Ben Bernanke: 03-25-09 Statement, AIG, House Financial Services Committee

Chairman Frank, Ranking Member Bachus, and other members of the Committee, I appreciate having this opportunity to discuss the Federal Reserve’s involvement with American International Group, Inc. (AIG). In my testimony, I will describe why supporting AIG was a difficult but necessary step to protect our economy and stabilize our financial system. I will also discuss issues related to compensation and note two matters raised by this experience that merit congressional attention.

Reasons for Our Original Lending Decision

We at the Federal Reserve, working closely with the Treasury, made our decision to lend to AIG on September 16 of last year. It was an extraordinary time. Global financial markets were experiencing unprecedented strains and a worldwide loss of confidence. Fannie Mae and Freddie Mac had been placed into conservatorship only two weeks earlier, and Lehman Brothers had filed for bankruptcy the day before. We were very concerned about a number of other major firms that were under intense stress.

AIG’s financial condition had been deteriorating for some time, caused by actual and expected losses on subprime mortgage-backed securities and on credit default swaps that AIG’s Financial Products unit, AIG-FP, had written on mortgage-related securities. As confidence in the firm declined, and with efforts to find a private-sector solution unsuccessful, AIG faced severe liquidity pressures that threatened to force it imminently into bankruptcy.

The Federal Reserve and the Treasury agreed that AIG’s failure under the conditions then prevailing would have posed unacceptable risks for the global financial system and for our economy. Some of AIG’s insurance subsidiaries, which are among the largest in the United States and the world, would have likely been put into rehabilitation by their regulators, leaving policyholders facing considerable uncertainty about the status of their claims. State and local government entities that had lent more than $10 billion to AIG would have suffered losses. Workers whose 401(k) plans had purchased $40 billion of insurance from AIG against the risk that their stable value funds would decline in value would have seen that insurance disappear. Global banks and investment banks would have suffered losses on loans and lines of credit to AIG, and on derivatives with AIG-FP. The banks’ combined exposures exceeded $50 billion.1 Money market mutual funds and others that held AIG’s roughly $20 billion of commercial paper would also have taken losses. In addition, AIG’s insurance subsidiaries had substantial derivatives exposures to AIG-FP that could have weakened them in the event of the parent company’s failure.

Moreover, as the Lehman case clearly demonstrates, focusing on the direct effects of a default on AIG’s counterparties understates the risks to the financial system as a whole. Once begun, a financial crisis can spread unpredictably. For example, Lehman’s default on its commercial paper caused a prominent money market mutual fund to “break the buck” and suspend withdrawals, which in turn ignited a general run on prime money market mutual funds, with resulting severe stresses in the commercial paper market. As I mentioned, AIG had about $20 billion in commercial paper outstanding, so its failure would have exacerbated the problems of the money market mutual funds. Another worrisome possibility was that uncertainties about the safety of insurance products could have led to a run on the broader insurance industry by policyholders and creditors. Moreover, it was well known in the market that many major financial institutions had large exposures to AIG. Its failure would likely have led financial market participants to pull back even more from commercial and investment banks, and those institutions perceived as weaker would have faced escalating pressure. Recall that these events took place before the passage of the Emergency Economic Stabilization Act, which provided funds that the Treasury used to help stem a global banking panic in October. Consequently, it is unlikely that the failure of additional major firms could have been prevented in the wake of the failure of AIG. At best, the consequences of AIG’s failure would have been a significant intensification of an already severe financial crisis and a further worsening of global economic conditions. Conceivably, its failure could have resulted in a 1930s-style global financial and economic meltdown, with catastrophic implications for production, income, and jobs.

The decision by the Federal Reserve on September 16, 2008, with the full support of the Treasury, to lend up to $85 billion to AIG should be viewed with this background in mind. At that time, no federal entity could provide capital to stabilize AIG and no federal or state entity outside of a bankruptcy court could wind down AIG. Unfortunately, federal bankruptcy laws do not sufficiently protect the public’s strong interest in ensuring the orderly resolution of nondepository financial institutions when a failure would pose substantial systemic risks, which is why I have called on the Congress to develop new emergency resolution procedures. However, the Federal Reserve did have the authority to lend on a fully secured basis, consistent with our emergency lending authority provided by the Congress and our responsibility as central bank to maintain financial stability. We took as collateral for our loan AIG’s pledge of a substantial portion of its assets, including its ownership interests in its domestic and foreign insurance subsidiaries. This decision bought time for subsequent actions by the Congress, the Treasury, the Federal Deposit Insurance Corporation, and the Federal Reserve that have avoided further failures of systemically important institutions and have supported improvements in key credit markets.

The Federal Reserve’s Ongoing Involvement with AIG

Having lent AIG money to avert the risk of a global financial meltdown, we found ourselves in the uncomfortable situation of overseeing both the preservation of its value and its dismantling, a role quite different from our usual activities. We have devoted considerable resources to this effort and have engaged outside advisers. Using our rights as creditor, we have worked with AIG’s new management team to begin the difficult process of winding down AIG-FP and to oversee the company’s restructuring and divestiture strategy. Progress is being made on both fronts. However, financial turmoil and a worsening economy since September have contributed to large losses at the company, and the Federal Reserve has found it necessary to restructure and extend our support. In addition, under its Troubled Asset Relief Program (TARP), the Treasury injected capital into AIG in both November and March. Throughout this difficult period, our goals have remained unchanged: to protect our economy and preserve financial stability, and to position AIG to repay the Federal Reserve and return the Treasury’s investment as quickly as possible.

In our role as creditor, we have made clear to AIG’s management, beginning last fall, our deep concern surrounding compensation issues at AIG. We believe it is in the taxpayers’ interest for AIG to retain qualified staff to maintain the value of the businesses that must be sold to repay the government’s assistance. But, at the same time, the company must scrupulously avoid any excessive and unwarranted compensation. We have pressed AIG to ensure that all compensation decisions are covered by robust corporate governance, including internal review, review by the Compensation Committee of the Board of Directors, and consultations with outside experts. Operating under this framework, AIG has voluntarily limited the salary, bonuses, and other types of compensation for 2008 and 2009 of the CEO and other senior managers. Moreover, executive compensation must comply with the most stringent set of rules promulgated by the Treasury for TARP fund recipients. The New York Attorney General has also imposed restrictions on compensation at AIG.

Many of you have raised specific issues with regard to the payout of retention bonuses to employees at AIG-FP. My reaction upon becoming aware of these specific payments was that, notwithstanding the business purposes that might be served by this action, it was highly inappropriate to pay substantial bonuses to employees of the division that had been the primary source of AIG’s collapse. I asked that the AIG-FP payments be stopped but was informed that they were mandated by contracts agreed to before the government’s intervention. I then asked that suit be filed to prevent the payments. Legal staff counseled against this action, on the grounds that Connecticut law provides for substantial punitive damages if the suit would fail; legal action could thus have the perverse effect of doubling or tripling the financial benefits to the AIG-FP employees. I was also informed that the company had been instructed to pursue all available alternatives and that the Reserve Bank had conveyed the strong displeasure of the Federal Reserve with the retention payment arrangement. I strongly supported President Dudley’s conveying that concern and directing the company to redouble its efforts to renegotiate all plans that could result in excessive bonus payments. I have also directed staff to work with the Treasury and the Administration in their review of whether the FP bonus and retention payments can be reclaimed. Moreover, the Federal Reserve and the Treasury will work closely together to monitor and address similar situations in the future.

Lessons Learned from AIG

To conclude, I would note that AIG offers two clear lessons for the upcoming discussion in the Congress and elsewhere on regulatory reform. First, AIG highlights the urgent need for new resolution procedures for systemically important nonbank financial firms. If a federal agency had had such tools on September 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now. Second, the AIG situation highlights the need for strong, effective consolidated supervision of all systemically important financial firms. AIG built up its concentrated exposure to the subprime mortgage market largely out of the sight of its functional regulators. More-effective supervision might have identified and blocked the extraordinarily reckless risk-taking at AIG-FP. These two changes could measurably reduce the likelihood of future episodes of systemic risk like the one we faced at AIG.

Footnotes

1. In addition, many of these same banks had borrowed securities from AIG’s securities lending program for which they had given AIG cash as collateral. Upon an AIG bankruptcy, the banks would have taken possession of the securities instead of receiving back their cash, exposing them to possible losses on those securities.

William C Dudley: 03-25-09 Government Intervention, AIG

Oversight of the Federal Government’s Intervention at American International Group

March 24, 2009

William C. Dudley, President and Chief Executive Officer Testimony before the Committee on Financial Services, U.S. House of Representatives Good morning, Chairman Frank, Ranking Member Bachus, and other members of the Committee. Thank you for giving me the opportunity to appear before you today. As you know, on January 27, 2009, I became the president of the Federal Reserve Bank of New York. Before I assumed that position, I served as the head of the Markets Group at the New York Fed. I appreciate having this opportunity to discuss the Federal Reserve Bank of New York’s involvement with American International Group, Inc. (AIG). Role of the Federal Reserve Bank of New York At the outset, it is important to note that before the New York Fed became involved with AIG as a lender on September 16, 2008, the Federal Reserve lacked any kind of authority to oversee AIG. The lack of effective consolidated supervision over AIG was a critical contributing factor to the debacle that occurred at the company. The Federal Reserve made its decision to lend based on a judgment that a failure of AIG would cause dramatically negative consequences for the financial system and the economy—consequences worse than what occurred in the aftermath of the failure of Lehman Brothers. We stand by that judgment today. In the case of Lehman, some of the most severe repercussions related to the difficulties in coordinating cross-border insolvency regimes and in coordinating the insolvency regimes among different types of institutions within the organization’s corporate structure. In light of AIG’s unparalleled global footprint—operating in more than 130 countries around the globe—and the multiplicity of different types of financial services entities within its structure—including insurance providers, foreign banks, consumer lending companies and OTC derivatives affiliates—the factors that proved unmanageable in the Lehman insolvency threatened to be much more severe in AIG’s case. The fact that no effective emergency resolution procedures exist under U.S. law to reconcile these difficulties heightened the need for quick, effective action by the Federal Reserve, in consultation with and supported by the U.S. Treasury. From the outset, the New York Fed has been sharply focused on addressing two overarching goals with respect to AIG: (1) the stabilization of the company so that it no longer poses a disruptive threat to our financial system and economy and (2) obtaining full repayment of the government funds that have been extended to AIG. In light of the exceptional size and scope of AIG’s operations, with over 110,000 employees in more than 130 countries, spanning hundreds of legal entities, it was clear from the beginning that the New York Fed—which had never been engaged in any regulatory oversight of the company—was not in a position to exert day-to-day management control over the company. Rather, the New York Fed’s actions have consistently been directed at securing its objectives as lender. As any lender in our position would do, the New York Fed has put into place a loan agreement that contains covenants designed to help ensure ultimate repayment of the loan—but these creditor’s rights do not create an ability to manage AIG. Responsibility for AIG’s day-to-day affairs continues to rest with AIG’s chief executive officer, Edward Liddy, under the oversight of AIG’s board of directors. Mr. Liddy, who has only become involved with AIG in a public-spirited attempt to resolve its troubled affairs, has made strides in dealing with AIG’s opaque corporate structure, lack of centralized controls and complex risk exposures, but much remains to be done. In light of the inherent conflicts that would arise from either the U.S. government or the Federal Reserve exerting ownership control over the world’s largest insurer, the Federal Reserve, with the support of the Treasury Department, directed in the loan agreement that an approximately 77.9 percent equity interest in AIG be issued to an independent trust established for the sole benefit of the United States Treasury. The trust, which now holds that controlling equity interest, is overseen by three independent trustees who are of the highest integrity and who have considerable experience leading major companies. These trustees have a legally binding obligation to exercise all of their rights as majority owner of AIG in the best interests of the U.S. taxpayer, with the proceeds of any ultimate sale of shares going directly to the Treasury of the United States. Efforts to Reduce Risk at AIG Financial Products As has been widely noted, the activities at AIG’s Financial Products unit (FP) were a principal cause of the losses that drove AIG to the brink of bankruptcy in September 2008. Risks of substantial magnitude—including derivatives positions with a current total notional value exceeding one trillion dollars—still remain in force at FP, meaning that not millions but billions of taxpayer dollars are potentially at stake as the orderly wind-down of FP continues to progress. The winding down of these risk positions at FP is a delicate and complex matter with systemic implications for the U.S. and global economy. Our oversight of this risk-reduction process remains a top priority. With respect to the retention awards owed to FP employees under their pre-existing contracts, we believe that Mr. Liddy weighed a number of factors in deciding not to attempt to prevent payment, including: the likely negative effects of disruption in staffing at FP in managing its multi-billion dollar exposures; legal advice that the contracts were valid—meaning that breaking them would likely increase the amount of company funds ultimately paid to the covered employees; and the negative consequences to AIG’s business that could result from the public abrogation of contracts. In conducting our oversight as lender, the New York Fed did not see reason to disagree with Mr. Liddy’s judgment from a risk perspective. Equally important, we did not think it was legally permissible—or within the proper role of the New York Fed—to attempt to substitute our judgment for that of Mr. Liddy in this circumstance, even though we found the payment of the retention awards extremely distasteful. The broad public disapproval of sizeable retention payments being directed toward the unit most responsible for last fall’s downfall of AIG is understandable. Americans naturally feel outraged when confronted with news of such payments to an entity that worsened the financial crisis and that is dependent on taxpayer funds to stay out of bankruptcy court where these contracts would not have been fully honored. Moreover, the payments occurred during a time when so many Americans are struggling to find jobs, seeing their wages reduced or watching their retirement savings plummet as a result of a crisis they had no hand in creating. This feeling of outrage underscores the urgent need to reform the system of compensation at our financial institutions to more closely align the incentives of executives, owners and taxpayers. Congress saw fit to impose appropriate compensation restrictions on recipients of Troubled Asset Relief Program (TARP) funding, and we think it is crucial for Congress and the U.S. Department of the Treasury to continue to craft effective and sensible policies in this area. Although oversight of TARP-related compensation matters rests with the Treasury Department, the New York Fed has played a role since September in reviewing the adequacy of AIG’s corporate governance procedures. This review has helped to identify longstanding deficiencies with respect to compensation committee governance, compensation benchmarking and lack of centralized control over compensation policy. We will continue to work with our colleagues at Treasury and the independent trustees to ensure that AIG’s management properly addresses these deficiencies. Ongoing Involvement with AIG The total package of assistance that the Federal Reserve and Treasury Department have committed to AIG has established a more durable capital structure for the company that gives AIG greater time and flexibility to execute its asset disposition plan to repay government funds. Notably, we have recently agreed in principle to accept preferred interests in two of AIG’s large foreign life insurance subsidiaries, AIA and ALICO, in order to make repayment of our loan less dependent on forced divestitures into a depressed acquisition market. Although it will take time, we still expect that the proceeds from asset sales should enable AIG to repay the New York Fed in full. In all that we have done, we have been motivated by two goals: to preserve the stability of the U.S. economy and to protect the U.S. taxpayer. The threat of a major systemic risk event has been averted by honoring all of AIG’s contractual obligations around the globe—from insurance policy obligations owed to individuals, municipalities and businesses across the U.S., to the posting of collateral under credit default swap arrangements with the full range of counterparties recently disclosed. As unattractive as certain aspects of this treatment may be, these negative aspects have followed unavoidably from the decision to avert a systemically destructive bankruptcy. I look forward to your questions today and, in the longer term, to working with you and your staffs on the broader public policy questions—such as formulation of a resolution regime for institutions like AIG and consideration of the appropriate supervisory structure for OTC derivatives—that are posed by the events at AIG. Thank you.

