Visit Your Local PBS Station PBS Home PBS Home Programs A-Z TV Schedules Watch Video Donate Shop PBS Search PBS
Photo of Bill Moyers Bill Moyers Journal
Bill Moyers Journal
Bill Moyers Journal
Watch & Listen The Blog Archive Transcripts Buy DVDs
The Bailout Hearings.
Capitol Money
December 12, 2008

On September 6, 2008 just six months after engineering JP Morgan's takeover of the failed hedge fund BearStearns, the U.S. Federal government re-absorbed the pseudo-public mortgage giants, Fannie Mae and Freddie Mac. The move will be remembered as the first step in what has become the largest government intervention in the economy since the Great Depression.

The September 15, 2008 collapse of Lehman Brothers raised the stakes, setting off an unexpected chain reaction that some experts warned could threaten the entire economy. Responding to calls for a centrally planned response to the growing crisis, the Bush Administration approached Congress with a three page proposal: allow the Treasury to spend $700 billion to purchase the distressed mortgages causing banks so much pain.

On September 23, 2008 Congress held the first of many hearings to evaluate both the plan and the crisis, summoning key players in the crisis and demanding to know what went wrong and how to fix it.

Timeline of the Hearings
Below are summaries and links to some of the key hearings of the financial crisis. The committee pages often have prepared statements from the witnesses, as well as streaming video and transcripts of the hearings.

THE WASHINGTON POST continues to update a timeline of the financial crisis here. And ProPublica is tracking the disbursements of government money under the Troubled Assets Relief Program (TARP), popularly known as the $700 billion bailout, here.

September
"Turmoil in US Credit Markets: Recent Actions Regarding Government Sponsored Entities, Investment Banks and Other Financial Institutions,"
U.S. Senate Committee on Banking, Housing and Urban Affairs, September 23, 2008

Rarely do Congressional hearings garner the sort of attention the Senate Banking Committee earned for grilling top Bush administration officials about the $700 billion bailout proposal. For hours, Senators of both parties chided Treasury Secretary Paulson et al for not doing enough to prevent the crisis and balked at Paulson's simple, expensive proposal.

Witnesses:
-Henry Paulson, Secretary of the Treasury
-Ben Bernanke, Federal Reserve Chairman
-Christopher Cox, Securities and Exchange Commission Chairman
-James Lockhart III, Director of Federal Housing Finance Agency

Further Reading:

"In a Crisis, Senatorial Rhetoric Bursts Forth" by Alessandra Stanley, THE NEW YORK TIMES, September 23, 2008.

"Top Executives at Bruised Firms Among Wall Street's Highest Paid" by Cecilia Kang and Annys Shin, THE WASHINGTON POST, September 24, 2008.

October
"The Causes and Effects of the Lehman Brothers Bankruptcy"
The House Committee on Oversight and Government Reform, October 6, 2008.

Many Americans, furious about the bailout and the collapsing economy, let their Congress know they wanted accountability. On October 6, 2008 the House Oversight Committee held the first of a series of five hearings investigating the causes of the Wall Street meltdown. After a panel of economic experts, Lehman Brothers CEO Dick Fuld appeared alone before a full table of fuming Congressmembers to answer for the failures of the financial industry.

Panel I Witnesses:
-Luigi Zingales, Professor of Finance at University of Chicago
-Robert Wescott, President of Keybridge Research LLC
-Nell Minow, Chairman of the Board and Editor at The Corporate Library
-Gregory Smith, General Counsel at Colorado Public Employees' Retirement Association

Panel II Witness:
-Richard Fuld, Jr., Chairman and CEO of Lehman Brothers Holdings

Further Reading:

"The Road to Lehman's Failure Was Littered With Lost Chances" by Louise Story and Ben White, THE NEW YORK TIMES, October 5, 2008.

Fuld as Fall Guy by Elizabeth Olson, PORTFOLIO, Oct 6 2008.

"Lehman Managers Portrayed as Irresponsible" by Bernie Becker and Ben White, THE NEW YORK TIMES, October 6, 2008.

"The Causes and Effects of the AIG Bailout"
House Committee on Oversight and Government Reform, October 7, 2008.

On September 16, 2008 the Federal Reserve lent $85 billion to American International Group (AIG) in exchange for almost 80 percent of its stock, effectively a government takeover of the largest insurance company in the world. AIG was sinking under the weight of investments tied to subprime mortgages as well as insurance it provided to others who made similar investments. In the wake of the surprise failure, the Bush Administration forced the resignation of AIG's CEO Robert Willumstad, and on October 7th, 2008 he appeared with his predecessor before the House Oversight Committee to explain the company's sudden collapse. Also causing particular ire among the assembled congress members was an expensive spa trip AIG extended to top sales agents just one week after AIG received government aid.

