Hearing of the Senate Committee on Finance - The Nomination of Timothy Geithner to be Treasury Secretary

SENATE COMMITTEE ON FINANCE VOTE ON THE NOMINATION OF TIMOTHY GEITHNER TO BE TREASURY SECRETARY
CHAIRED BY: SENATOR MAX BAUCUS (D-MT)
SPEAKERS: SENATOR JOHN D. ROCKEFELLER IV (D-WV); SENATOR KENT CONRAD (D-ND); SENATOR JEFF BINGAMAN (D-NM); SENATOR JOHN KERRY (D-MA); SENATOR BLANCHE LINCOLN (D-AR); SENATOR RON WYDEN (D-OR); SENATOR CHARLES E. SCHUMER (D-NY); SENATOR DEBBIE STABENOW (D-MI); SENATOR MARIA CANTWELL (D-WA); SENATOR BILL NELSON (D-FL); SENATOR ROBERT MENENDEZ (D-NJ); SENATOR THOMAS R. CARPER (D-DE) SENATOR CHARLES E. GRASSLEY (R-IA); SENATOR ORRIN G. HATCH (R-UT); SENATOR OLYMPIA J. SNOWE (R-ME); SENATOR JON KYL (R-AZ); SENATOR JIM BUNNING (R-KY) SENATOR MICHAEL D. CRAPO (R-ID); SENATOR PAT ROBERTS (R-KS); SENATOR JOHN ENSIGN (R-NV); SENATOR MICHAEL B. ENZI (R-WY)

SEN. BAUCUS: The committee will come to order.

The committee will meet today to consider the nomination of Timothy Geithner to be secretary of the treasury.

Henry Kissinger said, and I quote him, "It is the responsibility of the expert to operate the familiar and that of the leader to transcend it."

In the current grave economic circumstances, America's next Treasury secretary will not have the luxury of being simply an expert or simply a leader. Tim Geithner will need to be both.

As an expert, he will operate in familiar halls. Mr. Geithner has served in the Treasury Department. He has a significant fiscal policy experience. He will address familiar tax policy issues. He will need to work to close, for example, the tax gap. He will administer the IRS, and he will need to make it an efficient 21st century agency.

He will perform these familiar tasks, and he will need to perform them well. The fiscal health of our country depends on it.

But in these troubled times, Mr. Geithner must also transcend the familiar. He will need to lead the country -- lead it out of the worst economic crisis in 70 years. He will need to take unprecedented action to administer hundreds of billions of taxpayer dollars.

Congress gave the secretary the responsibility to implement the TARP program, and he will need to do it transparently in consultation with Congress and with the American people. He will need to lead the global economy out of a global crisis. He will need to ensure that other countries do not respond to crisis with protectionism. We're in this together. And we must work together to find a solution.

He will perform these groundbreaking tasks, and he will need to perform them well. The economies of countries around the globe will depend on it.

At times, Mr. Geithner will need to be both the expert and the leader. As Treasury secretary, he will need to consider all whom the financial crisis affects.

He will need to undertake the familiar task of helping small businesses like those in Montana and across this country. But he'll need to wield new tools, such as the Troubled Assets Relief Program, to fix old problems.

Mr. Geithner will need to make sure that the American taxpayers who are funding this economic relief see the fruits of their hard- earned dollars. He'll need to remember that he, like us, is just a hired hand. The people for whom we work will not have patience for million-dollar Wall Street bonuses when Main Street Americans are losing their homes.

He'll perform these old tasks in new ways, and he will need to perform them well. The very fabric of this country depends on it. Small businesses and Main Street Americans drive our economic competitiveness. We must keep them uppermost in our thoughts as we work on the economy.

Mr. Geithner cannot be both an expert and a leader without assuming great responsibility. I am confident that he will discharge his duties well.

Yesterday the committee considered Mr. Geithner's nomination for nearly three hours. Mr. Geithner fielded questions from the TARP to tax reform, from entitlements to economic recovery, from China to TurboTax.

At a private meeting last week and again yesterday, senators had ample opportunity to ask Mr. Geithner about errors in his tax returns. Mr. Geithner told us that his mistakes were, quote, "careless, avoidable, but completely unintentional," end quote. And I believe that Mr. Geithner has taken appropriate steps to remedy what were honest mistakes.

The challenges facing this new administration are formidable. Our new president needs to have his Treasury secretary in place to help address these challenges. So let us put in place a Treasury secretary who has the experience and the expertise to do the hard but familiar jobs that continue to face our country.

Let us come together to support a nominee who has the leadership to transcend the distinct obstacles that confront our nation in these troubled times. And let us approve the nomination of Tim Geithner to be secretary of the Treasury.

I now recognize Senator -- I'll pass Senator Grassley for a moment and now recognize Senator Bingaman for four minutes.

I'd like all statements to keep their remarks to four minutes.

Senator Bingaman?

SEN. BINGAMAN: Mr. Chairman, I did not have remarks to give. I was just planning to vote. Thank you.

SEN. BAUCUS: That's a great precedent you're setting, senator.

(Laughter.)

You're a leader.

Senator Hatch?

He's not present.

The next -- I'll ask you, senators, in order of arrival, which is the customary committee rule.

And after Senator Hatch, Senator Schumer, you're next.

SEN. SCHUMER: Thank you, Mr. Chairman.

I want to reiterate my strong support for Tim Geithner as President Obama's nominee to be Treasury secretary.

In these times, our financial system is entering troubled, dangerous and uncharted waters. And there is no navigator more suited for this job by way of intelligence, experience, inclination and temperament than Tim Geithner.

We all know that Tim has made some mistakes, which he's freely admitted and corrected. But these errors pale before the myriads of mistakes that need correcting, made by the operators of financial institutions and government regulators overseeing them.

In my view, in these very difficult economic times we need the very best, not the second best, person in Treasury to correct those mistakes. And Mr. Geithner is that person. The depth of his experience, his understanding the need for change, his prediction that we would have many of these problems and his solutions that would have, had he been Treasury secretary and unmitigated (sic) some of the problems we're seeing, all make him so well qualified for this nomination that I hope there is broad bipartisan support for it.

Tim Geithner's been a leader in talking about regulating the unregulated areas of the market, like hedge funds and over-counter derivatives. Had we heeded his advice, the Treasury Department and the Federal Reserve might not have faced the failure of Lehman Brothers with an empty regulatory toolbox, because Geithner's talked about the need for new powers after Bear Stearns failed. And the Bear Stearns failure was very similar to the Lehman failure.

So he faces an overwhelming set of challenges and tasks but is uniquely qualified for this position. And I would hope in this difficult area of the economy -- where President-elect Obama has made real efforts to reach out and create, if not a consensus, a broad bipartisan center of gravity -- that a large number of votes for Tim Geithner would help us move along and continue in that direction.

Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you, Senator.

