once information the first gavel was just to get the picture taken it was ok it was to alert the this one will bring the subcommittee to order today the subcommittee meet to discuss the work of the treasury department and its budget requests for fiscal year two thousand and ten i am pleased that the request includes funding for expanded i r s and forstmann efforts targeted at individuals and businesses seeking to part overseas in order to escape s taxes i am also pleased to see the strong funding increase for the community development financial institutions fund to provide capital and financial services for under served low income communities throughout the country communities that are suffering most from the current state of the economy at the same time however i am dismayed that the department is refusing to abide by key provision of the fiscal year two thousand and nine appropriations act relating to agricultural and medical sales to cuba this is totally unacceptable and i will have more to say about this today of the treasury department's many responsibilities none has attracted the attention and concern of the american public as much as apartments role in responding to the financial crisis and in particular with apartments implementation of the emergency economic stabilization act of two thousand and eight its success or failure is just too important to the country and to our constituents there are several key questions we must ask first other departments actions helping to restore confidence in the financial markets our credit markets opening up again and its lending increasing again second others apartments actions helping to stem the tide of home foreclosures in this country that's month alone more than three hundred forty thousand properties received a default or auction the orders over seized as highlighted by a study released last week by the pew research center eighty five percent of the neighborhoods worst hit by poker pro closures a minority neighborhoods other research has found that tenants make up a large percentage of those who lose their homes in foreclosure because their new landlords do not have to respect the leases signed by the old landlord well i'm encouraged that the parliament has unveiled a plan to prevent foreclosures and while it is reasonable to expect that the plan will take some time to see results this problem is of utmost urgency to millions of americans a third question is whether the american taxpayer is getting a good deal will the taxpayer recoup the massive public investments that are being made in financial institutions i have said in the past that when wall street was doing great and these guys were giving each other fifty million dollar bonuses i can see anything happen to my district in the bronx that made me say wow there's some good from what's happening on wall street now wall street is not doing us well bonuses have still been paid and many other problems in my district specially the foreclosure problem are getting worse i hope that the palmer will keep in mind the needs of all americans in all communities and not just wall street as we attempt to solve the crises i expect that we will have a very healthy and vigorous discussion this morning secretary geithner knows more about these issues than most anyone else in the country having previously headed up the federal reserve bank of new york secretary geithner has also played a lead role in the treasury department's responses to the global financial crisis of the late one nine hundred ninety s we welcome you today mr secretary i look forward to your testimony today you were supposed to be our first hearing as it turns out you are our last hearing but somehow you either going to started or ended and you're closing the hearing season so we welcome you today and we look forward to your testimony  to recognize our ranking member and my colleague join emerson thank you chairman welcome secretary geithner i'm glad you're able to be with us this morning and welcome to like many in the nation's current economic condition you we all know have a very challenging task that in clues reinvigorating bank lending to consumers and small business stabilizing the housing market saving the american auto industry and most importantly protecting the american taxpayer their investments and preserving the long term financial health of the federal government i know that you and your staff have been working extremely hard on these issues and we appreciate the dedication of all of you like many of my republican colleagues who voted for the tarp last fall i am disappointed with the former administration's allocation of the funds providing banks with hundreds of billions of dollars borrowed dollars i might add with little accountability or with not what the congress thought it was authorizing when we passed the emergency economic stabilization act and let me tell you that i come from a very rural district in southeast south central missouri and it is quite difficult to explain to my constituents why banks have received billions of dollars without being required to increase lending account for the funds they received or take meaningful steps to limit executive compensation in february you released the new administration's plan for using the remaining tarp funds at this time the plan had at the time excuse me this plan had few details and was not met with great confidence by the american people or the markets many questions and concerns still remain about your plans to address issues such as growing home foreclosures limiting executive compensation the federal government ownership of common shares of banks the future of the american auto industry finding ways to increase small business lending and eliminating toxic assets from balance sheets in a mission to administering the tarp program see all of treasury have many other responsibilities including acting as the government bookkeeper  countries coins and paper money administering the governments that assisting citizens and filing their taxes and pursuing those who do not pay their fair share while is performing in proportion work involving terrorist financing budget because it projects a deficit in two thousand and nine of one point eight trillion dollars and projects continuing deficits for the forseeable future my concern and the concern of many of us is where will these funds come from china saudi arabia fall a sovereign wealth fund will this public borrowing crowd out investment in the private sector slowing the recovery who will ultimately pay for this borrowing our children your children o grandchildren what are we doing to the future of the financial health in the long term for this country in conclusion you do face great challenges and manage and managing the federal government's finances and then tempting to reinvigorate the economy i look forward to working closely and collaboratively with you chairman and the rest of this committee to address these difficult matters so thanks for being here thank you the committee is honored to have wi damn dime to any company like general motors who decide as part of their real reorientation operation they're going to be closing plants in this country more than the mexico or any other foreign country  there is a limit to the toleration of taxpayers and voters and when it comes to accept the realities of globalization and one of the put a lot of funding for the i m f but i have to tell you very very reluctant to support any additional funding for the i m f in the supplemental we are being asked to borrow money by the world community in order to stimulate our economy we don't want to we don't want them to be and for the life of me do not hamilton thought you had the most important job in the federal government next to the presidency and indeed its challenges are part and parcel of carrying out that responsibility you have them to look forward to having a chance to ask questions  hope to have that support and i want to have a close productive working relationship with this with this committee this subcommittee it's very important the department and give me a chance to work with you closely on these issues my opening  about our budget not about the financial system financial recovery efforts about the i m f or autos but i would welcome a chance to talk to you about all those questions have to discuss any issue before the country these are challenging times president  obama's administration working to meet these challenges by getting americans back to work trying to get our economy growing again recognizing the imperative of getting our fiscal house in order bring our deficits down on time to more sustainable levels by making long neglected investments in health care energy education that are necessary to improve the productive to best of our economy over the longer term and to enhance our competitiveness in this in this little bit in the global economy to achieve this we must repair and reform our financial system so the works in favor of recovery rather than against recovery we need to support growth and meet our long term goals we need must redesign and bolster enforcement of our tax code so that's both fairer and more efficient to advance our interests globally we have to work with other nations to promote economic recovery and to ensure more open markets for u s businesses a more balanced sustainable global recovery over the longer term and to protect our national security interests we need to continue to use all the tools at our disposal to exclude terrorists raters other list actors from using our financial system to advance their interests the fiscal year two thousand and ten budget before you today will allow the treasury to pursue these core missions the thirteen four billion dollar request includes a six hundred seventy six million or five point three percent increase over inactive two thousand and nine levels of this and let me just give you a few brief highlights fourteen million will go to both string increasing the staff of our domestic finance and tax policy offices which are at the center of as you know the challenges facing our country in the van system and on the fiscal front we included a one hundred thirty seven million dollar request to more than doubling by fund to ensure that the benefits of financial repair beach reach beyond our major banks and to businesses in economically distressed communities these communities were under served by our financial system even before the current crisis and they have been deeply hurt by the job losses foreclosure crisis business failures that the crisis has spawned we propose a total of three hundred thirty two million dollars devoted to the new internal revenue service enforcement efforts including  hundred twenty eight million to add nearly eight hundred new i r s employees to combat offshore tax evasion and improve compliance with u s international tax laws by business and high income individuals another one hundred thirty million would go to bolster the security of our us information technology to improve the efficiency of its business systems and to upgrade its fraud detection capabilities although not directly under the jurisdiction of the subcommittee our budget also includes funds to meet our international