AIG Bailout Oversight Hearing, Panel 1

Oct 7, 2008

House Committee Oversight and Government Reform

The House Oversight and Government Reform Committee held the second in a series of oversight hearings on the regulatory mistakes and financial excesses that led to the market breakdown on Wall Street, and on the impact of the crisis on financial markets and the U.S. economy. This session focused on the causes and effects of the government bailout .. Read More
The House Oversight and Government Reform Committee held the second in a series of oversight hearings on the regulatory mistakes and financial excesses that led to the market breakdown on Wall Street, and on the impact of the crisis on financial markets and the U.S. economy. This session focused on the causes and effects of the government bailout of American International Group (AIG). In the first panel witnesses testified that deregulation in 1999 and 2000 of financial markets and inadequate disclosure by top AIG officials contributed to the collapse of major firms.

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TIME SPEAKER TEXT
00:00:57 Waxman, HenryU.S. Representative THE COMMITTEE WILL PLEASE COME TO ORDER. TODAY WE ARE HOLDING OUR SECOND DAY OF HEARINGS ON THE FINANCIAL...
00:13:21 Shays, ChristopherU.S. Representative THANK YOU, MR. CHAIRMAN. TODAY WE CONSIDER THE CASE OF THE AMERICAN INTERNATIONAL GROUP, AIG, A GLOBAL...
00:19:00 Waxman, HenryU.S. Representative THANK YOU VERY MUCH. FOR OUR FIRST PANEL, WE'LL HEAR FROM BE LYNN TURNER WHO SERVED AS CHIEF ACCOUNTANT...
00:21:00 Dinallo, Eric R.Superintendent THANK YOU, CHAIRMAN. IT'S AN HONOR TO BE HERE. I'M HERE TO TRY TO EXPLAIN FROM OUR PERSPECTIVE A LITTLE...
00:29:05 Waxman, HenryU.S. Representative THANK YOU.
00:29:09 Turner, Lynn E.Chief Accountant THANK YOU, CHAIRMAN, WAX MAN, COMMITTEE MEMBERS. I THINK THIS IS A VERY IMPORTANT HEARING IN LIGHT...
00:29:32 Waxman, HenryU.S. Representative COULD YOU PULL THE MIC CLOSER TO YOU? THERE IS A BUT ON KNOW ON THE
00:29:34 Turner, Lynn E.Chief Accountant IT'S ON.
00:29:36 Waxman, HenryU.S. Representative YES.
00:29:37 Turner, Lynn E.Chief Accountant I'M SORRY. BUT IN THE WORST L.WORDS OF GEORGE SANTANA, THOSE THAT CANNOT REMEMBER THE PAST ARE CONDEMNED...
00:36:18 Waxman, HenryU.S. Representative THANK YOU VERY MUCH. WE'LL NOW RECOGNIZE MEMBERS FOR 5 MINUTES EACH TO ASK THE TWO OF YOU QUESTIONS...
00:36:29 Maloney, CarolynU.S. Representative THANK YOU. AND I'D LIKE TO WELCOME OUR PANELISTS AND THANK THEM FOR THEIR PUBLIC SERVICE, PARTICULARLY...
00:38:52 Dinallo, Eric R.Superintendent WELL, I GUESS WE'LL FIND ON OUT. I HOPE NOT. BUT I WILL SAY THAT THE DISTINCTION BETWEEN CREDIT DEFAULT...
00:40:21 Maloney, CarolynU.S. Representative SO ARE THESE PRODUCTS JUST GAMBLING?
00:40:24 Dinallo, Eric R.Superintendent THE GOVERNOR CALLED THEM GAMBLING. I THINK, IF IT WERE --
00:40:30 Maloney, CarolynU.S. Representative WE BANNED IT IN NEW YORK STATE.
00:40:32 Unidentified Speaker AND THE COMMODITIES USURRENDER OUR POSITION AND DO YOU THINK --
00:40:35 Dinallo, Eric R.Superintendent WE DID BAN IT. IN 1909, AFTER THE CRASH OF 1907, WE BANNED THIS KIND OF ACTIVITY THEY USED TO BE DONE...
00:41:44 Waxman, HenryU.S. Representative THANK YOU.
00:41:48 Mica, JohnU.S. Representative FIRST OF ALL, LET ME SAY THAT I'M PLEASED THAT WE MAY BE LOOKING AT FANNIE MAE AND SOME OF ITS RESPONSEIBILITY...
00:43:57 Turner, Lynn E.Chief Accountant I HAVE ACTUALLY DONE WORK ON BEHALF OF OFAO AT BOTH FANNY AND FREDDIE.
00:44:03 Mica, JohnU.S. Representative THEN I DON'T WANT TO HEAR --
00:44:07 Turner, Lynn E.Chief Accountant BUT, LET ME JUST SAY THAT I SEE GREAT SIMILARITIES BETWEEN BOTH OF THOSE INSTITUTIONS AND AIG AND...
00:44:19 Mica, JohnU.S. Representative MORE THAN APPLAUD. IF THIS COMMITTEE ISN'T GOING TO INVESTIGATE -- I INTEND TO ASK -- NOW, THE SPECIAL...
00:45:12 Turner, Lynn E.Chief Accountant I THINK THE REPEAL OF GLASS SEEINGEL WAS A CONTRIBUTING FACTOR HERE.
00:45:17 Mica, JohnU.S. Representative MR. COMMISSIONER?
00:45:18 Dinallo, Eric R.Superintendent I AGREE.
00:45:22 Mica, JohnU.S. Representative AND ONE OF THE INTERESTING THINGS, TOO IS NEW YORK IS IN MOST CASES, THE STATES WERE PRETTY GOOD REGULATORS...
