morning the domestic policy subcommittee of the oversight and government reform committee will now come to order today's hearing is the second day of here things to examine the way that common equity shareholder rights acquired by the treasury department under authorities provided in the emergency economic stabilization act of two thousand and eight have been exercised to date and to assess alternative frameworks for exercising and protecting taxpayers interests without objection the chair and ranking minority member will have five minutes to make opening statements followed by opening statements not to exceed three minutes by any other member speech recognition without objection members and witnesses may have five legislative days to submit a written statement or extraneous materials for the record a i g citi group g m and chrysler came on their knees to the government for a bailout to an important degree the failures of all four companies have resulted from failures in corporate governance failures in risk management failures and compliance failures to hold executives accountable intelius to rein in excessive corporate pay taxpayers are underwriting the rescue efforts and the treasury department is managing about two hundred billion dollars in common equity in these four failing companies acquired under the emergency economic stabilization act two thousand and eight the first question we have to ask is this treasury appropriately accountable to congress and the taxpaying public in its exercise of the shares including t decisions that treasury has made or will have to make such as the decision to manage the shares passively the decision to allow citi group to decide when the government would divest it shares the criteria for dish investing how and under what circumstances would congressional approval be required for actions such as divestiture the regulations by which treasury would administer the shares the second question is have the actions of the federal government had the effect of upholding best practices in corporate governance or us treasury manage our stake in these four companies in a way that amounts to a major step backward in corporate governance the experts we spoke with yesterday when unanimous on at least one point the us government has done far less than it could have done and should have done to advance the cause of effective accountable corporate governance instead the us government has adopted a passive role by refusing to exercise even the minimal role expected of large shareholders and board level decision making and dealing with corporate management this failure puts taxpayer interest in the public interest at risk in several ways it breaks the chain of authority transparency and accountability it weakens oversight functions and fosters a culture of backroom deals and it sends a signal to corporate boards and management that this government has very low expectations when it comes to reasonable and responsible exercise of legitimate shareholder preferences we also heard evidence that the government hasn't taken a hands off approach in all matters we heard testimony in the past in the past and receive confirmation from the g a o yesterday for example than the case of a the federal reserve bank of new york participates in board and committee meetings meets frequently with management has a large team of experts following many aspects of company activity the third question we have to ask is whose interest and whose values are being represented by the way in which government shareholdings being exercised nothing the treasury department is doing as dominant shareholder according to expert witnesses yesterday assures that government owed companies do not participate in consumer ripoffs schemes are neutral towards any efforts by workers to unionize as a law allows them to do or dab stricter stricter than legally required controls over the use of exotic financial instruments in off balance sheet financial transactions fourthly we asked how has the treasury used its rights as dominant shareholder to be preserve jobs homeownership pensions and life savings as a lot requires political statute is the emergency economic stabilization act of two thousand and eight which sets out two fundamental purposes one of course is to provide authority and in facilities that the treasury ity and facilities are used in a manner that a protects home values college funds retirement accounts and life savings be preserves home ownership and promotes jobs and economic growth see maximize overall returns t taxpayers of the united states and d provides public accountability for the exercise of such authority as treasury realizing those goals through its dominant equity positions in a i g citi group g m and chrysler and jobs we learned that our ownership and the issue of jobs we learned that our ownership of g m and chrysler is actually accelerated job losses plant closings and dealerships were also downsized expectations as was the probability of meaningful success in protecting let alone expanding our core industrial base for only the second time since records have been kept industrial capacity is actually shrinking in this country we were reminded that the obama administration brag that they were even tougher on workers compensation than the bush administration was forcing american workers to accept by the end of the year pay and benefit cuts to make their compensation comparable to foreign automakers in the u pointed out that dent c e o of g m announced in october two thousand and nine post taxpayer bailout that the company would be searching even more parts and equipment from korea thus depriving american manufacturers of the benefits of supplying their own home market and pensions were reminded that creditors of the auto companies were forced to accept as little as ten cents on the dollar for their investments in the auto companies well big banks that were main creditors of ai g and other companies have been made whole made who this crisis and home homeownership this committee has held several hearings in washington and in the field in atlanta and cleveland it's very