Next, in order of appearance, is Senator Kyl.

Senator Kyl?

SEN. KYL: Thank you, Mr. Chairman.

During especially this economic crisis, I had many confidential conversations with Secretary Paulson. He shared very confidential information with me. And I kept those confidences, and he kept mine as well. And because of that trust relationship, I think my judgments about a variety of things were much better informed.

And I'm very comfortable with all the judgments that I made because of that. But a lot of it was based upon that personal relationship and the candor that I knew he was expressing his views to me.

That candor is critical for a good operating relationship between senators and certainly between us and key cabinet officials. And I'm sad to say, because I very much wanted to support his nomination, that at this point I don't believe that the requisite candor exists for me to indicate my support for him with an affirmative vote.

I've had a lot of good meetings with him. I think he has very good instincts in terms of dealing with -- as I was saying, I think that Tim Geithner has good instincts in dealing with a lot of the problems that we're going to be facing. I think he will bring good judgment and positions to the office and in that respect will be a good adviser to President Obama.

And, while he will be constrained in some respects, as you noted Mr. Chairman, he needs to work to close the tax gap. He's probably not in the best in the best position to credibly do that. But that's not disqualifying.

I'm just very disappointed that I don't think yesterday before this committee or in the responses to my questions he displayed the kind of candor that I expect from someone to work very closely with. And I hope, assuming that he is confirmed, that all of us will be able to work with him with in a very close relationship. I certainly hope to develop that relationship.

But I also can't vote yes when I believe that as of right now he has not been as candid with me or with this committee as I believe he should have. And so reluctantly, as I said, I'm not going to vote to confirm him.

SEN. BAUCUS: Next is Senator Nelson.

Before I recognize Senator Nelson, I'd like to note that Senator Nelson, a new member to our committee, is only the fifth member from the Sunshine State to sit on the committee. The most recent Floridian to sit on the committee is Senator Bob Graham, who retired at the conclusion of the 108th Congress. And Florida is now attempting to catch up for lost time, as three of its five members have served in the last eight years, since Senator Connie Mack, you might remember, was that third member.

Senator Nelson.

SEN. NELSON: Thank you, Mr. Chairman.

SEN. BAUCUS: Welcome to the committee.

SEN. NELSON: Well, and it's a great honor for me to be here.

And I'm particularly excited about this because the action is going to be in this committee in the next couple of years because of the enormity of the economic crisis that this committee will have to address. So I'm looking forward to working with all of our colleagues in a bipartisan basis.

Mr. Chairman, I'm going to vote for the nominee. I want to put down a marker. I don't think that there was the specificity that should have been forthcoming. I will give him the benefit of the doubt. But my attitude is conditioned on the fact of the meeting that we had with Larry Summers, which was a private meeting, and there was a lack of specificity there.

And I think that this is a time that there has to be the exchange between the two branches of government.

Now, the nominee said that he firmly believes, and he represents that the administration firmly believes -- and knowing the president and the vice president as we do, I think they do believe -- that in the separation of powers that if we're going to confront an economic crisis like we have that the legislative branch has to be in a constant dialogue so that we can be a partner in solving this.

The marker I want to place down is that I would urge the secretary and all of the people that are engaging in trying to find the solution to have a free flow of ideas with us in the Senate and specifically this committee.

I just want to note what the nominee said yesterday. And you were very kind to allow me to sit in, Mr. Chairman, even though I was not officially a member of the committee as of yesterday. This is what he said, quote, "Our expectation is, our hope is, that we will be able to come forward relatively quickly with a comprehensive plan. I don't want to provide any specific details today." Well, that's what I thought should've been provided yesterday.

And so I will take the nominee at his word that, quote, he will "come forward relatively quickly with a comprehensive plan."

Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you, Senator.

Senator Bunning?

SEN. BUNNING: Thank you, Mr. Chairman.

The financial crisis we are experiencing today did not happen overnight. It could've been avoided. As Mr. Greenspan now admits, the easy monetary policy that he and Mr. Geithner championed at the Federal Reserve created an asset bubble. Large capital inflows from countries like China for the purpose of keeping its currency load contributed to the bubble, and they went unchecked.

But the collapse of the bubble would not have happened and been so devastating if Mr. Geithner had been effective in his role as a regulator. Mr. Geithner talked occasionally about systemic risk in his role as a chief regulator of the major banks, but he sat idly by and devastating risk became more and more concentrated in the hands of a few financial large institutions. And the pricing of risk detached from reality.

Mr. Geithner's testimony yesterday showed that he did not understand the new financial products he endorsed were weapons of financial destruction. Trillions of dollars in savings held by retired Americans have been destroyed as a result.

When the crisis became apparent last fall, Mr. Geithner helped craft a plan presented to Congress as the only way to save us from a new Depression. The plan would have resulted in the transfer of $700 billion from taxpayers to banks with no strings attached. Hundreds of economists immediately criticized the plan, and Treasury reluctantly agreed to add a few strings to it. Nevertheless, the TARP plan may prove to be the largest transfer of taxpayers to wealthy investors and bank executives in the United States' history.

Now we learn that Mr. Geithner is comfortable with giving taxpayers' money away, not so much with paying them himself. He relied on e-mails -- and I have a direct e-mail that I want to read from shortly -- from an accountant, that I have here. But in the same e-mail chain he received contrary advice from an expert at the IMF, namely Kimberly -- and I won't use her last name. Contrary to his testimony, he was informed indirectly by Kimberly as early as 2004 that his return for 2001 and 2002 were wrong. He chose to ignore the IMF expert's advice and relied on an unsupported statement by an accountant with no experience in preparing these types of returns.

Now he and President Obama are proposing a $500 holiday on Social Security premiums for every American in the form of a tax credit. This proposal will make it less likely that the federal government can afford the paper IOUs it has written to the Social Security Trust Fund. It threatens the very viability of the safety net that Americans will now need more than ever thanks to Mr. Geithner's effort as a regulator.

For all these reasons and particularly the fact that he has applied in writing for extra money from IMF to pay his taxes, promising to pay in writing and never pay, I cannot in good conscience support the decision to go forward with this nomination without a more thorough investigation of Mr. Geithner's role in the current crisis and the numerous tax issues that have come to light in the course of a routine investigation.

This is a quote from the e-mail: "I spoke to blank" -- and I'm not going to use her name -- "and she gave me additional information regarding your retirement rollover as it relates to your income, but she said that if U.S. citizens at the IMF the wages are treated as self-employed income." She is a U.S. citizen and she described it in her own circumstances. She actually reports her wages as self- employment income and complete the form that calculates self-employed taxes. "I noticed on the 202 (sic) return that only self-employed taxes on income, nothing from you." This is inconsistent with what she says she does on her own return. "Do you work for the IMF -- did you work for the IMF in 202 (sic)? The tax return you provided me does not provide a wage schedule and a W2 form were not attached," end of e- mail, end of statement.