Larry Summers: 02-22-09 on CBS about AIG

Battle Over Bonuses

Financial Services Hearing: 03-19-09 AIG and Government Intervention

Full Committee Hearing, Oversight of the Federal Government’s Intervention at American International Group

AIG: 03-16-09 Where Did the Money Go?

Class, an article suggesting that United States through AIG (and other likely institutions) have been bailing out other countries financial system. Is this necessarily bad?

See German and French banks got $36 billion from AIG Bailout

AIG 03-02-09 Equity Restructured, Additional $30B of Taxpayers Money

Treasury: 02-04-09 New Restrictions on Executive Compensation

Today, the Treasury Department is issuing a new set of guidelines on executive pay for financial institutions that are receiving government assistance to address our current financial crisis. These measures are designed to ensure that public funds are directed only toward the public interest in strengthening our economy by stabilizing our financial system and not toward inappropriate private gain. The measures announced today are designed to ensure that the compensation of top executives in the financial community is closely aligned not only with the interests of shareholders and financial institutions, but with the taxpayers providing assistance to those companies.

The Treasury guidelines on executive pay seek to strike the correct balance between the need for strict monitoring and accountability on executive pay and the need for financial institutions to fully function and attract the talent pool that will maximize the chances of financial recovery and taxpayers being paid back on their investments. The proposals below, such as emphasizing restricted stock that vests as the government is repaid with interest, seek to strike exactly that balance.

The guidelines distinguish between banks participating in any new generally available capital access program and banks needing “exceptional assistance.” Generally available programs have the same terms for all recipients, with limits on the amount each institution may receive and specified returns for taxpayers. The goal of these programs is to help ensure the financial system as a whole can provide the credit necessary for recovery, including providing capital to smaller community banks that play a critical role in lending to small businesses, families and others. The previously announced Capital Purchase Program is an example of a generally available capital access program.

If a firm needs more assistance than is allowed under a widely available standard program, then that is exceptional assistance. Banks falling under the “exceptional assistance” standard have bank-specific negotiated agreements with Treasury. Examples include AIG, and the Bank of America and Citi transactions under the Targeted Investment Program.

As part of President Obama’s efforts to promote systemic regulatory reform, the standards today mark the beginning of a long-term effort to examine both the degree that executive compensation structures at financial institutions contributed to our current financial crisis and how corporate governance and compensation rules can be reformed to better promote long-term value and growth for shareholders, companies, workers and the economy at large and to prevent such financial crises from occurring again.

I. COMPLIANCE AND CERTIFICATION:

All Companies Receiving Government Assistance Must Ensure Compliance with Executive Compensation Provisions: The chief executive officers of all companies that have to this point received or do receive any form of government assistance must provide certification that the companies have strictly complied with statutory, Treasury, and contractual executive compensation restrictions. Chief executive officers must re-certify compliance with these restrictions on an annual basis. In addition, the compensation committees of all companies receiving government assistance must provide an explanation of how their senior executive compensation arrangements do not encourage excessive and unnecessary risk-taking.

II. ENHANCED CONDITIONS ON EXECUTIVE COMPENSATION GOING FORWARD:

A. Companies Receiving Exceptional Financial Recovery Assistance:

* Limit Senior Executives to $500,000 in Total Annual Compensation – Other than Restricted Stock: Current programs providing exceptional assistance to financial institutions forbid recipients of government funds from taking a tax deduction for senior executive compensation above $500,000. Today’s guidance takes this restriction further by limiting the total amount of compensation to no more than $500,000 for these senior executives except for restricted stock awards.

* Any Additional Pay for Senior Executives Must Be in Restricted Stock that Vests When the Government Has Been Repaid with Interest: Any pay to a senior executive of a company receiving exceptional assistance beyond $500,000 must be made in restricted stock or other similar long-term incentive arrangements. The senior executive receiving such restricted stock will only be able to cash in either after the government has been repaid – including the contractual dividend payments that ensure taxpayers are compensated for the time value of their money – or after a specified period according to conditions that consider among other factors the degree a company has satisfied repayment obligations, protected taxpayer interests or met lending and stability standards. Such a restricted stock strategy will help assure that senior executives of companies receiving exceptional assistance have incentives aligned with both the long-term interests of shareholders as well as minimizing the costs to taxpayers.

* Executive Compensation Structure and Strategy Must be Fully Disclosed and Subject to a “Say on Pay” Shareholder Resolution: The senior executive compensation structure and the rationale for how compensation is tied to sound risk management must be submitted to a non-binding shareholder resolution. There are no “Say on Pay” provisions in the existing programs.

* Require Provisions to Clawback Bonuses for Top Executives Engaging in Deceptive Practices: Under the existing programs providing exceptional assistance, only the top five senior executives were subject to a clawback provision. Going forward, a company receiving exceptional assistance must have in place provisions to claw back bonuses and incentive compensation from any of the next twenty senior executives if they are found to have knowingly engaged in providing inaccurate information relating to financial statements or performance metrics used to calculate their own incentive pay.

* Increase Ban on Golden Parachutes for Senior Executives: The existing programs providing exceptional assistance to financial institutions prohibited the top five senior executives from receiving any golden parachute payment upon severance from employment, a ban that will be expanded to include the top ten senior executives. In addition, and at a minimum, the next twenty-five executives will be prohibited from receiving any golden parachute payment greater than one year’s compensation upon severance from employment.

* Require Board of Directors’ Adoption of Company Policy Relating to Approval of Luxury Expenditures: The boards of directors of companies receiving exceptional assistance from the government must adopt a company-wide policy on any expenditures related to aviation services, office and facility renovations, entertainment and holiday parties, and conferences and events. This policy is not intended to cover reasonable expenditures for sales conferences, staff development, reasonable performance incentives and other measures tied to a company’s normal business operations. These new rules go beyond current guidelines, and would require certification by chief executive officers for expenditures that could be viewed as excessive or luxury items. Companies should also now post the text of the expenditures policy on their web sites.

B. Financial Institutions Participating in Generally Available Capital Access Programs:

The Treasury intends to issue proposed guidance subject to public comment on the following executive compensation requirements relating to future generally available capital access programs.

* Limit Senior Executives to $500,000 in Total Annual Compensation Plus Restricted Stock – Unless Waived with Full Public Disclosure and Shareholder Vote: Companies that participate in generally available capital access programs may waive the $500,000 plus restricted stock rule only by disclosure of their compensation and, if requested, a non-binding “say on pay” shareholder resolution. All firms participating in a future capital access program must review and disclose the reasons that compensation arrangements of both the senior executives and other employees do not encourage excessive and unnecessary risk taking. Under the current Capital Purchase Program, the companies were only required to review and certify that the top five executives’ compensation arrangements did not encourage excessive and unnecessary risk-taking.

* Require Provisions to Clawback Bonuses for Top Executives Engaging in Deceptive Practices: The same clawback provision that applies to companies receiving exceptional assistance will apply to those in generally available capital access programs. Thus, in addition to the clawback provision applicable to the top five executives as under the Capital Purchase Program, a company receiving assistance must have in place provisions to claw back bonuses and incentive compensation from any of the next twenty senior executives if they are found to have knowingly engaged in providing inaccurate information relating to financial statements or performance metrics used to calculate their own incentive pay.

* Increase Ban on Golden Parachutes for Senior Executives: Even under generally available capital access programs, the golden parachute ban will be strengthened: Upon a severance from employment, the top five senior executives will not be allowed a golden parachute payment greater than one year’s compensation, as opposed to three years under the current Capital Purchase Program.

* Require Board of Directors’ Adoption of Company Policy Relating to Approval of Luxury Expenditures: This policy will be the same for companies accessing generally available capital programs as it is for those receiving exceptional assistance. There are no guidelines on luxury expenditures under the current Capital Purchase Program.

[These new standards will not apply retroactively to existing investments or to programs already announced such as the Capital Purchase Program and the Term Asset-Backed Securities Loan Facility.]

III. LONG-TERM REGULATORY REFORM: COMPENSATION STRATEGIES ALIGNED WITH PROPER RISK MANAGEMENT AND LONG-TERM VALUE AND GROWTH:
Even as we work to recover from current market events, it is not too early to begin a serious effort to both examine how company-wide compensation strategies at financial institutions – not just those related to top executives – may have encouraged excessive risk-taking that contributed to current market events and to begin developing model compensation policies for the future. Such steps should include:

* Requiring all Compensation Committees of Public Financial Institutions to Review and Disclose Strategies for Aligning Compensation with Sound Risk-Management: The Secretary of the Treasury and the Chairman of the Securities and Exchange Commission should work together to require compensation committees of all public financial institutions – not just those receiving government assistance – to review and disclose executive and certain employee compensation arrangements and explain how these compensation arrangements are consistent with promoting sound risk management and long-term value creation for their companies and their shareholders.

* Compensation of Top Executives Should Include Incentives That Encourage a Long-Term Perspective: Over the last decade there has been an emerging consensus that top executives should receive compensation that encourages more of a long-term perspective on creating economic value for their shareholders and the economy at large. One idea worthy of serious consideration is requiring top executives at financial institutions to hold stock for several years after it is awarded before it can be cashed-out as this would encourage a more long-term focus on the economic interests of the firm.

* Pass Say on Pay Shareholder Resolutions on Executive Compensation: Even beyond companies receiving financial recovery assistance, owners of financial institutions – the shareholders – should have a non-binding resolution on both the levels of executive compensation as well as how the structure of compensation incentives help promote risk management and long-term value creation for the firm and the economy as a whole.

* White House -Treasury Conference on Long-Term Executive Pay Reform: The Secretary of the Treasury will host a conference with shareholder advocates, major public pension and institutional investor leaders, policy-makers, executives, academics, and others on executive pay reform at financial institutions. Treasury will seek testimony, comment, and white papers on model executive pay initiatives in the cause of establishing best practices and guidelines on executive compensation arrangements for financial institutions.

Release here.

Fed of New York: 01-16-09 AIG Credit Facility Trust

The Federal Reserve Bank of New York announced today, with the full support of the Treasury Department, the formation of the AIG Credit Facility Trust. The Trust is being established for the sole benefit of the United States Treasury to hold the 77.9% equity interest in American International Group, Inc. (AIG) that will be issued in connection with the previously announced credit facility extended to AIG.

Three independent trustees have been selected by the New York Fed, in close consultation with the Treasury Department, to oversee this equity interest in the best interests of the U.S. Treasury. They are Jill M. Considine, former chairman of the Depository Trust & Clearing Corporation; Chester B. Feldberg, former chairman of Barclays Americas; and Douglas L. Foshee, president and chief executive officer of El Paso Corporation.

Pursuant to the terms of the Trust Agreement, the trustees will have absolute discretion and control over the AIG stock, subject only to the terms of the Trust Agreement, and will exercise all rights, powers and privileges of a shareholder of AIG. The trustees will not sit on the board of directors of AIG. Day-to-day management of AIG will remain with the persons charged with such management.