obligations in the international financial institutions again to help us mount an effective global response to the crisis which is so important to our recovery as we seek these additional funds to respond to our nation's troubles we've cut back on some programs that are either ineffective or can be safely delayed as just one example even as we seek to increase capital investment for the i r s our budget would reduce the department wide capital investment account by sixty five percent for a savings of seventeen million dollars now before i conclude i just want to say a word about the treasury department staff i've had the leading a team of smart and dedicated individuals who are working exceptionally hard to make our government more effective our society more just following a long tradition of debating policies openly and courageously on their merit it's doing what is right not what is expedient in our drawing on the best ideas and expertise available across the nation they're performing a great service for the country under very challenging circumstances and i am grateful to them as i said an honor to serve with them again treasuries of course responsible for promoting the nation's prosperity and protecting its financial security we have the answer interests around the world through the strength not only of our economy but the quality of ideas by the by the commitments we demonstrate to our actions at other times in our history when the economy was growing on its own and markets seem capable of regulating themselves these duties might have seemed comparatively routine but these are not such times the president and the treasury are going to have already begun the hard work of recovery and reform our budget will help us pursue these critical bullet goals and we hope to earn your support and cooperation as we go forward thank you mr chairman i'll be happy to answer your questions thank you mr secretary secretary in your prior to your written statement you mentioned the fact that you needed to have a good working relationship with this committee and i certainly understand the need to have a good relationship with every member of congress this committee and this subcommittee in particular so what i wanted to know before i move on to a discussion with you is just to get out of the way the one on pleasant perhaps unpleasant question i had sure that that was not going to take place that was not good that was not a good way to start a relationship because i take very seriously article eight of the constitution that says that congress dictate what the law will be met is your role to carry it out and so i was distressed to see that you basically with telling two senators if you vote for this i promise you this is not going to take place when i had intended and senator durbin tenderfoot to take place so my question to you was was that you did not understand the intent of what congress is trying to do after all this was a bill agreed to by two by the senate and the house and was on its way to the president's  desk or was this a ministrations desperate need to pick up two votes thank you for raising this i understand how strongly you feel about this and thanks for give me a chance to respond your concerns on this i know you've worked on these issues for many many years and i admire your leadership in these issues and i think you're finding we're at a time now we're a chance to move together on many of the things you've worked very hard for now in ricin this particular cont with respect to the concerns raised about this letter what i did was explain how the department interpret the law clarify your interpretation same interpretation we've had for some time it was consistent statement of how we interpret the obvious law and that's that's my obligation as you know now i understand your concerns with this and i want to say today before that we would be happy to work with this committee and with the authorizer to seek changes in the law that allow us to meet the concerns you've supported and pursued for some time i don't know what's going to be possible my contacts but the i would have to work with this committee with the authorize on ways to figure out a way to move forward to address your concerns in this area but i didn't this letter is just simply explain what has been treasury's interpretation of what the law requires and we came to that judgment very carefully we were very thoughtful in doing it but it was a consistent your position well and i understand that in even on this committee not everyone agrees with me in this emerson who agrees with me on how we should go forward but i think we all agree that if any member here gets the committee to accept the language or or dollars that then you have to carry out that and so my concern at that time and i'll drop the subject was i'm not interested in pursuing it any further at that time was that the administration was basically saying it doesn't matter what the congress said we in order to pick up two votes to pass this bill will tell these two senators that that issue is dead and that troubles me because it could happen on any of the issues that mr oakley brings up and then the issues  that's not the practice so you said you answer the next question i was going to ask you was on any issue when you feel that there is a difference please discuss it with us before you issue letters and various the heck out of me in the in the spanish press let me move on to two more pleasant things we understand that the financial services authorizing committees and the administration are giving serious consideration to creating a new agency to address consumer problems with financial services such a commission might be started in the next fiscal year and it would fall within the jurisdiction of our financial services subcommittee we believe can you share with us your thoughts about what a commission might look like how much it would cost to run how large a staff would be required and how it should be funded mr chairman as you know the president is committed to work with the congress this year to enact comprehensive reform of our financial system to put in place a much stronger form of protections for consumers and investors and a range of other reforms to make our system more stable in the future less vulnerable to this crisis and as part of that we've outlined in the public the public and to the congress in the next several weeks a broad set of conference reforms as part of that we will make some proposals for how we change the oversight structure of this country has lived for some time with a very complicated very segmented archaic framework of oversight over financial and that's one reasons why that one reason why this crisis was so severe one reasons why consumer protections were evaded so easily and that's something we're going to have to change as part of that you are correct we are examining the merits of setting up a new independent commission or agency to help provide stronger rules to protect consumers and better enforcement of those rules we are not the point and i think it'll probably take a little longer to address the questions you raise which is how to fund it how large is going to have to be we're starting to think through those questions now but as you know those are very complicated consequential questions the funding in particular is difficult because of the complications you create created by some of the using funding mechanism for supervisory authority to work through this but the objective is which is the most important thing is that we have better design rules to protect consumers that are rules not for this not just for the substance of the rules of the game but for the oversight structure to force those rules well thank you we have great attendance at the committee to thank you mr chairman let me just put in my one bit of a comment on on the original issue that mr serrano brought up with you particularly in light of your comment about the desire to open a market and certainly cuba has been a market that has great potential and has served us well so far but i i just want to point out and this is bothered me for some time and  recipient of this having worked over the last several years with the treasury department on this issue and having been one of the authors of the original test bill some folks at the treasury department have told me that they were interpretating the intent of congress and when they're telling me that they're interpreting my intent and it's not being interpreted properly it's really rather problematic so i i just say that and hopefully we will be statement about that sometime earlier this week and that you and that the fund would or could be used to make investments in community banks when congress authorized the top tarp program we were led as i said earlier to believe that the program would purchase troubled assets and i believe that members did not think that the proceeds from the sale of assets would then be used to purchase additional assets so my three quick questions are based on do you believe that the treasury has the authority to use funds for a term by the banks to purchase new assets rather than perhaps to pay down our dad or pay down our deficit number two if you believe treasury does have the authority to purchase new assets with return funds as a tarp going to go on forever and the last question i have is well this administration or future administrations have the ability to restart the tarp funds over and over again in order to nationalize our partially nationalize additional businesses and industries beyond banks insurance companies or the auto industry is to go in reverse order no no and yes let me try it let me try and go through them we believe as the law is written and we spent but it also increases the headroom available under that authority and gives us the flexibility if we think there's a strong case for doing so to use that additional resources to support the programs we put in place that flexibility is designed in the law and i think it's a prudent important thing to retain because we're still in a very challenging economic hard to know what's going to be necessary and possible going forward we would like nothing better than to have all those resources go into the general fund reduce the debt but i think prudence requires that we use the flexibility the law provides to reinforce these programs are designed to get credit available to businesses and families across the country now the law does i believe the  treasury has the ability under the law to extend it and its initial expiration for an additional nine months but i do not have the authority to extend beyond that so it is not a permanent program so we cannot permanently recycle these programs and it is not our objective and i would never support a program designed to as you as you as you question the program designed to allow us to nationalize banks or other businesses as a matter of policy i would never support that it never should be the  objective what our obligation though is to try to make sure we get this economy back on track as quickly as possible and we get this financial repaired and working grand so it's not damaging the fortunes of american businesses and people who wan put