in response the fed formed talf in 2008. with backing from the treasury, talf provides loans to investors to finance chair purchases of highly rated asset backed securities with the securities themselves as collateral for the loans. and backing was from the treasury, so the tarp funding was instrumental in our ability to be able to do that. as conditions evolved, we modified the facility along multiple dimensions, even before it began its operations in the beginning of april. the first markets targeted by the facility were those for securities backed by relatively simple assets. the securities were familiar to market participants and their pricing was relatively straightforward. then we moved onto more complex and long-lived instruments. initially the only eligible securities were those backed by newly and recently activated auto credit card and student loans and small business loans guaranteed by the small business administration. in april other securities were made eligible, backed by servicing advances, leases of business

in march 2009, talf would be extended to legacy access. it would attempt to ease balance sheet pressures on lenders. the maximum maturity of talf loans has been expended -- extended to five years. the size of the total operation was increased from $200 billion to $1ri

in addition, the fed has a talf lending facility for asset-backed securities. are you con -- can you give us some idea of what you expect in the way of recovery or repayment on these assets so that we can in turn look towards of recovery for some of the moneys to pay off the debt that was incurred in advancing these loans in the first place? >> i think that with respect to the t.a.r.p., i think our recovery will be excellent. in particular, a number of banks are looking to repay t.a.r.p., and we expect to -- the federal reserve will announce a list of banks next week that we believe are sufficiently sound and able to lend that they are eligible to repay the t.a.r.p., with, of course, interest. and that the treasury accepts that recommendation, then we will see some repayments of the initial t.a.r.p. outlays. with respect to the talf, the federal reserve's program for asset-backed securities, we have extensive protections, which i'd be happy to detail if you'd give me a few minutes. but we're very comfortable that this program is, on the one hand, very effective

talf is generated to opposite concerns. one is that the credit requirements were very conservative. the other is the central bank is taking too much credit risk on its balance sheet. i think we have struck a good balance. we have taken appropriate action to limit our exposure to credit risk through stringent credit qualities. hentoff is not intended to substitute for the aps markets as they existed before the crisis. -- a b.s. markets as they existed before the crisis. we want to get the markets back to life by mitigating some of the stresses they are experiencing. it should allow them to reach their purpose has in a less dis. the top program has been working. some investors are re-entering the market without the support which is a good sign. the third precept relates to size. until recently, monetary policy had changed in small steps. it was a behavior that some have labeled. our response to the present crisis has moved beyond gradualism. our cats were one indication and the size of our untraditional policies is another. last march, we announced a considerable increase in the size

into place for the legacies security program which will be managed by the treasury and the fed under talf. any insights on you have basically parties with an interest on both sides of the transaction? >> well, there are going to be very clear conflict of interest rules in the public/private partnership. those rules are also being discussed with the special inspector general as well as the people within treasury. and i think it's very important for the credibility of the program and to protect the taxpayers that the program be administered in a way that prevents such conflicts of interest. >> absolutely. thank you. >> thank you. >> mr. allison, there's been a few figures floating around about how much is left to be invested or loaned, however you want to put it. have you been able too take a peek and see what's left out there, how many billion are left? >> it's roughly $100 billion, senator, that is available today. >> as as things unfold here, your crystal ball being as clear as anybody's, what kind of criteria do you see utilizing for poestentially investing tho dollars? >> i believe it

with respect to talf, the program for asset backed securities, we have extensive protections that i would be happy to detail if you give me a few minutes. we are very comfortable that this program will be very effective in opening up markets to consumer credit. including loans. at the same time, i think that the credit risks to the fed itself are quite minimal. >> as the fed implied to what extent we will have to borrow from those savings pools? in order to meet debt requirements in the future? >> we certainly look at that. an interesting point, even though the federal government's borrowing has skyrocketed, the current account deficit, a measure of what we do from abroad, is lower than it has been in some years, suggesting that the increase in federal borrowing has been substantially offset as banks and households we leverage. in the sense of availability, there is the availability to meet the needs of u.s. governments and other governments. as i mentioned in my testimony, to make the lenders willing to finance us at reasonable interest rates, we must persuade them that we are serious ab

