applicable standards and regulations. there has been a lot of misinformation about a repo 105. there were completely erroneous reports on the front pages of newspapers claiming we used this to remove toxic acids from its balance sheet. that was simply not sure -- to remove toxic assets from our balance sheet. that was simply not true. some of the newspapers that got it wrong were fair minded enough to print a correction. another piece of misinformation was that these transactions were

used to hide lehman brother's assets. that was simply not true. repo 105 transactions were sailed as mandated by accounting rules -- were sales as mandated by accounting rules. there was a misconception is contributed to lehman brother's bankruptcy. it was forced into bankruptcy and mint one of the most turbulent periods, which culminated in a catastrophic crisis of confidence. that almost brought down all large number of other financial institutions, but those institutions were saved because of government support in the form of additional capital and fundamental changes in the rules and regulations governing banks and investment banks. as to repo 105, the examiner and villages first, these transactions were not inherently improper -- examiner

acknowledges first, these transactions were not inherently improper. we properly accounted for those transactions. repo 105 transactions were modeled on fax 140. in 2000, there were rules that expressly provided them. in 2001, are written accounting policy -- the outside auditor review that policy and supported the firm's approach and application of the relevant rules of faz 140. that rule mandated those transactions be accounted for as a sale, and that is what i believe lehman brothers did. lehman brothers should not be criticized for complying with applicable accounting standards. my job was to put in place a robust process to ensure that

lehman brothers complied with its obligations to make accurate, public disclosures. i have hundreds of people in the internal audit, finance or risk management, legal functions to ensure we did comply with all of our obligations. that process had a number of components. first, the role and auditing our financial statements in reviewing our quarterly and annual sec filings. second, our readers a certification process before every annual and quarterly sec filing involving hundreds of people who had firsthand knowledge of the firm's day-to- day business and the responsibility to review and certified for accuracy the firm prosy sec disclosure before there were filed. third, a mandatory meeting is chaired by lehman brother's chief legal officer, including the and more than 30 other senior officers, with responsibility for all parts of lehman brothers.

i relied on this certification process because it showed that those with granular knowledge believed the sec filings were complete and accurate. and i never signed an sec filing without -- and less it was first approved by the chief legal officer. in conclusions, given all that has been said, i would like to add that i am very much aware that one day we had a firm. the next day, we did not. a lot of people got hurt by that. and i have to live with that. thank you, mr. chairman. >> we will next year from mr. thomas cruikshank, a former member of the board of directors

in share of lehman brothers -- committee. >> thank you. i would like to thank the commission. >> please turn your microphone on. it's not on. sorry. >> pull it. >> can you hear me now? i would like to thank the committee for inviting me to appear at today's hearing. no one can deny that the bankruptcy of lehman brothers has had a disastrous impact on the company, its employees, its investors, and even on our country and its economy. it is vital that we learned from lehman brothers's history so we do not repeated. the day we filed for bankruptcy was the darkest of my profession.

looking back, i am sure there are things we could have done differently. but note -- what may seem crystal clear today was much less so three years ago. indeed, even after bear stearns nearly collapsed in march, 2008, the then treasury secretary stated the worst was likely behind us. if only he and other financial leaders have been right. in retrospect, the examiner found that there are absolutely no claims against the independent directors in connection with our work on behalf of the company. this conclusion comports with our own belief that we did our absolute best to try and help navigate lehman brothers through what was the greatest financial tsunami since the great depression. between 2007 and lehman brother's bankruptcy filing, our board and its committees

convened on more than 80 occasions. we received detailed reports from management on lehman brother's financial performance and other important issues. board meetings were an active affair. we program management and demanded and received a detailed and cogent answers. one issue debt management spent a great deal of time discussing with the board was risk. as directors, we took great comfort from their reports regarding the company's extensive risk management system. in performing its oversight role, the board of directors relied upon the expertise of a variety of outstanding, outside professionals, including ernst and young. and no time during our substantive discussions and throughout 2007 and 2008, did they raise any red flags regarding lehman brother's risk- management, valuation, or the firm's certified filings.

as the board of directors, we also had confidence in what we understood to believe in brother pose a close working relationship with government regulators, even before the financial crisis, lehman brothers voluntarily subject itself to the scrutiny of the sec. lehman brothers continue to work into it late with the sec and the new york fed as the financial crisis deepened. lehman brothers took numerous steps to adjust to the worsening economic climate. and they shut down at the subprime mortgage lending unit, substantially reduced mortgage and asset backed securities exposure by many billions of dollars, raised more than $15 billion in new capital, and pursued a number of strategic alternatives in order to help stabilize the firm. the examiner's report raised questions about certain transactions now known as repo 105.

