guest: i probably agree with the caller. these things tend to get unfounded in a larger debates. illegal immigrants are estimated to be about 11 million of the 40 million population in the u.s.. it is a concern to everyone. i guess what the issues are about stemming future illegal immigration in dealing with people that are here, for many years is what we have been working on. host: independent line, virginia. good morning. caller: my question comes down to more how do we changed the arguments into something about

class rather than the color of skin? when i was young i could not believe that people actually were categorized by shade. i am 30 and is still happening. is it not really just a class argument? guest: the caller makes an interesting point. it goes to the question of what the definition of minority is. and with what is considered minority in the united states representing so many different people in every part of the world, you could argue that the social divisions in parts of the country that have been divided racially for so long, in the

children that are growing up with poverty. host: new york, new york, republican line. guest: -- caller: i would like to raise a few points. i am an immigrant myself. no one talks about what it actually means to become an immigrant in the united states. meaning how you get there. because when i got here you had to have a direct relatives in the united states. or you had the have the value to become an immigrant. guest: the caller is rrght. with all of the focus on illegal immigration, one of the big things that will be up for debate is how we define the flow of legal immigration. there are many ways that legal

immigrants get into the country. one is integration. one of the issues that some in the immigration debates have raised is how we do define the appropriate legal flow that reaches the demand of the labor market and hopefully provides less incentive for illegal immigrants. host: dr. ajay chaudry, thank you for being with us this morning. guest: thank you. host: this follows the show for today, we are going to the congressional oversight panel with secretary timothy geithner talking about tarp. [captioning performed by national captioning institute] [captions copyright naaional cable satellite corp. 2010] .

>> strain in the ability to lend to small businesses. finally, it seems clear, the treasury's efforts to reduce mortgage foreclosures is not working. approaches,d date

the panel must know if potential risks have been assessed. we must also evaluate if the impact has been measured, using credible metrics to measure the success or failure of programs. has the treasury department targeted the highest degree of accountability and transparency. reasonable people might approved or not approve of the plan, but no one questions that the progress should be measured against clear benchmarks for success. reasonable people might define financial stability in different ways, but everyone agrees we can best gauge the stability by measuring the stability of our banks. treasury has called for additional stress test. reasonable people might disagree about how to help small

businesses gain access to loans, but no one doubts that the solution must begin with a clear understanding of the problem, yet treasury has collected only sparse data on the small business credit crunch. without more handedness -- handedness, the shape and depth of the risks facing our economy remains hidden. without a willingness to separate the programs that have worked from those that have not, it is not possible to build the best defenses. the problems in commercial real estate, where mortgage foreclosure -- home mortgage foreclosure, they grow worse by the day. your office will lose the capacity restructure programs, or deal with the programs. i will be very glad to see tarp

end, but i realize that the time is running out to make sure that we have used the money to assure the stability of our financial system. time is also running out to make sure that tarp money is used to help families and small businesses the way it was so quickly used to bail out wall street. counterparts on the penultimate opening remarks. mr. mcwatters. >> thank you, elizabeth warren. it is my hope that secretary timothy geithner will assist the panel in addressing a number of significant questions, including the contemplation of the application of additional tarp funds to new programs, or the application of additional tarp funds to existing programs?

will they be applied to any financial or non-financial institutions such as aig, gm, chrysler, or anc? will the investors received dividends in cash? what is the exit strategy with respect to these institutions as well as the other tarp recipients? has tarp enshrined into our law of the concept of too big to fail? have established an implicit guarantee for the benefit of our largest financial and non- financial instiiutions? will the pending legislation ratify and codify the existing standdrds? we will treasury yet again allocate additional funds to goldman sachs, citigroup, bank

of america, and a group of other significant firms if they notified treasury today that they were experiencing a severe liquidity and solvency crisis? how would the answer change if the date approached treasury and the new york fed after the financial legislation is enacted? would the ftse liquidate these institutions -- would these institutions be liquidated? is this not what we were told with respect to goldman, aig, citigroup, bank of america, among others, that simply certain institutions were too big to fail, and could not be permitted to liquidate? is a resolution of 40 included in the pending financial reform

legislation -- is the resolution included in the pending financial reform legislation, dressed up? aig was regulated by approximately 400 regulators. most professionals completely missed the best systemic risks that were percolating. how will the addition of a systemic regulator proposed under the pending financial reform legislation help to solve this problemm where did treachery, the fdic, the sec, and the cftc expect to find these super-regulators who are competent to call out systemic risk that others have missed? even though systemic regulators have timely call about risk, how will they convince other regulators, the global

financial -- the global financial community and congress that the worries are significant and could be a great cost to taxpayers and the financial community? why it former federal reserve chairman paul volcker in an interview state that the resolution authority provided in the proposed financial package is a "workable proposition for anything short of the biggest banks." does chairman volcker believe it will be all but impossible to liquidate in an effective manner? does he believe that tarp, too, will be required? why did treasury released a press release and pine that the tarp program has been profitable, -- implying that the tarp program has been profitable, even though the

congressional budget office expects taxpayers to lose approximately $109 billion. why it had whitaker implied that gm has replaced all of its tarp funds, even the taxpayers have yet to receive payments in cash? the congressional budget office suggests that taxpayers will lose $34 billion of the tarp- fund investments in gm, chrysler, and gmac. thank you, mr. secretary, for joy in the. and look forward to our disk of -- discussion. >> thank you. damon silvers. >> i wish to express my appreciation to secretary geithner for his willingness to appear before this panel and a

regular basis. today, i think the treasury department and secretary geithner deserves considerable credit for the overall performance of the assets the government has acquired through tarp. as my colleague, mr. waters, pointed out in a different tone, the cost of -- mr. mcwatters pointed out in a different tone, the cost of tarp continues to fall. while it is hard to know exactly the full cost, the public should be aware that the real cost of tarp is not at this $0.700 billion, or even the three and a billion dollars that it was thought to be. it is falling pretty consistently. however, there remain three significant questions that have been with us since the inception of tarp. the first is, is tarp working to

achieve economic goals, reviving credit markets, stabilizing the economic system, and providing relief to homeowners facing foreclosure? projections of long-term -- digit unemployment suggest that we might not have prepared our credit system or are will housing market. are we continuing to manage tarp's assets effectively? i am here, particularly addressing aig, citigroup -- i am accused from -- i am recused from ottawa. -- auto. i am particularly mindful of the lessons of our panel's detailed examination of the collapse of aig in our june report.

that report is a powerful brief for the wisdom of keeping government-insured liabilities away from highly risky assets, and for the need of a strong resolution of 40, and need which you have championed much to the public's benefit. it is a challenge to evaluate tarp in two different metrics, which are both important. tarp is literally a set of investments in the financial institutions and certain other firms. the second is really the purpose of tarp, which was to ensure the financial system did not take our economy down. we have moved from an

environment where the threat was a cute, too, i believe, where the threats are chronic. that is what i hope to take up today, in addition to the other two subject to i'm mentioned. again, my thanks to the secretary for appearing before us. i look forward to a testament. >> thank you. dr. troske. >> thank you. i would like to start by thanking the treasury secretary dieter for appearing before us. as the newest member of the panel, i am looking forward to hearing your thoughts about the crisis we have been through, and what we couud expect going forward. i would like to focus on why financial markets have not paid

eight -- not behaved, as i believe they should have if they were a well-functioning competitive market pared their -- market. there are several aspects that i find that both surprising and confusing. i would not have expected to see the events if they truly were a a well-functioning, competitive market. while i have not closely studied the sector, you, secretary geithner, have played a key role in dealing with the crisis, and try to understand in preventing a similar crisis. i feel one of the purposes is the effect of tarp on limiting the financial crisis. and the aspect -- one aspect of the financial crisis that i find confusing is the existence of

too big to fail firms. the argument has been made repeatedly that the government had to bailout firms because the standard bailout process is slow and destructive. had they been able to enter, it would have resulttd in enormous disruption. numerous companies, both large and small, have entered bankruptcy. the participants should have been well aware. they should have faced increasingly higher costs of capital because of the cost of potential bankruptcy rest. by imposing higher costs, there would have been a limit placed. instead, it appears that the large financial firms face both -- face lower costs than smaller firms.

this allows them to purchase riskier assets. in a well-functioning market, they should not have occurred. another aspect that i found surprising was that while the market was sending clear signals that the mortgage-backed securities were risky, as basic financial theory teaches us that there is no such thing as a free lunch. it is a formulation of something mothers tell their children. if something seems too good to be true, it is. unfortunately, they ignored that. since these securities were

earning an above-market returns risk, people purchasing them should have realized that the historic returns were not supportable. over time, people learned these assets were risky. many of these assets are now worth much less than what was paid for them. in addition, managers seem to have done a poor job of assessing the risks, yet few of them have been penalized. they're essentially purchasing boxes with residential mortgages, boxes that were stamped by the rating agencies. they through the boxes in the corner, and what it to cash dividend payments. it is not apparent that they opened any boxes to see if there was an accurate representation of what was that -- stamped on the box.

in other sectors, these managers would be out of the job. in the financial sector, they seemed to still be working. this is hard to understand. this all leads me to conclude that it is not a well functioning, competitive market i'm trying to understand why the government h. the government has long backed.+ >> thank you, dr. troske. superintendent neiman. >> thank you for being here, again to speak to the public on important issues. it has been over one year since our first hearing with you in april of 2009.

it is sticking to take stock on where we stand in comparison. first, it goes without saying that progress has been made in restoring financial stability. although difficult challenges remain, the crisis levels of last year have receded, and capital markets are beginning to function more normally. second, a significant amount of tarp funds had been successfully repaid. this is impressive, as many banks have been able to privately raise capital and increase earnings in a market that is constrained by recession. finally, many of the causes of the crisis that put many taxpayers on the hook on -- in the first place, are being addressed in congress, as we speak. however, in other areas, needed change has not come as quickly as desired. unfortunately, these are some of the very areas where americans are hit the hardest. i may be the virtual broken

record on foreclosure prevention. it is clear that families have auctions at work. i am equally concerned -- particularly concerned that there are more families whose trial modification has been canceled rather then converted to long-term further, i think we all believe small business lending is key. we continue to hear the viable small businesses are unable to access the credit they need. this was a recurring theme. the house recently approved a fund that will provide capital to regional banks that are at the heart of small-business lending. our like to explore small business access and other lending issues with you this

morning. finally, with a financial reform work near completion, the united states finds itself in a unique and precarious position. as you are more aware than anyone, there are challenges we face in the global community between balancing our role as a leader of financial reform with the future of our international competitiveness. time permitting, i would like to discuss this challenge with you so the public can gain your perspective. i look for to your testimony. >> thank you, superintendent neiman. secretary geithner, i would like to recognize you for five minutes. secretary geithner. >> thank you. thank you members of the panel.

