financial advisers, anyone providing financial advice, educational classes, custodian of money, private pools of capital, municipalities who issue bills on utilities, waters, sewer, like that, waste collection, et cetera, courts dealing with fees, fines, taxes paid on installment basis for counties and municipalities, schools, tuition, installment, room and board, third-party agencies handling fee process ing, merchants, layaway plans, real estate activities, brokers, appraisers, title companies, auction nears, inspectors, survares, cockroach inspectors for homes are covered under this bill. what is fnshal about that snr doctors, issuers of credit, point of sale, lawyers, disbursing money to a trust account, real estate transaction. madam speaker, this bill is so pervasive that the term anybody involved in a financial transaction literally covers someone writing checks on behalf of his mother who is in a nursing home. this bill is dangerous. we can't proceed on a bill like this and have all these different groups that are impacted, most of these groups will have no idea they will be gov

these efforts have played n my view a significant role in arresting the financial crisis and financial markets have begun to recover. for that, mr. chairman, you and the federal reserve deserve, in my view, praise and gratitude for your role in preserving a far worse outcome than we might have otherwise seen. i believe that you deserve another term as chairman of the federal reserve and i intend to vote for your nomination, because i believe you are the right leader for this moment in our nation's economic history and i believe your reappointment sends the right signal to markets. while i congratulate foyou for these efforts, he remain concerned about the weaknesses in the regulatory system that allowed the financial collapse to occur in the first place which brings me to the second question. does the structure of the institution you oversee deserve to be maintained as it presently is constituted? today we have a regulatory structure, as i see t created by historic accidents as government reacted to problems with piece meal solutions over nearly a century. you and i, i think, agree tha

reforming our financial system is vitally important to creating a functional, sustainable financial system that american families and businesses can count on. we must not fail to enact adequate safeguards so that the mistakes of the past do not reoccur. topping our to-do list should be the enactment of a strong consumer financial protections that will keep our constituents safe as they rehabilitate their trust in our ability to effectively monitor america's financial health. in order to accomplish this goal we need an independent agency whose sole purpose is to protect and empower consumers to make informed, financial decisions. the new cfpa, our consumer financial protection agency, would go a long way toward that end. restoring vital protections that were absent and dealer needed toward the build-up to our financial fallout. the committee has made significant improvements to this bill. one of the initial concerns we heard was that companies who do not engage in consumer financial business would be regulated by the cfpa. merchants, retailers, doctors, realtors and others, some suggested,

markets, our financial system.e were extremely concerned that the collapse of these large firms in a disorderly way would have very adverse affect on the broader economy and the broader global economy. the evidence is baldwin brothers is that we were right, that the collapse of these firms is very destructive -- the evidence is, with lehman brothers, is that we were right, the collapse of these firms is very destructive. the reason we did not save lehman brothers was but a conscious choice. given the limited powers that we had, the only power we had was the lending authority against collateral, which were unable and did not have the tools. it was not a conscious choice. it was something we could not do within our legal authority. if we are going to avoid this crisis in the future and avoid the very unpopular bailout that were so did with it, we have to have a better system. congress is working on that. i very much support that approach. >> let me ask one more question. what is the best thing about being chairman of

and unfair financial products. and mr. president, not since the great depression has the financial system been as unsafe and unsound and unstable as it has been during mr. bernanke's tenure, more than 120 banks have failed. since he has been chairman and the list of troubled banks has grown from 50 to over 416. and mr. president, mr. bernanke has failed to prevent banks from issuing deceptive and unfair financial products to consumers. under his leadership, mortgage lenders were allowed for issue predatory loans that they knew consumers would be unible to repay and this risky practice was allowed to continue long after the f.b.i. warned in 2004, of an epidemic in mortgage fraud. and here's what the bottom line is, the bottom line is -- is that -- that -- there are key responsibility of the fed is to maintain the safety and soundness of our financial institutions, and -- they failed. and they failed. and as a result of the greed and speculation on wall street, which the fed should have been observing, which the fed

the chairman of financial services. and i hope we can continue the house and the senate moves these bills to figure out a way to make sure that we have the maximum amount of transparency as we did in the financial services version of the bill. with that, i thank the gentleman for yielding me time to raise this issue. the speaker pro tempore: the gentleman's time has expired. the gentleman from texas. mr. sessions: without challenging the gentleman's words on the floor, i challenge anyone to think that there'll be $600 trillion worth of derivatives business that has taken place in this country. madam speaker, at this time, i'd like to yield two minutes to the gentleman from lubbock, texas, the gentleman from the financial services committee, mr. neugebauer. the speaker pro tempore: the gentleman is recognized. mr. neugebauer: i thank the gentleman. secretary geithner gave my colleagues on the other side of the aisle a christmas present yesterday he extended their revolving slush fund until october of next year. going dow

