. >> is that what happened with john paulson. he came to goldman sachs and said, hey, i want to put this package together and i want to bet against it? >> for the most part. most of that is perfectly legal within, unfortunately, the structure that we have. >> is it important -- is it an important economic thing to do? does it -- does it help the national economy in any way? >> it is purely a betting mechanism. there's certainly no help that paulson gives. paulson took a bet that the housing market was going to go down. frankly -- >> which is perfectly legitimate to do. >> there are many writers including myself who thought there were problems with the market and things were looking too good to be true. so that in itself that wasn't the problem. the problem was that he came to goldman and said i want to do this structure. i want to select the things that you're going to buy from me but i'm going to bet against you. and so that's kind of, again, sort of legal because the fact that i'm betting against you, you're still taking the be

paulson returning to ceo? >> absolutely not. >> i just think -- mostly by me, but whatever. >> there are a whole lot bunch of conspiracy theorists out there and one of the dangers perhaps mr. paulson coming back is that it kind of gives more fuel to that fire where people are saying, hey, well, no wonder goldman is doing well, they're in bed with the government. what is your take, chris? >> i agree with you 100%. i think that is exactly the problem. if, in fact, he comes back, it does look like, i'm not sure if he comes back from a leadership position it's not a difference as far as i'm concerned. >> matt, let's leave paulson alone. but let me ask you structurally, there are some people saying goldman needs a banker, an attractive banker and good spokesperson at the sort of most visible spot at the head and goldman needs more of a customer's man rather than a trader. what are you thinking on that? >> i think what's interesting, those points are relevant. but next week you see a possible split between ceo and c

then i bought hank paulson's book on the brink and paulson was the secretary of treasury the last few years of the bush administration and his daily routine had to be much like the one dorothy parker describes when she says opening up a newspaper each morning, what is this? i don't agree with everything paulson says. but i think history will judge him well because he was probably the right person for the job at that time. it was a hellacious job. he and he had a lot of tough decisions to make her go he did them very systematically. each morning he would be, let's see, lehman brothers, sorry. [laughter] it wasn't quite that way but people think you did it that way. in 2008, hank paulson in the middle of 2008 in the middle of the meltdown meltdown he convenes all the big shots on wall street to a meeting in washington and he asked what went wrong? and this is the heads of morgan stanley, the heads of goldman sachs, the heads of jpmorgan chase etc. and here is what they tell him. they tell him things that, you can find in the editorial page. they are just not interesting. excess leverage

paulson. putting in a fiduciary duty situation that's subject to a variety of conflicting interests might just set them up to fail. >> how about the issue of the adequacy of fines? don't you think that to have some deterrent effect there have to be jail sentences under the rainbow? >> we have a number of different jail sentences for securities fraud, so i think we already have a lot of fines on the books. and a lot of jail sentences on the the books -- >> so you would agree that jail is necessary, but it ought to be imposed under existing law? >> it depends on the situation, and i don't want to say that i, you know, think goldman's situation determines -- >> i wasn't putting goldman in the question. >> okay. >> professor ribstein, how about it? are fines sufficient as a deterrent? >> they may or may not be, senator. i think we have to take into account both the costs and benefits of imposing criminal liability -- >> you have professor pontell's example of a $50 million fine willingly paid with

i'm sure secretary paulson was.ime, as bear stearns fell off the cliff, we were deeply worried about what that we do to the broader stability of the financial system, and we knew at that point that fannie and freddie, like many other parts of the financial system, based very substantial losses on there, tickling retain their portfolio. and we work very hard to encourage the relevant authorities to encourage those firms to go out and raise a lot of capital. as we were doing in other parts of the system, it seemed that straightforward sensible thing. and that was important because, as we saw fundamentally, short capital going to a storm like this is catastrophic and they were short capital. and the problem with these crisis is people tend to wait. if they wait too long it looks week. the price seems expensive. they are shareholders, so basic classic pattern that was magnified dramatically on untamable corporate structure than internet. and we were as many people did work very hard to encourage people to encourage them

-- week, there is no capital to pay off paulson. that explains the meltdown. the american taxpayer has been the lender of last resort to people who were betting that things would fail even though they did not own them. the people that took the bet and the most prominent, aig did not have the capital to pay them off so we the taxpayer did. host: mark democratic line, philadelphia, pennsylvania. caller: i was watching cnbc regarding the financial muscle bump. they had an interview with someone from the rating services. he was coming up with a bond rating. he said i cannot come up with this unable to do it. he had been in the business for ages. some say he cannot generate revenue for the ratings on. the credit agencies committed fraud. i am not an attorney but an accountant. if it was not criminal fraud, it was civil fraud. either they get hit with criminal fraud and wire these credit agencies not going to jail? guest: you ask some very good questions. first, senator ben cardin has introduced legislation trying to be added to the senat

