this is something paulson has been trying to avoid. much more comfortable having the fed do this than the congress and beg for money. >> host: not surprisingly. >> guest: totally irrational. he and bernanke, no sign of the president go to capitol hill and meet with leaders and bernanke does scare the hell out of them. bernanke invokes the great depression and says it is up to them to stop and he says he's known for some time it is likely they are going to the taxpayer money and every other banking crisis eventually the taxpayers come in and help rebuild the foundations of the bank and i think that he makes the judgment that the only way to get congress to act as to tell them the world will and if they don't act. and that is a high risk thing because, as initially says no the house rejects the bill and it's kind of like he told us the world would end if we don't do this and then they don't do it and so i think there was a great deal of damage done, and even worse they told congress they are going to use the money for one thing and use i

paulson. mr. paulson please stand as i administer the oath. do you solemnly swear to tell the truth, and nothing but the truth? if so answer in the affirmative? >> i do. >> you may be seated. let the record reflect he answered in the affirmative. i'll ask the witness to summarize his testimony in five minutes and, of course, we know the procedure, you know, the yellow light means you have a minute left and the red light means stop and then, of course, we will have time to raise questions with you. you know the procedure. you've been through this quite a few times. so good to have you back. >> mr. chairman, thank you. and i will go through this quickly. first of all, chairman towns, ranking member issa, and distinguished member s of the committee, i appreciate the opportunity to testify before this committee. i was secretary of the treasury in 2008. in that role i had the privilege to work with many talented men and women in government and the private sector who labored to pull our nation back

bernanke and hank paulson, s. res three secretary pronounced it to be contained meaning that the damage would be limited to housing and screw up the rest of the economy. and it turned out not to be contained, and when big financial institutions began to include especially after, i think ben bernanke realized he was at risk of presiding over something like the episode he had studied, and that gave him more courage i think to do dramatic things and some other person but at that. i think the beginning some of his colleagues thought he was overreacting. after all anybody who studies one episode in history tends to see everything that happens like this is happening again. and they thought he was overdoing it. i think the and -- >> host: he was fighting the last war. >> guest: or the 500 war and it turned out he was fighting something that looked a lot like the depression which was stunning the we could be in 2008 going for something that we thought cause all the economists told us would never happen again. >> host: he

paulson. mr. paulson, please stand as i administer the oath. sworn sworn do you solemnly swear to tell the truth. answer in the affirmative. you may be seated. let the record reflect he answered in the affirmative. i'll ask the witness to summarize his testimony in five minutes and we though the procedure, the yellow light means you have a minute left and the red light means stop and then we will have time to raise questions with you. you know the procedure. you have been through this quite a few times. good to have you back. >> thank you and i will go through these quickly. first of all, chairman towns, ranking member issa and distinguished members of the committee, i appreciate the invitation to testify before this committee. . those payments, nor was i involved in any of the decisions about aig's public disclosure of those payments. those matters were handled by the federal reserve bank of new york and the federal reserve board. they sought to make appropriate decisions on those matters and

paulson. >> thank you, mr. paulson, for -- >> i agreed to stay for another eight minutes. it's been 10 minutes. >> for that reason, i dismissed the gentleman who had the time to tell him his time has passed. and for the committee, and especially for chairman towns, may i thank you for not only eight minutes, butank you. >> this weekend on c-span2 book tv. >> in the nation's capital and across the country, listen to c-span radio in washington >> u.s. senate convenes next. they will start with an hour of general speeches and a plan to finish a measure that increases the u.s. federal debt limit. in the late morning, we expect vote on for amendments and final passage. later, debate and vote on a second term for ben bernanke as fed chairman who scored a appointment expires on sunday. the house is not in session today. republicans are meeting today and tomorrow. president obama will speak to republicans to our. the president today and can't of florida for a town hall meeting. live coverage just after 1 p.m. eastern on c-span. now to the senate here on c-span2. the chaplain, dr.

