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53–247 PDF 2009

TARP OVERSIGHT: WARRANT REPURCHASES 

AND PROTECTING TAXPAYERS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

OVERSIGHT AND INVESTIGATIONS 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JULY 22, 2009 

Printed for the use of the Committee on Financial Services 

Serial No. 111–67 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

BARNEY FRANK, Massachusetts, Chairman 

PAUL E. KANJORSKI, Pennsylvania 

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 

DENNIS MOORE, Kansas 

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 

MELISSA L. BEAN, Illinois 

GWEN MOORE, Wisconsin 

PAUL W. HODES, New Hampshire 

KEITH ELLISON, Minnesota 

RON KLEIN, Florida 

CHARLES WILSON, Ohio 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

BILL FOSTER, Illinois 

ANDRE ́ CARSON, Indiana 

JACKIE SPEIER, California 

TRAVIS CHILDERS, Mississippi 

WALT MINNICK, Idaho 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

SUZANNE KOSMAS, Florida 

ALAN GRAYSON, Florida 

JIM HIMES, Connecticut 

GARY PETERS, Michigan 

DAN MAFFEI, New York 

SPENCER BACHUS, Alabama 

MICHAEL N. CASTLE, Delaware 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, JR., North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

JEB HENSARLING, Texas 

SCOTT GARRETT, New Jersey 

J. GRESHAM BARRETT, South Carolina 

JIM GERLACH, Pennsylvania 

RANDY NEUGEBAUER, Texas 

TOM PRICE, Georgia 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

ADAM PUTNAM, Florida 

MICHELE BACHMANN, Minnesota 

KENNY MARCHANT, Texas 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

BILL POSEY, Florida 

LYNN JENKINS, Kansas 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

LEONARD LANCE, New Jersey 

JEANNE M. ROSLANOWICK, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

DENNIS MOORE, Kansas, Chairman 

STEPHEN F. LYNCH, Massachusetts 

RON KLEIN, Florida 

JACKIE SPEIER, California 

GWEN MOORE, Wisconsin 

JOHN ADLER, New Jersey 

MARY JO KILROY, Ohio 

STEVE DRIEHAUS, Ohio 

ALAN GRAYSON, Florida 

JUDY BIGGERT, Illinois 

PATRICK T. MCHENRY, North Carolina 

RON PAUL, Texas 

MICHELE BACHMANN, Minnesota 

CHRISTOPHER LEE, New York 

ERIK PAULSEN, Minnesota 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

July 22, 2009 ..................................................................................................... 1 

Appendix: 

July 22, 2009 ..................................................................................................... 47 

WITNESSES 

WEDNESDAY, JULY 22, 2009 

Allison, Herbert M., Jr., Assistant Secretary for Financial Stability, U.S. 

Department of the Treasury ................................................................................ 7 

Barofsky, Neil, Special Inspector General for the Troubled Asset Relief Program ...................................................................................................................... 25 

McCool, Thomas J., Director, Center for Economics, Applied Research and 

Methods, U.S. Government Accountability Office ............................................. 29 

Warren, Professor Elizabeth, Chair, Congressional Oversight Panel ................. 27 

APPENDIX 

Prepared statements: 

Moore, Hon. Dennis .......................................................................................... 48 

Allison, Herbert, Jr. .......................................................................................... 50 

Barofsky, Neil ................................................................................................... 60 

McCool, Thomas J. ........................................................................................... 70 

Warren, Professor Elizabeth ............................................................................ 86 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Moore, Hon. Dennis: 

Letter to Hon. Timothy Geithner, dated June 2, 2009 .................................. 94 

Letter from Neil Barofsky and Elizabeth Warren, dated June 16, 2009 ..... 96 

Letter from Neil Barofsky and Elizabeth Warren, dated June 10, 2009 ..... 97 

Bachus, Hon. Spencer: 

SIGTARP audit report entitled, ‘‘SIGTARP Survey Demonstrates That 

Banks Can Provide Meaningful Information on Their Use of TARP 

Funds,’’ dated July 20, 2009 ........................................................................ 99 

Warren, Elizabeth: 

Additional information provided for the record in response to questions 

asked at the hearing ..................................................................................... 143 

(1) 

TARP OVERSIGHT: WARRANT REPURCHASES 

AND PROTECTING TAXPAYERS 

Wednesday, July 22, 2009 

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON OVERSIGHT

AND INVESTIGATIONS, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C. 

The subcommittee met, pursuant to notice, at 2 p.m., in room 

2128, Rayburn House Office Building, Hon. Dennis Moore [chairman of the subcommittee] presiding. 

Members present: Representatives Moore of Kansas, Klein, 

Speier, Kilroy, Grayson; Biggert, McHenry, Bachmann, Lee, and 

Paulsen. 

Ex officio present: Representatives Frank and Bachus. 

Also present: Representatives Sherman and Marchant. 

Chairman MOORE OF KANSAS. This hearing of the Subcommittee 

on Oversight and Investigations of the House Financial Services 

Committee will come to order. Our hearing this afternoon is entitled, ‘‘TARP Oversight: Warrant Repurchases and Protecting Taxpayers.’’ We will begin this hearing with members opening statements up to 10 minutes per side, then we will hear testimony from 

our first witness. After that, members will each have up to 5 minutes to question our witness. I will then excuse our witness and invite the second panel of witnesses to give their testimony and we 

will continue with members’ questions. 

The Chair advises members that given the busy afternoon schedule, I will be keeping everyone, including myself, to 5 minutes. Any 

unanswered questions can always be followed-up in writing for the 

record. Without objection, all members’ opening statements will be 

made a part of the record. I now recognize myself for up to 5 minutes for an opening statement. 

The past month or 2, it has been nice to see some good news regarding the TARP. After some upbeat results of the stress tests on 

the largest financial firms, 10 of the largest banks holding companies were authorized to pay back $68.2 billion of TARP funds. If 

you include smaller banks, they totaled over $70 billion that has 

been repaid to U.S. taxpayers. And this news coming after the 

Treasury Department used more than $200 billion for more than 

600 banks to stabilize the financial sector. When Congress enacted 

TARP last year, we authorized the Treasury Department to request 

that firms receiving TARP funds issue warrants. This provides an 

opportunity for taxpayers to share in the upside for their investments. These warrants give us the right to buy shares of a comVerDate Nov 24 2008 17:27 Dec 16, 2009 Jkt 053247 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\53247.TXT TERRIE
2 

pany at a set price at some point in the future, much like an employee stock option. But as you might imagine, whenever the government is the key actor in executing these warrants, unlike an 

employee stock option, there are a number of other policy issues 

and concerns that we have to deal with and that have to be 

weighed. 

Even so, I am firmly committed to doing all we can to ensure taxpayers are fully repaid. On May 8th, Old National Bancorp became 

the first TARP recipient bank to repay its TARP funding and repurchase their warrants held by Treasury. The bank paid $1.2 million to buy back these warrants. But what concerned me was a professor from the University of Louisiana in Lafayette, Professor 

Linus Wilson, analyzed this transaction very closely, and he determined that the warrants were worth, at a minimum, $1.5 million, 

and as much as $6.9 million. So at the low end, Treasury was off 

by $300,000 and in the worst case, Treasury missed a return of an 

additional $5.4 million. 

$5 million might not sound like a lot of money when we are talking about billions of trillions of dollars in financial rescue aid, but 

if you consider the 600 other banks that will eventually need to repurchase their warrants, this money quickly adds up to a big potential return for U.S. taxpayers. I wrote a letter to Secretary 

Geithner on June 2nd urging him in no uncertain terms that he 

act to protect the taxpayers’ investments in these firms by maximizing returns in these warrants. I carbon copied SIGTARP, COP, 

and GAO, and 2 weeks later, I received a joint letter from Special 

Inspector General Barofsky and Professor Warren expressing their 

commitment to transparency. They noted a coordinated effort between COP and SIGTARP to review, ‘‘whether those warrant repurchasing procedures provided fair value to the American taxpayers.’’ 

Earlier this month, I was glad to see COP issue a report entirely 

focused on TARP repayments, including the repurchase of stock 

warrants. Similar to the analysis done by Professor Linus, COP 

found in the first 11 banks that repurchased their warrants, Treasury was receiving only 66 percent of what they could have received 

for taxpayers. COP knows that these small banks represent only a 

fraction of 1 percent of all warrants issued, but if this trend continues, taxpayers could miss out on an additional $2.7 billion worth 

of returns on their investment. 

But on the same day the COP report was released, we received 

some good news when The Wall Street Journal reported that 

JPMorgan Chase had decided to pursue repurchasing its warrants 

through a public option. They were frustrated with the Treasury 

Department for demanding too high a price for their warrants. I 

am very glad the Treasury Department is holding a tough line, especially against the largest of the TARP recipients. And today 

Goldman Sachs announced they will pay $1.1 billion to redeem 

their warrants, representing a return of 23 percent for U.S. taxpayers. That sounds pretty good, but is it enough? I will keep pushing to make sure that every single TARP dollar that helped stabilize our financial sector is fully repaid so that our children and 

grandchildren are not left with the tab. 

3 

I look forward to hearing from our witnesses today, especially the 

new TARP Administrator and the Assistant Secretary for Financial 

Stability, Mr. Herb Allison. He has one of the toughest jobs in the 

country, and I look forward to Treasury’s viewpoint on how they 

weigh these difficult decisions to stabilize the financial sector while 

protecting taxpayers. And the strong oversight Congress put in 

place when we created TARP continues to publish what amounts 

to thousands of pages of oversight reports all free and available online examining every angle and aspect of TARP. 

Just this week, SIGTARP published their third quarterly report. 

I look forward to hearing Mr. Barofsky, Professor Warren, and Mr. 

McCool’s testimony today. I now recognize for 5 minutes the ranking member of the subcommittee, my colleague and friend from Illinois, Ranking Member Judy Biggert. 

Mrs. BIGGERT. Thank you, Mr. Chairman, for holding this hearing today, the hearing which is intended to focus on a specific aspect of the TARP program, warrant repurchases and protecting 

taxpayers. It is in the taxpayers’ best interest that as soon as possible, the Federal Government gets out of the trillion dollar bailout 

business and out of the practice of owning and running private 

businesses. This is something the Administration also supports. 

How soon can we withdraw taxpayer money and end the practice 

of taxpayers propping up industries. Treasury, the Fed, and the 

FDIC must communicate to the markets and taxpayers the exit 

strategy and the timeline for it. We need to put an end to the Federal Government picking winners and losers in the marketplace 

which has facilitated unfair competition, competitive advantages 

for some businesses, and completely abandoned others. 

It is also in the taxpayers’ interest that Treasury secure the best 

possible return on its investment. I think we will hear some criticism from some of our witnesses today that Treasury is shorting 

taxpayers on the investment. From what I understand, this may or 

may not be true. The accusation may be more for headlines than 

true and is based on differences of opinion as to what is the best 

modeling methodology to value warrants. Whatever the case, taxpayers must be assured that Treasury is using the best means to 

recapture taxpayers’ money. I hope that Mr. Allison will provide us 

with those assurances today. And I agree with many of our witnesses today that taxpayers deserve transparency with regard to 

warrants and with regard to what TARP recipients are doing with 

taxpayer money. At the same time, I want assurances from today’s 

witnesses that as they work to improve TARP transparency, and 

while TARP is still active, they will not jeopardize Treasury and 

taxpayers’ negotiating position to secure the best return on their 

investment. 

It is also vital that we prevent any individual, Federal entity or 

business involved in TARP from making a profit based on insider 

information especially when it is at the expense of the taxpayer. 

That is unacceptable and I want to know what is being done to prevent this. 

Finally, I am disappointed with legislation that would siphon off 

TARP returns when we still don’t have a guarantee that TARP will 

ultimately produce a return or loss for taxpayers. At a time of 

record deficits and unemployment reaching 10 percent nationwide, 

4 

any profit on this tremendous risk should first and foremost go toward paying down the deficit. With that, I would like to yield the 

balance of my time to the ranking member of the Financial Services Committee, Mr. Bachus. 

Mr. BACHUS. Thank you. And thank you, Mr. Moore, for convening today’s important subcommittee hearing on oversight of the 

TARP program. I would also like to recognize Ranking Member 

Biggert’s fine service. She has been particularly, I think, helpful on 

the issues involving the SEC and the CFTC. I thank you. Last fall, 

Congress required recipients of assistance under the Capital Purchase Program to issue warrants to the Treasury. I have a particular interest in this program because I first proposed it or something like it on September 18th, and felt like by setting a dividend 

or at least the repayment at a certain percent, I felt like we would 

be best assured of receiving a fair return as opposed to a more fluid 

definition. 

For instance, when you buy toxic assets, and I said that in the 

very first meeting with Secretary Paulson and Chairman 

Bernanke, you know, what do we price these at? If you price them 

too low, it doesn’t help the banks with their capital. If you pay too 

much for them, it is a bad deal for the taxpayers. So I have always 

thought that this was our best opportunity of safeguarding the taxpayers and yet coming to the aid of the banks. And I think time 

has shown that to be correct. 

Chairman Frank and I and others worked in a bipartisan way 

on this along with Representative Roy Blunt. And this was done so 

that the American taxpayer would have the opportunity to benefit 

from the warrants, particularly from any upside as these companies return to financial health. And although we were hoping that 

was the case now, some of them had a spectacular return. And you 

saw today with Goldman Sachs paying back the money, there was 

a 23 percent annualized return. Now, that is going to be unusual 

I think, but it certainly was good news to the taxpayers. 

However, many questions do remain about how to properly value 

these warrants to ensure that taxpayers receive a proper return on 

their investment. And I know, Ms. Warren, Professor Warren or 

Dr. Warren, you had proposed that they be placed on the open 

market for sale to the highest bid. And certainly, that is one option 

that has some appeal. Particularly if the Treasury and the party 

cannot come to some agreement, I think that is probably the only 

valid option. And normally I would be in favor of letting the market 

decide asset values in all cases. I do think that the Oversight Panel’s formula for setting the option price could result in the government having to hold the warrants for an extended period of time, 

and then you have the risk of another economic downturn. 

So if you knew that the economy was going to continue to recover, or the companies’ prospects, I would say yes. But you look 

at the commercial mortgage market and others and it is really a— 

it is a somewhat speculation. And I have advocated trying to, particularly if the Treasury sets a price and it is accepted, let the taxpayers get their money back, go ahead and get that money back in 

the Treasury where it can be used to pay down the deficit. 

In the July report on additional views, my colleague, Mr. Hensarling, explained that the valuation of the warrants is a highly 

5 

complex analysis. And that a one-size-fits-all approach may not 

yield the best results for the American taxpayer. You know, I agree 

that is true. While the July report seems to paint a picture that 

some money may be left on the table if its valuation formula is not 

used, I believe that a far better result for the American taxpayer, 

as I said, is to go ahead, and as soon as possible, get the Federal 

Government out of the business of holding stocks and warrants. 

The financial institutions and Treasury have indicated that is also 

their policy. So to get the government’s investment back as soon as 

possible. 

Let me conclude by saying, Mr. Chairman, as institutions begin 

to pay back their TARP assistance, and really Capital Purchase 

Program monies, we need to end bailouts, return the money to the 

taxpayers, not recycle the funds back into more bailouts. Part of 

that will be regulatory reform to ensure that we don’t have any 

more bailouts. And I think protection of consumers is a part of 

that. Although my approach differs from Chairman Frank, I believe 

that what we ought to be doing is saying to the regulatory agencies 

which have the skill and the means and the resources to enforce 

consumer protection, that we give them the charge to do it, and tell 

us how they are going to do it. And if over the period of 6 months 

to a year, we see that is not working, then we could address it in 

a more novel way. 