-- week, there is no capital to pay off paulson. that explains the meltdown. the american taxpayer has been the lender of last resort to people who were betting that things would fail even though they did not own them. the people that took the bet and the most prominent, aig did not have the capital to pay them off so we the taxpayer did. host: mark democratic line, philadelphia, pennsylvania. caller: i was watching cnbc regarding the financial muscle bump. they had an interview with someone from the rating services. he was coming up with a bond rating. he said i cannot come up with this unable to do it. he had been in the business for ages. some say he cannot generate revenue for the ratings on. the credit agencies committed fraud. i am not an attorney but an accountant. if it was not criminal fraud, it was civil fraud. either they get hit with criminal fraud and wire these credit agencies not going to jail? guest: you ask some very good questions. first, senator ben cardin has introduced legislation trying to be added to the senat

-- week, there is no capital to pay off paulson.at explains the meltdown. the american taxpayer has been the lender of last resort to people who were betting that things would fail even though they did not own them. the people that took the bet and the most prominent, aig did not have the capital to pay them off so we the taxpayer did. host: mark democratic line, philadelphia, pennsylvania. caller: i was watching cnbc regarding the financial muscle bump. they had an interview with someone from the rating services. he was coming up with a bond rating. he said i cannot come up with this unable to do it. he had been in the business for ages. some say he cannot generate revenue for the ratings on. the credit agencies committed fraud. i am not an attorney but an accountant. if it was not criminal fraud, it was civil fraud. either they get hit with criminal fraud and wire these credit agencies not going to jail? guest: you ask some very good questions. first, senator ben cardin has introduced legislation trying to be added to the senate f

paulson for joining us here today.i want to turn to a portion of your testimony with which i agree, and i would like to highlighted if i could. go on page 4 of your testimony on securitization, you say, because securitization separated mortgage originators and underwriters from holding the risk of the loan they originate it enabled sub-prime lenders to stop focusing on the creditworthiness of the loans they made and instead focus solely on their ability to focus on those upstream to underwriters. underwriters in terms relax their reliability to sell their securities into a booming market. you want to save reforms are in reforms are in question will be required. better disclosure is necessary, underwriters and originator should be required to retain some portion of what they sell requiring underwriters to keep some skin in the game will properly aligned their incentives with those of investors who end up holding the bulk of the risk. .. amount of money in light of the capitalization of a lot of the institutions that had

henry paulson -- hank paulson comes in on bended knee with a nancy pelosi, and said please don't blowf the deal. and she says, i did not know you were catholic. and as part did not come out of all. barney frank bursts in with a string of expletives beyond his normal banker, and he is pretty quick to anger as its -- really out of control and both robert gibbs and jim manly, harry reid's spokesman, told me on the record that they thought it was going to get physical between barney frank and hank paulson. barney frank was saying, blow of the deal, we are not blowing it up, it is your people blowing up of the f-ing deal, you go back and tell your party to get it together. senator obama goes between them like a teacher on the playground with his hands spread and says easy guys, easy. hank, you go back and talk to spencer -- spencer baucus, ranking minority member of the house financial-serves committee and get it straightened out with him and we will get straightened out here and he kind of made peace and as he left on the way back to the hotel he is telling his staff of the car phone, the

not hank paulson we're talking about, that's not a leader. we're talking george washington. and when the congress was afraid that the people who signed up for six months enlistment around july 4, around the -- around july fourth, they got why these guys may not re-enlist. so they passed a bill giving washington the power, pay whatever he needed to pay, we didn't have a constitution yet. but they knew this man and said, you fix it. and they sent a cover letter that in essence was saying that we know you well enough to know our liberty's not at risk and when you have further need of this power you'll give it back. and he did. like no man has ever done before since in history. but in 1787 where he got -- we got a constitution. since that constitution we have never allowed one man to do what hank paulson and now tim geithner are being allowed to do. and with bernanke a-- bernanke's assistance. it's a disaster. systemic risk council. we're going to decide who wins and who loses in america? and you want us on this side of the aisle to vote for this bill? and you're calling it a fi