SEN. BAUCUS: Next, Senator Menendez.

I might note before recognizing the senator from New Jersey that Senator Menendez is the 12th member from New Jersey to serve on this committee, 12th from the Garden State. He resumes a long line of New Jersey senators that served on the committee, most recent being Senator Robert Torricelli, who retired in 2002, and Senator Bill Bradley, who retired in '96.

While a member of the founding 13 states, New Jersey has never had one of its members serve as the chairman of the committee. It joins Illinois as the state with the highest number of members on the committee, but without ever having a member serve as chairman. And the new senator may break that record at some future date.

Welcome, Senator, very much.

SEN. MENENDEZ: Thank you, Mr. Chairman. And I'd be happy to just serve under your leadership for the -- for a long time. And let me say how honored I am to be a member of the committee and to work with you, Mr. Chairman, under your leadership.

I know there's an incredible amount of work that we need to accomplish, and that I'm sure we will accomplish. And I also look forward to working with the ranking member, whose views I -- I know quite well from my presiding time and listening to his statements on the floor. So -- as well with all the members of the committee.

Mr. Chairman, I watched the hearing yesterday and was able to hear the answers of Mr. Geithner to some very important questions. And I do believe, from both that hearing, as well as my own extended opportunity to meet with him in my office, that he has learned some of the lessons and mistakes of the past.

I believe he is the right person for this job with incredibly important credentials at a time in which we need the brightest persons available to be able to lead the country in its economic effort working with the president and the congress. This economy is teetering on a tightrope. We need a steady, bright and sturdy hand to get us through this financial tsunami. And I believe we have no time to waste.

American families are scared. Jobs are being cut. Pensions are being drained. And wallets are getting thin. It is frustrating to see the impact of the storm, knowing the red flags that were ignored by so many. But we can't change the past. We can only learn from it. We learned a $350 million lesson. And taxpayers are expecting there to be no feelings of deja vu this time around.

The money, from my view, has to be used to increase lending, liquefy the credit markets, not simply to buy healthy banks. It needs to decrease foreclosures, not simply fill the banks' coffers. And this program must have increased transparency and accountability, not a rubber stamp from Congress.

I had the pleasure of meeting with Mr. Geithner last week for a rather extended time. And I appreciated his thoughtful answers to my questions. And I intend to support his nomination. And I hope the Senate will do so as well quickly, so that we can get to work on putting America back to work, getting our economy straightened out, and realizing the hopes and dreams and aspirations of our people.

Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you, Senator.

Next, Senator Enzi. Welcome, Senator Enzi, a new member of our committee. I might remind all those here that you, Senator, are the sixth senator from the Equality State --

SEN. ENZI: Thank you.

SEN. BAUCUS: -- to serve on the committee and of course assume the seat of the late beloved Craig Thomas.

He -- he was a wonderful member of our committee. And of course we all know Senator Enzi has served as chairman, ranking and -- as ranking member of the Health Committee.

And so we're going to very much welcome you here, Senator. Your expertise on -- health issues and pension issues will be very helpful. Welcome.

SEN. ENZI: Thank you, Mr. Chairman.

Thank you, Mr. Roberts.

As a new member of this committee, I appreciate the welcome that I received from the chairman and the ranking member and my fellow colleagues. I am an accountant by trade and look forward to working on positive, pro-growth changes to our tax policy that can bring recovery to our nation's economy and discipline our federal budget.

The legislation that goes through the Finance Committee affects more people than anyone realizes. Our work directly affects people's wallets. And I'm humbled by this opportunity to serve.

I thank you for allowing me to comment on Mr. Geithner's nomination to the United States Treasury. I have serious concerns about Mr. Geithner. And I'm not convinced that he's the right man for the job at hand. I was not able to take part in the hearing yesterday. But I got to watch the rerun last night, followed the three hours that you asked the questions. And I'm -- I'm really disappointed that we're even voting on this.

In -- in previous years, nominees that had made less serious errors in their taxes than this nominee have been forced to withdraw. This is the man whose going to be in charge of tax reporting and collection. It's an unusual precedent, I think, for a committee in charge of taxes.

I -- I can't believe the vetting process didn't find that. I looked at the 100-plus questions that everybody had to answer in order to be nominated. I have a lot more comments that I'd make on the bailout that he participated in. And -- but I -- I'll just make those a matter of record.

Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you, Senator.

Next, Senator Carper. Welcome, Senator, to the committee. And as you well know, you are the eleventh senator of the First State to serve on this committee and assume the seat of -- succeeded the former chairman, Bill Roth. And of course you know who the other chairmen were that represented Delaware from the Finance Committee. There's Senator Thomas Francis Bayard, served as chairman from 1879 to 1881. And, of course, Senator Roth served as chairman from 1995 to the year 2000.

Welcome, Senator.

SEN. CARPER: Thank you very much, Mr. Chairman. If I'm fortunate enough to stay on this committee for a while, I'll have to stay here a long, long while before I'd be a chairman of this committee. There's -- it's a long line looking from here around the corner to over to you

I walked in. I was talking with some of the staff in the -- in the room before we came in. And I said, "Where's my seat?" And they said you're out sitting with the press, out at the press table. So then I thought -- and I said, "I don't care where I sit. I'm just happy to be in the room."

And I just want to say to my colleagues, a number of you are good to -- to give me advice and counsel and encouragement over the last eight years, as I sought to become a member of this committee. Some of you have worked for longer than eight years to -- to serve on this committee. Those of you, whether you worked for eight years or eight months to get here, or 18 years, you -- you know as I do, this is a wonderful committee to serve on.

I greatly respect our chairman and our ranking member. I've had an opportunity to work with them on a number of issues in the past, important issues that I've enjoyed. And I think were important for our country. And I've had the pleasure of serving with many of you on other committees and working with you on -- on issues that -- that related to those committees, and some that -- that -- that did not.

I want to go back to Mr. Geithner for just a few. I had an opportunity to visit with him, as all of you have done. I did not have an opportunity to attend yesterday's hearing. But I think, in -- in looking for a Treasury secretary, I've met a bunch of them. So have you. And I've worked with a number of them. So have you.

We want somebody who's -- who's really bright, uncommonly bright, somebody with a strong work ethic, somebody who understands the way -- not only the way Treasury works, but the way this place works, the way the Federal Reserve works, and understands financial institutions. Tim Geithner understands all of those things. He has -- he brings a very strong resume.

The question is has he screwed up on his taxes. And by his own admission, he has; and not just once, but a couple of times. Not that he -- the question is not did he pay his personal income taxes, federal taxes, state taxes. He paid those. The question is has -- has he -- the mistakes that he's made with respect to the lack of withholding for his Social Security taxes, his FICA taxes, should that be a -- a disqualifier?

