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Week 2 Wrap-Up: Treasury Sent 22.180 Million Stimulus Payments This Week

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May 9, 2008
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Week 2 Wrap-Up: Treasury Sent 22.180 Million Stimulus Payments This Week

This week the Treasury Department sent out 22.180 million economic stimulus payments to American households totaling $20.138 billion. So far, Treasury has sent out 29.888 million total economic stimulus payments totaling $27.230 billion.

Week Two (May 5-May9)

Total Number of Payments: 22.180 million
Total Amount of Payments: $20.138 billion

Week One (April 28-May 2)

Total Number of Payments: 7.708 million
Total Amount of Payments: $7.091 billion

Cumulative Total

Total Number of Payments: 29.888 million
Total Amount of Payments: $27.230 billion

The Treasury Department will announce at the end of every week the total number of payments that have been sent to households, and the total amount of payments sent. Payments began April 28th and will continue via direct deposit or paper check through mid-July. For a single filer, the minimum payment is generally $300 and the maximum payment is $600. For joint filers, the minimum is generally $600 and the maximum $1,200. There is also an additional $300 payment for each qualifying child.

For tax returns processed by the Internal Revenue Service by April 15, households will receive their payments according to the last two digits of the Social Security number on the tax form. On a joint return, the first number listed will determine when a stimulus payment will be sent.

REPORTS

Direct Deposit Payments

Under Sec McCormick Remarks on Global Financial Turmoil and its Implications for China

May 9, 2008
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Treasury Under Secretary for International Affairs David McCormick
Remarks on Global Financial Turmoil and its Implications for China

Shanghai �Thank you, Vice Chairman Zhu, for your kind introduction. I would like to thank the co-chairmen of the forum, Governor Zhou and Mayor Han, as well as the co-hosts of the forum at the CBRC, the CSRC, and the CIRC for inviting me to deliver remarks today. It is my distinct honor to participate in this inaugural session of the Lujiazui Financial Forum. I anticipate this year's event will be the first of many lively and informative sessions.

Today I'd like to talk about the recent financial turmoil in the United States � why it happened, how we have responded, and what lessons we have drawn for financial regulation and policy for the longer term. I will also suggest some of the lessons that I hope China will draw from this episode and why recent events should be seen as all the more reason for China to push ahead with financial sector reform.

I will make the case that continued financial sector reform and development is critical to China's own future growth and prosperity. Foreign participation � and the critical technology and knowhow that foreign investors bring � will help accelerate China's financial sector development.

Responses to the Financial Market Turmoil

In the United States

Why did this financial turmoil occur? A long period of benign credit conditions � relatively stable asset markets, low interest rates, and low inflation � encouraged many investors to seek higher returns. Responding to this demand, the financial services sector created a variety of complicated new products that diversified risk and lowered borrowing costs. Financial innovation brought enormous benefits, helping many people to move into homes, others to start or expand businesses, and investors to diversify their risk and enhance returns. Complacency about risk, however, encouraged a loosening of credit standards and an erosion of market discipline among investors, regulators, and credit rating agencies alike.

Last summer, these new vulnerabilities in our financial system became clear. Looser credit standards in the housing market, combined with an end to rapid home-price appreciation, led to a significant rise in delinquent mortgages. This in turn contributed to immediate and unexpected losses for investors and a reconsideration of the risk-reward relationship � first in housing, and soon after, across all asset classes. The shaken investor confidence in housing assets had a domino effect throughout world markets, ratcheting up demand for cash and liquidity, and curtailing the pace of the new lending and investment necessary for strong growth to continue.

In short, those in the United States and around the world were reminded of an age-old lesson: financial innovation, for all its advantages, sometimes produces unexpected consequences to which policymakers must quickly and creatively react.

Policy Responses: Domestic and International

Policymakers in the United States have responded quickly and aggressively to stabilize markets, reduce the impact of the turmoil on the real economy, and address underlying regulatory and policy weaknesses. At the same time, we have sought to avoid overreacting with regulations or policy responses that would stifle innovation or distort the natural self-correcting forces of markets.

Treasury Secretary Henry Paulson has led the U.S. government effort to ensure a comprehensive, timely and appropriate response to the turmoil. He and other authorities have urged banks to promptly recognize and report losses, and raise additional capital. Many global financial institutions have done just that � reporting subprime-related losses of over $300 billion and raising additional capital of more than $200 billion.

The U.S. government has acted decisively to help soften the negative impact of these events on the real economy, through fiscal policy and a series of initiatives to help families stay in their homes. The $150 billion economic stimulus package will support consumer and business spending as we weather the current economic slowdown, and will lead to the creation of over 500,000 new jobs that would not have been created otherwise.

The U.S. Federal Reserve and other central banks have taken focused, and sometimes coordinated, actions to protect the financial system from severe disruption by ensuring that markets have access to financing.

There are already some early indicators that this combination of actions is beginning to have the desired effect, as markets appear to be gaining confidence and the availability of credit has improved modestly.

As the immediate remedies take effect, we have also begun to focus on the weaknesses in business practices of financial institutions that this experience has revealed, and on fragmented U.S. and European regulatory structures that had difficulties guarding against or responding to modern challenges.

The President's Working Group on Financial Markets recently recommended changes to mitigate systemic risk and restore investor confidence to facilitate stable economic growth. The President and Secretary Paulson have welcomed these recommendations, and we are now implementing them.

At Treasury, we have also worked closely with counterparts in major economies around the world, including China, to address market instability. The Financial Stability Forum (FSF), which brings together the supervisors, central banks, and finance ministries of major financial centers, has been critical to this effort. The FSF has produced a series of recommendations that echo and complement efforts underway in the United States. These proposals include:

Strengthening prudential oversight of capital adequacy, liquidity and risk management;
Enhancing transparency and improved valuation, particularly for structured products;
Revising and clarifying the role and use of credit ratings;
Improving the responsiveness of authorities to risks; and,
Creating robust arrangements for dealing with stress in the financial system.

There is no silver bullet to place financial markets on a sound footing or prevent past excesses from recurring, but each of these specific proposals represents an important step toward addressing the challenges we face. Taken together, they constitute a clear and significant response to the underlying weaknesses that contributed to the turmoil in global financial markets.

A Look Ahead

While our first priority is working through the current turmoil in the capital markets and the housing downturn, we are also considering longer term changes to our financial regulatory system to maintain efficient, safe, and sound U.S. capital markets. This dynamic process requires balancing appropriate regulation with the need for an environment that fosters innovation.