facing the financial system is critical to restoring faith in our financial institutions and markets,tween our recommendations and the specifics in the bill that have come out of the house financial services committee and are now being considered by the senate banking committee. our task force members came into the process with very different views. much like the differences you see in congress. we debated these views intensely, but calmly, and we learn from each other. and for my part, there were a few mines change, including my own, on some issues. what we did not cover the waterfront and some members with a prepared -- would have preferred a different approaches, we came up with a package of principle reforms that we believe would be a significant improvement over the status quo. bob steele will elaborate on some of the specifics. here are mine. we need monarch in by an oversight council for the financial agencies. specifically, this council on its own initiatives or upon recommendation of the fed should add to minimum standards for capital, liquidity, margin, and leverage to preve

funds unless necessary to respond to immediate financial threat to our economy from financial stability a determinationly only make after consult wgs the president and chairman of the federal reserve board and submitting written notification to congress. fourth we will continue to reduce our financial stake in banks and manage our down other investments we will keep the government out of the business decisions of these companies and we will exit from our investments as soon as is practical and return ownership to private hands. this strategy requires a limited temporary extension of the authority provided by the congress under the emergency economic stabilization act. it would be irresponsible to do otherwise. the expected cost of the t.a.r.p. have fallen dramatically. while we're extending the program we do not expect at this point to deploy more than 550 billion in total. we also expect up to $175 billion in repayments from banks by the end of next year. substantial additional payments thereafter and as a result we know expect the ultimate cost of t.a.r.p. will be at least $200 billio

from sending shockwaves throughout the financial system. the compromise was the agriculture and financial services reach was to bring greater transparency and oversight to these markets. we must provide necessary jeefer sight. this compromise strikes a careful balance and protects use of derivatives by so-called end users who hedge the cost of their operation. whether dealing with grain, energy, steel or financing, american companies use derivatives to lock in prices to plan for the future. when the agriculture committee first considered this, i offered an amendment to require mandatory clearing. i'm pleased to see this compromise with the chairman maintains this concept. clearing exposes a credit risk which up until now has been hidden behind closed doors. while every derivative does not need to be cleared, it will be make sure that will all classes have the clearance. it ranges from 400 to $600 trillion. to allow something this massive that impacts every american to continue to operate unregulated is simply not acceptable. this legislatio

last year the financial system, credit was overextended and financial firms were overledged to a pointthat was unsustainable. .pm unsustainable. sec are tear paulsen said we may not have a market on monday. so more than a year later, well past time for congress to take the next step and create strong, clear rules for wall street. i believe in free and hope markets, but i don't believe in letting people game the system. this bill will make sure that can't happen by number one, ending too big to fail, and putting an end to taxpayer bailouts, and number two, preventing future bernie may dauf ponzi schemes, and number three, strengthening consumer protections. i worked with my colleagues in our committee offering amendments to strengthen this package, such as the moore-meeks amendment to have big institutions to ensure stress tests to ensure that they're fully prepare nerd worst. and second my amendment to strike qualified receivership, a form of conserve toreship that would have allowed the government to revive a failing firm. the amendment ensures the next a.i.g. or lehman brothers will

would it be the fed or would it be a new financial regulator? >> i think the one with the most experience is the fdic. they would say a significant role. the fed is not interested in being part of this process except insofar as congress sees temporary liquidity as part of the wind down process. we do not want any more aig's or lehman brothers. we want a well-established system that can be used to wind down these companies and let creditors take losses, but without destabilizing the whole economy. >> i am concerned we will not reestablish the kinds of proper approaches and principle of moral hazard until we end tarp and provide an exit strategy and decide how we will proceed with fannie mae and freddie mac. would you agree? >> i do agree. they have to be addressed, but under the current situation, the tarp was used to bail out companies and make them whole under a well-designed resolution regime. many creditors should lose money which would create market discipline going forward, which is what is needed to avoid the moral hazard. >> the recent qu

markets, our financial system.hat the collapse of these large interconnected firms in a disorderly way would have adverse effects on the broader economy and the global economy. i think the evidence is that we saw following lehman that we were right. the collapse of these firms is very destructive. we're very consistent in their best to save and protect the system from the collapse of these firms, all of them. the reason we did not say lehmans was not a conscious choice, but as i have said many times in public, given the aloud -- the limited powers that we have, the lending authority against collateral, we were unable and did not have the tools. it was not a conscious tool -- a conscious choice is something we could not do. that is why it is so essential, if we're going to avoid this type of crisis in the future and avoid the very unpopular and deservedly so bailouts associated with it, we have had a better system. congress is working on that and i very much support that approach. >> let me ask one more question. wh

