did they come from your treasury? where do they come? >> they come from the -- the fed obviously can print money. >> okay. and did they take money that they had from fees charged to member banks or print money to accommodate this $85 billion? >> you'd have to ask the fed that. >> you're not aware? >> i'd like them to answer that question. >> you may not like to answer the question, sir, but if you know the information i'm asking you to share with us, what is your best understanding of where that money came from? >> my best understanding is all dollars are green so those are ultimately taxpayer dollars and that was why -- >> we're painfully aware they're taxpayer dollars, sir. >> that was why the treasury was supportive and we -- we were very supportive of that transaction. >> we all understand the full faith in -- the promise -- taxpayer dollars we're painfully aware. i'm asking you whether since they didn't come to congress for the appropriation, whether the $85 billion came from fees charged to member banks, newly printed money or some

the current or -- from the current treasury secretary than the past treasury secretary. >> i understand that, but we have a hearing that's been scheduled and structured, and i wish we could stay here and allow everybody to do that, but i think in this situation -- >> mr. chair -- >> i'd be delighted to yield to the gentleman again, yes. >> and i appreciate it. is there a way that we could vote on which direction to go on this? >> well, you know, it's actually up to the chairman, but let me say what i'd like to do. you know, i would give a minute to two on this side and a minute to two on this side, and that's it. i mean, we have to move forward. we have a scheduled hearing -- >> would the gentleman yield? >> looking for certain information, in order to get the information we need to talk to the present secretary, we need to talk to the past and, of course -- >> would the gentleman yield? >> mr. chairman, i join in you for two additional minutes per sideervi e the right to object. mr. chairman, i just want to say that any member of this committee has the ability to submit questions in wr

i was secretary of the treasury in 2008. in that role i had the privilege to work with many talented men and women in government and the private sector who labored to pull our nation back from the brink of disaster. the decision to rescue aig was correct and i strongly supported it. and aig failure would have been devastating to the financial system and to the economy. today's hearing relates to payments to aig's credit default swap counterparties. i was not involved in any of the decisions made with respect to those payments, nor was i involved in any of the decisions about aig's public disclosure of those payments. those matters were handled by the federal reserve bank of new york and the federal reserve board. they sought to make appropriate decisions on those matters and i am confident that this review will show that they did. i have limited knowledge on the topics of immediate interest to the committee, but will share the following observations. the rescue of aig was necessary and i believe that we and the government wh

treasury to reduce the treasury's funding need, to reduce our debt. yet when i asked him to confirm that the money repaid was no longer part of the total authorization of $700 billion, secretary allison said that when tarp funds are repaid, headroom is created within the program to provide additional commitments to maintain the $700 billion funding level. thus, as the treasury puts repaid funds back into one pot, it reaches into another for more. basically, recycling the $700 billion. this is not what was promised. it is not what was passed. it is not what was envisioned. and i most certainly never voted to authorize a revolving fund to allow the treasury to remain in our economy definitely. i didn't even vote for $350 billion of this $700 billion that is now becoming a revolving fund. according to the most recent tarp report from the office of financial stability, approximately $545 billion in tarp funds have been committed. repayments through tarp were over $165 billion. this leaves roughly, with the amount of the $545 billion, which has been paid o

but as you know, bernanke and hank paulson, treasury secretary in the fall of 2007 were describing the housing problem as contained. they really didn't see how much what was going on at bear stearns or aig or any number of these big financial institutions was tied to mortgages which were tied to the price of the value of the house. >> host: it seems amazing in retrospect, but i was among those inside the subprime mortgages quite small and it's not going to move the whole financial structure. >> guest: one lesson might draw from this for the press is when my view is that experts say everything is going to be okay and 10% say they are wrong. the sky is falling. our tendency is to ignore the 10% or make our coverage kind of 90/10. but i think we have to listen more carefully to the critics and examine their arguments more. not hype than the ones who say the world is good and for three days hoping someday will be right but the ones who have reasoned critiques. we need to spend more time thinking about them and sharing their views with public and getting people talking about them so we don'

what does the treasury do?it just expanded the amount fannie mae and freddie mac -- that is a scandal. what we need to do is get rid of anime and freddie mac. if they are going to subsidize housing, which they most certainly will, it should be on the budget. that is way democratic government is supposed to run. fannie mae and freddie mac running around the democratic process and open to corruption, and has been corruption. host: of this article notes the hostility that has increased for the federal reserve and the chairman ben bernanke. but before this hostility turned on the federal reserve, when alan greenspan was heading up the federal reserve, there seemed to be admiration or reverence for what mr. greenspan would say. how can this institution be both revered by some people and have distain for mothers? guest: that is easy. when times are good and things are going well, they were great and people like them. when times are bad, as i have been, people say, look, why is the public angry about the puppet of res

