treasury. our time is short so we will enter the lightning round and try to get in at least one more question. i know you need to leave -- >> i need to be somewhere else out 12:00. >> we understand you are here until 12. >> like five minutes before 12 because i need to be at my next thing at 12. >> i thought we were told we were ending at 12 that we have to for two hours. so, let me to ask the questions -- >> let me -- >> as the bank's -- we are talking about how to wind down t.a.r.p., here's my question to read the top of the guarantees for the money market expired september 18. that is one of the winding down of t.a.r.p.. but we jumped in, we the federal government, we, the treasury department, jumped in when the money markets were about to break the buck. now the money markets don't have any official guarantees. they don't pay anything for any guarantees that most of the market believes if the money market started to break the buck again there would be substantial government assistance. you

treasury. i believe this omission needs to be addressed as soon as possible. thank you. >> thank you. >> mr. silvers? >> good morning and thank you chairwoman warren. i wish to begin by saying mr. secretary that i believe the administration's decision to extend t.a.r.p. was the only responsible course of action. the financial system today is not fundamentally stable in my opinion. the mortgage foreclosure crisis accelerating and overall economic situation particularly when looked at globally is not good. the risk of a systemic problem in the coming months is significant. while i believe a tough resolution authority such as proposed by the obama administration and being acted on hopefully in the house in the coming hours would be far superior to t.a.r.p. as a means of dealing with a possible future financial crisis. at the moment congress has not passed any such authority. in this context the administration's decision was the only responsible one and as i think you just got a little taste of, it

again we not, the only role we have is on the ring -- not the treasury. it was a treasury decision.ave a stabilizing affect, yes. >> the next question is the harder one. many banks and -- many non-banks decided to become banks conveniently in this crisis. >> right. >> many entities in fact fled to the fdic and the fdic finds itself with its funds, funds which are designed to ensure that we never have to actually put in taxpayer dollars, those funds are stressed right now. going forward, do you believe that in fact in the future people should be able to run to the fdic, run to being a bank, when it suits them, even if they hadn't been when it didn't suit them? >> no, i don't think they should be able to do that. absolutely not. >> is that -- a reform that you presently see on the horizon that would give you that ability next time to say, you better be there early or not come at all? >> well i think two things. i think we need a robust resolution mechanism so when entities get themselves in trouble, they don't get government assistance. they get put into receivership. i think entities

treasury, you were just too slow. you talk about all of the things you are going to do, how you are going to improve. we've been listening to long. fdic, we are appreciative for what you have shown can be done. i don't know who is talking to whom, but it appears to me that some of the advice that fdic should be given to others involved in trying to deal with this foreclosure issue is advice that needs to be shared. it doesn't appear that it's being looked at. and for the occ, i just i don't get a real sense of what you do. you do advisory's. you look at what is or is not being done and then you issue information that says what should be done and what can be done. this is not good enough. and we did not hear a lot. do you know about the legislation tomorrow that we have, h.r. 4173? the wall street reform and consumer protection act? you know about what we have for the unemployed? do you support that treasury? mr. allison? >> this man, in fact we are working closely with the staff of the various leadership members in th

i can understand why a treasury secretary, any treasury secretary really would want to extend t.a.r.p.. why not. it's a free option at taxpayer expense and essentially a blank check to finance any macroeconomic stimulus initiative that the executive branch can imagine to the tune of hundreds of billions of dollars. by -- but now that last year's emergency has abated the rationale behind t.a.r.p. as a safl for financial markets in distress no longer supports treasury choice i believe to extend it. the previous congress reluctantly authorized t.a.r.p. in response to extraordinary financial panic. would kong today approve snarp i cannot imagine it. that was why it was extended i believe. but toex tend t.a.r.p. borders i think on recklessness and irresponsibility in treasury's role as a stewart of the nation's financial system. t.a.r.p. continues to inflict great economic costs both directly to the taxpayer in the form of actual and potential tens of billions of dollars of losses and indirectly as chairwoman said of moral hazard distorted insentives created by implicit government guarante

treasury's approach has been to offer a carrot. taxpayer-funded incentives paid to servicers, lenders and in some cases to homeowners to encourage hamp modifications. a carrot is a good way of encouraging behavior. when it's combined with a stick, it's likely to be much more effective. take the carrot and if you don't, out comes the stick and bankruptcy will be the stick. there are a few things that ms. schwartz said that i want to comment on, not so much to disagree with her but just to expand on her comments. ms. schwartz rightly noted that servicers who sign up for hamp, it is largely voluntary whether they sign for hamp, they are then under a contractual obligation, they have a contract with fannie mae that as treasury's agent that they will operate under the terms of the program. it's worth noting what's the penalty for a servicer that fails to do this the only thing that is in that participation agreement is regular contractual rights that if trizzri thinks the servicer isn't complying with the contract, isn't giving a proper