n ain a financial panic generalized financial ron, if you see cascading defaults like this on any type of contractual financial contract, that will accelerate cannot mitigate the panic. again, nothing would have been better if there was a solution in place in this case where you could have negotiated instead about comes that left the taxpayer with less exposure of losses that has no realistic prospect of success in a financial panic of this magnitude. resolution of 40 but mix of the trees is a little bit easier. but there are no good choices in a panic like that. >> i would conclude after derivatives -- if derivatives are the kind of instrument that are having the kind of importance in the markets in which 100 cents on the dollar is necessary in a crisis we need to regulate them as such. >> and impose sweeping changes to how derivatives are treated and regulated under markets because of that risk. >> thank you. superintendent neiman? >> i would like to me in on the aig issue just to confirm that there is not necessarily a consensus on this viewpoint on the panel but also more important

system, then the financial collapse occurred. and what happened? what the fed did is provide not only -- not only the -- that congress put $700-plus billions of dollars into the bailout, the fed provided several trillion dollars -- trillion dollars of zero interest loans to large financial institutions. and, mr. president, when i asked chairman bernanke which financial institutions received these zero interest loans, the answer was, i am not going to tell you. not going to tell you. mr. president, the reason that congress, against my vote, bailed out wall street is they were too big to fail. large financial institutions were too big to fail. well, since the collapse, three out of the four largest financial institutions have become even larger. so the systematic danger for our economy is today even greater than it was before the bailout. mr. president, the american people want a new wall street. they want a wall street which begins to respond to the needs of small business so that we can begin to create jobs, not just to wall stre

lastly, on financial reform, all of the executives discussed their support for the concept of financial reform. the president said clearly that he and the administration were hearing something markedly different from their lobbyists and from organizations that they funded to lobby on their behalf. the president reiterated that financial reform was a big priority to him and to the american people, to ensure that the crisis we saw never happens again, and he suggested that they find ways to be more vocal about the support that they discussed on financial reform. so that is a quick rundown of notes from that meeting. and we'll start with mr. hurst. >> robert, moving off that topic to afghanistan, general rodriguez said today that it's now going to take nine to 11 months to move the 30,000 troops pulling into afghanistan. and the impression i think left after the president's speech at west point said this was something that was going to be happening within six months. what's happened there? >> well, i would point you to the remarks that secretary gates and others made in testifying in front

financial innovation in many financial centers around the globe. now looks increasingly like never land. financial voodoo if you will enabled by a gross abdication of regulatory authority. for those who have been financing our debts not just the people's republic of china but also central bankers of saudi arabia, in japan, and elsewhere, while the u.s. still remains perhaps the dominant preserve or national savings but it no longer seems quite the unshakeable paragon that it once did and this suggests that we may see a continuation of a marginal shift, a marginal shift away from the dollar into other currencies into investments elsewhere. there are also significant forces at play inside china that make it less likely that we can just simply depend on the money continuing to flow this way and continuing to bail us out of our credit excesses, not along the coast the fact that so many american households are now so strapped that we're not going to the mall buying as many chinese-made goods as we used to and that means china has fewer dollars to send b

are transported to other financial institutions. could you elaborate on that piece of the puzzle, on the role of derivatives on too big to fall. how do we reduce that risk? >> i don't think that derivatives are by any means the only issue. we have had destructive crises where that were not the point. in this crisis, they were not proep rately overseen. they were not protected by capital or reserves. the classic case was aig. they had a lot of one-direction nal bets. they didn't have reserves of capital behind that. when the bet went wrong, then the company came under a lot of pressure. one thing that the aig example illustrates is that derivatives have the risk associated with the outcome but counter party risk. those people who are holding aig insurance faced not only the possibility of loss because of the underlying but because of the possibility that have aig could not pay. so clearly, making derivatives safer both this terms of the operational sense in terms of the way they're traded and protecting against counterparty risk is a

markets, our financial system. we were extremely concerned that the collapse of these large interconnected firms in a disorderly way would have adverse effects on the broader economy and the global economy. i think the evidence is that we saw following lehman that we were right. the collapse of these firms is very destructive. we're very consistent in their best to save and protect the system from the collapse of these firms, all of them. the reason we did not say lehmans was not a conscious choice, but as i have said many times in public, given the aloud -- the limited powers that we have, the lending authority against collateral, we were unable and did not have the tools. it was not a conscious tool -- a conscious choice is something we could not do. that is why it is so essential, if we're going to avoid this type of crisis in the future and avoid the very unpopular and deservedly so bailouts associated with it, we have had a better system. congress is working on that and i very much support that approach. >> le

immediate financial threat to our economy from financial stability.fter consult wgs the president and chairman of the federal reserve board and submitting written notification to congress. fourth we will continue to reduce our financial stake in banks and manage our down other investments we will keep the government out of the business decisions of these companies and we will exit from our investments as soon as is practical and return ownership to private hands. this strategy requires a limited temporary extension of the authority provided by the congress under the emergency economic stabilization act. it would be irresponsible to do otherwise. the expected cost of the t.a.r.p. have fallen dramatically. while we're extending the program we do not expect at this point to deploy more than 550 billion in total. we also expect up to $175 billion in repayments from banks by the end of next year. substantial additional payments thereafter and as a result we know expect the ultimate cost of t.a.r.p. will be at least $200 billion less than was projected as r