The thing that I like most about my meeting with Mr. Geithner, was that he said -- he didn't say this is somebody else's mistake. He didn't say -- he didn't make excuses. He said I -- I -- I screwed up. This is on me. This is not on anybody. I'm not blaming my accountants. I made a mistake. I shouldn't have made these mistakes. And I've made them.

And I would just remind all of us as we sit in judgment of -- over this nominee or other nominees in the future, I -- none of us is perfect. God knows I make mistakes. And one of my core values, a value I think I share with at least one of you, probably most of you on this panel is to focus on excellence in everything we do. If it isn't perfect, make it better.

And Mr. Geithner needs to serve as a role model for all of us. We need to, in our positions -- we need to serve as role models. And we have to subscribe to a higher standard than most ordinary citizens. And clearly, he needs that. And he's learned that lesson.

I'll close with this thought. Chuck Schumer said he thought that Mr. Geithner could be a navigator. And few are better suited to be the navigator to navigate us through these tough times.

I'm an old Navy guy. I spent about 23 years in the Navy. And we talk about -- when we have a tough job ahead of us, we talked a lot about turning an -- an aircraft carrier. Now you can turn an aircraft carrier, but it's hard. And you need a whole crew or a whole crew working together in order to turn this.

When we're running into dangerous waters, and God knows we're running into dangerous waters. And it's going to take our best efforts of every one of us, in the executive branch, in the legislative branch and in the private sector as well, to get us out of this mess that we're in and keep us off the shoals.

I'm thrilled to be here with all of you and look forward to working with you toward that end.

SEN. BAUCUS: Thank you, Senator.

I note the good senator from Utah, Senator Hatch.

SEN. HATCH: Well, thank you, Mr. Chairman. Happy to be here with you. And this is a very important nomination. It's a very important time for our country. I intend to vote positively before -- for this nominee.

You know, I think there's room to criticize certainly. What happened shouldn't have happened. But I believe that he made honest mistakes. And I believe that this human being is the right person for this country at this -- at this time.

We are in real difficulty. This man has had extensive experience working all areas of the financial community; worked eight years for the -- for the Treasury Department; has worked with Ben Bernanke and Treasury Secretary Paulson; has had extensive experience in Asia. I'm convinced he's a person of great integrity, even though he has made these mistakes.

And I come at this from a position that the president of the United States deserves support on his selection of cabinet officials, unless you can show some lack of integrity, or some criminal conduct, or some really offensive conduct on the part of a nominee.

Now, we all acknowledge that what happened with regard to his tax returns should not have happened; serious stuff. On the other hand, what he's going to be handling is very serious stuff too. And there are very few people in this country who have the qualifications that he does.

Plus, I believe he's non-ideological, which to me is very, very important -- to have a person who's going to put aside politics at this particular time. Even though he comes from a different side of the spectrum than I, I think that's a very, very important thing. And I commend the president for making this choice, knowing that he's not going to follow the ideological line of the far left or the far right.

And hopefully, he can do this job in a way that all of his abilities and all of his experiences seem to indicate. I believe he should be given this opportunity to serve this country. We will all be watching him very carefully. And of course he'll have multiple hearings before this committee.

This is one of the most important committees in the Congress. I think this and Ways and Means Committees are the two most important committees in the Congress. And I appreciate you, Mr. Chairman, and the work that you do in this area.

I wish Mr. Geithner well. Our country's going to depend on his abilities. And I believe he has the abilities to help us at this time. And that, to me, is a very profound and important aspect to why I support him.

SEN. BAUCUS: Thank you, Senator. Thank you, thank you very much. Next, Senator Cornyn, you're recognized next. But before I do recognize you formally, just a couple words of history. As you well know, you're the ninth senator from the Lone Star State to serve on this committee.

This committee, by the way, was formed in 1816. I think it's -- one of the first, if not the first committee formed by -- by the Congress. And you're the first Texan to sit on the committee since Senator Phil Gramm, who served -- retired in the year 2002.

Of course, one of the big notables is the former chairman of the committee, Senator Lloyd Bentsen, who then became the 69th Treasury secretary, coincidentally for our country. And you are the 350th member to serve on this committee. Again, this committee started in 1816. Welcome, Senator.

SEN. CORNYN: Well thank you, Mr. Chairman, for those words of history. They make the -- my membership on this committee even more significant than I thought, certainly in that historical context.

But I look forward to working with you and Senator Grassley, the ranking member and all committee members on both sides of the aisle as we face uncertain times and an economic crisis, namely getting the economy back on track, making sure that we don't raise taxes on working families, expanding markets for goods made by our farmers and small businesses, and reducing our reliance on foreign energy and improving the quality and affordability of health care for all Americans.

I especially look forward to working on our biggest fiscal challenge, which is the economic tsunami that threatens to engulf us unless we undertake fundamental entitlement reform.

President Obama nominated Mr. Geithner as his secretary of the Treasury soon after the November election. And although I've just become a member of the committee, I have followed the committee's work with respect to this nomination and had the opportunity to visit with Mr. Geithner.

During our meeting I expressed my concerns regarding the TARP program: the lack of transparency, the lack of participation, really, of the legislative branch once we voted to authorize up to $700 billion only to find the former Treasury secretary essentially pivot and embrace a program which they had rejected earlier, all without really sufficient transparency and legislative oversight, which I think is very important.

And then, of course, there's the precedent established of using the money to bail out the automobile industry by the former administration, which I hope will not be used as a precedent-setting opportunity to do further private sector bailouts that basically deviate from the program that Congress originally authorized.

I share the concerns expressed by a number of members of the committee about Mr. Geithner's failure to pay his self-employment taxes. I respect the views of all members of the committee with regard to how they intend to vote. But I find myself actually in accord with Senator Carper in a number of ways, thinking about all of us having made mistakes in life and then acknowledging those and trying to do better. I'm willing to give Mr. Geithner the benefit of the doubt.

Although, I am not willing to give him the benefit of the doubt or, frankly, any of the masters of the universe, who basically think they know better than Congress or the American people on how to fix the economy. I think the experience we've had with the first stimulus passed last January, which basically had zero impact, the best I can tell, except increase the deficit by about $160 billion.

The other attempts that have been made to deal with this flagging economy, which basically led me to the conclusion that, notwithstanding the goodwill and best efforts of some of the smartest people in the country and perhaps on the planet, they really don't know what to do, which I think ought to give us some humility and an extreme note of caution about what we embrace and how fast we pass legislation not knowing how the money will be used and particularly whether it will have the desired effect, whether it will merely add to the deficit, whether it will merely add to our financial problems that are very severe indeed. So I'm gratified to be here, and I will support this nomination. I look forward to working with Mr. Geithner and the administration to get the economy moving again and create jobs, keep taxes low, and expand opportunity here at home.

SEN. BAUCUS: Thank you, senator.