this issue was never brought to the attention of the board. if there were any questions whatsoever about lehman brother's account date or disclosures, are believed our auditors would have a problem raised and i would have expected them to do so. they did not. now i am not so presumptuous as to say i know precisely why lehman brothers collapsed. i believe there were many contributing factors, including the for's real a state exposure, which was exacerbated by the rules for applying mark to market accounting, the short sellers that were fueling nurumors, and a loss of confidence at lehman brothers that led to a run on the bank. i was dismayed when the sec and the new york fed essentially told the board at lehman brothers needed to file for bankruptcy. i do not understand why the government did not help finance the sale of lehman brothers to

barkley's like it did in the case of beer stearns or expand our access to the fed's primary dealer credit to lehman brothers like they did for other major investment banks or expurgate lehman brother's conversion to a bank holding -- expedite lehman brother's conversion to a bank holding company. there may be good and reasonable explanations for all of these distinctions, but i do not know what they are. . .

we broke the a raging epidemic of control fraud without legislation from 1984 until

1986. we were able to stop that because we did not continue business as usual. the lehman brother story is one of fraud and it begins in 2001. that is with their subprime operation. they were the leading purveyor of liar's loans in the world. the studies show incidence of fraud of 90%. lehman brothers sold this to the world. if you want to know why we have a global crisis, in large part

it is before you to but it has not been discussed today, amazingly financial institution leaders are not engaged in risky when they engage in these type of loans. these will cause a failure, they lose money, the only way to make money is to deceive others by selling bad paper and that will lead to liability and paper. when people cheat you cannot continue business as usual. they go into a different category than and you must act completely differently but we have gotten is sad excuses. we are told that there are only top people in the top program at sec. who decided to fight the sec

did. to say that we only had 24 people is to give an edition. secretary geithner said that this brought the financial system to d link of collapse. we sent 50 credit people to the largest savings and loan in america. we had a whole lot less staff. we replaced the ceo and we did that not through regulation but because the power of leverage as creditors. who had more leverage in 2008? the fed?

incomprehensible greater leverage. it simply was not used. we have known that this is a common scam in which every major bank that was approached by enron agreed to help them deceive creditors and investors. what happened? there was a proposal before shi'a on

when your nation is on the brink of economic collapse, they are engaged in fraud. would you continue business as usual? and they met a lot. they said they only had a nuclear stick, that says that you are a good one to use if you are on the brink of the system. that is not what the said hasted

do. the fed is the central bank and they have gotten rid of the heads of financial institutions. the bank of england does it with a luncheon. the board of directors are invited. the head of the bank of england has said that we have lost confidence in your enterprise and we believe that mr. jones would be a good replacement. by 4:00 that day, mr. jones is running the place. he has a mandate to clean up all the problems. instead, every day, the exposure of the american people to loss grew by hundreds of millions of dollars on average.

one company was pumping out $3 billion a month on bad loans. it is critical not to do business as usual, to change. we have also heard from secretary geithner, we cannot deal with these lenders because they had no authority. this said had unique authority to regulate all mortgage lenders and to finally use it in 2008. it could have stopped the subprime unit. it was a liar is loan place as well. thank you. >> we ask our witness to confine

themselves to five minutes to summarize the testimony. >> thank you. mr. chairman, thank you for inviting me here today to answer questions about my story. i have provided a written statement and if i come under five minutes i will give a more brief oral statement. i was born and educated in the united kingdom. in 1977, i joined the london office in the uk.

i was transferred in 1981 to the new york office. at arthur young, i specialize in financial companies. and made my career after understanding and control, figuring out potential issues and resolving issues, that is what i did for a living.

i very rarely raised my issue to writing. i joined lehman brothers in 1994. i held my final position twice which was the comptroller of the global financial controller of the fund balance sheet and the global legal entities. there were a number of issues over the year at lehman brothers. i had my normal load of issues

which were discussed regularly with my boss. those include all of the items in which i will get to it in a second. they also include issues in the second e-mail that i will talk about later. my own personal issues, there were other issues that we had some sort of classification as to why these issues were not being resolved. on may 16th, which was two weeks before the end of the second quarter, i hand delivered to my letter to the four addressees.

i was fired the any notification. i stayed another two weeks, i had meetings with the internal order and i realized that this was being done about my letter. i was so angry that nothing was being done. i said i would write down some answers for some other issues. i drafted a second letter, i sent it to my attorney decided not to issue it.

