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ACCOUNTABILITY FOR THE TROUBLED ASSET RELIEF PROGRAM THE SECOND REPORT OF THE CONGRESSIONAL OVERSIGHT PANEL VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00001 Fmt 7513 Sfmt 7513 E:\HR\OC\A500.XXX A500 e:\Seals\Congress.#13 smartinez on PROD1PC64 with HEARING JANUARY 9, 2009.—Ordered to be printed smartinez on PROD1PC64 with HEARING VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00002 Fmt 7513 Sfmt 7513 E:\HR\OC\A500.XXX A500 ACCOUNTABILITY FOR THE TROUBLED ASSET RELIEF PROGRAM THE SECOND REPORT OF THE CONGRESSIONAL OVERSIGHT PANEL JANUARY 9, 2009.—Ordered to be printed *COM008*For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00003 Fmt 7513 Sfmt 7513 E:\HR\OC\A500.XXX A500 e:\Seals\Congress.#13 smartinez on PROD1PC64 with HEARING 46–500 CONGRESSIONAL OVERSIGHT PANEL PANEL MEMBERS ELIZABETH WARREN, Chair REP. JEB HENSARLING 1 RICHARD H. NEIMAN DAMON SILVERS SEN. JOHN E. SUNUNU smartinez on PROD1PC64 with HEARING 1 Rep. Hensarling did not approve this report. (II) VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 E:\HR\OC\A500.XXX A500 CONTENTS Page smartinez on PROD1PC64 with HEARING Executive Summary ................................................................................................. Introduction .............................................................................................................. Treasury Department Updates Since Prior Report .............................................. Questions About the $700 Billion: Discussion of Treasury’s Responses ............. 1. What Is Treasury’s Strategy? ...................................................................... 2. Is the Strategy Working to Stabilize Markets? ......................................... 3. Is the Strategy Helping to Reduce Foreclosures? ...................................... 4. What Have Financial Institutions Done with the Taxpayers’ Money Received So Far? ....................................................................................... 5. Is the Public Receiving a Fair Deal? .......................................................... 6. What Is Treasury Doing to Help the American Family? .......................... 7. Is Treasury Imposing Reforms on Financial Institutions that Are Taking Taxpayer Money? ................................................................................ 8. How Is Treasury Deciding Which Institutions Receive the Money? ........ 9. What Is the Scope of Treasury’s Statutory Authority? ............................. 10. Is Treasury Looking Ahead? ...................................................................... Treasury Department Response Grid .................................................................... Oversight Activities ................................................................................................. Future Oversight Activities .................................................................................... About the Congressional Oversight Panel ............................................................. Alternative Views .................................................................................................... Appendix I: Letter from Congressional Oversight Panel Chair Elizabeth Warren to Treasury Secretary Mr. Henry M. Paulson, Jr., dated December 17, 2008 ................................................................................................................. Appendix II: Treasury Department Responses to Questions of the First Report of the Congressional Oversight Panel, dated December 30, 2008 .................... (III) VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 E:\HR\OC\A500.XXX A500 1 4 5 6 6 7 8 8 9 9 9 10 10 11 12 39 40 41 41 44 47 smartinez on PROD1PC64 with HEARING VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 E:\HR\OC\A500.XXX A500 ACCOUNTABILITY FOR THE TROUBLED ASSET RELIEF PROGRAM JANUARY 9, 2009.—Ordered to be printed smartinez on PROD1PC64 with HEARING EXECUTIVE SUMMARY In its first report to Congress on December 10, 2008, the Congressional Oversight Panel (COP or the Panel) posed ten basic questions—in effect asking for an explanation of the U.S. Department of Treasury’s goals and methods for the Troubled Asset Relief Program (TARP). The Panel’s questions, in turn, included a number of subsidiary questions, which sought additional details from the Treasury. In total, the Panel sought responses to 45 separate questions about the execution of the authority granted to Treasury under the Emergency Economic Stabilization Act (EESA) and the $350 billion in taxpayer funds that has been ‘‘effectively allocated’’ under that program. On December 30, 2008, Treasury responded to the Panel with a 13-page letter. While the letter provided responses to some of the Panel’s questions and shed light on Treasury’s decision-making process, it did not provide complete answers to several of the questions and failed to address a number of the questions at all. To gain a more complete understanding of what Treasury is doing and why, the Panel asks Treasury to provide additional information clarifying its earlier responses. In order to exercise its legally-mandated oversight functions, the Panel has initiated a number of fact-finding efforts and independent investigations that will be the subject of future reports. But the Panel’s independent work does not eliminate the need for Treasury to respond to the Panel’s questions. Some of these questions can be answered only by Treasury (e.g., Treasury’s strategic plans) and others seek to clarify what appear to be significant gaps in Treasury’s monitoring of the use of taxpayer money (e.g., asking VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 2 smartinez on PROD1PC64 with HEARING financial institutions to account for what they have done with taxpayer funds). To ease the burden on Treasury and to make it clear precisely which questions remain to be answered, the Panel has constructed a grid with its original questions and Treasury’s responses. Although many questions remain outstanding, the Panel highlights four specific areas that it believes deserve special attention: (1) Bank Accountability. The Panel still does not know what the banks are doing with taxpayer money. Treasury places substantial emphasis in its December 30 letter on the importance of restoring confidence in the marketplace. So long as investors and customers are uncertain about how taxpayer funds are being used, they question both the health and the sound management of all financial institutions. The recent refusal of certain private financial institutions to provide any accounting of how they are using taxpayer money undermines public confidence.2 For Treasury to advance funds to these