Panel I Witnesses:
-Eric Dinallo, Superintendent of New York State Insurance Department
-Lynn Turner, Former Chief Accountant of Securities and Exchange Commission
Panel II Witnesses:
-Robert Willumstad, Former AIG CEO
-Martin Sullivan, Former AIG CEO

"Insurance giant AIG's role in market crisis probed" THE LOS ANGELES TIMES, October 08, 2008.

"A.I.G. Takes Its Session in Hot Seat"
By Michael J. de la Merced and Sharon Otterman, THE NEW YORK TIMES, October 7, 2008.

"Turmoil in the US Credit Markets: The Genesis of the Current Economic Crisis"
U.S. Senate Committee on Banking, Housing, and Urban Affairs, October 16, 2008.

Before the current financial storm was a credit crisis, it was a sub-prime mortgage crisis. On October 16, the Senate Committee on Banking held a hearing to investigate these loans -- the foundation of a vast financial pyramid whose collapse wreaked havoc on communities across America and contributed to the downfall of several powerful financial institutions.

Witnesses:
-Arthur Levitt, Senior Advisor of The Carlyle Group
-Eugene Ludwig, CEO of Promontory Financial Group
-Jim Rokakis, Treasurer of Cuyahoga County, Ohio
-Marc Morial, President and CEO of National Urban League
-Eric Stein, Senior Vice President of Center for Responsible Lending

"Credit Ratings Agencies and the Financial Crisis"
U.S. House Committee on Oversight and Government Reform, October 22, 2008.

According to the forensic financial analysts, securitized mortgages, the toxic bundles of good and bad mortgages sold to investors, could not have insinuated themselves as deeply as they did into the U.S. financial system had credit ratings agencies not drastically underrated their risk. Several current executives of the nations largest ratings agencies, and two former executives, appeared before the House Oversight Committee to explain how they got things so wrong. The two former executives testified that conflicts of interest prevent the agencies from doing their job properly, a contention that three of the current executives disputed.

Witnesses:
-Jerome Fons, Former Executive at Moody's Corporation
-Frank Raiter, Former Executive at Standard and Poor's
-Sean Egan, Managing Director at Egan-Jones Ratings
-Deven Sharma, President of Standard and Poor's
-Raymond Mcdaniel, Chairman and CEO of Moody's Corporation
-Stephen Joynt, President and CEO of Fitch Ratings

Further Reading:

Credit-Rating Firms Grilled Over Conflicts by Amit R. Paley, THE WASHINGTON POST, October 23, 2008.

"The Financial Crisis and the Role of Federal Regulators"
U.S. House Committee on Oversight and Government Reform, October 23, 2008.

In its fourth hearing on the financial crisis, the House Oversight Committee turned its attention to the Federal government to determine what policies contributed to the inflation and bursting of the housing and credit bubbles. The hearing included the memorable moment when Alan Greenspan, the formerly-hailed hero of unstoppable growth, for publicly admitted that his long held market ideology had failed him. Greenspan explained that he was shocked to see his world view unravel, since he had "been going for 40 years or more with very considerable evidence that it was working exceptionally well."

Witnesses:
-Christopher Cox, Chairman of Securities and Exchange Commission
-Alan Greenspan, Former Chairman of Federal Reserve
-John Snow, Former Secretary of Department of the Treasury

"Turmoil in the US Credit Markets: Examining Recent Regulatory Responses"
U.S. Senate Committee on Banking, Housing, and Urban Affairs, October 23, 2008.

Appearing before the Senate Banking committee, Bush administration officials assured anxious Senators that they were devising a plan to help struggling home owners. Sheila Bair, chairwoman of the FDIC, emerged as among the most ardent supporters of loan modifications for home owners, putting her at odds with the rest of the administration. To date, the administration has devised no plan and has begun publicly feuding with Bair.

Witnesses:
-Sheila C. Bair, Chairwoman of Federal Deposit Insurance Corporation
-Neel Kashkari , Interim Assistant Secretary for Financial Stability and Assistant Secretary for International Affairs at US Department of the Treasury
-James B. Lockhart III, Director of Federal Housing Finance Agency
-Elizabeth A. Duke, Governor - Board of Governors of the Federal Reserve System
-Brian D. Montgomery, Federal Housing Commissioner and Assistant Secretary at Department of Housing and Urban Development

November
"Private Sector Cooperation with Mortgage Modifications — Ensuring That Investors, Servicers and Lenders Provide Real Help for Troubled Homeowners"
U.S. House Financial Services Committee, November 12, 2008.