paulson, excuse me. we want to make sure members can hear your testimony, and it's amazing with so much money in this federal government we don't have a better sound system, but i'm going to need you to speak as close to that mic as you can. thank you, you may continue. >> so to just be clear, there was no way to handle this situation differently. there was a very few days to act to prevent bankruptcy with no winddown powers to let this company be liquidated and avoid bankruptcy. >> well, with all due respect if it's a separate entity, the rest of it could stand on it own, sir, but let me move on with another question here very quickly. and secretary geithner's testimony he indicated that he felt contractually the contracts that we had, the investments that were made by foreign banks into aig that they were involved with needed to be adhered to and worked with. was the government a part of those contracts? >> i, as i've said in my testimony, i had no involvement with the payment of any of those contracts

i believe we would have had 25% unemployment. >> reporter: paulson faced skepticism as well.ff stearns is a republican from florida. >> here's the problem i think a lot of us are having. mr. geithner says he was not involved with the counterparty negotiations. you'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 fin

reporter: paulson faced skepticism as ll.ff stearns is a replican om florida. >> hers the problem i think a lot us are having. mr. geithner says he w not involved wh the counterparty negoations. you're saying u were not inlved. oh 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 a

we said, all right, we will give secretary paulson his $700 billion headline. we'll allow him to stand up and say, the congress has authorized the treasury department to spend $700 billion dealing with this problem of troubled assets. however, the fine print makes it clear that they really are only going to have authority for $350 billion without coming back to congress to get approval for the second $350 billion. so the headline was there, secretary paulson was able to get on the telephone and call all of the central bankers all over the world and say, the u.s. congress is going to approve $700 billion of authority, but the fine print said you're going to break it up into two tranches, the first one $350 billion for immediate debt burstal -- and again, that will take months to do -- and then come back for the second $350 billion after you see how it works. here in the senate, we approved that by a large margin and it went forward, and i voted for that first tranche of $350 billion because i was convinced that the challenge really was there and that the crisis

paulson and mr.own to $2 a share because the american taxpayer money was in the bailout. that was something we supported by the fed, by the treasury because we felt that because the taxpayer was bailing them out that the shareholders should not be held harmless. you have a different situation here. slightly different. we have aig going under. these are credit default swaps. the money is going out to the counter parties. this is a pass through. the folks on the other side are goldman sacks. largely that's a principal beneficiary of all this. we don't negotiate a nickel, not a cent off of what they are getting. you are in the same position, supposed to be negotiating on behalf of the american people. you are saying oh, the regulations were different. let me tell you something. we were changing the rules every single day. we were taking action with the fed on the extraordinary circumstances. you had every opportunity, every opportunity to weigh in on behalf of the american people and make these people t

paulson and mr. bernanke, we forced bear sterps's shareholders from a position i think that was a high of $172 a share in january, we forced them down to $2 a share because the american taxpayer money was in the bailout. that was something we supported by the fed, by the treasury because we felt that because the taxpayer was bailing them out that the shareholders should not be held harmless. you have a different situation here. slightly different. we have aig going under. these are credit default swaps. the money is going out to the counter parties. this is a pass through. the folks on the other side are goldman sacks. largely that's a principal beneficiary of all this. we don't negotiate a nickel, not a cent off of what they are getting. you are in the same position, supposed to be negotiating on behalf of the american people. you are saying oh, the regulations were different. let me tell you something. we were changing the rules every single day. we were taking action with the fed on the extraordin

paulson and mr. bush's administration paulson was not a democrat, paulson is the one that came out with the tarp funds for the banks and wall street. so if you could address those concerns of mine, mr. beach, i would be most appreciative. guest: i very much appreciate your comments. first, let me just say that this economic freedom index does not reflect a republican viewpoint. it may appear that way. but in fact, it doesn't. and it certainly is not a bush administration's viewpoint. how will i sustain that point to you. if the bush administration had been dedicated entirely to the principles which would have given it a high score -- and remember, this year's score, 50% the responsibility of the bush administration. then they wouldn't have done some of the thing that is you just ill lit rated. secondly, economies which are economically free are ones in which the distribution of income is sliveraging, that is the distance between the top and the bottom. one of the reasons why the united states may hav