clear that despite whatever treasury thinks it's doing and may well be doing it's very hard to find anyone who is benefiting from its decent meal and half baked approach forget about subprime mortgages the evidence is that the level of household indebtedness that is resulted from the government sponsored inflation of home equity values the extraordinary explosion of household between the year two thousand and one and two thousand and seven is the single largest impediment to economic recovery that we face today and nothing meaningful to most ordinary americans has been done and fifth we have to ask why is treasury giving preferential treatment to the t financial service companies whose failures required a bank government bailout as compared to the treatment of two manufacturing companies almost every day brings new reports of yet another secret backroom negotiations to provide yet another sweetheart deal to yet another favor free spending fat cat wall street firm yesterday the revelation was the outrageous report that in order to let citigroup escape from u s ownership the u s treasury our trusted fiduciary secretly gave its ok to an i r s exemption from a tax roll that may be worth several billion dollars high level administration is he was quoting the washington post as saying the tax benefit was unavoidable quote either the government changed the rules and parted ways with citi group or the company kept the government as a shareholder and kept the tax break anyway you kidding me give away the tax break give away any semblance of control over a company that has a thirty year in a thirty year poster child for trouble management heads on most a continuous need for government to do it given a real upside from our most massive investment citigroup do this or else we'll be forced to do what keep our tax break keep our ownership keep our potential every individual associated with it examined every communication related to it but every person who may have had an interest in it well may have had some kind of a channel of influence and i speak as someone who opposed the bailout was skeptical about this whole process from the beginning it might be the christmas season but you're looking at a chairman who administrations over eighty billion dollars of this money was used to bailout to auto car to auto companies general motors and chrysler president obama has turned the tarp into little more than a political slush fund doling out money to special interests under the guise of job creation this has to stop our country cannot sustain much more fiscal irresponsibility in a year of record deficits tarp needs to be wound down as soon as possible and the money applied to deficit reduction i mean repeat tarp needs to be wound down as soon as possible and the money applied to deficit reduction tarp has broader implications than just rising deficits our use of public funds by the federal government to get its hooks in the private sector may have far reaching consequences for freedom and prosperity in the united states bailed out companies are merely responding to the whims of well connected special interests and powerful politicians these companies have ceased to be private enterprises and become arms of the government and its favored constituencies this process threatens to stifle the innovation and competitive spirit that made america the great nation that it is we didn't we need an exit strategy from tarp and we need it now yet the g a o told us yesterday that the administration's plans for an exit strategy are quote evolving that is not sound encouraging when you're headed down the wrong road progress is defined as turning around and getting back to where you need to be just as quickly as possible i want to thank mr allison again for appearing before the committee today and i'm eager to hear from him about what the administration's plans are to get us out from under this tarp and repay the american taxpayers as quickly as possible american people are suffering job losses home foreclosures continue to take a terrible toll on ordinary americans everywhere robust economic recovery depends on restoring a stable economic environment based on a clear separation between government and business with predictable rules of the road to get there the federal government needs to stop making up the rules as it goes along and extricate itself from this ill conceived adventure in crony capitalism someone to vote against the i think i'm more sure footed when i say that this has been a misguided chapter in american government and one that we need to put behind us just as quickly as possible thank you mr chairman again i look for hearing from our witness controlling shareholder unfortunately none of the witnesses seem to cite the administration's method as a best course of action president obama has publicly stated his preference for the government acting as a passive investor in a g m citi group and other firms voting only on the most fundamental corporate governance issues mr nader on the other hand argue persuasively that when the government has controlling interest in these firms it has a responsibility to vote its interests actively leveraging its position into real change at the front in corporate governance executive compensation consumer protections and corporate social responsibility the hearing was also valuable in that it reminded us that regard was whether the government votes its shares actively or passively that decision must be quite unaided without overall economic policy independently but not unrelated hours before the hearing conven it was reported that the internal revenue service federal to grant citi group has exemptions from tax liability on thirty eight billion dollars in future profits by the government selling it thirty four percent stake in city the company stood to lose tax breaks on up to thirty eight billion dollars in losses fortunately the i r s came to city's rescue providing a welcome exemption while questions emerge almost immediately about the fairness of granting citi group such a benefit what concerned me more about the story was a quote from financial