the kids through college and these programs are designed carefully to try to get credit flowing again where it's necessary so again we have recovery come as quickly as possible that's our reading of the statute and i know there's some there's some  questions about the way it was designed but we've looked at it very carefully we've checked it interpretation with independent people and we think that's the way the law is written thank you for i recognize mr robey let me just say that i agree with his comments  every block now for the first time in all my years in new york they're closing down if you would have bailed them out they would open up in the same place down the block we hire the same people but to bail out major corporations and then go to mexico in the government they call me and i raise because i am very concerned that over the long haul our long term situation is simply not sustainable i fully support and in fact i think we need even more aggressive effort at stimulating the economy short term and we've engaged in very concerned that in the long term we're simply not going to be able to get  question or simply making a point we don't normally think of capitalism as being a system under which the government shovels money into the banks and shovels money into corporations it's an emergency situation and we have to do it but we don't like it but i would urge you to look at the treasury department and its responsibilities in a far more expensive way has been the case in the past workers are being asked to swallow the idea that the government is going to shove billions of dollars into the high rollers in the economy which is much in the ninety's we had a period where we had responsible fiscal policy helped a large sustain increase in private investment strong productivity growth and much more broadly shared gains of growth across the american economy and i think that's a shows how important is to look more broadly at how you design economic policy because you're going to get a more sustained  more productive growth more evenly shared if you bring that mix of long term fiscal responsibility investments in things that make our economy more productive over time now it just does underscore our commitment to this the senate confirmed two weeks ago alan krueger so we're very much in support of the president as you know the president very committed to trying to make sure that we create the conditions for a more balanced more sustainable economy over time as we address this crisis and you're right that we have this huge obligation to work with the congress to being our fiscal deficit down over time to a more sustainable level now right now the most important thing we can do towards that objective is to fix the crisis we inherited it requires in the short term more stimulus more support to repair a financial system but that is the only way to get growth back the only way to make sure deficits are lower not larger in the future but that has to come with a very clear  commitment to bring those deficits and over time now in the important thing about the international imperative absolutely our efforts to promote recovery here will be less effective if we do not get other countries moving with us to support demand in the growth in their economies and the went to the london about six weeks ago and got broad agreement among the major economies including the europeans to provide the largest most coordinated support in terms of fiscal policy that we have seen ever seen and as part of that the major economies are doing very substantial stimulus in two thousand and nine what  distinguishes their approach today from ours is the stimulus package that the congress designed with the president provides for more support sustain over a two year period of time the europeans have a somewhat different system and they've been reluctant to commit at this stage to lock in now additional stimulus for two thousand and probably because their systems are different but my sense is the whole context is changed year ago six months ago people  debating whether this is a crisis or not this ought to be contained the united states will be insulated from it no one takes that view now their economies are going through as challenging or in many ways more challenging sort of things than ours and i think that  led to greater recognition about the imperative in europe for more aggressive action you're seeing it we want to make sure it's sustained it's strong enough so it's reinforcing our efforts and you're right to underscore that point so i think it's slightly better than you think but family have access to the american dream that is the opportunity everybody knows that's a that's a part of of a family solid future etc we allowed that over the years to get so out of control that we may very well have undermined that dream being available for the average family and indeed over the years i supported that idea i'm sure my colleagues supported that idea in turn we found ourselves in a circumstance in one neighborhood close to my own a fellow who wanted to live in oregon got the bank to invite him with a six hundred thousand dollar  loan his wife took that to oregon and walked away from the house in the neighborhood which i speak next door to that same house another fellow saw an opportunity because obviously house prices are going to continue going up forever and he had a home on the marketplace shortly for two point one million dollars in a neighborhood where next door was going to be six hundred thousand dollars i don't know have any idea what that bank sold the latter house  to two physicians for momentum for but i'm absolutely certain they took a heavy loss in connection with that the fellow who went to oregon simply walked away seems to me that somewhere we've we've missed it as we try to make sure the american dream is available to that average family i read was some interest treasuries response to all this it sounds to me like you may be proposing policies that would take us right back to the track that got us here in the first place it really seems to me that we ought to be examining whether the family that wants a piece of the american dream should also have some skin in the game if people don't put ten percent down or twenty percent down wasn't that long ago it was twenty percent expected and then they want to have skin in the game i'd like to hear what your thinking is about that as we go forward on another level i'd like to ask a question if i have time about our governor's suggestion that perhaps the treasury should be involved in helping the california economy with its american dream congress on the housing thing i think you're actually right that the basic failures in underwriting standards in consumer protection in lending behavior helped exacerbate the unsustainable boom in housing prices which has put at peril were put at risk the dreams of many other americans who are much more responsive and allies from being able to participate in owning their own stay in their home and i think that one of the tragic things about financial crises is when they end the pain is indiscriminate it affects people who are careful  responsible effects people in neighborhoods who didn't borrow too much to do to be honest who had a lot of equity in our house and that's was basically unfair about crises and that's why one reason why it's important that we put in place reforms that will make sure there's going to be more conservative underwriting standards in the future and that's going to require a change to the rules of the game and better enforcement among other things now the proposals in the president's housing initiative i do not believe carry the risk you described let me just describe what those are they have three key parts the first is working with a set to help bring mortgage interest rates down to levels that will help stabilize reduce the risk of further declines in house prices and they have come down now to a story a close second is to make it possible for millions of americans who under previous programs could not refinance or mortgages take advantage of them to have the opportunity to do that and that you've seen refinancing rates surge and that program again will be very helpful to a lot of people who would not have had the opportunity to take advantage of lower interest rates and that will bring meaningful reductions in their monthly payments it will help the economy as a whole as well the president's program is to allow eligible homeowners to modify their loans to bring down their monthly payments to a more affordable for a period of time but those programs will not benefit americans who really just went too far they will not benefit speculators who are people who bought second homes so they're carefully designed to have maximum benefit for the people that were most affected by this fight for reasons beyond their control and i think there are important very important part of recovery in housing is not the only cause of this crisis but the center of the crisis and i think these programs are necessary and i think would be helpful in those parts of the country that were most affected by the crisis every briefing on the question you raised about the about the ability of state governments immiscible governments missile dramatically affected by the broad pressure of this crisis and least and it caused a very very sharp increase in borrowing costs for governments for government authorities and things are getting better though on that front the cost of borrowing has come down a lot those markets are starting to find some new balance in equilibrium and they're significantly better but there are many states including your state where states are facing much higher deficits and they thought and they're going to face a challenging period ahead still they are working very hard as they are in your state to try to bring those deficits down take actions or help make it possible for them to meet their borrowing needs and we are open to working with the congress on ways to help address those constraints a lot of proposals are on the hill for doing these for help in that context and we're working with some of the offices that legislation to see if we can help but the primary it's going to rely on governors and mayors to try to make sure that they're taking the steps necessary to bring their deficits down and they can earn back the confidence of the people they need to invest in their and investor securities weekend we need help in some ways but they're going to carry the primary burden of trying to manage through this to imagine they're encouraging treasury to say sure we will back your bonds and we'll pay part of the price because we know we're absolutely certain you're going to reduce your spending patterns and thereby get your  condom in order but it sure leaves a lot of questions in my mind as to whether that's real world well i mean again we're we're prepared to work with members of congress who have ideas for how we can help address this  i just want to point out that a lot of the burden as as all those officials recognize i think is going to be on them to lay out a path to get their deficit down to the point where they're going to be left on themselves comfortably i'll