the original tarp was $350 billion, half of what paulson asked for. the other had to be approved by the president elected later by a congress to be elected later, that's this congress, the pelosi congress, the reid senate and the obama presidency, all of this except 350 billion sm spending. it brings us to this point where the american people have seen that they thought they elected people that were responsible, that understood high finance and the whole big picture that a government has to do so well, that is this constitutional republic, this representative form of government, madam speaker. when we saw the tarp plan come through and the nationalization of a couple large banks and then a.i.g. and we watched some of those insider deals work out pretty good for those people on the independence, as we marched down this line, freddie mac and freddie mac. american people were getting nervous of the government takeover of private business. when they got to the takeover of the car company, that for sure wasn't george bush. that was all president obama. and

well, that is what chairman bernanke and the treasury secretary's paulson in geithner did for nation. so he deserved to be reconfirmed for that reason. the second reason he needs to be reconfirmed is because we are looking at very tough times. and the money, the liquidity that was required to be put into the system, this $2 trillion, as the system recovers becomes a risk for the system. we all know that. effect liquidity is allowed to play itself out and multiplied, you could end up with a fairly significant inflationary event and as we all know, inflation is the crew list at the vault because it the values peoples savings and it undermines the productivity of the nation. so, how this liquidity comes out of the markets, how we get this $2 trillion plus as a dismal supply data the system is going to be a very complicated but very very important undertaking and it is going to be primarily the responsibility of the fed. chairman bernanke has outlined very clearly and they think it is very positive way how he intends to accomplish that. how the federal reserve will start to draw down the

. >> guest: you mentioned earlier the incident where mayor paulson insulted khrushchev in los angeles. then khrushchev got mad and threaten to go home. the dinner ended in a moment of anxiety. and then khrushchev went upstairs to his hotel room and gathered his aides and you around him, and went into kind of a tantrum about the mayor and about this incident, hoping that he was being overheard on a blog. could you tell us that story? >> host: you can tell this story. >> guest: you are their. >> host: before you ask a question, i tell you the story about. >> guest: , well, he was so convinced that the americans were bugging his hotel room that he figured if he exploded with anger, they would be listening and they would change their policy. now as i -- i asked the state department and the fbi if they were bugging the rooms, and they told me no. i don't know whether that's true or not, but they did change their policy after that. but perhaps because gromyko went and talked to large. i don't know whether they were bugging them or not. but khrushchev assumed they were. >> host: the routine

so i decided to lobby myself the treasury, rather easy, hank paulson was very helpful and then to lobby the congress to see if really it was totally impossible to make this -- we were talking simple to obtain finally a vote from the congress, allowing us to sell the gold and after long story but i want to make it short now, it happened, with the help of this administration, very helpful, asking the congress to go forward. so, finally, great news, last september, we were likely to go forward, telling the gold. now you don't sell the gold that easily. can't just open a shop and say, you want it? so we created a first period in which we could have direct sale to several banks and this was the framework in which we sold 200 tons out of the 400 to the indian central bank and others to other and now we're in the second period where we will sell it on the market. sell on the market. what are we going to do with this. the -- sorry, i made it long but, was for you to understand, the idea was to use it to put it into a monday and take the return of the fund for financing the fund and between the

and it was chairman bernanke, along with secretary paulson, who came to the congress begging for tarp. and if you like those bailouts, by all means vote for chairman bernanke. but if you want to put an end to bailouts and send a message to wall street, this vote is your chance. i urge you to vote no on the confirmation of chairman ben bernanke for another four-year term as fed chairman. i yield the floor -- yield the floor and reserve my time. mr. dodd: mr. president? the presiding officer: the senator from connecticut is recognized. mr. dodd: mr. president, i'm ing to ask to address the chairman for three minutes and reserve the balance of my time for later in this debate. and let me say to my friend and colleague from kentucky who is a member of our committee, and a worthwhile member of the committee. while we disagree on this nomination, i'm appreciative. he raises very good questions. he does so with a great deal of compassion and conviction on these matters. and i appreciate his gracious comments and trying to accommodate his -- the matter affecting a.i.g. where $180 billion of t

