the t.a.r.p. shares that treasury bond was a 5% dividend payment. there could have been 8-cent -- incentives built around those payments. by increasing lending over a baseline it would turn the bank a better dividend. that's just one example. the second problem was the lack of transparency. again, this policy goal was set, but when i came to office, literally a week after i got there and made the recommendation that there be some mechanisms of the bank could report how they're using funds so we could measure and see whether this policy goal was being carried out with a lack of policy mechanism so that we could adjust it. it was utterly rejected. i was told that i was out of my mind, going to destroy the country, destroy the banking system. neither the first or last time i was told that. but there was this lack of accountability. there was a sense of we will measure it later. [inaudible] >> i think so. if your going to have a policy goal and state your credibility on that policy goal which is what treasury did, the treasury came out and said, listen,

the t.a.r.p. shares that treasury bond was a 5% dividend payment. there could have been 8-cent -- incentives built around those payments. by increasing lending over a baseline it would turn the bank a better dividend. that's just one example. the second problem was the lack of transparency. again, this policy goal was set, but when i came to office, literally a week after i got there and made the recommendation that there be some mechanisms of the bank could report how they're using funds so we could measure and see whether this policy goal was being carried out with a lack of policy mechanism so that we could adjust it. it was utterly rejected. i was told that i was out of my mind, going to destroy the country, destroy the banking system. neither the first or last time i was told that. but there was this lack of accountability. there was a sense of we will measure it later. [inaudible] >> i think so. if your going to have a policy goal and state your credibility on that policy goal which is what treasury did, the treasury came out and said, listen,

i mean, this is the treasury. s is the, this is the group that handles the manages the nation's wealth. and it's being pillaged. did you not have a sense of responsibility to let the american people know that a corporation that had defaulted was playing a shell game with taxpayer dollars? >> i don't think in any way, shape or form that we deceived the american people, and i don't think anybody was being pillaged in any way, shape or form. the -- >> do you think it was appropriate, do you think it was appropriate to claim that they were paying down their debt from one pot of taxpayer dollars that was, essentially, a prop up in the first place? into another? >> i think the treasury's characterization of what general motors did, which is that we invested money in this company after we made the investment the money was the property of the company, at that point they chose to use some of their corporate resources to repay a debt that they had taken out from the treasury. >> you called it an investment. i think the ameri

some help from the treasury. m going to colombia to see how the action plan is being implemented and whether there are some further issues that need to be addressed. that is why i am going to go. i have always done this, to go myself, and spend five or six days in serious discussions with everybody. >> would you vote against it at this point? >> i'm going to see what is going on. >> let me ask you about redistricting. it looks like you and gary hughes might be in the same district. what are your thoughts on the redistricting plan? >> i wish i could have brought the maps. i think the public would look and say, what kind of shapes are those? they've got salamanders and crocodiles. and cats and dogs. >> the republicans in illinois are wondering, too. >> it makes no sense. in terms of -- look, the voters need to have a choice and this is just one, this is a map that is not official. and i hope people realize what it does. what it does is to say, there are now four contested seats in michigan. i ran for 10 years in a v

well the treasury secretary pull the plug? if not, don't they have the same problem we have that with the current system? >> that is the risk. but if you have them separated out and you don't have and there isn't confusion with a safety net that has been, then i think their capital standards -- the market will demand more and the market will pay more attention to it because if you subject them to the real bankruptcy laws, then it becomes a greater risk to those creditors that are outside. right now the assumption is, because you are tied to the safety net, the safety net will because the impact on the primary financial institution will be the main concern and can't take any chances of you bail out over here. that is why the one to limit their ability to do it. that is what is behind that. understand, i am not saying crises go away. i am not saying risk of goes away. i am sending it gets better allocated, better price, and therefore we can handle the crisis that will inevitably come, more successfully, without a 10% unemploymen

remember in every finance textbooks around the world, the u.s. treasury funds are more aligned times free financial the instrument. if we undermine that belief into the crisis people thought of the subpar securities were good now that belief is quaint and foolish people look back and think how quaint to think they can cut the u.s. government so it's a very dangerous game of roulette we are paying right now. >> he's got a lot of money, maybe not as much as you, i don't know, in an interview in "the wall street journal" let me turn over to michael. our cleaves says a treasury bond with a long term debt deal is worth more than a treasury bond that is not defaulted on but without a deal. >> there seems to be a function that the u.s. were to get beyond the debt ceiling the yield would rise significantly because the concern of redefault or nist coupon payment. instead what is happening is the market's focus on the economics of it all, and if we were to move beyond that date, it would be a brisk scenario, so investors would get out of treasury, out of the risk a

