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67–930 PDF 2011

FEDERAL RESERVE LENDING DISCLOSURE: 

FOIA, DODD-FRANK, AND THE DATA DUMP 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

DOMESTIC MONETARY POLICY 

AND TECHNOLOGY 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JUNE 1, 2011 

Printed for the use of the Committee on Financial Services 

Serial No. 112–35 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO R. CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

LARRY C. LAVENDER, Chief of Staff 

(III) 

SUBCOMMITTEE ON DOMESTIC MONETARY POLICY AND TECHNOLOGY

RON PAUL, Texas, Chairman 

WALTER B. JONES, North Carolina, Vice 

Chairman 

FRANK D. LUCAS, Oklahoma 

PATRICK T. MCHENRY, North Carolina 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

NAN A. S. HAYWORTH, New York 

DAVID SCHWEIKERT, Arizona 

WM. LACY CLAY, Missouri, Ranking 

Member 

CAROLYN B. MALONEY, New York 

GREGORY W. MEEKS, New York 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GARY C. PETERS, Michigan 

(IV) 

C O N T E N T S 

Page 

Hearing held on: 

June 1, 2011 ...................................................................................................... 1 

Appendix: 

June 1, 2011 ...................................................................................................... 19 

WITNESSES 

WEDNESDAY, JUNE 1, 2011 

Joint statement of Scott G. Alvarez, General Counsel, Board of Governors 

of the Federal Reserve System and Thomas C. Baxter, Jr., General Counsel, 

Federal Reserve Bank of New York ................................................................... 4 

APPENDIX 

Prepared statements: 

Paul, Hon. Ron .................................................................................................. 20 

Clay, Hon. William Lacy .................................................................................. 23 

Joint statement of Scott G. Alvarez and Thomas C. Baxter, Jr. .................. 26 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Paul, Hon. Ron: 

Written responses to questions submitted to Scott G. Alvarez and Thomas 

C. Baxter, Jr. ................................................................................................. 36 

Data files corresponding to the response to question 11 ........................ 77 

Bloomberg article entitled, ‘‘Fed Gave Banks Crisis Gains on $80 Billion 

Secretive Loans as Low as 0.01% ................................................................ 78 

(1) 

FEDERAL RESERVE LENDING DISCLOSURE: 

FOIA, DODD-FRANK, AND THE DATA DUMP 

Wednesday, June 1, 2011 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON DOMESTIC MONETARY

POLICY AND TECHNOLOGY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 3:40 p.m., in room 

2128, Rayburn House Office Building, Hon. Ron Paul [chairman of 

the subcommittee] presiding. 

Members present: Representatives Paul, Jones, Luetkemeyer, 

Schweikert; Clay, Maloney, and Green. 

Ex officio present: Representative Bachus. 

Chairman PAUL. This hearing will come to order. 

I would like to advise the members that the microphones we 

have improvised will be live all the time. So be careful what you 

say; the microphone is on. I imagine that is true down there, as 

well. 

First, I want to welcome our two witnesses, and I will introduce 

them a little bit later. But, once again, I apologize to everybody for 

the inconvenience. I apologize to myself, because nobody likes to be 

inconvenienced. But it looks like we have a system set up here so 

that we can pursue our hearing. 

And, without objection, all members’ opening statements will be 

made a part of the record. 

I will go ahead with an opening statement, and I will have time 

for anybody else who wants to have an opening statement. 

I want to emphasize that I consider these hearings to be very, 

very important. They have come about because of many things that 

have happened over the last few years, and a lot of movement in 

the country for more transparency, in general, as well as with the 

Federal Reserve System. And I think my position on this is fairly 

well-known. 

But, also, there has been legislation passed. The Dodd-Frank bill 

has stipulations about more information coming to us. That legislation passed last year. There have also been the court cases that are 

under the Freedom of Information Act. We will be dealing with a 

lot of that today. And, also, the provisions in the law that was language that was put in by, basically, Senator Sanders, that has required some additional information. 

But, what is referred to today so often in hearings on the materials that came out of the Freedom of Information Act, it is called 

‘‘the dump.’’ And I find that rather interesting, to call it that, beVerDate Nov 24 2008 14:13 Nov 29, 2011 Jkt 067930 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 K:\DOCS\67930.TXT TERRIE
2 

cause it sounds like a lot of material was dumped. And when you 

think of 29,000 pages of technical information, it is very large, and 

a lot of people have been studying it. Our staffs have been working 

very hard, and, quite frankly, it isn’t all that easy to figure out. 

It reminds me of a story that was told, supposedly a true story, 

that an individual was being audited by the Federal Reserve. And 

they came to him, and they said, ‘‘We want 5 years of everything 

that you have ever done, every receipt you have ever had.’’ And, of 

course, that made him very unhappy, so he put them all together 

in a bushel basket and he dumped them. And I will tell you what, 

it didn’t go over very well, and he got into a lot of trouble. I am 

not suggesting this is similar, but it is a story that reminds me, 

when I look and try to figure out really what we have, it is a lot 

of material, and to sort this out is not easy. 

One argument, and I understand the argument very clearly, on 

the hesitancy of the Federal Reserve not to give out too much information too early, with the idea that it might be proprietary and it 

might set the stage for concerns in the market. 

But, I think it is in contrast to the purpose of the SEC. The SEC 

has a purpose to investigate, demand reports, and get the information out immediately, and that is their responsibility. And if a company doesn’t let us know exactly what they are doing and what 

their accounting procedures are, they get into a lot of difficulty. But 

the argument seems to be different for the Federal Reserve, that, 

oh, if we have information about a bank that might be in difficulty, 

in a market situation, that information should be available to us. 

So I take the position that information shouldn’t be that detrimental to us and the more we can get, the better. 

I am hopeful that today we will be able to ask some pertinent 

questions to get more information and that members can follow up 

with more questions later on, and that there will be more transparency without ever injuring anybody. That certainly would be my 

goal. 

I would now like to yield 5 minutes to Mr. Clay. 

