bill from start to finish and we are close to the finish line. i urge my colleagues to once again join me in supporting this bill and i reserve the balance of my time. the speaker pro tempore: the gentlelady reserves. the gentleman from texas is recognized. mr. poe: mr. speaker, i yield myself as much time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. poe: it's widely recognized that patent litigation is too expensive, too time consuming and too unpredictable. h.r. 628 addresses these concerns by authorizing a pilot program in certain united states district courts to promote patent expertise among participating judges. the need for such a program becomes apparent when one considers that fewer than 1% of all the cases in the united states district courts on average are patent cases and that a district court judge typically has a patent case proceed through trial once every seven years. nevertheless these cases account for 10% of complex cases and they require a disproportion share of attention and judicial resources.

notwithstanding the investment of additional time and resources, the rate of reversal on claim construction issues, the correct interpretation of which is central to the proper resolution of these cases, is unacceptably high. the premise underlined in h.r. 628 is stated, practice makes perfect or at least better. judges who focus more attention on patent cases will be expected to be better prepared to make decisions that can with stand appellate scrutiny. the bl the bill before us today -- the bill before us today focuses on patent litigation which was conducted by the subcommittee on courts, the internet and intellectual property in october, 2005. this litigation is similar to h.r. 34, the funding of the 110th congress and a bill that was passed the house unanimously during the 109th congress. more recently the house passed h.r. 628 on march 17, 2009. the other body passed the legislation with amendments on

december 13. the new changes improve the measure by eliminating a $10 million authorization and by expanding the bill's application to smaller judicial districts. mr. speaker, h.r. 628 requires the director of the administrative office of the courts to select at least six district courts to participate in a 10-year pilot program that begins no later than six months after the date of enactment. the bill specifies criteria the director must employ in determining eligible district courts. it also contains provisions to preserve the random assignment of cases and to prevent the selected district from becoming magnets for umshopping litigants and lawyers. the litigation additionally requires the director in consultation with the director of the federal judicial center and the chief judge of each participating district to provide the committees on the judiciary of the house of representatives and the senate with periodic progress reports. these reports will enable this

congress and other congresses and the courts to evaluate whether the pilot program is working and in so whether it should be made permanent. mr. speaker, the bill does not substantially amend the patent laws or judicial process, nor does it serve as a substitute for comprehensive patent reform that is needed. rather h.r. 628 constructs a foundation that future congresses and the courts may use to assess the merits of future related proposals. before closing, mr. speaker, i'd like to take a moment to commend the superb job of the bill sponsors, that includes representative issa and schiff. and what they did in seeking out and incorporating the advice of numerous experts. their success and cooperation have resulted in a good bill that deserves the support of members of the house on both sides of the aisle. i urge my members to support this bill. i reserve the balance of my time. the speaker pro tempore: the gentleman reserves. the gentlelady from california, for what purpose does do you

rise? ms. chu: i'm pleased to yield three minutes to the gentleman from california, the sponsor of the bill, mr. schiff. the speaker pro tempore: the gentleman from california is recognized for did you say two minutes? three minutes. mr. schiff: mr. speaker, i rise in support of h.r. 628 and i want to begin by acknowledging the leadership of my colleague, mr. issa from california in developing this bill. i joined with mr. issa to introduce this important legislation back in the 109th congress. it has not been a short road to get here today, to hopefully enact this bill. but we would not have made it without his leadership. i partnered with mr. issa on the bill because we share a deep interest in improving the efficiency of the patent process. in reducing litigation costs and inefficiencies in patent review and also improving the quality of patents. this bill in part grew from a hearing in the 109th congress on improving federal court adjudication of patent cases. at the hearing a number of proposed options to address the issue were discussed, serious concerns were expressed about a

number of proposals, including those that would create new specialized courts and those that would move all patent cases to existing specialized courts. these concerns centered around the need to maintain generalized judges to preserve random case assignment and to continue fostering the important legal that occurs among the various courts. our proposal aims to avoid these pitfalls. h.r. 628 establishes a mechanism to steer patent cases to judges that have the desire and the aptitude to hear such cases while preserving the principle of random assignment in order to prevent form shopping among the pilot districts. the legislation will also provide the congress and the courts with the opportunity to assess the program on a periodic basis. reports to examine whether the program succeeds in developing greater expertise among participating district judges, the extent to which the program

attributes to judicial efficiency in deciding these cases and whether the program should be extended, expanded or made permanent. by providing our courts with the resources they need to carefully consider patent cases we will ultimately say the taxpayer -- save the taxpayer money. while this legislation is an important step in addressing these patent reforms, i believe that congress must continue to work on a more comprehensive reform of our patent system and i look forward to continuing my work with my colleagues in order to address these issues. i thank you, mr. speaker, and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back. the gentleman from texas. for what purpose does do you rise? mr. poe: i yield as much time as he wishes to consume, the gentleman from california, mr. eye sarks who is the sponsor of this bill. the speaker pro tempore: the gentleman from -- mr. issa, who is the sponsor of this bill. the speaker pro tempore: the gentleman from california is recognized. mr. issa: thank you. thank you, mr. chairman. it's been eight years since this bill began being kicked around as a pilot. some people would be less happy to announce it than i, but i'd like to find them.

eight years ago when i began the dialogue with my colleagues, then the subcommittee ranking member, mr. berman, said, tell me more about this problem. and i told him from life experience of the problem of these very talented judges, magistrates and federal judges, who wanted to do a good job on patents but it was almost always their first patent and they lacked a support system to make it happen in both large and small districts. i told him how the southern district of san diego had found ways to try to improve the system. weaning some additional expertise from one or two judges who preferred these cases over some others and who actually sought them out. i also told some of my fellow colleagues about the horror stories of a magistrate ascending to the bench, finding

that what he got from each of the other members were all their patent cases and suddenly he had a backlog of these, had to find out what a markman hearing -- hearing was, had to start getting into technical issues, one on electronics, another on biotech, another on telecommunications. so over the years we have all been educated well beyond that initially anecdotal example -- initial anecdotal example. then warren hatch was supportive. now chairman leahy is supportive. all along the way my classmates -- classmate adam schiff has been supportive, along with howard berman. chairman conyers has continued to be supported -- supportive and it's helped -- and has helped me along with ranking member lamar smith vote this out early on in this congress -- congress. but i have a special thanks for chairman leahy who made sure

this bill went -- was pulled out of the comprehensive patent reform bill because it's time -- its time truly had come to begin saying to judges throughout the congress, i'm sorry, throughout the country, that in fact we were going to help them help themselves be better at this. although it's called patent pilot, over the years it has been expanded into the number of jurisdictions that it could be used in to where it's become quite clear that this will be a challenge to be expanded country-wide in whatever format the study shows is best. i find that this congress and its lame duck session has done a few good things, no surprise that this is one that i think is particularly good, particularly good because as congressman schiff just said we are in fact dealing in the lame duck session with a problem that has been pervasive since before

congressman schiff and i became members of this body 10 full years ago. so as i thank each of you for your passage of this bill and with full confidence that this will become a broader consensus throughout the federal system, i also join with my friend and colleague, adam schiff, in saying that in the next congress, in the early days, we must truly dedicate ourselves to comprehensive patent reform, to take each of the major issues that have been difficult and have congress after congress failed to become law, and find ways to resolve some or all of them for the good of the american people who find themselves spending two, three or eight or 10 -- $2 million, $3 million, $8 million or $10 million on often what can be a frivolous suit. so again, i thank you for yielding me the time. i asked all my colleagues to vote for this small but

important change in patent law and yield back the balance of my time. the speaker pro tempore: the gentlelady from california is recognized. ms. chu: i have no further speakers and i reserve the balance of my time. the speaker pro tempore: the gentlelady reserves. the gentleman from texas. mr. poe: i yield myself as much time as i may consume. mr. speaker, patent law is complicated. it is difficult, it is messy. that's why law schools have a special track for those who want to be patent lawyers them. get their own certification in many law schools because it is so complicated. and then when those cases go to court, they need to be presented to a judge that has a lot of experience in patent law. it is a difficult, complex legal issue and -- in almost every case and those cases take sometimes years before they are resolved in court, then on appeal and the reversal rate is extremely high. this legislation hopefully corrects that problem in giving those district judges that want to hear these cases that special

expertise in hearing a great number of these cases, becoming experts and understanding the law of the complexities of the law and hopefully getting a better and quicker result in the courtrooms of the united states. i support this legislation, i want to commend once again the two representatives from california, mr. schiff and mr. issa, for their long endurns over sponsoring this legislation -- endurance over sponsoring this legislation and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentlewoman from california. ms. chu: mr. speaker, i yield back the balance of my time. the speaker pro tempore: the gentlelady yields back. the question is will the house suspend the rules and concur in the senate amendment to h.r. 628. those in favor say aye. those opposed, no. in the opinion of the chair, 2/3 of those voting having responded in the affirmative, the rules are suspended, the senate amendment is agreed to and without objection the motion to reconsider is laid on the table. ms. chu: i object to the vote on the grounds that a quorum is not present and i make a point of order that a quorum is not present. the speaker pro tempore: further proceedings on this question will be postponed.

for what purpose does the gentlewoman from california seek recognition? ms. chu: i move to suspend the rules and pass senate bill s. 4005. the speaker pro tempore: the clerk low report the title of the bill. the clerk: senate 4005, an act to amend title 28, united states code, to prevent the proceeds or instrumentalities of foreign crime located in the united states from being shielded from foreign proceedings. the speaker pro tempore: pursuant to the rule, the gentlewoman from california, ms. chu, and the gentleman from texas, mr. poe, will each control 20 minutes. the chair recognizes the gentlewoman from california. ms. chu: i ask unanimous consent that all members have five legislative days to revise and extend their remarks and include extraneous material on the bill under consideration. the speaker pro tempore: without objection, so ordered. chu and i yield myself such time as i may consume -- ms. chu: and i yield myself such time as i may consume. the act will ensure that u.s. courts can freeze assets while foreign legal proceedings will pending. this fix permits federal law

enforcement to assist foreign governments without waiting for a final judgment in a foreign court. i want to tell you a story that highlights the importance of this legislation. years ago i met a bright young man named bobby who grew up in my district in california. what struck me right away was bobby's dedication to improving the lives of children and residents of his community. it was that dedication that gave him his incredible energy and passion to achieve as much as he did. he was an elected member of the el monte school district. he became the assistant principal and was studying for his doctorate in education at ucla. aside from his caring, selfless nature, bobby was very intelligent, driven and charismatic. it was clear to everyone who knew him that he was going somewhere. he was our rising star. a year ago, bobby traveled to gomez in durango to visit his

family during the holidays. on new year's eve he was out with family in a restaurant when gunmen dragged bobby out of the restaurant by gun point. they were then each shot to death execution style. the next day all bodies were found dumped in a ditch. bobby was only 33 years old. after the investigation began, it was confirmed that none of the six murder victims were connected to the drug trade in any way. bobby and the others were in the wrong place at the wrong time. their death exemplifies the growing number of innocent bystanders who are being victimized by the drug violence in mexico. it seems the situation could not get worse, however, only weeks after bobby was so brutally murdered, the lead investigator in the case was also shot dead. for me and thousands of others,

bobby's death is a symbol for both of our countries that progress for peace in mexico must be made. we cannot allow the death of innocent bystanders or american citizens to pass without consequences. until there is true accountability for the violence, there is little incentive for the drug lords to keep the peace. in my conversations with law enforcement, i hear the same thing over and over again. in order to stop this wave of violence on the border and protect both american and mexican citizens, we must hit the cartels where it hurts the most, their bank accounts and property, which are often located in the united states. so when i heard that federal courts had severely limited law enforcement's ability to freeze foreign assets in the united states at the request of foreign governments i had to act. in 2000, congress passed the civil asset forfeiture reform

act of 2000 which authorized federal courts to assist foreign nations by freezing assets located in the united states while individuals stood trial in foreign courts. this process is consistent with our treaty obligations, and under those same international agreements foreign courts will offer the united states similar assistance with assets located overseas. this law is an important tool to fight organized crime, money laundering and drug trafficking. it allows the u.s. to assist foreign governments in cutting the money supply to international criminal organizations. earlier this year, however, federal courts interpreted the statute to apply only after a final decision has been reached in a foreign court proceeding. after the decision, law enforcement have no way to prevent illicit property from

being moved before it's too late. in the past few months our government has been unable to protect more than $550 million that had been identified for forfeiture by foreign governments. this money will remain a continuing resource for criminal organizations, allowing them to fund extensive additional criminal activity. the bill we are considering today includes due process protections similar to those used for restraining orders in anticipation of domestic forfeiture judgment. it also requires the courts to verify that the relevant foreign tribunal observes do you process protection, has subject matter jurisdiction and is not acting as a result of fraud. this is just one small step to ensure that international criminal organizations, like the cartels that murdered bobby

salcedo, have fewer resources to evade prosecution. it is for bobby, his family and the thousands of others who have been affected by cartel violence around the world that i fought to pass this important legislation. i thank the chairman of the judiciary committee for allowing this bill to come to the floor so quickly, and i want to recognize the steadfast bipartisan support of my friend, judge ted poe, and our colleagues in the senate, senators whitehouse and cornyn. this bill has the support of the department of justice, which is eager to use this tool to protect our borders and make the world a safer place. i urge my colleagues to support this important legislation and i reserve the balance of my time. the speaker pro tempore: the gentlelady reserves. the gentleman from texas is recognized. mr. poe: mr. speaker, i yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. poe: mr. speaker, s. 4004,