To avoid possible conflicts with the New York Fed’s supervisory and monetary policy functions, the Trust has been structured so that the New York Fed cannot exercise any discretion or control over the voting and consent rights associated with the equity interest in AIG. The New York Fed will, however, continue to monitor closely the financial operations of AIG in connection with its role as lender.

Trustees’ CVs ››

Martin Feldstein: 01-08-09 Economist of the Day

Martin Feldstein

We choose Marty Feldstein as the Economist of the Day; he likely has more influence of any economist today. He is also a Director of the Economics Research Network – ERN.

Contact Information

Address:
National Bureau of Economic Research
1050 Massachusetts Avenue

E-Mail: mfeldstein@harvard.edu
Tel: 617-868-3900
Fax: 617-868-2742

Martin Feldstein is the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research.

Short Biography

Martin Feldstein is the George F. Baker Professor of Economics at Harvard University and President Emeritus of the National Bureau of Economic Research. He served as President and CEO of the NBER from 1977-82 and 1984-2008. He continues as a Research Associate of the NBER. The NBER is a private, nonprofit research organization that has specialized for more than 80 years in producing nonpartisan studies of the American economy.

From 1982 through 1984, Martin Feldstein was Chairman of the Council of Economic Advisers and President Reagan’s chief economic adviser. He served as President of the American Economic Association in 2004. In 2006, President Bush appointed him to be a member of the President’s Foreign Intelligence Advisory Board.

Dr. Feldstein is a member of the American Philosophical Society, a Corresponding Fellow of the British Academy, a Fellow of the Econometric Society and a Fellow of the National Association of Business Economics. He is also a member of the Trilateral Commission, the Council on Foreign Relations, the Group of 30, the American Academy of Arts and Sciences, and the Council of Academic Advisors of the American Enterprise Institute.

Dr. Feldstein has received honorary doctorates from several universities and is an Honorary Fellow of Nuffield College, Oxford. In 1977, he received the John Bates Clark Medal of the American Economic Association, a prize awarded every two years to the economist under the age of 40 who is judged to have made the greatest contribution to economic science. He is the author of more than 300 research articles in economics.

Dr. Feldstein is a director of two corporations (American International Group and Eli Lilly), and an economic adviser to several businesses and government organizations in the United States and abroad. He is a regular contributor to the Wall Street Journal.

Martin Feldstein is a graduate of Harvard College and Oxford University. He was born in New York City in 1939. His wife, Kathleen, is also an economist. The Feldsteins have two married daughters.

Vitae (We have decided to place papers first and then other data)

Publication List (From earlier to later work) Note: some later files are in PDF form and may be downloaded.

1. “Economic Analysis, Operation Research and the National Health Service,” Oxford Economic Papers, Vol. 15, No. 1, March 1963.

2. “Net Social Benefit Calculation and the Public Investment Decision,” Oxford Economic Papers, Vol. 16, No. 1, March 1964.

3. “The Social Time Preference Discount Rate in Cost-Benefit Analysis,” The Economic Journal, 1964.

4. “The Problem of Time-Stream Evaluation: Present Values versus Internal Rate of Return Rules,” (with J. S. Flemming), Bulletin of the Oxford University Institute of Economics and Statistics, 1964.

5. “Cost Benefit Analysis and Investment in the Public Sector,” Public Administration, 1964.

6. “Opportunity Cost Calculations in Cost-Benefit Analysis,” Public Finance, Vol. 19, No. 2, 1964.

7. “Hospital Planning and the Demand for Care,” Bulletin of the Oxford University Institute of Economics and Statistics, 1964.

8. “The Derivation of Social Time Preference Rates,” Kyklos, Vol. 18, 1965.

9. “Improving the Use of Hospital Maternity Beds,” Operational Research Quarterly, 1965.

10. “Hospital Bed Scarcity: An Analysis of the Effects of Interregional Differences,” Economica, November 1965.

11. “A Binary Variable Multiple Regression Method of Analyzing Factors Affecting Perinatal Mortality and Other Outcomes of Pregnancy,” Journal of the Royal Statistical Society, Vol. 129, Part 1, 1966.

12. “Specification of the Labor Input in the Aggregate Production Function,” Review of Economic Studies, 1967.

13. Economic Analysis for Health Service Efficiency: Econometric Studies of the British National Health Service (Volume 51 of Contributions to Economic Analysis), Amsterdam: North-Holland Publishing Company, 1967.

14. “Alternative Methods of Estimating a CES Production Function for Britain,” Economica, 1967.

15. “The Effectiveness of the British Differential Profits Tax,” Economic Journal, 1967.

16. “On the Measurement of Risk Aversion,” Southern Economic Journal, Vol. 35, No. 1, July 1968.

17. “Estimating the Supply Curve of Working Hours,” Oxford Economic Papers, 1968.

18. “The Interest Rate, Taxation and the Personal Savings Incentive,” (with S. C. Tsiang), Quarterly Journal of Economics, 1968.

19. “Uncertainty and Forward Exchange Speculation,” Review of Economics and Statistics, Vol. 50, No. 2, May 1968.

20. “The Use of An Econometric Model for Health Sector Planning,” in Federal Programs for the Development of Human Resources: A Compendium of Papers Submitted to the Subcommittee on Economic Progress of the Joint Economic Committee, Congress of the United States, 1968.

21. “Shadow Prices in Industrial Project Evaluation,” (with J. S. Flemming), in U.N. Industrial Development Organization, Evaluation of Industrial Projects, 1968.

22. “Mean-Variance Analysis in the Theory of Liquidity Preference and Portfolio Selection,” Review of Economic Studies, 1969.

23. “The Effects of Taxation on Risk-Taking,” Journal of Political Economy, 1969.

24. “Advertising, Research and Profits in the Drug Industry,” Southern Economic Journal, 1969.

25. “Corporate Taxation and Dividend Behavior,” Review of Economic Studies, 1970.

26. “Choice of Technique in the Public Sector: A Simplification,” Economic Journal, 1970.

27. “The Fundamental Determinants of the Interest Rate,” (with O. Eckstein), Review of Economics and Statistics, Vol. 52, No. 4, November 1970.

28. “Health Sector Planning in Developing Countries,” Economica, Vol. 37, May 1970.

29. “Inflation, Specification Bias and the Impact of Interest Rates,” Journal of Political Economy, Vol. 78, No. 6, Nov.-Dec. 1970.

30. “The Rising Price of Physicians’ Services,” Vol. 52, No. 2, May 1970.

31. “An Aggregate Planning Model of the Health Care Sector,” in J. Paelinck, Programming for Europe’s Collective Needs, Amsterdam: North-Holland Publishing Company, 1970.

32. “Improving Medical Care Price Statistics,” 1969 Proceedings of the Business and Economics Statistics Section of the American Statistical Association, 1970.

33. “An Econometric Model of the Medicare System,” Quarterly Journal of Economics, Vol. 85, No. 1, February 1971. (See also “Econometric Analysis of the Medicare Program,” in Benefit Cost Analysis of Federal Programs, Joint Economic Committee, U.S. Congress, 1973.).

34. “The Error of Forecast in Econometric Models When the Forecast-Period Exogenous Variables Are Stochastic,” Econometrica, Vol. 39, No. 1, January 1971.

35. “The Other Half of Gross Investment: Replacement and Modernization Expenditures,” (with D. Foot), Review of Economics and Statistics, Vol. 53, No. 1, February 1971.

36. “Production with Uncertain Technology: Some Economic and Econometric Implications,” International Economic Review, Vol. 12, No. 1, February 1971.

37. “Tax Policy, Corporate Saving and Investment Behavior in Britain,” (with J. Flemming), Review of Economic Studies, Vol. 38, October 1971.

38. “Hospital Cost Inflation: A Study of Nonprofit Price Dynamics,” American Economic Review, Vol, 61, No. 5, December 1971.

39. “A New Approach to National Health Insurance,” The Public Interest, No. 23, Spring 1971.

40. The Rising Cost of Hospital Care, published for the National Center for Health Services Research and Development, U.S. Department of Health, Education and Welfare (Washington: Information Resources Press, 1977).

41. “Equity and Efficiency in Public Sector Pricing: The Optimal Two-Part Tariff,” Quarterly Journal of Economics, Vol. 86, May 1972.

42. “The Rising Price of Physicians’ Services: Reply,” Review of Economics and Statistics, Vol. 54, No. 1, February 1972.

43. “The Incidence of the Social Security Payroll Tax: Comment,” American Economic Review, Vol. 52, No. 4, Sept. 1972.

44. “Distributional Equity and the Optimal Structured of Public Prices,” American Economic Review, Vol. 62, No. 1, March 1972.

45. “The Pricing of Public Intermediate Goods,” Journal of Public Economics, 1972, pp. 45-72.

46. “Corporate Taxation and Dividend Behavior: Reply and Further Results,” Review of Economic Studies, April, 1972. pp. 235-240.

47. “An Econometric Model of Business Cycles: Discussion,” in B. Hickman (ed.), Econometric Models of Cyclical Behavior, Vol. II (New York: Columbia University Press, 1972).

48. “Financing in the Evaluation of Public Expenditure,” in W. Smith et al. (eds.), Essays in Public Finance and Stabilization Policy, Amsterdam: North-Holland, 1974.

49. “The Welfare Loss of Excess Health Insurance,” Journal of Political Economy, Vol. 81, No. 2, Part 1 March-April 1973.

50. “Distributional Aspects of National Health Insurance Benefits and Finance,” (with B. Friedman and H. Luft), National Tax Journal, Vol. 25, No. 4, December 1972.

51. Resource Allocation Model for Public Health Planning, (with M. Piot and T. Sundaresan), published as a Supplement to the Bulletin of the World Health Organization, 1973.

52. “Multicollinearity and the Mean Square Error of Alternative Estimators,” Econometrica, Vol. 41, No. 2, March 1973.

53. “Cost Benefit Analysis in Developing Countries: The Evaluation of Projects Financed by Aid and External Loans,” in W. David (ed.), Public Finance, Planning and Economic Development: Essays in Honour of Ursula Hicks, (London: Macmillan, 1973).

54. “Distributional Preferences in Public Expenditure Analysis,” in H. Hochman and G. Peterson (eds.), The Political Economy of Income Distribution, New York: Columbia University Press, 1974.

55. Lowering the Permanent Rate of Unemployment, Joint Economic Committee, U.S. Congress, Washington, 1973.

56. “Tax Incentives, Corporate Saving, and Capital Accumulation in the United States,” Journal of Public Economics, Vol. 2, April 1973.

57. “Distributional Constraints in Public Expenditure Planning,” (with H. Luft), Management Science, Vol. 12, No. 12, August 1973.

58. “An Econometric Model of the Medicare System: Reply,” Quarterly Journal of Economics, August 1973.

59. “Tax Subsidies of Private Health Insurance: Distribution, Revenue Loss and Effects,” (with E. Allison) in The Economics of Federal Subsidy Programs, Joint Economic Committee, U.S. Congress, Washington, July 1974.

60. “Toward An Economic Theory of Replacement Investment,” (with M. Rothschild), Econometrica, Vol. 42, No. 3, 1974.

61. “Taxes, Corporate Dividend Policy and Personal Savings: The British Postwar Experience,” (with G. Fane), Review of Economics and Statistics, Vol. 55, No. 4, November 1973.

62. “The Quality of Hospital Services: An Analysis of Geographic Variation and Intertemporal Change,” in Economics of Health and Medical Care (An I.E.A. Conference), M. Perlman and S. Tsuru (eds.), 1974.

63. “Econometric Studies of Health Economics,” in Frontiers of Quantitative Economics II, Vol. 2, M. Intriligator and D. Kendrick (eds.), Amsterdam: North-Holland Publishing Company, 1974.

64. “Multimarket Expectations and the Rate of Interest,” (with G. Chamberlain), Journal of Money, Credit and Banking, Vol. 5, No. 4, November 1973.

65. “Tax Incidence in a Growing Economy with Variable Factor Supply,” Quarterly Journal of Economics, Vol. 88, November 1974.

66. “The Medical Economy,” Scientific American, Vol. 229, No. 3, September 1973.

67. “On the Optimal Progressivity of the Income Tax,” Journal of Public Economics, Vol. 2, July 1973.

68. “Economics of the New Unemployment,” Public Interest, No. 33, Fall 1973.

69. “Errors in Variables: A Consistent Estimator with Smaller MSE in Finite Samples,” Journal of the American Statistical Association, Vol. 69, No. 348, December 1974.

70. “Tax Incentives, Stabilization Policy and the Proportional Replacement Hypothesis: Some Negative Conclusions,” Southern Economic Journal, Vol. 40, No. 4, April 1974.

71. “Incidence of a Capital Income Tax in a Growing Economy with Variable Savings Rates,” Review of Economic Studies, Vol. 41, No. 4, October 1974.

72. ” Neutrality and Local Choice in Public Education,” American Economic Review, Vol. 115, No. 1, March 1975.

73. “Social Security, Induced Retirement and Aggregate Capital Accumulation,” Journal of Political Economy, Vol. 82, No. 5, September-October 1974.

74. “Unemployment Compensation: Adverse Incentives and Distributional Anomalies,” National Tax Journal, Vol. 27, No. 2, June 1974.

