mr. geithner?>> i believe i know one. >> when you left goldman sachs and went to the treasury you were there three years and you got $200 million in tax benefits because you didn't have to pay capital gains on $500 million worth of stock, right? >> i would strongly disagree with that. because -- >> well, that's what's been reported. >> let me explain. >> it's okay. you can respond -- i'll send a question to you in writing. >> okay. >> the concern i have is the same concern that mr. sterns has. you came before our conference very nervous saying, oh my gosh, the sky's falling. we have to come up with this money quickly. you were visibly nervous when you came before our caucus. then we have this bailout of aig and you don't know anything about it. mr. geithner had nothing to do with it. it just really boggles the mind that some of the biggest people involved in this whole thing from beginning to end had nothing to do with it. they didn't know. makes you want to think that some clerk some place was mak

mr. geithner? >> i believe i know one. >> when you left goldman sachs and went to the treasury you were there three years and you got $200 million in tax benefits because you didn't have to pay capital gains on $500 million worth of stock, right? >> i would strongly disagree with that. because -- >> well, that's what's been reported. >> let me explain. >> it's okay. you can respond -- i'll send a question to you in writing. >> okay. >> the concern i have is the same concern that mr. sterns has. you came before our conference very nervous saying, oh my gosh, the sky's falling. we have to come up with this money quickly. you were visibly nervous when you came before our caucus. then we have this bailout of aig and you don't know anything about it. mr. geithner had nothing to do with it. it just really boggles the mind that some of the biggest people involved in this whole thing from beginning to end had nothing to do with it. they didn't know. makes you want to think that some clerk some place was ma

mr. geithner. the government comes to the taxpayers and say is we need a boatload of your money couple we won it for a specific person. then they go for something else. then they come to the taxpayers and say we need more of your money and were going to use 62 billion ipo dollars. this is why we never should have traveled down this road. this unprecedented involvement by the government in the private sector. we have seen it with -- >> the gentleman's time has expired. >> we have seen now with aig. i thank the chairman. >> the gentleman's time has expired. thank you. the chair recognizes mr. clay. >> thank you so much, mr. chairman. i want to thank chairman towns and mr. issa for conducting this hearing. policymakersthner, several assert that aig's ability to provide cash collateral to their counterparties was not relevant in designing their assistance package. what is your opinion on this claim? that it was not relevant in design in the assistant. >> i agree. what was relevant and necessary was how

mr. geithner at that time documents detailing a.i.g.'at time did upon learning about the problems with a.i.g. or whether chairman bernanke knew of a.i.g.'s meeting with the new york fed, at that time mr. geithner. the fact that the fed may have known about the problems with a.i.g. before its collapse raises serious questions here about whether they ignored early warnings and failed to take action before the situation became untenable without massive taxpayer bailouts. madam president, many have said that if chairman bernanke is not reappointed, financial markets will be rattled. the notion seems to be that continuity of leadership will be valued more by markets than the assurance of responsible and accountable leadership at the fed. i believ -- i believe this is shortsighted and wrong. it is more important to find the most competent person available for the job than to simply adhere to the status quo. madam president, it's also wrong to speculate as to what might happen should someone other than mr. bernanke serve as chairman. i believe

mr. geithner had nothing to do with it. it just really boggles the mind that some of the biggest people involved in this whole thing from beginning to end had nothing to do with it. they didn't know. it make you want to think that some clerk someplace was making these decisions. i don't think anybody is going to buy that. you in mr. geithner and others were directly involved in making this decision, will you not? >> of course were director involved, and i said in my testimony. i heard mr. guyton's testimony. i heard him say the same thing. i was very supportive of that decision. to prevent the failure of aig. >> who is next? mr. lynch? >> thank you, mr. chairman. >> two minutes. >> mr. secretary, you are essentially involved in negotiations regarding bear stearns when you insisted on a very, very low price on the part of the bear stearns shareholders in order to protect the taxpayer who has been reported that you are very supportive of a 2-dollar a share price in order to protect the shared excuse me protect the taxpayers i

