markets people, solvency people marketing people to make sure we are designing something that somebody values to separate that and have an agency only focus on the consumer side we believe is not complete. if we didn't have all of our pieces, if we didn't have all of our disciplines at the point in time we designed a product, that product would fill. >> what could we do or what would we do? what might be due that would limit your ability to allow americans to have a greater opportunity to insure themselves against challenges? >> i believe that, you know, obviously the life insurance industry is about strong consumer safety standards. i believe it if it is looked at in a vacuum and not part of a federal function regulator and insolvency capital markets is that the regulation would not be complete and would therefore slow down the process, and to have regulators, regulation is bifurcated.

regulators with different standards and different agendas. and that would keep us from designing the product of the customer needs most. >> mr. hill. >> congressman price, we represent the property-casualty, our membership is mainly property-casualty. and we see this as more geared towards financial products of which we really don't -- >> so if we got into your business that would be bad? is that accurate? >> just. >> i want to switch gears to mr. mcraith. you mentioned that you wanted to comment on the solvency ii framework and i wonder if you had a opportunity to look at the consequences that will have or may have four states. >> yes, thank you. for so i do want to commend mr. skinner and his colleagues in the european union for developing solvency ii. it remains in its stages and as we heard its not even to be

adopted by legislation until 2012. of course, we have 64000 company years of regulating solvency, so we look forward to working with the eu as they further develop their approach. one report mentioned earlier by mr. skinner was what's called a double rosier reported what is interesting about the report is that he commented on the need to reflect upon and improve the capital standards. you might recall several years ago there was a clamor in washington to give our own banks and the capital freedom that it allowed for european institutions. and for that reason solvency ii i think warrants some serious scrutiny. but i think it's fair to say if solvency ii had been in place during the current crisis, the economic impact would have been

significantly worse for companies and consumers in the united states. >> thank you. thank you, mr. chairman. >> mr. price, may i., if i may also comment on the solvency to matter. if i could actually take a sentence out of mr. skinner's testimony. it seems to me this is the concern of the reinsurance market has about solvency and the statement from mr. skinner's testimony as its equivalent decisions will have to be made at the country level, this fact alone will make it almost impossible to find the u.s.a. equivalent under solvency ii unless changes are made to the current insurance regulatory framework in the u.s. the global market of reinsurance is one, dependent upon regulatory interaction and comedy, and we would strongly encourage a federal regulator to facilitate that kind of international trade agreement. >> if i may, tonight is coming, i'm sure the question was corrected as too much as anyone. correct the impression, which is

that this is not a piece of legislation already. i rather think that like your house when you have two vote on it you think of it as long. but it have to go then afterwards it to each member state and have them ratify it in the statute book. once it has been adopted in the european, which was on the 22nd of april at issue was long. it now has two years to be intimated by the regulars on the ground. i think we should be absolutely clear about this so there is no false impression left as to whether or not this is legislation. secondly, it deals with the three principles that we want to debate. so i'm not so sure where we go by comparing what's happening with the u.s. and what's happening in the eu. so we went for a risk based approach, a principle -based approach and an economic -based approach. this has been 10 years in the velvet with practically every industry that there was that the no insurance, in europe and from elsewhere. getting involved in consultations about getting the piecemeal issues involved and

out of the way before him. now we have intimating processes, where the regulars will be allowed to introduce this on the ground where we will be guaranteeing and looking after policyholders interest far more than we ever could have done in the past. not in a piecemeal way, but in an absolute harmonized way. and i think we are looking at the best and the highest standard. i think i'm afraid, you know, i must correct the impression that was left with you that solvency ii's standards, that's not what we are saying either. what we are saying is we have got all the way in union and it matches the development that is happening elsewhere in the world. it is happening, it's happening in the eye ais with 11 countries choosing to go ahead, the united states not so. the danger is and the risk is the policyholders and companies if they can't be competitive in their global situation, that we will not be finding like for like. you have a market which has 85% penetration already with foreign companies. that means you have 15% left,

u.s. companies in terms of your global region, you have got copies that can do it. i would say you have to consider whether or not not changing the rules, not moving along with the international global standard is going to endanger many of those other companies that you have with international ambitions. >> thank you very much, mr. chairman. i thank you and ranking member garrett. for holding this hearing today to discuss systemic risk. treasury will release its obligatory proposal tomorrow, june 17, which makes this hearing all the more important. i have always supported state regulation of insurance and i will continue to rally behind the regulatory construct. at the national association of insurance commissioners is

correct, that even the failure of a major insurance entity based and operating in the united states will generally not impose systemic risk, we need to pursue this claim further and not rush to judgment on the capability of the state insurance commissioners to properly and effectively regulate the insurers. furthermore, i cannot support a system in which an insurance company headquartered in one state is given permission to operate in the remaining 49 states based on their home state insurance regulations. whereas this might be accepted and feasible in the european union, i'm not certain that comparing sovereign nations to state in the united states is appropriate. we might be comparing apples and oranges. so i ask my question and direct it to mr. mcraith from illinois, department of insurance, and if