paulson can short and mr. ikal told us that he was uncomfortable with the transaction and turned it down and according to mr. wagoner, mr. wagner also said that he was involved in it being turned down because it was a fundamental conflict of interest. were you aware of this decision and whether or you were or not do you think you made the right decision and goldman made the wrong decision to make that transaction? >> i wasn't aware of it at all. >> do you think you made the right decision and goldman made the wrong decision? >> no. >> mr. schwartz? >> i wasn't aware of it and it's not enough detail to know whether it was the right or wrong decision. >> thank you, gentlemen. all right. mr. vice chairman. >> thank you, mr. chairman. again, i want to thank both of you for coming. as the case study, given -- >> we will take a quick break on "power lunch." we continue to monitor the hearings on capitol hill. >>> you just heard from two former top bear stearns executives. the markets holding in there after triple-di

henry paulson -- hank paulson comes in on bended knee with a nancy pelosi, and said please don't blow of the deal. and she says, i did not know you were catholic. and as part did not come out of all. barney frank bursts in with a string of expletives beyond his normal banker, and he is pretty quick to anger as it is -- really out of control and both robert gibbs and jim manly, harry reid's spokesman, told me on the record that they thought it was going to get physical between barney frank and hank paulson. barney frank was saying, blow of the deal, we are not blowing it up, it is your people blowing up of the f-ing deal, you go back and tell your party to get it together. senator obama goes between them like a teacher on the playground with his hands spread and says easy guys, easy. hank, you go back and talk to spencer -- spencer baucus, ranking minority member of the house financial-services committee and get it straightened out with him and we will get straightened out here and he kind of made peace and as he left on the way back to the hotel he is telling his staff of the car phon

when treasury secretary paulson and fed chairman bernanke asked congress for the money, our financial system was teetering on the brink. if it fell, the recession would have been much worse. with a $14 trillion economy, it made good sense to put $700 billion at risk, not to spend it, in order to tilt the odds in our favor. and now, with the dust settling, the net cost looks likely to be under $100 billion. that sounds like a success story to me. i'm alan blinder. >> tom: finally, here's an interesting question: is the national football league one business? or, is it 32 of them, each run by an individual team? the answer could be worth billions of dollars in merchandise. the u.s. supreme court today let an anti-trust lawsuit against the league go forward, filed by a clothing maker claiming the n.f.l. was wrong to sign an exclusive merchandise licensing deal with reebok. that merchandise-- caps, t-shirts, and other items-- brought in almost $8 billion in 2008, susie. >> susie: sounds like there will be a lot of blocking and tackling over that one. >> tom: it was a shutout as well. the n

henry paulson -- ha paulson comes in on bended knee with a nancy pelosi, and said please don't blow of the deal. and she says, i did not know you were catholic. and as part did not come out of all. barney frank bursts in with a stri of expletives beyond his normal banker, and he is pretty quick to anger as it is -- really out of control and both robert gibbs and jim manly, harry reid's spokesman, told me on the record that they thought it was going to get physical between barney frank and hank pason. barney frank was saying, blow of the deal, we are not blowing it up, it is your people blowing up of the f-ing deal, you go back and tell yr party to get it together. senator obama goes between them like a teacher on the playground with his hands spread and ss easy guys, easy. hank, yo go back and talk to spencer -- spencer baucus, ranking minority member of the house financial-services committee and get it straightened out with him and we will get straightened out here and he kind of made peace and as he lefon the way back to the hotel he is telling s staff of the car phone, the conferenc

paulson after all under the influence of the german state. he had been fired from his durham uneducated graduate school professors published a book in 1889 called the stake and even before that he wrote the famous essay that dustin about the centralized bureaucracy of the bismarck pressure and urged the adoption of that model in the united states. from being a defender of the so-called provincial liberties, or states' rights as he allowed himself to be portrayed in 1912 wilson was an ardent nationalist his writings again the 18 nineties made clear even of leading wilson on several occasions to say that he celebrated of the defeat of the south and this wasn't of course because he had racial views. now sid certainly doesn't claim that willson was anything other than a progressive policy doesn't make air for example that is made in the highly flawed analysis of the same question. yet like this, sid's account of willson relies heavily on willson's 1908 book easily the most conservative sounding of wilson's work. and thus i think the analysis runs

you think ikb knew paulson was part of selecting those securities? >> the question is whether we satisfy the requirement. that is a legal question. >> you know the requirements. do you, on behalf of goldman, accept any part of responsibility for the collapse of 2008? >> yes. >> are you anyway embarrassed that the taxpayer had to bail out goldman? but it is an embarrassing situation to get funds from the government -- >> it is an embarrassing situation to get funds from the government. >> were those funds critically important for you to stay in business? >> i think they were important. i cannot say what would have happened otherwise. they were critically important. >> do you feel you owe anything to the taxpayer because of that bailout? >> yes. we live -- and for many other reasons. i would like to say, senator, and i am answering the without qualification on all of those points -- answering you without qualification on all of those points. we were not waiting for a government bailout. this is quite famous and observed. weeks before that, we did a tra