. >> they did, and hank paulson, the former secretary of the treasury. in a sense, we don't know what happened. i mean we do know that aig got 85 billion dollars and then the companies that had bet on them and taken this crazy bet were reimbursed 100 percent. they didn't take a haircut or anything. and we don't know how it happened but we know the people who did it are prospering, walked away, and are untouched. so i think there is an anger that is still looking for a target. >> we do know one thing that happened. we just ran out of time. thank you both very much. >> woodruff: now, the debate over where to hold the trials of suspects accused of masterminding the terror attacks on the world trade center and the pentagon. margaret warner has our report. >> there are places that would be less expensive for the taxpayers, and less disruptive for new york city. >> warner: in a sharp reversal, mayor michael bloomberg spoke out this week against holding the trial of khalid sheikh mohammed, the alleged leader of the 9/11 conspiracy, in lower manhattan. >> it wou

. >> they di and hank paulson, the forr secrary of the treasury. in a sensewe don't know what happed. i mean we do knothat aig got 85 billion dollars and then the companies thahad t on them and taken this crazy bet were reimbursed 0 percent. they didn't ke a haircut anything. and we don'tnow how it happened b we know the people who did it are prospeng, walked away, and are untohed. so i think there is an ang that is still lookg for a target. >> wdo know one thing that happened. we just n out of time. thanyou both very much. >> woouff: now, the debate over whe to hold the trials of suspects aused of mastminding the terror attacks on t world trade center and the pentagon. maaret warner has our report. >> tre are places that would less expensive for the taxpayers, andess disruptive fonew york city. warner: in a sharp reversal mayomichael bloomberg spoke t this week against holding thtrial of khalid sheikh mohammed, the allegeleader of the 9/ conspiracy, in lower manhattan. >> it would be phenomenall exnsive, and it is very disrtive to people who live

also testifying as former treasury secretary hank paulson.we will have live coverage on c- span3, oversight of federal aid to aig. go-ahead, independent line. caller: please, i am a little nervous. give me a chance to explain myself. i would like for the president to come out and not ask any more but to demand that the republicans and a republic -- democrats pass the senate health bill. we, the people, we need it. you have not had any help from the democratic party. in fact, so many of them ran for president and lost, they don't want to see you succeed, either. please tell them if they don't, we the people -- they will not be there the next. massachusetts, massachusetts sent a message back to you, mr. president, they love you. they sent a president to your own party that if you did not think enough of ted kennedy's seat to come out and fight for id g-8 -- fight for it, that goes for senator kerry who wanted to be president and couldn't because he cannot have a backbone. host: the line for democrats, north carolina. w3caller: i would like him

bill paulson -- secretary paulson give $750 billion unconditionally to wall street.obama came in and give them another $850 billion i think, but with attachments. with conditions attached. that they had to pay the money back. it was alone. the people in the media, you get to paint the picture for the people and to have it both ways. people believe that president obama is propping up wall street one really president obama save and our economic bacon and made it an investment for the people, something never before done. guest: let me just say to the caller that i have worked with bill mcinturff for 20 years and he is the best. i have no problems with him. he looks at the issues and data as a straightforward as anyone can in the business. whether you are working from the democratic side or the republican, i'd i can guarantee you we analyze and strategizing. from the point, yes, we are part. as a n but in terms of doing the job and doing it right, bill mcinturff visit as well as anyone in the business. guest: you know, what the guy is referring to is what the obama admin

and it was chairman bernanke, along with secretary paulson, who came to the congress begging for tarp. and if you like those bailouts, by all means vote for chairman bernanke. but if you want to put an end to bailouts and send a message to wall street, this vote is your chance. i urge you to vote no on the confirmation of chairman ben bernanke for another four-year term as fed chairman. i yield the floor -- yield the floor and reserve my time. mr. dodd: mr. president? the presiding officer: the senator from connecticut is recognized. mr. dodd: mr. president, i'm going to ask to address the chairman for three minutes and reserve the balance of my time for later in this debate. and let me say to my friend and colleague from kentucky who is a member of our committee, and a worthwhile member of the committee. while we disagree on this nomination, i'm appreciative. he raises very good questions. he does so with a great deal of compassion and conviction on these matters. and i appreciate his gracious comments and trying to accommodate his -- the matter affecting a.i.g. where $180 billion of

