in the united states. but in europe, entrepreneurship is frowned upon and consequently the best and the brightest are actually afraid to take a risk. he goes on to say in his letter that many of my european friends are smart and educated, bum when i ask them about -- but when i ask them about their career path, no one mentions about starting a new business. they don't think any products will come to the u.k. in 50 years. that letter had a big impact on me, and it ended with a pointed request from this student. he said, please, please be careful that our government not do anything to discourage entrepreneurship and innovation in america. now we all know there's a lot being written today, as some are actually asking whether the united states is really losing

its competitive edge. and over the past year when i've talked to entrepreneurs around the country, when i meet with people making decisions of where to allocate capital and whether to put money to work, they're actually questioning whether it's worth the risk for them to do so here in the u.s. . u.s. why is that? because over the last several years, the u.s. marketplace has been increasingly defined by runaway debt, but ever-increasing regulations coming out of this town, and, frankly, in any competitive tax structure. the recent midterm elections that we just experienced was about many things. health care, government spending, deficits, lackluster job growth. but above all, i'd argue that it

was a repudiation of an agenda that responds to these problems by siphoning money away from the private sector and therefore reducing opportunity and freedom and concentrating the power and resources here in washington. now, for us conservatives, this election represented a golden opportunity to show america a better way forward. we've got a second chance to produce first-rate results by applying our common sense conservative principles. when you redistribute wealth and impose stringent regulations, it comes at a direct cost to freedom and to economic opportunity. right now our government is growing so large that it is crowding out the private sector. that's why our first priority in the majority is to arrest the ever-growing government spending

and debt which results and ensure that it is not higher taxes which we all must face. that's why we are intent on removing a dark cloud that has formed over our country and our economy and we are committed to getting our country back on track towards the path of opportunity, responsibility, and success. in short time, it's my hope that this congress under a republican majority, will become known as the cut and grow congress. cut spending and job-impeding regulation and grow private sector jobs in the economy. now, this idea of cut and grow can be put into contrast, perhaps with some of what the president said last night and certainly what some in the white house have been talking about for the past several days.

he envisions, they envisions that administration to be about cut and invest, that somehow we have to go about cutting spending so we can invest it from washington somewhere else. now, all of that gives most of us pause, because using the word "invest" in this town through the prism of federal government, to me, means more spending. so that's why each day our response in the new majority is to wake up and ask three questions. one are our actions focusing on jobs and the economy? two, are our actions focusing on cutting spend? and three, are our actions focusing on shrinking government, and thereby protecting and expanding freedom. and if our actions do not fall within one of those three lanes, we must ask ourselves why are we

doing it. during the current fiscal year, as you know, we have pledged to return spending to fy 2008 levels or less. we've got many more miles to go, but in our first month, we've cut our own budgets by 5% in the house. we have renewed our moratorium on earmarks, eliminating billions of dollars in pork barrel favors that have always been used to buy members' votes on larger, more wasteful spending packages. we've implemented new house rules that make it easier for congress to cut spending and grow the economy. for example, all mandatory spending increases must be offset by spending cuts elsewhere in the budget. no more new taxes. we've moved to repeal the health care bill, because it threatens to bankrupt our country and serves as an impediment to job creation. we've already instructed our

committees to start work on a replacement. and that starts with patient-centered care with an emphasis on lowering cost and affording more flexibility and choice for all americans. the coming weeks and months will not be easy. we need to wean america off its dependence on debt, loose monetary policy, and government programs. and we must blaze a new trail, rooted in long-term investment, strong businesses, innovation, entrepreneurship, and exports. we must remember that the strength of our republic resides not in a vast government safety net, but in the innovative spirit of our people. not in our people's desire to take from the government, but in their drive toward self-sufficiency and controlling their own destiny. my pledge to you today is that we will act to restore america

as the freest, most prosperous nation on earth. and we in congress are going to count on groups like the heritage foundation to come forward with your best ideas to help us, to help our country do what it does best, to innovate, compete, and lead in this 21st century. no doubt about it, the stakes are very high. but we all must commit ourselves to do all we can to preserve and protect this country that we love and that starts by committing ourselves to protecting and expanding freedom. thank you very much. [ applause ] >> thank you very much. that was really great. that's got a nice ring to it, the cut and grow congress. representative cantor has time for two or three questions. he has to go back to the hill to vote. who would like to go first?

yes, the young lady right there. >> congressman, thank you for your leadership on spending cuts. i'm just wondering if you'll support congressman jim jordan's amendment for a true $100 billion worth of cuts in the cr debate? >> yes, we are -- that is in reference to the cr debate, which will come to the floor february 14th. we announced yesterday, well in advance. the purpose of my announcing earlier is to make sure that all of our members, on our side of the aisle, as well as others, have the ability to proffer their vision as to how we cut the deficit. and budget chairman to hold us all accountable for spending levels. and we said that we want to be at least 2008 levels as our party committed to during the election and the pledge for america, and we said 2008 levels

or less. as you know, we are in the situation we are in five months practically into the fiscal year, because the former democratic house failed to produce a budget. and so we have now found ourselves in a continuing resolution environment that has held constant 2010 levels. so, we are looking at the appropriators to come up with their version of how we cut this budget. again, they have the limit of saying 2008 or less, so let's see what they do, and the reason why i'm so insistent to say orless is because we all have to be very focused on making sure that we find new ways to cut spending and to do more with less. in response to the question in that context, we are going to accomplish $100 billion cut on an annualized basis. >> who else would like to ask a question? yes, right there. a hand in the back.

>> good morning, congressman, james reid, a reporter for the campus radio for george washington university. >> good morning. >> the president briefly spoke last night about the education sector that he plans on making that a part of the initiative in the next year. as a university student, what republican initiatives can, will the majority of republicans in the house take? i know that meg whitman, the california gubernatorial candidate said that education in our country is the innovation engine and i know you endorsed her, so i would hope you would speak about that. >> yes, the president spoke about education, and secondary education and spoke about the need to access to secondary education and most are goals that americans would support. the reality is that we are spending billions and billions of dollars in this area.

the first order of priority is to figure out why if we are spending this kind of money, it is not working. the answer should not be to refleckir flexively say, more money. we need to know how the money is being spent and how the administration promulgating expenditures that is impeding the results that the american people expect. we are very focused on the role that the republican majority plays in the unchecked an unfut fettered result in the last two years and looking for a better future to strengthen the academic institutions in our country, because yes, we are the crucible of innovation here in the united states. >> a thank you. yes, right there. last question. no, no, right there. >> thank you, mr. leader.

eric potter with the american heritage foundation. we have seen a change from those of the left to tax rates and the president sees pro growth economic policy tied to lower tax rates and we have seen it with the extension of the bush era tax rates and in the rhetoric of corporate tax rates and, mr. leader, have conservatives won this battle? >> i would not rest on our laurels that we have won any battle. if you remember that the tax package that passed in the lame duck session was one that had things in it that all of us, we didn't embrace all of it. we did say priority one is to make sure that taxes didn't go up on anybody. we did accomplish that. we didn't accomplish any permanent reduction of rates. we didn't accomplish any permanent elimination of uncertainty. and what we want to focus on and where we have not yet won the

battle is we want to focus on an environment where risk takers are willing and confident to go and put capital to work and grow jobs. again, the reason why we have become the envy of the world is because here mo anywhere elseit that innovation that has translated to people taking action and creating value, and creating jobs and a better life. we have not yet done, that because in the speech last night, you heard, again, some rhetoric that may hint at the left's continued insistence that washington should be about equal outcomes, and when we believe in equal opportunity. that is a battle that is yet to be won. thank you all the house has gaveled out for the week but before leaving the members passed a bill that ends taxpayer financing of

presidential election campaigns and party conventions. all legislative work for the week has now been completed. the chamber is out of session until tuesday, february 8, at 2:00 p.m. eastern. you can follow the house live here on c-span when members return. >> no question, 9/11 redefined the presidency because it made it abundantly clear that my most important job was to protect the country and i took -- i made a lot of controversial decisions to do that. many of which i describe in the book. and the truth of the matter is if i had to do them over again i'd have done them again. >> former president, george w. bush, talked about his memoir with students from southern methodist university sunday at 8:00 on c-span's q & a d. >> this weekend on american history tv on spee span -- c-span 3, we'll tour the home of frederick douglass. texas a & m university professor

jerry jones tells of the aggressive diplomacy of woodrow wilson and then from the nixon foundation and nixon library, a focus on daniel patrick moin ham -- moin han. experience american history tv on c-span 3 all weekend, every weekend. see the complete schedule online at c-span.org/history or you can press the c-span alert button and have our schedules emailed to you. >> special inspector for the troubled asset relief program, neil, calls the treasury department's program to help homeowners facing foreclosure a failure. inspector and acting assistant treasury secretary of financial stability appeared before the house oversight committee to update congress on problems with the program. the special inspector for tarp release reports on the program today. this is 2 1/2 hours.

>> good morning and welcome to our first hearing of the full committee of the 112th congress. today's hear something on the bailout and the foreclosure crisis and the report and specifically the report of this special inspector general for the troubled asset relief program, sig/tarp. this is the first hearing for both chairman issa and ranking member cummings, so i ask all of your indulgence as we go through a number of first time mistakes that undoubtedly i will make. the chair notes that pursuant to the rules, there will not be opening statements, however members may have seven days to submit opening statements and

extraneous materials for the record. seven days to submit opening statements and extraneous we will now recognize our panel. >> mr. chairman. >> yes. >> parliamentary inquiry, mr. chairman. i know this is our first meeting and i just want to make sure we're clear, we had a lengthy discussion on -- >> will the gentleman state his parliamentary inquiry? we're clear. we had a lengthy discussion. >> will the gentleman state his -- >> i'm trying to do that. we had a lengthy discussion yesterday with regard to opening statements and the chairman, i thought we had reached a wonderful agreement where the chairman had said that he would provide us notice with regard to opening statements, whether we were giving them or not. and this is our firs hearing and some of the members and, of course, i am wondering exactly why we are not having opening statements and, two, we were given notice just about a half an hour ago or so that there

will not be opening statements. i'm just wondering so that -- the. >> i thank the gentleman. the chair is waiving opening statements, including my own. all members will have seven days in order to place their opening statements into the record. on a very personal note, i felt that it was most important on this first hearing to start off by listening to the witnesses as though this -- and i know that the special ig, this is his 20th visit. however, for the purpose of all of us, including the freshmen, i wanted to start off by listening first. i recognize that tradition is that we hold the members -- the witnesses here for sometimes an hour through opening statements. that is a tradition that i intend tbreak. that doesn't mean that there won't be opening statements in the future, but for this first one, i wanted to make it perfectly clear, if you will, that we're interested in listening to our witnesses first. and i appreciate the gentleman's

partmently inquiry. >> mr. chairman, for the parliamentary inquiry, pursuant to what you said yesterday, and i have the transcript, will you give us more notice with rerd to that? i mean, i thought we were very -- we had a gentleman's wonderful discussion yesterday where you said you would give us proper notice. and i was just wondering what should we expe in the future? that's all. >> as i said, that we will intebd to give notice to all things. in this case, we only organized yesterday, less than 24 hours ago. in the future, i would expect there will be greater notice and i appreciate the gentleman's question. >> will the chairman yield? will the chairman yield? >> at this time, i'm going to introduce the witnesses. mr. timothy -- >> mr. chairman? >> mr. chairman? >> for what purpose? >> an inquiry of the chair with respect to procedure. >> the gentleman will state his parliamentary inquiry. >> i've been in the congress for

14 years and i've never -- it's just unprecedented that rank member not be permitte to give an opening statements or for a chair to suspend with the opening statements pp so tha people know -- >> does the gentleman have a parliamentary inquiry? >> i didn't make a parliamentary inquiry. >> then the gentleman is no longer recognized. >> mr. chairman? on a point of order. >> yes, point of order. >> i certainly understand if the chairman has decided that he has nothing to say. but can you cite one example, any single example in the history of the congress, if you would, where a minority ranking member has not been given -- not been afforded -- not been given the respect of an opportunity to make a brief opening statements? >> the chair will respond for the record with an appropriate list of the times in which opening statements have been waived or ranking members have not been able to -- >> but you can't think of one right now? >> the gentleman is no long recognized. we now turn on our witnesses.

mr. timothy bassette from the office of financial stability and chief troubled asset relief program. mr. massed assumed the title of assistant secretary on september of 2010 after her better ellison stepped down from the position. before that, mr. massett served as the chief counsel for the office of fincial stability. prior to starting his government work, he was -- he worked at the office of -- let's see. worked at the onset of the 2008 financial crisis. mr. massid was a partner at kraf it's, swan and moore where he had a diverse corporate practice with an emphasis on security offerings and bank financing.

counseling, underwriting security issues. mrmassed received an ab degree, magna accumulate lady from harvard college and his jd from harvard law school in 1984. mr. neil barofsky, no stranger to this committee, was sworn into office of december 2008 as a treasury department inspector general to oversee the troubled asset relief program. prior to that, mr. barofsky was a federal prosecutor in the united states attorney's office for the southern district of new york for more than eight years. in that office, mr. barofsky was the senior tal counsel who headed the mortgage fraud group. mr. barofsky also was -- has extensive experience as a line prosecutor leading white collar prosecution during his tenure as

a member of the securities and commodities unit. mr. barofsky led the investigation that resulted in the indictment of the top 50 leaders of the revolutionary armed forces of columbia on narcotics chars. a case described by then attorney general as the largest narcotic indictment filed in u.s. history. mr. barofsky received his ba from the warton school of business and is a magna cum laude graduate of the new york university of law. pursuant to the committee rules, all witnesses will be sworn in before testifying. please rise. raise your right hand. this is my first time. do you solemnly swear that the testimony you will give about --

you are about to give this committee will be the truth and the whole truth and nothing but the truth? thank you. you may please be seated. >> as is accustom to this committee, we would ask that your full written statements be placed in the record and that you limit your opening statements as close as possible to five minutes. as was the ctom of my predecessor, you will see three lights. green means continue to go. yellow is the warning that you should not run through our intersection and red in all 50 states means stop. thank you, mr. chairman. the normal rule of committee is that we go in order of rank. mr. massed, i believe you would, by protocol, be first.