guest: paulson was the head of goldman sachs. there's no question about that. tim geithner has been criticized as being too close to wall street. there are legitimate issues about how tough financial regulation that is being proposed really is. there are people out there, respectable people, who argue that if the fundamental problem was that if the banks were too big to fail, they should be smaller and less connected. you should have the equivalent of very powerful antitrust action against those banks. we're not going anywhere near that. we are tightening regulation, hoping to be able to spot the next problem before it occurs. that is a really tough one. if it does, if we have another financial panic, procedures would be in place that you would not have to have a gigantic u.s. taxpayer-funded bailout. nobody will know if that turns out to be the case until we hit the next one. what happens inevitably in those types of situations -- policymakers and the population are scared to death. you wind up doing the maximum that you can do. host: we had yesterday's volati

henry paulson -- hank paulson comes in on bended knee with a nancy pelosi, and said please don't blow of the deal. and she says, i did not know you were catholic. and as part did not come out of all. barney frank bursts in with a string of expletives beyond his normal banker, and he is pretty quick to anger as it is -- really out of control and both robert gibbs and jim manly, harry reid's spokesman, told me on the record that they thought it was going to get physical between barney frank and hank paulson. barney fnk was saying, blow of the deal, we are not blowing it up, it is your people blowing up of the-ing deal, you go back and tell your party to get it together. senator obama goes between them like a teacher on the playground with hisands spread and says ea guys, easy. hank, you go back and talk to spencer -- spencer baucus, ranking minority member of the house financial-services committee and get it straightened out with him and we will get straightened out here and he kind of made peace and as he left on the way back to the hotel he is telling his staff of the car phone, the c

paulson, i need you because a couple of things that happened.reece has gotten out of hand. we had a horrific day yesterday. and e.s. browning at "the wall street journal" said this market's got a long way to go, after having written a dozen other pieces how it's due for a pullback. so there's a lot of negative things hitting the mark. are you still okay? you still sanguine? >> i am pretty much, joe. i think that -- i think this european crisis eventually will be contained. i think the wherewithal is there in the region to do that. i think politics keep interfering. but eventually i think it will be contained. i think in some ways, we had a huge run from the january lows, market's vulnerable. we had optimism turn up. you have wall street strategists upping their target prices. >> it's all bad things. >> you know, yeah. and so maybe this is what we needed to refresh that. we check optimism a little bit. gas at the pump here in minneapolis was closing in on $3 in a couple weeks it's going to be back at $2.69.9. maybe some of the things, the ten-yea

thank you secretary paulson for joining us today. i want to turn to a portion of your testimony with which i agree. i would like to highlight it if i could read on page 4 of your testimony on securitization, use a," because securitization separated mortgage originators and underwriters from holding the loans there is genetic, +u÷ to stop focusing on the credit worthiness of the loans they made and focus on their ability to sell those loans upstream to underwriters. they relied on their ability to sell those loans into the market. you say under writers should keep some skin and a gay man that would probably align themselves with investors who -- skin in the game and that would properly aligned themselves with investors. that would lead to more responsible lending practices. yesterday, we heard from chairman caught in his written statement and he said were to the effect that if of lending practices have been followed, most of this crisis simply would not have occurred. this led to the creation of so much worthless mortgage paper that a

. >> before they seize fannie and freddie, paulson, the former treasury secretary wrote in his book and told congress the reason he did it russia, he says, advising china to dump fannie and freddie debt. in other words the bond yield started to fall apart and the government had the seize those two immediately. >> mike: we hear the president say the economy is on the rebound. are we doing better? >> the economy is expanding. that is true. there is some very limited new job creation, very limited. the deficit, the hangover of debt will slow us down. we're not recovering in a robust fashion like we should be from a se serious recession. far from it. it's slow recovery. >> the administration says we inherited a recession. every administration said it for two decades. joe biden has been in the government since the nixon era. when they start borrowing they put the thumb on the scale to do their borrowing. >> mike: before we go, remind the viewers of something. liz, great story of you, nothing to do with the economy. you met mother teresa one time and she attempted to give you a blessing. she