institutions without requiring more transparency further erodes the very confidence Treasury seeks to restore. Finally, the recent loans extended by Treasury to the auto industry, with their detailed conditions affecting every aspect of the management of those businesses, highlights the absence of any such conditions in the vast majority of TARP transactions. EESA does not require recipients of TARP funds to make reports on the use of funds. However, it is within Treasury’s authority to make such reports a condition of receiving funding, to establish benchmarks for TARP recipient conduct, or to have formal procedures for voluntary reporting by TARP recipient institutions or formal guidelines on the use of funds. The adoption of any one of these options would further the purposes of helping build and restore the confidence of taxpayers, investors, and policy makers. (2) Transparency and Asset Evaluation. The need for transparency is closely related to the issue of accountability. The confidence that Treasury seeks can be restored only when information is completely transparent and reliable. Currently, Treasury’s strategy appears to involve allocating the majority of the $700 billion to ‘‘healthy banks,’’ banks that have been assessed by their regulators as viable without federal assistance. Of course, whether a bank is ‘‘healthy’’ depends critically on the valuation of the bank’s assets. If the banks have not yet recognized losses associated with over-valued assets, then their balance sheets—and Treasury’s assessment of their health—may be suspect. Many understood the purpose of EESA to be providing assistance to financial institutions that were ‘‘unhealthy’’ and at risk of failing. Such institutions were at risk, the public was told, due to socalled toxic assets that were impairing their balance sheets. EESA was designed to provide a mechanism to remove or otherwise provide clear value to those assets. The case of Citigroup illustrates this problem. Treasury provided Citigroup with a $25 billion cash infusion as part of the ‘‘healthy banks’’ program whereby Treasury made nine initial investments in major banks. About two months later, Treasury provided Citigroup with $20 billion in additional equity financing, apparently to avoid systemic failure, but it did 2 See, e.g., Matt Apuzzo, Where’d the Bailout Money Go? Shhhh, It’s a Secret, Associated Press (Dec. 22, 2008) (online at apnews.myway.com/article/20081222/D957QL7O0.html). VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 3 not classify that investment as part of the Systemically Significant Failing Institution program (SSFI program). These events suggest that the marketplace assesses the assets of some banks well below Treasury’s assessment. To date no such mechanism to provide more transparent asset valuation has been developed, meaning that the danger posed by those toxic assets remains unaddressed. The bubble that caused the economic crisis has its foundations in toxic mortgage assets. Until asset valuation is more transparent and until the market is confident that the banks have written down bad loans and accurately priced their assets, efforts to restore stability and confidence in the financial system may fail. (3) Foreclosures. The crisis in the housing sector continues to affect any efforts at recovery. In enacting EESA, Congress called upon Treasury to implement a plan that seeks to maximize assistance for homeowners and use the authority of the Secretary to encourage the servicers of the underlying mortgages, considering net present value to the taxpayer, to take advantage of the HOPE for Homeowners Program under section 257 of the National Housing Act or other available programs to minimize foreclosures. In addition, the Secretary may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.3 When Congress authorized the Panel, it specifically requested that the Panel evaluate ‘‘the effectiveness of foreclosure mitigation efforts.’’ 4 While the statute contemplates that foreclosure mitigation would be accomplished through the purchase of mortgage-related assets, many believe that Treasury has clear authority to use a portion of the $700 billion to address mortgage foreclosures in other ways. For Treasury to take no steps to use any of this money to alleviate the foreclosure crisis raises questions about whether Treasury has complied with Congress’s intent that Treasury develop a ‘‘plan that seeks to maximize assistance for homeowners.’’ 5 (4) Strategy. The Panel’s initial concerns about the TARP have only grown, exacerbated by the shifting explanations of its purposes and the tools used by Treasury. It is not enough to say that the goal is the stabilization of the financial markets and the broader economy. That goal is widely accepted. The question is how the infusion of billions of dollars to an insurance conglomerate or a credit card company advances both the goal of financial stability and the well-being of taxpayers, including homeowners threatened by foreclosure, people losing their jobs, and families unable to pay their credit cards. It would be constructive for Treasury to clearly identify the types of institutions it believes fall under the purview of EESA and which do not and the appropriate uses of TARP funds. The need for Treasury to address these fundamental issues of strategy has only intensified since our last report. The issues related to strategy have wider implications as well. It appears that Treasury in its post-American International Group, Inc. (AIG) actions is using public dollars to support the value of eqsmartinez on PROD1PC64 with HEARING 3 Emergency 4 Id., 5 Id., VerDate Nov 24 2008 05:21 Feb 10, 2009 Economic Stabilization Act of 2008, Pub. L. No. 110–343, at § 109(a). at § 125(b)(1)(A)(iv). at § 109(a). Jkt 046500 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 4 uity in financial institutions. What strategy lies behind that decision? What about other alternatives? Would it be better and more cost effective to encourage private capital investors to assume control of such banks? Should those banks be required to maintain higher capital or liquidity positions or to pay higher Federal Deposit Insurance Corporation (FDIC) insurance premiums? Should we focus on ensuring that systemically significant institutions meet their fixed obligations and let the equity in such institutions be fully at risk, as we did in AIG? Should we simply let market forces work—letting sick banks fail and the healthy banks take the business? The Panel does not embrace any of these suggestions. Instead, it asks whether Treasury is involved in that re-thinking process. The Panel recognizes that Treasury has many pressing obligations, and the Panel appreciates Treasury’s efforts to give timely responses. Ultimately, the