treasury's approach has been to offer a carrot.funded incentives paid to servicers, lenders and in some cases to homeowners to encourage hamp modifications. a carrot is a good way of encouraging behavior. when it's combined with a stick, it's likely to be much more effective. take the carrot and if you don't, out comes the stick and bankruptcy will be the stick. there are a few things that ms. schwartz said that i want to comment on, not so much to disagree with her but just to expand on her comments. ms. schwartz rightly noted that servicers who sign up for hamp, it is largely voluntary whether they sign for hamp, they are then under a contractual obligation, they have a contract with fannie mae that as treasury's agent that they will operate under the terms of the program. it's worth noting what's the penalty for a servicer that fails to do this the only thing that is in that participation agreement is regular contractual rights that if trizzri thinks the servicer isn't complying with the contract, isn't giving a proper review to

treasury securities less than triple a rated. we know soon our colleagues on the other side of the aisle are going to have congress lift to -- lift the debt ceiling. this is like the credit limit on your credit card. once congress is bumped up against that $12 trillion debt ceiling, congress is going to have a vote on whether to ask the american people, and people buying our debt, whether we can increase the limits of our credit card because we maxed it out. media reports indicate that the majority intends to slip this provision into a bill on funding our troops in afganistan. because, frankly, they're embarrassed to have a stand alone vote on raising the debt ceiling. especially because they know that there are many of us here on both sides of the aisle that will insist on some measure to affect some discipline on this spending binge as a condition to voting on the debt ceiling. but whatever the vehicle that the majority leader decides upon, they cannot hide the fact that we are borrowing money so fast that we'll have to raise t

treasury has to give a bond to medicare, a treasury note, an i.o.u., so when medicare starts running in default, as it will within the next 15 years if this bill were to pass, when medicare starts running into default, they're going to have the treasury pay for it. so in effect, this bond coughs -- causes the united states treasury to pay interest to medicare. and during this first ten years, the united states treasury will pay interest to medicare of of $69 billion on the money they borrow, this i.o.u. here. and then when the -- when it goes into default, this is inevitably heading into default, the treasury will have to pay those bonds. and so it increases the debt, and what c.b.o. says, without any equivocation, is not disputable. the debt of the united states will be increased by this bill, not decreased. it will not be $132 billion surplus in the -- in reality, but will be $170 billion deficit just on that, and then when you get to what senator thune talked about, other gimmicks in the bill, it makes that even worse. you say well, the c.b.o. has a score that said it's it's $132

treasury securities less than triple a rated.we know soon our colleagues on the other side of the aisle are going to have congress lift to -- lift the debt ceiling. this is like the credit limit on your credit card. once congress is bumped up against that $12 trillion debt ceiling, congress is going to have a vote on whether to ask the american people, and people buying our debt, whether we can increase the limits of our credit card because we maxed it out. media reports indicate that the majority intends to slip this provision into a bill on funding our troops in afganistan. because, frankly, they're embarrassed to have a stand alone vote on raising the debt ceiling. especially because they know that there are many of us here on both sides of the aisle that will insist on some measure to affect some discipline on this spending binge as a condition to voting on the debt ceiling. but whatever the vehicle that the majority leader decides upon, they cannot hide the fact that we are borrowing money so fast that we'll have to raise th

the secretary of the treasury has said that is the primary objective here and it is working. it is working. but i must be cognizant of the dantion danger that we not lose people that are essential to these companies. >> woodruff: still, what is the main message you want to have. because the public looks at this, unemployment is at 10%. and they're saying wait a minute, these people are still going to be earning up to $500,000 and these are just the middle tier people at these banks. >> the message here must be first the taxpayer has a right to get every dime back from the companies that were in such distress financially that they needed the help of the taxpayer in the form of loans. my primary objective is to get that money back to the people who lent the money to these companies. secondly, i am hoping that the printss that we've developed, limited cash-based salaries, stock that will be redeemed over a period of years so that the individuals compensation is tied to the future financial success of the company, those are principless that we hope will be adopted voluntarily by

again we not, the only role we have is on the ring -- not the treasury. it was a treasury decision.he harder one. many banks and -- many non-banks decided to become banks conveniently in this crisis. >> right. >> many entities in fact fled to the fdic and the fdic finds itself with its funds, funds which are designed to ensure that we never have to actually put in taxpayer dollars, those funds are stressed right now. going forward, do you believe that in fact in the future people should be able to run to the fdic, run to being a bank, when it suits them, even if they hadn't been when it didn't suit them? >> no, i don't think they should be able to do that. absolutely not. >> is that -- a reform that you presently see on the horizon that would give you that ability next time to say, you better be there early or not come at all? >> well i think two things. i think we need a robust resolution mechanism so when entities get themselves in trouble, they don't get government assistance. they get put into receivership. i think entities asking for assistance maybe won't ask for assistance so