. >> as a last clip you have a little rap song and secretary hank paulson, former treasury secretary, in a hearing situation this is only a minute or so. let's run this and then we'll wrap it up. >> this morning we meet for a hearing on the turmoil of u.s. credit markets recent actions regarding government sponsored entities, investment banks and other financial institutions. >> everybody's broke and everybody knows they're messing your money, everybody's broke. >> this is not just a cosmetic issue and a feel good issue. >> we all ain't got no money, i don't think it's very funny, everybody's broke. >> the tax payer already is going to suffer the consequences if things don't work the way they should work. >> welcome to the great depression. oh, this is a double dip recession enough is never quite enough, oh say can you see, oh the cost of living is killing me, i can't afford to buy my own tin cup. >> the video you must of gone in there with that idea because you weren't in a normal position where you shot all that. >> well, actually it's no it didn't work that way. it was shot before

also known as paulson's bazooka.his legislation gave the treasury secretary the power to buy an unlimited amount of securities, from fannie mae and freddie mac, if the treasury secretary determined a couple things, that such actions are necessary, a, to provide stability, to the financial markets and b, to prevent disruption in this availability of mortgage finance and, c, protect the taxpayer. ultimately, they allowed the government to effectively take control of those companies, if it deemed their losses to be a systemic risk to the u.s. financial system. then, in september, 2008, when the housing market continued to decline, secretary paulson, fired the bazooka and the federal housing finance agency placed fannie mae and freddie mac into a government conservatorship and then, beginning of last year, 2009, cbo concluded fannie mae and freddie mac should now be included -- this is the important point, they should now be included in the federal budget. and accord to a report, you arrive at the conclusion after consid

november 2008, after those presidential elections, you and secretary paulson came before the members of the committee and basically said we have an set of circumstances. we need you to act to do so boldly. and in the absence of doing that, that we would have a global financial meltdown. so i want to start there, because it's the beginning of what has been transcended since then. is that a fair statement? >> yes, sir. expect that was october. >> october. okay. and then the actions took place thereof. i often get from my constituents, you know, senator, when i make a mistake i have to pay for it. when the financial institutions make a mistake, i have to pay for it too. and i think the difficulty is creating the correction between why we acted based upon the exper teal of yourself and others who said we needed to do so because otherwise there'd be a global financial meltdown. that has real-life consequences to main street or for that fact, across the country. is that a fair statement? >> of course. >> now which brings me to where we are today. and i want to get a sense from you, do you

also known as paulson's bazooka.this legislation gave the treasury secretary the power to buy an unlimited amount of securities, from fannie mae and freddie mac, if the treasury secretary determined a couple things, that such actions are necessary, a, to provide stability, to the financial markets and b, to prevent disruption in this availability of mortgage finance and, c, protect the taxpayer. ultimately, they allowed the government to effectively take control of those companies, if it deemed their losses to be a systemic risk to the u.s. financial system. then, in september, 2008, when the housing market continued to decline, secretary paulson, fired the bazooka and the federal housing finance agency placed fannie mae and freddie mac into a government conservatorship and then, beginning of last year, 2009, cbo concluded fannie mae and freddie mac should now be included -- this is the important point, they should now be included in the federal budget. and accord to a report, you arrive at the conclusion after consi

also known as paulson's bazooka.ecurities, from fannie mae and freddie mac, if the treasury secretary determined a couple things, that such actions are necessary, a, to provide stability, to the financial markets and b, to prevent disruption in this availability of mortgage finance and, c, protect the taxpayer. ultimately, they allowed the government to effectively take control of those companies, if it deemed their losses to be a systemic risk to the u.s. financial system. then, in september, 2008, when the housing market continued to decline, secretary paulson, fired the bazooka and the federal housing finance agency placed fannie mae and freddie mac into a government conservatorship and then, beginning of last year, 2009, cbo concluded fannie mae and freddie mac should now be included -- this is the important point, they should now be included in the federal budget. and accord to a report, you arrive at the conclusion after considering the following questions, who owns the agency and who supplies the capital, and,