00:45:31 Dinallo, Eric R.Superintendent YES, I THINK THE RECORD WOULD SUPPORT THAT.
00:45:34 Mica, JohnU.S. Representative THE DEFAULT SWAP IS REALLY OUT OF YOUR PURVIEW BUT EVEN REGULATION OF FANNIE MAE AND WHAT THEY WERE...
00:46:14 Turner, Lynn E.Chief Accountant IT WAS ACTUALLY -- CONGRESSMAN FRANK, MUCH TO HIS CREDIT, DID INTRODUCE LEGISLATION THAT GOT PASSED...
00:46:21 Mica, JohnU.S. Representative BUT IT WAS BLOCKED IN THE SENATE.
00:46:23 Turner, Lynn E.Chief Accountant IT WAS NOT PASSED IN THE SENATE AND THAT WAS GREATLY UNFORTUNATE.
00:46:30 Mica, JohnU.S. Representative I VOTED AGAINST IT. NOW GLASS SPIEGEL, WE VOTED AGAINST NOT TO REPEAL THAT. WE VOTED IN THE AUTOPSY...
00:46:52 Dinallo, Eric R.Superintendent THE RESPONSIBILITY OF THE STATE REGULATORS, WHICH EXECUTED ON EXTREMELY WELL HERE --
00:46:58 Mica, JohnU.S. Representative YOU COULDN'T CONTROL THE SITUATION, CORRECT?
00:47:02 Dinallo, Eric R.Superintendent TO PROTECT POLICY HOLDERS AND PROTECT THE INVOLVENCEY --
00:47:05 Mica, JohnU.S. Representative IT WAS THE RESPONSIBILITY OF THE CONGRESS OF THE UNITED STATES AND ALSO THE RESPONSIBILITY OF THE...
00:47:26 Waxman, HenryU.S. Representative GENTLEMAN'S TIME EXPIRED.
00:47:29 Cummings, ElijahU.S. Representative THANK YOU VERY MUCH, MR. MR. CHAIRMAN. TO THE WITNESSES, I WANT TO THANK YOU FOR BEING HERE. AND...
00:49:34 Turner, Lynn E.Chief Accountant I HAVE BEEN A BUSINESS EXECUTIVE MYSELF AND I TELL YOU WHEN OUR COMPANY, WHEN THINGS GOT TOUGH, YOU...
00:50:13 Cummings, ElijahU.S. Representative AND IF A COMPANY IS DROWNING, THEN YOU'RE GOING TO GO AND SPEND THAT KIND OF MONY? IT'S CRAZY. I...
00:51:19 Dinallo, Eric R.Superintendent I THINK THERE ARE SOME REGRETTABLE HEADLINES IN THAT BUT I WILL SAY ONE THING, HAVING BEEN AT LARGE...
00:52:14 Cummings, ElijahU.S. Representative I WOULD TEND TO DISAGREE WITH YOU WHEN IT COMES TO PEDICURES, FACIALS, MANICURES, THE AMERICAN PEOPLE...
00:52:21 Dinallo, Eric R.Superintendent I AGREE.
00:52:23 Cummings, ElijahU.S. Representative THEY ARE VERY UPSET.
00:52:25 Dinallo, Eric R.Superintendent I SAID THEY ARE REGRETTABLE AND WRONG HEADLINES IN THAT. BUT THE IDEA OF MAKING SURE THAT YOU CAN...
00:52:38 Cummings, ElijahU.S. Representative THAT'S THE WAY TO GET THE GAMEPLAN BACK ON TRACK.
00:52:41 Dinallo, Eric R.Superintendent I AGREE.
00:52:43 Waxman, HenryU.S. Representative GENTLEMAN'S TIME EXPIRED.
00:52:44 Bilbray, Brian P.U.S. Representative THANK YOU. MR. CHAIRMAN, LET ME SAY THANK YOU VERY MUCH FOR COMMITTING TO DO A HEARING ON THE FREDY...
00:54:24 Dinallo, Eric R.Superintendent YES. WHAT I WOULD HAVE DONE IS I WOULD HAVE SAID EACH ACTIVITY HAD TO GET SOME KIND OF AN EXEMPTION...
00:54:57 Bilbray, Brian P.U.S. Representative MR. CHAIRMAN, THIS IS THE TYPE OF LINE THAT I WISH, INSTEAD OF JUST US MEETING, AND MAYBE WE OUGHT...
00:55:42 Dinallo, Eric R.Superintendent I WOULD FIRST REVISIT THE CFMA ON ITS CREDIT DEFAULT SWAP DECISIONS THAT IT IS COMPLETELY UNREGULATED...
00:57:29 Turner, Lynn E.Chief Accountant WE NEED A SET OF HEARINGS THAT IDENTIFY WERE EACH OF THE ISSUES AND PROBLEMS ARE, AND IT SHOULD BE...
00:58:59 Bilbray, Brian P.U.S. Representative GOT BACK FROM MY DISTRICT, AND THE OUTRAGE IS NOT THAT WE THREW MONEY AT THE PROBLEM, BUT THAT WE...
00:59:23 Waxman, HenryU.S. Representative THANK YOU VERY MUCH, MR. BILBRAY. MR. KUCINICH.
00:59:29 Kucinich, DennisU.S. Representative THANK YOU VERY MUCH, MR. CHAIRMAN. TO MR. DINALLO, TREASURY SECRETARY PAULSON IS THAT THE FORMER...
01:00:15 Dinallo, Eric R.Superintendent YES.
01:00:18 Kucinich, DennisU.S. Representative COULD YOU SPEAK INTO THE MICROPHONE?
01:00:20 Dinallo, Eric R.Superintendent YES.
01:00:25 Kucinich, DennisU.S. Representative WAS SECRETARY PAULSON AT ANY OF THOSE MEETINGS?
