Mr. Chairman, thank you very much.

And I want to thank you for holding this hearing. I agree with you,

in your statement this morning, that...

Well, I want to commend you, and to say to each one

of you -- and I have one more question that'll be for Mr. Lewis, Mr.

Chairman -- but...

I talk so slow, I can't do it. Will there be

another round, Mr. Speaker?

Mr. Chairman, excuse me.

Can I just read --

Okay.

This is the e-mail -- and I'm going to make it real quick, Mr.

Chairman -- the original course of action to be taken by Congress is

to...

-- (inaudible) -- I yield back. Thank you, Mr.

The gentleman from Texas, Mr. Hinojosa.

We're not an originator, but we are a servicer of

mortgages and our mortgage servicer, Litton, has been very aggressive

at reaching out...

Congressman, we're not in the mortgage business.

Congressman, we also are not in the mortgage

business.

Thank you.

Congressman, we service one in seven mortgages in

America, and we have doubled our staff to 6,000 people who spend --

make thousands and...

Congressman, that legislation has not yet been

passed.

Let me say -- (inaudible) -- not every member can be

here at all times, I'm -- (inaudible) -- absent myself. The panel was

polled by one...

It was "behind" in the early returns. (Laughter.)

The gentleman from Massachusetts.

Congressman, I think it's something that definitely

is going to be discussed with the exchanges. It's an idea that I

haven't heard yet,...

Congressman, I have not looked at that in a long

time. Different countries have done that in different time periods.

This is an unusual...

We would have no problem paying some fees to help

bear the costs of -- I think you mentioned regulation or something

like that.

I had assumed that the banking industry was going to

pay for it one way or another; I just hadn't thought about the way,

but of course.

I think we should consider it, but at the same time I

think we need to be careful. Exchanges have become global, and we

need to make sure...

Let me take the gentleman's left time because he's

on to something. Let me remind people: In the TARP bill which we

passed, we adopted an...

Mr. Chairman, I'm just fearful that the urgency that

we have around this issue right now, if things start to get better --

Thank you, Mr. Chairman. I yield back.

Thank you, Mr. --

Thank you very much, Mr. Chairman. I certainly

appreciate you all being here, and it's a very, very important

hearing, but I believe we...

Okay. Three weeks. That is good news.

Mr. Pandit, you have mortgages. Could you concur with that, for

three weeks?

Thank you.

I think, Mr. Stumpf, you were -- can you concur with the three

weeks?

If the gentleman will yield --

If the gentleman will yield for one minute just to

say -- and I'll get back to your time -- I hope fairly soon to have

legislation passed...

So help is on the way in that regard.

Well, thank you all for that commitment to forgo the

foreclosures, and I thank you on the parts of all Americans who need

this help, just...

Right. Well, what FAS 114 does, it requires that

the value of the loan be set at the fair market value of the

collateral or market to market....

Thank you very much, Mr. Chairman. I

don't want to beat a dead horse, and my dad always told me that you

should never ask somebody how much...

Okay.

For the year '07, $1 million salary and $29 million

of cash and stock. Again, the stock is not worth what it was then.

Congressman, in 2007 it would have been $1 million

salary, and with all the long-term option-type compensation, in total

it was around $20...

Yes.

Congressman, I believe it was a million dollars in

salary and total compensation of about 20 million, $500,000, if my

memory serves me well.

Two-hundred-fifteen-thousand dollars in salary and

$2.5 million in stock.

I think that might help give us a little bit more

insight into the train wreck.

Mr. Dimon, there's some arguments on both sides about this...

That's the next question, but right now, if there

was an arbitrary cram down, if a judge could reduce the amount --

Okay, does anyone beside Mr. Pandit disagree with

that? I mean, it's logical; it makes sense to me.

The next thing is, I gave an example...

Is it your own loans or loans that you might

service?

And you are modifying loans that you service now,

then?

Mr. Lewis, are you -- let's see, one two three,

you're Mr. Countrywide -- Mr. Bank of America? No, you are --

But you have already changed the policies, like

these people should be getting some kind of response rather than walk

away or --

It's a no-brainer. Maybe I can get my staff to get

one of your cards or something and they can contact you directly and

they can get this...

Mr. Dimon? Out of time?

(Cross talk.)

Thank you very much for your indulgence, gentlemen.

Thank you. I'm against arbitrary cram

down too. However, judicial modifications, based on the very clear,

well-established legal standards,...

My question is, who should bear the loss? If they

are insolvent, who should bear that loss?

Is there any reason, based on...

That's not my question there, Mr. Blankfein.

Okay. Mr. Dimon, do you have an answer to the

question I asked?

Mr. Kelly?

Shareholders.

Shareholders.

Shareholders.

It should be shareholders and unsecured creditors but

I also think you need to look at is there a chain reaction? If

there's no chain reaction...