Senator Roberts, you're next.

SEN. ROBERTS: Were you going to talk about the history of the committee and Bob Dole being on --

(Laughter.)

SEN. BAUCUS: Well, if you want to leave and come back again, we will.

SEN. ROBERTS: No, I know once I'd leave what happens.

(Laughter.)

Conrad bolts the door. I had charts out there I was going to bring in, but Senator Conrad wouldn't let me do that because he's the chart master of the Senate.

I think you'd probably like me to get to my statement.

I would like to say that I'm not going to split the shingle on the tax issue any more. I think Senator Bunning and Senator Enzi pretty well summed that up, and I share their views.

And I'm a little puzzled by some on the committee who said they really appreciated the answers by Mr. Geithner, who I think has displayed a considerable grasp of economic issues -- there's no question about that -- but it was general background, and it was discussion. It wasn't specific in terms of answers to specific questions by people on the committee: namely Senator Grassley, who asked very specific questions, and they were not answered; Senator Kyl, who asked very specific questions; Senator Bunning, who asked very specific questions.

I asked a few questions, but by that time the chairman was worried about time, so he got out his Lizzie Borden gavel, and that was the end of that.

I thought that Mr. Geithner was a very good witness from the standpoint of being a person who could not be in a position of providing specific answers because he's waiting on marching orders from Mr. Summers and also the transition team. And I think most of the nominees are in that position. And that's unfortunate, because I think this committee needed to really get at the specific questions mentioned by the senators that I have mentioned, and others on the other side.

I would like to identify myself with the remarks made by Senator Cornyn, the new member of the committee, who pretty well summed up my views. And so I would associate myself with those remarks.

And I thank you, Mr. Chairman

SEN. BAUCUS: Thank you, senator.

Senator Conrad, you're next.

SEN. CONRAD: North Dakota -- how many?

SEN. BAUCUS: We're working that data --

SEN. CONRAD: Okay.

SEN. BAUCUS: We're stretching our brains to see how far back we can go.

(Laughter.)

SEN. CONRAD: Thank you, Mr. Chairman.

First of all, I want to apologize for not being able to be here yesterday, but we had a hearing in the Budget Committee at the exact same time on our short- and long-term fiscal challenges. And for that reason, I could not attend.

One of the things we talked about yesterday was the causes of the current financial crisis. My own belief is that it is the combination of a loose monetary policy under the control of the Federal Reserve, coupled with a very loose fiscal policy under control of the Congress and the president, combined with a lack of regulation and a deregulatory climate that led no one to be effectively minding the store. And that trifecta led to the creation of a seedbed from which bubbles formed.

And we didn't just have a housing bubble, although we've certainly had that. We also had an energy bubble. We have a commodity bubble -- when wheat goes to $18 a bushel, that's a commodity bubble. And when energy went to $145 a barrel for oil, that is an energy bubble. And a housing bubble, all of these bubbles, I think, flowing from a common set of causes.

Mr. Geithner was not responsible for those failures.

In an attempt to address the crisis that has developed -- we had a rebate program last year that cost over $160 billion. I think the evidence is really quite strong that that was not very effective. We then had TARP I, the first half of TARP, $350 billion committed to preventing a collapse of the financial system. My personal belief is while many mistakes were made in the handling of those funds, if we had not had the first half of TARP, I believe we would've faced a financial collapse. I believe the Dow today would be in the 4,000 range.

And, while I personally think that there were serious mistakes made: that there wasn't a requirement that banks use the money that they received to expand the provision of credit; that they were not prevented from using taxpayer funds to buy other healthy financial institutions; and that they were not prohibited from giving bonuses to executives of firms benefiting from taxpayer funds -- those were serious problems that need to be corrected in the second half of TARP. But I believe the second half of TARP is absolutely necessary.

I believe a rescue package is absolutely necessary. If we've learned nothing, just to watch the events of this week with the Royal Bank of Scotland losing two-thirds of its value on Monday, with Barclays skating on the precipice, with other key financial institutions still under grave threat, including major institutions of our own.

On the matter of Mr. Geithner's failure to pay certain self- employment taxes, I find it completely unacceptable. I am a former tax commissioner. I've dealt with hundreds of cases like this one. And in normal times, that alone would lead me to oppose his confirmation.

But these are not normal times. And I personally don't think we can afford a further delay in the filling of this critically important position. I think we are not anywhere near out of the woods, that very serious days lie ahead of us, and that it is absolutely imperative that we get a secretary in place. And this man does have the background to contribute to solving this crisis. For that reason, I will support his confirmation.

I thank the chair.

SEN. BAUCUS: Thank you, senator.

Senator Crapo, you're next.

SEN. CRAPO: Thank you very much, Mr. Chairman.

And I, too, join with you in welcoming our new members to the committee. I was the one on our side who worked with our leader to help put all this together, the committee assignments and so forth, and so I know what goes into these decisions. And I truly look forward to working with Senator Enzi and Senator Cornyn, Senator Carper, Senator Menendez and Senator Nelson as our new members here.

This is a tremendous committee. And as the discussion we're having today shows, the issues that we deal with are far reaching and, particularly in today's climate, very momentous.

I, too, intend to support the nomination. I tend to share the sentiments made by Senator Carper and joined in by Senator Cornyn with regard to the tax issue.

And with regard to the substantive issues regarding how we are going to deal with our economy and the incredible threats that we face today, I find myself in an interesting position. I did not vote for the first rebate plan. And, as Senator Conrad indicated, it didn't really do much, if anything. It was $160 billion that our children and grandchildren are now going to have to pay back.

I did not vote for TARP I, because I didn't think the toxic asset purchase plan was sensible. I was one of those who was quite pleased when there was a pivot, and the funds from TARP I were used in other ways. I don't know that I'm as confident that they were used wisely even then. But another $350 billion is now spent.

And as we face a $1.2 trillion deficit, not counting the stimulus package that is being put together and the TARP funds, it appears to me that Congress is in a runaway spending mode. And we need some strong leadership to help us work through these issues.

I had a long meeting yesterday, and have had other conversations with Mr. Geithner, and I don't know that he comes from the perspective I would come from, frankly because, as Senator Cornyn indicated and I agree with these comments of his as well, I'm not sure anybody knows exactly where we ought to be going and how we ought to be managing the situation in terms of the governmental intervention that everyone is contemplating.

I have strong doubts about what we expect to see from TARP II. I have even stronger doubts about what we are seeing in the stimulus package and the way that it is being crafted. But the reason I intend to vote yes is because I believe that of those decisions that we need to face, Mr. Geithner has a strong background and already a strong involvement and engagement and is going to be able to be a strong member of the leadership team that our president has asked that we put together and move forward on.

And, like I say, I'm not -- after discussing issues with Mr. Geithner -- I'm not sure that he comes from where I come from. But he's the president's nominee. And we need somebody in place who can start working and working aggressively.

