the blame for the collapse of the company should start with aig. from a regulatory standpoint, there were failures at both the state and federal level. using capital for their -- from their insurance subsidiaries, with the approval of various state insurance regulators, the securities lending division in tandem with the financial products unit put at risk the entire company and the broader financial system. half of this came from the securities lending division, the other half from the financial products unit in terms of the overleveraging. with more than 250 subsidiaries operating in 14 states and more than 100 countries, aig is the poster child for both the need to open up lines of communication among regulators worldwide and the need to establish a domestic insurance regulator with the ability to oversee these large and complex institutions, and again, mr. chairman, thank you for holding this hearing. >> thank you, mr. royce. we'll hear from the gentleman of georgia mr. scott for one minute. >> thank you very much, mr. chairman. i think this is

aig financial -- aig in our conservative estimate had 247 different companies. 71 of those were u.s. based insurance company. each one was independently financially viable. the financial products and the jet company leasing, jet leasing company, those were regulated in other ways by other agencies in which the insurance companies in the insurance companies were not threatened by those operations. >> so the life insurance side of aig is always been sound? in terms of -- you would have to have all of the insured dies in one day or a week in order to threaten the solvency of the insurance end? >> it is very smart experienced financial regulators in this country would say exactly that. >> why would anybody want to regulate the life insurance company on a federal level? how can it done any different, any better than what's been done on the state level? >>> our position is that it cannot be. your colleagues have pointed out numerous examples of why that cannot be the case. i was asked by reliance company and would a federal regulators have discovered the misconduct of its principal. they d

in september as you recall aig, lehman brothers collapsed and aig was teetering. the fed felt compelled to prevent them from collapsing. the september 16th goldman sachs said its exposure to aig was not material. that's fine. but come the middle of march, it turns out of the initial 85 billion of the federal bailout money aig received, about 7 billion went to goldman sachs. well how do you reconcile? this goldman receiving 7 billion had no exposure to a aig. goldman was an empty creditor. goldman bought credit to default swaps from aig from, quote, large financial constitution's so care terribly much what happens to aig and it indeed was quite aggressive in terms of calling for collateral from aig. >> but it didn't work. >> what was interesting is it did work for goldman but it illustrates this issue, social issue. >> we are still wondering where the bottom is on aig. islamic and using this to illustrate the concerns you have is as a public policy matter we should be concerned about these creditors who used to care about ensuring our worst stay out of bankruptcy.

lending program, aig securities lending programs invested in mortgage backed securities and took the money from insurance subsidiaries and aig life insurers suffered 20 billion in losses related to their securities lending operations last year. and, of course, the bottom line, the federal reserve has provided billions now to recap talize aig life insurance companies. we've got a patch work quilt here of regulation. as i said in my opening statement. we had problems with the financial products unit. we have problems with the securities lending unit. and the securities lending program. so we've got a difficulty here. now, at this -- as we've discussed at this subcommittee, there was an implicit belief in the market that should fannie mae and freddie mac get into trouble, they would step in to save them. in part it was that perceived federal lifeline that enabled these firms to borrow cheaply and take on so much risk. as we discussed reforming our regulatory structure to address firm that are too big to fail, i'm concerned we run the risk of bifurcating our financial system between thos

well, we found out aig was no different. it could blow up as well. so aig wasn't really there when the big default that said, that wasn't supposed to happen but happened. so what's the difference between merrill lynch did or aig did? >> in what scale? jp morgan used aig a bit, not that much. and partly because they had internal line limits. so, yes, back in 1998, they cut the first time aig joined it was back in 1998 when, you know, they went to see cassano and you get this crazy thing called super senior and he said are you interested, yes, bring it on. they spotted due to regulation arbitrage they could basically do whatever they wanted and be a super senior they could limit capital and it made a lot of sense. yes, jp morgan did deal with aig quite a bit at the very beginning and, yes, it had dealt -- >> was it by the government would jp morgan never would have lost a lot of money. >> not to the scale of its other competitors. if you broke it into, it's pretty stark. jp morgan is not even up there in the top half dozen from my memory. yeah, you can