01:00:28 Dinallo, Eric R.Superintendent AND THAT I WAS PRESENT AT. -- C-SPAN.ORNONE THAT I WAS PRESENT AT. I AM NOT TRY TO AVOID THE ANSWER,...
01:00:42 Kucinich, DennisU.S. Representative DID YOU HAVE KNOWLEDGE THAT HE WAS THE FORMER CEO OF GOLDMAN SACHS?
01:00:47 Dinallo, Eric R.Superintendent OH, ABSOLUTELY. I AM HAPPY TO TALK TO ABOUT THIS. YOU ARE ASKING YES OR NO QUESTIONS AND I AM FINDING...
01:00:57 Kucinich, DennisU.S. Representative BEFORE THE BAILOUT, DID SECRETARY PAULSON AND OTHERS RAISED CONCERN ABOUT THE IMPACT IT WOULD HAVE...
01:01:09 Dinallo, Eric R.Superintendent YES, BUT NOT ONLY GOLDMAN SACHS. I ADMIRE THE PRESIDENT OF THE FEDERAL RESERVE. HE HAS TAUGHT ME VARIOUS...
01:01:21 Kucinich, DennisU.S. Representative I AM NOT REALLY ASKING ABOUT HIM.
01:01:25 Dinallo, Eric R.Superintendent PLEASE, SIR, I PROMISE --
01:01:29 Kucinich, DennisU.S. Representative I WANT YOU TO ANSWER MY QUESTION. THE HEAD OF GLOBAL COMMERCE FOR LEHMAN BROTHERS SENT AN E-MAIL ON...
01:03:11 Dinallo, Eric R.Superintendent FOR WHAT I WITNESSED IN THE FOUR DAYS AND FIVE DAYS OF WHAT I WAS EXPOSED TO, BASED ON MY PERSONAL...
01:03:25 Kucinich, DennisU.S. Representative YOUR ANSWER IS YOU DO NOT KNOW.
01:03:29 Dinallo, Eric R.Superintendent I DO NOT FEEL I HAVE A BASIS TO ANSWER THE QUESTION ASKED.
01:03:36 Kucinich, DennisU.S. Representative MR. CHAIRMAN -- THANK YOU, MR. CHAIRMAN.
01:03:41 Waxman, HenryU.S. Representative THE GENTLEMAN YIELD BACK THIS TIME.
01:03:51 Souder, Mark EdwardU.S. Representative THIS UNBRIDLED GREED, THIS CALLOUS ABUSE OF TRUST, OF HARD- WORKING AMERICANS' SAVINGS, IT IS JUST...
01:05:00 Dinallo, Eric R.Superintendent THE SYSTEM WORKED WELL, BECAUSE THERE IS A STRONG REGULATORY MODE AROUND ALL OF THE COMPANIES. THERE...
01:05:31 Souder, Mark EdwardU.S. Representative THOSE ASSETS ARE WALLED OFF AND CANNOT BE USED, AND ARE OF THE PROBLEM IS THAT THEY DISCOVERED THAT...
01:05:45 Dinallo, Eric R.Superintendent THAT IS A VERY SOPHISTICATED STATEMENT. THERE IS SOME TRUTH TO -- I DON'T KNOW, BECAUSE I'M NOT IN...
01:06:08 Souder, Mark EdwardU.S. Representative I MET WITH ONE COMPANY THAT IS IN DANGER OF GOING UNDER, AN INSURANCE COMPANY, BECAUSE THEY HAD TOO...
01:06:32 Dinallo, Eric R.Superintendent WE DO CONSTANTLY 7 EXAMINATIONS OF THE COMPANY. THERE ARE FAIRLY STRICT RULES AND ACCOUNTING STANDARDS,...
01:07:14 Souder, Mark EdwardU.S. Representative DO YOU HAVE A BAD LIGHT OF NEW YORK FOR FANNIE MAE? -- THE GUIDELINE OF NEW YORK FOR FANNIE MAE? DO...
01:07:40 Dinallo, Eric R.Superintendent YOU ARE BEING VERY HELPFUL, THANK YOU. WE HAVE WHAT IS CALLED A GUARANTEED FUND, YES.
01:07:48 Souder, Mark EdwardU.S. Representative ONE OF THE DEBATE IS WHETHER THE STATE CAN DO THIS AS OPPOSED TO THE FEDERAL. IT LOOKS LIKE OTHER EXPOSURES...
01:08:27 Dinallo, Eric R.Superintendent WE HAVE OVER 1000 COMPANIES. I CANNOT SIT HERE AND TELL YOU WHAT THE NUMBERS ARE. WE HAVE IN PLACE...
01:09:34 Waxman, HenryU.S. Representative MR. TIERNEY.
01:09:39 Tierney, JohnAssistant Director THAT FOLLOW ON MR. DINALLO, -- LET ME FOLLOW UP ON MR. DINALLO. MASSACHUSETTS WAS QUICK TO SHARE ...
01:10:36 Dinallo, Eric R.Superintendent THEY COULD HAVE CHOSEN US.
01:10:40 Tierney, JohnAssistant Director THEY COULD HAVE CHOSEN A REGULATORY AGENCY THAT WOULD HAVE BEEN MORE DIFFICULT TO DEAL WITH. THE...
01:12:23 Dinallo, Eric R.Superintendent I WOULD VIEW THOSE AS A SERIOUS ALLEGATIONS, YES.
01:12:27 Tierney, JohnAssistant Director IT ALSO SAYS THAT PRICE WATERHOUSE COOPER HAD REPORTED THE SAME CRITICISMS OVER LACK OF TRANSPARENCY...