Specifically, Treasury has considered how to modernize our financial regulatory structure, which resembles a patchwork of overlapping agencies and responsibilities cobbled together over the past 75 years. Secretary Paulson's recently released Blueprint for a Modernized Financial Regulatory Structure proposes an optimal financial regulatory model that ensures market stability, safety and soundness for federal guarantees, and consumer and investor protection. It calls for a market stability regulator, a prudential financial regulator, and a business conduct regulator. We believe that this approach will foster innovation, mitigate risk, and enhance the competitiveness of America's capital markets.

Effects on the US and Global Economies

Although we have taken major policy steps to cushion the consequences of current market events on the real economy, they are undoubtedly having an impact. Growth has already slowed significantly to 0.6 percent in the last quarter of 2007 and the first quarter of this year. The combination of stress in financial markets, the housing correction, and high energy prices will weigh on growth through 2008, though fiscal stimulus will support the economy while corrections take place in the housing and financial markets. Despite these near-term challenges, our longer-term growth prospects remain sound because of the underlying strength of our institutions, the flexibility of our markets, and our capacity to absorb technological change.

Recent events have also made clear that emerging markets are not decoupled from events in the United States. As U.S. growth has slowed, so too has our demand for imports, affecting exporters in a variety of nations, including China. At the same time, emerging market growth has shown resilience in the face of a U.S. showdown. Most emerging market countries have followed prudent macroeconomic policies, giving them room to respond to slowing external demand. Stronger domestic demand growth in emerging markets like China is playing an important role in cushioning the impact of the U.S. slowdown.

Financial Market Turmoil and China

China has weathered the recent turmoil relatively well. Stronger growth in domestic consumption has offset much of the weakness in external demand. Moreover, a slowing of overall Chinese economic growth from last year's pace may in fact be welcome in addressing concerns about excessive growth in investment and rising domestic inflation. The sharp fall in Chinese equity prices since last October appears more due to domestic factors than to linkages with global stock markets.

Financial Reform and Future Growth

Despite its relatively benign effects thus far, I fear the recent bout of turbulence in global financial markets is being viewed by some in China as a reason to slow or pause financial sector reform. I hope Chinese policymakers will ask the more pertinent question: What lessons should China's leaders draw from recent events as they consider the pace and potential benefits of financial sector reform?

This morning's presentations highlighted the giant leaps China has made in financial sector reform in the past decade, from the banking sector to the stock, foreign exchange, and bond markets. These reforms have been important for laying the foundation to address the key challenges ahead in China's financial sector development. These challenges include:

Increasing access to direct financing through the equity and bond markets;
Developing a yield curve for government bonds that can be used as the baseline for pricing other financial products;
Introducing a variety of financial products to hedge risk; and,
Fostering the growth of institutional investors.

These are the basic building blocks of financial sector development, not exotic products on the cutting edge of financial innovation. There are risks, to be sure, in carrying out these reforms. Financial regulation and supervision must be developed in tandem. But policymakers in China must also recognize that there will be significant costs if China slows the development and reform of its financial sector. Important gains for China and its people would be left unrealized. An ambitious reform agenda will advance China's economic goals in four important ways by:

Rebalancing the sources of China's growth to ensure that it is more harmonious, more energy and environmentally efficient, and provides greater welfare for Chinese households;
Creating effective macroeconomic policy tools to ensure stable, non-inflationary growth;
Supporting China's transition to a market-driven and innovation-based economy; and,
Assisting in dealing with demographic challenges.

First, as China's economy becomes more sophisticated, an efficient, well-developed financial sector is essential to channeling capital to the new ideas, businesses, and entrepreneurs that will power future growth. As China's economy becomes more complex, so too will its need for financial services. A more developed financial sector is necessary to fund the industries of tomorrow.

A more developed financial sector is also essential in shifting to a growth model that can be sustained in the future, one less dependent on industrial activity and exports, and one more oriented towards services and household demand. Key to this is reducing the need for very high saving rates. A greater diversity of financial instruments for saving, risk diversification, and consumer borrowing would relieve some of the need for precautionary saving.

A higher risk adjusted return from a broader array of financial assets would allow Chinese households to achieve their financial goals � such as buying a house, educating their children, or achieving a secure retirement � without having to set aside large portions of their current income. A more developed financial sector will also provide Chinese enterprises with options beyond reinvesting earnings primarily in expanding their own capacity. This will enhance the efficiency of capital allocation and dampen the volatility of investment cycles.

Third, more developed financial markets will help bring greater stability to China's economy by giving the authorities the macroeconomic tools � flexible and more powerful monetary policy in particular � to assure stable growth and prices. Deeper, interconnected bond markets would give the central bank greater ability to guide market interest rates and credit throughout the economy to ensure continued strong, stable, and non-inflationary growth.

Finally, a robust financial sector will help to enable China to deal with the demographic challenges that lie ahead, including population aging and the provision of healthcare. A deep and sophisticated financial sector will be critical to strengthening the social safety net and providing tools such as health care insurance and retirement investment vehicles necessary to cope with growing demographic pressures.

The Role of Foreign Participation

Greater foreign participation will contribute substantially to financial sector reform, and for that reason, it has been a top priority for the Strategic Economic Dialogue (SED) launched by Presidents Hu and Bush.

We recognize the concerns of some in China who believe that opening the doors to foreign financial firms could jeopardize the position of domestic firms. On the contrary, we believe that increased foreign participation expands the breadth and depth of opportunities for all firms in the market, including domestic Chinese firms. This is not a zero-sum game. Clearly, foreign firms stand to benefit from expanded opportunities in China. But they will also enhance the diversity of financial products in China, improve allocation of capital, and spur innovation, all of which will benefit China's economy and its people.

Foreign investment in Chinese financial institutions has, in fact, turned institutions that were a drain on fiscal resources into engines of growth � creating jobs and strengthening financial sector soundness. Take for example, Shenzhen (shun-jun) Development Bank, which was one of the first banks to be controlled by a foreign investor. Over the past several years, profitability and capital adequacy at the bank have increased significantly, while non-performing loans have declined sharply. The bank is lending more to finance households and medium-sized enterprises.

We have heard from financial institutions across China that meeting the strong demand for experienced personnel is a challenge in this period of rapid expansion. Increased foreign participation in the financial sector will expedite the development of world class financial sector talent within China, benefiting Chinese workers, businesses, and financial centers like Shanghai.

Looking forward, the current approach of offering limited scope for foreign investment in Chinese financial firms hinders the growth opportunities of China's entire financial sector. It leads to unwieldy managerial and ownership arrangements that reduce operational flexibility and the transfer of financial technology. We believe that higher ownership thresholds for foreign firms would benefit the financial sector overall and the Chinese businesses that depend on it to grow their companies and create jobs. China achieved great success by opening its manufacturing sector to foreign investment. This has fostered � not inhibited � growth of Chinese manufacturers. Greater opening in financial services will do the same.