one is that the fed and the treasury figured the money market funds, mutual funds that take deposits from people are not insured usually and then they use it to buy short-term ious from places like lehman or industrial companies. they thought certainly there's been so much publicity about lehman of the money market funds would have money in lehman while a big one today and would have to admit it couldn't pay back the money that put the money back 100 cents on the dollars that triggered the 19th century styled room on the money market fund but around the world what happened is people said if the u.s. government will let lehman brothers failed who knows who might go next and the banks refuse to lend to each other because they were not sure who else has problems we don't see so the financial system better job of the great metaphor and the right that it foresees is up, the wheels stop turning and it freezes and that's really when bernanke becomes the hero. >> host: we are going to have to leave it there for the moment in mid crisis. [laughter] take ahortreak and come back to continue thi

. >> ifill: then, lawmakers had tough questions today for treasury secretary timothy geithner and his predecessor henry paulson about the bailout for insurance giant a.i.g. kwame holman covers today's congressional hearing. >> why shouldn't we ask for your resignation as secretary of the treasury? >> that is your right, that is your right to that opinion. >> lehrer: a paul solman take on the federal reserve, as the fed held interest rates at a record low with a little country music help. >> ♪ the fed is printing trillions now, but will their ♪ efforts work? >> ifill: and margaret warner talks to ray suarez in haiti, where hundreds of thousands of people are still in need of food and shelter. >> lehrer: that's all ahead on tonight's "pbs newshour." major funding for the pbs newshour is provided by: >> what the world needs now is energy. the energy to get the economy humming again. the energy to tackle challenges like climate change. what is that energy came from an energy company? everyday, chevron invests $62 million in people, in ideas-- seeking, teaching, building. fueling growth ar

taxpayers, but of the united states treasury department.sought to cover the counterparty payments made possible by the taxpayers' money. we now better understand that the new york fed transferred their earlier responsibility to the american people after t.a.r.p. was passed. we know that the new york feds succeeding in getting the -- succeeded in getting the sec to continue the cover-up until 2018, ten years from the date the bailout began. and we know that the full amount paid to aig's counterparties will likely never be repaid to the american people. some facts, mr. chairman, remain unknown or uncertain. secretary geithner has claimed publicly that he has recused himself from the day-to-day management of the new york fed when the cover-up occurred. in fact, he has asserted complete ignorance of the fed's efforts to cover up the bailout details. many people, including members of this committee, have a hard time believing that secretary geithner entered into an absolute cone of silence for those of us old enough to remember what that was, on

which means -- seems to me is the treasury pours money in and they take the treasuries and send theirwn money back to us again as dividends. director, your counterparts, however at the office of management and budget, omb and treasury, somehow disagree with you. and, your conclusions about fannie and feel the cost to the taxpayers equals the kots of the actual cash infusions pumped into the gses and do not as you do account for risk to the taxpayer. ness of the losses the gse will continue to sustain in the coming years and the "wall street journal" article, said the administration has no plans to alter how it accounts for fannie mae and freddie mac and the federal budget and i don't anticipate any changes, assistant treasury secretary -- said michael bar and they'll have the same appearance they had before the budget books. and my first question is, is there any possible interpretation of the current relationship between the federal government and the gses that would allow to you change your opinion or for that matter, any reasonable person to concluded that they should not accuratel

department of treasury -- clark raises the u.s. department of treasury. -- clark vs. the u.s.ribing the action that every nation has been requested and it is confidential in formation. >> yes, your honor. second, bloomberg has argued that they are entitled to this. this is based on years of experience and expertise in the banking system and in this area and is entitled to a resumption of good faith. >> thank you. >> think you, your honor. -- thank you, your honor. >> ok, a few quick points here. the suggestion by banking council that we were manned and don't do it anything -- that we remand and don't do anything. the information is a few years old. on the next application, if the court continues to resistÑi it, but -- the board continues to resist it, they can invoke the regulations. if they could invoke those regulations and prove to a court that there was some basis, we are now up to 2.5 years, but let's not forget the bank's role. their role is to -- and their role heir -- their rule is never. the only way that never works is if this court about program the effectiveness an

