and proper competent management is what the t.a.r.p. program desperately needs. we need strong, steady management to ensure that the core purposes that congress outlined with the emergency economic stabilization act, protecting home ownership, college funds, retirement accounts, life savings and jobs, are fulfilled by the t.a.r.p. t.a.r.p. funds must be used to get credit flowing again to family, to pay for homes, a car or college tuition, and to small businesses, to stock inventory and to meet payrolls. because with 10,000 foreclosures every day being filed and 20,000 layoffs occurring every day, families and small businesses still need our help desperately in this country. thankfully we have begun to see a sharp change in direction for the t.a.r.p. program, from the home ownership preservation program which draws upon the $75 billion in t.a.r.p. funds to more accountability from firms which received taxpayer assistance. but as the news this week, the general meters was filing for bankruptcy reminds us, we're hardly out of the woods and i would add that this comm

the t.a.r.p. rogram today, sebody like you, i don't think, would take on a position like this unless you had responsibilities and you felt like you were making a difference. i mean, you have stature and you have substance, and yet as i look at the program and where we are, it seems to me that those decisions that are going to be left as it relates to t.a.r.p., other than making decisions about timing and when we -- when we take advantage of our warrants and those kinds of things, much of the heavy lifting may have already been done. and it seems like decisions about who we're going to invest in majorly will be made by the treasury secretary and that the t.a.r.p. leader may be more of an implementer. and i'm just wondering what kind of conversations you-all have had in that regard, because, again, looking at your resume and background, i'm just wondering what it is that is luring you to this position. >> well, i'm -- i'm lured to the position taking on this responsibility, if you confirm me, because

the t.a.r.p. as a statutory termination date that can be slightly extended. >> yes, sir. >> at the request of the treasury secretary. you know this. do you believe that the t.a.r.p. program should ultimately be terminated? and would you have any concerns if the program were converted into some kind of permanent revolving fund? >> senator, i think that's an important question, many americans as well as people in congress are asking. as you said, the program is scheduled to terminate at the end of the year, although it could be extended by an act of the secretary until, i believe, as late as october of 2010. but i think it's important to point out that the programs within the financial stability area have themselves termination provisions, many of them. there are terms to the financing, end dates. there are also disincentives built into those programs that cause, should cause, banks to want to repay that money as fast as possible. we've already seen, and we will see, additional repayments. so, this p

what will be the use of this returned t.a.r.p. money? >> i believe secretary geithner has said that the money will be held at least to be available to be respent. i think that the statute is at best ambiguous on whether this money can be recycled or whether this money must be returned to the treasury. and given the ambiguity, the treasury department certainly at least has grounds for terpg it the way they -- interpreting it the way they want to interpret it. so i think that's what they are going to do with the money unless congress tells them differently. >> thank you. my time is expired. senator brady is recognized. >> the bailout dollars, issued is this disturbing report that showed weak yess necessary in the design of the implementation of the bailout. he called on the treasury department to adopt recommendations and all the t.a.r.p. recipients simply account for the use of their t.a.r.p. funds. that they set up internal controls, and report periodically to treasury on the results with sworn certifications. do you support those recomme

my support for this second half of the t.a.r.p. was contingent upon a big chunk of it going to mortgage modification, assisting homeowners or perhaps in refinancing. the reports we got from the field in oregon remain very minimal, that is, people are as frustrated today in trying to reach someone they can talk to. those who service the loans are as un -- as unknowledgeable, if you will, as unhelpful as they were months ago. we have one particular institution that folks repeatedly get told, well, our institution is not participating when their institution is participating. this institution was featured in an article yesterday in a different state with experiences that very much reflect what's happening in oregon and which a person who had lost their job and was doing everything they could to make their payments but clearly was going under, was simply told they would have to wait until they were behind three months, and then the effort was made to sell them a new loan at a higher interest rate with high servicing charges that would ha

we put -- the t.a.r.p. money went in, but now we're past that and unless we take some steps to deal with too big to fail, and we've got that moral hazard, and i'm also worried about the ppip. a lot of people are saying the banks aren't participating because it looks like it will be political, and if they get in, who would want to get in partnership with the federal government when they see what some of our fellow members of congress are doing? are you going to be able to get any of these toxic assets out with ppip? where are the -- where are the participants? >> listen, i want to underscore that you're right. that's yet president wants to move so quickly on legislation. on the issue of the legacy assets that are still in the books of the nation's banks you're right that there is some concern in the market still about participation and whether that brings some risk of political conditions imposed in the future and that could limit participation in the beginning and that would be an unfortunate thing and i thi