And I agree with the sentiments that Senator Hatch shared as well, namely that I'm confident that he will be a very open secretary of Treasury and will work with not only both sides of the aisle but with all perspectives in trying to come together and identify the right path forward for our country.

So, although I have great reservations about the direction that we and the administration are looking at going, I'm willing to support this nomination and get on with the issues of trying to work these things through.

Thank you, Mr. Chairman.

SEN. BAUCUS: Thanks, senator.

Senator Ensign?

SEN. ENSIGN: Thank you, Mr. Chairman.

And I also look forward to working with the new members of the committee, and on both sides I think we have some very talented new members. And this is a tremendous committee. And the issues that we face are extraordinary right now, not only in our economic times but with entitlements coming and looming forward, we have some huge challenges that this committee in particular is going to have to tackle, and obviously the Congress and the administration.

A couple of comments on what Senator Conrad mentioned. I share your views on the fiscal irresponsibility of the Congress and the administration the last many years as being part of what's gotten us into this mess. I also share your concerns about monetary policy and what the Fed has done.

And the one place that I would probably disagree somewhat -- part of it I would agree with on regulation. We certainly should've had a much stronger regulator at Fannie and Freddie.

That was a huge mistake. There were people warning of that. The Banking Committee on our side attempted to do that. And that -- that was blocked. And that should have been done.

But I -- where I would disagree is this was not just a question of lack of regulation. This was overall government involvement in the private sector. But for -- for laudable reasons, we wanted to increase -- you know, low-income home ownership in the United States. That's a laudable goal.

The unintended consequence is it created a bubble between CRA and, not just, you know, setting out goals, but actually requiring banks to -- to get into these subprime markets, and then taking Fannie and Freddie and allowing them to get in; and then every year, setting higher and higher goals and -- and really requirements for them to get into the Alt-A loans and the subprime loans, created a situation in the United States where a lot of people got into homes that couldn't afford them.

And also it led to a lot of the selling off to various parties around and all of these various financial packages of home mortgages where you lost the accountability. And all of that created the perfect storm for this bubble.

And then, if you remember back early -- earlier in this decade, everybody was so pleased that the housing market was saving the economy. It was the only good part of the economy. We were all happy about it. So nobody wanted to ask any questions about it. But it was a big mistake.

So today, we have a situation where the housing market now has drug down the rest of the economy. And we are in a financial crisis now. And it is -- it is very difficult to see our way forward and exactly the right thing to do.

But it is going to be incredibly important to study history. You know, what were similar times in history? How did we get out of them? What actually what worked, what didn't work?

That's one of the reasons that I addressed my questions to Mr. Geithner yesterday on the Great Depression. I was somewhat dissatisfied with -- with his answers yesterday. And in a lot of the questions that I had in writing afterward, I was dissatisfied with some of the -- the question -- or the answers that he had yesterday as well; because frankly, he has a different philosophy that I do.

But, you know what? He is the president's choice. And I am a firm believer, unless there is something egregious, even if I disagree philosophically with somebody, that when a new manager is in town, that they do deserve their management team. And that's why I'm going to support the Geithner nomination today.

It is -- I do have concerns, the same with you, Senator Conrad, about his -- his tax issues. When -- when Senator Kyl was asking the question yesterday about when he was informed, and he paid some of his back taxes, why didn't he pay the other one? You know, a simple answer is most Americans would not have paid their other back taxes, because it was past the statute of limitations. I actually would have accepted that answer from him, because he didn't owe them, because of the statute of limitations. That's something fundamental in all law.

But because he would -- I -- that was the only troubling part, I think, of his testimony to me, is that he wouldn't admit that. He danced around the issue. Senator Kyl asked it, and asked it and asked it. And he wouldn't actually respond to that. And that was only really troubling part of the testimony, I guess, to me yesterday.

So anyway, it's -- it's an important nominee. We all have to work together now with him. And we're going to have to go forward and work together as Republicans and Democrats to figure our way out of this economic situation; because people are hurting really badly in the United States today, and especially for those who have lost their jobs or may be losing their jobs, and those who have lost their homes or -- or businesses.

So thank you, Mr. Chairman.

SEN. BAUCUS: Thank you, Senator, very much.

Senator Cantwell.

SEN. CANTWELL: Thank you, Mr. Chairman. And I do think it's been -- I'm not a new member of the committee, but I do think I'm the second member or so from Washington State given Scoop and Maggie's (ph) long history. So I think that's probably since 1930 since there was a member from Washington State on this committee. So I've enjoyed --

SEN. BAUCUS: Was Maggie (ph) on the committee?

SEN. CANTWELL: I don't believe so.

SEN. BAUCUS: (Inaudible) -- he's appropriations.

(Cross-talk.)

SEN. CANTWELL: It was some -- somebody before that. So it was quite a while away. So I've appreciated my time on this committee representing the State of Washington.

And I also want to say, Mr. Chairman, I think -- at yesterday's hearing, I think you basically characterized my concerns about the entire financial situation with your statement, I think in round two, to Mr. Geithner. And that is that I think our country and our country's economy is known for innovation, for the hard work, the skills of our work force, for the ingenuity of the American people, whether that's in agriculture, whether that's in manufacturing, in aviation or in software.

But a lot about our economy of late has been determined by the financial markets and what's transpired in the financial markets. And I look at this nomination. And I want to know whether the smartest guys in the White House are going to find out what the smartest guys in the room have been doing. I mean, that's how they're characterized, right, in books and novels now, the smartest guys in the room, these people on Wall Street who can cook up the latest financial tools and outfox our regulatory system.

And it's not just happened once. It keeps happening again. And it's not whether it's Enron today or credit default swaps of the moment. It's what's going to be the next financial tool that's going to be cooked up.

And so to me, while I very much appreciate and consider the title of secretary of Treasury as a great honor to be bestowed on someone, the title that I'm even more interested in, that Mr. Geithner will hold, is chairman of the President's Working Group on Financial Markets. This particular group, in the past, has really held the keys to what the administration's framework on a regulatory oversight is going to be.

And for the last several years that we, in Congress, have tried to get our hands around the derivatives issue, we were constantly thrown the recommendations of the President's Working Group not wanting to do anything on the regulatory side of derivatives.

It was just this past 2000 and -- I think 2000 and -- maybe it was actually 2008, maybe 2007 when we finally, after five years, got the Enron loophole closed. But really what stymied it for so long was the former advisers to the President's Working Group, who kept saying no, we don't want to do anything to close those loopholes. So Mr. Geithner will be in a very important position to influence the regulatory framework moving forward.

So yesterday I asked him a series of questions about credit default swaps, about position limits, about exactly how he wanted to move forward on the regulatory framework, and what he thought the promises of doing that were, as well as what the faults of the current system had been. And I'd have to say that I wish Mr. Geithner probably would have been more specific about the president's plan and -- moving forward. But I understand that they are still under development on that.

