to understand those risks and handle this as appropriately as possible. >> shameless plug number two. supply chain a big concern. we are on the markets again in 30 minutes. "market makers" >> live from bloomberg thisuarters in new york, is "market makers" with erik schatzker and stephanie ruhle. findch companies themselves caught in the middle. >> star witness, the government is counting on insider-trading cases against capital fund managers. quarterbacks, it is not all just brady and manning this weekend. two teams will be led by players who do not make $1 million. who knew? >> i'm scarlet fu.

how long have we been working at bloomberg and never had a chance to sunset together? >> since the reagan years. this is a first. we were talking about it yesterday. i'm thrilled be sitting here with you. were talking about cut- rate cornerbacks, the football this weekend, a lot of people are the big spenders on these know, the it as you super bowl is coming to new jersey. it will be in the meadowlands. >> they will be freezing. >> we will be watching from the comfort of our homes. we will get back to that in a minute. .t is time for the news the top business stories from around the world. >> morgan stanley profit fell 70% due to costs of bank securities. and litigation. the bank achieved this gold on cost-cutting and reducing capital used by the tracing --

trading. smog hit hazardous letters in china's steel producing region. pollution is 17 times the safe level recommended by the world health organization. the chinese government has asked local authorities to reduce illusion by up to 25% over the next three years. less than an hour from now, president obama is expected to reforms to the nsa surveillance program he will say the government should not hold onto the bulk of data it collects on phone calls. relieves -- leaves the question of what should be done with it instead. >> that is our top story. corporate america will be watching that speech very closely. have been caught in the middle of this battle between the nsa and ramsey writes. our chief washington correspondent peter cook joins us. the president will say he does

not want the government collecting phone calls anymore. how will that play with the phone companies? >> do not expect them to be popping champagne corks. it is a big change, but it is not the change that they were hoping for. the president is going to leave open the possibility that they could be forced to hold this information for the government going forward. that is something that would be worse than people in the is the current situation. the president will essentially recognitionapid -- -- recommendation of his panel. his not say the program should be scrapped. u.s. the attorney general and members of the all -- intelligence community to come up with an alternative plan. that is a higher bar than today. appease privacy and civil liberties groups, but it is not the solution the phone companies wanted to have. they did not want the government to hold this -- require them to

hold this information. they do not save all that information today. they do not want the responsibility or the liability and they have been fighting the idea hard at the white house. of a is the possibility third-party to store this information. they will face criticism from civil liberties rubes. it would wind up doing what the nsa is doing, except it would be identified as not to government. it would be funded by the government. it would be processing the data the way the part -- government processes that today. that is not much privacy benefit. is the phoney companies are agnostic about this idea of a third party. be ais an idea that could viable solution, even though it is not perfect. >> there is no perfect solution here. you're talking with the phone companies, one of the internet

companies? what do they want? right in this lot as well. they want the president to say the surveillance programs are scaled back. they have in playing ball with oracle salmon that has hurt their business at home and a specially abroad. you cannot trust american companies to secure data. want the them to president to reassure the rest of the world. ability toy want the share more details when they are forced to turn over information to the government under court order. a are very limited as to what they can this goes -- disclose an affront. greater transparency will show it is a relatively rare occurrence. they are not possibly turning over to robes of information or under court order to the federal government. >> transparency is a common theme. your cook is our chief washington correspondent. >> let us talk about the president's new policy.

privacy director for .he she is in san francisco, thank you for joining us. it is a pleasure to have you. >> thank you so much for having me. >> the president will be speaking in the next hour, what would you like to hear? >> my expectations are pretty low from what we are going to get from obama today. i think he is likely to pass the buck to recommend that congress take action to rein in the nsa spying rather than doing something meaningful himself. the first thing people are looking for from him is a clear statement that he is going to stop bulk surveillance of people who are not suspected of crimes. they will not be collecting metadata of phone calls and records around the world. tech companies are concerned

about the nsa efforts to undermine internet security. it will make it weaker for all technology. it would be wonderful if he said something on that as well. >> you mentioned the president will be putting this over to congress. isn't this the type of thing that should have congressional oversight? part of the criticism is that things of this nature, too much of the authority is in the executive branch. >> this is going to be one of those issues that is going to have by ends from both congress and the executive ranch if we wanted to move quickly. obama is unlikely to do anything. we are going to be reliant on congress to rein in nsa surveillance issues. ultimately, the president has the ability to a number of thinks or executive orders. i do not think he has the motivation to do it. surveillance program

is not curtailed, what are the long-term applications? >> the long-term effects are going to be hitting the tech industry. andcompanies like google facebook have been concerned about this. they met with the president to explain their concerns. analysts say that the cloud industry could suffer billions of dollars of loss. companies like cisco are saying they are already suffering losses of substantial amounts in their emerging markets. there is a serious economic consequence in addition to an enormous civil liberties question for people all over the world who want to use technology and have privacy. doesking a step back, why it matter who holds the data? if the government needs it, they can always get a hold of it later on. >> i think the important thing

is that we are not sweeping up data on people all over the world who are not suspected of a crime. at the end of the day, the phone metadata has not proven to be effective. in seven years of the program, they have not pointed to a terrorist attack that has been stopped. they have not been able to prove that the information they are getting is useful for them. why are they getting all of this information on everyone when it is on millions of people and they have no indication it is effective against terrorism? to mandaten is not the telecom companies to collect information and hang onto it. this has economic consequences and rhymes the issues -- privacy issues. stop collecting information that they do not need on people who are not suspected of anything. >> are we having this discussion if it were not for ever snowed in? >> that is a great question. raisee been trying to

this question for years. we have been an active litigation over nsa surveillance system thousand six. edward snowden change the game. we realize how much information the nsa has on everybody. >> but we get so upset about government collecting data but not internet companies like google? >> the government has the people to investigate and charged him with crimes and do things. they are bigger and have more funding than any company. a cut -- upset with company, you could switch to a different company. there are privacy concerns with other companies like google and facebook collecting more information than they should.

there are a few checks and balances there. director the activism for the electronic frontier foundation. she is joining us from san francisco. thank you so much for your time, we appreciated. >> we are waiting for the president, his speech will begin at 11:00 a.m. >> a lot of people are waiting for that. they are waiting for what the president will say. phil mattingly says there is a lot of confusion that will come out of the speech. there is a fine line that has to be drawn between collecting the data and keeping people safe and the privacy issue. >> there is telephone data and all of the other data that is out there. this is a big, big issue. we have a lot more coming up. for may be a crucial moment the prosecution in that insider trading trial. ♪