open market so if they buy a billion dollars from the treasuries across a billion dollars here in the united states we passed a law some thirty or forty years ago i believe it was you i'm sure you probably know that we really three days here over the years ago. if i can. if the the fed wants to buy our debt by bonds they have to do it on the open market they've got to buy them goldman sachs and goldman sachs takes their part of flesh out of this so q.e. two actually made a lot of money for the banks because they got to sell the fed bonds and i just thought. it's a good idea i mean i would place it is a much less important concern because i'm more concerned for example if the fed were to continue to hold federally funded eighty billion in interest of the treasury last year if the fed were to continue that rather than someone back to the public which is what it plans to do they can save us over a trillion dollars in interest payments over the next decade my point i mean if we blew up the law so that you didn't have it in there that's not what you don't have to change

that is, in the direction of being overly constraining of the treasury and the fed in a crisis. i don't think the error, although often in the public debate, people suggest there is in the other direction. i think martin is correct, that if we erred, we erred in limiting authorities, not insufficiently tough about them. on tom's comments i do think that there's always a debate in the regulatory structure, it's impossible to escape between rules and discretion. it's a debate that has been around for hundreds or thousands of years. and the question is not do we have only rules-based regime, or only discretion-based regime, the question is whether on a very complicated continuum you make sets of trade-offs on particular policy questions. and the dodd-frank act i think over all moves the spectrum on most other policy issues addressed more towards rules than it had been. not in a revolutionary way, but in a modest way. in terms of the 1930s issues, i don't think that the glass-steagall act or the gramm-leach bliley act, universal banking issues were central to the crisis over to the

the treasury would immediately have to cut and prioritize its spending. debt and interest payments would be made first. $500 billion is due in august alone. social security and medicare would be next on the list. >> on august 2, the government won't have to cut social security payments or medicare. but if it drags on for a couple three, four weeks, then yeah, i think they'll have no choice now cut almost everything that the government does, including social security and medicare. >> reporter: then the government would have to begin putting employees on furlough. what's the risk if we hit this ceiling? >> it would shake the basic foundation of the entire global financial system. >> reporter: treasury secretary tim geithner has said the biggest casualty would be confidence. >> the psychological impact of something like this is huge? >> absolutely. you don't want the genie out of the bottle. >> reporter: ric mishkin, a former federal reserve governor says the countries that have lent money to the u.s. would begin to doubt whether they'll be paid back. and tha

bonds so there aren't enough buyers for the issuance that the treasury has on deck which is over the next twelve months i think think it's something i want point five trillion or something like that it's a really matter i mean hundred billion here or there it doesn't really matter it's over a trillion and a half dollars all right gonzalo there are personally i'm in tim rogers camp i would take the euro over the dollar but we can talk about that on another time thanks again for being once again on the kaiser report it's a pleasure as always thank you for having me all right and i was going to do it for this edition of the guys the report with me maximizer and stacy herbert all right i guess and there are they going to send me an e-mail please do so at kaiser report and r t t v dot ru until next time this is max kaiser thing by. her is that so much to use because it is the right time to market is the key speech played out in yemen turning the country into a failed state oh should the international community be reacting to events there and will be.

meanwhile, the u.s. treasury will be paying tax payer dollars, not to read page dollars in utility for the doe's breach of contract. billions of dollars and over 30 years of research from the nation's top scientists were jettisoned, not for technical or safety reasons, but as the gao report stated, social and political opposition to the permanent repository, not technical issues is the key obstacle. when i visited yucca mountain last month i heard first hand the overwhelming support from local residents and officials from the surrounding counties. we would hear first hand of that support today from those representing the locals closest to yucca mountain. locals to raise families in that area and those that are directly affected the most took upon themselves to ensure the safety of their children and grandchildren to an independent scientific investigative program, and what they found is high-level nuclear fuel could be stored at yucca mountain while keeping their water supply safe. a major concern particularly fo