be very interested in your decisions about is a very effective successful program does have the government provide share some of the burden of borrowing cost states and the civil authorities but it's i think a well designed program at a time like this where a countr going through the deepest recession in decades it is important that states are able to meet their basic needs that they're able to you know keep policemen firemen teachers on the job and they're not have to do things are going to deepen the recession so i think that's a good example of things the government has done that can be very effective in this area without raising some of the risk you allude to thank you mr lewis we will now begin to recognize members of the committee and there will be lovett but strict five minute rule and we start with the gentleman from california mr shift keeping records in seventy six what's more the number of people out of work for almost a year rose by nine point four percent double team out in two thousand and eight recent a budget review by the nonpartisan legislative analysts office estimate that california  budget if the budget propositions failed as they did yesterday the state will face over one hundred billion dollars deficit over the next five years one hundred billion dollars deficit do these cash problems standard and poor's lowered its rating on general obligation bonds in february making california its bond rating lower than any other state in the country the short term initial bond market conditions are freezing liquidity sapping investor confidence shrinking the market for investor municipal sure bonds which burden taxpayers a substantial cost and worsen the state's budget woes these dire financial circumstances have left the state with few options and the governor is now contemplating just radical cuts in education health care and other essential services the state estimates it will need to borrow thirteen to fifteen billion dollars in short term bonds this year compared to three to five billion in a normal year they'll need money in january or face even more severe cuts it's unlikely the financial markets in the current state could even bear such a long large short term need and if the state cannot find the money somewhere it will likely be forced to stop all public work projects which will have completely counter stimulative impact cutting critical infrastructure jobs stop paying its contracts cut off those calories that perform state services could force a municipal bankruptcy is around the sense is given the enormous flexibility authority you've already demonstrated that you probably already have the power without legislation to help the state of california the simplest quickest way to support cash flow little risk in the long run to the federal government on the other hand allowing california go belly up presents a great risk to our hoped for continued economic recovery and turn around another solution might be for the federal reserve establish a guarantees are the quickest short term solution and i think you may have the authority to do that already and assuming the secretary that you do have the authority to do it and i understand you made up a pair to accept my assumptions assuming that you do are you willing to exercise it because i think that our dragon economy will result in california founders and we are going to make massive cuts so it's not like we're asking for a pain free solution but will you be using do you are you willing to use the authority if indeed it can be shown that you have it congressman let me just start by saying that you describe the challenge as well and those challenges are not unique to california they are acute in california but many states across the country facing very similar challenges both injures a level of unemployment a substantial increase in borrowing needs incredibly difficult choices ahead and i think you're absolutely right that if states and cities are forced to cut back too much in this context that could deep in the recession and lengthen the point at which detour and we can recovery and that's why the congress move so quickly and put in place very very substantial support for states that's why the build america bonds are so important and that's why it's when we get this economy back on track and the pedanticism working better and the improvements we have seen in the media market are partly a reflection of the strength of those broader efforts but they are not yet back to normal still a challenging environment now and your specific question about the authority let me do this very carefully we do not believe that tarp as currently designed and legislated provides a viable solution to this specific challenge and let me cite three reasons why that's the case we are not allowed under tarp to guarantee issues security issues after march two thousand and eight we are restricted in giving says to financial institutions the way tarp is designed every dollar we guarantee is charged against the limited funds congress authorized and for those reasons and others it does not appear to us to provide a viable way responding to that challenge and i think that's one reason why your colleagues in the house have are considering legislation to address that problem as i said we are you know of course we're prepared to work with congress on ways to think through how to address this problem ways that wouldn't make our some other problems worse in the future it's a difficult complicated balance we're in very close touch with officials in your state and many other states as they navigate through this and caller from california and your point which is correct that there are many other states that are in the same boat maybe not sinking as fast california so there may be a broader interest in this idea because of that  but my concern is we don't have the time and we already saw california demonstrated we had to put a halt to all the construction projects in the state we don't want to do that again we run completely con counter to what you're trying to refused to tell this committee who the financial intermediaries are between the world bank and iran over the last calendar year the world bank has provided checks from eighteenth street in washington d c to the central bank of the islamic republic around one hundred  twenty five million dollars i suspect previously the intermediary was bank melli then cited by the treasury department as a political i suspect that the intermediaries now the central bank of austria then paying bank cause and i'm wondering if you could commit to us that you'll let us know who these intermediaries are that the world bank is using to pay the iranians to have a committee to come back to you and  the design of a remarkably successful program except exceptionally capable and i really got strong bipartisan support of my main concern is about our official borrowing and i would hope that you would commit to visit commissioner van zant public in the trading floor yourself because there is a a reality check that you will go through once you talk to your team there since they are responsible for over forty percent of the funds raised by the united states  if i look at the charts from from the your the bureau you are borrowing given that so much of your debt is just for weak debt and rolling over your borrowing at a rate of one hundred sixty billion dollars a week  so far since the administration took office we borrowed three point two billion dollars and we have a new authority that is being used by the fed in which they're basically printing money and then buying u s debt which is now about one hundred twenty six billion dollars has been used and printed money to purchase u s debt now we have now received official concerns from the european central bank from the premier of china and the chinese central bank on this policy and growing perception of weakness of the dollar we've also seen now two major industrialized borrowers collapse in their ability to sell debt to the  public the german government collapsed in an effort in january and the united kingdom now has failed in two major efforts today and i hope you'll take time to read it the wall street journal reports that s and p and fitch have announced that  next july they will strip britain of its aaa credit rating britain invented i would call it the gilt standard and so when we have some people pressuring european company countries to increase their deficit spending we have a reality check that the markets are already saying to prime minister brown you are collapsing your ability to raise money my question is this is the european central bank central bank of china premier of china fitch and s and all wrong about the concerns about the dollar in the credit worry this and you're right that this is not a completely irresponsible borrowing policy of the united states or should we begin to be concerned about a new treasury debt bubble that's being created under the obama administr don't know each other but i want to say that i welcome your interest and concern about these proposals and we're going to need your support and the support of the congress because we're going to face the most challenging fiscal environment in a long period of time and it'll be as critical for this economy for confidence in our financial markets for the basic health of recovery that we work with the congress to put in place credible commitments to bring our deficits down to a sustainable level over the medium term  just as a republican moderate let me say the message that i am picking up right now from the american people is to message one difficult for republicans to hear and one difficult for democrats the message from the american people that i'm getting is get out of iraq and don't raise my taxes president bush really didn't want to listen to the first message and president obama doesn't want to listen to the second but the message is clear leave iraq and don't raise  taxes in that environment which we just heard from the voters of california overwhelmingly it leads to a downward pressure on spending because of the borrowing that you're doing the markets are rapidly telling other sovereign b rs that their plans are not sustainable because what i'm saying is you're absolutely right and as the secretary i want you to know that my basic obligation is to make sure that we put in place policies that sustain confidence in this economy in our currency that we sustain a strong dollar we retain what is a great strength an asset for this country which is the most deep and most liquid markets for treasury securities in the world and we will work very hard to make sure that we bring these  put in place a recovery and we fix this crisis we start with and we started with a exceptionally high deficit the cost of the crisis required additional costs up front there is no way we c good markets in the world and we will work very hard at that now you're right to say that the fed is embarked on a very unconventional exceptional program for buying treasuries which is basically they're printing money  i wouldn't think about that that way but i but i i think you're right it deserves amount of care and reflection evaluation but we have a very strong independent whose basic