mr. bernanke, for being here. mr. bernanke, under the humphrey-hawkins full employment act, the federal reserve has four benchmarks for the economy. one of the four is price stability. currently, economic statistics show an increase in energy prices. what are -- what can or will the feds do -- fed do to try to stabilize the prices in the energy sector. is there anything that can be done? >> you have to distinguish between the prices of individual goods and services like gasoline, for example, and the overall price level, what people pay for all the goods and services that they buy. again, i recognize that the increases in gas prices are very troubling for a lot of people and very difficult but they are not inflation per se. inflation is increase in the overall price level which is very low. the inflation rate right now is 1% for all goods and services. the main risk from a price stability point of view would be if higher gas prices, for example, would get people -- would start feeding into the broader basket. that is,

mr. bernanke. so that we didn't fall into a depression for the first time since herbert hoover. this president has been trying to bring us out and frankly is succeeding. unfortunately the republicans passed a spending bill full of short-sighted and indiscriminant cuts. do we need cuts, yes. do we need short-sighted and indiscriminant cuts, no. just over a week ago you would cut billions in energy and medical research, kick 200,000 children out of head start, make college more expensive and stop 21st century infrastructure projects in 40 states. that's what mr. zandi was talking about, that's what goldman sachs is talking about. cuts like these could cripple america's competitiveness and job growth. according to moody's analytics' chief economist mark zandi, republican cuts would cost america a total of 700,000 jobs. the economic policy institute puts it at 800,000. rather than such job destroying policies, both of us, both parties need to come together and reason together. frankly the american public doesn't care who works with whom, they just want it to work. this is no way to

mr. bernanke says, we -- we are on an unsustainable path? or is it true that mr. erskine bowles, the president's own director of the fiscal commission, says that we are facing the most predictable economic crisis in this country's history, and said it could happen within two years? are we making this up? the american people get it. they tell me what's going on in washington? you've got to get your house in order. that's what this past election was about. people understand we need some action and some leadership here, but we're not getting it. i just truly believe if we could get together, if we could get a bipartisan effort to look at this $61 billion, we could disagree on how to reduce that spending. maybe republicans have this idea and democrats have that. let's work all that out, but let's reach an agreement that actually reduces spending by enough to make a difference, that the world would say wow, the congress is beginning to take some steps. that was a nice, good, strong first step. now if they will stay on that path, maybe the united states will get on the

the tremendous cost of that the shadow cost of oil is the real danger and that ain't going away mr bernanke that a going away do you think that the u.s. well will intervene militarily because of oil and first and libya what do you think you know because the people that will be taking over will want to sell the oil because they'll want the money they can drink the oil they're going to want to sell it and they're want going to want to open the gas lines back up to to truly believe me no one's worried about not getting at peak oil or the other thing that i want to mention because you know bernanke here he goes to hell an outright failure to explain the fads monetary policy many both have criticized this very policy thang this is going to just be another bubble of inflation that's going to burst republicans have been particularly critical what's your take on. well i mean the republicans want to choke off the money supply when we're short of money here that's like saying if you're thirsty well let's cut off the water. it's it's madness it's destructive if anything obama vernand he have been very

mr. bernanke testified on the economic outlook and monetary policy for three hours before the house financial services committee. . . chairman ben bernanke on the conduct of monetary policy and the economy. without objection, they will be made part of the record. i am recognize the gentleman from texas. we want to welcome your to the committee. i want to commend you for the stand that we need to address the national debt. and make sure job much harder. it prevents -- it presents challenges plant should -- it presents challenges. the treatment has been to keep them low for a longer time. we were told that we should not expect that any permanent increase in price inflation will be temporary as we see it under control. if you but get the free market economy, the measurements is going at 9%. it is going up at 24%. i would suggest we still have a lot of inflation that will get much worse. the prices going up right now. we have growth. the answer will be to destroy a growth. we have growth. there is an excuse to diminish it. rarely if ever would we see an admission that the real cause of price infl