the t.a.r.p. shares that treasury bond was a 5% dividend payment. there could have been 8-cent -- incentives built around those payments. by increasing lending over a baseline it would turn the bank a better dividend. that's just one example. the second problem was the lack of transparency. again, this policy goal was set, but when i came to office, literally a week after i got there and made the recommendation that there be some mechanisms of the bank could report how they're using funds so we could measure and see whether this policy goal was being carried out with a lack of policy mechanism so that we could adjust it. it was utterly rejected. i was told that i was out of my mind, going to destroy the country, destroy the banking system. neither the first or last time i was told that. but there was this lack of accountability. there was a sense of we will measure it later. [inaudible] >> i think so. if your going to have a policy goal and state your credibility on that policy goal which is what treasury did, the treasury came out and said, listen,

bonds so there aren't enough buyers for the issuance that the treasury has on deck which is over the next twelve months i think they get something like one point five trillion or something like that if they're really matter i mean a hundred billion here or there it doesn't really matter it's over a trillion and a half dollars alright gonzalo in their own personal i own in them rogers cap i would take the euro over that dollar but we can talk about that on another time thanks again for being once again on the kaiser report it's a pleasure as always thank you for having me all right now is going to do it for this edition of the kaiser report with me max kaiser and stacey however i thank my guests gonzalo and there are going to send me an e-mail please do so and cries a report on r t v are you until next time this is max kaiser thing by. going to.

we turned it over by the to the treasury and received in return for the gold certificates. >> at the treasury entered under the exchange stabilization fund, i would just do you have the legal authority to do it. you have the security for all the gold? >> they have the trust in the gold owned by the treasury. we have simply an accounting document that is called gold certificates that represents the value at a statutory rate that we gave to the treasury. >> and still measured at $32 an ounce, which makes no sense whatsoever. the conventional wisdom today says that gold is really not money. we don't want it to be money. i mean, if you are for the gold standard, there is something wrong with you. and yet we hold the gold. you know, there have been suggestions made in a soda, you know, encourage the suggestion. , you know, encourage the suggestion. , you know, encourage the suggestion. money. it's an asset and you don't use it because it's on your balance sheet. would you have a position on this? why wouldn't they give it to the people? at the people have, would you advise us and say know,

his handsome frenchman gregory wardy they finished tied for second norman getting his hands on the treasury out of his two thousand and nine european masters title. really believe my game was good enough and with the last we know. we. would know as well you know a lot of it all and that is it feels. relieving you know. that's which demoted g.b. where australia in k.c. stoner won the catalan grand prix his third victory in five races but when he took pressure on reigning world champion jorge lorenzo who came in second however got the spaniard is still seven points clear in the overall standings and his teammate ben speed was the first podium finish of the season species finished ahead of multiple champion valentino rossi who has yet to win this season after joining but you can see team athens marcus immaturely starting from pole to have to settle for sixth place after you tell him great death threats local fans after crashing down

remember in every finance textbooks around the world, the u.s. treasury funds are more aligned times free financial the instrument. if we undermine that belief into the crisis people thought of the subpar securities were good now that belief is quaint and foolish people look back and think how quaint to think they can cut the u.s. government so it's a very dangerous game of roulette we are paying right now. >> he's got a lot of money, maybe not as much as you, i don't know, in an interview in "the wall street journal" let me turn over to michael. our cleaves says a treasury bond with a long term debt deal is worth more than a treasury bond that is not defaulted on but without a deal. >> there seems to be a function that the u.s. were to get beyond the debt ceiling the yield would rise significantly because the concern of redefault or nist coupon payment. instead what is happening is the market's focus on the economics of it all, and if we were to move beyond that date, it would be a brisk scenario, so investors would get out of treasury, out of the risk a

committee on finance and said some of your requests that our views on whether the secretary of the treasury has authority to determine the order in which obligations are to the aid should the congress fail to raise the statutory limit on the public debt or whether the treasury would be forced to operate on a first in first out basis and here's the key part of this letter it is our conclusion that the secretary of the treasury does have the authority to choose the order in which to pay obligations of the united states. now translating that into english what that means is that treasury secretary tim geithner has the sole authority to determine how our debt obligations are met by deciding which bills to pay and when to pay them of course doing to them on behalf of the president in fact he's already doing this we hit the debt ceiling and passed the debt ceiling back on may seventeenth and geithner is now borrowing from federal pension funds to keep our government running so if republicans really want to play hardball the president can direct tim geithner to play hardball right back after is tha