the preserving foreign criminal assets for forfeiture act of 2010, makes a simple yet very important technical change to federal law to facilitate asset preservation for foreign countries. i am pleased to be a co-sponsor of this legislation, and i commend my colleague from california, ms. chu, for sponsoring this house companion to s. 4005. i want to thank her for her work. it provides procedures by which the federal government can freeze certain domestic assets on behalf of a foreign government this is an important tool to take out of the hands of criminals the proceeds that fund their illegal operations. criminals will go to great lengths to stash their ill-gotten profits. whether it's a drug cartel, terrorist groups, organized crime syndicate or simply a

savory computer hacker or a corporation, the key to putting a stop to their crimes is to put a strangle hold on their money that they have illegally obtained. but a recent d.c. circuit court of appeals decision limits the united states to assist foreign governments in retaining and restraining those assets. the corporate interpreted section 2467 of title 28 governing the entry of foreign judgments to authorize the u.s. court to freeze assets only after the foreign court's final forfeiture judgment. this is a significant limitation on our ability to assist in foreign forfeiture proceedings. if forced to wait until a final foreign judgment is entered, we run the risk of allowing thousands if not millions of dollars to slip through our hands in the hands of criminals. in many countries, like mexico, their judiciaries operate at a much slower pace than ours and their prosecution rates are lower. in fact, the criminal conviction rate in mexico is

less than 10%. therefore, a lot of times -- a lot of times by the time a forfeiture judgment is made, the target has already moved their assets someplace else. this hampers our ability to go after mexican cartel members who have assets here in the united states. so unless congress clarifies the scope of section 2467, we run the risk of losing cooperation from foreign governments in our request to seize assets that are held abroad. the investigation into the million dollar ponzi scene undertaken by allen stanford shows our needs for foreign governments to freeze assets on our behalf. today, switzerland, the united kingdom have restrained a combined $400 million on behalf of the united states in just the stanford case. this is money that could have been lost if the united states prevented from requesting such assistance from our allies until a final judgment was made.

the court of appeals was correct that it's not a court's role to substitute its view or policy for the legislation which has been passed by congress. so i don't argue with the court's decision, but it is congress' obligation to change and fix the law so that this does not occur in the future. with adoption of this legislation, congress is establishing a clear and simple policy on the restraint of foreign assets. so i commend my colleagues, senators whitehouse and corn irn, and, of course -- cornyn, and, of course, the gentlelady from california, ms. chu, to clarify this statute. we must the foreign government to rely on our assistance with their criminal prosecutions and the united states will continue to receive cooperation from our foreign allies. i reserve the balance of my time. the speaker pro tempore: the gentleman from texas reserves. the gentlelady from california is recognized. ms. chu: i have no further speakers.

i reserve. the speaker pro tempore: the gentleman from texas. mr. poe: i yield such time as he may consume to the gentleman from louisiana. the speaker pro tempore: the gentleman from louisiana is recognized. mr. scalise: thank you, mr. speaker. i rise in support of the preserving foreign criminal assets for forfeiture act. i commend both my colleagues, ms. chu and mr. poe, for bringing this legislation forward. as he talked about, we have a problem where a court case has allowed a loophole, a major loophole where criminal organizations are able to shield their assets from our justice department. we do not want and we cannot allow for these foreign criminal organizations, whether it's drug cart tells, money launders or others to be able to shield those assets from the law. not only removing the accountability but allowing them to keep their assets that they may use against our law enforcement in the united states. it's critical we get it passed quickly to close this loophole and prevent those types of shielding from the law as it's currently happening.

i also want to point out something else my colleague from texas talked about. in the stanford case this is a case where somebody created a ponzi scheme that affected lots of people in my state, in texas and other states. we cannot allow these kind of people to be able to shield their assets from justice. ultimately they need to have their day in court and they need to have to face justice for the things that they did to our american citizens here. so i strongly support this legislation and urge all of my colleagues to do so as well, and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. who seeks recognition? the gentlelady from california. ms. chu: i reserve. the speaker pro tempore: the gentlelady reserves. the gentleman from texas. mr. poe: i yield myself such time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. poe: the forfeiture concept is very important to the helping of our law enforcement agencies throughout the united states. it's the concept that

criminals, drug cartels make a lot of money off of the crimes they commit. and that money, when confiscated, should not be given back to the perpetrator, of course. it should be used for law enforcement and other worthwhile endeavors. under current law this problem is not -- it's an extreme problem because of the fact that many times by the time the criminal cartel has been captured and they go to trial, they have hidden their assets, and then there is no money to go back into the forfeiture. so this legislation prevents this problem from occurring in the future, it allows the seizure of those assets where they can be used for law enforcement. it makes criminals to pay the rent on the courthouse and pay for the system they created and it helps end the forfeiture. i can't overemphasize how forfeiture of illegal,

ill-gotten gain is to our agencies. just one example of this, down on the texas border where our this was are operating on the border, we have one county, sheriff, doesn't have a budget for the motor pool. in other words, he has no vehicles that are funded at taxpayer expense. so the only way he gets vehicles is capturing drug cartels and drug runners when they come into huds pep county and forfeits their vehicles to law enforcement and that's why they have a nice set of escalades where they use in the fight against the drug cartels. so forfeitures is extremely important to law enforcement and we need to continue to help them where we can and help them pay for the rent they created on the courthouse and i yield back the balance of my time. the speaker pro tempore: the gentleman yields back the balance of his time. the gentlewoman from california. ms. chu: mr. speaker, i yield back the balance of my time. the speaker pro tempore: the gentlewoman yields back the balance of her time. all time having been yielded

back, the question occurs, will the house suspend the rules and pass senate 4005. all those in favor say aye. all those opposed, no. in the opinion of the chair, 2/3 having responded in the affirmative, the rules are suspended, the bill is passed, and without objection the motion to reconsider is laid on the table.

the speaker pro tempore: for what purpose does the gentlelady from california seek recognition? >> mr. speaker, i move that the house suspend the rules and agree to senate amendment to h.r. 2941. the speaker pro tempore: the clerk will report the title. the clerk: h.r. 2941, an act to re-authorize and enhance johanna's law, to increase public awareness and knowledge with respect to gynecologic cancers. the speaker pro tempore: pursuant to the rule, the gentlewoman from california, mrs. capps, and the gentleman from nebraska, mr. terry, will each control 20 minutes. the chair recognizes the gentlewoman from california. mrs. capps: mr. speaker, i ask unanimous consent that all members may have five legislative days in which to revise and extend their remarks and include extraneous material in the record. the speaker pro tempore: without objection. mrs. capps: mr. speaker, i yield to myself such time as i may consume. the speaker pro tempore: the gentlelady is recognized. mrs. capps: i rise today in

strong support of h.r. 2941, a bill to re-authorize johanna's law. i would also like to acknowledge the hard work of the bill's sponsors, representative delauro, on this legislation. she has been a tireless supporter of this program and a staumple advocate for this re-authorization -- staunch advocate for this re-authorization. the bill re-authorizes an existing c.d.c. program to educate women and health care providers about the detection and treatment of gynecologyal cancers. -- gynecological cancers. gynecological cancers are diagnosed in over 80,000 american women annually and they kill nearly 28,000. the program educates women so that they can recognize the warning signs of gynecologic cancers because when such cancers are found early, treatment is most effective. the bill also connects -- the program also connects women to patient support services and key

national organizations which are fighting gynecological cancers. i know that many of my colleagues here today are co-sponsors of the bill and i urge you all in joining me in supporting it. mr. speaker, i reserve the balance of my time. the speaker pro tempore: the gentlelady from california reserves. the gentleman from nebraska is recognized. mr. terry: i yield myself as much time as i may consume. the speaker pro tempore: the gentleman is recognized. mr. terry: mr. speaker, i too rise in favor of h.r. 2941, otherwise known as johanna's law re-authorization. it would re-authorize johanna's law which first passed congress at the end of the 2006 session and directed the health and human services department to carry out a national campaign to increase awareness among gynecologic cancer. in 2006, 76,515 women were told that they had a gynecologic cancer and 27,848 died from that

cancer. h.r. 2941 would authorize the centers for disease control and prevention to continue the nationwide campaign which is entitled, quote, inside knowledge, get the facts about gynecological cancer. the campaign is designed to increase the awareness and knowledge of health care providers and women with respect to gynecologic cancers. cancer screenings are effective when they can detect the disease early. it is widely known that the earlier -- the earlier the disease is caught, the greater chance a person has to survive it. however, in the group of gynecologic cancers, only cervical cancer has a screening test that can detect the cancer in its earliest stages. it is therefore important that both individual women and their physicians remain aware of the disease and recognize signals

that could lead to an earlier detection of the disease. that's why i urge all of my colleagues to support johanna's law and, the gentlelady from california, do you have additional speakers? i have one. mrs. capps: no, i don't. mr. terry: at this time then, mr. speaker, i'm going to yield to the gentleman from indiana as much time as he may consume. the speaker pro tempore: the gentleman is recognized. mr. burton: i thank the gentleman for yielding. ovarian cancer if it's caught early has a 93% chance for five-year survival with -- for women with this terrible cancer and if they don't catch it early only 27% of the ladies that get

it have a chance of survival. this bill was named after johanna silver gordon who went to the doctor regularly for her physical. her doctor missed the ovarian cancer that she had and like many women, because the doctor either misdiagnosed or missed it, she passed away, i believe, in december of 2006. this was brought to my attention by a very good friend, mrs. stacy in indiana, who had gynecological cancer. she fought it for many years and she was a champion of johanna's law and she brought to the attention of many people, including myself, the problems that women have by not knowing the signs of gynecological

cancer problems, in particular ovarian cancer. it's extremely important that this be caught early and for that reason that is why this law is so important. because it gives women the opportunity to find out about the problems they may face early so that their survival rate can be increased. and i want to thank mr. issa as well as our democrat colleague who sponsored this bill for bringing this to the floor a couple of years ago. and i'm very happy that it's being re-authorized today. what johanna's law does is it provides a cancer-specific fact sheet about gynecologic cancers in both english and spanish. it provides a comprehensive gynecologic cancer brochure, it provides research and concept testing using focus groups to better understand the target audience.

it provides materials for primary care and health care professionals and that's extremely important because many physicians don't karr catch it. it's not because they don't want -- don't catch it. it's not because they don't want to, it's because the signs have not been very clearly defined and they haven't seen it. and it's extremely important that these materials for primary care and health care professionals be provided. it provides print and broadcast public service announcements for women so that they can see on television maybe some of the symptoms that they have might be leading to a gynecologic-type cancer. it also provides all materials that have been created through johanna's law have been sent to outlets throughout the country. the c.d.c. is tracking and airing the p.s.a.'s and audience impressions and they're also reaching out to groups, encouraging the use of these materials. as my colleague has stated, a

lot of women have lost their lives or had their lives shortened because they didn't know the symptoms of gynecological cancer or ovarian cancer early enough. so this is a very important piece of legislation. i know that there's not a lot of people here speaking about it today, but women across the country who have suffered from various forms of cancer understand the import of legislation like this and so i'd like to thank my colleagues in the senate and my colleagues here in the house for bringing this bill to the floor and once again i'm very happy to be a co-sponsor of it and i urge its adoption. the speaker pro tempore: the gentleman from nebraska yields back. the gentlewoman from california. mrs. capps: thank you, mr. speaker. i had intended to yield to the bill's author, our colleague from connecticut, representative delauro, but then her schedule precluded her from attending

this hearing or this markup and so i'm going to read her statement into the record on her behalf. every hour approximately 10 women in the united states are diagnosed with a gynecologic cancer such as ovarian, cervical and uterine cancers. each year we lose over 26,000 of our mothers, our sisters, our doctors -- daughters and our friends to one of these terrible cancers. this is a tragedy. research shows that many of those deaths could be prevented if more women knew the risk factors and recognized the early symptoms of gynecologic cancers so that they could discuss them with their doctors. some cancers have a dramatic difference and likely survival when they are diagnosed early. ovarian cancer, as my colleague has just referred to, for example, has just about a three-fold difference in survivability between the early time it can be diagnosed and the later time that it is often diagnosed. in 2007 johanna's law, the

gynecologic cancer education and awareness act, was enacted. this important legislation created a gynecologic cancer education and awareness campaign which is administered by the centers for disease control and prevention, c.d.c., to raise awareness of the five main types of gynecologic cancers which are cervical, ovarian, uterine, vaginal and vulva. johanna's law was originally authorized for three years and h.r. 2941 re-authorizes the program for another three years. this bill re-authorizes a national awareness and education program to ensure that those diagnose -- those diagnosed are made as early as possible so that women can have a higher chance of survival and authorizes in addition funding of $18 million over the three-year period. the bill has more than 150 bipartisan co-sponsors in the house. it was passed by unanimous voice vote in late september and the senate passed a revised language

on december 10. so it's important that we re-authorize johanna's law this congress, to continue building upon the c.d.c.'s efforts to educate women and their health care providers. in conclusion, our colleague, ms. delauro, wants to thank congressman issa, dan burton, our colleague who has just spoken, and sandy levin, for their committed leadership on this issue and with these remarks, i yield back the balance of my time. the speaker pro tempore: all time having been yielded back the question occurs, will the house suspend the rules and concur in the senate amendment to h.r. 2941. those in favor say aye. those opposed, no. in the opinion of the chair, 2/3 of those voting having responded in the affirmative, the rules are suspended and the senate amendment is agreed to and without objection the motion to reconsider is laid upon the table. pursuant to clause 8 of rule to, proceedings will resume on motion -- 20, proceedings will