But let’s be clear about another fact. Although the Capital Purchase Program may earn a profit, the TARP program overall will 

not. So for that reason, I believe that all these dividend payments 

ought to be given back to the Treasury as soon as possible. Mr. 

Chairman, thank you for your indulgence and my opening statement. 

Chairman MOORE OF KANSAS. Thank you as well. I now recognize Mr. Klein for 2 minutes. 

Mr. KLEIN. Thank you, Mr. Chairman, for holding this important 

hearing. This is one of those hearings where we should have a lot 

more press coverage and a lot more attention to the fact that we 

are having a pleasant discussion about the TARP and the scenario 

where not only there are large banks that were probably put in a 

more solid position after what happened in September, but the consideration now is not only paying back the initial capital, but what 

is going to happen with the bonus, that is the warrants. And for 

those people who aren’t familiar with warrants, that is obviously 

the upside that we have been talking about all along. 

So there is a very positive discussion going on here today. And 

I am glad that members on both sides of the aisle can recognize 

that. That doesn’t mean that things are good for everyone, but this 

is a little bit of a silver lining to the fact that the taxpayers of the 

United States who put all this money on the table are going to get 

not only the money paid back, but will share in the upside. 

Now that being said, I want to, in my opinion, and I appreciate 

the witnesses today and I had a chance to meet with many of you 

and talk to you about some of the specifics. And I thank you for 

your service. It is a very important part of the oversight here, is 

making sure that the taxpayers receive the maximum return for 

the risk that they took. Not everybody wanted to go along with 

this, but we did what we had to do. And those people who said we 

6 

didn’t need to do this, that is a matter for history to judge. But at 

the present time, we want to wish all of our businesses and banks 

in the United States success; we want them to succeed; we want 

them to lend more. And a strong message I would like to deliver 

to the banks that are top recipients is to start lending, start moving along here. 

I mean, we have a liquidity issue in the United States that still 

is out there. And whether or not you are paying back the money, 

or the warrants are going to be exchanged in some form or fashion, 

we need you to be a part of our recovery. That being said, the fairness part of this is making sure that we get the maximum bang 

for the buck. And whether it is on an auction or whether there is 

a wait or not a wait, again, I will leave that to some of the professionals who can help us realize that we get the maximum bit of 

value back from the banks that end up taking this money. Some 

of them are now recording historic profits. And again, we wish 

them all well. We want that success to filter out to others as well. 

But we want to make sure that the taxpayers in this country who 

literally went on the line to make sure the recovery was going to 

begin, and it seems to be beginning now, that we can put some of 

this money back in the till. And those banks that may need some 

additional help and others around the United States may get that 

help, but other than that we get the maximum dollars back. Thank 

you, Mr. Chairman. 

Chairman MOORE OF KANSAS. Thank you, Mr. Klein. The Chair 

now recognizes Ms. Mary Jo Kilroy for 2 minutes. 

Ms. KILROY. Thank you, Mr. Chairman. Thank you for conducting this hearing. Although I was not part of the 110th Congress, and I voted ‘‘no’’ on the House plan to release more money 

from the Troubled Assets Relief Program, I understand that the 

American taxpayers took on some risk when we worked to bail out 

the banks, many of whom made decisions that have hurt Ohio’s 

families and hurt Ohio’s economy. In fact, they hurt our country’s 

economy. 

Now, as Main Street still awaits the economic recovery and the 

jobs that it deserves, some banks are back to making record profits 

again after receiving our help. And I think that it is appropriate 

that the American public receives a return on the investment that 

they made with the TARP money. I find it unacceptable that the 

downturn hurt Main Street hardest, yet the recovery seems to be 

benefiting corporate America first. This issue, the repayment of the 

taxpayers and the upside of warrants, is one situation where the 

taxpayers deserve to reap the full benefits in an open and transparent process. 

According to the reports that we have received from Dr. Warren, 

and from Mr. Barofsky, the banks and Treasury are negotiating the 

repayment of this debt, the purchase and sale of these warrants behind closed doors instead of allowing the transfer and the trading 

to happen on the open market and allowing the market to set the 

price. We do not know if the current process is producing the benefits we are owed, however, Dr. Warren has found that we are getting about $0.66 on the dollar for our investment and that the total 

shortfall to our constituents could be as much as $2.7 billion. 

7 

A market-based approach would remove the secrecy and special 

interest and maximize the return on taxpayers’ investment. That 

is why I introduced with six of my colleagues what we call the Profit Act. This logical and commonsense bill would maximize profits 

for our taxpayers and ensure transparency by requiring an open 

process, eliminating the loophole that allows banks to negotiate behind closed doors with Treasury. The public auction would be such 

a transparent open market. 

And I think that one of our witnesses, Assistant Secretary Allison, stated earlier this year in his testimony that in relation to 

toxic assets on bank balance sheets, ‘‘We have our theories, but in 

the last analysis that is why you have financial markets, you have 

to have liquid interchanges and then the truths will come out as 

to what assets are actually worth.’’ 

I look forward to today’s testimony. And I suggest to the panel 

and to my colleagues that now is the time to act to close this loophole. According to the Congressional Oversight Panel, which Dr. 

Warren heads, less than 1 percent of the warrants, those stock options for the American people have been sold. This is the time to 

push Treasury to open the process with transparency and to make 

sure Americans get the deal that they deserve. Thank you. I yield 

back. 

Chairman MOORE OF KANSAS. Thank you, Ms. Kilroy, for your 

opening statement. And it is now my pleasure to introduce our first 

witness, Mr. Herbert M. Allison, Jr., the newly confirmed Assistant 

Secretary for Financial Stability at the U.S. Department of the 

Treasury. As Assistant Secretary for Financial Stability, Mr. Allison is responsible for developing and coordinating Treasury’s policies on legislative and regulatory issues affecting financial stability, 

including administering TARP. Mr. Allison most recently served as 

President and CEO of Fannie Mae as well as the Chairman, President, and CEO of TIAA–CREF. He has held senior positions at 

Merrill Lynch, Time Warner, and the New York Stock Exchange. 

Mr. Allison also spent 4 years as an officer in the United States 

Navy, including a year in Vietnam. Without objection, your written 

statement will be made a part of the record. Mr. Assistant Secretary, you are recognized for 5 minutes to provide a brief summary of your statement. 

STATEMENT OF HERBERT M. ALLISON, JR., ASSISTANT SECRETARY FOR FINANCIAL STABILITY, U.S. DEPARTMENT OF 

THE TREASURY 

Mr. ALLISON. Chairman Moore, Ranking Member Biggert, and 

members of the subcommittee, thank you for the opportunity to discuss Treasury’s efforts to stabilize and repair the Nation’s financial 

system. In response to the major crisis in our Nation’s financial 

system and housing markets, Congress passed the Emergency Economic Stabilization Act, or EESA, last October establishing the 

Troubled Assets Relief Program, or TARP, and giving Treasury the 

necessary tools and flexibility to stabilize the financial system and 

restore the flow of credit to consumers and business. Our mandate 

in EESA is two-fold; to stabilize the financial system while protecting the taxpayers. Today I want to update you on our progress. 

In just 10 months, Treasury has invested more than $200 billion 

8 

in 657 financial institutions of all sizes in 48 States, including over 

300 small and community banks through the Capital Purchase Program, or CPP. We reopened the Capital Purchase Program recently 

for small and community banks recognizing the critical role these 

banks play in our communities. We provided support to three systemically significant institutions. 

We launched an unprecedented housing program to help millions 

of homeowners. We assisted with restructuring of both General Motors and Chrysler through the bankruptcy process, and as a result, 

both companies are better able to compete today. We helped to restart the securitization markets, a key source of credit to consumers and businesses. We launched a public and private investment program to help remove legacy assets from the balance sheets 

of financial institutions so they can redeploy their capital to support lending. And we issued regulations guiding executive compensation at all firms receiving TARP funds. We have allocated 

about $643 billion to our EESA programs. We have actually invested $362.6 billion of that amount to date. We have also received 

over $70 billion in CPP payments from 34 institutions and $6 billion in dividend repayments from participants in all the TARP programs. 

Finally, we are beginning to receive proceeds from the sale of 

warrants through the CPP. And as was noted today, we received 

$1.1 billion from Goldman Sachs, representing a return of 23.15 

percent on the taxpayers’ money. As you can see, Treasury has accomplished a great deal, all while building a new Office of Financial Stability. However, we have much more to do as described 

later in my testimony. I would like to briefly discuss Treasury’s 

process for selling the warrants it has received through the CPP. 

I have attached our policy statement and our frequently asked 

questions on this subject with my testimony for the record. Treasury has communicated its consistent and clear process for valuing 

warrants in a manner that protects taxpayers. We apply the same 

process consistently for all banks large and small. Treasury is committed to getting fair value for the taxpayers for these warrants 

and we made that process public on our Web site. When a publiclytraded institution repays Treasury’s investment under the CPP, it 

has the contractual right to repurchase its warrants at fair market 

value through an independent valuation process directly from 

Treasury. One source of complexity in valuing warrants is that the 

warrants do not trade on any market so they don’t have observable 

market prices. Models by themselves cannot give us reliable estimates of the realizable price in the marketplace. 

So we are using a comprehensive approach to estimating these 

values, which involves a variety of inputs, including a set of wellknown financial models. In developing our valuation and repurchase process, we counsel with numerous experts, market makers, 

and industry participants. Treasury also consults with third-party 

market participants as to what they would be willing to pay for the 

warrants and we obtain full independent valuations from outside 

investment managers. Treasury decided to sell the warrants within 

several months after they are eligible for sale rather than hold 

them for a substantial period. Our guiding principle is the President’s belief that the extraordinary government interventions neVerDate Nov 24 2008 17:27 Dec 16, 2009 Jkt 053247 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\53247.TXT TERRIE
9 

cessitated by the crisis should be unwound as quickly as is consistent with Treasury’s mandate under EESA to restore liquidity 

and stability to the financial system while protecting the interests 

of taxpayers. 

As with all aspects of our financial stability programs, Treasury 

welcomes the recommendations and comments of others as we continually strive for improvement, transparency, and accountability 

in all of our programs. Earlier this month, Treasury announced its 

selection of nine asset managers for the legacy securities public-private investment program, also known as PPIP, to remove legacy 

assets from the balance sheets of financial institutions. The PPIP 

is a critical element of Treasury’s financial stability plan and is designed to support market functioning and facilitate price discovery 

in the important asset-backed securities markets allowing banks 

and other financial institutions to redeploy capital and extend new 

credit to households and businesses. 

Treasury took a number of comprehensive measures to enhance 

the potential of this program and to protect the taxpayer. We consulted closely with the SIGTARP as we developed a robust framework for compliance, governance, and controlling conflicts of interest. Treasury also ensured that the PPIP includes a spectrum of 

minority-, women-, and veteran-owned businesses that represent 

our communities. The TARP has been key to stabilizing the financial system and preventing greater deterioration in the availability 

of credit to households, businesses, and communities. 

Amid signs of recovery in the financial markets in the first half, 

we have seen improvement in spreads, that is the measure of risk 

in the financial system, and we have also seen the issuance of corporate debt has increased sharply. There are also some signs that 

the economy is beginning to mend. Consumer confidence has increased significantly, housing starts have moved higher, and house 

purchases have begun to pick up in some parts of the economy. 

Nevertheless, our financial system and our economy remain vulnerable. Even with the modest improvement in conditions, unemployment and the level of home foreclosures remains high. Strains in 

the commercial real estate market continue to build. This is why 

Treasury must remain vigilant and press ahead with our financial 

stabilization efforts. 

Upon taking office, President Obama committed to increased 

transparency, accountability, and oversight in our government’s approach to stabilizing the financial system. Secretary Geithner further underscored Treasury’s commitment to transparency in all our 

programs. One of Secretary Geithner’s and my priorities is to ensure that we enhance and provide transparency as our activities 

evolve. I will regularly update Congress on our progress. We have 

productive working relationships with our four oversight bodies: 

the Special Inspector General of the TARP, or SIGTARP; the Government Accountability Office, or GAO; the Congressional Oversight Panel, or COP; and the Financial Stability Oversight Board, 

or FSOB. Treasury has accepted a great majority of the recommendations of those bodies. Where we conclude that a recommendation is impractical, we find other means to achieve the 

same goal. Treasury shares the concerns of Congress and/or oversight bodies that we see an increase in lending by banks. And we 

10 

have required banks receiving a Treasury investment to report 

their lending activities regularly. 

In January, Treasury launched an important initiative to help 

the public easily assess the lending activities of banks participating 

in the CPP starting with the top 21 banks, since they account for 

over 50 percent of lending in our communities. Then in March we 

expanded the survey to include all banks in the CPP and have now 

published 3 lending reports with data from over 500 banks. Because we believe these reports are critical to helping the public understand the lending environment during this crisis, we have asked 

10 large banks that have repaid Treasury’s CPP investment to continue participating in the survey through the end of this year and 

they have agreed, and we appreciate their voluntary cooperation. 

Treasury is working urgently to maximize the impact of our programs on financial stability but we must allow some time for these 

programs to have their full effect. 

We recognize that we have much work ahead to restore the flow 

of credit to consumers and businesses and alleviate the real hardships that Americans face every day. As my colleagues and I work 

on this important financial stability effort, we will strive to be prudent investors on behalf of the American people and to protect the 

taxpayers who have entrusted us with so much of their money. 

Here are the top priorities of the Office of Financial Stability: 

First, we will carefully review the controls over taxpayers’ 

money, giving special attention to compliance with laws and directives governing risk and internal audits. In this regard, we will 

work closely with Congress and the oversight bodies. Second, we 

will strive to maximize the effectiveness of financial stability programs restoring soundness to financial institutions and liquidity to 

our markets. And finally, we will emphasize transparency and 

interaction with Congress so that the American people will know 

what we are doing with their money, why we are doing it, and how 

it is helping the financial system, the economy, and their lives. 

Thank you very much, and I look forward to answering your questions. 

[The prepared statement of Assistant Secretary Allison can be 

found on page 50 of the appendix.] 

Chairman MOORE OF KANSAS. Thank you for your testimony, Mr. 

Allison. 

I now recognize myself for 5 minutes for questioning. Mr. Allison, 

as you know, Goldman Sachs announced they are buying back their 

warrants for $1.1 billion directly from the Treasury, and JPMorgan 

Chase is going to a public auction because according to news reports, there is a feeling you are driving too hard a bargain, which 

I am frankly glad to hear. Is $1.1 billion enough for Goldman’s 

warrants? Would taxpayers have received more if they went to a 

public auction. 

Mr. ALLISON. Thank you, Chairman Moore, for your question. It 

is a question that we ask ourselves all the time. We have, even 

though we are contractually obligated to go through this process of 

independent valuation with a bank if it chooses to do so, if the 

bank decides it would rather auction the warrants, we are willing 

to go that route. We have modeled both approaches. Of course, as 

I mentioned in my earlier testimony a month or so ago, we can’t 

11 

tell for sure how the market will end up valuing warrants. We try 

our best if the process is going to be the independent valuation approach mandated by contracts, to get market-based information 

nonetheless. 