Panel hopes that by posing these questions and offering these comments that it can be helpful to Treasury as it attempts to find more effective tools to deal with the current financial crisis. smartinez on PROD1PC64 with HEARING INTRODUCTION Under Section 125(b) of EESA, the Congressional Oversight Panel is charged with making regular reports on: • the use by the Secretary of the Treasury of authority under EESA, including his contracting authority and administration of the program; • the impact of purchases made under EESA on the financial markets and financial institutions; • the extent to which the information made available on transaction under the program has contributed to market transparency; and • the effectiveness of foreclosure mitigation efforts, and the effectiveness of the program from the standpoint of minimizing long-term costs to the taxpayers and maximizing the benefits for taxpayers. In its first report to Congress, the Panel posed ten basic questions and many subsidiary questions about Treasury’s exercise of its authority under EESA. These questions set the framework for the related areas of inquiry that the Panel intends to pursue. The Panel is seeking information and advice from noted financial experts, academics, and the public. COP also invites public contributions through field hearings or through our website (cop.senate.gov). The highlighted area of this January Oversight report is an evaluation of Treasury’s response to our December report. That section is titled, ‘‘Questions About the $700 Billion: Discussion of Treasury’s Responses.’’ In addition to monthly reporting, the Panel is charged with issuing a Special Report later this month on the topic of regulatory reform. The Panel also intends to issue other supplementary updates to Congress on a rolling basis, as recommendations or other findings are identified. VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 5 The Panel pledges to do its best to keep Congress and the public informed on the impact of Treasury’s use of public funds and the effectiveness of the program in achieving the Congressional purposes, as stated in EESA, of (1) helping to ‘‘restore liquidity and stability to the financial system of the United States,’’ and (2) ensuring that taxpayer funds are used ‘‘in a manner that protects home values, college funds, retirement accounts and life savings; preserves homeownership and promotes jobs and economic growth; maximizes overall returns to the taxpayers of the United States; and provides public accountability.’’ 6 TREASURY DEPARTMENT UPDATES SINCE PRIOR REPORT smartinez on PROD1PC64 with HEARING In the past weeks, Treasury has created new programs and expanded the scope of institutions eligible for TARP funding. The Panel will continue to evaluate the terms and conditions of the new programs and will provide updates on the effectiveness of these efforts. • Automotive Industry Financing Program (AIFP). On December 19, 2008, Treasury announced a plan to make emergency TARP loans to General Motors Corporation and Chrysler LLC, to avoid bankruptcy and prevent further financial harm to the economy. In addition, on December 29, Treasury purchased $5 billion in senior preferred equity with an 8% dividend from GMAC LLC. Under the agreement, GMAC issued warrants in the form of additional preferred equity in an amount equal to 5% of the preferred stock purchase. These warrants were exercised at the close of the transaction and pay a 9% dividend. Treasury has also agreed to lend up to $1 billion to General Motors to facilitate their participation in a rights offering by GMAC, to support GMAC’s reorganization as a bank holding company. These steps are part of the AIFP. The AIFP provides support both to automobile manufacturers and automobile finance companies and is a recognition by the administration of the critical importance of this key industry to economic stability. The Panel will be comparing and evaluating the appropriateness of the terms and conditions connected with the receipt of TARP funds across industries. • Asset Guarantee Program (AGP). On December 31, 2008, Treasury submitted a report to Congress that outlined the AGP, which was established pursuant to Section 102 of EESA. The program will provide guarantees for assets held by systemically significant financial institutions. The previous guarantees made to Citigroup that were announced on November 23 may come under the umbrella of the AGP. The December 31 report contains an overview of Treasury’s thought process in structuring guarantees, including the relative merits of various loss positions and eligibility standards for participating institutions. An evaluation of the AGP, including additional conversations with Treasury to consider specifics of the program, will be undertaken by the Panel. • Targeted Investment Program (TIP). On January 2, 2009, Treasury formalized the TIP, a new program for financial institutions at risk of a loss of market confidence due to market volatility. 6 Id., VerDate Nov 24 2008 05:21 Feb 10, 2009 at § 2. Jkt 046500 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 6 Eligibility considerations include whether destabilization of the institution would cause systemic disruptions to the nation’s financial markets, credit, payments and settlements systems, or would threaten asset prices or the broader economy. The terms and conditions of the TIP, a program that Treasury expects would only be used in exceptional cases, are still under development. The Panel intends to dialog with the Treasury to determine more specifically the conditions under which TIP, as opposed to the SSFI program, would be used. The Panel also intends to offer the new administration its input in the administration’s effort to design the parameters of the TIP. smartinez on PROD1PC64 with HEARING QUESTIONS ABOUT THE $700 BILLION: DISCUSSION OF TREASURY’S RESPONSES On December 17, the Panel asked Treasury to respond to the ten questions set forth in the Panel’s first report. On December 30, Treasury responded to the Panel’s December 17 request. This section sets forth a summary and analysis of the Treasury’s response, and the next section includes a grid with Treasury’s answers and COP’s response to those answers. (The full text of the Panel’s letter and Treasury’s response are included as Appendix I and II to this report.) While Treasury’s letter provided responses to some of the Panel’s questions and shed some light on Treasury’s decision-making process, it did not provide complete answers to several of the questions and failed to address some of the questions at all. The Panel is committed to making independent determinations of the answers to our questions. That work must begin, however, with an understanding of Treasury’s thinking. The Panel is concerned that Treasury’s initial response to our questions is not comprehensive and seems largely derived from earlier Treasury public statements. • Treasury should provide an analysis of the origins of the credit crisis and the factors that exacerbated it. Only then will Congress be able to determine the appropriate legislative responses. • Treasury should set forth the metrics by which success of the TARP in meeting the Congressional goals will be judged. • The Panel believes that, to date, Treasury’s actions to minimize avoidable foreclosures have not met Congress’ expectations. An upcoming Panel report will make recommendations on the best ways to stem such foreclosures. • Treasury should explain its basis for determining that all healthy banks are eligible to receive TARP funds, irrespective of whether they are in the lending business or are otherwise systemically significant. 