March 26, 2008

DODD ANNOUNCES HEARING ON RECENT MARKET TURMOIL, CALLS ON FEDERAL REGULATORS AND COMPANIES TO TESTIFY

WASHINGTON, DC ? Senator Chris Dodd (D-CT), Chairman of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, today announced a hearing on recent turmoil in the financial markets and efforts to address it. He has called on participants involved in the sale agreement between Bear Stearns and JPMorgan Chase to testify before the Committee next Thursday. In letters to the heads of the Treasury Department, the Federal Reserve Board, the Federal Reserve Bank of New York, the Securities and Exchange Commission, Bear Stearns and JPMorgan Chase, Dodd outlined several concerns raised by the agreement, including the role of the Federal Reserve, Treasury Department, and Securities and Exchange Commission in facilitating the deal, the implications for the U.S. taxpayer, and the implications for the regulation of our financial markets. ?While it is imperative to maintain the orderly structure of our markets, the sale agreement between JPMorgan Chase and Bear Stearns raises serious public policy questions regarding the role played by the Federal Reserve, Treasury, and Securities and Exchange Commission as facilitators of this agreement,? said Dodd. ?I am inviting the public and non-public principals involved in this unprecedented arrangement to come before the Senate Banking Committee next week to discuss the policy rationale behind the action taken by the Federal Reserve to intervene in the transaction by guaranteeing up to $30 billion in losses; the impact of both the original and new sale agreements on investors and the markets; the implications of these actions for the American taxpayer; and the implications of these actions on the regulation of our nation?s financial markets.? WHO: Chairman Chris Dodd Members of the Senate Banking Committee Invited Witnesses: The Honorable Ben Bernanke Chairman, Federal Reserve Board of Governors The Honorable Henry M. Paulson Secretary of the Treasury The Honorable Christopher Cox Chairman, U.S. Securities and Exchange Commission Timothy F. Geithner President, Federal Reserve Bank of New York Alan Schwartz President and CEO, Bear Stearns James Dimon Chairman and CEO, JPMorgan Chase WHEN: 10 a.m., Thursday, April 3rd WHERE: TBD The full text of the letter sent to invited witnesses is below: I am writing you to request your appearance before the United States Senate Committee on Banking, Housing, and Urban Affairs next Thursday, April 3rd, at 10:00 a.m. regarding the ongoing crisis in the U.S. credit markets and one of its outgrowths, the merger agreement and subsequent amended agreement regarding JPMorgan Chase's acquisition of Bear Stearns. Ensuring the strength and orderly functioning of our nation?s markets is one of this Committee?s primary responsibilities. I believe it is important to maintain liquidity, stability, and investor confidence in the markets. In that regard, the unprecedented nature of some recent actions by the Federal Reserve, Department of the Treasury, and others merits a full and public examination by the Committee. In particular, it is important to examine the role of the Federal Reserve Board, the Treasury Department, and the Securities and Exchange Commission in extending a $30 billion public loan to facilitate the merger between JPMorgan Chase and Bear Stearns, and the implications of this loan for taxpayers, investors, and the regulation of entities that receive such taxpayer-backed benefits. Had the merger between JPMorgan Chase and Bear Stearns been a routine transaction between two private entities, such an event might not merit public examination. But because this transaction has put public funds at risk, Committee review is not only warranted, but necessary. Accordingly, we ask that your testimony address the following issues: What is your understanding of the role of the Federal Reserve, Treasury, and Securities and Exchange Commission in determining the need for this transaction, placing a value on the transaction, structuring the public loan to support the transaction, and in approving the original and updated terms of the transaction? The Committee also seeks a thorough accounting of the securities assets that the Federal Reserve is guaranteeing with public funds, including a chronology and rationale behind the selection of those assets, and the valuation of those assets. Finally, given the exposure of public funds as a source of financing in support of the JPMorgan Chase-Bear Stearns transaction, we would welcome your views regarding the implications of these actions on the American taxpayer, and what possible changes these actions may or should herald for the Federal Reserve in its role as a lender of last resort and for the regulation of financial institutions. Sincerely, CHRISTOPHER J. DODD Chairman