>> the first week of the trial

wraps up today. he is the capital trader that is facing charges that he had the most profitable insider trading scheme ever. the prosecution's star with us will take the stand. as a doctor who passed on tips about pharmaceutical test results. -- covering the trial. was this doctor? dr..e trial is about this alzheimersteemed researcher. toma be friended him and cuddled up to him. he became the son he never had. he corrupted this dr. and extracted information about a drug trial the doctor was playing a role in. he is a key witness in a court case. take for himid it

to turn into a cooperative witness? >> quite a few months. this process often begins with an initial meeting with a potential witness and his lawyer and the government lawyers get together and they start figuring out what the guy knows. there is prodding and poking. cough upss might not the goods at the first meeting because that is their only leverage. they're accusing this person of doing something wrong. that is how the government forces them to cooperate. >> what is the government alleging? paid forhe doctor was information about this very key drug trial result before it was public. essentially accusing him of getting a copy of the slide show presentation a week before investors. >> he made a big profit on the trade. how busy of peer to?

appeared? how does he look? >> he looks very serious. it is hard to read him. he has a poker face. we are not going to hear from them because they do not put these guys on the stand. we have to glean a sense from the witnesses speaking on his behalf. i amfore we came back on, curious about what the jury looks like. some of this information is very complicated. ?hat is the reaction like are they confused? >> there is a lot of complicated science in addition to the hedge fund information. the jury is more sophisticated than i have seen in other trials. they have graduate degrees. there is a woman who works at rice waterhouse coopers.

she is unaware of this, she remained of the jury. there is a film professor. there is somebody who worked at aig. there is also a bus driver. there is a mix. seemed them have seen -- very alert. there is a lot of notetaking. >> are we past the point of no return? can he still slip? >> someone can always flip. did not know why he would do it now. he has not done it yet. they have pulled out every single weapon they have in the arsenal to try and motivate this guy. he has resisted. >> what will a conviction mean for stephen:? >> it would not be a good thing. he has a case outstanding with the sec. if he is convicted it will make cohen.er for stephen

he has been charged civilly. beene legal defense has paid for. >> that is the standard so far in these cases. >> i am rushing down the right now. >> thank you so much. >> maybe you can leave about it. consumers may find that america's most expensive credit card just isn't worth it. >> it is friday, we are trying to lay the yearbook game. investor graduated from woodrow wilson high school in 1947. you can tweet in with your suggestion on who you think it is. >> it looks very familiar. >> we will post the backup throughout the hour.

you can tweet us at market makers. this is a bloomberg television. ♪

>> it is time to talk plastic. changed express has policies. some are going away. there looking at how priciest cards are using some luster. how is that changing? >> if you have applied them card, it costs $450 a year to have it. that is an annual fee. if you pay that much money, you want a lot back. this is what you get.

no foreign transaction fees. if you go shopping abroad, you will not get charged. you get credit toward other things they charge you for like meals or checking a next her bag. conciergeet that 24/7 service. it will help you get some last- minute tickets to the theater. nobody can get tickets to "the book of mormon." those airportnt lounges. you will no longer be able to have access to the american admiral club lounge. they have teamed up with mastercard. express card members will have the get the boot. >> they are not reflect -- reacting positively? website, youon the will see outraged customers.

1989 says that if american express wants me to continue as a platinum member, the're going to resolve airline lounge or lower fees. after carrying this card, i am no longer willing or able to justify war hundred $50 a year for the privilege. not worth it. especially with a lot of credit cards offering cash back and return programs. is american express moving away from the emphasis on these platinum cardholders anyway? >> yes. a bill you had to pay in full every month. >> it was a charge card. >> is a credit card because there is a higher line of credit. you had to pay your bill. trying to branch out

into the lower end of the market. they signed a deal with wells fargo and u.s. bank to issue american express bank cards. they want to get into more lower income units. >> what is next then? how are they going as far as growth forecast? >> they came out with their earnings. they should be some slowdown in the fourth quarter. that is always going to be the strongest season for holiday sales. this is going to the growth area for them going forward. not just the high-end. not the black card that nobody knows the details about. they want to broaden the base and get more low income people. >> they are going in a different direction then all of the high- end companies. thank you, olivia. makers," on "market the other two quarterbacks playing this weekend make less

than seven figures. we'll be right back with more "market makers." ♪

>> live from bloomberg headquarters in new york, this is "market mark -- makers" with erik schatzker and stephanie ruhle. standing -- said in new business model. they are not selling as many new as hoped.s game boy is different. levelt keep rising the for twitter. shares will hit $75 within a year. they went public at one a six dollars last year.

the latest wearable device is a smart compact -- contact lens. that could be a blessing for diabetics who have to prick their fingers to draw blood. they will let me hit in the market for least five years. medicine the to watch for. >> the playoff games this weekend are not short on storylines. in the afc, peyton manning of denver will square off against new england's tom brady. two young cornerbacks will take center stage in the nfc championship game. mckee tomichael analyze these games like only he can. as is interesting because a lot of people are saying it is the passing of the torch. >> it may be. that is the marquee game of the weekend. tom brady versus peyton manning, two of the best quarterbacks to ever play the game. the two highest played cornerbacks in the game. their stats speak for themselves.

brady has a slight advantage over manning. manning has most of the statistics. it is going to be a game to watch. it will be a battle of giants. >> when you look at the four quarterbacks, for san francisco andhave colin kaepernick four seattle you have russell wilson. the teams that are looking to the future tom of they want and established talent. they want to keep that talent in-house as long as they can. it will pay big bucks to get it. seattlereat thing for and san francisco is they're not paying big bucks at this point. tom brady has worked his way up. peyton manning has worked his way up erie they make a lot of money. and russellnick wilson are two of the youngest and lowest paid quarterbacks because they have only been in the league two years. they do have the record to go on that the others do. that,n young guys like when you are in the middle of

contract negotiations, is all about wins and losses? or is it about their maturing? they're not at the level they need to be, but you can see that on the horizon. are you paying for future payoff? >> the nfl is mostly what have you done for me lately. it is what you have done it not what you will do. if you look at what happened with manning and brady, the stats on the football field say manning is the better for -- quarterback overall in terms of sheer numbers. the number of wins he provided his teams over the year compared to an average player, it is much higher than tom brady. the number of points per game likely to be scored with peyton manning out there is much higher than brady. may -- brady had the record for the year. moren manning has earned money than tom brady over the years. his average salary is 16 million a year. that is just looking at it after their rookie contracts.

