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THE ANNUAL REPORT OF THE FINANCIAL 

STABILITY OVERSIGHT COUNCIL 

HEARING 

BEFORE THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

OCTOBER 6, 2011 

Printed for the use of the Committee on Financial Services 

Serial No. 112–70 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

LARRY C. LAVENDER, Chief of Staff 

(III) 

C O N T E N T S 

Page 

Hearing held on: 

October 6, 2011 ................................................................................................. 1 

Appendix: 

October 6, 2011 ................................................................................................. 39 

WITNESSES 

THURSDAY, OCTOBER 6, 2011 

Geithner, Hon. Timothy F., Secretary, U.S. Department of the Treasury ......... 3 

APPENDIX 

Prepared statements: 

Paul, Hon. Ron .................................................................................................. 40 

Geithner, Hon. Timothy F. .............................................................................. 42 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Geithner, Hon. Timothy F. : 

Financial Stability Oversight Council, 2011 Annual Report ........................ 46 

Written responses to questions submitted by Representative Posey ........... 226 

(1) 

THE ANNUAL REPORT OF THE 

FINANCIAL STABILITY 

OVERSIGHT COUNCIL 

Thursday, October 6, 2011 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The committee met, pursuant to notice, at 12:47 p.m., in room 

2128, Rayburn House Office Building, Hon. Spencer Bachus [chairman of the committee] presiding. 

Members present: Representatives Bachus, Hensarling, Royce, 

Biggert, Capito, Garrett, Neugebauer, McHenry, McCotter, Posey, 

Westmoreland, Luetkemeyer, Huizenga, Hayworth, Renacci, Hurt, 

Dold, Schweikert, Grimm, Canseco, Stivers, Fincher; Frank, 

Waters, Maloney, Gutierrez, Velazquez, Watt, Meeks, Capuano, 

Hinojosa, McCarthy of New York, Baca, Lynch, Scott, Green, 

Cleaver, Donnelly, Himes, Peters, and Carney. 

Chairman BACHUS. The hearing will come to order. Without objection, all Members’ written statements will be made a part of the 

record. The Chair recognizes himself for an opening statement. 

Mr. Secretary, this morning you were quoted as saying that the 

biggest risk we face is financial institutions not taking enough risk. 

Secretary Geithner, with all due respect, I am not sure you have 

a clear picture of reality as it relates to not only the thousands of 

pages of restricting regulations that have been imposed on financial institutions, but also the daily drumbeat of the FDIC and other 

agencies directing the banks not to take risks. If you want a dose 

of reality, sit in my office or the offices of other members of this 

committee and listen to the stories related to them by Main Street 

bankers talking about the restrictive regulations imposed. 

Who do you think has the responsibility to encourage the banks 

to make more loans? Isn’t it the regulators? Isn’t it the regulators 

who are part of the Financial Stability Oversight Council (FSOC)? 

If those regulators who make up FSOC want to consider who is creating systemic risk, they need to look in the mirror. If in fact you 

are correct and banks are not taking enough risk, I would submit 

to you that the problem doesn’t lie with the loan officers in the 

community and regional banks, it lies in the regulatory approach 

of the very members of FSOC. 

We have all been saddened by the news of Steve Jobs’ death. His 

life should remind all of us that it is entrepreneurship and the private sector and innovation within the private sector that creates 

jobs. He worked to make his company the most profitable it could 

2 

be, and by doing so enriched the lives of people around the world 

through his company’s innovative products. Without those profits, 

Steve Jobs would not have made Pixar a success, and could not 

have vastly improved the cell phone, the iPod or the tablet computer. That is why many of us were disturbed to hear President 

Obama questioning whether businesses have a right to earn a profit. Mr. Secretary, I hope you don’t agree with the President on this 

point. 

There is a very real and palatable concern among many Americans that the increasing size and cost of government, and especially 

the expansion of the regulatory state, makes it harder and harder 

for the next Steve Jobs to come along, and that more and more regulation stifles innovation and productivity. Many of us on this committee have expressed that same concern to you. Mr. Secretary, 

more regulations from Washington and higher taxes do not encourage risk- taking, business development, and growth. 

Another successful entrepreneur, Charles Schwab, said recently 

about our economic problems, ‘‘We can’t spend our way out of this. 

We can’t tax our way out of this. We can’t artificially stimulate our 

way out of this. We cannot regulate our way out of this. What we 

can do and absolutely must do is knock down all the hurdles that 

create disincentives for investment in business.’’ Mr. Secretary, I 

agree with this statement. I hope you do, too. 

I thank you for being here and I look forward to the discussion 

we will be having today. 

At this time I recognize the ranking member, Mr. Frank, for an 

opening statement. 

Mr. FRANK. I note that in the chairman’s statement, while he 

discusses his objection to regulation in general, he cites no regulation in specific to which he objects, and that is because I think the 

basis of the argument that something in the legislation that we 

adopted prevents community banks from lending is fallacious. I 

wait for someone to show me anything in there. 

Now, I do agree we have had a problem with the loan officers 

perhaps being shell-shocked, perhaps being too restrictive. But 

there is absolutely nothing in the legislation that restricts them. In 

fact, there are several things in the legislation that empower community banks; that in fact raise the deposit level to $250,000; that 

with regard to the FDIC deposit insurance, gives them a break visa-vis the large banks. 

But let’s talk about these regulations which are so demonized in 

general. Is it the fact that we are now regulating swaps and derivatives? Apparently my colleagues would like to go back to the days 

of AIG, when the loan arrangers could ride again roughshod over 

any kind of rules. 

Yes, we do regulate derivatives. That was a great mistake this 

government made 11 years ago in saying they wouldn’t be regulated. Yes, we do say that those who are advising people on investments should have a fiduciary responsibility. The chairman comes 

from a community that has had a serious problem because they 

were advised to get into a financial investment that was a disaster, 

and we put into the legislation a new regulation. The regulation is 

that people in the future who are advising Jefferson County or anyVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
3 

place elsewhere would have a fiduciary responsibility to that entity. 

And I am very proud of that. I think that is a good thing. 

So, again, I would like someone to tell me, what regulation is it 

that keeps community banks from lending? And do people want to 

deregulate or re-regulate derivatives? Do they want to dismantle 

an independent consumer agency? I take it back. I know that they 

do. 

The chairman had said the regulators are there to serve the 

banks. He said that was not exactly what he meant, but we did 

have a situation where the bank regulators were the arbiters of 

consumer issues, and they tended to be very pro-bank. And we said 

no, no, that it will no longer be the case. There will be an independent consumer regulator. There is a fundamental difference 

here. 

By the way, there were not new regulations in that legislation 

over banks. There are new regulations over the competitors with 

banks that is another thing we do for the community banks, is to 

give them some protection against competitors who are not regulated and put pressure on them to do things that would be irresponsible. That is another area where we have regulated. 

In that law, we do what some of us had tried to do earlier, including the chairman, and he was I think not able to get his party 

leadership to agree with him—we put severe restrictions on the 

kind of mortgage lending that got us into trouble. 

Yes, we regulate mortgages in there. There are mortgages of the 

sort that people should not have been granted and they had trouble 

repaying that led to this problem, and we put that in there. We 

also regulated the notion of securitization. It used to be that you 

could make bad loans without any real restriction and you could 

then sell them, count on the credit rating agencies to overrate them 

and contribute to the problem. Now, there will have to be some risk 

retention. That is a new regulation. You cannot make loans without money that you have, sell them to other people based on inappropriate credit ratings, and then have those cascade through the 

economy in a negative way. 

So, yes, we regulate derivatives. We put fiduciary responsibility 

on people who are advising municipalities. We say you can’t make 

those loans without any kind of repayment. And I am very proud 

of those. If the Members think those are somehow choking off legitimate activity, they ought to be explicit about it. 

Chairman BACHUS. I thank the ranking member. 

Mr. Secretary, you are recognized. Without objection, your written statement will be made a part of the record, and you are recognized at this time to summarize your testimony. 

STATEMENT OF THE HONORABLE TIMOTHY F. GEITHNER, 

SECRETARY, U.S. DEPARTMENT OF THE TREASURY 

Secretary GEITHNER. Thank you. Mr. Chairman, Ranking Member Frank, and members of the committee, thanks for giving me a 

chance to talk about the Council’s work. 

In setting up this Council, the Financial Stability Oversight 

Council, you asked us to provide each year a comprehensive view 

of financial market developments and potential threats to our fiVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
4 

nancial system, so I am going to give you a broad overview of our 

conclusions and recommendations. 

In early 2011, the world economy, still healing from crisis, was 

hit by a series of very severe additional challenges: higher oil 

prices; the disaster in Japan; the ongoing crisis in Europe. And on 

top of that, we had this very damaging debate in the U.S. Congress 

in the summer about whether we as a country should meet our obligations, and that debate caused a lot of damage to the basic fabric 

of confidence among businesses and consumers across the country. 

If you, as I did, talked to businesses in that period, July and August, they would say to me, why would I make a new investment 

today, why would I hire somebody new, if I don’t know whether 

Congress is going to allow the Administration, the Executive 

Branch to pay our bills? 

Some of these factors have eased in recent months: oil prices 

have fallen; and Japan is coming back a bit. But the cumulative 

effect of these pressures has resulted in slower growth in the 

United States and around the world and much slower expectations, 

significantly lower expectations for growth over the next 18 months 

or 2 years. 

The crisis in Europe presents a very significant risk to global recovery, and we are working very closely alongside the IMF to encourage European leaders to move more forcefully to put in place 

a comprehensive strategy to stabilize that crisis. And the critical 

imperative for them is to ensure that governments, the governments in the financial systems that are under pressure, have access to a more powerful financial backstop that is conditioned on 

policy reforms, policy actions that can address the underlying cause 

of the problem. In the face of the situation in Europe and the general slowdown in growth, the most important thing we can do, Congress can do, is to take strong steps to strengthen our economy at 

home, and we think the most effective strategy for doing that is to 

enact steps now that would accelerate economic growth tied to 

long-term reforms to restore fiscal sustainability. 

The American Jobs Act provides a very substantial package of 

tax cuts and investments that according to estimates by independent economists would raise economic growth by 1 to 2 percentage points and help create one to two million new jobs. In the 

President’s proposal to the Joint Committee, we outline a comprehensive package of reforms to both spending programs and to 

our tax system that if enacted would bring our deficits down to the 

level where our overall debt burden would fall, begin to fall as a 

share of our economy. 

This Council, established under the law, is composed of each of 

the agencies responsible for oversight of the financial system and 

the firms and markets that comprise this system and it is the judgment of this Council that the U.S. financial system is in a significantly stronger position today to withstand the new risks we face 

in the global economy. 

Because of the actions we took in the early stage of the crisis to 

repair and reform our system, the weakest parts of our financial 

system, the ones that took the most leverage, no longer exist today; 

they were significantly restructured. The 19 largest banks in the 

country have increased their common equity—this is the most imVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
5 

portant financial cushion we have for financial stability—by over 

$300 billion since early 2009, and these institutions and the system 

as a whole are funding themselves much more conservatively, 

maintaining much larger cushions of safe and liquid financial assets. 

These are very significant improvements and together they represent progress on the path to a more resilient, more stable financial system than has been achieved in the other major economies 

that were caught up in this crisis. 

U.S. financial institutions, including our major banks and the 

money market funds, have substantially reduced their exposure to 

the economies of Europe that are under the most pressure. Our direct financial exposure to those governments and their financial institutions is quite small. Europe as a whole is so large and so closely integrated with the U.S. and the world economies that a severe 

crisis in Europe would cause significant damage to growth here 

and around the world, but the largest parts of Europe are strong 

enough to manage the problems faced across the continent. 

These pressures we are facing from Europe make it even more 

important that Congress act to strengthen growth now and act to 

put our fiscal position on a more sustainable path. 

The economic and financial elements we have seen since the release of the report I think reinforce the importance of the recommendations we have presented to Congress. Let me just summarize those very quickly. 