mr. bernanke said that you didn't include, and that is if the republicans proceed with the kind of cuts that they're talking about, that that could dampen the recovery. he said by a couple hundred thousand jobs, and mark standee, an economist who advised john mccain in the 2008 presidential campaign, said it could be as much as 700,000 jobs in 2012. so i think the message here is to be cautious about cutting spending because government revenue is still needed to boost the kind of recovery we're gig to see come alive. >> the jobs picture we got on friday is encouraging. it's an encouraging report. unemployment is still very, very high but there's another pillar to all of this that is all interrelated, but something that we haven't talked about yet, which is housing. and the housing market when it's very weak, housing prices continue to fall. so when you adds that with okay, the private sector is starting to get some juice backing starting to rehire people but you have a housing market that is soft and prices still falling, you have inflation that is now come into play and we 73 in food, energ

mr. bernanke said, to economic disaster long before these projections come to a conclusion. we cannot continue on this course. we have to get off this course. we owe it to every working american not to put this country back into another recession. and the truth is we can do these reductions in spending, this government is not going to sink into the ocean. we're going to be -- continue to serve the american people. and if we do it, we'll get us on the right path, and this economy can continue to grow knowing that we've gotten our fiscal house in order. it's not that hard. i urge my colleagues to do so. let's don't give up on the $61 billion total reduction in spending the house has asked us to meet. let's do it, and let's be proud of it. let's know then that we've done something that will amount to a real change in the debt trajectory we're on. i will just say we've calculated it. my budget staff has looked at the numbers. $61 billion reduction in baseline spending which is what they're proposing. over ten years we'll save $860 billion. it will reduce the debt of america by a

mr. chairman. chairman bernanke, i would like to ask you two questions. the first wille about rising oil prices. the second question will be about interchange fees. first, mr. chairman, we all agree that the rising price of l will slow the economic recovery. to me, one of the most anti-competitive forces in the world which raises the price of oil are the price fixing activities of the 12 member nations of opec oil cartel. i have a bill, mr. chairman, called nopec that will for the first time make the actions of opec subject to u.s. antitrust law. this bipartisan bill passed the senate four years ago with 70 votes. mr. chairman, if this price fixing cartel did not exist, wouldn't the market function better and wouldn't oil prices be lower? i would like your comment after i make my second question to you. interchange fees. the issue of interchange fees is very controversial, as you know. in the recent wall street reform bill, congress expted small banks and credit unions so that they would not be impacted by any attempt to regulate interchange fees. small banks are still worried they will be discri

mr. bernanke said." the c.b.o. projections, by design, ignore the adverse effects that such high debt and deficits would likely have on our economy, but if the government debt and deficits were actually to grow at the pace envisioned in this scenario, the economic and financial effects would be severe. diminishing confidence on the part of investors that deficits will be brought under control would likely lead to sharply rising interest rates on government debt, and potentially to broader financial turmoil. moreover, high rates of government borrowing would both drain funds away from capital private formation and increase our foreign indebtedness with adverseong-term effects on u.s. output, incomes and standard of living. he goes on to say it is widely understood that the federal government is on an unsustainable path, yet as a nation, we haveone little to address this critical threat to our economy. doing nothing will not be an option indefinitely the longer we wait to act, the greater the risk and the more wrench

mr. chairman. chairman bernanke, i would like to ask you two questions. thfirst will be about rising oil prices. the second question will be about interchange fees. first, mr. chairman, we all agree that the rising price of oil will slow the economic recovery. to me, one of the most anti-competitive forces in the world which raises the price of oil are the price fixing activities of the 12 member nations of opec oil cartel. i have a bill, mr. chairman, called nopec that will for the first time make the actions of opec subject to u.s. antitrust wouldn't prices be lower? i would like your comment after i make my second question to you. terchange fees. the issue of interchange fees is very controversial, as you know. in the recent wall street reform bill, congress exempt small banks and credit unions so that they would not be impacted by any attempt to regulate interchange fees. small banks are still worried they will be discriminated against. you and your staff are smart people, so can you see to it that the interests of small banks and credit unions are protected when you write the interchange rul