Mr. CLAY. Thank you, Mr. Chairman. And thank you so much for 

holding this hearing to examine information disclosed by the Federal Reserve in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Freedom of Information 

Act. 

Also, I want to thank the witnesses for appearing today. 

Due to the U.S. financial crisis, the Congress passed the DoddFrank Wall Street Reform and Consumer Protection Act of 2010. 

This legislation was crafted as a response to the financial crisis, 

which has cost nearly 10 million American jobs and over $10 trillion in household wealth. Nearly 4 million families have lost their 

homes to foreclosure and an additional 4.5 million have slipped into 

the foreclosure process or are seriously behind on their mortgage 

payment. 

According to the Financial Crisis Inquiry Report, a combination 

of excessive borrowing, risky investments, and a lack of transparency put the financial system on a collision course of self-destruction. In the years leading up to the crisis, too many financial 

institutions, as well as too many households, borrowed too much, 

3 

leaving them vulnerable to financial distress if the value of their 

investments declined even modestly. 

For example, as of 2007, the 5 major investment banks were operating with extraordinarily thin capital. By one measure, their leverage ratios were as high as 40:1, meaning for every $40 in assets, 

there was only $1 in capital to cover losses. Less than a 3 percent 

drop in asset value could wipe out a company. 

Leverage was often hidden in off-balance-sheet entities, in derivatives positions, and through ‘‘window dressing’’ of financial reports available to the investing public. Within the financial system, 

the danger of this debt was increased because transparency was 

not required or desired. Undercover corporate dealings assisted in 

the financial meltdown which still plagues us today. 

In order for democracy and capitalism to exist correctly, transparency must be at the core. Trust and transparency and the rule 

of law are fundamental to this Nation’s success. And business depends in some way on trust—a trust that business produces good 

products and a trust that business will deliver good services. Democracy depends in some way on trust. Transparency promotes 

government accountability, free and fair elections, competition and 

free markets; and the rules of law are critical to it. 

The Dodd-Frank Wall Street Reform and Consumer Protection 

Act addresses these issues by reforming the Federal Reserve in two 

ways: 

One, it limits the Federal Reserve’s 13(3) emergency lending authority by prohibiting emergency lending to an individual entity. 

The Secretary of the Treasury must approve any lending program, 

and the program must be broad-based and loans cannot be made 

to insolvent firms. Collateral must be sufficient to protect taxpayers from losses. 

And two, it requires the Federal Reserve to disclose counterparties and information about amounts, terms, and conditions of 13(3) 

and discount window lending, and open-market transactions on an 

ongoing basis, with specified time delays. 

These are just a few examples of the importance of the DoddFrank Wall Street Reform and Consumer Protection Act. 

Thank you, Mr. Chairman. I look forward to the witnesses’ comments. 

Chairman PAUL. I thank the gentleman. 

Mr. Luetkemeyer, you are recognized for an opening statement. 

Okay. There are no more opening statements, so I will go ahead 

and introduce our witnesses. 

First, we have Mr. Scott Alvarez, who is General Counsel at the 

Board of Governors, a post he has held since 2004. He has been 

with the Board for 30 years. And, also, Mr. Thomas Baxter, Jr., has 

been General Counsel and Executive Vice President of the legal 

group at the Federal Reserve Bank of New York since 1995. He 

also serves as Deputy General Counsel of the FOMC. Mr. Baxter 

has been with the New York Fed for more than 30 years. 

It has been agreed upon by the witnesses, Ranking Member 

Clay, and myself that Mr. Alvarez will deliver the oral remarks for 

the joint written testimony of Mr. Alvarez and Mr. Baxter. This 

testimony may run longer than the customary 5 minutes. And 

4 

without objection, your joint written statement will be made a part 

of the record. 

I now yield to Mr. Alvarez. 

JOINT STATEMENT OF SCOTT G. ALVAREZ, GENERAL COUNSEL, BOARD OF GOVERNORS OF THE FEDERAL RESERVE 

SYSTEM; AND THOMAS C. BAXTER, JR., GENERAL COUNSEL, 

FEDERAL RESERVE BANK OF NEW YORK 

Mr. ALVAREZ. Chairman Paul, Ranking Member Clay, members 

of the subcommittee, Thomas Baxter, the General Counsel of the 

Federal Reserve Bank of New York, and I appreciate the opportunity to discuss the ways the Federal Reserve informs the Congress and the American people about its policies and actions. 

Central bank lending facilitates the implementation of monetary 

policy and allows the central bank to address short-term liquidity 

pressures in the banking system. This role of lender of last resort 

is a critical one, long filled by central banks around the world, especially during times of economic crisis, when discount window 

lending can mitigate strains in financial markets that could otherwise escalate and lead to sharp declines in output and employment. 

In the United States, all discount window loans are fully secured, 

and the Federal Reserve has not suffered a loss to date on its discount window lending. 

The Federal Reserve regularly releases significant detailed information about its operations in order to promote the understanding 

of how the Federal Reserve fosters financial stability and economic 

stability and to facilitate an evaluation of our actions while preserving the ability to effectively fulfill the responsibilities that Congress has given the Federal Reserve. Since 1914, the Federal Reserve has published its balance sheet every week. 

We also publish full financial statements annually that are audited by an independent public accounting firm, which for the last 

4 years has been Deloitte & Touche. These audits cover Maiden 

Lane, Maiden Lane II, and Maiden Lane III, as well as the transactions conducted through the discount window and with foreign 

central banks. 

The Federal Reserve also publishes a special monthly report to 

Congress, posted on our Web site, that details the Federal Reserve’s emergency lending programs, including providing information on the amount of lending under each program, the type and 

level of collateral associated with those loans, and information 

about the borrowers under those facilities. 

In addition, the Federal Reserve Bank of New York maintains a 

Web site that includes schedules of purchases and sales of securities as part of open-market operations, with CUSIP information describing the securities involved. 