the treasury program is very well intended, but it is not indexed to the price of the home. as a result, just as we have seen the first-time homebuyer credit kind of a sop up the demand of the low-priced homes, it strikes me that by not making it based on a percentage of the home by you, that we are emphasizing homes on the low-end and we may not be reaching homes on the higher end. the servicer and the current mortgage holder will obviously respond to incentives. if the $1,000 payment makes the $200,000, or the $100,000 home mortgage modifiable, but it does not make the $300,000 or the $400,000 home mortgage modifiable, i wonder if you have looked at whether indexing those based on a percentage. >> indexing based on a percentage of payment that the servicers get? >> yes. >> the basic framework is that the loan has to be conforming loan, which currently has to be at 29.5. do not confuse the affront servicer and center -- incentive fee, which is used to incentivize the modified slone with the dollar for dollar support in dtr reduction from 30% to 31%. that is where you'll get

it became -- the fed and the treasury became aware of that. they also became aware that these losses were mounting and through a negotiation behind closed doors in which you were locked out, they negotiated additional money, now repaid, but additional money to make b of a go through this deal or to encourage or on their demand to have them go through. so all of that occurred with your agency locked out of the room. are you going to tell me today if there was something to be reported, are you going to say like sheila bair that was here earlier, yes, i would like to have been in the room and if i had been in the room or when i was in the room i wish i had said or done more? which is it? are you going to say the s.e.c. should darn well be in the room and be protecting stockholders, or are you going to say if, if, if today? which one is it? >> no, i'm sorry. perhaps i didn't make myself clear. >> i think i did. >> yes, you did, congressman, very clear. my only point was that we would certainly like to be in the room anytime there are discussions t

treasury is actively reviewing various ideas to improve program effectiveness in this area.hile remaining focused on helping borrowers as quickly as possible under the current program. a third challenge is preventing foreclosures of homeowners eligible for hamp. during the modification trial. , any foreclosure sale must be suspended and no new foreclosure proceedings may be initiated. we prohibit foreclosure proceedings until the borrower has failed the trial. india's been considered and found an indelible for other foreclosure prevention options. we are working with stakeholders to review, improve, and monitor compliance with our roles so no borrower being evaluated for hamp is subject to foreclosure during that process. a fourth challenges transparency. on august 4, our public monthly reports began including trial modifications by each service are. october's report added data on trial modifications by state. upcoming reports will show permanent modifications by servicers and measures of servicers responsiveness to borrowers. we are requiring servicers to send notices that

what was the role of the treasury? the federal reserve bank of new york? why did the federal reserve save a.i.g.? he made that decision? [laughter] in my paper [unintelligible] [laughter] >> when you thought the former member was called that he was some kind of plant? we, as you know, the federal reserve and the treasury spoke to the president, spoke with congress whenever possible and attempted to avoid the systemic collapse of our financial markets, our financial system. we were extremely concerned that the collapse of these connected for -- connected firms in a disorderly way would have a greater effect on the broad economy. the collapse of these forms -- these firms is destructive. we did our best to save, protect, the system from the collapse of these firms, all of them. reason we did not save lehman brothers was not chores, but as i have said, given the look very limited powers we had was the lending authority against collateral. we were unable but it did not have the tools. it was not a conscious choice but it was something we could not do within ou

again we not, the only role we have is on the ring -- not the treasury. it was a treasury decision.bsolutely going to have a stabilizing affect, yes. >> the next question is the harder one. many banks and -- many non-banks decided to become banks conveniently in this crisis. >> right. >> many entities in fact fled to the fdic and the fdic finds itself with its funds, funds which are designed to ensure that we never have to actually put in taxpayer dollars, those funds are stressed right now. going forward, do you believe that in fact in the future people should be able to run to the fdic, run to being a bank, when it suits them, even if they hadn't been when it didn't suit them? >> no, i don't think they should be able to do that. absolutely not. >> is that -- a reform that you presently see on the horizon that would give you that ability next time to say, you better be there early or not come at all? >> well i think two things. i think we need a robust resolution mechanism so when entities get themselves in trouble, they don't get government assistance. they get put into receiversh