>> thank you, mr. chairman. chairman issa, ranking member cummings members of the committee, thank you for the opportunity to testify today about the troubled asset relief prograor t.a.r.p., as it is commonly nope. i am the acting assistant secretary for financial stability at the treasury, which means i am responsible for overseeing the program on a day-to-day basis. i recognize that t.a.r.p. has not been popular. there is good reason for that. no one likes yood using taxpayer dollars to rescue financial institutions. flun the less, sitting here today, more than two years after a bipartisan congress passed the legislation that created t.a.r.p., it is clear that the program has been remarkably effective by any objective measured. first and foremost, t.a.r.p. helped prevent a catastrophic collapse of our financial system and our economy. in the fall of 2008, we were

staring into the abyss, lending by banks had practically stopped. our credit markets had shut down. and countless financial institutions were under severe stress. this the was a crisis not only for wall street, but also for main street. simply put, we were at the risk of going into a second great depression. today, people no longer fear that our major financial institutions or our financial system is going to fail. banks are much better capitalized and the weakest parts of our financial system no longer exist. the credit markets on which small businesses and consumers depend, auto loans, credit cards, student loans and other finances have reopened. businesses are able to raise capital and mortgage rates are at historic lows. of course, the economy is not yet fully recovered and there is still much work to be done. unemployment is unacceptably high and the housing market remains weak. but the worst of the storm has passed. second, we will not use all the money congress made availle

for t.a.r. and we are exiting our investments and the private sector far faster than anyone thought possible. let me briefly summarize a few key facts. congress originally authorized $700 billion for this program. we will spend no more than $475 billion. and of the money spend to date, much of it has been repaid. approximately $270 billion. we still have about $166 billion invested in various institutions and i am hopeful that we will recover much of that ove the next two years, dependg on market conditions. finally, the ultimate cost of t.a.r.p. will be far less than anyone expected. the total cost was initially projected to be $350 billion. that number, however, will steadily decline over the next few years according to the most recent estimates, the overall cost of t.a.r.p. will be in the range of $25 to $50 billion.

and the direct fiscal cost of t.a.r.p. as well as all the other interventions to address this crisis is far lesss a percentage of gdp than the cost of resolving the snl crisis in the 1980s. in addition, t.a.r.p. cost will be primarily attributable to what we spend on our housing programs and our efforts to hel responsible american families keep their homes. we expect that all the other t.a.r.p. programs and investments, when coidered as a whole, will result in very little or no cost to the american taxpayers and possibly a profit. in all of these efforts, t.a.r.p. has been subjected to unprecedented oversight. when congress created t.a.r.p., it also directed four different oversight bodies, including the special inspector general for t.a.r.p., mr. barofsky, cho is sitting with me today to carefully review all of our programs. in addition, t.a.r.p. has been subject to vigorous congressional oversight by this committee and several others.

we welcome this oversight. individually and collectively. it has helped us to develop, implement and constantly improve our t.a.r.p. program. and we have strived to be transparent by providing a wealth of information about the program to the public. in particular, i look forward today to discussing mr. barofsky's most recent quarterly report. i am pleased that the record concludes that t.a.r.p. helps, as he put the it, head off a catastrophic financial collapse. and that the program financial prospects are today far better, he says, than anyone could have dared to hope just two years ago. the other oversight agencies have reached similar conclusions. the report raises a number of concerns abouthe h.a.m.p. program and the so-called too big to fail issue and i'm happy to discuss those, as well. t.a.r.p. succeeded in what it was meant to do. it was not designed to solve all

our problems and we recognize that many americans are still suffering. nonetheless,hanks to a comprehensive strategy and decisive action, our economy is far stronger today than it was two years ago. both political parties deserve credit for these achievements. congress enacted the program at a time when the financial system was falling apart. in that moment, leaders from both parties stood up, stood together and did what was best for this country. thank you again for providing me the opportunity to testify here and i welcome your questions. >> thank you, mr. barofsky. >> chairman issa, ranking member cummings, it is an honor to present here once again and to present to you our most recent report to congress. for sig t.a.r.p., we've made great progress in striving to meet our goals of transparency, oversight and enforcemt. with this, our niepth quarterly

report along with 13 separate audits, it helped shine a light in some ofhe darkest aas of government's response. it's included some of the important recommendations which when implemented and adopted have resulted in great savings for the taxpayer which resulted in great fraud and abuse. our investigation unit has been similarly busy. we've been able to secure fraud charges against 45 individuals, 12 different companies and to date, 13 criminal convictions. we've also been able to either recover or prevent from loss of fraud more than $700 million. thereby assuring that sig t.a.r.p. as an agency will more than pay for itself. and with 142 ongone criminal investigations, including those into executive at 64 different banks that either applied for or received t.a.r.p. funds, we still have a lot more work to do. for treasury and t.a.r.p., the results have been more mixed. while it's certainly good news as mr. m assed noted, the estimates of t.a.r.p. costs have

declined and significantly it's not the whole story. and too often, with treasury in its statements and in its testimony has too muchf tunnel vision focus on the financial c decline of those, obscuring the very significant and very real nonfinancial costs that will arise out of the troubled asset relief program. first, it ignores the very significant, wholesale damage to government credibility that has aris from treasury's mismanagement of parts of the t.a.r.p. program. too often these programs have been marked by loose compliance, failures in transparency and questionable decision making. it's those aidable failures, ago anything else that account for some of the deep unpopularity of t.a.r.p. the second cost is perhaps the most significant o t.a.r.p.'s gacy, the continued existence and the moral hazard associated

with institutions that are still deemed too big to fail. when secretary paulson and secretary geithner spoke to the financial markets and assured that they would not allow the financial institutions to fail, they did more than reassure troubled markets. they sent a powerful message that these banks would not be left to suffer the consequences of their own folly. as a result, not withstanding the passage of dodd frank last summer, these still envoy an advantage with enhanced credit ratings as a result of that implicit government guarantee. t.a.r.p. has mixed the cocktail of implicit guarantees that led to the disasters at fannie mae

and freddie mac. i age with treasury that they have met the wall street goals, they did help prevent a collapse of the financial markets and that undoubtedly had a benefit not just for wall street but for main street. t.a.r.p. has not met the goals set forth for congress for main street. the most significant main street goal of preserving home ownership, its failures there have had some of the most devastating consequences. the home modication program has to date been a failure with estimates that over the life of this program, we're going to see probably well in excess of 10 million foreclosure filings on 10 million families, when compared with the congressional oversight of panel's recent estimate that no more than 7 or 800,000 permanent sustained modifications, hope is slipping away. treasury's administration of

this program gives little cause for optimism. they continue to refuse to adopt even the most baitic metrics and goals and benchmarks to measure success. they appear to be afraid to rein in penalties who everyone agrees has been nothing short of abysmal. as a result, we continue to see spiralling downward participation quarter after quarter after quarter. . chairman, ranking member, members of the committee. i thank you for this kpubt r opportunity and i do lk forward to answering any questions you have. >> ihank the gentleman and i thank him for the accuracy of five minutes. i now recognize myself for five minutes. mr. massad, since you're here on behalf of treasury as the person most knowledgeable, can you explain to us the secretary's statemenon december 2010 on the subject of t.a.r.p. and related bailouts when he said "in the future, we may have to do exceptional things again if

we face the shock that large. you just don't know what's systemic. i repeat, you just don't know what's systemic and what's not until you know the nature of the shock." does that mean that the secretary expects that if a housing crisis occurs again or some other shock, we're not talking about an exteal force, but some other shock to the community, that we still have systemic risk, too big to fail and the government will come in and bail out the large and allow the small to fail? >> mr. chairman, what the statement means, in my view, what i believe the secretary was saying was that we cannot predict what the future issues will be in terms of risks to our system. >> isn't that exactly what dodd frank and all these other legislation have done? we were supposed to eliminate too big to fail, systemic risk

was supposed to be managed by an analysis, if you will, of vetting of whether entities were robust enough now and in the future, and it's the reason that some companies are still around and some were folded. isn't that true? >> you are correct, mr. chairman, that that is dodd frank's purpose and that's what we're pleimplementing. it gives us the tools. >> right, but the secretary said this well after dodd frank. for example, we've had bank of america here before us on multiple occasions. we've rolled country wide into b of a, i'm not for breaking up companies or taking a heavy hand, but if bank of america is too big to fail, shouldn't we be suggesting that, i'm not suggesting this, but shouldn't we be suggesting that they find a way to note too big to fail in whatever kind of dw

divestitures. rather than putting them in the category of those who enjoy less expensive costs of assets. >> i think dodd frank gives us the tools to regulate any financial institution, regardless of its size, imposes systemic risks and gives us the tools to shut down such financial institutions. it gives us precisy the tools you're talking about. if i can respond more broadly. i think the concerns that mr. barofsky raised are those that animated the congress in passing dodd frank. those are the issues congress debated in passing dodd frank. >> as somebody on the conference for dodd frank and somebody who has been there all along, dodd frank was not altogether that bipartisan as you can imagine. i apprecia it can shut down entities after the fact. it has a heavy hand to determine who is a financial entity. perhaps the next time general

motors gets in trouble, we can shut them down rather than save them as a bank. moving on toham, as the ig reports pretty thoroughly, we cannot get money back from loans to insolvent companies. we have to look at theoney we won't get back an the suffering of people who won't get a loan modification if they can't afford a home or an elganltsz exit that won't destroy the neighborhoods as we seek somebody who can afford it. i have december 31st, 2010 results and i would like you to comment on them. the goal of hamp 3-4 million loans. modifications cancelled, almost 800,000. can you give me your view of hamp based on those figures? >> it's remarkably disspiriting.

this was the program that was supposed to be to help main street. when t.a.r.p. was originally enacted, when you gave the treasury $00 billion, the idea was the treasury was going to buy toxic assets. the idea of including a goal was to address the fact tha treasury was going to own so many of these mortgages that they be able to do these modifications themselves, being able to have that impact on main street. instead we have a program, the numbers you just indicated, it's just not woing. out of the $50 billion originally allated, only a billion dollars have been spent. i hesitate to use the word only a billion, but the numbers are -- we're running out of hope. there's no way we're going to ever get close to the 3 or 4 million that was the original expectations. even more frustrating is treasury will not give us their

expectations. they must know what the run rate what they expect the total number to be. they must have a goal. if they don't have a goal, they need to have one. we can't fix this program until we have specific benchmarks as to what the program is trying to accomplish of keeping people in their homes. not people who get trial modifications who fail, which was one of the benchmarks, not the number of people who get offers for trial modifications. how many people are going to get modifications who truly keep them in their homes. >> i recognize a member of this panel who has a deep interest in the modifications becoming permanent. >> thank you. the title of today's hearing is bailouts on the financial crisis. we have encouraging news. sig t.a.r.p. has increasingly favorable assessment of t.a.r.p.'s financial successes.

is that right, mr. barofsky? >> absolutely correct. >> here is what it says, i quote "on the financial side, t.a.r.p.'s outlook as never been better. not only did t.a.r.p. funds head off a financial collapse, but t.a.r.p.'s direct financial cost to the taxpayer have fallen substantially while treasury's ultimate return on its investment depends on a host of variables that are largely unknowingly at this time. t.a.r.p.'s financial prospects today are far better than anyone could havedared hope two years ago." this is great news for the american taxpayer, but the reportorrectly warns that there is still hard work ahead. it's important that we continue strong oversight. i've long demanded stringent oversight of the t.a.r.p. program, a program proposed by president bush in 2008 and enact the after improvements by congress. i previously requested, gentlemen, that sig t.a.r.p.

audit the hundreds of millions of dollars aig expended on bonuses. i led 26 of my colleagues audit the counterparties. that aid, i'm very concerned about the serious allegations of abuse by the mortgage service industry. today's sig t.a.r.p. report calls their performance abysmal and describes daily accounts of errors and more serious misconduct. the sig t.a.r.p. report also says this, "anecdotal evidence of their failures has been well chronicled, from the repeated loss of borrowed paperwork to the plate apt failure to follow program standards to unnecessary delays that severely harm borrowers while benefiting themselves." mr. chairman, we cannot do a comprehensive examination of the foreclosure crisis without hearing from the industry. that is why i sent a letter on

dember 21st asking you to hold the committee's first hearing on the widespread utilization of fraudulent practices throughout the mortgage industry. this has been my number one priority, as you said. i assume we would move forward. it's the same reason i sent you another letter on monday asking you that you add an industry witness. i understand that you were not prepared to do that at this time ani understand that. mr. chairman, and to our witnesses, let me go to you, mr. barofsky, the servicers, what are you all doing about them? i mean, government has a role, the servicers have roles. i'm wondering what's happening with that? i ask you the same thing, mr. massad? >> be brief. >> we have, at sig t.a.r.p., we exercise our jurisdiction as we can. our one area of jurisdiction is one to investigate them if there's any criminal conduct. we do have ongoing investigatio in that area.