, and paulson and bush when they came out and said we're in all kinds of trouble. we need the t.a.r.p. fund. in office, the ceo of goldman sachs. i think it's going to be part of his downfall. >> that's a little beyond our per view. we're in the fact checking business. i don't really know that i have anything to say to that. >> let me ask you what one of the earlier callers said. you mention transparency. you do touch on transparency and the area of promises stalled. let's go through a couple of those. lifting the payroll tax cap on earnings above $250,000. there's transparency standards for military contracts. a promise that's stalled. tell us more about that. >> guest: well, we looked for action on that. we just didn't find anything. i think that's typical of the fact that we're talking about 500 promises, actually 503 promises is our total. that the administration, i think made some calculations that they could only pursue so many things at one time. many of the things that we have stalled, i think earlier, we talked about some of the promises that obama made ab

country and we didn't do it ourselves because it hurts the federal reserve in the public secretary paulson. .. .. for 100 years almost. and in that respect, and we haven't been lobbying. what we've been doing if anything is trying to provide advice in our recent views on the subject. but i might think of it as turf it, in my view is an important component of thinking about how a successful financial stability program are to be structured or at so given that it's very much in our domain, you know, i don't want to use it listless, but to the extent we have arguments and positions to take ione asked you to believe that we do it based on what our view is based on the public policy, not because of turf. and you'll notice that we have not used the same kind of energy on other aspects of this has been the thing that we view as critical. and i actually do believe that the federal reserve is completely eliminated from financial stability policy will have very negative consequences sometimes in the future would neither you or i shearer. i have to understand that on that particular issue, we do feel

. >> and vechten clyburn night the number of the old treasury secretary hank paulson will be in conversation warren buffett that the omaha chamber of commerce and c-span will be covering it as well as booktv. it mighttteneng. we appreciate that and we are still lead the statuary hall and earlier we talked with mike castle who is a republican senate candidate from delaware, and now from illinois and we are going to put him right on the x, the republican senate candidate from illinois, mark ker. did the president give you anything to use in your senate campaign tonight? >> there were some pluses and minuses i wrote down, the pluses and minuses part of the plus side, earmark reform, no foreign campaign contributions and the discretionary spending freeze. on the minus is it looks like we have a trillion dollar deficit as far as the eye can see, no reset on the health care bipartisanship and his spending restraint only covered .5% of the federal budget. >> i see bank taxes, stimulus bill then second stimulus. >> that is right he is also calling for new bank taxes but that will cause a credit crun

ben bernanke and hank paulson said to the president, looking at the prospect of an economy worse thanthe great depression, it took people to their core. it reinforced a change, and republican party suffered from that. let us also give credit to where credit is too. president obama was a phenomenal candidate, literally and figuratively. it was an historical run for the presidency. he blazed a lot of trails in terms of technology, voter contact, so he deserves credit, as well as the dynamic working in his favor. 2006 was the second midterm of president bush's two terms. host: let us get to some student questions. go ahead, please. caller: good morning. i would like to know simply if you believe the republican party is ready to gain control in congress? guest: i do believe public and party is ready to take control. -- a republican party is ready to take control. the good thing about our system is a checks and balances. you learn lessons and i think the republican party has learned from the defeat. there is more that we can learn, but republicans in congress have learned the importance of

later, you will hear from hank paulson. >>> the committee will come to order. the committee will come to order. good morning. on september the 16 2008 the wall street giant aig faced immediate bankruptcy. aig was saved from collapse when the american people came to the rescue with an $85 billion bailout. less than two moss later, the american taxpayer was again forced to pay the bill when the federal reserve directed aig to hand out billions of dollars to counterparties, that inclupded the biggest names on wall street. in effect the taxpayers were propping up the hollow shells of aig. by stuffing it with money, and the rest of wall street came by and looted the corpse. the circumstances surrounding the payments to the counterparties has created an air of suspicion and distrust among the american people starting with the new york feds. initial refusal to name the counterparties. the new york fed argued that disclosing these counterparties would somehow injure aig. in fact when the information was finally released under pressure from congress, nothing happened. i