possible to give me a second opinion from mr. spence with travelers insurance. what do you like, or what would you like to see in the administration's regulatory reform proposal? >> thank you, congressman. first of all, i think it's important to appreciate the strength of our current system as you clearly understand. we are a nationally coordinated system of states. we have multiple sets of eyes of the multiple sets of experts looking at one company so that it's not a single regulator. it is multiple regulators working together in a correlated fashion with a national system of solvency regulation, a national system for people like mr. nutter and others in his

constituency and internationally, that there is that national system that can be recognized. in terms of systemic risk, as i mentioned earlier, there needs to be, there must be a primary role for the functional regulators. in our case, of course, it's the expertise that we have, the information we have and the experience that we have in relation to state insurance regulation. systemic regulation can integrate. it is inherently -- state regulation is inherently compatible with systemic regulation. we need to formalize regulatory coal operations, reduce barriers, enhance communication. the systemic risk management, as i alluded to earlier, as regulars of the insurance industry we require extensive, exhausted risk management for any insurance enterprise. we need that at the holding county level, and of course that

it systemically institute institutions that even more true. and in the circumstance in which the functional regulator can be preempted must be extremely narrow and extremely limited, only if there is an actual possibility of not just risk, but disruption to the system. and those circumstances are very narrow indeed. the primary function and purpose and service that a systemic regulator will provide is to enhance the communication, and using ait as the poster child, there was no significant interaction and communications between the functional regulators. wheezes sport systemic regulation, congressman. let me ask mr. spence with travelers insurance and how do you see it as an insurance company, what would you like to see in this reform proposal? >> finca, congressman. as i indicated, we would support

the concept of systemic risk, or systemic risk regulator for a number of years. travelers was part of a financial holding company that was regulated by the fed. the insurance operations were not regulated by the fed, but they did sound of something to reduce of the company, including the insurance operations. and that process, during that process demonstrated the lack of federal knowledge, or knowledge of the federal level of insurance operations which is why we think the chairman's oii is a sound proposal, and we think that depending on what a systemic risk of oversight would do even calls for the need for functional regulator to implement whatever directives the systemic risk regulator might choose to implement. and then as i indicated,

whatever the regime is, we think the two key components are mandated risk committees and enhanced disclosure. >> finca, mr. chairman. i yield back. >> thank you very much. >> thank you, mr. chairman. pick up on mr. spence's point. insurance operations were not regulated by the sped. the new york insurance department reviewed and monitored aig's security lending program. aig securities when the program heavily invested in long term mortgage-backed securities. as a matter fact, took that money from insurance subsidiaries. aig's life insurers suffered $20 billion in losses. related to their securities lending operations last year. and of course, the bottom line, the federal reserve has provided billions now to recapitalize aig

life insurance companies. so, you know, we have a patchwork quilt here of rage elation. as i said in my opening statement, we had problems with the financial products unit, we had problems with the securities lending unit. and the seekers lending program. so we've got a difficult here. as we discussed at this subcommittee, there was an implicit belief in the market that should fannie mae and freddie mac get into trouble, the federal government would step in to save them. in part, it was that perceived federal lifeline that enabled these firms to borrow cheaply and take on so much risk. as we discussed reforming our regulatory structure to address for that are too big to fail, i'm concerned that we run the risk of bifurcating our financial system between those

that we designate as systemically significant and everybody else that's in competition. as our experience with the housing government-sponsored enterprises demonstrates, this would be a big mistake. and it would provide competitive advantages to companies that have implicit backing of the taxpayers, and they would be incentivized to engage in higher risk behavior. that's what economists that look at this model tell us when they fret about what we are doing here. so in the context of systemic risk regulation, do we run the risk of destroying the market by labeling those institutions that are too big to fail as such, and would it be more effective for systemic risk regulator to focus on potentially higher risk activities in the market instead, rather than a set of large financial firms. mr. spence? >> is that directed to me? >> yes, sir.

>> we agree with you. we think the systemic risk regulator, it's not a question of labeling copies that are too big to fail but it's determining in advance and preventing companies to become too big to fail. >> thank you. and in my last question goes to mr. skinner because mr. skinner you have spoken at length on the need to establish a federal presence uninsured in the united states as well as the problems bu regulators have run into when trying to negotiate with the veriest state insurance commissioners. there appears to be a consensus that something should be done in this regard, but to what degree remains obviously a question. wing is an office of insurance information just an office to collect data? if this office is created without strong preemptive authority over the states, weakening the ability of an office of insurance information to an act agreements nationwide,