mr. posey. >> thank you. chairman bernanke, on to compliment you on your forthrightness. it is something that, unfortunately, we do not see very much of on the side of the table. thank you for being so frank with us when you appear before us. >> in your statement, you indicated that, until we see a sustained period of terror procreation, which cannot consider this recovery to be truly established. is that this says that despite the claims from the academics to the contrary, this indicates that the recession has not yet bottomed out? >> again, the recession is a technical term. it means that the claim -- that the decline has stopped. we have been this risk would be consumers would see unemployment going back up. today with this confidence. he would have decreasing grass that it would stall out. if that is the risk. >> i assume part of the goal is to provide an influx of capital in the economy to ensure that have adequate capital to lynn for commercial purposes and a staff. i learned to call your attention to a proposed regulation that could have a devastating impact. the i

mr. posey. >> thank you. chairman bernanke, on to compliment you on your forthrightness. it is something that, unfortunately, we do not see very much of on the side of the table. thank you for being so frank with us when you appear before us. >> in your statement, you indicated that, until we see a sustained period of terror procreation, which cannot consider this recovery to be truly established. is that this says that despite the claims from the academics to the contrary, this indicates that the recession has not yet bottomed out? >> again, the recession is a technical term. it means that the claim -- that the decline has stopped. we have been this risk would be consumers would see unemployment going back up. today with this confidence. he would have decreasing grass that it would stall out. if that is the risk. >> i assume part of the goal is to provide an influx of capital in the economy to ensure that have adequate capital to lynn for commercial purposes and a staff. i learned to call your attention to a proposed regulation that could have a devastating impact. the i

mr. chairman. chairman bernanke, nice to see you again. thank you for your testimony. you talked a little bit in your remarks about the importance of not just about cutting, what the composition of the spending looks like, what the comprehensive approach to taxation looks like. your view is more nuanced than the headlines that come out of this place and i appreciate it very much. and i wanted to ask you in that context how you evaluate the product of the fiscal commission. what do you think of their suggestions about their mixes of cuts versus -- cuts to spending versus revenue? do you think it should weighted one way or another? i know you're here to talk about monetary policy, but n fiscal policy. i wondered if you would spend a few minutes sharing your views on it. >> what i think was impressive about thedeficit commission is that it -- first of all, it highlighted the size of the problem. secondly it, for the most part made a set of proposals that while obviously painful would address the problem. i say that for the most part because, you know, in some areas they k

mr. chairman. thank you, chairman bernanke for your service. my main goal every day is how do we agree the economy, how do we get people back to work, certainly from my home state of new jersey and for that fact every american. and it was my hope that the quantitative easing that the fed was in the midst of would produce more jobs, more exports, more investments and ultimately a smaller budget deficit by obviously generating profits that would go into the treasury's coffers. but as we expand this balance sheet, and buy treasuries and buy goldman sachs and expect that these ultimately get deposited in banks so that those banks woul ultimately lend, i have to be honest with you, i not quite sure, and this is where i'm headed in terms of my question, i'd like toget a grasp from you, i don't see that lending still taking place and i hear it all over my state. i see food prices rising. i see gas prices rising, even before what was happeng in north africa. that certainly is an exacerbating reality. tuition rates rising. and so while we are worried ab

mr. bernanke says, we -- we are on an unsustainable path? or is it true that mr. erskine bowles, the president's own director of the fiscal commission, says that we are facing the most predictable economic crisis in this country's history, and said it could happen within two years? are we making this up? the american people get it. they tell me what's going on in washington? you've got to get your hse in order. that's what this past election was about. people understand we need some action and some leadership here, but we're not getting it. i just truly believe if we could get together, if we could get a bipartisan effort to look at this $61 billion, we could disagree on how to reduce that spending. maybe republicans have this idea and democrats have that. let's work all that out, but let's reach an agreement that actually reduces spending by enough to make a difference, that the world would say wow, the congress is beginning to take some steps. thatas a nice, good, strong first step. now if they will stay on that path, may the united states will get on the road t