And so that is why we go out and we ask market participants 

to give us quotes on these warrants. We are satisfied based on 

those quotes, based on analysis by independent asset managers, 

and based upon our own use of valuation models similar to that 

used by the COP, that this is a very fair price for taxpayers. We 

are comfortable with that. Although I still can’t tell you that we 

would do better or worse out in the open market. Nonetheless, 

based on a system we use for every bank and have since the beginning, we are very pleased with this outcome. 

Chairman MOORE OF KANSAS. Thank you. Mr. Allison, what is 

your response to the paper from Professor Linus on Old National 

as well as COP’s report saying that Treasury could miss out on a 

potential $2.7 billion worth of returns for taxpayers? What policy 

issues does Treasury consider when reviewing these warrant repurchases? And also, I have heard some say auctions should be held 

shortly after earning season, say early August, providing transparency to all potential buyers. When will Treasury hold these auctions? 

Mr. ALLISON. In response to our view of the process of the COP, 

first of all, we use a similar model to the COP. We respect their 

approach. We have had discussions with the COP about ours and 

about theirs. There are, as the COP report pointed out, small differences in the assumptions that go into a model, especially when 

you are valuing warrants as long as 10 years, can have a major impact on the result of the valuation. 

And in this case, one of the assumptions has to do with whether 

there should be a discount to the price baked into the model because small banks have much smaller warrant positions that we 

hold, and when they are sold, there is likely to be less demand, less 

liquidity in the market, and therefore a lower price. We factor in 

for small banks a discount for the lack of liquidity of those warrants. So that is one reason why there could be a difference between the model outcome of the COP and ours. I would also ask 

that you look at the comments of various COP members appended 

to the COP report where they point out some of these issues. I 

think we have to be—while we are all trying to do our best to value 

these warrants, we all have to respect the uncertainty of a model 

and that is why we use alternative approaches such as going into 

the market and asking real market participants what they think 

the warrants are worth. 

Chairman MOORE OF KANSAS. And my final question, Mr. Allison. I know you have only been on the job for a month, but have 

you given any thought to a TARP exit strategy? Do you have any 

sense of how long we should expect TARP to be up and running? 

The law creating TARP requires that after 5 years, the President 

must submit a legislative proposal to Congress of how the financial 

services industry will pay for any remaining outstanding losses on 

the program. Since we are nearing the one-year anniversary of the 

law, do you expect that we will have losses on the program in 4 

years? 

12 

Mr. ALLISON. The EESA legislation provides that at the end of 

the year, we might end up making investments in companies. However, the Secretary of the Treasury can make a determination as 

to whether the program should be extended, that is for making investments, until October of next year. The Secretary will be deliberating that matter in the Fall and will reach a decision. I should 

point out that the features of these investments either contain expiring dates for our investments, or increasing costs to the bank in 

which we are investing. So there are incentives built into the program for banks to repay Treasury as rapidly as their financial condition allows. 

Chairman MOORE OF KANSAS. Thank you, sir. My time is up. At 

this time, I recognize Mrs. Biggert for any questions she may have 

for you, sir. 

Mrs. BIGGERT. Thank you, Mr. Chairman. This is sort of similar, 

but Mr. Allison, you know the Treasury is being criticized for not 

securing the best possible return on its investment. In fact, I think 

in the Congressional Oversight Panel’s, the COP’s recent report 

they accused the Treasury of reselling the warrants back to the 

banks at two-thirds of their actual value. Is this true? 

Mr. ALLISON. Thank you for your question, Congresswoman 

Biggert. This is a question many people are asking as a result of 

that report. We have, as I said, taken various approaches to valuing these warrants. They are the exact same approaches that we 

took in valuing Goldman Sachs’ warrants. And we determined, 

based on this approach, that we were receiving a very fair value 

from those smaller banks, and that is why we accepted those bids. 

And we will eventually be disclosing more information that lay behind those bids and our decision. And we look forward to making 

that information available down the road. 

Mrs. BIGGERT. Is there a difference because the small banks have 

probably less liquidity than the larger banks? 

Mr. ALLISON. Yes, that is true. In fact, we did, as I mentioned, 

apply a liquidity discount in the model. That was also, by the way, 

reflected in the market indications that we received. We did not 

apply a liquidity discount in the case of Goldman Sachs, and we 

would not in the case of other larger banks, because given the 

value of those warrants, they are more likely to enjoy a liquid market if they were auctioned. 

Mrs. BIGGERT. Can you give the American taxpayers assurances 

that Treasury is using the very best means to recapture the taxpayers’ money? 

Mr. ALLISON. I can assure you that we are making every effort, 

and this is our obligation to the American public, to receive an appropriate and ample return for the taxpayer. We know they are the 

ones who put their money at risk and we feel a great obligation as 

responsible stewards of their money. 

Mrs. BIGGERT. Well, you received a fair value, but is there a difference with the best value? 

Mr. ALLISON. We believe that in each of these cases, these were 

ample values and we have applied the same standards to all. So 

we examine each method and the results that it produces, and then 

we determine what is an appropriate price that we should demand 

from each bank and we stick to that price. 

13 

Mrs. BIGGERT. As I mentioned in my opening statement, it is 

vital that we prevent any individual or fiduciary entity or business 

involved in TARP from making a profit based on insider information, especially when it is at the expense of the taxpayer. What is 

the Treasury doing to prevent and track this? 

Mr. ALLISON. Well, we have had many close consultations with 

the SIGTARP. We have also invited the SIGTARP’s staff to meet 

with us and the candidates to be asset managers on the PPIP program, for example. I think we have had a robust dialogue with Inspector General Barofsky and his team about this. We are charged 

with promoting financial stability while protecting the taxpayers. 

Our mandate and the reason for the law is to build and implement 

programs that are going to eventually help the American public 

and the financial system. And so with that in mind, we have decided on an approach where we and the SIGTARP will have the access to trading data across each of the fund managers that we are 

hiring daily so we and the SIGTARP can check trading in the various funds of each of these fund managers to see whether in fact 

there are any questionable trades that might cause us to wonder 

whether we are getting full value for the taxpayers’ money, whether a manager is trying to take advantage of our investments at the 

benefit of one of their other investments. So we have almost realtime ability to intervene. We are also getting certifications from the 

managements of these funds. We are prohibiting fund complexes 

from having one fund trade with our fund as another control. So 

we have we think very robust controls to protect the taxpayer. 

Mrs. BIGGERT. In Mr. Barofsky’s quarterly report which was released yesterday, he highlights the fact that Treasury has declined 

to institute barriers to prevent the conflicts of interest with the 

management of the PPIP program. Maybe this was before you 

worked something out with him. But thinks that this could have 

serious consequences related to money laundering or could lead to 

increases in government’s exposure to losses with no corresponding 

increase in potential profits. Is this accurate? 

Mr. ALLISON. Well, we carefully considered SIGTARP’s recommendation. We welcome SIGTARP’s ideas. I may say that the 

SIGTARP has suggested dozens of ideas to us. And we look back 

and we have accepted or in a way very similar accepted the 

SIGTARP’s recommendations about three-fourths of the time. 

There are some cases where we have determined that in the interest of financial stability and because we can find other ways of protecting the taxpayer that we declined to implement, and one of 

these cases has been the creation of a wall. Now, in many cases, 

and here I draw upon 35 years experience in the financial services 

industry, in many cases, it makes great sense to have a wall to separate asset managers in one area from asset managers in another. 

In the case of the asset managers, we are hiring on behalf of the 

taxpayer, and we want to have their best talents working for the 

American taxpayer in the PPIP fund. But these managers in these 

fund complexes are already committed to other funds that they 

manage. The fund cannot take them away from those in order to 

focus on ourselves. 

Conversely, if we allowed the best managers to stay with the 

other funds, we would have to have them hire other managers 

14 

without the track records that are the reason why we hired those 

fund complexes. So instead of having a wall, we provide transparency, the ultimate test. And I have worked with walls. A wall 

can be defeated by people determined to collude. They can leave 

the workplace, they can go out in the street and talk to each other, 

they can use cell phones to talk to each other. Even if you have 

a wall, you have to make sure the wall is working. That is why we 

are insisting on these managers making available their trades 

across the whole fund complex every day so we have the ability to 

get total transparency on what they are doing, pin them down right 

then and there if we see suspicious trading activity in order to protect the taxpayer. 

Mrs. BIGGERT. Thank you. 

Chairman MOORE OF KANSAS. Thank you. With all due respect, 

I am going have to advise the members and the witnesses that we 

have just been advised that we have votes being called in the next 

15 to 30 minutes. There are six votes which I anticipate will take 

about an hour, so I would like to move along here. And I would advise members and the witness too that they will have an opportunity to submit additional information for the record if they 

would, please. 

Ms. Kilroy, you are recognized for 5 minutes. 

Ms. KILROY. Thank you, Mr. Chairman. Mr. Allison, thank you 

for being here this afternoon. It is my understanding that the 

TARP statutes initially permitted Treasury to convert a warrant 

into cash or to exercise that when Treasury decided that doing so 

would allow the public reasonable gain and that the market was 

optimal for such assets and that the goal of that was to maximize 

the value for taxpayers, is that correct, is that your understanding? 

Mr. ALLISON. Yes, Congresswoman. In fact, the law has changed 

several times since the EESA law was enacted. And recently we 

have been given the ability, again the flexibility, to sell the warrants at a time of our choosing when we think it is in the best interest of the taxpayers. 

Ms. KILROY. And do you believe that it is still, despite the 

changes in the law, the goal to maximize return for the taxpayer? 

Mr. ALLISON. We believe that selling the warrants relatively soon 

after we are repaid by the bank for its preferred stock investment, 

that it is appropriate for us to sell the warrants in a way that will 

benefit the taxpayers. And the reason for this, one of the reasons 

is that a warrant value is based on a stock value that incorporates 

the market’s expectations regarding the future performance of the 

stock. 

So even if we sell the warrants over the near term, we are not 

forfeiting the upside potential of the warrant. We also find if we 

hold a warrant for a longer period of time, and here it gets a little 

bit technical, the option value of that warrant declines. We also 

would engage in market timing if we hold the warrant for a long 

period of time. And we are not in the business of being long-term 

investors conducting market time and trying to find the right time 

to sell the stock, and frankly there never will be any agreement on 

what is the right time to sell. 

Ms. KILROY. Separate and apart from the timing issue, is there 

an issue in terms of protecting the taxpayer and protecting taxVerDate Nov 24 2008 17:27 Dec 16, 2009 Jkt 053247 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\53247.TXT TERRIE
15 

payer confidence in the process of the methodology by which the 

warrants are sold or converted to cash? 

Mr. ALLISON. Well, again, where we are going to be disposing of 

the warrants, we first have to follow a contractual process where 

the bank that issued the warrants has the ability to bid to buy 

back its warrants. We don’t have to accept their bid. In fact, in 

most cases, we have not. We will let them rebid if they wish. If 

they decide to no longer bid, then we have the ability to go out and 

auction those warrants in the open market. 

Ms. KILROY. The contractual process, would you agree, is more 

one-sided, and gives the banks more authority in setting the methodology for the sale of the warrants? 

Mr. ALLISON. Actually, Congresswoman, I think it puts the 

Treasury in a very good position to represent the taxpayers. We do 

not communicate what to us is the price that we require in order 

to sell in that process. The bank has to bid. We will not accept 

until there is a bid that reaches our considered price. And at that 

point, if they reach that price, and some don’t, we will sell, and we 

think at that point we are capturing ample value for the taxpayer. 

Let me also add that I know there is concern, and you voiced it, 

about whether we are doing this in a closed room. We are going 

to be disclosing information about the methodology and the actual 

calculations that we used in arriving at the appropriate warrant 

price. I mentioned at the appropriate time. Right now we are engaged in discussions with a number of large banks. We think it is 

in the taxpayers’ interest that we defer that disclosure until a later 

date. 

Ms. KILROY. Would it be your understanding that the Treasury 

would have no authority to enter into contracts with the banks regarding the TARP money other than that flowed from the statute 

that set up that program in the first place? 

Mr. ALLISON. I am aware that all of our actions on behalf of financial stability in the Office of Financial Stability are carrying out 

the law, the EESA law. 

Ms. KILROY. And that would include the obligation to protect the 

taxpayers’ interest first and to, to use the phrase from EESA, to 

maximum the return for the taxpayer? 

Mr. ALLISON. Absolutely. 

Ms. KILROY. Thank you, Mr. Chairman. I yield back. 

Chairman MOORE OF KANSAS. The ranking member is recognized. 

Mrs. BIGGERT. Thank you, Mr. Chairman. I just have a unanimous consent to allow two members of the general Financial Services Committee, but not of the subcommittee, to participate today, 

Mr. Brad Sherman of California and Mr. Kenny Marchant of 

Texas. 

Chairman MOORE OF KANSAS. Without objection, it is so ordered. 

Mr. Bachus, Congressman Bachus, excuse me, you are recognized 

next. 

Mr. BACHUS. I have been called a lot worse than that. Mr. Allison, the Act we passed back on October 1st, the EESA that includes the TARP and the Capital Purchase Plan, it states exclusively that proceeds from the sale of troubled assets and revenues 

from dividends and the surrender of warrants shall be paid into 

16 

the general fund of the Treasury for reduction of the public debt. 

And of course, that was part of the bargain in passing that Act. 

Mr. ALLISON. Yes, sir. 

Mr. BACHUS. The Treasury has interpreted that, and this is according to Mr. Barofsky’s most recent report, you interpret that the 

maximum amount of funding is $299 billion. So as long as you 

don’t have that much funding out, you can replenish the fund as 

opposed to returning it to the general fund, is that correct? 

Mr. ALLISON. The limit that was set on the amount of investments outstanding at any one time is $700 billion. As I mentioned, 

currently that number is a little over $360 billion. We have budgeted to spend about $643 billion to date. However, we have also received repayments, as you know, of over $70 billion so far. And 

that together creates headroom under the $700 billion outstanding 

at any one time of about $128 billion to date. 

Mr. BACHUS. So you have interpreted that as, when you get these 

dividend payments, that you don’t have to—they don’t have to be 

returned to the general fund? 

Mr. ALLISON. All the monies that we receive are returned to the 

general fund. And then under the EESA law— 

Mr. BACHUS. Then you draw back out. 

Mr. ALLISON. Under the EESA law, we may make additional investments so as long as we do not exceed $700 billion outstanding 

at any one point. 

Mr. BACHUS. So it is deposited in the fund and then it is drawn 

out. 

Mr. ALLISON. It is deposited. And then there is a new decision 

and a new allocation. 

Mr. BACHUS. I am sure you are aware that Chairman Frank has 

introduced TARP for Main Street— 

Mr. ALLISON. Yes, sir. 

Mr. BACHUS. —which is legislation to use the dividend payments, 

and I guess the warrant payments too, I am not sure about that, 

to fund several public housing initiatives instead of the money 

being returned to the Treasury. Was this type of use of TARP in 

your opinion ever envisioned by the Treasury Department? 

Mr. ALLISON. Let me first say that the Treasury is carefully looking at Chairman Frank’s proposals. And we also, however, believe 

that it is important to maintain the headroom that we have today, 

keeping in mind that while conditions have improved a great deal 

there are still strains in the financial system. Banks are still facing 

pressures. But let me go back and say that we are carefully analyzing Chairman Frank’s proposals and we will be coming back to 

Chairman Frank with our thoughts. 