as you know, in the fall of 2008, as we confronted the worst financial crisis this country has seen in more than 70 years, congress and the previous administration mobilized extraordinary financial response. their action started the process of stabilizing a system that was on the verge of collapse. when president obama came into office, he took the necessary steps to start to finish the job, to start to save the economy from what could have been a second great depression. last december, outlined an exit strategy. i want to update you briefly on the progress and the ultimate cost. first, because of the actions we took, alongside actions of the federal reserve and the recovery act, the economy is growing again, exports are rising, manufacturing output is

rebounding, businesses are investing, and so far, this year, the economy has treated half of 1 million jobs in the private sector. economy is in a much stronger position to the cost of credit for homeowners,,consumers, and businesses has fallen considerably rates for all those up -- of all loans, for which it considerably. rates for auto loans, for example, are considerably lower. second, we are now in the process of ending our emergency programs and recouping our investments. as you know, we have shut down most of the programs that characterized that initial phase of the of emergency response -- the capital purchase program, treasury's guarantee for money markets, and the federal reserve has wound down the vast majority of its lending programs. all of those programs are on

course for significant profit for the taxpayer. more than half has been repaid. when president obama took office nearly $240 billion had been invested into our nation put the banking system. today, we have recovered -- recovered three-quarters of that money, and we are making progress getting out of aig, gm and chrysler. third, the overall cost of car continues to fall. last august, we projected potential losses at 340 billion -- $340 million. it is expected to fall further. the present is expected to impose the fee to insure that

the largest institutions bear the cost, that way the american people would not have to pay one penny of their hard-earned dollars to cover the losses we might still face. we are on track to shut this program out as scheduled, and we expect to do so without using hundreds of billion dollars of authority. we will return it to devote to the medium and long-term needs of the country. it is important to recognize that they did what they were supposed to do. there is no job growth without economic growth. no economic growth without access to credit, and no access to credit without a stable functioning system. our emergency plan started that

process. the damage caused is still in affecting the lives of millions of american families and thousands of businesses across the country. those struggling to find a job, making mortgage payment, or divans their jobs or education -- or advance their jobs or education. we will continue to promote and maintain stability in the housing market and improve access to credit for families and small businesses. that is why we are working with congress, and are quite close to getting congress to adopt a small business lending facility. we are urging the congress to enact quickly to -- to act quickly to enact financial reform. taxpayers should never again be asked to bail out a financial

system crisis. the house and senate are close to enacting the strongest set of reforms we have seen since the great depression. i would be happy to talk about those in more detail. it is time to provide clarity and detail. that will help make sure this financial system does a better job of meeting the needs of main street business and families. it will help restore confidence that our financial system will be a source of stability, not3 you began with excellent questions. i will be happy to spend some time with you walking to the challenges ahead. >> thank you, mr. secretary. the point about the accomplishments of tarp is quite .ignificant your emphasis on the importance of a stable, functional

financial system is what i would like to talk about. we have made an enormous progress. tarp oversight is where the problems still lie. in just over three months, treasury will no longer be able to initiate or redesign programs. what we do not not -- what we do not now, we cannot do in the future. i wanted to start with small bankss this panel has written about the upcoming troubles in the commercial real estate. about half of the $1.40 trillion loans held by banks will be held by -- will be held under water. that will make lending almost impossible. about 3000 of the 8000 intermediate and small banks have portfolios that are heavily concentrated in commercial real estate. we estimate that banks could be

facing a $200 billion or $300 billion in losses on these loans. it means that hundreds or thousands of more -- more small banks could capsize. what is treasury doing to prepare for this coming problems? and do we need to be reworking any of our programs? >> that is an excellent question. we will be living for a long time with a lasting effect of this crisis. the damage was extraordinary. it reached car and brought across the country. if you are in the real-estate business, parts of the country that have been exceptionally high unemployment rate, if you run your business on access to credit that washed out, it is still an enormous the challenging environment. you are right to point out that small banks came into this crisis, much more conservatively

managed and their wall street competitors, but many got into a position where they had an exceptionally, regrettably, and unacceptable high levels of exposure. they face difficult adjustment ahead. we have a set of programs stiil in place. that will last beyond the expiration of tarp. my view is that the most effective thing which could do for the credit problem still facing small businesses and small banks is for congress to enact this set of credit programs for small businesses. the way these programs are designed, they do two important things. they provide a modest amount of additional resourcessto states across the country that have

programs in place to provide support to small banks and small businesses, but, alongside that, we propose a new lending facility that small banks will be able to access. the more they increase lending, the lower the rate they pay on those investments. >> mr. secretary, if i could stop you there -- emphasized -- i want to emphasize a different part of the question. the question is that 3000 of our 8000 banks across the country have heavy concentrations in commercial real estate as i read the new initiative on small business lending, that is money that is not designed to go into banks to help them repair balance sheets. it is money to go to healthy

banks that do not face the serious problems. the question i want to sk, and press on, is when you talk about the stability of the american banking system, we have a 3000 banks at serious risk that they might not survive. what is treasury doing about that, or is the answer, we will let them go? >> as you know, i cannot associate myself with your basic numbers. that is an issue where the fdic's basic framework is the most reliable resource we have had. >> so we are all clear, the numbers come from the bank's examiners. they're not numbers we generated. >> i am a great about the challenges, i just did not want

my agreement to be about the numbers. we have a very elaborate the country for dealing with the challenges facing our nation of 9000 community banks. that process was designed in the wake of a series of past crises. that gives it government the ability to help those banks manage through, and help facilitate the restructuring ahead those banks that are uuder pressure have a lot of options. they can raise capital. they can shrink lending. you also have to point out that the programs we designed from the beginning are only available for banks that we believe would be viable. these are important programs because they will help the banks face less need for

shrinking balance sheet. >> i am over. i just want to make sure that there is no reason to change anything, we will stay steady on the same course? >> i am a very careful, pragmatic person, and i am open to any ideas, but, at this stage, i believe that the programs we have within the tarp, and the existing programs with the fdic and the new small- business lending initiative is the best mix of solutions that we have found. >> thank you, mr. secretary. mr. mcwatters. >> i will start with an easy question. a soft ball over the plate.

does the administration plan to test congress to extend tarp beyond october, 2010? >> no. this hearing should be a eulogy for tarp. we're working very hard to put this program to rest, put it out of its misery. it will not solve all of the problems facing the country. it was not designed to. we will not use it that way. we use it carefully. it has come the essential thing we designed it to do. -- it has done the essential thing we decided to do. you said one thing in your opening statement that i wanted to correct. you referred to a press release where we implied the overall programs would be profitable current we have never done that. we were explicit that the latest cost estimates were in the hundred billion dollar range.

for the bank piece of the program -- for many americans the program was defined by the incredible act of the commitment of the united states putting capital in banks that represented three-quarters of our nation that was a focus of the deep outrage where we had to put money in the hands of destitution that played an important role in the crisis. it is hard -- and every estimate that i have seen, they will return a positive investment for the american taxpayer. every time we said that, i always make clear to say, and our numbers always show, we still face a substantial risk of loss on a range of other programs, including the ones we inherited from the previous administration i want to make sure that we never made that

mistake, and i will never make that mistake. we are still exposed to substantial risk. >> but, but export sort of curious -- but the metrics were sort of curious. to a lot of people it looks like you're trying to say there was safe for the million-dollar profit, when at the end of the day, there is it $500 billion loss. >> one of the important things about the way we have done these programs is that we put out regular estimates, including by independent analysts, of the potential costs. it is hard to find any country and around the world that has explicitly identified and provided regular independent estimates of the ultimate cost the taxpayer. i am committed to that. judgments.

life is uncertain. these programs will cost a fraction of what the critics feared and what the architectss of the program thought was likely. a very small fraction. the best way to measure this is to look at the projected costs relative to, for example, the crisis in the 1990's, which was simple to solve, still more%- devastating for the communities effected, but dramatically higher costs from a much smaller crisis. >> at the end of the day, $105 billion is a lot of money. >> a absolutely. -pthat is why we're working so hard to bring those costs down. >> let me as to the. is treasury contemplated the allocation of funds to any new programs before october 3?