Just as openness to foreign investment is important for strong growth in China, openness to foreign investment is fundamental to the United States. The United States is committed to ensuring a stable and open international financial system. In his Statement on Open Economies last May, President Bush reaffirmed the United States' long-standing policy of welcoming international investment.

Foreign investment creates good jobs, spurs innovation, improves productivity, and results in lower prices and greater variety for consumers in the United States. Foreign direct investment flows into the United States were $204 billion in 2007, which is nearly double the level of a decade earlier. Research shows that foreign-owned firms in the United States directly employ over 5 million Americans � 4.5 percent of all private sector employment. These are good jobs, paying more than 25 percent higher compensation on average than other private sector jobs. Foreign firms also indirectly employ about the same number of Americans. Foreign-owned firms contribute almost six percent of U.S. output, 14 percent of U.S. R&D spending, and 19 percent of U.S. exports.

Despite the benefits of foreign investment, there is rising protectionist sentiment around the world that poses a dangerous threat to the global economy. We unfortunately see some of these same protectionist forces in our own country. A number of countries are considering new or revised investment review mechanisms, some of which have the potential to impose broad barriers. We are engaging our counterparts bilaterally, and through multilateral institutions to emphasize the importance of crafting policies that are predictable for investors and ensure proportional responses to genuine national security concerns. Investment reviews must not be used to promote protectionist policies.

I know some of you may have concerns about the investment review process in the United States, known as CFIUS, or the Committee on Foreign Investment in the United States, a committee that is chaired by the U.S. Treasury. However, I want to make clear that the legal authority of CFIUS is narrowly targeted to address only acquisitions that raise genuine national security concerns, not broader economic interests or industrial policy factors.

Moreover, we are committed to living up to both the letter and the spirit of the new law and the President's open investment statement. Last month, Treasury issued proposed CFIUS regulations to implement our new Foreign Investment law which passed our Congress and was signed by the President last year. The new regulations clarify and improve our existing process, reinforce strong open investment principles and procedural protections for foreign investors, and ensure a more timely and efficient review process. Our focus in this area reflects Secretary Paulson's strong commitment to maintaining an open investment climate in the United States.

Sustaining China's Growth

For all the reasons I have described, financial market development is key to assuring that strong Chinese growth is sustained in the future. This is vital to China and the global economy. But financial market development alone is not enough. China also needs to rebalance the sources of its growth away from heavy industry and exports towards products and services for Chinese households. This is essential if China is to reduce inequality, assure environmentally harmonious growth, and trim its huge and growing current account surplus. Achieving these goals will require China to take structural measures to build a strong social safety net and channel the growing profits of Chinese enterprises to their owners.

Also critical to sustained growth for China is greater exchange rate flexibility. A more flexible RMB would give China's policy makers greater scope to adjust monetary policy as needed to maintain price stability and to address the risks of excessive investment and credit growth. Just as it was important for the Federal Reserve to have a monetary policy framework that allowed it to move quickly to maintain financial stability, the People's Bank needs to be able to move rapidly to contain inflation today and safeguard financial stability.

Exchange rate flexibility is also needed to provide the price signals that will ensure a more market-driven allocation of resources and investment. RMB appreciation would provide greater incentives for domestic firms to direct investment towards the domestic market and produce goods and services for Chinese consumers. In this regard, the increased pace of RMB appreciation since last October is welcome. We urge China's leaders to maintain this accelerated pace.

Conclusion

There are many reasons to believe that the appetite for economic reform in China may be waning, after years of demanding reforms. Each successful reform brings calls from around the world for yet more. Global volatility in financial markets may give China's leaders pause as they chart the course ahead. However, I urge our friends in China to use the lessons of the current turmoil to sharpen their focus and strengthen their commitment to the bold path of financial sector reform on which they have embarked. It is a critical component of China's future, economic growth, and stability.

As I reflect on recent events, I am confident that the United States will pass through this current phase of turmoil and return to the path of sustained growth. I am also convinced that China will successfully overcome the challenges that it faces in achieving sustained long term growth and stability in an increasing complex economy. We must not forget that our economies are more interconnected and more dependent on each other than ever before. Together, we can bring prosperity to our own countries and the world economy.

Treasurer Cabral Remarks on the Economic Stimulus

May 8, 2008
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Prepared Remarks of Treasurer Anna Escobedo Cabral on the Economic Stimulus Package

San Francisco, CA-- I'm pleased to be here at the San Francisco Regional Financial Center today. Thank you for having me.

There is going to be a lot of anticipation around mailboxes in the coming days and weeks. And I'm pleased to report to many Americans, "Your check is in the mail!"

Your economic stimulus check that is.

I have just toured the San Francisco facility. It is a wonderful sight to see these checks rolling off the high-speed printers, very soon to be loaded into United States Postal Service trucks and making their way into the mailboxes and the hands of hardworking Americans across our nation.

Earlier this year, the President, Treasury Secretary Paulson, and members of Congress recognized that our economy was experiencing a slowdown. Our nation's top leaders and economic advisors joined together in a bipartisan effort to help Americans.

They acted swiftly by enacting an economic stimulus package that would put money in the hands of American consumers and businesses. This bipartisan plan, which was signed into law by the President in February, will inject needed money into our economy. We expect to see a meaningful boost in the economy in this quarter and through the remainder of the year.

Of course individuals will benefit. Single filers will generally receive a minimum of $300 and as much as $600. Married couples will generally receive $600 and up to $1200. There is also an additional $300 payment for every qualifying child.

This money is for families and individuals to spend as they choose. Some Americans will use it to make a new purchase for their home, take a vacation, pay down debt, or to buy everyday items like food or gas. By trusting people with their own money, President Bush believes we can help family budgets, we can help local communities, and we can help the economy.

We've followed this approach before � with the 2001 and 2003 rebates. While we saw that some Americans did choose to save the money, others went out and spent their checks. And we did see a boost in our economy. We fully expect this growth package to give the economy a boost and create new jobs this year.

The plan also includes incentives for businesses, including a temporary change to the tax code, nearly doubling the amount small businesses can expense and allowing firms to deduct an additional 50 percent of the value of new investments from their taxes this year.

Small business owners across the nation have begun to take advantage of these incentives:

Bob McCutcheon, the President of a family-owned apple products company is in the middle of a major retail expansion and is planning to purchase at least $150,000 in ovens, demonstration products, furniture, and cash registers. Bob had planned this expansion for years, but is said he wants to proceed this year as a result of the incentives provided in the stimulus package.