the second thing we can do is use our audit function to do reviews of the servicers, we have that ongog as well. we're doing a review of their performance under the net present value tests and other aspects ofheir performance. what we cannot do is what treasury can do. you yield a big stick as well as the can carrots it offers and yield significant, tough penalties. we have to keep this program from being voluntary, not just in participation for the servicers but in compliance as well. >> mr. massad, what are we doing with regard to the servicers, because there have been horrendous stories about what servicers have been doing and what impact do they have on these numbers? >> congressman cummings, i agree it's been abysmal. this is a voluntary program. congress didn't give us the tools to impose fines as mr. barofsky is suggesting. what we have is the ability to

withhold payment when they enter a permanent modification. a lot of the problem was, we couldn't get them to get the permanent modifications done. we worked with them to change their performance. now, there are a number of other things that are going on in terms of the performance of the servicers. interagenctask force that is looking at all the wrong things they've done in foreclosures, there is talk about having standards. we can't through hamp change the entire industry's behavior. this is a model, it's an industry that's broken. it didn't work. >> can you tell me this? is the justice department involved in anything you're doing? >> yes, they are. they are involved in the interagenctask force, as are all the federal bank regulators and there's a lot of work being done on what types of reforms are needed. there's also work being done by the fhfa in terms of the business structure. they simply weren't prepared for

this crisis and aren't able to deal with people. nevertheless, i think we've got to remember that hamp has achievedver half a million modifications. these are people that make $50,000 a year. to write it off and say it's a failure i think is not really appropriate. now, the reason we haven't reached 3-4 million is basically, we have eligibility andards. the pool today of the people that are eligible is about 1.5 million. what are those eligibility standards? we don't help people who make enough money that they don't need government help. we don't help people who have million dollar mansions. we don't help people who have vacation homes. when you go through that and realize that's the eligible population, we've actually reached a lot of them, wre continuing to reach a lot of them. we had a thousand people turn out for an event in las vegas. while we've tried to incorporate

mr. barofsky's suggestions, other than the one where he said people should thumb print people, we didn't feel thawas appropriate, i think the program is helping a lot of people. >> thank you, mr. chairman, i think my time has expired. >> the gentleman, from ohio is recognized for fiv minutes. >> thank you, mr. chairman. gentlemen, thank you for being here and addressing these important issues we have. both of u get a sense of the anger of the american people but also the sadness of the issues we're dealing with. when we look at your the "new york times" issued a quote and it says "the greatest tragedy would be to accept the refrain that no one could have seen this coming and that nothing could have been done. if we accept this notion, it wi happen again. "

"what's sad is we approached this as it was unfolding. these things were knowable. i know i and many members of the congress were sounding the alarm of the mortgage foreclosure crisis and capital had to be lost as families were losing their economic future and their homes. when you loo at t.a.r.p. and what is happening and how it's progressing, i do really -- i can't understand how treasury can claim its successes when it's had so many undefined executions. i voted against t.a.r.p. i voted against t.a.r.p. because i'm from ohio. ground zero from the mortgage foreclosure crisis. when they came and said they were going to buy toxic assets and they were going to have value, i knew they did not. i walked the neighborhoodand talked to the family who lost their homes. the short t.a.r.p. bill was not defined, as justify said, mr. barofsky. i greatly appreciate that you not only look at what you're

trying to unwind but what they started with. this was an undefined bill and process. i think there are billions that have been lost. i'm very concerned abo the hamp program because if we look to what the commission said that this was avoidable, that means families were taken advantage of. that means families were taken advantage of and lost their financial future. hamp came forward as supposedly a government answer that's going to help them. we recognize there was a federal issue here. as the banks, all of the people, due to their greed, ad perpetrated this, we were going to step in and help them. but it's not helping them. mr. barofsky, i want to thank you for the detail you provide us. when you get these final numbers and do the division, we're going to have spent an unbelievable amount for each of the loan modifications that occurred while doing nothing to stop the rerd foreclosures that are still occurring. first off, mr. barofsky, i think, when we look at the

ultimate numbers, we want to figure out what percentage of thespeople who did ultimately get loan modifications could have gotten them in the market meaning there was no subsidy that would have been needed. two, how many of these are going to fail anyway, because those are lost dollars also. what are the per unit costs in the end? could you speak to thator a moment as to how we're going to actually assess what was spent and -- we can always tell its a failure. thank you for your words on that. how are we going to assess the waste. >> one of the good news aspects of the hamp program, to the extent there is good news, it's reflected in cbos loss estimate is that the program won'tpend even close to the amount of money that's allocated for it. money only gets spent when there's actual success. the remarkably low numbers of modications means that a remarkably small amount of money will be spent. that's why we've only had --

it's only been a billion dollars out of the 45 that's actually been spent so far. to the extent there is good news, it is that it will not cost 9 taxpayer anywhere close to the allocated amounts. that distinction really bears any type of claim of success for the remarkably modest numbers of modifications that are coming from the program don't match up with what was originally intended. the advantage of not having real goals or benchmarks is you can claim success wherever you want and say that's a success. i do not mean in any way to demeanor say that this program isn't very important to those pele who are enjoying it and have the benefit of these important sustainable permanent modifications in had any way, but i think the idea the reason there aren't more is because there are millionaires livingn mansions and that's why. there are a lot of people out there who are struggling very hard who could benefit from these modifications. >> mr. massad, i believe that

the mortgage foreclosure crisis when it's ultimately analyzed will turn out to be the largest theft of history. now we have t.a.r.p. and treasury is involved with this, and we have sig t.a.r.p. looking at it saying you're still managing this without measurable outcomes and are not being very forth coming in how the program is bng evolved? >> i'm happy to respond to that. first of all -- >> puck do so briefly. >> as mr. barofsky noted, we only pay money if there's a permanent modification entered into, if we actually help someone enter into a permanent modification. we only pay for as long as that modification continues. there's a built-in taxpayer protecti element to this. your question about unit costs, very good question, sir. in fact, it's structured so it is a unit cost program here.

we won't spend all the money if we don't enter into enough difications. that money won't be spent for anything else. it will go back to repay the debt. that's number one. number two, as we said, the eligibility criteria here are another way to protect xpayers. we only pay for people that we think are greatly in need. as to your here on the mtgage crisis, obviously there's a lot of study of this, fcic released its report today, and i think it noted that there's blame to go around in a lot of places. we must remember, t.a.r.p. was just set up to provide the resources to stabilize the system. didn't change the regulatory structure. we now have dodd frank, which gives us new tools to regulate the financial industry so as to prevent this type of problem in the future. >> the chair now recognizes the former chairman of the committee, long-standing member of the committee, mr. towns of

brooklyn, new york. >> thank you very much, mr. chairman. let me first thank both of you for being here. i get the feeling that we sort of blaming each other. that bothers me because people are losing their homes. i wish you could just come and spend one day in my office. and just listen to people who are coming in and the stories that they're telling. some of the things they're saying, they made an application, all of a sudden, the application is lost. they cl and they say no, we never received the papers when they actually presented the papers. the other on which is really going becoming a problem is when they call back the third or fourth time, the person no longer works here you need to find out who you were dealing with and of course, if the person is no longer there, how can you find anything? i noticed you indicated,

mr. massad, that the congress didn't give you the power. i understand that as well. but what can we do now to fix the situation that we're in? i mean, this is a crisis. i'm hoping that -- i want to join you, ranking member, in asking for a foreclosure hearing, where we can bring people in and let them tell their stories. for some reason, i don't think that the message is getting out in terms of the seriousness of this situation. >> congressman, i agree with your concern. i think you're absolutely right. we've tried to do what we can through hamp to put in a lot of borrower protections. we've required the servicers, if you're evaluating someone for hamp, you can't foreclose on them. we put in call centers, escalation centers, and aa lot of calls we get are from people who aren't eligible for hamp. in terms of the overall industry, a lot of attention

needs to be paid to this. more work will be needed. this congress needs to consider it. a lot of people have talked about whether we should have national servicing standards. people have noted that the basic economic model of servicing doesn't work. servicing works when you've got performing mortgages. the servicers collect the payments and pass them on to the investors. when it comes to dealing with a crisis like this for foreclosures, they're not equipped to do it. we've got to look a things like servicing standards, interagency task force is looking at a number of problems, regulators are as well. there's a lot of activity here. we'll see it in the coming months. >> mr. barofsky, what are the penalties you're talking about? can we sort of look again at that? something needs to be done. >> absolutely. i think as mr. massad said, there's discussions of national

servicing standards. i think chairman bahr of the fdic have put out great ideas for all servicers. they could be adopted and put into the hamp program, but financial penalties based on withholding payments to the servicers. treasury negotiated a deal when it obligated about $30 billion for payments and that includes the ability to withhold payment and impose financial penalties. to the extent those penalties are not strong enou or good enough, that falls on treasury for not negotiating a better deal. this is not the most unpredictable possibility, when yohave a program of this size and scope, there's going to be problems. treasury has repeatedly cited their ability to impose financial penalties is a stick that they have. we would encourage them to take the stick out. >> if i can reply to that. we are certainly conscious of that. we may withhold amounts in the

future. let's remember, we can only withhold the amount that we owe them for permanent modifications. if they haven't entered into very many permanent modifications, there's not that much to withhold. there weren't many permanent modifications, as this committee knows. people testified here in march. there were only 170,000 modifications. a lot of people said then the program was a failure. what we did since that time is we he had a number of remedial actions that servicers took. from that date, from late last march, we have increased the number of permanent modifications substantially now. as i say, we're over 500,000. the redefault rate on those is very, very low. >> mr. chairman, if there's something that we need to do, i think you need to say it, because we just can't continue to let people lose their homes.

thank you very much, chairman. >> the chair recognizeshe gentleman from north carolina and the sub committee chairman of jurisdiction for this, mr. mchenry. >> thank you, mr. chairman. in consultation with the chairman, it's the intents of my sub committee to have field hearings and to hear from those that have been affected. we would welcome the treasury to invite individuals that have been helped. however, in my constituency and the constituents i've talked with, it's easier to find those hurt by hamp rather than helped. my question is, do you have adequate pvision under current law to make sure hamp is successful. yes or no? >> congressman, it depends -- >> yes or no. >> if i can -- >> i've got five minutes, mr. massad. yes or no. let me begin by asking, do you think hamp is successful.

>> i do. >> do you believe under current provision of law, you have adequate authority to ensure that hamp is successful. >> i cannot solve the housing crisis with hamp alone if that is the meaning of your question. i think helping over 500,000 people enter into permanent mod modify indications, people who would herwise be thrown out of their homes, people who make $50,000 and their neighborhoods would be hurt because they're now living nex to a home that could be vandalized, it depresses their property values, it's a trag on the economy, i think yes, those are dollars well spent. >> thank you. mr. barofsky, in your written testimony today, you outlined that there are 2.9 million homes received foreclosure filings in 2010, up from 2.8 million in 2009 and 3.8 million in 2008. can u discuss your findings on the hamp program? >> yes, again, not to diminish

the positive impact it has on those families and those that are able to sustain the program, but you have to look at what the program was expected to do and the context of the entire foreclosure crisis. the advantage of never actually putting out meaningful goals, means you can declare success, even when you have looking at a total for this entire program of 7 to 800,000, when you originally expected to help 3 to 4 million. this program, it helps five people, that's great for those five people. what about all those millions of people who are not getting helped? the millions of people that treasury and the administration identified the very beginning of this program who they were going to try help keep in their homes by modifying their mortgages to a sustainable level. the numbers don't lie. when i hear them declaring success with these incredibly modest numbers, numbers that are

so modest that they can't have enou money to pay to impose financial penalties, it's heartbreaking, it means they won't recognize and make the changes cessary to make this a better program, because i hear from those people as well. >> thank you, mr. barofsky. moving on to the small business lending fund, well, i one of your -- in your report, you requested treasury remove t.a.r.p. assets and equity from the entity's balance sheet for purposes of evaluating its application for the small business lending fund, the intent of the small business lending fund is to increase lending. has treasury been open to your proposal? >> treasury has rejected that recommendation. >> mr. massad, why did you reject that? >> because we wanted to make

sure we complied with congress's directives and the law. congress provided in the law that existing t.a.r.p. recipients could refinance their loans int this small business lending fund. we believe we're acting in accordance with that. >> sure, but it's not a provision of law how you measure the removal from t.a.r.p. into this small business lending fund, is there? >> we did not believe that congress was instructing us to basically penalize those institutions that had already received t.a.r.p. funds. quite the contrary. >> mr. barofsky, under your reading of the law, do theyave provision to do this? >> absolutely. congress specifically made a provision in the law that gave the secrary of treasury the ability to fashion certain regulations for t.a.r.p. banks to enter into sblf. there's nothing in the statute that gives you a matter of right by being a t.a.r.p. recipient

that you automatically get to apply -- you automatically get converted into sblf. it offers tremendous advantages to t.a.r.p. recipients to convert. the taxpayer loses out on a lot of those. our recommendation is a simple one. let's make sure the banks you take outof t.a.r.p. and put into sblf are adequately capitalized to meet the goals of this program. we're not saying penalize blanks, but weo think it's important for treasury to be very responsible and make sure that those that are going to get the benefits of being an sblf are well suited to be able to do the new lending, new incentivized lending from government capital and we believe those banks should be treated as other ap kabtss who come into the program. for example,hen a bank applied for the cpp, it didn't get to take into account government capital. that should be the same standard here. the fact that these banks have

the benefit of government capital, we don't believe that that necessarily -- that that capital should count when making that evaluation. if they can fulfill the goals of this program, great, they should be brought into the program, if they meet the other conditions. >> mr. chairman, i know my time has expired. i would ask mr. massad to respond in writing to is very subject. we were interested in this committee and if you have concern that you don't have adequate provision of law, we would like to change that. >> i thank the gentleman. the chair recognizes the chair from new york. >> first i would like to thank the panelist for their public service and report some good news in that the dojust crossed 12,000 for the first time since june of 2008. that shows capital is flowing again and is a very good sign of economic recovery in our great country. from your testimony today, t.a.r.p. played a role in moving

us in this good direction. you pointed out that it not only averted a meltdown, but laid the groundwork for economic recovery which we're seeing today. must say that during the dark days, i was getting phone calls in the middle of the night and all day long from constituents who were afraid of a collapse there was a run on the money market on some banks and i personally believe that my vote in support of t.a.r.p. will historically be regarded as the right thing to do and good public policy, although all of us who were on the campaign trail, many of us were attacked relentlessly for having supported this important program. i would like permission to put in the record one of the best report that is i've seen on the successes. it's bipartisan from blinder, a democratic economist and zandy,

a republican one, on how the great recession was brought to an end. also an article in the american banker which talks about the home foreclosures and a foundation that is working with hamp and others to help people stay in their homes. >> so ordered. >> i specifically would like to respond to the two problems th mr. paragra mr. barofsky mentioned in his opening. first the confidence in our government, transparency and other management mistakes and i would like to mention that i authored a bill in response to your first criticisms on this that wou have computerized t.a.r.p. in realtime so w would know where the finces are. it passed the house, backed by the chamber of commerce and labor, and i truly believe we should do it for the entire system. if we should be able to track our packages in two seconds, we should be able to track our exposure in finances.