>> at this stage, we are not contemplating any new programs using this authority. we have an obligation of care and prudence. we are very reluctant to do things unless we think there is a very, very high return on the taxpayer's investment. we think this is a set of programs today thht strikes that balance. >> how about additional tarp funds to existing programs? >> no. we have no plans of adding to the current estimates that we have put out. again, first of all, for perspective, most americans think we went and spent $700 billion, and we will never see again. in fact, we actually put out half of that, we got more than half of that back already, and we have substantially reduced the estimates that we started with about how much these programs would ultimately commit

to. >> ok. my time is up. >> mr. silvers. >> mr. secretary, i hope i conveyed in my opening remarks my sense that the analysis you went through is ethically correct, and i think you and your team are to be commended for getting where we have gotten. with that introduction, i want to shift to the question of the interaction of tarp with a larger. i will ask our staff to give us an updated loan level measure. as our chair noted, we think there is some deficiencies. my question is this -- given that datt, at a time when i

think the administration's view is that we re unit and economy mode, it appears that the private credit system is acting assa light on the growth of the economy. that would appear not to be what we are trying to get at. can you give us an analysis of that and what steps you think need to be taken to address it? >> it is a complicated question, and it is gephardt of heart of any evaluation. at the if you look at most measures of the cost of credit of overall financial conditions, they do not suggest the the financial system today is a source of weakness for the overall economy. in fact, i would say the opposite there is not a chance that this economy would have started to grow again in the second quarter of next -- of last year, and this early a

return into a the economy started to add jobs again, without the dramatic actions we talk, however unpppular to bring down the costs of the fed and stabilize the system. this is not something we can know for certain. it is absolutely the case in the housing market. in the context of small businesses that were unlucky in their banks. i do not think that on the available evidence today, you could say that the financial sector itself is operating as a significant drag on the i will finish quite quickly. one of the reasons we decided we decided -- was wanted to make

for that the system would be able to finance recovery. i think we are in a good position to achieve that outcome, a notch in there is still a lot of damage out there. >> -- acknowledging the there is still a lot of damage out there. >> i do not think you are confronting what i asked head- on. i do not disagree with you that we could have been much worse. the situation in 2008 and 2009 is significantly worse than today. my concern is that the situation today is not what it should be at this moment of economic recovery in terms of the behavior of the private credit system. that is not so much in housing. it is clear we have a private credit system in housing at the moment. it is more on the business side, where the job growth needs to come from. that brings us back to my opening statement about a chronic problem replacing an

acute one. >> the best measure we have about whether the financial system is a constraint on growth is what is the price of a loan? if you look to the price of municipal borrowing mortgages, business credit, in almost any sector, there are very low. another example is if you look at the balance sheet, how much cash businesses have on hand across the american economy, the business sector as a whole has very, very strong balance sheets and is sitting on a lot of cash. i completely agree with you about the basic risk. we did not want to have a recovery constrained by credit that is too tight, and it is still too tight in significant parts of the economy. on those measures i would say i

do not believv we face the risk of a chronic, although i don't think i would use that word, but we are continuing to make sure that the economy is growing as fast as we can. >> i think most economists would say that the fact that businesses are sitting on a lot of cash is not necessarily a good thing in relation to our recovery. >> that i would agree with, but as a measure of financial had once, it is a good measure. -- head winds, it is a good measure. we still have roughly 8 million americans out of work. people are still living with a basic level of financial insecurity that they had not experienced in decades. you are absolutely right about that. we are still at the early stage of fixing what was broken in this economy. >> the chair was kind enough to give each of us the same time

she talked, so i'm going to use -- what i am pushing on is if you look of those reserves in cash, i believe they are weighted toward the companies that have access to markets where the recovery has been more -pdramatic. if that is not so, i would appreciate hearing about that. our reports suggest that if we have to deal with the banks as your source of credit, you have a much tougher situation as a business person. the testimony we have heard from small business people is that the bank might post a rate out the window, but it is not available to them at that rate. that feels like a serious problem turned >> i agree. that is why we have asked congress to enact legislation that would help mitigate that

problem. i would say that on your basic question about whether on the available evidence you ave a financial system today that is a source of restraint, i do not believe that would be a fair evaluation. in parts of the country, in particular sectors, that is the case. it would be surprising if it was not the case appeared >> thank you, mr. secretary. dr. troske. >> thank you. i'd like to start off by getting your thoughts or having you respond to concerns expressed by many that the large financial institutions and their creditors, for them, the federal government has publicized profits, and privatized rest.

>> you are absolutely right. market discipline failed. the market failed to constrain risk-taking by financial institutions. that had two causes. one was classic moral hazard risk -- the expectation that the government would insulate private creditors from losses. that was acute and conspicuous .n the case of the gse's the crisis had another cause that was much more powerful in a moment. the market had financed a huge growth in leverage in a set of institutions that were allowed to operateeoutside of the constraints of capital leverage. for example, in many of our investment banks, in a vast range of non-banks and venture

companies, some of which call themselves thrifts, those institutions were able to operate without a history of government support. that is not something you can attribute to moral hazard. that was a classic act of judgment that we might face a recession with a huge losses. -- with acute losses. we have a set of reforms that will address that risk? this is important. those institutions, that essentially operate like banks, whatever you call them, and take risks like banks, are important to the functioning economy. we will constrain their risk- taking. whether you call them aig, goldman sachs, or j.p. morgan,

we will constrain the leverage and risk that the take on. if they get to a pooition where they could not survive on their own, we will step in and dismember them safely. we will minimize the risk of loss to the taxpayer, and make sure they can be broken up in a quasi bank like mechanism. that is what this does. the absence of tools is what forced us to take those exceptionally offensive measures in the fall of 2008 and the first half of 2009 it to put up >> the example of long-term capital management will be one where that was not a bank, and the government came into backstop. they did arrange a rrscue that

would lead one to think that that is what the government is quick to do for the other ffrms. rescuing became an expected norm. there are zero entities out there, presumably credit holders' equity holders that are supposed to be regulating these firms. the creditors, who did not experienced the upside, were the ones that had the most to lose. it is not a large stretch to think that they were failing in that role because they felt they were a point to be guaranteed a return regardless of what happened. >> i think you're right that all financial systems have this risk of moral hazard, this expectation in the extreme event that it is possible the government will act. that is the job of oversight, policy, and government, to make sure that because of that risk,

you have tough, well-design constraints on leverage that are enforced across the system ahead of the crisis none of us run the system, and no country runs the system on the expectation that market discipline alone is adequate to constrained rest- taking. all companies -- all countries restraint risk. some do better than others in some parts of the system, but did it partly -- poorly in large parts of our system. that is what we need to change appeared . >> you mentioned the systemic risk regulator, or whatever you want to cut. under the current system, we're supposed to be assessing systemic risk to the economy. you would know more about it than me. what is the difference between what we are setting up going forward -- because it is the

same players -- what powers to have that were different than they have currently? >> that is an excellent point. we are not we to design a system that depends on the foresight and wisdom of officials sitting in washington in those agencies to come in and preamp -- preempt, act preemptively to diffuse future crises he's. we hope that will happen, but that does not the promise. what we are doing is making sure there are clear, public, and forcible constraints on the types of risks that could imperil a system. we think that is the most realistic way to make sure the system runs with much greater cushions against future sources of lost stocks and distress.

i agree very much with the promise of the -- the premise of the question where if we designed the system to work only if regulators are pre-emptive, that is not the reform we are supporting. i grieved for skepticism. -- i agree with your skepticism. >> ultimately, if the government is faced with another crisis in which several institutions are facing simultaneously -- is there anything that will prevent them from enacting a tarp two? nothing that i have seen what change anything from what happened in the past. >> excellent system. that issthe system we had.

that is what put the government in the outrageous situation of having to commit an extraordinary amount of resources. that was necessary given the system we have pared the reforms that are not -- that are on the verge of enactment help to fix that problem. did did not have the ability to constrain risk taking because they did not call themselves banks. it fixes that problem. it also make sure that if in the end, and individual firm gets itself in the mess, we will be able to let them fail, ensure they fell, dismember them safely, and not give them a chance to operate again, putting them out of their misery without the taxpayer being forced to

uxor these losses, or -- absorber these losses, or left with the liability. you want to be able to make sure you can draw a line around that fire. that is what this reform does. >> mr. secretary. thank you. >> too wet. -- thank you. >> thank you. superintendent neiman. >> in the treasury report from just yesterday, trial modifications nearly tripled from march to may. the number of families that have received permanent modifications has now surpassed -- been surpassed by the number that has been pushed out of the program.+ it is deeply troubling that the

homeowners relied and trusted this government program, that they might be left out of the -- left out in the cold. over 70% of those individuals have been making timely payments for six months or more. first, we need to really understand why these hundreds of thousands of modifications were canceled. . .

and therefore we are in a position today where we are, as you said, canceling some of those modifications. more than two-thirds of the people in those progrrms that

have canceled modifications are benefiting from other modification programs that banks offer that we are not that helps him for a little bit -- that helps to temper a little bit some of these consequences. we're devoting these scarce resources to people who are able to prove their eligibility for the benefit. >> what kind of verify ability or compliance can we provide?3 about the arguments being lost and errors being made in processing documentations. how can we be assured that servicers are acting properly. -- properly? >> i think servicers have done a terrible job of making sure they are doing everything they can to meet the needs of their customers who are facing the possibility of losing their

home, and most importantly, there's financial security. they still have some distance to go to try to make up for that. it is a series of basic -- how should i say it? mistakes, inadequacies. what we try to do is to simplify and reduce document burdens. we have put out. each of public metrics of performance so that people can judge themselves -- we have put out very detailed public metrics of performance of the people can judge themselves who is doing a good job. and we continue to put as much pressure on them as we can to improve their crops -- their quality of service. >> you have said that the majority of those who dropped out of the program were offered these proprietary modifications by the servicer. but isn't it true that the true

test will be whether the bar work is better off? until we see the statistics -- about the borrower is better off? until we see those statistics, isn't there a question whether those are truly sustainable? unlike the situation two years ago before the government poured out this basic system for standard modifications, most did not meet that test. they left the ball as dead as coming in. but since then, the government has raised he standard of those modification programs. >> do you expect that the public will be seeing any data? has the treasury requested, even if on a voluntary basis, some of those key elements of of the

modifications? >> we are continuing to do that and we're happy to be responsive about what we think is achievable in other areas. >> another thing we are surprised to find, with his grounders -- with its grounder -- scrogginbar were short in thm is been that there about -- they are loved with the inadequacies in the program -- the other thing we are surprised to find it with borrowers in this program is that they are left with the inadequacies of the program. one element, a provision that i think would be extremely helpful and have been calling for a while for, would be an extreme

measure with the treasury. i would hope what administrative reports we -- but administration supporter we would see something like what senator menken has been working on. >> we have been working alongside the excellent people of huddy, led by sean donovan. -- excellent people of hudd, led by sean donovan. >> have a process that people can reach out to treasury would be very important, in my opinion. thank you. >> mr. secretary, i want to go back to this question about a stable functional financial systems. we talked about these potentially dangerous concentrations in commercial real estate.

i want to look at the top end. six of the 19 stress tested banks hold real-estate loans that are a big percentage of their capital. with the commercial real estate losses, because of the way they are set up, they're likely to be much larger in 2011, 2012, and on into 2013. how can we be confident about the stability of these financial institutions without rerunning the stress tests to account for leeding troubles in commercial real estate lending? >> as i said, these loans and law sets -- losses and assets are board to be a challenge -- are going to be a challenge. i think it is fair to say that actual losses on the books --

again, this is a question that weelook at all the time on a regular basis. based on what we have seen so far, the losses are better than what we have projected. therefore, the capital is even better than what we thought we had achieved. >> we know the loss is on commercial real estate. those are coming up in 2011, 2012 and 2013 for a major reset. i'm glad that you think the numbers look better than in 2010. are you running in many stress

test? >> -- a mini-stress test? >> what our supervisors have done is put in place a much higher level of disclosure on the u.s. bank system of detains. you are seeing countries move to adopt the basic framework. the virtue of this approach was, we pushed a lot more capital into finances at the early stage. the best way to look abroad whether the market is judging relative to potential risks -- and i think again, a relative to expectations, it is still better. but there are challenges ahead. >> let me try this again with second loans. big banks are still carrying second liens on their books.

many analysts who believe a large portion of these should be written off. as of march 1, 2010, theefour largest banks held $434 billion in second mortgages and had total capital of only $505+ billion. do you have any concerns about what this means? now we are moving from commercial real estate on to second mortgages. >> of course, banks have on their balance sheets still -- even though they can produce assets to some extent -- they still have challenges. how much they will win against -- how much assets are they holding against the challenges?

the general sense is the projected losses are less than they expected, and therefore, more capital is now held against those assets than we thhught would be their year ago. >> let me try one more. the fannie and freddie are pushing mortgages backe to these financial institutions because they say the mortgages sold to penny and freddie are not of the quality that they were represented. fannie does not disclose po requested -- danny does not disclose requested by? -- fannie does not disclose requested buybacks. are there requests from these larger institutions to buy back these mortgages?