1. What Is Treasury’s Strategy? The Panel’s first set of questions asked about Treasury’s strategy in administering the TARP. There has been much public confusion over the purpose of the TARP, and whether it has had any effect on the credit markets, helped in price discovery for frozen assets, or increased lending. The name ‘‘Troubled Asset Relief Program’’ indicated that original purpose of buying troubled assets, but Treasury abruptly switched course and began making direct investments in banks. VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00012 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 smartinez on PROD1PC64 with HEARING 7 Treasury’s response regarding its strategy was not limited to its use of TARP funds: Treasury’s strategy is to work in coordination with all government agencies to use all the tools available to the government to achieve the following critical objectives: • Stabilize financial markets and reduce systemic risk; • Support the housing market by avoiding preventable foreclosures and supporting mortgage finance; and • Protect taxpayers. Treasury’s response to our questions lists numerous initiatives that do not involve the use of TARP funds. While the Panel agrees with Treasury’s goals, our Congressional mandate is to oversee the use of the TARP funds to determine if these goals are met. In particular, the Panel sees no evidence that Treasury has used TARP funds to support the housing market by avoiding preventable foreclosures. For Treasury to meet the stated intentions of EESA, Treasury must strengthen its efforts in this regard. The Panel also asked Treasury for its conclusions about the nature and origins of the problem it is trying to address through TARP. Treasury did not provide any such analysis of the cause of the problem. The Panel believes, however, that it is important for Treasury and our financial services regulators to have an analysis of the causes and nature of the financial crisis to be able to craft a strategy for addressing the sources, and not solely the symptoms, of the problem or problems. 2. Is the Strategy Working to Stabilize Markets? The Panel’s second set of questions dealt with whether Treasury’s strategy was working to stabilize financial markets and our overall economy and to fulfill the other Congressional goals. The Panel continues to believe that Treasury needs to set forth the metrics by which these goals will be judged. Treasury’s response designates an assertion and two metrics that purport to show that—in combination with other actions—Treasury’s strategy has worked. Treasury claims that the TARP capital investments stemmed a series of financial institution failures and made the financial system fundamentally more stable than it was when Congress passed the legislation. It cites the ‘‘average credit default swap spread’’ for the eight largest U.S. banks, which Treasury notes has declined by about 240 basis points since before Congress passed EESA. Treasury does not state the dates of their measurements or note that credit spreads have been extremely volatile over the fourth quarter. The metric Treasury cites is the spread between the London Interbank Offered Rate (LIBOR) and the Overnight Index Swap rates (OIS). Treasury notes that 1-month and 3-month LIBOR–OIS spreads have declined about 220 and 145 basis points, respectively since the law was signed, and about 310 and 240 basis points, respectively, from their peak levels before the Capital Purchase Program (CPP) was announced. While it is true that the short-term spreads have contracted, they remain far above historic averages. Moreover, the long-term bank spreads remain extremely elevated. And, bank spreads represent a single indicator on the broader financial crisis. There is a need to have metrics that gauge the markets more broadly, as well as other economic measures, in order to form any firm view of the effectiveness of Treasury’s strategy. VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00013 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 8 smartinez on PROD1PC64 with HEARING Although Treasury notes that it is also monitoring the effects of capital infusions on lending, it does not state what metrics it plans to use. While both tightened credit standards and the economic slowdown undoubtedly have depressed lending, these events do not justify the failure to measure whether the TARP capital investments are having a positive effect on lending. The Panel therefore hopes to learn how Treasury plans to measure this important variable. The Panel stated in its first report that it believed Treasury should monitor lending at the individual TARP recipient level, and here the Panel again restates that recommendation. 3. Is the Strategy Helping to Reduce Foreclosures? One of Congress’ stated goals was ‘‘foreclosure mitigation efforts.’’ The Panel’s third question was whether Treasury’s strategy with respect to the TARP was reducing foreclosures. Treasury responded with a resounding yes, although none of the actions they credit with reducing foreclosures have a direct connection to TARP funding. This includes (1) preventing the failure of Fannie Mae and Freddie Mac, (2) Treasury and Fed programs to purchase Government Sponsored Enterprise (GSE) mortgage-backed securities, (3) attempts by the HOPE NOW Alliance, a coalition of mortgage servicers, investors and counselors, to help struggling homeowners by negotiating loan work-outs, (4) the development by HOPE NOW and the American Securitization Forum of a fast-track loan modification program to modify loans of subprime ARM borrowers facing unaffordable rate resets, and (5) the November 2008 industry announcement, along with HOPE NOW, the Federal Housing Finance Agency (FHFA) and the GSEs, of a streamlined loan modification program that builds on the mortgage modification protocol developed by the FDIC for IndyMac. A group of state attorneys general and banking departments have criticized many existing loan modification efforts, since many do nothing to reduce mortgage rates to affordable amounts. 