did you know that why you were secretary of treasury? >> i knew -- >> yes or no? >> yes. >> did you know -- >> i didn't view him as a decision-maker. >> did he call you up and advise you that i reaches myself? did he call you up? how do you notify you? >> he told me on the phone that he did not think it would be appropriate for him to be -- >> did you know he never got a letter? all he did, he testified that he recused himself. he decided, put up a flag and said i reaches myself, i'm not going to be involved in the counterpart negotiation. like you went to the white house counsel and you want to secretary-treasurer. you got a letter. he never got a letter. he never got a written confirmation of his recusal. did you know that? did you know he was just doing it on his own by his own volition? >> i did not know the details. >> did you think a person who would recuse himself in this crisis we had, that he could go about and operate in his present job and not have a conflict of acres? did it ever occur to yourself to say, gee, the chairman of the federal reserve is in

which means -- seems to me is the treasury pours money in and they take the treasuries and send theirown money back to us again as dividends. director, your counterparts, however at the office of management and budget, omb and treasury, somehow disagree with you. and, your conclusions about fannie and feel the cost to the taxpayers equals the kots of the actual cash infusions pumped into the gses and do not as you do account for risk to the taxpayer. ness of the losses the gse will continue to sustain in the coming years and the "wall street journal" article, said the administration has no plans to alter how it accounts for fannie mae and freddie mac and the federal budget and i don't anticipate any changes, assistant treasury secretary -- said michael bar and they'll have the same appearance they had before the budget books. and my first question is, is there any possible interpretation of the current relationship between the federal government and the gses that would allow to you change your opinion or for that matter, any reasonable person to concluded that they should not accurate

approval, and only once the treasury had approved the list, did we then go well let the contracts. >with a question in the uor -- were they questioning the uor's? >> i think that there were later -- one of the problems was once you acquire a piece of equipment, it has to be supported and maintained appeared there has to be training. i think there were discussions with the treasury about with the budget could be increased to allow all of that maintenance. that was an area of difficulty. >> the long-term implications for the defense budget. >> we have acquired some sheen guns -- some machine guns, maintaining them, turning the soldiers, it was the continuing costs, not simply the cost of acquiring the machine guns and the first place. >> and in terms of money, what was the likely projected costs? >> i did not have that figure. the boiler>> would it be betwee0 million pounds and 1 billion pounds? >> i believe that that would be correct. the boilers the strategic defense review set in motion some significant changes in the way we organize our forces. you had not gone all the money that y

and final questn is, why ouldn't we ask for your resignatioas secretary of e treasury?that is your right, thais your right to at opinion. i have wked in public service all my life. i have never been a potician. i ve served my country as carefully as i cannd it is a great privilege to mto work with this presidt to help repair the dage that was here when he took oice. >> reporter: and several mbers rejected geithner'contention that forcing wall street fir to accept cuts in paymentsould only have caused defaults d an even worse csis. ssachusetts democrat stephen lynch. >> you could havdone the right thing by thoseeople, by the amican taxpayer, because their money was being t into this deal... and it just stinks to thhigh heaven what ppened here. >> reporter: mcy kaptur-- democrat of ohio-- was among those who suggested geithn was too commodating to wall street. geithner fired back. >> cgresswoman, you are suggestinghe people who were involved in this wernot acting in the public intest and you were suggestinthathey were working r the private terest, not the public intere. a

two secretaries of the treasury stood up and made the tough calls, treasury secretary paulson, treasury secretary geithner, but there was only one fed chairman throughout this whole period. and he took the fed down a path which it had never been down before. he injected into the economy over $2 trillion of liquidity. he basically allowed the fed to become the lender of the nation. nobody had ever done that. the way he did it was extraordinary in its creativity and the results were that the country's financial system did not collapse. and many americans, everyday americans' lives were not fundamentally disrupted because of the actions of chairman bernanke. he deserves credit for having been willing and courageous enough to have been made these types of decisions, and that is the type of leadership we needed. strong, definitive leadership at a moment of acute crisis. that's what chairman bernanke gave our nation. he deserves to be confirmed just for that action alone. now, there is no question but you can monday morning quarterback what he did, and you can analyze it and you can probably

treasury can borrow. if congress does not enact this legislation, and soon, then the treasury will default on its debt for the first time in history. if congress does not enact this legislation, then the government would fail to pay benefits on a portion of social security recipients. the government would fail to pay benefits to a portion of the beneficiaries of all other federal programs. that would be unacceptable and plainly we must enact this legislation. when the federal budget runs a deficit, the united states treasury must borrow money to make up the difference or language around here, we call the shortfall. that shortfall results from laws enacted in the past. it spent money and it cut taxes. if we want to avoid the need to borrow, then congress and the president must enact laws that will cause the federal government to spend less money or raise more revenue in the future. simply preventing the treasury from borrowing more money is not the solution. if congress does not allow the treasury to borro