this spring and abs funding rates have declined back by term asset-backed securities loan facility or talfas a market backstop. bond issuance by nonfinancial firms has been relatively strong recently and spread between treasury yields and rates by corporate borrowers have narrowed some though they remain wide. mortgage rates and spreads have also bl reduced by the federal reserve's programs of purchasing agency debt. however, in recent weeks long-term treasuries and fixed-rate mortgages have increased. greater optimism by economic outlook and technical factors relating to the hedging of mortgage holdings. as you know, last month the federal bank regulatory agencies released the results of the superer advisory capital assessment program. the purpose of the exercise was to determine for each of the 19 u.s.-owned bank holding companies with assets exceeding $100 billion, a capital buffer sufficient for them to remain strongly capitalized and able to lend to creditworthy borrowers even if economic conditions over the next two years turn out to be worse than we currently expect. according to th

liquidity tools such as capital purchase program the term asset backed securities loan facility or talf. that isn't a gift but a loan from the public and requires certain protections. one of these protections is a pay star who will place transparency into the system so the public shareholders are properly informed. bonus compensation poses a risk it merits limits. i thank the witnesses for helping frame the discussion on which bonus compensation limits may be appropriately and in systemic risk. that said no t.a.r.p. recipient should have souder is capped by the president or the congress. thank you. i yield back the balance of my time. >> we will do one more minute to mr. moore. i apologize, we will go to mr. campbell. >> thank you, mr. chairman. you know, there's no argument there been instances, a number of them and which people and companies have been paid a great deal for not much performance. the question is what do we do about it? as someone who has designed compensation plans for hundreds of the employees in my 25 year career i will tell you it isn't easy and sometimes people too

our talf program has brought those spreads down, has increased activity, and i do think we have already seen, for example, an in auto loans, we have seen better availability and lower rates. as we continue in that area, we expect that will help you ask me where there are still problems, one area i would mention besides small business and consumer lending is commercial mortgage-backed securities, commercial real estate, that's an area where we are also going to try to address that. but currently, getting refinancing for existing commercial projects is very, very difficult. >> thank you. let me just say, as a student of not only a student of, of the most world renowned specialists in great depression, what are your thoughts on aborting these kinds of economic crisis in the future and are there lessons the fed has learned from its role in the banking supervision that we have gone through so far that we might -- that we as a body might pay attention to and help with? >> so, in dealing with the situation like this, there is the immediate emergency response, and then there is the longer term

this spring and abs funding rates have declined back by term asset-backed securities loan facility or talf as a market backstop. bond issuance by nonfinancial firms has been relatively strong recently and spr

at assurant talf we are acutely aware of how our coverage affects people's lives. it is the responsibility we take very seriously. unfortunately there are times when we discover information that was not disclosed during the enrollment process. when this information is brought to our attention, we ask additional questions to determine if the information would have been material to the underwriting risk we assume. ackeridge risk assessment keeps rates lower for all. assurant health this not want to rescind coverage. we are in fact in the business of providing healthcare coverage. we regret the necessity of even a single recision. the decision is never easy and that is why we follow a fair and thorough process that includes a number of careful review is. here is our system works. when we become aware of the condition that exists that prior to the application date and that information was not disclosed, a senior underwriter reduce the admitted information to determine if it was material to the underwriting decision. then the underwriting management verifies the analysi

at assurant talf we are acutely aware of how our coverage affects people's lives. it is the responsibility we take very seriously. unfortunately there are times when we discover information ,,,, was not disclosed@@ information was not disclosed, a senior underwriter reduce the admitted information to determine if it was material to the underwriting decision. then the underwriting management verifies the analysis. fig mission was not material to the review is complete. if the omission was material the underwriter makes a recommendation to a review panel which includes a least one physician. this review panel evaluates information and makes the decision. the amount of the potential claim is never disclosed to the underwriters or to the review panel. the decision to resendiz only made when the undisclosed information would have made a material difference to the underwriting decision based on our guidelines. the consumer is given the opportunity to provide additional information before coverage is rescinded. this information is evaluated and a decision is made. if the