First, the Council emphasizes the importance, as it always will, 

of making sure that the core parts of the U.S. financial system are 

moving to strengthen their financial position, their financial resilience. We want the largest institutions to manage their businesses 

so they have the ability to withstand future economic environments 

that are much more challenging without government assistance in 

crisis, and towards this objective, the regulators will gradually 

phase in over a period of several years the much tougher standards 

for capital and liquidity that we have negotiated with the other 

major financial systems around the world. 

Second, the Council recommends reforms to strengthen a number 

of the key funding markets in the United States, markets that 

were a critical source of vulnerability in the crisis. The most important of these recommendations targets the tri-party repurchase 

markets and the money market funds, and the essence of the 

Council’s recommendations in these areas is to make the tri-party 

repo markets and the money funds less vulnerable to the classic 

dynamic you see in crises in which an abrupt rush for the exits 

forces a damaging spiral of asset sales, deleveraging and broader 

contagion. We have made substantial progress toward this objective 

but we have some more work ahead of us. 

Third, the Council recommends a comprehensive set of reforms 

to the housing finance system, which I would be happy to talk 

about. 

Finally, the Council emphasizes the importance of much closer 

coordination and cooperation in the implementation of financial reform, both here in the United States, but also around the world. 

This is important, of course, because if we allow large gaps to 

6 

emerge, as we did in the years before the crisis, risks will migrate 

to those gaps, leaving all of us more vulnerable to another crisis. 

The most important challenge we face in building a more level 

playing field is in the design and enforcement of these new capital 

standards and the new reforms to the derivatives markets. 

Although our system is much stronger than it was before the crisis, we have more work to do on reform. But we are going to do 

this in a balanced way, weighing the benefits of regulation against 

the costs of excess restraint. We need to move at a pace that fully 

recognizes the fragility of the global economic recovery, phasing in 

these reforms over time so that we limit the risks to economic 

growth. 

I want to thank the members of the Council and their staff for 

all the hard work they have done in building this institution for cooperation and for producing this report. And I want to emphasize, 

as I always do, that I look forward to continuing to work with this 

committee and the Congress as a whole to build on the substantial 

progress we have already made in creating a stronger financial system here in the United States. 

Thank you, Mr. Chairman. 

[The prepared statement of Secretary Geithner can be found on 

page 42 of the appendix.] 

Chairman BACHUS. I thank the Secretary. 

Secretary Geithner, earlier this week President Obama said that 

banks don’t have some inherent right just to get a certain amount 

of profit if your customers are being mistreated. It appears as if he 

is equating profits with mistreating people. 

Does it bother you that he connects the idea of profits with mistreating people? Is there anything inherently evil about profits? 

Secretary GEITHNER. I don’t think he did that. The President believes, as I believe, that it is not the role of government to determine how profitable firms are. But we also learn, and we learned 

with tragic consequences for this country, that if you don’t put in 

place basic protections for consumers and investors, apply those 

across the market, don’t prevent firms from taking the kinds of risk 

that could imperil the economy as a whole, then you leave all of 

us much more vulnerable. And so what we are trying to do is build 

a system with better protections, give consumers better choice, 

more transparency, and the basic protections against fraud and 

abuse and predation and risk that were so damaging to us. 

Chairman BACHUS. Mr. Secretary, can you tell us some practice 

that the financial institutions are engaging in, how they are mistreating people today, that you don’t have the power presently to 

stop? 

Secretary GEITHNER. Thank you for asking me that. There is an 

excellent example, and I will just give you one. 

Chairman BACHUS. Okay. 

Secretary GEITHNER. The reforms Congress enacted lay out a 

much more comprehensive system of protection for consumers so 

that we have rules that apply not just to banks, but to all of the 

other institutions that are in the business of consumer finance, 

from payday lenders to basic loan companies across the country. 

And although the authority is there in the law, until there is a Director confirmed for the new Consumer Financial Protection BuVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
7 

reau, we do not have the authority to apply those protections to 

non-bank financial institutions. And that makes no sense. 

Chairman BACHUS. I would agree with that. But we are talking 

about our banks, our regulated institutions, those that are presently regulated. Now, are there practices going on, any widespread 

practices which are mistreating customers? 

Secretary GEITHNER. I think the most compelling example today 

of behavior by the largest banks in the country that we all worry 

about, and we are all living with and your constituencies, is the 

mortgage servicing business. Just look at what is happening in the 

foreclosure process or the mortgage servicing business across the 

country. You have people who still cannot get somebody on the 

phone who they can talk to about how to figure out how they can 

stay in their house if they have income, transition to better housing 

options, make a catchup payment. And I think that is an example 

today where because we don’t yet have in place authority that allows us to enforce national servicing standards, and because the 

basic infrastructure of servicing is still so inadequate relative to 

the scale of the crisis, we see systematic problems still. 

Chairman BACHUS. I think what we found is that there were 

legal requirements that weren’t complied with on many occasions. 

Is that not true? 

Secretary GEITHNER. You have seen some evidence of that, but 

I think the problem is much bigger than that. 

Chairman BACHUS. I will acknowledge that there have been 

problems. But let me ask you about the charges for debit cards. 

That is the one the President picked out as an example of—actually I think in his terminology, he represented that it is almost a 

greedy reach. But do you think that Dodd-Frank and particularly 

the Durbin Amendment had anything to do with the banks charging for their services? 

Secretary GEITHNER. Mr. Chairman, I am not going to comment 

on any particular bank practice in the areas of fees, but I will tell 

you what we are trying to do. 

Chairman BACHUS. Do you think it was wise for the President 

to do that? 

Secretary GEITHNER. I am not going to speak to that question, 

but I will tell you what he said about this, which is very important, 

that what the law does is try to make sure we move this system 

to a place where there is much more transparency and clarity 

about the fees Americans have to pay to access a basic banking 

service or to borrow. 

Chairman BACHUS. And I absolutely agree with that, Mr. Secretary. But that $5 disclosure was a pretty honest up-front disclosure. 

Secretary GEITHNER. And I think you are seeing some improvements in transparency and clarity. But remember, you all do banking, you all do banking services. Look at your disclosure statements 

that come with the returns, and ask yourself how good those look 

today. We have some work to do. 

Chairman BACHUS. But we are talking about a $5 disclosed fee 

on debit cards, which I think if you will be forthright, you will say 

is a result of the Durbin Amendment. That is what restricted their 

ability to recover the costs. 

8 

Secretary GEITHNER. No, I didn’t say that, and I don’t think you 

can justify that judgment. What you are seeing is— 

Chairman BACHUS. You don’t think there is a connection between 

the charges the banks are now making and the reduction in their 

revenues based on Durbin? 

Secretary GEITHNER. I will tell you what I think is happening. 

We are, and we need to, we are trying to fundamentally improve 

the quality of consumer protection, clarity, transparency, disclosure, and we are doing things that change fundamentally, because 

we are putting tougher rules on institutions, how they manage risk 

and how they meet the needs of their customers, and that is changing practice across the system, changing how banks charge and pay 

for basic services. And there is much more change ahead of us, and 

that is necessary for us to do. Because, again, we are still living 

with the scars of the damage caused by the failures. 

Chairman BACHUS. Thank you, Mr. Secretary. And I agree with 

that. I just don’t understand how there is anything misleading 

about a $5 charge. I am not defending it, but it appears to be very 

transparent. 

The ranking member is recognized. 

Mr. FRANK. To begin, Mr. Chairman, as I heard you talk about 

the President’s quote, I think you misrepresented it very substantially. He didn’t say he was against them making a profit. There 

was an ‘‘if’’ in there. As you read it, there was no right to make 

a profit if there is mistreatment of the customers. And that is saying not that there is no right to make a profit, in fact it is clearly 

suggesting that there is, but that if the profit came from mistreating the customers, there is no right. 

Now, I am not commenting on this particular controversy here, 

because, as we all remember, the swipe fee thing was a present to 

America from the United States Senate. It was never in our bill, 

and I believe you and I talked, Mr. Chairman, if the Senate had 

passed the Tester Amendment, which I strongly supported, we 

would have put it through the House very quickly. And I do not 

think consumers, I don’t think that when they go into the 7-Eleven 

the slushy is going to be any cheaper when they don’t do it. But 

that is not what the President said. He said if, that there was no 

right to mistreat. 

Let me go on to a couple of points I wanted to ask the Secretary. 

One of the issues that people were concerned about legitimately 

with regard to the financial reform bill was the possibility that we 

would put our financial institutions at a competitive disadvantage, 

and obviously we don’t want to do that. Money is pretty fungible. 

It moves pretty quickly. 

What has been the experience so far with regard to, and I know 

there have been serious negotiations, I have had them and others 

with the European Union, with England, with Japan, with Canada, 

what does it look like so far in terms of not having any competitive 

disadvantage as a result of the implementation? 

Secretary GEITHNER. I would say that we are reasonably encouraged so far; that having set the standards for our system here, that 

the world is going to move to those standards. And based on what 

we have seen so far on capital and on liquidity and even on derivatives, the most complicated area for making sure there is a level 

9 

playing field, we are very encouraged by what the Europeans are 

saying and what they are doing. And, of course, we are not focused 

just on Europe, but we are looking at Asia, too, where you see very 

rapid growth in financial activities. 

So I would say we are modestly encouraged so far, but this is 

going to be a real change challenge and we have a lot of work to 

do. 

Mr. FRANK. Let me say, we put into the bill very specifically, as 

you know, we consulted, a mandate to you and to the Federal Reserve if there are countries that are taking advantage of a gap, if 

they are deliberately underprotecting the public interest here, they 

are to be excluded from our financial system. 

So, yes, it is important to work together. And I know sometimes 

the Administration is reluctant ever to take action against anybody, and I am for the China currency bill. But in this case I think 

it is very important, and I don’t think it will come from the EU or 

Japan or the major entities, but if there are some small countries 

that try to do that, we would expect you to use that authority. 

I want to turn to the other area that the chairman talked about 

which was the regulation. And, again, I am waiting for people to 

tell me which regulation they want to get rid of. I will say this, and 

I agree with the chairman, we certainly want to see productive activity. One of the problems I think is that a good deal of the financial activity that we were seeing that we tried to give people the 

authority to regulate contributed very little to the real economy. 

The role of the financial institutions is they are intermediaries, 

that is, they are the connector of people with money to invest and 

people who will take that money and use it to produce goods and 

services in a productive way. That is a fundamental role, and I 

think the bill did nothing to impinge on that. I did think when AIG 

was playing credit default swap games with other financial institutions, when we had collateralized debt obligations squared, that we 

were not helping the real economy. I think some of those things 

had as much relationship to the real economy as fantasy football 

does to what happens on Sunday afternoon. So I would hope we 

would go at that. 

In that regard, I was pleased to hear you say that—and we don’t 

want to just be looking at the past problems. One of the things we 

tried to do in the legislation was to give the regulatory authority 

the ability to go into new things. 

You talked about some things that have people worried now that 

weren’t there before. First of all, repos. But, secondly, and even 

more in the newness, the technologically produced ones, exchange 

traded funds; very, very, very rapid trading. Where are we on 

those? Because there is I think a legitimate concern that there are 

dangers in those. And I am pleased to say that we did I think give 

the regulators appropriate authority to look at those. 

What is the status now of looking at what the impact could be 

going forward on exchange traded funds and on the very rapid 

trading, for example, on the questions of stability? 

Secretary GEITHNER. Mary Schapiro is taking a lead in the Council and examining developments in both of the two areas you referred to, and she has a process under way not just here but 

around the world where there is much more rapid growth in exVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
10 

change traded funds to examine the risks in those. But she is also 

looking at the market structure issues and the high-frequency trading. I don’t recall precisely when she expects to come back to us 

and talk about it, but she is all over it. 

You are right to emphasize again that one of the jobs of the 

Council is to try to look at areas where we are seeing very, very 

rapid growth and innovation, untested by the kind of stress you 

need to kind of test these kinds of things to make sure we can 

move a little more quickly than the system moved in the past to 

try to contain these things. 

Mr. Chairman, could I very briefly respond to one thing you said 

in the beginning in your opening comments? 

Mr. FRANK. If the chairman allows it. I am over my time. 

Chairman BACHUS. Yes. 