funds unless necessary to respond to immediate financial threat to our economy from financial stability a determinationly only make after consult wgs the president and chairman of the federal reserve board and submitting written notification to congress. fourth we will continue to reduce our financial stake in banks and manage our down other investments we will keep the government out of the business decisions of these companies and we will exit from our investments as soon as is practical and return ownership to private hands. this strategy requires a limited temporary extension of the authority provided by the congress under the emergency economic stabilization act. it would be irresponsible to do otherwise. the expected cost of the t.a.r.p. have fallen dramatically. while we're extending the program we do not expect at this point to deploy more than 550 billion in total. we also expect up to $175 billion in repayments from banks by the end of next year. substantial additional payments thereafter and as a result we know expect the ultimate cost of t.a.r.p. will be at least $200 billio

why did they bail out the financial system? was it because hank paulson any of his buddies on wall street are you take your guys, or do they have some broader social purpose? i actually think, although it's not mr. potter, at least not in this zip code, that he did the right thing because the alternative was worse. when bernanke one of 60 minutes he sat on a park bench on main street where his father's store had been. if it had been called wall street he would have been dead. [laughter] >> and he said i didn't set out to save wall street. i set out to save main street in order to save mainstreamed i had to save wall street that when you go out the financial system, that people make their money and don't financial institutions get bailed out. and that just happen. the question is, what, are we charging him enough money for this great service we did. we will see when it is in. , pay back their money. it's been a pretty healthy return for the taxpayer. the other thing are going to enough so that we are not in this situation again

reforming our financial system is vitally important to creating a functional, sustainable financial system that american families and businesses can count on. we must not fail to enact adequate safeguards so that the mistakes of the past do not reoccur. topping our to-do list should be the enactment of a strong consumer financial protections that will keep our constituents safe as they rehabilitate their trust in our ability to effectively monitor america's financial health. in order to accomplish this goal we need an independent agency whose sole purpose is to protect and empower consumers to make informed, financial decisions. the new cfpa, our consumer financial protection agency, would go a long way toward that end. restoring vital protections that were absent and dealer needed toward the build-up to our financial fallout. the committee has made significant improvements to this bill. one of the initial concerns we heard was that companies who do not engage in consumer financial business would be regulated by the cfpa. merchants, retailers, doctors, realtors and others, some suggested,

>> oh i don't think these rules alone will prevent another financial collapse. i think that what happened today in the congress, with the regulator its are doing, the other initiatives promoted by this administration, i think if you look at the entire package, as well as what foreign governments are doing. the secretary of the treasury and the g-20 urging foreign governments to do these things, i think if you look at the whole panapoly of reforms together as a package, there is a real attempt by the federal government to rein in excessive risk-taking on the part of 9 financial services industry. >> woodruff: what about what some of these countries have done, in the u.k., in britain, in france they are taxing these bonuses at what, 50% tax. is that something that would fly in this country do you think? >> i, again, i defer to others. i have enough problems dealing with my own statute. but i will say this, although these other countries may try various alternative creative measures, what i find particularly interesting is that as a result of the secretary of the t

markets, our financial system. we were extremely concerned that the collapse of these connected for -- connected firms in a disorderly way would have a greater effect on the broad economy. the collapse of these forms -- these firms is destructive. we did our best to save, protect, the system from the collapse of these firms, all of them. reason we did not save lehman brothers was not chores, but as i have said, given the look very limited powers we had was the lending authority against collateral. we were unable but it did not have the tools. it was not a conscious choice but it was something we could not do within our legal authority. that is why it is so essential, again, if we're going to avoid this kind of crisis in the future and avoid the very unpopular and deservedly so bailouts associated with them, we have had a better structured system. congress is working on it. i very much support that approach. >> let me ask one more question. what is the best thing about being chairman of the federal reserve board? [l

the churches cause the financial meltdown? no. why not address the disconnect among existing federal agencies before layering on another one. are we creating a new agency. we need straightforward derivative reform and don't need regulation that charges regulators with creating a one size fits all approach to regulate compliance and justify mandates and kill jobs. this crackdown on illegal and deceptive activity, regulate gaps and strengthen enforcement agencies. we should have transparency and accountability on wall street that will discourage and never say that those too big to fail. that's what our republican alternative aims to do. my republican colleagues on the financial services committee and i have offered every step of the way solutions for stronger financial regulations and yet the bill, mr. frank's bill steamrolls ahead and threatens to weaken the competitiveness of our markets and tie the hands of businesses, limit consumer choice and this bill is an overreach and overreaction and should be thrown overboard. we need bip