>> i think the major banks of the company -- country now old a cap of the larger risks. and that goes to reach of the things that you pointed out, each of the potential sources of lost still ahead. again, this is still an unknown. we want to be conservative in making these assessments, as we were a year ago. our supervisors will continue on a regular basis -- one of you said in your opening remarks that rew do not contemplate stress tests along this -- that we do not contemplate stress test along this basis. i hope we do. aggregator lee, quarterly, difficult challenges and assessments -- regularly,

quarterly, and difficult challenges and assessments. carta are you saying that will be ongoing or quarterly? >> -- >> are you saying that will be ongoing or quarterly? >> both. >> you have said that there will not be a new taye are p program. -- t.a.r.p. program. that no money going to gmac. but we do not anticipate at this stage putting more money into those existing programs or to the institutions. >> in the same way that would apply to chrysler and gm. >> on the underside of your question, we are now on a path to exit those companies much

more quickly at a much lower estimate of losses than we anticipated. at gm, we are drink -- bringing down the risk dramatically. we will continue as aggressively as began to get the government out of those investments -- as we can to get the government out of those investments. those are commitments that we inherited. we are trying to reduce them as quickly as we can. and fdot low a risk as we can. >> -- and at as low a risk to the taxpayers as began. >> if one of these institutions came to your office and said, we are experiencing liquidity crisis, would you advance the money -- a them money?

>> i do not ever has to as questions because that this kind of impossible. if financial reform is in place, then we have a very well- designed process. and instead of emergency measures than we have in place in the fall of 2008, we would -- i would assume we would make better choices. you're talking about the 12 weeks remaining in this program? >> yes. >> our job and my responsibility is to be sure the we are safeguarding the basic strength of the american financial's system. again, our system because of the actions of we took is still in a much larger -- noa much better position than we were. >> if financial reform is in

place, the same people come to you and say, ttere is a systemic and regulator. the systemic regulator is supposed to look into a crystal ball and see stuff. >> i will say it again. we are not designed a financial reform program and -- we are not designing a financial reform program that looks into this and -- we are born to force the system to run with less leverage, less risk of finding, less exposure to cash risk, and that is the best protection we have against systemic financial crisis. >> the problem with that is that aig was not a mystery to people. most people under -- on wall

street understood that aig was writing trillions of dollars in credit and billions of dollars in mortgage-backed securities. the problem was that even though people recognized it, they did not recognize that as risky behavior. >> i do not agree with that. i think this crisis is littered with people feeling to see risks that cause catastrophic damage. aig is a more simple failure. there was nobody responsibll with the authority and capacity to restrain risk taking by that institution. as you said, there were tens of billions across the country, but none of them were responsible for onsidering the risk that aig took on and i was ahead mistake easy to avoid. -- and that was a mistake easy

to avoid. >> you are saying there is one mooe. >> we're not adding regulators. we are reducing the number in our system. all we're oing, quite frankly, is making sure that the people whose job it is to manage financial stability for the country have the authority to constrain risk thinking -- risk taking when it could cause damage. that is what caused the crisis. aig is the perfect example, but not the only example. you could look of bear stearns or merrill lynch or a whole raft of companies that were taking on systemic risk. nobody have the tools or respond slowly to constrain those risks ahead of time. and when they mess up, we did not have the choice to let those failures happen without

catastrophic damage. the great virtue of capital constrained leverage is to recognize the fact that we live in an inherently uncertain world. no one will know with confidence what the response is or the probability is. neilon thing you can do is to force these institutions -- the only thing you can do is to force these institutions to run with less risk. that is an effective tool of concerning risks. -- restrrining risks. >> if you define risk appropriately and you enforce the rules appropriately. >> again, we think the basic lesson of this crisis is possible, objectively

measurable set constraints on leverage. banks should fund more conservatively. they should not be exposed to the possibility that overnight, people will withdraw tens of billions dollars and put huge pressure on the system. i do not know any credible argument that there is a more effective basic tool then capital constraints on the equity funding as a safeguard. it will not prevent firms from failing. we will create a system where firms can still fail. that is an important part of the system. but i do not know of any other alternative. i do not know any other feature that does not begin with well- designed, measurable risk

taking. they will not keep companies from taking risks, but they will protect the system. " i'm not sure that with -- >> on not sure that with more regulators -- i am not sure that with more regulators that problems will not come from the investment and banking community. they will derive new types of instruments that 10 r 15 years ago we did not see. >> maybe we agree more than you think. but again, the future of our system was not that aig was crawling with the supervisors with the authority to restrain and control risk taking. are right.s present, then you changing the deck chairs -- it

is important is it institutions take risks that play this fundamental role in our system need to be subject to conservative restraints on the system. aig was not. we will make sure it is. >> thank you, mr. secretary. mr. silver's? >> i cannot resist continuing this line of discussion. mr. secretary, i think that your fundamental of observations about this set of questions are all absolutely correct. our report on aig showed a two fundamental things. one was that the lines of business that we lead -- had led to aig. the unregulated numbers is just an in-depth vacation of the

impact of aig was just a global -- was an indication of the fact that aig was just a global firm. as a panel, we may disagree with where you did with the choices you had. but it is very clear that the choices that you diddnot have -- in your current role of the bank of n.y., of the treasury. you did not have the ability to pick and choose with the systemic crisis. i would take it a little further from there, though. and we learned as a panel, and it is reflected in our report on the day -- on aig, what a

powerful force they exerted on the torrez is available during the crisis. in particular -- on the choices available during the crisis. in particular, those tied to the regulated guaranteed subsidiaries of aig. that is, the insurance companies pupport were tied together by credit rating agencies and the firm. that seems to me a powerful argument that making sure in the future that those that have guarantees behind them are also tied up with risky lines of business. derivatives, proprietary funds, hedge funds and the like. does, -- the irst is the vocal

world. the notion that we ought to say banking companies can outdo proprietary trading, cannot invest in hedge funds, -- cannot do proprietary trading, can on invest in hedge funds because there is a problem. it essentially requires that derivatives dealers not be within a bank holding companies, barack and leased -- but at least there be somebody at the banking lobby -- bank holding companies. could you explain the position today? >> members of the committee, including chairman lincoln and chairman daud, or carefully going through these provvsions to be sure we come to an appropriate balance perido.

we want to follow our key objectives. one is, as you said, the banks are unable to take risks like proprietary trading. or if they use derivatives for proprietary trading, they could imperil the stability of the bank, or allow them to benefit from the access to the safety net that the bank enjoys and extend the benefit of those activities that we do not believe are essential for baking. the other thing to point out -- for banking. the the thing to point out is that an essential part of banking is helping customers hedge their risks, whether those are. we want to make sure that the

banks are able to hedge their risks. i think it will come to a very good balance. this bill will do an excellent -- an exceptionally important thing, bring restraint to the derivatives market. we would still present enormous risks if we were unable to enact these reforms. >> there are reports being made with respect to both measures i indicated. to essentially weaken them. you spoke a moment about the area in section 17 of derivatives. can you speak to the question of whether banks will be allowed to put meaningful amounts of capital into these

and defense experts are not goinn to comment on the etails -- into these hedge funds? >> i'm not going to comment on the details. i am very confident that this bill will do the necessary >> i would just observe, and my time has expired, but i would just observe that when you're talking about hedged investments under a bank logo, that a diminutive exception could easily blow up the capital structure. it would seem to me that the lesson of our aig report would be to not allow that. >> we are not going to create risk.

we also do not want to support the basic balance of risk taking that we saw in the system. there was no capacity to restrain those risks and abbas not a good outcome for the system. >>zuj] -- and a that was not a d outcome for the system. >> i would like to hear your rationale for why liquidity was invested innthis part of the banking system, what the goals were from this program. >> i'm sorry, for the -- ? >> the use of the small funds for the non-banks. >> excellent question. the first just dreaded everything that we did in the crisis. -- guided everything that we did in the crisis.

we made sure that credits that did not exist at that time would be open again to american businesses and families. without that, there would be no recovery. for that reason, small banks, as you know, get about half their credit -- small businesses get about half their credit from small banks. for that reason, it seemed fair to make sure that they have the same access to the poor -- to the capital programs. for the reason of fairness and the pragmatic reason that they play a role in these businesses, we thought it was important that they have access as the major institutions did. >> staying with the smaller banking sector, -- and i did not read the panel's report.