75. “The Rising Price of Physicians’ Services: A Clarification,” (with D. Brown and H. Lapan), The Review of Economics and Statistics, Vol. 104, No. 3, August 1974.

76. “The Income Tax and Charitable Contributions: Part I – Aggregate and Distributional Effects,” National Tax Journal, Vol. 28, No. 1, March 1975.

77. “The Income Tax and Charitable Contributions: Part II – The Impact on Religious, Educational and Other Organizations,” National Tax Journal, June 1975.

78. “The Effect of National Health Insurance on the Price and Quantity of Medical Care,” (with B. Friedman) in The Role of Health Insurance in the Health Services Sector (a Universities-National Bureau of Economic Research Conference), R. Rosett (ed.), No. 27, 1976.

79. “Social Security and Private Savings: International Evidence in an Extended Life Cycle Model,” in The Economics of Public Services, an International Economic Association Conference Volume, M. Feldstein and R. Inman (eds.), 1977.

80. “Tax Incentives and Charitable Contributions in the United States: A Microeconometric Analysis,” (with C. Clotfelter), Journal of Public Economics, 1976.

81. “Unemployment Insurance: Time for Reform,” Harvard Business Review, March-April 1975.

82. “Toward a Reform of Social Security,” The Public Interest, No. 40, Summer 1975.

83. “Personal Taxation and Portfolio Composition: An Econometric Analysis,” Econometrica, Vol. 44, No. 4, July 1976.

84. “On the Theory of Tax Reform,” Journal of Public Economics, 1976.

85. “Charitable Bequests, Estate Taxation and Intergenerational Transfers,” in Essays in Urban Economics and Public Finance in Honor of William S. Vickrey, 1976.

86. “Perceived Wealth in Bonds and Social Security: A Comment,” Journal of Political Economy, 1976.

87. “Temporary Layoffs in the Theory of Unemployment,” Journal of Political Economy, 1976.

88. “The Importance of Temporary Layoffs: An Empirical Analysis,” Brookings Papers on Economic Activity, 3:1975.

89. “The Income Tax and Charitable Contributions,” (with A. Taylor), Econometrica, Vol. 44, No. 6, November 1976.

90. “Tax Subsidies, the Rational Demand for Insurance and the Health Care Crisis,” (with B. Friedman), Journal of Public Economics, 1977.

91. “Social Security and Saving: The Extended Life Cycle Theory,” American Economic Review, 1976.

92. “The Unemployment Caused by Unemployment Insurance,” Proceedings of the Industrial Relations Research Association, 1976.

93. “The Welfare Cost of Capital Income Taxation,” Journal of Political Economy, Vol. 86, No. 2, Part 2, 1978.

94. “Inflation, Income Taxes and the Rate of Interest: A Theoretical Analysis,” American Economic Review, 1976.

95. “Taxing Consumption,” The New Republic, February 1976.

96. “Social Insurance,” in Income Distribution, Colin D. Campbell (ed.), 1977 and in Public Policy, Vol. 25, No. 1, Winter 1977.

97. “Inflation and Taxes in a Growing Economy with Debt and Equity Finance,” (with J. Green and E. Sheshinski), Journal of Political Economy, 1978.

98. “Social Security and the Distribution of Wealth ,” Journal of the American Statistical Association, 1976.

99. “The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question,” Journal of Political Economy, Vol. 85, No. 2, 1977.

100. “Hospital Costs in Massachusetts: A Methodological Study,” (with James Schuttinga), Inquiry, Volume 14, March 1977.

101. “Compensation in Tax Reform,” National Tax Journal, 1976.

102. “Effects of the Charitable Deduction on Contributions by Low Income and Middle Income Households: Evidence from the National Survey of Philanthropy,” (with Michael Boskin), Review of Economics and Statistics, Vol. 119, No. 3, August 1977.

103. “Inventory Behavior in Durable Goods Manufacturing: The Target Adjustment Model,” (with Alan Auerbach), Brookings Papers on Economic Activity, 2:1976.

104. “National Saving in the United States,” Capital for Productivity and Jobs, The American Assembly, E. Shapiro and W. White (eds.), 1977.

105. “The Social Security Fund and National Capital Accumulation,” Funding Pensions: The Issues and Implications, for a Federal Reserve Bank of Boston publication, 1977.

106. “Does the U.S. Save Too Little?” American Economic Review, Vol. 67, No. 1, February 1977.

107. “Quality Change and the Demand for Hospital Care,” Econometrica, Vol. 45, No. 7, October 1977.

108. “Seven Principles of Social Insurance,” Challenge, 1976.

109. “Corporate Tax Integration: The Estimated Effects on Capital Accumulation and Tax Distribution of Two Integration Proposals,” (with Daniel Frisch), National Tax Journal, Vol. 30, No. 1, 1977.

110. “New Evidence on the Distribution of Unemployment Insurance Benefits,” National Tax Journal, Vol. 30, No. 2, June 1977.

111. The Rapid Rise of Hospital Costs, (with Amy Taylor), published by the Council on Wage and Price Stability, 1977.

112. “Facing the Social Security Crisis,” The Public Interest, No. 47, Spring 1977.

113. “Distributing Federal Education Aid to Low Achievement Pupils: The Predicted Achievement Method,” in Evaluation Studies Review Annual, Vol. 2, Marcia Guttentag (ed.), 1977.

114. “Is the Rate of Profit Falling?” (with Lawrence Summers), Brookings Papers on Economic Activity, 1:1977.

115. “The High Cost of Hospitals — and What to Do About It,” The Public Interest, No. 48, Summer 1977.

116. “The Effect of the Capital Gains Tax on the Selling and Switching of Common Stock,” (with Shlomo Yitzhaki), Journal of Public Economics, February 1978.

117. “Tax Reform and the Investor,” Data Resources Review, August 1977.

118. “Social Security : The Impact of Alternative Inflation Adjustments,” (with Anthony Pellechio), in Colin Campbell, Financing Social Security, 1979, 91-117.

119. “The Effect of Unemployment Insurance on Temporary Layoff Unemployment,” American Economic Review, 1978.

120. The Economics of Public Services, (edited with Robert Inman), an International Economics Association Conference Volume, London: Macmillan, 1977.

121. “The Effect of a Differential Add-on Grant: Title I and Local Education Spending,” Journal of Human Resources, Vol. 13, No. 4, 1978.

122. Corporate Tax Integration: A Quantitative Comparison of Alternatives, (with Daniel Frisch), New York: Tax Foundation, Brief No. 28, 1978.

123. “Inflation, Tax Rules and the Long-Term Interest Rate,” (with Lawrence Summers), Brookings Papers on Economic Activity, Vol. 1, January 1978, pp 61-109.

124. “The Private and Social Costs of Unemployment,” American Economic Review, Vol. 68, No. 2, May 1978, pp 155-158.

125. “Do Increase National Savings?” Journal of Public Economics, Vol. 10, No. 3, December 1978, pp 277-293.

126. “Corporate Financial Policy and Taxation in a Growing Economy,” (with Jerry Green and Eytan Sheshinski), Quarterly Journal of Economics, Vol. XCIII, No. 3, August 1979, pp 411-432.

127. “Social Security and Private Savings: Reply to Barro,” American Enterprise Institute, 1978. Journal of Political Economy, Vol 90, No. 3, June 1982, pp 630-642.

128. “The Rate of Return, Taxation, and Personal Savings,” The Economic Journal, Vol. 88, September 1978.

129. “Inflation and the Excess Taxation of Capital Gains on Corporate Stock,” (with Joel Slemrod), National Tax Journal, Vol. 31, No. 2, June 1978, pp 107-118.

130. “Social Security and Household Accumulation: New Microeconometric Evidence,” (with Anthony Pellechio), Review of Economics and Statistics, Vol. 61, No. 3, August 1979, pp 361.

131. “How Inflation Distorts the Taxation of Capital Gains,” (with Joel Slemrod), Harvard Business Review, No. 78559, September-October 1978.

132. “The Welfare Cost of Permanent Inflation and Optimal Short-Run Economic Policy,” (The Morgan Prize Lecture), Journal of Political Economy, Vol. 87, No. 4, 1979, pp 749-768.

133. “The Lock-In Effect of the Capital Gains Tax: Some Time Series Evidence,” (with Joel Slemrod), Tax Notes, Vol. VII, No. 6, August 1978, pp 134-135.

134. “The Optimal Taxation of Foreign Source Investment Income,” (with David Hartman), Quarterly Journal of Economics, Vol. XCIII, No. 4, November 1979, pp 613-629.

135. “Alternative Approaches to Compensatory Education: Expenditure Effects,” (with Bernard Friedman), Public Finance Quarterly, 1979.

136. “A Contribution to the Theory of Tax Expenditures: The Case of Charitable Giving,” Essays in Honor of Joseph Pechman, H. Aaron and M. Boskin (eds.), 1980. See also “Reply to Driessner,” Journal of Public Economics, 1980, pp 99-122.

137. “The Effects of Taxation on the Selling of Corporate Stock and the Realization of Capital Gains,” (with Joel Slemrod and Shlomo Yitzhaki), Quarterly Journal of Economics, Vol. XCIV, No. 4, June 1980, pp 777-791.

138. “The Effect of Social Security on Private Savings: The Time Series Evidence,” Social Security Bulletin, Vol. 42, No. 5, May 1979, pp 36-39.

139. “Fiscal Policies, Inflation and Capital Formation,” American Economic Review, Vol. 70, No. 4, September 1980, pp 636-650.

140. “Inflation and the Stock Market,” American Economic Review, Vol. 70, No. 5, December 1980, pp 839-847.

141. “The Effect of Social Security on Saving,” (The 1979 Frank Paish Lecture to the British Association of University Teachers of Economics), Contemporary Economic Analysis III, 1981.

142. “Social Security Hobbles Our Capital Formation,” Harvard Business Review, No. 79449, July/August 1979.

143. “Taxes, Inflation, and Capital Formation,” National Tax Journal, Vol. 32, No. 3, 1979.

144. “Teenage Unemployment: What is the Problem?” (with David Ellwood), R.B. Freeman, D.A. Wise, eds. The Youth Labor Market Problem: Its Nature, Causes and Consequences, Chicago: University of Chicago, 1982, pp 17-33.

145. “Inflation and the Taxation of Capital Income in the Corporate Sector,” (with Lawrence Summers), National Tax Journal, Vol. 32, No. 4, 1979, pp 445-470.

146. “Personal Taxation, Portfolio Choice and the Effect of the Corporation Income Tax,” (with Joel Slemrod), Journal of Political Economy, Vol. 88, No. 5, October 1980, pp 854-866.

147. “The New Economics and Government Policy,” Business Horizons, No. 79401, 1979.

148. “Domestic Savings and International Capital Flows,” (with Charles Horioka), The 1979 W. A. Mackintosh Lecture at Queen’s University, Economic Journal, June 1980, 90(358), pp 314-329.

149. “International Differences in Social Security and Saving,” Journal of Public Economics, October 1980, 14(2), pp 225-244.

150. “Inflation, Tax Rules and the Stock Market,” Journal of Monetary Economics, July 1980, 6(3), pp 309-331.

151. “Tax Rules and the Mismanagement of Monetary Policy,” American Economic Review, Vol. 70, No. 2, May 1980, pp 182-186.

152. The American Economy In Transition (Introduction and editor), The Sixtieth Anniversary Volume of the National Bureau of Economic Research, 1981.

153. Hospital Costs and Health Insurance, Cambridge: Harvard University Press, 1981.

154. “Social Security Benefits and the Accumulation of Preretirement ,” The Determinants of National Saving and, Proceedings of a 1980 International Economic Association Conference, and in The Determinants of National Saving, Franco Modigliani and Richard Hemming (eds.), New York: St. Martin’s Press, 1983, pp 3-23.

155. “The Distribution of the U.S. Capital Stock Between Residential and Industrial Uses,” Economic Inquiry, Vol. 19, No. 1, January 1981, pp 26-37.

156. “Inflation, Tax Rules, and the Prices of Land and Gold,” Journal of Public Economics, 14(3), December 1980, pp 309-317.

157. “Government Deficits and Aggregate Demand,” Journal of Monetary Economics, 9(1), January 1982, pp 1-20.

158. “Adjusting Depreciation in an Inflationary Economy,” National Tax Journal, Vol. 34, No. 1, March 1981, pp 29-43.

159. “Inflation, Portfolio Choice, and the Prices of Land and Corporate Stock,” American Journal of Agricultural Economics, 62(5), December 1980, pp 910-916.

160. “Private Pensions and Inflation,” American Economic Review, Vol. 71, No. 2, May 1981, pp 424-428.

161. “Why Do Companies Pay Dividends?” (with Jerry Green), American Economic Review, 73(1), March 1983, pp 17-30.

162. “Pension Funding, Share Prices and National Saving,” (with Stephanie Seligman), Journal of Finance, 36(4), September 1981, pp 801-824.

163. “Social Security and Private Savings: Reply,” Journal of Political Economy, Vol. 90, No. 3, June 1982, pp 630-642.

164. “Inflation and the Taxation of Capital in the Corporate Sector: Reply,” (with Lawrence Summers), National Tax Journal, Vol. 33, No. 4, December 1980, pp 485-488.

165. “Inflation, Capital Taxation and Monetary Policy,” in R. E. Hall (ed.), Inflation: Causes and Effects, Chicago: University of Chicago Press, 1982, pp 153-167.