the issue was raised by senator shelby about aig. and on may 20th the issue came up dealing with creditors and counterparties. and obviously a lot of the attention was focused on bonuses and so forth. and at the same time there were announcements about the creditors and counterparties that didn't get anywhere near the same attention. while the value of aig stock has declined, obviously, creditors and counterparty were getting paid 100% of value. the issue that many of us raised here is who is doing the negotiating? we're an 80% owner and here counterparties are getting 100 cents on the dollar. doesn't sound like a great negotiating position it seems to me, given the exposure of the dollar amounts. what i'd like to know -- i realize you're not in that job yet, but what tools do you feel the government needs to negotiate the best terms for taxpayers? do we need to give you any additional tools? if there's something we should be doing, i need to know about it. if there's something you need to negotiate better, then we like to know what

back in march of 2009, aig disclosed the name of the counterparties. the people that had credit stifel swap agreements and bank of america was among them as others. it appears from the records that there were losses in the so-called super senior multi sector credit default swaps portfolio aig had and that it created a liquidity problem and had obligations there were problems in the portfolio to push more cash or collateral security for the obligation. the federal reserve board of new york had $85 billion loan to a ing. the testimony today is that money was used to buy all the contracts and cancel them, that's how they took care of that obligation. what was of concern to me and others is the counterparties appeared to have received 100% of that even though testimony from people at aig before the committee said they thought there were a lot of contentious reasons to think they did not all 100% if they would anything at all on those partilar obligations that there had been serious negotiations about whether they should pay anything to the counter parties

well, we found out that aig was no different. different but yet a two blow up as well so a giant -- aig wasn't there when a big if all that happened in that wasn't supposed to happen but could happen happened so what is the difference which merrill lynch didn't with a id and jpmorgan? >> in a word, scale. jpmorgan use aig a bit but not much partly because they have internal lines of women. so yes back in 1998 the cut first on aig as discovered this super senior was back in 1998 when they went to see this wacky weird thing called super senior, are you interested in the san yes brianna on because due to regulatory arbitrage they basically do whatever they wanted and angie was super senior and had the capital. so yes jpmorgan did deal with aig quite a bit and the very beginning and, yes, it dealt with them throughout the decade, but two or three years ago far less impact jpmorgan did not lose a lot of money? >> not to the skill of many of the investors and you can see that in the figures. if you look at the breakdown of who aig was

would we have stopped aig? >> it's always hard in hindsight. i think a number of features here would have slowed down and maybe even stopped. aig put on an enormous book of business without putting aside capital or margin, and what happened just last fall, when the rating agencies downgraded aig, all of a sudden they had to post significant collateral. i think it was over $30 billion within a day or two. they would have had to have done that across the daily basis. it is a harsh discipline, i know, one that i learned when i was in the investment banking business but one i think it an important one, is to value on a daily basis or weekly basis the risks that a firm mass -- has and put aside capital and margin and aig wasn't doing that. >> senator johanns we're doing another round this is a complex topic and we're fortunate to have the chairmen and chairman and miss white from the federal reserve. let me just ask one question. we're engaged in a very complicated regulatory reform process, which is going to touch many, many different areas. so i w

well, we found out that aig was no different-- it could blow up as well, so aig was not really there when the big default happened, that was not supposed to happen but could have happened, happened. what was the difference between what moral lynch-- merrill lynch did? >> j.p. morgan used aig a bit but not that much parley because they had internal limits, so yes back in 1988 to cut the first-ever deal, the first time aig discovered was that in 1998 when they said it that this wacky way, are you interested? he said yes, bring it down because they spotted coming to to regulus nouri arbitrae as they basically do whatever they wanted and-- [inaudible] so, yes, j.p. morgan did deal with aig quite a bit at the very beginning, and yes it kept on dealing with them throughout the decade. far, far less. >> [inaudible] >> and not to the skillet many of its competitors in the concede that from the figures. to look at the break down, it is pretty stark. j.p. morgan is not even up there in the top half-dozen. you can see the breakdown of who have benefited from the rest cooper guy think j.p. morga

aig, the management of aig, what steps do you believe need to be taken, have you thought about this, for the federal government's oversight of aig? in other words, you got a big bear and you can't turn it loose. it's -- i hope we won't have to put more money into it. i don't know. but it's -- it's -- seems -- i don't know how you discard it. >> senator, certainly i understand the importance of the aig situation. again, i have to tell you that aye n i've not been involved in aig, because, again, that would have been presummous if i had gotten involved in that. i'll turn to that issue as well and i'll be happy to come back and discuss it with you. >> just a generic thing. how do you believe -- what do you believe is the best way for the federal government to manage its equity investments in the t.a.r.p. recipients to, one, ensure that the management of these firms have the proper incentives in running these companies and hopefully paying back the money? you would have an interest in that, would you not? >> yes, sir. i think that's a very important question that you're asking, and very

