| 00:00:54 |
Neugebauer, Randy - U.S. Representative, [R] Texas
HAVE MR. DAN BURKOD WITS, MR. ROBERT COOK, WHO IS DIRECTOR OF TRADING AND MARKETS, MR. TERRENCE DUFFY, EXECUTIVE CHAIRMAN CME GROUP, MR. RICHARD KECHUM,...
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| 00:01:39 |
Berkovitz, Dan - General Counsel
AFTERNOON, CHAIRMAN, AND RANKING MEMBER AND MEMBERS OF THE SUBCOMMITTEE. THANK YOU FOR THE OPPORTUNITY TO TESTIFY. >> WOULD YOU MAKE SURE YOUR BUTTON'S...
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| 00:06:44 |
Cook, Robert - Director
THANK YOU. I'D BE HAPPY TO ANSWER ANY QUESTIONS. >> THANK THE GENTLEMAN. MR. COOK? >> CHAIRMAN, RANKING MEMBER AND MEMBERS OF THE SUBCOMMITTEE. ...
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| 00:11:37 |
Duffy, Terrence A. - Executive Chair
TO ANSWERING YOUR QUESTIONS. >> I THANK THE GENTLEMAN. NOW, MR. DUFFY? >> MR. CHAIRMAN, MR. RANKING MEMBER, MEMBERS OF THE COMMITTEE I'M TERRY DUFFY,...
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| 00:16:42 |
Ketchum, Richard G. - Chair and CEO
DUFFY. NOW WE GO TO MR. RICHARD KECHUM, CHAIRMAN AND CEO OF FINANCIAL REGULATORY AUTHORITY. >> CHAIRMAN, RANKING MEMBER AND MEMBERS OF THE SUBCOMMITTEE....
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| 00:21:58 |
Kobak, James - Attorney
QUESTIONS YOU MAY HAVE. >> THANK YOU, MR. KETCHUM. NOW WE PROCEED TO MR. JAMES KOVAK, CHIEF COUNSEL TO MR. JAMES GIDENS, BANKRUPTCY TRUSTEE FOR MF...
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| 00:28:42 |
Baxter, Thomas - Executive Vice President and General Counsel
CHAIRMAN, RANKING MEMBER CAPUANO AND OTHER MEMBERS OF THE SUBCOMMITTEE. THANK YOU FOR INVITING ME TO APPEAR HERE TODAY. I AM TOM BAXTER, GENERAL...
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| 00:33:45 |
Canseco, Francisco "Quico" - U.S. Representative, [R] Texas
AS A RESULT OF THE FIRM'S COLLAPSE. WE AT THE NEW YORK FED STAND READY TO ASSIST THE MF GLOBAL TRUSTEE AND THE CONGRESS IN THEIR IMPORTANT ROLES IN THIS...
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| 00:34:51 |
Cook, Robert - Director
THE S.E.C. AND OTHER AGENCIES? THERE'S A SECOND PART TO MY QUESTION. WAS SECRETARY GEITHNER OR FSOC NOTIFIED AND INVOLVED IN THE MF GLOBAL SITUATION?...
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| 00:35:30 |
Berkovitz, Dan - General Counsel
OTHER REGULATORS AT THAT TIME. >> MR. BERKOWITZ, DO YOU HAVE ANY -- >> I WOULD ADD THAT TYPICALLY THERE IS CONSULTATION AND COORDINATION BETWEEN THE...
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| 00:37:30 |
Cook, Robert - Director
RED FLAGS, WOULDN'T NECESSARILY RISE TO SOMETHING THAT THE FSOC WOULD HAVE BEEN NOTIFIED OF. >> IF I COULD ADD, SIR, WHEN I WAS ADDRESSING YOUR EARLIER...
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| 00:40:28 |
Berkovitz, Dan - General Counsel
WERE HEARING FROM MF GLOBAL AT THE TIME? >> WE HAD EXCHANGED INFORMATION. WE WERE IN COMMUNICATION WITH THE S.E.C. AND OUR STAFF WAS IN COMMUNICATION...