i think it's an important bill. you also mentioned the too big to fail, the fact that there were concerns that we may not have done enough. i would like mr. massad to respond to this, specifically in the dodd frank bill and likewise on the conference committee with the chairman, we created a financial stability oversight council to monitor the systemic risk and to set criteria to identify institutions that may be heightened risk. i would like you to comment on the status of where that is. we also, very importantly, established an orderly winddown, similar to what we had in the fdic. we had two choice boil out an institution or let them fail. neither was a good solution. we want to be able to wind them down as we were le to do with fdic banks so successfully. i want to know, are the rules in shape and where does that stand?

they'rely, we imposed capital requirements and leverage ratios to ensure that large institutions aren't taking excessive risk. i believe those rules are coming out in july, correct me if i am wrong and where does that stand? where do you think the leverage and capital requirements will come out in your best judgment? and lastly, we called upon the sec to come up and we gave them actually new powers and authority and resources to go after bad actors so we could find the next bernie madoff and help protect our system. i would like you to respond to where these initiatives stand? what do you recommend, if anything else, we need to do to protect us from too big to fail as pointed out in his testimony, and if you have enough time, could you respond to t.a.r.p. as it relates to the taxpayer? we know it was areat deal for our economy. it was a great deal for averting

economic risk. i'm the daughter of two parents who suffered in the depression. their stories were terrible. we averted thatin our economy, but was it a good deal for the t taxpayer? thank you very much for your service. >> certainly, congresswoman, i would be happy to respond to all of those things. let me start with the last point. i appreciate that people th are still suffering from this crisis, and there are many, may not feel that t.a.r.p. did anything for them. mr. barofsky also has asked what did it do for main street. i think the study you pointed out, the zandy study -- >> i would ask unanimous condition sent for an additional one minute for the witness to respond. >> it makes it very clear, we would have entered into a second great depression. we could have entered into unemployment of above 16%. the fact that we averted that is a benefit to main street. the fact that people can now borrow again and they couldn't

as a result of this crisis is a benefit to main street. the fact that we have an auto industry in this country and we saved a million jobs, not just at the auto companies but their suppliers is a benefit to main street. there are a number of benefits to main street. i don't think one has to look very far to realize that. as to the progress in implementing dodd frank, a lot of work is going on. i'm not responsible for that, but i'm happy to tell you what i know and make sure the proper officials of treasury give you additional information. the financial stability oversight council has been meeting actively in developing a number of rule makings to address these issues. they have the powers to regulate systemic risk and to look at what are the emerging trends in our financial system that need to be addressed, so i think you will see a lot of work going on there. as to capital rats, they are

working on that also. those will be higher. they are already higher. in other words, our financial system today is much better capitalized than it was in the fall of 2008, and many of the institutions are much better capitalized than their foreign competitors. the other thing i want to note -- >> if you can summarize briefly. >> on small banks, we funded over 400 small banks under t.a.r.p. that's another benefit to main street, because those banks help local communities, small businesses and families ands to congressman mchenry's point on the sblf, obviously treasury supported this new fund. the only issue is a minor one that mr. barofsky is raising because treasury does make a new credit decision on whether a t.a.r.p. recipient is eligible. if a t.a.r.p. recipient hasn't paid its dividends it's not allowed to refinance, there is a new credit decision made. he's just raising a particular point which we felt the statute

did not allow us to do. >> i thank the gentleman. the chair recognizes the gentleman from ohio, mr. jordan. >> i want to thank the gentleman for being with us today. mr. barofsky, you and your staff in particular forhe integrity and professionalism you bring to your job. we certainly appreciate that. your comments earlier were that the hamp and the making home affordable programs, their performance remarkably disspirits. in today's journal, the foreclosure efforts have been with problems d continues to fail -- fall dramatically short of any meaningful standard of success. it goes on to mention about the fha short refinance program which started last fall and has helped 15 people. i guess my question is at what point do we say this just isn't working? this just isn't getting the job

done? would we be better off discontinuing the whole program? after three years, 3-4 million goal, a few 100,000 have had help. the congress talks about the metric that they're using is offering people help. at what point do we say this is not working? let's just end this program. >> i continue to be a glass half full type of person. >> based on your comments, mr. barofsky,ou wouldn't be a glass half full, you would be a glass 2% full or 1% full. i'm an optimistic guy too, live in america. that's stretching it. >> i think hope is slipping away. if treasury couldn't respond to some of these things in a quick manner, your suggestion of ending the program and others''s suggestions is going to be a louder and louder chorus.

we can't keep clinging for these noncredible declarations of success and be straightforward and honest and say this is where we think the program will be at the end of 2012 or the end of 2017 when the program is done. this is the number of people we intend to have sustainable permanent modifications. this is how we're going to get to that number. then you and this committee and the congress and the american people can make the evaluation. is it worth it? is it worth it to continue? i think if they fail to do so, u're probably dead on right. >> you got more patience than i have. yesterday, introduced with the co-sponsorship of the airman and the ranking member of the committee, we introduced legislation to end the hamp program, we think any objective look at this, it doesn't warrant continued spending of taxpayer dollars. i want to be clear. you have jurisdiction over the 45 billion in the t.a.r.p. program that affects the foreclosure programs, hamp being

the biggest one. there's 25 billion that's available to treasury in the housing and economic development -- recovery act. is that accurate? >> that money is money that goes to fannie and freddie. >> is any of thatmoney, i unrstand it's not your jurisdiction, has any of that money been applied or used in any wa for foreclosure prevention type programs, if so, are the results similar to what we've seen in hamp? >> yes, when we're talking about hamp, we're talking about both components, the gsc and the t.a.r.p. the gse part of the program is better than the t.a.r.p. part of the program. of this 520,000, approximately or 540,000 of ongoing permanent modifications, more than half of those are attributable to fannie and freddie and the gse. it's about 230,000 modifications that are actually t.a.r.p. permanent modifications. there is activity over there. we detail in our report, we

break these numbers down,rom gse to nongse, including the money they've reported that they've spent on the modifications. >> the bottom line is, there is approximately $70 billion that has been appropriated for this type of program, the hamp program, 70 billion, not 45, 70 billion, and 1 billion is all that went out the door for a program that's hurt people it's suosed to help an in your definition, remarkably disspiriting program, what i would call a colossal failure. is that accurate? >> yes, i understand your frustration and share your frustration. i hope the easury can hear what you're saying and come up and be honest about where this program is going, i it's going anywhere. >> i got 15 seconds. to put it all in context, $70 billion appropriated for this at a time, not helping the people it's designed to help, total

failure, the guy who is charged with inspecting it, understands total failure, at a time we have a $14 trillion national debt. at some point we have to say enough is enough and end this program. >> the chair now yields to the gentleman from ohio, . kucinich. >> isn't it true that hamp's performance is dependent upon the voluntary willingness of mortgage servicers to give loan modifications? >> yes. >> isn't it true that private mortgage servicers have found creative ways to frustrate attempts by distressed borrowers to save their homes? >> there certainly have been problems. >> is that a yes or no? >> i don't know if it's created but it's happened. >> since it's apparent that consumers don't get a fair shake, i can't understand why we don't have a representative from the servicing industry to explain that industry today.

the minority requested that j.p. morgan chase, a major servicer appear today but the chairman refused. i don't know how we can have effective oversight for congress or the american public, how can they can really understand the federal response to the foreclosure crisis, which depends on the private sector without asking the private industry to explain their actions that are impeding this program. >> would the gentleman yield? >> if the chair will let me have my time afterwards. >> of course. the chair made a decision that today would be fully involved with the government side and the special ig's rept. we do intend on having, among other, servicers and a review of the hamp program. this is the first of our discovery and the gentleman's yield back. >> sig t.a.r.p.'s report and other reports of abuses by loan

services raises serious concerns that these mortgage providers may engaged in a pattern of abuse. mr. barofsky, i would like to request that your office conduct a specific audit on this issue and i would like to, estimate, ask the chair if you would join with me on this request since you're saying you're willing to go forward with looking at the mortgage servicers. >> i'll certainly consider it. would you give me the request in writing in. >> i'll do that, because i want to point out, thankou, mr. chairma is while the chair has the unilateral privilege to issue subpoenas, the chair has the privilege not to call certain witnesses. it's comforting to know you'll consider calling witnesses in mortgage service industry, especially since it's so relevant to the matter at hand. the chair also, as we know, has the privilege to deny documents, the production of documents to other members. for example, in this case, i'm not saying this happened, but my concern would be about the policy is that if there's any communication with the committee

and j.p. morgan chase, that the minority may not know about it. perhaps myself i wanted to address that in my opening statemen i didn't have that privilege. that's one of the problems in not having opening statements. i hope that as we continue down the road, this committee will understand the importance of tradition and procedure that respects the rights of all members because i think what it really does is it enables us to function more effectively. mr. massad, what is treasury doing to retool hamp to require service or performance? >> thank you, congressman for the question, it's a very important question. let me talk about some of the things we have done. we've required the servicers to, if they're evaluating someone

for hamp, they cannot foreclose on that person. if they decide the person isn't eligible for ha, they have to consider other alternatives, short sales. it's only after they've certified they've done all those things, you can proceed to the foreclosure. we've required the servicers to have a process for appealing the decision. we've also set up our own centers so people can come to us if they feel they've been wrongly denied. we will run calculation to give them a view on that. we have an escalation center that deals with complaints. >> let me ask you this. would you agree we'll never get to the bottom of this problem or figure out how to proactively deal with the foreclosure crisis if we don't examine the actions of mortgage servicers? >> i would agree, congressman, that we need to look at howhis entire industry is functioning or rather no functioning. i think there is a lot of work

going on in that regard. obviously through hamp, which is a voluntary program, we cannot forca change on the entire industry, but we have learned a lot about what is -- >> mr. barofsky can examine it. >> yes, congressman. by the way, we do have an ongoing audit of the mortgage servicers. i will make sure my staff meets with your staff to make sure we have anyoncerns to incorporate. >> you have to communicate with the chair on that. is my time expiring or do i have 20 seconds more? >> the gentleman has 20 additional seconds. >> thank you. this is so important to my constituency, because cleveland, ohio has been an epicenter of the sub prime meltdown. people have lost everything they worked a lifetime for. when you get into a situation when they depend on hamp to try to save their homes and the mortgage servicers have a

subterfuge to defeat that, it's important we call them to an accounting. >> the chair recognizesthe gentleman from florida. >> thank you, mr. chairman. i want to thank both of the witnesses for being here today. recognizing that we're in difficult times. there are lots of -- i'm sure -- let me say i'm sure it's not easy to sit there and take the questions, but there is a lot of frustration. i wanted to start o by saying this, that my observations so far is that what we're talking about is failed government regulations and programs, and today, what we're talking about, or some people are talking about is what other government programs can we add on top of that to try to make the failed ones work as if though more government regulation, more government programs is going to

be the answer? i'll tell you, i've heard a couple people from ohio talk about ohio being the epicenter of foreclosures, i would welcome them to come down to fort myers, florida, to lehigh, to cape coral. i'll tell you what my stilts are telling me, they're telling me stop. we don't want more of this government kind of control. we don't want the idea that government is going to solve all of the problems. when a lot of people feel like government is part of the problem. so if you think about what's happened, government started to push people and mortgage companies into making loans and putting people into homes that maybe weren't fiscally able to do that, either the company or the individual. then when we have a crisis, we then turn to more government in

regulating. what you get is, instead of banks being able to lend, if you talk to community banks, they're afraid to lend, because exactly what mr. massad just -- you got to think about what you said earlier. you said that we need to incorporate some national standards. when these lenders hear that, what they hear is more punishment. what they hear is more changes are coming. we don't know what the ground rules are. we're afraid to lend. when you bail out the big banks, it disadvantages the small banks. when you talk about the costs of t.a.r.p. or these other bailout programs, what you're missing is the cost of potential from other

sectors. so you've got the big banks that you want to claim have, you know, done so well, i don't know that i see it that way, but it's been at the cost of the small banks. now what we're seeing is lenders do not want to lend because they're afraid of statements like, now we need national standards. so again, what i'm saying is stop. what i want to hear is not what's the next regulation, what's the next program, whas the next acronym that we're going to srt talking about that is a failure because government can't do it, i want to hear from both of you, if you would, very specifically, what should we repeal? what kind of repeals can we do that will help ignite borrowing and lending that is going to help small businesses or that are going to help families who

are trying to put their lives back together, instead of talking about what new programs we're going to pass, i would like if both of you, mr. massad, start with you, if you could tell me, what do you think we ought to repeal? >> thank you, congressman, i'm happy to do that. first of all, my responsibility is the t.a.r.p. program. not a regulator, but what i would say is this, i'm trying to get the vernment out of the business of owning stakes in private companies, and telling private companies what to do. >> excuse me real quick, when you say we need national standards, think about what you said and think about what people back home, think about the small banks, think about the people who are trying to make it every day, what they've heard is the rules of the game are going to change again. now you are saying we need national standards. >> i was referring to national servicing standards for the servicing of mortgages, which we already have some.