in addition, the special inspector general for t.a.r.p. in his report in april criticized the treasury for not adopting recommendations to@@@@ comment on, why hasn't the treasury made as a condition of receiving of tarp funds a condition requiring an increase in lending in full transparency? >> excellent question. the crisis produced two significant things. one, families across the country substantially increased the amount that they borrowed and household debt rose dramatically. we have pockets of excess leverage across the financial system. we are going through a very deep recession. and any recession the demand for credit falls. a recession that follows such a big credit boom like this would give you normally been expected very steep fall. it is hard to know how best to measure the full impact of these programs. measure the full impact of these programs because again, it would have been under any circumstance we would have had a period where borrowing would fall as homeowners, as families decide to go back to living within their means an

>> it's well within the philosophy of t.a.r.p. lated to mortgages and housing as one of the key target markets for the t.a.r.p. funds. we've been talking to treasury about this. it's different. the t.a.r.p. banks all have federal regulators. the insurance companies as you know, don't have federal regulators and with the federal regulators that made the recommendations to the treasury team. so we're working our way through the various issues. >> leaving aside t.a.r.p. for a second, are there other governmental solutions, congressional solutions you would seek for us to consider that would try to right this situation? >> my view is that the better mechanism would be t.a.r.p. the -- it's difficult to see what these are state regulated entities. it's difficult to see what congress could do to help. >> i think there's enormous concern that fanny and freddie are big and maybe, too big. there's some discussion that maybe we need to have a few smaller entities to provide the gsc service. >> i've always said their portfolios are too big. on

did you know it was going to be -- they are going to ask us all of the t.a.r.p. dollars? >> no, i did not. >> you thought it was the general concern of the economy? >> i didn't know. but. >> what were the rumors on the street? what were the rumors on the street amongst your colleagues and the other big lending institutions? >> it was a weekend -- i think it was a monday was a holiday or something. i didn't hear a lot of things that -- in that time period, i don't know if it ever got out -- i did talk to at least one other person and he did not know anything about it either. >> did anyone in the meeting expressny re -- express any reservations, anyone not sign it? >> not to my knowledge. >> anyone express reservations about not signing? >> one person. >> was that you? >> no, it was not i. >> okay. mr. chairman, thank you for the time, i have to run to a 1:00 meeting. i want to thank the witness for his patience and thoughtful answers. >> i yield to the gentleman from ohio again, this time mr. kucinich. >> thank you, mr. chairman. mr. lewis, we would hope a ceo would have a

number two, several weeks after we did the t.a.r.p., we also passed a t.a.r.p. corrections bill, a 400-page bill we passed to correct all the mistakes we made in t.a.r.p. so i'm not so sure of the wisdom of congress is necessarily accurately as described in that statement. i do want to say i agree with chairman kanjorsky about the context you took all this action, sky was falling, very difficult time but i do want to say the reason we are going over this chronology is because we have granted the fed enormous independence and there is sometimes a tension between the taxpayer interest and the power of the fed and the independence of the fed. that's why we are going over this. there has been a lot of back-and-forth today but basically what the facts are is that merrill lynch got into trouble very early in '07, it was a very difficult situation, there was a merger proposal that you supported quite strongly between bank of america and merrill lynch. there was an agreement to enter into that merger and then the sub -- at some subsequent time, there were major losses, t

the t.a.r.p. money was sold to the congress as acquiring assets, not as a quiring stock positions in various companies and particularly not in acquiring a stock position in a bankrupt manufacturing company. when we approved t.a.r.p. the first time around we did it with the understanding he was dealing with the credit crisis and the financial meltdown we were facing around the world and instead the t.a.r.p. money has gone into bankrupt companies, and once again, the question of conflict of interest. i am saying there must be no conflict of interest with respect to how the t.a.r.p. money is being spent so that the treasury secretary says well, wearing my hat, looking at for the benefits of general motors i am going to suddenly switch and take my hat as the treasury secretary and determine some t.a.r.p. money is going to go to relieve my problems as an executive overseeing the auto companies, so those are the two aspects of the addition i am making two senator alexander's amendment. number one, we ar