01:12:48 Dinallo, Eric R.Superintendent I DO NOT KNOW WHERE THEY DOWNGRADED IT FROM AND TO, BUT IT IS THAT THEY HAD SOME CREDIT ENTERPRISE...
01:13:05 Tierney, JohnAssistant Director YOU INDICATED THAT WE OUGHT TO BE LOOKING AT WHAT WENT WRONG HERE, AND I AGREE. WHAT IS YOUR REACTION...
01:13:26 Turner, Lynn E.Chief Accountant BITTERLY SINCE THE BEGINNING OF THE DECADE THEY HAVE SAID THEY -- LITERALLY SINCE THE BEGINNING OF...
01:14:04 Tierney, JohnAssistant Director WHEN THE TWO NEXT WITNESSES TAKE THE STAND AND TELL US IT IS ALL ABOUT MARK TO MARKET, IN FACT, MANAGEMENT...
01:14:14 Turner, Lynn E.Chief Accountant I WOULD TOTALLY AGREE WITH THAT.
01:14:17 Tierney, JohnAssistant Director THANK YOU VERY MUCH.
01:14:21 Waxman, HenryU.S. Representative THANK YOU VERY MUCH, MR. TIERNEY. MR. CARTER. -- TURNER.
01:14:32 Turner, Michael R.U.S. Representative THIS IS ARE HELPFUL, NOT JUST FOR THE AMERICAN PEOPLE, BUT FOR ALL OF US. IN LOOKING AT YOUR WRITTEN...
01:18:27 Dinallo, Eric R.Superintendent I WOULD AMEND ONE OF MY EARLIER ANSWERS. ONE OF THE THINGS THAT HAVE THE FINANCIAL SERVICES COMMITTEE...
01:19:53 Turner, Lynn E.Chief Accountant I AGREE WITH ERIC ON THIS. YOU GOT PAID HANDSOMELY FOR DOING THOSE TYPES OF DEALS. IT IS A MAJOR CONTRA...
01:21:29 Turner, Michael R.U.S. Representative MOST OF THOSE LOANS THAT WENT INTO DEFAULT WERE REFINANCED. SOMEONE WENT BACK AND SOLD THEM AS A PRODUCT...
01:21:38 Waxman, HenryU.S. Representative THANK YOU VERY MUCH, MR. TURNER. MR. HIGGINS?
01:21:44 Higgins, BrianU.S. Representative GENTLEMAN, I WOULD LIKE TO TALK TO YOU ABOUT INTERNAL AUDITS OF INDEPENDENT AIG AUDITORS ADVISING...
01:24:50 Turner, Lynn E.Chief Accountant IF YOU LOOK AT THE THIRD QUARTER FILING FOR THE PERIOD, YOU DO NOT SEE ANY NOTION OF THE FACT THAT...
01:26:55 Yarmuth, JohnU.S. Representative THANK YOU, MR. CHAIRMAN. IN THE CHAIRMAN'S OPENING STATEMENT, HE SAID WE ARE GOING TO ASK QUESTIONS...
01:28:21 Turner, Lynn E.Chief Accountant I AM A BELIEVER THAT IF A COMPANY HAS PERFORMED WELL, THE EXECUTIVES SHOULD BE COMPENSATED WELL FOR...
01:30:04 Yarmuth, JohnU.S. Representative IN THE NEXT QUARTER, THE LOSS WAS ALMOST $8 BILLION, $13 BILLION LOSS IN TWO QUARTERS. AT POINT, THEY...
01:30:33 Turner, Lynn E.Chief Accountant WHEN EVER YOU ARE PAYING SOMEBODY FOR WALKING AWAY FROM THE COMPANY, THAT IS NOT IN THE BEST INTEREST...
01:30:46 Yarmuth, JohnU.S. Representative I HAVE A QUESTION OF THESE SWAPS THAT I WOULD LIKE TO GET AN ANSWER ON. YOU DROP THE NUMBER, 62 TRILLION...
01:31:22 Unidentified Speaker - OWED?
01:31:25 Turner, Lynn E.Chief Accountant YOU RAISE AN INTERESTING QUESTION, BECAUSE NOBODY KNOWS WHAT THE REAL EXPOSURE IS. THAT IS THE NOMINAL...
01:32:28 Dinallo, Eric R.Superintendent THIS IS AN OVERLY SIMPLISTIC STATEMENT THAT WILL NOT HOLD IN PRACTICE, BUT THERE IS AN ARGUMENT THAT...
01:33:23 Yarmuth, JohnU.S. Representative THIS IS ONE CORP., IN THIS CASE, AIG, BETTING AGAINST ANOTHER CORPORATION ON A VALUE THAT DOES NOT...
01:33:45 Dinallo, Eric R.Superintendent I WILL CORRECT YOU TO THE EXTENT THAT IT MAY GO THE OTHER WAY. THEY SOLD PRODUCTION AS A AAA OR AA-RATED...
01:34:45 Braley, BruceU.S. Representative MR. DINALLO, I WANT TO START WITH YOU. 25 YEARS AGO, I WAS A RESEARCH ASSISTANT TO UPDATING THE BASIC...
01:35:43 Dinallo, Eric R.Superintendent THERE IS A STRONG INTENTION BETWEEN POLICY WILL ADDRESS AND SHAREHOLDER INTERESTS. -- THE POLICYHOLDERS'...
01:36:05 Braley, BruceU.S. Representative A FIDUCIARY OBLIGATION TO POLICYHOLDERS.
01:36:09 Dinallo, Eric R.Superintendent THERE IS SOME DEBATE, ACTUALLY, BECAUSE THEY HAVE BEEN SO TRAINED UNDER OUR OLD LAW, AND AFTER ENRON...