resume on motions postponed. s. 841, s. 3860 and s. 3447. all by the yeas and nays. the first electronic vote will be conducted as a 15-minute vote, remaining electronic vote lbs conducted as five-minute votes -- will be conducted -- votes will be conducted as five-minute votes. the unfinished business is the vote on the motion of the gentleman from georgia, mr. barrow, to pass s. 841 on which the yeas and nays were ordered. the clerk will report the title of the bill. the clerk: senate 841, an act to direct the secretary of transportation to study and establish a motor vehicle safety standard that provides for a means of alerting blind and other pedestrians of motor vehicle operation. the speaker pro tempore: the question is will the house suspend the rules and pass the bill. members will record their votesly electronic device. this shall be a -- votes by electronic device. this shall be a 15-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the

united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the speaker pro tempore: on this vote the yeas are 376 --

the speaker pro tempore: on this vote the yeas are 379. the nays are 30. 2/3 of those voting having responded in the affirmative, the rules are suspended, the bill is passed, and without objection the motion to reconsider is laid upon the table. the unfinished business is the vote on the motion of the gentleman from california, mr. filner, to suspend the rules and pass s. 3860, on which the yeas and nays are ordered. the clerk will report the title of the bill. the clerk: s. 3860, an act to require reports on the management of arlington national cemetery. the speaker pro tempore: the question is, will the house suspend the rules and pass the

bill. members will record their votes by electronic device. this will be a five-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the speaker pro tempore: on this vote the yeas are 407. the nays are three. 2/3 having responded in the affirmative, the rules are suspended, the bill is passed, and without objection the motion to reconsider is laid on

the table. the unfinished business is the vote on the motion of the gentleman from california, mr. filner, to suspend the rules and pass s. 3447 on which the yeas and nays are ordered. the clerk will report the title of the built. the clerk: senate 3447, an act to amend title 38, united states code, to improve educational assistance for veterans who served in the armed forces after september 11, 2001, and for other purposes. the speaker pro tempore: the question is will the house suspend the rules and pass the bill. members will record their votes by electronic device. this will be a five-minute vote. [captioning made possible by the national captioning institute, inc., in cooperation with the united states house of representatives. any use of the closed-captioned coverage of the house proceedings for political or commercial purposes is expressly prohibited by the u.s. house of representatives.]

the speaker: on this vote the yeas are 409. the nays are three. 2/3 having responded in the affirmative, the rules are suspended, the bill is passed, and without objection the

motion to reconsider is laid on the table. the speaker pro tempore:

the gentleman from massachusetts is recognized. mr. mcgovern: thank you, mr. speaker. i'd like to yield one and a half minutes to the gentleman from massachusetts, my colleague, mr. lynch. >> mr. speaker, the house is not in order. the speaker pro tempore: how much time is the gentleman from massachusetts yielding? mr. mcgovern: 1 1/2 minutes to mr. lynch. the speaker pro tempore: the gentleman is recognized for a minute and a half. mr. lynch: thank you, mr. speaker. i thank the gentleman for yielding. to return to this debate -- mr. speaker, the house is not in order. the speaker pro tempore:

members, let's carry our conversations off the floor. members. members, let's carry our conversations off the floor, please. the gentleman is recognized. mr. lynch: thank you, mr. speaker. just to remind members where we are in this debate, we are about to debate and take up a measure that would, number one, preserve the tax cuts for the wealthiest 2% of americans while we have a $1.3 trillion deficit in the current year. we would also, if this bill were to pass, create a tax exemption for estates of up to $10 million .

that's for 6,600 individuals which brings to mind i'll paraphrase winston churchill who has said, it has been some time since so many have been asked to do so much for so few. with no legitimate reason, i might add. we are also talking about raiding the social security trust fund for the next two years. a total of $111 billion. and increasing the deficit by about $1 trillion. which will require us to exceed the national credit -- debt limit. in april or may of next year with this bill passing we will definitely exceed the current $14 trillion debt limit that the country has. i had a fair opportunity to negotiate contracts when i was an ironworker. one thing i learned, and it applies to this agreement with the republican senate, there's a

big difference between compromise and surrender. and what this bill represents is a complete surrender of democratic principles and standing up to working people and makeling them -- making them carry an undue burden under this tax law. i yield back, mr. speaker. thank you. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california has 11 minutes remaining. mr. dreier: mr. speaker, at this time i'm happy to yield three minutes to my very hardworking colleague from columbus, indiana, who offered some very thoughtful remarks and endured the committee on rules last night. three minutes for mr. pence. the speaker pro tempore: the gentleman from indiana is recognized. mr. pence: thank the ranking member for yielding. i ask unanimous consent to revise and extend. the speaker pro tempore: without objection, so ordered. mr. pence: thank you, mr. speaker. since last summer i have been among those voices in this congress calling for action to prevent a tax increase that

would affect every american. just a few short weeks from now. so i rise with a heavy heart today to say that as i look at this short-term tax deal negotiated by the white house with congressional leaders, that i have concluded after much study that it's a bad deal for taxpayers. it will do little to create jobs. and i cannot support it. let me say, though, that i have the deepest respect for my colleagues on the republican side of the aisle who may differ with me on this issue in the final analysis. this is a tough call. no republican in this congress wants to see taxes raised on any american. we all know what we should be doing today is voting to extend all the current tax rates permanently. the reality is that uncertainty

is the enemy of prosperity. and simply by extending some of the tax rates that are on the books today for a few short years, we will not create the certainty necessary to encourage businesses to take out loans, to expend resources in ways that will put people back to work. we just know that. i was back in muncie, indiana, a couple days ago, hi a bappinger walk up to me and said what are you going to do on this? sounds like a tough deal? i said i hadn't decided at that point. he said, well, he said nobody's going to come walking into my office to sign a five-year note on a two-year tax cut. so why are we doing two years? there's an election in two years. i get that. there are people that for whatever reasons want to redebate this in two years. i get that. i just don't get how it actually

gets people back to work. and with regard to the spending in this bill, we can help families that are hurting in this economy, particularly during this cherished holiday season, but we can also figure out how to pay for it. and lastly, let me say, the american people have spoken. on november 2, mr. speaker. they -- the american people did not vote for more deficits or more stimulus or more uncertainty in the tax code, but that's just what this lame duck congress is about to give them. i think we can do better. every republican in this congress would like the opportunity to do better. and sadly, this rule does not permit us to even have a fair up or down vote on extending all the current tax rates. and i'm profoundly disappointed by that. and so i rise in opposition to this rule, but i also rise in

opposition to the underlying bill. we can do better. we must do better on behalf of hurting families and americans who want to go back to work. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from massachusetts. mr. mcgovern: mr. speaker, i'm happy to yield two minutes to the gentleman from california, mr. sherman. the speaker pro tempore: the gentleman from california is recognized for two minutes. mr. sherman: i'll be voting yes on the amendment and if it fails as i expect it will, i will be voting yes on the bill. i'll vote yes on the amendment because we ought to have a fair estate tax in this country. but instead republicans insist that we increase the deficit $28 billion over the next two years in order to provide the lowest tax rates in 80 years on the

richest few dozen families in each of our states. we should care about the deficit. and to say that the tax rate included in the amendment is unfair is to say that every republican voted for an unfair tax when they voted for the bush tax law that was applicable to 2009. furthermore, another problem with the estate tax in the bill is that it provides a rate of tax for those debts that occur in 2010 that is less than zero. because the richest families can choose between a zero tax rate or huge write-offs on their income tax which might be even lower and they'll get the best possible tax advice. finally, under this bill, you're going to have some people who realize that if the patriarch of the family dies this year, they save tens of millions of dollars over next year. i hope that no plugs are pulled.

i'm going to vote for the bill overwhelm because of one question, compared to what? if we do not send this bill to the president's desk this year, he will certainly sign a worse bill next year. it is not clear that house democrats were at the table in the december negotiations, but it is clear that house republicans will be at the table for the negotiations in january. on this bill. the president, democrats in the senate, have already agreed to this deal and i fear that they would agree to something a little bit worse. so it is with great reluctance that i will vote for this bill should the amendment fail. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california. mr. dreier: mr. speaker, may i inquire of my friend how many

speakers he has remaining? mr. mcgovern: we still have a few more speakers, mr. dreier. mr. dreier: is that three? mr. mcgovern: i would say three. more than a couple. mr. dreier: fewer than several? ok. in light of that let me reserve the balance of my time. the speaker pro tempore: the gentleman from california reserves the balance of his time. the gentleman from massachusetts. mr. mcgovern: mr. speaker, i'd like to yield one 1/2 minutes to the gentlewoman from texas, ms. jackson lee. the speaker pro tempore: the gentlewoman from texas is recognized. ms. jackson lee: i thank the speaker. i thank the gentleman very much. i'd like to make sure we classify this not as a class warfare, if you will, but a good samaritan waiving the flag. frank -- waving the flag. if we take the best of america and recognize that working people need help so the unemployment insurance that is part of this bill is a valid part of it, the child tax credit, the payroll holiday, all

of those speak to the vision of this nation. that we have the willingness to share, we understand what men and women on the frontlines of iraq and afghanistan, they fight not for any one class or any one community. they fight for america. so when we provide an estate tax that blurs the understanding of america, that we need an estate tax that is $5 million and $10 million, we are not telling the truth. the present law provides for most americans. $3.5 million for an individual, $7 million for those who are couples. provides for family businesses. it provides for farmers. it works and it has worked. not necessarily the best, but to give $25 billion to $28 billion unnecessarily that would go and take away from education and social security and medicare, domestic spending that is necessary, is a crime. so this is not about fighting against someone who has a few

more dollars than the next person. it is to do what we are sent here to do to make sure that the capitalistic system works for everybody, including those who are now unemployed. let's get our senses together. let's get the senate to understand what the real deal is. fight for everybody. not just a small special interest group. it's time to stand up and be counted. i'd like to see this rule go forward simply because i want to put it to them that you can't spend $28 billion and waste it on those who don't need it. i yield back. the speaker pro tempore: the gentlewoman yields back. the gentleman from california. mr. dreier: thank you very much, mr. speaker. at this time i'm happy to yield a minute and a half to our very, very, very diligent and hardworking ranking member of the committee on energy and commerce, the gentleman from texas, mr. barton. the speaker pro tempore: the gentleman from texas is recognized for a minute and a half to address the house. mr. barton: i thank the distinguished chairman to be of the rules committee, mr. dreier of california, my good friend. mr. speaker, i ask unanimous consent to revise and extend my remarks.

the speaker pro tempore: without objection, so ordered. mr. barton: mr. speaker, this is not a bad compromise that's before us. but it is also not the best compromise. it's not a bad deal but it's not the best deal. . the gentleman from california who spoke on the democratic side just a few minutes ago i think said it the best when he said, in january our republican friends will be at the table. we are making a compromise today on the republican side, in my opinion, that we don't have to make. i think the tax cuts should be permanent, not temporary. i think the additional spending should be paid for now, not just added to the deficit. a funny thing happened in november, we elected over 80 new republicans. the majority is going from about 255 democrats to 242

republicans. you cannot tell me that the week before christmas americans in the business community are deciding what their capital investments are going to be for 2011. those decisions have already been made. so i am going to vote against the rule and with he will -- reluctance vote against the bill. not because it's a bad compromise but because we can do better and i fully expect in january, when the republicans become the majority party in the house, that we will do better. so again this is not the worst bill that's ever been before us, but it could be better and it should be better and so i would ask my colleagues to vote no on the rule and no on the bill. the speaker pro tempore: the chair will receive a message. the messenger: mr. speaker, a message from the senate. the secretary: mr. speaker. the speaker pro tempore: madam secretary. the secretary: i have been

directed by the senate to inform the house that the senate has passed h.r. 6516, an act to make technical corrections to provisions of laws enacted by the coast guard authorization act of 2010. the speaker pro tempore: the gentleman from massachusetts. mr. mcgovern: mr. speaker, i'd like to yield one minute to the gentleman from the great state of new york, mr. rangel. the speaker pro tempore: the gentleman from new york is recognized. mr. rangel: i ask unanimous consent to revise and extend. the speaker pro tempore: without objection, so ordered. mr. rangel: for the first time approaching this rule, it's my understanding that if i want to stop $23 billion from increasing the deficit by knocking out a senate provision and substituting a pomeroy, in order to do that i would have to accept the remainder of the senate bill. and i don't think that members

of this house should have to make that choice. it seems to me that if you believe that it's inequitable for a handful of people to receive such a large amount of money at the expense of the deficit, at the expense of discretionary spending, that we should have an opportunity, one, to vote against the senate bill in its present form, this does that, and, two, to vote for pomeroy which would allow us to at least control the amount of tax relief that we give to estate taxes. so i yield back the balance of my time but i do hope that we get a rule that would allow us to express exactly how i feel, republican or democrat, because if you're not a part of the deal it's hard to be supporting it. the speaker pro tempore: the gentleman yields back the balance of his time. the gentleman from california. reserves. the gentleman -- >> i inquire of my friend how

