let me walk you through the decision to purchase merrill lynch. we made the decision in september of 2008. we did so because we saw the potential benefits i just described. we did so without any promise or expectation of governmental support. in-december i was advised merrill lynch raised forecasted losses and recontacted the federal reserve to inform them we had concerns about closing the transaction. as a matter of contract law, this can propel to consummate a deal. federal and treasury reserve asked tus to delay action and expressed significant concerns about the systemic consequences and the risk to bank of america. we explore government support. we both were aware the the system was in fragile condition and a collapse could hasten the crisis. bank of america concluded that proceeding with action with governmental support was the better course. this made sense for bank of america and shareholders. it made sense for the marks. i believe committed people with good intentions in the private sector and the government were desperately hard in late

countrywide and merrill lynch. it does not appear to beny debate these were in the best interest of the financial system, the economy and the country. the failure of countrywide could have destabilized an already crippled market. merrill lynch could have caused havoc when assessing a government-style bailout. these acquisitions, those, were also in the best interest of bank of america and shareholders. certainly the merrill lynch acquisition in particular came with risk. some materialized in 2008. the merrill lynch acquisition also came with a promise of significant long-term rewards. rewards bank of america and shareholders are already beginning to reap. we put together an organization already producing substantial profits, not losses, for o company. understanding that fact is absolutely critical to understanding why we acquired merrill lynch. we really bought two businesses. the first is the world's most productive brokerage force. currently 14,000 financial advise advisers. top 100, top 1,000 and top 100 women f

to disclose those losses at merrill lynch.given the fragility of the financial markets at that time we were concerned about the potential for a strong adverse market reaction to the reports of significant losses at merrill lynch. if federal assistance is stabilizing these companies were to be effective the necessary facilities would have to be in place as of the disclosure date. dessauer planning with importantly influence by the company's plan disclosure schedule. but the decisions and responsibilities regarding public disclosure always remained as it should with the companies themselves. a related question is whether it there should have been earlier disclosure provided by the u.s. government to the bank of america. importantly there was no commitment on the part of the government regarding the size and structure of the transaction until very late in the process. hall do it indicated to bank of america in december that the government would provide assistance to keep the company from being to stabilize as it did then in cases

when merrill lynch recognized significant losses. the marle lynch acquisition also came with the promise of significant long-term rewards, that we were already

should have been aware of the problems at merrill lynch earlier. perhaps as early as mid november and not caught by surprise. that could cause other problems for him around the disclosures bank of america made for the shareholder vote. mr. lewis, i will ask you a series of simple questions, and if you are not forthcoming, i am not going to have any choice but to interrupt you. is it not true that bank of america exam and merrill lynch's book of business before signing a merger agreement and then received detailed financial reports every week from merrill lynch? after signing the merger agreement on september 15? >> that is true. >> is it not true that the merrill losses in mid december that motivated you to go to the government were not the largest week to week losses use all? in fact, was not the experience in mid november larger than the one in the december? week-to-week loss experienced in mid-november larger than the one in mid-december. >> the losses that were. >> the losses were partly based on losses in november. i'm not saying the losses in

but it was not, it was not, i don't see the connection to merrill because merrill was, the next year. >> i would sure appreciate, mr. lewis, if you could provide for the record what net effective tax your company paid in 2008. because to me it looks like you pay 1/50th of what you should and i would like to compare what tax rate was paid and the amount that was paid versus what the average middle class family in our country pays. i think the record will show you paid actually substantially less. i have a request, mr. chairman, if i could, for information for the record. mr. lewis, is it possible that in the spring of 2008, i have information that bank of america bought a portfolio of subprime loans from the federal deposit insurance corporation that had been previously originated by superior bank of illinois. consequently, bank of america sold those same loans valued at hundreds of billions of dollars to investors who as of last year have now suffered major realized losses. has bank of america estimated the amount of those losses attributable to the acquisition of the superior fdic po