Secretary GEITHNER. Mr. Chairman, you quoted something 

slightly off from what I said this morning in the Senate— 

Mr. FRANK. I assume by ‘‘Mr. Chairman,’’ that was a cultural lag 

and you meant me. Okay. 

Secretary GEITHNER. I said this morning in the Senate that one 

of the big challenges for the economy as a whole, and I mean the 

economy as a whole now, is the risk that after a period where people took too much risk in a real crisis, people aren’t going to take 

enough risk. And I wasn’t commenting beyond that. But I think it 

is true. The natural thing you see after a crisis is you see a period 

of people pulling back, too much excess caution, and that tends to 

make growth weaker than it is, and we have to be worried a little 

bit as we go through this. 

So I was just making a general observation that we want people 

to take responsible risks, and that will be helpful as we recover. 

There is still a lot to be worried about, a lot of challenges out there. 

But as I also said, we have been very careful to make sure that 

as we design these tougher rules, and they are much tougher rules 

for our system, that we are designing them sensibly and that we 

are phasing them in over time so that we don’t hurt the recovery. 

Chairman BACHUS. Thank you. Mr. Secretary, what you are saying is the quote, if you look at the U.S. economy today I would say 

the biggest risk we face is institutions not taking enough risk. 

Secretary GEITHNER. Think about it this way: Consumers still 

have too much debt. They are bringing down debt. They are raising 

savings rates, they are being more cautious. Supervisors, you said 

it, examiners, having been a little burned, are being tough now. 

You see banks being cautious, too. And I was making a sensible observation that those things tend to work against growth in this 

case and you want to make sure people aren’t overdoing it, you 

don’t want to see too much tightness following too much looseness, 

laxity. 

Chairman BACHUS. No, and I acknowledge that, but I believe the 

fault lies mainly with the regulators who are restraining the banks 

and actually questioning many of their loans. 

Mr. FRANK. Will the chairman yield briefly, because I tend to 

agree with that, although not with the top regulators. I think we 

have had—the problem is a lot with the people in the field. But I 

have asked people to point to anything in the statute that we 

adopted that does that. I don’t think that is compelled or even inVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
11 

fluenced by the statute. I do agree that there is a mindset among 

some of the people in the field that has been problematic. 

Chairman BACHUS. I think we are all three agreeing with that. 

Mr. Royce? 

Mr. ROYCE. Thank you, Mr. Chairman. 

Secretary Geithner, you and I agree about the need for higher 

capital standards as part of the solution to the problem. We have 

talked about that in the past and agree on regulating derivatives 

for transparency, Hernando De Soto’s arguments, the importance of 

that in terms of being a component of the equation. 

I think my concern, as I have expressed to you before, is that we 

are taking our eye off the ball and instead pursuing this course of 

micromanaging the financial sector without the international community really buying into the approach that we have laid out. And 

you are right to say that the regulatory community in Europe says 

that they will buy into the approach. But that is not what is happening in this country. 

I think the concerning comments by the CEO of the large foreign 

bank who called the U.S. approach to derivatives a terrific opportunity, he said it is one of the biggest own-goals in financial market 

history. And he says that the Asians don’t need to do anything to 

gain an advantage. This is the type of press, if you pick up The Financial Times, the kinds of advertisements basically that are being 

made. Then when you think about the Fed Chairman’s own comment on this point, he says portions of the proposed derivatives 

rules, I think he is talking about extraterritoriality here, could create a significant significant competitive disadvantage for U.S.- 

based institutions. 

So the further we get from passage of Dodd-Frank, the less likely 

it seems that Europe is going to blindly follow us. And I don’t see 

that on Asia’s part. They have already flat out rejected many of the 

reforms that we have instituted. 

What I want to ask you is, will Treasury commit to ensuring that 

if we can’t get that concurrence, we hit the pause button on some 

of this micromanagement until we bring them online so that everybody is on the same playing field and we don’t have to worry about 

that competitiveness issue that the Fed Chairman is bringing up? 

Secretary GEITHNER. Let me just say, the Fed Chairman is right 

to point out there are provisions of the law that because of how 

they treat the foreign operations of U.S. affiliates, could cause that 

problem that we are worried about. But I would say in general, 

based on what our counterparts around the world are saying, I am 

more encouraged than I thought I would be at this point. It is not 

just what they are saying, but how they are drafting their rules. 

I will just give you one example. We have had 3 decades or 4 decades of experience with global capital standards, not an excellent 

experience, frankly, they were set too low, but we started 30 years 

ago designing a global standard for capital. No such regime existed 

on derivatives. But we proposed after regulation was passed that 

we negotiate a global regime on margin for derivatives, and we 

found very strong support not just from the European systems but 

from the Asians too to the same basic principle. 

So we are going to keep working on it, and we are making sure 

that we try to sequence and design the rules in the United States 

12 

so we are not in the position of landing ours before we are confident that the others are going to land theirs in a sensible place. 

We are not going to do this on trust. We are going to verify and 

make sure we are all over it. 

Mr. ROYCE. I think I am going to lay out another argument here 

that I think would give you and I both pause because I think we 

agree on this both, too. It is no surprise that the international community really is pushing back on this because they look at us and 

they say it eludes the United States, they can’t even get their international coordination right between the CFTC and the SEC, right? 

So there are wildly divergent views here. 

Secretary GEITHNER. No, I wouldn’t say it quite that way. But I 

would say you are right and I will reinforce your point. We left in 

place in the American financial system a very complicated set of 

independent agencies with overlapping jurisdictions and different 

responsibilities, and that makes the coordination challenge much 

harder, but much more important, because you are right to say if 

we don’t— 

Mr. ROYCE. It was a mistake. 

Secretary GEITHNER. I am not sure it was a mistake, but you 

guys decided to do it. If you don’t have alignment among them, 

then you are right to say how are we going to convince the rest of 

the world— 

Mr. ROYCE. Right. And we are out of alignment on 50 different 

items at the moment. 

Secretary GEITHNER. No, that overstates it. But we want them, 

where Congress—where the statute permits it, we want them to be 

fully aligned. 

Mr. ROYCE. And we are not there. 

Secretary GEITHNER. We are not there yet. 

Mr. ROYCE. And until we get there, it is going to be hard to figure out how you get the Europeans there. And that is why you 

have to be very cautious here. There is a competitiveness problem, 

to quote a former Fed Chairman, if the capital markets march off 

to London. That is the problem when you reading the Times. 

Secretary GEITHNER. You are right. We are not going to let that 

happen. I am reasonably encouraged at this point that we are 

going to be able to prevent that. But we are working very hard at 

it. And again, part of that is making sure that where we can, we 

have alignment here at home. And you are exactly right to point 

out that if we are sort of off a little bit here, it is harder to get 

the world to come to a common standard. But you are right to emphasize that we care about it as much as you do, and we are, and 

the SEC and the CFTC and the Fed are working to the same objective. 

Mr. ROYCE. Thank you, Secretary Geithner. 

Chairman BACHUS. Thank you, Mr. Royce. 

Ms. Waters? 

Ms. WATERS. Thank you very much. 

Mr. Geithner, we are delighted to have you with us again today. 

I would like to draw your attention to something that is going on 

in this country that I think is extremely important and needs to 

be addressed or recognized. 

13 

There is an occupation on Wall Street in New York that is taking 

place by protestors and the protestors are growing every day. 

Today, here in Washington, D.C., we have an organized protest. In 

Los Angeles, they have set up camps on city hall steps. And in 

many other cities across the country. 

They are basically reciting their concerns. They are very concerned that 1 percent of rich Americans do not pay their fair share 

of taxes. They are really angry about the banks that we bailed out, 

the too-big-to-fail banks that were bailed out and they are not reinvesting in this economy with small businesses, they are not giving 

mortgages, and they are not modifying loans, these mortgages. 

In addition to that, they talk about the $1 trillion that the Feds 

used to bail out banks and other well-connected businesses and institutions. They are really agitated about the Bank of America announcing that they are going to charge a $5 monthly fee for these 

deficit cards. Citibank has announced that it is going to charge up 

to $20 a month for checking accounts. They are saying no one has 

gone to jail as a result of causing the financial crisis. 

What do you say? Have you said anything about the protestors? 

Do you support them? Do you recognize them? Do they have a real 

beef here? You are the treasurer. They are angry at all of us. And 

I am not just saying they are angry at you. But, you represent the 

money systems of our government. So what have you said about 

the protests? Do you support them? 

Secretary GEITHNER. I have been asked this several times over 

the last couple of days when I was in New York on, I think it was 

Tuesday, and I will tell you what I said in response to those questions, which is I think you see reflected there, like you see reflected 

across the country, a deep sense of concern about the fact that we 

have 9 million Americans out of work. We have seen a huge increase in inequality, a huge rise in poverty. I don’t know if many 

people know this, but I think 40 percent of Americans born in the 

United States today, children born this day, are born to families eligible for Medicaid. I think one in eight Americans are eligible for 

food stamps today. You have seen a dramatic change, deterioration, 

in people’s basic confidence in the ability of this political system to 

do a better job of meeting the needs of middle-class families. We 

are still living with the scars of the worst financial crisis in generations. So that is what I say to them. 

I think that is why it is important, so important that we are 

working to improve confidence, not just in the quality of public institutions, but in the safeguards we provide, protections we provide 

Americans in the financial system, but also that we can find a way 

to get Congress to demonstrate that we can do things to help the 

economy now. And if Congress does not act this fall to do things 

to help growth, help get more Americans back to work, then you 

are going to be causing much more damage to an economy already— 

Ms. WATERS. I don’t want to interrupt you, but some of us have 

been wondering for a long time what you are saying about principal writedown? That is a big issue in this debate. What can you 

do to get the banks and the financial institutions that caused the 

subprime meltdown to do something about keeping people in their 

14 

homes? That is a big issue. Where do you stand on principal 

writedown, Mr. Geithner? 

Secretary GEITHNER. That is a very good question, and thank you 

for asking about that. The programs we put in place in the housing 

system have helped directly and indirectly about 4 million Americans get their mortgages restructured and their payments reduced 

significantly. As part of our programs, we have also created a targeted program for principal reduction, which, to be frank, has had 

very little take-up to date, in part because we don’t have the power 

to compel the biggest parts of the mortgage market. FHA is prohibited by law, and Fannie Mae and Freddie Mac, we can’t compel 

them to do it, and they have been unwilling to move in that direction to support targeted principal reduction where it makes sense. 

But we have been supportive of it. We have put a fair amount of 

care and effort and resources into it, but we don’t have the authority now to compel the largest parts of the system to move. 

Ms. WATERS. I don’t want to interrupt you. My time is up. Would 

you like to send a message to the protestors while you have national attention right now? 

Secretary GEITHNER. I would just say what I said, which is 

that— 

Ms. WATERS. You support them. 

Secretary GEITHNER. We all need to do a better job of demonstrating that the responsible bodies in the United States, and for 

the economy today it requires Congress, are able to act to do more 

things to help get the economy stronger today. And without that, 

you are going to be living with more pain, more poverty, more fear, 

and more insecurity about the future. 

Chairman BACHUS. Thank you. Congresswoman Waters and Secretary Geithner, I do agree with you that the demonstrators probably ought to be demonstrating in front of Congress and the White 

House and the Secretary over at Treasury. Maybe they misdirected 

their protests at the wrong city. 

Secretary GEITHNER. I didn’t imply that. 

Mr. FRANK. But I am sure the banks will appreciate it. 

Chairman BACHUS. I was talking about all these job-killing regulations. 

Mr. Hensarling? 

Mr. HENSARLING. Thank you, Mr. Chairman. 

Good morning, Mr. Secretary. I noticed in your testimony you 

work in a reference to the President’s latest economic plan where 

you speak about the tax relief. I do think it is important from one 

perspective. According to the job creators I speak to in the Fifth 

Congressional District of Texas, number one, when you combine 

temporary tax relief with permanent tax increases on the other end 

you are unlikely to create too many jobs. And at the same time I 

would point out that the payroll tax relief in the President’s plan, 

although perhaps it could be meritorious in a certain context, without a simultaneous plan to deal with the insolvency of Medicare 

and Social Security by borrowing from the payroll tax for this program, you are frankly hastening the bankruptcy of programs that 

we already know are going bankrupt for our seniors. 