it eems like many of these banks -- and small banks also made decisions with these programs leading them to scramble to get out of the program. this is something to be -- that is important to be able to do in a financial crisis. looking forward, if we ever have another ffnancial crisis, have these programs impaired our ability to inject liquidity into the system given no reluctance -- given the reluctance of the banks to participate in this current program? >> i hope so. the central challenge that you face in designing reforms or the financial system -- the

government will be there to protect your future. that is where these bills are so important, because they give us the tools to definitively all of those expectations. that is very important because of the things we had to do in the crisis. >> i guess, the difference between injecting liquidity into the system and sort of providing for failing institttions, i think it is he to inject liquidity into the system. >> i completely agree that the necessary part of the tools in the financial crisis are those that the system can find. without that, the the system

will crash, and our system almost did. and that gambert 2008, we work on the verge of a crash -- in september 2008, we were on the verge of a crash that the banking system had not seen since the great depression. we need to make sure that the government has the funding needs -- meets the funding needs of all solvent into -iistitutio. but in doing that, you have to make sure that people do not make judgments on how much risk they take on the assumption that the government will be there again if they are in prudent in their judgments. that is the classic, vital challenge of getting reform. >> let me turn to the housing market, which was mentioned before. almost 30 years between 1965 and 1995 tte housing is tree was stable. starting in 1995, it grew dramatically for a variety of

reasons. my own view on the how to market is that we return to a rate of 65% of houses are people who own their own homes. honassuming we get back to a rae that is sustainable, we wouldn't a better program the one in which you design people into and a corporate housing program? >> i think you are describing the objectives that exactly shaped this program, which is why it got so much criticism. our program was designed exactty as you said, to make sure for those americans who can afford

to stay in their home, but they have the option to do that. but this program is not designed to be sustained at a level that would be imprudent. >> i would like to come out to your recent remarks about communnty and regional banks as a key source for credit or small businesses. much of the public focus and our prior reports have been focused on the largest t.a.r.p. recipients that were part of the stress test. our july reports that we're working on at the moment are a unique window into the performance and health spof hundreds and to assess the

bank's program. to help in assessing we have to have clear goals. one thing you just said about accessing capital to large banks, do you want to expand oo that? opposed to too large to fail? >> one of our basic strategy is is to make sure that we are safeguarding the bases security of many americans and we have a financial system that is able to meet those objectives. as you said, we have 9000 banks,

not 12,000 and, not 24,000 banks. most small businesses get most of their credit from small banks. the drugs we have bout 2700 community banks -- >> we have about 2700 community banks participating in the program. >> exactly. we have assets remaining in bank's federal $10 million or below in assets, we did that for the simple reason of fairness because they showed the same access that we gave the major institutions. we thought it would be important to make sure there was access to credit on affordable terms. it is a simple process. as you said, it is still a challenge for many of those banks and, therefore, many of

their customers. >> would be the -- what would be the goals involved in the, how they utilize the capitol? >> if you compare small banks that to occur t.a.r.p. capitol as opposed to those who did not, the spaull bank is lending at about twice the rate as those that -- the small bank is running at about twice the rate as those that would not take capital. and of course, for many banks, access to t.a.r.p. capital meant that they did not need to do any lending. having said that, fundamentally, this program did not meet our

objectives because as many of you have pointed out, because of concern about the conditions that might come with the future. we have banks that did not want to be subjected to either to the sigma or the fear of conditions, which is why we have legislation pending before the congress that has been pending for six months. it has very carefully funded programs to help banks get through this. when compared to the whole range of alternatives, this seemed like the best process for a set of constraints. >> we have a program in new york

days at the fed.member from your it is comprised of member banks that not only provide equity, acts as an lending consortium to small businesses. it makks loans that the individual funding banks may not have made. we are for it to you as a suggestion. maybe consider it at the national level. because we're nottonly looking at loans passed up by a particular banks, but also the lending. i do not think it is clear under blf that the banks are lending under the consortium. >> if you look at the state+

option provided to the small business facility, that option is provided to executive programs. again, the virtue in the will we designed this is that if you increase lending, the dividends and go down. that is a great incentive, but also, providing assistance to states across the country that have those programs. we are in a sense, enhancing a greater diversity of programs as well. >> thank you. >> i was surprised by your answer about the metric for success on the home mortgage foreclosure gramm. -- foreclosure program. but i want to come back to this.

over the 15 months that the program has been in effect there have been 330,000 so-called modifications. about two-thirds of those are going to fail. aad that means over 15 months -- and correct me if you have a better estimate -- but over 15 months, that means the hemp program is permanent modifications. that is about 186,000 every month that are newly possed the faults and foreclosures. i'm caught in the question of what is your metric for success here? >> let's step back and look at the basic strategy that the president put in place alongside

the fed. first, we put down a floor on mortgage prices. we made it more possible that millions of americans would be able to refinance the world to take advantage of lower interest rates. the courts are unfamiliar with -- >> i am familiar with what you have done overall. the problem is that what -- more than 1 million families this year will lose their homes to foreclosure. hampstead is it. >>. -phamp -- what's hamp hamp doesy to make sure that a set of foreclosure have the chance to

do that. and again, the members are -- the numbers are 1.1 million will try for modifications and 1.1 million will see modifications. >> as superintendent neeman said, we will find out what the consequences are of that. one of the early modification programs acttally got people in more trouble. it raised overall payments and got them in more trouble than they started out with. what do you have to show for it? >> we have 1.2 million americans that have a reduction in their payments, had a chance,

therefore, to keep their homes.+ >> and passed up other argentines that they might have had to deal with their foreclosures. -- past of other opportunities that they might have had to deal with their foreclosures. and the point is that they've lost their homes. what is it to say that a family -- how do we decide when the program is working? >> you look at its results family by family, foreclosure by foreclosure, a change in monthly payments by change in monthly payments. in looking at that, these programs could not have been designed responsibly to try to prevent a set of foreclosures that were probably unavoidable.

>> help me with the metric. arr you saying preventiig one foreclosure would have been enough for $60 billion? >> zeyno. did you have an estimate when you start of this? >> the virtue of the program that we have laid out is that we have given everyone detailed numbers they can look at. >> you say we designed the program from the beginning and in effect you are saying, not to save everyone. i understand that. you have designed around servicers. servicers have done a terrible job. you have designed it around3

we economy of hundreds left to prevent thousands of foreclosures. -- we only have hundreds left to prevent thousands of foreclosures. >> these proggams will outlast the expiry of charge. as you have seen, we have added to this basic framework of loan modifications games a series of programs. we will keep working on that. i will never stand before this body or any other body and over going to do. -- and over-claim for what this program is going to do. >> we must stop.

i am running over and it is not fair to my colleagues. mr. make walters. >> mr. secretary, if you could turn back the last quarter of 2008, what changes would you make to the t.a.r.p. and be said? what did you learn from your experience? >> the best i can tell you is that the forms we proposed for managing the future, we're doing is giving that enaated in past -- and passed so that we can again tell the american people thht we have a reasonable chance of preventing this from happening again. that is what i am working on at

the moment. the basic framework in the reform bill for rescue programs is much better. >> y unanimous vote of the battlpanel, it was a four-vote . the government's failed to exhaust all options before committing $787 billion in t.a.r.p. funds to help aig. throughout its rescue of aig, the government failed to address perceived conflicts of interest.

even at this late stage, it remains unclear whether taxpayers will be repaid in full. i think it is only fair that you be permitted to respond. >> i do not agree with those conclusions, except perhaps the fourth. which says, and i say all the time that the carrot is still exposed to risk with aig. -- the government is still exposed to risk with aig. this hamp in the peak -- this mess in the hamp in the peak of the crisis, this has come darnell a tiny fish -- come down now a tiny bit because we

have been so careful in managing the risks we're going to be continually selling off the risk to minimize lost and we are working hard to make sure that there are a set of financial reforms to make that happen. the basic package of these protections will be in a position to both prevent and better manage mistakes like that. >> on a slightly different, but i think related note, when does the administration returned fannie and freddie to the private sector? >> i'm not sure when it is framed quite that way, but let

me answer it this way. we are deep into a process of examining what set of reforms should replace the current system that we have in the housing and finance market. those required -- those would require somethiig well beyond the basic problems then prevented the gst's. -- the gse's. i have said publicly that we expect to recommend senate broad reforms sometimes -- sometime next month. a and i would point out that thh losses that we still face in these institutions are losses that we inherited.

at our assistance, they have put in place much more conservative underwriiing standards. they're bringing down risk and restitution quite significantly. institutions today are being run much more conservatively, as you might expect. i think we're going to find -- i hope we will find broad support in the congress. this is the kind of reform that these institutions and the housing market needs. >> thank you. my time is up. >> i want to take you back to a fellow panelist who cited home ownership levels from 1965 to 1995 as something that we ought to be aspiring to.

and your response is that is exactly where reward -- where we are trying to get to. i will give you a chance to modify your answer. from 1965 to 1995, the flight number give assistance to economies of color. but cannot be we go back to. -- that cannot be what we go back to. i want to talk about the shift in foreclosures, which i think is evident iran the question of people's ability to pay. it cannot be -- is evident around the question of people's ability to pay. it cannot be that of people cannot find employment that they should be thrown out of their rooms. >> our policies are not

designed to sustain home ownership ates at a level that we think is not sustainable. it cannot be our objective. i think it is true that we need to not just need the needs, but play keep huge role in -- play a huge role in the financing in the system. as you have pointed out, there or big gains in access -- those big gains in access to credit that our system generated also came with fraud and abuse. that happened on because of the present regulation, but because

a system that did not provide protections. we do know that we have a whole range of incentives across the american financial system that were designed to encourage home ownership. it is important to recognize in our broad housing policies, and this would be true for the housing and gse arket, we will try to make sure that americans have access to affordable housing programs, but not sustain an investment level in housing that was part of this basic question. having said that, i have from your second question. >> unemployment.