i think that as we have seen with aig, and the decisionmaking errors that aig had in terms of it serving as a cds dealer, it tends to illustrate how it's important for the federal government to in fact get involved into issues as to how these errors can occur, how the decisionmaking errors can occur to what extent are the payoffs structures, the compensation structures within derivatives units highly asymmetric, you know, big payoff if some product works and at most presumably losing your job if it doesn't work. how financially literate are the people who we're spoused to be supervising, these rocket scientists developing these products. when did the risks arise inçf term0s deriff testify personnel there's high turnover. the risk may not arise until they're three banks away. in part of the process, we need look very carefully in terms of both in terms of as as an administrative matter in terms of how these error can arise in terms of the lob sided, weird compensation structures in the face of the financial economics of derivatives, both in terms deriverative dealers as well as in connec

what you're saying is not the scenario we saw with aig, that wouldn't pose the kind of systemic risk you're talking about. what you're talking about there is some sort of attack or natural disaster that would impose trillions at least hundreds of billions of dollars potentially talking about for instance, a nuclear blast, on industry. at that point do you think that would be a systemic risk and at that point would that be in effect the least of our worries. >> as i indicated on an aggregated business, those events could be significant db systemically at risk, correct. >> is there anything in a systemic risk regulator could possibly do about that? >> that's a very good question. what systemic risk regulator would do would be to try to ensure that the examination of insurance companies' exposure to natural caps were properly managed, whether the grags of risks were managed. there are things to improve the situation, but depending on the situation, you're correct there may not be much that could be done. >> are there particular agencies to watch for a systemic risk in those extreme circ

responded to that panel's april request for specific information about your continued assistance to aig, even though our oversight panel told you that the lack of information, quote, has substantially hampered oversight. meanwhile, we've learned that the aig bailout was also a bailout of goldman sachs and some of the worlds largest foreign banks, all of whom were not asked to accept a penny of losses. i have four questions or question areas for you that are all closely related, and i'll try to state them and then just ask you to respond at the end. the first one is just directly -- when will you have a thorough and complete response to every query that the oversight panel ask you in april? the second is, that that same congress oversight panel concluded that a third of the taxpayer moneys that the fed gave away under t.a.r.p. were wasted. you have not provided details of a similar analysis to determine what the fed has been doing to determine what value the fed is getting for its investment of our public money. what meaningful assurances can you provide the american people that we're no

you're talking about aig, bank of america, gm, chrysler, those paybacks are probably going to take some time, or what's your perspective on that? >> senator, i don't think any of us can forecast exactly how long that will take. i think it will take some time. the purpose of putting capital in there is to enable, for instance, the auto companies to make that transition over some period. >> okay. jump back to the auto program. you had said that you're going to be jumping in waist deep at least, if not further, into this program. can you tell me, from your perspective right now, who is making the day-to-day decisions on that program, or will it be you? >> well, eventually, if i'm confirmed, i will be involved in making those decisions. >> the primary decision maker? >> the secretary is involved as well. >> yes. >> and i will report to the secretary of the treasury as well. and i'm sure we'll have a continual dialogue about that, along with others in the treasury department and throughout the government. >> one of the -- one of the concerns that ranking member shelby brought up, i believe,

the fed has not responded to the request for specific information about continued assistance to aig, even though the oversight panel told you that the lack of information has substantially hampered overside. we have meanwhile learned that the bailout was also a bailout of goldman sachs and some of the world's largest foreign banks, all of whom were not asked to accept a penny of losses. i have four question areas for you that are all closely related. i will try to ask you to just respond at the end. the first one is just directly, when will you have a thorough and complete response to every query asked in april by the oversight panel? bill that's -- if that same panel concludes that one-third of the money given away and of the tarp was raised did, you have not disclosed significant details to provide an analysis of what the fed has been doing to determine what value they are getting. what meaningful assurances can you provide the american people that were not being -- that we are not being squeezed again. have you done a full review of the deal from the taxpayers? if so, will you pro