I would want to make sure that we seriously look at

whether their insolvency is a result of credit or whether liquidity --

these are fundamental...

I agree with my colleagues.

I believe they're capable. I've only had a three-

month relationship with my new regulator.

Thank you, Mr. Chairman.

And I thank the witnesses for appearing today.

A rare occasion when I'm the only Texan in the room

but it's an honor to be with you.

Thank you. The American people are exceedingly

angry. I have the opportunity of hearing and visiting with many of

these angry people. If...

We're not in the consumer lending business.

This is going to be a good "Saturday Night Live"

sketch.

Yes, we're lending -- our consumer loans are up. In

fact, we were lending through this whole crisis --

Because it's all part of the same capital pool. I

don't segregate certain amount of capital against one loan; so when we

finance $1.5 billion...

Yes we can do that.

Yes, absolutely.

Absolutely.

Congressman, we do that to the Federal Reserve in our

TARP filings; it shows all categories.

It's not a problem at all, I think it's being done.

Could I ask a question just--?

Do you factor in the deterioration in the economy and

the drop in demand for credit? I don't know how you factor in all the

Thank you, Mr. Chairman.

I have about seven pages of questions that were sent to me from

my district -- I represent Kansas City, Missouri...

Lending, warehouse lending.

No, no, no --

Anyone in the retail bank business, do they know

what we mean by warehouse lending? You probably ought to take that.

We're familiar with the business. We do very little

of it, if any of it, anymore primarily because we'd rather make loans,

our home loans,...

Very little.

Very little.

Very little.

We've been out of the warehouse lending business for

five, six, or seven years. The reason we got out is because we saw

them doing crazy...

Well, there are two kinds --

I'm not an expert in mortgage lending, but there is

two kinds. One we actually finance and give them a line of credit;

another one is where...

I don't know which one it is.

Yes. That's precisely it. And one Wall Street

investment bank at one point not long ago had a $250 million line of

credit just for one originator....

I do.

Plus $3.8 billion in interest a year.

Right.

(Off mike.)

Correct.

Correct.

Well, I don't know. I haven't seen the program, but

that would be something that would be at a market or -- it would be

available to everyone,...

If it were less than fair value, and that's the issue

that people are dealing with, and that's why it's so complicated.

That is my expectation.

It is absolutely my expectation.

Yeah.

We are a user of the FDIC program, but it's not

our expectation to have to sell assets at a higher-than-market value.

We categorically expect to pay back the TARP funds.

If it is, it won't be me. (Laughs.)

We also expect to be able to pay back the TARP funds,

hopefully within three years and hopefully again even sooner than

that. And we won't...

We expect to pay back the TARP funding as well, and

we would expect that we would not need any other funding.

We will pay back the government -- the TARP funds.

I don't know what the rest of the program is going to be used for. If

you come to us...

So you may anticipate the government purchase of

dead loans or --

Thank you.

Thank you, Mr. Chairman. I yield back.

I'd like to ask a question of the

gentleman from Bank of America. Have any of the TARP funds you've

been given so far been used to lobby?

Are you familiar with a posting that was in the

Huffington Post which seemed to indicate that there was a financial

roundtable conversation...

Do you agree with me in principle that any company

that gets TARP funds, those funds should be used to either

recapitalize the bank or to...

Okay. And so I can -- can I have your assurance

that no TARP funds have been devoted to lobbying?

Do you think it's appropriate to, while in receipt

of TARP funds, to be trying to defeat measures such as the Employee

Free Choice Act?

Yeah, but as has been pointed out already, money

is fungible. What you don't use one place you can switch and use

other monies for that....

And not trying to defeat union organizers?

Okay.

Right. Well, I just wanted to put into the record

-- have unanimous consent to have entered into the record this letter

from Change to Win...

I'd also like to give voice to the people of my

district who sent me a number of questions to ask all of you. I'll

just give you a sense...

-- and that is a article written by Adam Levitin,

who talks about how securitization of credit card debt has contributed

to the financial...

Yeah.

Will the gentleman yield just for one --

In the questioning before that, I think -- and I

know the gentleman's thoughtful -- we very much as a body respect the

freedom of association...

That's really a debate on the gentleman's issue.

No, and I apologize. But I'm just saying, I didn't

want them to get the wrong -- and I know you didn't mean --

I hope that doesn't come out of my time.

And Bank of America, what is your Tier 1 capital

ratio?

Now --

Well, I mean, I'm -- I've asked the question;

you've answered it. Tell me, how is Merrill Lynch -- the acquisition

of Merrill impacted your...

And what about Countrywide? How does that impact

your --

Can I just say -- when you said the injection,

that's the second TARP funding.

Not the first but the second injection.

