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

agreement and then received detailed financial reports every week from merrill lynch after signing the merger agreement on september 15th? >> that is true. >> isn't it true that the merrill losses of mid-december that you claimed motivated you to go to the government were not the largest week-to-week losses at merrill you observed since agreeing to purchase the company. in fact, wasn't the 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 that time frame were what caused the increase, it was the increased projections of the losses based on some of those losses in november. >> mr. chairman, i move to put up a bar graph representing the week-to-week losses recorded by merrill lynch to bank of america. i also want to insert an analysis by the statistics expert showing that the november loss should have alerted bank of america to a decelerated rate at merrill lynch. now, mr. lewis, isn't it true isn't it true that you understand the portfolio because

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

the bank of america, merrill lynch deal is a case in point. new e-mails we have obtained from the fed indicate that fed officials may have attempted to keep other agencies in the dark about what was going on. k-fed e-mail discusses not telling the office of the comptroller of the currency what is happening. others discuss how to minimize the amount of information given to the sec. in a remarkable exchange, fed officials note that an sec official can be counted on to be discrete. i am not going to prejudge the issues. at this point, we are not even close to finishing this investigation. bank of america ceo ken lewis gave us his story. now it is dead chairman bernanke's turn to give his side of the story. next, it will be former treasury secretary hank paulson to give his side. we need to get all of the facts out on the table before we are in a position to say what happened and when it happened. but, i promise you this. we will follow this investigation wherever the road leads, and we will do our best to make sure the facts get out on the table,

only long-term to significant losses in revenue or revenue production are grounds and of course merrill lynch has proved to be a profitable acquisition for bankamerica. why not negotiate a better price, that wasn't the issue that lewis raised. he was talking about breaking off the merger but i think that the walls of be very dangerous because the markets would have been faced with the uncertainty of whether the deal was going to go through merrill lynch would probably not be able to survive absent the support of bank of america said there would have been immediate problem with merrill lynch which would have created broad problems in the financial market. >> even if they threatened to do that in the context of negotiating? >> well, you can't negotiate anything unless you are willing to go through with your threat. and so therefore there would have to be a probability in the mind of market participants that in fact bank of america wouldn't go through. >> you think that would be considered a plus? >> it has been stabilizing as well, yes. >> and in consummating though, the merger as it was origin

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 it true? >> repeat that, please. >> inthat if you went through t mac and later needed financial assistance from the government, wrnlts you told you wouldn'

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

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] >> at this time, i yield five minutes to the gentlewoman from california. >> thank you, mr. lewis. in your testimony, you stated that nine days after the shareholders vo

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

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

so in other words, you are in a situation where you have to handle this merrill lynch problem anyways. you have what looks like a merger following. all at once they pull it apart. they're seeing it from the b.i.a. or the -- i mean the bank of america taking on this burden. you see you're going to have the burden one way or the other. safe to say it looks simpler from a management point of view to get them to take this on so you can manage this as a single piece rather than going back and forth? >> the gentleman's time has expired but if you want to put that in a question and then mr. bernanke can answer, you can have the time. >> let me finish with him. the -- you stated today if you had it all to do over again, you believe today that you would do it exactly the same. later in your testimony i am going to -- >> i'll take that as a question and answer. >> the fact you made it -- how do you explain the fact today you did add a condition and clause that you did exactly what you needed to do for what you knew at that time? does that leave you a question -- does that statement leave in the

lewis recklessly agreed to pay too much for merrill lynch so that the federal government felt backed into a corner when faced with the prospect of louis backing out of the merrill deal and of course we 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 probl

>> 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

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

, -- bank of america announced that it was purchasing merrill lynch, creating one of the nation's largest financial institutions. at the time, mr. lewis called the merger a great opportunity for bankamerica's shareholders. -- bank of america's shareholders. it was negotiated between to willing parties. it was designed for this clause a benefit of private shareholders, and it was to be paid for exclusively with private money. four months later, on january 16, 2009 after the merger was consummated in the quarterly earnings were announced, the world woke up to a different kind of marriage. the american people discovered that merrill lynch had this very -- had experienced a $15 billion fourth quarter loss. most importantly, we found out that the merger had taken place only after the federal government had committed to give bank of america billions in tax payer money. what happened in the interim? 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