So I come to this hearing today with a lot of concern about where we're going to get as a Congress on that regulatory issue. But like many of my colleagues here, I think about what the president's choices are in presenting this nominee to us. And I appreciate that the president has chosen someone who is not from Goldman Sachs, hasn't spent a ton of time making money on Wall Street, but has basically been a public servant in various regulatory oversight positions, at the New York Fed and at the IMF.

And so I am going to support Mr. Geithner today in hopes that we can work with the administration on what the new regulatory framework will be, and that we will have a more transparent system as it relates to TARP and to the use of those funds; but that this administration will be aggressive at putting in a new framework that really does say that this administration and Congress, whether it's in coordination with the SEC and the CFDC, is going to allow those industries that have made our country so great, the financial framework to continue their success.

It is not a $62 trillion credit default swap industry that has made our country great. Nor will it be the lack of oversight and regulation of that industry that will pull us out of this economic crisis. Only transparency and the proper regulatory framework will allow us to get our financial markets to allow the American economy and what has made us great to be restored.

So I look forward to working with Mr. Geithner and holding him accountable to his promises of a very strong regulatory framework for our country.

I thank the chairman.

SEN. BAUCUS: Thank you very much, Senator.

Senator Lincoln.

SEN. LINCOLN: Chairman, I'll just submit mine for the record.

SEN. BAUCUS: All right.

Senator Stabenow. You're next.

SEN. STABENOW: Thank you, Mr. Chairman. Just briefly, let me indicate that I intend to support this nomination of Mr. Geithner. I think he has the -- certainly brings the intelligence and the expertise. It's clear. This is an incredibly important position. I think the president has put together a very, very strong economic team.

Frankly, there's no state right now that is more impacted by the decisions that are made on the economic front than my state. This week, the unemployment numbers have gone up to 10.6 percent and expect to go up to 11 percent or 12 percent.

When Mr. Geithner was talking about, to me, the focus on jobs and re-direct the TARP funding more specifically to open up credit markets for consumers and small businesses, I think that is incredibly important. And I am counting on him and the economic team to follow through on commitments related to manufacturing in this country, new advanced manufacturing that has been the backbone of the middle class in this country and will continue to be, if we have a 21st century manufacturing strategy.

So I -- I look forward to working with him and the entire team. Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you very much, Senator.

Senator Snowe.

SEN. SNOWE: Thank you, Mr. Chairman.

And I too want to offer my support to Mr. Geithner. I think that there's no question that we're in the midst of perilous economic times. And as I said yesterday, the Treasury Department's mission is both to oversee and to be the steward of both our financial and economic system, both of which are simultaneously in crisis; that ultimately, could best be described as monumental in terms of where we find ourselves today.

And as we -- this recession approaches the longest and deepest since World War II, with the cascading collapse of the housing market, combined with the unregulated, unchecked, irresponsible instruments and investments in our financial markets that ultimately led to the disastrous economic repercussions is having a tremendous impact on hard-working Americans which, you know, as we all know 2.6 million Americans have already lost their jobs, and facing this year with most profound dread.

The financial markets have fallen precipitously. Credit markets are still failing to function, frankly, anywhere close to normal. And this is the morass out of which the next secretary will have to chart a course. And it has to be the next secretary who is equal to that challenge.

And we heard extensively yesterday from the president's Treasury nominee, Mr. Geithner, on a range of issues. We know his background, which certainly is significant in terms of, not only having served for five years as president of the New York Federal Reserve, but also worked in three different administrations for five different Treasury secretaries. So he can draw on an exceptional reservoir of experience and expertise that's going to be so critical to facing and grappling with the economic challenges that really are unprecedented in our modern economic system.

At the same time, I think leadership demands the ability to translate vision into action. As I indicated to him yesterday, I think it is a prerequisite, not only to identify a problem, but to act upon it. And so with his combined experience and expertise, it'll have to go hand-in-glove with very aggressive management and leadership of the problems that we're facing in this country.

And to that point, it will be to act upon transparency and accountability. More than anything else, the American people deserve to have confidence, you know, in the $700 billion that's been appropriated to help rescue the financial system in this country. They deserve to have transparency. They deserve to have accountability by elected and non-elected officials.

And those that are reaping the benefits of this rescue plan by having the money that they are required to lend the money. They are required to live by the conditions that we should establish and impose on that rescue plan and those who accept the funding; because to do no less is eroding the public's confidence, not so much in what is happening in our economy but the fact that our solutions are not effective -- not effective to address the overarching problems facing this country.

And we have a right to demand accountability, you know, from those financial institutions that are receiving funding through this rescue plan.

We have a right to establish the restraints on executive compensation. We have a right to know that they're making those loans or they're not. And, frankly, I find it disdainful that so many of the banking institutions in a recent newspaper survey were unwilling or did not feel obliged to respond to the inquiries in terms of did they make loans.

So those are the challenges to which Mr. Geithner will have to respond. He certainly has the background. He certainly has the depth of experience that will allow him to address these challenges. It also is going to require a very aggressive and strong leadership.

I do believe that his resume is essential for this time. He may well be the right man for the time and certainly demonstrates that his background and experience in understanding financial policies and programs, the financial markets and the financial systems, is absolutely instrumental and central to navigating our future economic course, and certainly is commensurate with the gravity and the enormity of the times that America finds itself in.

So for all of those reasons, Mr. Chairman, I am going to support Mr. Geithner, because I do believe that he can offer the leadership for these compelling times.

SEN. BAUCUS: Are there any other senators who wish to speak?

Senator Rockefeller, does he wish to pass?

Senator Wyden or Senator Kerry?

(Cross-talk.)

SEN. WYDEN: Mr. Chairman, you can't solve a problem if you don't dimension it. And for months, the country has been waiting to get an accurate assessment of how serious the liabilities are with respect to the books of America's financial institutions.

Several committee members asked about this very question yesterday. And Mr. Geithner said it was complicated. It clearly is. But I'm of the view that the effort to have the financial institutions of this country disclose the true measure of their liabilities must be accelerated. The country can't get on top of this problem unless it does.

And in hopes that this committee on a bipartisan basis will push very, very hard for Mr. Geithner, if confirmed, to do that work I will vote for the nominee today.

Thank you, Mr. Chairman.

SEN. BAUCUS: Thank you, Senator.

Senator Kerry?

SEN. KERRY: Thanks, Mr. Chairman.

Just from a few comments that I've heard here, I want to sort of -- first of all, I said yesterday I will support Mr. Geithner. I think that we need to get that team in place.

But let me say to my colleagues that a lot of this responsibility is going to be ours. And we need to move with an authority and a determination and speed that we don't often do around here, if I may say.