The Federal Reserve is fully cooperating with the GAO in an extensive review of each of the special lending facilities developed 

during the crisis. This review will assess operational integrity, internal controls, security and collateral policies, policies governing 

third-party contractors, and the existence of any conflicts of interest or inappropriate favoritism in the establishment or operation of 

the facilities. 

5 

As provided by the Dodd-Frank Act, on December 1, 2010, the 

Board published detailed information on its Web site about the 

Federal Reserve’s actions during the financial crisis. This release 

includes the names of borrowers, the amount borrowed, the date 

credit was extended, the interest rate charged, information about 

collateral, and the description of the credit terms under each facility. 

Similar information was provided for the draws of foreign central 

banks on their dollar liquidity swap lines with the Federal Reserve. 

For agency MBS transactions, details included the name of the 

counterparty, the security purchased or sold, and the date, amount, 

and price of the transaction. 

On March 31, 2011, the Federal Reserve released documents related to the discount window in response to requests filed under 

the Freedom of Information Act. The March 31st release included 

documents containing information related to borrowers at the discount window between August 8, 2007, and March 1, 2010, that 

was not required to be disclosed under the Dodd-Frank Act. 

Going forward, the Dodd-Frank Act provides for the release of information on any broad-based emergency lending facility 1 year 

after the termination of the facility, as well as a GAO audit of the 

facility. The Act also provides for the release of information regarding discount window lending and open-market operations conducted after July 21, 2010, with a 2-year lag. 

For lending facilities, including both emergency lending facilities 

and the discount window, and for open-market operations, the Federal Reserve will publish information disclosing the identity of the 

borrower or counterparty, transaction amount, interest rate or discount paid, and the collateral pledged. 

The Federal Reserve believes the lags provided by the DoddFrank Act for the release of transaction-level information establish 

an important balance between the public’s interest in information 

about participants in transactions with the Federal Reserve and 

the need to ensure that the system can effectively use its congressionally authorized power to maintain the stability of the financial 

system and implement monetary policy. 

We will carefully monitor developments in the use of the discount 

window and other Federal Reserve facilities and keep the Congress 

informed about their effectiveness. The Federal Reserve has 

worked and will continue to work with the Congress to ensure that 

our operations promote the highest standards of accountability, 

stewardship, and policy effectiveness, consistent with meeting our 

statutory responsibilities. 

We appreciate the opportunity to describe the Federal Reserve’s 

efforts on this important subject and are happy to answer any 

questions you may have. And we will be responsive to any written 

questions you may submit, as well. 

Thank you very much, Mr. Chairman. 

[The joint prepared statement of Mr. Alvarez and Mr. Baxter can 

be found on page 26 of the appendix.] 

Chairman PAUL. I thank the gentleman. 

I will yield myself 5 minutes, but announce that we will likely 

be able to have repeat questioning. I think the time will permit 

that. But I will start off with 5 minutes. 

6 

I first want to ask unanimous consent to submit an article for 

the record from Bloomberg called, ‘‘Fed Gave Banks Crisis Gains 

on $80 Billion Secretive Loans as Low as 0.01%.’’ Without objection, it is so ordered. 

I want to refer to one document. And this little document from 

the material that we got from the Federal Reserve is called a 

‘‘Chart Pack of Market Monitoring Metrics for Fed Facilities.’’ I am 

sure you know all 29,000 pages, and you probably know exactly 

what I am talking about, but it tells you about the problem that 

we have in trying to find out information. 

And this particular document has 327 pages to it, but, in this 

particular document, it has some interesting material that I did not 

know about, and I want to ask about it. It reveals that there was 

a previously undisclosed Fed lending program known as the singletranche open-market operations, and it is referred to as ‘‘ST OMO.’’ 

This is something new, and it allows the Fed to give .01 percent— 

that is, free money—to companies like Goldman Sachs and was essentially a free loan to these well-connected businesses. 

But, also, the problem that we had in analyzing this to find out 

information that we are looking for is, it turns out that, just in this 

particular area, 81 percent of the contents has been redacted. So, 

we end up with a lot of pages, and then we end up with 19 percent 

that actually has information that we have to sort out. 

The question is, why were these details not mentioned? Is it that 

everything has to be done in secret? We would like to know, the 

people would like to know, but we didn’t see any evidence until this 

was dug out of here. And maybe it was mistakenly not redacted or 

something like that. It makes us wonder why we don’t know about 

this. 

That, of course, is one of my big beefs with the Federal Reserve, 

that the central bank wields so much power, so much financial 

power, you literally can have transactions greater than what we 

can do with our own budget. And that is why it is a deep concern 

to me, but to many other people as well. 

But why was this not published? And are these and other programs that have yet to be disclosed—are there others? Why were 

so many pages redacted? Can you really claim this to be in compliance with FOIA, the Freedom of Information Act, when we don’t 

know what has been excluded? 

I would like to get your reaction to this and for you to talk specifically about this one program and what has been going on with 

it. 

Mr. ALVAREZ. Mr. Chairman, the program you refer to, the single-tranche OMO program, was not a secret program. It was actually publicly announced by the Federal Reserve on March 7, 2008, 

when the program began. It was a short-term program that ended 

in January of 2009. And transactions that were conducted under 

that program as part of our open-market operations were reported, 

along with other open-market operations, on the New York Federal 

Reserve Bank Web site very quickly after the transactions occurred. 

The documents you have before you are from the response for the 

Freedom of Information Act request. And so that, itself, should explain why there are redactions. The way the Freedom of InformaVerDate Nov 24 2008 14:13 Nov 29, 2011 Jkt 067930 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\67930.TXT TERRIE
7 

tion Act works, it is a request for certain types of information in 

documents. First, the agency collects all documents that may have 

any information that relates to the request. Then, information that 

is not requested is taken out of the documents, redacted from the 

documents, simply because it is not responsive to the request. 

So, it is not a desire to keep things secret. It is, instead, a desire 

to be responsive to the request. Often, when a requester asks for 

documents, there is information that is extraneous or not the kind 

of information that was requested, not relevant to the request, and 

that is taken out of the documentation. And that is why you see 

redaction in the documents before you. 