. >> before they seize fannie and freddie, paulson, the former treasury secretary wrote in his book andold congress the reason he did it russia, he says, advising china to dump fannie and freddie debt. in other words the bond yield started to fall apart and the government had the seize those two immediately. >> mike: we hear the president say the economy is on the rebound. are we doing better? >> the economy is expanding. that is true. there is some very limited new job creation, very limited. the deficit, the hangover of debt will slow us down. we're not recovering in a robust fashion like we should be from a se serious recession. far from it. it's slow recovery. >> the administration says we inherited a recession. every administration said it for two decades. joe biden has been in the government since the nixon era. when they start borrowing they put the thumb on the scale to do their borrowing. >> mike: before we go, remind the viewers of something. liz, great story of you, nothing to do with the economy. you met mother teresa one time and she attempted to give you a blessing. she wa

i think secretary paulson was. at that time, as bear stearns fell off the cliff, we were deeply worried about what that would do to the broader stability of the financial system and we knew at that point that fannie and freddie, like many other parts faced substantial losses on their particular their retained mortgage portfolio, and we worked very hard to encourage their relevant authority to encourage those firms to go out and raise a lot of capital. as we were doing in other parts of the system, and seemed the straightforward sensible thing. and, that was important because, as we saw fundamentally, short capital going to a storm like this was catastrophic and they were short capital. the problem with these crises is people tend to weight. if they wait too long it looks weak. the pricing is expensive. they don't want to dilute their shareholders so they keep the bass sick pay down-- basic pattern that fannie and freddie had then we worked very hard to try to encourage people, to encourage them to raise capital. >>

i'd think lowry and tim and hank paulson and a bunch of people here and you could second-guess some ofthe things they did. that sunday morning, things did not know how things would turn out. they had to make big decisions. you have to err on the side of trying to throw as many things at the problem as you can and hopefully one of them will work. i think history will show that they got this country for a very difficult time. my perception of all of this financial crisis is -- i don't mean to make light of the people lost their jobs or houses -- it is tragic but why did we get into this situation? i would blame everybody. we all wanted more credit, easier credit, we were out there encouraging home ownership as a social policy, which happen to agree with and incidentally, 90% of the people who got their homes without the expanded programs still have their hamas. no matter how tragic the 10% is, i think history will show it was a good thing for america to encourage homeownership and make the opportunity available to many people who were starting up the ladder who would not otherwise have g

secretary paulson prepared it and it was 200 pages long asking for $800 billion.ny of us thought it was not adequate. we needed provisions on how the money was spent and the supervisory of congress and so forth. it was eventually passed. people like myself who voted for it did it out of a feeling for desperation. what else could we do if we were being told by the financial leaders of our government that our economy was about to fail, we'd seen it already in the stock market going down in value, and we knew that people were losing their jobs and businesses were failing, we felt this was the only way to try to stop this terrible crisis from becoming much worse. well, the toxic asset relief program ended up sending billions to the financial institutions. they were struggling because they made bad judgments. they bought, created and sold securities, derivatives which were, in fact, toxic. they were based on a mortgage market that turned out to be totally wrong. they made bad business decisions, their companies were about to fail and the federal government, make that t

with secretary paulson. thank you all very much. and current secretary geithner to follow.inaudible conversations] [inaudible conversations] [inaudible conversations] a billion dollars more than this year's budget. next, a senate panel hears from the nih director about that budget request as well as some of the ongoing research at the institute. iowa senator tom harkin shares this 90 minute hearing. >> the senate subcommittee on labor, health and human services appropriations will come to order. i want to start first by welcoming dr. francis collins who of course has appeared before the subcommittee many times over the past 20 years. until now he testified as the director of the national human genome research institute. today, wearing a much different and bigger hat as director of the entire national institute of health. the fiscal year 10 budget for the genome institute is $516 million. the budget budget for nih as a whole is $31 billion. at least that is where it is right now anyway. we are looking at dad and of course the portfolio as nih director is much larger than the

what they still think of as the one true church then you have the crazy sellers in the churches and paulson who think they can bring on the messiah by stealing their of land and the christians who say wouldn't it be a great idea. we support the jews. they bring on the shopocalypse and we get jesus. a lot of humor in the country at trolleying still to maintain if this goes on i wouldn't have believed it that american children should be taught garbage with equal time. now girls and place will not alter the outbreak. [laughter] they never stopped in texas and elsewhere. big schoolbook producing iran as that of the nonsense is on the stoppable. >> i remember the time the states decided that intelligent design had to be taught at the same level as the vaguely darwinism. i wrote a piece i still suggest is the best decision by the states because it showed darwin was wrong. [laughter] it should natural selection didn't always choose -- [inaudible] [laughter] and it is possible for the human population to regress. there was a wonderful -- in alabama i remember there was a public servant who said we

