8/3/2019 20111128 EEC to Issa Hearing Request
1/3
D A R R E L L E . I S S A , C A L I F O R N I AC H A I R M A
N
D A N B U R T O N , I N D I A N AJ O H N L. M I C A , F L O R I
D AT O D D R U S S E L L P L A T T S , P E N N S Y L V A N I AM I C
H A E L R. T U R N E R , O H I OP A T R I C K M C H E N R Y , N O R
T H C A R O L I N AJ I M J O R D A N , O H I OJ A S O N C H A F F E
T Z , U T A HC O N N I E M A C K , F L O R I D AT I M W A L B E R G
, M I C H I G A NJ A M E S L A N K F O R D , O K L A H O M AJ U S T
I N A M A S H , M I C H I G A NA N N M A R I E B U E R K L E , N E
W Y O R KP A U L A . G O S A R , D . D . S . , A R I Z O N AR A U L
R. L A B R A D O R , I D A H OP A T R I C K M E E H A N , P E N N S
Y L V A N I AS C O T T D E S J A R L A I S , M . D . , T E N N E S
S E EJ O E W A L S H . I L L I N O I ST R E Y G O W D Y , S O U T H
C A R O L I N AD E N N I S A . R O S S , F L O R I D AF R A N K C .
G U I N T A , N E W H A M P S H I R EB L A K E F A R E N T H O L D
, T E X A SM I K E K E L L Y , P E N N S Y L V A N I A
O N E HUNDRED TWELFTH CONGRESS
Congress of tfje mteb StatesH ouse of &epresentattoes
C O M M I T T E E O N O V E R S I G H T A N D G O V E R N M E N
T R E F O R M2 1 5 7 R A Y B U R N H O U S E O F F I C E B U I L D
I N G
W A S H I N G T O N , D C 2 0 5 1 5 - 6 1 4 3
L A W R E N C E J . B R A D YS T A F F D I R E C T O R
M A J O R I T Y ( 2 0 2 ) 2 2 5 - 5 0 7 4F A C S I M I L E ( 2 0
2 ) 2 2 5 - 3 9 7 4M I N O R I T Y ( 2 0 2 ) 2 2 5 - 5 0 5 1
ht tp: / /oversight .house.gov
November 28, 2011
E L I J A H E . C U M M I N G S , M A R Y L A N DR A N K I N G M
I N O R I T Y M E M B E R
E D O L P H U S T O W N S , N E W Y O R KC A R O L Y N B. M A L
O N E Y , N E W Y O R KE L E A N O R H O L M E S N O R T O N ,
D I S T R I C T O F C O L U M B I AD E N N I S J . K U C I N I C
H , O H I OJ O H N F . T I E R N E Y , M A S S A C H U S E T T SW M
. L A C Y C L A Y , M I S S O U R IS T E P H E N F. L Y N C H , M A
S S A C H U S E T T SJ I M C O O P E R , T E N N E S S E EG E R A L
D E . C O N N O L L Y , V I R G I N I AM I K E Q U I G L E Y , I L
L I N O I SD A N N Y K. D A V I S , I L L I N O I SB R U C E L. B R
A L E Y , I O W AP E T E R W E L C H , V E R M O N TJ O H N A . Y A
R M U T H , K E N T U C K YC H R I S T O P H E R S . M U R P H Y ,
C O N N E C T IJ A C K I E S P E I E R , C A L I F O R N I A
The Honorable Darrell E. IssaChairmanCommittee on Oversight and
Government ReformU.S. House of RepresentativesWashington, DC
20515Dear M r. Chairman:
I am writ ing to request that the Committee hold a hearing w i t
h Federal Reserve ChairmanBen Bernanke and off ic ia ls f rom the
nation's largest financial institutions that benefitted f romtrill
ions of dollars in previously undisclosed government loans provided
at below-market rates.
In the past, the Oversight Committee has played a prominent role
in investigating theactions of government entities and private
sector corporations that led to the financial collapse.On October
23, 2008, for example, former Federal Reserve Chairman Alan
Greenspan testifiedbefore our Committee, stating: " I made a
mistake in presuming that the self-interest oforganizations,
specifically banks and others, was such that they were best capable
of protectingtheir own shareholders."1
Yet, a report yesterday in Bloomberg Markets Magazine disclosed
that the FederalReserve secretly committed more than $7 t r i l l
ion as of March 2009 to rescuing the nation's topfinancial
institutions. As a result, the banks that received these loans
"reaped an estimated $13bi l l ion of income by taking advantage of
the Fed's below-market rates." This report was basedon 29,000 pages
of Federal Reserve documents obtained under the Freedom of
Information Actafter a protracted legal dispute.2
1 House Committee on Oversight and Government Reform, Hearing on
The FinancialCrisis and the Role of Federal Regulators (Oct. 23,
2008) (online at http://nara-wayback-00 1 .us.archive.org/congress
11
Oth/20081216220913/http://oversight.house.gov/story.asp?id=2256).
Secret Fed Loans Gave Banks Undisclosed $13B, Bloomberg Markets
Magazine (Nov.27, 2011) (online at
www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html).
See also 'I Made a Mistake' AdmitsGreenspan, Financial Times (Oct.
24, 2011).
8/3/2019 20111128 EEC to Issa Hearing Request
3/3
The Honorable Darrell E. IssaPage 3
The context for the Federal Reserve System's management of risk
of losses on its loansdiffered f rom that for private sector
institutions. In contrast to private banks that seek tomaximize
profits on their lending activities, the Federal Reserve System
stood ready toaccept risks that the market participants were not wi
l l i n g to accept to help stabilize
In addition to withholding information about these loans f rom
Congress, banks alsoapparently failed to disclose this information
to their shareholders. For example, Kenneth D.Lewis, the Chief
Executive Officer of Bank of America, told shareholders on November
26,2008, that the company was "one of the strongest and most stable
major banks in the wor l d . "According to the Bloomberg report,
however, he failed to disclose that "his Charlotte,
NorthCarolina-based f i rm owed the central bank $86 bi l l ion
that day."8
Many Americans are struggling to understand why banks deserve
such preferentialtreatment while millions of homeowners are being
denied assistance and are at increasing risk offoreclosure.
Unfortunately, officials f rom many of these financial institutions
declined tocomment about these loans, including officials f r om
Goldman Sachs, JPMorgan, Bank ofAmerica, Citigroup, and Morgan
Stanley.
For all of these reasons, I respectfully request that the
Committee hold a hearing wi th theFederal Reserve chairman and
officials f rom each of these financial institutions to examine
theseissues in greater detail. Thank you for your consideration of
this request.
Government Accountability Office, Federal Reserve System:
Opportunities Exist toStrengthen Policies andProcesses for Managing
Emergency Assistance (July 21,2011) (GAO-11-696) (online at
www.gao.gov/new.items/dl 1696.pdf).
o Secret Fed Loans Gave Banks Undisclosed $13B, Bloomberg
Markets Magazine (Nov.27, 2011) (online at
www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html).
markets.7
Sincerel