01:36:32 Braley, BruceU.S. Representative AIG WAS NOT STRICTLY AN INSURANCE COMPANY, AND THAT IS ONE OF THE BIG PROBLEMS. INTEREST ON THESE...
01:37:25 Dinallo, Eric R.Superintendent I WISH I COULD HAVE SAID SO CLEARLY. I DO NOT KNOW HOW WE GOT HERE. WE THOUGHT IT WAS IMPORTANT TO...
01:38:18 Braley, BruceU.S. Representative REAL ESTATE, INSURANCE, BANKING, OTHER LENDING INSTITUTIONS, AND HOW YOU HOLD ACCOUNTABILITY WHEN...
01:38:56 Dinallo, Eric R.Superintendent EARLIER, I SAID I WOULD RECOMMEND EVERY VISITATION OF GRAMM LEACH BLILEY, AND THE CONCEPT OF THE SUPERMARKETS,...
01:39:41 Braley, BruceU.S. Representative YOU AGREE THAT MOST STATE INSURANCE LAWS PROVIDE A CAP ON THOSE GUARANTEED FUNDS, TYPICALLY IN THE...
01:39:59 Dinallo, Eric R.Superintendent NEW YORK IS ONE OF THE BIGGEST GUARANTY FUNDS. THE NUMBERS TO DESCRIBE OUR NEW YORK NUMBERS. -- THE...
01:40:19 Waxman, HenryU.S. Representative MR. DAVIS?
01:40:25 Davis, ThomasU.S. Representative DO YOU THINK ANYBODY OUGHT TO GO TO JAIL OVER THIS?
01:40:32 Dinallo, Eric R.Superintendent TO WHOM IS A QUESTION DIRECTED?
01:40:36 Davis, ThomasU.S. Representative BOTH OF YOU. I AM NOT ASKING YOU TO NAME ANYBODY OR BUILD A CASE, BUT LOOKING AT AND RESULTS OF PUBLIC...
01:40:51 Dinallo, Eric R.Superintendent I DO NOT HAVE SUFFICIENT EVIDENCE TO HAVE AN OPINION ON THAT. AS A REGULATORY SOCIETY, SO TO SPEAK...
01:41:47 Davis, ThomasU.S. Representative MR. TURNER, DO YOU HAVE THOUGHTS ON THAT?
01:41:53 Turner, Lynn E.Chief Accountant YES, CONGRESSMAN, I DO NOT THINK YOU SEND PEOPLE TO JAIL FOR MAKING BAD BUSINESS DECISIONS.
01:41:57 Davis, ThomasU.S. Representative I AGREE.
01:42:01 Turner, Lynn E.Chief Accountant THAT HAPPENS DAY IN AND DAY OUT AND PEOPLE SHOULD NOT BE PROSECUTED FOR THAT. ON THE OTHER HAND, IF...
01:42:26 Davis, ThomasU.S. Representative HOW ABOUT PEOPLE WRITING THE MORTGAGES? HE TALKED ABOUT THE FIRST TIER AND SECOND-TIER AND HOW IT...
01:42:38 Dinallo, Eric R.Superintendent NO INCOME, NO JOB, NO ASSETS. IT IS UNBELIEVABLE. WE WERE HARVESTING MORTGAGES AT A RATE THAT I THINK...
01:42:56 Davis, ThomasU.S. Representative AIG GOT CAUGHT UP IN THIS. THEIR COMPETITORS WERE DOING IT. THEY STARTED A NEW LINE THAT THEY HAD...
01:43:08 Dinallo, Eric R.Superintendent THIS IS WHAT I WAS TRYING TO SAY BEFORE. WE RELY ON HISTORICAL DEFAULT RATES IN HOUSING THAT DURING...
01:43:40 Davis, ThomasU.S. Representative IT WAS SIGNED JUST ON THE EVE OF THE 2000 ELECTION. IT PASSED CONGRESS. UNFORTUNATELY, I DID NOT ...
01:44:21 Unidentified Speaker HAT ABOUT THE REAUTHORIZATION? THAT WAS REALIZED THIS YEAR. -- WE AUTHORIZED THIS YEAR. THE ATTACHED...
01:44:59 Dinallo, Eric R.Superintendent YES, BUT HAVE LEARNED A LOT THROUGH THIS PROCESS.
01:45:04 Davis, ThomasU.S. Representative SHOULD THE SEC AND PROMISED AT STEP IN A LOT EARLIER TO DEAL WITH THE MARK TO MARKET RULES?
01:45:13 Dinallo, Eric R.Superintendent I DID MR. TURNER WOULD BE BETTER QUALIFIED TO ANSWER THAT -- I THINK THAT MR. TURNER WOULD BE BETTER...
01:45:23 Davis, ThomasU.S. Representative MR. TURNER, DID YOU HAVE THOUGHTS ON THAT?
01:45:27 Turner, Lynn E.Chief Accountant NO, I DO NOT THINK THAT CONGRESS SHOULD STEP INTO THAT. THE GAO FOUND -- ACTUALLY SUPPORTED GOING...
01:45:59 Davis, ThomasU.S. Representative THANK YOU. CAN I ASK THAT UNANIMOUS MEMBERS OF THE ASKED TO SUBMIT STATEMENTS FOR THE RECORD? -- UNANIMOUS...
01:46:16 Waxman, HenryU.S. Representative WITHOUT OBJECTION.
01:46:22 McCollum, BettyU.S. Representative MR. TURNER -- I HAVE IT ON. CAN YOU HEAR IT NOW? THANK YOU. MR. TURNER, MR. TO ALLOWDINALLO, AIG...
01:48:35 Turner, Lynn E.Chief Accountant AS YOU GO THROUGH THESE PILINGS, AND YOU LOOK AT THE -- GO THROUGH THESE FILINGS AND LOOK AT THE DISCLOSURES...