manning was over one and brady was number one. >> peyton manning has the edge? >> he has the edge statistically. reddy has the edge in terms of stupor -- super bowls. it is to income economy, you look at the dispatch side. ayton manning's wife is gorgeous woman but she is a stay-at-home mom. tom brady's wife works for a living. she makes more than both of them put together. paidis the world's highest- supermodel and has been since 2004. her earnings for for manning and brady put together. >> the stay-at-home moms say they work for living as well. my peytonaring manning denver broncos tight. it could go either way. this is going to be an interesting game to watch. going for seattle.

the super bowl will be in our backyard in the new jersey meadowlands. important person will be the weatherman. >> michael, thank you so much. coming up, he may be martha stewart last chance. theill tell you why domestic diva hired a scrap metal executive to save her company. we will be right back. ♪

>> martha stewart is klein her way back to profitability. the new ceo should have the right recipe. he was a scrap metal king known for not condemn companies. week's issue of have an in-ek," we depth story about him.

he is here with some insight. tell us about him. he is not who martha stewart would be expected to hire. who is this guy? he does not have a backhanded meteor merchandise. these are the things that martha stewart does. he has been in the scrap metal business. before that, -- >> is about a family run business? >> yes. he took over a company that was taken out of bankruptcy. he is been in that for the last decade. >> there is not necessarily a negative here. >> if you look at this company, in a certain an annual profit once. he will be the sixth ceo in the last decade. nobody has been able to change the culture during that time. everybody sees the same thing. ass is a company that acts if it is still the 90's. david spent endless amount of

money on media -- you can spend endless amounts of media -- money on media. you can make the broadcast product and make the magazine. media executives could not get this done. a summit with a different background can. >> is he the guy who can tell martha stewart not to take so many flights across the country? >> he has a tough guy from his background. he has a social relationship with her going back a number of years. his wife runs a gallery downtown. they have gone on vacations with her to montana. a bad thing or a good thing. she may trust him. >> is that what was lacking before? the trust? redskins with the head coaches. what is going on here? thesere a theme to why other ceos did not work out?

>> have the founder whose name is on everything that they make. she had a hard time giving up control. that is not surprising. the optimistic spin is she is comfortable with him. say do ite able to needs to be done in terms of getting our costs down. i will give you the leeway to do that. -- like the way you described it. their branded merchandise did very well. there is a big legal battle over it. that is been going strong. >> the merchandise site is doing great. if you get the media side to break even, you would have a profitable company. that is all it takes. spend tooint, if you much on media, that affects the merchandise. her brand awareness is incredible. >> everybody knows who she is. her,en if they do not like

they think highly of the product. >> they are losing so much money. if you of it is just look at martha, they cover all of her life expect -- expenses and private jets. once upon a time, the margins were where they could cover that. that has come down. they've taken some criticism in terms of their corporate governance. why hasn't some he stepped in to do something about that? her sister is on the payroll. her daughter is on the payroll. her sister-in-law is on the payroll. there is his inner circle of friends who are resistant to the changes that have been tried to enact in the past. this company is molded in the image of martha stewart.

what happens when she takes a less active role? try to diversify. they bought amaral a guy sees -- a celebrity chefs empire. great story in business week. >> thanks. tenant, the secret agent who is not double 07 returns to the screen. speaking of the 90s, right? you're watching "market makers." we will be right back. ♪

>> the stories behind the jack ryan character, based on a tom clancy books, are a billion- dollar business in hollywood. jack ryan returns to the big screen in paramount's new movie.

more.lichman has he is in los angeles. i know he was popular back in the day, can he make a comeback? it is almost like counterprogramming during the oscar talk, to put an action movie in theaters. , all ofes you mentioned inse films have generated the neighborhood of $200 million in global box office. we know the global box office has gotten larger since then. there is an opportunity internationally. filmis a moderately priced in terms of what they spent to make it. however, we should highlight you are going to the new phase of jack ryan. alec baldwin to

harrison ford to ben affleck to did not havehey the opportunity to do that. they forge ahead. baldwin aslike alec the original jack ryan. i think he fits the role. the weight gain did not go so well for him. yesterday, we were talking about megan allison. her brother david is a producer on this film. they have become a real force in hollywood. financed theison co- film. he has a company called sky dance. the mission impossible movies are tied to him. he is working on the next terminator franchise. producer ofthe , he wasck ryan movies working with david ellison to find out more about him.

this is what he had to say. guyavid is a very bright with great taste. he has a lot of financial resources. paramount tol with do and co-finance. he picked this as one of his movies. he was not intrusive. he knows how to process information and come to a conclusion. he is not ashamed to say what he has in his mind. hands on is an important way to describe it. you're going to see a name like david ellison involved in moviemaking. they will say your dad is larry ellison and you have a lot of money. everybody who is out to make it in hollywood, getting involved

in films as a way to do it. this film is not based on a tom clancy book. it is based on the character that they had the rights to. they have the rights to keep chris pine and do more movies. if it is successful they will do it again. you,at is hollywood for one good idea spawns many, many sequels. thank you, jon erlichman. better, jamese bond or jack ryan? >> james bond. >> it is a classic. las vegas high rollers are connoisseurs of the good life. they get perks from all the casinos. the new nightclub in the blotchy has turksbill longino to top them all. trish reagan talked to vegas will don johnson. one of mgm's casino,

the most expensive tables in the world. >> wow. i like this table. >> it is gorgeous. >> part of it is the view. 1200 water spain robots. it has 460 seats. this $40 d million. inside the club, the fountains are made of champagne. this is the most possible club in vegas. the average table costs $8,000 a night. cost $250,000. what makes it different? this red button. here we go. how much is a cost to set up these sounds?

$10,000. nice. it was an expensive night. >> she got dressed up to vegas. >> that is me in all of my glitz. 200 $50,000, tell us why it is worth it. >> i don't know if it is worthless, to be honest. you get to press that button. the fountains go off. i did at least 25 times. this thing gets comp. twice a year is how often it is booked. it goes to really big whales. it is somebody who is going to spend a couple million dollars in the casino. you can make the fountains go off. this is part of the way these casinos bring in wales. strategyas their

during the down years during the recession russia mark the high rollers with the only ones who could come in. documentaryhat the looks at. of the casinoity industry faces as they try to bring in these big whales. there is one whale in particular, he is able to exploit the weaknesses. making $15 million playing blackjack. >> at the $250,000 table? >> this was over a span of three months. this is an atlantic city, new jersey. you'll find out how he did it. did i win any money? i did. i had some luck at the slots. >> very nice. >> i had fun. >> you can see more about the

life of a vegas whale. at 9:00 p.m.day thank you so much, good to see you. >> is approaching 56 past the hour, we are on the markets. we start with the equity markets. there is some decline in the s&p 500. the nasdaq is little changed. investors are reacting to corporate earnings for december. general electric reported. we're ending the week on a mixed note. individual movers to highlight, intel had a first-quarter profit forecast. a lot of concerns for the pc maker and market is struggling to grow. that is because right now, there is not a big market share at all in mobile devices. it only has a one percent market

share in smartphones, if you can believe that. we want to quickly mention ups. they had the disappointing fourth-quarter. they failed to deliver packages for christmas. for thess it is time yearbook. >> it is time for the yearbook. >> i have no idea. >> scarlet was writing down the 1947. >> he graduated from high school in 1947. >> can we get one more tip? >> he is a billionaire. >> he is a billionaire. an older white guy who is now a billionaire who is about 88 years old. >> i do not know. >> he is a billionaire. >> it is worn buffet.