we are in a crisis now, if financial crisis, -- a financial crisis, and we have a foreign policy thatis a major reason we are in the financial crisis. we spend over $1 trillion per year maintaining our empire or on the world. we're still in korea, japan, germany, all over the middle east. the speech by the president the other day was conditioning as for the next war in pakistan. -- conditioning costs for the next war in pakistan. what you do is bring the troops home, save the money, defend this country. it is our presence, especially in the middle east, that motivates people to become a radical extremists and potential terrorists that will commit suicide. it is because they detest occupation of their land. we get into trouble and we think, oh, we need to occupy more countries, only compounding our problems both internationally and for safety, but also compounds are financial problem. i think the worst thing we could do is to raise taxes for the war. host: last call on the republican line. caller: i saw that twitter message about your running in trade -- in 2012. i am one of those coll

international mobility or financial capital was virtually nonexistent until the early '80s. i don't think we're going back to the system. first of all, the u.s. will not do it unilaterally all it would mean is the activity would shift from the u.s. to samarra else. and i spoke this money to the financial condition there's the issue of poor regulation of nine enforcing existing regulation which is also a part of the problem, the fact a complete ignorance of leverage in some firms that became too big to fail. i think the issue that is going to be seriously revisited i don't say we will return to a glass-steagall world where everything was regulated and in response to the great crisis of the thirties but i do think there will be changes of regulation that try to limit this is what i answered the previous question that limits the amplitude of the cycle and by that i mean things to avoid the kiss of death and the rating agencies they can upgrade you during the boom therefore you can borrow more and you can amplify the boom bust pattern. those will be revisited but broadly speakin

they see that government bailed out the financial service industry. they see that many of the executives of the financial services industry gets big losses, and they see people in the counties in the financial services industry charging these kinds of these two generally working-class consumers. that just doesn't -- i just hope the people from industry on this panel and others in the audience understand the frustrations, fair or not in those assessments, understand the frustrations of so many americans have with how their government is treating them, how wall street is treating them, how banks, and i don't latest at the feet of the community bankers, but how banks are treating them and how their lives are going in these very tough economic times. >> we don't often enough to the dissension between community banks or even a large investment banks. i always promised by so i will draw that distinction when we gather because it is important to use the word banks across the border it draws draws an awful lot of people who do a very good job. so we thank you

host: the house on friday passed a financial regulations bill. one of the and then is defeated was one by john conyers and others that would have allowed bankruptcy judges to write down or unjust mortgages. would that have been a good thing? guest: bill, that is one of the most powerful tools that could actually move this foreclosure crisis forward in terms of modifying loans. essentiallyÑi what it says is a home would be treated like any other major asset -- a luxury yacht, rental property. in the event you are struggling to pay your mortgage, you have access to a bankruptcy judge and that judges -- not talking consumer advocate, but that bankruptcy judge will be able to look at the consumer's perspective, from a consumer and lenders perspective, and strike a reasonable deal that would allow them to maintain their home and at the same time be something working in the interest of the investors as well. that was defeated. the problem was that of that lot alone would resolve -- could result as much as 30% of the crisis at no direct cost to the taxp

. >> in a financial panic, in a generalized financial ron, if you see cascading defaults like this on any type of contractual financial contract, that will accelerate cannot mitigate the panic. again, nothing would have been better if there was a solution in place in this case where you could have negotiated instead about comes that left the taxpayer with less exposure of losses that has no realistic prospect of success in a financial panic of this magnitude. resolution of 40 but mix of the trees is a little bit easier. but there are no good choices in a panic like that. >> i would conclude after derivatives -- if derivatives are the kind of instrument that are having the kind of importance in the markets in which 100 cents on the dollar is necessary in a crisis we need to regulate them as such. >> and impose sweeping changes to how derivatives are treated and regulated under markets because of that risk. >> thank you. superintendent neiman? >> i would like to me in on the aig issue just to confirm that there is not necessarily a consensus on this viewpoint on the panel but also more

i should note that around the table, all the financial industry executives said they supported financialgulatory reform. the problem is that there is a big gap between what i'm hearing and the white house and the activities of lobbyists on behalf of the institutions or a suspicious of which they are a member up on capitol hill. -- or associations of which there are a member of one couple mildred urge them to close that gap and i assume it will make every effort to do so. it is not to dictate to them or manage -- or micromanage their compensation practices. it is to ensure that consumers and -- my job is to ensure that consumers and the larger economy are protected from risky speculation and predatory practices that credit is flowing and businesses can grow and jobs are being created at the pace we need. some of the banks and financial institutions have taken small but positive steps to improve lending, small and medium-size businesses, as i indicated. they become reworking mortgages that are under water because of a decline in home values. the have acknowledged that much more needs to be