Go ahead, Mr. --

Are you talking to me?

Absolutely not. I don't know why you would ask the

question.

This answer will end the time. The gentleman got

extra time.

Thank you.

Thank you, Mr. Chairman.

Gentlemen, I have a question -- I have several questions, but I

have question for all of you. If I came to you...

Sure.

Okay.

No.

No.

No.

Thank you. I didn't think so, but help me explain

to the people back home what has happened with their tax money that

went out in the first...

Okay. Maybe I can rephrase my question, Mr.

I think we put in the record a lot of what was done

with the TARP money. We have lent in the last 90 days -- I believe it

was $250 billion...

I think the question that I nor anyone will ever be

able to answer is what would have happened had that not been injected

when and how it...

Yes. (Laughter.) The reason is that they don't want

the government involved in their business. Simple as that.

I thank the gentleman -- he has a minute left. Let

me just say -- I do have to say Mr. Dimon saying we'll never know did

remind me, and...

I can only speak to our firm. We're not too big, and

we still plan to grow. So we don't find that as an issue for

ourselves. Also, as I...

Yes. And I think that's an issue, especially as we

grow our businesses -- not only here in the U.S., and develop new

products, or globally,...

I think if I was in your seat I would want large,

successful American corporations that do business around the world,

some of which, by...

Are you asking me, or --?

Well, yeah, I think you have special obligations, and

you take -- you know, you do have risks, you have to serve the

countries and the communities...

The gentlewoman from Illinois.

You're being unfair now.

I think that every person at this table is doing

everything they can, with all their brains and might, to fix this

situation. I also think...

I would add, there's a couple of things that -- to

that. We've talked about mark-to-market accounting before, which has

really destroyed...

Well, I'll begin. I don't know if I know all the

answers -- obviously, I don't. But we've passed -- you're soon to

pass the stimulus package....

I'd just say, I don't -- do away with it --

(Cross talk.)

When markets are not functioning, it's no longer

mark-to-market, it's mark...

You know, I hear from so many of the customers of

yours that they can't get to the lender, or if they do they talk to

somebody, and then...

-- (inaudible) -- Let me -- (inaudible) -- time has

expired, but if I can get the indulgence, I was distracted, I

distracted myself, it's...

All right, well I would ask you to, afterwards work

with --

Yeah, and we -- I will say this, with regard to the

bankruptcy, which I know many of you don't like, but we did do a

separate piece to that...

-- the owner. But, we should be able to work it out

short of that. So let's please be in touch with our staff. And we

obviously want to...

-- (inaudible) -- unravel all that.

Thank you.

The gentleman from Indiana.

I think the answer is absolutely yes. And I think

in -- I believe in our company's case, we have stuck by our customers

during the difficult...

Correct.

I don't know a lot about the RV business, but we are

looking for opportunities, and if they're good ones, then our point

is, make every...

This is not an issue of liquidity. Most -- at least

our company has never been this liquid in our history. This is about

an issue of demand...

Let me make just one -- (inaudible) -- only

partially because -- (inaudible) -- at the initiative that you brought

to us, we have language...

The gentleman from Illinois.

We'd survive. I mean, we have a very high tier 1

ratio. We've reduced our balance sheet dramatically from 1.1 trillion

(dollars) to a little...

Well, I think some of those things can happen,

especially in the commercial market, as you were talking about. I

think we've not seen how...

I would -- I'm not going to guess, Congressman.

(Off mike) -- the nature of uncertainty, and

given enough time and the unpredictability of markets -- look where we

are, and look how we...

Yes.

What's your -- what's your numbers again?

That and beyond.

We do the math and our regulators observe us

doing the math.

You know, I'm just not that (conscious ?) of it,

but our plan, for example, in equity assumed 50 percent drop in the

equity market. So that...

Absolutely. We look in terms of standard

deviations and percentage moves and, yes, very -- they would be very

extreme.

We had 30 percent decline in real estate prices about

a year ago, so --

No, no, I --

Or you gamed out a survival strategy.

That's different than -- all right. The other

questions I had had to do with alignment of incentives. And my

attitude on that is, you know,...

But do you believe that's been done so far in the

industry? I mean, I think this seems to be almost a consensus that

there is a misalignment...

To add on to my colleague's point, as

you know, this committee will address the issue of moral hazard and

regulatory reform in the coming...

Thank you, sir.

Thank you, Mr. Chairman. Thank you,

gentlemen, for your testimony today.

Mr. Blankfein, there's a question I've wanted to ask you for

months....

Move the mike when you turn your head more. That's

all.

All right. Thank you.

The Congressional Oversight Panel has put out a chart that

suggests that for most of you, the taxpayers are now subsidizing...

Mr. Dimon?

I'm just asking the question. Yes or no?

Okay. Mr. Kelly, you're probably not in the

business, correct?