But the question I have is, you assert in your testimony that the 

President’s economic plan, according to outside economists, would 

15 

raise economic growth by 1 to 2 percentage points and help create 

one to two million new jobs. My question is, are these the same 

outside economists who told us the President’s original economic 

plan would ensure that unemployment never went past 8 percent 

and that it would create three to four million jobs? 

Secretary GEITHNER. Congressman, it is always a pleasure to debate these deep questions about tax policy and economic policy. 

Mr. HENSARLING. I knew you looked forward to the opportunity. 

Secretary GEITHNER. I was looking forward to it. Let me respond 

this way, and I will make some arguments that many on your side 

have been making for some time. If Congress does not act on the 

tax front now or on investment, what happens? What happens is 

the taxes every person with a job in this country pays go up by 

roughly $1,000 at the end of this year. The taxes every business 

pays will go up. Now, what we propose to do is to extend and expand those tax cuts and to tie them to long-term reforms that give 

people confidence that we are going to go back to living within our 

means. 

Mr. HENSARLING. But, Mr. Secretary, if I could, I am really curious, because I haven’t seen the estimates of these outside economists, if you would be able to share them with me. 

Secretary GEITHNER. Oh, they are in the public domain, but I 

would be happy to do it. If you look at the broad range of views, 

and there is a range of views, economists disagree on everything, 

but the broad consensus is in that direction. They are not our estimates, they are their estimates. 

Mr. HENSARLING. If I could, because unfortunately, the time is 

running out here, and specifically I was trying to figure out about 

which economists were saying this. At least when I speak to a 

number of people, small business people, and I think you mention 

it in your testimony, there does seem to be a lot of uncertainty, 

frankly, a lack of confidence, part of this does have to do with regulatory uncertainty, and I do know that there has been a dizzying 

array of rulemakings that have to take place of which FSOC certainly has some, frankly a fair amount of oversight. 

As I understand it, 64 new rules have been finalized, and 126 

deadlines have been missed. And, believe it or not, I am not actually trying to ascribe blame, I would rather it get done right than 

get down quickly, and we still have another 210 rules to come, as 

I understand it. I guess the question I have is that there still appears to be so much lack of specificity and certainty within a lot 

of the community financial institutions I speak to, what is it that 

FSOC can do to move this particular process forward? Because I 

believe, again, it is the uncertainty of the rulemaking process and 

frankly the certainty of bad rules that is inhibiting a lot of our job 

creators today. 

Secretary GEITHNER. I disagree with you on that, but I will respond in the following way, and I just want to repeat some of the 

comments made earlier, if you talk to community bankers across 

the country as I do, most of them will say the following: They will 

say they recognize that they were largely and almost completely 

left out of, if not privileged and advantaged in the Dodd-Frank Act, 

but they are concerned, some of them, that they are under too 

16 

much pressure from examiners to tighten standards beyond what 

they think is necessary. 

It is hard to know how much of that is true, but that is what 

they say. They don’t complain about the regulatory framework. As 

you know, the people who represent community banks supported 

the bill and they were very successful in convincing you to carve 

them out of most of the protections, and they are privileged in 

many ways. But they say they are concerned they get a lot of heat 

from examiners that they think goes beyond what is necessary. It 

is hard to justify that. Examiners are trying to do their job. 

Mr. HENSARLING. Mr. Secretary, I see I am running out of time. 

I would just say it is clear that we are speaking to a different universe of community bankers. But I appreciate your testimony. 

I yield back. 

Chairman BACHUS. I thank the gentleman. 

Mrs. Maloney is recognized for 5 minutes. 

Mrs. MALONEY. Thank you. 

First of all, I would like to say thank you, Mr. Secretary, for your 

service. You probably understand more than anyone how close we 

came to a total collapse in 2008, and your leadership has been a 

great part of helping us to dig out of that challenge. 

I also want to join the comments of our ranking member who 

said the swipes was a gift from the other body. But a gift from this 

committee and this Congress on this side of the aisle was the 

CARD Act, the Credit Cardholders’ Bill of Rights. In that, they had 

many of the principles of Dodd-Frank, of transparency, a level playing field, and really making life better for the working men and 

women in our country. It stopped many of the most abusive practices, such as raising rates any time, for any reason, retroactively 

on balances. 

I want to note that many issuers were not following these unfair 

deceptive practices as prescribed by the Fed, but others were. A report that came out recently from the Pew Foundation said that this 

bill alone saved consumers over $10 billion last year. So this is an 

effort that the President signed into law, that you championed and 

many members of this committee on both sides of the aisle championed, and I want to say thank you for that. 

Yesterday, I was in New York, and I met with some of the 

protestors. They were very angry, and I can understand their 

anger. They were angry about what has happened to them financially, about their prospects for the future. So my question to you 

is, what would you say to the protestors if they were camped out 

in this room today about what has happened to them, what have 

we done to change their prospects for the future, what has this 

FSOC report said to the possibilities of the future? Certainly, stabilizing our markets, bringing in balanced and fair regulation that 

protects their deposits, that protects their work in the future is 

something that is really important. 

I want to share with my colleagues, many of whom treat DoddFrank like it was a horrible thing, I call that mentality, let’s forget 

that the financial crisis ever happened. 

When President Obama came to Wall Street and spoke to Wall 

Street, it was the day after the Senate vote and he pulled out a 

press clipping and he said, I want to read this to you. And he said, 

17 

it passed out of the Senate yesterday. And many leaders in the financial industry were aghast. They thought this was going to be 

the ending of the capitalist system, of the opportunity to grow and 

expand capital and jobs. He went on and on. And then he said, this 

came out in 1929, 1930, after we created the FDIC, which performed, I think, so brilliantly in helping us confront this financial 

crisis. 

So I would like to hear what the FSOC report says about what 

Americans can hope for and plan for a more stable future financially, and thank you for your service. 

Secretary GEITHNER. I don’t think I can improve on how you said 

it. What the financial reform law does is establish the basic protections we did not have to prevent Americans from being victimized 

by not just fraud and abuse and predation, but from the type of 

risk-taking that we saw that almost brought down the American financial system. 

I am very confident that with these reforms, we are going to 

build a much better system, a much more stable system. It will be 

to the benefit of not just the average working family who needs to 

borrow to put their kid through college or to buy a house, but for 

businesses that need to raise capital. And we have all seen what 

happens when you get that basic balance wrong. It hurts everybody, not just the imprudent. It hurts the innocent victims in that 

sense. 

What I would say generally, and I would say this to the American people generally, is that you should be demanding better results from Washington in things that can help the economy now. 

Because even with the strength of those reforms on the financial 

system and the progress we have made, we still have an economy 

that is not growing fast enough, millions of Americans are out of 

work. And we have seen these new shocks from Europe, and we 

have to act to protect ourselves from those things and do things to 

make the economy heal more fastly. 

I think this argument you have heard that what is hurting the 

economy now is an excess of regulation is without foundation. I 

want to quote to you a concluding paragraph from an article that 

Bruce Bartlett published on October 4th. Bruce Bartlett held senior 

policy roles in the Reagan and Bush Administrations and served on 

the staffs of Representatives Jack Kemp and Ron Paul. 

These are his words. ‘‘In my opinion.’’ It is a pretty thoughtful 

article, and he goes through the evidence, and he says, ‘‘In my 

opinion, regulatory uncertainty is the canard invented by Republicans that allows them to use current economic problems to pursue 

an agenda supported by the business community year in and year 

out. In other words, it is a simple case of political opportunism, not 

a serious effort to deal with high unemployment.’’ 

And he cites in this context—I will tell you what he cites because 

it is useful. What he looks at is the level of unemployment and the 

rate of growth and profitability in the sectors of the economy where 

we are trying to put in place better protections: health care; energy; and financial services. And he cites an academic in that context and he says that there is no evidence you can find to support 

the proposition that our efforts to design better protections in those 

areas are damaging growth. What is damaging growth, what is 

18 

damaging confidence is that growth is slower than we would like 

because we are still healing from a terrible financial crisis and we 

face the cumulative burden of these other shocks—oil, Japan, Europe, etc.—and that is why we have some more work to do. 

Mrs. BIGGERT. [presiding]. Thank you. The gentlelady’s time has 

expired. The gentlewoman from West Virginia is recognized for 5 

minutes. 

Mrs. CAPITO. Thank you, Madam Chairwoman, and welcome, Mr. 

Secretary. 

My first question is, one of the principal mandates of the FSOC 

was to look at the systemic connectedness of our larger institutions, 

because obviously that was a big problem with what happened in 

2008. Would you say today that our institutions are more or less 

systemically connected than they were pre-2008? 

Secretary GEITHNER. They are obviously very closely tied, but the 

most important thing we have seen is they hold much more capital 

against risk and they are funded much more conservatively, with 

much longer-term sources of funding. In addition to that, there has 

been dramatic progress in trying to make sure there is much more 

conservatism in the derivatives markets where people come together and the funding markets that join them. For those reasons, 

it is much less likely that a particular shock would damage the 

strong, not just the weak, and much less likely that pressures on 

a weaker institution would spread to the stronger. 

Mrs. CAPITO. Would you say that the effects, and we are seeing 

you address this in some of your statements, the effects we are seeing from the European situation, which is billowing over and affecting our markets and our financial institutions, doesn’t that kind of 

play into this systemically connected issue? In my speaking with 

some of these institutions, they are sort of saying one of the problems was we were too systemically connected. Why is the FSOC not 

saying, unwind your systemic relationships and maybe that would 

alleviate any kind of possible collapse such as we saw? 

Secretary GEITHNER. I think we are moving in the same direction, but just to be realistic, banks and markets are always going 

to be terribly closely connected. There is no way to separate them, 

disentangle them, separate them—you can’t put them in silos like 

that. 

What you need to do is to make sure that the firms have much 

bigger cushions against risk, again, are much less vulnerable to 

funding pressure, and that the markets where they come together, 

like tri-party repo and money market funds and derivatives, have 

a much stronger financial cushion. If you do that, then you have 

much less risk of contagion, which is the risk you were referring 

to. 

But in a competitive market—and we are going to run a marketoriented financial system—you can’t disentangle those things or 

otherwise, we wouldn’t have a financial system that worked. 

Mrs. CAPITO. How close are you, as the FSOC, to designating the 

SIFIs? 

Secretary GEITHNER. On Tuesday, I think, next week, the Council meets to consider approving new guidance that we would give 

to the market on the criteria we are going to use to determine— 

19 

Mrs. CAPITO. So when will that occur? After you do the guidance, 

then you have another year, so you are really 21⁄2 years into— 

Secretary GEITHNER. No, I don’t think so. But we are doing what 

people asked, really, which is—what people asked is for a little bit 

more clarity in the criteria we use before we designate. And we 

were trying to do something that is sensible, which is to give people 

a chance to look at those criteria, give us feedback on them, comments on them, so that we come out with judgments that people 

understand and respect and people can plan for those and adapt 

to them. 

So we are trying to be responsive to the concern many have expressed that we give people more guidance. 

Mrs. CAPITO. Okay. And once those are designated, whenever 

that is, 21⁄2 years from now, will they—the living wills that they 

are creating, when are they due in to the FSOC? 

Secretary GEITHNER. I can’t speak to that. I would be happy to 

get back to you in writing. I am not sure exactly when. But I don’t 

think you are right about the 21⁄2 year thing. I hope we can move 

more quickly— 

Mrs. CAPITO. I just know how slowly these things move. You 

know that, too. 

Secretary GEITHNER. Let me say one more thing on that. We are 

moving more slowly than some of the deadlines required. But I 

want you to know that, where we are slower, it is because we are 

trying to get them sensible and get them right, and we are trying 

to get everybody to move together, not separately with different 

standards. And it is a complicated thing to do. 

And we recognize that, in some ways, slow is bad, but slow is 

better in the service of a better outcome with smarter rules. 

Mrs. CAPITO. Thank you. 