These documents were reviewed by the court and released by the 

court in accordance with the Freedom of Information Act. 

Chairman PAUL. Does that mean, if somebody were to follow up 

and broaden that request, all that material could become available? 

Would they have to just change the Freedom of Information Act request? 

Mr. ALVAREZ. If another request was made for a broader range 

of information, we would review that information, determine what 

is confidential and what could be released, and a decision then 

would be made on that request. 

Chairman PAUL. Could it be made so broad that you just turn 

over everything? 

Mr. ALVAREZ. I am not sure there are enough people in the world 

to look at everything we have to turn over, but we would do the 

best we could. 

Chairman PAUL. Okay. 

My 5 minutes is up, and I now yield to Mr. Clay. 

Mr. CLAY. Thank you, Mr. Chairman. 

And thank you, Mr. Alvarez. 

Just one question. Has the dramatic and, I believe, welcome increase in transparency, including your own initiatives and those 

called for in the Wall Street Reform Act of 2010, had any adverse 

or troubling consequences either for policymaking at the Fed or for 

the financial institutions that you regulate and interact with? 

Mr. ALVAREZ. We think the increases in transparency, particularly around monetary policy, that we have taken in the last few 

years have been very helpful and responsive and have improved 

understanding of the Federal Reserve and the policy actions we are 

trying to take. 

We have provided a lot of detailed information about the credit 

transactions we engaged in during the crisis. Congress, we think, 

struck a very important balance between the need for access to 

that information and providing a delay so that participants in the 

transaction don’t experience the stigma that often occurs when 

there is an immediate release of information, allowing, therefore, 

an explanation for why institutions have participated in the facilities. 

We are monitoring whether there will be any effect. We, of 

course, won’t know until we see how these facilities operate in the 

future. We will keep the Congress informed on the effectiveness. If 

there is any bad effect, we will let you know. 

Mr. CLAY. So you will inform the Congress as to if there needs 

to be changes in the— 

8 

Mr. ALVAREZ. Absolutely. 

Mr. CLAY. Okay. Thank you for your response. 

And, at this time, Mr. Chairman, I would like to yield the balance of my time to the gentlewoman from New York. 

Mrs. MALONEY. I thank the gentleman for yielding, and I thank 

the chairman for holding this important hearing. 

And I welcome both of our witnesses. 

And I think we all have to remember that we were really on the 

verge of collapse, that this was a—we had the great recession instead of a great depression because of the monetary policy and 

many of the steps that we took. 

One of those steps that we have taken to stabilize our markets 

and move forward is the Dodd-Frank bill. And, in that, we required 

the GAO to conduct an audit of the Federal Reserve, and we also 

required the Fed to make information about the transactions 

through emergency lending facilities from December 2008 to March 

2010 available to the public. In addition, Dodd-Frank required that 

the Fed disclose information about the entities that used the discount window or under I believe it was section 13(3) lending facilities. 

But in addition to what we required in Dodd-Frank, the Federal 

Reserve is also already subject to robust congressional oversight. 

And I would like to ask our two witnesses, can you give the committee some examples of the types of congressional oversight that 

you are already required to do, even before Dodd-Frank? 

Mr. ALVAREZ. Two of the most important types of oversight are: 

The Chairman of the Federal Reserve, who is also the Chairman 

of the FOMC, provides testimony on the economy twice each year, 

on the call of the House and the Senate. And that is an important 

check on monetary policy and the state of the economy. 

Another important method is this hearing and hearings like this 

that we are going through. The staff and the Governors and the 

Chairman of the Federal Reserve, and the Presidents of the Reserve Bank have often been called to Congress to report on every 

aspect of our duties and how we implement various policies. And 

you use those as oversight of us, and we explain positions that we 

have taken. 

So, I think it is the interaction between the Congress and the 

Federal Reserve in testimonies, in particular, that have been an effective form of oversight. 

Mrs. MALONEY. Okay. My time is about to expire, but, as you 

know, there is a GAO audit authority now. Was there anything 

that is excluded from the GAO audit authority? 

Mr. ALVAREZ. The GAO is authorized to audit a full range of the 

Federal Reserve’s responsibilities. That includes all of the emergency transactions, the discount window, our supervisory authority, 

our consumer authority, all the various aspects of authority. 

An area that Congress has reserved is the implementation of 

monetary policy, the actual policymaking decision process. The 

GAO does look at how we implement the policy, in the form of 

making sure that transactions actually occur as appropriate, that 

they are accounted for properly on the balance sheet, that they are 

fully disclosed. But the decision-making process for monetary policy 

is the one thing outside the GAO’s scope of authority. 

9 

Mrs. MALONEY. Mr. Chairman, may I follow up with one brief 

question on what are the arguments for excluding it? Why was that 

excluded? What is the argument for it? 

Mr. Alvarez? 

Mr. ALVAREZ. The importance of allowing the Federal Reserve 

and the FOMC to conduct monetary policy independently has been 

demonstrated throughout the world in both actions by other central 

banks and in a variety of studies of monetary policy. 

The point, I think, is that the Congress wanted to reserve to the 

FOMC the ability to have discussions that are full and free and 

frank and to explore all the possible alternatives for monetary policy to reach the best monetary policy decision. 

Moreover, the GAO doesn’t do audits in the sense of a technical 

audit like a financial auditor might do, but does performance reviews and policy reviews. So that would mean that the GAO would 

review the alternatives considered for monetary policy, how the decisions were made, whether the decisions were actually appropriate. That would cause second-guessing of the FOMC, cast into 

doubt whether the FOMC was actually making the policy decisions 

or whether the GAO was making policy decisions in monetary policy, and make it more difficult for the monetary policy to be done 

effectively by the Federal Reserve. 

Mrs. MALONEY. Thank you. 

Thank you, Mr. Chairman. 

Chairman PAUL. Thank you. 