how the problems in the financial sector would move to the real economy or how severe the financial crisisld be. that was his answer to me. in those, i thought, those were the kinds of things regulators or the fed in mare were paid to understand and a half. we shouldn't be paying fed chairman to get it wrong or to learn on the job. just like the consumer protection. chairman ben bernanke did not take the job of regulating the ban bes under the fed's authority seriously. instead of closed supervision of the biggy and most dangerous banks he allowed them to grow balance sheet and increase risk. at the same is true about the derivatives. after taking over the fed, he did not see a need for serious regulation of derivatives until it was clear they were headed to a financial melt down thanks in part to those very products. even worse than those flawed policy i mentioned, chairman ben bernanke destroyed independent of the federal reserve and bowd to the political oppression of the bush and obama administration and turned the fed into an arm of the treasury. walking arm and arm with treasury, cha

funds unless necessary to respond to immediate financial threat to our economy from financial stability a determinationly only make after consult wgs the president and chairman of the federal reserve board and submitting written notification to congress. fourth we will continue to reduce our financial stake in banks and manage our down other investments we will keep the government out of the business decisions of these companies and we will exit from our investments as soon as is practical and return ownership to private hands. this strategy requires a limited temporary extension of the authority provided by the congress under the emergency economic stabilization act. it would be irresponsible to do otherwise. the expected cost of the t.a.r.p. have fallen dramatically. while we're extending the program we do not expect at this point to deploy more than 550 billion in total. we also expect up to $175 billion in repayments from banks by the end of next year. substantial additional payments thereafter and as a result we know expect the ultimate cost of t.a.r.p. will be at least $200 billio

he was bold in using the powers of the fed to stabilize the financial system.t was a really dangerous, chaotic situation. we could have had domino effect, big institution after big institution going down and a total meltdown you of the financial system. he avoided that. >> lehrer: but you don't believe -- you don't buy professor galbraith's captain of the ship analogy -- right? that it happened to his watch so he should go? >> no, i don't. i don't have a good explanation of why so many people who watched the fed carefully and who watched the markets carefully missed this crisis, but almost all of us did, and i don't think bernanke, who came in rather late in the development -- he took over the fed in 2006 -- now, they might have acted more quickly in 2006 and 2007, before the crash, but nobody saw this coming, and i don't think it's fair to say bernanke should have seen it when nobody else did. >> lehrer: what about that, professor galbraith? nobody else saw it. why should bernanke have seen it? >> i might go to court and change my name to "nobody." there were

we unlike a lot of financial publications do not give personal finance advice. i think for reasons that are very consistent with the perspective which is to say what you should do with your ith your money is so specifically dependent on your particular situation, how close are you to retirement? do you rent or own? do you expect to inherent money? do you have children in college? there are so many variables that go into it. to construct advice that would be useful for everyone is to automatically construct advise that is close to meaningless. with that said i think one of the things that comes across consistently, but the debt is to be taken seriously and almost brutally. individuals and governments will create major headaches were themselves to take on too much debt. you never know when the market is going to go into the tour toilet. predicting when is near impossible. even our current prices, there here are a handful of economists that have been warning about this quite severely for years, but no one could say it will happen on date x. holding a lot of debt ca

and the financial system. the fed took actions that often appeared to be ad hoc and piecemeal. the to quote dr. scwharts, owe yet failed to arctic late its own goals. the market was thus bewildered when the fed rescued certain firms and not others. mr. bernanke ultimately failed to convince the market the fed had a plan and was not performing in an ad hoc fashion. under chairman bernanke, the federal reserve also vastly expanded use of its discount window including the provision of funds to institutions over which the fed had no oversight. the fed, as you know, also created new lending facilities to channel liquidity and credit to markets that were deemed most stressed and systemically important. the fed's balance sheet ballooned from a pre-crisis level of around $8 lunz billion to more than $2.2 trillion through credit extensions and purchases of risky private assets, gse debt and, of course tresh dee debt. some fed actions in the recent crisis were innovative ways to provide liquidity to a wide variety of fi

it is true coming out of a worldwide recession, financial crisis, we do not see the conditions in financial markets that would suggest that is tomorrow. but it does not mean you should just go along your way. we should take action. >> if markets are forward looking and somewhat better than governments in seeing the future, you look into the future and you see the fiscal catastrophe, why aren't we seeing this in yields for long- term bonds? >> you have to assume two things. number one, the aftermath of the financial shock where you did see people with flight to u.s. treasurys, whether it is a -- rational or not, traditional place to go. number two, financial market accounting on the government to get its act together. the last thing you want to do is disappoint them and that expectation. like alice said, commit now to credible policies in the future, could have dramatically beneficial impact on our performance. >> thank you. jim jones, another former budget committee chairman and house, a democrat, and among things, former u.s. ambassador to mexico. doug mentioned that unlike in the past, th