>> for real? to his son and grandson. i do not think they look anything alike. one of the viewers voted correctly. here is his answer. the oracle of omaha, warren buffett. woodrow wilson high school, class of 1947. >> we will be back in just a moment. coming up, we are looking at a live shot from the justice department. that will be where president obama will speak moments from now about the nsa and surveillance program. >> he will begin speaking at questions, a lot of about what policy shift he will announce at this press conference. it will be a big win and we will take you there live when it happens. you're watching bloomberg television. ♪

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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. snowden changed the game. eight set off a global uproar with revelations about the nsa's electronic surveillance programs. in a couple of minutes, president obama will unveil long-awaited reform. >> the president is expected to put an end to one practice, the government collection of bulk phone records. we will get some answers moments from now. >> welcome to "market makers." everybody.y, i am scarlet fu. >> and i am mark crumpton. erik and stephanie are headed to davos.

any moment from now, president obama will be speaking to the justice department but changes he wants to make to the nsa data collection programs. we will take you there live once that press gets underway. phil mattingly joins us now. what do we know about what the president is going to say this morning? mark, two major topline changes that we know the president is going to propose -- one immediate, one that he is just asking for in the future. on that bulk collection program, section 215, the president is going to require that as of today, the attorney general is going to have to work with the secret surveillance court to to get nsa analysts judicial approval before they query any of the bulk of data that they have collected. he president is also going to propose that the nsa no longer hold that data. is a point here -- it proposal. he has not said where he wants

that data to go. there is talk of an independent third company, but he is talking about the attorney general the director of national intelligence and congress to get together to find a new place to hold those woke collection telephone records. two major changes being proposed by the president, mark. >> we were speaking last hour, and we were talking about the president possibly hunting this over to congress. will anybody be happy with this? >> i do not think anybody will be completely happy with what is announced today, and white house officials acknowledge he is trying to thread a needle here. he believes he will defend these programs, why they exist and the protection they provide the country, however he is willing to acknowledge their need to be changes made. he is going to try to address those today, but as you said, he will leave a lot to congress, he will establish a lot of report -- report, new panels, new advocates to work on this issue.

there will be a lot of ground for privacy advocates and critics in congress to say you have not done enough. twice bloomberg's white house correspondent phil mattingly. phil, stand by. let's bring in a riveting editor richard falcon rock. he was a top security visor in the bush white house. -- let's bring in top security editor richard dawkinfalkenrath. about generalk issues related to privacy, but with respects to the pacific -- and the specifics, he will do very little. he will ask congress to adjust the law with respect to the bulk metadata. congress is one of its most this optional phases in years, so this is a very cup located area that will not move quickly. he is not being specific about how he wants to change the practice, polling the bulk metadata. i think in party does not know exactly what he wants to do.

he knows that he has a lot of criticism coming his way primarily from the tech community and the civil liberties community and he wants to address that by talking about it, but i conclude from the timing of this speech that this is not in fact a high for hisive priority administration. >> why happy speech at all? >> -- why have the speech at all? >> to quiet the critics. ,e has the state of the union which is where real priorities,. as someone who worked in the white house, if you give a speech on the friday the week before the state of the union, it tells you something. it's tells you in fact that i want people to hear me talking about this, but i'm not going to give it my most high-profile rap form. >> there is a belief, richard, that the president has the ability to rein in the nsa if he really wanted to. does he really? >> he does. the lots at the outer limits of what the nsa can do and then

they can be further restricted by the executive order. he cannot lawfully tell them to go beyond the law, but he can tell them start that she can tell them to stop sure from where the law would permit. it is within his power to hold back in rein them in. he cannot make them go further, but he can hold them back. >> you talk about the partisan atmosphere in washington. is this the president's way of saying ok, before you even suggest that i am abusing my vesttive authority, i will it in the legislative branch and you guys can deal with this? >> that is what he does. he has a big issue, he will isen tee it up, framing, he very eloquent and intelligent anyway he friendly, and then tossed it over to congress. particularlybeen a effective legislative strategy for his time in office. this is not a highly partisan issue. this issue happens to be characterized by rod bipartisan consensus -- braooad bipartisan consensus. continuing the

policies of president bush. >> richard, has edward snowden push to this debate? is this an apparent victory or real electorate for edward snowden? >> well, edward snowden is a fugitive and will spend the rest of his live on the run or in jail, so i would not call that a victory for him. this is the most consequential leap of information in u.s. government in history. anothern one way or trigger the debate in a discussion, the level of inquiry into these issues that had not happened before. >> going back to president obama for a moment, he was a constitutional professor before he became president, so he had been critical of intelligence community overreach. now that he is president, that tune has changed a bit. talk about the evolution of obama's conviction. >> the candidate obama, you never would have thought would be adopting essentially all the policies of the bush administration and in fact

intensify and sharpen. once he is in office, he is responsible for the security of the united states, he has changed his tone and adopted an extremely centrist point of view which has alienated people in the political left and the civil liberties community -- ofbut this is the politics politics, if you will. until you were in that office and until you get an intelligence briefing, which you were not privy to, obviously i need to know basis, and when you are a candidate, you do not need to know. but when you are in the oval office and you get the briefing, things are little different. >> you are absolutely right. in addition, he picked her up rose for his administration, inside the white house, john brennan, a continuity pick, extreme professional in this area. they continued the policies. they also recognize there is a partisan elements, which they at the democratic party are not going to be weak on defense and security. they will not let the republicans say that. so on issues of secrecy and

electronic surveillance and on drones and use of lethal force, he has continued all the policies of his predecessor, george debut bush -- george w. bush. >> all right, richard falkenrath , you will be staying with us as we await the president's speech. moments from now, he will be at the justice department making changes to the nsa surveillance programs, and when he does began speaking, we will take you there live. this is "market makers," on bloomberg television, streaming on your phone, your tablet, and at bloomberg.com. and now we are also on apple tv. ♪

>> while we wait for the president to unveil his proposed nsa reforms, let's talk of wall street. the too big to fail lenders have all reported their fourth quarter earners. morgan stanley was the last one to do so as to profit tumbled by 70% because of money set aside for litigation expenses. but morgan stanley still beat analysts' estimates.

shares are trading higher by 4.4%. last year, morgan stanley was the biggest performer among all global investment brings. our guest -- morgan stanley has changed a lot from back then, even even the last five years. is james gorman facing the right strategy for the bank? >> that it's not fair. remember, i was a partner -- [laughter] brandon --likes what what james is doing, so he is turning morgan stanley into the old merrill lynch, and it is going to be a better version. frankly, this quarter -- you know, this is his opportunity to do a victory lap and that is what he did. in 2009, he promised a 20% in wealthgin management. history got revised for a while at morgan stanley. he is delivering on it right now.