I now yield 5 minutes to the vice chairman, Mr. Jones from 

North Carolina. 

Mr. JONES. Mr. Chairman, thank you very much. And I appreciate you holding these hearings, as others have said. 

I am going to take a little different approach. I represent the 

Third District of eastern North Carolina. It is a great district to 

represent, the home to the Camp Lejeune Marine Base, Cherry 

Point Marine Air Station, and the Outer Banks. 

The frustration of the average businessperson down in my district is very deep and severe. And we have had numerous inquiries 

from the Third District, the citizens of the Third District, about the 

Federal Reserve and how decisions are made. 

I know you cannot go into some of the backroom negotiations at 

the Reserve; I am not even asking that. But how do you say to the 

small-business owner that, in this crisis situation, we seem to find 

ways to help foreign banks, foreign entities? And I am looking here 

at the note that my staff prepared for me—Harley-Davidson, 

McDonald’s, GE, Verizon, Toyota. And yet, I have people in my district saying, ‘‘I go to the local banks, and I can’t get any loans, and 

my credit has always been good.’’ 

Why and how does the Federal Reserve seem to be able to find 

the way to help these entities that are gigantic? And through greed 

and manipulation, they cheated, and, yet, they get bailed out. They 

get the help, when the average businessperson down in eastern 

North Carolina and probably across America, they can’t even go to 

a bank that they have been banking with for 15 or 20 years and 

get a loan. And yet, here we are at the Federal Reserve, looking 

at those foreign banks who might need some help or these corporations that might need some help. 

10 

It really is—that is why this hearing is very important. The 

transparency, the trust—and that is a big word to me, ‘‘trust’’—is 

just not there with the average system, when it comes to the Federal Reserve. And yet, if it had not been for the push by—I won’t 

name all the entities that pushed—to tell you to show the bottom 

line, to show what was in the closet of decisions, who was being 

helped, we never would have known it. 

And yet, I know you gentlemen are attorneys, and you are probably not at the position where the person ought to be here who 

ought to be putting a hand on the Bible to tell the truth to the 

American people. 

That is my concern, is, how do we build the confidence of the 

American people when we see what is happening at the Federal 

Reserve? 

Mr. ALVAREZ. Congressman, we understand that and feel that 

same frustration. 

The programs that were designed and implemented by the Federal Reserve during the financial crisis were not designed to aid big 

companies for the sake of aiding big companies. The programs that 

we designed—for example, the TALF program—were designed to 

pass money and credit and liquidity on to the American people. So, 

for example, the TALF resulted in 3 million more auto loans during 

the crisis than would have occurred, a million more student loans, 

and almost a million small-business loans. 

The programs you are talking about that aided Harley-Davidson 

and Toyota and other companies were the commercial paper facility, which provided short-term funding to those companies so they 

could continue to keep employment up and manufacturing up in 

the United States, so that they could continue to provide jobs and 

provide opportunities in the United States. 

Our efforts were all designed to try to keep the economy moving 

in order to help individuals and small businesses, not for the sake 

of helping the larger institutions. 

And I understand that there is a different perception. Part of 

that perception, I think, comes from the fact that most of the financial tools that we were given are designed to work through banks 

or work through large markets. So we use the tools the best we can 

in order to have the funding aid the broadest range of people possible. 

Mr. JONES. Mr. Chairman, I know my time is about up. But I 

guess, in a way, that if it had not been for Bloomberg and the Wall 

Street Journal and all of these raising the questions, doing investigation, I don’t know if we would be having this hearing today. I 

don’t know. 

Chairman PAUL. I thank the gentleman. 

I yield 5 minutes to Mrs. Maloney from New York. 

Mrs. MALONEY. I thank the chairman for yielding. 

And, as he is well aware, on Friday the jobs numbers come out. 

And the economy has been improving, not as fast as we would all 

like, but we are digging our way out of that hole. 

And now that we have the benefit of hindsight and we are slowly 

recovering from the financial crisis of 2008, I know that some have 

taken the position—a position that I do not agree with—that the 

Fed’s lending during this time actually helped contribute to the criVerDate Nov 24 2008 14:13 Nov 29, 2011 Jkt 067930 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\67930.TXT TERRIE
11 

sis. And some have argued that the Fed didn’t need to take the actions that it took because the situation would have stabilized on its 

own. 

But I would like to ask our panelists today, isn’t it true that, 

without the actions that the Fed took, that by not setting up the 

facilities it did, by not giving institutions access to the discount 

window to provide additional liquidity to our economy, that the crisis would have been far worse? 

So your comments, please, Mr. Alvarez and Mr. Baxter? 

Mr. ALVAREZ. Thank you, Congresswoman. 

We believe that the facilities that the Federal Reserve established did ease the crisis, and they certainly were designed to do 

that. The studies that are beginning to come forward now show 

that they actually were successful in unfreezing various markets— 

the commercial paper market, the asset-backed securities market— 

and providing liquidity to the financial system that was important 

for the financial system to continue to operate. 

The funding that we provided was without any losses to the tax- payer. Indeed, the emergency lending facilities resulted in $9 billion worth of interest and fees that were passed on to the Treasury. 

As I was explaining to Congressman Jones, the facilities were designed to provide real relief to American consumers and small businesses in the form of student loans, auto loans, small-business 

loans, credit card loans, as well as allowing the operation of companies that relied on the commercial paper market, which had frozen 

up, to continue to find a source of funding to keep their operations 

going. 

So, we think that the facilities were successful and were a good 

use of taxpayer funds. 

Mrs. MALONEY. I would say that there is an impression—I hear 

it, and I think other Members of Congress hear it—that is out 

there, that all of the actions the Fed took during the crisis served 

only to help financial institutions. But I want to make clear the 

point that, and I want to make sure that people understand, that 

all of these actions were in the form of loans, and, in fact, over 

$125 billion has been returned to the Treasury over and above 

what was loaned out. 

That is what I read. I want to know if that is true. Is that true? 