the treasury secretary at the time hank paulson needed to let someone fall.on, it is my belief that if they had not failed, someone would have eventually. a few days before lehman brothers failed, the market was pricing and 80% probability that washington mutual was going to go bankrupt. the property values was the source of the crisis. this was taken down numerous banks, you have to know. host: we have all heard the phrase "too big to fail." what about the phrase "too big to succeed" -- where does that come from? guest: it is the idea that banks have gotten so big, they pose a risk to the economy and have demonstrated an inability of the managers to run their company. there are serious questions to the extent to which the management of citigroup knew the risks that there traders were taking on or just how badly they would be affected if their ability to shift their securities on their balance sheet was compromised. these banks should be cut down to size or kept so big from growing, not only for the good of the economy, but for their own good. however, many c

hank paulson and the bush said we are in trouble, we need the t.a.r.p. fund. no questions asked. then he keeps tim geithner in office who was the ceo of goldman sachs. i think that could be part of his downfall. guest: that is a bit beyond our per view. we are in the fact-checking business. host: the first caller mentioned transparency. you touched on the area of promises stalled . let us go through some of those -- guest: we looked for action on that but we could not find any. we are talking about a total of 503 promises. the administration made some calculations that it could only pursue so many things at one time. earlier we talked about some of the promises obama made about gay rights. those are stalled by a political calculation, but by the white house, that they were not going to pursue that in the first year. with 500 promises, you have to figure out which ones you will tackle first. host: they also promised -- what is the difference between a stalled promise and a broken promise? guest: we write something "stalled" up until the point where there cannot be any more action.

henry paulson will also testified. live coverage starts at 10:00 a.m. eastern on c-span 3. now a senate hearing with the cochairs of the 9-11 commission. tom keane and lee hamilton discuss security measures following the attempted bombing on christmas day. this is an hour 50 minutes. >> welcome to this second in a series of hearings during which we will investigate the reforms passed by congress and the wakes of the attack of 9-11 are working and to examine the reforms in the light of recent attacks in the ongoing threat and what parts of what we have done earlier may need further reform so we can fulfill our responsibility to protect homeland security of the american people. i want to go back to last week's first in the series of hearings before focusing on this one and say i very much appreciated the fact that all of our witnesses -- dennis blair, director of the national counter-terrorism center, and the department of homeland security, janice napolitano, all acknowledge mistakes were made with regard to the christmas day attack on the plane over detroit, and all three o

henry paulson will also testify. live coverage from the house oversight committees are set and a glut eastern on c-span3 -- an oversight committee. live coverage begins at 10:00 a.m. eastern on c-span3. >> the state of the union address, wednesday night. our coverage starts it 8:00 p.m. eastern on c-span. you can also listen to the president's address live on your iphone with the c-span radio application. the congressional budget office issued an outlook on the federal budget. the cbo report said that the deficit which currently stands at $1.40 trillion could rise to $1.60 trillion this year. the cbo director presented the report at the news briefing. this is just over an hour. >> for those of you i do not know, i am the associate director for communications at cbo. we release our budget and economic outlook. it is now live on the web at divi-divi -- at www.cbo.gov. the also launched a new interactive web page that will make easier for people to access the information. it is my pleasure to introduce our director. he

ben bernanke and hank paulson said to the president, looking at the prospect of an economy worse than the great depression, it took people to their core. it reinforced a change, and republican party suffered from that. let us also give credit to where credit is too. president obama was a phenomenal candidate, literally and figuratively. it was an historical run for the presidency. he blazed a lot of trails in terms of technology, voter contact, so he deserves credit, as well as the dynamic working in his favor. 2006 was the second midterm of president bush's two terms. host: let us get to some student questions. go ahead, please. caller: good morning. i would like to know simply if you believe the republican party is ready to gain control in congress? guest: i do believe public and party is ready to take control. -- a republican party is ready to take control. the good thing about our system is a checks and balances. you learn lessons and i think the republican party has learned from the defeat. there is more that we can learn, but republicans in congress have learned the importance o