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| 00:41:23 |
Capuano, Michael - U.S. Representative, [D] Massachusetts
STATED. >> THANK YOU VERY MUCH, GENTLEMEN. I NOW YIELD FIVE MINUTES TO MR. CAPUANO, RANKING MEMBER. >> THANK YOU, MR. CHAIRMAN. MR. CHAIRMAN, I'M GOING...
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| 00:41:52 |
Kobak, James - Attorney
TOTALLY 100% AGREE YOUR FIRST AND PRIMARY RESPONSIBILITY IS TO THE CUSTOMERS. BUT FOR THE SAKE OF DISCUSSION, I PRESUME AS A BANKRUPTCY TRUSTEE YOU WERE...
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| 00:44:01 |
Baxter, Thomas - Executive Vice President and General Counsel
MR. BAXTER, DO YOU KNOW IF THE FED HAS STARTED LOOKING AT ANY OF THE REGULATED ENTITIES THAT MIGHT HAVE BEEN ON THE OTHER SIDE OF THESE AGREEMENTS?...
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| 00:45:11 |
Berkovitz, Dan - General Counsel
PENDING SINCE MAY OF 2009. THAT'S TWO YEARS. IT WAS OFFICIALLY PUT OUT THERE IN OCTOBER OF 2010. YOU'VE BP DEALING WITH THIS FOR TWO YEARS. DO YOU...
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| 00:49:02 |
Cook, Robert - Director
NOW CLOSED THOSE DOORS, WHICH IS FINE. MR. COOK, YOU NEVER OPENED THOSE DOORS AT THE S.E.C. IS THAT A FAIR STATEMENT? IN-HOUSE REPOS AND INVADING --...
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| 00:49:52 |
Neugebauer, Randy - U.S. Representative, [R] Texas
HOW I READ IT. I WOULDN'T MIND A FOLLOW-UP AT A LATER TIME. I THINK I'M OVER MY LIMITED TIME SO I THINK I'M DONE. I'LL BE BACK. >> THANK THE GENTLEMAN....
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| 00:50:07 |
Berkovitz, Dan - General Counsel
SUMMERS TOLD THE SENATE COMMITTEE ON TUESDAY WE HAVE A VERY GOOD IDEA AT THIS POINT WHAT HAPPENED TO THE MONEY. WHAT HAPPENED? >> CONGRESSMAN, I THINK...
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| 00:51:37 |
Duffy, Terrence A. - Executive Chair
MILLION TRANSFER THAT WAS CLASSIFIED AS A LOAN TO A UK SUBSIDIARY AND THAT HE DENIED ACTUALLY KNOWING ABOUT THOSE TRANSACTIONS. DO YOU AGREE WITH THAT...
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| 00:53:28 |
Cook, Robert - Director
I JUST AMPLIFY THAT THAT WAS INITIATED REALLY BY THE FRONT LINE SUPERVISORS OF FINRA AND THE CBOE, WHO INITIALLY IDENTIFIED THE ISSUE AND THEN CONSULTED...
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| 00:53:57 |
Berkovitz, Dan - General Counsel
FRAME. >> AND MR. BERKOVITZ, WHEN WAS KIND OF THE FIRST INDICATION TO THE CFTC THAT THERE WAS A PROBLEM OVER MF GLOBAL? >> IT WAS THE WEEKEND -- OBVIOUSLY,...
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| 00:54:46 |
Cook, Robert - Director
OF THE GAME. >> YES, SIR. >> IF I MIGHT JUST AMPLIFY BECAUSE I THINK YOU WERE TALKING ABOUT THE BANKRUPTCY AND THE WEEK BEFORE HAND. THE CAPITAL CHARGE...
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| 00:55:38 |
Berkovitz, Dan - General Counsel
RESTATE THEIR REPORT OF -- THEIR FINANCIAL REPORT, WHICH WOULD THEN BE FILED WITH US AND CFTC ALL IN THE AUGUST, EARLY SEPTEMBER TIME FRAME. >> I WANT...
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| 00:56:12 |
Perlmutter, Edwin "Ed" G. - U.S. Representative, [D] Colorado
WERE AWARE OF THAT IN THE EARLY AUGUST TIME FRAME. >> OKAY. THANK YOU, GENTLEMEN. MR. PERLMUTTER? >> THANKS, MR. CHAIR. IT WILL BE INTERESTING AS THE...