Mr. ALVAREZ. We have, in the last 2 years, provided about $127 

billion in earnings to the Treasury. Yes, that is correct. 

Mrs. MALONEY. But can you bring this down to Main Street? Can 

you give the committee members and the general public some examples of how that lending helped not only stabilize the economy 

and keep our financial institutions in place, but literally helped 

Main Street and working men and women? 

Mr. ALVAREZ. I would like to return to the TALF program, which 

was one specifically designed to make sure that loans were made 

in the United States to help students obtain education loans for 

college, to help small businesses have SBA loans, credit card loans, 

to provide auto lending, to provide equipment leasing, and a variety of other kinds of loans that were not being made during the financial crisis because of liquidity shortages. 

That program was extraordinarily successful— 

Mrs. MALONEY. Is it still operating? 

12 

Mr. ALVAREZ. It is. It has closed, but there are still about $14 

billion in loans outstanding. There were $70 billion of credits extended through the program through its life. Much of it has been 

repaid. 

Mrs. MALONEY. I would like to ask about a number of programs 

that the Fed engages in, including holding gold for foreign countries, account services, and liquidity programs. In your experience, 

are these common activities for central banks? 

Mr. BAXTER. Yes, Congresswoman, they are common for central 

banks. It is common for central banks around the world to hold reserves, and, as you know, the dollar is the principal reserve currency. At the Federal Reserve in New York, we hold over $3 trillion 

on behalf of foreign central banks and countries. 

It is very important to hold those sizable reserves because those 

sizable reserves are principally invested in Treasury securities, 

which helps to finance the debt of the United States. So, holding 

dollar reserves is a very important function of the Federal Reserve, 

and we do that at the New York Fed. And it is similar to functions 

that other foreign central banks perform around the world. 

Mrs. MALONEY. My time has expired. Thank you, Mr. Chairman. 

Chairman PAUL. Thank you. 

I yield 5 minutes to Mr. Green from Texas. 

Mr. GREEN. Thank you, Mr. Chairman. 

I thank the witnesses for appearing, as well. 

I am interested in the central banks of other countries as compared to our country and this disclosure that they engage in compared to our country. I know that the systems are not going to be 

the same, but with reference to disclosure, can you give us some 

indication so that we can have some sort of comparison? 

Mr. ALVAREZ. The practices of disclosure vary quite a bit across 

the world, but I believe the Federal Reserve is one of the, if not 

the, most transparent central banks. 

Many central banks in developed countries do not, for example, 

announce their policy decision or the votes that are taken. The Federal Reserve does both of those. Many central banks do not provide 

minutes for their meetings. The Federal Reserve provides minutes 

3 weeks after each meeting. Many foreign central banks do not 

publish at all the transcripts of their meetings, and the Federal Reserve publishes the transcript 5 years after each meeting. 

On the discount window lending, that is a common power that 

foreign central banks have, but they are much less transparent in 

that area, as well. Indeed, you may recall that, at the start of the 

crisis, it was a leak about a discount window loan made by the 

Bank of England to Northern Rock that resulted in a run on Northern Rock there. So, the foreign countries tend to be more circumspect about the information they disclose about their discount 

window lending operation. 

Mr. GREEN. Yes, sir? 

Mr. BAXTER. With respect to the incident that Mr. Alvarez described, the British Parliament has written a report, which is entitled, ‘‘The Run on the Rock,’’ and it has a section that describes 

how that run began. And that was triggered by public reports 

about a borrowing by Northern Rock at the Bank of England. With 

13 

the permission of the Chair, we could submit that report for the 

benefit of the subcommittee. 

Mr. GREEN. Thank you. 

One other quick question, Mr. Chairman, if I may. 

I know that you probably have gone through this, but explain to 

those who are viewing why it is important to have disclosure and 

why you try to achieve this balance that you have with reference 

to disclosure. For example, why not just have a CPA come in or 

someone come in and just audit everything all the time every day? 

What is the downside? 

Mr. ALVAREZ. We do have a CPA come in—Deloitte & Touche, 

currently—to do an audit of our financial statements, including all 

of our transactions, our discount window lending and our openmarket transactions. 

The thought on disclosure is that disclosing the names of borrowers and the amount they have borrowed provides the American 

people with more information to make sure that the Federal Reserve is acting in a responsible way in its lending facilities. 

The balance on the other side is that the discount window is a 

very important tool both in good times and in bad—in good times, 

for providing short-term liquidity to institutions when they need it 

and also as a monetary policy tool to help reduce the volatility of 

interest rates; and in emergency times, to provide liquidity to institutions that are generally healthy, but where panic has caused 

asset values to be out of whack, as it were, so that the institution 

can’t fund itself in an appropriate way. 

So the discount window is a very important tool. The concern is 

that, because it is often used by both healthy and troubled institutions, the public will be confused if it sees the names of a borrower 

at the discount window and not be certain if that institution is 

healthy or not. And if a healthy institution is wrongly thought to 

be troubled because it has accessed the discount window, then that 

could cause problems for that institution. That causes institutions 

to back away from using the discount window, and that makes it 

a much less effective tool, both in good times and in bad times, for 

addressing liquidity crises. 

So it is important to have a balance in the disclosure. That is 

why we think the lag time, the 2-year period between the actual 

loan and the announcement of the borrower, is important. That 

leaves the institution some period of time to explain itself, to demonstrate its health, and to not be tied to a troubled transaction at 

a difficult time. 

Mr. GREEN. I think my time is up. Thank you, Mr. Chairman. 

Chairman PAUL. Thank you. 

I would like to direct this question to Mr. Baxter. And I want to 

follow up on Mr. Jones’ question about how some of these decisions 

are made and how sometimes the big guy seems to benefit and the 

little people lose their mortgages and lose their homes and they 

lose their jobs. And, quite frankly, it is very difficult at times in 

this country, because it seems like people are too-little-to-save— 

there are people who are too-big-to-forget about them, too-big-tolet-them-fail. 