many speakers he has remaining. mr. mcgovern: mr. capuano and myself. how much time is remaining, mr. speaker? the speaker pro tempore: the gentleman from massachusetts has 3 1/2, california, 6 1/2. mr. mcgovern: mr. speaker, at this time i'd like to yield to my colleague from the commonwealth of massachusetts, mr. capuano. the speaker pro tempore: how much time? mr. mcgovern: 1 1/2 minutes. the speaker pro tempore: the gentleman from massachusetts is recognized for a minute and a half. mr. capuano: thank you, mr. speaker. mr. speaker, like all major bills that we do here, there is good and bad in this bill. there are things i like and things i don't like. thanks a normal circumstance here. but in the final analysis, i think people have to ask themselves one simple question. are we ever going to get to the place where we pay our bills? this bill doesn't do it. in 2002, the last time this house had the opportunity to be fiscally responsible, and that's not the same thing as fiscally

conservative or liberal, it's responsible, we voted to let the pay-go rules go and the results are where we are today. this bill will kill our children with very little input or benefit at the moment. it is not an emergency. i want a tax cut just like everyone else. but i also consider myself -- i am a social liberal. i do believe in social security and medicare and senior housing and all the other things that we do here. i do believe in them. i know that others don't and i respect those who want to cut those programs. let's have that debate. but let's not do it through the back door. if you believe in those programs it is incumbent upon us to pay for them. voting for this bill simply empowers those who want to cut those programs anyway and i

cannot in good conscience support that. this bill must go down even if the deal we get next year is worse. i understand that but it's not the right thing to do for those of white house believe in the programs that we have. thank you -- for those of us who believe in the programs we have. thank you, mr. speaker. mr. dreier: is my friend prepared to close? the speaker pro tempore: the gentleman from massachusetts. mr. mcgovern: i'd ask my -- mr. dreier: i'd ask my friend if he's prepared to close. mr. mcgovern: i am. mr. dreier: mr. speaker, with that i yield the balance of my time. the speaker pro tempore: the gentleman is recognized. the gentleman from california. mr. dreier: mr. speaker, democrats and republicans alike share the goal of job creation and deficit reduction. we regularly hear that argued from both sides of the aisle. the best way for us to do that is to encourage economic growth. economic growth is the key to dealing with job creation and

deficit reduction. now, mr. speaker, i don't like this bill that's before us but i like even less the idea, i like even less the idea of increasing the tax burden on working americans. in fact, putting into place what would be tantamount to the largest tax increase that we have ever seen. i am very pleased that president obama is beginning to embrace the john f. kennedy vision for economic growth. the vision that has recognized that reducing marginal rates does in fact create jobs and create more opportunities and the famous john f. kennedy like, the rising tide lifts all boats. the fact that president obama is now moving into that direction is a very positive thing. he's also on another issue that's going to create jobs done so on the issue of trade. i'm pleased that he wants us to

move ahead with what will be the largest bilateral free trade agreement in the history of the world, that being the u.s.-korea free trade agreement. i think it's imperative for us to do this in columbia and panama as well. so that we can create union and nonunion jobs, good manufacturing jobs right here in the united states of america. that's an issue that i hope we'll be able to address early next year. so, mr. speaker, i believe that it is the right thing for us to do, for us to make sure that we don't increase taxes on working americans and with that i yield back the balance of my time. the speaker pro tempore: the gentleman from california yields back the balance of his time. the gentleman from massachusetts. mr. mcgovern: mr. speaker, i want to close simply by saying that i agree with many of my colleagues who have come to the floor today to express their concern about how these tax cuts, mostly for the rich, will add ancredible debt burden on the backs of our -- an

incredible debt burden on the backs of our children. we can do better than this. i'm also worried because i think what my friends on the republican side want to do is take tax cuts for the rich off the table next year when they use a budget axe to go after domestic spending and i will say to my colleagues, that as we have this debate on tax cuts, there are a lot of people in this country who this debate is meaningless to because they're falling through the cracks and we have an obligation to help strengthen the safety net in this country and i worry about the agenda that my republican colleagues are going to pursue next year. i worry that it's going to be on the backs of the most vulnerable in this country and that is wrong. we have an obligation, a moral obligation, to be able to make sure that everybody in this country not only has opportunity but is also not allowed to fall through the cracks. we have a hunger problem in this country. we have people, we have children who go to sleep at night hungry in the richest country in the world. we should be ashamed of ourselves. we can do better than add to the

deficit by giving more tax cuts to the wealthy. mr. speaker, with that with -- i withdraw the resolution. the speaker pro tempore: the resolution is withdrawn. >> before this, in number of democrats indicated they could now supports the bill, citing differences over an a state tax provision. there is work to be done on suspension bills. live coverage when the house returns here, on c-span. we get more now from a reporter who was covering the issue on capitol hill.

>> they pulled a procedural measure off of the floor when they realized they could not get the votes. it seems that liberal democrats are upset they will not have a claim opportunity under the rule was approved last night to vote up or down on the bill that the senate passed. of course, this was a compromise the president obama reached with republicans. under the rule, was to be approved. basically, the house would vote on an amendment to the estate tax provision of a broader compromise. is that past, the underlying bill would be approved along with the change and it would be sent back to the senate. liberals opposed to the entire measure did not want to have to

vote costs for the estate tax change, which they support. they wanted a clear opportunity to reject the bill. >> better vote on the estate tax would have been a symbolic vote. >> right. that vote was expected to fail because republicans are united against changing the compromise. a number of blue dog democrats would have joined them to vote down the change to the estate tax, and if that failed, they would have moved on to the underlying bill, which was expected to pass. >> that makes sense, but their role was passed not all that late last night. have some point, leadership must of known things were not breaking their way, even before the house came in today. >> right. democrats have been meeting separately to determine

committee assignments, so there were some other meetings going on. it did seem that they were caught off guard a little bit. they had announced as late as this morning the schedule for voting when they would vote on the role, and have debate on the bill, and final passage later this evening turret as late as mid-morning, they were expecting this to go forward. >> the clock is literally it's icking, so what happens next? >> it was characterized as just a little bump. they said they did not know what the next step was, whether they would have to go back to the rules committee, or whether they can nullify some of the concerns of of the floor. it is not known, but he did

think they would be able to go forward today, but it is not in the air right now. >> in your view, does that in the house will go out for a bit, might come back later today, or calling off today and come in tomorrow? >> right now, they expect to come back later today. as we speak, they're trying to work out these differences and set up a procedure for moving forward. >> we will let to go. russell berman, thank you for the update. >> thank you. >> again, the house is in recess subject to the call of the chair. we understand house democratic leaders plan to meet sometime next hour and they are hoping to bring the measure back to the floor sometime today. we will bring you live coverage of the house when they return. and so then, remarks from treasury secretary timothy geithner earlier today before a

congressional oversight panel. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] next morning, mr. secretary. we appreciate your willingness to come out here and help us. it is easy to forget the sense of panic that overwhelm the economy in late-2008. stock prices were plummeting can i can remember turning on the television and seeing anchor after angkor looking scared and frightened -- after an anchor looking scared, frightened, and concludes -- confused.

the american system was never supposed to collect that way. you played a key role in the turnaround. the troubled assets relief program provided critical support. the recovery act has restored stability into our economy. the congressional budget office recently estimated that at the end of the day the tarp will cost about $25 billion. it is an astronomical sum, to be sure, but far less than anyone expected, even six months ago. as treasurer has conducted its work, governments, citizens across the country, have done their part. thanks to their shared efforts, the economy is in a tremendous a better place today than it was when tarp was enacted. we must not forget the pain that continues to plague so many americans. 15 million americans still cannot find a job. as many as 30 million families

will lose their homes in foreclosure in the next few years. the panic of 2008 has subsided, but has been replaced by the annoying pain of men who cannot find work, cannot keep their home, and in the knowledge their economic story will ever end in recovery. the tarp was never meant to be a complete solution, but even now, your authority to make major changes even though it has changed, you can make steps to help the economy. you could make it easier for homeowners to receive a loan modification by allowing them to modify online. these steps illustrate a larger point.

though the t.a.r.p. legacy may still be determined, the details remain to be decided. mr. secretary, you can descend them. you continue to manage billions of dollars. that is the way the obligation, and i look forward to hearing you describe how you will handle it. i really do hope we will use today's hearings to focus on the remaining opportunities to reshape the economy for all americans. before we proceed, we will hear from other panelists. >> although the congressional budget office has recently revised the cost of the target down at two $25 billion, -- of the tarp down to $25

billion, that should not allow it to be determined a success or failure. we should not forget the multi- trillion dollar innovations of the federal reserve and fdic, as well as the in cannot devote efforts of private market participants. -- as well as being in calculus al -- the incalcuable ever to a private market participants. it is cold comfort that to be too big to fail financial institutions aided by the t.a.r.p. are recording your record earnings. in order to better assess a t.a.r.p., we noted in our

2010 oversight report that the repayment of advances received is a misleading measure of the effectiveness, and therefore should not serve as the standard by which the t.a.r.p. is judged. the unlimited bailout of fannie mae and freddie mac buy treasury and the purchase of $1.25 trillion in mortgage-backed securities by the federal reserve no doubt materially benefited the t.a.r.p. recipients and other financial institutions. these institutions were not however required to share in any of the cost of the bailout. in effect, the bailout of fannie mae and freddie mac permitted t.a.r.p. recipients to monetize their guarantees atkins prices above what they would have -- at

prices above what they would have received without these guarantees and used these proceeds to repay their outstanding debt owed it because of the tarp costs such as this should be thoroughly considered when evaluating the tarp. with respect to aig, the government actions continue to have a poisonous effect on the marketplace. by providing a complete rescue that called for no shared sacrifice among aig creditors, the federal reserve and treasury fundamentally changed the relationship between the government and the country's most sophisticated financial players. this rescue demonstrated that taxpayers would be required to pay any price and pay any burden to prevent the collapse of

america's largest financial institutions and to ensure repayment to the creditors doing business with them. so long as this remains the case, the worst effects of aig's rescue in the marketplace will linger. the panel offered the following observations in the september 2010 report. treasury has claimed that based upon evidence today, a mortgage- related problems pose no danger to the financial system. but unlike of the -- in light of the situation today, these assumptions appeared premature. with respect to treasurys foreclosure mitigation programs, we offer the following observations in a report released two days ago. while the most dramatic shortcoming has been the poor results in preventing foreclosures, the program has

other significant flaws. for example, despite repeated urgings for treasury to collect and explain data, they do not even have a way to collect data. further, treasury has refused to specify meaningful goals by which to measure progress. the program's initial goal, to prevent 3-4 million programs, has been repeatedly redefined and watered down. treasury has also failed to hold loan services accountable when they have repeatedly lost borrower paperwork or refuse to perform loan modifications. in conclusion, it is critical to note that while t.a.r.p. has played a meaningful role in the rescue of the united states economy, the enduring legacy may be to have all but codified a guarantee of the too big to fail institutions,

notwithstanding the profound moral hazard risks arising from such action. thank you, and i look forward to our discussion. >> good morning. i would like to begin by saying thank you to the secretary for once again appearing before our panel. in general, i concur with my colleague's comments and the summary of some of the issues that we have been concerned about. the story of the troubled assets relief program over the past two years has two faces. on the one hand, looked at purely from the perspective of how much it will cost the american public and the affect of it on the acute crisis and severe crisis we faced in 2008, the news just keeps getting better and better. recently, the congressional budget office estimated that the total cost will be approximately $25 billion, less than one-tenth of the original

estimate. certain individual investments that were entered into the were clearly an unfavorable to taxpayers in light of the risks involved, such as asset guarantees of citigroup, have been skillfully managed by treasury to produce significant profit. i would like to commend you, mr. secretary, for -- and your colleagues -- for what you have done to protect and recover the public's money in this regard. but there is another, frankly, more important way of looking at it. t.a.r.p. cannot be so accountable for the -- cannot be held solely accountable for the state of the u.s. economy. but if we look at two issues t.a.r.p. was designed to address, the availability of stayed of the foreclosure crisis, on both fronts, the news is grim.

we can expect between eight and 13 million families to face foreclosure before the crisis is over, millions more than we have experienced already. under the pressure of hundreds of thousands of foreclosures a month, housing prices have resumed their downward slide. on the credit side of things, mortgage financing is available today, but entirely through the assistance of government back to vehicles like, but not limited pin but business lending remains hard to come by -- but business lending remains hard to come by. business lending remains stagnant at crisis levels. unemployment levels are above those projected in the worst case scenario projected by the stress test in 2009.

asset inflation, banks that will not take normal lending risks, these are signs of a system that remains unhealthy. i continue to believe we made a major mistake by not restructuring the major banks. >> we are going to go live now to the senate chamber to hear from majority leader harry reid. >> i have been one who does believe in our constitution, separation of powers, and one of the issues that i have fought is to make sure that the white house does not continually take from us our power. everyone should understand this earmarked issue is simply that. a way for the executive branch of government to steal power we have been granted in our constitution. we have a constitutional duty to

do congressionally directed spending. i do not want to give up the responsibility. i cannot understand why someone more -- why some of our more conservative members want to give up their power. i do not understand that. on the issue that is before the senate, dealing with how we are going to fund the government over the next few years, i should say next year, i cannot accept the fact that people are saying, why should we vote for this? it has congressionally directed spending. that is our job. that is what we are supposed to do. i have some things in this that i am very happy will help the state of nevada. there are things in it that help our country in addition to helping nevada. as was learned yesterday, some of the people who speak out

against congressional redirected spending, or earmarks, are people that have more earmarks than others. they are hoping, of course, that it will pass. they can go home and do the press events as they have done with the stimulus money that we have gotten back to the state saying, here i am. cut the ribbon. look what i did. you cannot have it both ways. you can all look it up in the dictionary itself, but i bet if you went to h in the dictionary and found hypocrite, under that would be people who ask for earmarks but vote against them. i have not yet heard any of these folks, once they get an that they asked for and a vote for, i have not heard any of them asked to rescind it.