7 More importantly, Treasury does not cite recent statistics on re-default rates. Only if homeowners have a realistic chance to remain current on their mortgages can a modification be deemed effective. 4. What Have Financial Institutions Done With the Taxpayers’ Money Received So Far? The Panel’s fourth area of inquiry focused on what financial institutions have done with the taxpayer money they received. As indicated in question 1 above, Treasury appears to believe the question is beside the point because their goal for the CPP is to stabilize the financial system and to restore confidence in financial institutions. This, they believe, will eventually increase the flow of credit. Treasury argues that there are several reasons why the TARP investments will be slow to produce increased lending: (1) The CPP began only in October 2008, and the money must work its way into the system before it can have the desired effect. (2) Because confidence is low, banks will remain cautious about extending credit, and consumers and businesses will remain cautious about taking on new loans. (3) Credit quality at banks is deteriorating, which leads banks to build up their loan loss reserves. For example, Treasury notes that the level of loan loss provisioning by 7 Conference of State Bank Supervisors State Foreclosure Prevention Working Group, Analysis of Subprime Mortgage Service Performance: Data Report No. 3 9–10 (Sept. 2008) (online at www.csbs.org/Content/NavigationMenu/Home/SFPWGReport3.pdf). VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 smartinez on PROD1PC64 with HEARING 9 banks doubled in the third quarter from one year ago. Treasury seems to be suggesting these larger trends may be obscuring the effect of TARP funds. The Panel understands the reasons why measurement of banks’ use of TARP funds may be difficult. Nevertheless, the Panel believes such direct measurements at the level of individual TARP recipient firms are important for determining the extent to which the funds are having a direct benefit to businesses and consumers. 5. Is the Public Receiving a Fair Deal? The Panel’s fifth question dealt with whether the public is receiving a fair deal from the CPP and other investments. Treasury states that its investments are a good deal for the public for two reasons. First, the government will own shares which Treasury expects to yield a reasonable return and, second, the government will also receive warrants for common shares in participating institutions, which will allow the taxpayer to benefit from any appreciation in the market value of the institution. The Panel asked Treasury to compare the terms Treasury obtained for its investments and terms obtained by private parties investing in the same firms during the same period. Treasury did not believe this comparison was relevant and made no comparison. Treasury claims that, when measured on an accrual basis, the value of the preferred stock is at or near par. Treasury does not explain whether by ‘‘accrual basis’’ it means historical cost accounting, in which case its statement is a tautology, or whether it means some other method of accrual accounting. Treasury states that when measured on a mark-to-market basis, the value of some preferred stock may be judged lower than par, particularly if the valuation date is the purchase date rather than the announcement date, as equity markets have dropped since the program was first announced. Finally, Treasury argues that it is not making the CPP investments for short-term gains. Rather, Treasury claims that, over time, the taxpayers will be protected by ensuring the stability of the financial system and by earning a return on these investments when they are eventually liquidated. 6. What Is Treasury Doing to Help the American Family? The Panel’s sixth question was whether Treasury was using its ownership position in banks to encourage them to take actions to help American families. In particular, the Panel asked whether Treasury’s actions preserved access to consumer credit, including student loans and auto loans at reasonable rates, and whether Treasury was taking action to ensure that public money could not be used to subsidize lending practices that are exploitive, predatory, or otherwise harmful to customers. Treasury answered that its TARP programs to preserve access to consumer credit do not involve encouraging or mandating banks to take consumer-friendly actions with respect to credit cards or other consumer loans. 7. Is Treasury Imposing Reforms on Financial Institutions that Are Taking Taxpayer Money? The Panel’s seventh group of questions concerned whether Treasury was requiring recipients to undertake any particular reforms, including (1) the presentation of a viable business plan, (2) the replacement of failed executives and/ or directors, (3) reforms designed to prevent future crises, to in- VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00015 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 smartinez on PROD1PC64 with HEARING 10 crease oversight, and to ensure better accounting and transparency, and (4) other appropriate operational reforms. Treasury responded that it has required recipients of CPP funds to adhere to the executive compensation restrictions required by EESA. In addition, Treasury barred any increase in dividends for three years and restricted share repurchases. Both the dividend increase and share buyback restrictions are designed to prevent banks from taking capital out of the financial system. Under the SSFI program, Treasury imposed additional terms and conditions on AIG. AIG must meet additional executive compensation, corporate expenses, and lobbying restrictions. While some executives at some financial institutions have voluntarily reduced their compensation, there is no uniform program in place. Treasury has the power to set the ‘‘terms and conditions’’ of any purchase it makes using the TARP funds. The Panel continues to ask Treasury to explain why it has not required more of financial institutions, particularly in light of both the steps taken by the United Kingdom in similar circumstances and the extensive conditions imposed on auto companies, as a condition for receiving TARP funds. 