you received upon acquiring merrill, is that right? >> we didn't sign the agreement on the wrap. >> contrary to your representations to the fed, you were concerned primarily about the losses at merrill lynch. merrill's losses were less than half of the problem you faced. losses orng orng naturing at bank of america itself were larger. mr. lewis, please look at the following e-mail dated december 18th, 2008, between officials at the new york fed. one report finding on the basis on the total of 13 basis points detee yoration of the combined bank of america, merrill lynch entity, 16 basis points is due to bank of america. 14 basis points due to merrill lynch. the other officials described this as a smoking gun. isn't it true, more than half of the decline in your all important was not caused by merrill lynch? >> your apples and oranges. the securities -- >> maybe rotten apples and rotten apples. isn't it true you were told if you went through with the mac and later needed financial assistance from the government you wouldn't get it, isn't

angula does the letter, what's happening with merrill lynch. i think it's a reasonable question to say: when did you know this? if you didn't know until after october 3 what took you so long to figure it out? frankly two weeks of debate in this congress, you remember they sent us home for a few days, came back and we passed this. >> i'd be happy to answer that question. the drawback of the asset purchase plan as we discovered was that it took some time, probably some months, to put it into operation, and we thought perhaps that would be possible but the banking situation deteriorated quickly and by columbus day we had a global crisis and the only way to stop it from spread asking creating a huge problem was to inject capital to have guarantees and take the steps we took. this was the only way to do it as quickly as was needed given the way the situation changed so what xhain gd was the financial situation between october 3 and october 14 and we had no way to do the other approach because would just take too long. >> i have a few seconds and i'l

if the bank of america/merrill

the 50 billion refers to aig merrill assets. the record clearly shows you did believe there would be systemic consequences if bankamerica took steps to back out of its deal with merrill lynch perspective when in court. so did the threat of mac which you believe would have serious consequences influence your willingness to give bankamerica's financial assistance when you didn't believe it needed to have it? >> we demonstrated if we saw a major institution about to fail and risk the stability of the financial system we would try to take steps to stabilize it so we would have done that in any event. >> i just want to conclude with this point. mr. bernanke has testified he was concerned about systemic collapse. we all understand that. he's concerned about think of america, we understand that and he said bankamerica would hardly be a good thing for investors, that was your testimony but if the fed do merrill lynch was feeling before the shareholders voted, why did you not inform the sec? >> if they knew about it, if you knew about be

the government had given you 25 billion before you approached it about merrill lynch. if the government believed all of that about you and your management team, were you surprised that the fed arranged for you to receive consider bl additional financial support in january, does that surprise you? >> we received 15 billion, not 25 billion from the original t.a.r.p. package. it did not surprise me they were willing to give us more. we talked about coming to a solution to get the merrill lynch deal done. >> there was a financial crisis and they thought it was necessary -- unanimous consent for two more minutes. >> without objection. >> there was a financial crisis and they thought it was necessary for the system, for the deal to go through. if there's one thing about your record that's clear, you have experienced negotiating deals. what do you believe your leverage with the government was at the end of 2008? >> the only leverage i would say we had was that two honorable people had given me their word they would try their best to find a solution. >> isn't it true it was be

lewis threatened to back out of the merrill lynch deal merrill lynch deal and to what extent were you concerned and did you have conversations with secretary paulson that that would sort of unravel a lot of things therefore we had to accelerate the t.a.r.p. funding for b of a and did you take it or did secretary paulson take it as an implied threat if i don't get that line going to go public and let everybody know we are pulling out of the deal? >> when i first heard about it on december 17th i took that as a possibility i was concerned about but subsequently i thought as i said mr. lewis was genuinely uncertain how to proceed. >> mr. chairman, my time is up i want to say on the record while some one this narrative to be this poor ceo of a moderately sized bank with the boot of government on his neck forcing him to do things he didn't want to do i believe the narrative lends itself to a corporation gaining the system because he could recognize an opportunity when he saw and it was 15 to 20 million-dollar opportunity. my time is up. i thank the chair. >> i now yield five minutes to the