treasury secretary tim geithner. so what i'm saying to this bill that we are going to offer is basically to all these tax cheats that they seem to be talking about in the i.r.s. right now that are offshore, if they come in and voluntarily do what they said they should do, let's treat them like we treated the chief tax man of the united states. the top tax guy, just treat them like that. that's only fair. if he doesn't have to pay the penalties and interest, and he gets off from those penalties, i don't think any other people should have to pay penalties. because the truth is we want to do what the president says. we don't want there to be one set of laws for important people in washington and another set of laws for the rest of the people in america. and those who earn income that are americans. it's only fair. it's like the rangel rule. if you haven't paid your taxes, you write rangel rule on your tax form and onet won't northern ireland penalty and interest until mr. rangel does, anyway. this is the same concept, t

street, they could hire lobbyists, come to washington, some of their former executives are working at treasury or the fed. they are well connected. they can get along. if there's a lot of government regulation, they have the lawyers to cope with it. small businesses don't. and the more government involvement and management you have, it's almost impossible for

water, wastewater grants has left the treasury. the fact is 99% of that funding has already been provided to the states. so much for that strawman. let me, madam speaker, simply make this observation. we have before us a bill that determines to redirect $75 billion which had initially been directed to help wall street and we want to instead redirect that money to help main street. so we provide $27 billion, for instance, for highway infrastructure projects to put people back in construction. you are either for it or you're against it. we provided enough funding in this legislation to assist more than $670 communities address their growing backlog of water and sewer repairs and put people to work in the process. you are either for it or against it. we provided $27 billion to try -- from wall street to main street to try to stabilize public service jobs. we are trying to preserve $250,000 teaching jobs over the next two years, for instance. you are either for doing that or you are against it. we are trying to use $500 million to pres

, i quote, the corporation may borrow from the treasury and the secretary of the treasury is authorized to lend to the corporation on such terms as may be fixed by the corporation and secretary such funds as in the judgment of the board of directors of the corporation are required. unquote. now, this is saying the resolution fund in every institution that falls under its purview has the support of who? the u.s. taxpayer. that you are going to be on the hook for these loans. my colleague from california, mr. sherman, referred to this authority as tarp on steroids. well, considering that the bill fails to even put a cap on the potential taxpayer exposure, i think mr. sherman is spot on. it is indeed tarp on steroids. and while some have compared this model to the fdic insurance fund, well, that's, folks, like comparing apples to oranges. the fdic fund is backed by the full faith and credit of the federal government to protect insured deposits inside the fund. that's what the fdic fund does. while there is a level of moral hazard that comes with this support, insured deposits are only a sm

we encourage treasury to expand hamp to assist meeting some of these challenges. housing ratio less than 31% for the low to moderate income borrowers. and in any case, bank of america will continue to provide solutions to these customers that fall outside the reach of hand. at bank of america, our goal is to keep as many customers and their homes as possible. we understand the urgency of solutions not only for the customers we serve, but to further encourage the housing recovery that has begun to take root. we appreciate the continued strong support and partnership from the head and attrition and congress on this very important issue. thank you. -- before, mr. schakett. the chair next recognizes for testimony mr. gordon for the responsible lending. you have four minutes. >> good morning mr. chairman, ranking member capital and members of the committee. thank you for inviting me to talk about stopping foreclosures. without stronger policy intervention, not only will millions of families lose their homes and necessarily, but foreclosures will continue to destroy com

after that 1971, they just used treasury bills. which was bad. but still there was some restraint on that. that depends on the amount of debt. that gave license to the congress to run up the amount of debt. but today what backs our dollar is derivatives. all of the worthless, toxin assets that we were required to buy are now held by the feds. we don't know exactly how much and what they have bought. that's why we are arguing for the case of auditing the fed. next to the federal reserve board chairman that i had some confrontations with and discussion with was alan greenspan. and i'd tell the story in there about the time -- i think most of you here in this audience would know the story. alan greenspan was of course a supporter of and a friend of ann rand. he was in the group of people. in the 1960s, he wrote the fantastic article about how bad debt was and how bad the wang was and confiscating money. it was a wonderful article. we had one session one morning before we were going to banking committee. it was to go in and personally say hello to th

department of treasury and the assistant treasury for public affairs. we have a public forum.of my colleagues. unless someone would like to object, i would like to move those three and then move to the ben bernanke nomination. if anyone know would like to comment one way or the other? i would mess with unanimous consent to fifth consider -- consent to consider the nominations. if there is any objection? if not, all those signify by saying aye. ayes appeared to have it. now we continue with discussion of ben bernanke. i want to give everyone a chance to be heard on this. som i know are going to want more time than others to comment on this. obviously, to vote these nominations we need a quorum president, and the majority have to vote. we cannot vote by proxy for the nominee. i want to give a chance of a full opportunity to discuss the nomination in fall. what i am trying to do is put a five-minute time limit on it. i know people have more time than others to be heard. we come to a point where i am going to lose a quorum, then what i would do is set up a time whenever people wou