And then just one thing about the regulatory—obviously, this is 

a big issue that is coming up—the regulatory burden of DoddFrank. And your previous answer—I wrote you a letter—and you 

responded to it, and I appreciate that—about what types of regulations after the President’s Executive Order 1 and 2 asking you to 

weed out old regulations, streamline. And, basically, your final 

point here is that, ‘‘I will seek ideas from council members on concrete ways in which agencies can use the council as a vehicle to improve coordination.’’ 

I write these kind of letters, too. So, you are really saying that 

you haven’t really done anything here. 

Secretary GEITHNER. Not quite. But you are right, we haven’t 

made much progress yet. And it is hard, but I am very committed 

to this. 

When I first went to the New York Fed a long time ago, I remember looking at the bulk of accumulative stuff that had been 

built up over the years in the regulatory process, well-motivated 

stuff—Bank Secrecy Act, consumer protection things— 

Mrs. CAPITO. Right. 

Secretary GEITHNER. —and what we generally don’t do is go back 

and look at those when we do the new things to clean up the ones 

that don’t meet their objectives in the past. And it is very important we try to do that, because we are trying to get a smarter sysVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
20 

tem and a tougher system, not just more muck piled onto the current system. 

Mrs. CAPITO. I would encourage you to— 

Secretary GEITHNER. But I want to give you two examples. In the 

area of consumer— 

Mrs. CAPITO. I think my time is up. Sorry. 

Secretary GEITHNER. —mortgage disclosure— 

Mrs. CAPITO. Right. 

Secretary GEITHNER. —credit card disclosure— 

Mrs. CAPITO. That was in your letter. 

Secretary GEITHNER. —and there are two examples I can’t refer 

to you in detail but I would be happy to write you about in the 

Bank Secrecy Act where we have started to simplify things in a 

way that help. 

But we are just at the beginning of this process. We have a lot 

more work to do. 

Mrs. CAPITO. Thank you. 

Mrs. BIGGERT. The gentlewoman’s time has expired. 

The gentleman from Illinois, Mr. Gutierrez, is recognized for 5 

minutes. 

Mr. GUTIERREZ. Thank you very much. 

And welcome, Secretary Geithner. 

I want to go back to TARP and see if we agree on something: 

$700 billion for banks and $30 billion for homeowners under the 

HAMP program; is that correct, Mr. Secretary? 

Secretary GEITHNER. No. We—when I took office, the President 

took office— 

Mr. GUTIERREZ. I didn’t ask you when you took office— 

Secretary GEITHNER. No, no. I— 

Mr. GUTIERREZ. —but according to TARP. How much money was 

there in TARP? 

Secretary GEITHNER. No, there was $700 billion authorized for 

the system as a whole, but— 

Mr. GUTIERREZ. And how much was authorized under HAMP? 

Secretary GEITHNER. Hold on, I am coming to you. I am going to 

respond to your question. 

Mr. GUTIERREZ. It is only—it is already half a minute. 

Secretary GEITHNER. Roughly $350 billion. 

Mr. GUTIERREZ. $700 billion authorized. And how much was authorized for HAMP? 

Secretary GEITHNER. Roughly $350 billion was disbursed to 

banks. 

Mr. GUTIERREZ. Okay. 

Secretary GEITHNER. Fifty authorized for HAMP. Thirteen-billion-dollar profit on the investments in banks. 

Mr. GUTIERREZ. But I am— 

Secretary GEITHNER. Hold on. 

Mr. GUTIERREZ. I am not—those aren’t the questions. See, we 

ask the questions. I know it is uncomfortable, but every now and 

then, we ask questions, you answer questions. You have answered 

other people’s questions. You are answering questions I haven’t 

even asked. So you might be getting ahead of yourself here a little 

bit, Mr. Secretary. 

21 

So let me just ask, so there was $50 billion for HAMP, right? Is 

that what you just stated? 

Secretary GEITHNER. Authorized for HAMP. 

Mr. GUTIERREZ. Authorized for HAMP. How much of that $50 

billion was spent? 

Secretary GEITHNER. A very small amount. 

Mr. GUTIERREZ. A very small amount—$2 billion. 

Secretary GEITHNER. We have committed substantially more. 

Mr. GUTIERREZ. I know. How much has been spent? 

Secretary GEITHNER. Very little. 

Mr. GUTIERREZ. Very little, okay. So you won’t agree to $2 billion, but I know it is $2 billion. You can write me a letter—and you 

are going to write me a letter that says it is $2 billion. 

Secretary GEITHNER. You have to look at the Hardest Hit Fund, 

the whole package of it. 

Mr. GUTIERREZ. That is okay. It could be $3 billion, but it is still 

a miserable amount of money. 

Secretary GEITHNER. It is not $50 billion. 

Mr. GUTIERREZ. Even if it is $4 billion, it is not very much. It 

is terrible. 

And so we authorized $700 billion. The banks got $350 billion. 

We authorized $50 billion so that people could stay in their homes. 

So the banks got quite a bit of money to stabilize themselves, and 

the money that we put forward so that homeowners could stay in 

their homes really wasn’t utilized that much. Isn’t that a fair— 

Secretary GEITHNER. If you want me to respond to your point, I 

am happy to do it? 

Mr. GUTIERREZ. But isn’t that fair, though? 

Secretary GEITHNER. First of all, it is true that we have spent 

a very small fraction of the money authorized under the housing 

programs. And that is because the number of people who are eligible through those programs are a fraction of those that we thought 

would be eligible. But— 

Mr. GUTIERREZ. Okay. So, in other words— 

Secretary GEITHNER. But one more thing. 

Mr. GUTIERREZ. —Mr. Secretary, you are going to blame, as the 

Republicans do, Freddie Mac and Fannie Mae. And we— 

Secretary GEITHNER. Nope. 

Mr. GUTIERREZ. —hear from them all the time how terrible they 

are. And they won’t do anything because they are under receivership, and there is nothing you can do with the money. So— 

Secretary GEITHNER. No, I am not going to say that. I am just 

saying— 

Mr. GUTIERREZ. But the fact is—let me ask you a question. So, 

you said to us—first, you said mortgage-servicing business, you 

said that was really big. All right? And you said to us earlier, you 

said, huge increase in poverty and inequality. You said that to us, 

and that we should speak more clearly and more boldly, you said. 

So I guess my point is, when the regulations were established as 

to how you could use the HAMP program, were there regulations 

established so that you could reduce the principal amount of the 

loan, which you and your Assistant Secretary have agreed would 

be very helpful in keeping people in their homes? 

22 

Secretary GEITHNER. Yes. As I said in response to your colleague’s question, we did establish—at the beginning, we had authority to do it. And we were providing assistance for it with the 

taxpayers’ money, both through the State programs and directly, 

programs that support targeted principal reduction. Yes. 

Mr. GUTIERREZ. So why hasn’t more money been used? 

Secretary GEITHNER. For the reasons I said. Because our programs directly only reach— 

Mr. GUTIERREZ. Okay. Mr. Secretary, forgive me if I fail to grasp 

this. I am not the Secretary of the Treasury. I didn’t work at the 

Federal Reserve in New York, and maybe I don’t understand. But 

it seems to me that, as I see people out there on Wall Street and 

I see this conversation that we are having here, look, I think it is 

pretty natural to say, hey, there was hundreds of billions of dollars 

in TARP money, there was a sense of urgency both by your predecessor, Mr. Paulson, and you and others to come here to the Congress of the United States and say, let’s stabilize our financial system, it is in gridlock, it is going to fail, we need to give them the 

money. And, indeed, they got hundreds of billions of dollars to stabilize that system. But, basically, the homeowners didn’t get very 

much from the HAMP program which was established. 

And I just want to state for the record, I voted for it, primarily 

because I thought, well, at least there will be some money so that 

people can stay in their homes. I think that is why people are a 

little angry. 

And then, Mr. Secretary, to be quite honest, when you come and 

say to us, there are a lot of people in poverty and then you say, 

I don’t want to talk about the $5 fee, look, Mr. Secretary, people 

pick up the newspaper and they read stories that you talked to 

JPMorgan Chase and Morgan Stanley and all the boys and girls on 

Wall Street first thing in the morning and at the end of the day, 

but you can’t comment when they put a $5 charge at Bank of 

America. They want you to speak, because they pick up the phone, 

Mr. Secretary, all the time to those same banks, and those banks 

won’t return their phone calls so they can get their mortgage mediated. 

Secretary GEITHNER. Can I say one thing in response, Mr. Chairman? 

Chairman BACHUS. Absolutely. 

Secretary GEITHNER. Congressman, I just wanted to say that— 

and I tried to say this at the beginning, but you didn’t let me—this 

Administration, at my recommendation, with the President’s support, put hundreds of billions of dollars into the housing market, 

not directly through HAMP but through the GSEs and through the 

direct purchase of mortgages, that had a dramatic effect in lowering mortgage rates for everybody, helping people refinance, stay 

in their homes—made a huge difference in easing the pain. 

But our programs have dramatically underperformed what we 

thought. But why did they do that? It is because there were far 

fewer people eligible for our programs than we estimated originally. We have tried to reach as many as we can, and we are going 

to keep doing it for exactly the reasons you said, and we should 

keep doing it. And we are very disappointed and frustrated by it, 

and we have a lot of challenges ahead. 

23 

But we did not—the HAMP authorization of $50 billion does not 

capture the full scale of the resources we put into the housing market. We put much more into the housing market, in total, than we 

did for the banking system as a whole. 

Mr. GUTIERREZ. I just want to say, the next time they have a crisis, don’t call me. 

Chairman BACHUS. Thank you. 

And thank you, Mr. Secretary, for that response. 

At this time, I am going to recognize Mr. Garrett. Then I will go 

to Ms. Velazquez. And then Mr. Neugebauer will have voted, and 

we will go to Mr. Neugebauer. He may be in the Chair at that 

time. And if Members wish to go vote and come back, Mr. Meeks, 

we can keep the questioning going on. 

The Secretary has agreed to be here until 3:45. Originally 5:00, 

but he was going to come at 2:00, but we had agreed on 3 hours, 

Mr. Secretary. 

Secretary GEITHNER. No, Mr. Chairman, I am sorry— 

Chairman BACHUS. Two hours, that is right, 2 hours. 

So, as long as the questioning goes on, we will have a 2-hour 

stop. If it is interrupted, we will extend to the point it is interrupted, but hopefully we won’t interrupt it. 

Mr. Garrett? 

Mr. GARRETT. I thank the Chair. 

I have to say I am taken aback by some of the comments by our 

witness today. The uncertainty being a canard, with regard to a 

weight on the pressures on the markets today? 

Secretary GEITHNER. Not my—not my words. I was just— 

Mr. GARRETT. No, but I know you were quoting from them favorably. But if there is anything more of a pressure on the markets 

than uncertainty, it is the certainty that this Administration would 

take this view and take the view that the over 2,300 pages of regulation, the 400 of statute, the 400 regulations that are coming from 

it, is not a burden and the uncertainty that creates is not a burden 

on this marketplace. 

Just as an aside, I would very much appreciate if you could provide me with even half a list of those community bankers who you 

have talked to who say that they are privileged that they don’t 

come under Dodd-Frank. Because I have not met one. 

Secretary GEITHNER. Again, they supported the law because— 

Mr. GARRETT. They have supported the law, but if you are saying 

that they appreciate not being under it, I would like the individual 

names of those bankers. 

And to the ranking member, to say that he has not seen anything in the legislation specifically articulated that would either 

raise the intermediation costs or the costs on businesses, obviously 

the ranking member has not been listening to any of the testimony 

we have had before and after Dodd-Frank has gone into effect and 

he is not listening to what the markets are saying right now. 

Mr. FRANK. Will the gentleman yield? 

Mr. GARRETT. No, I will not yield. 

Mr. FRANK. Big surprise. 

Mr. GARRETT. The other uncertainty in this, of course, Mr. Secretary, is in a couple of other areas—GSEs. 

24 

Mr. Secretary, do you remember we had a meeting back in April 

and we said, ‘‘We want to work with you.’’ You did a White Paper, 

you had three plans, and we sincerely want to work with you. And 

you asked us to let you have a little bit of time, and you will have 

your staff work on it—give you a few weeks, and then you will get 

back to us. 