166. “Simulating Nonlinear Tax Rules and Nonstandard Behavior: An Application to the Tax Treatment of Charitable Contributions,” (with Lawrence Lindsey), in M. Feldstein (ed.), Behavioral Simulation Methods in Tax Policy Analysis, Chicago: U of Chicago Press, 1983, pp 139-167.

167. “Alternative Tax Rules and Personal Savings Incentives: Microeconomic Data and Behavioral Simulations,” (with Daniel Feenberg), in M. Feldstein (ed.), Behavioral Simulations Methods in Tax Policy Analysis, Chicago: U of Chicago Press, 1983, pp 173-209.

168. Behavioral Simulation Methods in Tax Policy Analysis, (Introduction and editor), NBER Conference Volume, 1983.

169. “‘Twas a Night in the Sixties,” Journal of Political Economy, Vol. 89, No. 6, 1981, pp 1266-1269.

170. Two Lectures on Macroeconomic Policy, The 1980 Woodward Lectures, Department of Economics, University of British Columbia, Vancouver, B.C. 1980.

171. “Inflation, Tax Rules and Investment: Some Econometric Evidence,” The 1980 Fisher-Schultz Lecture of the Econometric Society, Econometrica, Vol. 50, No. 4, July 1982, pp 825-862. See also “Reply to Chirinko,” Journal of Public Economics, 1987.

172. “The Retreat from Keynesian Economics,” The Public Interest, No. 64, Summer 1981.

173. “Inflation and the Stock Market: Reply,” American Economic Review, Vol. 72, No. 1, March 1982, pp 243-246.

174. “The Effective Tax Rate and the Pretax Rate of Return,” (with James Poterba and Louis Dicks-Mireaux), Journal of Public Economics, 21(2), July 1983, pp 129-158.

175. “Inflation, Tax Rules and the Accumulation of Residential and Nonresidential Capital Stock,” presented at the Conference on Allocational and Structural Consequences of Short-Run Stabilization Policy in Open Economies, Stockholm, September 1981, Scandinavian Journal of Economics, No. 84, No. 2, 1982, pp 293-311.

176. “Private Pensions as Corporate Debt,” in B. Friedman (ed.), The Changing Roles of Debt and Equity in Financing U.S. Capital Formation, NBER Conference Volume, 1982, Chicago: University of Chicago Press: pp 75-90.

177. Capital Taxation, Cambridge: Harvard University Press, 1983.

178. “Inflation and the American Economy,” The Public Interest, No. 67, Spring 1982.

179. “Pension Funding Decisions, Interest Rate Assumptions and Share Prices,” (with Randall Morck), in Financial Aspects of the U.S. Pension System, Zvi Bodie and John Shoven (eds.), Chicago: U. of Chicago Press, 1983.

180. Inflation, Tax Rules and Capital Formation, University of Chicago Press, 1983.

181. “Should Private Pensions Be Indexed?” in Financial Aspects of the U.S. Pension System, Zvi Bodie and John Shoven (eds.), NBER Conference Volume, Chicago: University of Chicago Press: 1983, pp 177-207 and 209-210.

182. “Has the Rate of Investment Fallen?” Review of Economics and Statistics, Vol. 65, No. 1, February 1983, pp 144-149.

183. “The Conceptual Foundations of Supply Side Economics,” in Supply Side Economics in the 1980’s, proceedings of a conference sponsored by the Federal Reserve Bank of Atlanta and the Emory University Law and Economics Center, March 18, 1982.

184. “Domestic Saving and International Capital Movements in the Long Run and the Short Run,” European Economic Review, No. 21 (1-2), 1983, pp 129-151.

185. “The Fiscal Framework of Monetary Policy,” Economic Inquiry, 21(1), January 1983, pp 11-23.

186. “The Effects of Taxation on the Selling of Corporate Stock and the Realization of Capital Gains: Reply,” (with Joel Slemrod and Shlomo Yitzhaki), Quarterly Journal of Economics, 94(4), 1980, pp 777-791.

187. “Unemployment Insurance and Reservation Wages,” (with James Poterba), Journal of Public Economics, 23(1-2), February-March 1984, pp 141-167.

188. “The Optimal Level of Social Security Benefits,” Quarterly Journal of Economics, 10(2), May 1985, pp 303-320.

189. “Why the Dollar Is Strong,” Challenge, 26(6), February 1984, pp 37-41.

190. “Public Education: Reply,” American Economic Review, Vol. 74, No. 4, September 1984, pp 820-821.

191. “The International Debt Problem: From Crisis to Renewed Growth,” Challenge, 27(3), July-August 1984, pp 27-30.

192. “International Debt Policy,” World Affairs Journal, Vol. 3, No. 1, Winter 1984.

193. “The Welfare Cost of Social Security’s Impact on Private Saving,” pp. 1-13 in Modern Developments in Public Finance: Essays in Honor of Arnold Harberger, M. Boskin (ed.), Oxford, England: Basil Blackwell, 1987, pp 1-13.

194. “Debt and Taxes in the Theory of Public Finance,” Journal of Public Economics, 28(2), November 1985, pp 233-245.

195. “American Economic Policy and the World Economy,” Foreign Affairs, 63(5), Summer 1985, pp 995-1008.

196. Handbook of Public Economics, Vol. I , (edited with Alan Auerbach) Amsterdam: North-Holland Publishing Company, 1985.

197. “Tax Rates and Business Investment: Reply”, Journal of Public Economics, 32(2), April 1987, pp 389-396.

198. “U.S. Budget Deficits and the European Economies: Resolving the Political Economy Puzzle”, American Economic Review, 76(2), May 1986, pp 342-346.

199. “Supply Side Economics: Old Truths and New Claims”, American Economic Review, 76(2), May 1986, pp 26-30.

200. “The Social Security Explosion”, The Public Interest, No. 81, Fall 1985.

201. “The Effects of Tax Rules on Nonresidential Fixed Investment: Some Preliminary Evidence from the 1980’s” (with Joosung Jun) in M. Feldstein (ed.), The Effects of Taxation on Capital Accumulation, University of Chicago Press, 1987.

202. “The Budget Deficit and the Dollar,” in NBER Macroeconomics Annual, 1986, S. Fischer (ed.), MIT Press, 1986.

203. “Should Social Security be Means Tested?”, Journal of Political Economy, 95(3), June 1987, pp 468-484.

204. The Effects of Taxation on Capital Accumulation, (ed.) University of Chicago Press, 1987.

205. Taxes and Capital Formation, (ed.) University of Chicago Press, 1987, pp 63-72.

206. “Tax Rules and Business Investment,” in M. Feldstein (ed.), Taxes and Capital Formation, University of Chicago Press, 1987, pp 63-72.

207. “The Effect of Federal Tax Deductibility on State and Local Taxes and Spending,” (with Gilbert Metcalf), Journal of Political Economy, 95(4), August 1987, pp 710-736.

208. “Correcting the Trade Deficit,” Foreign Affairs, 65(4), Spring 1987, pp 710-736.

209. “How Far Has the Dollar Fallen?” (with Philippe Bacchetta), Business Economics, 22(4), October 1987, pp 35-39.

210. Restoring Growth in the Debt Laden Third World. A Task Force Report to the Trilateral Commission. (with H. de Carmoy, K. Narusawa, and P. Krugman), 1987.

211. “The Efficiency of Tax Expenditures: Reply”, Journal of Public Economics, 33(1), June 1987, pp 133- 136.

212. The United States in the World Economy, (Introduction and Editor), University of Chicago Press, 1988. (See also The United States in the World Economy: A Summary Report, National Bureau of Economic Research, 1987).

213. “Rethinking International Economic Coordination: A Lecture on the Occasion of The Fiftieth Anniversary of Nuffield College, Oxford,” Oxford Economic Papers, 1988.

214. “The Effects of Fiscal Policies When Incomes are Uncertain: A Contradiction to Ricardian Equivalence,” American Economic Review, 78(1), March 1988, pp 14-23.

215. International Economic Cooperation (Introduction and Editor), University of Chicago Press, 1988. (See also International Economic Cooperation: A Summary Report, National Bureau of Economic Research, 1987.)

216. “Imputing Corporate Tax Liabilities to Individual Taxpayers,” The National Tax Journal, 41(1), March 1988, pp 37-59.

217. Handbook of Public Economics Volume II (edited with Alan Auerbach), 1987.

218. “Thinking About International Economic Coordination,” Journal of Economic Perspectives, 2(2), Spring 1988, pp 3-13.

219. “Government Debt, Government Spending and Private Sector Behavior Revisited: Comment,” (with Douglas Elmendorf) American Economic Review, 80(3), June 1990, pp 589-599.

220. “Keynesian Economics at Harvard College,” Challenge, July/August 1988.

221. “Budget Deficits, Tax Incentives and Inflation: A Surprising Lesson from the 1983-84 Recovery,” (with Douglas Elmendorf), Tax Policy and the Economy, Vol. 3, 1989, pp 1-23.

222. “The Second Best Theory of Capital Income Taxation,” Oxford Economic Papers, 1990 (Reprinted in Taxation, Private Information and Capital.)

223. “National Saving and International Investment,” (with Phillipe Bacchetta) in National Saving and Economic Performance Douglas Bernheim and John Shoven, (eds.), the University of Chicago Press, 1991, pp 201-220.

224. “The Case Against Trying to Stabilize the Dollar,” American Economic Review, 79(2), May 1989, pp 36-40.

225. “Tax Policy for the 1990s: Personal Saving, Business Investment, and Corporate Debt,” American Economic Review, 79(2), May 1989, pp 108-112.

226. “International Trade Effects of Value Added Taxation” (with Paul Krugman) in Taxation in the Global Economy, Assaf Razin and Joel B. Slemrod, (eds.), the University of Chicago Press, 1990.

227. “How the CEA Advises Presidents,” Challenge, 32(6), November-December 1989, pp 51-56

228. “Imperfect Annuity Markets, Unintended Bequests, and the Optimal Age Structure of Social Security Benefits,” Journal of Public Economics, 41(4), February 1990, pp 31-43.

229. “US Protectionism on the Rise,” European Affairs, 1989.

230. Reducing the Risk of Economic Crisis, (Introduction and Editor), University of Chicago Press, 1991.

231. The Economics of Art Museums, (Introduction and Editor), University of Chicago Press, 1991.

232. “International Considerations for U.S. Monetary Policy,” in International Financial Integration and the Conduct of U.S. Monetary Policy. (Federal Reserve Bank of New York, 1990.)

233. “The Rationale for, and Effects of, International Economic Policy Coordination: Comment,” in International Policy Coordination and Exchange Rate Fluctuations, William H. Branson, Jacob A. Frenkel and Morris Goldstein, (eds.), University of Chicago Press, 1990.

234. The U.S.-Japan Economic Forum (Introduction and Co-Editor with Yutaka Kosai), NBER 1991.

235. “The Budget and Trade Deficits Aren’t Really Twins,” Challenge, 35/2, March/April 1992, pp 60-63.

236. “The Council of Economic Advisers and Economic Advising in the United States,” Economic Journal, 102(414), September 1992, pp 1223-1234.

237. “Social Security Rules and Marginal Tax Rates,” (with Andrew Samwick), National Tax Journal, Vol. 45, No. 1, March, 1992, pp 1-22.

238. Comment on “The University in the Marketplace” by Michael Rothschild and Lawrence White” in Studies of Supply and Demand in Higher Education, Charles Clotfelter and Michael Rothschild, (eds.), University of Chicago Press, 1993.

239. “Lessons of the Bretton Woods Experience,” in Michael Bordo and Barry Eichengreen, A Retrospective on the Bretton Woods System: Lessons for International Monetary Reform, University of Chicago Press, 1993.

240. “National Security Aspects of US-Japan Economic Relations in the Pacific Asia Region,” in J. Frankel and Miles Kahler, Regionalism and Rivalry: Japan and the United States in Pacific Asia, University of Chicago Press, 1993, p 449.

241. “Does One Market Require One Money?”, The Policy Implications of Trade and Currency Zones, 1991 Annual Conference of the Federal Reserve Bank of Kansas City, 1992

242. “Investment Policies to Promote Growth,” in Symposium on Policies for Long-Run Economic Growth, 1992 Annual Conference of the Federal Reserve Bank of Kansas City, 1993

243. “Tax Reform and the Residential Real Estate Market in the Late 1980s,” in Real Estate and the Credit Crunch, Federal Reserve Bank of Boston Conference, 1993

244. American Economic Policy in the 1980s. (Introduction and Editor). University of Chicago Press. 1993

245. “American Economic Policy in the 1980s: A Personal View,: in M. Feldstein (ed.) American Economic Policy in the 1980s. University of Chicago Press. 1993

246. “The Recent Failure of U.S. Monetary Policy,” (The 1992 Tinbergen Lecture of the Netherlands Royal Economic Society), De Economist, 141, NR. 1, 1993, pp 29-42.

247. “The Use of a Monetary Aggregate to Target Nominal GDP,” (with James Stock) in Monetary Policy, University of Chicago Press, N. Greg Mankiw (ed.), 1994, pp 7-70..

248. “U.S. Commercial Banking: Trends, Cycles and Policy: A Comment,” NBER Macroeconomics Annual, 1993

249. “Higher Tax Rates with Little Revenue Gain: An Empirical Analysis of the Clinton Tax Plan,” (with Dan Feenberg) Tax Notes, March 22, 1993.