companies that caused this financial crisis.ould allow congress to show that we have the -- a plan in place for the recooperate of any shortfall consistent with the promises made during the debate over the emergency economic stabilization act. it will also ensure that the american public understands that we are not turning the page on tarp, but instead that we have a clear and decisive planner for making sure that taxpayers are made whole. i reserve the balance of my time. . the chair: the gentleman reserves. for what purpose does the gentleman from texas rise? helkshelks to claim time in opposition. the chair: without objection, the gentleman is recognized for five minutes. mr. hensarling: if this body really cares about protecting the taxpayer against losses in tarp, they will have an opportunity to show it later today. and that is vote to end the tarp program. now, we can have a debate about what tarp was, but the more relevant debate is what tarp is. and today tarp is nothing more than $700 billion of walking around money fo

but relatedç to that, front pae of "the financial times," it jeffrey m.ates, chief of general electric, in a speech -- jeffrey immelt. here is a little bit of the reporting of the story. host: a very different view from the government of new york, david paterson, gives wall street a "thank you." host: there are some different views. we would like to hear yours. but first an update from "roll call" about continuing unveiling of the compromise proposal on health care. emily, good morning. your front-page story has this headline appeared i was struck by comparison. pittsburgh post-gazette has a headline that says health bill deal thrills democrats. what is known and not known? guest: i think what they know about that they are encouraged. i would not say thrilled. in fact i was talking to senators yesterday who were not thrilled at all. however, i think people -- there is a spirit of cooperation, i think, trying to come to consensus. that is certainly clear. and people want to at least wait to see what the congressional budget office says about what this grou

i should note that a round the table the financial industry experts said they supported financial regulatory reform. the problem is there is a vague gap between what i am hearing in the white house and lobbyists -- there is a big gap between what i am hearing in white house and the lobbyists on capitol hill. i urge them to close that gap, and they assured me they would make every effort to do so. in the end, my interest is not in vilifying one person or institution or industry. it is not to dictate to them or micromanage their compensation practices. it is to insure consumers and the larger economy are protected from risky speculation and predatory practices, that businesses can grow, and jobs are once again being created at the pace we need. some of the banks and financial institutions have taken small but positive steps to improve lending to small and medium-size businesses. they have begun reworking mortgages that are now under water because of declining home values, and they have a knowledge much more needs to be done going forward. many have begun to follow our lead, switching from shor

we have $3 billion in financial services to go to that.lions more can go into that program in and of itself. that is targeted and focused. we ask for no more and no less than what wall street did. wall street is just as important as our community. >> we have another question. >> it is clear that we are in a job crisis but we are also in a very serious situation as it relates to structural unemployment. economists are telling us that the national rate of unemployment is going to shift from 5% to 7%. part of what we are saying here is this targeted job creation needs to respond to what could be, if you don't operate quickly, lasting, chronic unemployment situation for people. when a person loses their job that creates an enormous hole in their resumes which hurts employment chances in the future and impact children, children growing up in poverty have more detrimental statistics on nearly every measure. what we are talking about is even the generational problem that we are trying to fix not only with the crisis but what could be if we don't

he was very upset that if they failed it would have a bad effect on the financial system. so bad that he had somehow arranged -- i never could understand how-- a bailout , massive amount of money for those days to bail them out. >> reporter: bailout the pen central. >> bail out the penn central. so i think this is a lousy idea. i'm arguing with arthur burns and half of me is saying to myself, what am i doing arguing with arthur burns about the financial system? he knows more about it than i do. and in an odd moment a man walked in and said, mr. president, the penn central in its infinite wisdom has just hired your old law firm to represent them in this matter. under the circumstances, you can't touch this with a ten-foot pole." so no bailout. penn australiaed ... central failed. no dominos fell. >> reporter: did they think they might have been bailed out by the government? >> i'm sure they did. >> reporter: so we have the long shoreman's strike, penn central. plenty of examples. bring us to the present. why did everyone then presume that financial institutions were going t

i am on the president's financial advisory council and what we would say about financial literacy or what i would say is it is the target rich environment. there are as lots of work that needs to be done. the more you can educate folks that they need to save and have that the emergency fund, maybe have some opinions on where the best place for them to save is, you will have to do a little work on that side of the equation to see if they have an institution with the best savings interests at heart. there are two parts of that. then i have to have the programs you can come to and have an easy start certificate where they can start their savings at a small level. >> it surprises me that banks and credit unions would not want to have savings programs and to market those. poor business model to gathered deposits. i think that the current situation will end up, again, tightening up the situation a little bit so that people can look at the institutions that are offering new and diverse ways to save and to -- the programs that work for them. >> before opening this up to all of you i would li

did financial journalism, did everyone really do their job? then you go back and read the journal and elsewhere, and you find a fair amount of people who did great pieces that did not draw in any kind of attention at the time, because people do not want to hear a negative story. they just want to hear, there is an amazing merger in china. although growth is great, but people do not want to hear warnings. >> we were hearing this question, is a doll becoming opinion? people who criticize this -- is it all becoming opinion? people who criticize the stories did not say, this is an outrage. that is not our job. it is your job to figure out if it is susceptible. >> i did a story in 2006 were two people are talking about whether there is going to be housing crisis or not. the guy has now become famous as the great doomsayer. i was denounced in one place for having tried to cause housing prices. it was clear that the presenter favor the opposition of nouri al ribini. >> are people really doing the job, now that they are given the opportunity because p