mr. chairman, i would ask unanimous consent that the eight letters previously sent to secretary geithner and as of today not responded to also be placed into the record at this time, although they will not be reviewed further during this hearing. >> reserve the right to object. >> thank you, mr. chairman. thank you for all of this and more. working together with you on the subpoena documents has caused both the majority and minority to glean considerable new information. in recent weeks, this committee receiving these documents have caused us to better understand the new york fed's pressure to a.i.g. to abort negotiations designed to obtain a hair cut, as it was called, from its counterparties and keep the details of the counterparties' payments from appearing on forms -- the firm's forms at the s.e.c. today, one of the questions we will ask is, should the american people be kept from knowing until 2018 the details of who were the ultimate beneficiaries of this bailout. as i have said before, i consider this a backdoor bailout. the people giving us testimony today will tell us that they f

mr. geithner says he w not involved wh the counterparty negoations. you're saying u were not inlved.yes, you ard a little about . buon november 6, when they gave $62 billion to alof these parts that came in and looted a.i.g.all of you guys say "i knew notng about it." d yet it appears that this happened. >> reporter:he power of the growing backlash agast assistan to wall street may get another test tomorw when federal resee chairman ben bernanke is pected to face a senate vote on confirmation a second term. lehrer: next, a second economy story. this o about the fine line the federal reserve is wking. the fed annound today it plans to keep interest rates arecord low vels of near zero for an extended period of tim our economics correspondt, paul solman, examinethat strategy as pa of his continuing reporting on king sense of financial ns. >> ♪ as we go through this recession ♪ >> repter: investment advisor jon shaynender his nom de country, merle hazard,n the deral reserve's monetary mistrations to revive the economy. >> ♪ it's a mini-great depression ♪ our markets went bersk the fed is

mr. geithner says he was not involved with the counterparty negotiations.'re saying you were not involved. oh yes, you heard a little about it. but on november 6, when they gave $62 billion to all of these parties that came in and looted a.i.g., all of you guys say "i knew nothing about it." and yet it appears that this happened. >> reporter: the power of the growing backlash against assistance to wall street may get another test tomorrow when federal reserve chairman ben bernanke is expected to face a senate vote on confirmation to a second term. >> lehrer: next, a second economy story. this one about the fine line the federal reserve is walking. the fed announced today it plans to keep interest rates at record low levels of near zero for an extended period of time. our economics correspondent, paul solman, examines that strategy as part of his continuing reporting on making sense of financial news. >> ♪ as we go through this recession ♪ >> reporter: investment advisor jon shayne under his nom de country, merle hazard, on the federal reserve's monetary min

mr. geithner and dr. summers were very frank in their discussions. we have frank discussions with them as well. there are some issues that we have to work through, and we also know there is a jobs package. everything is about jobs. what we are here today talking about is the jobs for the people of america. our citizens, our shared constituency, and therefore we need to make sure that the target actions going forth is about jobs for our people. we need to maintain the jobs that we have, we need to create the jobs, and attract new jobs to our metropolitan economies. so throughout our meeting, we have had the opportunity to also hear from the first lady, her initiative on childhood obesity, and we will partner with her on this movement. we will do very well, because this is an area that we have been working on in our cities for seven years in the u.s. conference of mayors. we have also had the opportunity to talk with nine cabinet members, very frank discussions. our meeting was set up in a very different way this time so that we could have a dialogue r

geithner. it is committee policy that all witnesses are sworn in. so, mr. secretary, if you would stand and raise your right hand. do you slum heolemnly swear to tell the truth, the whole truth and nothing but the truth? >> yes, sir. >> let the record so mr. geithner has been duly sworn. >> chairman towns, ranking member issa members of the committee, thank you for the opportunity to temperature before you today. i welcome the committee's attention to this issue. and we will continue to work closely with this committee, with all other oversight bodies -- >> mr. secretary, pull the mike just a little closer. we're having a little trouble hearing you. >> i'm almost eating it. how's that sound? >> our sound system isn't that good around here. >> i don't think i can make it any closer. i want to make sure that the american people have a comprehensive view of the actions we took to end this financial crisis. deciding to support aig was one of the most difficult choices i've ever been involved in in over 20 years of public service. the steps that were taken were