mr. rogers: is the gentleman aware, the ben bernanke, the chairman of the federal reserve, that h.r. 1 would have no harmful effect on the economy? mr. kingston: i have heard that. i understand there are 150 other economists who signed a letter to that effect led by a john taylor an economist as well. mr. rogers: and cutting spending and reducing the deficit will give confidence to the business community to hire people and put people to work? mr. kingston: i thank the gentleman -- the speaker pro tempore: the gentleman's time has expired. the gentleman from washington. mr. dicks: i yield three minutes to the gentlelady from texas, sheila jackson lee, one of our distinguished members. the speaker pro tempore: the gentlelady from texas is recognized for three minutes. ms. jackson lee: i thank the speaker. let me thank the ranking member of the appropriations committee. let me thank the chairperson, sometimes have a slip of tongue, mr. dicks, and call you chairman, but i thank you very much for this opportunity. i want to just try to give a procedural class here today. the procedural class is t

mr. bernanke, federal reserve chairman and erskine bowles, president obama's chairman of the deficit commission and all have said this is an unsustainable path. well, interest last year on the budget was $200 billion. we paid out $200 billion to people of china, governments of china, japan, all over the world and american citizens who have loaned us money to pay the -- so we can spend $3.8 trillion this year while we're only taking in in $2.2 trillion. we have to borrow that money. we don't have that money. 40 cents of every dollar that is spent is borrowed. well, we get a budget for next year blithely calling for education funding to be increased 10%, 11%. calling for the energy department to get a 9.5% increase, calling for the state department to get a 10.5% increase, calling for huge increases in the transportation department. while inflation is what? 2% or less. and deficits are surging out of control. and what do they say? these are investments. sometimes you don't have money to invest. how can i buy stock if i don't have any money? you just don't have money. reality has to break through.

mr. bernanke and it was bipartisanly supported. i agree we had to do them. we had to do them was because of failure in past regulatory policies. the fact is in the bill we passed last summer this money wouldn't have come from the treasury. it wouldn't have been added to the deficit. it -- the republican party popped it. not here but in the senate. i will make this announcement. i plan to reintroduce next week the prevention of the financial reform bill that would have taken the money for this program and other programs to alleviate the impact of foreclosure. the neighborhood stabilization program that helps gets foreclosed properties back into use, aid to homeowners who are unemployed and pay for it as we tried to do last year but republican opposition stopped us, not from the taxpayer but from the large institutions. and i don't mean to demonize but i think goldman sachs and wells fargo and bank of america and city corp and morgan stanley, i think they can pay for this -- citicorp and morgan stanley, i think they can pay for this. with regard to the bill we

mr. chairman, thank you very much. chairman bernanke, thank you for the opportunity to question and make comments. mr. menendez asked earlier about, i think, at least from my perspective that the crux of his point was that despite significant monetary policy changes designed to put additional dollars into the banking system, loans do not -- are not being made. credit is not being extended to the degree that we need to increase the economy. and i'm interested in knowing whether that is accurate. still trying to assume our goal is still trying to increase loan demand and do you think the regulatory environment that particularly community banks face has a consequence in the fact that credit is not being extended and is there something we should do? >> well, first, the qe-2 is not intended to work primarily through banks. it is intended to work through broader markets and we have seen, for example, very open corporate bond markets in part because of the monetary policy actions we have taken. so that's not the direct object of the qe and wha

mr. bernanke and it was bipartisanly supported. i agree we had to do them. we had to do them was because of failure in past regulatory policies. the fact is in the bill we passed last summer this money wouldn't have come from the treasury. it wouldn't have been added to the deficit. it -- the republican party popped it. not here but in the senate. i will make this announcement. i plan to reintroduce next week the prevention of the financial reform bill that would have taken the money for this program and other programs to alleviate the impact of foreclosure. the neighborhood stabilization program that helps gets foreclosed properties back into use, aid to homeowners who are unemployed and pay for it as we tried to do last year but republican opposition stopped us, not from the taxpayer but from the large institutions. and i don't mean to demonize but i think goldman sachs and wells fargo and bank of america and city corp and morgan stanley, i think they can pay for this -- citicorp and morgan stanley, i think they can pay for this. with regard to the bill we