how effective would it be in the long run? >> thank you very much, but i suspect that you know the answer partly herself. in many ways, any international level its countries and groups of countries that have to work together in order to get the global rules which will prevent future systemic risk. systemic risk since we discussed today are at the root level, and the risk it tase, the premiums it doesn't charge, etc. so we need something that is standardized, harmonized that we can agree with. i think the office of insurance information is a great idea. don't get me wrong. i think that's what, perhaps, you will end up with. but i think we still have a fundamental which underlies the exact way in which we will approach each other over specific laws and the ways we will apply laws. and whether there is an absence of that particular bridge, you

know, there's always going to be a gap. so we have to find a way through that. now i suspect that, there isn't anywhere else, to come up with ideas and to talk to us about what should happen. and we should be an open door for your. you know, we're not going to say how you should do it, but we are a compliant group ourselves inside the european union. the european parliament wrestles with same issues that you wrestle with. we just want to work with you to make sure that you can figure out what's best for policyholders as well as the international competitiveness of companies. and as i say, those demand future organization and new approaches to regulation. >> thank you. thank you, mr. skinner. thank you, mr. chairman. >> the gentle lady from new york, ms. mccarthy. >> thank you, mr. chairman. i appreciate it. i think many of my colleagues have said that this is actually been a very interesting journey

that many of us have taken on this committee over the last several months. i wanted to ask ,-comhim as an alternative to federal regulation some have recommended moving to federal minimum standards that would enforce by the current state regulatory structure. would that solve the regulatory burden in areas such as licensing, market conduct and speed to market if not, please explain why. >> thank you for the question. we believe it does not. we believe federal minimum standards. many of us run national businesses. we are like the property and casualty industry, we price a product one time for all 50 states, our producers are often national, our producers often have our customers move from one state to another. so when someone suggests that federal minimum standards is the answer, what that means is those minimum standards will be met by there will still be 51 different

sets of rules and regulations that we must file product approvals for, design products around and producers must license for. so we think that solves very little, if anything. >> mr. skinner, listening to your remarks, when we think about, you're talking about working with all the different countries that you are working with, we have to work with all the states. and i would tend to think working with states are the same level as we like working with a country. and i think that's going to be, what we are going to have to solve because obviously a lot of the insurance companies do want to do global marketing. they are going to be into all the different countries, i keep saying uk. eu. so as we follow through, if you can follow through with what you were saying before, just go a little bit further on how you could possibly see all of us, because this is going to be

difficult. each state, we all represent, you know, we represent our districts but we actually represent our state. so what goes on in the state is going to come to us, and then they will put the issues in front of us as we fight for the regulations that are going to come down. i mean, they are going to come down. anyone that thinks they are not is not awake in the real world. we cannot allow or afford what has gone on in the last year and a half, two years happening again. if you could follow through with that. >> thank you, very much. i do think that we are dealing with multijurisdictional districts, regions, countries and states. and you're right, how do we harmonize? had we get the rules that will give the best safety for consumers, how do we help companies expand capacities in areas where there had not been in church before and lower rates. how do we get efficiency in the industry without running risk at all these things have to be based about what is potentially

sound, what is economically beneficial and sound, and what is hopefully subject to risk management. those things are the clues that we went through in terms of over 10 years in trying to sew together 27 countries, 500 million people. not everyone had the same level of confidence. this is a serious issue. i thank you for recognizing me coming from the uk. london like to think it is ahead of the world in many ways along with new york and financial regulation. but the truth is actually communal, we can all catch a cold from what happened. so we all have to be alert, and what comes across our borders are some things that we don't expect and can be beyond our control. so when we talk about systemic risk, we are talking about control over groups. groups that can cross borders, there are ranges and subsidiaries. so i want the same rules and the same path and the same tools to every regulator at a maximum level so that they can be in harmony with each other and that we know that consumers, can have

the same kinds of expectations about their policies being in good order when they finally come to have been paid out. that they can't afford them. and as i know in terms of an economic crisis, we are facing at the moment, many people are turning their back on insurance and thinking, well, you have to pay that insurance bill for my house? the consequences of that could be enormous in terms of the social impact of well so i don't want to price people out of the market. so its capacity and competence just driven us to make sure we have one market insurance. >> i appreciate what your thoughts on that because i actually do believe that people when they are cutting back and the same thing is happening here in this country, they are looking where they can cut back, just to survive by paying their mortgage or whatever. and that they can get away with whether its car insurance, letting it lapse hoping they don't get caught. health care insurance, obviously we're dealing with that so we are sitting with that. i'm sorry, my times of. thank you, mr. chairman.