taxpayers, but of the united states treasury department. that was from previous testimony and we rely on that to say that perhaps that is not the right answer. we know that the new york fed sought to cover the counterparty payments made possible by the taxpayers' money. we now better understand that the new york fed transferred their earlier responsibility to the american people after tarp was passed. we know that the new york fed succeeded in getting the s.e.c. to continue the coverup until 2018, 10 years from the date the bailout began and we know that the full amount paid to a.i.g.'s counterparties will likely never be repaid to the american people. some facts, mr. chairman, remain unknown or uncertain. secretary geithner has claimed publicly that he recused himself from the day-to-day management when the coverup occurred. in fact, he has asserted complete ignorance of the fed's efforts to cover up the bailout details. many people, including members of this committee, have a hard time believing that secretary geithner entered into an abs

two secretaries of treasury stood up and made tough calls treasury secretary paulson said treasury secretary geithner but there was only one fed chairman throughout this whole period and he took the fed down a path which we have never been down before. he injected into the economy over $2 trillion in liquidity. he basically allowed the fed to become the lender of the nation. nobody had ever done that. the way he did it was extraordinary and in his creativity and the results were that the country's financial system did not collapse and many americans, everyday americans lives were not fundamentally disrupted because of the actions of the chairman bernanke. he deserves credit for having been willing and courageous enough to have made these types of decisions. and that was the type of leadership we need it. strong, infinitively leadership at the moment of acute crisis. that is what chairman bernanke nation. he deserve to be confirmed just for that action alone. now there is no question but you can monday morning quarterback what he did. and you can analyze it and you could probably say he shoul

. >> woodruff: we'll have back to back interviews with treasury secretary timothy geithner and a leading republican congressman scott garrett. >> lehrer: then, more aid arrives in haiti by ship and by air. some shops re-open even as thousands still live on the streets. >> reporter: are you going to try to stay here, or are you going to try to move somewhere? >> well, moving somewhere... the big question mark is where. because, actually, no where in port-au-prince is safe. >> woodruff: margaret warner gets the latest from martin smith of "frontline" in port-au-prince. >> lehrer: that's all ahead on tonight's "newshour." major funding for the pbs newshour is provided by: >> what the world needs now is energy. the energy to get the economy humming again. the energy to tackle challenges like climate change. what if that energy came from an energy company? everyday, chevron invests $62 million in people, in ideas-- seeking, teaching, building. fueling growth around the world to move us all ahead. this is the power of human energy. chevron. >> this is the engine that connects abundant grain fr

then to send that to the treasury for their approval and in a sense only wants the treasury had approved, the list then could we go out and let the contract's. >> and how would these discussions handled with the treasury? were they questioning the uor? >> i don't recall having any difficulties, as far as the actual items were concerned, or indeed the overall amount of money. i think there was later, one of the problems which i think you're alluding to is once you acquire a piece of equipment, it has to be supported and maintained as to be trying. i think there was some discussions with the treasury about whether the budget could be increased to allow for that maintenance costs. and that was an area of difficult. >> there was a long-term application. >> i think one of the equipment was a machine gun. because they lay down a heavy rate of fire, and maintaining them providing the training for the soldiers and so on was a continuing cost over and above simply the cost of acquisition of the machine guns in the first place. >> what was the lesson you talk about in terms of money, what was the

treasury back with interest. the treasury makes money plus the people make money.national debt and we eliminate the middleman which is the federal reserve. it is almost like common sense in business. why can't that be done? >> guest: well, we are a big, the largest economy in the world. you know you can read all of these things about china being a threat to us but the chinese have a gdp that is about one-tenth of hours. i mean, they may eventually grow but we are a big country involved in the world and we have exchange rates. we have to control inflation. there has to be somebody who monitors inflation. moving the regulation from one place to another is not going to make very much difference. what we need to do is put our rules, which restrict the independent action they can take and make the people who take the losses as i have said several times, make them responsible for taking the losses. then we will have a sound financial system. >> host: mr. meltzer what is monetary policy? >> guest: the federal reserve at its meeting, the open market committee decides to se