i would hope we could cut down the mean-spirited talk about this and just do our job. though the constitution we have does not have a lot of information in it, what it does have is to be runs this country. i am convinced that i do not want to give up more power to the white house, whether it is george bush or barack obama. i am going to fight as hard as i can against president obama on these earmarks, and my republican colleagues to be a to vote for them but love to get them. questions? [inaudible] could be. [laughter] >> what the government runs out of money at midnight on saturday?

the government shuts down. >> the glass is half full. we will take care of things. >> when the plan to buy a cloture on the omnibus, and when you plan to vote? >> soon. [inaudible] i think we're going to proceed as we are. i hope some time in the next 24 hours to file cloture on the spending bill. [inaudible] i do not know if i will bring it before christmas. we are going to have a determinative a vote on the start treaty, the dream act, but don't ask don't tell, 9/11, and hopefully we can get some votes on nominations. [inaudible]

i am not sure we can get that done now. i am sure i would like to get it done, but i am not sure we can. the question is, what are the republicans going to do? start treaty, there has been one amendment filed, and that amendment is to wipe out of the treaty. we continue the second day of debate. there is plenty of time to talk and plenty of time to offer amendments, but as we learned yesterday from run republican senator, he said he was going to do everything he could to run out the clock. that includes the start treaty, -- don't ask don't tell, the dream act and the spending bill. i do not think that is what the american people want.

we need to get spending out of the way for next year. i am going to do everything i can to make that as smooth as possible. the start treaty is something so good for our country. it is good for the world. it is long overdue. and of course, you have all heard my lectures on the dream act. we're going to move forward. we are in session, if necessary, up to january 5th. i hope that is not necessary, but that is the clock republican colleagues have to run out. it is a long clock. i do not want to be here. i have a big family and nevada and i would like to go back and visit them. but i will not let the country's work not be completed in order to go back. i get paid whether i am in washington or in the nevada. for all of the congress, it is the same deal.

>> majority leader read discussing the senate agenda after a meeting with lawmakers. along with weekend sessions this weekend, they hope to make progress on some of the items that he mentioned. as he said, the senate could be in until january fete. the senate is working on the start treaty this afternoon, and you can see live coverage of that on c-span2. right now, we will go back to the hearing with secretary to geithner. the panel is giving opening statements. >> it might be fair to expect the public perception of t.a.r.p. would have improved and

that the administration would get more credit for it dealing with the program it inherited. but people do not feel their lives have gotten better, even as the financial system has stabilized and banks have returned to profitability. the government must continue to work to finally fill the unchecked boxes, mainly to encourage bank lending and to prevent needless foreclosures. discuss theseto two areas today. we must hold mortgage services fully accountable for the modifications they put homeowners into. they must truly be helpful unsustainable. more importantly, looking bored, i believe the vision of an effective -- looking forward, i believe the vision of an

effective bill must include foreclosures. the new financial office has been specifically empowered to write mortgage rules. mortgage servicers were critical players in the foreclosure crisis. no national standards exist for them today. new york has comprehensive service regulations in place that could serve as a model at the federal level. regardless, they cannot tackle mortgage servicing alone. they need the cooperation of state and federal banking regulators to enforce any new rules. hopefully together in a new era of cooperative federalism. with regards to the small business lending the public wants and needs, alone supply is not the only reason bank lending is down. other reasons must be integrated into our collective solution, such as loan demand,

underwriting standards, regulation and uncertainty. finally, i nearly two years after the establishment of this oversight body, it should be cited the you have been available and and valuable to this body. you have appeared before us five times publicly and several times privately. your openness has helped us to do our job better and the public is better off as a result. thank you and i look forward to our discussion this morning. >> i have to comment that each of the five panelists made up their remarks separately. really, we all say the same thing. thank you for coming today and we are interested to hear you have to say. >> thank you mr. chairman, and all of you. i agree with much of what you said in your opening remarks, but not all of what you said. i hope we will have a chance to

talk about the concerns you still raise and the challenges we face going forward. i want to provide a broad overview of the impact of each program on our economy and the financial system, and the challenges we face ahead. i think it is also important right at the beginning to say that it is very hard to separate the impact of t.a.r.p. itself on the economy in the financial system from the combined impact of other strategies. that strategy included very creative powerful programs by the federal reserve and very powerful actions by the fdic. the substantial support in terms of tax incentives and investments that came in the recovery act, support for fannie and freddie that was required to avoid a collapse, none of them would have been as effective without the overall package.

monetary policy does not work without a functioning financial system. that is an important thing to recognize. it is important to recognize that the shock that caused this great recession, this great crisis, was larger, more powerful, and more dangerous than the shock that precipitated the great depression. yet, despite that, two years after the peak of the crisis and two years after t.a.r.p. was first passed by the congress, the economy has been growing for 18 months. roughly 1.2 million jobs have been created by the private sector, more quickly than the in the last two recessions. household wealth has improved substantially over this time. the tax package approved by the senate yesterday and likely to pass the house this afternoon provides a very powerful package of support for middle-class

families, and a very substantial package of incentives for businesses which should get our economy growing more rapidly and more people back to work in the coming two years. i think it is fair to say that the worst part, the most dangerous part of the financial storm has passed us but the crisis has left a huge amount of damage in its wake. millions and millions of americans are still out of work and losing their homes. unemployment remains at 10% nationally, and higher in other parts of the country. it will take years to fully repair the damage caused by this crisis. government programs were not designed, and cannot solve all of those problems on their on or all of the damage caused by the crisis, but they did what they had to do. they were designed to protect the value of american savings and to restore a measure of stability to a financial system

at the edge of collapse, reopen access to credit, and restart economic growth. these programs did so much more powerfully, much more effectively, much more cheaply, much more quickly than i think anyone, including their architects, thought was possible two years ago. you can see independent evidence to support that conclusion from a range of different sources, including the work of this panel. a definitive independent study of the effect of these programs was published over the summer. they concluded that without these, the economy would have fallen and still be declining and unemployment would be above 15%. we would be a risk of a downward spiral of deflation. no one knows for sure how about it would've been, but if you look at the magnitude of the shock before the great depression and how that turned out for the country, against the evidence that has been provided

about this brief period of time, it is a very good record so far acknowledging that, as i said, the damage is overwhelming still and it will take years, years to repair the damage. now, let me just review some of the other basic estimates we used to judge where we are today. as many of you pointed out, these programs achieve their objectives at a fraction of the cost them allies and the observer predicted -- of the cost that almost any observer predicted. initial estimates were that t.a.r.p. would cost $350 billion. those estimates and now around $25 billion. they were too high in my judgment. ultimately, they will be lower. the investment programs in t.a.r.p., the combined investments that were put in banks, in aig, to support credit

markets, in the automobile industry, those investments together will show a positive return. the losses have been limited to housing. the investment programs will show a positive return. if you look more broadly as many of you suggested, the combined cost of everything the fed did, everything the fdic did, the losses we still face because of what fannie and freddie did before the crisis, and t.a.r.p. together, those total costs are likely to be less than 1% of gdp, which is less than one- third of the savings-and-loan crisis, which as you know was a much milder, much more limited financial crisis. if you look at the cost of crises over many countries over time, and you add the programs

all in, it is likely to be a small fraction of what we have seen in any period in history over this amount of time. we are moving aggressively to exit the government investment in these programs, and we are way ahead of schedule in achieving that objective. we have recovered a substantial fraction of the investments in banks. the government had invested about three-quarters of the entire american banking system. our remaining investments are in only 10% of the american banking system. that happened in just over 20 months. as you know, and i am happy to go through these in more detail, we are substantially far along the road to definitive exits from the automobile industry, from aig, and from all

of the banks. as many of you said, a key test is a are you leaving the system stronger than it existed before the crisis. the american financial system today is a much stronger position than was before the crisis. there has been a very dramatic restructuring of our financial system. the weakest parts no longer exist today. the remaining institutions had to pass a very rigorous test for market viability. there is much stronger capital solutions than they did before the crisis, and much stronger position than their international competitors. the bill gives us tools for oversight prevention and resolution to limit moral hazard risks that i believe will be the model for the world going forward and address the critical weaknesses that helped to cause this crisis. for those reasons, because the

system is a much stronger system today, it grows -- economic growth in the the future, if it proves weaker than we hope, it will not because -- it will not be because of the remaining problems in the financial system, it will be because millions and millions of people have taken on too much debt and it will take time to grow the new system. mr. chairman, i like to make a few final remarks. i am moving to a conclusion. we face the challenge is going ahead and i would like to list them. obviously, housing, small banks, access to credit for small businesses in particular, the challenge of winding down, prudently and carefully taxpayer interest in what is still a complex set of investments in

the financial system, implementing the financial regulation bill, and laying out reforms. that is a lot of work. overwhelmingly though, the biggest challenge facing the country is out to get the economy growing at a more rapid rate so we can bring the unemployment rate down as fast as possible. that is the most imprinting we can do for housing, for access to credit more generally, for small banks, and that will be the focus of our efforts. i would like to conclude with two remarks. give us the been very gracious, but it is important to step back and give -- you guys have been very gracious, but it is important to step back and give credit to the federal reserve board and staff, the men and women of the new york fed, a chairwoman sheila bair and the architects of this program.

they designed a very complicated program in a very short time for which there had been no precedent in modern financial history. it is an almost more successful than anybody -- it has been more successful than almost anybody expected. but like to conclude by saying how important a work of this panel and other bodies are you have look to what we're doing. i think one of the great strengths of our countries is that we subject to the judgment of public officials and to very rigorous independent oversight. i do not agree with all the judgments you have made, but the plan necessary function. it is part of rebuilding confidence -- you play a necessary function. it is part of rebuilding confidence in the united states. we have adopted many

recommendations, and will continue to do so as we go forward. i welcome the chance to talk with you about these things and i look forward to discussing some of the observations you made in your opening remarks. >> thank you. are you comfortable with $25 billion as being the cost for t.a.r.p.? >> i think it will be a little hypeigh. based on the things you can observe today, and based on what is reasonable to expect about the trajectory of our housing programs, i expect that number will be high. >> you talk about how well things are doing right now in the financial system, corporations and things like that, and the main reason we are having this hearing is to figure out the best thing to do to finish this out, what are your thoughts on though -- on where

you can do -- on what you can do to get the banks to start lending money? >> we authority still to continue this set of housing programs to make sure if we reach as many people as we can. beyond that, the t.a.r.p. contribution will be very limited. the principal thing we can do to help small banks manage through this is to do as much as we can to reopen access for small business to credit. the burden of that will fall on the new small business lending facility that congress established in september. >> so you think the fact that the banks have $one trillion on hand and are not lending it is something that has to be dealt with in a different way. >> what matters in crisis response is to get credit flowing again, because it is the oxygen in the economy is

required to recover. how should you measure how effective these programs were in this context? the only real measure you can look that is what happens to the price of credit, how much accosts for somebody to borrow, for businesses to borrow, for a person to get to college, for municipal governments to borrow. of those measures of the cost of credit -- as you know, we were in a panic levels in the fall of 2008 and early 2009, but it has come down dramatically. if you look at how much banks are actually lending, lending volumes are lower than they were before the crisis, but that is no surprise. this was a crisis brought on by the reality that people borrowed too much. when the economy shrinks, the amount of lending is going to fall. but whether credit is available or not have to be measured in the price of credit. >> i am understand, and that was

a major objective of t.a.r.p., but a number of panelists talked about perceptions. when i travel around and talk to people that go to banks, small business people, everyone, they say the banks will not lend me the money. many times they say it is the regulators. many times i do not believe it is the regulators. i think they just do not want to lend the money. i agree with most of what you said. p, with the rest of the targe you do not feel there is anything really -- >> not through t.a.r.p. >> the other problem we have is that people are out there not having jobs, but corporations' earnings are up, wall street is doing great, and you have corporations with trillions of dollars on their balance sheets in cash, and some of the corporations are buying back their stock. you're sitting here saying, hey man, this is like let them eat cake.

is there anything you can do under t.a.r.p. -- and the reason i raise this is because all six of us have talked about the same thing, and that is that the problem we have up there now is that people do not have jobs and cannot borrow money. it may be that the answer is no, but we let the corporations and the way they're structured, is there anything we could do, because it is so important? >> the most important thing for the governmental and economic policy right now is to put in place things that will help raise the rate of economic growth and speed the path of getting more americans back to work. t.a.r.p. itself now has done what it had to do, which was to get the market to reopen for credit. fit but the burden for achieving a more rapid pace of growth is going to have to come through

other policy instruments. >> mr. secretary, when you consider the potential legal and economic consequences of the following five things, and i will read them, one is the foreclosure irregularities, the signing problems, the failure of some securitization is to obtain proper mortgage notes, the challenges presented by the mortgage electronic registration system, the exercise of repurchase rights by securitization trusts as well, the filing of wrongful foreclosure suits and other legal actions, are you concerned that any of the largest financial institutions will experience a solvency, liquidity, or capital crisis as

a result of these items? >> no, i think they will pose very substantial challenges to the system, and i should be careful to it knowledge that because of the seriousness of these problems that we have a task force that includes 11 federal agencies, of bank supervisors, the fha, the department of justice and the ftc, undertaking a very careful, comprehensive look at all of those concerns so that we can get a better handle on the potential risks, but more importantly, so we can fix them and make sure the people who were disadvantaged by the mass are provided some relief, to make sure they're looking forward, homeowners is still at respite -- to make sure that looking forward, homeowners still at risk are in a better

position. we will provide an evaluation of where we are and what is next some time in the first quarter. >> do you foresee having to implement a program to purchase distressed or troubled loans from the financial institutions themselves? >> i do not. >> so, as far as you can tell, note t.a.r.p. part t2? >> not as far as i can see. >> where the ratings agencies? do you believe ratings agencies will take a different perspective and that when the judgments come down, and the judgments may very well be large, do you think the ratings agencies will react properly, overreact, downgrade stock? >> i would never want to predict

that ratings agencies would act appropriately. ratings agencies by their nature are, not to be unfair, [unintelligible] i would not want to make any judgments about whether they will be wise early or late on these things. >> but you do not think the problems will be systemic enough to rise to the level of needing a second program? >> we are not in the first inning of this housing crisis. this started and peaked at the end of 2006. it is going to take some time still for investors, creditors and ratings agencies to fully evaluate the implications. the market is finding its way now to feel a little more comfortable, but it is going to take a little more time.