mr. rogers: is the gentleman aware, the ben bernanke, the chairman of the federal reserve, that h.r. 1 would have no harmful effect on the economy? mr. kingston: i have heard that. i understand there are 150 other economists who signed a letter to that effect led by a john taylor an economist as well. mr. rogers: and cutting spending and reducing the deficit will give confidence to the business community to hire people and put people to work? mr. kingston: i thank the gentleman -- the speaker pro tempore: the gentleman's time has expired. the gentleman from washington. mr. dicks: i yield three minutes to the gentlelady from texas, sheila jackson lee, one of our distinguished members. the speaker pro tempore: the gentlelady from texas is recognized for three minutes. ms. jackson lee: i thank the speaker. let me thank the ranking member of the appropriations committee. let me thank the chairperson, sometimes have a slip of tongue, mr. dicks, and call you chairman, but i thank you very much for this opportunity. i want to just try to give a procedural class here today. the procedural class is t

mr. bernanke and it was bipartisanly supported. i agree we had to do them. we had to do them was because of failure in past regulatory policies. the fact is in the bill we passed last summer this money wouldn't have come from the treasury. it wouldn't have been added to the deficit. it -- the republican party popped it. not here but in the senate. i will make this announcement. i plan to reintroduce next week the prevention of the financial reform bill that would have taken the money for this program and other programs to alleviate the impact of foreclosure. the neighborhood stabilization program that helps gets foreclosed properties back into use, aid to homeowners who are unemployed and pay for it as we tried to do last year but republican opposition stopped us, not from the taxpayer but from the large institutions. and i don't mean to demonize but i think goldman sachs and wells fargo and bank of america and city corp and morgan stanley, i think they can pay for this -- citicorp and morgan stanley, i think they can pay for this. with regard to the bill we

mr. president. it's because those in the know say it. ben bernanke, the g.o.p.'s plan will cut jobs. economist mark zandi, the g.o.p. plan would cost 700,000 jobs. another analysis, house spending cuts will hurt economic growth. so what we have is economist after economist telling us that h.r. 1 is a recipe for disaster when it comes to the question of jobs in america. now, that analysis that says that we would slash 700,000 jobs directly impacts the lives of middle class and working families struggling to get back on their feet. they are severe cuts that run roughshod over the green shoots of economic recovery just to satisfy a political agenda. now, i favor smart, commonsense cuts, cuts made with a surgeon's knife, not a meat ax, cuts that are thoughtful, surgically precise, cuts that actually reduce the deficit, not cuts that eliminate jobs and disinvest in educational opportunities for millions of promising young americans. not cuts that hurt middle-class families struggling to make ends meet, make our work force less competitive, our communities less safe and strip away basic pr

chairman bernanke, you may begin your testimony. >> thank you, mr. chairman. chairman johnson, ranking member shelby and other members of the committee, i'm pleased to present the federal reser's semiannual monetary policy report to the congress. i'll begin with a discussion of economic conditions and the outlook before turning to monetary policy. following the stabilization of economic activity amid 2009, the u.s. economy is now in its seventh quarter of growth. last quarter, for the first time in the expansion, our nation's gdp matched its precrisis peak. job growth remains relively weak. economic recovery was largely attributesable to the stainlessization of the financial system the effects of financial, monetary d fiscal policies and strong boost to production for businesses rebuilding their depleted inventories. economic growth slowed significantly in the spring and early summer of 2010 as the impetusor buding of fiscal stimulus diminished. more recently, however, we have seen increased evidence that a self-sustaining recovery in consumer and business spe