>> thank you, mr. carty and now we will hear from the gentle lady from illinois. ms. baker. >> thank you, mr. chairman. mr. baird, in response to doctor prices question, you basically said that the functional regulator in charge of regulating the safety and soundness of a financial institution should also be the regular in charge of regulations related to consumer products and practices. what is and why should it be the same regulator that looks at safety and soundness as well as consumer related products? >> yeah, thank you for the question. i certainly didn't want to get into the issues of congress to determine who reports to whom. the remarks i made, and i want to make this very clear, we think that they have to be together in a collaborative oracle operative or perhaps one

does report to another, you will decide that and not us. but you cannot separate and bifurcate consumer standards, consumer safety standards from solvency regulation. >> thank you. been mr. mcraith. what sort of ordination took place among the regulators following the aig debacle? >> thank you, congresswoman. at the national level, there was coordination within the days and weeks, of course there is ordination constantly, but as we learn about the holding company problems that aig financial products division in london, we learned that the holding company challenges could have implications for the insurance subsidiaries. and immediately, nationally, the regulators worked collectively

daily, multiple calls the, meetings, visits, regulators from around the country because of course policyholders are based in every state of the country with aig. in addition to that, led by the new york department, the state regulators led national, or i'm sorry international conference calls hitting our colleagues from the eu and all continents the opportunity to participate in a discussion to understand really the root cause of this problem in the financial products in london, it is not a u.s. problem and those conversations to continue to this day. >> well, and it appears that the insurance sector has fared better than the banking and the securities counterparts in the current economic crisis.

what are the reasons for that and what are some of the elements of the state insurance regulatory system that could be instructive to federal policy makers in setting up a systemic risk and regulatory system? >> first, i understand the eu is working to bring together 27 different countries, and they intend to implement solvency ii within a few years. and again i commend the effort. it a significant achievement. as the states, we have been working together collaboratively for over a hundred years. we have as i mentioned earlier 64000 years combined of company regulation. we understand the importance of working together. so that consumers in illinois understand the impact of an aig challenge, for example, that the regulars in illinois collaborate

with aig. in new york and pennsylvania, all the other states. so the primary and essential -- let me back a. one other key component of insurance regulation that was raised by congressman, we restrict not only what types of investment insurance companies can have, but how much any one company can invest in any one type of investment. that type of conservative capital and accounting requirement prevents the crisis in the insurance industry that we have seen in the banking and other sectors. >> if i can just get in one more question in my time. if we were to have the federal market stability and capital adequacy board, that is what i mentioned before, it comprised of all federal regulators and maybe some outside experts, and others to look at what could be done with regard to the

derivative regulations, should an insurance representative or representatives be at the table and who should be at the table? should be a rotating state regulator, or should it set up the office of insurance information, if we set that up it would be the head of that entity to be involved in that. >> unequivocably, congresswoman, a state regulator should be in that conversation with the council. absolutely. >> and should be rotating or could we use the office of insurance information? >> that's right. i expect it would be rotating. i think there's value in having that diversity of opinion, although a consistent standard message, but diversity respective. absolutely. >> that you very much. i yield back. >> thank you very much, ms. ms.

biggert. now we'll hear from mr. scott. >> thank you, mr. chairman. >> let me ask, we are here debating this largely because of actions that stem from the problems at aig. with excessive trading and credit default swaps out of their financial products unit in london that was not regulated by state commissioners, but by the federal government, the office through supervision. however, some are using the collapse of aig to argue for the creation of an optional federal charter for the insurance industry. and as i said in my opening statement, this is somewhat

problematic because here we've gotten an entity that had the federal oversight. so the question has to be asked, would an optional federal charter, had it been in place, would it have prevented the collapse of aig, which again, is all ready federally regulated? baggage or point? . .

>> and ensure competition within the industry. am i not right about this?

should that be the case? >> i would agree with it. i believe that what we found is the state insurance structure has been a real asset we believe to our industry. if you can imagine, we are obviously participating in the mortgage market where we are subject not only to some of the issues of you know, those that were originated but also to a lot of macroeconomic issues that we can't control like unemployment, etc. and yet we are in a position to be able to continue paying our claim because of the structure of the reserve system that we have with the states. and what we found is that that has been a structure that has helped us really survive through this challenging time. at the same time, it has been very clear that the regulators themselves have been talking to each other and coordinating, as

well as in our case sharing information with the fh at a. and so, you know, we believe that structure is working and will continue to work. . . aspects of regulation where federal regulator would enhance

that. >> however, may i add to that the ultimate consumer protection congressman is when your constituent pays a premium and doesn't have a claim for several years that the company is not only able, is not only a around to answer the telephone, but able financially to pay the claim. reinsurance is an essential part of solvency, and solvency is the core mission, core purpose of consumer protection in each state, and for that reason it is inappropriate subject for state regulation. >> thank you very much, mr. chairman. >> thank you, mr. scott. now the gentleman mr. posey. >> thank you very much, mr. chairman. we have really heard about two issues today. one is international harmony and

the other is about regulation. and i won't go into the harmony because there is not time when asia gets in and south america gets in. i mean, too large to discuss here today. but as you've heard most of our colleagues discussed today, many of us believe clearly that the regulation of insurance is a state's right. that's purely and simply a state's right. it's reserved under the states. and the biggest violation of consumers that i have seen quite frankly has been by companies that write health insurance for example under erisa. every state except the state the reside, collect premiums and don't play claims because the federal government doesn't do anything and wasn't until the state's got together several years ago and crossed state lines for the first time in history to prosecute health insurance fraud.

