gutierrez said that she left -- sheila bair helped write this bill, and that is not exactly true. we know who wrote it because you can read the april 27 article by the "new york times." it said it was drafted in large measure by a law firm that represents many banks and financial industry's lobbying group. mr. geithner hired them to represent the new york fed during the aig bailout. most significantly, the bill does not require any government rescue of a troubled firm be done at the lowest possible cost, as required by the fdic when it takes over a federal bank. treasury officials said that is because they would use the rest of powers only in rare and extreme cases. the managing director of the washington research firm federal financial analytics said it essentially gives treasuryyand blackjack. wheat -- a blank check. we have been asking secretary gunnar for a long time how much thii resolution authority would cost, and he refuses to answer, so we do not know. we do not know whether we are talking $seven trillion -- house republicans have written him two letters asking him for a

mayor shapiro, elizabeth warren, and sheila bair are all strong supporters of this bill. there are a number of important things in the bill. a fiduciary requirement for municipal advisers said the we do not give the kind of problems we have all seen. all those are very important. i am prepared to make compromises. for those who worry about is getting too far, the conservative party prime minister of canada said over the weekend that with this bill america takes the lead in financial regulation and the rest of the world will follow. on the tarp, what it says is this. i prefer the original way. what cbo is saying is this, money repaid to the tarp goes into the treasury and to have made a profit on the big part. what the cbo is saying is that if you spend the remaining on allocated tarp money, you will lose some of it. you will not get it all back. cbo is a wondrous institution. i am often puzzled by it. i do know that my colleagues have a tendency to love it when it agrees with us and not so much when it does not. that is where we are. given the importance of this bill, i h

so and i think last week sheila bair actuay mentioned this among e list of things that might be doneand that is maybe we shouldn't say we're going to get you all kind of inentives to tie up your ealth. you can either rent or buy and you buy a home cause it is a place to live. and the value -- as i think over the long run the price of housing doesn't allow thethree fast but it scillates a lot. that may not be desert so you may need to ddress that problem. what ithe role of the policymaker? should you use rules or discretion and to some extent the rules i think are useful because they prannounce the intent to damp bubbles but there probably will have to be some discretion. the markets are tricky and i think the way to introdu the rolef discretion is r the central bank to include in its specific astment the avdance of large movements in asset market prices that are disruptive, and i know that is hard to define. t at the central bank says we are not goingto ignore them, thk that is a big step in the right direction and probably a sufficient condition for dealing with some of these issues. s

maybe you could take a look at that with sheila bair at the fdic. thank you. >> thank you mr. chairman. since is economic situation started back in 2008 we have seen in our country a significant rise in defaults on home mortgages. at the same time the absence of the homebuyer tax credit will i believe lead to a decrease in demand. it would seem these happenings will cause the housing crisis to drop even more significantly in the future. what is the appropriate response of the fed in such a scenario? what can the fed due to do address the situation, if anything? >> the main thing we are doing of course is that we have purchased a large amount of mortgage-backed securities guaranteed by the government-sponsored enterprises and right now the 30 year mortgage rate is about 4.8% so that will clearly make it accessible. affordably right now in terms of price and interest rates, you are right that the larger amount of foreclosed properties is a major drag particularly in some areas of the country and i agree with ms. kaptur on this issue that we need to work with the treasury to and

but has never existed for the most risky financial firms, and that is why it is supported by miss sheila bair from the fdic and a very strong language in a letter that was sent to us. >> thank you, mr. chairman. i rise in support of the gentle lady from west virginia's amendment. i have lived in the world of real bankruptcy and a real risk. i know the difference between money that you get and trust and money that is infested, either by stockholders or by vendors. i think one of the challenges we have here today is we are continually muddying what is a bank and what is a financial institution. after all, not in the years i've visited chrysler factories around the world, i never saw them as a bank, not once. in the years that i was a vendor for general motors and their quality-control people came in to inspect me, i never once had a banking conversation with general motors and specter. they wanted to know about product. they never offered to finance me as they took 60-90 days to pay. the fact is we have a muddied it the difference. the fdic exist for good reason. confidence by people of our tru