the entire financial system of the u.s.ould have collapsed, and goldman sachs right along with it. Ñito hear them saying banks, but no things and we did not need the help -- in washington that is the height of arrogance. you have wall street's problems looking at washington with no understanding. you have this culture clash with all at stake. lloyd blankfein will be there at the white house. goldman sachs announced last week that they are changing composition of their top executives, the 30 most powerful will now get special stock instead of cash bonuses at the end of year. it is designed to keep their interest in line for the next five years or so with goldman sachs, so they don't get paid unless the firm does well. that is designed to appease reformers. reformers say you give a executives incentive to loot the company in the short term without incentive. many think that is what happened with the 2008 meltdown. host: goldman sachs field the aig gambles. the firm says the problems were hidden in some of these financial prod

we are in a crisis now, if financial crisis, -- a financial crisis, and we have a foreign policy thatis a major reason we are in the financial crisis. we spend over $1 trillion per year maintaining our empire or on the world. we're still in korea, japan, germany, all over the middle east. the speech by the president the other day was conditioning as for the next war in pakistan. -- conditioning costs for the next war in pakistan. what you do is bring the troops home, save the money, defend this country. it is our presence, especially in the middle east, that motivates people to become a radical extremists and potential terrorists that will commit suicide. it is because they detest occupation of their land. we get into trouble and we think, oh, we need to occupy more countries, only compounding our problems both internationally and for safety, but also compounds are financial problem. i think the worst thing we could do is to raise taxes for the war. host: last call on the republican line. caller: i saw that twitter message about your running in trade -- in 2012. i am one of those coll

there's no definition of what orderliness means in financial parlance. without that word defined -- without that word, the section has power and this would remove a word that seems nebulous, without a common understanding. second amendment number seven, in the language of the underlying bill, the section creating the systemic resolution fund indexes the amount to inflation, where any mitt gaer to mitigater to -- this would index those amounts. amendment number -- burgess number 11. the metrics of what determine significantly undercapitalized will be determined by rule or regulation. in the language of the underlying bill, title 1 portends to elaborate on what significantly undercapitalized mean but it neither gives a fixed dollar amount, a ratio or a formula. without a specific formula, this is left too much to individual interpation, just like on page 494 of the bill where substantial net provisions requires a specific definition by rule making, significantly undercapitalized, should be defined in rule or regulation and i would further point out that th

it has a financial crisis.are in two wars, and what the republicans are doing and saying, we want to read every word for hour after hour after hour? we want to obstruct any movement in the united states senate? i think the american people do not believe that that is what we should do when our nation has so many serious problems. i think it is sad. >> the think you will end up voting for the manager's amendment? >> i been a strong proponent of the public option. the reason for that is two reasons. number one, there is huge dissatisfaction with private insurance companies. people believe quite correctly that function of the private insurance company is to make as much money as possible. i share that concern. the second is that you need to build into this legislation strong cost containment mechanisms. as i said a million times, the only way i would know that you have real cost containment and comprehensive universal health care, is eight medicare single payer bill. but if you do not have that, you have to provide

he said the fed did not understand the relationship between financial firms, how problems in the financialisis would be. that was his answer to me. in those i thought those were the kind of things regulators or the fed in particular were paid to understand and address. we shouldn't be paying fed chairmen to get it wrong or to learn on the job. just like the consumer protection, chairman bernanke did not take the job of regulating the banks under the fed's authority seriously. instead of close supervision of the biggest and most dangerous banks, he allowed them to grow their balance sheets and increase risk. the same is true about derivatives. after taking over the fed he did not see any need for serious regulation of derivatives until it was clear that they were headed to a financial meltdown, thanks in part to those very products. even worse than those failures and flawed policies i just mentioned, chairman bernanke destroyed the independence of the federal reserve. he bowed to the political pressures of the bush and the obama administrations and turned the fed into an arm of the treasury

financial sec ter would move to the real economy or how severe the financial crisis would be.that was his answer to me. in those -- i thought those were the kind of things regulators, or the fed in particular, were paid to understand and address. we shouldn't be paying fed chairmen to get it wrong or to learn on the >> he did not take this job seriously. under the supervision of the most dangerous banks, he allowed them to grow the balance sheet and increase the risks. and the same is true about derivatives. after taking over the fed, he did not see any need for serious regulations of derivatives until it was clear that they were going into a financial meltdown, because of the projects. with those fears and flawed policies, bernanke destroyed the independence of the federal reserve. he bowed to the political pressures of the bush and the obama administrations, and turned the fed into an arm of the treasury. walking arm in arm with treasury, he bailed out of the large financial institutions, including many foreign banks. he put the printing press into overdrive, funding the gov