obligation to the congress the american people is to keep inflation low and stable over time and they have been exceptionally good at doing that and they will be good in the future and as the chairman has said in public they are very committed to making sure they have the ability to unwind and reverse the exceptional measures they've taken once we've achieved the necessary stability in our financial markets and a kind of economic back on track let me just i just want to close with one technical point which is you were sent a message by the market when the thirty year no jumping all over me today you gave me time to calm down i'm telling you first of all i'm delighted to see you glad that you're here but i am fuming at your response to the chairman with regard to what happened on the medical supply and provisions that occurred on cuba first of all let me just say this this administration is an administration of change the president campaign based on a campaign of change in direction  and we have seen the president may want a major effort and i fully support what he is doing what you said to the chairman in response with regard to interpret this provision that was in the law that we  passed consistent with prior interpretations flies in the face of what congressional intent was until two members of the senate decided it was not going gresson ill intent and secondly when you said you want to work with the authorizing committee to try to move forward in the world i accept that because the same two senators may weigh again as we pass whatever changes we may want to pass and so that is unacceptable to me because that's the only reason you all fly against violated congressional intent based on what we wanted to do then i don't know how you're going to do it in the future but that is not change any interpretation of any laws based on the past eight years when we're trying to change those laws to go back and say that interpret consistent with the last administration to me is just downright outrageous secondly chairman rangle and myself we asked g a o to conduct a report on ofac and its expenditure of tax dollars as it relates to the embargo against cuba you all were instructed again under the last administration which we never received  to conduct a risk based assessment which g a o recommended cuba sanction and enforcement for many years was unbelievable in terms of the dollars t individuals or bringing in cuban cigars thirdly chairman let me just ask you about the tarp funding as it relates to minority and women owned businesses also minority media outlets we have written to you and  major media outlets that they also play fair and provide advertising in black and latino and asian pacific american media and we've written to you we've written to the vice president we're going to stay on until there is some justice in this whole effort like me to respond on your first point i understand your concerns were applying the law as we believe do that in the legislation i understand and i know that i'm not addressing your concern today but i mean what you're trying to do that is what i'm saying we're going to have to try again because i think that if we don't believe it's interpret the law as we believe it's written exactly why i wrote the letter as i did what it's rationale for and i'm committing to work with the authorizing appropriators on how to move in this question we'd like to find a way to try to address this and we have a chance trying to that c sanctions to be related sanctions if i understand the numbers correctly we have roughly ten full time equivalent slots in treasury now devoted to this enforcement challenge that's ten against one hundred fifty five i'm not completely sure we've got the balance right but we'll keep looking at that trying to make sure we're not overdoing it and we're not using resort milla miss allocating resources but we've got a whole set of obligations we have to meet we have to you allocate resources should be guided by a risk based approach and should be looking at where we get the highest return on margin resources that approach is something i believe in deeply and we're looking forward to the report now on the on the tarp question i'll give you i hear you understand  concern i understand your interest in this if you would let me give you one example where we're trying to be responsive we outlined as part of reference try to fix the financial system clean up the financial system a set of new funds the provide a market for real estate related loans and securities that were at the heart of the crisis still gumming up the financial system and as part of soliciting interest applications for participation by asset managers in these funds we encouraged firms to partner with small veteran owned minority women owned businesses and the applications a lot of interest in this program and i'm pleased to say that the most applications and certainly the strongest applications have come with very substantial partnerships and we expect to announce the next couple of weeks our decisions on the selected asset management companies and i hope you'll see in that context evidence that we're trying to be responsive to your concerns in this in this area about a minority media now  i don't i don't i can't i can't respond today on the media question you raised but i heard you and i have to get back to you on that question but thank you very much with chairman and have a second go around i have yes thank you and i would just for the gentlewoman information we want to just clarify and i cash in advance sales to cuba the senate bill had the same language the senate had in addition to allow businessmen to travel to cuba we accept that that that's part of the negotiating between the two houses whether you pass a bill on the floor well you do it in and of the situation it was then that the issue came up of just kind of going around those agreements between twelve thirty and one with all of the action happening about six minutes out from one o'clock and the bureau the public that is very proud that they report the results of these options within ninety seconds and so i coming out of my reserve duty in the war room of the pentagon i said if you have a collapse of an option as now happened in germany and the united kingdom can you get the president of the united states on the phone right away because m s n b c will know before the white house and they said no we actually don't have that procedure we would call our assistant secretary who would call the undersecretary who might get that and so i'm wondering technically when you visit the office can you set up a procedure where commissioner bends and has your cellphone  because i am very worried that as we've now seen other sovereign borrowers begin to collapse van zandt is going to have to get you on the phone as he is telling the media because he has a ninety second e foundation released showing that eighty five percent of the american public rank as the greatest threat to our national security head of terrorism and everything else they rank growing budget deficits the national debt is the greatest threat to the nation's long term security and absolutely have to agree when you look at the level of borrowing the level of spending voted against two point three trillion dollars worth of spending under president  bush dedicated fiscal conservative always described myself as a jeffersonian first and foremost and so far voted against one point six trillion here so i don't play favorites and my concern is and if you've ever seen one of these is a fifty billion dollars bank note from zimbabwe that's the real mccoy do you have one of these you have one you carry around good for you secretary is there a rule about having foreign currency appropriation i'm glad to see it thank you you obviously are thinking about it a lot and i'm really thrilled to hear it because that's very important and i have in the brief time that i got and i hope there will be a follow up i want to ask on behalf of my constituents and i asked him to send me some questions on facebook and twitter i got a couple of question i have a set of important obligations the american people the most support of those to help this president get this economy back on track repair this mess put us on a path we're going to be growing again and get our fiscal house in order and everything we do we view through that prism and we will have to do exceptional things as we have done already to fix this mess because the only way we're going to get the economy back on track a more sustainable balanced recovery to get our fiscal position back to a sustainable level is to fix this crisis and now that's not not saying that that's not putting on the table or taken off the table any specific thing like that but i just want you to know that there are things that we've had to do i would never of contemplated doing and and it were doing it only because we inherited and started with such a dramatic and a recovery recession that was still deepening intensifying and the only responsible way and the only fiscally conservative way addressed that challenge was to put in place probe helped get growth back on track and if we didn't act congressman and i am a fiscal conservative too and i think again the only responsible fiscal policy this country to death is to make sure we are taking actions to fix this crisis if we did not do that you would have had much more damage done to the productive states is now on a path where if we do not bring those deficits down it will be unsustainable yes sir and a really important obligation we share and we can't do it alone we need the congress with us on this is to make sure we have the will to put in place policies that will bring those to credibly to the point where our debt stabilizes at acceptable level as a share of our economy if we don't do that then recovery will be delayed will be weaker and we're going to face much deeper challenges so without raising taxes and cutting spending to say and that is not everybody on the subcommittee agrees that that letter was inappropriate and i in fact agree with your interpretation of the law and thought that your issuing that letter was the correct decision  think it's important to note that the fiscal year zero nine appropriations process was done outside of regular order to the dismay of all of us but that the fact that you needed to even issue a letter like that and that we had to go through the process of wrangling with with two senators or and going back and forth in a very internal instead of regular order way was demonstrative of why your letter became necessary so before you go too far out on a limb committing to move in a dramatically new direction on it's over policy with great respect to my colleague a colleague on the right and the two on the left who i know do not agree with but with my views on the on the matter  please understand that it is very likely if we tested it that a majority of the congress supports leaving the sanctions in place particularly because we have a regime in cuba that has not reformed that in spite of president obama's overtures and the administration's overtures has not made any concessions on human rights on democracy on abusing its people on recognizing