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

but you can now take money out of the corporate treasury and put it into politics to get someone elected or kick somebody

particular disagreement with the treasury in september 003. do you recall that? >> i do. >> perhaps you could explain what it was about. >> i'll try. >> it is complicated. >> it goes back actually to the settlement in july, i think it was, 00. this is the complicated part. the treasury were moving towards a system of resource account budgeting which in a simplistic way meant that departments had to pay for existing equipment as well as new equipment, so that there was an amount allocated for what you already held. now, for most departments, i suspect the two that were particularly affected by this were defence more than any other, but transport probably as well. but most departments this was a means of adopted from the private sector of bearing down on historic costs using existing resources more efficiently and more effectively. what i think the treasury probably overlooked in their settlement letter in july 00is that, because of a large amount of equipment that the mod held, it was 93 much easier for them to bear down on those costs and did so. it is one of the

yesterday, the senate disposed of the thune amendment to terminate the treasury department's troubled asset relief program. today, three amendments remain pending: the substitute amendment raising the amount of the debt limit, this senator's amendment to protect social security, and the conrad-gregg amendment to create a fast track process to consider a budget commission's recommendations. up to eight other amendments remain in order to the joint resolution. the senator from alaska has the right to offer an amendment on the environmental protection agency's endangerment finding.

taxpayers, but of the united states treasury department. that was from previous testimony, and we rely on that to say, perhaps that is not the right answer. we know that the new york feds sought to cover the counterparty payments made possible by the taxpayers' money. we now better understand that the new york fed transferred their earlier responsibility to the american people after t.a.r.p. was passed. we know that the new york feds succeeding in getting the -- succeeded in getting the sec to continue the cover-up until 2018, ten years from the da @h eb in fact, he has asserted complete ignorance of the details. many people have a hard time believing that secretary geithner entered into an absolute come of silence on the day that his nomination was announced. where was secretary geithner for the months and months that the back door bailouts were being questioned in the media? aig's counterparty was kept secret for so long? these are the questions the american people deserve. mr. chairman i would ask unanimous consent the remainder of my

i have treasury, federal reserve, fdic and the sec.they are the principal federal government banks supplemented by the trade commission, investor protection act, and a new agency called consumer financial protection agency. basically, the federal reserve, based on its experience and using the principles i've just described, in which have been embedded in the system over the years would become the key consolidated resonator and the vice chairman had described these, chairman bernanke had described those as well. so that's the message of my paper. hopefully will have a chance to have a few discussion. now what i would like to do is turn to to discuss these and ask them to make their comments. and after they make their comments i will not turn to the panel to form rebuttals but i would give the audience a chance to ask a question. so i will start in the book. jamie, margaret simms. >> how much time? >> five minutes. >> i had the somewhat challenging tax of delivering comments compared in real time and doing so in five minutes. so i will s

but the treasury department is not hundred what aig thinks.eaking with the lobby on capitol hill daly, if not hourly. they will always have a connection. it is theçóÑiÑjr mid-list corporations, smaller nonprofit corporations. they do not have enough people in their organizations to fund the pact and make it viable. the chamber of commerce, 96% of the united states chamber of commerce are entities that have 100 employees or fewer. that is not an organization that has existing opinion. if they could ever get money together to speak directly about who should be elected and who should not. host: that rouge, louisiana, republican line. chris, a good morning. caller: this is very complicated from first amendment standpoint, because they are giving corporations the right to do with they do, and the second thing is the ability to spend money, free speech. how can you, both of you, i guess, as individuals, give us your opinion on that point. and the second thing is, if you compare the ability of corporations, especially large ones, to spend, versus the

what does the treasury do?t just expanded the amount fannie mae and freddie mac -- that is a scandal. what we need to do is get rid of anime and freddie mac. if they are going to subsidize housing, which they most certainly will, it should be on the budget. that is way democratic government is supposed to run. fannie mae and freddie mac running around the democratic process and open to corruption, and has been corruption. host: of this article notes the hostility that has increased for the federal reserve and the chairman ben bernanke. but before this hostility turned on the federal reserve, when alan greenspan was heading up the federal reserve, there seemed to be admiration or reverence for what mr. greenspan would say. how can this institution be both revered by some people and have distain for mothers? guest: that is easy. when times are good and things are going well, they were great and people like them. when times are bad, as i have been, people say, look, why is the public angry about the puppet of rese

treasury and i have no comment.whenever you see any announcement that sparks fear in the marketplace, unheard people run to the u.s. dollar. the idea that people cannot see the u.s. government has a column in the middle of a star has been disproven. >> -- a calm in the middle of a storm has been disapproving. >> last friday's jobs figures, the unemployment rate fell. i would submit that we are going to have an uncomfortably high unemployment next year. we have midterm elections coming up in november. it is not a particularly pleasant number for any administration. there are two things which one can worry about. to what extent does this put pressure on the administration to come up with policies to deal with this? there's also the risk of protectionism. something i have long worried about in this whole crisis and frankly i have been surprised how little there has to insofar. if you have an environment of relatively weak growth by historic standards and unemployment, shouldn't we be worried about this being the clear