instead, he wrote the meat of the letter in two paragraphs in an e-mail. this letter was issued on june 10th in attendance was the general counsel of lehman brothers. at one point, the head of general counsel was left along with arms and young. i worked several years for ernst and young, i have a loyalty to them, if they had already dismissed this through my attorney.

i did not have the e-mail with me. that is where they learn about these issues. there was a committee the next day, i think the next -- the only other point of note is on page 960. this is on a presentation to the order committee. this does not have any content of the e-mail in it. i was not asked to give any input. >> thank you. i thought that it would be borne session when the first two witnesses started. i was wondering why we did not provide baseball bats.

it seems to be immaterial disagreement as to whether there's any responsibility at lehman brothers or whether not any rules or regulations were violated. that is the conclusions we have dropped from the latter two witnesses. let me simply trying and classify your testimony. as i heard you testified, you did nothing wrong. you performed to the standards you would expect from the chief executive officer. your termination was just something that happened. is that correct?

>> i wish it was that easy. at that time i said that i take full responsibility for the decisions that i made. all i can say is that i made those decisions, i made the information at the time that thought was accurate and with that i made a prudent decision. >> what caused the demise of lehman brothers?

>> a number of factors. lehman brothers started as a public company in 1994. we've built up to an organization that had 20,000 people, hundreds and hundreds of business line products, five continents.

>> what happened why did your company failed t? >> there was a number of initiatives that we undertook as we grew. in the last five years, those all record years. we had grown from an organization that went from net income of a hundred million to an organization that had four billion. we had been known for strong risk management, we had been known for when in doubt, do the

right thing. we had been known for a strong culture. >> very simply, what caused your demise. did you over invest in risky obligations did you not have enough adequate staff? there has to be some fundamental reasons. >> mr. chairman, i was trying to lay a foundation. >> you heard the testimony earlier that you had a reserve funds, inadequate.

it was noted earlier that in one instance you had $2 billion on the books and on the other had 5 million. neither should have happened. >> you are talking about liquidity. >> we were on the mid 30's. we had a series of stress tests.

not once did i hear any feedback that led me to believe these issues. >> how about the day when they told you had to go down. no one told you that you could not cover your obligations? when you are looking at the federal reserve access to funds, when you cannot get that, what was your methodology to stay in business? >> mine meaning for saying that was that that facility had been in place and we have never

needed it, we have not used it, we financed ourselves that friday night. we'll turn to each other and said that we are fine. we then learned that the window was denied to us. >> that was not quite correct, was it? >> the window was closed. >> were you able to survive and the federal government forced you to go into bankruptcy? >> my time has expired, i will

leave it. >> could we have not heard an additional three minutes? >> i would have no objection. >> the failure of the federal reserve to require at lehman brothers to collect its material and misrepresentations on the grounds that they did not because they would like the primary regulator, do you find

that explanation convincing? >> this has pushed the financial system to the brink of collapse. . i insist that the problem be fixed. the fed had an astonishingly large leveraged, all the leverage that it needed if it had exerted it and of course chairman bernanke is the one that ignored this.

>> we have a duty as regulators, we swear and tu oath to protect. we have a duty to report any evidence of securities fraud. we have a duty to make criminal referrals. >> there were also a creditor and and the counter party. going to the credit files, if you will take exposure to something like lehman brothers which was vastly more

complicated and had more problems, we would have the staff which would be sending 300 people from the federal bank of new york. instead, they did a pittance. you cannot believe that whole system is about to come down and then say, we cannot do anything so we won't try. >> if lehman had tried to reduce their leverage by selling assets, they would not have discussed mistakes. the markets would have discovered that these for grossly overvalued. what do you make of the comments about the mistakes in the lehman markets? >> he was asked about it twice that i recall and he did not answer any thing.

honesty and accounting would have shown that the problem was not putting, that was a symptom of the underlying problem. some said the liabilities are grossly in excess. that is the secretary's own words. >> did you ever try to convey the information -- the impression that lehman brothers was in good financial shape? >> i don't recall.

>> there is a "in a book that says that you're telling jim cramer, "i am on the board of the federal reserve of the york, why would i lie to you? i see everything. they are watching everything that we are dealing." what did you mean, they see everything. >> i don't recall that, but the fed and the treasury were watching. they saw our liquidity and our capital positions. they saw the the hour mark to market process these. i believe they saw everything that we were doing real-time. >> i could agree that that would convey a sense of confidence.

did they ever ask you to do something different? >> not that i am aware of. i do recall conversations where we talked about potential capital providers and potential structures. we discussed with him the fast number of people with him we had conversations about additional capital, additional investors, and i thought they were productive.