01:50:41 Dinallo, Eric R.Superintendent I AM NOT INFORMED ENOUGH ON THE COMPANY LEVEL TO HAVE A POSITION ON THIS. I DID SAY EARLIER THAT I...
01:52:05 McCollum, BettyU.S. Representative PEOPLE WERE GAMBLING, NOT INVESTING WITH THE DOLLAR'S THESE INVESTORS HAD.
01:52:11 Waxman, HenryU.S. Representative MR. VAN HOLLEN.
01:52:15 Van Hollen, ChristopherU.S. Representative THANK YOU BOTH FOR YOUR TESTIMONY TODAY. MR. TURNER, I WANT TO FOLLOW ON MY COLLEAGUE'S QUESTIONS....
01:54:54 Turner, Lynn E.Chief Accountant THAT IS THE WAY I WOULD READ THAT.
01:54:58 Van Hollen, ChristopherU.S. Representative THIS COMES ON THE HEELS OF THE FIGURE. 28 AIG POSTING OF LOSSES OF $5.3 BILLION -- THE FEBRUARY 28...
01:56:05 Turner, Lynn E.Chief Accountant AS SOMEONE WHO HAS FOLLOWED GOVERNANCE AND READ MANY OF THESE TYPES OF PLANTSS, WHAT I WAS RUNNING...
01:57:31 Unidentified Speaker WHEN WE INVEST IN THE U.K., WHEN WE INVEST IN THE NETHERLANDS, BUT WHEN WE INVEST IN THE U.S., WE...
01:57:54 Van Hollen, ChristopherU.S. Representative THANK YOU, MR. TURNER.
01:57:58 Dinallo, Eric R.Superintendent A LOT OF WALL STREET AND TRADERS, AND AIGFP IS ANALOGOUS TO THIS IS PAID ON THIS BASIS. YOU CAN CREATE...
01:58:23 Waxman, HenryU.S. Representative THANK YOU.
01:58:29 Sarbanes, John P.U.S. Representative THANK YOU, MR. CHAIRMAN. I'M TRYING TO UNDERSTAND THIS IN THE CONTEXT OR TERMS OF HOW WE GOT ALL THESE...
02:00:37 Dinallo, Eric R.Superintendent THEY WERE ARGUABLY AT THE END OF A CHAIN OF EXCEEDINGLY OPTIMISM ABOUT THE VALUE OF THESE MORTGAGES....
02:01:54 Sarbanes, John P.U.S. Representative TWO THINGS WERE HAPPENING. A BUNCH OF PEOPLE ALONG THE WAY COULD KEEP OFFLOADING THE RISK DOWN THE...
02:03:04 Dinallo, Eric R.Superintendent I THINK WE'RE MIXING THE TERM INSURANCE POLICY. YOU MEAN PEOPLE WITH PROPERTY -- THE COMMON MAN AND...
02:03:15 Sarbanes, John P.U.S. Representative NO, I'M TALKING ABOUT THE INSURANCE PRODUCTS. IT BEGAN THAT WAY.
02:03:23 Dinallo, Eric R.Superintendent MY UNDERSTANDING WAS THAT IT WAS ALWAYS OUT OF FINANCIAL PRODUCTS.
02:03:28 Sarbanes, John P.U.S. Representative IT BEGAN AS A LEGITIMATE HEDGING AGAINST THE DOWNSIDE RISK OF THIS PARTICULAR SECURITY THAT YOU HOLD....
02:03:54 Dinallo, Eric R.Superintendent AT AIG, MOST OF THE ACTIVITY IN CDS WAS COVERED NON-NAKED. DESERT TRADERS THAT WANTED TO FALL PROTECTION...
02:04:38 Waxman, HenryU.S. Representative THANK YOU, MR. SARBANES.
02:04:42 Welch, PeterU.S. Representative THANK YOU VERY MUCH. I REALLY APPRECIATE YOUR TESTIMONY. MR. TURNER, A THING TO SAID THAT THE SEC...
02:05:04 Turner, Lynn E.Chief Accountant YES, WHEN THAT GENTLEMAN WENT HOME AT NIGHT, HE COULD TURN THE LIGHTS OUT. WE HAVE GOTTEN DOWN TO ONE...
02:05:15 Welch, PeterU.S. Representative THAT INCLUDED THE 62 TRILLION DOLLARS CREDIT DEFAULT SWAPS?
02:05:20 Turner, Lynn E.Chief Accountant THAT IS CORRECT.
02:05:23 Welch, PeterU.S. Representative HOW DID HE DO?
02:05:27 Turner, Lynn E.Chief Accountant I SUPPOSE HE THOUGHT THE LIGHTS TURNED OUT, BUT DID NOT GIVE THE PROBLEMS TAKING CARE OF.
02:05:33 Welch, PeterU.S. Representative WE HAD A HEARING EARLIER ON ABOUT THESE TAINTED TOYS. KIDS WERE GETTING TOYS WITH LEAD PAINT. IT...
02:05:51 Turner, Lynn E.Chief Accountant IN ALL FAIRNESS TO THE SEC, THE STAFF OVER THERE THAT I HAVE DEALT WITH OVER THE YEARS HAVE BEEN EXCELLENT....
02:06:14 Welch, PeterU.S. Representative WAS THEIR SYSTEMATIC DEPOPULATED OF THE REGULATORY FORCE SO THAT IT WAS IMPOSSIBLE FOR REGULATION...
02:06:39 Turner, Lynn E.Chief Accountant I THINK THERE HAS BEEN A SYSTEMATIC GUTTING OF THE AGENCY AND ITS CAPABILITY THROUGH CUTTING BACK...