. >> about of they seize fannie and freddie, henry paulson former treasury secretary wrote his book on brink and told congress the reason he did that, russia he says was advising china to dump fannie and freddie debt. reads like a tom clancy novel. the fannie and freddie started falling apart and the government had to seize those. >> mike: we hear the president say the economy is on the rebound. so are we doing better? >> look, the economy is expanding, that's true. there's some very limited new job creation, very limited. >> right. >> but this deficit, this hangover of debt will slow us down. we're not recovering in a robust fashion like we should be from a serious recession, far from it, it's a slow recovery. >> and now what gets me, the administration says we inherited this recession, well, every administration said that for the last two decades and by the way, vice-president biden has been in the, you know, in government since the nixon era and when they started borrowing, they put the thumbs on the scale to do their borrowing. >> mike: before we go. i've got to remind our viewers

paulson. i want to turn to a portion of your testimony with which i agree. i would like to highlight this if i could. on page four on securitization, you say, "because securitization separated mortgage originated and underwriters from holding the rest of the loans they originate, it enabled subprime lenders to stop focusing on the creditworthiness of the loans they made and instead focus solely on their ability to sell them upstream to underwriters. underwriters relaxed underwriting criteria relying on their ability to sell these into a booming market." you go on to say that "reforms are unquestionably a required." they should be required to retain some portion of what they sell requiring underwriters to keep some "skin in the game" which would align their incentives to hold the bulk of the risk. you go on to say "these changes will provide them with powerful incentives to focus on credit worthiness and lead to more responsible lending practices." yesterday we heard from chairman cox. he said words to the effect of a "if honest lending practices which have b

since the crisis hit in 2008 and we worked and much of this by the way you can see shadowed that hank paulson made in march of 2008. the dissolution authority and how we deal with that. unfortunately. it didn't always carry through. senator dodd thanked the four republicans that voted for the bill in the senate. i would thank the republicans who voted in the house if there were any and i would hold out to them the prospect of being thanked if any of them break party discipline and vote how i know they want to vote but are intimidated from doing so. we will have a conference, i think, that will work well. it will be conducted the formal parts in public. that means no agreements, no compromises will be made part of anything without being publicly presented and voted on and discussed. i understand the urgency for the financial stability of the country in getting this done quickly. knowing what is going on is important. i think that people can be pretty confident. it is hard for me to think it will take this more than a month. i believe the president will be able to sign this before we leave. one

with former secretary hank paulson, and turn secretary timothy geithner. -- and turn secretary timothy geithner. -- and current secretary timothy geithner. [captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] >>, and today, a retiring supreme court justice john paul stevens and elana kagan. america and the courts, today, 7:00 p.m. eastern. >> saturday night and c-span, remarks by utah republican senator robert bennett that his party pulled the nomination convention. he is addressing the 3500 delegates saturday, at the salt lake palace convention center in salt lake city. >> this weekend, an entrepreneur ted leonis. sunday night on "c-span's q &a ." >> janet napolitano visited tennessee today. she spoke about the severe flooding. this last about 10 minutes. >> i want to welcome you all. during this last week, as we have been dealing with the impact of this flood, we have had a wonderful response from the federal government. fema has been here since their rain started falling on saturday. they have been very helpful. the offices

lehman brothers fell, nobody got paid anything, and according to bernanke and paulson, the financial system was about to grind to a halt, because everything depends on landing. -- depends on lending. so he did not do anything. he got terrified then, as did bernanke, because the thought of major depression was in the offing. when aig said we are next, we cannot pay our debts, they came to us and said, if we do not do something to alleviate the consequences of a ig's inability to pay its debts, the economy stops. that is when we began to get involved. that was their choice. lehman brothers and aig, two non-banks. after the bill passes, that will not be the case. they will have the authority to step in, but the failed in the out of business, abolish all the equity, etc., and use money raised from the financial industry itself to pay off some of the necessary gets to keep this from spiraling out of control. it is a model very close to what the fdic does. sheila bair has had a major role in deciding this. the first part is, how do you keep this from spiraling out of control, and getting t

larry, tim, hank paulson and a bunch of people here, today, you can second-guess a couple of things paulson and tighten their did. -- and tim geithner did. they made very big decisions. you have to air on the side of trying to throw as many things as you can at the problems and hopefully they will work. history will show that they got the country through a very difficult time. my perception of all of the financial crisis and i don't mean to make light of those that have lost their jobs and have lost their houses because it is tragic. why did we get into this situation? i would blame everyone. we all wanted more credit, more easy credit. we were out there encouraging home ownership as a social policy. incidently, 90% of the people that got their homes that would not have caught it without those expensive programs still has their homes. history will probably show that it was a good thing for america to encourage home ownership and make opportunity available to a lot of people who were starting off the ladder who would not otherwise have gotten there. congress will certainly behind it. if you