mr. geithner at that time documents detailing a.i.g.'s financial condition and its exposures to other financial institutions. we still do not know what treasury secretary geithner at that time did upon learning about the problems with a.i.g. or whether chairman bernanke knew of a.i.g.'s meeting with the new york fed, at that time mr. geithner. the fact that the fed may have known about the problems with a.i.g. before its collapse raises serious questions here about whether they ignored early warnings and failed to take action before the situation became untenable without massive taxpayer bailouts. madam president, many have said that if chairman bernanke is not reappointed, financial markets will be rattled. the notion seems to be that continuity of leadership will be valued more by markets than the assurance of responsible and accountable leadership at the fed. i believ -- i believe this is shortsighted and wrong. it is more important to find the most competent person available for the job than to simply adhere to the status quo. madam

mr. geithner to tell what he knew? >> when the financial services committee generally has hearings with the treasury secretary, he goes to the hearings. >> the state of the union -- this month or next month? >> soon. >> one is still in the running. >> soon. >> is it the white house as hope to hold up the state to the union until there is a healthcare bill? >> not necessarily. >> [inaudible] >> are you a big fan? we will announce something soon. >> the labor leaders are going to be to the president on monday to talk about healthcare. will he tried to make them understand that the taxing mechanism is a better idea than they think it is? >> i would be surprised if the topic did not come up. >> what is the purpose of the meeting? what does he hope to gain out of it? >> i think the president will take the opportunity to discuss that issue with them. i know that it is an issue that is a difference in the legislation that the house and the senate passed. i think the president will talk through it with them, what he believes c

mr. geithner at that time documents containing aig's financial condition and his exposures to other financial institutions. we still do not know what treasury secretary geithner at that time did upon learning about the problems with aig or whether chairman bernanke knew about aig's meeting with the new york fed at that time. the fact that the fed may have known about the problems with aig before its collapse raises serious questions here about whether they ignored early warnings and failed to take action on the situation and became unmanageable without tax bailout. madam president, many have said that if chairman bernanke was not reappointed financial markets will remodel. the notion seems to be that continuity of leadership will be valued more by market than the assurance of responsible and accountable leadership of the side here at a buddhist perspective is shortsighted and wrong. it is more important, i believe, to find the most competent person available for the job to simply adhere to the status quo. madam president, it is also wrong to speculate of what should happen if someone other th

mr. geithner, for not being the change that i expected to see and not doing enough for main street. but when the president last came here he did say something that's so important for us to remember. he was talking about how big the challenges are that we face, whether it's health reform or energy independence or the great recession and he said, we're going to step up and face this because that's what americans do. we don't back down. we don't back away from a challenge. every generation of americans are faced with a challenge. some had destroying the -- had to storm the beaches of normandy, some had to fight great wars. we are being asked to figure out how to compete against in the 21st centuryry and have a strong middle class and part that have is being willing to do the tough decisions on energy independence and other areas that are going to be the job creators. when we worry about something like the supreme court decision saying if corporations can spend unlimited money, that means the corporations that are competitive today will be able to lock in their monopolies through the wa

mr. geithner, the secretary of the treasury said this in testimony before the budget committee last year, it is going to require a different approach if we're going to solve the long-term fiscal imbalance. it's going to require a fundamental change in approach because i don't see realistically how we're going to get there through the existing mechanisms. and david walker, the federal former head of the general indicating office, i think the regular order is dysfunctional as it relates to these types of issues. it is, quite frankly, understandable because you're talking about putting together a package that crosses many different jurisdictions and the idea that that would end up emerging from the regular order i think is totally unrealistic. that is testimony before the budget committee in 2007 by the controller general. and leon panetta, the former chairman of the house budget committee, and the former chief of staff of president clinton, now the director of the c.i.a., said this in testimony before the senate budget committee. in response to the question shouldn't we rely on just the reg

mr. geithner, the current secretary of the treasury, said this before the senate budget committee on february 11 of last year. "it is going to require a different approach if we're going to solve the long-term fiscal imbalance. it's going to require a fundamental change in approach because i don't see realistically how we're going to get there through existing mechanisms. and mr. walker said i think the regular order is dysfunctional as it relates to all these types of issues and it is quite understandable because you're talking about putting together a package that across many different jurisdictions. the idea that it would cross the regular order is totally unrealistic. and leon panetta, former chief of staff of president clinton, said this: it will never happen. the committees of jurisdiction will never take on the kind of challenges that are involved in this kind of them under their own jurisdictions, that will never happen. mr. president, senator gregg, the ranking republican on the committee, and i came to the same conclusion. two years ago we started an effort to come up with a process

