(Strikes gavel.) The committee will come to order.

I'd like to welcome the secretary of the...

Can I -- oh, yes, I can skate. North Dakota boy?

(Laughter.)

So I want to emphasize I...

Welcome. (Laughs.) You know, there's nothing

quite like it, is there?

But this is a debate that we owe the American

people.

And you said it very clearly as you came in. This

is a debate we need to have. So we're delighted...

Thank you, Mr. Secretary, and thank you for that

excellent opening statement. And again, I want...

All right. I'm -- we're going to have six-minute

rounds. Given the level of interest here today,...

Senator, could we go through these? I'd like to

Senator, can I respond now?

Could we go back to that first chart?

So this is a very important thing to go through.

Okay, a significant part of that -- the resulting...

Absolutely. And what the budget does --

No, and again --

No, what the budget does is propose to bring the

deficits down to 3 points -- 3 percentage points...

Now, you're right, if we do not --

No, in --

No, but the judgment of sustainability in all

economists across the spectrum is, what level...

Is absolutely the core -- completely agree.

But Senator, if you -- if your proposal is we

should go -- try to go lower in terms of deficits-to-GDP...

And that's a -- but that's a reasonable

proposition. But 3 percent of GDP is a fiscally sustainable...

Thank you, Mr. Chairman.

Mr. Secretary, the chairman gave an example that has happened to

a...

Okay.

Then my question to you -- and please, we're all

interested in this -- what do you do to control...

So does that mean that the regulators are going to

start being more realistic about the poor...

Well, they have been in my state and, I assume, in

the chairman's state.

Well, I don't know how you do what you do, and you

don't have a lot of your subordinates in...

I thank the Senator.

Senator Sessions.

Senator, thank you. Can I just start with one

point? I've been in public service my entire professional...

You're absolutely right. As part of my

responsibilities, I've --

But my obligation to the American people is to

protect the financial security of this country...

No reluctance again as long as they replace that

with private capital, so that they're again...

Well, then they're in a good -- then they're

going to be in a good position to repay the government...

Well, you know, Senator, I just want to say one

thing. I was not secretary of the Treasury until...

And although I support many of the actions that

were taken by the Congress, over that period...

But the question was ongoing.

(Cross talk.)

Just very quickly we're doing what I think, as

any American would understand, which is that...

I was just one minute.

(Sort of like the billions ?)?

Thank you, Mr. Chairman.

And welcome, Mr. Secretary. This discussion or debate going on

reminds...

Absolutely.

Well, what I would ask that you look at, again,

is that in the recovery plan -- and I was pleased...

Thank you, Mr. Chairman.

Secretary Geithner, I see in the press that you have a plan to

save...

No, but you -- excuse me --

But --

-- but don't -- no, I'm going to let you do that,

because you were part of the problem. You...

And Ben Bernanke has not denied that before our

committees.

I didn't blame you for it. I said you're credited

for it.

Mr. Secretary, I've got six minutes, and I want to

ask some questions.

Thank you. Last week, AIG's bailout bring a total

to about $180 billion. I don't understand...

Have you seen this report?

Well, it's a strictly confidential report, "AIG Is

the Risk Systemic." And it was supposed to...

I got it from the New York examiner of insurance.

Where's the bottom line, Mr. Secretary?

Where's the bottom line for the American taxpayer,

dollar-wise?

I did.

And disagreed completely with what you did.

I've looked at the consequences.

I looked at Bear Stearns. I looked at Lehman

Brothers. I looked at all the things that were...

Thank you.

Thank you.

The first thing that France did when they went

socialistic was nationalize the banks. We have...

No, no, I'm -- (chuckles).

That's really funny. (Laughter.)

No, I'm not.

How many banks?

Now -- okay, I understand all those things.

I have a community banker who attacked me out in...

Right.

We'll work together to change it. Thank you.

Thank you, Mr. Chairman.

Secretary Geithner, first let me tell you what I like about the

Obama...

I know the tools are there. We just haven't seen

the results. I'll tell you -- I -- I'm --

I can tell you, I meet with small business people

in my state frequently, and the credit is...

I would just urge you -- first of all, keep us

informed as to what is happening, what the facts...

I appreciate that.

Let me just talk for a moment, if I might, about these toxic

assets,...

Or are you trying to get a -- just a better

evaluation?

You're trying to get them off the books. So you're

going to have a private partner -- private-public...

And then a private entity would own that -- the

toxic asset, and the bank would get the --

And are the specifics of this proposal now well --

As you know, predictability is important --

-- in all of our businesses, and there's a lot of

speculation out there as to how much risk...

And the last thing I'll just underscore is the real

estate situation. The foreclosures -- February's...

Thank you very much, Mr. Chairman.

And Secretary Geithner, thank you for coming today. I want...

Yes.

I understand that. And leaving out the potential

for another war, I am one of those who, I'm...

You just got to my second point that I wanted to

make. And that is, you say that the tax increases...

So are you saying --

So are you saying that if we don't see the more rosy

picture, in 2011, that we may not see the...

But what about the tax policy? Are you including

tax policy in that?

Well, I ran out of time. I only got to two points.

So -- (inaudible) -- another round.

I thank the senator. He gets a prize, as well.

Senator Sanders.

Senator, I want to begin by saying I completely

share your sense of basic outrage and angry...

Senator, you're absolutely right that we have to

create a system that is less vulnerable to...

I completely agree that we don't want to put this

country in the position in the future where...

I thank the Senator.

You are rising to a whole new position.

(Laughter.)

Senator Graham.

(Laughs.) I -- I don't like to respond --

I do not. (Laughter.)