every dollar will come out of the treasury and taxpayers will be footing the bill. further, this legislation is a virtual mystery to almost every single member of the house. i think we got the basic material at 11:00 last night, i think. its contents were at least just shy of midnight last night for most and there's no way for anyone to have read or understood it completely. how much thought or member input really went into it? i dare say very, very little. ironically it was chairman obey who said on december 11, 2006, and i quote, we will work to restore an accountable, above board, transparent process for funding decisions and put an end to the abuses that have harmed the credibility of the congress. this is a demonstration project of just how serious mr. obey was about that. let me take just a moment to outline the transparent process by which this legislation comes before us today. chairman obey instructed his majority staff not to share any details or information with the minority staff about the bill. chairman obey's staff sent the bill to the rules committee

and the treasury of the sec -- the secretary treasury said at this point that he does not anticipatend what we estimate those payments are. as we look at those, let's listen to it, it from buford, n.c., chris on the republican line. caller: you mentioned that you were not very happy with some of the usage of the t.a.r.p. by some of the bigger banks. i was wondering how you felt about them, i guess, using some of those funds to underwrite at some deals to pay back the tv money. -- the t.a.r.p. money. guest: the big concern i have with the money that we put in the large financial institutions is that we shoveled literally hundreds of billions of dollars into those financial institutions on basically, no questions asked basis. secretary paulson a year ago told us, oh, they will start lending again, that will get the economy evolve, money for small businesses. originally, we will use those to solve the foreclosure crisis. none of that happen. instead, we just gave the money to the banks and i'm not quite sure how they used it. we believe some of the financial institutions use it in order

as reserved and then after 1971 they just used treasury bills which was bad but still there was some restraint that depended on the amount of debt could force that gave license to the congress to run up the debt. but today wetbacks the dollar is derivatives. all of the worthless assets, toxic assets we were required to buy are held by the fed and we don't know how much and what they've bought and that of course is why we are arguing for the case auditing the fed. but the next federal reserve board chairman but i had confrontations with and discussion with was alan greenspan, and i tell the story in there about time i think most of you in this audience would know the story that alan greenspan of course was a supporter of and friend of ayn rand in their group of people but in the 60's he wrote this article how bad the debt was and the central bank was and that we confiscated wealth by printing money. it is a wonderful article, and so we had one session one morning before we were going to the banking committee and it was to go in and personally say hello to the federal reserve board cha

and they sent the goods back to us to finance our goods, buying up a stock of treasury bonds and other dollar denominated assets that are worth about $2 trillion. this money has been a crucial means of allowing americans to live far in excess of our incomes. chinese purchases of american debt have kept interest rates in this country much lower than they would have otherwise have been and it enabled all these funny money mortgages it drove prices high and allowed people to borrow against their home prices so they could go to the mall and buy more chinese-made goods, among other things. but the world has changed in crucial ways as a result of our crisis. and so has the american place in the world which means we've got to figure out a way to break this cycle of codependence and grow our way out of this mess ourselves and not simply depend upon the continued largesse of foreign creditors as if we as a country are too big to fail. confidence in our financial system and our regulatory structure has been shaken in what looked like enviable financial innovation in many financial centers around

the treasury secretary can go to the treasury and ask for $150 billion from the american public and it could bail out some company, maybe a.i.g. again as this past administration helped to facilitate. after that, there's no money in the fund again, so they go back to treasury and say we need another $150 billion because under the terms of the bill, there's no money in the fund they can borrow up to $150 and then another company goes under or another company, or auto company and pay it out. how much is in the fund then? zero. which point, the treasury secretary can go back a third time and ask for an additional $150 billion. when does this end? this bill puts no limit on it whatsoever. it could be $150 billion, it could be $1 trillion, it could be $10 trillion. all in the hands of the political appointee, secretary geithner, for him to decide where this money would go and where it goes to and it could be a political decision because he can prop up favored companies and allow them to go into receivership and come back out of it after he has asked the american public to spend $1 trillion

treasury sees smaller loss from bail out. first call here is maurice on the line from democrats from loganville, georgia. what's your reaction? caller: i'm pretty optimistic, we're going to take losses but it seems like the alternative would have been much worse. i think a top program could have been done - perhaps i think that homeowners and the middle class could have perhaps gotten some of this money because it could have helped people keep they're homes and even some small businesses could have gotten some of this money that could have been of some help. the republicans completely, they would hate - it's a terrible thing to say but it seems as though republicans would hate what president obama and his administration to be successful in anything. healthcare, the war. it's too sad. it's such a sad thing that because of politics and partisanship they're attacking constantly. president bush did no wrong. but now you hear them saying, well, i didn't like what he was doing, but i just had toed by my time. no, sir. host: part of