if we lifted the to the federal government they would be pondering in 49 states unfortunately. it's clear if your testimony to labels true very few of you need any more useless bureaucratic regulation, and who would have ever thought that after the s&l crisis so relatively shortly after the s&l crisis with all the additional regulation that was put in place following the crisis that we would again find ourselves in this whole financial crisis. i mean if regulation would solve the problem, we wouldn't be here today because brighter minds created for lawmakers through a bunch of regulation at the end of the s&l crisis and obviously

it didn't do anything and why we would think that we could be successful in trying to advance and outthink a creative risktaker kind of defies logic. i think to old people -- hold people who harm people accountable. you know, we pretty much i think i agree that the cause of the crisis that we are and now has been caused by greed. we have greedy execs, and it apparently is not illegal, who put the long-term best interest of the financial fiduciary relationship that they have with their customers or their clients, their stockholders, behind their personal ambition for short-term gains and grossly export of imbalances and that is why we are in the problem we are

in now. i think everybody agrees with that and i don't think that you're going to be able to ever craft a wall that is going to outwait these creative, i hate to use the term, geniuses. some of the schemes to come up with seem pretty good for the short term to improve their own life. i think the answer is going to be if you will the people responsible who violate these fiduciary relationships like they do in some industries. and for that, i realize there's not enough time for all of you to respond. i don't expect all of you to agree with that, but i would appreciate if you would respond to your thoughts in writing to the chairman and see to it the rest of us get a copy when your thoughts would be, where you would draw the bar. what kind of boundaries he would recommend to legislate accountability for these people

that have plundered this nation. they've plundered the world so to speak. and if regulation would take care of it, the sec's 1100 attorneys would have prosecuted bernard madoff ten years ago when his scheme was exposed to them and they refused to take action. so i think it's going to have to be a matter of criminal and civil accountability on a personal level. if we are going to change the course of the future in this regard. thank you, mr. chairman. >> thank you very much, mr. posey. we will send that response and make sure the members of the committee receive it. the gentle lady from illinois, ms. bean. >> i would like to ask ennis consent to enter the written statement steve bartlett, president ceo of the service roundtable into the record. >> without objection, so ordered. >> thank you. i will also like to acknowledge

some of the testimony in response to some of my colleague's questions that no one is advocating for national and insurance charter in any way suggesting that we will work consumer protections and in fact we are starting at the baseline of the models and only improving by adding a systemic risk of regulator by adding and national commissioner that would have oversight of holding company information both for insurance and non-insurance subsidiaries like aig financial could prohibit activities that put those companies or the policy holders at risk. and also the testimony that you mentioned of the federal provincial regulator again only enhances consumer protections. my question is for mr. mcraith. if the federal government hadn't stepped in to provide aig bailout money, how prepared were the state regulators and reserve funds to deal with the fallout? how will the states have come up with $44 billion of federal tax dollars that had gone to shore

up aig life insurance subsidiaries who took risky bets through deep lending programs that notably were approved by the state commissioners? and a follow-up to that but resources have been put in place subsequently by you and other state commissioners to oversee insurance subsidiaries security program? >> thank you. security lending has come up in other comments as well. it's important to understand the problem first of all the new york department of insurance was working to reduce the level of securities lending in the aig subsidiaries before the crisis. the crisis, remember was the result of essentially the collateral call on the aig holding company resulting from the credit-default swaps. this wouldn't have been a problem, but for the cbs failure and it's also important to remember that the securities and which were involved were the aaa

rated securities at the time so it points to the need for better regulation of the credit de fault swap market. >> so we're with the 44 billion have come from? >> i'm going to get to that but he also asked about reforms that have been undertaken. we have increased capital requirements if companies are engaged in securities lending enhanced reporting and we are looking at how to revise our accounting standards in that last improvement is ongoing. in terms of 44 billion it's important to understand each insurer of course has a significant capital requirements to begin with. other assets cannot be used to satisfy the debts of the holding companies. even if these subsidiaries -- i think it's an open question also, congresswoman, whether if

-- without the 44 billion, whether these companies would have actually become insolvent. many financial regulators will argue they would not have been insolvent without the 44 billion. that they would have been okay. however, if there had been a question of solvency, than the companies would have been placed into receivership, and insurance is not like the fdic for example where you need of liquidity and cash immediately. insurance in the guaranty fund system essentially replaced the contract. they don't have to -- and the coverage, they don't have to generate cash immediately because of course not everyone dies, god forbid everyone dies on the same day or everyone has a car accident on the same day. and for this reason, $44 billion wouldn't have been needed immediately if hypothetically it would have been needed at all it would have been managed over a period of many years if not decades and this is what happens