political parties so an announcement about the change in policy and relaxed the travel policy for family members traveling to cuba as well as rolling back the remittances the limits on remittances he also issued a very important statement in sending a message to the cuban regime that the thirty per cent in taxation that comes right off the top of any remittances that is sent to cuba should end and initially cuba cuba has a takes twenty eight cuban law takes twenty percent of every dollar that is sent to a relative on the island that's confiscated by the castro pack castro government and then they are required to convert u s dollars to a convertible to a coupe convertible u s peso and that's an additional ten percent exchange fee so what i'd like to know is what steps are you taking to pursue president  we are working very hard to put in place regulations to apply these new changes in cuba policy as part of that would be have to come talk to you about how to address the separate concern you raised i don't know really i'm not can i can do it justice now ok but it's important and  is because if the idea is to get the remittances to family members on the island of course thirty percent off the top which is which is by the way the second largest source of in time for the castro government second largest source of  income that's absolutely wrong and i might add before any more steps are taken by the administration to ease sanctions we should at least be insisting on the castro regime responding in kind as raul castro strongly indicated that everything is on the table well so far not one thing has been on the table in fact reiterated by and underscored by the former president fidel castro that his brother was misguided and incorrect and nothing has occurred so i just want to be very very clear that if we tested it which one one day soon we will the majority this congress does not support rolling back sanctions against cuba particularly unless there is a a response in kind in easing human rights abuses and making sure that the cuban people have an opportunity to truly be free in my remaining time i want to ask you just a completely separate question related to the visually and the blind and visually that was ordered by the court requires treasury to make changes to paper money as the currency is redesigned to make it accessible to the blind and i actually had a fourth grader who when i went and spoke to a class in my district raised the didn't know about the law but raised the issue and said why don't we have braille on paper money because how are blind people supposed to know what the nomination the money is and i just thought that was a nice idea and looked into it and found out that this lawsuit occurred so can you for that was included so there's some things we like some things we don't like that's the process secondly mr secretary i don't disagree with the gentlewoman to you should ask for things in return i hope you  for being here today and i think you give a new meaning to the term baptism by fire certainly the work that you've done early on here and i want to give you a chance to comment on some good things and lead people to begin to say we see in the stock market we're seeing unemployment we're seeing some positive signs but i don't but as you comment on that i'd like you to do include the area of the average american because you can say the big banks and not so good what are your concerns i mean you've been criticized over time maybe you have an odd hawk approach or piecemeal but i imagine you've learned a lot of things in a very quick period of time and financial markets are starting to heal easier for businesses to borrow in the capital markets have come down quite a bit the cost of credit has come down asset backed securities market  starting up again the cost of borrowing by banks has come down those are signs of somewhat greater confidence and stability but i agree with you that it is very early still this is really just the beginning and businesses and families across country still going through again the most challenging period that this country seen in decades the companies are still laying off people the labor market has not yet stabilized unemployment is still rising and even as growth starts to recover and it will unemployment is likely to continue to rise for some period of time so this is just the beginning but i you know we need to be candid about encouraging stuff is just as we can about the challenges and these are necessary conditions for recovery and you know you have to get recovery with a financial market functioning better and it's important to point out that the positive effect of what the  the executive branch of the congress and the fed have done to help bring a bit more confidence lay a bit better foundation for repairing this financial system and i think that's that's an important getting but i think you're absolutely right that it's still a very challenging period the on the latter question you raise which is a very complicated question let me just step back for one second what i did when i when we came in was to lay out a very broad general framework of reforms to our financial programs and laid out the specific areas where we thought additional action was going to be necessary in housing in getting small business and consumer lending going again in  recapitalizing and cleaning up the banking system and we have moved at any credibly rapid pace to put in place very complicated programs within that broad framework and we are we made a lot of progress we have some programs are still not operational yet but they will be operational in next couple months and i think that basic framework that basic strategy is the most effective mix of policies that we believe are available for us to fix this at least cost the taxpayer over time maximum benefit to get incredibly going to small businesses now people disagree about whether we got the design exactly right and we may have to adapt these policies but it will not be an ad hoc approach that basic framework which is to make our banks strong enough they can lend and fix these broken securities markets is a necessary condition for every any recovery in the financial system and that suite of programs that we put in place are showing important initial signs of positive effect it's to make sure that we're going to do what it takes and we're going to keep out until we fix it because the cost of us doing too little of being kind of tentative or slow or holding back would i think be a deeper recession and more damage to viable businesses more risk of failure that could be avoided we talked to very broad range of experts in the financial community in the academic community make sure we're taking we're taking a consideration for any good pragmatic idea in this area but at its core any effective strategy will be to make sure banks are strong enough to get through a bad recession they can get lending again and going again and we fix the broken these broken securities markets and housing market s thank you we have three votes going on we have about five minutes on this first vote but a lot of members not voting so we have time to take mr boyd boy then after that we're going to have to take a break mr secretary but everybody's eager to speak to you and you're welcome to stay in an office nearby that will provide for you to look at pictures of my children and things undisclosed location mr boyd thank you mr chairman and miss secretary  little meat on the bones mr secretary farce but before i do i want to for the sake of must call britain for least put us back into historical perspective and go back to two thousand and one after we'd come out of the ninety's cutting spending and trying to get everything in order and we had revenues and expenditures as a percentage of g d p both in the night and a half percent range with revenues actually being a little bit higher thereby creating a surplus many of us encouraged the new administration to use that money to reform tax cuts and debt payment you know the rest of that story was all crammed into tax cuts and even that you didn't deal with the problems of a m t an estate tax which now create a problem where it may be make it very much more difficult for us to come out of the recession because we have to deal with those issues can you talk to me on the committee a little bit about short term recovery versus long term fiscal sustainability and try to put a little meat on the bones about what we have to do to get those numbers back even right about the history i think is important remember that when i left the treasury in two thousand and one we had significant deficit budget surpluses in existence and projected and then we started this congress started this year with largest deficit in decades one point two trillion dollars and a very expensive problem fix i don't believe there is any conflict in the near term between those basic objectives the only way to get the long term fiscal position better shape is to make sure we get growth back on track that requires and there is no other way it requires significant support for demand and it requires again fixing a damaged financial system and the recovery act would not work in less we got the credit flowing again and banks and the capital markets healed and and but the opposite was true too you couldn't fix the economy just by fixing the financial system now what the president laid out in his first budget was a commitment to bring those deficits down so that five years from now they were at three percentage point three percentage points of g d p and if sustained at that level that would leave our debt is your g d p stable at acceptable rates if we're unable to do that we're convinced people may feel confident going to do that then we have the risk that interest rates will be higher recovery be choked off investment squeezed by public borrowing to achieve that's going to require first fundamental reform of health care system so the cost growing at much slower pace that is the most powerful weapon we have to bring this discussion back in order as you know the president's is a presence highest priority and we believe we're making a lot of progress towards that basic objective that's going to be necessary but not sufficient we're also go if i might just follow up briefly all of the projections under the previous administration after two thousand and one showed a systemic deficit under the current law all relative to revenue and to spending  you obviously have to change both of those to do what you've just talked about and that's what i hope you would put a little meat on but i think you're right we're going to get we're going have to bring our revenues and our expenditures back into balance closer to balance and it's going to require movements in both and he's on the president's budget a range of proposals both on the revenue side to help achieve that objective we laid out a path consistent with that imperative and there may be other ways to do it but i think our obligat to make sure that people understand we have to commit to do that we have to make sure we do enough to get there and build whatever consensus we can i think what's encouraging just to find hope in this is that i think there is