250. “Why Maastricht Will Fail” The National Interest, 1993.

251. “The Integration of World Capital Markets,” in Changing Capital Markets: Implications for Monetary Policy, 1993 Annual Conference of the Kansas City Federal Reserve Bank, 1994.

252. “Competing in the World Economy,” (The 1993 Adam Smith Address to the National Association of Business Economists), Business Economics, January 1994, pp 7-11.

253. “The Effect of Outbound Foreign Direct Investment on the Domestic Capital Stock,” in The Effects of International Taxation on Multinational Corporations, M. Feldstein, J. Hines and R.G. Hubbard (eds.), University of Chicago Press 1995.

254. The Effects of International Taxation on Multinational Corporations, M. Feldstein, J. Hines and R.G. Hubbard (eds.), University of Chicago Press, 1995.

255. “The Effects of Tax Based Incentives on National Saving and Government Revenue,” Quarterly Journal of Economics, May 1995, pp 475-494.

256. “College Scholarship Rules and Private Saving,” American Economic Review, Vol. 85, No. 3, June 1995.

257. “The Effect of Marginal Tax Rates on Taxable Income: A Panel Study of the 1986 Tax Reform Act,” Journal of Political Economy, June 1995, (103:3), pp 551-72.

258. “Tax Rules and The Effect of Foreign Direct Investment on U.S. National Income,” in Taxing Multinational Corporations, M. Feldstein, J. Hines, and R.G. Hubbard (eds.), University of Chicago Press, 1995.

259. Taxing Multinational Corporations, M. Feldstein, J. Hines, and R.G. Hubbard (eds.), University of Chicago Press, 1995.

260. “Taxes, Leverage and the National Return on Foreign Direct Investment,” in Essays in Honor of Erich Streissler, F. Baltzarek, F. Butschek, and G. Tichy (eds.), Von der Theorie zur Wirtschafspoltick – ein osterreichischer Weg. Stuttgart: Lucius & Lucius, 1998, pp 304-319. NBER Working Paper No. 4689, (March 1994).

261. “The U.S. Fiscal Problem: A Comment,” in NBER Macroeconomics Annual, S. Fischer and J. Rotenberg (eds), 1994.

262. “Can State Taxes Redistribute Income?” (with Marian Vaillant), NBER Working Paper No. 4785, (June 1994). Journal of Public Economics, Vol. 68, No. 3, June 1998, pp 369-396.

263. “Tax Policy and International Capital Flows,” The 1994 Bernhard Harms Prize Lecture, Welwirtshaftsliches Archiv, 1994:4, pp 675-697 and NBER Working Paper No. 4851, June 1994.

264. “Fiscal Policies, Capital Formation and Capitalism,” The 1994 Joseph Schumpeter Lecture to the European Economic Association, European Economic Review, 39 (1995), pp 399-420.

265. “A Major Risk Approach to Health Insurance Reform,” (with Jonathan Gruber), in Tax Policy and the Economy, J. Poterba (ed), 1995.

266. “Reducing Supply Side Disincentives to Job Creation: A Comment,” Federal Reserve Bank of Kansas City, in Reducing Unemployment: Current Issues and Policy Options, 1995.

267. “Measuring Money Growth When Financial Markets are Changing,” (with James Stock), NBER Working Paper No. 4888, October 1994, Journal of Monetary Economics, 37 (1996) pp 3-.

268. “Behavioral Responses to Tax Rates: Evidence from TRA86,” American Economic Review, AEA Papers and Proceedings, Vol. 85, No. 2, May 1995.

269. “The Economics of Health and Health Care: What Have We Learned? What Have I Learned?”, American Economic Review, Vol. 85. No. 2, May 1995.

270. “The Taxation of Two Earner Families,” (with Daniel Feenberg) in The Empirical Foundations of Household Taxation, M. Feldstein and J. Poterba (eds.), 1996.

271. “Tax Avoidance and the Deadweight Loss of the Income Tax,” in Review of Economics and Statistics, November 1999, 81(4): pp 674-680. NBER Working Paper No. 5055.

272. The Empirical Foundations of Household Taxation, (ed. with J. Poterba), 1996.

273. “Social Security and Saving: New Time Series Evidence,” National Tax Journal, 1996.

274. “Health Care Reform: Comment,”in Victor Fuchs (ed.), Individual and Social Responsibility: Child Care, Education, Medical Care and Long-term Care in America, 1996.

275. “Would Privatizing Social Security Raise Economic Welfare?”, in Privatizing Social Security, Martin Feldstein (ed.), (Chicago: Chicago University Press), 1998.

276. “The Effects of Increased Tax Rates on Taxable Income and Economic Efficiency: A Preliminary Analysis of The 1993 Tax Rate Increases,” (with Dan Feenberg), in Tax Policy and The Economy 1996, J. Poterba (ed.).

277. “The Costs and Benefits of Going from Low Inflation to Price Stability,” in Monetary Policy and Inflation, C. Romer and D. Romer (eds.), (Chicago: University of Chicago Press), 1998.

278. “Would A Consumption Tax Reduce Interest Rates,” in Tax Policy and The Economy 1997, J. Poterba (ed.). See also The more technical analysis in “The Effects of a Consumption Tax on The Rate of Interest,” NBER Working Paper No.5397.

279. “The Missing Piece in Policy Analysis: Social Security Reform,” The Richard T. Ely Lecture, in American Economic Review, 86, No. 2, May 1996, pp 1-14.

280. “Price Stability,” in Achieving Price Stability, 1996 Annual Conference of The Federal Reserve Bank of Kansas City, 1997.

281. “How Big Should Government Be?”, National Tax Journal, 1997, NBER Working Paper No. 5868.

282. “The Transition Path in Privatizing Social Security.” (with Andrew Samwick) in M. Feldstein (ed.) Privatizing Social Security, (Chicago: Chicago University Press), 1998.

283. “Privatizing Social Security: Introduction,” in M. Feldstein (ed.), Privatizing Social Security, (Chicago: University of Chicago Press), 1998.

284. Privatizing Social Security, (ed.) (Chicago: Chicago University Press), 1998.

285. “The CEA: From Stabilization to Resource Allocation,” American Economic Review, May 1997, NBER Working Paper No. 5908.

286. “Employment Policy of The Middle Reagan Years: What Didn’t Happen and Why It Didn’t Happen,” The North American Journal of Economics and Finance, 1997, NBER Working Paper No. 5917.

287. “Policies to Grow The U.S. Standard of Living,” Business Economics, January 1997, pp 33-37.

288. “Privatizing of Social Security, Journal of Finance, July 1997.

289. “Capital Income Taxes and The Benefit of Price Stability,” in M. Feldstein (ed.), The Costs and Benefits of Achieving Price Stability, (Chicago: University of Chicago Press) 1999.

290. “The Economics of Prefunding Social Security and Medicare Benefits,” with Andrew Samwick, in NBER Macro Annual 1997.

291. “The Case for Privatization,” Foreign Affairs, 76:4, July-August 1997, pp 24-38.

292. “Costs and Benefits of Achieving Price Stability: Introduction” in M. Feldstein (ed.) Costs and Benefits of Achieving Price Stability, (Chicago: University of Chicago Press, 1999.

293. Costs and Benefits of Achieving Price Stability, (Chicago: University of Chicago Press) 1999.

294. “Transition to a Fully Funded Pension System: Five Economic Issues,” in Redesigning Social Security, Horst Siebert (ed.), Institut fur Weltwirtschaft an der Universitat, Kiel, (Tubingen: Mohr Siebeck, 1998), pp 299-315.

295. “EMU and International Conflict,” Foreign Affairs, 1997.

296. “The Political Economy of The European Economic and Monetary Union: Political Sources of an Economic Liability,” in Journal of Economic Perspectives, Vol. 11, No. 4, Fall 1997, pp 23- 42.

297. “Maintaining Financial Stability in a Global Economy,” 1997 Annual Conference of The Federal Reserve Bank of Kansas City, Maintaining Financial Stability in a Global Economy, 1998.

298. “A new era of Social Security,” The Public Interest, Winter 1998, No. 130, pp 102-125.

299. “Refocusing the IMF,” Foreign Affairs, March-April 1998, pp 20-33.

300. “Potential Effects of Two Percent Personal Retirement Accounts,” (with Andrew Samwick) in Tax Notes, Vol. 79, No. 5, May 4, 1998, pp 615-620.An updated version is available with the title, “New Estimates of the Potential Effects of Two Percent Personal Retirement Account.”

301. International Capital Flows, (Martin Feldstein, editor) (Chicago: University of Chicago Press) 1999.

302. “International Capital Flows: Introduction,” in International Capital Flows, (Martin Feldstein, editor) Chicago: University of Chicago Press) 1999.

303. “Interest-Rate Rules in an Estimated Sticky Price Model: Comment,” in John Taylor (ed.), Rules and Guidelines for Monetary Policy, (Chicago: University of Chicago Press, ) 1999.

304. “Income Inequality and Poverty,” 1998 Annual Conference of the Kansas City Federal Reserve Bank, Income Inequality: Issues and Policy Options, August 1998. NBER Working Paper No. 6770.

305. “Social Security Pension Reform in China,” NBER Working Paper No. 6794, in China Economic Review, Vol. 10, No. 2, Fall 1999.

306. “Unemployment Insurance Savings Accounts,” (with Dan Altman), Tax Policy and the Economy, Vol. 21, 2006. NBER Working Paper No. 6860.

307. “Individual Risk and Intergenerational Risk Sharing in an Investment-Based Social Security System,” (with Elena Ranguelova), NBER Working Paper No. 6839.

308. “Il caso del passaggio del sistema pensionistico italiano verso un modello a capitalizzazione”, Assicurazioni LXV: June 1998, pp 7-13.

309. “Prefunding Medicare,” American Economic Review, May 1999. NBER Working Paper No. 6917.

310. “The Economics of Bequests in Pensions and Social Security,” (with Elena Ranguelova) NBER Working Paper No. 7065, in M. Feldstein and J. Liebman, Distributional Aspects of Social Security Reform, (Chicago: University of Chicago Press), 2000.

311. “The Transition to Investment-based Social Security when Portfolio Returns and Capital Profitability are Uncertain,” (with Elena Ranguelova and Andrew Samwick) in J. Campbell and Martin Feldstein (eds.), Risks Aspects of Investment Based Social Security Reform,,(Chicago: University of Chicago Press), 2000. NBER Working Paper No. 7016.

312. “Administrative Costs in Social Security Reform: A Comment,” in John Shoven, Administrative Costs Aspects of Social Security Reform, (Chicago: University of Chicago Press), 2000.

313. “Public Policies and Private Saving in Mexico,” NBER Working Paper No. 6930, in Economia Mexicana, Vol. 8, No. 2, Fall 1999, pp-231-265.

314. “A Self-Help Guide for Emerging Markets,” Foreign Affairs, March/April 1999 issue, Vol. 78, No. 2, pp 93-109. (Also as NBER Working Paper No. 6907).

315. “Reducing Poverty, Not Inequality,” The Public Interest, No. 137, Fall 1999, pp 33-41.

316. “No New Architecture,” The International Economy, September/October 1999, pp 32-35.

317. Risk Aspects of Investment-Based Social Security Reform, (ed. with John Campbell), Chicago: University of Chicago Press, 2001.

318. “Risk Aspects of Investment-Based Social Security Reform: Introduction,” with John Campbell, in Martin Feldstein and John Campbell, Risk Aspects of Investment-Based Social Security Reform, University of Chicago Press, 2001.

319. “The Distributional Effects of an Investment-Based Social Security System,” (with Jeffrey Liebman) NBER Working Paper 7492, January 2000, in M. Feldstein and J. Liebman, Distributional Aspects of Social Security and Social Security Reform, Chicago: University of Chicago Press, 2002.

320. Distributional Aspects of Social Security and Social Security Reform, edited with Jeffrey Liebman, Chicago: University of Chicago Press, 2002.

321. “Distributional Aspects of Social Security Reform: Introduction,” with Jeffrey Liebman, in Distributional Aspects of Social Security and Social Security Reform, edited by Martin Feldstein and Jeffrey Liebman, Chicago: University of Chicago Press, 2002.

322. “The European Central Bank and the Euro: The First Year”, Journal of Policy Modeling, May 2000, Volume 22, Number 3, pp 345-354. NBER Working Paper No. 7517, February 2000.

323. “Allocating Payroll Tax Revenue to Personal Retirement Accounts,” (with Andrew Samwick), Tax Notes, June 19, 2000, Vol. 87, No. 12, pp 1645-1652. NBER Working Paper No. 7767, July 2000.

324. “Accumulated Pension Collars: A Market Approach to Reducing The Risk of Investment-Based Social Security Reform,” (with Elena Ranguelova). NBER Working Paper No. 7861, August 2000, in Tax Policy and the Economy 2000, (Cambridge, MA: MIT Press, 2001)

325. “Aspects of Global Economic Integration: Outlook for the Future,” in Aspects of Global Economic Integration, Annual Conference of The Federal Reserve Bank of Kansas City, 2000. NBER Working Paper No. 7899 , September 2000.