and it does happen through the course of state based receivership companies. the state based system would have been able to handle licht and it would have been, again, protected the consumers, the policyholders first. >> i appreciate your testimony on what has been done since that time to address the gaps that exist in the current system to protect policyholders. and again, it is those who oppose legislation to move towards a national charter who suggest there be any weakening of consumer protections to refuse to acknowledge the $13 billion of savings to the industry that could get passed on to consumers from the redundancies' of the 50 state system. thank you. i yield back. >> thank you very much, ms. bean. now the gentleman from illinois, mr. manzullo. >> thank you. i find it interesting that some

of you think that you can ask the federal government for so much and in your own wisdom stop it and then you'd be in a position later on where you are complaining the federal government went too far. and i think mr. royce and his own questions went beyond his own bill on setting up an office of information, insurance information, and then his question was, and this is mrs. bean's bill also, what good does it do to have the information if you have no authority to act upon it? i mean, i come from illinois and one of the things we do the right in that state is regulate insurance. we have the cheapest insurance rates probably in the country. mr. mcraith, mike understanding, and correctly, aig plus in five pieces.

five separate entities, colleen will you want, and that the life insurance aspect was corner of by fire walls from the investment side that went sour. is that correct? >> that is correct, congressman. every state has adopted what we call the holding company act. the holding company act along with our other financial regulations requires each in-store to be financially independently liable and we have strict capital and accounting and investment requirements. one function of the holding company act is that insurer, the life insurers for example cannot release capital to the holding company to support the holding company without regulated approval. >> so, the investments that were made by a the aig life insurance

section were separate from the investment arm that went sour; is that correct? >> that is correct. aig financial -- aig and our conservative estimate had 247 different companies. 71 of those were u.s. based insurance companies. each one was independently financially viable. the financial products and jet company leasing company, those were regulated in other ways by other agencies in which the insurance companies were not threatened by those operations. >> so the life insurance side of aig has always been sound? in terms of you would have to have all of the insurance, life insurance donley and one day or in a week in order to threaten the solvency of the insurance

and? >> adis some very smart experienced financial regulators in this country would say exactly that. >> then why would anybody want to regulate the life insurance company at a federal level? how could it be done any different come any better than what's been done at the state level? >> well our position of course congressman is that it cannot be and i think that your colleagues have pointed out numerous examples of why that would not be the case. i think that chairman kanjorski asked earlier about reliance company and what a federal regulator have discovered that misconduct of its principal or sec didn't discover the misconduct of mr. madoff either. >> and if i could stop you right there that's my point. the sec -- the man, the whistle-blower, i can't think of

his name right now -- >> [inaudible] >> marcopolis screamed that he had been referred nine years but nobody would listen be read the field and the same thing with the federal reserve. now you said, mr. mcraith, that quote, we've restricted the nature and the extent of the investments of insurance companies. and the federal reserve has jurisdiction to restrict the nature and extent of mortgage instruments and underwriting standards and they sat on their butt and did nothing. in fact chairman bernanke testified here in october of 2008 that it wasn't until

december, 2007 the fed ever got involved in the whole sub prime housing market. i find that astonishing. and mr. capuano was giving you tell, he said where were the states when this went down the tube, but it was the federal agency with direct jurisdiction that did absolutely nothing and now we are talking about using that standard, the sec standard that will lead with madoff, the federal reserve standard that blew it with doing nothing on governing these instruments to stop the 228 and the 327 and making sure people who took loans could afford to buy them now were expected to sit here and have a federal insurance regulator? why? looking at door testimony here you plead the tenth amendment on some certain areas and i could

understand what you're trying to do. the problem is how do you think you can stop the fed from going only as far as you want them to go and then not going beyond the area you don't want them to go? that's a tough question but if you want to handle it, go ahead. >> well, i would like to try. i owe that to you and i appreciate it. >> if i could have more time, mr. chairman. >> i will try to keep this in the context of the purpose of the hearing which is systemic risk. if the chairman would indulge me for 30 seconds i've been coming up here seven or eight years long before aig became a household name and long before there was a financial crisis and we were a pair and ticketing for a charter because we thought we could serve our customers, those of us who do business on a national basis which is much of the life-insurance better. as congressman bean suggested

and you had a bigger number than i would have in my pocket but there are billions of dollars of annual operating expenses that would be saved if we had a single regulator rather than 51 regulators that gets passed on to the customers. now in the context of systemic risk, what we've been talking about today is whether it's federal or state in the past there have been failures of regulators on both sides and i think the purpose of this hearing is to try to make it better, try to improve and bring all the risks from the entire financial service industry to get their to keep this from happening again which given the amount of sleep i've lost the last eight months i am all about so if we are indeed here to talk about a federal system it overseer or regulator we don't think that you can regulate just systemic risk of a life insurance industry without having expertise, collaboration and cooperation of a federal regulator and that to me is how we bring all this together. >> that's a good answer.