Mr. BACHUS. Do you have any initial concerns with legislation 

that draws out of that fund for purposes other than what was authorized in the EESA? 

Mr. ALLISON. I think we have to have more conversations about 

exactly what form that would take before I could draw a conclusion. 

Mr. BACHUS. It really sounds to me like you all have not taken 

any hard approach, that you are not going to reach into that fund 

for all sorts of new ideas. 

17 

Mr. ALLISON. I would not presume at this point to speak on 

whether we might or might not be funding some of those initiatives 

out of the TARP funds, but we are considering it consider carefully. 

Mr. BACHUS. Would you have conversations with the Minority as 

you move forward? 

Mr. ALLISON. Let me say, Congressman, that I look forward to 

meeting with each member of the committee. And I would be glad 

to discuss and respond to any questions or suggestions that you 

may have for us. 

Mr. BACHUS. I have one last quick question. Rahm Emanuel has 

said that the Obama Administration has rescued the economy. Do 

you agree with that assessment? 

Mr. ALLISON. I would say that the EESA law has played a very 

important role in improving the financial markets and the soundness of the financial industry in the United States, which has already had measurable benefits for the American public. 

Mr. BACHUS. And I do agree that the Act that was passed last 

September has had benefits. I am not sure that we can pronounce 

victory. A former President did that in a foreign policy matter and 

it came back to bite him. 

Mr. ALLISON. As this President has said, it is going to take time 

to heal this economy and to heal the financial system. 

Mr. BACHUS. Thank you. 

Mr. ALLISON. Thank you. 

Chairman MOORE OF KANSAS. Ms. Speier, you are recognized for 

5 minutes. 

Ms. SPEIER. Thank you, Mr. Chairman. And thank you, Mr. Allison, for joining us this afternoon. 

I have been listening to the discussion, although I haven’t been 

present in the room. But I do have a couple of questions for you. 

The Inspector General for SIGTARP was before another committee yesterday, and he was very clear that no one in Treasury 

has come over to review the surveys that he has received from 

every one of the banks in terms of how they are using TARP 

money. I find that absolutely unbelievable and irresponsible that 

one agency of government has been able to access information, has 

the information, and nobody from Treasury has looked at it, no one 

from your shop has looked at it. And I want to know, why not? 

Mr. ALLISON. Well, thank you for your question, Congresswoman. 

First let me compliment Inspector General Barofsky for his initiative. I look forward to seeing the information, as do my colleagues, and we will be happy to meet with him about this. 

Ms. SPEIER. So you are committing to this committee now that 

you are going to meet with the Inspector General and review the 

material that he has developed in the survey of 360 banks. 

Mr. ALLISON. I will be very pleased to meet with him. 

Ms. SPEIER. Great. In his report that he issued yesterday, he 

said, ‘‘Although Treasury has taken some steps towards improving 

transparency in TARP programs, it has repeatedly failed to adopt 

recommendations that SIGTARP believes are essential to providing 

basic transparency and fulfill Treasury’s stated commitment to implement TARP with the highest degree of accountability and transparency possible.’’ 

18 

Now, one of the recommendations is that the Treasury should require all TARP recipients to report on the actual use of TARP 

funds. Treasury has declined, saying that reporting would be meaningless. And I have to tell you that my constituents probably don’t 

think it is meaningless to know precisely where their taxpayer dollars are going. 

So my question to you is, will you actually adopt that particular 

recommendation? 

Mr. ALLISON. Well, first of all, we welcome the recommendations 

of the SIGTARP and the other oversight bodies. As I mentioned 

earlier in my testimony, we have adopted—or come very close, with 

a few minor details to adopting—about three-fourths of the recommendations that we have received. 

Ms. SPEIER. Well, there are only four recommendations here, and 

he says you haven’t adopted any of them. I just want to get a clear 

answer, will you or will you not make public how the money that 

has been received by these banks in TARP have been spent? 

Mr. ALLISON. Let me, first of all, point out that every month we 

provide comprehensive information on our Web site, 

financialstability.gov, about the actual lending activities of all the 

banks in which we have invested. 

Ms. SPEIER. Mr. Allison, with all due respect, I am asking a very 

simple question, and I just want a simple answer. Either you are 

willing to do it or you are not willing to do it. 

Mr. ALLISON. Well, we think that the most important information— 

Ms. SPEIER. Either yes or no. Will you do it? 

Mr. ALLISON. We have looked at that possibility. Our concern, 

which we have mentioned, is that—let me give you some examples. 

This is a Capital Purchase Program. Its intent is to provide capital 

to banks. We disclose all those activities. Every capital transaction, 

whether we invest or whether we receive monies back, is posted on 

our Web site within 48 hours. There is voluminous information 

about that. 

Once the money has been invested, on a daily basis the banks 

may be shifting the use of the funds. They are dynamic institutions. If they report one day the money has been used for this, another day it can be changing. 

Furthermore, because the money is all placed in a cash account 

as it is received and money is fungible, while the bank may say 

that they have, let’s say, put $50 million— 

Ms. SPEIER. Mr. Allison, I hate to interrupt you, but my time is 

very limited and you have just used up another 2 minutes. 

This is my request to you. Mr. Barofsky believes that you can put 

this on a public place for public distribution. I am asking you to 

work with him and find a way by which the taxpayers of this country are going to be able to access this information and know how 

the banks are spending their money. I want to know—and I am 

really getting tired of many of the people in the Administration 

and, frankly, some of my colleagues in Congress, protecting the 

banks. We should be protecting the taxpayers, and the taxpayers 

have every right to know how their TARP money is being spent. 

Chairman MOORE OF KANSAS. The gentlelady’s time has expired. 

19 

The next person we recognize is Congressman McHenry for 5 

minutes. 

Mr. MCHENRY. Thank you, Mr. Chairman. And thank you for 

your testimony, Mr. Allison. 

I think, to my colleague’s point here, you know, money is obviously fungible, right? So it would be very difficult for you to say 

that it is the $100 billion or $1 billion that this institution got that 

they lent here the whole deal. That is fair to say; is that correct? 

Mr. ALLISON. Yes, sir. 

Mr. MCHENRY. Now, the point that I think many of us have is 

we are concerned about what is happening on Main Street, how 

that money is actually being lent. So to get more precisely at my 

colleague’s question, are you able to track lending standards for 

these various institutions? 

Mr. ALLISON. While we post the actual information on lending by 

all those banks—which we think is very important for the public 

to know—we are not the regulator for those banks. We don’t oversee the bank’s lending standards. Our role has been, under the 

EESA law, to provide capital to promote the stability of those 

banks, not to manage the banks and not to regulate the banks. The 

regulation is handled by other regulatory agencies. 

Mr. MCHENRY. Obviously. But in terms of disclosure and tracking those lending standards, are you doing that? 

Mr. ALLISON. We are not tracking the individual lending standards of each bank. I assume that the regulators are very much involved in monitoring the lending standards. 

Mr. MCHENRY. Yes. But we have you before the Congress about 

TARP funds, and TARP funds which are then being lent out or not 

being lent out. And the SIGTARP report says obviously this can be 

done to track lending standards, so we will get to that in the next 

panel. 

With that, I would like to yield the balance of my time to my colleague from New York, Mr. Lee. 

Mr. LEE. That is very kind of you, sir. Thank you. 

Just a quick question. And it gets back to—and I have to tell 

you, the taxpayers in my district are very frustrated with what we 

are doing in Washington and the concern over the debt that we 

have in this country. Now, at the end of this year, the projections 

are close to $2 trillion. And I think it is very positive news in the 

fact that we have—I believe you mentioned somewhere in the 

neighborhood of $70 billion being paid back. But overwhelmingly I 

hear from my constituents that we need to start paying down this 

debt rather than—it sounds like what I heard from you today is 

that we just plan on keeping this program going on in perpetuity, 

or at least over the next 5 years. So dollars coming back are being 

potentially reinjected into the market and potentially going to 

places outside what their original purposes were stated, or the potential to do so. Is that a fair statement? 

Mr. ALLISON. Let me make clear, Congressman—and thank you 

for that, it gives me an opportunity to clarify that concern—under 

the EESA law the Treasury would no longer make investments in 

institutions after the end of this year unless the Treasury Secretary makes the determination that it is in the interest of the 

economy and of the Nation to extend this program until October of 

20 

2010. This is not an open-ended, unending investment program. 

And in the investments themselves there are built-in incentives to 

pay back the money. 

The cost of the funds in many of these programs rises over time. 

In some, the program itself expires over a period of time. So we are 

very mindful of the need to protect the taxpayers’ interest, to get 

the highest possible return we can, to be careful stewards of the 

money, and we also understand that this program, in terms of 

making investments, will terminate at some point in the not too 

distant future. 

Nonetheless, the government may still hold investments for a 

longer period of time, and we are preparing for that eventuality to 

make sure we continue to have the procedures, the policies, and 

the personnel to be responsibly overseeing those investments. 

Mr. LEE. Thank you. I yield back my time. 

Mr. MCHENRY. Thank you. 

Chairman MOORE OF KANSAS. The Chair now recognizes Mr. 

Grayson for 5 minutes. But I will remind everybody in the room 

that votes are about to be called, so we will probably go another 

5 to 7 minutes after votes are called and then recess the hearing 

and come back after votes are concluded. 

You are recognized, sir. 

Mr. GRAYSON. Thank you. 

On page 3 of your statement, Mr. Allison, you say, ‘‘We have provided capital to 657 institutions across 48 States, including over 

300 small and community banks, enabling banks to absorb losses 

from bad assets. While continuing to loan to consumers and businesses, we continue to invest in banks every week.’’ 

In terms of that statement, Mr. Allison, I think of this myself as 

a distinction between good banks and bad banks. Good banks are 

banks that have been profitable and remain profitable through the 

economic disaster that we have experienced the past year and a 

half, are well managed, can assess risk properly, and they are fundamentally different from the bad banks. The bad banks have basically taken bets, often with taxpayer-provided money, governmentprovided money, they have made bad decisions, and unfortunately 

for all of us, many of the people at those banks are still in charge 

of those banks, making more bad decisions every day. 

Now, it seems to me that if you provide a dollar’s worth of capital 

to a good bank, that bank might be able to make $10 worth of 

loans. That is the fractional reserve system we live under. If you 

provide $1 worth of capital to a bad bank, that bank certainly is 

not going to be able to do any more than provide $10 worth of 

loans. It also will try to cover its losses, maybe pay out more money 

to its bad management, maybe pay out money to its shareholders, 

and not do what we are trying to do through this program. 

So why is it that we do something like enable banks to absorb 

losses from bad assets in this program? Why don’t we invest in the 

good banks, not the bad banks? 

Mr. ALLISON. Congressman, thank you for the question. 

We are investing in banks that are deemed to be viable by the 

regulators. And banks voluntarily come to us, but they must be 

deemed to be viable banks. Now, some viable banks have bad assets, but those viable banks are still very important to their comVerDate Nov 24 2008 17:27 Dec 16, 2009 Jkt 053247 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 K:\DOCS\53247.TXT TERRIE
21 

munities. And so as part of the financial stability effort, we are 

helping banks to recover and stabilize so that they can continue 

lending in their communities to businesses, large and small, and to 

individuals to keep the economy going. 

Mr. GRAYSON. Well, following this line of questions, wouldn’t we 

be better off if we gave the same amount of money to good banks, 

banks that were functioning well, so that they could expand their 

operations and make more loans rather than propping up bad 

banks that have made mistakes that have cost all of us? 

Mr. ALLISON. Congressman, these are viewed as good banks with 

some bad assets, and as banks that can be viable and ongoing and 

continue to serve their communities. 

Mr. GRAYSON. How do we get to a point where a good bank has 

a bad asset? I mean, seriously, doesn’t that reflect some really bad 

choices on the part of the management of that bank whenever they 

have a bad asset? 

Mr. ALLISON. Well, I think that virtually every bank has some 

bad loans on its books. And what we have seen is, because prices 

of real estate have declined so much, commercial as well as residential, a number of companies have had to go out of business because of declining economic activity. Loans that seemed to be quite 

good when they were granted turn out to be not so good in an extreme environment like today. 

Mr. GRAYSON. And yet we have had banks that make the right 

decision. Are you familiar with the concept of ‘‘moral hazard?’’ 

Mr. ALLISON. Yes, sir. 

Mr. GRAYSON. Aren’t we inviting serious moral hazard by continuing in this way to prop up bad banks rather than helping good 

banks expand their operations and letting capitalism work? 

Mr. ALLISON. Well, sir, we have to keep in mind that these banks 

have to pay us back—and we have been well paid back just today 

by one of them. And we are working and making every effort to 

make sure that the taxpayers who made these investments obtain 

an appropriate return. That is our responsibility, to work on their 

behalf. 

At the same time, these funds are going to help stabilize not just 

the banking system, but the economy, which benefits all Americans. And we have seen that the banking condition has improved. 

We have seen that home sales are starting to stabilize in many 

parts of the country. The risk of the financial system has declined, 

which is good for everybody. And we are hopeful that by continuing 

to provide the support, as the banks need it, that we are going to 

have a strong underpinning to begin this recovery that we are all 

so anxious to see. 

Mr. GRAYSON. But resources are always limited, even for the 

Federal Government. Wouldn’t we be able to accomplish all of that 

and more if we directed our support to good banks rather than to 

propping up bad banks? 

Mr. ALLISON. Well, again, I believe that many of these were good 

banks that were active in lending in their communities, and we are 

now seeing a financial situation that this country hasn’t experienced since at least the 1930’s. This has been an extremely serious 

decline in asset values that has affected every American. 

22 

We have to keep the economy going. The whole purpose of this 

program, as enacted by Congress last year, was to inject capital 

into the banking system so it could not only survive, but stabilize 

as soon as possible. 

Mr. GRAYSON. I see my time is up. But I would urge you, Mr. 

Allison, to give some thought to this subject. If you are continuing 

to invest in banks every week, give some thought to investing in 

the good banks, not the bad ones. 

Mr. ALLISON. Thank you for your advice. I appreciate it. 

Chairman MOORE OF KANSAS. Thank you. 

Mr. Paulsen, you are recognized for 5 minutes. 

Mr. PAULSEN. Mr. Allison, you mentioned in your testimony that 

you could not comment on some of the existing discussions and negotiations you are having with some of the banks given that they 

are trying to buy back some of the warrants that they have that 

are outstanding. 

I have had some questions come back from some of these folks 

that I have interacted with about other different set of rules, etc., 

that apply to them, but you also mention in your testimony that 

if Treasury and these firms or these banks cannot agree on a fair 

market value for these warrants, that the warrants would be sold 

then by Treasury in a public auction, correct? 

Mr. ALLISON. Yes, sir. 

Mr. PAULSEN. Is there a timeline on that public auction of when 

that would be? Is there a timeframe that would be put in place 

when the auction would actually take place? Are there guidelines 

or stipulations that you can share a little bit more about? 

Mr. ALLISON. Yes, sir. Thank you for the question. 

We are actually working hard on those guidelines now. They are 

not yet completed. When they are, we will provide more information. We want this to be as transparent a process as possible, but 

we have had to give very careful thought since this amendment to 

the Act was put into place on how we might best do this in a way 

that protects the interests of taxpayers. 