As the crisis dragged on, and more and more people lost their homes, the House Financial Services Committee called together a panel of financial managers and experts to determine the barriers to modifying loans held by struggling home owners. They received a mixed response from their witnesses as to whether the contracts were difficult or impossible to modify.

Witnesses:
- Mr. Benjamin Allensworth, Senior Legal Counsel, Managed Funds Association
- Mr. Thomas Deutsch, Deputy Executive Director, American Securitization Forum
- Mr. Michael Gross, Managing Director of Loan Administration Loss Mitigation, Bank of America
- Ms. Molly Sheehan, Senior Vice President, Home Lending Division, JPMorgan Chase

"Oversight of the Emergency Economic Stabilization Act: Examining Financial Institution Use of Funding Under the Capital Purchase Program"
U.S. Senate Committee on Banking, Housing, and Urban Affairs, November 13, 2008.

Like their peers on the House Financial Services Committee, the Senate Banking committee subpoenaed financial industry leaders to find out whether they were using the bailout money as Congress intended. Sen. Chris Dodd (D-CT) was so frustrated with what he saw as the recalcitrance of the financial sector that he threatened them with punitive legislation if they failed to make progress halting foreclosures and addressing other root problems of the crisis.

Witnesses:

- Ms. Anne Finucane, Global Corporate Affairs Executive, Bank of America
- Mr. Barry L. Zubrow, Executive Vice President, Chief Risk Officer, JPMorgan Chase
- Mr. Jon Campbell, Executive Vice President, Chief Executive Officer of the Minnesota Region, Wells Fargo Bank
- Mr. Gregory Palm, Executive Vice President and General Counsel, The Goldman Sachs Group, Inc
- Mr. Martin Eakes, Chief Executive Officer, Self-Help Credit Union and the Center for Responsible Lending
- Nancy M. Zirkin, Director of Public Policy, Leadership Conference on Civil Rights
- Dr. Susan M. Wachter, Worley Professor of Financial Management, Wharton School of Business, University of Pennsylvania

Further Reading:
It's Lending Time (Not!) by Joe Nocera, THE NEW YORK TIMES, October 25, 2008.

>>Watch Bill Moyers interview with Joe Nocera

"Hedge Funds and the Financial Market"
U.S. House Committee on Oversight and Government Reform, November 13, 2008.

Appearing before the House Oversight Committee in a much-anticipated hearing, five prominent hedge fund managers surprised many when they agreed that the financial world was in need of new regulations, and that hedge funds could handle greater transparency requirements. Among the managers was George Soros, billionaire investor and philanthropist, who argued that Congress should regulate more, but be wary of going overboard and inflicting further damage.

>>Watch Bill Moyers interview with George Soros

Witnesses:
- John Alfred Paulson, President, Paulson and Co., Inc.
- George Soros, Chairman, Soros Fund Management, LLC
- James Simons, President, Renaissance Technologies, LLC
- Philip A. Falcone, Senior Managing Partner, Harbinger Capital Partners
- Kenneth C. Griffin, Chief Executive Officer and President, Citadel Investment Group, LLC
- Professor Andrew Lo, Director, MIT Laboratory for Financial Engineering, Massachusetts Institute of Technology, Sloan School of Management
- Professor David Ruder, Northwestern University School of Law, Former Chairman, U.S. Securities and Exchange Commission
- Professor Joseph Bankman, Stanford University Law School
- Houman Shadab, Senior Research Fellow, Mercatus Center, George Mason University

Further Reading:

A Safety Board for Hedge Funds, by Joe Nocera, THE NEW YORK TIMES, November 14, 2008.

"Is Treasury Using Bailout Funds for Foreclosure Prevention, as Congress Intended?"
House Committee on Oversight and Government Reform, Subcommittee on Domestic Policy, November 14, 2008.

Three weeks after Bush Administration officials assured Congress that a foreclosure prevention plan was forthcoming, a Congressional committee called Neel Kashkari to appear before them. Kashkari, the Treasury Department official responsible for distributing the $700 billion bailout package, came under fire for not using the money as Congress intended.