326. “Individual Risk in an Investment-Based Social Security System”, (with Elena Ranguelova). NBER Working Paper No. 8074, January 2001, American Economic Review , Vol. 91, No. 4, September 2001, pp 1116-25.

327. Social Security Pension Reform in Europe , edited with Horst Siebert. (Chicago: University of Chicago Press, 2002.

328. “Introduction”, Social Security Pension Reform in Europe, edited with Horst Siebert. (Chicago: University of Chicago Press, 2002)

329 “Anna Schwartz at the National Bureau of Economic Research.” Journal of Financial Services Research, 18:2/3, 2000, pp 115-117.

330. “Economic Problems in Ireland.” NBER Working Paper No. 8264. The Thirty-First Geary Lecture,2000, published by the Economic and Social Research Institute, Dublin, Ireland, 2001.

331. “Social Security,” with Jeffrey Liebman. NBER Working Paper No. 8451, September 2001.”The Handbook of Public Economics,” edited with Alan Auerbach, Vol. 4, 2002.

332. “The Transformation of Public Economics Research: 1970-2000,” Journal of Public Economics,September 2001.

333. “Oil Dependence and National Security: A Market-Based System for Reducing U.S. Vulnerability,” The National Interest, November 2001, pp 60-64.

334. “Potential Paths of Social Security Reform,” (with Andrew Samwick) in Tax Policy and the Economy 2001 , Vol. 16, 2002, Cambridge: MIT Press, pp 181-224. NBER Working Paper No. 8592, November 2001.

335. “Germany’s Economic Ills,” in Essays Honoring Professor Horst Siebert, 2002.

336. The Handbook of Public Economics, edited with Alan Auerbach, Vol.4, 2002.

337. “The Future of Social Security Pensions in Europe,” in Naar beste vermogen, Essays Honoring Pieter Korteweg, eds. JJ van Duijn, et. al., Kluwer, December 2001. NBER Working Paper No. 8487, September 2001.

338. “Argentina’s Fall: Lessons from the Latest Financial Crisis,” in Foreign Affairs, March/April 2002, Vol. 81, No. 2.

339. “Economic and Financial Crises in Emerging Market Countries: An Overview,” in M. Feldstein (ed.), Economic and Financial Crises in Emerging Market Countries. (Chicago: University of Chicago Press), 2003.

340. “Economic and Financial Crises in Emerging Market Countries,” (Chicago: University of Chicago Press), 2003.

341. “A Role for Discretionary Fiscal Policy in a Low Interest Rate Environment,” in the 2002 Federal Reserve Bank of Kansas City Annual Conference volume, Rethinking Stabilization Policy , 2003.

342. “Why is Productivity Growing Faster?”, Journal of Policy Modeling, Vol. 25, No. 5, July 2003, pp 445-452.

343. “Monetary Policy in an Uncertain Environment,” in Monetary Policy and Uncertainty, 2003 Federal Reserve Bank of Kansas City, Jackson Hole Conference Volume, 2004.

344. “Risk and Uncertainty in Monetary Policy: Comments of Remarks of Chairman Alan Greenspan,” American Economc Review: Papers and Proceedings, May 2004.

345. “Rethinking Social Insurance,” The 2005 Presidential Address to the American Economic Association, in American Economic Review, March 2005. “Rethinking Social Insurance” Presidential Address to American Economic Association, January 8, 2005. (Full text as published in American Economic Review, March 2005) Chinese translation as published in Journal of Comparative Economics, April 2006

346. “Structural Reform of Social Security,” Journal of Economic Perspectives, Vol. 19, Issue 2, pp.33-55 Spring 2005. NBER Working Paper No. 11098, February 2005.

347. “Reducing the Risk of Investment-Based Social Security Reforms,” in Social Security Policy in a Changing Environment (Chicago University Press, forthcoming) edited by Jeffrey Brown, Jeffrey Lieberman and David Wise. (Previously distributed as NBER Working Paper No. 11084, February 2005.

348. “Monetary Policy in a Changing International Environment: The Role of Global Capital Flows,” in Conference Papers of 80th Anniversary of Banco de Mexico, November 2005, Banco de Mexico, November 2006, pp 245-58. NBER Working Paper No. 11856, December 2005.

349. “The Return of US Saving”, Foreign Affairs, May/June 2006, pp 87-93.

350. “The 2006 Economic Report of the President: Comment on Chapter One (The Year in Review) and Chapter Six (The Capital Account Surplus)”, Journal of Economic Literature, September 2006, Vol. 44, Issue 3, pp 673-79. NBER Working Paper No. 12168, April 2006.

351. “The Effect of Taxes on Efficiency and Growth,” Tax Notes, May 8, 2006.

352. “Taxes on Investment Income Remain Too High and Lead to Multiple Distortions,” The Economists’ Voice, Vol 3, Issue 6, Article 5., May 2006.

353. “Balancing The Goals of Health Care Provision and Financing,” Health Affairs, Vol 25, No. 6, pp.1603-1611.

354. “The Underfunded Pentagon,” Foreign Affairs, Vol 86, Number 2, pp.134-140.

355. “Housing, Credit Markets and the Business Cycle,” NBER Working Paper 13471, October 2007, forthcoming in the 2007 Kansas City Federal Reserve Annual Conference Volume Housing, Housing Finance and Monetary Policy, 2008.

356. “Why is the Dollar So High?” NBER Working Paper 13114, October 2007, forthcoming in Journal of Policy Modeling 2008.

357. “Effects of Taxes on Economic Behavior,” in The National Tax Journal,, Vol. LXI, No. 1, March 2008, pp 131-39. NBER Working Paper 13745, January 2008.

358. “Designing Institutions to Deal with Terrorism in the United States,” NBER Working Paper 13729, January 2008, forthcoming in The American Economic Review, Papers and Proceedings, May 2008.

359. “Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate,” Journal of Economic Perspective, NBER Working Paper 13952, April 2008.

360. “Did Wages Reflect Growth in Productivity,” NBER Working Paper 13953, Journal of Policy Modeling, 30 (2008) pp 591-94.

361. “Monetary Policy Challenges in the Decade Ahead”. Remarks at the 7th Bank for International Settlements Annual Conference, June 2008.

362. “Optimal Currency Areas”, ECB Fifth Central Banking Conference, November, 2008.

363. “The Breakup of the Euro Area: A Comment”, forthcoming in A. Alesina and F. Giavazzi, NBER Conference, Europe and the Euro, October 2008.

Other publications

Recent Articles in the Wall Street Journal

Defense Spending Would Be Great Stimulus , December 24,2008
How to Help People Whose Home Values Are Underwater , November, 2008
The Problem Is Still Falling House Prices, October, 2008
John McCain Has a Tax Plan To Create Jobs , Joint with John B. Taylor , September, 2008
The Tax Rebate Was a Flop. Obama’s Stimulus Plan Won’t Work Either. , August, 2008
We Can Lower Oil Prices Now , July, 2008
Enough With the Interest Rate Cuts ,April, 2008
How to Stop the Mortgage Crisis ,March, 2008
Our Economic Dilemma,February, 2008
How to Avert Recession ,December, 2007
Social Security Compromise,October, 2007
Liquidity Now!,September, 2007
The Fed’s Difficult Task , August, 2006
Tradeable Gasoline Rights , June, 2006
The Dollar at Home — and Abroad , April, 2006
There’s More to Growth than China …, February, 2006
Raise Taxes on Savings? Tell Joe It Ain’t So!, December 2005
Saving Social Security, July 2005
The $110,000 Question, September 1, 2004
Fact vs. Fancy: The Skinny on Social Security, August 17, 2004
Here Are the Facts, February 12, 2004
Health and Taxes, January 19, 2004
There’s No Such Thing As a ‘Jobless’ Recovery, October 10, 2003
Stimulate Now, March 4, 2003
Argentina Doesn’t Need the IMF, May 28, 2002
Tax Cuts, Rate Cuts Put the Economy Back on Track, March 13, 2002
Vouchers Can Free Us From Foreign Oil, December 27, 2001
Don’t Cut Taxes – Yet, September 28, 2001
Democrats Play Politics With Social Security, August 2, 2001
Japan Needs To Stimulate Spending, July 16, 2001
The 28% Solution, February 16, 2001
Archive of Wall Street Journal articles.

Other Recent Non-Technical Papers

The Economic Stimulus and Economic Growth, Full Statement for the House Democratic Steering Committee, January 7, 2009
The Economic Stimulus and Economic Growth, Short Testimony to the House Democratic Steering Committee, January 7, 2009
Will the Euro Survive the Current Crisis? Project Sydicate , December, 2008
Testimony to House Financial Services Committee, , November 18, 2008
A Chapter for Detroit to Open, The Washington Post, November 18, 2008
Optimal Currency Areas, ECBs Fifth Central Banking Conference, November 14, 2008
The Breakup of the Euro Area: Comment , October, 2008
The Stimulus Plan We Need Now – The President-Elect Won’t Have to Wait Till January to Act, The Washington Post, October 30, 2008
TV Interview with Charlie Rose on Financial Crisis, September 30, 2008
The Power of Oil Consumers, The Washington Post, Joint with Henry Kissinger , September 18, 2008
Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate, Journal of Economic Perspectives , Summer, 2008
Credit and the Real Business Cycle, Remarks at the 2008 Money and Banking Seminar of the Central Bank of Argentina
America’s Economic Challenge, Project Syndicate, September 2008
How to shore up America’s crumbling housing market, The Financial Times, August 26,2008
The Current Economic Context, Opening remarks for the Federal Reserve Bank of Kansas City Conference on Maintaining Stability in a Changing Financial System, Jackson Hole, Wyoming, August 22, 2008
The crisis: a tale of two monetary policies The Financial Times , August 7, 2008
What is the Dollar’s Sustainable Value?, Project Syndicate, July, 2008
Stepping Down as NBER President, Remarks at the NBER Summer Institute, July 24, 2008
Monetary Policy Challenges in the Decade Ahead, Remarks at the 7th Bank for International Settlements Annual Conference, June 2008
A Home Price Firewall, The Washington Post, June 19,2008
Saudi Arabia should ditch its dollar peg, The Financial Times, June 18,2008
Dollar and the Price of Oil , Syndicate, May, 2008
Misleading growth statistics give false comfort, The Financial Times, May 7,2008
The dollar may be falling at just the right time, The Financial Times, March 28,2008
The Declining Dollar , Project Syndicate, March 12,2008
Testimony to Senate Finance Committee, January 24, 2008
Designing Institutions to Deal with Terrorism in the United States, , Presented at the AEA meetings, January, 2008
Did Wages Reflect Growth in Productivity?, Presented at the AEA meetings, January, 2008
Testimony to House Budget Committee, December 05, 2007
A more competitive dollar is good for America, The Financial Times , October 15, 2007
Housing, Housing Finance and Monetary Policy: , Remarks at the 2007 Jackson Hole conference of the Kansas City Federal Reserve, September,2007
The Revolution in Economic Thinking and Practice:, Remarks at the Bradley Foundation Award Ceremony, May 3, 2007
Why is the Dollar So High?, American Economic Association, April, 2007
The Underfunded Pentagon, Foreign Affairs, March/April 2007
Balancing The Goals Of Health Care Provision And Financing, Health Affairs, November/December 2006 – Volume 25, Number 6
Immigration is no way to fund an ageing population,The Financial Times, December 13,2006
Remarks to Institute for Defense Analysis and at West Point, 2006
The New Economic Geography: A Comment, remarks at the 2006 Jackson Hole conference of the Kansas City Federal Reserve, August 2006
Europe has to face the threat of America’s trade deficit , The Financial Times , August 2,2006
Taxes on Investment Income Remain Too High and Lead to Multiple Distortions , The Economists’ Voice, Vol. 3 (2006): Iss. 6, Article 5
Falling Dollar Sets Test for Asia and Europe, Financial Times , May 26, 2006
The Return of Saving, Foreign Affairs , May/June 2006
What Remains of Keynes’ Work in Today’s Economics?, The Financial Times Deutschland , April 21,2006
Central Banking: Is Science Replacing Art? Comments at European Central Bank conference in honor of Otmar Issing, March 17, 2006
The Effect of Taxes on Efficiency and Growth, Tax Notes, May 8, 2006. (Remarks Presented at National Association for Business Economists, WDC , March 14, 2006)
The Case for a Competetive Dollar, Remarks at the Annual SIEPR Summit, Stanford University, March 3, 2006
America will fall harder if oil prices rise again,The Financial Times, February 2006
Why Uncle Sam’s bonanza might not be all that it seems, The Financial Times, January 2006
The Euro and the Stability Pact, American Economic Association, January 2005
Risk and Uncertainty in Monetary Policy: Comments on Remarks by Chairman Alan Greenspan, American Economic Association, January 2004
Monetary Policy in an Uncertain Environment, In Monetary Policy and Uncertainty, 2003 Federal Reserve Bank of Kansas City, Jackson Hole Conference Volume
Fiscal Activism Would Speed a Recovery,The Financial Times, August 2003
Accounting for Taxpayer Behavior, The Washington Post, April 2003
Britain Must Avoid Germany’s Mistake,The Financial Times, April 2003
Banking, Budgets, and Pensions: Some Priorities for Chinese Policy, Presented at China Development Research Council Forum, March 2003
Why is Productivity Growing Faster?, Presented at the AEA meetings, January 2003
Reducing America’s Dependence on Foreign Oil Supplies, Presented at the AEA meetings, January 2003
Deflation,November 2002
Milton Friedman and Public Sector Economics, November 2002
A New Strategy for Social Security Investment in Latin America Inter-American Conference on Social Security, Mexico, October 2002
Is There a Role for Discretionary Fiscal Policy? Jackson Hole Federal Reserve Bank Conference, August 2002
Argentina’s Fall: Lessons From the Latest Financial Crisis, Foreign Affairs, March/April 2002
Germany’s Economic Ills, Essays in Honor of Horst Siebert, 2003
The President’s Tax Cut Proposal, Testimony to The Senate Budget Committee, February 13, 2001
The President’s Tax Cut Proposal, Testimony to The Ways and Means Committee, February 13, 2001
The Transformation of Public Economics Research: 1970-2000, Journal of Public Economics, September 2001
Oil Dependence and National Security: A Market-based System for Reducing U.S. Vulnerability, The National Interest, November 2001
A productivity divide: US economic performance will rebound but Europe risks being left behind, The Financial Times, June 28, 2001

Archive of Other Recent Non-Technical Papers.