this week the treasury secretary said before the small business committee that we need to increase taxes on small businesses, the job creators, so that government has to shrink. when you're increasing federal limosines 73% or let me give you another example. the department of education or transportation. when the recession started, there was one employee that made over $170,000 a year. a year-and-a-half into the recession, we had 1,690 employees that were making over $170,000 a year. these are the kinds of things that the american people are saying, are you kidding me? we can't do this anymore. there really is, bob, waste all across this government. as president of the united states, i guarantee you we will not have a 73% increase in the number of federal limosines and we certainly won't be increasing government salaries at the expense of our economy. >> schieffer: let me talk to you about president obama. you have said that your goal is to see that he is a one-term president. but, you know, back in 2008 you went on chris matthews' broadcast and said because of some of the people he asso

and those would be a, the treasury, and the, the new york state insurance superintendent, if that's nota joke, or maybe treasury was the joke. what is your view of the which of those really deserving of the blame? because new york in a lot of respects is charged with knowing -- with being the series supervisor when it chooses to be. because it is the financial capital, and it tells washington what it needs when it needs a place to lay off the results. so how do you see that? >> conveniently need of those groups are represented on the panel. why do i start with you, viral. >> yes, to the best of my knowledge there was a -- aig bought a small savings and loans and they were regulate but office of supervision pics i think the new york superintendent wanted to regulate this but, there was a lot of stuff that aig did to its london office because london had a very light treatment for creditor during that period, mainly to boost its financial sector. and that is exactly the concerned i am concerned on the clearinghouse part which is whether, rather than getting relatively high standard of regu

some have suggested payments by the treasury to be prioritized the principal interest payments on the debt outstanding and thus avoiding the default on the federal debt. however, even if that were the case, given the current size of the deficit and the time pattern of the government free seat and payment the treasury would soon find it necessary to prioritize and withhold critical disbursement such as social security and medicare payments and funds for the military. moreover, when a debt related payments might be met in this scenario, the fact that many other government payments would be delayed would still create serious concerns about the safety as treasury security among the financial market participants. the hypocritical of holds the first we should do no harm. and the beating of the critical fiscal issues we should avoid unnecessary actions or threats that risk shaking the confidence of investors and the ability and willingness of the government to pay its bills. reason this concern i am by no means recommending the delay or action in addressing the nation's long-term fiscal chal

>> yes, the treasury says that. again economic growth is an important factor in addressing the deficit. if we don't grow much better, it's going to be hard by any other measures to grab hold of the deficit. you know you would think this was relatively doable. you have been reporting for a long time. i think -- i would guess you may with the public, what is the problem here? why can't we move and find some common ground. and the problem i think in large measure, not only, but in large measure is that the republicans are kind of stuck on a rigid idiological base and they deny the feed back. and i was reading the report and worried about the debt ceiling and one republican said, it's not our mess. and in the "new york times" report it indicates what is indicated that so much of the deficit is a result of the policies under george bush. later in these last months, the last year-and-a-half, in part because of the recession. i just say to the naysayers, when we had this problem, when there was a recession, what there was t

we used at the treasury department. we get the letters ready, tell them, look, constituents will get these letters -- >> absolutely. >> and all of a sudden -- >> the arithmetic is compelling. the last 60 years, highest percentage of gdp we have ever spent we're spending now. the most amount of gross domestic product taxed we are taxing now. >> and the gap, cost gap, number of people who are paying less taxes and making 400 times more, are 1%, then they and did it, whatever, at 10 years ago. it is astonishing. >> can i ask you about the supreme court ruling this week, the class action suit against wal-mart by some of the women who worked there? >> it is very interesting. it was a 5-4 decision on the key legal question. all nine justices agreed that this lawsuit might too far. it was too big, and that standard used to certify the class was the wrong standard. but five justices basically were if you give a lot of discretion to supervisors at they discriminate, that is not all of the big boss. >> is this the end of class- ac