you know, this business is mostly dominated by the big banks. the small banks really aren in it. >> yeah, bause they can't compete because government has sided one over the other. >> i think the -- >> if you come down to southwest florida, the community banks are so important to housing, but they've en pushed out becau govement has come in and bailed out the big banks. they can't compete. >> congressman, i agree small banks are very important. that's why we funded so many of them under t.a.r.p. again, that was something we had to do. i don't think it was a good thing for the government to have to do that but we had to do it. that's why we're trying to get out of it so quickly. in terms of your comment on failed government programs, i think all we're trying to do is say we still are in the midst of a very terrible housing crisis that is a drag on our economic recovery. >> if i could, i'm sorry. >> the gentleman's time has

expired. >> if i coulask -- >> i would ask unanimous consents for one additional minute. >> i would say this to the chairman, if you would submit to this committee for us, please, in writing, specific things that we can repeal that's going to help, instead of submitting to this committee what other regulations and programs that we ought to be performing, i would like to hear what you think we ought to repeal. thank you, mr. chairman. >> if the gentleman would yield his remaining time. >> yes. >> asong as we're doing ask mr. massad, would you commit before the next quarterly special ig comes ou produce an estimate of how many loan modifications you expect hamp to produce, as well as a source of material to the special ig or in the alternative, ke available to mr. barofsky the source material so he can bring us an assessment? >> yes, sir. i would be happy to do that.

we've been working on that. i think a lot of that data is out there. >> we sure appreciate that. the chair recognizes the gentleman from massachusetts, mr. lynch, for five minutes. >> thank chair now recognizes lynch for five minutes. >> thank you, mr. chairman. mr. barofsky, mr. massad, thank you both for your great work and thank you for your service to our country. mr. barofsky, i'm more familiar with your work, especially, so, sir, the work that you've been doing. i want to take half a minute to really correct some of the revisionist history here on t.a.r.p. i voted against t.a.r.p. and when it came before the financial services committee and before this congress, the stated legislative goal of t.a.r.p. was to help main street, to help main street, the troubled asset relief program. and when we asked secretary paulson at the time, just before

thvote, we said -- actually, i think it was the ranking member of financial services said, why don't you just take money and stuff it into the banks? the $700 billion that you wanted? and mr. paulisson siaid, no, we not going to do that. and then ten days after t.a.r.p. passed, they d exactly that. they injected a that money into the banks. this was the bank shareholder relief program. and for people now to say, yeah, this is exactly what we voted for, this is not what we voted for. we voted to increase lending. that was the goal of the congress when t.a.r.p. was put on the floor. and many of us saw the failings of that. and to now say, oh, yeah, we supported t.a.r.p. for all the right reasons, i think you have to accept the fact that t.a.r.p. stuffed basically $700 billion worth of taxpayer money into big banks, helping out these

shareholders. we paid 100 cents on the dollar to goldman sachs because we pumped $14 billion into aig. it was a pass-through. it went right to goldman sachs. 100 cents on the dollar on credit default swaps that shouldn't have been worth half that. we also passed through hundreds of millions of dollars to aig fp employees who mispriced this risk as part of t.a.r.p. they got paid off. they gotonuses from taxpayer moy. hoyou can take credit for that and say that that was a good thing. and it was never a question of, i know people said, well, if we did nothing -- well, we wouldn't have done nothing. we would have done something different. and i think there are a lot of weaknesses in this t.a.r.p. program. i think mr. barofsky, you've drilled down and got to many of them. but i want to take my lst couple of minutes to talk about

the service industry, because so much of the servicing industry is mentioned in this report. and i think it's spot-on. i want to just talk about -- i'll just list all the investigations that are going on right now th the services. and we're not going after them in a meaningful way. i don't think treasury is. on october 13th, 2010, the attorney general of all 50 states announced the joint investigation to whether some of the nation's largest financial institutions are using flawed and forged documents to execute wrongful foreclosures. the federal reserve and the fdic and the office of the comptroller of the currency are now investigating whether systemic weaknesses in the industry are leading to improper foreclosures. on januy 7th, 2011, the supreme judicial court in my own state of massachusetts voted home citizens, because the folks who were foreclosing couldn't actually prove they owned the mortgages. the united states trustee program has a similar program. the attorneys generals of

arizona and nevada doing the same thing. the justice department. what are we doing about the services, how are we going to clean up this city and correct these problems if we're not going right after the services? that seems to be wherethe problem lies. >> i'm happy to respond to that, congressman. >> please. >> thank you for the question. you've referred to the activity that is going on by a variety of federal agencies and it's under the auspices of an interagency task force that treasury cochairs. so tt is very important work and i think we will see some results of those investigations and i think it will help us figure out what types of reforms are needed, and potentially some of those things will be coming before the congress. let me just also, though, respon-- i appreciate the fact that because this program was first announced as a means to purchase troubledassets, and then it became a program where

at least, initially, what secretary paulson did under the bush administration was to invest money in banks, people, were critical of that. and all i would say to that is a couple of things. one, under the circumstances, we had to make that change. there wasn't time to do the troubled asset purchase as it was originally contemplated. number two, we didn't do $700 billion, we actually spent for a less than that. >> $534 billion. >> we -- >> $534 billion. if you want an exact number that went directly to the banks. >> congressman, if i may -- >> if you would summarize your answer, please. >> sure. about $250 billion went to banks and most of that has been recovered and we will make a profit on those investments. >> thank you, gentleman. the chair now recognizes the gentleman from pennsylvania, mr. kelly for five minutes. >> thank you, mr. chairman. mr. massad, in your opening

comments, you made a reference to the automobile industry, of which am a part of. i'm a car dealer in a small business. so while people talk about small business and their view of it from 40,000 feet, i'm actually on the ground. i can tell you this. the small business loan is not working. the most banks cannot operate out of fear. the regulations that have been posed on these people makes it impossible to get access to these funds. now, why do i say that? because i go through it every day. not only myself, but also the people i'm in business with. and while i'm an elected official today, in my real life, i'm a small business owner. i can tell you, with someone who s all the skin in the game, every day, i would suggest to you that while we go on with these programs and we live in this wonderful world of acronyms that really make sense inside this beltway, in real america, it makes absolutely no sense to everybody. and these loans simply are not available. so while we talk about that money that's available to help us survive, the reality of it is

that it is not available to us. now, what's changed? it's the rules. to me, too big to fail means that i'm too small to survive. most of the banks that i do business with are small banks. they are absolutely frozen with fear. the eregulations and the rules have put them in a situation whereas they cannot operate on a day-to-day basis. quarterly, the covenants change for me. and as we talk about small business leading the way out of this economic mess we're in, i will tell you, it is the uncertainty that all of us face. and i'm not talking about big corporations, i am talking about main street america. i am talking about the average person. the guy that gets up every day and worries about it, not just during business hours, but seven days a week, 24 hours a day. my only question to you, sir, and i don't know what you can do about it, but there has to be some way that we can free up these funds to make it possible for these people to survive.

the people have lost faith in this system. >> congressman, that's a very good question and you raise a lot of important points. let me say a couple of things. one is that what we tried to do under t.a.r.p. was in part restart the credit markets that helped small businesses, the securitization markets on which a lot of them actually depend for loans. and i think we have succeeded there. there's still a lot of work to do to help small business. i agree with you 100%. small business has been hurt in this crisis. small banks have been hurt in this crisis, and they haven't fully recovered. the small business legislation that was passed last year, which set up not only the small business lending fund, but also another program where the states are trying to help small businesses directly, i think, goes -- you know, provides some help. it may not be enough. so i'm happy to explore with you further things that should be done in that regard, because i agree, it's a problem that needs attention, and i think the treasury and the obama administration have tried to pay

attention to that. >> a i appreciate your comments, buttime is of the essence. and we really do not have -- we are that close to the ground right now. there's not a lot of free fall left. i appreciate you so much for being here and i yield back my time, mr. chairman. >> and the chair appreciates that. the chair now recognizes the gent gentlelady from washington, d.c., ms. norton, for five minutes. >> thank you, mr. chairman. as predicate to my question, i want to note an article from the abilene porter news, describing what appears to be the republican approach to the meltdown of homes. and i ask that this be placed into the record. >> without objection. >> mr. numberburger is the chairman of the association, he's a former banker hills and

he's pretty frank. he essentiallyays that the initiatives aimed at cushioning the blow have all failed. and so he says let the market take over. to quote him, markets aren't kind, but they're very efficient. should we go cold turkey and leave millions of homeowners out there to suffer the consequences? and i would like a short answer, because i have further questions. mr. massad, and mr. barofsky, who seems to just throw up his hands often. yes, mr. massad? >> thank you, congresswoman. no, i don't think we should just go cold turkey. that's why i would disagree with some of the comments that have been made, that because hamp has not achieved 3 million to 4 million modifications, that therefore we should end it. i don't think that makes sense. i think this program can still help a lot of people. i think it's constructed so that we only use taxpayer funds

prudently and wisely to the extent that we do help peop. i think it's helping the right people. people who need -- let me go to mr. barofsky, then. >> i think it's an incredibly important -- you know, paerp was designed in part, just as much to help the wall street banks as to help strugglinghomeowners. that was part of the intent of the legislation. and i think treasury bears an important responsibility to fulfill that goal that congress set forth. >> so you don't think we should go cold turkey and just leave millions of borrowers out there? >> i would like to see -- >> to lethe market do what the market always does? it does resolve all such as crises, one way or the other. >> i would like to see an incredible revamp of hamp, so it can achieve the goals that -- let's talk about that. because i'm essentially remedy oriented, and as i've seen in my own district how hamp has faied so many homeowners, people who wo hard for their homes, got

caht up in a crisis not of their making, it does seem that the only way out of this is to take measures that protect both homeowners and investors. a recent "washington post" article, january 18th, as a matter of fact, suggested that the incentive structure for services is greatly misaligned. let me just quote that. studies have shn that foreclosure is often more profitable for a company known as a mortgage servicer that collects the monthly payments on mortgages and passes them ono investors who own the mortgages. how it is often not the best path for borrowers who lose their home or investors or investors who lose money. mr. massad, is it true that mortgage servicers often have a

financial incentive to foreose on distressed borrowers, and at times of that program, your program actually gives them a financial disincentive to work with borrowers, and what are you doing about it? >> well, what we're trying to do is give them an incentive to keep people in their homes. and i think that the structure of the program has worked in that regard. and that's why, also, it has been emulated by the industry. you know, before this program was started, we had two years of th crisis. nothing was done. >> why is fhfa considering an entirely new compensation structure if this one is so fine and dandy? >> no, no, let me make sure i'm clear. i agree with what the fhfa is doing. and treasury has supported that. they are looking at theasic business model of the servicers. because it doesn't work. it is broken. it doesn't create the right incentives. hamp because also trying to

change those incentives with respect to the loans we could affect. and that is, i've said, a limited pool. it's not the entire industry. but one thing that has -- >> do you think the fhfa measures would have a meaningful impact? >> well, i certainly hope so, congresswoman. what they're doing is saying, look, we need to re-examine how servicers are compensated. because what's happened is, they're overcompensated for loans that are performing, but when it comes to the underperforming loans, they're not set up to deal with people, to resolve -- >> mr. massad, if this is not a win-win, it's not going to work. if it's a win-lose, and it appears often to be just that, then we're going to betuck and that's where the borrowers and the homeowners are stuck. >> well, that's right, congresswoman, and that's why i've said wing there needs to be a lot of attention paid as to how this industry has failed us in a lot of ways. we've seen a lot of probms coming out of this crisis. >> and how you incentive structure has failed.