september and october of 2008 when president bush put forward the economic stabilization plan secretary paulson, then secretary of the treasury, put together the plan that they proposed in late september of 2008. i thought those ideas were wrong. i thought the stimulus bill was wrong in february and in fact when you look back over this year and you look at the expenditure of political capital on that stimulus bill, had the health care bill been ready to go, had their been anything more than just rhetoric during the campaign and had there actually been legislative language laid down or at least legislative principles developed from which legislative language could be developed, if we had taken that health care bill up in february because of the enormous popularity that the president enjoyed in those early days after the inauguration i think that the president could have pretty much gotten whatever -- whatever he -- whatever he wanted during those early days. but the decision was made for whatever reason not to do that and to go forward with the stimulus and that's the legislation that came out o

you see more -- more parallel critiques of the rahm emanuel's and the tim geithner's and the henry paulson'srom places like rolling stone and blogs like mine. things. and, you know, the general consensus among critics on both the left and the right is that the obama financial services, financial quote unquote reform policy has built to make banks that were too big to fail even bigger. and has rewarded the enron style accounting of pain and freddie mac was even more bailout money. and so i think you'll see more of those bedfellow alliances targeting both -- both targeting democrat politicians have enabled it. >> host: michelle malkin, a lot of people we've talked about michelle malkin.com. when people post comments, they are not always nice, is that correct? do you leave is up or take those down? >> guest: if they violate my terms of use policy, which you can see on the website, i do my best to ban commenters who cross my line, crossed the lines of those terms of you. >> host: do you support an open dialogue among people disagree with you? >> guest: there are liberal commentators on this site

this is from a book and henry paulson. the book goes on sale on monday. on the front pages of "the financial times," there's a story that deals with the book -- a book. international bankers have responded to this notion of it fee for bankers. among regulators and politicians for an insurance levy. the best way to insure that collapsed would not fall on taxpayers. bankers have resisted the idea is. they said considering a global levee from the president't. any new levy would be likely to appear in a resolution fund which is in front of the senate. it creates a resolution fund for when the bell companies -- for big companies. what did you learn from the exchange yesterday between the president and the gop republican leaders? caller: good morning, pedro. i learned a lot. i learned we have a very, very intelligent and sharp president and everybody needs to start respecting this man. i am glad the two showed jeb henserling of texas. the president mentioned that he would love to see this after it was checked on the facts. i wish you would go to the trouble if

speaker murphy, leader mccarthy, leader granstall, and leaders paulson and mckinley.be here. i am happy to be with you for this extraordinary 80-day session. there is much to do and no time to waste. we face real challenges, once we did not create, but once we will overcome. on the one hand, we will recover from natural disasters which are historic in their scope. the fourth natural gas master -- natural disaster in our history. we continue to address these challenges head-on, with resilience, optimism, determination, and good old- fashioned hard work. we're also a people of great faith, a faith that teaches us with god's help, all things are possible. [applause] with god's help, all things are possible. perserverance, there is nothing we can not indoor, and there's no -- we cannot endure, and there it is a challenge we cannot overcome. regardless of what part of the state we come from, our political views, or are station in life. you see, despite the obstacles that did a year anyway, i winds continue to look for work, not backward. they believe, as i do, that the 21s

administration, president bush came to congress during the financial meltdown along with secretary paulson and asked for hundreds of billions of dollars. they said they were going to use it to buy bad debt from the banks. did they use it for that? no. they started to use it to nationalize american companies. they bought automobile companies. they bought banks. they used the government to take over the means of production. and now it falls to us to break this socialist stranglehold in our country. the wall street reform and consumer protection act was one of the first steps. we banned future tarp failouts. we require companies to pay into a fund. no longer will companies be bailed out by taxpayer dollars. i call on the united states senate to pass the wall street reform and consumer protection act and take additional steps to privatize these companies the federal government owns. i yield back. the speaker pro tempore: the gentleman yields back the balance of his time. for what purpose does the gentleman from florida rise? >> permission to address the house for one minute. the speaker pro te