19%, he is right there, so he is keeping his word, but now he is moving onto the next challenge, which is fixed income, which is the our oe of the form. the firm is generating a 5%, 16% 6 % roe. he laid out today how he will get to a 10% roe pour th -- for the firm. >> goldman has brought its compensation down sharply, and that -- if you would've asked me five years ago which firm was going to take the lead in compensation reduction, i would not have guessed goldman sachs, but that is exactly what is happening. they said fixed income has changed, trading has changed, we need to get margin up. you can only cut one expense. so they and gpm are the only two banking their cost of

capital. >> how much does it take to make money for shareholders? >> if you think of the history of wall street, for every dollar of revenue that came in, you used to get $.50. well, that is the modern now at morgan -- at goldman sachs, it is down less than $.40. the offset was that. spring. frank is to hold it. the leverage ratios have been cut in half, the regulatory capital is done up by 40%. is adjusting to that, and they are adjusting by taking down their own column rather than increasing the prices to the client. ultimately, client pricing will. i just -- will adjust. >> are other banks making that adjustment? >> they are lagging because it is difficult. you were the world-famous traitor that made $5 million

each year and i at your manager had to say now you are worth $1.5 million. that is really tough on your ego. so we have seen that sort of thing. let's face it, there is no shortage of talent of fetal willing to work for $1 million a year so i am not worried there will be a talent shortage on wall street. but from a managerial point of view, this is difficult. it is tanking -- it is taking a long time before we will get to a world where you can see trading assessed. brad, hold on, the president is now in front of the lectern at the doj right now. >> thank you so much. leave, have a seat. please have a seat. at the dawn of our republic, a small secret surveillance committee born out of the sons of liberty was established in boston, and the groups members included paul revere will stop

at night, they would patrol the streets, reporting back any signs that the british were preparing raids against america's early patriots. history,t american intelligence has helped secure our country and our freedoms. in the civil war, union balloons, reconnaissance track the size of confederate army by counting the number of cannon fires. in world war ii, codebreakers give us insight into the japanese war plans. marched across europe, intercepted communications helped save the lives of his troops. after the war, the rise of the iron curtain and nuclear weapons the need ford sustained intelligence gathering, and so in the early days of the cold war, president truman created the national security agency or nsa to give us insights into the soviet bloc and provide our leaders with information they needed to

confront aggression and avert catastrophe. evolution, wes benefited from both our constitution and our traditions of limited government. u.s. intelligence agencies were anchored in a system of checks and balances with oversight from elected leaders and protections for ordinary citizens. meanwhile, totalitarian states like east germany offered a cautionary tale of what can happen when the vast unchecked surveillance turn citizens into informers and persecuted for people -- and persecuted people for what they said in the privacy of their own homes. in fact, even the united states roof not to be immune to the abuse of surveillance in the 1960's. government spied on civil rights letters -- leaders and critics of the vietnam war. partly in response to these

revelations come additional laws were established in the 1970's to ensure that our intelligence capabilities could not be misused against our citizens. long twilight struggle against communism, we have been reminded that the very liberties werewe sought to preserve not being sacrificed at the altar of national security. after the fall of the soviet union left america without a competing superpower, emerging threats from terrorist groups and proliferation of weapons of mass destruction place new and complicated demands on our intelligence agencies. globalization and the internet made these threats more acute as technology raised borders and empowered individuals to project a great violence as well as greater good. newe new threats raised a legal and new policy questions. for while few doubted the legitimacy of spying on hostile

states, a framework of laws was not fully adapted to prevent terrorist attacks by individuals acting on their own or acting in small, ideological -- ideologically driven groups. 11thorror of september brought all of these issues to the floor. across the political spectrum, americans realize we had to adapt to a world in which a bomb could be built in a basement, and our electric grid could be shut down by operators an ocean away. we were shaken by the signs we had missed leading up to the attacks. how the hijackers had made phone ands to known extremists travel to suspicious places. so we demanded that our intelligence community improve it's capabilities and that law enforcement change practices to focus more on preventing attacks before they happen than

prosecuting terrorists after an attack. it is hard to overstate the transformation of america's intelligence community had to go through after 9/11. our agencies suddenly needed to do far more than the traditional mission of monitoring hostile powers and gathering information for policymakers. instead, they were now asked to identify and target plotters in parts ofhe most remote the world and to anticipate the actions of networks that by their very nature could not be easily penetrated with spies or informants. it is a testimony to the hard work and dedication of the men and women of our intelligence community that over the past decade, we have made enormous strides in the filling this mission. today, new capabilities allow trackigence agencies to

who a terrorist is in contact with and follow the trail of his travel. allow information to be collected and shared more federal agents and stay local law enforcement. relationships with foreign intelligence services have expanded an hour capacity -- and our capacity to repel cyber strengthened. taken together, these efforts have prevented multiple attacks and saved innocent lives, not just here in the united states but around the globe. in our rush to respond to a very real and novel set of threats, the risk of government overreach, the possibility that we lose some of our core oferties in pursuit security also became more pronounced.

we saw in the immediate aftermath of 9/11, our government engaged in enhanced interrogation techniques that contradicted our values. as a senator, i was critical of several practices such as warrantless wiretaps, and all too often, new authorities were instituted without adequate public debate. direct combination by action by the courts and adjustments for the previous administration, some of the worst access that occurred after 9/11 were curbed by the time i took office. a variety of factors have continued to come locate america's efforts to both defend our nation and uphold our several -- our civil liberties. first, the same technological advances that allow u.s. intelligence agencies to pinpoint an al qaeda cell in yemen or an e-mail between two

terrorists in the hell -- in sa hel also mean that this is within our reach. at a time when more and more of ital,ives are dig that prospect is disquieting for all of us. second, the company should increase of digital information and powerful supercomputers offers intelligence agencies the possibility of sifting through massive amounts of bulk data to identify patterns or pursue leads that may thwart and endingg threats -- imp threats, but the government collection and storage of such bulk data creates a potential for abuse. the legal safeguards that restrict surveillance against u.s. persons without a warrant to not apply to foreign persons overseas.