8. How Is Treasury Deciding Which Institutions Receive the Money? The Panel’s eighth question concerned Treasury’s decisions about which institutions would receive TARP money. In response, Treasury referred the Panel to Treasury’s website, which showed the application form for TARP funds. The Panel was not seeking the information about the technical process for applying to participate in the progress, but rather whether Treasury’s approach to advance taxpayer money to all healthy banks, regardless of the bank’s business profile, constitutes an effective use of funds. If the goal of the program was to stabilize financial markets, then Treasury should have standards for determining which banks are significant participants in the capital markets. If the goal of the program was to increase consumer and small business lending, then Treasury should have standards for determining which banks are active small business and consumer lenders or have committed to lend to small businesses and consumers. The Panel was also interested in Treasury’s approach to the effect TARP transactions were having on the structure of the banking industry, and whether any such effects were the result of a deliberate strategy on Treasury’s part. Treasury did not address this aspect of the Panel’s question. 9. What Is the Scope of Treasury’s Statutory Authority? The Panel’s ninth area of inquiry sought Treasury’s opinion of the scope of its statutory authority. It also sought information about guarantees, credit insurance, joint stabilization efforts, and transparency of prices under the Term Asset-Backed Securities Loan Facility (TALF) program. In response, Treasury quoted the language of EESA and said it was working on the guaranty and credit insurance programs. The Panel posed this question in order to understand Treasury’s interpretation of the statute in relation both to the actions Treasury has taken so far under EESA and to actions Treasury might take in the future. The pending arrangements with the automobile industry suggest that more thinking must go into this question VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 11 smartinez on PROD1PC64 with HEARING than a mere rote recitation of the statute. COP is particularly interested in what limits, if any, Treasury sees to the definition of ‘‘financial institution’’ and ‘‘troubled asset’’ and hopes Treasury will provide its assessment of whether those terms cover other businesses, such as commercial real estate, manufacturers of consumer products, and other businesses not directly involved in financial services. 10. Is Treasury Looking Ahead? Finally, the Panel asked whether Treasury was looking ahead. In particular, it asked about likely challenges in implementing EESA and whether Treasury believed it had adequate contingency plans if the economy suffered further disruptions. Treasury responded that it is actively engaged in developing additional programs to strengthen our financial system so that credit flows to our communities, and that it is confident that it is pursuing the right strategy to stabilize the financial system and support the flow of credit to our economy. But it did not share any future plans or explain if any strategic planning for other financial reversals is in place. VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00018 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 17 46500A.001 smartinez on PROD1PC64 with HEARING 12 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 18 46500A.002 smartinez on PROD1PC64 with HEARING 13 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00020 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 19 46500A.003 smartinez on PROD1PC64 with HEARING 14 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00021 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 20 46500A.004 smartinez on PROD1PC64 with HEARING 15 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00022 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 21 46500A.005 smartinez on PROD1PC64 with HEARING 16 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 22 46500A.006 smartinez on PROD1PC64 with HEARING 17 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00024 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 23 46500A.007 smartinez on PROD1PC64 with HEARING 18 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 24 46500A.008 smartinez on PROD1PC64 with HEARING 19 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00026 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 25 46500A.009 smartinez on PROD1PC64 with HEARING 20 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00027 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 26 46500A.010 smartinez on PROD1PC64 with HEARING 21 VerDate Nov 24 2008 05:21 Feb 10, 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6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert graphic folio 43 46500A.027 smartinez on PROD1PC64 with HEARING 38 39 OVERSIGHT ACTIVITIES COP was established as part of EESA. It was formed on November 26, 2008, and it issued its first report on December 10, 2008. That report posed ten questions that identified central issues regarding the use of taxpayers’ funds through the TARP. Since the first report, the following developments pertaining to COP’s oversight of the TARP took place: • On December 16, 2008, COP held a Field Hearing in Clark County, Nevada to examine the roots of the financial crisis and its impact on everyday Americans. At the hearing, scores of local residents turned out to personally voice their skepticism and concern over the TARP’s lack of transparency. • On December 17, 2008, Elizabeth Warren, Chair of the Panel, sent a letter to Treasury Secretary Henry Paulson on behalf of the Panel requesting that Treasury answer the questions posed in the first report. • On December 30, Treasury responded to the Panel’s December 17 request. Both the full text of Professor Warren’s letter and Treasury’s response are included in the Appendices to this report. • COP has engaged consultants to help us determine if Treasury’s investments in preferred stock of various banking organizations under its Capital Purchase Program were made on terms that minimize long-term costs and maximize benefits to the taxpayers. • COP has received and reviewed more than 2,500 messages with stories, comments, or suggestions through cop.senate.gov. smartinez on PROD1PC64 with HEARING REPORT ON FIELD HEARING IN CLARK COUNTY, NEVADA On December 16, 2008, COP held its first field hearing, in Clark County, Nevada. Clark County suffered from over 30,000 foreclosures in 2008, an increase of nearly 300% from 2007. Overall, Nevada has had the highest foreclosure rate in the nation for 23 months. The hearing took place at the Thomas and Mack Moot Court at the University of Nevada-Las Vegas Law School. Three Panel members attended the hearing: Elizabeth Warren, Richard H. Neiman, and Damon Silvers. At the hearing, the Panel sought information from a broad spectrum of sources about the nature and cause of the current financial situation, the impact of federal government actions to date to address the economic