what kind of financial regulations existed when aig nearly collapsed? guest: you get a lot of argument that financial structure existing was effective, regulators just dropped the ball. but with the umbrella idea, you will see there were gaps. even though you had this alphabet soup of regulators who overlapped there was no trading of information. they missed important things. host: you write about the aig that the office of thrift- supervision were overwhelmed by this. guest: actually, people from the disease came to testify before congress. they claim there were not built to oversee something as massive as aig. the insurance component has largely succeeded, but they had one component, the financial products division which created these credit default swaps which people have the lanais right now -- and those ots which oversees savings and loans found itself as the primary international regulator of this firm and were overwhelmed. host: president obama will release this white paper this week. tell us withabout the political procedure to get this through

has anybody here heard of the company aig? >> i know it hasn't been in the news lately. >> but congressman, to be clear, aig is cloak wally referred to as the world's largest insurance company. >> 71 -- >> excuse me. the idea is, it is an insurance company that does different lines and the problem that i have with it is that it is one company that was into so many things that the state regulators chose not to regulate. the federal government didn't have anybody to regulate and the states collectively said we don't need to look at what aig's doing. we only look at this slice, this slice and this slice. that's all and when those slices worked fine. >> actually, congressman, the insurance regulators looked at the insurance subsidiaries. the problem was, and this is why we support systemic regulation -- >> bingo. >> there was a complete lack of regulation at the holding company level which should happen -- >> well, the problem is -- >> you were looking at the relationship between the policyholders and the companies. no one was loo

we woke up one morning and aig was receiving $80 billion from the fed. for was the money coming from? not only that, we had more. a balance had to be struck as to what is required to run the fed and irresponsible way, what transparencies there should be, so that the american people have more knowledge about it. i am really not familiar with the details. >> the reports on the current health care plan shows that it is arctic coughing up -- how much are you concerned with the cost of health care? >> i believe they were just scoring a particular bill. first of all, the health-care bill will be paid for. second of all, we have to reduce cost. costs must be reduced as we go forward. we know there are many initiatives for wellness that may not score down. nonetheless, we have to try to keep the number a containable one and an affordable 1one. as the president has already indicated, there is money to be found in medicare and medicaid. administratively, it is ok. but it is how the money is spent. we cannot just say that we want the health care bill and we will pa

what was the thinking of saving aig, merrill and in these companies failed to adequately perform and uphold their fiduciary responsibility to its stockholders? what made this different from lehman? >> we made extraordinary efforts to prevent women from failing a we were unsuccessful partly because the couldn't find a merger partner and bank of america was a potential partner. they decided against it and we did not try to endorse them to do it. we didn't have the powers and that is why they failed. we have for very concerned about it and our concerns proved to be justified. with respect to the other cases we did everything we could to avoid this is the mcfeeley because of the rest of the financial system. aig was possible to address because the large company provided collateral that would allow us to provide liquidity to the financial products division which was a source of the problem. after the congress passed the t.a.r.p. legislation it was then much more direct and easy to address these problems and had we had the t.a.r.p. money in september we might have been able to address the

not long ago everybody was outraged about aig. the enormous amount of moneys the taxpayers had to put into aig to prevent it from dragging the entire financial system down with it. we have the kind of resolution authority and laws in place that will allow an orderly winding down of aig then taxpayers could have saved a lot of money. we want that power to be available so that taxpayers are not a burden. >> -- are not burdened. >> you said you were appalled and outraged about iran. what took you so long? >> i do nothing that is accurate. track what i have been saying. right after the election, i said we have profound concerns about the nature of the election, but it was not up to us to determine what the outcome was. as soon as violence broke out, in anticipation of the violence, we were very clear in saying that violence was unacceptable. that is not tell governments operate with respect to the people. we have been entirely consistent in terms of how we have approached this. my role has been to say the united states is not going to

they would have believed that aig would have been a solid company the matter what their unit did. i don't think anybody in that unit or in this country realize that that's unit could bring down that enormous company. likewise, keep in mind at least for this example, assume that this unit might show profits on, for accounting purposes for five or ten years in a row before it imploded and now try to figure out what kind of executive compensation system would reward the people for taking the right kind of risk but with actually penalize them for taking the wrong kinds of risks. now, for a question for our representatives from the sec, there were elections in venezuela to control the government of venezuela. our state department criticized hugo chavez for using the resources of the government to affect the outcome of the elections for representatives to control the government. so, what can you do to propose to congress are to your own board for regulatory changes, rules that would prevent corporate management from using the resources of the company to unduly influence the outcome of t