Dan Glier owns a meat company in Northern KY, and when the stimulus package passed, he began installing a new processing facility, an investment he would not have made without the incentives in the stimulus legislation.

And there's Ray Pinard, President and CEO of an online supplier of customized printing products, who responded to the bonus depreciation in the stimulus package by purchasing a $2 million off-set press. The incentives provided by the stimulus package made his purchase possible a year earlier than planned.

All around the US, there are stories like these. I'm sure there are plenty of small business owners taking advantage of these initiatives right here in San Francisco.

At $150 billion--or around 1 percent of GDP--these business and household measures are large enough to make a real difference as we weather the current economic slowdown, and by the end of this year will lead to the creation of more than 500,000 new jobs.

In the state of California, approximately 14.7 million households will receive about $12.4 billion in payments.

If you are still waiting on your stimulus payment, you won't be waiting much longer. I assure you that Treasury is working hard to ensure the checks will be in the mail as quickly as possible to more than 130 million households.

Last week, 7.7 million Americans received more than $7 billion in stimulus payments electronically. And we will continue this process every week, until about 44 million stimulus payments have been made through direct deposit.

This week mass production of paper checks will begin and will be largely completed in early July. San Francisco is just one of four distributions centers across our nation where paper checks are being printed today. The other centers are in Kansas City, Missouri; Philadelphia, Pennsylvania; and Austin, Texas. All told, the Treasury Department expects to send about 88 million stimulus paper checks through the mail by the end of the year.

Here in San Francisco, the staff operates high-speed laser printers capable of printing more than 60,000 checks per hour. During the month of May, on a weekly basis, the San Francisco center will disburse approximately 1 million economic stimulus checks. During June and July, this will increase to approximately 1.9 million checks per week.

I would like to take a moment to thank all the hardworking employees here at the San Francisco Regional Financial Center, including Director Philip Belisle and Deputy Director Abbie Loftus. I also send thanks to our regional centers across the country for all their hard work. Americans across our nation thank you for ensuring they get their checks ahead of schedule.

So keep up the good work, and keep those checks coming!

Thank you.

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Paulson Remarks on the Economic Stimulus

May 8, 2008
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Secretary Henry M. Paulson, Jr. Remarks on the Economic Stimulus

Kansas City, Mo.--Thank you; it is great to be back in Kansas City. I have just come from one of Treasury's bureaus here, the Financial Management Service Regional Financial Center, where they are printing the economic stimulus checks that will put money in the hands of American families and boost our economy this year. It's fitting that I see this economic stimulus become a reality in Kansas City, because my visit here last December was among the events that convinced me that we needed to boost the U.S. economy, and do it early so it could make a difference in 2008.

In December, I was at the Bruce Watkins Cultural Heritage Center and Museum for a town hall meeting. I met with and heard from many homeowners about mortgage and other housing difficulties. They also talked of their concerns about the broader economy in Kansas City and Missouri. During that week, I also spent time in Florida and California, where I heard similar concerns. And when I got back to Washington, I talked to people in a variety of industries; I asked them what their business was telling them about where the economy was headed. My travels, my discussions with industry leaders and a review of the economic data with the rest of the President's economic team convinced me in mid-December that the economy had taken a sharp turn for the worse and the risks were to the downside going forward.

The President recognized the downturn early, and took decisive action. At the beginning of January, President Bush told the nation we were considering an economic stimulus package. Congressional leaders also saw the weakening economy and the need for action. The President directed me to work with Congress to craft legislation that would put cash in the hands of American consumers and help American businesses invest and create jobs. And the President directed me to get this job done quickly, because we needed to bolster both consumer spending and business investment to protect the health of our economy.

And today, we are seeing that our action couldn't have been more timely. We didn't wait for the twenty-twenty hindsight of economic data to confirm a slow economy, we knew it was happening. And because we didn't wait, the bipartisan stimulus package the President and the Congress enacted is injecting dollars into the economy now, when it can make a real difference.

It was a pleasure to work in a bipartisan spirit with House and Senate leaders. Together, we crafted a stimulus package that is big enough to have an impact, easy to implement, provides targeted payments and is temporary. We acted quickly to support our economy and help create jobs this year.

The package includes stimulus payments to households, and tax incentives for businesses to invest and create jobs. For households, single filers generally will receive a minimum of $300 and as much as $600, and joint filers will generally receive at least $600 and up to $1,200. There is also an additional $300 payment for each qualifying child. Total cash to households will be over $100 billion.

In 2001 and 2003, tax relief payments to individuals and families stimulated the broader economy by increasing consumer spending. Evidence suggests that households spent one-third to two-thirds of their 2001 and 2003 payments, and the current stimulus package is almost three times as large as what was enacted in 2001 --- $38 billion then, versus $100 billion now.

For businesses, there is a temporary change to the tax code that will allow them to buy new equipment this year and deduct an additional 50 percent of that investment cost in 2008. In addition, the package expanded the current expensing limits for small businesses, allowing up to $250,000 of qualifying purchases to be deducted for tax years beginning in 2008. Businesses will save approximately $50 billion in near-term taxes and lower taxes will help create new jobs this year.

At $150 billion � or around 1 percent of GDP --- these business and household measures are large enough to make a real difference as we weather the current economic slowdown and, by the end of this year, will lead to the creation of over 500,000 new jobs that would not have been created otherwise. And just as important, these initiatives are temporary � so as not to impact our long-term fiscal position. The cooperation between the Administration and the Congress demonstrated to the nation and to the world that we can come together to address the needs of the American people.

On February 13th the President signed the Economic Stimulus Act of 2008, the bipartisan bill that set this stimulus process in motion. Just 75 days later, on April 28th, the first electronic direct deposits were sent into Americans' bank accounts. Last week, the first week of payments, 7.7 million individual direct deposits averaging $920 were sent, amounting to more than $7 billion. And we are continuing this process every week, until about 44 million stimulus payments have been made through direct deposits.

This morning at the FMS center I saw employees printing checks non-stop on high speed printers. There are machines manufacturing envelopes and wrapping the envelopes around the checks. Checks are being sorted by zip code and loaded onto trays for pickup by the U.S. Postal Service. Today is the first day that economic stimulus checks are being mass produced --- more than two million checks are being printed at FMS centers across the country, and this is just the first big batch. During the rest of May, Kansas City will print 2.5 million checks a week. In June and July, once the regular tax filing season is finished, we expect Kansas City will send 3.75 million stimulus checks per week. FMS centers in Philadelphia, Austin and San Francisco are also preparing checks that will be, without a doubt, in the mail soon. In total, we will send an estimated 88 million stimulus payments as paper checks through the mail.