crisis, and local initiatives to address the crisis. The Panel heard testimony from the following witnesses: • George Burns, Commissioner, Nevada Financial Institutions Division • R. Keith Schwer, Director, Center for Business and Economic Research, UNLV • Bill Uffelman, President and Chief Executive Officer, Nevada Bankers Association • Gail Burks, President and Chief Executive Officer, Nevada Fair Housing Center • Julie Murray, Chief Executive Officer, Three Square Food Bank VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00045 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 40 • Danny Thompson, Executive Secretary-Treasurer, Nevada State AFL–CIO • Alfred Estrada, Resident of Clark County The Panel also heard from the following elected officials: • Harry Reid, United States Senate Majority Leader (D–NV) • Shelley Berkley, Congresswoman (D–NV) • Dina Titus, Congresswoman-elect (D–NV) Senator Harry Reid, Representative Shelley Berkley and Representative-elect Dina Titus emphasized the importance of ensuring that the use of TARP funds benefit American working families. George Burns, Keith Schwer, and Bill Uffelman discussed the collapse of the housing bubble and the current state of the Nevadan economy. The witnesses on the second panel—Gail Burks, Julie Murray, Danny Thompson, and Alfred Estrada—testified about the human consequences of the economic downturn. Video, a transcript and testimony from the Clark County Field Hearing are available at cop.senate.gov. The Panel owes a special thanks to UNLV President David Ashley, UNLV Law School Dean John White and the Boyd School of Law staff for their hospitality in hosting this event. The Panel also owes thanks to Kenneth LoBene, the local Field Office Director for the U.S. Department of Housing and Urban Development, for providing them with a tour of local neighborhoods severely impacted by foreclosures following the hearing. FUTURE OVERSIGHT ACTIVITIES PUBLIC HEARINGS Given its successful public hearing in Clark County, Nevada, COP will continue to hold field hearings to shine light on the causes of the financial crisis, the administration of TARP, and the anxieties and challenges of ordinary Americans. The next hearing will be on January 14, 2009 in Washington, DC. UPCOMING REPORTS In January 2009, COP will release a report providing recommendations for reforms to the financial regulatory structure. The report will provide a roadmap for a regulatory system that will revitalize Wall Street, protect consumers, and ensure future stability in the financial markets. In early February, COP will release its third oversight report. PUBLIC PARTICIPATION AND COMMENT PROCESS smartinez on PROD1PC64 with HEARING The Panel encourages members of the public to visit its website at cop.senate.gov. The website provides information about COP and the text of COP’s reports. In addition, concerned citizens can share their stories, concerns, and suggestions with the Panel through the website’s comment feature. To date, COP has received more than 2,500 comments, and COP looks forward to hearing more from the American people. By engaging in this dialogue, COP aims to enhance the quality of its ideas and advocacy. VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00046 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 41 ABOUT THE CONGRESSIONAL OVERSIGHT PANEL In response to the escalating crisis, on October 3, 2008, Congress provided the U.S. Department of the Treasury with the authority to spend $700 billion to stabilize the U.S. economy, preserve home ownership, and promote economic growth. Congress created the Office of Financial Stabilization (OFS) within Treasury to implement a Troubled Asset Relief Program (TARP). At the same time, Congress created COP to ‘‘review the current state of financial markets and the regulatory system.’’ The Panel is empowered to hold hearings, review official data, and write reports on actions taken by Treasury and financial institutions and their effect on the economy. Through regular reports, COP must oversee Treasury’s actions, assess the impact of spending to stabilize the economy, evaluate market transparency, ensure effective foreclosure mitigation efforts, and guarantee that Treasury’s actions are in the best interests of the American people. In addition, Congress has instructed COP to produce a special report on regulatory reform that will analyze ‘‘the current state of the regulatory system and its effectiveness at overseeing the participants in the financial system and protecting consumers.’’ On November 14, 2008, Senate Majority Leader Harry Reid and the Speaker of the House Nancy Pelosi appointed Richard H. Neiman, Superintendent of Banks for the State of New York, Damon Silvers, Associate General Counsel of the American Federation of Labor and Congress of Industrial Organizations (AFL–CIO), and Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard Law School to the Panel. With the appointment on November 19 of Congressman Jeb Hensarling to the Panel by House Minority Leader John Boehner, the Panel had a quorum and met for the first time on November 26, 2008, electing Professor Warren as its chair. On December 16, 2008, Senate Minority Leader Mitch McConnell named Senator John E. Sununu to the Panel, completing the Panel’s membership. In the production of this report, COP owes special thanks to Adam Blumenthal for his help in interpreting financial statistics and to Professor Adam Levitin for his assistance in working through the foreclosure data. Ganesh Sitaraman provided important drafting help and also deserves COP’s special thanks. ALTERNATIVE VIEWS smartinez on PROD1PC64 with HEARING SEN. JOHN E. SUNUNU The central portion of this report presents Treasury’s response to questions posed in the Panel’s first report, released on December 10, 2009, as well as an evaluation of those responses. In many cases, the report highlights areas where additional information may or should be provided to better understand Treasury’s motives in choosing specific features of the TARP, measuring its performance, and monitoring compliance. In these and other areas, the public is better served by a process that is as clear and transparent as possible. Compiling this evaluation, and creating a panel report, is a consensus process. As a result, its tone and emphasis cannot perfectly reflect the priorities and language of every member. Taken as a VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00047 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 smartinez on PROD1PC64 with HEARING 42 whole, I believe that the material presented in the January Report will help increase the public’s understanding of the process to date, and, as such, I have supported its release. In two areas, however, the approach taken