this is not unique to america. few, if any, spy agencies around constrain their activities beyond their own borders. intelligencent of is to obtain information that is not publicly available. but america's capabilities are unique, and the power of new technologies means that there are fewer and fewer technical constraints on what we can do. obligation a special on us to ask tough questions about what we should do. finally, intelligence agencies cannot function without secrecy. which makes their work less subject to public debate. inevitable bias not only within the intelligence community but among all of us who are responsible for national security to collect more information about the world, not less.

so in the absence of institutional requirements for regular debate and oversight that is public as well as , thete, or classified danger of government overreach becomes more acute. this is particularly true when surveillance technologies and our reliance on digital information is evolving much faster than our laws. for all these reasons, i maintained a healthy skepticism toward our surveillance programs after i became president. i ordered that our programs be reviewed by my national security team and lawyers, and in some cases, i ordered changes in how we did business. we increase oversight in auditing, including new structures and that compliance, improved roles were proposed by the government and approved by the foreign intelligence surveillance court, and we

sought to keep congress continually updated on these activities. what i did not do is stop these programs wholesale. not only because i felt that they made us more secure, but also because nothing in that initial review and nothing that i have learned since indicated that our intelligence community has sought to violate the law or is cavalier about the civil liberties of their fellow citizens. to the contrary, in an extraordinarily difficult job, one in which actions are second- guessed, success is unreported and failure can be catastrophic. the men and women of the intelligence community, consistently nsa, follow protocols designed to protect the privacy of ordinary people. they are not abusing authorities in order to listen to your private phone calls or read your

e-mails. made, which isre inevitable in any large and collocated human enterprise, they correct those mistakes. human complicated enterprise, they correct those mistakes. often unable to discuss their work even with family and friends, the men and women at the nsa know that if another ack1 or massive cyber att occurs, they will be asked by congress and the media why they failed to connect the dots. what sustains those who work at our other intelligence agencies through all these pressures is the knowledge that the professionalism and dedication play a central role in the defense of our nation. now, to say that our intelligence community followed the law and is staffed by patriots is not to suggest that in my administration

for complacency about the potential impact of these programs. those of us who hold office in america have a responsibility to our constitution, and while i was confident in the integrity of those who lead our intelligence community, it was clear to me in observing our intelligence observation on a regular basis that changes in our technological capabilities were raising new questions about the privacy safeguards currently in place. an extendedter review of our use of drugs in in the fightdrones against terrorist networks, i believe a fresh observation about terrorist networks was the next seven and able to get a better footing since 9/11. for the reasons that i indicated in a speech at the national defense agency last may, we need a more robust public discussion securityhe balance of

and liberty. what i did not know at the time was that with the release of my speech, an avalanche of unauthorized disclosures would at home andversies abroad continue to this day. given the fact of an open investigation, i am not going to dwell on mr. snowden's actions or his motivations. i will say that our nation's defense depends in part on the fidelity of those entrusted with our nation's secrets. who objects toal government policy can take it into their own hands to publicly disclose classified information, then we will not be able to keep our people safe or conduct foreign policy. the sensational way which these disclosures had come out has often shed more heat than light. while revealing methods to our

advertisers -- to our adversaries that we may not fully understand for years to come. regards us of how we got here, though, the task before us now is greater than simply repairing the damage done to our operations or preventing more disclosures from taking place in the future. instead, we have to make some important decisions about how to protect ourselves and sustain our leadership in the world while upholding the civil and protect is that our ideals and our constitution require. we need to do so not only because it is right, but because the challenges posed by threats like terrorism and proliferation and cyber attacks are not going away anytime soon. they are going to continue to be a major problem. for our intelligence community to be effective over the long haul, we must maintain the trust of the american people

and people around the world. effort will not be and givenovernight, the pace of technological change, we should not expect this to be the last time america have this debate, but i want the american people to know that the work has begun. over the last six months, i created an outside review group on intelligence and communications technologies to make recommendations for reform. i consulted with the privacy and civil liberties oversight board created by congress will stop i have listened to foreign partners, privacy advocates, and industry leaders. my administration has spent countless hours considering how to approach intelligence in this era of technological revolution. so before outlining specific changes that i have ordered, let me make a few broad observations

that have emerged from this process. everyone who has looked these problems, including skeptics of existing programs, recognizes that we have real enemies and threats, and that intelligence serves a vital role in confronting them. we cannot prevent terrorist attacks or cyber threats without some capability to penetrate digital communications, whether it is to unravel a terrorist plot, to intercept malware that targets the stock exchange, to make sure air traffic control systems are not compromised, or to ensure that hackers do not enter your bank accounts, we are expected to protect the american people. that requires us to have capabilities in this field. moreover, we cannot unilaterally disarm our intelligence

agencies. there is a reason why others are notd allowed in the intelligence room. we know that some countries, including those who feign surprise over the snowden disclosures, or consulate probing our government and accelerating programs to listen to our cover stations and inner to listen to our conversations and intercept our e-mails will sub there are some who were loudly -- our e-mails. >there are some who americae but admit that is the largest superpower. and that they themselves have relied on the information that we obtain to protect their own people. second, just as ardent civil

libertarians recognize the need capabilities,ce those with responsibilities for our national security readily acknowledge the potential for abuse as technology -- as intelligence capabilities advance and more and more information is digitized. after all, the folks at nsa and other intelligence agencies are our neighbors, they are our friends and family. they have electronic banking medical records like everybody else. they have kids on facebook and instagram, and they know more than most of us the vulnerabilities to privacy that wherein a world transactions are recorded in e- mail and text messages are stored and even our movements can increasingly be tracked through the gps on our phones. there was a recognition by all who participated in these reviews that the challenges to our privacy do not come from government alone. corporations of all shapes and

size truck we buy, store and analyze our data, and use it for commercial purposes. that is how those targeted ads pop up on your computer and smartphone periodically. but all of us understand that the standards for government surveillance must be higher. the unique power of the state, it is not enough for leaders to say trust us, we won't abuse the data we collect. has too many examples when that trust has been breached. our system of government is built on the premise that our liberty cannot depend on the good intentions of those in power. it depends on the law to constrain those in power. i make these alterations to underscore that the basic values of most americans when it comes to questions of surveillance and privacy converge a lot more than the crude characterizations that have emerged over the last several months.