broader support now broader recognition on both sides of the aisle of the magnitude of these challenges and i think that will help provide a basis for a consensus that will looted us for the last many years thank you mr chairman and i just want you to know i'm not a johnny come lately fiscal conservative know we're all on the same page with the gym and this time of ok i'm a big spending liberal and proudly so no secretary we will  sorry for the delay but we had a drawn out voting process democracy get to know at times and the secretary must leave the hearing at one fifteen so we will try to get in as many of the members as possible but certainly the two members who have not participated yet and will start off with a mr fatah thank you mr chairman mrs secretary welcome at the beginning of the last president term we had here and like this that alan greenspan is testifying in a subject matter if you go back to the transcript was the discussion was the projection that the bush administration could pay off the entire national taken by the conclusion of that administration given the project the surplus and the projected surpluses over time and we were literally having a discussion an academic discussion about whether it was good for the country to be completely out of debt or rather what not as the chairman was asked at the time chairman greenspan whether or not and he was jesting about maybe having leaving some small amount of debt on the books that it may have some economic  so now we are eight years later and it's a very different reality this a ministration comes in at which the revenues generated don't meet the country's needs and we have an economic challenge that you are in an extraordinary way of trying to address and there's good news today from the phillies that i represent philadelphia so in terms of the leading economic indicators you point one percent but my question is more about  something that's in your testimony which is this question about tax reform and tax policy you recommend an increase in the office for tax policy and one that i'm very enthusiastic to support because i think at the at the end of the day we really have to have a system that generates the needed revenue to protect our natural national security to deal with the challenges that our citizens face and i think on taxes to leave half over hundred years i'm not sure what's going to take us over the next hundred years the treasury department under reagan did some studies of fundamental tax reform found the notion of a flat tax fundamentally flawed i think in the words of the  report and then a national sales tax would work the bush administration without a lot of publicity did the treasury department publish it two studies on the same two ideas and found them not to be workable i'm interested in whether or not  this office of tax policy is going to look at fundamental reform and because i'm i'm supportive of the notion that we need to have a system that's reliable so we don't have as much as the president and you talk about this bust a boom economy that we don't have and national budgeting and governmental responsibility a system that can generate the revenue the country needs at any particular time whether it's in face of war when faced with a need for economic stimulus and that we don't have to have a circumstance in which we are using a system of generating revenues that may have outlived its usefulness the interested in your comments about one of the form in this office the tax policy where you make we are  thinking maybe on the subject thank you congressman i would like i think i would define the higher priorities this way we need to a do a much better job of enforcing the existing tax laws we all live with and you see in the budget substantial dition resource for the i r s to into enforcement activities which we think will generate substantial that's fair it's important to do and that's where we start secondly i would say is that across the entire economic policies the president we're working towards there are very important tax provisions that will have to confront that kind of health care is a good example and that context we're going have to look for ways to make sure that as we work to bring down cost reform this health care system that we're finding revenues to pay for the commitments we all think we need to make we also believe that there's going to be substantial opportunity to simplify the tax code the president it's very important opposing this campaign to begin that process and we will begin to examine ways we can simplify this very complicated tax code we have looking beyond that we hope and expect we have the option to look at a broad range of other aspects of tax code in the corporate tax area there's a lot of opportunity for reform to help make us business more competitive and close some gaps and loopholes make that whole system more fair to so that that be an initial list of priorities the office tax policy it is a one of the great resource of the treasury in the country and we're proposing some significant additional resources so that they can discharge what is a much much more demanding burden then i think their predecessors had and would welcome the support of of the disk image in the congress for that for that objective let me just and not just making what we have now work a little bit better which is in everyone's interest but looking at rental and not well we have meets the needs of the country going forward and whether there's some other ideas that  that should and should be reviewed by you tax policy i just want to start with the initial list of priorities but as you know the president in the recovery act in the president's budget there's a very long list of important provisions that are designed not just to make the tax code more fair and more balanced to make sure we're putting in place incentives to encourage savings and investment a longer term and absolutely as any as any security would we are always looking at broader corporations with terribly irresponsible decisions why should that happen so i'd like to ask you two questions what in your opinion what would have been the possible negative consequences to our economy if tarp one and ta two had not been approved and secondly what could have been the specific impacts upon average working families had not been given federal funding kindly try to respond a very important question i believe that what the congress authorized at that time in september was absolutely necessary to prevent the catastrophic failure of the u s financial system and without that authority and without those actions to put capital  banks we would have risked much greater failure and much more damage to pension values to cost of credit much larger business failures higher rates of growth unemployment even though we saw the this recession was going to be a challenging recession no matter what because it followed a long period of overborrowing over leveraging we were living beyond our means as a country many americans were as well so it was going to be a difficult recession but it was made dramatically worse because this country came into the crisis without the tools to limit the damage to some of those excesses so i would start this way to say it is that people saw a version of this in the last few months of last year where you saw the economy decline at a remarkably rapid rate here and around the world you saw pension values decline dramatically americans are going to have to work longer because of this you saw interest rates rise dramatically businesses fail he didn't need to fail because the damage to the financial system and that was even with very dramatic action if that authority had not been made not been provided by the congress those actions taken it would have been dramatically worse now important difference between t two when i came into office pressing him in office we made some very very important changes in priorities and direction in response to the legitimate frustration and concern people had without how to program the administered so we put in place much higher standards for transparency all the details conditions terms that were provided to banks across the country were put on the website people could see who was getting assistance across the country we put in place much more stringent reporting requirements  getting small banks capital getting small business consumer credit going again and those are the things we've done now we had to take some additional action to help stabilize help stabilize fannie and freddie those are those are complicated problems we inherited and without action to do that then again you would face the risk that you have another wave of collapse in confidence that people see in their monthly savings when they open up those pension accounts and seen much greater damage to capacity businesses to borrow higher rates of growth unemployment that's the starkest way to present it but i'm not sure people are aware this is the only assistance that we have provided since this president came into office banks are going to the markets to raise capital and are restructuring they need to do that so these are big changes in the direction the program and i think they're helping as we discussed earlier to bring some measure of healing and stability to the financial system and you see that reflected in somewhat greater confidence numbers could you just very briefly address the issue to talk to an individual family what could this have meant to them what are they what they have lost their life insurance value directress i want to put this in every day a direct risk directorate that means the everyday person that mean they paid in for twenty years and a life insurance or a pension and they were going to lose that pension or a big part of it there's some risk of that but you know people bought a whole range of products from protections that guarantee savings value those could have been at risk but it's bigger than that it's not just that direct risk which would've been significant in the greater risk is that you would have had broader loss of confidence greater failures to other businesses other financial solutions that would have produced again this dynamic we saw in the fall of higher unemployment more businesses failing pension values hurt by the fall in equity prices credit not available so it's not just a direct immediate people can see it's the much more the more indirect consequences that people sort of live with in the last half of last year finish percent i think we have to make a better effort all of us members of congress included that supported tarp want morgan stanley have asked the federal reserve to repay twenty billion in tarp payments press reports have indicated that they're eager to remove themselves from the federal restrictions that were attached to the use of these funds what criteria will you be using to determine whether these large financial institutions will be allowed to repay this money do you get out do you see a criteria go beyond the ability to pay to sweep a repayment by large institutions create a disincentive to invest or work for institutions that have not yet repaid the funds in addition when the top was created while the financial firms were at