That was back in April. This is—May, June, July, August, September—October. And now I understand you may have just told 

Senator Vitter on the Senate side, or you may have told someone 

else, that you are now working on coming up with it still. 

In a nutshell, when can we have a response to our April request 

as to what the Administration’s exact details are and not another 

White Paper? 

Secretary GEITHNER. I meant what I said when I said it to you 

in April, which is that we are looking at options and we are happy 

to discuss them with you. But, as you know, we have been a little 

busy. We had a little crisis in Europe. We had a little debt limit 

debate— 

Mr. GARRETT. I understand that, but when—that is 6 months, 

so— 

Secretary GEITHNER. So, soon. I don’t know when yet, but soon. 

Mr. GARRETT. It was a couple of weeks back in April—6 months. 

By the end of the year? Because this is important. Isn’t GSE reform very important, that we should be tackling it? 

Secretary GEITHNER. It is. It is. And I am glad to hear that the 

debate seems to be moving in a constructive direction on your 

side— 

Mr. GARRETT. It is constructive over here in the House. It is not 

constructive from the White House and from yourself. 

Secretary GEITHNER. But we are not stopping you. If you want 

to come up with ideas, it is fine. 

Mr. GARRETT. But we would like to work—the President is on TV 

today saying that we are not working with him. We are all about 

working with him, as long as we have something specific from you 

or the Administration. 

Secretary GEITHNER. I took you at your word when you said you 

wanted to work with us. And I also said, and I said it publicly 

today again, that I think the burden is on us to propose a detailed 

plan. And I would like to do that. 

Mr. GARRETT. And, on that note, I will just say, we are still waiting. 

And, also, we sent you a letter that was also a reference to 

FSOC—and this just went to you, so I am not asking for an immediate response. But our letter basically asked, with regard to all 

the regulations out there, can’t we have a roadmap, basically, in 

place, directed by FSOC, as for a timetable for the regulations to 

come out, and put it in the Register by FSOC? Can we— 

Secretary GEITHNER. I read your letter, and— 

Mr. GARRETT. Good. 

Secretary GEITHNER. —I have to confess to you, I had the same 

basic instinct at several times over this process, because it is a very 

complicated, confusing path of uncertainty on timing, and we are 

trying to resolve it. So we are going to try to get as much clarity 

25 

as possible from the regulators—remember, they are independent 

of us—about what the timeframe is going to be. 

Mr. GARRETT. But they are independent of—if FSOC put it out 

and put it in the Register as the timeframe that you wanted to go 

by—right? 

Secretary GEITHNER. As I said, it would be great to have a little 

more clarity out there about actual sequencing, and— 

Mr. GARRETT. Two more quick questions. Now, I will switch over 

to other uncertainty, not here but over in Europe. I understand 

that you have urged the Europeans to leverage their $400 billion 

European financial stability facility—their facility—to issue euro 

bonds. 

Secretary GEITHNER. No, that is not quite right. But go ahead. 

Mr. GARRETT. No? 

Secretary GEITHNER. No, not precisely. But go ahead, I will let 

you finish your question. 

Mr. GARRETT. Okay. So, basically, if they were to do that, these 

would be euro bonds that would be issued by the EU, which would 

be backed by member states, who basically can’t print their own 

money because member states can’t do their own money anymore. 

Some would connote that, then, to be some sort, if you will, a CDO 

sort of thing, a sovereign CDO to try to infuse capital into those 

marketplaces. 

My question on that is, if they were to do that, can you assure 

us that this Administration, the Fed, would not be looking to buy 

any of those euro bonds? 

Secretary GEITHNER. I don’t think we would have the authority 

to do it. So I don’t think you have anything to worry about. 

Mr. GARRETT. And so, nothing through the Fed. Okay. 

Secretary GEITHNER. I don’t think so. I can’t envision a circumstance like that. 

As you know, they are members of the IMF. So they have the 

right, as members of the IMF, to borrow from the IMF if they meet 

the conditions. 

Mr. GARRETT. That is my next quick question, in 6 seconds, is 

that the Fed has swap lines where we— 

Secretary GEITHNER. They do have swap lines, that is right. 

Mr. GARRETT. —and these go back to those banks over there, and 

those banks get—and, in return, is they are backed by the social 

security of what? Of the other banks over in those countries or the 

sovereign debt of those countries? Effectively, we are put on—by 

the swap lines, we effectively are connected, if you will, through 

the Fed and through those swaps, to the potential for a contagion 

of the failure over in the EU. 

Is that something that is good for us to be in the position of? 

Secretary GEITHNER. Absolutely. And there is no risk to us in 

this country. These are the swap lines extended to the ECB. 

Mr. GARRETT. Yes. 

Secretary GEITHNER. And they are swaps of euros for dollars. 

There is no risk in them. We have used them once at enormous 

scale. And there is no risk to the United States. 

And they are very much in our interest to do because we run a 

dollar-based international financial system. And those institutions, 

26 

when they need dollars, have nowhere to go except from us, and 

we are trying to meet that need. 

Chairman BACHUS. All right. Thank— 

Mr. GARRETT. But the ECB is backed by— 

Chairman BACHUS. Thank you, Mr. Garrett. 

Mr. GARRETT. Thank you. 

Chairman BACHUS. Ms. Velazquez? 

Ms. VELAZQUEZ. Thank you, Mr. Chairman. 

I yield to Mr. Frank. 

Mr. FRANK. First, Mr. Garrett, as he often does, won a debate 

with a straw man. ‘‘The Wizard of Oz’’ must be his favorite movie. 

The fact is that I never said there was nothing in the bill that 

would restrain businesses. I am very proud that we restrained the 

kind of credit default swaps that AIG engaged in with no ability 

to repay. I am very glad we restrained people from making the 

kind of mortgage payments they shouldn’t make in selling them. 

So, of course there were things that restrained some activity that 

was not productive. 

What I said we did not do in that bill, and no one has pointed 

to me, was anything that would increase the lending standards for 

banks on conventional loans. Nothing in that bill tightens them. 

But, secondly, as the gentleman leaves, I have to say, his blaming the Administration because we haven’t done anything about 

GSEs—have people forgotten he is the chairman of the subcommittee that has jurisdiction over the GSEs? When he blames 

the Administration for the fact that this committee has not gone 

beyond subcommittee on the GSEs, he makes Pontius Pilate look 

like a standup guy. 

The fact is that there has been the greatest inability to focus on 

this. And the notion that they can’t do it without the Administration has to be the least credible excuse I have ever heard. It is not 

that the dog ate my homework, it is that the unicorn ate my homework. Because what we have here are people who have been very 

critical of the Administration, who have never asked the Administration’s permission to do anything, but when it comes to the GSEs, 

because there is this great gap between their ideology and reality, 

all of a sudden the poor dears can’t do anything without the Administration’s telling them to. 

I thank the gentlewoman for yielding. 

Ms. VELAZQUEZ. Mr. Secretary, last month, the Treasury made 

its final round of investment in the Small Business Lending Fund, 

bringing the program’s total to just $4 billion, just 13 percent of the 

$30 billion that was set aside. And only 332 banks across the country were able to access the funds. 

Mr. Secretary, I truly personally believe that the Small Business 

Lending Fund’s error was that it wasted today’s resources on yesterday’s problems. It was in 2008–2009 when small businesses 

were not able to secure access to capital, but we didn’t do anything. 

Then it wasn’t until 2010, a year after we passed the legislation, 

that the program was up and running. 

So, at the height of the financial crisis, small businesses struggled to find credit, but today they struggle more with depressed 

sales. So you put a solution to a problem that didn’t exist, because 

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27 

fectively at zero and deposits at all-time highs, banks have ample 

capacity to lend. 

So, still, now, small businesses are struggling. And when people 

try to explain why is it that in the 1990s, we created 3.6 million 

jobs, small businesses did it, why is it that we are not doing that 

today? 

Secretary GEITHNER. I agree with much of what you said, but I 

want to just change one thing. This President and this Congress 

did a dramatic, with your leadership, huge number of things in the 

early stages of the crisis for small businesses through the SBA and 

even through the TARP program at the beginning and, in addition, 

did very substantial tax cuts for small business at that early stage 

in the crisis. 

Ms. VELAZQUEZ. Ye, but I am talking about this bill. 

Secretary GEITHNER. And this bill, although it took a long time 

to design it by Congress, time to implement it, it was also very well 

targeted to help make sure that there are no more credit constraints across the country. 

But you were right to say that the biggest problem facing small 

businesses across the country is weak growth and weak growth in 

sales. The best thing we can do about that, in addition to making 

sure they can get credit, is to make sure that we make the economy 

stronger. And that is why this mix of tax cuts and infrastructure 

spending that the President has proposed is so important. 

If Congress were to enact those things, there would be more demand for products small businesses create and services they 

produce across the country. But you need the credit, too, because, 

as you know—this is your life’s work—they need the oxygen in this 

context. 

And the reason why you saw relatively limited participation in 

this program was, in part, because, as you said, some banks have 

plenty of capital, and we only had applications for about one-third 

of the authorized assistance, but only half of those banks met the 

standards in the law, and it is less than we thought. We were a 

little surprised by the takeup. 

But you are right to point out that the most important thing we 

should do is to make sure we get growth stronger so demand is 

greater, and more demand for the products and services small businesses create. 

Chairman BACHUS. Thank you, Mr. Secretary. 

Mr. Dold from Illinois is recognized for 5 minutes. 

Mr. DOLD. Thank you, Mr. Secretary, for taking the time to be 

with us. And I certainly know, I guess, one of the advantages of 

waiting while there are votes is that we get to ask questions. 

So I am concerned and wanted to talk to you about the China 

currency bill that currently just got passed, actually, by the United 

States Senate. As somebody who represents a district that exports 

over a billion dollars over to China, I am obviously concerned about 

what kind of ramifications this has. 

Currently, we have had little word from the Administration 

about what their plans are. A lot of other bills, we hear that the 

President is going to put his veto threat out there. If this were to 

pass through, would your recommendation be to the White House 

to veto the bill or to sign it? 

28 

Secretary GEITHNER. As the White House said yesterday—and I 

will just repeat their language just to be careful—if this bill were 

to advance, then Congress would, or should, address the concerns 

that have been raised about the consistency of some provisions 

with our international commitments. 

But let me just say, we— 

Mr. DOLD. Specifically with the world trade obligations; is that 

correct? 

Secretary GEITHNER. Yes. 

We have a problem, though, which is that I think we all need 

China to let their currency rise more rapidly, and we need to find 

a bit more effective way to address a whole range of practices the 

Chinese continue to do to subsidize and disadvantage U.S. companies—stealing offshore property, forcing transfer technology. And 

we are very concerned about that, working very hard to address 

them. And we have not made enough progress. We want to build 

on that progress. 

Mr. DOLD. If the bill were to go—sometimes you have the opportunity to say, ‘‘We want you to address those things,’’ and sometimes they do and sometimes Congress doesn’t—in its current form 

right now from the United States Senate to the President’s desk, 

your recommendation would be what? 

Secretary GEITHNER. As I said, if this bill were to advance, we 

would want Congress to address the concerns that exist about the 

design of those provisions that would violate our international commitments. That is what I would say. I won’t go beyond that, for 

reasons you can appreciate. 

Mr. DOLD. All right. 

If I can, I will just jump to something else. Overseas regulators 

have made it clear that they will potentially not follow the lead of 

the United States on a number of provisions that are a prominent 

feature of our regulatory reform, including the Volcker Rule and 

swaps push-out, more specifically with Section 716. 

Shouldn’t this make you skeptical that they will not harmonize 

their rules with those of the United States on other important provisions, as well? 

Secretary GEITHNER. I am a little worried about that. But, we 

never could expect that the world would match us identically for 

specific provisions we thought were in our interest of protecting our 

system. 

But I think we have a very good chance, as I said earlier, on the 

fundamental things that determine the economics of finance here 

and around the world—in capital liquidity derivatives, margin, 

etc.;—we are going to work very hard to make sure we come to a 

common position so we don’t see that material shift in activity outside of the United States to the disadvantage of U.S. firms. 