>> did they lead you to believe that they would interject capital into lehman brothers? >> no. >> you said you were on the board of directors, if you said that to mr. creamer -- >> i remember having lunch with him. >> what would you be trying to convey? >> as i think about it now, my conversation, i don't know. if they had something to say, they would have said it.

if they had something to say to me regarding our position, work position that needed to be corrected, modified, or change, i had enough conversations with fed officials that they would have said it to me. that is why at the third quarter, i actually believe these last two quarters are behind us. >> in 1994, this congress passed the homeowner's equity protection act, this was actually launched online predecessor.

that bill was passed in 1994 and then it was explicitly ignored by mr. greenspan. the authority that mr. bernanke had was exactly the same authority that mr. greenspan refused to use. that is important for this debate. some have argued that the federal reserve is responsible for the housing bubble because they failed to inflate the entire economy.

there was a way in the subprime problem other than restraining growth. it was to use the specific authority given by the congress in 1994 and their efforts to get it used. first, we tried to get mr. greenspan to use the authority. we were frustrated, it became an ideological dispute. we were then in the minority.

and 2007, we did pass such a bill in the fall of 20072008. -- 2007. the federal reserve acted. it is important to note that we dealt with the consumer agency and people did point to actions on the federal reserve.

when you raise these issues, what is the response that we got? >> annoyance, they knew the point. >> on the issue, they knew about it. >> to the extent that there was any ambiguity, do you think that a subsequent revision have

improved the situation? >> i cannot really comment. >> there is a certain extent of justice. the lehman brothers went to the united kingdom to get their opinion and then they sent you back to get even. you made us a little bit more whole. thank you. >> thank you. the chair recognizes the gentleman from texas. >> good evening, mr. chairman. i assume that you were here for the testimony earlier. >> i did hear a good piece of it. >> on page 3 of his testimony, he said that lehman represented

in writing that there >> was a "binding constraint on their risk taking that cannot be exceeded under any circumstances. do you agree or disagree? >> we set up risk appetite with a lower level hurdle >> 8010%. that was the level below which we were not allowed to go and an internal standard. what did you represent to the sec? >> what we were presented was given our level of revenues. let me explain the risk

appetite. i don't need to be too technical but this is important. risk appetite was the amount that the firm could lose in a year and still pay all of those expenses and create an after- tax of 8%-10%. >> i understand that. my time is limited. >it is understood that there was binding limits and yet they were breached. >> this was at 8%-10%. our risk appetite was set at 4 billion and change between 3,000,000,006, 4 billion to. had we lost 4 billion, that would have triggered a 12% roe.

the risk appetite was set with a cushion. >> this is just a simple question, the you disagree with the assertion. >> the assertion was that we're not supposed to go below the standard. >> on page 4 of the testimony, it is in stated that there was a stress test program to design and assess whether you could withstand a hypothetical and historical stress scenarios but you did not include the assets such as commercial real estate. do you agree or disagree with that assertion? >> that was the case until towards the end of 2007.

the day to day marking was an impractical exercise. then again, that was a risk committee and executive committee regardless. we will include commercial real estate. >> the former president and ceo, is this correct? he would have answered it to you, i assume. are you familiar with the e-

mail exchange between himself and mr. lee at the panel? exhibit 7, we have mr. lee asking about this. are you familiar with the e-mail exchange? >> yes, sir. >> do you have an opinion on what you're former president and ceo meant? >> no, i do not. that was not an exchange. that riwas rare. >> what about the lehman finance

group? he had an exchange with another employee, "what is up with repo 105?" "this is basically window dressing. we are basing this on technicalities. he was a senior member of your finance group. are you aware of his existence? >> i am not. thank you. >> in your written testimony, on april 20th, 2010, i have no

recollection whatsoever of hearing anything about the transactions while i was ceo of lehman brothers. is that correct? >> yes, sir. >> were your employees hiding this from you? >> no, they were not. >> then why did you not know about this? ? >> these occurred on the government trading desk.

on any given day, we moved through the system over one trillion dollars. on any given day, lehman traded between $50 and a hundred billion dollars. we were probably one of the biggest government dealers in the world. that is $50 to $100 billion a day. there is no reason why i would have known about a sale. there is no reason why i would have known about these transactions.