geithner or ben bernanke jamie diamond lloyd blankfein american princes who rain down upon the people with their love of a penny here to nickel the oh thank you lloyd blankfein doing god's work. oh mr deity and so you see this and these two headlines about colonel gadhafi who was a good buddy of tony blair they they went camping together in that little tents and the camels many times and tony blair brought him back into the global community and watching the news here and talking to local people and reading the newspapers they target tony blair as the reason that this guy even had any power so first colonel qadhafi secretly moved four point eight billion of his own money to london last week so next headline libya colonel gadhafi must go now says pm amid mounting pressure on dictator so then the u.k. where who are all thought he was buddies with these these cronies and these crooks and these autocrats and despots there you transferred all this money there and then they seize the assets so it's a hard time being a dictator issued by the wax museum in london and you could just stand there all day scaring people you know like looking like a wax figure and then who could all be behaving

and so we also know that chairman bernanke did not agree with the predictions of the kind of cuts that mr. zandi and others have predicted according to his testimony and certainly we believe very strongly that if you cut government spending we create environment for private sector jobs. to the gentleman's direct question about when we can proceed a longer term solution we don't have to continue operating in stop-gap ways, i would say to the gentleman, as he knows, it's not just the house, it's trying to work with the senate as well as the white house. the senate did act this week and we now know that the senate rejects our $60 billion -- approximately $60 billion cut off of 2010 levels and it also rejected the proposed $10 billion worth of cuts by leader reid. in fact, there were more votes in favor of the $60 billion h.r. 1 level than there were off the $10 billion level off of current spending. the problem is the white house is not -- has not indicated where it wants to go and as we both have discussed before, as i have told the gentleman, i just don't see where the leadership is on the

and so we also know that chairman bernanke did not agree with the predictions of the kind of cuts that mr. zandi and others have predicted according to his testimony and certainly we believe very strongly that if you cut government spending we create environment for private sector jobs. to the gentleman's direct question about when we can proceed a longer term solution we don't have to continue operating in stop-gap ways, i would say to the gentleman, as he knows, it's not just the house, it's trying to work with the senate as well as the white house. the senate did act this week and we now know that the senate rejects our $60 billion -- approximately $60 billion cut off of 2010 levels and it also rejected the proposed $10 billion worth of cuts by leader reid. in fact, there were more votes in favor of the $60 billion h.r. 1 level than there were off the $10 billion level off of current spending. the problem is the white house is not -- has not indicated where it wants to go and as we both have discussed before, as i have told the gentleman, i just don't see where the leadership is on the

mr. cummings, that there's not enough verification of production that is occurrin on the land is in order to make sure the government is getting its fair return. as bernankeput this on your hi list risk is that right? why was that? >> we believe there wasn't reasonable assurance that the federal government was getting the revenue that they were due as a result of the leases for two of the reasons i mentioned before. >> in other words they were bng cheated? >> i think that it's not clear we have reasonable assurance. we are getting everything we should -- >> but the fact is it's money that is due to the american people on our land and we are not getting it will let me tell you something, if that happened anywhere people were being cheated, folks would be going to jail in my district. as a matter of fact someone steals a $300 bike they go to jail. so, here we have billions drifting away into the same time we are trying to find money to make sure that kids can go to school and have teachers and all that kind of thing, but this has to be a priority. and i know the chairman has made -- th is a big issue for the chairman and i looking for to working with you as

mr. chairman. in late 2008, treasury secretary paulson and federal reserve chairman bernanke came to congress demanding $700 billion to buy toxic assets from banks. they insisted we were on the verge of a worldwide meltdown. their scare tactics worked. congress passed legislation creating the troubled asset relief program or what we call t.a.r.p.. although t.a.r.p. was proposed by president bush, his successor was what supporter of the program. i voted against t.a.r.p.. i believe then as i do today that t.a.r.p. was a serious policy mistake, and while many claim it was a success, a thorough examination of t.a.r.p.'s record tells a very different story. the design of t.a.r.p. was so flawed that just weeks after the bill was passed, they boppedded the plan for toxic assets. it proves to be a difficult plan to implement and very risky way to stabilize the financial system. if treasury purchased assets at too low a price, it could have threatened the solvency of institutions forcing them to mark down the value of assets to reflect the prices paid, and if treasury paid too much, it would give taxpayers a wi