market analyst christopher whalen who doubted that citi group would emerge from this without having to soon raise capital again for the last night it was reported that the market reaction to city's equity share offering was less than enthusiastic share sold at substantial at a substantial discount and investors especially turned that city was which leads me to the question that i hope secretary allison can address if the market confidence in city is so low that the government refuses to unload its shares at a loss are we still comfortable that the firm does not present systemic risk and thus should be let out of risk reducing executive compensation restrictions in closing mr chairman i look forward to assistance secretary alice incest moaning and along with a continuing discussion on exercising shareholder rights how we can get clarification on the status of the government's stake in citigroup the rationale for waiving our claims extensive tax revenue and and thank you for your leadership in this in your attention to detail and your leadership really truly in so many areas and thank you mr allison for being here today the great depression was horrific my mother and father lived through it the torah the stories they told me were absolutely horrible about the human stuff suffering and when the historical accounts are written of the great recession the story of what the american people lived through and recovered from will have to be told   the troubled asset relief program voting for it as i did was probably the most unpopular vote i ever cast but probably one of the most important the alternative would have been the failure of our financial markets  people were calling me there was a run on the money market funds that were money run on the banks and it was not until the democratic leadership stood up and said they would join the republican leadership in voting to stabilize our markets that the runs on the banks the money markets and other financial institute instruments held christina romer before the joint economic committee a testified that the economic shocks during the recession were far greater than the great depression so what we lived through was truly a tremendous shock on our markets that could have brought down the american economy and the troubled asset relief program in fact although unpopular the financial system has stabilized the markets are returning not to the point we would like but it has stabilized and unlike the last month of the bush administration where the unemployment numbers with seven hundred fifty thousand last month the unemployment numbers were eleven thousand too much for the families that have lost their jobs but certainly trending in the right direction there's been a great deal of criticism of the troubled asset relief program tarp and therefore i put in a bill which passed the house of representatives unanimously with bipartisan support to computerize and track the tarp money so that we know actually where it what how it was spent so in the future we can do a better job and also putting sunlight on where we're going and what we're doing i do want to say on the citi group thing i believe that treasury made the right decision in terms of the american taxpayer not to buy the stock at  distressed amount but to wait till the stock improves in value so that we get a better return on our money but my colleague raised some very good points that need to be addressed and as always he has a strong sharp pencil one of the most important things that passed in our financial recovery is the wound down authority that we put in legislation after the great recession we had two choices to let it fail like lehman or to bail it out like a i g neither of which is a good choice when this legislation passes we will have all financial institutions they i g s will be under the f b i see so that we can have an orderly wind down we lost over one hundred thirty banks with forced mergers acquisitions or wind down we we controlled it and taxpayers deposits were secure with this new wind down authority we hope to have a better control all over the entire financial markets should we have such a tragedy in the future in any event this is an ongoing discussion and one that is important to the american people i applaud the chairman for his attention everyone told me that they the hearing was canceled today that surely he wouldn't be here because we were in session and i said no i know dennis kucinich is having his hearing i was right thank you mr chairman for your steadfast work also the opportunity that you're providing us to answer questions about your involvement in the programs that supervise so you may proceed and you have at least five minutes if you need a little more i'm sure we can work that repayment of the total amount invested in banks we expect a positive return from the government's investments in bank investments are generating more income than previously anticipated more than fifteen billion dollars so far and we will additional income going forward as banks vestments with private capital confidence in the financial system to day management of any company government involvement in day to day management might actually reduce the value of these investments in the ability of the company to return fully to being privately owned and frustrated  need for government support as soon as practical for us we take a commercial approach to the exercise of our rights as a shareholder we will vote only on core shareholder matters such as board membership outlined the specific situations terms and exit strategies surrounding our investments in citigroup and the auto companies and i'll be happy to answer any questions on those topics as i work  the timing of your decision to permit to reverse your decision to allow the city to exit from the tarp well let me say first m chairman thank you for your question we don't make the determination of when city can repay the treasury for our investment in the company that decision is made by the regulator and under the provisions of the our law we must follow the the permission that's given by the regulator meaning regular