and when merrill lynch intends to file. if i get a sense merrill lynch is leaning towards an early january filing i will try to steer him towards a later filing. that is so inconsistent with the comment you made. do you see they are consistent or is their inconsistency? >> i didn't see that e-mail exchange until after i had written my letter but having looked at the exchange field the subsequent e-mails that in fact merrill lynch had taken the disclosure decision and mr. angelou did not attempt to make them change it so in the event he did not make any attempt to affect the disclosure. >> bup the intent is still there? >> but he did not take the action. >> do you feel in any way shape or form that you adversely affected or threatened mr. lewis or the board of directors? >> i do not. >> thank you, mr. chairman. >> thank you. the gentleman from virginia, mr. connolly. >> welcome, chairman bernanke. mr. bernanke, i guess i come at this differently than my friend from utah. i guess i'm interested who was threatening whom. what

experienced the inevitable bankruptcy of merrill lynch. could you respond to this? >> yes, sir. today i think has been productive in terms of transparency and more information about what happened. clearly there was a very difficult period and many complex problems of the that were being addressed but as i indicated i believe that we solve this problem without an any way taking steps that were either beyond oh-la-la or on ethical. and i believe we did the right thing in order to stabilize both companies or the financial system. >> thank you very much and thank you, mr. chairman. >> the gentleman's time is expired. congresswoman norton for five minutes. >> thank you, mr. chairman and we do appreciate the transparency your try e and to bring to this transaction. i am not inclined to second-guess the judgment of people in the midst trying to deal with the problem rising, problem after problem in the midst of a unusual crisis that i am interested in bank of america's options under the circumstances. bank of america shareholders. we did have a s

>> sir, are you speaking to the lehman or merrill lynch? >> to the requirement of your filing for disclosure and notice to your shareholders when this was pending. you didn't necessarily precisely follow what could be considered a notice requirement. >> i think clarity is always better. if it were left up to me i would go to clarity first. >> so what you recommend we do, go into that area and declare more disclosure as to what's happening? should we put you on the net or what? >> i don't know. i'm not sure i'm following you in terms of the disclosure that you're speaking to. i'm a little shaky on your question, frankly. >> okay, do you know of any disclosure, do you have any feelings s of any disclosures, there anything that we could create in the form of our regulatory requirements on acquisitions or mergers? >> it would be difficult because you don't have an event many times because you're still looking at alternatives and negotiating and lehman or the merrill lynch bank of america situation, then it could be well into the morning before

curl fwaled to unless $12 billion of merrill lynch's losses, it is wise to have mr. curl be your chief risk officer? and did you approve of that decision? >> mr. curl didn't miss the instruments which caused the loss. what happened is we did not anticipate the meltdown of such a significant proportions in the fourth quarter. so we -- he identified everything properly. no one thought things would get as bad as it did in the fourth quarter. and i made that decision. >> you made the decision that mr. kerl should go ahead and become the coo. >> i made the decision for him to become the cro. >> let me announce that we have two votes on the floor and that we will recess for until 12:30, we will be returning at 12:30 and of course continue the questions. so the committee is in recess until 12:30. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> in your testimony you stated that nine days after the shareholders approved the merger you became aware of significant accelerating losses, raising concerns that the

so, let me just ask you, at that time or at this time, did you believe that merrill lynch was too big to fail? >> i thought it very likely that if merrill lynch failed, it was after robbing and-- the lehman brothers and it would create very serious problem in the financial markets, i did. >> as a manager, he pretty well filled merrill lynch needed to be addressed one way or the other to keep it from going under. >> i thought letting it failed would be, pose a serious risk although it was not clear we could that prevented it from failing. >> okay, now, i saw that committee's statement here and it is in the record, that when someone said, did you in polk a threat or something else, that they invoked the mac there would be repercussions to management. and, we can pull up the record. i am almost sure you said no, i didn't say it that way but i did indicate that if they invoke the mac and there was, what was that? they needed assistance afterwards, that there was this created situation where they needed assistance then there would be problems. and, the clarification there was the fact that