, and auctioning off its treasury notes and bills.at that point we are already beyond the point where simple action will restore balance. because we don't know where that actual borrowing capacity is, it is essential that we take actions well in advance of anything that could occur which would disable the economy because there is no question, as walker has been pointing out, to restore the type of balance unless we do very drastic things. these are exceptionally difficult to implement in a democratic society. >> so that the question of borrowing capacity and what the limits of america's borrowing capacity is not a question, if i'm hearing you correctly, of when it's impossible for america to borrow in world markets, it's a question of when the interest we have to pay begins to rise so much that it will compromise our standard of living and so much more we value? >> if we ever get to that point we will see it first in rising long-term interest rates. because clearly the credit quality of any entity tends to be very evident on its abili

we had a treasury purchase program that brought our holding of treasury bonds about to where it was before the crisis. we have also had a very big program of purchasing fannie mae and freddie mac mortgage based securities. the current program will be wound down, tapered off through the first quarter of next year. that's currently on schedule. so what we have is a -- if you will, a lolling exit process. the special programs are running off because of lack of interest. they'll be shut down over time. we've bought a lot of treasuries and mbs. we've announced tapering off of those programs. the next step, at some point, when the economy is strong enough, is to begin to tighten policy, raising interest rates. we can do that by raising the interest rate on excess reserves. congress gave us that power. by raising that rate, we can raise rates throughout the money markets. we will reduce the amount of reserves in the system. we'll do that over time. from a technical perspective, we have plenty of clarity about how to commit from the programs. how we can tighted policy, raise rates, remove the acco

, and auctioning off its treasury notes and bills.t we are already beyond the point where simple action will restore balance. because we don't know where that actual borrowing capacity is, it is essential that we take actions well in advance of anything that could occur which would disable the economy because there is no question, as walker has been pointing out, to restore the type of balance unless we do very drastic things. these are exceptionally difficult to implement in a democratic society. >> so that the question of borrowing capacity and what the limits of america's borrowing capacity is not a question, if i'm hearing you correctly, of when it's impossible for america to borrow in world markets, it's a question of when the interest we have to pay begins to rise so much that it will compromise our standard of living and so much more we value? >> if we ever get to that point we will see it first in rising long-term interest rates. because clearly the credit quality of any entity tends to be very evident on its ability to market

which will have its own staff assigned under this amendment by treasury. and then within each of the 12 agencies a new position is created, a director of consumer affairs. so you have 12 new positions, staffed by the treasury with no limitations on how that's done, and this new council. it is also unwieldy. one of the responsibilities of the consumer agency will be to issue rules to prevent the kind of abusive mortgage that is had such a contributing role in our crisis. this bill says yes. there will be such rules. they'll be adopted by the 12-member council. they will vote on those. the chairman of the commodities futures trading commission will have a vote on setting mortgage rates. the chairman of the securities and exchange commission will help set mortgage rates. other agencies without any particular involvement there will help set mortgage rates. now, the 12 agencies that make up this bureaucratic version of the christmas song will include the agency that has more responsibility for consumer regulation today than the other, the federal reserve system

treasurys, whether it is a -- rational or not, traditional place to go. number two, financial market accounting on the government to get its act together. the last thing you want to do is disappoint them and that expectation. like alice said, commit now to credible policies in the future, could have dramatically beneficial impact on our performance. >> thank you. jim jones, another former budget committee chairman and house, a democrat, and among things, former u.s. ambassador to mexico. doug mentioned that unlike in the past, the distant past when we had deficits and we owed the money to ourselves, that now we are borrowing more and more from abroad, largely from china. what do you see is the international dimension of the u.s. on the verge of becoming what some might consider world's largest subprime forward? >> i guess i would say this situation reminds me of a friend who was overweight, smoked, drank, had bad eating habits, didn't exercise, and we all told him, and you've got to shape up and he said his grandfather lived into his 90s and drink and smo

in terms of risk management or possible cost to management or possible cost to either sipc or the treasury. and it's both the chairman and the ranking member implied this morning, it is imprudent to enact a measure without that analysis and knowing that what it will cost as o possible drain on the treasury. sipc cannot take a position on this without the appropriate due diligence and my written statement contains a great deal more on that issue. sipc is a complex law, but the pension fund issue shows that the current state of the law is somewhat in accord with common sense. if you have an account and you can call your broker and make a purchase or trade and get a statement, you're a customer. granted, the statute was drafted in a simpler time when that was the standard, but that is still the law. in terms of extended coverage for other indirect claimants, one of this morning's panel members testified he is an indirect victim and he certainly is, but i think i have to elaborate. he placed his money with -- he placed his money with a hedge fund which invested in another hedge fund which inve