representatives and 1893 passed a bill called the silver service purchase act and this required the treasury to buy 4.5 million ounces of silver every month. and print and equivalent of currency for that will this cause inflation, rapid inflation in the united states is oldest currency poured into the markets of the thing was the people in the west for gold mining states they didn't mind this because they could sell their currency to the treasury and the farmers a lot of them were in debt especially in the south still recovery from the civil war. well, inflation, if you're in debt it's actually not a bad thing because of the money you're paying your debt off is, you know, cheaper than the money you borrowed. so, it's not that bad of a thing. the needed lots of money in their pockets, and of course back east bankers and industrialists who are by and large the people lending the money, they didn't think so much of this inflation because it devalued the money that they had and it really set up a section of battle in the united states. was the most contentious issue between the civil war and fir

the treasury department fights the debt every day and tries to raise money with in effect i.o.u.s toelp keep the country financially afloat and it is done in a very secret place. here is jonathan karl. >> reporter: inside the unmarked building through the empty lobby past a small warning sign across a small lobby up several floors we find the governmente the dwoft borrows unthinkable amount of money almost every day. the war bond posters the only indication of what is happening here and where we are is this tiny sign that says auction room. >> reporter: what happens inside this room is the difference between the government operating for another day or turning the lights out. >> this is how we finance the u.s. government. this is where it happens. >> right here in this room. >> right here. >> assistant treasury secretary mary miller is the most powerful woman you never heard of. she supervises auctions finding out if the world is willing to lend the government more by buying i.o.u.s. better known as u.s. treasury bonds. auction will bring in $28 billion. enough to fund the entire fepg

if you want to pay off the debtors with wanted to come to the treasury you can if you want to play games and play chicken with the economy his words not mine he can spend the money elsewhere on all the stupid programs that are going to exist you guys are on it ok it's as you thousand i think you're talking about things like medicare people want but how do you bridge the gap that people don't want these programs. rather rely on if we can take people want free ponies too but we can't afford that anymore either is medicare free pony. wow or you're equating making sure that elderly people have good medical care to free ponies government i don't care isn't good medical care the sort of mentally contract that is that it that is fundamentally you are fundamentally wrong about that we actually spend less and overhead costs that's because they probably sure you understand what they do you know the interest in what they do in medicare they are they pay much lower rates for goods and services the amount of time they pay we pick up a terrible time with our private sector insurance costs so i'm happy

>> the fed could essentially use the bond-selling capacity of the treasury to recapitalize our banks.he european union can't tax. so it can't issue euro bonds. it doesn't have the ability to back up the banks quite the way -- see, the fed doesn't act alone. the fed acts in concert with the treasury. >> hold on to that thought for a second. christine romans joining me right now. christine, i get it. if i'm an investor in one of those banks, i'm worried about what greece might do. if i'm not, if i'm the average american, why do i care about what happens in greece? >> well, you care because if you have a break-up or a breakdown of the euro zone, that's a huge instability and uncertainty that goes into a fragile economic system already. if you've got european banks that are in trouble because of their exposure to greece, then you have an international banking system that has another weak spot, at a time when you're going get the banks to be healthy again. this week, we saw a couple of days when they were worried about greece and greek debt, u.s. stocks were going down. that's your 401(k)

we're also living through the reality that our leaders of the treasury department and federal reserve in the stipulations on these banks when it came to lending them the billions of dollars to say, you need to begin to extend credit. let's just be honest. robin rice talks about this. we made a mistake in shoring them up, and they turned around and held onto the money and did no lending. the problem is we're living with the result of them holding the money and not being able to lend it out because no restrictions, no conditions were put on any of it. >> it's a good -- i'm not sure that's the whole story. diane? >> the banking industry, first of all, we lost the shadow banking industry which was a major supplier of consumer to credits. that's gone. secondly, the new recommendations are causing banks to raise their capital ratio and the regulations have forced them to tighten up on their credit because they were too easy. there are a lot of factors. it's a very complicated thing and it's very easy to use this argument, but i think the situation is more complicated than that. one thing i

we are involved in the different treasury options. we look around to who else is buying. and when a big buyer -- and the fed has been buying about three-quarters of what the treasury has been issued. when a big buyer steps away, any investor has to ask the question who else is going to be buying? we can't find another big buyer to step in when the fed steps back. we can't find a new buyer. but other things being equal, that means higher interest rates unfortunately. >> i take the point that you have to worry about where the demand for the treasuries will come. but on the other hand there are a lot of other things going on in the global economy right now which may, by comparison to other opportunities, u.s. treasuries, ten-year treasuries an attractive place to park your money. >> this is what i believe you were referring to, mohammed. can you be right about quantitative easing but it doesn't matter because everything else in the world is so uncertain. does that just buy us time or is that a longer-term development? >> we've seen two things happen over the last few weeks th