things you say in your background is on september 15, bank of america announced an agreement with merrill lynch. i did not play a role in arranging this transaction and no federal reserve assistance was promised or provided in connection with with that agreement. is that accurate, yes or no? >> yes. >> all right. oops well then you go on to talk about all the things you did do. i'm confused. let's talk about this whole situation with one of the things you did. this is your statement. it says in responding to the bank of america and these discussions, i, talking about yourself, expressed concern that invoking the m.a.c. would entail significant risks and then you go on to talk about that. we had mr. lewis who testified before us that he's been an experienced guy in this whole banking stuff for many, many years, he took this m.a.c. situation very seriously. and then paulson comes along and you come along, according to your own testimony, and you say, you know, i don't think that you're right on this. but basically it sounds like you did not believe in the competence of mr. lewis. i'm just f

when bank of america urged its shareholders to approve the acquisition of merrill lynch, there was no public disclosure of any problems with the transaction. having a deposition taken by the new york attorney general, mr. lewis testified that just nine days after the shareholder vote, he discovered a $12 billion loss at merrill lynch. mr. lewis said he told treasury secretary hank paulson that he was strongly considering backing out of the deal. according to mr. lewis, poles and ultimately told him that if he did not go through with the acquisition, he and the board would be fired. however, internal e-mail is we have obtained say they were very skeptical about mr. lewis's motives about backing out. federal chairman ben bernanke fought louis was using the merrill losses as a bargaining chip to obtain federal funds. other e-mail's revealed that federal analysts found a suspect that mr. lewis claimed to be surprised by the rapid growth of merrill lynch posted losses giving the clear signs in the dead. they noted that at a minimum, it calls into question the due diligence process. bankame

at merrill lynch i contributed to strengthening the governance practices in the 1990s. since leaving merrill lynch a decade ago i've led two other major financial institutions through transitions necessary for their long-term success. in 2002 i became chairman and ceo of tiaa-creff, a leading retirement and asset management service. we adapted t ed ed the company changing climates. as a result, tiaa-cref is one of very few financial companies that carry aaa ratings. and during my tenure, the company became the first company in the fortune 100 to allow its stakeholders an advisory role on executive compensation. in september of 2008 i was named ceo of the federal national mortgage association, as that company was placed into government conservatorship. the crisis that devastated fannie mae's liquidity and capital base also threatened millions of american homeowners with foreclosure. new management had to shift the company's focus from maximizing profit and market share to helping hard-pressed american families stay in their homes. as a result fannie mae is the agent for

experienced the inevitable bankruptcy of merrill lynch? could you respond to that? >> yes, sir. today i think it's been very productive in terms of transparency and more information about what happened. clearly there was a very difficult period and many complex problems being addressed but as i've indicated, i believe that we solved this problem without in any way taking steps that were either beyond the law or unethical and i believe we did the right thing in order to stabilize both companies and the financial system. >> thank you very much. thank you, mr. chairman. >> gentleman's time has expired. congresswoman norton. >> we do appreciate the transparency, mr. chairman, you are trying to bring to this transaction. i'm not inclined to second-guess people's judgment when trying to deal with problems that are arising, problem after problem, in the midst of a crisis, an unusual crisis at that. i am interested in bank of america's options under the circumstances, bank of america had shareholders. we did have a series of rather unusual late-de

they would be acquiring this at merrill lynch. i do not know why we are spending our time to find out what happened between the 15th of september and january 1. . lot went over the dam and particularly in that spectacular two week period after september 15. i want you one, before you leave here, to tell this committee and the american people what kind of jeopardy the american system and the world system was in so we reiterate that moment that we weren't all a bunch of relaxed, confident people walking around confident people walking around making clear were making an emergency judgments, working 20 and 24 hours a day and not with the clearest hits in the world. is that correct? >> thank you are for that opportunity. september was an incredibly intense period a financial crisis. many of the largest firms came under severe pressure. the failing failure were important reasons why the world economy went into a nosedive that lasted for the entire second half or fourth quarter of 2008 in the first quarter of 2009. how the treasury, fede