mean the federal reserve in this case and also in consultations go to the federal reserve that the sides want to exit the tarp in the federal reserve does it at their choosing who chooses how do we know who makes the choice whether to accept the tarp how do we know if it's the banks that are deciding or the federal reserve do ask you if you have any position on this they just tell you they're doing what you're saying we don't exercise regulatory oversight over the banks that's a matter for the regulatory agencies but we are were are holding all these billions that is with the approval of the regulator if you have to agree with the banks that are healthy or not or if that agree with the banks where they're healthy don't talk to you just go live with whatever they tell you we have conversations with the regulatory agencies citi group the byelaws would determine the rights of the shareholders in that case let me also say if i may that he said the banks that is repaid has raised capital in the public markets they are replacing when they repay us government capital with higher quality capital in the private markets and so far as i mentioned we have received about two thirds of the  investment back on behalf of shareholders from the banks they have raised about one hundred fifty billion dollars of capital in order to be able to repay us we received about one hundred go to mr jordan a moment but we were going to get into the discussion  they tried to rewrite history a little bit the fact is congress wasn't in fact mr allison your opening statement that tarp was created to purchase troubled asset direct quote from your opening statement but that's not what took place  we had this bear from this committee just last week she was at the meeting nine days after the tarp was passed where the nine biggest financial institutions were brought to this town she indicated she was in that meeting and her direct question when i asked her was it took her breath away took her breath away what took place at that meeting where hank paulson ben bernanke with a piece of paper over and said you will take this partial nationalization of your bank you will take this tarp money not to buy just injected capital into the into the bank and so we have the history in the record that we got from all the various hearings we've had over the last year but now we finally have it in writing i don't know if you've read mr wessels book in  fed we trust but there's a quote there on page two twenty six to twenty seven of the book and i'm reading from the book now the house of representatives rejected the bush administration's bank rescue plan on monday september twenty third member last fall there was the first vote that last then a few days later came back to the to the congress and the vote that passed the tarp program lost about two hundred to a five the next morning according to mr wessels book mr paulson read into michelle davis a spokeswoman and policy coordinator in the treasury building quote i think we're going to have to put equity into the banks in quote he said despite what paulson had told congress buying toxic assets was going to take too long davis gave him a blank stare and said this we haven't even gotten the bill through congress she remembered thinking quote october member jordan first of all the isa law allows the treasury to purchase preferred stock and that and other forms of stock from these banks  fall and i think you talk to just about any member of congress and they will tell you maybe with exception mr foster they will tell you that that was the premise of the entire package presented to the congress united states last fall i know this is going to question has been asked many times however if we department and other and in the regulators and elsewhere that it would be more efficient use of the authorization in order to stabilize the financial system at the time which was on the verge of a catastrophic meltdown the most efficient way of doing the tarp is to try to wind down this program as quickly as responsibly possible while also maintaining financial stability and that's exactly what we're doing and that's why already we've received two thirds of the   you know we really do need to do a short term emergency loan kind of have that kind of effort and my understanding bonnie frank has that in his bill that we just passed when it came to the banks we didn't say that we didn't say they just got appalled by the we just got a fall by the wayside we gave them billions upon billions of dollars and i'm just wondering and i just wondering  be sometimes a lack of sensitivity with regard to the person on the street on main street and then and how the bank and then we compare how wall street is treated and i'm telling you that i am a big supporter of president obama probably nobody more loyal but i got to tell you that in order for him to get his economic efforts to have be most effective efficient in his economic efforts strain our economy you've got to have the american people they got to believe that that is something coming out of this for them that's that's what underlies a lot of the and that we hear every day and so i'm just wondering what do you see with regard to these foreclosures because i'm telling you it's just not the pain it's also the draining of community property values going down tax revenues going down i mean it's just a vicious cycle and guess what those people have to live somewhere so i'm just wondering can you comment on that sir first of all let me thank you for your comments and your questions the administration certainly shares your deep concerns about the american public about people losing their homes and that's why one of the first acts that the president took when he entered office was to establish the making home affordable program which were administering and that's aimed at keeping people in their homes and so far with that program to help over seven hundred thousand homeowners who are saving on average five hundred fifty dollars a month in their mortgage payments we have shifted also the focus of the tarp program initially placed large amounts of money in