>> thank you for doing that. we have done a continuous series of innovations from the beginning of this program. we're going to design programs that will directly help the unemployed reduce the payments on their homes, but also we will also work to encourage much less in the program. we will announce a range of programs to help the unemployed in their states 3 range of other types of innovative programs at the state level -- through a range of other types of innovative programs at the state

level. as you said, unlike the early stages of the foreclosure crisis, the principal driver that we see is unemployment. >> two responses. one is, i think there is an issue of relationship of scale to the problem. the scale is simply inadequate. i think we have models in pennsylvania. you have three months. i hope your thinking about that. i did so of the data is contrary to what some of my colleagues would say -- i think some of the data is contrary to what some of my colleagues would say. starting in iran in 2002, 2003, we saw an -- starting in 2002, 2003, we saw a set of unsustainable practices begin to take control. >> that is one good way to think

about it, but you also left you think about -- you also have to think about the credii crisis. roughly 8 million haveelost their jobs in this credit crisis. >> i would like to clarify the miserly do not believe that we should have a process -- that i certainly do not believe that we should process in which people find as the rooms when they lose their income. should be homeless. i think it is important to recognize that not everyone needs to own a home. by think renting is a perfectly viable option.

people need to pick what best fits their financial situation. maybe programs that help move people out of a situation that may be is not a cooporate into one that is a of corporate, even if it is not -- that maybe is not appropriate into one that is inappropriate, even if it is not owning their own home, especially as it is designed in the way that they did to keep people in their homes is not that effective. maybe you could comment on that. . .

use. now, recognizing that we can't reach everyone and difference solutions are going to be appropriate for different people and that we got a lot of challenge ahead in that area. but those two mistakes are

those we need to make sure we fix in the financial reform and i hope we can do that. >> maybe we'll stay in the housing market and build on both some of the comments that has been made previously. do you think the federal government should be involved significantly in the future in the, you know, financing and the mortgage market? does the federal government have any particular advantage over the private sector in this sector which would suggest that we nned to -- the federal government needed to maintain a role in that sector? >> excellent question. i testified on this before and i don't want to change, alter the basic framework i laid out in that context so i'll say it that way. i think there will be a good policy case for the government still promoting the objectives of access to reasonable housing options for low-income americans. that's an important objective. i believe in that objective. we need to make sure e do it as carefully going forward. i also believe it's likely that we'll determine it will be n appropriate role for the government providing some form

of guarantee to help make sure that there are broader housing finance market are able to provide credit in recessions and downturns. that's a very important basic debate. we are going to have that debate when we talk about reforms. but having looked at a variety of different models, there will be a reasonable case for petaining a limited role for government and providing that kind of basic guarantee. how to do that is a challenge. i want to make sure that where you do that -- have to pay for that guarantee and the terms will have added capital against risk. these are the kinds of questions we're will bing at in the context of reform. you are -- what do you know %- that the american public isnnt

aware where and why hasn't that been conveyed to the american public? >> i think the american public was left with thh impression that the government of the united states came in and wrote checks for $700 billion to our nation's largest financial institutions and they will never see that money again. pnd that initial perception that was created by the critics of this program hardened and has been a challenge. as you on this committee have found. particularly of those that have been here since the beginning. the reality, of course, is different. we've only put out about half of that authority. we have more than half back. this administration that came into office didn't write a single check to our nation's largest banks. we wrote $700 billion to small community banks across the country. as i said, this program is generating a very substantial positive return to the american people and we are going to return hundreds of billions of

dollars of authority. how often does that happen in washington to meet our long-term needs? those are the facts and realities of this practice. if you compare that record, not just against the expectations of the critics, not just against the expectations of the architects but the experience of any major country in a crisis, it is a remarkably effective program. highest return on the use of a dollar of taxpayers' money than i think almost anything the government has done in this crisis. now -- >> mr. secretary, this is your time and we are over the time. i still want to give superintendent neiman a last round of questions. we are past the time. >> but acknowledging that this cost a huge amount damage. we are going to be living with the aftershocks of that for a long time. we are still in the beginning of repairing that basic damage and it's going to take more time. >> thank you, mr. secretary.

superintendent neiman. >> in my opening statement, you know, congress' finalizing financial reform that will have implications for decades, both nationally and internationally. many are glad to see the u.s. acting on regulatory reform. i've heard from foreign government fficials that they are very much pleased that we're moving ahead. they are probably not saying it asspublicly as they should. i'm particularly very proud of the sick -- significant areas of the world, things like the %- volcker rule, executive pay and risk. however, we all know that these also -- these issues acting as a first mover do raise issues around global competitiveness, regulatory arbitrage and regulatory gaps around the

world. would you mind sharing with us the standard you would apply when determining the u.s. must leaddand when the u.s. must lead in global concert? >> we are trying to do so together. we are trying to fix the things we got wrong but at the same time we laid out our basic objectives of reform. we negotiated internationally a broad consensus on the set of broad objectives internationally that would parallel the basic strategy we adopted here. you will see when the g-20 leaderssmeet in toronto on saturday and sunday they -- a remarkable commitment across the major economies through that set of basic principles for providing better oversight, better transparency and disclosure, better protections against risk takkng on a more even standard and across the major markets. we could have decided to move place high standards here and pull the world to these standards over time. we decided to move together.

now, we have a very difficult challenge ahead in negotiating a new set of capital standards for the globally active banks and that will be the critical test of our capacity. again, to pull the world to a higher standard. but we come to that with a remarkably strong position because we were able to move so quickly in the united states to recapitalize our system with private capital, replace the government's investments early and, therefore, our firms on most measures have less leverage, more capital, more the kind of capital you need against future losses. and that gives us a very strong position in those discussions. again, the best way for us to shape that consensus, to make sure we come to the table having acted to fix the things we got wrong in the united states, and we are, i believe that the reforms congress will enact will be a good model for the world and will give us enormous credibility in trying

to pull the world to those higher standards. >> are there other examples like capital where thh u.s. has to act to be a first mover if there's not a global concert on that particular area? >> again, we are going to try to make sure we're moving in pair less. derivatives is anothee example. anything where they can move quickly to evade the weakest pegulation. derivatives is a great compamplet again, we want to make sure that all these firms and all these markets are operating under much more rigorous standards for disclosure anddtranspareecy. otherwise, again, the risk will move to the dark and will leave us more risk in the future. we will try to make sure that, you know, we are going to dramatically strengthen the competitiveness of the u.s. financial system. as we have done well in the past, make sure we put in high standards for protection for

investors nd in the u.s. marketplace and we are going to do everything we can to make sure the world joins us in that cause. >> thank you. >> thank you. we now bring to a conclusion our 21st hearing of the congressional oversight panel. we want to thank you, mr. secretary, for being here with us today. the record will be held open for any additional questions. and with that this hearing is adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010]

>> an update now on economic more than half of the $787 billion has been commmtted to -precovery projects. just under $250 billion has beennspent. more more information about the projects, go online to c-span.org/stimulus. negotiations continue on new financial regulations. among today's issues, the creation of a consumer financial protection agency and predatory lending.

see live coverage at noon eastern on c-span 3. and both the house and senate will be in session today. the senate is spending the morning on general speeches. this afternoon they may take up tax breaks and long-term jobless ben pets. the house meets for legislative work at 2:00 eastern and has five resolutions, including support for national hhrricane preparedness week. the house is live here on c-span and the senate on c-span2. the white house has called afghanistan commander, general stanley mcchrystal, to washington, d.c. to explain comments in an upcoming "rolllng stone" article. senator john kerry urged everyone to stay cool and calm and not let the comments interfere with the mission in afghanistan. his comments are about two minutes.

we are going to be showing you those remarks from senator kerry a little bit later. right now we're live at the white house where president obama has just finished meeting with health insurance scomblecktiffs and state insuranceeccmmissioners. he's expected to talk about the ongoing effort to implement the health care law passed by congress earlier this year. associated press writing that today at this event here at the white house president obama will talk about consumer safeguards, announcing a patient bill of rights, including guaranteed coverage for children. also, a ban on lifetime coverage limits. more than 100 million people are enrolled in plans that currently impose such limits. that's what's happening here at tte white house today live on c-span.

this event with president obama at the white house is late getting started. we are going to move on with our programming and show it to you later on the c-span networks. this morning's "washington

journal" we took your calls on the u.s. indirectly paying afghan warlords. we are going to watch that now while we wait for the house to come in. and here is this story in "the washington post." the u.s. is funding a massive racket in afghanistan, and directly paying of dollars tons warlords. the security arrangements are of a $2.16 billion transport contract and viilate of private use as a defenses well department regulations.

military oficials on the ground suppliesed on getting needed, and have rtually no addition of health security actually provided for the transport goods throughout the country. a democrat from massachusetts the findings of this report fm severing too shocking. he wrote that in introduction to the report. so, that is what we will talk during this first segment. we're wondering what you think that? is it a necessary part of war? does it just happened in afghanistan to increase security there? we will learn more about the report throughout the day. congressman tierney is part of ppthe committee on house ooersit and reform.

he said in an interview on monday that he hopes to report help members of congress to the analyst with the they think is the most effective way to go about dealing with terrorism, or the most effectively. the report's conclusiins will be introduced at a hearing today in which offia are scheduled to testify. the lawmaker will not comment, give fleet from arizona, until he has seen the entire report. looking at how the of t papers are covering this issue. here is one concerning the taliban taking u.s. fus. the trucking contractors say as $150 -- much $150,000 per month to warlords in protection money.

let's go to the phones and hear michael on the democrats' line, in queens, new york. caller: good mooning. quick question. can you explain to me why this is the first time that i have gooten through on c-span? see the party lines, why is it that republicans are always on the top line? hot: well, do not hang up yet. we do change that up so that are notans or democrats given preference. we change ii periodically so is at the top compared to the other.

do you have ny comment on this news that the u.s. is indirectly the afghanistan war lords? caller:, i am an obama supporter. not much that i know much about it right now. but my comment, that is wt i was calling about. i guess you are right. host: it is not topic-dependent, just changed it periodically out of fairness. let's go to john in ncaster, pennsylvania. caller: yes, this is why we pay $4 per gallon for gas. it is for the troops in afghanistan. we are bribing people not to kill us. it is a continuatn of the way .s. works -- we are as corrupt as possible. the cia, blackwater, other

givene contractors are this money and they in turn give it to the warlords. you can bet that they are hanging onto some of that money themselv. we are just unbelievably corrupt -- is more than bad. host: what is a different model? how can things be changed in afghanistan? caller: turn around and go to east, or to the west -- come back home, get the troops out. get them out of afghanistan, iraq -- get them out of all the bases we have all over the world. it is the most misguided policy i can imagine. host: bringing it back to this story, the report describes a system in which subcontractors

between $1,500 up $15 project to supply guides and secure safe passage through territory they control. let's go to vivian on the democrats' line from memis, tennessee. caller: our government is dealing in illegal things over there. that money they are using in afghanistan to pay this what here to save right people unemployment and jobs, manufacturing jobs people.ing our government needs to come out of afghanistan, like the previous caller said. people are suffering right here and here they are paying or

lord's money? america, wake up. need to revolt against our own government. host: lookingg at other news frm afghanistan -- from "the financial times" -- a botched bomb attack. richard holbrooke arrived yesterday to assess progress in phase in the campaign against the taliban. we will go to fairfax, va., with the independent line. caller: hello, are you there? i was going to say that is prrtty disturbing news. ii is probably part of the way that you have to conduct waa as a nation to get things done. but i would appreciite it if the government would tell me the there,why we are over rather than just telling us

their case in the taliban or osama bin laden. i could exct the facts of were much moreereadily. that is pretty much all that i have to say. -- i could accept the facts%- under the circumstances. host: craig, democrat from las gas,evada. caller: yes, iiwould like to see the people of the u.s. step forward. what we tell the senators, until you pass unemployment extensions, we cut your pay. you get no pay. let them live on $20 per week in food stamps. let them d that for about one month, and then they will know how we feel. instead of wasting $900 apiecc.