02:07:09 Welch, PeterU.S. Representative YOUR TESTIMONY WAS REALLY SUPPORTED BY ERIC DINALLO, IDENTIFIED A NUMBER OF THINGS THAT HAVE CONTRIBUTED....
02:08:05 Turner, Lynn E.Chief Accountant UNEQUIVOCALLY, YES. I SUSPECT THAT IT FALLS SHORT. IF YOU REALLY WANT THE SEC TO DO THE JOB AND YOU...
02:08:32 Welch, PeterU.S. Representative THAT IS PAID FOR BY THE SEC TRANSACTION FEE.
02:08:36 Turner, Lynn E.Chief Accountant YES, AND THE SEC COLLECTS MORE IN TRANSACTION FEES, SUBSTANTIALLY MORE IN TRANSACTION FEES, FROM ...
02:08:48 Welch, PeterU.S. Representative SOME OF US HAVE SUGGESTED THAT THERE BE AN SEC TRANSACTION FEE THAT WOULD GO INTO AN ESCROW ACCOUNT...
02:09:05 Turner, Lynn E.Chief Accountant FROM A FUNDING PERSPECTIVE, I BELIEVE THE SEC SHOULD BE TREATED AS AN INDEPENDENT AGENCY, AND THAT...
02:09:32 Welch, PeterU.S. Representative MR. DINALLO, HOW ABOUT YOU ON THIS QUESTION OF GETTING THE PEOPLE TO GET THE JOB DONE?
02:09:39 Dinallo, Eric R.Superintendent I'M OBVIOUSLY A BIG FAN OF HIRING REGULATORS. THERE ARE HUNDREDS OF PEOPLE WHO DO WHAT THEY DO AT...
02:10:08 Welch, PeterU.S. Representative THANK YOU. AND NUMBER OF COMPANIES WILL PARTICIPATE IN THIS BAILOUT PROGRAM. DO YOU BELIEVE IT WOULD...
02:10:37 Turner, Lynn E.Chief Accountant THE PROVISIONS BETTER IN THE LEGISLATION DOES, UNDER WHAT I WOULD CONSIDER, LIMITED SITUATIONS, ALLOW...
02:10:56 Welch, PeterU.S. Representative DO WE HAVE ANOTHER CRACK AT THIS? THIS WAS A GUN AT OUR HEAD PIECE OF LEGISLATION TO AVERT A CATASTROPHE....
02:11:16 Turner, Lynn E.Chief Accountant YES, THE CLOCK BACK PROVISION, THE SEVERANCE PROVISION, AND COMPENSATION. THEY COULD ALL BE MUCH STRONGER...
02:11:25 Welch, PeterU.S. Representative MR. DINALLO.
02:11:29 Dinallo, Eric R.Superintendent I THOUGHT, AS DID A GOOD JOB THE FIRST TIME AROUND. I WOULD HAVE TO SEE SOME KIND OF PROPOSAL.
02:11:35 Welch, PeterU.S. Representative THANK YOU.
02:11:37 Waxman, HenryU.S. Representative THANK YOU.
02:11:44 Speier, JackieU.S. Representative MR. DINALLO, I'M ONE OF THOSE THAT POLICE THE REGULATION OF INSURANCE COMPANIES SHOULD BE AT THE STATE...
02:12:26 Dinallo, Eric R.Superintendent YES.
02:12:30 Speier, JackieU.S. Representative THE TAXPAYERS KNOW OWN AIG. THE GOLDEN BOY OF THE CASINO IN LONDON HAD HIS COMPENSATION VERY ATTRACTIVELY...
02:14:11 Waxman, HenryU.S. Representative YES. IT IS $1 MILLION A MONTH.
02:14:17 Speier, JackieU.S. Representative EXCUSE ME. THANK YOU FOR THAT CLARIFICATION.
02:14:24 Dinallo, Eric R.Superintendent IF THE CONTRACTS WERE AN OPERATING COMPANY THAT WE'VE BROUGHT INTO REHABILITATION, WE WOULD HAVE AN...
02:14:42 Speier, JackieU.S. Representative THE FANCY CONFERENCE IN CALIFORNIA COULD HAVE BEEN STOPPED UNDER THOSE CIRCUMSTANCES.
02:14:50 Dinallo, Eric R.Superintendent YES, ALTHOUGH WE ARE TALKING ABOUT A HOLDING COMPANY ACTIVITY.
02:14:59 Speier, JackieU.S. Representative MR. TURNER, KNOWING WHAT WE KNOW, KNOWING THAT THE HEAD OF THE COMPANY IS GETTING $1 MILLION A MONTH...
02:15:17 Turner, Lynn E.Chief Accountant THERE'S ALWAYS THE LEGAL QUESTION OF WHEN YOU CAN OR CANNOT DO. UNFORTUNATELY, ONE OF OUR PROBLEMS...
02:16:18 Speier, JackieU.S. Representative ONE LAST QUESTION TO YOU, MR. DINALLO. YOU DETERMINED TO TAKE $20 BILLION FROM THE INSURANCE COMPANY...
02:16:36 Dinallo, Eric R.Superintendent WE DID NOT ACTUALLY DO IT, BUT WE OFFERED TO DO IT AS PART OF THE HOLISTIC SOLUTION. WE DID BELIEVE...
02:17:50 Speier, JackieU.S. Representative THANK YOU.
02:17:55 Waxman, HenryU.S. Representative MS. WATSON.
02:18:00 Watson, DianeU.S. Representative MR. CHAIRMAN, THANK YOU FOR THIS OPPORTUNITY TO HAVE THE PUBLIC LISTEN IN AS WE TRY TO UNSCRAMBLE...
02:19:02 Turner, Lynn E.Chief Accountant YES.