Mr. PAULSEN. And just knowing that it is in the interest of protecting taxpayers, as you said, and repaying and kind of unwinding 

all this that has taken place, you don’t foresee this is going to be 

like another year or— 

Mr. ALLISON. No, sir. 

Mr. PAULSEN. Okay. I was just kind of curious on that. 

I also want to mention, too, from your estimation, all the work 

that you have done on this issue, do you think that the TARP 

funds have been equitably reaching the smaller financial institutions? 

Mr. ALLISON. Well, most of the institutions that have received 

TARP funds are small. And we have at least 300 quite small community banks and other small institutions who have received these 

funds. Nonetheless, we are concerned about making sure that 

small banks—which are so vital to their local communities and account for an outsized portion of small business lending—are able 

to continue lending. So that is why we reopened the CPP program 

in May, I think it was, to make it possible for these banks to, if 

they need it, tap into the CPP facility. And we have had a number, 

23 

we have a number every week who are coming to us for that funding and giving us their preferred stock. 

We are also looking at other ways of assisting small business, 

and we may have some announcements to make about that before 

long. 

Mr. PAULSEN. And this was a question I was going to ask also 

of the next panel, but it seems at least I am hearing differently 

from some of the smaller financial institutions about their inaccessibility of some of the opportunities for these funds. And I am just 

curious as to if you have a perspective on why I might be hearing 

that perspective. 

Mr. ALLISON. Well, first of all, I would like to know the names 

of those banks, Congressman. If you can provide them to us, we 

will get in touch with those banks as soon as possible. They also 

should be talking with their regulator. 

We make investments on the recommendation of the bank’s regulator. So their first stop should be the regulator, and then we will 

consider the investment. 

Mr. PAULSEN. Thank you. I yield back. 

Chairman MOORE OF KANSAS. Mr. Marchant of Texas, you are 

recognized for 5 minutes, sir. 

Mr. MARCHANT. Thank you, sir. 

Could you just really quickly discuss the concept of headroom 

that you were talking about earlier? You have a $700 million, basically, cap on the amount of money that you can put out at any 

given time. 

Mr. ALLISON. Yes, sir. 

Mr. MARCHANT. So now that we are pretty far into this program, 

you also have an inflow of money, so you have kind of a revolving 

fund. So is it public how much the Goldman Sachs transaction was 

worth today? 

Mr. ALLISON. Let me make clear that when money is repaid to 

us, it is put in the general account of the U.S. Treasury. So the 

headroom is the difference between the amount that we have budgeted and the amount of the total limit, which is $700 billion, plus 

the amount that has been repaid. So we have budgeted totally 

about $643 billion, but we have also repaid money. And when you 

add the repayments to the difference between the $643 billion and 

the $700 billion, you end up with about $128 billion of what we call 

headroom, which we think is important to have at this point in this 

economic crisis in case banks find that they need additional funding in order to maintain their activities and preserve their financial 

strength. 

Mr. MARCHANT. But when you define budget, you mean that 

those are funds that you have already committed that have not 

been disbursed? 

Mr. ALLISON. These are funds that we have allocated and we 

may use for certain purposes. But we point out that at this moment 

we have invested about $360 billion. So it is the difference between 

the $360 billion and the $643 billion, I believe it is, is what we 

have more or less earmarked for additional uses. 

Mr. MARCHANT. So when you say allocated, it may be an assettype allocation, but not a specific obligation to fund a bank? 

24 

Mr. ALLISON. As far as the CPP program goes, that is correct, 

yes, sir. 

Mr. MARCHANT. So if Congress reauthorizes the extension to— 

October 2010; is that correct? 

Mr. ALLISON. Well, it will be the Treasury Secretary who has the 

authority to extend the program until October 2010. 

Mr. MARCHANT. So if the Treasury Secretary authorizes the extension to 2010, then this whole dynamic process of headroom and 

inflow and outflow remains the same. I mean, you have that pretty 

well fixed in the way you are going to do that? 

Mr. ALLISON. Yes, sir. 

Mr. MARCHANT. Then in 2010, is there a possibility to extend beyond that on the part of the Secretary, or would that be a congressional act? 

Mr. ALLISON. I believe that the Treasury’s authority—the Secretary of the Treasury’s authority extends through 2010 to extend 

that. 

Mr. MARCHANT. And that is to disburse. And then the repayment 

follows that. 

Mr. ALLISON. The repayments could continue for some time. 

Mr. MARCHANT. But then there is no longer any outflow; it is all 

inflow at that point. 

Mr. ALLISON. That is my understanding of how it works, yes, sir. 

Mr. MARCHANT. And what if you ended up with a situation where you had in excess of the $700 billion because of the repayment of 

the TARP and the sale of the warrants and the redemption of the 

preferred and the interest paid? 

Mr. ALLISON. Do you mean—we would not be above $700 billion, 

we would be well below it. 

Mr. MARCHANT. You have already forecasted that you— 

Mr. ALLISON. There is a limit on the amount we can have outstanding at any one time invested on behalf of the public; that 

limit is $700 billion. We may not exceed that number. 

Mr. MARCHANT. So it goes into the Treasury in the general fund. 

Mr. ALLISON. Yes, sir. 

Mr. MARCHANT. But we have already raised the debt ceiling to 

include that appropriation, correct? 

Mr. ALLISON. Sir, you are getting beyond my expertise. 

Mr. MARCHANT. Well, I mean, is there a snap-back provision in 

the bill that says that as the money comes back into the Treasury 

then the money is paid down on the debt? Or did we not already 

have through the—by raising the budget, isn’t the money really 

captured in the Federal Government coffers? 

Mr. ALLISON. I will get back to you on that, but it is my understanding that as the money comes in, that reduces the national 

debt as it comes in. But let me give you a more definitive answer 

on that as soon as possible. 

Mr. MARCHANT. Thank you. 

Chairman MOORE OF KANSAS. I thank the gentleman. And I 

would, at this time, thank you, Mr. Allison, for your testimony. You 

are excused. 

I invite the second panel to sit down. We have just a very few 

minutes, I think, before votes are called, and we will go as long as 

we can. We will go for 5 or 7 minutes. 

25 

Mr. BACHUS. Mr. Chairman, I would just like to introduce into 

the record the Special Inspector General’s report on the banks’ use 

of money, which does show that 83 percent of them tell the SIG 

that they had used it for lending, even the 4 percent that said 

they— 

Chairman MOORE OF KANSAS. They had or had not used today? 

Mr. BACHUS. Had. So, I mean, it does, I think, indicate at least 

some evidence that the U.S. banks are using the TARP funds to increase lending. Some of them did it to maintain their capital levels 

and stay in business to keep the doors open. 

Chairman MOORE OF KANSAS. Without objection, it will be received into the record. 

Mr. BACHUS. Thank you. 

Chairman MOORE OF KANSAS. And thank you, Mr. Allison. 

At this time, the Chair would invite the second panel to be seated. 

I am pleased to introduce the second panel of witnesses for this 

hearing. First, Mr. Barofsky, the Special Inspector General of the 

Troubled Asset Relief Program, better known as SIGTARP. 

And next, we are glad to have with us again Professor Elizabeth 

Warren, Chair of the Congressional Oversight Panel. 

And finally, we will hear testimony from Mr. Tom McCool, Director of the Center for Economics at the Government Accountability 

Office. 

Thank you all for being here. And without objection, your written 

statements will be made a part of the record. 

You will each be recognized, and I think votes are just now being 

called. I think we can take the first witness. You will each be recognized for 5-minute statements summarizing your written testimony. 

Inspector General Barofsky, you are recognized for 5 minutes, 

sir. 

STATEMENT OF NEIL BAROFSKY, SPECIAL INSPECTOR 

GENERAL FOR THE TROUBLED ASSET RELIEF PROGRAM 

Mr. BAROFSKY. Thank you, Mr. Chairman. It is an honor to be 

back before this committee. 

It is also an honor to be sitting next to two of our most important 

oversight partners, of course Professor Warren from the Congressional Oversight Panel and Mr. McCool from GAO. 

This week we have introduced and presented our most recent 

quarterly report and the oversight that we have been conducting 

over the past quarter. So much of that oversight is a result of the 

coordination that we have had with our oversight partners. And 

one of the things we strive for of course is to coordinate the oversight. The TARP has gone from a $700 billion program, which is large 

enough in its own right, to now being expanded with activity at the 

Federal Reserve and the FDIC into an almost $3 trillion program. 

This is more than any one of the three of us in our organizations 

could ever cover alone. And we strive to coordinate that oversight, 

working with GAO, our important audit partner, trying to cover as 

much of this terrain as possible. We are putting forward a joint 

audit project, our first on corporate governance, utilizing the expeVerDate Nov 24 2008 17:27 Dec 16, 2009 Jkt 053247 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 K:\DOCS\53247.TXT TERRIE
26 

rience and activity of both of our agencies. And we recently, this 

month, did a coordinated project with Professor Warren and the 

Congressional Oversight Panel. The first part was, I thought, their 

excellent valuation report in their July report and the conclusions 

there. We are going to be using that as context for an audit that 

we have launched into the warrant repurchase process. 

Basically, in our report that we have just delivered this week, I 

will very briefly describe what is contained in there. 

In section 2 of our report, we do a brief overview of what has 

happened in the last 3 months in the TARP. And there has been 

a lot of activity, from the bankruptcy of the auto companies, from 

repurchase of more than $70 billion in the Capital Purchase Program, from the selection of the nonasset managers and the commitment of approximately $30 billion of taxpayer money in the PublicPrivate Investment Program. 

In section 3 or our report, we attempt to put that in context by 

giving detail surrounding the approximately 50 other programs. So 

often a particular TARP recipient not only accesses the TARP, but 

will access other parts of the financial bailout from the government, whether it is a loan guarantee from the FDIC or borrowing 

money from the Federal Reserve. And what we have attempted to 

do in our report is bring transparency to that by setting out approximately 50 of the most significant programs that have been implemented or discussed and described since the onset of this crisis. 

In section 5 of our report, we give our recommendations. We go 

over our past recommendations and have issued several new recommendations. One of them, which was discussed with Mr. Allison, 

was our continued recommendation that Treasury require TARP 

recipients to provide information on their use of funds. 

As was also discussed, we recently finished our audit, which was 

completed and made public this Monday. And we have demonstrated that, notwithstanding the inherent fungibility of money, 

banks can and should be required to report on the use of funds. 

Contrary to Mr. Allison’s suggestions, we have demonstrated that 

this is a meaningful task. And when we asked the banks what they 

did with the money, they were able to tell us, and they were able 

to tell us some of the things that, Ranking Member Bachus, you 

described just moments ago. They were able to explain how they 

were able to increase lending, or at least stop the hemorrhaging, 

avoid further reduction of lending. Banks told us that they would 

have come to a standstill if not for these funds. 

But they were also able to explain other uses of funds, how they 

invest in money, how they are able to maintain capital cushions so 

they can withstand future losses. This is vitally important data 

from our perspective and vitally important transparency. I understand the orthodoxy in the concept of capital accounts, and I understand that perhaps that is why Treasury initially was so reluctant 

to adopt our recommendation. But now that we have the proof, now 

that banks, when asked, the banks themselves have said we can 

report on how we are using the funds, we believe that these excuses and explanations for lack of transparency should no longer 

be countenanced, and we believe that Treasury should, and, in 

order to meet its promised goals of bringing transparency to this 

program, must adopt this recommendation. 

27 

We also make other recommendations in the report relating to 

other aspects of transparency, including the Public-Private Investment Program, as well as some other transparency recommendations that have been kicking around for some months, including the 

basic one that Treasury report to the American people what the 

value is of their investment. Treasury receives monthly reports 

from its asset managers with estimates of what the value of the 

TARP portfolio is, and we believe basic transparency would require 

Treasury to make that information public. 

Thank you, Mr. Chairman. 

[The prepared statement of Special Inspector General Barofsky 

can be found on page 60 of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. Barofsky. Votes 

have been called. There are 10 minutes left for votes. We can hear 

one more witness. 

Professor Warren, I will ask you to do a 5-minute presentation, 

or less, so we can get over and vote. And then we will reconvene 

and hear from Mr. McCool and then have questions for the witnesses afterwards. 

Mr. BACHUS. Actually, Mr. Chairman, if she takes even 6 minutes, I think we are in good shape. 

Chairman MOORE OF KANSAS. Very good. 

Mr. BACHUS. Thank you. 

STATEMENT OF PROFESSOR ELIZABETH WARREN, CHAIR, 

CONGRESSIONAL OVERSIGHT PANEL 

Ms. WARREN. Thank you very much. Thank you, Chairman 

Moore. Thank you, Ranking Member Bachus. It is an honor to be 

here again today in front of this committee. I appreciate your inviting us. 

I want to say, as I always do, unlike the gentlemen to my left 

and right, I am part of a panel, and so when I am here, I am not 

scripted, which means I speak for myself. I will do my best to represent my panel, but I represent only my views when I open my 

mouth. 

Our job is to review the current state of financial markets in the 

financial regulatory system and to report to Congress every 30 

days. So far, we have delivered to you eight oversight reports and 

two special reports on regulatory reform and on farm credit, both 

of which were also required by law. We have also had nine hearings. We have been out in the field on your behalf. We will have 

our tenth hearing next Monday in Detroit. 

Our contribution, again, our statutory mandate is a fact-based 

analysis designed to raise issues about the operation and direction 

of TARP and about the broader effort to restore stability to the economic system. We call that asking whether or not TARP is operating to benefit the American family and the American economy. 

We hit three repeating themes, and that is the need for transparency, the need for accountability, and the need for clearly articulated programs by Treasury. We coordinate closely with the 

GAO. And the Special Inspector General, Mr. Barofsky, just identified our coordinated effort which we are very pleased to participate 

in, and that is an important part of the report we just issued on 

warrant valuation. 

28 

Ranking Member Bachus identified the key to what the warrants 

are about. We understood what the risks were when Congress allocated the potential $700 billion to TARP. This is the American taxpayers’ one opportunity to participate in the upside. 

Our statutory mandate is to look at the choices Treasury is making, and that really involves not just our July report, but also our 

June report. Our June report was on stress tests, the question 

about repayment in the first instance and whether the stress tests 

were stressful enough. We then moved to our July report. Once the 

decision is made to take money back from these financial institutions, what should be the pricing on the warrants. 

In order to do the warrant valuation, we thought it would be 

helpful, in terms of oversight, to do an independent valuation, to 

ask how it is that others might value this, our own expertise within 

the panel, but also, we were aided by Nobel Laureate Robert 

Merton, Professor Daniel Bergstresser, and Professor Victoria 

Ivashina. All are from the Harvard Business School; all advised us 

independently without consulting with each other. They helped us 

review our model, and they helped us review our inputs. Ultimately, we did all of the calculations internally to the panel. And 

that is how we came up with the numbers we came up with. 

Now, our finding was that the price paid in the first warrants 

that were sold were about 66 percent of what our valuation would 

show was the current market value. If Treasury got only 66 percent of current valuation as it went forward, that would be a loss 

to the American taxpayer of about $2.7 billion. 

Now, we are very careful in this report to point out some key features. The first is, only a tiny proportion of these warrants have 

been sold, and they are in very small banks in the first sales. We 

acknowledge there may be differences about what are the appropriate liquidity discounts to put into the valuation. We also acknowledge that there may be considerations other than maximizing 

the return to the taxpayer, for example, trying to get out of this 

business of holding warrants as quickly as possible, and those 

could affect the valuation. 