banks in order to stabilize the financial system and without that the far more people unemployed and losing their homes but in this administration we put very little money into banks only about seven billion dollars we've received back one hundred sixty billion dollars and we've now focused this program on promoting home ownership helping small business through small banks and part and helping the securitization markets which are responsible for providing a lot of the credit that's available to american households and we run out of time but just let me ask you this with the with us owning say for example as having so much equity in some of these banks i mean i know i know the president says take a passive position but it seems to me that we ought to be able to use more than just a conversation and a strong talk to get these  folks to do the right thing because i think a lot of us who voted for the bailout and whatever were of the opinion that that people would be able to get the loans and whatever and i'm just wondering people normal average people say well  improve the the making home affordable program we're making considerable progress we're not satisfied by any means we're not where we need to be but we're helping more and more people very rapidly today we still want to be encouraging the banks to work even harder and more effectively with meeting with housing counselors we're holding events all over the country to bring in homeowners to acquaint them with this program we've made we've streamlined the program a great deal so it's easier for people to provide the documentation to get a permanent modification and there's still more that we can be doing we're looking at how we can help more unemployed for example currently the program provides that if a person is unemployed and they're going to be receiving at least nine months of unemployment insurance they're eligible for a modification we're seeing whether we can enhance that program further but let me also say that the obama administration is not relying only on the isa programs under tarp to help homeowners the economic stimulus and all of the many activities of hud and others in the administration are working very hard to housing agencies and state local governments to help people keep their homes to be accomplished that it could result in inequities i come from ohio like the chairman and ranking member jordan and i'm from ground zero of the mortgage foreclosure crisis and i didn't see anything that was going to result in targeting the real problem that resulted in the financial crisis i believed it was going to reward those who were the bad actors and in fact leave the american people those who were either in neighborhoods where foreclosure was rampant or those themselves that were foreclosed without having any significant help having said that though i do want to thank you for your dedication and i'm certain that as you approach the issues you have in your heart and absolute dedication to moving this country forward into ensuring our to the general motors bailout and in your testimony one of the paragraphs in that paragraph the new companies are now leaner and more efficient and poised to help further the ongoing economic recover and the competitiveness of the american automotive industry the problem with that leaner and more efficient is it translates directly to the issue of job commitments to retirees commitments to employees and that's an area where i have  significant concern because in my community general motors closed plants delphi closed plants delphi walked away from its pension obligations to the soured workers twenty one thousand soured workers were treated differently than their coworkers that they work side by side with having  losses of substantial portions of their pensions that not only did they pending on for their future but they aren't and this is being done in the name of a leaner and more efficient company is their pushed aside and creditors  some of which are being honored instead of the honoring of the employees who made the company successful in the past companies failing of no fault of their own as they showed up every day and were dedicated to the success of delphi an so my two questions are could you please speak for a moment about the delphi pension issue and the disparate treatment that workers received i think it's inherently unfair and i believe that this should have been handled differently and there were great opportunities as the administration was at the table in the goetia of the bankruptcy deals in the terms where people could have been honored instead of cast aside in the name of more leaner and more efficient the second thing is this  issue of jobs going offshore i personally believe that when this is all said and done that we're not only be less jobs in the united states in the in the vein of having them leaner and more efficient but there will be more jobs overseas with general motors for their suppliers their direct investment and their partnerships and i would've thought that would have been a goal of the administration to ensure that the jobs remain here in america that we don't take taxpayer money and finance in effect jobs going offshore so that it weakens our economy in the future the suppliers that would have supplied those jobs individuals that would have held those jobs lose that opportunity so i'm very concerned on those two areas one but the loss of the pensions to people reduce the unemployment rate and also to to begin to rebuild this economy in ways to create far more jobs for the american public if we look back on the actions taken to rescue general motors and chrysler without those actions hundreds of thousands of more jobs would have been lost not just in those companies but in the suppliers and the dealers in the large network that is the auto industry in the united states so we would have had a far worse crisis our role in tarp is to promote financial stability and by intervening with those two companies we were able to do just that they were not just manufacturing to to assure us that they would be able to sustain and eventually grow their