02:19:06 Watson, DianeU.S. Representative AS PART OF THE COMMITTEE'S INVESTIGATION, WE REVIEWED INTERNAL MINUTES FROM AIG'S AUDIT COMMITTEE...
02:21:19 Turner, Lynn E.Chief Accountant YES, GOING BACK INTO 2007, THERE'S OBVIOUSLY SOME QUESTIONS ABOUT WHETHER THE COMPANY AT A TIME IT...
02:23:21 Watson, DianeU.S. Representative I WOULD LIKE TO MR. DINALLO.
02:23:30 Dinallo, Eric R.Superintendent I THINK THAT WOULD CERTAINLY GET MY ATTENTION. WHETHER THEY WERE RECTIFIED OR NOT, I CANNOT SAY. I...
02:23:50 Watson, DianeU.S. Representative THANK YOU VERY MUCH.
02:23:51 Waxman, HenryU.S. Representative THANK YOU.
02:23:54 Unidentified Speaker MR. SHAYS.
02:23:59 Shays, ChristopherU.S. Representative MR. TURNER, FANNIE MAE HAD ASSETS DRINKING AT #TWO. ONLY CITIGROUP HAD A LARGER ASSET RANKING. FREDDIE...
02:24:40 Turner, Lynn E.Chief Accountant I THINK IT WAS FLAT OUT WRONG. SOMEONE WHO IS SELLING THAT MUCH IN THE SECURITIES MARKET AND IN TRADING,...
02:24:59 Shays, ChristopherU.S. Representative WOULD YOU TAKE ISSUE WITH FEDERAL CHAIRMAN GREENSPAN'S WARNING ABOUT THE GROWTH OF FANNIE MAE AND...
02:25:23 Turner, Lynn E.Chief Accountant AT THE BEGINNING OF 2007, I THINK THESE TWO INSTITUTIONS WERE DOING 35% OF THE TOTAL MORTGAGE LOANS...
02:26:05 Shays, ChristopherU.S. Representative AND WE HAD A WEAK REGULATOR. THE FEDERAL HOUSING REGULATORY FORMAT IN 2005 UNDER THE PREVIOUS CONGRESS...
02:27:20 Turner, Lynn E.Chief Accountant THE QUESTION IS THEFAIR. FIRST OF ALL, I GO BACK TO WHAT CONGRESSWOMAN MALONEY SAID THE BEGINNING....
02:28:08 Shays, ChristopherU.S. Representative IN THE BILL THAT WE SENT TO THE SENATE, WE HAD A CLAWBACK PROVISION TO BE A WILL TO GO BACK AFTER...
02:28:21 Turner, Lynn E.Chief Accountant I'M A BIG SUPPORTER OF THE CLAWBACK. WHAT WAS IN THE BILL WAS EXCEEDINGLY BLEAK TO THE EXTENT THAT...
02:28:46 Shays, ChristopherU.S. Representative THANK YOU, MR. TURNER.
02:28:50 Waxman, HenryU.S. Representative THE GENTLEMAN YIELD BACK THE BALANCE OF HIS TIME. I AGREE THAT THIS SHOULD NOT BE A PARTISAN ISSUE....
02:31:40 Shays, ChristopherU.S. Representative WILL THE GENTLEMAN YIELD FOR A QUESTION?
02:31:44 Waxman, HenryU.S. Representative YES, SIR.
02:31:48 Shays, ChristopherU.S. Representative I WANT TO COMPLIMENT THIS COMMITTEE FOR THE WAY THEY HAVE ASKED THE QUESTIONS. WHAT IS TROUBLING TO...
02:32:22 Waxman, HenryU.S. Representative WE WILL HAVE TO LOOK OF THE SCHEDULE. WE HAVE THE HEARING YESTERDAY ON LEHMAN, WHICH MANY PEOPLE SAY...
02:33:25 Davis, ThomasU.S. Representative WE LOOK FORWARD TO WORKING WITH YOU ON THAT. I THINK FANNIE MAE AND FREDDIE MAC ARE HUGE PIECES OF...
02:33:48 Waxman, HenryU.S. Representative THANK YOU. ONE OF THE REASONS WE HAVE NOT SCHEDULED THAT IS THAT THE COMMITTEE OF JURISDICTION JUST...
02:34:11 Shays, ChristopherU.S. Representative WE 360 TO FREEZE JURISDICTION OVER EVERY ACTION OF GOVERNMENT FOR INVESTIGATION. WE HAVE NO JURISDICTION...
02:34:34 Waxman, HenryU.S. Representative I DO NOT THINK ANYBODY WOULD DENY THAT.
02:34:36 Unidentified Speaker WE HAVE OVERSIGHT JURISDICTION. I THINK THAT IS WHAT THE GENTLEMAN FROM CONNECTICUT WAS REFERRING...
02:35:03 Davis, ThomasU.S. Representative THEY WILL BE IN THE RECORD AS WELL.
02:35:05 Waxman, HenryU.S. Representative WITHOUT OBJECTION. THANK YOU VERY MUCH. WE WILL MOVE ON TO THE NEXT PANEL. WE WILL BREAK FOR SUFFICIENT...

NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.

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PEOPLE GRID LIST

  • Dinallo, Eric R.
  • Turner, Lynn E.
  • Tierney, John
  • Waxman, Henry
  • Shays, Christopher
  • Mica, John
  • Welch, Peter
  • Davis, Thomas
  • Kucinich, Dennis
  • Speier, Jackie
  • Cummings, Elijah
  • Sarbanes, John P.
  • Souder, Mark Edward
  • Braley, Bruce
  • Watson, Diane
  • Van Hollen, Christopher
  • Yarmuth, John
  • Turner, Michael R.
  • Bilbray, Brian P.
  • Maloney, Carolyn
  • McCollum, Betty
  • Higgins, Brian

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