so what's the difference between merrill lynch did or aig did? >> in what scale?p morgan used aig a bit, not that much. and partly because they had internal line limits. so, yes, back in 1998, they cut the first time aig joined it was back in 1998 when, you know, they went to see cassano and you get this crazy thing called super senior and he said are you interested, yes, bring it on. they spotted due to regulation arbitrage they could basically do whatever they wanted and be a super senior they could limit capital and it made a lot of sense. yes, jp morgan did deal with aig quite a bit at the very beginning and, yes, it had dealt -- >> was it by the government would jp morgan never would have lost a lot of money. >> not to the scale of its other competitors. if you broke it into, it's pretty stark. jp morgan is not even up there in the top half dozen from my memory. yeah, you can actually see the breakdown who benefited most from the rescue. i think jp morgan was somewhere around 10 or 11 but i can get the figures for you >> but what about -- >> and the model i t

recipient had merrill been a t.a.r.p. recipient at that point, it would not be, it would not be, have been permitted under the law but more generally again, our view is very much to try to have greater transparency on the practices, greater independence and we feel very much that these types of practices one brought to light, that the transparency is often decisive and so when people say for example say on pay is non-binding, i don't think that is the way it works in fact. i think that it is very troubling for a company to face in-in those areas and that, if you want-- pheaa want to take the public rest. >> any other comments on this issue? >> so, madam congresswoman, one issue i would add to what jean has said is that it is important when, an organization has not performedell, that bonuses be adjusted for that. there-- one of the principles we think is very important and the federal reserve will incorporate in its guidance going forward is that the compensation should be risk sensitive. it should reward good performance

if the loss made this horrible business deal to acquire merrill lynch, why did you still do it? and i know you've told us over and over again. but let's be frank. i mean, and i'm wondering, how do you determine what is -- you must disclose. we have shareholders here who are concerned. you're about to go into a deal with a company that is worse off than is made to believe. and it just seems to me that and a person with your experience, there are a lot of people in this situation and i don't care what paulson may have said, what bernanke may have said. they would have said, the tell with you, i'm going to stand on principle and my principles tell me there's a mac here and a real problem. if i go down, i go down. but i'm going down on principle. i want to give you an opportunity to tell us, because i got to tell you, i mean, i'm kind of concerned because i think there are some serious credibility issues and i think mr. kucinich raised some things that if i were your lawyers, i would be concerned about. so help me. >> your referring to the fact that despite the fact we thoug we coul

you will press the merrill lynch. regardless of how many billions of dollars they owe because if it goes down like lehman brothers the whole house of cards may collapse. that is the backdrop we're dealing with now the obama administration is throwing trillions of dollars that it but unfortunately the first rescue package was a payoff to democratic constituencies and some of the money that has been spent has been nothing short of ludicrous. they are burdening the taxpayer with a huge tax burden and the amount of taxes that will have to be spent it is horrible to contemplate. how deepen the whole we are going and how much money is being spent. now they say we take on health care which will be trained one and 1.5 trillion dollars to assume health-care that meant the united states government will crowd out the private insurance company then they will be responsible for all health-care for everybody in the nation and. it will be a hideous mess. so this is the book "right on the money" that is the backdrop with which we hav

ben bernanke before a house committee, taking questions on that merger between bank of america and merrill lynch. one headline in "the new york times," the gop expected to paint ben bernanke as an ally of big government. the senate health committee continues its market appearance today on the issue of health care reform. nancy pelosi holding her weekly news conference. president obama meeting with some members of congress. today the issue is immigration. there's also a white house picnic on the south lawn for lawmakers. governor mark sanford admitting his affair yesterday on the front page of "the washington times." social conservatives fall from the moral high ground. that is our focus for the next half-hour. our phone lines, as always, 202- 737-0001, of our line for republicans. 202-737-0002 for democrats. if you are an independent, the number to call is 202-628-0205. beginning with the "los angeles times," another gop bombshell. the "atlanta journal constitution," where the governor flew back cut from his trip to argentina, a costly confession for the south carolina governor. also this