mr. segales. [unintelligible] >> we need to establish what is the counter-factor. what will happen in the absence of t.a.r.p.? chairman bernanke and then secretary paulson represented the alternative as the collapse. if that -- if the alternative is the abyss, t.a.r.p. was a success. even if we have escaped the abyss, we have to conclude the t.a.r.p. was a success. we estimate that the bankruptcy of the 10 largest banks would have wiped out 22% of their value, for a total of 2.4 trillion dollars. the financial system was at risk, and some intervention was needed, yet it is misleading to say that there were no walker alternatives. -- no other alternatives. there were feasible and superior alternatives. it made t.a.r.p. appear inevitable. i stated clearly -- by stating clearly where intervention was needed, it would of been possible to design plans that were more effective and less expensive. this is not hindsight. in 2008, i wrote a proposal to address the since instability of the financial system to an emergency reform of the bankruptcy court that could transform the debt of financial institutions into equity. the feasibility

mr. cummings, that there's not enough verification of production that is occurring on the land is in order to make sure the government is getting its fair return. as bernanke put this on your hi list risk is that right? why was that? >> we believe there wasn't reasonable assurance that the federal government was getting the revenue that they were due as a result of the leases for two of the reasons i mentioned before. >> in other words they were being cheated? >> i think that it's not clear we have reasonable assurance. we are getting everything we should -- >> but the fact is it's money that is due to the american people on our land and we are not getting it will let me tell you something, if that happened anywhere people were being cheated, folks would be going to jail in my district. as a matter of fact someone steals a $300 bike they go to jail. so, here we have billions drifting away into the same time we are trying to find money to make sure that kids can go to school and have teachers and all that kind of thing, but this has to be a priority. and i know the chairman has made -- this is a big issue for the chairman and i looking for to working with y

mr. segales. [unintelligible] >> we need to establish what is the counter-factor. what will happen in the absence of t.a.r.p.? chairman bernankehen secretary paulson represented the alternative as the collapse. if that -- if the alternative is the abyss, t.a.r.p. was a success. even if we have escaped the abyss, we have to conclude the t.a.r.p. was a success. we estimate that the bankruptcy of the 10 largest banks would have wiped out 22% of their value, for a total of 2.4 trillion dollars. the financial system was at risk, and some intervention was needed, yet it is misleading to say that there were no walker alternatives. -- no other alternatives. there were feasible and superior alternatives. it made t.a.r.p. appear inevitable. i stated clearly -- by stating clearly where intervention was needed, it would of been possible to design plans that were more effective and less expensive. this is not hindsight. in 2008, i wrote a proposal to address the since instability of the financial system to an emergency reform of the bankruptcy court that could transform the debt of financial institutions into equity. the feasibility of thi

mr. segales. [unintelligible] >> we need to establish what is the counter-factor. what will happen in the absence of t.a.r.p.? chairman bernanke and then secretary paulson represented the alternative as the collapse. if that -- if the alternative is the abyss, t.a.r.p. was a success. even if we have escaped the abyss, we have to conclude the t.a.r.p. was a success. we estimate that the bankruptcy of the 10 largest banks would have wiped out 22% of their value, for a total of 2.4 trillion dollars. the financial system was at risk, and some intervention was needed, yet it is misleading to say that there were no walker alternatives. -- no other alternatives. there were feasible and superior alternatives. it made t.a.r.p. appear inevitable. i stated clearly -- by stating clearly where intervention was needed, it would of been possible to design plans that were more effective and less expensive. this is not hindsight. in 2008, i wrote a proposal to address the since instability of the financial system to an emergency reform of the bankrucy court that could transform the debt of financial institutions into equity. the feasibility of