Recent articles on Social Security Reform — Non-Technical Papers
Structural Reform of Social Security, Spring 2005 (Full text as published in Journal of Economic Perspectives)
(Chinese translation)
Realizing the Potential of China’s Social Security Pension System, , February 24, 2006
With Jeffrey Liebman (Published in China Economic Times and reprinted in Jiwei Lou and Shuilin Wang, editors)
Public Finance in China: Reform and Growth for a Harmonious Society, World Bank, 2007, chapter 17
(Chinese translation)
Saving Social Security, July 2005
The $110,000 Question, September 2004
Fact vs. Fancy: The Skinny on Social Security, August 2004
Reducing the Risk of Investment-Based Social Security Reform: A Progress Report, August 2004
The Future of Social Security Pensions in Europe, September 2001
Social Security Reform and Fiscal Policy in the Clinton Administration, June 28, 2001
Archive of Social Security Reform papers.
Research studies of Social Security

Boston Globe

Archive of Articles in Boston Globe with Kathleen Feldstein.

—-

Degrees

Harvard College, A.B., summa cum laude (1961)
Oxford University, B. Litt. (1963), M.A. (1964), D. Phil. (1967)

Previous Positions:

Chairman, Council of Economic Advisers, 1982-84
Harvard University: Assistant Professor, 1967-68; Associate Professor, 1968-69
President and CEO, National Bureau of Economic Research, 1977-82, 1984-2008
Oxford University:
Lecturer in Public Finance, 1965-67
Nuffield College: Research Fellow, 1964-65; Official Fellow, 1965-67

Professional Activities and Honors:

President, American Economic Association, 2004
John Bates Clark Medal of the American Economic Association, 1977
Member, President’s Foreign Intelligence Advisory Board 2006 -
Honorary Degrees: University of Rochester, (1984); Marquette University, (1985); Bentley College, (1988); Adelphi University, (1991).
Fellow, Econometric Society, 1970-
Member, American Philosophical Society, 1989-
Member, Institute of Medicine, National Academy of Sciences, 1971-
Fellow, American Academy of Arts and Sciences, 1977-
Fellow, National Association of Business Economists, 1980-
Honorary Fellow, Nuffield College, Oxford, 1998-
Corresponding Fellow, British Academy, 1998-
Foreign Member, Austrian Academy of Sciences, 1996-
Fellow, European Economic Association, 2004-
Member, Council on Foreign Relations, 1980-; Trustee, 1999-; Executive Committee, 2002-
Member, American Economic Association. Executive Committee, 1980-82; Vice President 1988-89; President Elect 2003; President 2004.
Distinguished Fellow, American Economic Association, 2005
Member, The Trilateral Commission, 1984- ; Executive Committee, 1990-
Member, Group of 30, 2002-
Member, National Committee on United States-China Relations, Director, 2001-
Member, Academic Advisory Council, American Enterprise Institute, 2008 -
Kiel Institute of World Economics, Scientific Advisory Board, 1991-2003; International Research Fellow.
Member of the Editorial Board, Review of Economic Studies (1965-67),
Journal of Public Economics (co-editor, 1972-86), American Economic Review, (1974-79), The Public Interest, The National Interest.
Board of Contributors, The Wall Street Journal
Director: American International Group, 1988-; HCA, Inc., 1998-2006; Eli Lilly, 2001-
Member, International Advisory Council: Daimler-Chrysler, 1990-2006; Robeco, 1988-2006; JP Morgan International Council, 1984-93, 2001-
Member, Panel of Economic Advisers, Congressional Budget Office
Member, Panel of Economic Advisers, Federal Reserve Bank of New York
Member, Panel of Academic Advisers, Federal Reserve Bank of Boston
Member, Chairman’s Advisory Council, Financial Stability Forum
Member, Board of Directors, Smith-Richardson Foundation, 2007-
Member, Council of Academic Advisors, American Enterprise Institute, 2008-
Member of the Corporation, Massachusetts General Hospital
Member, New York Economic Club
Chairman, Publications Committee, Foreign Affairs, 2001
Elizabeth Morgan Prize, University of Chicago, 1976
Fisher-Shultz Lecture, Econometric Society, 1980
Joseph Schumpeter Professor, University of Vienna, March 1981
Distinguished Public Service Award, The Tax Foundation, 1983 & 1999
John R. Commons Prize, Omichron Delta Epsilon, 1989
Jan Tinbergen Lecture, Netherlands Royal Economic Society, 1992
Adam Smith Lecture, National Association for Business Economics, 1993
Bernhard Harms Prize, Weltwirtschafts Institut, Germany, 1994
Schumpeter Lecture, European Economic Association, 1994
Richard Ely Lecture, American Economic Association, 1996
International Prize of INA – Academia Nazionale dei Lincei (Italy), 1997
Frank Geary Lecture, Economic and Social Research Institute, Ireland, 2000
Corporate America’s Outstanding Directors Award, Year 2000 (Director’s Alert)
National Tax Association, Daniel M. Holland Award, 2003
Money Marketeers Lifetime Achievement Award

TARP: 12-31-08 Gene L Dodaro (Financial Services Committee)

Release here.

Summary, for complete Testimony, click here.

Mr. Chairman, Ranking Member Bachus, and members of the committee:

I am pleased to be here today to discuss our first report on the newly created Troubled Asset Relief Program (TARP), which gave the Department of Treasury the authority to purchase and insure up to $700 billion in troubled assets held by financial institutions through the Office of Financial Stability (OFS).[Footnote 1 GAO, Troubled Asset Relief Program: Additional Actions Needed to Better Ensure Integrity, Accountability, and Transparency, GAO-09-161 (Washington D.C.: Dec. 2, 2008).]

Treasury was granted this authority in response to the recent financial crisis that has threatened the stability of the U.S. banking system and the solvency of numerous financial institutions. Among other things, the Emergency Economic Stabilization Act (the act) that authorized TARP on October 3, 2008, requires GAO to report at least every 60 days on findings resulting from our oversight of the status of actions taken under the program.[Footnote 2 The Emergency Economic Stabilization Act of 2008, Pub. L. No. 110-343(Oct. 3, 2008). The act requires the U.S. Comptroller General to report at least every 60 days, as appropriate, on findings resulting from oversight of TARP’s performance in meeting the act’s purposes; the financial condition and internal controls of TARP, its representatives, and agents; the characteristics of asset purchases and the disposition of acquired assets, including any related commitments entered into; TARP’s efficiency in using the funds appropriated for its operations; its compliance with applicable laws and regulations; and its efforts to prevent, identify, and minimize conflicts of interest among those involved in its operations.]

My statement today is based on our December 2, 2008, report. This report is the first under the act’s mandate and covers the actions taken as part of TARP through November 25, 2008.[Footnote 3 Selected transaction information in this statement has been updated through December 5, 2008.]

Our oversight work under the act is ongoing, and our next report will be issued by January 31, 2009.

Like the report, this statement focuses on (1) the nature and purpose of activities that were initiated under TARP as of November 25, 2008; (2) the structure of OFS, its use of contractors, and its system of internal controls; and (3) preliminary indicators of TARP performance.

To do this work, we reviewed documents related to TARP, including contracts, agreements, guidance, and rules. We also met with OFS, contractors, federal agencies, and officials from the eight large institutions that had received disbursements. Going forward, we plan to continue to monitor the issues highlighted in the report, as well as future and ongoing capital purchases, other more recent transactions undertaken as part of TARP (e.g., capital purchases in Citigroup and American International Group), and the status of other aspects of TARP. We conducted this performance audit in October 2008 and November 2008 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Treasury has taken a number of steps to try to stabilize the U.S. financial markets and banking system, including injecting billions of dollars into financial institutions. Although Treasury initially planned to buy mortgages and mortgage-related assets through TARP, Treasury shifted its focus to a preferred stock and warrant purchase program, known as the Capital Purchase Program (CPP). Treasury has provided more than $155 billion in capital to 87 institutions through CPP as of December 5, 2008. It has also established a Systemically Significant Failing Institution (SSFI) program, through which Treasury may invest in any financial instrument, including debt, equity, or warrants determined to be a troubled asset, and continues to explore other programs, including those focused on insurance, foreclosure mitigation, and consumer lending.[Footnote 4 The Secretary of the Treasury is to make the determination that the asset is a troubled asset, after consultation with the Chairman of the Board of Governors of the Federal Reserve System and notice to Congress.]

As of December 5, 2008, Treasury had allocated a total of $335 billion of TARP funds and disbursed $195 billion to institutions under the various programs.5 While we recognize that TARP has existed for a short time and that a new program of such magnitude faces many challenges, especially in this current uncertain economic climate, we found that Treasury has yet to address a number of critical issues. These include determining how it will ensure that CPP is achieving its intended goals and monitoring compliance with limitations on executive compensation, dividend payments, and stock repurchases. Moreover, it has yet to formalize transition planning efforts

Summary

5As of December 5, 2008, Treasury had allocated $335 billion to various programs, including $250 billion to CPP, $40 billion to American International Group (AIG) under SSFI, $20 billion to Citigroup, and $20 billion to a Federal Reserve lending facility. To date, it had disbursed a total of $195 million of the $335 billion including $155 billion under CPP (excludes $10 billion committed to Merrill Lynch & Co., which has yet to be disbursed) and $40 billion to AIG.

TARP (e.g., capital purchases in Citigroup and American International Group), and the status of other aspects of TARP. We conducted this performance audit in October 2008 and November 2008 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Treasury has taken a number of steps to try to stabilize the U.S. financial markets and banking system, including injecting billions of dollars into financial institutions. Although Treasury initially planned to buy mortgages and mortgage-related assets through TARP, Treasury shifted its focus to a preferred stock and warrant purchase program, known as the Capital Purchase Program (CPP). Treasury has provided more than $155 billion in capital to 87 institutions through CPP as of December 5, 2008. It has also established a Systemically Significant Failing Institution (SSFI) program, through which Treasury may invest in any financial instrument, including debt, equity, or warrants determined to be a troubled asset, and continues to explore other programs, including those focused on insurance, foreclosure mitigation, and consumer lending.[Footnote 4 The Secretary of the Treasury is to make the determination that the asset is a troubled asset, after consultation with the Chairman of the Board of Governors of the Federal Reserve System and notice to Congress.]

As of December 5, 2008, Treasury had allocated a total of $335 billion of TARP funds and disbursed $195 billion to institutions under the various programs.5 While we recognize that TARP has existed for a short time and that a new program of such magnitude faces many challenges, especially in this current uncertain economic climate, we found that Treasury has yet to address a number of critical issues. These include determining how it will ensure that CPP is achieving its intended goals and monitoring compliance with limitations on executive compensation, dividend payments, and stock repurchases. Moreover, it has yet to formalize transition planning efforts given the upcoming shift to a new administration or to establish an effective management structure and an essential system of internal controls. In our report, we recommended that Treasury take nine actions to help ensure the program’s integrity, accountability, and transparency. These would require that Treasury

• work with the bank regulators to establish a systematic means of determining and reporting in a timely manner whether financial institutions’ activities are generally consistent with the purposes of CPP and help ensure an appropriate level of accountability and transparency;

• develop a means to ensure that institutions participating in CPP comply with key program requirements (for example, executive compensation, dividend payments, and the repurchase of stock);

• formalize the existing communication strategy to ensure that external stakeholders, including Congress, are informed about the program’s current strategy and activities and understand the rationale for changes in this strategy to avoid information gaps and surprises;

• facilitate a smooth transition to the new administration by building on and formalizing ongoing activities, including ensuring that key OFS leadership positions are filled during and after the transition;

• expedite OFS’s hiring efforts to ensure that Treasury has the personnel needed to carry out and oversee TARP;

• ensure that sufficient personnel are assigned and properly trained to oversee the performance of all contractors, especially for contracts priced on a time-and-materials basis, and move toward fixed-price arrangements whenever possible;

• continue to develop a comprehensive system of internal control over TARP, including policies, procedures, and guidance that are robust enough to protect taxpayers’ interests and ensure that the program objectives are being met;

• issue final regulations on conflicts of interest quickly and review and renegotiate mitigation plans to enhance specificity and compliance; and

• institute a system to effectively manage and monitor the mitigation of conflicts of interest. Page