By the end of May, we will have pumped almost $50 billion into the economy and another $50 billion will follow --- by early July, about 130 million households will have almost $100 billion of payments in-hand.

We expect that these payments will help right away --- help individuals, families and our economy. Giving people cash means they can decide how best to use it. Seniors, veterans, moms, dads and grandparents can each put their payments toward what is important to them --- whether it's gas for a summer vacation, clothes for back to school, or a trip to see the grandkids.

And these payments will provide a boost to the U.S. economy as we go through a difficult patch. Our economy had been growing for more than six straight years when growth started to slow last winter. And it has remained slow in the first part of 2008. Wages have risen, but so have the costs of food, gasoline, and health care.

In addition, after years of unsustainable home price appreciation, we are experiencing an inevitable and necessary housing correction. We are working to minimize the impact of the housing correction on the rest of the economy, but we do not want to impede its progress --- because the sooner the correction is completed, the sooner we will see home values stabilize, the sooner we will see more people buying homes, and the sooner housing will again contribute to economic growth.

The ongoing housing correction and volatility in the financial markets are causing many Americans to feel uncertain. That is understandable and reasonable, and it's also true that the long-term economic prospects of the United States remain solid. I never tire of repeating that we have the most resilient economy in the world --- because it is true --- and that we will emerge from this period as we have emerged from past periods of difficulty and move on to new heights.

These stimulus payments will reduce the impact of the downturn on households across the nation. I am pleased to be here and have seen the evidence that when we say the check will be in the mail, we mean it. Thank you.

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Treasury Speeds Aid to Burma

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May 7, 2008
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Treasury Issues General License to Speed the Flow of Aid to Burma

Washington - The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), in consultation with the Department of State, issued a general license to help facilitate the flow of funds for humanitarian assistance to the Burmese people in the wake of Cyclone Nargis.

"The American people continue to demonstrate their concern for the people of Burma, particularly as they reel from the devastation of Cyclone Nargis," said OFAC Director Adam J. Szubin. "This license will help to clear the way for additional humanitarian aid to make it to the Burmese people swiftly and efficiently."

This general license is particularly needed in the wake of Cyclone Nargis and the resulting devastation. The issuance of this general license will ease the work of U.S. and third-country nongovernmental organizations (NGOs), as most will no longer need to apply to OFAC for specific licenses or registration numbers in order to transfer funds to Burma to support their humanitarian activities. The general license authorizes the export and reexport of financial services, including the flow of humanitarian funds, to Burma in support of the not-for-profit humanitarian or religious activities in Burma of U.S. or third-country NGOs.

Prior to the issuance of the general license, sending funds to Burma, which is generally prohibited under the Burma sanctions program, would have required the issuance of a specific license by OFAC. NGOs may continue to rely upon outstanding specific licenses and may apply for specific licenses to engage in funds transfers in support of humanitarian activities beyond the scope of the general license.

Existing general licenses already authorize the exportation or reexportation of financial services ordinarily incident to the exportation of goods, technology, or services, other than financial services, to Burma. This action will allow U.S. individuals and entities to send, and U.S. financial institutions to transfer, funds to Burma to be used to support the humanitarian activities of U.S. or third-country NGOs in Burma. Third-country individuals and entities also will be able to transfer dollar-denominated funds through the United States to be used to provide humanitarian assistance by NGOs in Burma. This general license does not authorize the provision of financial services directly or indirectly to the Government of Burma or to persons blocked under the Burma sanctions and such services remain prohibited.

All transfers authorized by this general license may be made utilizing the services of blocked financial institutions in Burma, provided the transfers are made through third-country banks (no debits or credits may be made to any blocked account on the books of a U.S. financial institution).

Please visit the following link to access the general license:
www.treasury.gov/offices/enforcement/ofac/programs/burma/gls/burmagl14.pdf

OFAC also will be sending a corresponding regulatory amendment to the Federal Register for publication.

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U.S. International Reserve Position

May 7, 2008
2008-5-7-15-21-43-3509

U.S. International Reserve Position

The Treasury Department today released U.S. reserve assets data for the latest week. As indicated in this table, U.S. reserve assets totaled $73,918 million as of the end of that week, compared to $74, 541 million as of the end of the prior week.

I. Official reserve assets and other foreign currency assets (approximate market value, in US millions)


	May 2, 2008
A. Official reserve assets (in US millions unless otherwise specified)	Euro	Yen	Total
(1) Foreign currency reserves (in convertible foreign currencies)			73,918
(a) Securities	15,399	11,609	27,008
of which: issuer headquartered in reporting country but located abroad			0
(b) total currency and deposits with:
(i) other national central banks, BIS and IMF	15,354	6,519	21,873
ii) banks headquartered in the reporting country			0
of which: located abroad			0
(iii) banks headquartered outside the reporting country			0
of which: located in the reporting country			0
(2) IMF reserve position	4,245
(3) SDRs	9,750
(4) gold (including gold deposits and, if appropriate, gold swapped)	11,041
--volume in millions of fine troy ounces	261.499
(5) other reserve assets (specify)	0
--financial derivatives
--loans to nonbank nonresidents
--other
B. Other foreign currency assets (specify)
--securities not included in official reserve assets
--deposits not included in official reserve assets
--loans not included in official reserve assets
--financial derivatives not included in official reserve assets
--gold not included in official reserve assets
--other

II. Predetermined short-term net drains on foreign currency assets (nominal value)


			Maturity breakdown (residual maturity)
		Total	Up to 1 month	More than 1 and up to 3 months	More than 3 months and up to 1 year
1. Foreign currency loans, securities, and deposits
--outflows (-)	Principal
	Interest
--inflows (+)	Principal
	Interest
2. Aggregate short and long positions in forwards and futures in foreign currencies vis-�-vis the domestic currency (including the forward leg of currency swaps)
(a) Short positions ( - )
(b) Long positions (+)
3. Other (specify)
--outflows related to repos (-)
--inflows related to reverse repos (+)
--trade credit (-)
--trade credit (+)
--other accounts payable (-)
--other accounts receivable (+)