i appreciate that. i have another question but i passed my five minutes. >> we will go to another round. the gentleman from florida, mr. grayson. >> thank you mr. chairman. i don't want to talk to you or ask questions whether we should have a federal regulator versus state regulators for insurance. i do want to talk and ask questions about the subject of systemic risk. you are a panel here to represent the insurance industry and i would like to start with a very simple question. assume systemic risk reflects the idea the failure of one particular company would cause its creditors to also failed to go bankrupt and reverberate throughout the financial system to the point where there is a dry up credit nationwide or even of worldwide. the first question i want to ask will start with mr. mcraith is which companies does that describe? in other words which existing

companies post systemic risk if they fail? >> not one insurance company based in the united states presents systemic risk according to the definition you provided. >> without aig? >> eitc 71 insurance subsidiaries were financially strong and remain financially strong. not one of those companies independently ever presented systemic risk. >> as a group to the post systemic risk? >> as a holding company is the financial products division which out of london which was not appropriately regulated but not a matter of state insurance regulation by the way. that clearly presented systemic risk to the country. >> so when you're saying is only the financial product section of aig poses systemic risk, not the insurance operations and the financial product section was not an operation in your view;

is that correct? >> according to the definition you provided as systemic risk mr. spence, which today posed systemic risk to the system? >> thank you, congressman. as we detailed in our testimony i essentially agree with mr. mcraith. on an eckert e-business the insurance companies as a whole in the u.s. could if there was a natural catastrophe of significance or in the event of a terrorist attack. >> well, that's an interesting point. we were singing is not the scenario with aig. that wouldn't oppose the kind of systemic risk you're talking about. pledge your talking about is attack or natural disaster that would impose trillions or at least hundreds of billions of dollars potentially, talking about for instance a nuclear blast, hundreds of billions or trillions of dollars lost on the

industry. at that point, do you think that would be systemic risk the least of our worries? >> as i indicated i think on an aggregate basis insurance companies and those events could be systemically at risk, correct. >> is their anything a systemic risk regulator could do about that? >> that's a jury good question. what the regulator could do would be to try to insure that examination of insurance companies' exposure more managed. whether the aggregation of risks and urban areas were properly managed. there's things they could try to do to improve the situation by you are correct depending on the situation there may not be much that could be done. >> are there particular entities you identify being the ones to

watch if we wanted to avoid risk in those extreme circumstances? >> again, we have looked at it more on the aggregated basis. >> at osnos if you regard this as fair or not but if your company went broke, who else would go broke? >> we don't have that many counterparties like other insurance companies so i'm not sure i can answer that question. >> as far as you know what any other major entities go broke? >> no search. >> what about you, mr. baird? >> you're asking me to use imagination what a systemic risk regulator does because i thought about that a lot -- >> no, what i'm asking is are there any current companies in existence including your own the you believe pos system at risk in the sense if your company failed so many others would feel that would result in effect in the mass destruction of credit in this country or even the world. that's the question. >> if all else were the same, if

the reason for the failure didn't impact the other companies, or can i think of any other single company out there and the life-insurance industry, okay, if the reason they were going to feel didn't impact any of your company the answer is no. >> going back to the previous answer when you're saying is there are certain scenarios we would have something resembling risk, something like a terrorist attack, mass disaster. those are the kind of scenarios we should be thinking about and systemic risk; is that correct? >> in the capitol market yes, it could be credit defaults and so forth, it would impact of companies. >> to me this has been helpful. if any of you to supplement your comments with addressing the specific issues i would certainly be grateful. my time is up. thank you very much. >> thank you, mr. grayson. we are going to try another round quickly and those members can take their five minutes if they so desire but they can

certainly take less if they so desire. i think i will hold my hand pass over to my co-host here, mr. garrett. >> i will run quickly for. i don't want to hold the panel up. i appreciate the panel being here. mr. mcraith, and i saw mr. skinner -- why shouldn't make comments -- mabey disagree with you. my wife always says that. with regard to the aig situation. you were running down the scenario in regards to who's looking at it and of course mr. manzullo raised the issue and mr. mcraith you made the comment portions were overseas and london specifically. and i believe i've heard that before that part of the issue here is that -- not state regulator necessarily but federal regulators or lack thereof as mr. manzullo was making your raising one as well as far as the european arm of it

or looking at it may be missing it as well, do you want to join in on that? >> i think the important point is that regulators need to have formalized structure for information sharing, for communication not because of the risk but because frankly there are large companies who will present risk. it's to avoid the disruption so that the stability -- >> i guess what i heard, mr. skinner, you commented, was their failure also not on the federal reserve or federal regulators looking at the aig situation but also a failure from the european regulators as well looking at the situation and not catching this going into it. >> this is interesting as i'm listening to this i gather that you believe aig function as it did in the united states. in fact aig functioned country by country and sell the european union and challenged aig and said you now got to be as a