I will say, however, that since we issued our report 12 days ago, 

Chase has decided it wants to go to auction, and Goldman Sachs 

has just struck a deal today which adjusted for the rise in the 

value of their stock prices over the last 12 days. It is almost precisely at our estimated valuation. And I heard Treasury announce 

in this hearing that they will be revealing more information about 

their negotiations over stock price warrants. I think that means 

oversight works. 

So I am pleased to be here today to give you our report, to answer your questions in any way that we can, and to talk about alternative approaches to valuing these warrants. 

I, again, appreciate the invitation to be here, and I am glad to 

take your questions. 

[The prepared statement of Professor Warren can be found on 

page 86 of the appendix.] 

Chairman MOORE OF KANSAS. Thank you for your testimony, 

Professor Warren. 

We are going to stand in recess until after votes, and I would ask 

members to come back immediately after votes so we can reconvene 

29 

this hearing. We will finish up with the testimony of Mr. McCool 

and then have questions by the members. 

Thank you. And I apologize for this interruption of our hearing, 

but we do have to vote. Thank you very much. We will see you all 

in a bit. 

[recess] 

Chairman MOORE OF KANSAS. The hearing will reconvene. I 

thank the witnesses for staying around for the hearing, and we got 

back here just as quickly as we could. 

Mr. McCool, you are recognized, sir, for 5 minutes. 

STATEMENT OF THOMAS J. McCOOL, DIRECTOR, CENTER FOR 

ECONOMICS, APPLIED RESEARCH AND METHODS, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. MCCOOL. Thank you, Mr. Chairman. Chairman Moore, 

Ranking Member Biggert, and members of the subcommittee, I am 

pleased to be here today to discuss our work on the Troubled Asset 

Relief Program. 

The Emergency Economic Stabilization Act that authorized 

TARP requires GAO to report at least every 60 days on findings 

resulting from our oversight of the status of actions taken under 

the program. My statement today is based on our fifth mandated 

report issued on June 17th, which follows up on our previous recommendations and covers the actions taken as part of TARP 

through June 12, 2009. 

Our oversight work under the Act is ongoing, and our next report 

will be issued in the next few days and will focus on TARP’s Loan 

Modification Program. Specifically, my statement today focuses on 

the nature and purposes of activities that have been initiated 

under TARP, including repurchases of preferred shares and warrants and Treasury’s efforts to establish a management structure 

for TARP. 

As of July 10, 2009, Treasury had disbursed about $361 billion 

of the roughly $700 billion in TARP funds. Most of the funds, $204 

billion, went to purchase preferred shares and subordinated debentures of over 650 financial institutions under the Capital Purchase 

Program. This Program continues to be the Office of Financial 

Stability’s primary vehicle for stabilizing financial markets. At the 

same time that Treasury continues to purchase preferred shares in 

institutions, other institutions have paid over $70 billion to repurchase shares. As of July 10th, 12 of the 33 financial institutions 

that repurchased their preferred shares from Treasury had also repurchased their warrants and three others had repurchased their 

warrant preferred stock from Treasury at an aggregate return of 

about $80 million. 

Although the Office of Financial Stability and its regulators have 

established criteria for accepting and approving CPP applications, 

the regulator’s criteria for determining when institutions can repurchase preferred stock from Treasury lack adequate transparency. This is an area in which we made a recommendation in 

our report for the Treasury in coordination with the primary regulators to ensure consistent criteria in the consideration of repurchases. 

30 

While Treasury has provided some limited information about the 

warrant valuation process, it has yet to provide a level of transparency at the transaction level that would address questions 

about whether the Department is getting the best price for taxpayers. This is another area in which we recommend that Treasury 

provide such transparency in the process by publicly disclosing 

more detailed information about warrant prices. I was pleased to 

hear Mr. Allison suggest earlier Treasury seems to be moving forward in that effort. 

Although it is unclear whether any institutions will choose to 

participate in the Capital Assistance Plan, the Federal Reserve did 

conduct stress tests of the largest 19 bank holding companies to see 

how well they would withstand more arduous than expected economic conditions. While the Federal Reserve disclosed the stress 

test results, it had no plans to disclose information about the institutions going forward. What information, if any, is disclosed will be 

left to the discretion of the affected institutions raising a number 

of concerns, including that the institutions could disclose inconsistent or only selected information. 

Moreover, the Federal Reserve had not developed a mechanism 

to share information with the Office of Financial Stability about 

the ongoing condition of the bank holding companies that continue 

to participate in TARP programs. For this reason we made a recommendation to the Federal Reserve to disclose to the public information on the companies against the more adverse scenario on a 

going forward basis. 

While the Office of Financial Stability has made progress in establishing its management infrastructure, continued attention to 

hiring remains important, especially within the Office of the Chief 

Risk and Compliance Officer and the Home Ownership Group. 

Those are areas where their hiring has not been up to what they 

themselves say are their requirements. They still have a number 

of vacancies and they need to fill them as rapidly as they can. 

Treasury has also continued to build a network of contractors 

and financial agents to support TARP administration and operations that have been key to OFS’s efforts to develop and administer the TARP programs. Treasury has provided information to the 

public on procurement contracts and financial agency agreements, 

but has not included a breakdown of cost data by each entity. As 

a result, Treasury has missed an opportunity to provide additional 

transparency to its TARP operations. This is another area in which 

we made a recommendation to Treasury to improve transparency. 

Mr. Chairman, Ranking Member Biggert, that concludes my 

statement. I am happy to answer any questions. 

[The prepared statement of Mr. McCool can be found on page 70 

of the appendix.] 

Chairman MOORE OF KANSAS. Thank you, Mr. McCool. At this 

time, I will recognize myself for 5 minutes for questions. 

Professor Warren, once people have had a chance to analyze the 

transaction, do you have any sense that $1.1 billion paid by Goldman Sachs will be enough for taxpayers? Do you think we could 

have received more if Goldman went through a public auction? Are 

there other policy issues that should be considered? 

31 

Ms. WARREN. I think that—thank you, Mr. Chairman. I think it 

is a good question. Using the valuation metrics that we laid out in 

our report, the Goldman price comes in almost precisely at what 

we had recommended. I believe the Goldman price is $1.1 billion, 

and using our valuation, it would have been $1.08 billion. So we 

are within rounding error on that. And that certainly increases our 

confidence that Treasury is using a strong valuation approach here. 

I do want to say, though, that there are these other issues that 

lurk in the sales process, and it is hard to find a substitute for the 

benefit of a public sale. A public sale reassures everyone that this 

is the market price. But I certainly understand Congressman Bachus’ point. There are times when we decide that we don’t want to 

delay, that we want to be able to move faster. These are costs and 

benefits and ultimately policy choices not just for Treasury but for 

Congress to weigh in on. We think as your Oversight Panel, the 

best we can do is outline it. We can give you this independent valuation, as we have done, and put the factors in front of you, which 

we have tried to do. 

Chairman MOORE OF KANSAS. Thank you. 

Mr. Barofsky, do you have any different thoughts about that or 

do you agree with what Professor Warren said? 

Mr. BAROFSKY. I definitely defer to Professor Warren. Her report 

and her study I think was comprehensive. I thought it was very instructive. We haven’t done a similar effort. We do have an ongoing 

audit that will address different issues, but I would certainly defer 

to Professor Warren and the panel on this. 

Chairman MOORE OF KANSAS. Mr. Barofsky, another question. I 

notice that in addition to your quarterly reports you issued this 

week, you also concluded the ‘‘use of funds’’ audit that you conducted. What did you learn from that audit and what steps should 

Treasury take to increase accountability in the TARP program? 

And I want to ask you that, sir. 

Mr. BAROFSKY. I think the most important thing we have learned 

is I think we have definitively proved that despite the apparent 

fungibility of money banks can, when asked, report on how they 

are using their funds and that they can provide a great degree of 

transparency and answer that question. We saw that banks did— 

although Treasury, as Mr. Allison noted, does provide lending 

snapshots of each month, that is not the only thing that banks do 

with their TARP funds. According to the banks themselves, they 

use it to maintain capital cushions, insurance for a rainy day for 

future losses, they use it to acquire other financial institutions, 

they use it to invest in securities. All sorts of different things that 

our survey helped provide a necessary level of transparency, but it 

is only part of—you know, our survey was a snapshot as of February. We don’t have the resources to do this on a regular basis, 

and our survey was voluntary. 

So my recommendation is that Treasury finally adopt our recommendation and require financial institutions who are receiving 

TARP funds to report on a periodic basis on how they are using the 

money. 

Chairman MOORE OF KANSAS. Thank you. 

Professor Warren, did you find any connections or parallels with 

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32 

viewing the lending practices and how it affects American families 

and small businesses? 

Ms. WARREN. Yes, Mr. Chairman, we did. In our field hearings 

and our earlier reports we have documented the constriction in 

small business lending and the inadequacy of the tools that have 

been used thus far by Treasury to try to stimulate small business 

lending. We think this is entirely consistent, what we have found 

and reported on, with what it is that Mr. Barofsky has found and 

reported on through a different mechanism. 

Chairman MOORE OF KANSAS. My time is up. And at this time, 

I will yield to questions from Mrs. Biggert, please, the ranking 

member. 

Mrs. BIGGERT. Thank you, Mr. Chairman. Mr. Barofsky, in talking about the audit of the warrants and valuation and sales, when 

can we expect to see this audit? 

Mr. BAROFSKY. We are basically valuating the timing. When we 

first launched the audit, it was unclear when sort of the larger institutions were going to be either repurchasing or going through 

the auction process. Now that we are seeing some of these repurchases, I think we want to take a look and see the auction process. 

For it to be the most useful audit I think we would like to see that 

process be used before we project an end date. 

Mrs. BIGGERT. Can you ensure that the audit will not compromise the Treasury Department to negotiate the best possible 

price for taxpayers? Do you think there is any chance of that happening if the audit is out and they are negotiating? 

Mr. BAROFSKY. With everything that we do, including this and 

any of our audits and really with our recommendations, I think it 

is very important for us to take into consideration the point that 

you just raised. And we would never make a disclosure midway 

through a negotiation, anything that could possibly impact in a 

negative way on the taxpayers’ return. Our job is to protect the 

taxpayers’ interest, and we are very, very sensitive to these types 

of issues and protecting confidential information to the extent it 

may impact or be a detriment to the taxpayer. 

Mrs. BIGGERT. Thank you. 

And Professor Warren, the July report issued by COP states that 

the best manner to sell these warrants is on the open market, however—and as my colleague Mr. Hensarling stated in his additional 

views to that report—choosing a one-size-fits-all method does not 

seem to be the most appropriate method to value these warrants 

given that each repurchase negotiation will have different circumstances. Don’t we need flexibility in the process to help determine the best value while getting the taxpayers out of the business 

of owning bank stocks or warrants? 

Ms. WARREN. Congresswoman, I actually think the report says 

exactly that, that there should be flexibility. We talk about the advantages to an open market process, but we acknowledge that 

there are circumstances that may differ. And I assume that is part 

of the reason that Congressman Hensarling voted for that report. 

We had a 5–0 vote on the valuation report. 

Mrs. BIGGERT. There are always additional views. 

Ms. WARREN. In which I think he cited the report extensively. 

33 

Mrs. BIGGERT. Right. In determining like fair market value do 

you use financial models or is it just a one-size-fits-all? I mean like 

Black-Scholes, do you take that into consideration? 

Ms. WARREN. Of course. Actually our financial models are laid 

out in many, many pages in our report. And as I said in my testimony, they were independently reviewed, the models were independently reviewed by three highly renowned specialists in modeling, all from the Harvard Business School. 

Mrs. BIGGERT. Three members of the panel, Representative Hensarling and, I think, Senator Sununu and Richard Nieman, voiced 

their support for the Administration’s and Treasury’s stated objective to exit warrant holdings as soon as practical after banks repay 

the preferred stock. It didn’t seem like this point was stressed at 

all in the July report. 

Ms. WARREN. Well, I think that it is like so many things, it depends on the cost. There is always a judgment to be made. And 

exiting in the fastest possible way in return for getting the lowest 

cost for the taxpayer may not be ultimately beneficial. On the other 

hand, I certainly understand the point about not hanging on to the 

warrants for 10 years and the political as well as economic implications of that. 

So I think the main point in the report was that there are advantages and disadvantages to speed and to going to the market in 

order to try to sell these warrants. Ultimately, though, we did emphasize the point that when there is a market-based auction, no 

taxpayer needs to wonder what happened behind closed doors or 

whether the appropriate price was reached. 

Mrs. BIGGERT. I guess my point is that it seemed like that was 

the majority and it wasn’t really stressed in the report what they 

said. And next, the panel’s press release for the July report contained the headline, ‘‘So Far Treasury Has Sold Warrants Back at 

66 percent of Panel’s Best Estimate of Fair Market Value.’’ And I 

think that the headline kind of seemed misleading since the banks 

that have redeemed their warrants represent less than 1 percent 

of the value of all the warrants outstanding. It sounded like there 

were 66 percent. 

Ms. WARREN. Actually, I think the press release makes exactly 

that point. But let’s keep in mind that when that press release was 

issued, the immediate response was that Chase said, we will go to 

a public auction, Goldman 11 days later said, we will sell at the 

panel’s recommended price, and Treasury said, we will release 

more information about our sales process. If the consequence of 

this report is to encourage those sorts of responses, then I am very 

happy about that report. 

Mrs. BIGGERT. I yield back. 

Chairman MOORE OF KANSAS. Thank you. And the Chair will 

next recognize Congresswoman Jackie Speier, please. 

Ms. SPEIER. Thank you, Mr. Chairman. I want to thank each of 

you for being true public servants and incredible guardians of the 

American taxpayers. Having said that, I find this discussion very 

interesting because on the one hand some of my colleagues often 

call upon us to think about small businesses and lending to small 

businesses and the fact that we haven’t had enough lending to 

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34 

tion from the banks as to whether or not they are lending to small 

businesses, and wouldn’t we want to know that? And isn’t that 

what our job is really all about? 

Now, I think we have to be very practical here. This is an arm’slength transaction that goes on between these financial institutions 

and the U.S. Government, and these warrants have value. Now, I 

think timing has everything to do with our success at maximizing 

the amount of money we get back for the taxpayers. And it is very 

clear to me that there are some of these arrangements that aren’t 

going to be profitable. AIG comes to mind as one in particular. 

So it is important to us I think to maximize profits to compensate for the ones that are clearly going to be underwater forever. And I am hoping that as you continue to evaluate, if you believe that we should be holding these assets, these warrants, that 

we should hold those. It is an arm’s-length transaction. If the 

banks are coming to us now saying, we want you to exercise the 

option on the warrant or to redeem the warrant, they are saying 

that because they know that they are on the road to recovery and 

it is only going to increase in value. So it behooves us to be smart 

investors right now. 

And I would like your opinions on whether or not there is something to be gained by holding onto them. Just because they say 

they want them redeemed doesn’t mean we have to act and redeem 

them. Our first and only goal should be maximizing the profits for 

the taxpayers. Your comments. 

Ms. WARREN. Congresswoman, I think you have put your finger 

right on the ultimate policy question here. If that is the only goal 

and that is what Treasury should be doing, then Treasury should 

act like any other investor. And you are exactly right that they 

should take these to market when it is appropriate to take them 

to market. When they make the judgment that they would be better off to hold, then they should hold. 