money's concerned, we'll provide all the information that i think t.a.r.p. ould want or anyone else that needs to have enforcement authority. >> thank you, mr. chairman. welcome, chairman bernanke. if the staff could put up chart ten, please. mr. chairman, as you well know we are looking at an explosion of debt over the next ten years. presently our federal debt is at 41% of gdp. i know this is well known to you. cbo says that it will increase to 82% of gdp in ten years. in your testimony, you speak of the need to have prompt attention to questions of fiscal sustainability. in order to maintain the confidence in our financial markets. so, certainly the case has been made for short-term federal intervention in our marketplace. i believe that in testimony by the head of cbo, their estimate is that we will reach positive gdp growth in the third quarter of this year and that unemployment will level off, i believe -- i think the second quarter of next year. o and b had a rosier scenario, and today in your testimony you speak of an incipient recovery, and i believe

and instead, the t.a.r.p. money has gone into these bankrupt companies and once again the question of conflict of interest on a and saying there must be no conflict of interest with respect how the t.a.r.p. money is being spent. so the treasury secretary says well, wearing my hat looking out for the benefit of general motors on an going to suddenly switch and take my hat as the treasury secretary and determine some t.a.r.p. money is coming to go to relieve my problems as an executive overseeing the auto companies. so those are the two aspects of the addition of ibm making to senator alexander's amendment, number one, we are giving the secretary of the treasury the same kind of fiduciary responsibility and therefore exposure any officer or director would have with a corporate opportunity and at the same time we are saying no more t.a.r.p. money, mr. secretary, whichever hagee you may be wearing can go to one of the bankrupt of companies. senator kyl has joined. >> i support the kyl-bennett -- just kidding. [laug

at that time the t.a.r.p. money was provided in form of preferred stock, which is on the one hand mont voting but on the other hand is senior to common equity and therefore is safer. >> i & that, but it's the lack of -- it seems like mr. lewis was most concerned with lack of input or control on the part of the tax payer and i think that would have helped, you know, in this deal if we had greater control on behalf of the american taxpayer. -- chairman thank you. i yield back. >> i now yield five minutes to the gentleman of massachusetts mr. tierney. >> thank you mr. chairman. mr. bernanke, another we the public money seemed to flow to these financial institutions. back in march of 2009, aig disclosed the name of the counterparties. the people that had credit stifel swap agreements and bank of america was among them as others. it appears from the records that there were losses in the so-called super senior multi sector credit default swaps portfolio aig had and that it created a liquidity problem and had obligat

was maybe threats here or at least strong suggestions that you initially partake, participate in the t.a.r.p. program. can you tell me about what took place at that meeting and walk me through it, that october 13th meeting? >> the nine chief executives were called by hank paulson or at least i was -- >> let me interject. you said earlier, i believe, too, i forget which member's question, you initially felt your bank and your board did not need any infusion of cash or t.a.r.p. money from the government, is that right? >> yes. >> when did you make that decision as a bank, this obviously was prior to -- >> that's the first reaction that i had to the fact that we were being offered 15 billion was that we didn't need it. the prior week we raised $10 billion in equity. and that it could be -- i'm speculating, but it could have been that that's why we were offered 15 and not 25 like some of the other big banks were. but as you mentioned, the people that were there, on the other side of the table, there were nine of us, nine bank ceos and each of the people spoke about the possibility of detear y yo

>> we received 15 billion, not 25 billion from the original t.a.r.p. package. it did not surprise me they were willing to give us more. we talked about coming to a solution to get the merrill lynch deal done. >> there was a financial crisis and they thought it was necessary -- unanimous consent for two more minutes. >> without objection. >> there was a financial crisis and they thought it was necessary for the system, for the deal to go through. if there's one thing about your record that's clear, you have experienced negotiating deals. what do you believe your leverage with the government was at the end of 2008? >> the only leverage i would say we had was that two honorable people had given me their word they would try their best to find a solution. >> isn't it true it was because bank of america was a big bank. if you hadn't been a ceo, been the top executive at the mid sized or small regional bank and acquired a similar size bank, do you think the federal regulator would have behaved in the same way? >> i don't think i have a favorite son from the e-mails you

we can recapture money that is already on the table in this t.a.r.p. and get over 20 million americans in short in half the time the obama administration is talking about and not spend new money. so, we have got to look at proposals like this that don't put this further in debt. we don't have the money they are going to pay for it with new taxes or borrowing which will make america more expensive place to do business which means more jobs will go overseas. >> this notion that you have to introduce a new government program to solve the challenges that we have that are real in their health care is just falling. it simply isn't true. there are wonderful ways to improve the system and utilize the money that we currently spend on health care to have a much more efficient system. if you talk about cost drivers they are no different than the cost drivers had any other industry. they are taxation, litigation, regulation primarily. and if we truly have appropriately and robust liability we can save hundreds of billions of dollars currently in the practice of def