Senator, that is the prerogative of the SEC. I

want to say one basic thing --

-- which is that we're in a period where

investors do not have a lot of confidence in their...

My personal point of view is that we have to be

very careful not to do things that would erode...

-- in the people's ability to assess the risks in

exposure to a bank.

There are some versions of those proposals that

would have that risk.

And like many things, these are complicated,

careful judgments. And -- but I know that my colleague...

I think that's a reasonable judgment, based on

the evidence available when the budget was put...

I do think it's a reasonable judgment. But as

you know, that's the kind of judgment we have...

Not today I would not.

Senator, I'll just say it again. I mean, I know

what you're asking, and --

(Chuckles.) Again, I've said that that forecast,

done with the independence and integrity that...

Senator, I still believe if you look at the

consensus for private forecasts, they project recovery...

Senator, I'll -- I'm going to say it exactly the

same (this time ?)

(Chuckles.) Okay.

You know, I'll have to look more carefully at it,

but as we've said before -- and I think this...

-- in years out there, it would affect a very

small fraction of the American --

You know, Senator, it depends, as you know, on

what else is happening. And the most important...

But --

I'm very glad you said that and I completely

agree.

No more important, no more noble opportunity.

Just don't want to say "the few."

Want to say "the many" and the proud and the

brave.

Yeah. I'm not sure the word "stress" is the best

used in this context. Again --

Well, that's the sort of standard term.

Remember, every institution --

That's the objective, yes.

Yes.

We're leaving the regulatory standards in place.

But, you know, as you know, what matters is...

We're going to look at the existing regulatory

requirements, both in terms of the overall amount...

Yeah. The existing framework will remain in

place.

What matters is to look forward --

-- at what might happen in a more adverse

recession.

Senator, that's not the case today, although

under the proposal that they presented to their...

I would say that we're going to do what is

necessary in the interest of the American financial...

You know, my operating assumption, Senator, is

that there is widespread recognition across the...

Our hope is that the Congress will come together

and do what's necessary to make sure the financial...

Thank you, Mr. Chairman. And happy

birthday to you. I can't think of anybody else who'd rather...

And do you know how much it is?

In the hundreds of billions.

More than 150 billion (dollars).

And Merrill Lynch.

Including guarantees -- debt guarantees?

Okay. If you could -- but it is a substantial

amount of --

And that was necessary because we needed to make

sure we were stabilizing the industry. I understand...

Okay. And Bank of America recently formalized the

acquisition of Merrill Lynch in January. Correct?

Yeah.

I appreciate it. Where I'm going with this is,

they have received a large amount of money from...

Correct. And have they been profitable since they

received that money?

Well, okay. Let me just ask you, do you think it's

appropriate, given the financial condition...

Okay. I appreciate that, because my constituents

are hurting. Families and businesses are really...

Okay.

Okay. I appreciate that, and I think it's really

important that we continue to send that message...

I think that's so important. We have to understand

that this is having a huge impact. So I'm...

And I'm extremely concerned about some of our

countries in Central and Eastern European who...

Particularly since our U.S. banks have invested in

many of those countries. So longer conversation,...

Thank you, Mr. Chairman.

Mr. Secretary, thank you for being here, for your good humor and

your...

Well, it's an interesting book. It tries to

compare as you face decisions to make, see if there...

Well, I have -- I have just a few seconds left.

And I respect what you're saying. And I -- I'm...

Thank you, Mr. Secretary.

Thank you, Mr. Chairman.

Thank you, Mr. Chairman.

And thank you, Mr. Secretary. I know it's been a long morning,

and...

Yes.

Thank you, Senator.

Senator Merkley.

Well, and you're right about the problem. And

the challenge is to try to make sure that with...

You can take the mortgage example as a simple

example. If you had to sell your house tomorrow...

It's not a close call, Senator. It is necessary,

to protect the financial system and get recovery...

But -- that's right. But you know, our basic

obligation, again, is to help protect the overall...

Exactly --

The president said it best. Economies recover a

well-functioning financial system. Credit is...

There is no path to recovery that doesn't start

with a better foundation for the provision of...

You're absolutely right that, you know, this

crisis in part was caused by basic failures of...

I would -- I meant to say that I completely agree

with the broad objectives. I will look at...

Senator Wyden?

Certainly open. I wasn't part of those

conversations, but I'll catch up to where you are and...

No.

Many things. You have to start by making sure

that institutions that pose potential risk to...

Yes.

We are beginning a process -- we've begun a

process of consultation with the relevant committees....

I know -- I understand that view and I know that

my colleague Chairman Bernanke and his colleagues...

Senator, could I -- Mr. Chairman, could I just

say one last thing on this?

It's very important to clarify this. You know,

when the government has to act to preserve the...

I feel strongly, as you do.

Of course, that would concern all of us. But you

have to look at the source of the difference...

I have a series of quick questions. When you set up

this effort, which is the public-private...

Is that to be done by guarantees?

Or insurance?

Well, that's good. You've given us a number that

you're working with, a trillion dollars. What's...

Are we going to have to insure it? Or are we going

to put a floor underneath?

Maybe I don't understand, but I presume the way

you're going to get the private sector to participate...

Well, when you announce this, do you expect that you

will -- that the public -- the market will...

To -- up to a trillion dollars?

Will this be done by the Fed? Or will it be done by

the Treasury?

And will this require the TARP 3 -- any TARP 3

money? Or will you be able to do this within...

Thank you.

That's because of our shared commitment to fiscal

responsibility over the medium term.

I look forward to that. And thank you, for what

you both said.

And Senator Gregg, we share...

We're going to disagree on some things. But on

this basic imperative, of getting us back to...

I thank the secretary very much, and the committee

will stand in adjournment.