But I want to direct a question about the foreign loans. And it 

seems to me from the figures I look at, that nearly one-third of all 

14 

the loans during this period of time went to foreign banks. And, at 

one time, at the peak of this, 88 percent of these overall discount 

window loans went to foreign banks. But at the New York Fed, I 

think practically, essentially 100 percent of the loans were going to 

foreign banks. 

And the answer I get is that, they are foreign banks but they 

have subsidiaries, and they qualify under the rules—I wouldn’t say 

under the law, but under the rules—that they can go to the discount window. But it just seems to be way out of proportion, when 

you think of that tremendous amount of loaning that went to these 

foreign banks. And this is not easy for the average American citizen to understand. 

Could you enlighten us on why it seems to be disproportionate? 

I am sure they don’t represent that percentage of the financial 

problems that existed. A third of the problems didn’t deal with foreign banks, surely. What is the explanation for that? 

Mr. BAXTER. Yes, Chairman Paul. Thank you for that question. 

First, the starting point is Federal statutory law. And section 13, 

paragraph 14, of the Federal Reserve Act says to the Federal Reserve that, with respect to discount window borrowing, we are to 

treat the branch or the agency of a foreign bank just like we treat 

our own U.S.-charterd depository institutions. So, there is this 

principle of national treatment that we start with, and it is a principle that is embedded in the Federal Reserve Act itself. And so, 

we must treat the branch and agency of a foreign bank in the same 

manner we treat our own. That is the starting point. 

The second is, New York is the money center of the United 

States. And with respect to foreign banks that intend to come to 

our country and invest in our people and form branches and agencies in the United States, many of those foreign banking organizations look to form those organizations in the money center, which 

is in New York. 

The short answer to your question, Chairman Paul, is the law requires us to lend to branches and agencies. And with respect to 

New York in particular, that tends to be the place where foreign 

banking organizations enter our country. 

Chairman PAUL. Okay. Proportionately, it still seems to be out 

of whack. Wouldn’t the system invite foreign banks? They are making most of their money overseas. Just open up a subsidiary in 

New York. And, therefore, they get the line of credit and the protection of the bank, and it is almost like free insurance for them. 

Do you think this is a good idea, that a foreign bank, all they 

have to do is open up and get these bailouts? It just doesn’t seem 

fair at all. 

Mr. BAXTER. These were loans, Chairman Paul. They weren’t 

gifts in any way. And the foreign banks have to repay, just like everyone else, the principal and interest. 

Second, if a foreign bank—and some do—decides that they would 

prefer not to form a branch or an agency but to start a subsidiary 

bank in the United States, that is their option. And some foreign 

banks do just that. And, of course, the subsidiary bank, which 

would have a U.S. charter, that has access to the discount window 

as well. 

Mr. ALVAREZ. I would add one more thing. 

15 

There is a limit on the amount that they can borrow. They are 

limited by the amount of collateral that they have, that they can 

post at the discount window. So, that is dollar collateral in the 

United States. That doesn’t allow the foreign bank to borrow to the 

full extent of its assets worldwide. It borrows in order to support 

its dollar activities. And those dollar activities are largely, though 

not exclusively—you have a point there—but largely in the United 

States. 

Chairman PAUL. Could the argument be made that maybe the 

banks in Greece should have had a lot more subsidiaries in New 

York, and maybe then Greece wouldn’t be in so much trouble, the 

Fed would have bailed them out too? 

Mr. ALVAREZ. No, their assets are in Greece, so they are Greek 

assets. And they would go to the Greek central bank to borrow 

there, not to the United States. 

Chairman PAUL. Okay. 

Mr. Green, do you have any more questions? 

No? Okay. Mr. Jones, for 5 minutes. 

Mr. JONES. Mr. Chairman, thank you again. 

Looking through a lot of these reports—and I want to go to Libya 

and see if you can help me understand the rationale by the Treasury and the Reserve. 

I will just read one paragraph: ‘‘Arab Banking Corporation, the 

lender part-owned by the Central Bank of Libya, used a New York 

branch to get 73 loans from the U.S. Federal Reserve in the 18 

months after Lehman Brothers Holdings collapsed.’’ 

Help me understand, so that I can explain to people back in my 

district, that here we are, an undeclared war. Any time—and I 

thank God we haven’t lost any American military at this point, but 

we certainly have fired a bunch of missiles. And we are spending 

millions and millions of dollars, probably billions by now. And we 

are helping other countries. 

What is the protection if Libya is Gaddafi and Gaddafi is Libya— 

or, at least, it has been for a period of time—and we have made 

these loans to their affiliate or to Libyan banks, their relationships, 

what happens in a wartime situation, where we are trying to drive 

Gaddafi out of business and we have made these loans to him or 

to Libya? 

How do you explain to that person that each and every one of 

us, on both sides of the political aisle, has talked about today that 

can’t get the loans? How do you explain this to Walter Jones, who 

happens to be a Member of the Congress, so he can explain it to 

his people back home? 

Mr. ALVAREZ. The Arab Banking Corporation is a bank located 

in Bahrain. It is not located in Libya. The Libyans bought a substantial part of that bank after all the loans that were extended by 

the Federal Reserve were repaid. 

We work with the Treasury Department and the State Department, which have responsibility for identifying banks that the 

United States should not deal with for foreign policy reasons. The 

responsibility for designating those banks rests with them. We consult with them to make sure that we don’t lend to institutions that 

they have determined we should not be lending to. 

16 

At the time our credits were extended, Arab Banking Corporation was not identified by Treasury or State Department as a bank 

that was of concern. It was a foreign bank that had an operation 

in the United States that was well-rated in all other respects, like 

another foreign bank from a foreign country. 

Mr. JONES. Mr. Chairman, I tell you, knowing that you, for many 

years, have picked up more and more support for your legislation 

to audit the Federal Reserve, I wish, truthfully—and it has nothing 

to do with you gentlemen here today, but I am telling you that the 

distrust out here by the American people is as deep and as severe 

as I have ever seen it. And not only Congress itself, not only the 

Administration, but the Federal Reserve is just, at this point, at a 

very low ebb as it relates to trust. 