>> the gentlewoman's time has expired. the and chair would note we're expecting two votes at approximately 11:10. we'll work for about one more question after the vote is called. we'll leave, we will return, and as soon as there are two people on the dias, we will begin questioning again, as to be respectful of yo time. the gentleman may contie. >> thank you, mr. chairman, and mr. barofsky and mr. massad to be here and appear in fro of us. i had the dubious distinction to vote on t.a.r.p., to vote against it, i think for all the right reasons. i had the dubious distinction to be foreclosed upon in my election. and for the last two years, to hear the response of people that finally awakened to the fact that s, there was a prblem, yes, there was a significant concern, yes, there was a

meltdown that was taking place. but frankly, their opinion was that it was the wrong approach to take, and it seems to have borne out. mr. massad, i would ask you, and i hope this hasn't been asked while i was away, but what are the plans for the obligated t.a.r.p. funds that have not yet been spent? >> t only funds that have not yet been spend are those for the housing programs and let me just note, it's not $70 billion for hamp, our portion of hamp there is a gse portion, our portion of hamp is 29. we've done a number of other housing programs. so there's $45 billion allocated r a variety of housing programs. there's still a very small amount that's committed fothe public/private investment partnership. basically, we're no longer making new commitments. we're no longer doing new prrams. our focus now is getting the money back, and we've gotten, as i say, a lot of it back, and i expect we will get a lot more of it back, and essentially all the

program programs leaving aside the housing programs, all the programs considered as a whole, llesult in a very little cost or essentially even a profit, because we will get all the funds back. >> can you make a blanket committee here today that those unobligated funds will not be spent? >> congressman, i can make a blanket commitment to you that we will make no further commitment of funds. we do not have that authority. but let me make clear, there are funds that are obligated that may be spent. there are no funds that are unobligated. we will not make any further obligation of funds. >> but youill not spend them? unobligated? >> unobligated funds we will not spend. but i want to make sure we're communicating. we no longer have authority to make obligations. i can't make new commitments of funds. i will not, therefore, make new commitments of funds. we do have some funds that have been committed but not spent. and those, you know, we expect

at least some of those will be spent. not necessarily all of them. >> thank you. mr. barofsky, on page six of the sigtarp report, in referencing, in comparing recipients of the federal assistance to fannie and freddie, you make this statement -- in many ways t.a.r.p. has helped to mix the same toxic cocktail of implicit guarantees and distorted incentives that led to disastrous consequences for the government-sponsored entities. based upon that statement, how are big banks who receive t.a.r.p. money similar to those entities? >> well, two of the big characteristicsf what happened with the lead up of the conservatorship of fannie and freddie was, one, the implicit guarantee they received that they had a government backstop. and one of the legacy results of t.a.r.p. is that the market

still believes that the united states government is backstopping the largest too big to fail institutions. and that causes a whole range of problems. it hurts market discipline, counterparties, creditors, investors, they don't do the due diligence that's necessary when evaluating whether to do business with one of these banks or investing in one of these banks, because they believe that any type of risk they'll take will be backstopped by uncle sam and the taxpayer. that gives them an advantage. it gives them the opportunity to borrow money more cheaply. s&p recently announced their attempting to change the rating system to make it a permanent aspect that the too big to fail banks will have higher ratings based on implicit government guarantee. and they say the notwithstanding dodd/frank and other countries' response to the finaial crisis. this is a market distortion. and as a result, the executives of those banks get back into the position where it's, heads i win, tail the taxpayer bails

me out. >> what recommendations might you suggest to go away from that moral hazard? >> i think we are where we are. and what we have is dodd/frank and the fstock and the committee that's providing oversight. and it does have a lot of tools. they need to have both the regulatory will and the political will to rein in the size of these banks. they have to do two things, which argoing to be remarkably difficult. and secretary geithner, to his credit, was remarkably candid with us about the limitations about what they're going to be able to do. but first of all, they have to have a system where they can credibly resolve large financial institutions without bailing out the shareholders, the creditors, the executives. second, which is probably just as important, they have to convince the markets that that's actually going to happen. was if they don't convince the markets, if they don't have the credibility that they will not be bailing out institutions going into the future, it almost won't matter otherwise, because, again, those incentives will still be warped. that discipline will still be

gone, and those risks where with the idea that thetaxpayer will bail out the executives, the shareholders, the counterparties will continue a perversion of the system. >> thank you. in the parent world, we call that tough love. thank you. >> i thank the gentleman. the chair asks unanimous consent that a statement for the record submitted by the american bankers association be inserted at this time without objection. the chair n recognizes the gentleman from missouri, mr. clay, for five minutes. >> thank you, mr. chairman, and thank you for holding this meeting. mr. barofsky, inderstand that you have the oversight authority to investigate mortgage service provided. i want to discuss on one specific example of a horrendous abuse against our active duty service member. according to an nbc news report of january 17th, jpmorgan chase and company admitted thatthey overcharged thousands of active

duty military families millions of dollars on their mortgages. they also improperly foreclosed on some of these families. they weren't supposed to do that, because we passed a service member civil relief act, specifically to protect military families from higher interest rates and foreclosure action. we recognize the importance of those families service to our country. mr. massad, have you seen this report? >> i have, sir. >> what can these families do other than seek redress from the company? >> congressman, i'll be happy to look into that. that's really outside of my jurisdiction. but it was a veryroubling report, i agree. and i'd be happy to get back to you or get the appropriate officials to get back to you. >> well, and i'm glad to learn that jpmorgan has acknowledged their errors and is working with the families to try to make things right, starting by paying

them back $2 million in overcharges, interest. but this story makes me worry for a different reason. the victims in this case complain that the industry servicer in this case harassed them endlessly, refused to acknowledge legitimate documentation when they presented it, and essentially made their lives miserable. all wiout any basis to do so. and now i assume that banks don't have one collection agency, just for military service members, and another one for everyone else. mr. barofsky, have you seen similar abuses of this kind, where the banks and their collection agencies harass people without any justification? >> we have. you know, we operate the sigtarp hotline, where we've collected more than 24,000 contacts since our inception. and a lo of them are complaints from homeowners dealing with

mortgage servicers, absolutely. and when we see those, we try to direct them to the right place. if there's an allegation of criminal activity and it relates to the hamp program, we'll take it. if it's criminal activity that's outside of o law enforcement jurisdiction, we'll refer it out. we'll refer it to treasury, if it's appropriate. if there's some degree of -- thing that they can do. and we also collect them for our review and for our audit function. >> how about the rule abusive servi servicers? can they be removed from the program? >> i'm sorry? can they be removed from our program? from the hamp program? >> yeah. >> they could be. again, you know, because there are some servicers that cover a lot of the market, and we were simply to kick them out of the program, then we wouldn't be able to reach the people we'd like to reach. so that's why our focus has been to try to, you know, improve the practices as much as we can. let me just say, you know, we will continue to be aggressive in this.

we're in the large servicer shops, you know, all the time, and we'll continue to work with sigtarp on practical constructions -- practical suggestions on how to get the servicers to do a better job, because we agree that they need to do a better job. >> but if they are totally ignoring the homeowner and ignoring the documentation, then -- >> sure. i wouldn't say they're -- if i may, congressman, i wouldn't say they're totally ignoring the homeowner, at least with respect to our program. i think with respect to our program, we've gotten them to pay attention. they've come a long way. when we started this, they said, we can't do this, they said, we're not ready, and we said, you've got toget ready. while we haven't achieved as many modifications as we'd like, i admit that, i've always admitted that, but nevertheless, we're making some progress. we're still getting about 30,000 new families helped a month. that's important. it's not enough, but it's

important. >> could either one of the witnesses supply us with the breakdown of state by state modifications? >> yes, we can certainly do that. we can do that for our program, congressman. we do produce a lot of statistics and metrics on our program, but that only covers our program. there, frankly, aren't a lot of statistics on the rest of the industry in th regard. >> okay. d of special interest to me would, of course, be on missouri. >> certainly. >> okay. i thank you, i thank the witnesses, and i yield back. >> i thank the gentleman. our last for this round before we go to votes will be the gentleman from arizona, mr. gosar. >> thank you. being from arizona and hearing of the discussion in regards to florida and ohio, i have to say that arizona, which we thought was a leveling of our problems with the housing, is now all of a sudden showing some signs of double dipping. so this is very troubling. and being from a very poor

community from the district, we see homeowners on the very urge -- or the very brink of catastrophe. my question to you, first, mr. massad is, doesn't the lower cost of borrowing that results from the implicit government guarantee partially explain the banks' ability to pay back t.a.r.p.? >> yes. it's probably a factor, but i think a more important facr was the process that we implemented of the stress test. because what we did was we put the largest banks through a very intensive stress test, because the market didn't have confidence as to which institutions might fail and how much capital they needed. so in the spring of 2009, we implemented the stress test process. and we made the results and the whole process very transparent. and as a result of that, they were ablto raise private capital and we were able to get the government out. >> so in a follow-up question, so the success depends on that implicit guarantee? >> no, i don't think i said

that. what i'm saying is that we got out of t banks' investments, we got the money back through this stress test and recapital station process. i think if i may, i think the thrust of your question, it really relates to some of the concerns mr. barofsky has raised on too big to fail and moral hazard. and those are very legitimate concerns, and this congress obviously debated them at length when it passed the dodd/frank legislatn. we're still implementing that. i think mr. barofsky is raising his views on that, that, in effect, it sounds like what he's saying is that dodd/frank may not have been strong enough or may not be strong enough. maybe we should break up some of these banks. maybe wehould take more aggressive action. that's certainly an opinion. you know, and others have voiced that opinion. my own view is, let's give dodd/frank some time to work, because now we do have a lot of tools that w didn't have, so i think it's premature to say, to pass judgment on dodd/frank.

it was really the first overhaul of our financial system in many years, and it was, you know, it was necessary, or, rather, t.a.r.p. was necessary, because we didn't have the tools that dodd/frank provided. >> mr. barofsky, how would you feel or would you differ in that opinion? >> yeah, i don't think that mr. massad has correctly characterized my position, to put it mildly. the answer to your question, though, is, yes. the implicit guarantee absolutely enabled those banks to get out of t.a.r.p. on the terms that they did. because though banks enjoy enhanced credit ratings from the ratings agency, part of the conditions that the federal reserve put was to get out of narcotics and raise capital. and the larger banks can raise capital more efficiently and cheaply because of this implicit guarantee, because of the benefits they have. so, in short, the answer to your question is yes. >> thank you. i yield back the balance of my

time. >> thank you, mr. gosar. and i am instructed that we are about to be called to some votes. so i'm very, very grateful, both mr. massad and mr. barofsky for your attendance to this point. i know there are, if you can give us the indulgence, as soon as we conclude the votes, i know there are some members who would like to continue with some questioning. so the committee stands in recess. thank you.

>> thanks to the witnesses for continuing to be what is here today. mr. massad, i looked at something that had been different than had been talked about today. a review of the most recent report, the issue of the extent to where we caliber as asian -- three caliber as asian -- recalibarization, and coming to you for recapitalization. they are making application.

what is your policy with respect to when you get that notification, sharing it with others? >> congressman, thank you for the question. you raise an important issue. first of all, we do not ever provide additional funds. i want to make that very clear. secondly, our job with respect to those investments is to get as much money back as we can. we still have investments in about 560 banks. there are a few of those situations where banks have had trouble and had come to us because they are trying to attract private capital, and they asked us to modify our investment, and we have been agreed in a small handful of situations. in citigroup, we agree to convert from preferred stock to common stock.

that one turned out very well where we will realize a $12 billion profit on our overall investment. others will be very small, but we do try to work with the banks. we have a whole process of monitoring our investments and these banks. occasionally, because the bank is troubled, the choice for us is not doing anything and losing our entire investment. the question is always, can we agree to some terms that help them attract new capital and therefore realize as much as we can? >> there is one of the issues that struck my interest. part of your participation with them is creating an awareness among others, and to some extent, a sign of good approval, taking other private investors to help with that bank. one of the things that concerned me in the report was the

suggestion that simultaneously, some of these banks may be having trouble for a variety of reasons, including they may be looked at for fraudulent activities. what timing has been your policy to report that to the ig, who may as you saw 24,000 reports from people? as a prosecutor i saw the whistleblowers being to keep things to us. they have the information. what are you doing to ensure that they are not activities that simultaneously they are under activity -- investigation for fraud and activity? >> we cooperate fully with sigtarp when they tell us there are investigating someone and we give them all that information. i know that in their core report, mr. barofsky has raised the question of whether treasury

should notify sigtarp when at some point in the process, and that is our recommendation we are looking at. we have from time to time do that -- done that. >> are you asking that sigtarp say to you when they have someone under investigation? >> no, we're not asking that. >> i am trying to understand. i am just trying to understand the timing here. that is the concern i have. they may be sitting on information, investigative information, and that could be contrary to your interest. i know my time is going to run out so i'm going ask you, mr. barofsky, if you could jump in at the conclusion of this, after ms. massad tells me, what do you need with respect to the ability to have timely notification that you may have a matter under investigation while

simultaneously treasury is encouraging people to invest in that bank? >> it is a very sensitive question. a lot of complexities to it, actually. you have touched on many of them. and we thought about this about the sec investigating the bank, or the justice department? should that knowledge be knowledge that we have, what do we do? their complexities that we're looking at in talking with mr. barofsky's staff as well as the other staffs and i would be happy to get back with you. >> i don't think there is a great deal of complexity with respect to sigtarp. they used to give us a heads up before that would do capitalizations, before they were publicly announced, which would give us an opportunity to communicate with the there is an issue. we've now made a formal recommendation that that process be implemented and also that

with respect of giving money in the other programs in which part banks have the opportunity to be capitalized in the small business lending program, the last thing we want to do is pour more money into an ongoing fraud. one was colonial bank which they had additional approval for tarp money and treasury did a remarkably great job working with us to make sure that money did not go out the door and we want the opportunity to repeat that success. >> mr. chairman, one more question? if there was a policy where in the past they were and they are not now, what is different? why did that change midstream? >> congressman, there was an informal policy. we had very few of these before. we did notify sigtarp and we are looking at what should the formal policy be. we have to be sensitive to the fact that if a law enforcement

officials shares information with us, we have to protect the confidentiality of that information, what position that puts a sen. as i say, there are some complexities to this. i would be happy to meet with you and your staff to discuss it further. we are getting a very serious thought. >> i think the gentleman. we now recognize the gentleman from virginia, mr. connolly, 45 minutes. >> good timing. >> the best. >> thank you for appearing before the committee today. mr. massad, did the bush administration make a mistake in creating the tarp program? >> no, i do not think so, congressman. i think it was unfortunate that we had to create tarp. we did not have the tools to otherwise deal with this crisis. but they were right to take the

action that they took. i am proud of those members of congress on both sides of the aisle who stood up and supported it. i think we needed it. again, it is unfortunate that we had to do it but i do not think we have much choice. >> at the time, mr. massad, bush secretary of the treasury, mr. paulson, were there not calls and then subsequently for the nationalization of the banking system in the united states? >> yes, there were. >> did tarp offer a market- driven private-sector alternatives to those calls? >> yes, i believe it did. >> despite the rhetoric about big government takeover, actually, would it be fair to say, mr. massad, that tarp represented precisely the opposite? >> i agree, congressman. >> and there were many

concerns, and mr. barofsky, you can comment, that tarp would be this endless sucking sound that would suck up tax dollars and inflate the federal deficit enormously. is that what happened in the tarp program? >> no, it is one of the areas where tarp has exceeded is in the declining aspects of the financial cost of the program. >> what is the cause currently of the 700 billion originally allocated to tarp? >> it at -- it depends on the u.s.. -- it depends on who you ask. treasuries most recent estimate is in $50 billion. omb has a higher estimate, but it is stated in may of 2010. i anticipate that number will