paulson, who actually was the c.e.o. of goldman sachs, as i recall, came to this house, came to the senate and said, oh, my, oh, my, the world's going to collapse unless you immediately cough up $1 trillion to the banks to stabilize the banks. fortunately this house said, wait a minute, let's see what we're doing here. instead of a one-page bill, giving the treasury department $1 trillion, the tarp program was put in place. and it did stabilize the financial institutions. but it was a clear sign that the financial -- that wall street banks had become too big. a.i.g. how much have they taken? $200 billion, $300 billion of our money? are we going to get it back? we don't know. mr. dry house, if you'll carry on here. i now you were involved in that tarp legislation and share with us. mr. driehaus: getting back to the issue of too big to fail, i think this is really a critical issue for people to get their arms around. you know, i think it's important that we have strong capital markets. that the private sector works well in

was paulson the customer on one side of the deal? or was it the investor on the other side of the deal? and where's the good-faith obligation that goldman surely must have had. >> and you know who bought a lot of abcus, who was on the other side, you won't be surprised to hear a.i.g., will you? mr. garamendi: a.i.g. they received $200 billion of taxpayer money. ms. speier: that's right. mr. garamendi: when a.i.g. got the money from the taxpayers in the tarp money, the wall street bailout what did they do with that money? did they give it to the homeowner that was going to lose their home, or did they give it to goldman? ms. speier: interestingly enough, goldman had purchased credit default swaps from a.i.g. and of course they were repaid in full by the taxpayers of this country, $12 billion worth, the highest recipient of money from those c.d.s.'s. mr. garamendi: i think that book is misnamed, you know "the great short," i think "the great fraud" would be the better name. ms. speier: i want to show you one last chart. this is the cre

he knows the plan that tells me he should never have been confirmed if he worked with paulson on the original plan because it was a disaster and it should never have been allowed to have happened as it did. but now we've got these guys, federal reserve, head of the treasury, they're going to pick the winners and losers in the country. yield. mr. king: would we go choose some mainline i.v. drug user off the street to go in and do i.v.'s in the hospital because they happen to have had the kind of experience that they're good at it, even though it's illegal? if somebody was proficient in how they operated turbo tax, was able to avoid their taxes that means they'd be a good person to have as head of the i.r.s., so they could set up a system to prevent other people paying a -- paying taxes? mr. gohmert: it's an interesting issue. secretary geithner had great problems complying with his certification four years in a row where he swore he would pay the tax that was shown on the form and certified that they would just pay him that money, he would pay it, then he didn't pay it. but in answer

so congress was supposed to give $700 billion to hank paulson. well, did he really need that? no, he didn't need it. in fact, it was part of the same mistake that we make frequently here and that is that every time there's a problem economically the government has to jump in and fix it. it's bailout fever. and this was, of course, the beginning of the big wall street bailout. and unfortunately some republicans supported that idea, along with most of the democrats and we took $700 billion away from the american taxpayer to buy these supposedly troubled assets that had been created by wall street. well, it's pretty hard to buy something when there isn't a market in it. and so we took $700 billion out of the market, about $350 billion supposedly spent during bush's last year, another $350 billion in obama's first year and that was the beginning of our big spending and again it's based on this concept that the government should jump in and fix everything and that the government is going to be able to fix the u.s. economy. that turns out to be a troubling assumption. and it continu

the robotics -- look, they are doing what they can do safely at the site in order to try to fix the paulsonet as accurate picture as they can as what is happening under water. you have some i think some pretty specific diagrams and explanations of where the breaches are which is governing the engineering has the instrumentation to put on top of the leak, so but

it's very similar to volcker and paulson going before congress and president bush's famous speech thatrld is coming to an end unless we had t.a.r.p. so, it's playing out pretty much what i was expecting. i expect this, you know, today and tomorrow to be the peak of the panic as it were. friday, the germans have to vote positively on this or it's really going to descend into madness. so, i would say we've got about three more days of this, but somewhere in here, it's going to plain out and stabilize. >> alec -- >> what if they never pony up the money? they're going to say they're going to do it but they keep saying that and then you never actually see the money. >> well, i mean, yeah, i mean, that's a possibility. they could vote it down, too, of course, or delay the vote as well. that would, you know, cause even more havoc. but i think they're frightened now. i think they see what the potential for the problem is. and i think they're going to have to vote yes, whether they want to or not. >> but they're not rioting because the germans aren't going to give them the money! they're riotin