>> it is true that we did not think we needed the t.a.r.p. funds at the time we were asked to take them. >> was there any connection between your reluctance in accepting them and the

they hope to repay at least part of the t.a.r.p. in the future. >> i am sure this might be the experience in other members' offices. i represent a district out in los angeles and we get calls every day, up to 10 to 30 calls, people who have gone to the bank and they're not having their loans restructured and i am very curious about where that money went when it went into the system. it's like trying to unscramble eggs but i know that the consumers and owners of property are not being assisted with refining their loans. let me go on. in testimony before the committee on june 11, bank of america ceo ken lewis claimed that the revelation of a $12 billion loss at merrill lynch on december 14 of 2008 caused him to consider invoking the material adverse effect clause, referred to as mac, to back out of the deal nine days after shareholders had voted to approve the acquisition, however, in an e-mail on december 19, the bank supervision office of the new york fed, tim clark, stated lewis's claim that they were surprised by the rapid growth o

can you tell me the effect, if the banks wanted to pay back the t.a.r.p. funds, what effect would the cashing in the warrants have on the cost of paying back? >> so besides paying back the preferred shares, as you know there are warrants also, which give the public some upside on the stock values of the companies. the treasury is trying to determine, you know, how to price those warrants and how to go forward with that. there is a bit of a complication as i understand it because in the law, the banks have the right of first refusal in terms of purchasing those warrants before it can be -- before the warrants can be auctioned in a public market. so that requires some analysis of the value of the warrants which i understand treasury is undertaking. so i assume that -- >> will we necessarily cash in? because some have complained the cost of the warrants would make the cost of the loan actually excessive. >> well, you know, the point of the warrants was that if things turned around and got better, that the public would share in some of that gain. and i would sa

the t.a.r.p. fund has received two forms of payment, the principal that was advanced and also interest on the preferred. does that interest refer back to the t.a.r.p. program and another question related was the value of the warrants, the profits from the warrants. does that go back into the top program? >> moneys that are received go into the general funds of the u.s. treasury. the amount advanced initially is then deducted from the amount outstanding under the $700 billion limit. i will double-check that for you, but that's my derstanding. >> so essentially what the repayment would restore the ability to extend the principal amount that's repaid, but the addition additional, the profits and the value of the warrants, they go back to the general treasury. >> that's my understanding. i will go back and doublecheck it for you. >> thank you very much, mr. allison. i will assume that you looked at the april 21st report of the special i.t. for t.a.r.p. >> yes, sir. >> i think you did a good job of layi

>> he had been involved in the original t.a.r.p. money, yes. >> right. and tell me about mr. summers, the intersection and place of involvement that he had with the project. >> i personally had no involvement with mr. summers. mr. chairman, i would ask that mr. price's notes from december 2 1st of 2008 and mr. lewis's notes also be entered into the record. >> without objection. >> thank you. >> so ordered. >> tell me about the interaction you continued to have in -- with mr. bernanke and mr. geithner at this point? >> well, i've had very little conversation with -- in fact, i can't recall of a conversation i've had with mr. bernanke in terms of being one on one. i remember council called the federal reserve advisory council and we -- there were 12 of us and we have dialogue with federal reserve, including mr. bernanke in a group setting. >> any interaction with the administration -- >> gentleman from utah, your time has expired. >> my apologies. >> now yield to the gentleman from maryland, mr. cummings. >> mr. lewis, i've listened to your testimony very carefully and you know,

secretary i want to follow up on the discussion we had about the use of t.a.r.p. funds. it troubles me that banks have received billions of dollars without having to demonstrate that they've increased lending as a result, and without having to be fully accountable and transparent in the expenditure of funds they have received. i mentioned to you that i've seen in my state a large recipient of t.a.r.p. funding constrain credit to actually cut off lines of credit to cease lending to a non-profit hospital in my state, a major retail er. so i don't see on the grassroots le