And I am not talking about you personally. You are two men of 

high integrity, I know that. But, right now, the Federal Reserve is 

not held in high esteem by many people in this country. 

I will yield back. 

Chairman PAUL. I thank the gentleman. 

I have a few short questions, and then we will finish up. 

One thing is, on a follow-up on what Mr. Jones says, is, the confidence is very low. But when you speak of independence—and I 

understand your terms, and I disagree with the need for that, but 

I understand it. But what people hear, when you say ‘‘independence,’’ they hear ‘‘secrecy.’’ You are going to keep it from us. 

And like the point I made at the beginning, the SEC is to pressure companies to reveal information, where the Federal Reserve 

does the opposite. They want—no, we can’t tell anything because 

it might disturb the markets. 

I have one question: During the crisis or at any time that you 

are aware of, has the Federal Reserve or Treasury participated in 

any gold swaps arrangements? 

Mr. ALVAREZ. The Federal Reserve does not own any gold at all. 

We have not owned gold since 1934. So we have not engaged in any 

gold swaps. 

Chairman PAUL. But it appears on your balance sheet that you 

hold gold. 

Mr. ALVAREZ. What appears on our balance sheet is gold certificates. Before 1934, the Federal Reserve did own gold. We turned 

that over, by law, to the Treasury and received, in return for that, 

gold certificates. 

Chairman PAUL. If the Treasury entered into—because under the 

Exchange Stabilization Fund, I would assume they probably have 

the legal authority to do it—they wouldn’t be able to do it, then, 

because you have the securities for essentially all the gold? 

Mr. ALVAREZ. No, we have no interest in the gold that is owned 

by the Treasury. We have simply an accounting document that is 

called ‘‘gold certificates’’ that represents the value at a statutory 

rate of the gold that we gave to the Treasury in 1934. 

Chairman PAUL. It is still measured at $42 an ounce, which 

makes no sense whatsoever. 

But, the conventional wisdom today says that gold is really not 

money. We don’t want it to be money. If you are for the gold standard, there is something wrong with you. And, yet, we hold the gold. 

17 

And, there has been the suggestion made, and I have sort of encouraged the suggestion, if gold is not money and it is an asset and 

you don’t even use it because it is on your balance sheets and you 

don’t even use it at the real value, why—would you have a position 

on this? Why shouldn’t the Treasury just sell the gold and give it 

back to the people? The people had it at one time. Let the people 

have it. 

Would you have any objection to that? Would you advise us and 

say, ‘‘No, that is not good; we ought to hold the gold?’’ Do you think 

holding the gold is a good idea or a bad idea? 

Mr. ALVAREZ. I have no position on that at all. That is clearly 

a matter for the Treasury. 

Chairman PAUL. No position? 

Mr. ALVAREZ. It is a matter for the Treasury. It is not within the 

purview of the Federal Reserve. 

Chairman PAUL. Mr. Baxter, would you have an opinion? 

Mr. BAXTER. My opinion is, I agree with Mr. Alvarez. 

Chairman PAUL. No position. 

It is amazing, because I have asked questions of the Federal Reserve, the Members of the Board, for years. And whether it has 

been Mr. Greenspan—I can’t recall exactly what I have asked Mr. 

Bernanke—but it is always, ‘‘Well, no, we have to hold on to these 

assets.’’ But if it is not money and we don’t need it and we are not 

going on a gold standard, I would think that they shouldn’t be 

holding it. 

The reason I ask that is, the truth is, gold is money. And people 

don’t throw it away, and people do cling to it. But I would be really—there are a lot of people who suspect, because of this lack of 

transparency, that there have been a tremendous amount of gold 

swaps and loans made and central banks sold a lot of gold off after 

the last 10 years. A lot of the gold has left the West and has gone 

to the East. And the central banks now have positive trade balances; they buy up the gold. 

There has to be a message in there and a significance, even for 

those who don’t want the restraints of gold, there has to be a message out there that we should look at, because we are in a financial 

mess and it has to do with our monetary system, and it is being 

reflected today in rising prices and a weak economy. And just 

printing all this money isn’t doing any good. 

All this stuff that has been done for 30 years—when you look at 

the economic statistics now, they are horrible. And these people 

who lost their jobs, they are still unemployed. The people who 

bought stocks in the year 2000, if they held on, they probably 

haven’t even broken even. They probably lost purchasing power. 

So, eventually, I think—I know this is off the subject a little bit. 

But it is reflected only in that we don’t know exactly what goes on. 

And people, when they don’t know, then they get suspicious, and 

they say, ‘‘Well, it is kept secret from us. Why aren’t we allowed 

to know?’’ And we just march on. 

And the type of dollars we are talking about, and when we hear 

about this money going to central banks and banks that Qadhafi 

was a part owner in, this really stirs up the emotions of a lot of 

people. 

18 

I do appreciate you being here. And I know that there will be a 

lot of questions, there will be written questions submitted. And we 

would appreciate your cooperation in sending us your answers. 

The Chair notes that some members may have additional questions for this panel which they may wish to submit in writing. 

Without objection, the hearing record will remain open for 30 days 

for members to submit written questions to these witnesses and to 

place their responses in the record. 

Also, I would like to emphasize at this time that this hearing 

deals with a very complex matter and is a large amount of material. And, therefore, written questions, I am sure, will be followed 

up. So I ask for as much cooperation as you can give us, because 

there are times when questions are sent in and they sort of get 

lost. But because there is so much and it is complicated and now 

that our time looks like it is going to be shortened, we may have 

to depend a lot on our written questions. So we ask you for your 

cooperation there. 

And I thank you. 

Mr. ALVAREZ. Thank you very much. 

Mr. BAXTER. Thank you, Mr. Chairman. 

Chairman PAUL. This hearing is adjourned. 

[Whereupon, at 4:40 p.m., the hearing was adjourned.] 

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