Witnesses:

Panel 1
- Mr. Neel Kashkari, Interim Assistant Secretary for Financial Stability and Assistant Secretary for International Economics and Development, Department of Treasury

Panel 2
- Mr. Michael Barr, Former Deputy Assistant Secretary for Community Development, Department of Treasury University of Michigan Law School and Center for American Progress
- Mr. Anthony B. Sanders, W.P. Carey School of Business, Arizona State University
- Ms. Alys Cohen, National Consumer Law Center
- Mr. Larry Litton, Litton Loan Servicing LP
- Mr. Stephen Kudenholdt, Thacher Proffitt and Wood
- Mr. Thomas Deutsch, American Securitization Forum

Stabilizing the Financial Condition of the American Automobile Industry
U.S. House Financial Services Committee, November 18, 2008.

On November 18, 2008 the CEO's of Detroit's Big Three automakers petitioned Congress for $25 billion in emergency loans, threatening the possible collapse of the American auto industry. Congress sent the executives — who had arrived in three individual private jets and without specific plans for survival — back to Detroit, asking them to come back when they had a specific plan for how they were going to use the money.

Witnesses:

Panel 1
Members of Congress

Panel 2
- Mr. G. Richard Wagoner, Jr., Chairman and Chief Executive Officer, General Motors Corporation
- Mr. Robert Nardelli, Chief Executive Officer, Chrysler, LLC.
- Mr. Alan Mulally, President and Chief Executive Officer, Ford Motor Company
- Mr. Ron Gettelfinger, President, United Auto Workers

Panel 3
- Mrs. Annette Sykora, Chairman, National Automobile Dealers Association
- Mr. James S. McElya, Chairman and Chief Executive Officer, Cooper-Standard Automotive, Inc.
- Professor Jeffrey D. Sachs, Director, The Earth Institute; Quetelet Professor of Sustainable Development and Professor of Health Policy and Management, Columbia University
- Dr. Matthew J. Slaughter, Professor of International Economics, Tuck School of Business, Dartmouth College

"Oversight of Implementation of the Emergency Economic Stabilization Act of 2008 and of Government Lending and Insurance Facilities; Impact on Economy and Credit Availability"
U.S. House Committee on Financial Services, November 18, 2008.

As the Treasury Department dispersed the first half of the $700 billion TARP fund, Congress called senior Bush Administration officials before them to complain about what they saw as a lack of direction. Secretary Paulson defended his performance, citing a rapidly changing landscape for his many improvisations.

Witnesses:

Panel 1
- The Honorable Henry M. Paulson, Jr., Secretary, U.S. Department of the Treasury
- The Honorable Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System
- The Honorable Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation

Panel 2
- The Honorable Steve Bartlett, President and Chief Executive Officer, Financial Services Roundtable
- Mr. Edward L. Yingling, President and Chief Executive Officer, American Bankers Association
- Ms. Cynthia Blankenship, Vice Chairman and Chief Operating Officer, Bank of the West on behalf of The Independent Community Bankers of America
- The Honorable D. Cameron Findlay, Executive Vice President and General Counsel, Aon Corporation on behalf of The Council of Insurance Agents and Brokers

Panel 3
- Dr. Alan S. Blinder, Gordon S. Rentschler Memorial Professor of Economics and Co-Director of the Center for Economic Policy Studies, Princeton University
- Dr. Martin S. Feldstein, George F. Baker Professor of Economics, Harvard University and President Emeritus, National Bureau of Economic Research, Inc.

Further Reading:

Bernanke Says Federal Reserve Won't Reveal Details on Loans, by Steve Matthews and Craig Torres, BLOOMBERG NEWS, November 18, 2008.

The Economic Outlook and Options for Stimulus
U.S. Senate Budget Committee, November 19, 2008.

Witness:
- Dr. Mark Zandi -- Chief Economist and Co-founder of Moody's Economy.com
- Dr. Simon Johnson -- Senior Fellow at the Peterson Institute for International Economics
- Dr. John B. Taylor -- Mary and Robert Raymond Professor of Economics, Stanford University

"Helping Families Save Their Homes: The Role of Bankruptcy Law"
Senate Judiciary Committee, November 19, 2008.

Witnesses:
- Sheriff Thomas J. Dart, Cook County, IL
- Michael D. Calhoun, President of Center for Responsible Lending, Durham, NC
- Professor Adam J. Levitin, Georgetown University Law Center, Washington, DC
- David G. Kittle, CMB, Chairman of Mortgage Bankers Association, Washington, DC
- Dr. Christopher J. Mayer, Senior Vice Dean and Paul Milstein Professor of Real Estate, Graduate School of Business, Columbia University, New York, NY
- Scott Stengel, Partner, Orrick, Herrington and Sutcliffe LLP, Washington, DC

December
Review of Industry Plans to Stabilize the Financial Condition of the American Automobile Industry
U.S. House Financial Services Committee, December 5, 2008.