III. Contingent short-term net drains on foreign currency assets (nominal value)


		Maturity breakdown (residual maturity, where applicable)
	Total	Up to 1 month	More than 1 and up to 3 months	More than 3 months and up to 1 year
1. Contingent liabilities in foreign currency
(a) Collateral guarantees on debt falling due within 1 year
(b) Other contingent liabilities
2. Foreign currency securities issued with embedded options (puttable bonds)
3. Undrawn, unconditional credit lines provided by:
(a) other national monetary authorities, BIS, IMF, and other international organizations
--other national monetary authorities (+)
--BIS (+)
--IMF (+)
(b) with banks and other financial institutions headquartered in the reporting country (+)
(c) with banks and other financial institutions headquartered outside the reporting country (+)
Undrawn, unconditional credit lines provided to:
(a) other national monetary authorities, BIS, IMF, and other international organizations
--other national monetary authorities (-)
--BIS (-)
--IMF (-)
(b) banks and other financial institutions headquartered in reporting country (- )
(c) banks and other financial institutions headquartered outside the reporting country ( - )
4. Aggregate short and long positions of options in foreign currencies vis-�-vis the domestic currency
(a) Short positions
(i) Bought puts
(ii) Written calls
(b) Long positions
(i) Bought calls
(ii) Written puts
PRO MEMORIA: In-the-money options ¹¹
(1) At current exchange rate
(a) Short position
(b) Long position
(2) + 5 % (depreciation of 5%)
(a) Short position
(b) Long position
(3) - 5 % (appreciation of 5%)
(a) Short position
(b) Long position
(4) +10 % (depreciation of 10%)
(a) Short position
(b) Long position
(5) - 10 % (appreciation of 10%)
(a) Short position
(b) Long position
(6) Other (specify)
(a) Short position
(b) Long position

IV. Memo items


(1) To be reported with standard periodicity and timeliness:
(a) short-term domestic currency debt indexed to the exchange rate
(b) financial instruments denominated in foreign currency and settled by other means (e.g., in domestic currency) �
--nondeliverable forwards
--short positions
--long positions
--other instruments
(c) pledged assets
--included in reserve assets
--included in other foreign currency assets
(d) securities lent and on repo
--lent or repoed and included in Section I
--lent or repoed but not included in Section I
--borrowed or acquired and included in Section I
--borrowed or acquired but not included in Section I
(e) financial derivative assets (net, marked to market)
--forwards
--futures
--swaps
--options
--other
(f) derivatives (forward, futures, or options contracts) that have a residual maturity greater than one year, which are subject to margin calls.
--aggregate short and long positions in forwards and futures in foreign currencies vis-�-vis the domestic currency (including the forward leg of currency swaps)
(a) short positions ( � )
(b) long positions (+)
--aggregate short and long positions of options in foreign currencies vis-�-vis the domestic currency
(a) short positions
(i) bought puts
(ii) written calls
(b) long positions
(i) bought calls
(ii) written puts
(2) To be disclosed less frequently:
(a) currency composition of reserves (by groups of currencies)	73,918
--currencies in SDR basket	73,918
--currencies not in SDR basket
--by individual currencies (optional)

Notes:

1/ Includes holdings of the Treasury's Exchange Stabilization Fund (ESF) and the Federal Reserve's System Open Market Account (SOMA), valued at current market exchange rates. Foreign currency holdings listed as securities reflect marked-to-market values, and deposits reflect carrying values.�

2/ The items, "2. IMF Reserve Position" and "3. Special Drawing Rights (SDRs)," are based on data provided by the IMF and are valued in dollar terms at the official SDR/dollar exchange rate for the reporting date. The entries for the latest week reflect any necessary adjustments, including revaluation, by the U.S. Treasury to IMF data for the prior month end.�

3/ Gold stock is valued monthly at $42.2222 per fine troy ounce.

U.S. International Reserve Position

May 7, 2008
2008-5-7-15-10-42-3385

U.S. International Reserve Position

Treasury, OECD Co-Host International Conference on Financial Education

May 7, 2008
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Treasury, OECD Co-Host International Conference on Financial Education

Washington - The Treasury Department and the Organization for Economic Cooperation and Development (OECD) welcomed officials from more than 40 countries today at the International Conference on Financial Education. The two-day conference will allow government officials, researchers, and non-profit and business leaders to share best practices and educational tools in the growing field of financial education. Secretary Paulson will deliver closing remarks Thursday, May 8.

"When it comes to financial education efforts around the world, the tide is rising," said Dan Iannicola, Jr., Deputy Assistant Secretary for Financial Education. "Although our economies each have unique characteristics, there are a number of common problems that arise in part because our populations lack the financial skills they need. By working together, beyond our national borders, we can move quickly and more effectively to find common solutions to these shared problems."

"In a world where financial risks are increasingly transferred to households, financial education has become an essential policy tool," said Andr� Laboul, head of OECD's Financial Affairs Division. "There is an urgent need to develop a new culture of financial responsibility and to help citizens to become financially educated."

The conference will be available for viewing via webcast at http://www.oas.org/OASpage/Live/OASlive.asp.

Treasury co-hosted the conference on behalf of the Financial Literacy and Education Commission, which published a National Strategy for Financial Education in 2006. One of the National Strategy's Calls to Action outlined the need for an international conference to share best practices and increase cooperation on financial education efforts. The National Strategy and other financial education resources are available at www.mymoney.gov.

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Reminder: Paulson Visits Facility in Kansas City to Observe Stimulus Checks Rolling off the Presses

May 7, 2008
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Reminder: Treasury Secretary to Visit Printing Facility in Kansas City
Thursday to Observe Stimulus Checks Rolling off the Presses

Washington, DC--Treasury Secretary Henry M. Paulson, Jr. will tour a Treasury Department printing facility in Kansas City Thursday to observe the first mass production printing and packaging of the 2008 stimulus checks. He will also deliver remarks on the economic stimulus payments at the Kansas City Central Library.

"By the end of June nearly 130 million stimulus payments should be in the hands of Americans, providing an immediate boost to the economy and helping to create more than 500,000 new jobs by the end of the year," said Paulson.

The following events are open to the press:

What
Facility Tour with Treasury Secretary Henry M. Paulson, Jr.
When
Thursday, May 8, 8:00 a.m. CDT
Where
Kansas City Regional Financial Center
4241 NE 34th Street
Kansas City, MO
Note
All media should RSVP to Francie Abbott at (816) 414-2151, or Lauren Ray (816) 414-2113 with the following information: full name, Social Security number and date of birth, position, and organization.

***

What
Remarks by Treasury Secretary Henry M. Paulson, Jr. on Economic Stimulus
When
Thursday, May 8, 9:30 a.m. CDT
Where
Kansas City Central Library
Helzberg Auditorium
14 West 10th Street
Kansas City, MO
Note
Media will need to show ID at the door; RSVPs not necessary.