treasury back to medicare. as soon as medicare starts going into deficit again, they are going to cash in those bonds and the government is going to have to then borrow the money on the open market. there is actually a debt instrument in the trust fund. according to the c.b.o., it would not increase the deficit, but it would increase the debt of america. and when we raise the debt limit yesterday, and my colleagues voted to do so, that deficit -- that internal debt between the treasury and medicare counts as part of the nation's debt. it's just an internal debt and it's not scored the same way. but sooner or later when social security and medicare really start cashing in and claiming their money, the u.s. treasury has got to do something, what they're really going to do and what they have been doing is convert that and they have to sell bonds on the marketplace. whatever the interest rate that they have to pay in china and individuals in the united states and others buy those treasury bills. and we're selling s

we had a treasury purchase program which brought our holding of treasury bonds about back to where it is before the crisis. so we really haven't increased the holdings. we've also had a pretty big, very big program purchasing fannie mae and freddie mac. we have announced that the current program will be wound down, tapered off through the first quarter of next year. this is currently on schedule. so what we have is a -- we will roll the exit process. : >> we have good means now of reversing them and unwind in, as the time comes. >> as we look out to just in next year, let's take the next 12 months, we already have unemployment that is now gone over 10%. probably -- well, not probably. it's much higher than that if you cannot people just getting a. that number is in the 17, 17.5% range from what i understand. for consumer driven economy. so if you have a bunch of consumers are much on the sidelines trying to keep things together, as best they can, you've got a whole bunch of other consumers worried about losing their job. as you look out there over the next 12 months, what's your expec

and invest it in treasury at 3.5%. that's why bankamerica can't afford to repay the government because the government is basically giving them the money. it's a freaking. to cut a long story short i think the banking sector in the u.s. will recover more rapidly than the japanese sector, and that's why we will not have 10 years of japanese problem. my words are more on the other side that it will prove too successful and will get another bubble because interest rates are too low and there's lots of free money running around. so i'm on sort of the inflation side of things rather than the deflation. anybody else? >> we haven't heard a lot about hedge funds and what was the role of hedge funds in this? >> good question. the question is, what was the role of hedge funds in his. we haven't heard much of him since long-term capital crisis in 1998. he's right, the hedge funds were not particularly acted in subprime mortgage securities. they didn't have the distribution capacity, some hedge funds obviously hedge funds some of t

specifically tips, treasury protect from inflation.plain them. >> these are bonds where the government bumps up your interest rate payment as inflation accelerates. if we are recovering and the federal reserve has done the right thing in saving us from a depression at the end of '08 and beginning of '09, we might see a little more inflation going forward. unlike a regular treasury bond which would go down in value if we had an inflation scare, if you will, these compensate you for that so it's probably one of the best plays in the bond market right now. you don't want to own regular treasuries, you can go direct to the federal reserve and buy tips or an exchange traded fund, the ticker symbol is tip and it's a fund of treasury protected securities. >> if you have some money and a little time on your hands, you're okay to be patient, now is a good time, you can make some money. >> five to ten years real estate will be higher, stocks will be higher and tips will be a very, very good alternative to something like gold if you're at all wor

this will house those corporate treasuries? >> unlimited number of ads? >> unlimited number of ads and unlimited amount of money anywhere they want in the country. >> so somebody's fighting the drug industry. and they decide to make an example of this candidate. they put $50 million of ads against this person. he loses. how many others are going to go oppose the drug industry? it's poisonous. it's poisonous to our democracy. and you know the court is very cute here in a certain sense. oh, you can't say don't elect smith. but you can say smith's a horrible person. call him up and tell him not to be so horrible and that's an ad. who are we kidding? it's the same exact thing, and it can be done no longer 60 or 0 days before the election but up to the day of the election. this will dramatically change the structure, the warp and wolf of campaigns, for the worse. and this is what is -- this is what so upsets me. at a time when people are feeling estranged from their democracy, this is doing to make it so much the worse. i do believe, and i don't think i'm i'm

they can borrow money from the vetted 0%, and then invested in treasurys at 3.5%. that is why bank of america can afford to read by the government because the government is giving them the money. it is a free thing. to make a long story short it think the banking sector will recover more rapidly than the japanese banking sector and that is why we want to have ten years of japanese-- but my worry some more on the other side that it will prove to successful and people get another bubble and something or another because interest rates are too low and there's lots of free money running around so i am on the inflation side rather than the deflation side. anybody else? in the back. >> we haven't heard a lot about hedge was the world hedge fund in this? >> good question. the question is, what was the role of hedge funds in this? we have not heard since the capital management crisis back in 1998. he is right. the hedge funds were not particularly active in sub-prime mortgage securities. they didn't have the distribution capacity and some hedge funds obviously, some of the