Mr. DOLD. I had some other questions with regard to the FSOC 

specifically and derivatives, but Congressman Royce went over 

those, so I will just jump on to something else. 

The SIFI designation, which you are in the process right now of 

trying to take a look at those, about how many U.S. companies do 

you think would fall under that SIFI designation? 

Secretary GEITHNER. Can’t tell yet. 

Mr. DOLD. Rough estimate? 

29 

Secretary GEITHNER. Don’t know yet. 

But I will tell you what we are trying to do. We are trying to 

define the mix of size and risk that we think requires us to take 

a closer look about whether those institutions should be subject to 

the type of constraints we put on banks in terms of capital and leverage. That is the motivation for this. It is a very important thing 

to do because in our crisis, we had a huge buildup of risks outside 

the system, alongside banks, doing basically what banks are 

doing— 

Mr. DOLD. Sure. 

Secretary GEITHNER. —and that was devastating. And so we are 

trying to make sure the scope of that authority will extend to institutions that fell outside of those safeguards but need to be under 

them. 

Mr. DOLD. If I could just go out—and we don’t like to deal in 

hypotheticals, but if we can, I know there are specific companies 

out there that have actually filed Chapter 11, that have gone 

through a bankruptcy reorganization. Wouldn’t that, by sheer definition, make them outside of a SIFI designation? 

Secretary GEITHNER. We have had centuries, decades of experience with banking and financial crisis, and— 

Mr. DOLD. And I certainly don’t mean to say that you don’t. 

Secretary GEITHNER. No, no, I know—‘‘we’’—as a country, unfortunately. 

And what we learned as a country in that context is that banks, 

or institutions that are like banks—they take on leverage, they borrow short, lend long, assets are liquid, vulnerable to runs—those 

institutions require a modified bankruptcy regime to deal with 

them because of the risk that you suck the oxygen out of them and 

they come crashing down. 

And, the way bankruptcy works, normally under the corporate 

context, you need somebody to be able to lend in the financing role, 

and you need to adapt that model, as we did after the S&L crisis 

in particular, to give a special way—and Dodd-Frank did—to make 

sure you can adapt that same basic principle to institutions that 

are structured with that mix of leverage and liquidity risk. 

Mr. DOLD. I appreciate that my time is now up, but I do want 

to just mention that I was up and met with a company that actually has gone through the bankruptcy process, did not suck that oxygen out of the air, and yet they are considered under that SIFI 

designation, as of right now. And I would simply argue— 

Secretary GEITHNER. Nobody is under it yet. 

Mr. DOLD. They fear— 

Secretary GEITHNER. They fear. 

Mr. DOLD. —they fear, and I think rightfully so, that they will 

be put under these constraints. And I would just certainly like to 

caution you and those who are making these decisions that, if there 

is an organized way already existing in the laws that they would 

not fall under that SIFI designation, we want to make sure that 

we are not casting as wide a net and more of a narrowly tailored 

net if possible. 

Secretary GEITHNER. Fair point. We are going to try to get that 

balance right. And I think if the Council adopts this guidance, peoVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
30 

ple will have a lot more clarity about the criteria we are going to 

propose and another chance to comment on that criteria. 

Mr. DOLD. Mr. Secretary, thank you for your time. 

Mr. NEUGEBAUER. [presiding]. I thank the gentleman. 

The gentleman from Georgia, Mr. Scott. 

Mr. SCOTT. Thank you very much. 

And welcome, Secretary Geithner. 

Certainly, as you recall when you were last down in Atlanta, we 

had an opportunity to visit and have a chat. Let me just say at the 

outset, I would like for you to pass on a couple of words of commendation to members of your staff: Mr. Tim Massad, who is, I 

think, your Assistant Secretary of the Treasury for Stability; and 

Ms. Alvina McHale, who worked—as you know, we have decided to 

go in and approach this whole home foreclosure situation as a 

ground war. We put together home foreclosure prevention workshops. 

And I just want to commend your staff and those folks. And 

please pass the word along to Ms. McHale and Tim Massad, Carol 

Lambert and Andrea Risotto and Troy Clair, who works with 

Massad—all. We couldn’t have done it without them. We were able 

to get over 6,000 folks there, and we were able to help save 2,565 

homes. And we are planning for the next one, and our goal is 

10,000 homes that we can save. 

But I want to talk about this, because in getting there and working on this, I learned a lot, as I mentioned to you, and that we can 

correct some things. We are losing homes that we shouldn’t. 

One of the areas that we found—one of the reasons we were successful was because Bank of America, for example, brought their 

underwriters with them. That means they could go ahead right 

there on-site when we had the person there and write down that 

loan and be able to do modifying. 

If we could work and incorporate that with all of the other banks 

and all of the others that would come to such events—because I am 

not the only one that Treasury works with. You do this. This is 

something that you are to be commended for. Because I think that 

this is the way we are really going to win this war in helping people stay in their homes, is to get right down there on the ground 

with them and get the banks, get them face-to-face, with our encouragement, to make sure this happens. 

But, in your comments, you mentioned that what you needed was 

greater authority and enforcement with mortgage servicing. And 

let me just ask you to respond to that. Would that mean how we 

could work to make the HAMP program more successful? Because 

what I found out with HAMP was, the reason why that is not 

working as it should—and as Mr. Gutierrez was pointing out, only 

$2 billion—is because it is basically voluntary; the banks are not 

there. 

So could you comment about that? That might be helpful to us. 

Secretary GEITHNER. Let me just start by thanking you for commending the people who are working so hard on this. And I agree, 

you need to do it homeowner by homeowner, because it is such a 

tough thing to do. And I appreciate your suggestion for how to 

make it work better. 

31 

This requires a longer conversation, but we have all been living 

with the limitations of what HAMP can do. And there are, really, 

three types of limitations we discovered. One is, as I said, the number of people we thought would be eligible for the assistance is a 

fraction of what we thought—the number actually is a fraction of 

what we thought—meaning there are far more people than we 

thought where the home is an investor-owned home, it is a second 

home, it is a jumbo mortgage, where the people can really meet 

their payment, or they really just have too much debt. That is one 

factor. 

The second is, in our programs we don’t have the power to compel Fannie and Freddie to come alongside us. They have been willing to come on some things, but we can’t force them on the rest. 

That is one limitation. The fact that it is voluntary I am not sure 

is a fundamental constraint, but it is another constraint there. 

We are still looking for ways to expand the reach of these programs, and we are going to keep at it. And the fact that we still 

have resources available gives us an opportunity, but we have some 

constraints on how much we can spend those. And we have proposed, as part of the Jobs Act, asking Congress to appropriate substantial additional sums of money to the Department of Housing so 

they can get more resources into communities where you have had 

such terribly concentrated foreclosures. And we think that would 

be helpful, too. 

We expect to move forward in the next couple of weeks with 

FHFA to make it much easier for Americans to refinance even if 

they are somewhat underwater. That will be helpful. 

We are trying to get the huge amount of vacant property that is 

still on the market into the hands of people who can rent. That will 

be helpful, too. 

We have a lot of work to do, and we are going to still use all the 

authority we have to try to reach as many people as possible. And 

I am happy to get suggestions from you on how best we can do that 

on the ground. 

Mr. SCOTT. Yes. And getting more authority, what specifically, 

what would you say you absolutely need in terms of that authority 

for the— 

Secretary GEITHNER. To help with the neighborhoods that are 

facing just—there are just thousands of concentrated vacant property across these neighborhoods. You need resources. And that is 

why the Jobs Act has this proposal to give the Neighborhood Stabilization Fund substantially more resources. 

To substantially broaden the authority we have over the program, you would have to give us authority over Fannie and 

Freddie. 

Mr. SCOTT. Right. Now, one of the things that might be in there 

that we found out in these prevention workshops that we were able 

to be successful with was, in having FHA there and having Fannie 

and Freddie there, we are able to get the banks who would be able 

to work closer with the HAMP program to interact and go right to 

the table where the FHA is because we had them there. And that 

might be an area where we can improve upon, so— 

Secretary GEITHNER. That makes sense. I agree with that. That 

makes sense. 

32 

And, again, I just want to point out that, although we have only 

had a little over 800,000 people with permanent modifications 

under HAMP, if you look at the broad range of modifications, it is 

closer to 4 million across the financial marketplace. 

Mr. SCOTT. Right. 

Secretary GEITHNER. And that is a lot of people. And that is a 

big reduction in the monthly payment. And that is 4 million foreclosures avoided. 

We have a lot more risk we need to try to work to avoid. And, 

we are going to do everything we can to do that. 

Mr. SCOTT. Thank you so much. And I appreciate your letting 

Ms. Alvina McHale and Mr. Tim Massad know how much we appreciate the job that they are doing. Great job. 

Secretary GEITHNER. Thank you again. 

Mr. NEUGEBAUER. I thank the gentleman. 

Mr. Secretary, welcome. It is good to have you back. 

Secretary GEITHNER. Nice to see you. 

Mr. NEUGEBAUER. Back in April, Secretary Goldstein testified before our Oversight Subcommittee. And one of the things he said is 

that, as the Chair of FSOC, you would make it a top priority to 

make sure that the regulation process was well coordinated. And, 

in fact, I think you said this morning that failure to coordinate 

rulemaking will be enormously expensive to the economy and create opportunities for regulatory arbitrage. 

So, as the overseer of that process, what are you doing to go 

above and beyond to get these agencies to coordinate? 

Secretary GEITHNER. Under the law that the Congress passed, I 

was given the responsibility to try to coordinate but not the authority to enforce it. So I am doing what you would expect me to do, 

which is try to get them together, encourage them to use the discretion they have to be more closely aligned, and make sure it is 

being sequenced in a sensible way and make sure they are looking 

at the full scope of the things we are imposing on the system. 

Of course, the things we are imposing on the system have costs. 

And we are trying to make sure that it is done in a way that everybody knows what everybody else is doing. And, as you can see, it 

is a challenge. 

But you did not give me the authority to compel them to work 

closely together, and they exist with independent statutes, independent mandates, and they are going to be protective of that. But 

where they have the flexibility under the law to be more aligned, 

they are moving closer to being aligned. 

Mr. NEUGEBAUER. Because I think an example of that, and it 

was brought up a while ago, about the CFTC and the SEC, particularly on derivatives—in other words, business conduct standards 

and margin and capital requirements and clearing—there is obviously not coordination or mutual agreement on those. And obviously, those are very important issues to the economy. 

And I think you make a good point, that you were not given the 

authority to compel these agencies. So is this a flawed process? Because, as you say, this is maybe the most important thing that can 

happen here, important to the economy. And if the process isn’t 

going to work and we are not going to have harmonization between 

this rulemaking, then what direction should we be going? 

33 

Secretary GEITHNER. It is a dramatic improvement in the system 

we had before the law was passed—dramatic improvement. They 

are working very closely together. 

They recognize, if you had them here with me, the people who 

run the CFTC, the SEC, and the Fed, they would commit to the 

same basic objective, because they recognize it is important. They 

have a very elaborate, closely coordinated process to try to make 

sure that they are doing this in a sensible sequence. 

And, you are going to want to see, like we are, where they land 

the stuff, how closely they get to that stated commitment. But they 

are committed to it, and I think they are doing a reasonable job. 

It is a little messy to look at, I agree with that. We just have to 

keep emphasizing the importance of it. 

Mr. NEUGEBAUER. If it is not working or if it is—what is the alternative here? Should we elevate this to another level? I hate to 

bring another bureaucracy in there, but if the—do we need a referee here? A working group? 

Secretary GEITHNER. I don’t think you are going to pass a law. 

You don’t need another committee, that is for sure. You have 

enough committees. You are not going to pass a law, I don’t think, 

that gives me authority to tell them what to do. And I wouldn’t 

seek that authority. 

So what we are doing is the best we can with the authority we 

have. And I think it is working; it is just not—we can’t be certain 

yet it is going to work well enough. But I take a more optimistic 

view. 

Mr. NEUGEBAUER. I think one of the things you said earlier, too, 

is you are worried about the cumulative burden of the regulations. 

I am worried about the cumulative effect of all these regulations. 