There are those who believe there are alternative considerations. 

There are those who are deeply concerned about the notion that 

the Federal Government holds warrants. We ultimately believe 

that is a policy choice. There is a difference of opinion on which is 

the right way to go with these warrants. And my strong view on 

this is that we laid this out in our report and ultimately Congress 

should advise Treasury about what it thinks is the right way to go 

here. 

I think we do this through this hearing process. We want to say 

that if what they are trying to do is maximize value we can point 

out ways that we think that is best accomplished. If they have 

other considerations then—let me be blunt—then they should articulate what those alternative considerations are and evaluate 

how much money is left on the table in order to accommodate 

them. 

Ms. SPEIER. Thank you. 

Mr. Barofsky? 

Mr. BAROFSKY. I could not agree with Professor Warren more. I 

think that is precisely right. I think the report brought transparency to the issue, a decision needs to be made. And I think the 

really strong point that Professor Warren makes that I can’t agree 

with more is that you need to be up front in articulating what the 

35 

policy decision is, be up front with the American taxpayer that we 

think there is good reasons to liquidate these warrants now because for whatever the reasons are, for the benefits of the banks, 

let the financial institutions off the hook, whatever the justification 

is, but be up front and honest about what is happening. So I agree 

with Professor Warren on this. 

Ms. SPEIER. Mr. McCool? 

Mr. MCCOOL. Again, I would agree as well. I mean there are 

tradeoffs here, and I think that as long as you are transparent 

about the tradeoffs and everybody who should be involved in thinking about those tradeoffs is in the decision-making process, then I 

think that is the way it should work. 

Ms. SPEIER. Mr. Chairman, I would just like to point out that 

there are people who want to see the TARP fail, they want to be 

able to say I told you so. So there are people I believe who are 

going to make us try and take action that are not necessarily in 

the best interests of the public because they want to be able to say 

at the end of the process that we should never have done it in the 

first place. 

So I hope that we keep our eye on what is most important here, 

and that is the American taxpayer. I yield back. 

Chairman MOORE OF KANSAS. I thank the gentlelady for her 

questions and the witnesses for their responses. 

Next, I recognize the distinguished ranking member of the full 

committee, Mr. Bachus. 

Mr. BACHUS. Thank you. I think the theme here could be that 

oversight worked. I mean it worked very well. And I think that is 

always true of accountability or transparency. It normally has a 

very positive approach. And I think that one of the confirmations 

we got today that the panel can be proud of is the Goldman price. 

It was exactly as you say. It was actually $20 million more than 

you said, and so that maybe can pay for the panel. This is a panel 

that actually is going to end up making the taxpayer some money. 

Often the consumer, the taxpayer, is not at the table, and I think 

they were through this panel. It is interesting the history is that 

this was originally a three-page bill without any accountability. 

Then I think the Congress can take a bow because we put that in 

there, we put that accountability in there, which was the board. I 

think it worked very well. 

One thing that we always have to—if we could look in the future 

and see where the markets and the economy are going it would be 

pretty easy to make a call on whether we ought to hold it. Although I personally don’t think that the United States ought to be 

sort of investing or speculating in the market, which to a certain 

extent if you can get a good fair price you take it. Now, if the market dropped 600 points tomorrow and 300 the next day, I would say 

hold on to them probably. And that is a policy decision that I think 

the Administration probably will have to make. And it will be within 10 years, we can probably tell what we should have done. 

One thing that did strike me, and I heard 4 or 5 months ago 

from a banker in Alabama that he went to a seminar in Georgia 

and there was a bank there in Georgia wanting to buy, saying if 

you are for sale we are going to buy you, and they were going to 

do it with their TARP money. So you did have 4 percent that made 

36 

acquisitions. You know, it would be kind of interesting to maybe go 

back and take a closer look at that. Mr. Barofsky, I think they are 

probably going to tell you the truth because you have a right to 

prosecute them, and you have that reputation that you are a very 

good prosecutor. So I think that—now, there will be some I am 

sure in that number that actually were—you know, the FDIC or 

other people said this is a failing bank and they probably—I 

wouldn’t assume that that 4 percent was a bad thing in and of 

itself. I think the Treasury has to understand what we have to understand as a Member of Congress, and that is that this is the peoples’ money, so there needs to be accountability. This wasn’t—you 

know, this isn’t just a private business where you are wanting to 

know about some proprietary thing, this was money that was taxpayer money. So I think that—sometimes I think you can’t justify, 

you know, some sorts of getting information, but I think you can 

here. And I think you have done a great job. 

Let me change gears, Professor Warren. I wrote a letter to you 

on June 24th. I have looked at some of those questions. Some of 

them I am not sure. They are a little harder to interpret. Sometime 

maybe in August, if you could kind of respond to some of those, I 

would appreciate it. But I am not even going to ask you about them 

now. 

But the other thing I just thought I would show you— 

Ms. WARREN. Would you accept my apology that you don’t have 

a response yet? 

Mr. BACHUS. Well, I wouldn’t expect it. There is too much going 

on. 

Ms. WARREN. Nonetheless, Congressman, please accept my apology. We are doing our best. 

Mr. BACHUS. Actually, I don’t even think they are due, because 

I don’t think it is sufficient time for you to have responded, because 

the questions are really, you know they are going to take a little 

time. But I just wanted to direct—one thing I want to show you, 

and kind of at some point you might give me an answer. We are 

talking about one-page disclosures, and this is actually 15 pages on 

a card agreement. Now, some of these aren’t—you know they are 

just part of the page, but that is what the law requires right now. 

So you have quite a job, because you are going to have to almost 

say, you know, well, we are not going to require this anymore, or 

maybe some of this you are going to decide to put in small print. 

But it does show you the challenges you face if you get your agency 

through. So I thank you. 

Ms. WARREN. Thank you. 

Chairman MOORE OF KANSAS. Thank you, sir. Next, the Chair 

recognizes— 

Mr. BACHUS. I usually ask questions. That is very rare for me 

not to do that, but there were no questions because I thought the 

questions were answered. 

Chairman MOORE OF KANSAS. Thank you. 

The Chair next recognizes Congresswoman Kilroy for 5 minutes. 

Ms. KILROY. Thank you, Mr. Chairman. I appreciate it. And 

thanks all of you for your work on helping to look out for the taxpayers’ issue and to make sure that the values of transparency and 

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37 

ther away from the initial infusions of the TARP money. And each 

one of you have in your testimony emphasized the importance of 

transparency. And I will certainly agree with you, certainly sunshine is a great, great thing to have in the public sector. 

But I also think that in this instance that transparency can assist the taxpayers in getting maximum value, maximum return on 

the investment that they made. And I think the Congressional 

Oversight Panel report backs it up. It says, ‘‘Treasury would be 

more likely to maximize taxpayer returns if it sold the warrants 

through auction. The reason is straightforward. An auction would 

cause the warrants to be allocated to the buyers willing to pay the 

highest price, and competitive pressures in the bidding process may 

push bids up.’’ 

Do you agree with that statement, Professor Warren? 

Ms. WARREN. I do, Congresswoman. 

Ms. KILROY. Well, I certainly do as well. And I think that the 

markets and public auctions are certainly a very valid way for setting a price. We have heard today a lot of talk about Goldman and 

the value that was received through the negotiation process with 

Goldman, but not to be too pessimistic or too cynical, there are reports today that the initial offer from Goldman was made several 

weeks ago and the initial offer was $650 million. And that was followed up by a counteroffer by Treasury of some $900 million and 

then followed up sometime after that by the release of Goldman’s 

statements indicating how much money they had made, certainly 

in part because of the infusion of money the taxpayers gave them. 

And as Goldman stock prices go up, would you agree that the value 

of those warrants that the taxpayers were holding would also be 

going up? 

Ms. WARREN. Yes. 

Ms. KILROY. So then it is certainly maybe not surprising that 

Goldman increased its offer to the taxpayers and offered to pay 

$1.1 billion for the warrants. Do you agree with that? 

Ms. WARREN. Yes. 

Ms. KILROY. But would you also agree that perhaps if we allowed 

it to go to market that others who might see the same reports 

about Goldman’s recent earnings might think that holding Goldman’s warrants which could be used by them to purchase stock 

over a pretty lengthy period of time might be to them worth more 

than $1.1 billion and they might make a higher offer than that at 

public auction? 

Ms. WARREN. That is certainly possible, Congresswoman. 

Ms. KILROY. So would you agree that the market has a great deal 

of experience in this issue of setting prices and that Treasury has 

also experience in terms of conducting public auction? 

Ms. WARREN. Yes, Congresswoman. 

Ms. KILROY. And again going back to all three of you, in your 

statements with respect to maximizing value to the taxpayer and 

being transparent, would you agree that a public auction would be 

an excellent way to combine and achieve those two goals, maximizing profits and being transparent? 

Ms. WARREN. Yes, Congresswoman. 

Ms. KILROY. Does anybody on the panel have a different view or 

disagree? 

38 

Mr. BAROFSKY. I think in particular it addresses a lot of the 

transparency concerns and a lot of the allegations that may be 

made when it is a closed door process. 

Ms. KILROY. And the goal of restoring public confidence in the 

markets and having public confidence in our government officials 

is an important and worthwhile goal as well, I would think. 

Ms. WARREN. Yes. 

Ms. KILROY. Thank you. I yield back. 

Chairman MOORE OF KANSAS. I thank the gentlelady. 

The Chair now recognizes Mr. McHenry, Congressman McHenry, 

for 5 minutes. 

Mr. MCHENRY. Thank you, Mr. Chairman. Thank you all for testifying and sorry for the length of the day. It is long for all of us. 

Obviously, Mr. Barofsky, I heard from you yesterday in front of 

the Oversight and Government Reform Committee, of which I am 

a member. Ms. Warren, in terms of your panel, the Congressional 

Oversight Panel, what is your budget? 

Ms. WARREN. I can tell you how much we have spent, but we actually don’t have an allocation. 

Mr. MCHENRY. Is there an allocation? 

Ms. WARREN. No, we don’t have a budget allocation. 

Mr. MCHENRY. How much have you spent? 

Ms. WARREN. We have spent $2.7 million. 

Mr. MCHENRY. $2.7 million. Where did that money come from? 

Is it out of TARP or is it out of Treasury? 

Ms. WARREN. It comes from the Senate and from the House; it 

comes from you. 

Mr. MCHENRY. How is that allocated? 

Ms. WARREN. I am sorry, Congressman. 

Mr. MCHENRY. Basically you just spend whatever you want and 

send the bill to Congress. I mean, how is that allocated? 

Ms. WARREN. Well, we go through the process, for example, of 

hiring and getting your approval. 

Mr. MCHENRY. How many people can you hire, are you authorized to hire? 

Ms. WARREN. We can hire as many as we need. 

Mr. MCHENRY. Okay. That is enough. I think it just shows that 

there isn’t a clear budget. 

Ms. WARREN. No. 

Mr. MCHENRY. Mr. McCool, is that a fair assessment, that there 

has not been an appropriations for this committee? 

Mr. MCCOOL. I don’t really know, Congressman. 

Mr. MCHENRY. This is quite a challenge. 

Mr. Barofsky? 

Mr. BAROFSKY. Congressman, we have the TARP to look after. 

We haven’t looked into the funding for the Congressional Oversight 

Panel. Our funding I certainly could speak on if you would like. 

Mr. MCHENRY. The Inspector General’s Office is an appropriation, yes. Ms. McCool, in terms of your panel meetings—I am sorry, 

Ms. Warren. 

Ms. WARREN. I am sorry, I thought you said Ms. McCool, so I lost 

who you were talking to. I am sorry. 

Mr. MCHENRY. It is late in the day. I don’t have much time. 

Ms. Warren, is it true you have regular panel meetings? 

39 

Ms. WARREN. Yes, we do, Congressman. 

Mr. MCHENRY. Are those publicly disclosed? 

Ms. WARREN. The fact that we have the meetings, yes, Congressman. 

Mr. MCHENRY. No, actually the panel meetings. 

Ms. WARREN. We have business working meetings that are not 

public meetings. 

Mr. MCHENRY. So you have a panel of how many members? 

Ms. WARREN. We have a five-member panel. Since Senator 

Sununu will be stepping down, we will have a four-member panel. 

I presume it will be five again soon. 

Mr. MCHENRY. When you meet in session for the purposes of 

transacting business, is that open to the public? 

Ms. WARREN. We have working meetings that are not open to the 

public. 

Mr. MCHENRY. Do you have a transcript or minutes of that meeting? 

Ms. WARREN. I don’t have a transcript or minutes of that meeting. It is recorded by the Senate Conference Services. But no, Congressman, I have not seen a transcript. 

Mr. MCHENRY. Is a transcript available of your meetings? 

Ms. WARREN. Publicly? 

Mr. MCHENRY. For Members of Congress, is that available for 

your meetings? 

Ms. WARREN. It is not available publicly, no, Congressman. 

Mr. MCHENRY. I am a Member of Congress. 

Ms. WARREN. Oh, I am sorry. 

Mr. MCHENRY. Am I able to get a copy of the transcript of your 

meetings? 

Ms. WARREN. I believe our transcripts are held in our office. And 

if you wanted to send someone over to read them, I believe you 

would be able to read them. 

Mr. MCHENRY. Would that be available? 

Ms. WARREN. I believe you would be able to read them if you 

wish to do that, Congressman. 

Mr. MCHENRY. So you will make that available for Members? 

Ms. WARREN. If you wish to come to our offices to read it. 

Mr. MCHENRY. Why are the transcripts not available to the public? 

Ms. WARREN. These are working meetings of the panel and we 

discuss a great deal of confidential information. And so they were 

never public from the beginning. We do hold, I should remind you, 

Congressman, we do hold public hearings. 

Mr. MCHENRY. Is this an executive session? This is what is interesting to me. You are an oversight panel. 

Ms. WARREN. Yes. 

Mr. MCHENRY. Yet you don’t disclose your meetings. And what 

happens and what transpires in these meetings and the decisions 

you make, the votes you take, are there votes taken at these meetings? 

Ms. WARREN. There are sometimes votes. 

Mr. MCHENRY. So we don’t even know what the votes are much 

less how this report was created with this Panel. So there is no disVerDate Nov 24 2008 17:27 Dec 16, 2009 Jkt 053247 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 K:\DOCS\53247.TXT TERRIE
40 

closure from the Oversight Panel. Do you think that is perplexing 

or strange? 

Ms. WARREN. Well, we have working meetings where we discuss 

confidential information. We issue a public report every 30 days. 

And the report on that vote is made public every 30 days. And each 

of the members is entitled as part of that process to add additional 

views if they wish to do so. 

Mr. MCHENRY. I think it is quite perplexing that an oversight 

panel wouldn’t disclose their meetings. Even you can redact confidential information. That is certainly in your capacity, which is 

done throughout government. But it seems like this is very removed from the public and pretty nontransparent for a board that 

is demanding transparency from TARP funds and the Treasury in 

general. Do you find that problematic? 

Ms. WARREN. Well, what I would find— 

Mr. MCHENRY. If she would be able to finish. 

Ms. WARREN. I would find it quite problematic if we discussed 

sensitive information about TARP recipients, about the inquiries 

and the lines of inquiry that we were pursuing and that were a 

matter of public speculation as soon as we finished saying it. 