were being addressed by the acquisition of merrill lynch. >> have you made these financial studies available to the committee for its review? >> i don't know. i don't know what the committee has. >> so what you're saying is you did review financial statements from your adviser, those being whom, by the way? >> our financial advisers are us. >> so all internal. and on the basis of that, you decided that despite the knowledge of the $12 billion hole, it was prudent to proceed, correct? >> yes, sir. >> so whatever threat or whatever word it is we're going to use for mr. bernanke and mr. paulson interactions, you had come to an independent conclusion on the basis of financial review by your people that it still made sense for your shareholders to proceed, correct? >> no. as i recall, they were done in a context of the receiving the money. >> let's be clear. you're saying two things now, one you, did an independent financial analysis that said it would stretch out the payback time but it's still prudent to proceed but on the other hand, you had bernanke and paulson breathing down your n

that it considered the potential for systemic risk when you approve the merger of bank of america merrill lynch which only weeks later is too big to fail. now, chairman bernanke, did you really believe ken lewis's was a bargaining chip as you stated in an e-mail december 2008? >> i thought initially it might be. >> did his use of a bargaining chip help him obtain a deal he put into received had he asked for assistance from the government? >> as i said in the later e-mail after listening to him and having more discussions i came to the conclusion he was uncertain about what to do. we provided advice which he ultimately took and we took steps to prevent the destabilization of his company in the financial system. >> mr. chairman i ask for one more minute. >> i yield the chairman one additional minute. >> let me direct your attention to hand written note from your first meeting on december 17, 2008. you reported restated the downside 50 billion doesn't sound big for bank of america. the 50 billion refers to aig merrill assets. the record clearly shows you did believe there would be systemic consequ

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

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 a 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 scenario

after attending business school, i joined merrill lynch and spent 28 years leaving as president in 1999. the merrill i held many positions in finance, human resources and investment banking and capital markets and general management. in 1998 i played a central role in unwinding long-term capital management, the hedge fund that a decade ago presented a systemic risk to our banking system. i learned from my experiences at merrill that the long-term success of financial institutions includes sound corporate governances including independent checks and balances, tight control over risk and executive compensation geared to long-term performance on behalf of clients as well as shareholders. 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 i

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

at merrill lynch been a t.a.r.p. recipient at the time it would not have been permitted other the law but more generally and again our view is very much to try and have a greater transparency on the practices, greater independence and we feel very much that these types of practices when brought to light that the transparency is often decisive. so when people say for example stay on pay is non-binding, i don't think that's the way it worked, in fact,. i think that is very troubling for a company to raise a negative vote in those areas and that you want to take that type of public risk. >> any other comments on this issue? >> so madam congresswoman, the one issue i would add to the gene has said it is it is important when an organization has not performed well that bonuses be adjusted for that. one of the principles that we think is very important and the federal reserve will incorporate in its guidance going for it is that the compensation should be risks sensitive. it should reward good performance but then when perf

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

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 mornin

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

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

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

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

rules and make it seem as if the risk of mass had disappeared which was basically what ubs and merrill lynch were doing but actually the genuine risk having disappeared because if there was ever a situation bad enough to blow up the super senior it probably would have blown up the model lines to which was in touch with stupid to use model lines to protect yourself from super senior rest. >> what about the bear stearns funds? that was again done similar to a way how the cbo's were talking about buying cbs from all kinds of banks including jpmorgan and that is why jpmorgan was one of the biggest to have the hedge funds because they have the cbo's. but it. >> to them because they had a loan of 90% of the money that was to pay them. >> steve black and a diamond would say over and over like a cracked record we made mistakes and they're scared of people thinking they did too well because it's been like japan, no one wants to stick up by now and look as though they're doing well because they are getting too much retraction so, in fact, in the course of my interviewing the kept saying we have made m

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

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 -

you get your merrill lynch statement saying you have the stock but only with an iou.hey were created to settle fault tolerance but what's happened is hedge funds a small number figured out how they could abuse the loopholes and flood the market with billions of fake shares and by doing that they can manipulate the different stocks and crash companies. it's an issue intertwined. take down lehman bros. and so it's just intertwined around a lot of financial interests. we argue the loop hopes one of which is called the madoff loophole. >> how does this direct internet companies like yours? >> how it effects any company, i actually keep trying separate it from over stock. over stock is fine and we don't need capital b