is of particular concern and deserves additional clarification. First, in several places within the report text, language is used which can easily be interpreted as suggesting that the purpose of the TARP is to increase lending to the levels that existed before the current financial crisis. (See, e.g., page 8: ‘‘. . . or increased lending’’; page 10: ‘‘. . . why the TARP investments will be slow to produce increased lending’’; page 13: ‘‘. . . the goal of the program was to increase consumer or small business lending . . .’’). But the current crisis was caused, in large part, by the extension of too much credit to institutions and individuals that were not creditworthy. This, in turn, has resulted in a broad and dramatic deleveraging of the global economy. When, and as, the economy begins to recover, it will do so in an environment of lower leverage, and, thus, lower levels of aggregate borrowing than existed in 2007. This fact should not be ignored. With regard to lending, the TARP is intended to help ensure the availability of credit to individuals and businesses that are creditworthy and that credit is made available at sustainable levels over time. Language to this effect is used on page 11 (‘‘. . . the Panel asked whether Treasury’s action preserved access to consumer credit . . .’’), but by omitting it elsewhere, readers might easily, and incorrectly, conclude that the TARP is intended to bring total borrowing back to pre-crisis levels. Second, while Treasury can and should provide additional information to the public regarding the TARP’s design, its performance, and the compliance of firms receiving capital, there are several questions posed in the Panel’s December 10 report that are enormously difficult, if not impossible, to answer with any certainty. Moreover, there are a few that are best left unanswered. Questions such as: ‘‘3.8 Will lower rates lead to a large enough pool of buyers to lead to a general increase in home prices?’’ and ‘‘3.10 Will lower interest rates induce demand for home ownership in the face of falling housing prices, consumer uncertainty about the future of the economy and unemployment, and the reasonable expectation that an even better deal might be available in the future?’’ require gross assumptions about multiple economic indicators and human behavior. In the current environment it is not practical to attempt to accurately forecast such behavior. Questions such as ‘‘4.5 Is Treasury seeking to use TARP to shape the future of the American financial system?’’ and ‘‘6.1 Does Treasury believe American families need to borrow more money?’’ contain vague and sweeping generalizations. No Treasury Secretary should be asked to assert that ‘‘American families should borrow more’’ or ‘‘should borrow less’’ as part of the TARP oversight process. Families and consumers face situations and circumstances that are unique, and those situations and circumstances should be recognized as such. The work of the Panel is important, and it should help provide the public and Congress with useful information regarding the design, operation, and performance of the TARP. Thus, it is essential that every effort be made to use unambiguous language and to ask VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00048 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 43 smartinez on PROD1PC64 with HEARING direct and practical questions. We must redouble efforts to do so in future reports. VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00049 Fmt 6659 Sfmt 6602 E:\HR\OC\A500.XXX A500 44 smartinez on PROD1PC64 with HEARING APPENDIX I: LETTER FROM CONGRESSIONAL OVERSIGHT PANEL CHAIR ELIZABETH WARREN TO TREASURY SECRETARY MR. HENRY M. PAULSON, JR., DATED DECEMBER 17, 2008 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00050 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00051 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 51 here 46500A.028 smartinez on PROD1PC64 with HEARING 45 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00052 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 52 here 46500A.029 smartinez on PROD1PC64 with HEARING 46 47 smartinez on PROD1PC64 with HEARING APPENDIX II: TREASURY DEPARTMENT RESPONSES TO QUESTIONS OF THE FIRST REPORT OF THE CONGRESSIONAL OVERSIGHT PANEL, DATED DECEMBER 30, 2008 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00053 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00054 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 54 here 46500A.030 smartinez on PROD1PC64 with HEARING 48 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00055 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 55 here 46500A.031 smartinez on PROD1PC64 with HEARING 49 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00056 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 56 here 46500A.032 smartinez on PROD1PC64 with HEARING 50 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00057 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 57 here 46500A.033 smartinez on PROD1PC64 with HEARING 51 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00058 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 58 here 46500A.034 smartinez on PROD1PC64 with HEARING 52 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00059 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 59 here 46500A.035 smartinez on PROD1PC64 with HEARING 53 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00060 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 60 here 46500A.036 smartinez on PROD1PC64 with HEARING 54 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00061 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 61 here 46500A.037 smartinez on PROD1PC64 with HEARING 55 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00062 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 62 here 46500A.038 smartinez on PROD1PC64 with HEARING 56 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00063 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 63 here 46500A.039 smartinez on PROD1PC64 with HEARING 57 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00064 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 64 here 46500A.040 smartinez on PROD1PC64 with HEARING 58 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00065 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 65 here 46500A.041 smartinez on PROD1PC64 with HEARING 59 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00066 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 66 here 46500A.042 smartinez on PROD1PC64 with HEARING 60 VerDate Nov 24 2008 05:21 Feb 10, 2009 Jkt 046500 PO 00000 Frm 00067 Fmt 6602 Sfmt 6602 E:\HR\OC\A500.XXX A500 Insert offset folio 67/125 here 46500A.043 smartinez on PROD1PC64 with HEARING 61
@FedFRASER