My sense is we need an opportunity to work together, and that 

is what we try to do. But we issue public reports every 30 days and 

hold public hearings at least once a month. 

Chairman MOORE OF KANSAS. The gentleman’s time has expired. 

Thank you for the questions, Mr. McHenry. 

And next, the Chair will recognize Mr. Paulsen for 5 minutes. 

Mr. PAULSEN. Thank you, Mr. Chairman. 

Mr. Barofsky, I would just like to ask a question. I am going to 

yield some of my time, but just to follow up, in some of the discussion we had in the first panel with Mr. Allison it had been mentioned that some companies have been getting mixed signals, 

mixed answers in terms of what is coming out of Treasury on the 

requirements for paying back the payments or purchasing the warrants, I guess, what the regulations or stipulations might be for 

that. There is some frustration. 

In the work that your office has done or seen have you found 

that the government or Treasury has been very clear in terms of 

what it has actually demanded for repayment of those funds? Has 

it been foggy? I am just curious what your perspective might be on 

that. 

Mr. BAROFSKY. With respect to the warrants, our audit is pending and ongoing. So I am not really prepared at this time to give 

sort of a conclusion that would come out of that audit. So it is a 

little bit premature for me to answer that question. 

Mr. PAULSEN. Okay. And I also have heard from some in the 

small business community about the way the stimulus or the TARP 

funds have been distributed or handled. The committee had a hearing yesterday on the whole issue of too-big-to-fail, the full committee. And one of the things that we think we have missed is the 

whole too-small-to-save or the concept of with small community 

banks or small business, what the impact has been on them, where 

the majority of those funds have gone to the larger institutions. 

But after about 6 months now, we have seen the Administration 

has started now finally to talk about actually looking at the small 

41 

business angle and focusing more in that direction, which I think 

is smart and prudent. And as you know, I think at the first time 

go around, earlier this year we had an amendment that was before 

this committee that would have added authorizing legislation that 

would have required you to report on small business activity as 

well as a part of the Special Inspector General’s obligations on the 

next report. 

Is that something you think you could look at including in your 

next report, just kind of including some measures on small business participation in the TARP or small financial institutions? 

Mr. BAROFSKY. I think it would be—what we could do is with the 

information that we already have perhaps from the survey on what 

banks are doing with respect to small lending and what they are 

saying. We don’t really have the resources or mechanism to do exactly what you are saying. That really falls on Treasury. I mean 

that is a basic part of Treasury’s, I think, obligations. Under the 

concept of transparency they should be doing that assessment and 

making that information available. It really goes to the heart of our 

transparency recommendation about use of funds, how are the institutions using the funds with respect to small businesses, and reporting on in their transaction report what steps they are taking 

for small businesses. 

I will be happy to work with you and your staff and have my 

staff talk to you. If we could think out some other ways where we 

could contribute to that transparency, we are always open to suggestions and we look forward to following up with you on that. 

Mr. PAULSEN. I appreciate it. I do want to commend you for your 

work, and you have been very helpful to members on this committee. 

I just would like to yield the balance of my time, Mr. Chairman, 

if I could, to Mr. McHenry. 

Mr. MCHENRY. Thank you. I thank my colleague for yielding. Ms. 

Warren, just to follow up on this again. The fact that there is an 

unknown budget that hasn’t been allocated, and to my knowledge 

from the Legislative Branch Appropriations, there wasn’t a line 

item for that. And I would ask the GAO and I would ask the 

SIGTARP if you all could take a look at that and perhaps answer 

how that actually works if the Chair doesn’t know. 

Additionally— 

Mr. BAROFSKY. Congressman— 

Mr. MCHENRY. I know you don’t have purview. My apologies. 

Mr. BAROFSKY. I am actually prohibited by statute from doing 

that. 

Mr. MCHENRY. Well, it is late in the day, so obviously I am missing a few things here. 

Ms. Warren, you testified before this committee about the Consumer Financial Protection Agency last month, right? 

Ms. WARREN. Yes, Congressman. 

Mr. MCHENRY. And I also saw a YouTube video, and I think a 

few thousand others saw it as well, and your advocacy for CFPA, 

right? 

Ms. WARREN. Yes, Congressman. 

Mr. MCHENRY. Is that part of your official role as head of the 

Congressional Oversight Panel? 

42 

Ms. WARREN. No, it is part of my role as professor at Harvard 

Law School. 

Mr. MCHENRY. So that is done through your official resources at 

Harvard? 

Ms. WARREN. Yes, it is, and through my personal resources, I 

should say. I wrote a check for it. 

Mr. MCHENRY. Well, YouTube is actually pretty cheap. 

Ms. WARREN. A personal check. No, I wrote a check for the outof-pocket expenses to be able to produce the video. 

Mr. MCHENRY. Okay. You got a producer, that is good. No, I understand. It is YouTube. I understand. 

Ms. WARREN. Well, a person who held the camera. 

Mr. MCHENRY. But there is a lot of conjecture that you would be 

the head of the CFPA if Congress does pass that. But no official 

resources under the Congressional Oversight Panel has been used 

or staff has been used in your advocacy? 

Ms. WARREN. No. 

Mr. MCHENRY. Good to know. Thank you, and I yield back. 

Chairman MOORE OF KANSAS. Thank you. Next, the Chair recognizes Mr. Lee for 5 minutes. 

Mr. LEE. Thank you. Before I start, I do want to thank all three 

of you for your support and what you try to do to protect the taxpayers and the oversight. It is very commendable. And I will start 

off with Mr. Barofsky. We have had a chance to meet in the past, 

and again he has been very accessible and I appreciate what you 

have been doing. Again, one thing that does scare me, however, is 

the fact that over—or under your oversight at risk I heard numbers 

anywhere between $2.3 trillion to $2.8 trillion and that the total 

potential support governmentwide in response to the crisis since 

2007 could reach close to $24 trillion. Are those numbers fairly accurate? 

Mr. BAROFSKY. Yes. To explain the $24 trillion though, to put it 

in context, what we did in our report is in Section 3 we gave a 

summary of about 50 different support programs outside of the 

TARP. And for each of those programs we calculated how much is 

currently outstanding, what the high water mark was since the inception and then what the maximum amount that the government 

has said it would commit to each of those programs. So the amount 

outstanding is about $3 trillion, the high water mark was about 

$4.7 trillion, and the $23.7 trillion, that represents that if everything was maxed out at once. It is not likely that that would ever 

occur, but I just want to put that caveat there. 

Mr. LEE. Not likely but a scary number altogether. 

Mr. BAROFSKY. But it is absolutely an accurate number of what 

the government is committed to do to support the financial system. 

Mr. LEE. In June, the Congressional Budget Office scored the 

TARP at a loss to taxpayers of roughly $160 billion. We are writing 

off billions in loans to GM and Chrysler. Yet it is unclear to me 

what we are doing with the funds being repaid by the TARP recipients. In letters to the Secretary of the Treasury and to the President, which to my knowledge have to this point gone unanswered, 

many of us on this panel, led by my colleague Mr. McCarthy from 

California, have advocated for those repayments to be used specifically to reduce the national debt. Yet others want to recycle these 

43 

funds and use them for other programs, some of which are brand 

new. 

I am curious, from your perspective do you believe it is in the 

best interest of the taxpayer to take TARP repayments to pay down 

the debt? 

Mr. BAROFSKY. Our perspective is really a legal one. And I think 

legally, Treasury’s treatment of taking any interest or dividends 

and/or profits and direct them to reduction of the national debt, 

that is very clearly what is compelled by law under EESA. The 

principal repayments of the Treasury does have its position, and 

we think that it is consistent with the law, is they have the option 

to relet that money out up to a maximum of $700 billion as long 

as TARP is in existence—I am sorry, as long as EESA permits 

them to do so, which is right now through the end of the year. 

Mr. LEE. The part that I keep hearing from people, taxpayers, is 

take the money back and then we throw it out there and keep adding more risk and eventually the debt obligation that we have is 

staggered. 

I am just curious, Ms. Warren, from your point you have also 

been an advocate on behalf of consumers, i.e., the taxpayers. I am 

curious whether you think a taxpayer is better served by paying 

down the debt or spending TARP for other purposes. 

Ms. WARREN. Well, I think, Congressman, this is really the policy 

choice that Congress should be making, and the legislation is ambiguous on this point. And Treasury has made its position clear 

that it is going to use the headroom analogy that Mr. Allison 

talked about. So if Congress wants something different, then Congress is going to have to pass legislation, I think, to change that. 

Mr. LEE. With that, I am going to yield back. Thank you. 

Chairman MOORE OF KANSAS. Thank you, sir. 

And Mrs. Bachmann, you were up for questions, please. 

Mrs. BACHMANN. Mr. Chairman, thank you. And I agree—thank 

you all for being here. I agree it is a long day, but you have all 

been very responsive and we appreciate the great information that 

you have made available to us. 

I was curious, I was listening to the previous line of questioning 

on meetings, and help me, did I understand correctly, and I guess 

this would be Ms. Warren, you had mentioned if a Member of Congress requested a transcript of one of these meetings of the panel 

we could get it. Was that true or maybe I didn’t understand? 

Ms. WARREN. Congresswoman, I was surprised by the question. 

So let me articulate more clearly. We don’t have official transcripts. 

Unlike your circumstances where there are published transcripts, 

Members go back and they correct the language, we identify who 

spoke and who did not speak, we have no verified transcripts, we 

have no official transcripts. We have typing that comes back from 

someone who listened to our tapes who is not part of our panel, not 

part of this process, and no one has verified the accuracy of any 

part of it. 

Mrs. BACHMANN. So then the meetings that you had that are not 

the field hearings, where it is the four, I guess it is four members 

now, was five members, when the five members meet or when the 

four members meet, are those meetings recorded? 

44 

Ms. WARREN. We have working meetings that have been recorded. 

Mrs. BACHMANN. So those meetings are recorded. So are they 

transcribed or they are just in recorded form? 

Ms. WARREN. They are in recorded form. And as I understand, 

there is a transcription service. 

Mrs. BACHMANN. So we can get those transcribed? It is possible 

for us to have the transcription of those meetings? 

Ms. WARREN. Actually, I have not considered this question because no one had asked. And I am a little hesitant to commit my 

co-panelists to a process when these are unverified transcripts; that 

is, something may be attributed to someone that has never been 

verified. 

Mrs. BACHMANN. That is something that I would want to know 

as a Member of Congress. If the panel is meeting as a panel, 

whether it is the five or the four, and if the meetings are recorded, 

it seems to me that they could be transcribed. And I don’t know 

what the verification process is. The reason why I am asking is because I learned yesterday that two requests were made to access 

those transcriptions and that those requests were not honored. And 

I have no reason to doubt the cause for transparency. And the 

Treasury Department wants to be transparent, I have no reason to 

doubt that at all. But it seems to me that is in conflict. If on the 

one hand, the Treasury Department is saying they want to be 

transparent, on the other hand, why can’t we as Members of Congress at least receive transcribed copies? Or even if we as Members 

of Congress can’t receive the copies, couldn’t the members of the 

panel receive the copies of the transcribed—of the recorded meetings? 

Ms. WARREN. Congresswoman, you may be aware this is a matter of some discussion within the panel, and the panelists themselves have different views on this. And those views are currently 

under discussion. We have been trying to work out something that 

is congenial to all of the panelists. But I have to emphasize these 

are working meetings where we discuss lines of inquiry that we are 

taking in oversight. 

Mrs. BACHMANN. I understand that. And I understand Congressman McHenry said it is possible to redact material. One thing I 

had wondered—and I guess this is a little off point, but does the 

Congressional Oversight Panel have a phone number? 

Ms. WARREN. I believe we do. 

Mrs. BACHMANN. You do, okay. Very good. And can we get it? 

Ms. WARREN. Certainly. 

Mrs. BACHMANN. So then we would be able to call and make that 

request for the recording or the transcriptions potentially? 

Ms. WARREN. As I said to Congressman McHenry, I believe it 

would be the case. And I really must add the qualification, as I 

said before, I am not the entire panel. 

Mrs. BACHMANN. So no decision has been made about the transparency of those hearings. We know that they aren’t put up on the 

public for record, but no decision has been made. It just seems to 

me odd that if the commitment is transparency that we wouldn’t 

be able to actually receive those hearings because votes are made 

in those meetings. 

45 

Ms. WARREN. As I have said, Congresswoman, these are working 

meetings. I think perhaps the correct analogy would be a congressional committee holding a working or planning meeting. 

Mrs. BACHMANN. Well, what is the difference between working 

meetings and any other meeting? 

Ms. WARREN. Well, then there are public meetings where we do 

not discuss matters that should not be in the public domain. 

Mrs. BACHMANN. But aren’t these public meetings? 

Ms. WARREN. No, they are not, Congresswoman. 

Mrs. BACHMANN. They are meetings of the committee, they are 

formal meetings of the committee members, right? 

Ms. WARREN. These are working meetings. I don’t know what 

formal meetings. These are working meetings. 

Chairman MOORE OF KANSAS. The gentlewoman’s time has expired. And I will advise the members that if they have additional 

questions or other questions or would like to pursue this, you certainly have a right to submit that in writing. 

Without objection, the hearing record will remain open for 30 

days for members to submit written questions to the witnesses and 

to place their responses in the record. 

Mr. MCHENRY. Mr. Chairman, if I may, I just wanted to clarify 

what the witness said in answer to my question versus Congresswoman Bachmann, and I want to make sure I have the correct understanding. 

Chairman MOORE OF KANSAS. Sir, we have another meeting 

scheduled for this room at 5:30, so I am going to deny the gentleman’s request. 

Mr. MCHENRY. Well, parliamentary inquiry. 

Chairman MOORE OF KANSAS. You have a right to submit written 

questions and they will be answered within 30 days. 

Mr. MCHENRY. Parliamentary inquiry. 

Chairman MOORE OF KANSAS. Yes, sir. 

Mr. MCHENRY. At what point will a transcript of this meeting be 

available? 

Chairman MOORE OF KANSAS. I don’t know that we have a transcript of this meeting. 

The CHAIRMAN. There will be one. I don’t know how long. If the 

gentleman would yield to me? 

Chairman MOORE OF KANSAS. Certainly. 

The CHAIRMAN. We have a pretty hardworking staff here since 

we have had a lot of hearings. But I will say this: Rather than wait 

for a whole transcript if there is a particular piece that the gentleman is concerned about we could have the stenographers prepare that piece for him. 

Mr. MCHENRY. Thank you. 

The CHAIRMAN. A whole transcript may take a while, but a particular piece we could break it out. So if you would designate to the 

staff what you want to look at so you could formulate your question 

based on that you can get it tomorrow. 

Mr. MCHENRY. Thank you, Mr. Chairman. And thank you, Mr. 

Chairman. 

Chairman MOORE OF KANSAS. And again I just want to thank all 

of the witnesses for their testimony this afternoon. I think this 

gives us a better understanding of how the TARP process works. 

46 

We need to continue to keep pressing for taxpayer protections 

throughout TARP. 

And I look forward to working with Republicans and Democrats. 

These issues should not be partisan at all. We are all in this together, as well as the Treasury Department and TARP oversight 

organizations to finish this. And I again thank the witnesses. 

The hearing is concluded. 

[Whereupon, at 5:48 p.m., the hearing was adjourned.] 

(47) 

A P P E N D I X 

July 22, 2009 

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