Mr. Lewis?

Mr. Logue?

Mr. Mack?

Mr. Pandit?

Mr. Stumpf?

So what is the interest rate you're charging, for

those of you in the business, on credit cards?

To what? Twenty-seven?

Twenty-something percent.

Do any of you believe that we have a -- we should have a law in

America that has a usury rate? You think there's...

What do you think it should --

All right. There's a GAO report that just came out

in December of 2008. It talked about the number of the biggest

financial institutions,...

Thank you.

Thank you, Mr. Chairman.

Gentlemen, I've received over 500 e-mails from my constituents

concerning this hearing. Let me read two of them...

Well, let's take a look at page 3. Under heading

number 2, Treasury and the FDIC also have agreed to share with

Citigroup losses on a designated...

Three hundred-one (billion dollars), 306 (billion

dollars)?

Well, you know, a billion here, a billion there --

soon you're talking real money, Mr. Pandit.

All right. Now in this deal, Citibank took the

first $29 billion in losses and then the taxpayers take 90 percent of

the remainder. Is that...

Well, further down in that paragraph, which you

have extra copies of, if anybody wants to see it, it says under the

terms of the guarantee...

Are you saying the number 29 is number 30?

Well, the bottom line -- you can correct me if I'm

wrong, Mr. Pandit, but the bottom line is that the government has

assumed liabilities...

You call it insurance, but that word does not

appear anywhere in this document, does it?

So the government gets $7 billion in preferred

stock, and the government's on the hook for $250 billion in losses?

Is that correct?

You tell me, Mr. Pandit, where I can get a deal

like this, where I can get $250 billion in insurance, as you put it,

for toxic assets that...

Well, if it turns out that they're not truly toxic

and there is an upside, who gets the upside?

Right. So you get 100 percent of the upside, and

the government gets 90 percent of the downside. Correct?

Have you heard the phrase, Mr. Pandit, "Heads, I

win; tails, you lose"?

Is this on your balance sheet, this arrangement?

Do you know if it's on the Federal Reserve's

balance sheet? They are responsible for $234 billion of losses. Do

you know if the Federal...

The gentleman's time has expired.

The gentleman from Connecticut.

Yes, we will.

Yes.

(Cross talk.)

Congressman, there are established markets with

established standards and established protocols. And then there are

markets that are newer....

Well, if you were in a market -- let's go back to the

Internet boom that we had in the mid-'90s, all the way up into 2000,

2001. The volume...

Well, many of the companies that we underwrite, not

only we're doing the equity deal, but that we have loans to them,

we're very much involved....

The time has expired.

That's correct. And we have two more gentlemen

that wish to question.

Three.

The chair recognizes Mr. Peters for five minutes.

Well, first, absolutely, red line or whatever you

want to call it is not the case. We want to make every good loan

anywhere we can make...

Well, I want to follow up on that. And I

appreciate both of your comments, but is it possible to get numbers,

so I can just get a sense...

Yeah.

When you say proposals -- requests?

Congressman, I'd have to check. We have a very active

dialogue with the auto industry. And I will check on it back and let

you know exactly.

We actually are advising one of the companies on

doing that. And so we're in the middle of the execution of that -- of

the conversion from...

We're currently executing on the game plan that we

advised on.

We feel the pressure.

We've had conversations with some of the companies,

but I'm not up to date on them.

Because it is critical. And there is a sense in

some meetings that we've had that some of the creditors to the auto

industry may believe...

And there'll be haircuts in either case.

Is one worse than the other?

It's difficult to get financing in bankruptcy.

It's going to be very difficult for these -- oh, sorry. Thank you.

Thank you, gentlemen.

Thank you very much, Madame Chair.

Gentlemen, it's been a long day. We understand that. It's

obviously been a long number of weeks and months...

Do you believe that this is more a question of that

there really aren't enough borrowers out there that are creditworthy?

Or...

Mr. Maffei. Congressman Maffei is recognized for

five minutes.

Right. So I'll just start by saying, you know, we

are continuing that project at Syracuse University, the Technology

Center, and we're not...

So I think we had mentioned before and I -- is that a

lot of non-banks did pull out of the system. So we have this little

dichotomy where...

In that -- we've been suckered a little bit with that

in the last six months or so.

Yeah, I would agree with Mr. Dimon.

Yup.

Banks are not the only institutions that have been

lending money in the past. There have been finance companies, and

also there's been funding...

We're --

(Off mike.)

The finance companies are finding it difficult to

fund themselves in order to turn around and make loans.

Securitization market is basically...

Yeah --

And we see a lot of demand out there. Even through

discipline and all other rigor, there is still a lot of demand out

there. There is a...

Thank you very much for your testimony. This

hearing is adjourned. (Strikes gavel.)