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| 00:56:43 |
Ketchum, Richard G. - Chair and CEO
OUR HANDS ON THIS QUICKER, BUT IF I'M NOT MISTAKEN, SIPIC STEPS IN AND THEY CAN FREEZE EVERYTHING BY FILING A BANKRUPTCY. THAT'S HOW WE PROTECT CUSTOMERS...
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| 00:59:29 |
Duffy, Terrence A. - Executive Chair
AND I APPRECIATE THAT THE CME HAS PUT UP $550 MILLION, WHICH IS, YOU KNOW, TOWARDS THE ASSISTANCE TO THE CUSTOMERS. HOW DOES THIS HAPPEN? YOU CLEAR...
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| 01:01:32 |
Baxter, Thomas - Executive Vice President and General Counsel
TODAY. I'M CURIOUS -- AND THIS IS WHERE MR. CAPUANO WAS GOING -- YOU KNOW, DID THE BANKS COME IN -- AND IF THEY DID, THEY WERE DOING THEIR JOB -- AND...
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| 01:05:53 |
Posey, Bill - U.S. Representative, [R] Florida
FEDERAL CRIMINAL OFFENSE HAS BEEN COMMITTED. >> AND THE GENTLEMAN SITTING NEXT TO YOU WOULD COME AND COLLECT THAT MONEY. SO WITH THAT I YIELD BACK....
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| 01:07:52 |
Kobak, James - Attorney
IN "THE WALL STREET JOURNAL," THOSE BONDS WERE SOLD AT A LOSS AND AT AN ADDITIONAL DISCOUNT OR BARGAIN PRICE SO, TO SPEAK, TO BUYERS THAT INCLUDED...
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| 01:11:42 |
Baxter, Thomas - Executive Vice President and General Counsel
BE CONCERNED ABOUT THE POSSIBILITY OF BUYING STOLEN GOODS? >> I REALLY DON'T KNOW WHAT THE CIRCUMSTANCES OF THOSE SALES -- >> MR. BAXTER, DO YOU?...
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| 01:12:15 |
Ketchum, Richard G. - Chair and CEO
THE BANKRUPTCY COURT FELT THEY WERE VIOLATIVE OF THE LAW. >> MR. KETCHUM? >> I -- I -- I -- I KNOW NO MORE WITH RESPECT TO THE LICKWY WIWY DAGS, CONGRESSMAN,...
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| 01:12:40 |
Berkovitz, Dan - General Counsel
WHAT I READ IN THE PAPER ALSO, SIR. >> MR. COOK? >> I HAVE NOTHING FURTHER, SIR. >> MR. BERKOVITZ? >> I CAN'T REALLY COMMENT ON WHERE THE MONEY, WHERE...
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| 01:13:06 |
Baxter, Thomas - Executive Vice President and General Counsel
FOR CUSTOMERS TO EXPECT SOME CLAW BACK? STARTING WITH MR. BAXTER. >> AGAIN, THERE ARE PROTECTIONS IN LAW FOR TRANSFEREES WHO ARE BONA FIDE PURCHASERS...
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| 01:14:58 |
Kobak, James - Attorney
MAYBE THERE'S NOT. BUT IT'S JUST AN INTERESTING CONCEPT BROUGHT FORTH. CAN I JUST GET THE RESPONSE? I THINK THEY'RE ALL GOING TO PLEAD IGNORANCE ON...
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| 01:16:01 |
Berkovitz, Dan - General Counsel
EXPERT. I THINK YOUR ORIGINAL QUESTION WAS WOULD IT BE REASONABLE FOR A CUSTOMER TO LOOK FOR CLAWBACK. IF I WERE A CUSTOMER, I'D WANT EVERY AVENUE PURSUED....
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| 01:16:25 |
Miller, Brad - U.S. Representative, [D] North Carolina
CHAIRMAN. >> YIELD BACK? >> I YIELD BACK, AND I THANK YOU -- I THANK YOU FOR THE EXTRA TIME. >> THE JE NAN, MR. MILLER, IS RECOGNIZED. ? THANK YOU. I...
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| 01:18:45 |
Berkovitz, Dan - General Counsel
GLOBAL AT THE RULES THAT EXISTED AT THE TIME TO USE ASSETS IN CLIENT ACCOUNTS AS SECURITY FOR ANY KIND OF SHORT-TERM LOAN FOR MF GLOBAL? AND WHETHER...
