The House Financial Services Committee is interrogating Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke, and New York Fed President William Dudley on the government's handling of the AIG bailout. We here at BankThink were expecting more pressure on Geithner than has materalized so far, and we were also hoping for some hints on the Treasury's new regulatory restructuring plan. Geithner's opening statement contained a brief mention of the need for an authority to seize and dismantle non-bank financial institutions that pose systemic risks. But there were few details, and Geithner didn't say which government agency should be granted the authority.

12:41pm: Rep. Judy Biggert, R-Ill., is wrapping up questioning in which she asked Geithner to describe the Treasury department's management workings and personnel resources.

12:43pm: Now Rep. Stephen Lynch, D-Mass., is stepping up the rage over AIG bonuses. He's talking about the stipulations in the Financial Products division's bonus contract that erected "a firewall betwen the damage" to the company and the division's bonuses.

Lynch: "As shareholders--I don't dispute bonuses generally--but in this case, is there not" a way to retreive these bonuses legally by changing the contract?

Geithner: "I share your frustration...we are working very carefully" with White House lawyers to find a legal way to retrieve the bonuses.

Lynch: "If you're not going to go forward then this committee needs to know that so we can go forward."

12:48pm: Rep. Barney Frank, D-Mass., says Geithner has to leave at 1pm.

12:49pm: Rep. Jeb Hensarling, R-Tx., asks Geithner to repeat the bonus timeline.

Geithner replies that it was generally known that "there were a whole range of compensation issues that we were going to have to deal with" at the beginning of the AIG bailout.

12:51pm: Hensarling to Geithner: Why did you say that Financial Products was an unregulated business? The OTS is claiming oversight.

Geithner: The regulation was ineffective. "Over the entire entity, not just that division."

12:55pm: Rep. Brad Miller, D-N.C.: Wasn't it a little incestuous to appoint Edward Liddy as the administrator of AIG?

Geithner: "I would never make a judgment because it would benefit a specific firm in this context." That said, the New York Fed didn't choose him.

Miller: But what did you think about the appearances? The propriety?

Geithner: No concern about particular issues, but we knew he had a broad mix of experience that qualified him for the job.

12:59pm: Rep. Gresham Barrett, R-S.C.: I approve of the toxic asset plan, but "who in their right mind, in the private sector, would want to enter into a contract with the US government" after last week's bonus debacle?

Geithner: You're right to that concern, and we'll have to design the terms carefully.

Bernanke: I do think we have to provide assurances to the users of Talf and investors in the public-private funds that contracts will be stable.

1:03pm: Barrett: Do you guys have a backup plan? What happens if the toxic asset plan fails?

Geithner: "This plan will just requires will, not ability."

Frank: We do not intend to extend the bonus clawback legislation to anyone outside AIG and the Capital Purchase Program.

1:05pm: Geithner is gone. Bernanke and Dudley remain. Rep. Joe Baca, D-Calif., has returned to the subject of bailing out foreign counterparties to AIG. Bernanke is repeating his answer that it's important to maintain the integrity of the international financial system.

Baca wants to "reclaim the American tax dollars" from other countries.

1:09pm: Rep. Bill Posey, R-Fla., is criticizing the "crisis-of-the-day management style" of the federal regulators. Since Geithner's gone, he's directing his criticism toward Bernanke. "Hopefully somewhere there's a flow-chart that says 'here the direction we want to go...and here's the way we measure if we're on track or not.'"

Posey: What is the plan? "Are you familiar with the plan?"

Bernanke: "I'm sure you appreciate how complex and difficult this whole situation has been. I think there is a plan." (He lists its components: recapitalization, foreclosure prevention, and toxic asset cleanup. Then, later, regulatory restructuring.)

1:16pm: Frank brings the hearing to an abrupt end. Bachus jokes, "Mr. Dudley, you did an outstanding job answering all of those difficult questions today."