before the end of the $165 million in aig bonuses in march we also learn from new york's comptroller in january that was executives were paid $18.4 billion in bonuses last year. i was troubled by this news especially during a national emergency when the federal government is providing billions of dollars to taxpayer funds to stabilize the financial sector. now under normal circumstances i don't believe and i think most of the american people don't believe that we should congress be involved any way in setting executive compensation or compensations for board of directors and shareholders. i believe the same. i don't think we should be setting those salaries. but we are not in normal circumstances and that's what i felt a stir 857 to limit for tarpon -- t.a.r.p. recipients would have limited compensation to the same level of compensation the president gets paid for and a thousand dollars. starting with mr. sperling i guess i want to ask, to believe the compensation practices can pose a systemic risk or jeopardize a firm's safety and soundness? how should cover start against risk to th

that is why -- and it was not designed to do with more complex failures like that of aig -- that is why the president will recommend stronger capacity to resolve and better manage the risks posed by those types of institutions. i want to underscore a couple of things about context. when i came into office the government had already invested roughly $250 million in their banks. it was the right thing to do at that time. it was essential. >> i am running out of time, but i think everyone would agree that the fed came up and flooded the system with money. we put the tarp money in, but now we're past that. unless we take steps to deal with too big to fail -- we have the moral hazard. i am also worried about the p.p.i.p. many people say the banks are not participating because it looks political. who would want to get into partnership with the federal government when we see what some fellow members of congress are doing. will you get any toxic assets up with ppip? ppip? where are the -- where are the participants? >> listen, i want to underscore that you're right. that's yet president wants t

-- and that system was not designed to deal with a more complex type of failure, for example, like aig. that's why a centerpiece of what the president will recommend will be stronger capacity to resolve, address, better manage the risks to the system imposed by those types of institutions. i just want to underscore a couple of things about contexts. when i came into office the government of the united states had already invested roughly $200 million in our nation's banks. as i said to senator collins, it was an essential thing to do. >> mr. secretary, i'm running out of time, but i think everybody would agree that the federal reserve came in and flooded the system with money. we put -- the t.a.r.p. money went in, but now we're past that and unless we take some steps to deal with too big to fail, and we've got that moral hazard, and i'm also worried about the ppip. a lot of people are saying the banks aren't participating because it looks like it will be political, and if they get in, who would want to get in partnership with the federal government when they see what some of our fellow

well, we found out aig was no different. aig wasn't really there when the big devolve that happened that wasn't supposed to happen but happened. so what's the difference between what merrill lynch did or jpmorgan? >> jpmorgan joost a ing of it, not that much partly because they have

well, aig i remember in september of 2008 being told by secretary paulson and chairman bernanke, two bush appointees, that they had decided with no congressional input or even advice to advanced $82 billion to aig. two days later we were asked by the same two bush appointees to initiate the tarp program of $700 billion. subsequently, we worked with the bush administration, and after we were unable to pass the bill because the house passed it and the senate bennett, involving the auto companies the bush administration initiated it. so we are talking now about a bush administration initiations of funding for aig, a bush administration request to congress to create the tarp, and the bush administration intervention without congressional final action for the auto companies. how that became a democratic agenda puzzles me. perhaps i will be enlightened later on. i do know that i have colleagues who believe that the world was created only 4000 years ago. i had not previously known there were some who thought it was created on january 20, 2009. so i do want to say we are engaged in this and

we are now some $50 billion plus into aig. the accounting was really the first sign to alert people of the problems there. there are trade groups that represent financial institutions, a number of them that -- again, in your introduction, they have views that the accounting ought to be one way or the other. that was part of the hearing in march. again, i'm not going to tell them to stop that. the risk is that the perception can be if too much of that goes on, it does make people think that the politics are to bend the accounting rules. that is dangerous. we create the rule or in bending the rule is not appropriate. >> with the new era of tarp and government ownership, do you have any concerns of financial transparency? >> it is very important. we talk about transparent si to the owners of the business, the investors, people who invest capitol. all of us are now investors in that business. i think transparency is very important. it's important to understand what happens with our money and how they are using it and the like. a s