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| 01:22:17 |
Duffy, Terrence A. - Executive Chair
OR SHOULD THIS JUST GO ON THE WAY IT HAS OVER THE LAST THREE OR FOUR YEARS? MR. DUFFY, YOU WANT TO ANSWER A QUESTION? >> I WON'T ANSWER ON BEHALF OF...
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| 01:22:49 |
Berkovitz, Dan - General Counsel
BILLION. IT'S ME SPEAKING PERSONALLY THAT THESE LEVERAGE RATIOS NEED TO BE ADJUSTED. >> I THINK ALL OF YOU ARE EQUALLY QUALIFIED TO SPEAK TO MR. MR....
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| 01:23:27 |
Baxter, Thomas - Executive Vice President and General Counsel
OF SHADOW BANKING. >> MR. BAXTER, NEW YORK FED IS DEEPLY INVOLVED IN ALL THIS STUFF. >> THANK YOU, CONGRESSMAN. ONE ADDITIONAL POINT I WOULD NOTE IN...
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| 01:25:55 |
Berkovitz, Dan - General Counsel
AND BORROWED THE CLIENT'S FUNDS? >> I WON'T SPEAK TO MF GLOBAL. HYPOTHETICALLY SPEAKING, YOU COULD PUT A CORPORATE -- HIGHLY-RATED CORPORATE BOND COULD...
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| 01:26:20 |
Renacci, Jim "James" B. - U.S. Representative, [R] Ohio
COULDN'T PUT YOUR OWN BOND IN. YOU COULD NOT PUT YOUR OWN BOND IN. >> OKAY. ALL RIGHT. >> I THINK THE GENTLEMEN. THE GENTLEMAN FROM OHIO IS RECOGNIZED....
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| 01:26:46 |
Baxter, Thomas - Executive Vice President and General Counsel
YORK. >> POOR RECORDKEEPING CONTINUED ON AT MF GLOBAL UNTIL THE TERM'S COLLAPSE. IF THE NEW YORK FED HAD A SYSTEM FOR PRIMARY DEALERS IN PLACE, DO...
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| 01:32:21 |
Neugebauer, Randy - U.S. Representative, [R] Texas
SAYING. THAT'S A SIGNIFICANT BURDEN ON US. MAYBE THAT'S A BURDEN WE NEED TO UNDERTAKE. I'LL TAKE THAT UNDER ADVISEMENT, SIR? >> THANK YOU. I YIELD BACK....
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| 01:32:38 |
Capuano, Michael - U.S. Representative, [D] Massachusetts
TWO-MINUTE ROUND. I ASK MEMBERS TO PICK THE QUESTION THAT THEY WERE GOING TO ASK AND I WOULD ASK OUR PANEL TO BE BRIEF IN THEIR ANSWERS. WITH THAT I...
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| 01:36:22 |
Neugebauer, Randy - U.S. Representative, [R] Texas
TO GO BACK TO SOMETHING. IN LATE SEPTEMBER OF 2010, I
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| 01:36:32 |
Ketchum, Richard G. - Chair and CEO
THINK Y'ALL DID A CALL AROUND AND ASKING FIRMS IF THEY HAD SOVEREIGN DEBT EXPOSURE IN EUROPE. CAN YOU TELL ME WHAT THE RESPONSE FROM MF GLOBAL WAS...
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| 01:38:34 |
Perlmutter, Edwin "Ed" G. - U.S. Representative, [D] Colorado
WE HAVE A RULE BEFORE THE SEC TO GIVE US THE REQUIRE TO REQUIRE MORE EXTENDED DISCLOSURE THAT EXISTS IN THE SEC'S PRESENT FOCUS FORMS. >> I THANK...
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| 01:39:49 |
Posey, Bill - U.S. Representative, [R] Florida
WOULD JUST ASK YOU TO DO THAT AND I HAVE A MILLION QUESTIONS, SO I'M NOT GOING TO ASK ANYMORE AND WISH YOU ALL HAPPY HOLIDAYS. >> I THANK THE GENTLEMAN....