Detroit's auto makers returned to Congress, appearing before the House Financial Services Committee on December 5, 2008 asking for as much as $38 billion in emergency loans. Democratic leaders quickly proposed a $15 billion loan to the Big Three. Leaders of both parties in the Senate and House negotiated with the automakers, the unions and each other. On December 11, 2008 the House passed a bailout bill for the auto makers. Senate Republicans, however, voted down the bill because they wanted the United Auto Workers to face more severe salary cuts. The auto makers appealed directly to the White House, and on December 12, the Treasury Department agreed to provide the Big Three with emergency loans from the $700 billion TARP fund.

Witness List:

Panel 1

- Mr. G. Richard Wagoner, Jr., Chairman and Chief Executive Officer, General Motors Corporation
- Mr. Robert Nardelli, Chief Executive Officer, Chrysler, LLC.
- Mr. Alan Mulally, President and Chief Executive Officer, Ford Motor Company
- Mr. Ron Gettelfinger, President, United Auto Workers

Panel 2

- The Honorable Gene Dodaro, Acting Comptroller General, U.S. Government Accountability Office
- The Honorable Felix G. Rohatyn, FGR Associates, LLC
- Professor Edward Altman, Leonard N. Stern School of Business, New York University
- Mr. David Friedman, Research Director, Clean Vehicles Program, Union of Concerned Scientists
- Professor Jeffrey D. Sachs, Director, The Earth Institute; Quetelet Professor of Sustainable Development and Professor of Health Policy and Management, Columbia University
- Mr. Damon Lester, President, National Association of Minority Automobile Dealers (NAMAD)

Further Reading

NEW YORK TIMES Topics: Auto Industry Bailout

"Democrats Set to Offer Loans for Carmakers"by David M. Herszenhorn and Bill Vlasic, THE NEW YORK TIMES, December 5, 2008.

Lawmakers Still Not Sold on Auto Rescue by Lori Montgomery and Kendra Marr, THE WASHINGTON POST, December 5, 2008.

"A government-run auto industry?" by Gail Russell Chaddock, THE CHRISTIAN SCIENCE MONITOR, December 10, 2008.

"Autoworkers Glued to the Set for Hearings" by Mary M. Chapman, THE NEW YORK TIMES, December 5, 2008.

Oversight Concerns Regarding Treasury Department Conduct of the Troubled Assets Relief Program U.S. House Financial Services Committee, December 10, 2008.

Following a report (PDF) critical of the Bush Administration's handling of the first half of the $700 billion TARP fund, the House Financial Services Committee summoned Neel Kashkari to answer for charges that he was improperly handling the bailout.

Witness List:

Panel 1

- The Honorable Gene Dodaro, Acting Comptroller General of the United States, U.S. Government Accountability Office
-The Honorable Neel Kashkari, Interim Assistant Secretary for Financial Stability and Assistant Secretary for International Affairs, U.S. Department of the Treasury

Panel 2

-The Honorable Jeb Hensarling (TX-05), Congressional Oversight Panel under the Emergency Economic Stabilization Act
-Professor Elizabeth Warren, Leo Gottlieb Professor of Law, Harvard University, and Chair, Congressional Oversight Panel under the Emergency Economic Stabilization Act.

Also This Week:

GLENN GREENWALD
Bill Moyers sits down with political commentator and Salon.com blogger Glenn Greenwald who asks: Are we a nation ruled by men or by laws? A former constitutional and civil rights lawyer, Greenwald looks at the legacy of the Bush Administration, the prospects for President-elect Obama's cabinet choices, as well as the possibilities for government accountability.

THE BUSH LEGAL LEGACY
Review a collection of JOURNAL reports on the Bush Administration and the Rule of Law.

BAILOUT ANALYSIS
Georgetown University's legal and finance scholar Emma Coleman Jordan takes Bill Moyers through recent news on the bailouts as big business begs for more.

BAILOUT HEARINGS TIMELINE
Follow the course of the bailout hearings — bargains, media moments and more.

FCC UPDATE
Bill Moyers on a new report about the FCC.

TALK BACK: THE MOYERS BLOG
Our posts and your comments
OUR POSTS
YOUR COMMENTS
For Educators    About the Series    Bill Moyers on PBS   

© Public Affairs Television 2008    Privacy Policy    DVD/VHS    Terms of Use    FAQ   
SIGN UP FOR BLOG UPDATES AND PODCASTS EMAIL US