business so this is about unable in these companies to survive and then the auto industry and those companies to grow in the future we did  take steps to assure that they would have a new board as well as new management they have been making progress and so we are hopeful that down the road they will be growth engines again  to the economy from the collapse of the money markets had they not been bailed out if the if the money market funds were allowed to begin failing there would have been in fact a giant run on the bank both on the money market funds which are a source of many american savings as well as on the banking system as a whole i don't think we can exaggerate the level of of of that crisis last year it was earlier stated unprecedented in terms of being a financial crisis and if we hadn't taken very strong action at the time the consequences of that would have been cataclysmic the taxpayer actually turned a small profit on that interact r profitability on the city to position i would i would tell you as currently we would have a small profit on that position overall counting their payments of dividends to us over time but i wouldn't make a forecast down about what i would point out however i would point out that so far we have learned a profit on our investments in the financial institutions in the in the in the banks that is and could you see a little bit about the difference in the difference if any in the decision mechanism for deciding how to accept our well again the decisions are made as to when a bank is ready to exit by the regulator and let me point out that there are separate does the bank also have to request to exit or or does the regulator boot them out or does there have to be a separate choice that i want to exit no there is a discussion between the bank and the and the regulators and i think in many cases the banks have been eager to to exit the tarp and but they can't exit unless the regulators opines that they're able to and these cases where the banks are exiting i should point out that their capital ratios are far better than they were before this crisis began and they've been building a tangible common equity positions which are far larger than they were and so they're in a much better financial condition than before this crisis and certainly during to these firms the regulators are constantly examining the condition of these banks closely monitoring them closely and then they render their opinion as to whether the bank is ready to repay  maximize taxpayer value and if you're maximizing the value how do you do that by vesting rapidly in awarding special tax benefits that reduce tax revenues well let me talk about the the recent guidance that was issued by the i r s regarding section three eighty two which you commented on earlier i think that  this the purpose of that section has been mischaracterized in the press it was intended and it was enacted actually back in the one nine hundred eighty s to prevent corporate raiders from sheltering income bailout and we're going to keep that going i don't want to spend all my time talking about that but i just want you to know that we're going to keep asking questions about that can you explain how treasury avoided a conflict of interest taxpayers money to the shareholders help me with that please i'm having difficulty understanding of first of all the united states government is not a tax payer the united states government is not a taxpayer  treasury will be voting shares along the lines outlined in my testimony will be voting on the election of directors we will be voting overtime on special corporate events what what's the process by which you will take positions on issues before the shareholders we are working on those on those guidelines now and  those just last week we published our valuations of all of our assets and we'll be sending you a copy of this if you haven't already received it and is a full report on our approach to valuation and the current values of that the total current valuation of the auto companies would be a loss of about sixty billion dollars which is less than it was before again let me have the size that the now the public sector are you troubled by the fact that we have one single individual in the united states government telling private american citizens how much money they can make first of all mr feinberg has made his decisions to put this in the context we made investments on behalf of the taxpayer extraordinary investments unprecedented and financial institutions these are temporary investments we have to protect the taxpayers interest and therefore  catastrophe and it literally had to act before the entire system would unwind repairable perhaps and therefore those decisions were made i think by very capable people under tremendous pressure and i think that the events since then have proven the wisdom of those actions that were taken at the time i think they saved the financial system and the american economy and the taxpayer is receiving returns that i the other companies treasury overseeing our investments i think it's important to link the authority over financial stability with the oversight of our investments in those companies so that administration have any kind of say on what happens with our vote i mean and i was at the site what we'll do is to provide you with the information on how we intend to vote  dividends over the treasury so future dividend payments will be effectively funded look equity drawn from the treasury and went back to some questions on a part of the chairman believe that the investments we made should be adequate and we are monitoring that company carefully and is making progress against those plans for example we're going to get our money back again  currently we would show in our valuations a loss on that investment that is not a prediction of the outcome and i wouldn't want to make a prediction that this point i think it's too soon in the midst of transformation this point you have been hesitant to speculate on the final outcome which i certainly understand and respect understand that you're basically saying to us the final