Trying to get a measurement on the liabilities is complicated because they're going to change every day. In many cases, the books are going to get worse by the day. And they'll get worse unless we begin to face up to -- you've got a credit card crunch coming at us; you've got a real estate, commercial real estate crunch coming at us. And as the economy goes down and more and more people are unemployed, each of those are going to get exacerbated.

So we're really in a situation where, I think -- you know, I've heard some people on the other side say, "Well, I'm afraid that this package may be too great in an effort to stimulate the economy." Right now, we've got too many banks, Senator Snowe, in terms of making people lend. If you're a banker and you're also charged with the responsibility to live up to regulatory standards, the loan you make has to be a loan that's made responsibly. And if you're staring at an economy where consumerism is going inwards, downwards, and an economy where the prospects of getting that loan repaid are very difficult, it's very hard to say, "Well, you've got to lend," because you might be violating those standards, number one, or number two, just violating common sense, that you're not looking at a return on the investment, a return on equity.

So we have to turn that around in this economy. We have to, you know, begin to give people a sense that the marketplace has a future. And I think the greatest single source of that future, personally I think, you know, is going to be in a combination of immediately stunting the hemorrhaging in states by preventing layoffs of firefighters, of teachers, of public people, others, and helping mayors and states to sort of stem that tide which begins to spread some optimism. In local establishments, people sit there and say, "Well, you know, I got a job," or "I'm going to be able to buy the house."

And then the second part of that is the future parts of the economy, and then particularly that's energy policy. If we can stop sending a billion dollars overseas, you know, as frequently as we do -- a day, or a week -- and start putting it into the Southwest or into other parts of the country, our economy's going to change overnight dramatically.

So these things are staring us in the face. And I think we up here have got to act in a way that in 25 years I'm not always sure I've seen us act. But I hope that we will, because I think we, both in the stimulus and in the tax -- or stimulus recovery, or whatever you want to call it that gets money out into the marketplace for the things that will change behavior and, two, the tax incentives that will do that -- or we're going to have a profound impact on this. And I hope this committee and the others charged with that responsibility will affect it.

Thank you, Mr. Chairman.

SEN. BAUCUS: You're welcome, Senator.

As I've been listening to this debate, at the risk of prompting further debate, one concept I just cannot help but make, namely, in my judgment -- without getting into what the answers are in how we get out of this mess -- addressing how we got into this mess, one thing that strikes me is, and I think is a principal reason, which is so many institutional investors, so many banks, were just so over- leveraged. They just borrowed way, way, way too much. They made a lot of money, and they're leveraged, you know, 30, 40 times, maybe up to 50 times. And now that those loans are due, they just go deeper and deeper and deeper and deeper in the hole.

And I -- just a couple of anecdotes here, and it's true for all of use. We talk to our banks back home, or smaller institutions, we find -- at least I find -- that they're not in trouble. They're not in trouble. They didn't borrow like this. They didn't borrow 40 times their assets. They didn't borrow like that.

And I must also say, I was in the UAE three or four weeks ago, and I met with ADIA (ph) -- that's the largest sovereign wealth fund in the UAE. And I asked, "How are you doing financially?" They said, "We're doing great." Now, of course, I mean, that's probably what they're expected to say. But then they volunteered and said, "We're not leveraged. We didn't leverage. A little bit on the real estate side, but basically we're not leveraged." Now, of course, they've got some oil and they've got some cash, but still they weren't leveraged.

And it's the leverage in some respect which has caused this hole to get deeper and deeper and deeper, in my judgment. And I just very much hope that, whether it's the SEC or whatever the regulatory agency is, that we begin to set some limits on leverage. Now, paradoxically, we now want those institutions to lend. They probably borrowed too much back then, but today we want them to lend to get the economy going again. But it's my hope that we just set some limits on leveraging. I fault the SEC here. They dropped the ball -- maybe other institutions, too. But I just do think that's a large part of the problem.

Well, I see that all senators have spoken. It's time for a vote.

I'll entertain a motion that the committee report the nomination.

SEN. KERRY (?): I so move.

SEN. BAUCUS: Record a vote -- the (committee requests ?) we record a vote.

To record a vote, I request the clerk call the roll.

CLERK: Mr. Rockefeller?

SEN. ROCKEFELLER: Aye.

CLERK: Mr. Rockefeller, aye.

Mr. Conrad?

SEN. CONRAD: Aye.

CLERK: Mr. Conrad, aye.

Mr. Bingaman?

SEN. BINGAMAN: Aye.

CLERK: Mr. Bingaman, aye.

Mr. Kerry?

SEN. KERRY: Aye.

CLERK: Mr. Kerry, aye.

Mrs. Lincoln?

SEN. LINCOLN: Aye.

CLERK: Mrs. Lincoln, aye.

Mr. Wyden?

SEN. WYDEN: Aye.

CLERK: Mr. Wyden, aye.

Mr. Schumer?

SEN. SCHUMER: Aye.

CLERK: Mr. Schumer, aye.

Ms. Stabenow?

SEN. STABENOW: Aye.

CLERK: Ms. Stabenow, aye.

Ms. Cantwell?

SEN. CANTWELL: Aye.

CLERK: Ms. Cantwell, aye.

Mr. Nelson?

SEN. NELSON: Aye.

CLERK: Mr. Nelson, aye.

Mr. Menendez?

SEN. MENENDEZ: Aye.

CLERK: Mr. Menendez, aye.

Mr. Carper?

SEN. CARPER: Aye.

CLERK: Mr. Carper, aye.

Mr. Grassley?

SEN. GRASSLEY: No.

CLERK: Mr. Grassley, no.

Mr. Hatch?

SEN. HATCH: Aye.

CLERK: Mr. Hatch, aye.

Ms. Snowe?

SEN. SNOWE: Aye.

CLERK: Ms. Snowe, aye.

Mr. Kyl?

SEN. KYL: No.

CLERK: Mr. Kyl, no. Mr. Bunning?

SEN. BUNNING: No.

CLERK: Mr. Bunning, no.

Mr. Crapo?

SEN. CRAPO: Aye.

CLERK: Mr. Crapo, aye.

Mr. Roberts?

SEN. ROBERTS: No.

CLERK: Mr. Roberts, no.

Mr. Ensign?

SEN. ENSIGN: Aye.

CLERK: Mr. Ensign, aye.

Mr. Enzi?

SEN. ENZI: No.

CLERK: Mr. Enzi, no.

Mr. Cornyn?

SEN. CORNYN: Aye.

CLERK: Mr. Cornyn, aye.

Mr. Chairman?

SEN. BAUCUS: Aye.

CLERK: Mr. Chairman votes aye.

SEN. BAUCUS: The clerk will announce the results of the vote.

CLERK: Mr. Chairman, the final tally is 18 ayes and 5 nays.

SEN. BAUCUS: The ayes have it. The nomination is ordered reported.

And the committee is adjourned.

END.

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