treasury securities less than triple a rated.n our colleagues on the other side of the aisle are going to have congress lift to -- lift the debt ceiling. this is like the credit limit on your credit card. once congress is bumped up against that $12 trillion debt ceiling, congress is going to have a vote on whether to ask the american people, and people buying our debt, whether we can increase the limits of our credit card because we maxed it out. media reports indicate that the majority intends to slip this provision into a bill on funding our troops in afganistan. because, frankly, they're embarrassed to have a stand alone vote on raising the debt ceiling. especially because they know that there are many of us here on both sides of the aisle that will insist on some measure to affect some discipline on this spending binge as a condition to voting on the debt ceiling. but whatever the vehicle that the majority leader decides upon, they cannot hide the fact that we are borrowing money so fast that we'll have to raise the debt ceil

the first 30 years of the class act will generate revenues that will add to the federal treasury and -- and that was the purpose of my discussion. that's the point i made. the first 30 years of this proposal is that younger people will be paying in and very few people will be taking out because they will not have yet qualified for the insurance because they won't be old enough to go into assisted living. mr. durbin: reclaiming the floor, i would just say if i understand what the senator has said, he is concerned that in the year 2040 that this program may not work as effectively as we had hoped it would work. i trust in the wisdom of future members of the senate and the house if that's necessary to modify the program, but it's certainly worthwhile for us to at least reflect on what this program is. it is a voluntary, self-funded insurance program for long-term care for american citizens. it was one of the visions of senator kennedy as part of health care reform. understanding that we're living longer and many times need help in our late years in life, and it can be expensive and depl

the treasury made mistakes. virtually every other regulatory body made mistakes. congress made mistakes. those on the left made mistakes. those on the right made mistakes. virtually every other government and their institutions made mistakes. virtually every institution of any magnitude in the private sector made mistakes. so should there be accountability? absolutely. do we need to maintain a sense of urgency to change those things to led to those mistakes? you bet. but some degree of mod stay and intro spec shun i think is in order and perhaps even a good long look in the mirror before engaging in too much monday morning quarterbacking. claire voins is an attribute in short supply around here all the way around. my question to you is, with the benefit of hindsight, what would you have done differently? >> well, i think there are two areas. senator dodd has alluded to both of them. first -- and senator bunning: we were slow on some aspects of consumer protection. senator bunning was not exactly correct. we did have nontraditional mortgage guidance and subprime gu

we had a treasury purchase program that brought our holding of treasury bonds about to where it was beforecrisis. we have also had a very big program of purchasing fannie mae and freddie mac mortgage based securities. the current program will be wound down, tapered off through the first quarter of next year. that's currently on schedule. so what we have is a -- if you will, a lolling exit process. the special programs are running off because of lack of interest. they'll be shut down over time. we've bought a lot of treasuries and mbs. we've announced tapering off of those programs. the next step, at some point, when the economy is strong enough, is to begin to tighten policy, raising interest rates. we can do that by raising the interest rate on excess reserves. congress gave us that power. by raising that rate, we can raise rates throughout the money markets. we will reduce the amount of reserves in the system. we'll do that over time. from a technical perspective, we have plenty of clarity about how to commit from the programs. how we can tighted policy, raise rates, remove the accommoda

the co-chair would be the secretary of the treasury. that would be a critically important role. >> but your proposal is basically for everyone to link arms and jumped off the cliff together, i essentially. do you really think the administration is enthusiastic about that idea when the commission would be taking action just at the beginning of the next presidential election cycle? >> i cannot speak for the administration. i have been in many hours of negotiations with the them. i do think that they are warming to the idea that there needs to be in a process like this one, not necessarily this one that we propose, but something like it in order to effectively take on this threat. the circumstance we face as a nation is very clear. we have had the death of -- we have had the depth of the previous administration. the current trend line, the debt will currently increase more. we have only seen a debt like we have now once before in our history, and that was after world war ii. in the longer term, the trend is even more dramatic and more seri

we did have republicans at the treasury, that's true.we had the credit expansion that went on for 20 years. it went on under bill clinton and it went on under george bush. there is plenty of blame to go around. i don't think -- if you look, i don't think you would find too many innocent people in washington. one thing that i will say, and that's republicans in the house, during the clinton administration, we warned that these no-down payment loans, and extending loans to fannie and freddie and a lot of banks to people with bad credit without any money down and we did warn about that. we said that this was going to create a disaster. i don't think anybody knew the magnitude of that disaster. yeah, i think what's important, and this is where i think we can all come together is where do we go from here? ,and, you know, to the caller, i would say, ok, all these mistakes were made and there were bailouts made, but do you want to continue the bailouts? that's what i have to say to the caller and ask her -- i don't know if she is still on the l