Treasury Targets FARC

May 7, 2008
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Treasury Targets FARC Money Exchange House

Washington - The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) today designated a Colombian money exchange house for acting on behalf of and materially assisting the narcotics trafficking activities of the Revolutionary Armed Forces of Colombia, a narco-terrorist group also known as the FARC. This is OFAC's fourth action against the FARC in the past six months.

"Today's action targets the FARC's drug trafficking and terror activities by undermining its financial network," said OFAC Director Adam J. Szubin. "This deals another blow to the FARC's ability to fund its operations by laundering criminal proceeds through the international financial system."

Today's designation targets Mercurio Internacional S.A., a Colombian money exchange house headquartered in Bogota, Colombia, with several branches throughout Colombia. The FARC used this Colombian money exchange house--or "casa de cambio" as they are commonly known in Colombia--to launder narcotics proceeds from its Eastern Bloc and, more specifically, the 27th Front. The FARC sells its illicit foreign currency to domestic money exchange businesses or profesionales del cambio. These profesionales del cambio then sell the foreign currency to casas de cambio that, like a bank, can export the foreign currency from Colombia.

Mercurio Internacional accepted foreign currency from the FARC via a number of profesionales del cambio. The FARC derived this foreign currency from drug sales. Mercurio Internacional would then convert the foreign currency back into pesos for the FARC to use in Colombia to fund its activities. For example, Cambios El Trebol, a professional del cambio that was designated by OFAC on April 22, 2008, is one customer of Mercurio Internacional that would sell the FARC's illicit foreign currency to Mercurio Internacional in return for Colombian pesos.

The Eastern Bloc is the strongest military faction of the FARC and uses murder, extortion, kidnapping, and drug trafficking to further the financial and political goals of the FARC. Luis Eduardo Lopez Mendez (alias "Efren Arboleda") leads the 27th Front and ultimately reports to FARC Secretariat Member Victor Julio Suarez Rojas (alias "Mono Jojoy"). Suarez Rojas is the FARC's Chief of Military Operations and formerly served as the commander of the Eastern Bloc. Victor Julio Suarez Rojas and Luis Eduardo Lopez Mendez were designated by OFAC in February 2004 and November 2007, respectively.

On May 29, 2003, President George W. Bush identified the FARC as a significant foreign narcotics trafficker pursuant to the Foreign Narcotics Kingpin Designation Act. Previously, in 2001, OFAC designated the FARC as a Specially Designated Global Terrorist pursuant to Executive Order 13224, and in 1997 the FARC was designated as a Foreign Terrorist Organization by the Secretary of State.

Today's action continues ongoing efforts under the Foreign Narcotics Kingpin Designation Act to apply financial measures against significant foreign narcotics traffickers worldwide. In addition to the 68 drug kingpins that have been designated by the President, 393 businesses and individuals have been designated pursuant to the Kingpin Act since June 2000. Today's designation would not have been possible without support from the Drug Enforcement Administration.

Today's action freezes any assets Mercurio Internacional may have under U.S. jurisdiction and prohibits U.S. persons from conducting financial or commercial transactions with this entity. Penalties for violations of the Kingpin Act range from civil penalties of up to $1,075,000 per violation to more severe criminal penalties. Criminal penalties for corporate officers may include up to 30 years in prison and fines of up to $5,000,000. Criminal fines for corporations may reach $10,000,000. Other individuals face up to 10 years in prison for criminal violations of the Kingpin Act and fines pursuant to Title 18 of the United States Code.

REPORTS

For a complete list of the individuals and entities designated today, please visit:
http://www.treasury.gov/offices/enforcement/ofac/actions/index.shtml

To view previous OFAC actions directed against the FARC, please visit:

Treasury Action against the FARC on April 22, 2008.

Treasury Department Public Engagements Schedule

May 7, 2008
PublicSchedule

Public Schedule

FOR THE WEEK OF MAY 3 � MAY 9

*Revised Wednesday, May 7, 8:45 a.m. EDT
(Removes Remarks by Secretary Paulson Wednesday morning before the Council of the Americas.)

Wednesday, May 7, 2008 9:00 a.m. - 5:30 p.m. EDT
Deputy Assistant Secretary for Financial Education Dan Iannicola, Jr.
International Conference on Financial Education
Organization of American States
17th Street & Constitution Ave., NW
Washington, D.C.

Thursday, May 8, 2008, 9:00 a.m. - 6:00 p.m. EDT
Deputy Assistant Secretary for Financial Education Dan Iannicola, Jr.
International Conference on Financial Education
Organization of American States
17th Street & Constitution Ave., NW
Washington, D.C.

Thursday, May 8, 2008, 8:00 a.m. CDT
Secretary Henry M. Paulson, Jr.
Tour of the Kansas City Regional Financial Center
4241 NE 34th Street
Kansas City, Mo.
Note: All media should RSVP to Francie Abbott at (816) 414-2151 or Lauren Ray at (816) 414-2113 with the following information: full name, Social Security number, date of birth, position, and organization.

Thursday, May 8, 2008, 9:30 a.m. CDT
Secretary Henry M. Paulson, Jr.
Remarks on the Economic Stimulus
The Kansas City Central Library
Helzberg Auditorium
14 West 10th Street
Kansas City, MO

Thursday, May 8, 2008, 1:15 p.m. EDT
Deputy Secretary Robert M. Kimmitt
Remarks on Sovereign Wealth Funds
United States Council for International Business
Sullivan & Cromwell
125 Broad Street
New York, N.Y.
Note: Media should RSVP by 2:00 p.m. on May 7th to Jonathan Huneke at 212-703-5043 (office), 917- 420-0039 (mobile) or jhuneke@uscib.org.

Thursday, May 8, 2008, 11:00 a.m. PDT
Treasurer Anna Escobedo Cabral
Remarks and Tour of the San Francisco Regional Financial Center
1650 65th Street
Suite A
Emeryville, Calif.
Note: All media should RSVP to Abbie Loftus at (510) 594-7100, or Fay Rurup at (510) 594-7330 with the following information: full name, Social Security number, date of birth, position, and organization.

Thursday, May 8, 2008, 5:30 p.m. EDT
Secretary Henry M. Paulson, Jr.
Remarks to the International Conference on Financial Education
Organization of American States
17th Street & Constitution Ave., NW
Washington, D.C.