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| 01:40:04 |
Duffy, Terrence A. - Executive Chair
TWO MINUTES. >> THANK YOU, MR. CHAIRMAN. MR. DUFFY, I BELIEVE IN A SENATE HEARING YOU WERE ASKED TO BASICALLY BUTT OUT OF ANY INVESTIGATION. COULD...
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| 01:40:57 |
Kobak, James - Attorney
HAD? >> PART OF OUR STATUTORY DUTIES AS I SAID IN MY REMARKS IS TO DO A THOROUGH
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| 01:41:08 |
Ketchum, Richard G. - Chair and CEO
AND INDEPENDENT INVESTIGATION. WE ARE DOING THAT. WE'RE TRYING TO COORDINATE IT WITH THE OTHER INVESTIGATION. >> BUT YOU WEREN'T ASKED TO BUTT OUT?...
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| 01:41:46 |
Duffy, Terrence A. - Executive Chair
OUT. ANYBODY HAVE ANY IDEA WHY THAT WOULD BE? NEB NOBODY HAS ANY IDEA -- >> JUST SO IT'S CLEAR, ALL THE INFORMATION I'VE TESTIFIED IS NFTH WE HAVE...
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| 01:42:06 |
Berkovitz, Dan - General Counsel
INCREDULOUS? >> I GUESS YOU'D HAVE TO ASK THE CFTC WHY. I DON'T KNOW. >> WHY? >> I'M NOT FAMILIAR WITH WHAT HAS BEEN REFERRED TO. BUT EVEN IF I...
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| 01:43:00 |
Canseco, Francisco "Quico" - U.S. Representative, [R] Texas
THAT YOU POSSIBLY COULD, WE GREATLY WOULD LOOK FORWARD TO HAVING YOUR EXPLANATION ON THAT. >> I THANK THE GENTLEMAN FOR HIS QUESTION. THE GENTLEMAN FROM...
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| 01:43:18 |
Duffy, Terrence A. - Executive Chair
A VERY SPOTTY COMPLIANCE RECORD AND PAID ABOUT $87 MILLION IN FINES TO REGULATORS IN 2007. WAS THERE ANYTHING IN MF GLOBAL'S PAST THAT WOULD GIVE CME...
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| 01:43:59 |
Miller, Brad - U.S. Representative, [D] North Carolina
DAILY REPORTING. WE'VE CONTINUED TO KEEP A CLOSE WATCH ON ALL OF OUR FIRMS INCLUDING MF GLOBAL. >> THANK YOU VERY MUCH. I YIELD BACK. >> I THANK THE...
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| 01:45:43 |
Duffy, Terrence A. - Executive Chair
USED@AD INFINITUM OR SHOULD THERE BE SOME LIMIT ON HOW MANY TIMES A GIVEN ASSET CAN BE HYPOTHECATED? MR. DUFFY? >> I SAID I DO BELIEVE THERE NEEDS TO...
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| 01:46:08 |
Cook, Robert - Director
AT THE SAME TIME, THERE'S 20 OF US LOOKING FOR ONE THING, 19 OF US ARE GOING TO HAVE A PROBLEM. I DO BELIEVE THERE NEEDS TO BE SOME KIND OF LIMIT TO...
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| 01:48:01 |
Ketchum, Richard G. - Chair and CEO
THAT IS AN IMPORTANT ONE TO THINK ABOUT FURTHER. I DON'T WANT TO USE UP YOUR TIME ANSWERING THAT QUESTION. >> ANYONE ELSE? I'M PAST MY TIME. >> I WOULD...
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| 01:49:46 |
Cook, Robert - Director
I THINK IN SOME RESPECTS LEHMAN AND BEAR ARE EXAMPLES WHERE COUNTERPARTIES LOOKED BEYOND THE COLLATERAL BECAUSE THOSE ENTITIES, AS I UNDERSTAND IT, ...
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| 01:50:19 |
Neugebauer, Randy - U.S. Representative, [R] Texas
IS TO THINK ABOUT THE APPROPRIATE CAPITAL TREATMENT OF THESE TRANSACTIONS, WHETHER THEY'RE BEING PROPERLY ADDRESSED THROUGH CAPITAL CHARGES. >> I THANK...
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NOTE: The transcript for this program was compiled from uncorrected Closed Captioning.