>> do you anticipate that the federal reserve may use part of the funds in qe2 to purchase some of the distressed assets off the books of these financial institutions, much as they did in qe one? >> i am very careful not to talk about monetary policy any more. i believe it's a it's treasury secretaries should not talk about monetary policies, -- i believe that treasury secretaries should not talk about monetary policies, so you should direct that question to them. >> if fannie mae and freddie mac had been left to fail, the fed could have still done qe i, but they would have had to purchase at a market price that was below

face. >> i am not sure i fully understand your suggestion. i believe this, but that does not mean it is true. i do not believe there was any plausible argument to suggest that the u.s. economy could have withstood, or could withstand today, allowing institutions with five trillion dollars in guarantees to default on those obligations. that is why a conservative, republican president, decided it was in the interest of the nation to intervene to prevent that outcome and to allow those systems to be managed down more gradually over time. to suggest the we would have been better off as a country, financially, economically, if we chose an alternative path, is not a credible argument. the idea that the overall cost to the economy and the taxpayer would have been less because of that, is not a judgment i would support. >> that is not the point i am

making. the point i am making is that the bailout of fannie mae and freddie mac should be considered when we judge the t.a.r.p. program. >> i agree with you on that. when you look to the overall cost of this crisis, look at two things. one is the direct financial cost of all of these programs, fed, fdic, fannie freddie, t.a.r.p., money-market guarantees, etc. you have to look at the overall fiscal cost of lost revenues, unemployment insurance and things like that. but on the broad measure of direct financial interference, including fannie and freddie, the overall cost will be incredibly small in comparison to almost any experience we can look at in the united states or around the world, even in much milder, much less damaging crises, and that is because of the effectiveness of the overall response. >> i agree all factors should be considered, but sometimes those

factors are not mentioned in the sound bites. that is all. >> thank you. >> before i ask my first question, i think you mischaracterized my opening remarks. i do not think the financial system is weaker today than it was in 2007 or 2008. i think it is clearly stronger. i think it is nonetheless week. mr. secretary, at our last hearing, your colleague was here before us. he gave me some concern about the a administration's policy around foreclosures. -- she gave me it some concern about the administration's policy around foreclosures. >> she is really excellent at what she is doing, but she can take it. >> i concur with your judgment, but i wanted to raise these

matters with you directly. in her testimony, she stated that slowing down of foreclosures, and this is in the context of the debate about a foreclosure moratorium, slowing down foreclosures may exert downward pressure on the overall housing prices both in the short and long run. i would like you to respond to this very simple question. in the view of the administration, do more foreclosures equal lower housing prices or higher housing prices? >> can i ask you a question first, just for context? >> sure. >> do you support a compulsory moratorium? >> i support a moratorium as part of a larger solution. by itself, and here we may agree, by itself a moratorium is not an answer. like any delay, it does not get

you where you need to go. i have thought going back to 2007, that a moratorium would be helpful incentive to the parties to reach private solutions. i am happy to answer your question coming but it is my turn -- i am happy to answer your question, but it is my turn -- to ask questions. >> you're absolutely right. if you could prevent -- if you could slow the pace of avoidable foreclosures, as we did effectively through these programs, that was one factor that contributed to bringing a measure of stability to housing prices at a time when people said they would fall by 40%. but that is not quite the right question for this debate. the right question is, what a

compulsory moratorium -- >> that is not the question i asked. i do not see the moratorium -- the moratorium is a subset of the basic question that i think the administration's statements over the last few months have clouded which is, are foreclosures good for our country or not? >> foreclosures are not good for the country. >> and is that because the lower or raise housing prices? >> let me try it this way. if you were to stop foreclosures from happening and suspended depth -- suspended the process nationally, what would that mean for housing prices? it could mean that there are people unwilling to buy, and people sitting in neighborhoods at the epicenter of the foreclosure pcrisis, that see

their home prices fall further because the market is going to take more time to work through this process. >> isn't the only true if at the end of the day everyone gets foreclosed on? >> ltd. unit in the right approaches to this. -- let me tell you what i think the right approach is to this. if they cannot be certain that they have a legal basis for for closure and that they have given a home honor every opportunity participate, the foreclosure should be stopped. >> at that approach, it would appear to me, what appeared to be found dead -- would appear to me to be founded on the premise that foreclosures are bad for society. one of the reasons they're bad is that they lower housing prices.

in her testimony, she said that 25% of current for closure -- of current home sales are due to foreclosure. >> i disagree with your assessment on the impact and merits of that approach. >> you disagree that 25% of the total sales in the housing market are due to foreclosure? >> i do not think that is the right way to think about it. >> ayman understand what this administration cannot answer the simple question of whether foreclosures will drive prices up or down. it seems to me that you are covering for something. my time has expired. >> [laughter] yeah are asking an interesting financial question. it is a question for economists. but i think that is not really the question we face. the most -- the question is,

what is the most effective, and responsible thing we can do for our country? we have a lot of other things to worry about too. we have to plan for the future, make sure we do not get into this kind of mess in the future again, the right now, we need to figure out what to do to make sure people can stay in their homes if they can afford to, and make sure we get through the damage remaining to provide the least risk to people who have suffered so much in this crisis. >> we will take that up in the next round. >> mr. secretary, in my opening statement i read aquote about how a proper cost-benefit analysis would be conducted.

get your thoughts on what he said about the importance of understanding -- we put a lot of taxpayer money at risk. >> i have a huge amount of respect for the professor. i have worked with him in the past. he is fundamentally right. you have to measure return again stress, as an investor would do. there is a very thoughtful set of questions one should ask about whether we have priced investments appropriately. looking just at the financial return independent of that, i think that is a fair way to evaluate whether we got that right. i think we did. i have some evidence for that suggestion, and this is oversimplifying a little bit coming but in a financial panic,

in a financial crisis, of what you want to do is price emergency finances available below market credit price, but it has to be more expensive than what credit would cost in normal conditions. the virtue of doing it that way is that as things normalize, you're more easily able to wean the dependence on the market for these programs. there is no perfect place between those two things, but you can say that because we price our investments below the cost of credit available at the time of financial panic that we underpriced the investment. that cannot be a fair way to evaluate it. in that case, i think we passed what central bankers would call

a classic lender of last resort doctrine. the press how quickly we've been able to get out of these investments, how quickly the programs work wound down, how quickly we were able to get out of emergency guarantees. they were expected to be expensive. >> i guess i agree with you about the comprehensive study out there on the impact of the financial crisis. i guess my own reaction is, i consider that to be very disappointing, given that i would -- i feel was a fairly cursory study, a fairly short, nine pages. i usually it makes students write much lumber papers. it is hard to see -- i usually make students write much longer papers.

it is hard to see how you could make such an argument in only nine pages with very little documentation and what i consider a faulty methodology. in my opinion, we are still looking for much more comprehensive studies. part of that is going to be a function of the abrasion that is out there. that is made available. in my opening statements, and as a we have seven number of times, we pushed treasury to provide more data, more data, collect data. the more recent report -- i guess, you know, give me your thoughts about -- to do that, to allow a comprehensive analysis of the financial situation to be done. >> i completely agree that the necessary condition from people that evaluate is better data.

we have been very transparent with all the financial firms in our programs. you can judge them very easily. i am happy to continue to look a ways to get more data out there. the financial reform legislation does establish broad authority to improve the overall data availability going forward. again, i am happy to look and other ways we can get better data out there. i think there is much more out there then was there before we came in on all of these programs, and it provides a rich body of evidence. >> my time is up. >> mr. secretary, as the patel and my opening statement, i spent a lot time focusing on proprietary modifications performed by banks and servicers

outside of the program. six months ago when you are year, we discussed this and you agreed it was an important part. i think because of the additional information that the treasury has shared since that time, we now know is even more important. in fact, a 7% of those -- 70% of those modifications now fallen the program. that is 3-1. what is your assessment of these proprietary modifications? >> i actually spent quite a bit of time in preparation for these hearings asking similar questions. how much do we know about these modifications? the quality of the data so far is not so great. the general consensus though is that the majority of those modifications barring -- are

lowering monthly payments quite substantially. one of the most valuable things we didn't setting up industry standards for modifications -- we did in the setting up industry standards for modifications was that a bar. we're going to continue to look -- was set a bar. we're going to continue to look at that. the issuehe heart of of the sustainability and length of those modifications? there are five years and then reset to the historical rates of today. we do not know about the non- program models. >> i think what you want to let that is the magnitude of the payment reduction, -- look at is the magnitude of the payment reduction, how long is it in place, and what is the balance after the modification expires.

again, we will look for ways to get better information out there to assess those programs. >> the monthly report shows improvement month government. we now have a greater information distinguishing the performance by servicer. last week in the new york times there was a big story focused on large servicers mart evocations -- modifications, and highlighting differences. for those the board denied a modification, all made -- all may -- only 14% received a non- program modification from bank of america, but over 40% received one from wells fargo. had you explain those differences? >> i am not sure.

>> we talked to the supervisors. to the same extent that this data has been voluntarily provided with respect to the model, i think information for the non- program model would be extremely important to us. >> one of the things we did early in a successful way was put out very detailed metrics of performance by individual servicers of modifications, but also on a whole range of other measures of customer service, which as you know has been abysmal. if there are other ways we can improve the quality of information, it gives people a chance to look at that because it changes behavior. it is a form of consciousness. >> even the data that i cited with respect to that article may be misinterpreted.

it does not necessarily mean that wells fargo is three times better than bank of america. the portfolio itself may have characteristics that drive this, so i think, we have talked about in the past and need for a mortgage performance data system. do you have a view as to the need at this point for this type of data? a demonstrated need for performance data? >> i think we can do much better job with much better data out there for the world at large. i'm happy to look for ways that we can do that. >> thank you. >> looking forward, trying to figure out what we're going to do in the remaining days, i was interested that you talked about the employment program and a second lien program. the second lane program is something i have become convinced is a major problem.

if a servicer doesn't want to make a modification -- this has been at around for awhile and based on the data we see, not what we would like to see. do you have any thoughts on how we can get the second lane program up and running? >> it took a long time to get up and running and has only been in place for a short time. i think it is very probable site -- very promising in the sense that it achieves a simple imperative -- is the first is modified, the second has to be modified. we now have better incentives to do that. i it's very promising, but it's going to take some time. >> do you have any idea how much money you can spend on that program? >> i thought you might ask me about new estimates. >> i look at this, and i think the panel does, if you read the

report, this is a big problem. this is an extraordinarily complex problem, so getting up to speed is going to be a long time. is there any thing anybody can do to get this program to be all it can be? >> we're doing all we can. we have a tremendously talented group of people who do housing who are on this all the time. we would like the reinforcements and the more we can shine a light on the relative performance of servicers, the better we can do. on the cost estimate, i don't know how much will end up spending on this. we are in the process of how much we expect to -- looking at how much we are spending on these programs but you will have a chance to look at the estimates. >> the unemployed program is not budgeted for any money because there are no incentives. it shows the difficulty of the

problem. if you look at the debt to income ratio for many of these people need modifications, the reason is because they are unemployed. an unemployed program is key to making this work. what are your thoughts and the unemployed programs? >> i totally agree. servicers are required to have three months for forbearance. that usually comes later, between five to eight months in their time of an employment. it has more value than people think. the other program we have is with a variety of state housing agencies, providing resources to help the unemployed. you made the central point which is that the principal factor that is driving foreclosures today is not what was at the heart of being in the crisis. that was a set of broader lending practices. now it is really about

unemployment and that is why it is important to emphasize. the ability for people to stay in their home is what the government is able to do to get the unemployment rate down much more quickly. >> since hamp is at ramping down, this is an important issue and so much has been learned, is there's some suggestion -- you don't have to do it here at the table, but i think this should be the subject of legislation. this is still going to be a problem, this program is years out and is absolutely key to the recovery. we have learned a lot in the tarp program, but we are stymied now. i would like to have your thoughts, but also some kind of statement of paper.