kucinich seemed to be hung up on the fact of when there was a significant indicator that merrill lynch was in rapid decline. rather than focus on november of '08. we can go all the way back to fall of '07 when they mounsed an almost $8 billion loss and mr. o neil was forced into retirement. there's a long history of decline here, all be it it accelerated to some degree around the time of your purchase. but there was significant evidence that they had overloaded with collateral debt obligations and other complex derivatives and they were in pretty tough straits for a while. isn't that true? >> yes,sir, it is true. >> let me ask you, there's a couple of e-mails and unfortunately they are very small up there. let me try to help you. one is from chairman bernanke to a selection of the board of reserve governors. and this is december 21st, 2008, around the time that your thinking about this material adverse change being existent or not. this is from chairman bernanke, i think the threat to use the mac, the material adverse change, is a bargaining chip and we do not see it as a likely scenar

kenneth lewis testified at a house hearing today that looked into his company's merger with merrill lynch. now here is a part of that hearing. for five minutes. >> thank you, mr. lewis, i appreciate you being here. looking at some notes here dated december 31st, these are your notes also looking at some notes taken by joe brice, the cfo at bank of america were taken on december 21st of 2008 about the attempt to pull -- use the mac clause and get out of the merrill lynch transaction. in the notes it says fire board of directors if you do it, irresponsible for country. tim g agrees. is tim g. i would assume would be timothy geithner? >> those are joe price's notes? >> yes. >> i would have to assume with you because they are his notes. >> based on your recollection of what was going on and based on the notes we see from the cfo that was there, fire board of directors if you do it, was that your understanding? >> the -- that was is probably a reference to the conversation i mentioned that i had with secretary paulson. but, again, those are his notes. >> based on your personal recollection, is

the time that the merger took place between bank of america and merrill lynch? i have read accounts in the paper and i have heard information that bank of america new, and signed this agreement, that these bonuses could take place. later i am told that the ceo said that he was made to sign an agreement, understanding that these bonuses were going to be given. normally these bonuses were given at the beginning of the year. they rushed them so that they would be given toward the end of the year, and prior to the signing of the agreement. what do you know about this? >> congresswoman, there is obviously been very contentious discussion as you know that is gone out to the public between former secretary paulson, the chairman and the chairman of bank of america over what transpired during that transaction, which as you know, was months before i entered the obama administration. i would have to, i would need to go back and would be happy to do so to get what our administration's best understanding is of that, of that dispute but it is an ongoing dispute with the delet

what was the difference between what moral lynch-- merrill lynch did? >> j.p.morgan used aig a bit but not that much parley because they had internal limits, so yes back in 1988 to cut the first-ever deal, the first time aig discovered was that in 1998 when they said it that this wacky way, are you interested? he said yes, bring it down because they spotted coming to to regulus nouri arbitrae as they basically do whatever they wanted and-- [inaudible] so, yes, j.p. morgan did deal with aig quite a bit at the very beginning, and yes it kept on dealing with them throughout the decade. far, far less. >> [inaudible] >> and not to the skillet many of its competitors in the concede that from the figures. to look at the break down, it is pretty stark. j.p. morgan is not even up there in the top half-dozen. you can see the breakdown of who have benefited from the rest cooper guy think j.p. morgan was somewhere around ten or 11 but i can get the figures to you if you want. >> but,. >> they thought they monolith in session was nets. one of fastening things about telling

fess board to citigroup and merrill lynch with a different position taken. similarly jpmorgan basically quds its credit line in 2002 and 2003 because the thought the structure didn't make much sense. again a very different decision was made by other banks. i say that not because i think that jpmorgan was somehow superior alien beings who have wonderful insight in geniuses who dodged a bullet, nothing could be farther from the truth, they make plenty of mistakes true but is become far too easy to see that all bankers are stupid and risky and somehow happened was inevitable. that was not the case. one of the things that became clear by doing research is just how different the different banks or in terms of their treatment of the risks and analysis which brings me to my third point and the crucial point and this is where we come toward the disaster section of the book. which is when we are faced with a tremendous joy is clearly the financial system has imploded to a terrifying degree and many of the ideologies and principles on which finances have been based in