start doing stuff for our people tteforget the rest of world. get out of these wars and quit wasting money. host: let's look at other news in the headlines, from the wall street journal" bomber pleads guilty in plot. this is looking at the event yesterday. a pakistani-born citizen calling himsell a muslim soldier monday he tried to made car bombdely in times square in may. shahzad pleaded guilty in federal court in manhattan to attend-count indictment that included charges of conspiracy among others. he faces life in prison. he is one of the number oo terrorists who have surfaced. difficulty toer track then other foreign-born

suspects. also, news from the supreme court. we will tall soon about negotiations, what is on in congress on the hill as the house and senate committees work on him not regulatory reform. let's go to francis in pine hearst. caller: this has been going on for many years. it is not new. i also feel if we have to pay war lords for protection, then we should not be there. they are very correct. been going on for years not new. it is only coming out now. it is absolutely the wrong way to be fighting a war, when we have to pay people to be on our side, thh we should not even trust them. host: this is from sioux falls, -- good morning, eric.

caller: ok, we're talking about afghanistan, and my question is karzai'ss running party? it seems like escially bush was funding the skies campaign. 's seems likeehis cousins and brothers are always in charge of illegall activities -- it seems like especially bush was funding this guy's camping. they are making money off the rou. his family has been accused of trafficking all kinds of things. why are we supporting this guy? will we support someone else? that is my question to people. host: ok. looking back at "the washington

post" article, it says the report found no direct evidence of payoffs to the taliban. one trucking manager ffund that about $2 million per week goes to the insurgents. pp let's go to virginia, john, on the democrats' line. caller: good morning. it goes back to president -- now is's warning the military /pharmacological/energy slashed congressional complex.

they had just bought enough conggessmen to keep wars going and waste resources, and line of a few at the expense of everyone else. we have to have campaign finance reform, have to get rid of the corporate suits within congress. it is the only solution. host: this is dan come on the line, from massachusetts. caller: thanks for having me on. i am with a lot of colors this morning -- with a lot of callers. this is not a news story. it has been going on for quite some time. we are paying the enemy to get our supplies in there, and the same enemy is fighting us. it is crazy. i think in our country wat has happened, generally, taking a broad look at it is we have put

premium on faith and a discount on facts. we think we know people in or who have been in office, and would not think it would do such bad things, so all these conspiracy things people business. pople who have faith in these people -- it is blind faith and then they discount the facts of reporting about things that have actually happened where the us theisot telling truth. but all these peopl who have this mysteous thing called faith --no one is accountable. if everyone just has faith in things, then there is no accountability. is where we are as a country. we put a premium on faith,nd a

on flooking at this -- tentatte limit debit card fees. the house and senate democrats announced a tentative agreement to impose new limits on the big would resolveh the main difference between the two chambers as the race to financial legislation before the fourth of july. it largely preserves the senate's language. >> we're leaving "washington journal" from this morning for live coverage of the u.s. house and morning hour speeches when members can speak on any topic. legislative work bbgins at 2:00 eastern. debate on five resolutions today, including support for national hurricane preparedness week. live on c-span. 's rooms, washington, d.c. 22, 2010. appoint the honorable act as speaker pro tempore on this day. signed, nancy pelosi, speaker of the house of representatives.

the speaker pro tempore: pursuant to the order of the 6, 2009, the ry now recognize mbers from the lists submitted by the majority minority leaders for hour debate. of rule to clause 12-a house chair declares the 2:00 p.m. ntil today. >> the house just completed morning business for the day. members begin lidge work at 2:00 eastern considering five resolutions, including one encouraging preparation for hurricane season. live coverage when the house returns. and house democratic leaders plan to pass a bill this week that would give subpoena power for the panel investigattng the b.p. oil spill in the gulf of

mexico. house majority leader steny hoyer says members will vote as early as wednesday and he expects it to pass. now, president obama has appointed a sen-member commission to investigate this bill. hoyer says that the commission needs subpoena power to get to the bottom of the nation's largest spill. earlier today, admiral thad allen laid out the latest plan for capturing more oil. his comments are just under half-hour. >> all set to go? all set, folks? >> good afternoon.

be glad to answer any questions. we had a really good last 24-hour period as far as production. the discovery enterprise the q-4 platformm. we produced 25,836 barrels of petroleum. that is a new record for uu. and we continue to make progress in optimizing the capacity out of the well-head there. regarding the relief well feet below the sea floor in 077 preparation of closing in on a pipe in a ranging technique for the beholding -- that will penetrate the well-head. we continue to divide our vessels of opportunity, task force, provide them with radios. be more effective on the water as far as surveillance

information. this week we will have meetings with the air force regarding coordination and plan to go in with a coordinated structure in dealing with the significant flights occurring at the well-heads, the sites for oil and the flights to support logistics and so forth out there one other interesting note, we fouud -- we didn't find -- we were able to recover the 40 feet of reiser pipe that was cut -- riser pipe that was cut off. that section of pipe is important for forensics and inquiry. that will be brought to new orleans. of course, that will be part of the evidentiary issues -- evidentiary material will be part of the investigation. the vessel had several incursions into the area for fishing where we are enforcing not fishing areas. there are people for whatever reasons that are fishing in areas that have been closed by noaa. in most cases we do boredings

and coordinate back to the national fisheries and there is a catch and discard at sea. -pwe are actively surveiling th coastline and taking our fight, if you will, from shore out to about 15 to 20 miles as the slick continuessto migrate slowly to the east moving towards destin and fort walten beach. i've got some skem attics with me today. -- schematics with me today. i've been doing it with my hands. we have some charts here that can explain if you have any questions. i will be glad to go into it. with that i'll go to questions. naublenauble -- [inaudible] >> this is what we are going to try to do by the end of june. what you have here is you have the current well-head with the

block -- riser package connected. to the discover enterprise. and then you have the q-4,000 that is drawing product off the choke line through this man fold and that's producing -- manifold and that produced almost 26,000 barrels over the last 24 hours. we will bring in another production vessel, the second line that comes over the manifold and will have 20,000 to 23,000 barrels per day. that's going to pretty much optimize what we can do at the well-head site. there are three ways to get oil out. come up through the riser pipe or come up through the choke surface. we are producing through the kill and choke line and the q-4,000 will do that. and with the discovery enterprise, we have three vessels. and at that point the total capacity will be 53,000

barrels. was that clear? [inaudible] >> well, what's going to happen -- i'll take you to the next chart here. the key difference when we start shifting to different means of production is something called a free-standing riser, you can see it here. the riser pipe is connected by a fix pipp. this is actually -- put it back up here. can somebody stand by and hold it for me? thanks . got it? ok. the discovery enterprise is actually fixed to the well-head the q-4,000 is actually connected through a flexible hoes. we are going to create a -- flexible hose. we are going to create a free-standing riser to connect that. ultimately, that will be the way the entire new system will be put together and make it

more seaworthy for the hurricane season. if i can walk over here and show you this one. hopefully i will not knock it off here. we have three risers. with no direct connection to the well-head. that does a couple of things. first off, it allows us to maximize the amount of oil that we can produce. there is nothing fixed to the well hear. this can be disconnected very, very quickly. thhs gives us redundancy and capacity. it gives us capability because they are on a hose and not a fixed pipe going forward. that gives us 60,000 to 80,000 barrels of oil a day through july and puts us in better position to assess the hurricane season coming. [inaudible] there are many concerns about that. they would call this -- i'm sorry. there are many concerns. when you have four standing riser pipes and four production platforms thereewell about

three ar four-squile-mile area you have to deconflict that and be very, very careful. i know that's a concern about the folks out there. not only for the vessels but the people and we have oil that will go to organic compound. in addition to the four free standing riser pipes, those are the relief wells that are being drilled. in addition to the four production riser pipes, we have four drilling operations going on that is aimed at drilling the relief wells. and the schematic over here shows you the relief wells in process. development driller three and development driller two. this is closing in, as i said, the next couple of weeks will be setting up in position to aatually make the drill into the well boor. is that more understandable? any questions here? [inaudible] with r.o.v.'s because many of

them have r.o.v.'s related to them. deconflicting r.o.v. operations is very, very significant. they are orange vehicles on the schematic here. we actually had a case early on where we had a riser and we had an r.o.v. that was -- they bumped into each other and had about a month or two ago. and everything presented to us by b.p., we understand that very well that this is a very densely packeddoperation. but we need to get these four riser pipes up there to get give us the capacity we need. anything else here? >> operator, we're ppepared to take questions from the phone now if you can get questions from the phone. >> yes, if you'd like to ask a question, please press star 1. we do have a question from priaa walsh of "time" magazine. >> we heard reports about cleanup workers actually on the gulf shore.