>> assure my colleagues would be happy to talk about that. i think it is important to recognize there have been a lot of very capable people to spend a lot of time looking at broad strategies to address the housing crisis. there are people in this room and people around the country who have suggested it much more dramatic approaches in the past. it would require legislation and additional resources, but the fundamental question is different. how many people do you think you can reach? the principal gap between the roughly 5 million americans today who are delinquent in their loans and the number of people who are likely to get a modification is really about the falling.

-- -- the following -- roughly 2 million are eligible for the hand and fha programs. the other 3 million americans delinquent on their loans fallen to a bunch of different categories. many of them are individuals who took out loans for houses that are quite expensive -- above $625,000, or his mortgage burden today is below 31% of income. or they were investors who had a second home. that is not all the 3 million. some of that is from loans for services or don't participate in the program. there is no economic case for helping them stay in their home that it's better to help them in

other ways. if you're going to think about a more dramatic approach, you have to decide whether you're going to expand -- extend the benefits using taxpayer monies to those class of americans of fallen through those categories. we did not think that was a reasonable policy choice or a good use of taxpayer money because a substantial fraction of those people were investors who had a second home, brought an expensive home or can afford to meet their payments. >> but you talk about 3 million people out there who are not in that situation any help, who we have learned a lot about how to deal with and we have learned about the unemployed and all of these things to get those 3 million and they are extremely important to whether we're going to deal with this -- how are going to get out of this thing and move to the next up?

at housing does not start being more productive, we are in deep trouble. you have a combination of the kind of moral obligation to help people who were not subprime people, people who did it right and now they have been unemployed through no fault of their own and are about to go belly up. we have an obligation to help them morally, but what makes it binding is we have an obligation to do it economically so we can move on to the next up. my mother used to have a saying that nothing worthwhile is easy. this is very difficult, but it's also very important. >> i agree with that. our work is not done. the damage is profound and tragic in its dimensions and it's going to take a long time. the most important thing for governments to understand is you have to keep that. you have to keep working on it.

you cannot stop too early. just in looking at the foreclosures and unemployment that 10%, we have a lot of work to do as a country. >> one of the things is that, next time, -- in the interim, we are in a deep hole. any thing we can use from what we have learned and what your people have learned from hamp, we can't just say is april 3rd and goodbye -- >> we are going to be met -- we're going to be at this much longer. >> i'm sorry for taking so much time. >> thank you. in your opening statements, he

said financial institutions are basically stronger than they were a few years ago. they have stockpiled a trillion dollars and so when we approach the question of lending, a question, there is a trillion dollars they can learn if they want to. there has to be a problem with demand. why is there a problem with demand? there has been a great amount of uncertainty interjected into the economy for people who sit around their offices drinking bad coffee of styrofoam cups to make decisions on hiring one person or two people at time. they have simply said i think we will hold off on that decision. what is going to change in that perspective over the next six months to a year? >> the principal source of

uncertainty remaining is uncertainty about what's going to be the pace of growth and demand for someone's products. your question about how fast our economy is going to grow, there is more uncertainty that is typical because of the scale of the damage caused by the crisis and the shock provided to confidence in the depths of the panic. the scars of that pact last along time. but people are still more economically insecure and uncertain today "than they were at any time in generations in this country. that's going to take some time to heal, but it is a healing. the best measure of whether it is healing is what is happening to forecast of demand. those show gradual healing and if you look at how companies are behaving, it suggests growing

confidence and optimism. private-sector job growth is faster, stronger than it has been in the last two recoveries. business investment spending in equipment and software ran at a rate of about 20% for six months of this year. it still looks quite strong, so businesses are spending again because they want to make sure they have the ability to participate in the recovery that is coming, and that is encouraging. it's going to take time to heal, but gradual healing, gradual improvement in confidence, and ultimately what is going to generate more confidence is at the reality of growth getting stronger. >> on november 17th, the fed announced another round of

stress tests. but for reasons i'm not sure i fully understand, these tests will be kept secret and will not be disclosed. i doubt if you made that decision, but can you comment on that? i'm troubled transparency in this is not complete. >> i was a principal part of the decision back in 2009 to force our major institutions to go to the stress tests and disclose the results of details so that investors could assess on their own whether they were appropriately conservative. that allowed these firms to raise a lot of capital much earlier. if you contrast that with what europe is going through, you can see the benefits of having a very detailed lover of -- detail level of disclosure, and i'm confident that a regular part of

risk management and supervision will be regular public disclosure of stress tests by major institutions. i cannot speak to any of the things the fed has announced recently, but looking forward, we as a country will go through regular publicly disclose stress tests of our major institutions. >> every day we read in the papers of rowboats signing an these stress tests were initiated based on that, so i think it would be helpful to disclose. do you believe fannie mae and freddie mac should write down a principle of their large number of underwater mortgages through participation in the short refinance program? >> we have a principal reduction program in the treasury housing

program. the fha, both of those things have a lot of benefits and we think there is a good economic case for fannie and freddie to participate in this programs and we are in the process of talking about the merits of those programs and their concerns. we're trying to understand their concerns and they have a different set of objectives and constraints, but i am hopeful they will find a way to participate in as many of these programs as possible. >> some news reports have said the treasury is pressuring -- what is your projected cost of doing this and writing down those loans? >> there are two ways to think

about the cost in this. fanny, freddie, no government owns all this risk today. if you do things to improve the odds that house prices will be higher in the future and defaults will be lower in the future, you will improve the overall quality and reduce losses to the taxpayer. we have to think about the financial implications to that broader prizm and we want to or encourage individual agencies to do it as well. >> thank you. i appreciate your answers to the questions. i think you are spot on. i would like to follow up on the questions that my colleague raised about non-hamp modifications.

the congressional budget office is projecting only a $12 billion expenditure out of a potential 75. do you agree with that projection and is that good news or bad news? >> i think is bad news, but i think it's blow. i think it is too pessimistic. what we set aside was more like 45 or 50. they expect to spend only 12, but that is too low. we're going through a comprehensive assessment and we will probably be able to share that with you in the first quarter. >> so you are not satisfied with the type of overall impact that projection would appear to present? >> and my obligation is to make sure these programs beach as many people as possible. the more we reach, the more we will be spending. i think it's a good use of the limited resources we have as a country because the returns we have are very high overall.

i want to say one thing in response to the question about how you evaluate risk and return. i think this is straightforward. you have to look at not just whether we got a 20% return on to of these programs. relative to what risk. we are the government, we're not an investor, hedge fund or a vulture fund. the impact should be judged by what should you do to overall economic growth and access to credit as a whole. when you think about the return to the taxpayer, the most important return is not the financial return to the treasury and investment. it is about the broad program. >> your remark is very helpful because i want to ask about that issue in relationship to a term you used several times around mortgage modifications, which is the question of what the hell

water can afford. -- what a homeowner can afford. do you mean what a hot water can afford consistent with what? to be more precise about this, we know what the homeowner -- maybe that there is a gap between what the homeowner can afford and what a financial institution views as the point where they start to lose money. of larger externalities' foreclosure, which is what i was trying to get at. >> there's no perfect answer to this. we want people payments to be reduced to 31% of income. while 31%? that is something that people can sustain over time. >> i know what the number is.

but when that number support the payment that is here, and the model of economics to the bank's support the payment that is here, a homeowner cannot afford. there's a gap between what is in the bank's interest and what is in the hall maters interest. if that gap means you go to foreclosures, which you were describing our earlier happens. to close that gap, you have to take a hit to principle and the bank takes a hit if they don't like. it seems like we are saying one that gap opens up, we let the bank make the call. that my right about that? why does that make sense? why should we be asking the banks to take a hit so we get

more across the real estate market better outcomes? >> that is a very good question. you are right that part of the difference between the number of people we have reached through the modifications and those we have not, it is a relatively small number of people. let's think about the implications of what you are suggesting. to decide we're going to take the taxpayers' money so that people can afford to stay in a home that is beyond their capacity to afford because we want to avoid the broader negative consequences and negative consequences of foreclosures, is that a fair use of the taxpayers' money? >> i was not asking about the taxpayers' money, i was asking about the bank's money. >> this again goes to the question the chairman raised

earlier. we do not have the legal authority to compel certain types of performance by banks. if congress decided to give it to us, i suspect they would not, but they could. >> i disagree with your characterization of the leverage you have around this question, which i think is implied by your statement of not having legal authority. the web of relationships that exist with an and the like i think give you a fair amount of ability to open that up. but i want to take you one more place, with the chairman's permission. given the fact that this is a difficult problem and what is clearly an increasing reliance of non-hamp mods across the

market, i am puzzled by what i read, and maybe i read incorrectly, to the treasury's opposition to having the state agencies among the usage of the money they have gotten from hamp to help homeowners counsel so that they can then have a better shot at negotiating mods. >> we have spent a lot of time looking at this and we do provide resources to help homeowners determine eligibility for the program and participate in the programs. the specific question members of congress have raised is can we use this authority to help provide more legal a -- legal aid itself. the way laws are written, we cannot legally use tarp hamp or resources for that area -- we

cannot legally use tarp hamp or for that area. >> how did you come to that? >> we consulted with a broad number of lawyers across -- >> the press reports that there were significant conflicts. >> we have plenty of lawyers at treasury and justice department to make those arguments. >> it is a false report that you asked a particular law firm -- give me a moment to find a name -- is false that you asked -- i think i can -- eli >> i think i can help you. we don't rely on judgment. we rely on the judgment of the

responsible people in the executive branch. the legal judgment is the correct judgment, though i have not a lawyer. >> the letter from your council says legal aid services are not necessary or essential to the implementation of the one modification program. is that the core of your findings? >> i would have to go back and read the letter again, but if i could make it more simple legal argument -- >> -- >> the general judgment of lawyers is we cannot use another source of funds to supplement or enhance the separate presentation. >> wasn't that particular authorization passed after the initial decision not to fund? >> i do not believe that is the

case. i would be happy to respond in writing to any questions about the legal basis for it. i want to say that there is a very good public policy case for using resources to help people take advantage of government programs, but managed a difficult and complicated process. i have been very supportive of counseling and where we have the legal authority, we have made tarp funds and hamp funds that available. but the lot would have to be changed to make available directly. >> it puzzles me that when hedge funds get tarp -- a vast amount has been expended on legal counsel for the benefit of the government.

it seems as though lawyers are understood to be a necessary and essential component of all the transactions that hamp tarp and -- hamp and tarp undertake. >> i am very confident legal judgment our lawyers said justice made with the right one. >> i appreciate you engaging with me on that. >> thank you. >> we're going to switch gears here. as you are aware, in december to decimate, a decision was made to use tarp funds to provide financial support to general motors and chrysler. would you have done that? would you reach the same decision if you had been

secretary of the time? >> it was not my decision to make up the time, as you implied. but i understood the merits of the choice of the time and i thought what my predecessor did was the right thing. >> this will essentially for them to avoid going into bankruptcy. i think it was the alternative that time. you have alluded to the estimate that a million jobs would have been lost firms as large like american airlines, delta, and polaroid have gone through bankruptcy and our economy survived. wraps with the world today look much different if general motors and chrysler had gone through bankruptcy in late 2008? how different with the unemployment picture beep? is that true and what the base

that opinion on? >> market economies require failure. they do not work unless you allow firms to fail when they cannot make things people don't want to buy. in normal recessions, not just in normal expansion to come up bankruptcy is a central part of the functioning of a market economy. but everything is different when you are in a financial crisis like what we faced in the great depression. in those circumstances, bankruptcy itself cannot provide an effective way to protect from the collateral damage of the failure of major financial institutions or even the failure of a concentrated number of major providers, and lady automaker case. you have to think of those different world. in a crisis, you have to do things she would not do in and

normal recession. -- in a normal recession. companies need to fund it to go through that and in a financial crisis, there'll be no source on a significant scale. in some cases, the government has to step in to provide temporary financing. but what matters most is if you do that, you have to do it on the condition that you bring about a restructuring. that is what the auto piece of our strategy is about. there is no doubt it would have been much higher and it would have been millions of jobs lost and i thought was a well- designed use of government resources in a crisis. >> let's talk about gmac and an

exit plan. the contrast with a lack of clear exit strategy in gmac, they have discussed the idea of a 2011 ipo. given that the company because reporting three consecutive quarters of profit, what is the talk of an ipo? >> as quickly as possible. if you look across the board, we're going to move as quickly as we can. to replace the government's investment, take those public, and access them as quickly as we can. we are working hard with management board of gmac to achieve that outcome. i do not know how quickly, but it will be much sooner than we thought six months ago. talk about executive compensation. when mr. feinberg testified before the panel, he stated if

the culture of pay on wall street is not changed in the wake of tarp, the work has not been successful and it's not being followed, at the problem. do you agree? >> i would completely agree with that. >> do you think it is not the case? >> it a good question and a good time to be asking that question. i would say the following. we did two things over the last six months or so -- one with the dog/frank reform act and one -- the dodge/frank reform act -- do thedd/frank reform act. to get shareholders the right to vote on shareholders packages. the second is a set of standards on the design of compensation incentives the federal reserve and bank supervisors are responsible for enforcing and we

will know more about the results of those things that behavior in the early part of next year. what you can say today is there has been a substantial shift in compensation. there is less in cash and more in equity. it is more at risk of being clawback if firms to not perform as well as people had hoped. that is good, but i would say you cannot say today -- i would not claim we have tested enough change in compensation and that is important for us to achieve. those incentives were encouraging risk-taking and play material role in what caused the crisis itself. >> thank you. mr. secretary, i think you may have anticipated my questioning are around servicer performance because you may have preempted me by characterizing service or