the back, and isn't this in some ways much the source of the imbalance and i think not only of the t.a.r.p. but things like the antiquities act and other authorities where one has granted party is on either side might find they don't like something carried out but they tend to say we will wait until our dog is back in power because we don't want to engage in the fight to repeal it. >> i think that is an excellent point and i don't want to say that it's laziness on the part of congress. i think i refer to it as cultural convenience. members spend less and less time on the hill and more time in their districts raising money and running for office and so on and what suffers as a result is committee work where most of the work with congress is done or should be done so what is being slighted is oversight of the executive con chris taking a policy initiative to correct things within the executive and so on and as a result you have seen this decline i think in the relative power of congress by default. they like the three day workweeks in washington and four days back in the home district, but c

today's later we were asked to initiate the t.a.r.p. program. sequently worked with the bush administration and after zero and we were unable to pass the bill because the house passed and senate didn't involving the auto companies the bush administration initiated it, so we are now talking about a bush administration initiation of funding for aig. a bush administration request to congress to create the t.a.r.p. and the bush administration intervention without congressional final action in the auto companies. .. more than one-third of the money advanced to banks had already been paid to the treasury. we have to decide what we do with that but does consider the whole 700 billion gone have to cope with the fact that approximately 200 billion advance in less than a year and more than 70 billion has come back some of which exceeded the loans because there was interest. these are complicated questions to be worked out and i would not ordinarily have brought this up but listening to what i heard before, yes we have had a problem with bailouts for the se

think i'm accurately paraphrasing your testimony, you indicated that in your opinion that both the t.a.r.p. funding and the stimulus legislation averted a tragedy. is that essentially -- >> that's correct. >> and in response to a question from mr. scott, you indicated that you thought direct government spending was the most effective means by which we would either stabilize jobs or create jobs? >> well, i think it is foreign ha important to have a mix. but upon the immediate impact on the economy, government spending doesn't have the issue that tax cuts do, which is part of it may be saved. but that being said, i think a good mix is useful. >> the stimulus package that was passed had round numbers, $500 billion worth of spending, $300 billion worth of tax cuts, those are round numbers. when that legislation was on the floor, the republican alternative offered was a package of essentially $500 billion worth of tax cuts. can you estimate what the impact would have been had we passed simply a $500 billion package worth of tax cuts as opposed to some stimulus spending? >> no, i really am not a

going back to the repayment of t.a.r.p. of $of 8 billion which was announced this morning, so what is the expected return on investment for taxpayers? >> well, the way the terms were initially established, these preferred investments of stock came with a 5% coupon. i don't have my press statement with me, but the treasury has already burned several billion dollars in terms of those dividend payments on the preferred. the full terms for the government include the value of the warrants that treasury took as part of these investments. we're in the process of going through a judgement about what fair market value for those warrants is likely to be and in the release we put out this morning is i'm not sure we made an estimate, but some of the estimates now are in the several billion dollar range for the banks that are repaying. government, so people will bring all sorts of financial prissps to judge the return. of course, you'll have to look at return of the country and not the direct financial return, and they're quite significa

for other parts of the economy, like the t.a.r.p. nvestment in banks, or some of the longer term holdings of the fed, it may take a few more years. but i would say that four or five years from now i would hope that we would be pretty much as a government -- will be pretty much out of the financial markets and that things will be operating on a more normal basis. >> thank you, mr. chairman. >> thank you, mr. chairman. and thank you, chairman bernanke, for being here with us. when we spoke last year as we were considering our response to the downturn in the economy, and we were trying to consider the parameters of a recovery package, i asked and you stated that helping the states prevent cutbacks and services could have a stimulative effect and indicated support for addressing weaknesses in the municipal bond market. the recovery act we passed did include money for state stabilization and created several flexible bond options to help our government, our state and local governments. and this past week when i was in massachusetts, as part

committee that looks at lending and seeing if we're using the t.a.r.p. funds to lend money. that is a report we just requested. there obviously is the involvement of regulators as they normally would be -- >> i'm talking over that. more than that. >> the only involvement that would be explicit would be after we were ordered to attain more capital as a part of this stress test, they did suggest to all banks that were raising that capital to relook he at the boards for financial expertise and look at the management and succession as part of the process and we have been doing that. but no day to day decisions made by regulators. >> talk to me about the t.a.r.p. dollars. t.a.r.p. funds you have, any kind of indue influence you felt there in relation to when you initially accepted t.a.r.p. dollars. >> no undue influence, no, sir. >> thank you and just a couple of follow-ups. although the threat seems to have been stated whether or not it influenced you, to your understanding under u.s. law and i realize we're not asking a banker to be a lawyer, but does the federal reserve chairm