come down as well. >> but the nonpartisan congressional budget office, of which this institution has historically relied, except recently when we apparently do not like their numbers, says $25 billion? >> and the reason for the big difference between there and dressers number is that cbo does not believe that treasury will pay them a fraction of the amount that it is allocated. >> are there still warrants and stocks yet to be sold that could improve that net estimate of $25 billion? >> i am assuming that when cbo does its estimate, it considers those factors. >> but everything is on timing. >> of course, the markets could improve, at the markets could go down market worse. >> ok. you mentioned the hamp program. i seem to recall this committee having a hearing last year, and at that time, my friends and the

other side of the doubt criticize the program which they opposed. but they nonetheless says -- nonetheless criticized because it only helps 167,000 americans. do i understand that number is now 500,000? >> yes, that is correct, congressman. that is the direct permanent modifications. >> set this failing program has managed to help americans. >> it is the little train that could. >> at that hearing, we had testimony from banks, and maybe mr. massad, you are aware of this testimony, those bankers said that even the number at that time was reported to be understated, they agreed to the program positively because a lot of the banks had a standard that they could follow. >> that is absolutely right,

congressman. before we started, the servicers were not doing modifications. to the extent modifications were done, they often raise people's pavements. when hamp came in, it provided some standards for the services to emulate in their proprietary programs. fannie mae and freddie mac also adopted some of our standards in their mortgages. so the indirect effect has been quite great. at the same time people talk about the numbers of foreclosures and so forth, if you look at the total number of modifications it into since april 2009, either under hamp or under other programs, it does outpace foreclosure sales -- completions if you will -- two to one. it is not enough. i'm always the first to say that we do not do enough. but we are making this crisis better. >> i think the gentlemen and my

time is up. >> the chair now recognizes the gentleman from oklahoma, mr. langford, 45 minutes. >> i have a few questions. thank you for allowing us to step out to vote and then step back again. mr. massad, i am aware of some of the limitations dodd-frank placed on tarp. is treasury willing to assure us today that there is no plan and no intention that any tarp funds will be used for state pension bailouts for for state government bailouts based on the limitations of what can be used in tarp? >> yes, sir. to get terrific. on page one of your report, paragraph four, it detail some of the numbers. $410 billion disbursed to date, we are perceived by to under $70 billion. approximately -- $270 billion. if i am reading those numbers,

we're missing $9 billion. could you submit to was a written update on that, how that fits in there? >> i would be happy to do that. i do not believe it is by billion dollars but i would be happy to do that. >> those numbers when you add them together, and the third thing is on the auto industry financing program, what is the plan at this point? you break a separate statement on that. we've gone from 61% ownership in stockton up 33% ownership. that is great progress. what is the plan to take this down to 0%? >> we are actively working on that. i want to be careful because of the securities laws, i cannot be definitive about a timetable. but now that we have completed the initial public offering of gm, we do have a pathway to sell the rest of our shares. i would expect we would sell all of those -- hopefully within the next two years, market

conditions permitting. with respect to our other investments in chrysler and others, we're working toward initial public offerings for other institutions. >> by this date certain, we're going to be out? is there some plan to stick by this date certain ". >> we have not done that because we have to be sensitive to a couple of things. one is market conditions and also in the case of the company's not yet public, they have to be ready to go public. we cannot force them to do that. we're trying to get out of these investments as quickly as possible. i firmly believe that our purpose, to promote financial stability, is best served today by getting government out of the business of the punning interest in private companies. >> i would definitely concur on that. his treasury still day-to-day in the operations?

is it helping advise? >> we monitor those investments but we have never participated in the day-to-day management. we made it clear that we will not do so and that is an appropriate role for the u.s. government. >> i will agree on that as well. detailsfsky's report $59.7 billion available, sitting out there. i am sure that number may move around some based on the day-to- day operations. many funds have been returned. what is the plan for that? >> on the investment side, we're trying to get out as quickly as possible. i cannot give you a timetable, but with respect to the remaining investment, roughly $170 billion, we will get most of that back in the next two

years, although there will be some portion we cannot get back within that timeframe. we are winding down the operation. we are trying to get out as fast as we can. >> would it help to have a legislative solution on this to set a timetable to save the american people need reassurances that 20 years from now -- >> i do not think a legislative solution would be helpful. that could depress the value that we could get for the investments that we have. believe me, i don't intend to be here 20 years from now. in one last quick question. the report details the five largest banks now control about 60% of gross national product. obviously we have the heavy interest in the largest bank. you're talking about how the small and medium banks are assisted. but the bigger banks have grown bigger and they seem to be more systemic risks. >> there have been increased

concentrates in our financial system as a result of this prices. -- concentration in the financial system as a result of this crisis. but the question is whether to concentrated? it is one that congress can take up. mr. barofsky has noted that this is an issue that the congress may wish to consider. what we have right now under dodd-frank r. tools to regulate that. some people have suggested nationalizing bank, breaking them up, and that is obviously a policy option that the congress can consider. today it seems that we ever preference for the largest banks in this structure. i understand my time has expired. >> i thank the gentleman. we recognize mr. walsh for five minutes. >> thank you for coming in. it has been a long morning. let me be very brief and asked two broad, macro-level questions

from each of you. like a lot of my colleagues, i hear from community banks everyday who are struggling. like a lot of my colleagues, i hear from community banks every day who resent the fact that it seems like tarp, that government sided with the big banks. broad question. why are these community banks struggling? what is your biggest concern that you have got right now for our committee bags? >> that is a very good question. a lot of the smaller banks to have loan portfolios that are more heavily weighted in the real estate sector and therefore they have been hurt by that. they did not have access to capital as easily as big banks. those are very real concerns. we tried with the park program to address some of that. essentially when you look at the money invested in banks, about $250 billion overall tarp has invested, most of that -- to win

the $34 billion or that amount, was done among -- done under the bush administration. i agree with the actions that they took, but they did that, sending it to the largest institutions and the pitcher. when obama came in, we have only invested another $11 billion in banks. a lot of that went to the smaller institutions and we set up as much a program to help them. many of them are still struggling. we're trying our best to get the economy back and getting an economic recovery, it get the housing market stabilized. those of the best things we can do for this by. >> why this persistent struggle with the community banks? >> part of it as mr. massad pointed out, the structure. a large part of that is also this continuing existence of too big to fail. it gives an inherent advantage to the larger banks. their reason why the smaller banks do not have access to capital is the largest banks.

they do not have the access to the freed money from the federal reserve that the larger banks have. what has been the result of tarp and related programs is giving the opportunities to the largest banks to earn their way out of trouble. those opportunities are not available for small and community banks. >> that leads me to my second question. offer one broad " level country -- broad level critique of tarp. if you are to each offer one broad critique of tarp, what would it be? >> if we had to do this all over again, and i am assuming we will not have to, there are a lot of things we could change or would change, congressman. it is hard to be specific. there are certain things in the housing program that we did later that we might of done earlier. i agree with a comment made earlier that it was proposed as

a troubled asset and then the bush administration wisely changed course because i think they had to. but that obviously contributed some of the criticism. it seems that there are many others that we would do over. but hopefully now under dodd- frank, we have the tools that will make this sort of thing and necessary in the future. >> 1 overall critique, mr. barofsky. >> what could have been done better was better transparency for the treasury department. from day one, this has been a recurring theme of our criticism, and we have been very bipartisan and our criticism for both the paulson treasury department as well as the secretary geithner's treasury department. explain this better to the american people, being more upfront and honest about the problem, saying that the first

nine institutions were by a bill -- by evelyn help they when we knew well that they were not. -- were a viable and help the when we knew well that they were not. it is not to live in now with courage treasury to renew its efforts toward transparency. -- it is not too late and we encourage treasury to renew its efforts for transparency. you can be a more informed conversation, be a more informed debate. right now treasury posture running of this program is like picking winners and losers, back room deals. those criticisms, we would come out of these transparency to failures. >> if i could respond to that, i am fully committed to transparency and the particular suggestions that sigtarp has made in this regard. we have implemented them. i like to note, because often people are not aware of it, we

published annual financial statements which are audited and we received clean opinions on its financial statements on -- for two years without material weaknesses. that is a very rare thing for a startup. and that, it is a relatively rare thing in government. we publish a monthly report to congress that lays out exactly where the money is, how much as come back, the status of the program. if we publish the transaction report within two business days of completing it. we show how much dividend and interest payments we have gotten. we put all our contracts and agreements on our website. that means not only in the contract entered into with a financial institution, but also the procurement contracts, all the documents related to hamp, and any program we have as well as program guidelines and others materials. we have testified before congress numerous times. we meet, we have three oversight agencies, and we fully cooperate with them and give them all the affirmation that they need.

they produce a total of 75 reports. we can always strive to do more, but i think actually there is a lot of affirmation about these programs available. >> thank you both. thank you, mr. chairman. >> you are very welcome. if anyone -- having not had a first round, we will take them after we finish. we could have a brief second round for a couple people. i would go to the ranking -- the chairman of the subcommittee jurisdictions, mr. mcinerney, for his questions. >> thank you, mr. chairman. this is not been discussed greatly, but the moral hazard. -- created by tarp, mentioned in your report, mr. barofsky. it is certainly a big concern. mr. massad, s&p considers the likelihood of government support explicitly in their credit

rating. are you aware of that? is that a direct result of tarp? >> i would say it this way, congressman. i think because we did not have the tools to deal with this rescue, we had to do tarp. that does raise the moral hazard, too big to fail concerns that barofsky has mentioned. now congress has addressed as through dodd-frank we have not implemented dodd-frank yet, but it is not appropriate to blame it on tarp. rather, blame it on the fact that we did not have an adequate regulatory system and that is what we're trying to improve. >> i would like to call up the geithner slide, if i could. in a report on citi, it outlines very quickly, in the future we may have to do exceptional things again if we face a shot at large.

we do not know what is systemic and what is not until you know the nature of the shock. mr. barofsky come up was this post signing of the dodd-frank law? it seems that your testimony is counter to your boss's testimony. >> i do not think that it is. i think that what secretary geithner was referring to, and neither i nor mr. barofsky were in the room, but -- >> we have his words. >> and i have spoken to him about this. he was talking about the ability to use the tools are under dodd- frank to address this in the fact we do not know what the issue will be. the tools under dodd-frank are flexible. we will not have a set of immutable quantitative criteria that say, eat your above this amount of assets, it your too big to fail. >> my next slide is president obama said last night in the

state of the union, because of this law, there will be new rules to make clear that no firm is somehow protected -- the dodd-frank signing last year, i'm sorry. these new rules will make clear that no firm is somehow protected because it is too big to fail so that we do not have another aig. mr. barofsky, it seems as secretary geithner's words run counter to that. it is hard after the fat for his staff to say he did not really mean it. can you give us context for this course are jiddah a couple of things i want to make very clear. i was not in the room. i had six members of sigtarp including my deputy in the room. after receipt this quote, we documented it. we provided a draft report to treasury. we had a number of conversations

and they made suggestions and we incorporated the suggestions. at the end of that process, treasury assured us that they did not contest the lenders that was used and did not think that we presented any type of misleading or long contract. the quote is the quote, and we stand by it. i think that secretary geithner and the impression of the six people of the room was being transparent and candid. i commend them for that. by recognizing the reality that the market is today, the banks are to -- still too big to fail. if dodd-frank, and it is given the regulators many potential tools, and if they are implemented correctly, and that is a very big if, it would require actions by the rate the letters that frankly they did not seem capable of doing in the run-up to this questions -- this crisis.

let's assume that they can. hopefully we can get to the point were the market will believe that the government will not bail out these companies but we are not there. >> we know that s&p has made the idea of the bailout, a tar-like program, or dodd-frank, it is hard to judge based on s&p making permanent their analysis, for the fed to backstop the biggest firms. there is explicit guarantees signed four contracts in 2008 and 2009 for these financial institutions, where the fed, the fdic, or tarp, a backstop to get government guarantees of assets. we know that explicit number. right? so the question to both of you is, can you tell this committee

what you believe the net present an iq of implicit government guarantees are, going forward, to these financial institutions? >> we include one as a footnote reference in our report. we do not do that type of economic analysis. i think us all in the suggested, and please do not quote me on this, up $34 billion a year advantage at the larger institutions have because they have the better ability to raise debt more quickly than their rivals. that was one academic studies. there may be others. >> certainly, congressman, i do not have the ability to quantify that. but let me respond to your question. in terms of explicit guarantees, i think you're referring to the citigroup asset guarantee program which has now been terminated. >> that is not what i am referring to. at the time of the economic

crisis, as has been well documented, fdic, the fed, tarp, treasury has explicit guarantees through contracts that are publicly available -- i am asking about the implicit. those are well known and three documented. i am asking about the implicit guarantees. mr. barofsky, as he mentioned in his report -- >> the gentleman could conclude. >> the thrust of your concern is, happily address the too big to fail issues efficiently? my response to that is, congress passed the dodd-frank law to address that. arizona -- there is a view that that is not sufficient, that is a judgment for congress to make. but where we are now, where treasury is, is that we are actively trying to implement

that law so that we can use the tools in gave us to make sure that no institution is too big to fail. i think it is premature that it has not worked and we need some tougher legislation to address that. and i thank the gentleman. the chair now recognizes the ranking member. >> dodd-frank includes a number of provisions intended to eliminate the concept too big to fail. legislation is clear that taxpayers will not cover the cost of saving failing institutions and will not cover the cost of liquidating such an institution. further, the legislation also gives the federal reserve emergency landing authority. finally there is an oversight council to monitor systemic risk and to require non-bank financial companies that pose a risk to financial stability of the united states to submit to supervision by the federal