performance as dismal in our last exchange. but i believe it deserves further discussion. speaker pelosi made public a letter she made public and sent to the department of justice, to the fed and to the occ, a letter that describes in 20 pages of excruciating detail, examples of real stories from home a lot -- from homeowners in dealing with servicers. it demonstrates their frustrations and, despite good faith efforts on the part of the homeowners, failures by the servicers. it highlights failures of areas to respond in a timely manner. for proceeding with modifications as well as a continual evidence of losing and

misplacing documentation. do we need national standards for mortgage loan servicers? >> i think we do. >> there are a number of states, including new york that have. we put in place not only a registration of mortgage loan servicers, but one of the most comprehensive in the country that imposes duties of care. rules around fair dealing and customers and homeowners and requiring modification and trained personnel and requiring data reporting requirements. is this something that could serve as a model as -- a model at the federal level? >> i think it could. a number of people think highly of what was done in new york, but i think you're making the right point. >> in your efforts to stand up

to cfpb, d.c. that as a priority? is this one of the mandatory responsibilities for statutory rulemaking? >> i am not sure how early that will come realistically. we're focused overwhelmingly on trying to make sure we are fixing the existing problems in service or performance. it will be a very important priority. what should be the basic future of the housing industry or generally. not that we want to take some much time to them because it's so consequential, but we got this terrible wrong as a country and what to make sure we're getting a ride to make sure we have a durable set of fixes. >> how do we proceed with

national standards to avoid 50 states proceeding down the road requesting david -- requesting data from servicers? >> i cannot tell you if it's something where we will have a proposal in six or 12 months, i can't tell you. we will see what is the best way to proceed. >> do you foresee a new era of cooperation, particularly between the states and the agencies? >> we will have a test of this in the mortgage documentation problems that have been the subject of any of your -- working with the state attorneys general, we have the financial

fraud task force. that would give us a seat at the table for insurance and banking regulators. we are a country and have a national financial system. if we're going to do a better job in the future, we have to present these -- we have to present these entities as working better closer together. >> thank you. what is the current systemic risk of troubled assets remaining in banks? how do you see it? >> i believe the u.s. banking system has a substantial amount of capital on their books today in the form of common equity against the assets they hold and the risk their taking. i am much more confident today

that we made the right judgment and that will give us a reasonable prospect of coming out of this stronger. what matters is the capital relative to potential exposure. but firms are working down those assets and most measures uc of performance now are improving and have been for some time, even in mortgages. >> the financial system may be stronger, but what is sure opinion on dodd/frank? people are just saying -- people just assumed we would be in trouble if one of these banks failed. what is your feeling now based on the increasing concentration of the big banks? >> the system is more concentrated today and that is

unavoidable. >> exactly. >> but we are much less concentrated than any other major companies -- any other major country. we still have about 8000 major banks -- >> but we have a few banks that are doing extremely bad. >> not to underestimate the consequences, but it's much smaller of a share of our country than is true for any other country. if you look at canada, the u.k., western europe or japan, even our largest banks are much smaller to the relative size of the economy that as a whole. the look at top 50 financial institutions in the world, u.s. banks are not distinguish on that list in terms of the relative size. that is not to say it's not a big problem -- >> the banks and the governments are so closely aligned -- >> we would not want to be like them.

>> the most important things that dodd-frank did was to force these institutions to hold more capital, we have achieved that to give us the authority to apply those constraints on deleverage to institutions that our banks even if they don't look like banks, like a.i.g. or investment banks or a range of other institutions that are not regulated as banks before. as you said, the revolutionary -- the rebel -- the resolution authority, in the event that bank makes a mistake like that in the future that causes it to fail, the government can step in and deadline them, but did not of their misery, break them up without risk to the taxpayer or the economy as a whole. we will be in a much better system in the future to prevent crises of these magnitudes and

manage them more effectively. we will have crises in the future, but the reform bill, to the credit of the architects in congress, will help us fix the fundamental failures that caused the crisis. >> with bankruptcy, is that it did you really want to avoid? >> you cannot have liquidation be the solution to a financial panic. >> it is better to do it when it's not? >> yes. >> i will keep this short because i know time is fleeting. to follow up on what the senator said, there is a trillion dollars of distressed mortgages on banks' balance sheets today. if those mortgages were marked to market in the losses book and the capital impaired, would we have a systemic problem? if so, is this being held together today by accounting convention? >> that is what the stress test

did. the stress test disclosed to the market the scale of potential losses that the banks might face. to force those institutions to hold capital against the potential losses and, because of that, because we brought a level of disclosure and reality to this balance sheets, those firms were able to raise a substantial amount of capital from private investors. that's the best measure of the risk banks face looking forward. >> so if those were marked to market, there would not be a problem? >> banks have the capacity to manage the risks today that they took on in the crisis. >> thank you.

>> the firm i was looking for on the foreclosure issue, on the legal aid issue is squire, sanders, and dempsey. you did not ask their advice? >> i don't know who they are. we asked a lot of people for advice, as we do all the time. the relative -- the relevant question is -- i'm accountable for those judgments. >> i would appreciate knowing if you asked that firm for advice. >> i would be happy to get that to you. >> there is a lot of numbers in the banking system. i watch one of them because i feel like i understand it. that is the value of second mortgages on the books of wells fargo. there is about a hundred billion

dollars on the books and that number has not changed much in the last two years. that makes me wonder a lot about -- the fact that the number is there and the size of their servicing -- mortgage servicing portfolio makes me wonder about two things. does that number air any relationship to economic reality? more broadly, similar numbers on the balance sheet of the other major for banks, the that there any relation to reality? if you take that number and put back risk number and the continuing inability of at least this panel to understand what the underlying holdings in toxic first mortgage assets, going back to the august 2009 report, take those things and add them up, they seem to represent a threat to the capital levels of the four large banks.

you seem to be quite confident they don't. can you explain why? i don't mean with respect to wells fargo in particular, but as a whole. >> there is no certainty about these judgments. they depend a lot on what is going to be the path of the economy in the future. we hope to do is put enough disclosure in the market about the composition of those assets. losses you may face on them, how they're performing, so that individuals across the financial marketplace, so you can judge whether the capital is sufficient against those losses. the judgment i reflecting is a broad judgment of most people, these banks all hold very substantial amounts of capital against the risks they still hold that they took on in the crisis. you can look at extraordinary

detail every quarter, if not more frequently, about how it is performing and make your own judgment about how it's likely to perform in the future. >> if i might be allowed one final comment, to you then disagree -- the thing that haunts me about those numbers in relation to the strength of our banks is that when you take that and connected to mortgage modifications, and there seems to be a fundamental question there which is are we in a zero sum game between the strength of those banks and our ability to modify mortgages and both the well being of the american public and the strength of our housing markets? i can clearly tell by your gestures that you don't believe we are in a zero sum game. but the evidence that comes before this panel suggests we are. can you explain why you think we're not?

>> that would take a lot of time. the principle barrier to reaching people we should be able to reach through modifications is weakness in some ways among the nations at major banks. you have to come back and look at what is the source of the difference between people who are being reached through modifications today and those who are not. as i said earlier, it is principally about how we define eligibility, not about the incentives problems banks face. >> thank you. >> i want to return to a comment you made and push you a little on the comments made earlier about executive compensation and risk-taking. i would argue that a major part of the excessive risk-taking was

the result of a perception of too big to fail, which after a certain point, firms simply did not worry about what the left tail of the distribution look like. do you think -- have we put situations in place that are pushing firms that will require firms to start thinking about what the left tail, the likelihood of an extremely that loss? >> i think you are exactly right. the two sources of the financial crises are moral hazard, the perception the government will insulate you from the consequences of your mistakes, and a fundamental uncertainty or excessive optimism about how dark the future might be. to use the technical term, how adverse detail is in extreme event. in this crisis, both were at work. moral hazard was the central part of what happened, but the failures across the system in my view are not principally about

moral hazard. they were a much more systematic failure of people to anticipate what might happen in the that we had a deep recession where prices actually fell substantially. that was not in the memory of most people alive today. most people ran their banks and businesses, their personal finances on the expectation that house prices would not fall. house prices fell dramatically. the failure to anticipate and plan for the potential adverse risk was fundamental to that. parts of the system, moral hazard make that worse. have we fix that? we will never think the completely. what the dodd-frank bill does is allow us to offset moral hazard risks and set up a system where in the event these large institutions are at risk of failure again, we cannot save them. all we can do is dismember them

safely, break them up with less collateral damage. that will help reduce the expectation in a market that is pervasive in a financial system that in the future, when there is a risk of failure, the government will insulate the firm from the consequences. you cannot correct completely, but we are in a better position to reduce that risk going forward. >> one final question -- until that actually happens and we see that situation and we see firms and businesses see how the government is going to deal with it, duty to see that before they start believing that the case or will they actually responding to that on the belief that now everything has changed? >> you cannot run the system on the hope that market discipline works that way. you have to do two things -- you have to constrain risk-taking, that is a function of government

and the government failed to do that. you have to do that and make sure you have the ability to let firms fail without causing collateral damage. the reform bill gives us those to authorities. that is fundamental. we're going to have crises in the future and how that happens will depend on the overall cost. we are a better position than we were before. >> thank you. you also have to anticipate where problems may develop with particular firms. >> right. you obviously want people running institutions, running the central bank, running supervision that have the capacity to anticipate. but you have to recognize the reality that we do not know what the future is. >> it is one of the three things -- >> fundamentally, yet to make sure system is strong enough to compensate for the failures

because that will happen. that is why capital is so fundamental. >> if you don't anticipate, as you said, when you get to bankruptcy, it's a totally different deal in the middle of a crisis that you are not. >> two quick questions. we both mentioned the unfinished work in bank lending, particularly by smaller banks. over 50% of loans to small businesses are made by banks under $10 billion even though they only hold 20 percent of all bank assets. could you give us an update on the status of the small business lending fund? >> we are working hard to put out a term sheet quickly so we can get capital to banks on a large scale as quickly as we can. we are very close to be able to do that. >> could you be any more specific? >> as soon as possible. >> in june, when you were here talking about the fund, you were

relatively optimistic about bank participation. what is your assessment today on bank participation? will the structure of that program overcome the tarp stigma? >> i hope so, i can't tell for sure. there are two types of discouragement for banks to participate. one is the stigma that it is a sign of weakness. it's hard to correct because people are getting capital from the government. the other source of deterrents was the fear of conditions, actual or perspective, that would make these not attractive. that was the principal reason why relatively small amount of the capital purchase program to small banks and why hundreds of banks went through the applications. i think we have fixed that problem. i can be sure we fix the other problem. >> i think of it in two buckets. those that are already in the

tarp or the banks not in the program. i appreciate your assessment, but will the loan demand be there for them to utilize that capital? >> the question of what will happen to loan demand is excellent. it's worth noting that if you look at the balance sheets of the american private sector, the nonfinancial corporate sector, it is not just the big firms people have a lot of cash. the average masks a lot of differences and lots of small businesses are not sitting on a lot of cash. what happens to loan demand will depend not just how quickly the economy recovers, but how quickly people start to work through the balance of cash they accumulated before the crisis and many of them built up in the early stages of recovery. >> thank you. >> thank you for coming. we have four more months to go in light of the problems out there which talked-about.

we are looking forward to working with you right up until the end to see if we get one more person employed at one more person into a house without a foreclosure. so i want to thank you for your service and testimony today. the record will be open for 1 weeks of the panel may submit questions to the record. this hearing is adjourned. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] >> the new supreme court justice issues facing a steep learning

curve and is trying to acclimate to life as a judge. in her first interview since joining the court in august, she talked about what it is like as the newest justice. >> while we are talking about argument and listening to the recordings of last year's cases, it is interesting to hear your colloquies with the chief. i'm wondering about your intellectual relationship with chief justice roberts because often your questions and answers were very rapid-fire and i wonder what you think of the intellectual relationship between the two of you. >> i have extraordinary respect for him. he was the great supreme court advocate of his time before he became a judge. i always felt as though he could do better what all the settlers are trying to do. he did it as well as anyone has

ever data, to be a that -- as well as anyone had ever done that, to be at that podium. that is intimidating, to the person questioning you has also stood in your shoes and has done the job better than anyone else ever has. i have listened to his arguments and talk to a lot of people who saw is argued that he was fabulous. he is a great, great questioner up there on the bench and he really challenges you, as he should. he does not let you get away with anything. if there is something you want to hide in your argument, he is certain to find it. i tremendously enjoyed arguing in front of him because you had to be at top of your game and you should have to be at top of your game. here is a little bit of a story -- when i walked in for my

swearing in, and lee the summer before my big, grand public investiture, the swearing in that is necessary for me to start during the summer to do the work of the court. i was met by the chief justice and he gave me a tour of the inner rooms that the justices go to come to the conference rooms the justices meet italy at the robing room where they take on and off their row -- their robes. he showed me the robing room and there is a would -- he showed me with lockers. it goes from the chief justice, that said justice stevens and carried on down. the last locker was just a sudden my door. -- was just sotomayor.

we ended up back in the robing room again and in that 15 minutes, justice stevens nameplates at gone off and each of them had gone over one. then he showed me the new locker with my name plate. it was a very effective way to say to me you are here now. you are part of the community, part of the institution. it was a very powerful thing to see. >> she says that she reached the supreme court briefs on a kindle >> this weekend on book tv,