the treasury secretary at the time hank paulson needed to let someone fall.on, it is my belief that if they had not failed, someone would have eventually. a few days before lehman brothers failed, the market was pricing and 80% probability that washington mutual was going to go bankrupt. the property values was the source of the crisis. this was taken down numerous banks, you have to know. host: we have all heard the phrase "too big to fail." what about the phrase "too big to succeed" -- where does that come from? guest: it is the idea that banks have gotten so big, they pose a risk to the economy and have demonstrated an inability of the managers to run their company. there are serious questions to the extent to which the management of citigroup knew the risks that there traders were taking on or just how badly they would be affected if their ability to shift their securities on their balance sheet was compromised. these banks should be cut down to size or kept so big from growing, not only for the good of the economy, but for their own good. however, many c

the treasury has taken that position.he next five years, when i talk by using a government corporation and deciding whether to renew the charter, our problem is that the covered blond model requires substantial capital. that is something that is missing in the financial system today. after those five years, it is a very promising possibility but i will defer to you because i have not studied the issue and i look forward to our luncheon speaker to becoming informed. no questions? >> i did not want to hog the microphone by asking a second question. the previous speaker offered a simple framework for moving from where we are to what he was recommending. do you have a perspective that is equally elegant? >> no one can match peters elegance. the first step is to remove shareholders from the equation and put both companies into receivership. then you can use them in receivership as government corporations. the second step is, and i think the concerns are there, will anybody buy the debt for the mortgage-backed securities of thi

they came out, the fdic, treasury, came out and said that none of continental illinois bondholders, the uninsured bondholders, they would not take any losses in the continental failure. this engendered quite a debate within the reagan administration. don regan who was at the time the treasury secretary, said come he wrote this to his college we believe it is bad public policy, would be seen to be unfair and represents an unauthorized and on legislative expansion of federal guarantees and conservation of executive branch policy. so he was against this. president reagan himself never said much publicly about the bailout, but an unnamed white house official said that the president's thinking was he agreed with regulators compelling argument that the only other choice was to risk worldwide financial havoc. so this is a sign of things to come. at the time, fed chairman paul volcker said this bailout would not set a precedence. but the markets know it set a precedent. we got a new freeze any financial industry, if not yet in the public lexicon, which was too big to fail. in the independent ba

i have not seen in a treasury secretary spankeed like tim geithner was today. a democratic congressman from massachusetts took him right to the wood chest. when a president has his treasury secretary badly abused by a member of his own party, this is a president in trouble. the principal difference between him and reagan was that reagan had a clear and coherent program and after a year it was not working. the problem that barack obama has is that he lacks a clear program. they appear to be grasping at straws. everyone is dissatisfied with his ceci. he is trying to fix his social agenda into the the economy. the reality is that things like clean energy, health care reform, they will change the economy but they need the tail wind of a good strong macro economy to get it done. the president talk about that on the campaign trail. in the midwest, he talked about dealing with china. tonight, he have to explain how he will get the job done. >> let me bring it back to some of the politics. i want to refer to what bill clinton said back in 1995 as he lost control of the

five weeks for an explanation from the obama administration about this christmas eve raid on the treasury to pay these executives. i yield back the bonds of my time. >> the gentleman consumed 3 minutes. there will be seven on this side and seven on that side. i recognize the gentleman from california for two and a half minutes. >> i believe in capitalism, that means shareholder control and shareholder risk. that is why we ought to have pay on -- as we ought to have a say on pay and it ought to be binding. there is a special circumstance where company -- a company is too big to fail. at that point, they have quite the federal government guarantees. -- quasi federal government guarantees. at this point, they should be broken up. the gentleman from virginia is willing to allow the administration to do just that. until then, those that are too big to fail should reduce fees to recruit for the taxpayer of the benefit those organizations get from this implicit federal guarantee. the bill we passed in this committee and in this house does that. and with peters amendment, allows those firms to pa