of money that taxpayers have to put into aig in order to prevent it from dragging the entire financial system down with it. had we had the kind of resolution authority, the kinds of laws that were in place that would allow an orderly winding down of aig, then potentially taxpayers could have saved a huge amount of money. we want that power to be available so that taxpayers are on the hook. >> major garrett. where is the major? >> right here in your opening remarks you said about iran that you are appalled and outraged. what took you so long? >> i don't think that's accurate. track what i've been saying. right after the election i said that we had profound concerns about the nature of the election, but that it was not up to us to determine what the outcome was. as soon as violence broke out, in fact, in anticipation of potential violence we were very clear in saying that violence was unacceptable, that that was not how government ought urate with respect to the people. so we have been entirely consistent, major, in terms of how we have approached this. my role has been to say the united

we may think that we own a aig, the government, but in fact i think aig and these companies end up owning us. mr. chairman, the appropriate response to this very real problem of handling market failures is we should resolve insolvent non-bank institutions. no matter how large were systemically important due to the bankruptcy system. bankruptcy is transparent and impartial process with seÓul rules. and far preferable to a vaguely defined resolution authority that encourages more of hazzard and further entrenches mcginn banks -- mega banks and other institutions of the state. it's important for regulators to monitor their financial system and i identify risks that could endanger the stability and soundness of the system. but it is unwise for congress to place stewardship of the economy in the hands of a super regulator salles to possess super hero powers to spot bubbles and excess debt risk taking before market's crash. given that we have no way of telling whose forecast will be right and was well be wrong. in conclusion i would remind my colleagues of a comment made by the fed chairman on

guest: yes, a few months ago congress, especially in response to the aig bonuses, went further than the obama administration wanted to. that is the problem that the treasury has had. trying to incorporate what congress wanted for the top 25 earners, the top executives -- there are limits. especially with bonuses. we see banks finding new ways to pay people. host: any indication this will be a temporary position? or full-time thing? or just for the duration of this bailouts? guest: no, from congress i think what you will see is a complete revamp of how we oversee the financial markets. one of the key things we expect secretary geithner to testify about is these principles that firms should get away from compensation systems that encourage risk. they encourage people to write $50 billion worth of credit defaults swaps. it stops them. it stops the incentives to write these. those that leverage risk up to a point, that, you know. it will be principles that regulators can go to companies and say your compensation is them here, you are encouraging bad behavior. encouraging people to write sub

the aig bonus situation. they went further than the administration wanted. that is the problem but treasury head. trying to incorporate what congress wanted. -- that is the problem that treasury had. we are finding banks new way to pay, forcing changes in the way banks do it. host: is this a temporary position or just for the duration of the bail outs? guest: however long that will be. this is a complete revamp on how we oversee the financial markets. one of the key things we expect secretary geithner to testify about is the principle that firms should get away from compensation systems, it encouraged people to -- stop the incentives to write these -- to put together financial products that are just leveraging your risk. host: these rules could be codified for companies? guest: it is more principles that regulators can go to a company and say your compensation system, you are encouraging bad behavior without any awareness of whether or not those mortgages will pay out. it will be more principle. for the first time, they are pushing the principle that risk is

aig was a thriving company for a long time. when there was any thought of interests, -- conflict of interest, then we should the vast -- the best -- divest. it got to the place for the united states government had to bail it out. >> later today, there will be a conference committee, and there has been a lot of debate. as a final decision -- has a final decision been made on that? how was the decision arrived at, and why? >> no final decision has been made in the conference committee. i can say to you there is great concern in the house about making an exception to freedom of information act while the case is before a judge. >> when your office was working on the tar legislationp and others -- tarp legislation, did you know how much your money had invested with aig? >> i signed my disclosure form, yes. we didn't know on september 17 or eighteenth that the administration would come in and tell us the condition of our economy. if we didn't act now, -- that was a thursday night. no, we did not know that. i signed my disclosure form

public market, a controlled contest for a company the size of aig, because the impediment to folks in a company like that are practically insurmountable. the range and we are discussing, the arrangement that tried to expose the directors directly, the electronic challenge. >> i might know that there's almost never any action abroad against the board of directors, to the best of my knowledge, never brought an action against any of the directors of enron, only one action against the directors of tyco and that is because the guy was taking a bribe. for the most part, given the way state laws operate, which are not very good and frankly the staff at this committee has been urged to take a proposal to allow shareholders to ask for incorporation and a shareholder friendly state which is the next proposal. for the most part, until you can hold directors accountable, and the proposal just to throw them out, you're never going to get any action because the law-enforcement agencies literally will not touch them, have not touched them even in the most egregious cases. >> many of the directors of