do you support that, treasury? mr. allison? >> yes, ma'am.osely with the staffs of various leadership members in the congress on that legislation and others. >> whether but you? do you support -- what about you? do you support that? do you agree with the portion that the deals with the unemployed? >> i have to apologize. i am not familiar with that specific provision of the bill. >> nor am i familiar with the bill. i cannot comment. >> we will build taking a strong look at what we do with people with emergency medical problems and the employed. what we want to hear from you is what you are going to -- and the unemployed. but we want to hear from you is what you're going to do about principle write-downs. we need to here create proposals. -- we need to hear create proposals. we did not hear that. we heard a lot of talk about how you will encourage the banks. the banks thumb their nose at all of us. they denied care about what we're saying. the reduced credit limits and increased credit rates. they said, we will pay you your money back and did

which will have its own staff assigned under this amendment by treasury. and then within each of the 12 agencies a new position is created, a director of consumer affairs. so you have 12 new positions, staffed by the treasury with no limitations on how that's done, and this new council. it is also unwieldy. one of the responsibilities of the consumer agency will be to issue rules to prevent the kind of abusive mortgage that is had such a contributing role in our crisis. this bill says yes. there will be such rules. they'll be adopted by the 12-member council. they will vote on those. the chairman of the commodities futures trading commission will have a vote on setting mortgage rates. the chairman of the securities and exchange commission will help set mortgage rates. other agencies without any particular involvement there will help set mortgage rates. now, the 12 agencies that make up this bureaucratic version of the christmas song will include the agency that has more responsibility for consumer regulation today than the other, the federal reserve system

treasury bond could lose its aaa rating as soon as 2012. they went on to project that the treasury bond by 2015 could have the same credit rating as that of estonia or greece. this is not a future that we want for our country. we must change course and change course fast. as you know, the treasury bond is the anger to the world's global financial markets. if it is allowed to slip, we do not know what will happen, but it will not be good, and it could even make the current financial recession look like a slide show. i'm glad to announce that the vast majority of blue dogs, a fiscally responsible democrats in congress, support the proposal. we are looking to persuade other members to join us in this fight because it is absolutely vital for the future of our country. finally in closing, mr. chairman, to quote the nike slogan, because this issue is even more important for our young people than it is for anyone else, as the nike slogan says, "just do it." thank you, mr. chairman. >> thank you, congressman cooper, and thank you for your powerful

department of treasury is on the ground. department of agriculture. drug enforcement administration. federal aviation administration. department of state. usaid. this is truly an impressivest. >> okay. general? >> the one point i would make, when you talk about military it may not look like what you traditionally think. we have military partnered with his. we're doing agricultural development, enabling civilian expertise. i think it's key we understand we're trying trying to do this with every part of our capacity that we have. >> thank you very much. >> the time of the general has expired. >> thank you, gentlemen, for appearing today. mr. ambassador, appreciate your emphasis on agricultural development. i think that's noteworthy. before my question, i want you all to succeed. the down side, gravity of the down side to not succeeding is very apparent. with that said, mr. ambassador, and this was touched upon a moment ago, your key to president obama as well as the potential for success of our military efforts. what changed? >> i wouldn't decide my vie

senator gregg and i have made on the democratic side, the cochair would be the secretary of the treasury that would be obviously a critically important role. >> but your proposal is basically for everyone to link arms and jump off the cliff together essentially. do you really think the administration is enthusiastic about that idea, particularly when the commission would be taking action just at the beginning of the next presidential election cycle? >> you know, i can't speak for the administration. i've been in many hours of negotiations with them and they can speak very well for their own position. i do think that they're warming to the idea that there needs to be a process like this one, not necessarily this one, that we've proposed, but something like it in order to effectively take on this debt threat. you know, the circumstance we faces a a nation is really very, very clear. we have had the debt double under the previous administration. we have now had a steep economic downturn that required more deficit financing for the liquidity to prevent an outright collapse, so that adds more

we did have republicans at the treasury, that's true.e credit expansion that went on for 20 years. it went on under bill clinton and it went on under george bush. there is plenty of blame to go around. i don't think -- if you look, i don't think you would find too many innocent people in washington. one thing that i will say, and that's republicans in the house, during the clinton administration, we warned that these no-down payment loans, and extending loans to fannie and freddie and a lot of banks to people with bad credit without any money down and we did warn about that. we said that this was going to create a disaster. i don't think anybody knew the magnitude of that disaster. yeah, i think what's important, and this is where i think we can all come together is where do we go from here? ,and, you know, to the caller, i would say, ok, all these mistakes were made and there were bailouts made, but do you want to continue the bailouts? that's what i have to say to the caller and ask her -- i don't know if she is still on the line, but