>> with respect to this particular issue the law is clear that any action regarding t.a.r.p. needs to be disclosed within a week and we did that. >> do you believe that the people where better served by being uninformed in making the investment decision, especially when official america knew there were misrepresentations in the financial status? >> again. those judgments were up to bank of america. our job was to make sure the system was stabilized and that was our primary focus. >> mr. chairman why did you think it was necessary for bia to inquire merrill lynch, when lehman had been allowed to fail? what was the thinking of saving aig, merrill and in these companies failed to adequately perform and uphold their fiduciary responsibility to its stockholders? what made this different from lehman? >> we made extraordinary efforts to prevent women from failing a we were unsuccessful partly because the couldn't find a merger partner and bank of america was a potential partner. they decided against it and we did not try to endorse them to do it. we didn't have the powers and that is

for other parts of the economy, like the t.a.r.p. investment in banks, or some of the longer term holdings of the fed, it may take a few more years. but i would say that four or five years from now i would hope that we would be pretty much as a government -- will be pretty much out of the financial markets and that things will be operating on a more normal basis. >>

treasury urged you to manage the timing of the disclosure so that merrill's earnings and the receipt of t.a.r.p. money were all disclosed in january? >> the target was it to do that so that we didn't damage the economy any more. >> so there were discussions about that with the u.s. treasury and with the federal reserve? >> it was about announcing everything at once. >> i understand. but the timing is interesting. let's announce it in january, not in december. was there something critical that happened in in wall street that made it better in january than december? >> there was not an agreement in december. >> i'm sorry? >> there was not an agreement in december. >> there was not an agreement among whom? >> among us. us being the federal reserve and the treasury. >> so there were discussions but not an agreement in december. >> there were discussions but not an agreement, yes. >> did those discussions involve the secretary of treasury himself and a the chairman of the federal reserve himself? >> yes, they did. >> and yourself? >> yes, they did. >> and the agreement was let's hold off until janua

we are one step forth in the t.a.r.p. program and you were in the eye of the storm. i look forward to visiting with you about all those things that impact the economy and where we're going from here and i appreciate you coming before the committee. thank you. >> senator bond? >> thank you very much, mr. chairman. ranking member collins. welcome, secretary geithner. everybody knows over the past year we've had a major economic storm raging and what great damage to everybody. the federal government has responded to the economic crisis with aggressiv and unprecedented, but unfortunately, i believe ad hoc, actions to taxpayer-funded bailouts are too big to fail private corporations, a trillion dollar stimulus, foreclosure rescue programs to name a few. we've seen positive signs of green chutes, but there's some wonder whethering they'll wither away with continuing problems in the housing sector and consumer debt remaining high and significant deleveraging occurring in the financial sector and lingering question about the solvency of banks. are we seeing a dead-cat bounce

let me ask you since the executive compensation issue is in terms of t.a.r.p., i want to ask a t.a.r.p. related question. the administration put forth a reorganization plan for gm. under that plan at gm bondholders many of whom are middle income americans including blue-collar workers, tradesmen who invested $100, a thousand dollars in gm bonds for their 401k and their retirement, the gm bondholders apparently ended the administration plan get 10 percent of the company for $27 billion in claims, warrants for an additional 27%. the united auto workers get 17.5% of the company for less in claims, 20 billion, and 10 billion in cash, 6.5 billion in preferred stock, 2.5 million i owe you, and warrants for additional two-point represent of the company. would that not create an impression of a double standard? >> i really don't believe so. i really believe that the bondholders represented themselves very well. i think they were better off and had they allowed for a completely uncontrolled bankruptcy. and in terms of a this, is going to require painful sacrifice from the retirees, retirees who