people screening them are private -- ambulance, medical services hired by b.p. before they would go to government -- do you have a -- who is actually in charge of them? are you giien fair data of what is going on there unless there is a problem, do you have, you know, -- corrupted by a company that is -- you know, on the b.p. payroll? >> well, i'm not sure what's happening right now. we can find out for you. but i would tell you this, for the last several weeks we've been operating under a memoranddm letter of understanding that we signed between the department of labor and the incident command and also the osha and how we monitor worker health and safety and how we coordinate that. there is a unified structure set up in mobile to do that. anytime there's an incident

that is more than first aid on the seee, there is a message and i get those personally. not aware of what you're 3 but i've had fairly positive feedback that when there's a health issue that's come up ww've treated it very quickly. and with the interest of the individuals that are in mind. if you like to give us specific information on this case and how the patient was transported, we'd be glad to follow up and see if that conforms with the procedure we set up with osha. we have a pretty good working relationship with and the coordination down on the ground is working fairly well. us the details. >> thanks. >> next question is from lewis of environment league. >> hello, admiral. thanks for taking my question. you keep saying that the -- the 10,000 feet and clossng in on an -- but b.p. said that the

well is drilled down to 18,000 feet. does it not have to go down all the way to 18,000 feet to do the intercept? >> it oes not. i believe they're going to try and intercept somewhere around -- between 16,700 and 17,000 feet. we will confirm that for you and put out a statement tomorrow. they don't have to go clear to the reservoir which is at 18,000 feet. what they are going to do is close in and very slowly close to that point where they will drill to the well bore casing and if they need to drill through the pipe itself. it will be slightly above the level of the reservoir. was that responsive? >> yes, thank you. >> ok. >> next question is from zack. >> hi. thank you. there's been some reports that the first major storm of the hurricane season might enter the gulf as soon as next week. could you walk us through what

will happen with the collection operation if that happened next week? >> sure. first of all, we're watching the hurricane season very, very closely. under constant contact with the administrator at noaa. and i talked to the fema administrator. we are informing each other of our respective operations. of course, they're very good with hurricane preps this time of year and we have a low depression that's been formed in the southeast caribbean. how we respond to a hurricane will be dictated by which productton capacity we have on scene. as you know, this is evolving and will continue to evolve over the next two to three weeks. by the end of next week, let's say, we will anticipate having three production vessels out there over the well site. the discovery enterprise, the q-4,000 and the he licks of the production capabilities, one of those is fixed hard to the platform itself and that is

the discovery enterprise. and the other is vertical riier packages. we would need in total to disconnect, recover to a saae harbor and return probably around 10 days to accomplish that. start doing that anywhere between three to seven days in advance of the hurricane. those procedures are being finalized right now. we are discussing that with b.p. and the folks at the unified command in new orleans. if that happened, if we got notice that a hurricane was coming, we would need anywhere from three to seven days in advance of that to demobilize and redeploy the equipmeet. is that responsive? have to come here for you to do that? what kind of wind speed?+ >> i have some folks working on how our system relet's to

saffir-simpson scale. the least capable platform that's in production to ride out heavy weather would be the discovery enterprise because it's fixed. anything that's through the vertical riser will have a little bit more flexibility as far as a sea state. and the large vessels that will be coming on later on in july have much more sea keeping capability, although none of them are designed or created to withstand a major hurricane. exactly the cutoff, we'll put that together and give you a briefing within 24 hours. >> next question is from sandy davis. >> thank you for taking my call. first of all, we didn't get a copy of the charts. will you be putting those up on the website later today? >> sure. would be happy to do that. >> why is the second relief

well going so slow? >> well, they didn't start at the same time. the second relief well started several weeks afterwards. also, the second relief well -- the second relief drilling rig had a blow youft preventer on it that they had intended to use after top kill if they were going to cap the well. they decided not to use a blowout preventer because of the uncertainty regarding the status of the well bore and the pressure. that's why they abandoned the top kill. during that time when they were doing the top kill exercise, the developmenter two moved off. the lower riser package should we need to do that. that didn't happen. they continued to drill. they are the risk mitigator for the first relief well. >> next question is from richard of "los angeles times." >> admiral allen, can you talk a little bit about the worst-case scenarios going

forward? what happens if the relief wells don't work out? how long can this go on and what kind of other contingencies have been drawn up, what kinds of conversations have you guys having about those possibilities? >> well, first of all, we're mitigating risk on the relief well by drilling a second relief well on the second side and hopefully that won't be needed. secretary salazar and secretary chu had a meeting in washington with other industry representatives beyond b.p., other oil-producing companies that are out there and we actually identified a couple of platforms that are in the area that might be capable of taking the product coming out of the well bore through type lines and producing ii or putting it back down in the reservoir. we are exploring that over the next couple of days. if we are able to do that we'll troll the flow. that wouldn't be the capacity we're looking for but another risk mitigator to handle some

of the other oil. we are in exploratory conversations and that is the result of a meeting where we asked industry to see what they could do for us. we are see if here's dormant wells out there. yes. >> next question is from henry of the associated press. >> admiral allen, i wonder if you can plain a little bit what you just talked about, putting the oil potentially back in the reservoir. give us a little sense of where those conversations stand? would this be a deproucks platform that will be put in, -- i think this is the first time we've spoke about that. >> we've had some communications with b.p. at the industry meeting that was held last week hosted by secretary salazar and secretary chu we were looking for alternatives that would help us increase capacity. there was an idea in the room, this is the reason we bring other people in to look for better ways to do this. they talked about whether or

not within the immediate area where this well was being drilled if there are other production facilities that are already there that could be used if we are to extend a pipeline among he bottom of the ocean and that's what we're looking at right now. there is a question of how many of those that might be available. and the capacity is being looked at right now as far as a request of information we are looking. it could allow us to continue production out of that well without the required surface vessel to be there which is problematic. >> so you extended pipeline back in the reservoir to return3 >> we would extend the pipeline to an existing facility that's not being used for well production right now, that has access to a different reservoir. johnson. >> hi, admiral. [inaudible] routinely said [inaudible]

not sufficient to protect [iiaudible] you called him outrageous. and b.p. has said that these are the federal limits, those are the ones that are going to direct the contractors [inaudible] . have you talked with the osha director about this? are you directing b.p. to follow [inaudible] >> let me make sure i understood your question because it is a little bit garbled. i don't know if you are talking about protective equipment or procedures. >> chemical -- >> oh, got it. >> the osha chief has said that the limits that his agency has set are out of date and are insufficient for workers. and b.p. has said that those are the official limits and -- >> i was not aware of a

statement from osha that their standards -- they thought their staadards weee out of date. i'll look into that and i'll release a statement later today. >> operator, one more call. >> no questions at the time. >> ok, thank you, everyone. >> thanks. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> the house is coming back in for morning hour, for legislative business at 2:00 eastern. five resolutions including one ennouraging preparation for hurricane season. live coverage when the house returns at 2:00 eastern. aad the white house has called afghanistan commander general

stanley mcchrystal to washington, d.c., to explain comments quoted in an upcoming "rolling stone" magazinne article. on capitol hill today, a senate foreign relations chairman, senator john kerry, urged everyone to stay ccol and calm and not let the comments interfere with the mission in afghanistan. his commentssare about two minutes. >> the hearing will come to order. just want to take a minute as we start to respond to remarks made by general mcchrystal and his staff in a magazine article . i hhd a conversation with general mcchrystal about a half-hour ago and emphasized to him that i thhnk obviously

those are comments that he's going to have to deal with with respect to the commander in chief, vice president, his national security staff. i have enormous respect for general mcchrystal. i think he's a terrific soldier. this is a critical moment in afghanistan. as far as i'm concerned -ppersonally the top priority i our mission in afghanistan and our ability to proceed forward competently. it will be up tt the president of the united states as commander in chief to make the decision as to whether or not he and his national security staff feel that they can do that. but my impression is that all of us would be best served by just backing off and staying cool and calm and, you know, not sort of succumbing to the normal washington twitter about this for the next 24 hours. we have troops on the front lines. we have a major mission that we

are in the middle of, and i think the priorities of that mission are best served by letting the ppesident and his top general have their conversation and make a determination as to how we proceed forward. [captioning performed by national captioning institute] [captions copyright national cable satelliteecorp. 2010] >> and defense secretary robert gates had an article written about general stanley mcchrystal's article in the upcoming "rolling stone" maaazine. he said i think he made a exercised poor judgment in this case. we're fighting a war against al qaeda and its extremist allies who directly threaten the united states and our allies around the world. going forward, we must pursue this mission with unity and purpose. that statement from defense secretary gates. and general mcchrystal publicly apologized today for using what he called poor judgment in that interview in "rolling stone" magazine. you can read that article by going to our featurr link

section at c-span.org. >> accompanied by mrs. amy. >> after meeting with health insurance executives today, president obama talked about a package of consumer safeguards and guaranteed coverage for children. 3 >> good afternoon. >> sit down, everyone. you got to take charge. >> my name is amy wilheit and i'm from ohio. in march of 2007, my 8-year-old daughter, taylor, was diagnosed with acute myloid leukemia, a

fast-growing cancer. after few rounds of keep owee therapy, we discovered alarming news of our insurance. we were about to reach our lifetime limit for coverage and the insurance will not soon pay our bills. we asked for that limit to be raised. the insurance company agreed to our request, but taylor, who is now 12, requires extensive follow-up care for long-term complications with her heart, hip and compromised immune system. we're constantly worried about hitting the new limit. make terrible choices. picking and choosing which 3 and treatments like a much-needed hip surgery. we woold put off or delay so we . n't exhaust taylor's coverage the provision in the affordable

care act that bans lifetime benefit limits will directly help taylor and our faaily. a huge weight has been lifted because i won't have to make the heart-breaking choice to pay for the surgery that will help her have a more active and fulfilling life or to save money in case othee health issues arise. i want to thank the president and others who have madeeit a priority to approve the health care system for families like ours. it's now my honor to introduce the president of the united states. [applause] >> thank you. what do you think, taylor? she did a pretty good job. she was solid. welcome to the white house,

everybody, and thank you, amy, for the wonderful introdux. thank you, taylor, for -- introduction. thank you, taylor, for being here. stories like amy's and taylor's is exactly why we passed the affordable care act and the courage that you and so many americans have shown and sharing your stories is what kept us going until we actually got t done. and so we're very grateful to you. i want to thank all the members of congress who are here today who helped to make reform a secretary of health and human services, kathleen sebelius, is here, as is secretary of labor, hilda solis, and they are two of the members of my cabinet who are helping to implement this law. i just finished a meeting with the c.e.o.'s of some of america's largest insurance companies, and some of our state insurance commissioners where we discussed how we're going to work together to where we discussed how we're going to work together to