reserve. can you describe briefly how implementation of these measures will address the too big to fail problem, and what is the timeline for implementing the measures? >> congressman, i can describe that very generally. it is not my responsibility to implement but i am happy to get the appropriate officials of treasury to brief you. in july, but there is a number of rulemaking procedures and studies that are being conducted. fsoc holds regular meetings, and there is a part of that which is public, and they are busy working on this. they are also breeding the office of margin conditions in the financial industry and determine what risks need to be addressed. i would be happy to get to a more detailed briefing. >> and we will follow up with detailed questions. and if you can, how will criteria be established to allow

us to identify firms that opose systemic risk? i take it that you will do that in writing. >> i can do that. i consider very generally that had been announced, qualitative as well as quantitative judgment, and it is not just size. there is riskiness of activities, interconnectedness, extended leverage, supervision, so these matters are given a lot of thought. they are obviously very complex issues but i would be happy to get you a more detailed summary. >> thank you. let me say this. i think that both of you, we are all very concerned about hamp. mr. massad, we also are concerned about servicer behavior. i understand that you and sigtarp disagree on your authority a. would it take more aggressive

steps to require servicer performance? >> i don't think that we disagreed, but maybe there is a difference on how we can best improve the program. we talk regularly. but let me just say, and i want to make very clear, while we think the benefits of these housing programs are very real and very important, we're still trying to improve them, still trying to reach as many people as possible. and it is not just have. the statements about hamp, a lot of the money goes to the other programs as well. i think the key thing is that the statement was made that, well, because this has not gone as well as you had hoped, or because there are these problems, we should simply turn it all back over to the servicers and let them deal with them. i think that what absolutely be the wrong thing to do. that is what got us here. it is clear not just from our

hamp experience but from the foreclosure of irregularities issue and the number of other standpoints that turning it back over to servicers would not be constructed at this time to things. you talked about retooling. there things that you're doing to make it more efficient. i want you to give us a list of those things. when you expect them to be complete? i am running at a time, unfortunately. >> it is an ongoing process. when we see problems, we respond to them. some of the things we have recently done is address the fact that servicers might been considering someone for hamp at the same time they were for closing. we have addressed the fact that initially we started this program by trying to get a lot of people into trials, and we did not make the servitors verify the income. thatled to the fact

people did not get in the permanent trust. we have worked through the backlog and i would like to give you a list. >> i want to thank the chairman for this. he talked about making our agencies more accountable. if you are doing things that will improve this program, mr. chairman, i would ask that we would bring mr. massad someone from his agency back or someone with that level of authority at a certain date to give us a report as to where they stand. i think you have said it and we all agreed that we do want accountability. i do not want to see the program ended. but if you tell us you're doing things to improve the program, i want to know. i want to tell -- i want you to tell us when you can come back and give us more permission so we can have confidence. both sides of the aisle are quite frustrated, to be quite frank with the. >> happy to do that. >> if you will commit to give us

monthly updates, next month, we will commit to having back in your next quarterly report at the worst for both of you. >> that is fine. >> mr. chairman, i really appreciate that. i yield back. >> i think the gentleman. in closing, i have a couple of questions that can be answered for the record. they tend to be a little complex. today we have talked specifically about tarp. that was the subject. we got into hamp, and my understanding that hamp is shared with another piece of legislation. it has joint funds and we did not get into that $30 billion obligated, all of that. if you would, and mr. barofsky has a very thorough quarterly report, but if you would try to create before this next 30-day update a good analysis so that the members can have your

interpretation of the outstanding funds, meaning -- and this is a question for treasury in consultation with the fed -- obligated funds remaining at the fed, because we're not the financial services committee said you have to give us a primer -- looking at funds committed in other programs, because i think that will help us understand where the money is still out that is either obligated or literally out. and that will help us 30, 60, and 90 days from now. it is very clear that we do still have major credible agencies that believe too big to fail is leading them to having more success in loaning money at lower amounts. that is a challenge for small banks and we certainly would like to work as a committee to ensure that as dodd-frank put in no action, that leads to a fading away of that as the president has promised that the time of its signing.

we also did not talk about and i like this included in your report or briefing sheet, the possible $145 billion that i believe is gone forever to the gses, the actual failure rate, which is often as we talk about the success of tarp, but forget about ready and fanny's actual back -- losses that we have backstop as a nation. one thing you need to treasury, most of us here in washington who had been in business have tried to convert understanding the federal government's pay-as- you-go accounting. in treasury, you're different. you are a hybrid. as i looked through reports which i believe people have furnished you with, a report we and that -- we had developed internally, i saw the accrual system of reserves come into play in a way that as a public company officer, i always question.

ok, you had reserves. you had a stated value, of mark to market value. you went back and stated them, restated them in this year for the previous year, and they got worse. however in this year, they got some much better, there's this $154 billion swing. and we will give you our source material because it berry -- it may well be that you can clarify it to be more simple. it is important because as i understand it, those numbers reflect on the anticipated deficit and other figures that we look at, and i think all of us want to know the true deficit in 2009 and 2010, and so on. but we would like it not to exist. but we will like to have the accurate numbers for them. lastly, the request. today we have been talking in net dollars. before talk again, i would like

the committee to have source material that you agree on preferably in the way that a normal business would do it, meaning, you represent a profit from investments he made, loans you make, and warrants, etc., that have been realized. they did not go as an offset against other bad deals. we're not looking for your net profit. what we would like to see is where you put the money in and what you lost. where you put the money in and what you gain. effectively, what we're saying is scraped up the profits and put them in the pile for the good deals, but any time of particular passage -- a particular basket, a company or an entity, had a loss, we like to see those losses. when we evaluate this program that never did what we anticipated but that something very different, it is important for all of us to see, ok, loans to solvent entities in certain

forms work. other things, not so much. some of these you cannot answer because general motors and chrysler is our projected but not yet final. we will take to projections. lastly i like to take the liberty and closing of reading what is a draft but we believe will be the final mission statement, because as a private- sector guy, i figured at some point when you takeover, if you have to make sure you have a mission statement matching what you like to see. and because this is our first hearing, i like to read it. americans deserve to note that money washington takes from them is well spent. americans deserve an efficient, effective government that works for them. our job on the oversight and government reform committee is to help americans secure these rights. our task is to hold government accountable to taxpayers, because taxpayers have a right

to know what they get from government. we will work tirelessly in partnership with citizens, watchdogs, to deliver facts to the american people that bring reform to federal raucously. this is our mission statement. hopefully we began today by asking you as you have done to help us in that effort. i think you and we stand adjourned. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2011] >> it redefined the presidency because it made it abundantly clear that my most important job was to protect the country. i made a lot of controversial decisions today that, many of

which i described in the book. the truth of the matter is that after i had to do them over again, i would've done them again. >> george w. bush talked about his best selling memoir with students from southern methodist university, sunday at 8:00 on "q&a." to end this weekend on american history tv on c-span3, we will tour the home of frederick douglass. texas a&m university professor jerry jones talks about the aggressive nabal diplomacy of woodrow wilson. from the nixon foundation, of focus on in -- daniel patrick moynihan, whose career spanned four presidential administrations. experience american history tv on c-span3 all weekend, every weekend. see the schedule online or you can press the c-span alert button and have the schedule e- mailed to you. >> the house has gaveled out for

the week. all legislative business for the week has been completed. the house has adjourned until tuesday, february 8, at 2:00 p.m. eastern. before leaving, if members passed a bill that and a taxpayer financing of protection election campaigns and party conventions. there is a portion of that debate. r. van hollen. the chair: the gentleman from maryland. mr. van hollen: thank you, mr. speaker. i thank my colleague. i rise in strong opposition to this measure which along with the supreme court's radical decision in citizens united takes our nation's campaign finance system in precisely the wrong direction. less transparency and less information for the voters. americans from across the political spectrum, democrats, republicans, independents, want less special interest money in politics, not more. they want clean, transparent and competitive elections and campaigns where candidates, those of us in thiroom, presidential candidates, rise

and fall based on the quality of their ideas, the strength of their arguments and their ability to attract support from the votes that are they seek to represent. what they don't want, what they don't want are campaigns decided byow much secret money flows into an election from secret outside groups. and they will no longer tolerate, i believe, those politicians turning around and saying to those citizens, you have no right to know who's paying for what in our political campaigns. you have no right to know who is paying for those tv advertisemts that you're watching. let's remember what we're talking about here. the current presidential financing system that this bill would eliminate arose from public outrage in theost watergate period. rather than presidential candidates trafficking in secret slush funds, our nation decisions that -- decided that our democracy would be better served by a system of public disclosure, contribution limits and emphasis on smaller dollar

contributions matched by the presidential financing fund. the system is voluntary. one line on your tax code. not complicated. and while not perfect, for most of its 36 years in existence, it has served this nation well. candidates from across the political spectrum, from ronald reagan to jesse jackson, have voluntarily participated in the presidential financing system. now, as a colleague on the other side mentioned, there is no doubt that the current law needs to be modernized. it needs to be fixed. we saw that in the last presidential election, but rather than throw out something that has served the country and the electorate well for 36 years, rather than throw it out let's fix it. and mr. price from north carolina and i and others have introduced legislation to do exactly that. so rather than shielding an avelampling of unlimited special interest money from public view,

we should shine a light on it, we should do it by modernizing the presidential system and also pass the disclose act which we could have brought up and voted on except for the previous question was just defeated. mr. speaker, at the end of the day our nation's democracy doesn't belong to presidents or members of congress. it belongs to the voters who send us here. and we have a solemn responsibility to safeguard it on their behalf and protect it for future generations, from the lessons of corruption in history, let's mend it, let's fix it, let's not throw it out. thank you, mr. speaker. the chair: the gentleman's time has expired. the committee will rise informally for the purposes of receiving a message. will the gentleman from nebraska kindly take the chair? the speaker pro tempore: the house will be in order and the chair will receive a message. the messenger: mr. speaker, a message om the senate. the secretary: mr. speaker. the eaker pro tempore: madam secretary. the secretary: i have been directed by the senate to inform the house that the senate has

agreed with s. 3, honoring the service and sacrifice of staff sergeant salvatore giunta, a native o iowa, in the first living recipient of the medal of honor since the vietnam war. in which the concurrence of the house is requested. the speaker pro tempore: the committee will resume its sitting. choipt chair sees the gentleman from illinois on -- the chair: the chair sees the gentleman from illins on his feet. are we going to go -- it will be the chair's inclinatn to represent the gentleman from california at this moment in time if you're going to do it all at the same time but the gentleman from california, mr. lungren. mr. lungren: thank you very much, mr. chairman. if it hasn't been requested already, i would ask that all members have five legislative days to revise and extend thr remarks. the chair: it's already been requested in the house. we can move on.

mr. lungren: mr. chairman, i rise today in support of h.r. 359 which terminates the taxpayer financing of presidential election campaigns and party conventions. at the outset i want to mention in response to something that was said by the otr side, th is absolutely nothing to do with the citizens united case decided by the supreme court. that changed not one eye oata campaign finance law. corporations still cannot make contributions to campaigns or candidates. it does not change that. citizens united had to do with the question of whether or not one loses his or her first amendment protections of free speech, particularly with respect to expressions of political nature, merely because they associate with another person. the supreme court told us that you do not in fact lose your first amendment rights because you happen to say itointly with someone else. so, as a matter of fact, they

pointed out that some people with the least amount of influence in a society actually expand their influence in the political debate by joining with others. and then the question of the supreme court, that the supreme court answered was that if at association happens to be corporate in nature, happens to be a union, happens to be a for-profit, happens to be a not-for profit, whether that changes the dynamic of contemplated by the rst amendment protections and they told us it did not. so let's g of that canarrd right abay. this has nothing to do with corporate contributions to campaigns or foreign contributions to camigns both of which remain illegal with criminal sanctions under the law. let's get that out of the way o

we don't have a lot of debate that doesn't have anything to do with the bill before us. mr. chairman, we find ourselves at a unique juncture in the long standing debate over this issue but the reality it's a juncture no longer. taxpayer financing of presidential elections and party conventions, the two major parties is simply no longer defensible. the first tax liability contributions for american taxpayers to be diverted toward the funding of psidential elections began 35 years ago in 1976. this new practice was as we were told by the other side, supposed to raise the public stress of the government and increase the number of candidates and thus electoral competition the financial footing between parties. i believe, mr. chairman, it has failed on all accounts. it did allow us to have lyndon larouche to be a participant in the presidential elections. i'm not sure when we've had someone who had been subjected

to a criminal conviction and conducted part of his campaign while still incarcerated, but that was brought to us by way of this fine law. in 1976 approximately $1.5 billion -- since 1976 approximately $1.5 billion has been spent on this system. as we speak there is a balance of $195 million sitting in the presidential election campaign fund at the u.s. treasury department. and yet this system of leak torle subsidies has not changed the public's perception of our presidential elections or our politics. according to one survey after another, americans continue to harbor deep distrust of elect officials. does anyone think our presidential elections have shown a virtual progression towards more accuracy and more honesty? mr. chairman, how many candidates, candidates who

supposedly believe in the system, have opted out of this taxpayer financing scheme in recent years? in004 and 2008 several candidateseclined public financing for their primary campaigns. and as was mentioned by the gentleman from illinois, during the most recent presidential election for the first time the nominee of one of our two major political parties withdrew from the public financing during the general election and instead went on to raise record amounts of money for his campaign and i recall when i thought we heard a pledge to participate in this program, because of the virtuous nature of the prram. somehow that was lost along the campaign trail. in addition to presidential primaries -- one of the things i would like to point out is this -- there is this idea somehow we are going to be able to suppress money that goes into politics. the fact of the matter is it's like a balloon. a water balloon. if you squeeze it on one side, it has -- comes out on the