those who were troubled by our resisting programs are not interested in repeating the tragedy of 9/11, and those who defend these programs are not dismissive of civil liberties. is getting the details right, and that is not simple. fact, during the course of our review, i have also been -- i have often provided myself that i would not be where i am today if it were not for the court -- the courage of dissidents like dr. king who were spied upon by their own government. and as president, a president who looks that intelligence every morning, i also can't help but be reminded that america must be vigilant in the face of threats. factsately by focusing on and specifics rather than speculation and hypotheticals, this review process has given me, and hopefully the american people, some clear direction for

change. announce a series of concrete and substantial reforms that my administration intends to adopt administratively or will seek to caught afire with congress. congress.fy with first, i have approved a new presidential directive for our signal intelligence entities both at home and abroad. this guidance will strengthen executive branch oversight of our intelligence activities. it will ensure that we take into account our security but also our alliances, our trade and investment relationship, including the concerns of the american companies, and our commitment to privacy and basic liberties. we will review decisions about intelligence priorities and sensitive targets on an annual basis so that our actions are regularly scrutinized by my senior national security team.

second, we will reform programs and procedures in place to provide greater transparency to our surveillance activities. and fortify the safeguards that protect the privacy of u.s. persons. since we began this review, including information being released today, we have declassified over 40 opinions and orders of the foreign intelligence surveillance court, which provides a judicial review of some of our most sensitive intelligence activities, including the section 702 pour program targeting individuals overseas and the section 215 telephone metadata program. going forward, i am directing the director of national intelligence, in consultation with the attorney general, to annually review for the purposes of the classification and the future opinions of the court with broad privacy implications and to report to me and to congress on these efforts.

to ensure that the court hears a broader range of privacy i am also calling on congress to authorize the establishment of a panel of advocates from outside government to provide an independent voice in significant cases before the foreign intelligence surveillance court. third, we will provide additional protections for sectionconducted under 702, which allows the government to intercept the communications of foreign talk -- foreign targets overseas, who have information that is important for our national security. specifically, i am asking the attorney general and dni to institute reforms that place additional restrictions on government's ability to retain, search, and use in criminal cases communications between americans and foreign citizens incidentally collected under section 702.

in investigating threats, the fbi also relies on what is called national security letters, which can require companies to provide specific and limited information to the government without disclosing orders to the subject of the investigation. which it isses in important that the subject of the investigation, such as a possible terrorist or thought, isnot -- terrorist or spy, not to adopt, but we can and should be more transparent in how the government uses this authority. i have therefore directed the attorney general to amend how we use national security letters so that the secrecy will not be indefinite, so that it will terminate within a fixed time, unless the government demonstrates a real need for further secrecy.

we will also enable communications providers to make public more information than ever before about the orders that they have received to provide data to the government. this brings me to the program that has generated the most controversy these past few months -- the bulk collection of telephone records under section 215. let me repeat what i said when this story first broke -- this program does not involve the content of phone calls or the names of people making calls. record oft provides a phone numbers and the times and links of -- lenght of calls. metadata that can be queried if and when we have a reasonable suspicion that a particular number is linked to a terrorist organization.

why is this necessary? the program grew out of a desire to address the gap identified after 9/11. made athe 9/11 hijackers phone call from san diego to a known al qaeda safe house in yemen. sawit's a solid call -- nsa that call, but they cannot see that the call was coming from an individual already in the united states. the telephone metadata program under section 215 was designed to map the communications of terrorists so we could see who they may be in contact with as quickly as possible. this capability could also prove valuable in a crisis. for example, if a bomb goes off in one of our cities and law enforcement is a thing to determine whether a network is poised to conduct additional tags, time is of the e ssence.

being able to quickly review see if thections to network exists is critical for that effort. sum, the program does not involve the nsa examining the phone records of ordinary americans. rather, it consolidates these records into a database of the government can query if it has a specific lead. a consolidation of phone records that the companies already retained for business purposes. group turned up no indication that this database has been intentionally abused, and i believe it is important that the capability that this program is designed to meet is preserved. that, i believe critics are right to point out that without proper safeguards, this type of program could be

used to yield more information about our private lives and open bulkoor to more intrusive collection programs in the future. to point out right that although the telephone bulk collection program was the subject to oversight by the foreign intelligence surveillance court and has been reauthorized repeatedly by congress, it has ever been subject to vigorous public debate. for all these reasons, i believe we need a new approach. i am therefore ordering a thesition that will end section 215 bulk metadata program at the currently exists thatstablish a mechanism preserves the capabilities we need without the government holding this bulk metadata. this will not be simple. the review group recommended

that our current approach be replaced by one in which the providers, or a third-party, retain the bulk records with government accessing information as needed. both of these options pose difficult problems. relying solely on the records of multiple providers, for example, could require companies to alter their procedures in ways that raise new privacy concerns. on the other hand, any third- party maintaining a single consolidated database would be carrying out what is essentially a government function but with more expense, more legal ambiguity, potentially less all of whichy, would have a doubtful impact on increasing public confidence that their privacy is being protected. review process, some suggested that we may also be able to preserve the apabilities we need through combination of existing

authorities, better information sharing, and recent technological advances, but more work needs to be done to determine exactly how this system might work. because of the challenges involved, i have ordered that the transition away from the existing program will proceed in two steps. effective immediately, we will only pursue phone calls that are steps removed from a number associated with a terrorist organization instead of the current three, and i have directed the attorney general to work with the foreign intelligence surveillance court so that during this transition period, the database can be queried only after a judicial finding or in the case of a true emergency. two, i've instructed the intelligence community and the attorney general to use this transition period to develop options for a new approach that

can match the capability that filled the gaps that the section 215 program was designed to address without the government holding this metadata itself. withwill report back to me options for alternative approaches before the program comes up for reauthorization on march 28. during this period, i will consult with the relative committees in congress to seek their reviews and then seek congressional authorization for the new program as needed. the reforms i am proposing today should give the american people that theirfidence rights are being protected, even as our intelligence and law enforcement agencies maintain the tools they need to keep us safe. recognize that there are additional issues that require further debates, for example, some who participated in a review as well as some members

of congress, would like to see more sweeping reforms to the use of national security letters, so go to a have to judge each time before issuing these requests. have concerns that we should not set a standard for terrorism investigations that is higher than those involved in investigating an ordinary crime, but i agree that greater oversight on the use of these letters may be appropriate, and i am prepared to work with congress on this issue. there are also those who would like to see different changes to those i havean proposed. on all these issues, i am willing to work with congress to ensure that we build a broad consensus for how we move forward, and i'm confident we can shape an approach that meets our security needs while upholding the civil liberties of every american. let me now turn to be separate set of concerns that have been raised overseas.