money aig has disbursed since january 1st of this year and who are the recipients? >> i think so, but i can't do that here. >> can you do it within the month? >> i think that information is in the public domain. >> how many of those and which contracts were paid at 100% on the dollar and which were not? >> i wish there was a legal contract, there was no bankruptcy allowed. we need a system where we can renegotiate those things, but we don't have a system like that. >> well, we are going to want as much detail as you can provide for the record because the fed is really, heavily involved in that. am i correct? >> the fed is involved unwillingly because there is no good system for addressing the failure of an institution. >> how much of our rising debt is being provided by foreign creditors? can you provide that? >> actually less than it has been because we know the current deficit has been declining. that measures the flow of lending for creditors. as the federal deficit has gone up, the private borrowing has gone down. >> thank you. how many no-bid contracts has the

. , obey received a wake-up call, having had to siege aig to kp its credit default swaps worth trillions of dollars from greatly exacerbating the financial crisis. it is now clearer than ever that we need to find ways to make these markets much more transparent and to ensure that the dealers of other users of these markets do a better job than aig of ensuring that their derivative activities did not threaten the stability of the overall financial system. but we face difficult questions as we move forward in accomplishing this goal. these products are often extremely complex and there is an equally complex history of regulation or lack thereof, of such products. as a result we need to take a careful and thoughtful approach to these issues. there is no doubt that improving the regulation and oversight of derivatives markets and those who trade in them is a key part of modernizing our regulatory system. i hope my colleagues and their witnesses will help us identify the key steps that we can and should take right now to address the serious problems that we are confronting. for example, what

insurers may be challenged by failure in other sectors as with aig, but the utmost vibrant markets in the world mean the demise of any one insurer will not alter our country's financial stability. also, contrary to misleading alarms, our state guarantee fun system has the wherewithal and creative force to resolve insurance failures, even multiple concurrent failures while protecting consumers. we support systemic regulation, pledge our good faith interaction and renew our commitment to engage constructively with this committee. thank you for your attention. i look forward to your questions and replying to comments made by mr. skinner and others. >> thank you plmuch, mr. mcrait. next we'll hear from teresa on behalf of the mortgage income companies from america. miss bryce? >> thank you, mr. chairman, ranking member garrett, members of the subcommittee. i appreciate the opportunity today to testify on behalf of the mortgage insurance companies of america, the trade group representing the private mortgage insurance industry. mortgage insurance enables foreigners to responsibly buy homes

we do not have any effective system in place to contain the failure of the aig -- of a aig. when this crisis began, crucial decisions about what happened to companies took place in emergency meetings in the middle of the night. that is why we have relied on taxpayer dollars. we should not be forced to choose between allowing a company to fail or to support the company with taxpayer money. that is an unacceptable choice. there is too much at stake, and we're going to change it. second, we're proposing new and powerful agency in charge of just one job. looking up for ordinary consumers. this is essential. this crisis was not just the result of decisions made by the mightiest of financial firms, it was also the result of americans wanting to open credit-card, take on home loans, and other financial obligations. we know there were many that took out loans they knew they could not afford. there were also millions of americans who signed contracts they did not always understand offered by lenders who did not always tell the truth. even today, folks sign up for student loans, mortg

i don't think that is the situation with aig. i think obviously we would have to look at it to see but i don't think that is the situation. >> i have splitted thanks for my amendment. the taxpayers own 60% of the new gm. it will own 8% of chrysler. that is very straightforward, a very simple. we could distribute that to the taxpayers within a matter once. the bank stocks and warrants that we may own could be more complicated and i was not willing to include that as part of this but i am setting that. >> i'm sorry, i misunderstood your question. i agree with his answer. >> thank you. >>c-span, created in 1979 by the cable television industry. but, with no commercials, how is c-span funded? >> federal funding for c-span? >> from donors and stuff like that? >> donations. >> publicly. >> i think there's some congressional appropriation. >> from the cable providers. >> that's right, america's cable companies have been providing c-span programming for 30 years commercial free as a public service. >> supreme court nominee judge sonia so