mr. president. calls torture bow tax cheat tim geithner's resignation heating up thanks to new e-mails regarding hisole in the bailout of aig. e-mails written by the federal reserve bank of new york while er in was president there isa believers the e-mails could prove during the bailout government officials encouraged aig to withhold vital information from you and the american people. issa and grassley are preparing to investigate these very serious allegations. a treasury spokesman claims geithner played no role in the e-mails because he already recused himself after being nominated to serve in the administration. i think i would like to hear that from the tax cheat himself, while under oath. this next story is one that could only happen in the city of san francisco. take a look at city supervisor known for frequently using inappropriate language at public meetings. a bay area newspaper called him out on his vile vocabulary. instead of cleaning up his act he announced this resolution for the new year. >> i'm vowing in 2009 i will the word [ bleep ] in every supervisor's meeting my apologies to thos

mr. elmendorf. i was at the oversight and government reform committee hearing, listening to secretary geithner, and,should be glad you're here, not there. i'm going to ask just, some, series of questions, real quickly if i can. first of all, i worked in the senate from 1979 to 1989 for a committee and those were the gramm-rudman hollings days, because we were so concerned about the deficit, growing debt. in retrospect in your opinion, is there empirical evidence that gramm-rudma gramm-rudman-hollings ultimately led to a balanced budget? >> actually did a little work on, congressman. i was a researcher in economics. i think the evidence is mixed. i think there is a, as you know, of course the particular numerical targets that were chosen proved to be unreachable, political matter. so the particular targets, not just the first version but the second version were not actually adhered to. i think many analysts would say that experience did focus people's attention on the issue. it kept it on front burner of the political discussion. in the end the larger steps were taken in 1990 and 1993 and later. but

geithner to be replaced. they have a bad decision. mr. bernanke deserves a chance. he hasn't been in there long enough to make a bad decision. so i think he just needs to have a chance to see what he can do. host: david has an op-ed in "the washington post" tomorrow, but we have an early advancer of it, and the headline says november doesn't need to be a nightmare for democrats. this is stemming from the oonts of this week. this is some of the recommendations that he has. he says, we still have much to do before november and time is running short. every race has unique characteristics, but there are few general things that democrats can do to strengthen our hand. he says, one, pass a meaningful health insurance reform package without delay. you'll excuse me as i flip the page. he goes on to make some other points. he says we need to show we are not just focused on jobs, but also create them, make sure that voters understand what the american recovery and reinvestment act can d for the economy. don't accept any lectures on spending. the g.o.p. took from us a $236 bil

mr. elmendorf. i was at the oversight and government reform committee hearing, listening to secretary geithner, and,ou should be glad you're here, not there. i'm going to ask just, some, series of questions, real quickly if i can. first of all, i worked in the senate from 1979 to 1989 for a committee and those were the gramm-rudman hollings days, because we were so concerned about the deficit, growing debt. in retrospect in your opinion, is there empirical evidence that gramm-rudma gramm-rudman-hollings ultimately led to a balanced budget? >> actually did a little work on, congressman. i was a researcher in economics. i think the evidence is mixed. i think there is a, as you know, of course the particular numerical targets that were chosen proved to be unreachable, political matter. so the particular targets, not just the first version but the second version were not actually adhered to. i think many analysts would say that experience did focus people's attention on the issue. it kept it on front burner of the political discussion. in the end the larger steps were taken in 1990 and 1993 and later. b

mr. elmendorf. i was at the oversight and government reform committee hearing, listening to secretary geithner, and, you should be glad you're here, not there. i'm going to ask just, some, series of questions, real quickly if i can. first of all, i worked in the senate from 1979 to 1989 for a committee and those were the gramm-rudman hollings days, because we were so concerned about the deficit, growing debt. in retrospect in your opinion, is there empirical evidence that gramm-rudma gramm-rudman-hollings ultimately led to a balanced budget? >> actually did a little work on, congressman. i was a researcher in economics. i think the evidence is mixed. i think there is a, as you know, of course the particular numerical targets that were chosen proved to be unreachable, political matter. so the particular targets, not just the first version but the second version were not actually adhered to. i think many analysts would say that experience did focus people's attention on the issue. it kept it on front burner of the political discussion. in the end the larger steps were taken in 1990 and 1993 and later.