and focus on america's approach to intelligence collection abroad. as i have indicated that, the united states have a unique response when it comes to technologies collection. our intelligence protect only our security but her friends and her allies as well. be efforts will only effective if ordinary citizens in other countries have confidence that the united states respects their privacy too. sed the leaders of our clo friends and allies deserve to know that if i want to know what they think about an issue, i will pick up the phone and call them rather than turning to surveillance. in other words, just as we balance security and privacy at home, our global leadership demands that we balance our security requirements with the need to maintain the trust and cooperation among people and leaders around the world.

for that reason, the new presidential directive that i've issued today will clearly prescribe what we do and do not do when it comes to our overseas surveillance. directorwith, the makes clear that the united states only uses signals legitimatee for national security purposes and not for the purpose of and is criminally reviewing the e-mails or phone calls of ordinary folks. the united states is not colette intelligence to create dissent or to disadvantaged people on the basis of their ethnicity, race, gender, sexual orientation, or religious beliefs. we do not collect intelligence to provide a u.s.itive advantage to companies or commercial sectors. in terms of our bulk collection

of signals intelligence, u.s. intelligence agencies will only use such data to meet specific security requirements, counterintelligence, counterterrorism, counter proliferation, cyber security, force protection for our troops and our allies, and combating transnational crime, including sanctions evasion. have takenective, i the unprecedented step of extending certain protections that we have for the american people to people overseas. i have directed the dni in consultation with the attorney general to develop these safeguards, which will limit the duration that we can hold personal information while also restricting the use of this information. the bottom-line is that people around the world, regardless of their nationality, should know that the united states is not

spying on ordinary people who don't threaten our national security. we take their privacy concerns into account in our policies and procedures. this applies to foreign leaders as well. given the understandable attention that this issue has received, i have made clear to the intelligence community that unless there is a compelling national security purpose, we will not monitor the communications of heads of state and government of our close friends and allies, and i have instructed my national security team, as well as the intelligence community, to work with foreign caliper -- foreign counterparts to deepen our operation in ways that we build -- deepen our core operation in ways that we bill trust further. let me be clear, we will continue to gather information about the intention of government as opposed to ordinary citizens around the world. in the same way that the intelligence services of every other nation does.

we will not apologize and would because our services may be more effective. but heads of state and government with whom we work closely and on whose cooperation nd should feel confident that we are treating them as real partners, and the changes i have ordered do just that. finally, to make sure that we follow through on all of these reforms, i am making some important changes to a lower -- the state department will designate a senior officer to coordinate on issues related to technology and signals intelligence. we will appoint a senior official at the white house to implement the new privacy safeguards that i have announced today. i will devote the resources to centralize and improve the process by which we handle foreign press for legal

assistance, keeping our high standards for privacy while helping our foreign partners fight crime and terrorists. i've also asked my counselor, john podesta, to lead a comprehensive review of big data and privacy. this group will consist of government officials who, along with the president council of advisors on science and tohnology, will reach out privacy experts, technologists, and business leaders, and lookup the challenges inherent in big data are being confronted by both the public and private sectors. whether we can forge international norms on how to manage this data, and how we can continue to promote the free flow of information in ways that are consistent with both privacy and security. for ultimately what is at stake in this debate goes far beyond a

few months of headlines or passing tensions in our foreign policy. when you cut through the noise, what is really at stake is how we remain true to who we are in a world that is remaking itself at dizzying speeds. whether it is the ability of individuals to communicate ideas, to access information that had once filled every great library in every great country in the world, or to forge bonds with people on the other side of the globe, technology is remaking what is possible for individuals and for institutions and for the international order. all the reforms i have announced will put -- will point us in a new direction. i am mindful that more work will be needed in the future. one thing i am certain of -- this debate will make us stronger.

and i also know that in this time of change, the united states of america will have to lead. it may seem sometimes that america is being held to a different standard, and i will admit the readiness of some to assume the worst motives by our government can be frustrating. no one expects china to have an open debate about their surveillance programs, or russia to take privacy concerns of citizens in other places into account. but let's remember we are held to a different standard recites the because we have been at the -- precisely because we have been at the forefront of human dignity. as the nation that developed the internet, the world expects us to ensure that the digital revolution works as a tool for individual empowerment, not

government control. dangers ofd down the totalitarianism and fascism and communism, the world expects us to stand up for the principle that every person has the right to think and write and form relationships freely, because individual freedom is the wellspring of human progress. those values make us who we are. and because of the strength of our own democracy, we should not shy away from high expectations. centuries, ourwo constitution has weathered every type of change because we have been willing to defend it. and because we have been willing to question the actions that have been taken in its defense. today is no different.

i believe we can meet high expectations. wayther, let us chart a forward that secures the life of our nation while preserving the liberties that make our nation worth fighting for. you, and, god bless may god bless the united states of america. [applause] >> the president of the united states in an address that lasted about 45 minutes speaking at the u.s. department of justice. the president outlining some of the changes that he says should the nsawith regards to and the spying program. let's bring in bloomberg contributing editor richard falkenrath, he was the top homeland security adviser in the bush white house. richard, something the president said, given the unique power of t enoughe, it is no for leaders to say trust us we will not abuse the data we collect, for history has too many examples of when that trust has been reached.

is that an olive branch to the critics? >> when you look at the details of what he is proposing, you will find that much of it remains "trust us." what i heard in the speech, and this is a very collocated --ech, was a number of complicated speech, was that a number of limitations he is imposing as president and how a is used in how dat and accessed, but no change on the collection itself, but there will be a digital process, research on when and how it is accessed, and that defaults back to the justice trust us problem because we are essentially trying to convince the critics that our internal controls and procedures are strong enough that you can trust us. in the end, they rarely do. >> he is also proposing to set up a number of panels and reviews to look at processes for doing things. that is not lead to much action, however. >> and one issue, he just kicked the can down the road.

he says the bulk telephone metadata that the nsa currently subject to court order was going to be transitioned out of the nsa and go to somewhere else, but he does not say where the someplace else is, and in fact he knocks down two of the obvious candidates, one being the telephone companies themselves, the second is some third party, either governmental or non-governmental, subject to lower standards of privacy than the nsa. >> you are going to preserve existing capabilities. is this tinkering on the margins? >> it is really. he wants to preserve the capability prison and evil telephone metadata program. bulk telephone metadata program. talk about the