risk congress insisted that when tarp funds were provided the taxpayer gets some upside benefit and require wants if some financial institutions we pay the top money what will you do to make sure the taxpayer gets full benefit from  chairman under the law as modified in the recovery act the judgment about whether firms can repay the judgment left with the federal banking agency that's responsible but i'd be happy describe what i believe the policy will be but i want to emphasize it is their responsibility to approve these repayments to basic conditions are to say i'm simply that you need to have more capital than the feds recent capital assessment said you needed to have that additional capital they need to demonstrate that you can issue debt in the markets without an f t c guarantee that sort of additional protection to make sure that these banks are not using taking advantage of other programs the government's laid out  stabilize the system is or if they meet those two conditions then my expectation is that they will get approval to repay and that is a positive sign about how far the system is to a greater a greater foundation of stability make sure that we use outside outside market based pricing to judge the appropriate value to the taxpayer in that context if they don't want to repurchase we still have the right to sell those warrants into the market and we use an option procedure t treasury from those capital in the fall i think now exceeded two and a half billion dollars already so that is resources back into the government back into taxpayers hands reflecting a return on that initial investment ok i just have one i'm going to put the rest of my questions for the record and just on your testimony discusses scrapping the early program because of problems with fraud but that program as a value to low income working families the last administration made a big deal out of fraud and was a big deal they made it sound like the program was horrible and it was the only program in the country that had a problem but it was not committed to making the program work well no one can defend fraud but before you scrap the program are you sure that you cannot eliminate the fraud so that the problem can continue and can't the program be promoted for wider usage mr chairman this is a very important program a remarkably successful program and this president and i certainly am committed to making sure that the broader program is sustained working doing was supposed to do this particular part of that program  been troubled in implementation and our judgment is that we need to modify this program that we've proposed to eliminate that risk and we think its impact will be modest the vast bulk of this existing program will remain in place and will continue to do what it needs to do but of course will reflect on your suggestion and concern and and of course your commitment to making sure we're making we're limiting any options for fraud in this in this in this program we do without causing too much damage to the other broad objective and i think the key word here is modify not eliminate ok like i said also met the rest of my questions and a desire to get everybody at least one right before you leave one fifteen december so extent i mean our constituents were up in arms about the whole a i g thing and one of the other problems and i'm not quite sure how to explain this and perhaps it was a process thing wasn't there been the way for y possible you know we came into this crisis without the tools already to manage prevent the potential failure of a large institution like this that could cause a lot of damage and without that authority we had limited options and when you choose to act to prevent failure and you are making a choice to help make it possible for that from to meet all its commitments to people bought insurance products of any sort and you can't selectively months of last year the consequences of failure of large institutions a big part of what made the recession so deep and so damaging in this country was the damage caused by the defaults and failure of quickly more effectively appreciate that thanks a special inspector general for the tarp has stated in written testimony basically he says quote we stand on the precipice of the largest infusion of government funds of the  hat we do everything we can to reduce the risk of fraud in any of these programs i think as you said confidence of the american people that we are using the taxpayers money money as wisely and as carefully as possible is deeply important the overall effect part of that is about making sure reducing risk of fraud and we are working very closely with this with the congressional oversight panel i think my second day in office i met with them as a group we look at all the recommendations and we will make sure they have the e programs that we inherited were actually quite carefully designed to limit risk and i am sure that the programs we put in place since i came into office will be very well designed to help limit that  at everything we do and one of the greatest protections we have is to make sure that there is transparency across all these programs that allows everyone to see what the terms are or where the researchers are going to and that's a good protection to thank you with you because we discuss this as as we walk down first of all with regard to any possible movement on legislation as relates to cuba moving through the house i had just have to remind you that over seventy percent of the american public wants the embargo ended over sixty percent of the cuban american community wants the embargo ok so that should tell you something about public opinion and about the possibilities of any actions that we may take here on the house on the house side and on the senate side secondly let me just say she mentioned the issue of remittance i want to clarify this because the percentage of remittances a twenty percent and then there's a ten percent surcharge r and for the record and my colleague from florida understands that also and i would suggest to you to look as you have these talks if you are with the cuban government understand that  some of us believe that taxes on income is appropriate the more income we make the more tax now the structure and the tax fairness of the issue has to be addressed now whether that is consistent with cuban policies as it relates to taxes who knows but for the record most countries charge a tax on additional income countries including our own country and so i think we have to be we have to be fair as we approach any type of discussion on remittances and have to know what we're dealing with secondly let me just go back to the issue of  the involvement of the banks and i asked you this earlier and i want to pursue it with the a little bit because we want the c e o s of the banks that received tarp money to tell us how much money they are investing  minority papers and media outlets i want to see those numbers i want to see what they're doing and then we need to talk about a strategy to commend them for their approach and the dollar amount in the percentages or t that members i know at the congressional black caucus would appreciate then thirdly and finally congresswoman waters and our economic recovery economic recovery efforts have been really looking at minority hiring at the treasury and  at that model we're not sure if he needs legislation or not but we wanted to know if you would consider are are you considering any efforts within treasury to stablish an office of minority affairs or something similar to what the g and we're getting down to that time appointees in mid may we pushed back for a couple of weeks that announcement but we're now in the process of going through the strongest applicants the more detailed the diligence in their applications but we're close to announcing  and one last point which is not a point of controversy to me but i do want to raise it nonetheless this is it has some currency as you see either earnings on those investments or repayment your intention is to have those dollars available in case they're needed intervention as we go through this process of trying to get the economy back on track just to clarify the way the law written a dollar repayment comes back goes in the general fund to reduce the debt but it creates dollar authority we can use to make new investments if we think there's a strong case for doing it under the terms of the act for income before we end just want to let you in on something if you were to attend the democratic caucus meetings you'd see that every time our leadership comes up with a program that they're presenting to us a new law or possible new law i get up and i ask will the territories be included equally and it's happening more and more every day predecessor participated in doing something that never been done before and it had the support boehner at the insistence of our speaker as i presented it to her and that was that during the stimulus checks that were sent to fifty states the territories were included and the issue of whether or not they pay certain taxes and i which you know it's all a fallacy they do pay taxes it's not an issue because it's the same economy you send the check to puerto rico where they spend it sears kmart circuit city when they were in existence at the same places but donald whatever so it is important for many of us that as you look at your policies in the future that we remember that it's not just fifty states it's also people who live under the american flag and american citizens and american nationals and we include them in everything else as we speak you know there are hundreds of thousands of them thousands of them in iraq and afghanistan w included at other times too and we that with that we should i was when i grew and when i was president the new york fed which it was for five years i had the privilege of having as part of my district puerto rico and and agree and agree very much with what you said yes and you know that's a little inside joke in the puerto rican community which is so me as ago when the puerto ricans with the lead group latino group in new york someone decided at the federal level whatever the new york it included the virgin islands and puerto rico and so the director of the new york region for whatever got to travel to puerto rican the virgin islands as well as manhattan just not record i did travel to puerto rico but not to the virgin islands even though the re i was also part of the new york district where we're going to take care of that now so we thank you and we want to keep these things in mind as you can see from the questioning this committee is very much interested in the work you're doing we're all on the same side in bring back our economy and taking care of the american people and making sure that people taxpayers don't get ripped off as we take care of other people so we stand ready to to work with you our opening comments on cuba and you heard many other comments on cuba only mean that we have to keep in touch and isn't it interesting or ironic that fifty two years later fidel castro is still an issue in the u s congress it's it's amazing you're gone from this place a month and they don't remember you you know and