happened in that wasn't supposed to happen but could happen happened so what is the difference which merrill lynch didn't with a id and jpmorgan? >> in a word, scale. jpmorgan use aig a bit but not much partly because they have internal lines of women. so yes back in 1998 the cut first on aig as discovered this super senior was back in 1998 when they went to see this wacky weird thing called super senior, are you interested in the san yes brianna on because due to regulatory arbitrage they basically do whatever they wanted and angie was super senior and had the capital. so yes jpmorgan did deal with aig quite a bit and the very beginning and, yes, it dealt with them throughout the decade, but two or three years ago far less impact jpmorgan did not lose a lot of money? >> not to the skill of many of the investors and you can see that in the figures. if you look at the breakdown of who aig was exposed to it is pretty stark. jpmorgan is really not up there in the top half-dozen from memory. you can actually see the breakdown of who benefited most from the rescue but i think jpmorgan was somewhe

so what's the difference between what merrill lynch did or jpmorgan? >> jpmorgan joost a ing of it, not that much partly because they have

there is a merger proposal that is supported quite strongly between bank of america and merrill lynchreement to enter into that merger, and then at some subsequent time, there were major losses. there were early

you said we are here because of merrill lynch it cetera. in fact, the democrats in this committee raise the say on pay issue in 2006, and in fact the house passed say on pay in 2007, back when i thought t.a.r.p. is what you use to cover the infield when it rains. so historically the causality is not as you suggested. now, let me ask, your general sense is that you have simply got to make its less difficult to replace board members, that that is, that that is the centerpiece and other things are not going to work out if you don't have a board that is more sensitive? >> yeah, i do think that is right but you also up to have shareholders who are capable of exercising that authority. >> that is what i mean. the key is not say on pay but say on boards. >> it is kind of a forest trees thing. and me focus on compensation and get down to the fine details of whether option should be indexed for not or whether they should be tied to quarterly earnings are not, i think we are missing the big picture. >> say on pay would do that, so you think say on pa

a recent merrill lynch report shows the u.s. enjoys the least concentrated wireless industry of 26 major industrial countries based on its hhi index. i have to pause to put to rest an underlying implication of the inquiry into this matter. that is whether or not wireless providers have somehow conspired to fix prices. as you know, a great deal of litigation has been filed as a result of these hearings and this issue. i want to make it perfectly clear that at&t sets the prices for all of its products on a unilateral basis based on analysis. there is no evidence to support an accusation that anyone at at&t engages in any inappropriate behavior as alleged in these lawsuits. there simply is none. i trust that this more complete picture puts to rest any concerns you may have about a single pricing options and i look forward to your questions. thank you. >> mr. milch. >> good afternoon. it is a pleasure for me to appear before you on behalf of verizon. weaver brought here to discuss to -- brought here to discuss testing. your letter o

i believe him about merrill lynch and bank of america, knowing what kind of academic administrator heas. reading is testimony. i am fairly confident that he is telling the truth. let us put that one aside. with regard to monetary policy and the banking crisis, he extended a great deal of credit. that needed to be done where the situation would have collapsed. when he did not do as regulator of the bank holding company is good will conditions on the way they run themselves. it would've been hard to oppose the kinds of reforms necessary in new york to get the job done. he did not do that. he gave them the money. rocket -- record profits and goldman sachs uno accountability. -- and no accountability. the same goes for jpmorgan. host: we have read about the latest economic plan by president obama. it would give more power to the fed. is that a good idea? guest: it is a good idea to have a systemic supervisor. the real question is can the supervisor see what is going to happen? the banks bundled the sub-prime mortgages into bonds and not sell the mall. they put them into offshore entered -