debits and credits have not been made so i'm not going to  because what we're really talking about is transactions from which there is revenue that will be offset by i believe massive losses in other areas and that when we talk in the aggregate i believe that there are going to be losses but no one currently is predicting problem well sir i've learned after forty years in the financial business not to make predictions about markets or investment outcomes however however but no one is well and i think under the circumstances if you look at our valu are also currently valuing some of those investments at a loss it's less of a loss and the number of these cases than it was even six months ago i don't know the final outcome but currently we are showing losses in some of those investments  appreciate you saying that because i think when members of congress or members of the administration step forward and give selected pieces of information to give the public the perception that there are actually profits that being generated they're ignoring and you have not done that  not done that that they were misleading the public on what the likely outcome will be i would invite the members of the committee as well as the public to take a look at our valuations again published last week as of the third quarter of this year and they will p where i was last time was the taxpayers have provided capital to general motors yes general motors has capital for the purposes of moving jobs offshore through partnerships direct investment and  outsourcing isn't it true that if the taxpayers are giving general motors capital and general motors using capital to move jobs offshore offshore that taxpayers funds are being used to move jobs offshore  weren't able to undertake capital projects and you gave them money for capital and then used capital money to move jobs offshore you are enabling of them you are making it possible for them you are providing capital b eing used as capital to fund their program that results in jobs moving offshore how can that not be the case i think the most accurate characterization of our investment is that to save hundreds of thousands of american jobs now again let me assisted general motors in moving jobs offshore you're denying that i think the taxpayer assisted general motors in surviving and creating more american jobs down the road and i think that was vital to the not just the industry had to states but the to the financial system as well i think that you've been very careful in your statements and in your credibility in this hearing and i really wish that you would not diminish your credibility by trying to deny this aspect which is a basic accounting one in which everyone knows is true the taxpayers provided capital general motors general motors is using capital to move jobs offshore tax payers capital is facility moving jobs offshore i would appreciate it for your credibility you could acknowledge that i do not agree respectfully sir that they're using their capital to move jobs offshore let me also say because i think what they're doing is and what we have done is to save hundreds of thousands of american jobs by stepping in with chrysler and general motors let me also emphasize that the u s government is not in the business of running companies we are owning those shares not by our desire but by a necessity we'd like to shed ourselves of those investments as rapidly as we responsibly can and that's precisely what we're about doing but we are not going to run these companies and i think that would be of great concern to many in the american public if we just take over the companies and start making management decisions and i don't think we make the best times expire but i just want to say again because you know i have the same concerns and one hand say that you really don't want to be managing these companies and that a lot of american jobs and watch companies that are holding bailout funds move jobs out of to the treasury secretary the feelings of members of this committee about how people use these funds and if jobs are going to korea and other countries jobs are going to this historical question of whether or not members of congress understood what was actually in the authorization and i'd like to quote if i could testimony to the financial services committee on september twenty eighth of two thousand and eight this is the day this is the time for serious people from both parties to work fast work smart and map a way out of this crisis the second point that i would like to make is that there are two routes mapped out of this crisis by the legislation we are considering the auction route and the equity ro te for the equity route and i believe that the american taxpayer and business owner will agree in the auction route taxpayer funds are used to buy off toxic assets left over from bad loans at a price well above anything you can get in the current market financial firms are bailed out and life goes on pretty much for these firms with the exception that they've learned that whenever they make a whole batch of bad loans they can expect but the u s taxpayer in the equity route also allowed by this proposed legislation the firms are bailed out but at the price of government getting a big share of the company i believe this is a far better deal for the taxpayer the companies will be required to write down the value of their toxic assets admitting that they're worthless paper is worthless and in exchange the government injects cash by buying a large fraction of these banks this is not dissimilar to the recent over time the market recovers and the banks are sold back to private investors and the testimony goes on describing the advantages of this so that the statement that congress did not understand what was authorized by the thing must come from people that either didn't read it or didn't understand what was there it was very clearly understood that there were two ways out of this and at least on my part very clearly understood that one of these was preferable because of all that could happen in the emergency situation where tell me about class warfare