Friday, May 9, 2008, 12:30 p.m. Local Time
Under Secretary for International Affairs David McCormick
Remarks on Global Financial Turmoil and its Implications for China
Lujiazui Forum
Shangri-La Hotel
33 Fu Cheng Road, Pudong
Shanghai, China
Note: Media may register at http://www.lujiazuiforum.org

Paulson Names Leadership for President's Financial Literacy Council

May 5, 2008
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Secretary Paulson Names Leadership for President�s Advisory Council
on Financial Literacy

Washington- Secretary Henry M. Paulson, Jr., and Charles Schwab, Chairman of the President's Advisory Council on Financial Literacy, announced the appointment of several key Council officers today as the group conducted its second public meeting.

Secretary Paulson designated Deputy Assistant Secretary for Financial Education Dan Iannicola, Jr., as Executive Director of the President's Advisory Council on Financial Literacy. On behalf of Secretary Paulson, Mr. Iannicola will manage the council's activities and support Chairman Schwab's agenda to raise the nation's level of financial literacy.

"Dan Iannicola has been a true leader in financial literacy for many years, and he will make an excellent Executive Director," said Chairman Schwab. "With Dan's appointment and our committee chairs in place, the Council is well positioned to carry out its work of making financial literacy a national priority, and ensuring that people of all ages and backgrounds have the skills to understand and manage their finances."

President Bush established the advisory council to focus on expanding Americans' access to financial services and increasing financial education for youth in school and for adults in the workplace.

In addition, Chairman Schwab selected the leaders for the committees that will set the Council's goals for the upcoming months, including:

Ted Beck, Committee on Outreach;
Tahira Hira, Committee on Financial Education Research;
John Bryant, Committee on Underserved Populations;
Janet Parker, Committee on Financial Education in the Workplace
Laura Levine, Committee on Financial Education for Youth.

Chairman Schwab named Council member Cutler Dawson to serve as a liaison to the Financial Literacy and Education Commission, and Council member Ted Daniels to serve as alternate liaison. Established by the Fair and Accurate Credit Transactions Act of 2003, the Commission is comprised of 20 federal agencies and led by the Treasury Department.

"The 20 agencies on the Commission make a critically important contribution to the effort to raise the nation's financial literacy level," said Chairman Schwab. "The Council's new liaison to the Commission will help maintain open lines of communication between the private sector and the federal government, and ensure that the two panels are working together toward a common goal."

The President and the Secretary of the Treasury have tasked the Council with advising them on how to raise the level of financial literacy for all Americans. The Council has turned to the American public for help with that task and is soliciting public comments at

<http://www.treas.gov/offices/domestic-finance/financial-institution/fin-education/council/index.shtml through May 23>. It will meet next in person on June 18 in Washington, D.C. Council meetings are open to the public.

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Asst. Sec. Lowery Statement at Annual AsDB Meeting

May 5, 2008
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Statement by Assistant Secretary for International Affairs Clay Lowery
before the 41st Annual Meeting of the Asian Development Bank

Madrid, Spain -- It is delightful to be here in Madrid for these meetings, and I would like to thank our gracious hosts, the Government of Spain and the City of Madrid, for their warm hospitality. We want to thank them for hosting the successful replenishment of the Asian Development Fund � which like Real Madrid's triumph last night � needed the final minutes for a result. Let me begin on a sad note and say that our hearts go out to the victims of the cyclone that hit Burma over the weekend.

In the United States, we are going through a difficult housing correction that has impacted our capital markets. We are taking a number of aggressive measures to minimize the downturn's effect. We believe our long-run fundamentals remain sound and we have confidence that we will work through this period.

Much of the rest of the world is suffering from large increase in global food prices, and the response requires both immediate and medium-term actions. We applaud the ADB's announced intention to take both kinds of action consistent with its comparative advantage and strategic vision. Structurally and strategically, we believe the most meaningful manner in which the ADB can contribute is by strengthening agricultural productivity through building rural infrastructure and providing appropriately scaled financing initiatives for farmers and rural organizations.

Asia is the world's fastest growing region, and despite the sharp rise in commodity and food prices and the recent slowdown in the United States, the ADB is forecasting growth in Asian developing economies of 7.6 percent in 2008. As the ADB itself forecasts, by 2020 Asia and the Pacific will account for more than 25 percent of global GDP in nominal dollar terms, have 90 percent of its population living in middle income countries and have only 2 percent of the population living on less than $1 per day.

While some countries have roared ahead, however, others have lagged behind and too many are still among the world's poorest countries. They need the institutional and policy reforms that create opportunities for private sector job creation, sustained growth and improved living standards. Infrastructure gaps prevent the connections to markets and products that drive essential private-sector commerce, both within and across borders. And where incomes have grown significantly, rapid growth is putting strains on the environment and natural resources.

To address these challenges, the ADB should put its efforts into three areas: building on the replenishment, adapting to changes in middle income countries, and strengthening institutional reforms.

First, we applaud the agreement's clear focus on the Bank's comparative advantage, focusing on four key areas � infrastructure finance, the enabling environment for private sector development, basic education, and preventing environmental degradation. On this last point, we look forward to close cooperation with ADB as the United States and other bilateral donors launch the Clean Technology Fund to help developing countries finance advanced technologies to cut greenhouse gas emissions.

Second, the ADB's role in middle-income countries has been a matter of rich debate among shareholders and we urge continued dialogue as we try to determine the optimal mode of engagement with countries that still face crucial development challenges even as they succeed and gain access to private financial markets. In some countries, this will mean shifting from financial assistance to fee-based policy guidance of the kind that the Bank is uniquely qualified to provide. Adaptation to change is a challenge, but it also presents a tremendous opportunity for the Bank to use its knowledge to help countries in new ways, and we look forward to helping the Bank stay true to its Charter.

Third, my boss Secretary Paulson likes to say that private entities that do not reform with the times go bankrupt, whereas public entities become irrelevant. At the ADB, we think a number of changes are needed to avoid being irrelevant. The ADB needs to ensure that it measures and manages for development results and its evaluation unit remains independent.

And, some have asked me why the United States cares so much about the human resources department. My answer is that the most valuable asset of the ADB is its people. The recruitment, retention, and career development of the kind of dedicated, qualified professionals needed by the Bank to fulfill its mission are central to the ADB's success. It is imperative that the management take concrete steps to professionalize human resources management. One place to start is scrapping the anachronism at many levels of the organization for a bias toward nationality as opposed to merit.

We think with efforts in these three areas � combined with the solid work in such countries as Afghanistan � the Bank will truly have a long-term strategy.

I would like to close by thanking President Kuroda and the entire bank staff for their work in preparing for our meetings here in Madrid, and my government looks forward to continuing our work with the Bank and fellow shareholders as we pursue our common vision of a region of growth and prosperity for all its citizens. Thank you very much.

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