in the meantime, the president reviewed the situation late today with his embattled treasury secretary, timothy geithner. he's come under growingcluding a contentious congressional hearing this week. >> sreenivasan: stocks fell today, despite the report of surging growth in the fourth quarter. wall street focused more on signs the surge may be short- lived. the dow jones industrial average lost 53 points to close at 10,067. the nasdaq fell more than 31 points to close at 2,147. overall, this was the market's worst month since last february. the dow ended with a loss of 3.5%. the nasdaq fell more than 5%. toyota moved today to begin fixing a gas pedal problem that has forced it to stop selling most models in the u.s. the pedals can stick, forcing the car to accelerate out of control. the associated press reported new parts are being sent first to factories. the problem affects about 4.2 million vehicles in north america, europe and china. toyota is a newshour funder. three more americans have been killed in afghanistan. that makes 29 this month. a nato announcement today said the latest

in his capacity as deputy assistant secretary of the treasury. and this was a job that really involves one of the most complex tasks in the antiterrorism effort. that have these people get their money, how they spend their money, and it takes a person with uncommon diligence and uncommon intelligence to be able to try to track this data, including for example, the assets of saddam hussein. but juan zarate went on from there, from the treasury department, to the national security council, where he responsible for the major part of the government, u.s. government counterterrorism strategy involving transnational security threats, counter narcotics, maritime security, hostagetaking, international organized crime. so his portfolio was a very broad one. so not only has juan zarate follow the money, he is followed a lot more than the money. and mr. zarate will become a professor at the roddy on the 16th of may, when he becomes the faculty director for the washington senators weeklong program, top secret national security and a global society which will

serving members of congress selected by the democrat and republican leader, the secretary of the treasury and one other administration official would serve representing the administration for a total of 18. bipartisan fiscal task force would provide broad coverage. everything would be on the table, entitle ments, spending and revenues all would be before them for a judgment on how we deal with the debt threat. the work of the fiscal task force would enjoy expedited procedures, procedures that we have used before here to bring especially difficult issues to both the senate and the house. the recommendations would only be submitted after the 2010 election. there would be fast-track consideration of the proposal in the senate and the house. there would not be amendments. it would be an up or down vote. and the final vote would come before the end of the 111th congress. again, i want to emphasize, i am not proposing that we take action to raise revenue or cut spending in the midst of an economic downturn. that would and counterpro duckeddive. -- counterproductive. but we do need to face up to

i should really go over to treasury and ask somebody. >> great, thank you. >> yep. [applause] >> our final session is with one of the leading consumer advocates in the country, ed mierzwinski, from u.s. public interest research group as well as mr. nader, ralph nader. [inaudible] okay. come on up, ed. ed is, as i said, a leading consumer advocate, has worked on a variety of issues including telecommunications reform, banking reform and other issues. thanks. >> and i don't know if they've been told, but john taylor and lisa rice, i've been asked to ask you to join me up here for this discussion if you're available and interested. yeah, up here at the front. [applause] make it a round table. this is supposed to be a round table, not a square or not a classroom. but thanks, charlie. again, ed mierzwinski with the u.s. public interest research group, and john richard and ralph nader thought it might be good to have a couple of housing efforts, which i confess not to be, to come up here and join me. without them being planned to be up here, i'm confident they'll do a fin

senior adviser, treasury secretary and dr. larry summers will convene a discussion on jobs and the economy while the mayors are here in town. on wednesday, january 20, first lady michelle obama will deliver remarks to the u.s. conference on the mayor' 78th winter meeting and discuss the launch of a major initiative to address childhood obesity and the impact it has on the health of the nation and communities around the country. with that -- >> on haiti, secretary clinton said this morning that the united states is providing a lot of the glue that is keeping people together and begin to do what governments have to do and the president said this is one of these moments that calls out for american leadership. is the u.s. government essentially in charge of haiti at least for the foreseeable future? >> no. obviously, you know haiti is governed by a sovereign haitian government. we have been in contact, our administration has been in contact with the haitian government as they have with governments around the world in seeking and r

is what the government taxes and as i said ironically a lower rate generates more revenue to the treasury and that's what happens when you reduce the capital gains rate. i believe that if the president were to announce tomorrow that he has not -- he is -- he is asking congress to pass legislation to send to him that would fix the tax -- the marginal income tax rates, the dividends rate, the capital gains rate at exactly where they are right now for, let's say, a period of five years, the certainty that that would create, even though some of those rates are too high in my opinion, leave that go. the certainty that that would create because the rates would be known for a period of five years. and these, by the way, would be the so-called bush tax cut rates, so they're much lower than they would be if they were allowed to go up again. if the president were to do that, i think he would see the stock morkt skyrocket the next day, and the job rate would be incredible, businesses would know that the taxes would not go up and be able to hire people and afford to do so. if you leave the tax rate i