mr. cummings, that there's not enough verification of production that is occurring on the land is in order to make sure the government is getting its fair return. as bernanke put this on your hi list risk is that right? why was that? >> we believe there wasn't reasonable assurance that the federal government was getting the revenue that they were due as a result of the leases for two of the reasons i mentioned before. >> in other words they were being cheated? >> i think that it's not clear we have reasonable assurance. we are getting everything we should -- >> but the fact is it's money that is due to the american people on our land and we are not getting it will let me tell you something, if that happened anywhere people were being cheated, folks would be going to jail in my district. as a matter of fact someone steals a $300 bike they go to jail. so, here we have billions drifting away into the same time we are trying to find money to make sure that kids can go to school and have teachers and all that kind of thing, but this has to be a priority. and i know the chairman has made -- this is a big issue for the chairman and i looking for to working with y

mr. cummings, that there's not enough verification of production that is occurring on the land is in order to make sure the government is getting its fair return. as bernanke put this on your hi list risk is that right? why was that? >> we believe there wasn't reasonable assurance that the federal government was getting the revenue that they were due as a result of the leases for two of the reasons i mentioned before. >> in other words they were being cheated? >> i think that it's not clear we have reasonable assurance. we are getting everything we should -- >> but the fact is it's money that is due to the american people on our land and we are not getting it will let me tell you something, if that happened anywhere people were being cheated, folks would be going to jail in my district. as a matter of fact someone steals a $300 bike they go to jail. so, here we have billions drifting away into the same time we are trying to find money to make sure that kids can go to school and have teachers and all that kind of thing, but this has to be a priority. and i know the chairman has made -- this is a big issue for the chairman and i looking for to working with y

mr. bernanke said.l budgffice d congressional budget office thao projections i made reference anr they've shown that have to benae this is what mr. bernanke said. the cbo projections by design tt ignore s the adverse effects thd such high debt and deficitsn efuld likely have on our economd but if the government debt andrt deficits were actually to grow at the pace envisioned in thisnl scenario, the economic and rtnancial effect would be severa diminishing confidence on thewie part of investors that deficits will b ue brought under control would likely s lead to sharply rising interest rates on the de, government debt and potentially to the broader financial. turmoil. moover, hi moreover, high rates of government borrowing would both drain funds away from capital, private formation and increasets our foreign indebtedness with adverse long-term effects on the u.s. output, incomes andstandaro standards of living. he goes on to say it iss misunderstood the the federal government is on an hisustainable path

mr. chairman. thank you, chairman bernanke for your service. my main goal every day is how do we agree the economy, how do we get people back to work, certainly from my hometate of new jersey and for that fact every american. and it was my hope that the quantitative easing that the fed was in the midst of would produce more jobs, more exports, more investments and ultimately a smaller budget deficit by obviouslgenerating profits that would go into the treasury's coffers. but as we expand this balance sheet, and buy treasuries and buy goldman sachs and expect that these ultimately get deposited in banks so that those banks would ultimately lend, i have to be honest with you, i'm not quite sure, and this is where i'm headed in terms of my question, i'd like to t a grasp from you, i don't see that lending still taking place and i hear it all over my state. i see food prices risin i see gas prices rising, even before what was happening in north africa. that certainly is an exacerbating reality. tuition rates rising. and so while we are worried abou

mr. bernanke, then-secretary of the treasury mr. paulson, and they told us the grim news if we didn't act quickly we could see the american economy sink lower and perhaps even a global depression. it was a frightening time. it was time before this current president came to office, and we had to act together on a bipartisan basis. decisions were made by many of us trusting those in the bush administration who told us that if we didn't act and act quickly, jobs would be lost and businesses would fail. people would lose their savings. it would be catastrophic. and so we went forward with a plan that initially i thought to be flawed, but the only show in town. tried to help financial institutions survive the terrible economy and to turn this situation around. we can say now that most of the money, virtually all of the money that was invested in these financial institutions has been repaid with interest to the federal government, which is the right thing. and we continue to pursue those like a.i.g. where the government has a substantial