as the ceo, i it work more on what i was supposed to be focused on. i was focused on residential, mortgages, loans. i was not focused on the most highly liquid securities or on the government securities day- to-day, that could vary between $50 and a hundred billion dollars a day. my concern was about impacting our capital. the government very rarely impacted our capital. lehman brothers rode down close to $25 billion that was essentially tied to the asset positions.

that was my focus. >> you said your focus is on what impacted our capital. was the fact that this was an over leveraged asset, was that not part of this at all? >> they were sold, they were gone. in any day, another 50 could be sold. >> i know that 50 billion should not be a lot to wall street but sit and you be aware of that kind of money? >> $50 billion is a lot. this is always a lot. i don't want to leave the impression that 50 billion is an

insignificant number. i must say that with the focus on liquid assets, whether on balance sheets which is an indication of one point in time was up or down 50 billion or 100 billion of revenues. >> in view of what has happened, should that have been your focus? >> i was not involved in the structures? >> aren't you the ceo? >> i was. >> shouldn't you have been involved? >> we had a thorough process around this. and our auditors approved it. the legal counsel signed off on disclosure. as i had come to understand

this, there was nothing wrong with the transactions. >> looking back now, your testimony is that there was nothing wrong with what happened at lehman brothers. >> that is a different question. >> well, answer that question. >> which goes back to the earlier question about what did we do wrong. what we did wrong as i believe we did not understand the contagion of one security, one asset class to the next. i believe that we did not see the death and violence of this crisis. i believe that we had too much

commercial real estate, i believe that we corrected that. we went from 50 billion down to 32 billion. we corrected our residential positions. we corrected our leveraged loan positions for. we have raised capital. >> let me stop you. mistakes were made, correct? >> i would say that fair judgments were made regarding the market. >> i hope that other companies can learn from the mistakes that you made. would that be a worthwhile goal? >> yes, sir, it would. >> i want to return to an

argument made earlier. the policies of the fed on inflation could have been offset by the regulatory oversight and perhaps that is true. it was chairman bernanke argued for setting the fed rate at a - level. this was for low inflation. fed funds rate were negative. the argument that congress was making at the time was that everyone in a home, regardless whether they had a means for a down payment, we were allowing for over leveraging.

i would make the reservoir dogs recommendation that running a negative interest rates for four years running does not help unemployment. in fact, it guarantees that when the bubble bursts. you have misallocated capital. i want to go into a couple of questions here. given this ongoing presence of the fed and in the s e c mentioning your testimony and the fact that you're much

smaller competitor, bear stearns, receive government assistance. were you working under assumption that lehman brothers would be bailed out? >> no, sir, i was not. what or a similar arrangement perhaps as to what happened with bear stearns, the diamond to deal? you were not working under that assumption? >> no, sir, i was not. >> in your opinion, these to not create a moral hazard.

do you believe that there was the presumption that lehman brothers should be treated as just another counterparty? do you think that the government might have been behind them. >> you have touched on a very interesting piece which i would like to talk to. there were a key claims at the end of september 15th. one was that there was a huge capital hold. some said 30 billion, some said some other numbers. one thing that was pointed out was that as we went to the different asset classes, there was some reasonableness and unreasonableness but at the end of the day it was somewhere between 500 million and let's

say 8,000,000,007. this would have lowered our equity. for those that thought it was dirty, this is important. >> we have your answer for the record. for my standpoint, what i think the world believes, once we have done bailouts, we would do future bailouts. i voted against the bailouts. the nobel prize was won by explaining how government intervention helped to cause this cycle in the economy. i cannot see why people cannot understand why running interest rates that are negative for four years in a row and then failing to control the over leveraging

and then congress's culpability in terms of going in and allowing further leveraging would not have this impact. i do not want to see those two or ceo's have the ability in the future to get a bailout at the expense of taxpayers. this legislation is the wrong approach to prevent it. thank you. >> i want to pursue that line that was raised about the role of fannie and freddie. i understand you were the direct competitor. you did the exact same thing that they did. >> you did not have a dual mission. your only mission was supporting affordable housing.

you were just under requirement to your shareholders to make money, profits. >> we had an opinion that the administration wanted everyone in the industry to extend themselves to fulfill the american dream. >> you are making a profit from securitized in mortgages. there was your growth in the residential real-estate market. >> in the later years we did not. did you have some security face or liars loans and selling that securities based upon this?

the events of the we can afford did impact us. >> your business over the course of the last decade. your participation of the market did not have anything coo with freddie and fanny, did it? >> we were a client and a competitor. >> >> he said that you never expected a bailout, that is different from other accounts. all of the public accounts said th