to news accounts, we were in march of 2009, there were key vacant positionings -- positions at the treasury department, the assistant secretary for tax policy and the deputy assistant secretary for tax policy and the deputy assistant secretary for tax analysis and the deputy assistant secretary for tax trade and tariff policy, the deputy assistant secretary for international tax affairs, the first choice for deputy secretary of the treasury withdrew her name from consideration. four months after the president's election in the biggest economic crisis we had had since the great depression, according to one news source, the list of vacancies on the treasury department website -- quote -- "showed main treasury building is a lonely place, conjuring up visions of geithner signing dollar bills one by one, watering the plants and answering the phones when he's not crafting a bank rescue plan. of course, there are other career employees available and there was at least one holdover assistant secretary and there are various czars in the white house." this kind of delay actually encourages the unheal

i'm pleased to be testifying alongside my colleagues from the state department of. we at treasury have been intently focused on venezuela over the past few years. we have uncovered and acted against a range of actors operating out of venezuela including terrorists and those who have facilitated iran's pursuit of weapons of mass destruction. our concern regarding the activities of terrorist groups in venezuela is lock standing -- long standing, particularly links to the iranian-sponsored hezbollah. as but one example, i would draw the committee's attention to an action we took in 2008 targeting a hezbollah facilitator and venezuelan diplomat. he was an diplomat who served as the charge of afares in da maas cat, syria, and he utilized his powers to provide financial support to hezbollah. among his activities were providing hezbollah doe donors with specific information on how to route their contributions such that they would go directly to hezbollah. he met with senior officials in lebanon to discuss operational issues and that be sill tate -- facilitated the travel of hezbollah mem

the need for such a cap was questioned by the treasury department as far back as 2001. while we believe that the statutory cap should be in place, a number of credit unions like mine and the millions of members we serve would benefit from the enactment of the small- business lending enhancement act. this would provide a practical and well thought out approach to raising the cap while addressing concerns about rapid growth and safety and soundness. we also support raising the $80,000 definition of a member business a long as it has not been increased since its inception. many credit unions have capital to lend small businesses across the country. we are in the position to further assist in recovery efforts. however, we are hampered. raising the cap will make available immediate funding to help small businesses create much needed jobs. i thank you for the time and opportunity to testify. i welcome any questions. thank you. >> thank you. >> chairman johnson, ranking member shelby -- my name is steve wilson. i am chairman and ceo of the national bank in lebanon, ohio. i am a

paulson secretary of the treasury was at goldman sachs. yes. >> rose: a whole range of people had come out of these wl street firms >> i think when we went into the bailout mode, however, that was very disturbing to a lot of people. the close relationship bween wa street and washington. >> and do you think financial reform has taken care of all the issues that cause this? >> absolutely not. as you know, as you know. i mean, dodd frank did not even address fannie mae and freddie mac. >> when you would ask secretary dodd about that he would say "that's what we're going to get to next." >> i understand that's big, huge a polital hot potato like you cannot believe because no one is willing to touch this because it's housing. because it's the american dream but don't you think we should have learned something from this episode that the very people we were ting to help, the very people we were trying to raise homeownership by allowing them the right of... >>ose: suffered the mt. suffered the most. you have foreclosure levs among minorities and li

ever since then the treasury department has been moving money around. e administration and timothy geithner by saying, no, not that date, this date. the latest one is august the 2nd. whether that's the real date or not, we don't want to find out. that's the point, you don't want to know. and here's why you don't want to know. it's not a political question, it's not a consumer confidence question, it's a markets question. the markets are watching washington much closer than washington is watching the markets. as that date gets closer and as those interest rates start to react, that's when we'll really see things happen but nobody wants that to happen at all. >> because the markets are watching, how hard is it for the president to talk up the risky stakes, to talk up the danger of seeing august 2nd come and go out a deal, without damaging consumer confidence and the broader economy? >> okay, so here's the thing. i'm going to get a little technical on you. you remember back in the financial crisis we heard about these things called credit default swaps wher