the average intrinsic value of options held by executives in t.a.r.p. recipient firms fell by, 94% from 2007 to 2008 and the value of their restricted stock holdings fell by 72%. the statistics on include firms that continue to operate at the end of 2008, thus ignoring the losses incurred by executives at bear stearns, wachovia and any other casualties in the crisis. given the existing penalties for failure there's nothing inherent in the current structure that leads two of these incentives to take excessive risks. to the extent the firm's indeed took such risk we need to look down the pay structure to explain. in particular the role of bonuses is like the forced by the roles of loose monetary policies, social policies on homeownership and poorly implemented financial innovations such as exotic mortgages, securitization and collateralized debt obligations. i'm especially concerned about offering too big to fail guarantees that provide enormous incentives to take risks. but this is not a compensation problem. another way compensation can lead to risk-taki

made by both the prior and current administrations to support the auto companies have come from the t.a.r.p., the task force and its staff activities have been subject to the full range of reporting requirements under the eesa statue. this includes oversight by the gao, esa's financial stability oversight board, the special inspector general for t.a.r.p. and the kwongsal oversight panel established under esa, as well as reporting to multiple house and senate committees. in a better world, the choice to intervene in these companies would not have had to be immediate. but in the midst of the worst economic crisis in three-quarters of a century, the administration's decisions avoided a devastating liquidation and put a stop in the auto industry of picking hard problems down the road. while difficult for all stakeholders involved, these restructuring provide gm and chrysler with a new lease on life and a chance to fundamentally restructure and succeed. thank you. >> dr. montgomery, welcome. >> thank you. i appreciate this opportunity to appear here today to discuss assistance that's being provi

the financial company. so it was a very different situation. >> if you had t.a.r.p. fun separates him time you would have saved lehman brothers? >> we would have given that a try. >> let me ask about the process you went through in determining to give bank of america 15 billion in october. why that number? how did you come up with that number? >> i did not develop that number. i'm sure it was related to the size of the firm and capital ratios. >> who came up with that number? >> i'm not certain, it was probably treasury. >> your mom sure who came up with the number? so the $10 billion given to merrill lynch at a subsequent point in time you don't know who came up with that number either? >> this was t.a.r.p. money and the treasury's responsibly. >> and you didn't have conversations with mr. paulson about this? >> i don't recall. >> as i look at it appears if you take the 15 billion the galt in october, the 15 billion that merrill got, the $20 billion that was given to the b of a of january that pretty much pays for what the b of a paid for merrill to read today basica

. >> i think with the establishment of t.a.r.p. under the previous administration and its continuance under this ad n administration there has been a shift of personnel within the department treasury to deal with the obvious demands and the administrative demands and can you give me a general impression of whether or not this has created dislocations in other parts of the treasury that needs to be addressed and the payback on the t.a.r.p. funds is some indication that we maying getting out of this business and get back to business as normal. >> the way that the legislation was written to provide funding for the administrative resources required to run the programs and we've substantially increased resources using the authority to restaff the office of financial stability and we'll also have to increase as we proposed in the budget, the rest of the domestic finance staff because they've got this greatly expanded and much more complicated set of challenges in the range of policies including the one you just raised and we did announce

when congress envisioned the t.a.r.p. and other assets, and other powers in order to help in the post-september meltdown of the economic market, we did so in a way that was make us lessen the impact as we unwound credit markets around the world. nowhere in the legislation did it suggest that hank paulson, ben bernanke or anyone else operating on behalf of the united states government was given the power to force shotgun weddings. today we're going to hear from ken lewis, ceo of bank of america. a man who spent decades understanding the value of financial institutions. we will hear about the transactions, the ratios determined for a stock trade type merger were in fact considered to be reasonable. as the chairman has said, rightfully so, the federal government played a clear part in this, but the american people should understand their dollars were not given to any party in this transaction, but, in fact, loaned at an amount substantially greater than the interest rate paid by the federal reserve. as such ken lewis had an o

water for the passive administration to make sure that legislation was not only engaged and major the t.a.r.p legislation actually past and also we must remember history tells us that this the administration has basically adopted the, line and sinker the passive administrations of the bailout philosophy so yes there are a number on the side of the aisle that repeated the in the past then there's one i see over there they joined with us and the fight against the tar bailouts and all the string of bailouts that followed, so let's remember what history was. i also see we have the counter to the secretary of the treasury with us here today. remember mr. geiger at that time was with the new york fed and at that time the new york fed, he was considered the architect of the bailout of the ig bailout and this administration adopted mr. geithner as their treasury secretary so i think there is the pity that this adminstration is continuing on in the mold and continues with the bailout and that is why a number of us thought it was wrong then and continue to fight now with our legislation and what we wil