with tim geithner, and henry paulson. this is becoming very ridiculous. it seems that they are starting to run this country. and what about commerce? this is going to swallow up the constitution and she will need to answer some questions. host: new york, independent line? caller: i think that the last person who called was spot-on. there is lawrence summers and the rest of them. i am here to hear her answer questions about miranda rights. we have the response of americans with this next criminal -- this last criminal incident. i would like to know what her case should be, if she would be strengthened, and other cases like the patriot at, to see her view in respect for this. and it seems that in this age of terrorism, we are giving up all of our rights as americans. this is something that is very questionable. given the fact that she has no experience as a judge. we have had numerous people on the court that do not have judicial experience. but she should be asking some hard questions -- they should ask for some hard questions and i believe that she will d

what we start with to stick to questions and as i said to former secretary paulson today at least in my instance while there has been a lot of fascination generally with the bailout and how the financial system was stabilized i think the questions i want to focus on today is how do we come to the point where it seems l the only two options were either to allow the collapse of the financial system or to commit substantial trillions of dollars ofaxpayers' money to save it and i do want to talk to you in your was the president of the federal reserve board of new york recognizing you had direct supervising responsibilities of th holding companies but beyond that in many respects to the eyes and ears of the federal reserve on wall street. you were in constant contact with primary dealers who had a board that did have linkages, to the financial community and that you would play a special role in the monitoring system crist infected had undertaken efforts of respect to cleaning up the backlog and trade confirmations in the otc derivatives market. one of the things i noted in preparing the l

benjamin bernanke and treasury secretary hank paulson as they explained what had happened to a.i.g.,the largest insurance company in the world and what would need to happen to fix the problems posed by the activities that that company was involved in. just as some international corporations create shell companies in the cayman islands to avoid tax responsibilities, a.i.g. created a subsidiary called a.i.g. financial products to sell complex and risky products. and it was thus able to take advantage of the fact that there was no regulatory requirement that a.i.g. hold enough capital to cover its exposure to these products. meanwhile, because a.i.g. was rated triple-a by the rating agencies as a company their counterparties didn't demand much in the way of collateral or margin. essentially a.i.g. guaranteed other people's bets. that is, these counterparties -- goldman sachs societe general sperbgs a frank bank -- a french bank. a.i.g. was able to do so without anyone knowing how many of these guarantees they actually sold. as we now know, they sold trillions of dollars worth. when it t

you are doing something up there right now that kills paulson said thousands of people every year inind of medical research, brought research, technical research, engineering research, all kinds of research. no better place to do a. and a degree of to develop new exploration technologies. so these are good priorities and should help ensure in tough fiscal times we build the space future in a measure and relevant and invative and sustainable way. and this is not bring to b.c.. one reason it isn't ging to be easy is because we are under a more or less flat line but most americans don't know that. i think most of them would welcome it if they did know it, but those of us who work in government and want to push programs for word that is hard to swallow. that does not affect the defense department or intelligence mmunity. it affects only part of the veteran community. but nasa's budget of $18 billion may be a high water mark. we don't now what the soft free means. it may be a high water mark for years to come so we have to live with that and make the most of it. we cannot assume the agenc

paulson and that guy up there now -- i'm trying to think of his name. guest: geithner.aller: i voted for him. i hope he succeeds. they need to be in jail. these people are criminals. guest: when the savings and loan issue happened. people stealing the taxpayers blind, hundreds of people went to jail . that was a smaller crisis. the taxpayers paid out. but it didn't sink the whole economy. the reason i call this book the presidency in peril, if the president didn't live up to the promise that a lot of people saw in him. when you raise hope sky high the way obama did during the campaign. then you deliver a very slow recovery. you safe it from a great depression, the air goes out of the balloon. 71% of first time voters voted for obama. young people went to work for him by the millions. a lot of disillusioned people that hope he gets his game back. i'm one of them. . . caller: please, america, you have to think twice. they destroyed this country. guest: well, in fairness, we need to cut barack obama at some slack. he inherited a huge mess. there are all kinds of structural

former secretary henry paulson, treasury secretary geithner, and some democratic senators are callingfor further regulation on the markets. has led to the volatility? guest: i'm sure that has led to it also pre there's no logical relationship between what is happening in greece right at the moment to the discussion about financial regulation. they are two different things. basically, after a banking crisis, there's often a sovereign debt crisis. in part because country's peso much to get their economies moving. -- countries pay so much to get their economies moving. host: bob davis, how long have you been aware of what is happening in greece? guest: this is what i do for a living, so the past year i suppose. host: should we be surprised by this? guest: yes, i am very surprised. it's a little country. it is 2% of the size of the united states. its trading with the u.s. is 1/10 of 1%. to have this kind of impact on the u.s. is quite surprising. it is not surprising some countries are getting into trouble. that has been brewing for years. we went through a really bad recession with a rea