Just the first 102 regulations that came out of Dodd-Frank, for example, according to the regulators themselves, will take 10.8 million hours of compliance. 

And we did a press conference not too long ago, and you may or 

may not know this, but you have a little—you did a little stint in 

New York. They built the Empire State Building in 7 million 

manhours. And so, this is just the first 102 rules. 

How are we not just suffocating the financial markets? And we 

have just begun. 

Secretary GEITHNER. I think you are too worried about the cumulative impact of these financial reforms on the basic business of finance in the United States. 

Now, we are not going to get it perfect, but we saw what happens 

when you get it wrong, when they are too weak, they are poorly 

designed, there are huge gaps, we leave a huge amount of stuff to 

operate in the shadows. We have a chance to fix that now. 

As I said—and I say this over and over again in public—as we 

fix it, we want to make sure we don’t overdo it. And where we have 

to get tougher standards in place, like on capital over time, we are 

going to make sure they are phased in over time so we are not 

going to hurt the recovery. 

And I do not believe—I do not believe there is credible evidence 

to support the conclusion that the rules, as they are now being designed, are doing material damage to the basic objectives we seek, 

which is to create a more stable system. Now, they have conVerDate Nov 24 2008 16:58 Apr 17, 2012 Jkt 072611 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 K:\DOCS\72611.TXT TERRIE
34 

sequences. They will raise costs of business for financial institutions. That is their objective, in some ways, or that is the necessary 

outcome of that stuff. But we have to get the balance right, and 

we are being careful to do it. 

Mr. NEUGEBAUER. I think that is the reason that coordination is 

extremely important, because not only are we seeing a lot of those 

regulations coming out by multiple agencies, but when we talk to 

people in the regulated community, they tell you that more coordination is needed. 

And so I would encourage you, Mr. Secretary, even though you 

may not be able to compel, but that you spend a tremendous 

amount of energy to make sure that process is moving along, because I think it is extremely important to the economy. 

Secretary GEITHNER. Thank you for emphasizing the importance 

of that. And I share your view about the importance, and I am 

spending more time than you can imagine. 

Mr. NEUGEBAUER. Thank you. 

Mr. Schweikert? 

Mr. SCHWEIKERT. I wasn’t sure someone else wasn’t in the queue 

to go ahead of me. Thank you, Mr. Chairman. 

Mr. Secretary, I assume a day like this becomes a long day for 

you. You were in the Senate this morning? 

Secretary GEITHNER. Not so bad. Sort of a good debate to have. 

Fun to be with you again. 

Mr. SCHWEIKERT. Hopefully, it is not necessarily a debate; it is 

an opportunity for us to learn. And hopefully, you are well 

caffeinated. 

I want to go off on a side issue. I have been trying to learn more 

about Basel III and what it affects and how it affects our capital 

requirements. First question: I see in some articles a discussion of 

what will be counted as Tier 1, Tier 2, Tier 3 types of capitals. Am 

I under the impression in Basel III that bonds from Fannie and 

Freddie would be Tier 2? 

Secretary GEITHNER. I don’t think I can answer that, but I would 

be happy to get back to you in writing. 

The fundamental thing we did in Basel III is to basically say, for 

the core minimum capital requirement, we are going to require you 

to meet it with common equity, not with a bunch of other stuff. 

That is for the Tier 1 capital requirement. But we do still—regulators do still allow you to use other forms of capital to meet the 

additional— 

Mr. SCHWEIKERT. Within that Tier 1? 

Secretary GEITHNER. No. In Tier 1, we are essentially limiting it 

to common, for all practical purposes. 

Mr. SCHWEIKERT. Okay. 

Secretary GEITHNER. But I would be happy to respond to you in 

writing on the details. 

Mr. SCHWEIKERT. Look, this is why I am trying to educate myself, because my understanding is, sort of like in FSOC, some of the 

additional premium out there is a couple hundred billion dollars of 

additional, even beyond what would have been a Basel III requirement? 

35 

Secretary GEITHNER. I have read those reports and the letters 

and concerns about that, and I do not believe that those estimates 

are accurate. But I have to talk to the Fed about it. 

But you are correct to say, in addition to the Basel III threshold, 

we have proposed—and the law asks us to do this, and I fully support this—that the largest institutions in the world should hold an 

additional buffer of capital. And the Fed is in the process of negotiating those details with our counterparts around the world. 

Mr. SCHWEIKERT. And I appreciate that. I am still trying to hunt 

for, sort of, the math that tells me what creates a level of safety, 

where at the same time holds so much capital out of the markets 

that we actually inhibit economic expansion and growth. And my 

fear is, are we heading toward a layering where, well intended, but 

we may be starting to pull too much of that capital away? 

Secretary GEITHNER. I don’t think so. And I will cite—you are 

right to say there is—first of all, there is no science to that basic 

choice. 

Mr. SCHWEIKERT. Yes, but there is always someone willing to 

make up a formula. 

Secretary GEITHNER. There is. And, you can go too far. I agree 

with that. 

But all we know is that they were way too low and they weren’t 

applied far enough across the system. And we are trying to get 

them more conservative so there is much lower probability of failure, of default, of financial crisis in the future, without going too 

far. 

If we go too far, what is the consequence of going too far? You 

are right, you say you put additional burden on the economy. But 

you also have the effect of just shifting the risk outside the banking 

system in ways that don’t necessarily make us better off. So we are 

trying to get the balance right for those reasons. 

My basic sense is that, first of all, U.S. firms, on average, are 

very far along to meeting those requirements already and that it 

seems, on the basis of the available evidence and what analysts 

have said independently, that since the remaining requirements 

will be phased in over a long period of time that they will be able 

to earn their way into those higher requirements. And because of 

that, we think we can manage this in a way where we will have 

limited effect on the recovery that is still sort of fragile. 

Mr. SCHWEIKERT. Two other quick things, because I only have 

about a minute and 20 seconds. 

In my running back and forth to vote, I was hearing some of your 

comments and discussions about mortgages and foreclosures and 

those. I happen to be one of those people who believe we don’t drive 

health back to our residential real estate market until we actually 

get the glut of nonperforming paper but also of vacant homes. 

What is it? The estimate is 13 percent of residential units in the 

country are functionally vacant. In some places like I represent in 

Arizona, Maricopa County, it could be 16 percent of our residential 

units. 

A lot of well-meaning mortgage-foreclosure moratoriums and 

abatements and those things, in many ways, have actually made 

the problem worse and last longer. I know that doesn’t feel as 

warm and fuzzy, but, ultimately, if we are going to bring back our 

36 

home values—I was somewhat happy to hear the understanding, 

saying, look, we have to grind through this, what isn’t performing 

we have to move into some status of performing. Am I hearing you 

correctly? 

Secretary GEITHNER. I think much of what you said is right, that 

we won’t do the system any good if we leave those broader foreclosure systems as broken and frozen as they are. And, in many 

ways, the best thing you can do for those communities is to get 

those vacant properties into better hands, into rental or other uses. 

That would help as a whole. 

But there is still a very strong argument, economic argument, financial fairness argument, that you want to make sure that people 

who have income and can afford to stay in their homes if they are 

given a chance are able to do that. And we are trying to help that. 

And I think, in helping that, I don’t think we are getting in the 

way of the necessary adjustment for this to happen in the marketplace. 

Mr. SCHWEIKERT. I know I am a little bit over time, but you have 

hit on something that concerns me. And, actually, this is one I actually give Fannie and Freddie some credit for. Some of their servicing best practices they have put out in the last couple of months 

actually seem to do that mechanic. If we can get you there, if we 

can keep you in the home and work those out, we are going to get 

you there. If we can’t, then we cannot let this slow decay of foreclosure linger. 

Secretary GEITHNER. Right. 

Mr. SCHWEIKERT. And it is sort of—you have to hit a decision 

point and actually make that tough decision, but you have to make 

it. 

Secretary GEITHNER. What we try to do is to say that some people need to be given some help through a short sale or a deed in 

lieu of sale to transition in some ways. And so, we have had a mix 

of approaches across the system. But, as you know, the servicing 

framework is still fundamentally broken, and the securitization 

system makes it much harder for that to happen on the scale you 

need to. 

Mr. SCHWEIKERT. And, Secretary, actually, I would love if you 

also have a staffer—you hit on one thing. I am a fan and we have 

been trying to write now for a couple of months the concept of deed 

in lieu to a lease-backed, maybe even a downpayment IRA, so in 

the future you could actually buy the property back—some of those 

mechanics. And, actually, believe it or not, we keep running into, 

sort of, regulatory hurdles within those concepts, because you are 

having to do three or four very different things all at once. If you 

have someone who intellectually has been working on that, I would 

love to spend some time— 

Secretary GEITHNER. I would be happy to do that. 

Mr. SCHWEIKERT. Mr. Chairman, thank you for your tolerance. 

Chairman BACHUS. Thank you. 

Mr. Secretary, we appreciate your testimony today. 

I want to end on a positive note. You made a speech in June of 

this year, when you said there is a very strong case for requiring 

the largest firms to hold more capital relative to risk than smaller 

institutions. And I agree with that. 

37 

But you also asked that day how much, which is, I think, a very 

important question. You said, ‘‘In making this judgment, the central banks and supervisors need a balance between setting capital 

requirements high enough to provide strong cushions against loss 

but not so high to drive the re-emergence of a risky shadow banking system.’’ 

And my question is, with, say, Basel III capital rules combined 

with all the rules imposed by Dodd-Frank, whether they are good 

or bad or neutral, will there be at least a tendency, a shift from 

the banking system or the banking sector to a less regulated, what 

we call a shadow banking system? 

Secretary GEITHNER. We always have to be worried about that 

risk, but I don’t believe that is likely, on the strength of the rules 

we see coming into place today. But we are going to be very attentive to that, for the reasons you said. 

Chairman BACHUS. All right. Great. I appreciate that. 

A significant move away from financial activity and highly regulated financial institutions into less-regulated sectors, how would 

that affect financial stability, or how could it? 

Secretary GEITHNER. It could be very damaging. As we saw, what 

some people call the shadow financial system or the parallel financial system, these are entities that were effectively doing what 

banks do but they operate outside of the prudential constraints on 

capital. They grew to be larger than the traditional banking system. 

And when that happens, you leave the economy at risk and the 

banking system at risk, because when the storm came and funding 

ran from those institutions, they collapsed, had to sell assets, put 

a huge amount of pressure on the economy. So if you get that balance wrong, you can do enormous damage. 

Chairman BACHUS. Thank you. 

Mr. Secretary, there have been 3,700 new regulations in the last 

year that have been enacted by the Congress and signed by the 

President. But there are actually—actually, by regulations, the regulators, in response to laws. But there are almost 4,300 regulations 

still in the pipeline, many of those in financial services. And, as 

you know, we have been asking for cost-benefit analysis. And 219, 

our best estimate, of those have an economic impact of over $100 

million or more. 

And I would just close this hearing by asking—I think maybe the 

most important policy that you could adopt, the regulators and this 

Congress, is to promote, not restrain, policies which create capital, 

investment, jobs, what we sometimes refer to as wealth growth. 

The American people are actually 8 times richer than they were in 

1820. And while there are actually countries that are—their populations are no richer. 

So I would simply urge you to look—and we have sent you a letter on—because the President did say he was going to look at all 

the different regulations and rules and see if those are restraining 

economic growth. And we would ask you to do that and make that 

a priority. We want to encourage and promote growth and wealth 

creation because that creates jobs. 

I thank you for your attendance. I thank you for working with 

us to start this hearing early. And I think we worked with you so 

38 

you would be free to go to the White House at 4 o’clock. So, with 

that, I will discharge you. 

The Chair notes that some Members may have additional questions for you, and they will submit those in writing. Without objection, the hearing record will remain open for 30 days for Members 

to submit written questions to you and to place your responses in 

the record. 

And you could also, your written statement if you wish to clarify 

that in any way, or your responses, you are welcome to do that. 

This hearing is adjourned. 

I thank you for your attendance, Mr. Secretary. 

Secretary GEITHNER. Thank you, Mr. Chairman. 

[Whereupon, at 2:35 p.m., the hearing was adjourned.] 

(39) 

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