group. you're overseas inside the european union in an internal market. you're now when to have to put your hands up and say your a group. if there were a group we would have been able to supervise the group in its entirety. what if it did, banking and insurance. it just seems to me strange to keep picking on london. london was a conduit, it was appropriate at that time. whether we have a crystal ball and look and say securitization was bad. i don't think that's true or rational either. but what went on is due to the derivative market and we know why indeed it went bad in the derivatives markets. we don't need to go there. but if we say aig and the united states has to blame what went on in london for failure of supervision i think it is taking a step too far. i think what we have got to say is where was it supervised in the united states, who had oversight, why didn't -- if state regulators had such a close relationship with this

company -- know about the kind of investments it was making and what position did it make in trying to stop those investments to buy the wave reject -- >> i appreciate that. i guess a lot of what we do is make the questions as the people said had we had regulations would we prevent the situation and it seems as though in certain cases maybe not. mr. mcraith, sorry, mr. skinner you talked earlier with regard to equivalency, and that's something we need to move to, right? you have the legislation that's out there in 5i will call it the bear bones legislation which does not have come sorry, as i understand, all the other regulatory aspects of it. it's basically office of information -- office of insurance and information and collection of information. what did bring loss to having -- would that bring us to equivalency alone? >> i can only say at the moment

from laureano, the information itself wouldn't be enough i would have to say. i think what we are looking for is the platform for further discussions and deliberations and it is up to you where you go but of course what we want is to examine what you bring in terms of regulation and it has to have some by the national level. >> i guess the last question is we see the dichotomy between the approaches. mr. capuano made the point i think that i don't want to put words in his mouth, he sees the need for the state regulation with regard to the consumer protection aspect. i think i heard that from him. mr. baird, though you could see the problems however long mr. mr. pryce's. if you don't have the same level and i know you don't want to get into who regulates what, combined with a regulator you can see the problem there indicated.

so you also see a problem and if mr. hi fi understand ms. capuano if you continue those divided between the state and the federal consumer protection on the federal regulator you would see a diversion were conflicting approaches of interest, correct? >> that is correct. >> besides the inefficiency. >> besides the inefficiencies, when we get it right we design a product that meets the customer's needs and allows us to be prudent and reasonable as regards to solvency so we can deliver on promises 20, 30 years out we bring together solvency people, financial reporting people, pricing people, and we have committees in the company that we call what you want your mother to allow the committee. that's our equivalent of making sure the consumer is treated fairly. when we get it right all those different disciplines come together in the same place to

regulate us any differently i think what fail. >> so if obama does nothing with regard to insurance, it's just not on the table but he does get a systemic risk regulator perhaps in the federal reserve and that's over here and over here he has the consumer protection division in some other area that would be -- neither one of those -- that would be the division that wouldn't work. >> if that includes insurance products -- in my opinion you have regulators with different agendas that doesn't allow us to bring it together to serve the customer the best. >> if you have ms. cow won a's approach to keep the level at the state and some on federal. >> that is correct. >> thanks a lot. >> thank you very much. knees bean for five minute. >> thank you, mr. chairman. mr. mcraith, you highlighted that the in ec works actively with international regulatory

bodies. what authority does the in a icf with compelling states to comply with any changes or recommendations the the international committee would like to see? >> well, the first value the in csis ads is a coordinated interactive agency to work with our international colleagues. there are 27 countries and the e.u. and many countries around the world who have similar systems in terms of the preemptive authority of the naic its role is not to preempt the states to supplement and support the state regulation so in that sense as it develops -- as internationally there are developed standards we support the development of those standards and that's the measure we will determine equivalency is the development and compliance

with international standards. so you support the standards and educate the states but ultimately don't have the authority to compel them to comply in the same way that for 140 years they've tried to drive uniformity across the states domestically and have been on able to get all the states to move forward towards agreement on standards as well? >> just quickly i think that's a fair comment. there are differences among the states i think as your colleagues have mentioned so an example in illinois we have a rating system where that works for our states companies don't need prior approval on property and casualty rates in the state however that system would not work i think many legislators would argue in the gulf states or on the pacific coast. so those differences while they might present a system that some of the largest players in the industry would argue is

difficult provide essential consumer protection to the people who live in the district and the states themselves. >> my question for mr. skinner is from the european perspective how successful is d-nd i.c.e. with your counterparts? >> to be honest reinsurance in particular where we have had problems on the charges not successful at all. the european commission holds up this is entirely discriminatory against european companies in the united states which as much as $40 billion worth of collateral held in states across the united states. there has been a move to move towards the rating process in itself seems quite discriminatory with the higher ratings being required, very high ratings for foreign companies and very much less so it seems for domestic companies which if you are operating in a global reinsurance market business to business doesn't

make much sense obviously i understand the necessity of covering risk, but we have just done away with collateral in side of the e.u. and we think it is a blunt instrument. we wonder why that is still of course here whenever the neic says this is what we are going to do we are shocked by it and think we have a very modern approach or technique and we prefer to look at risk management which after all at the end of the day tells you with those companies are doing and how they are we hitting and predicting their risk which is more essential than how much money they have in the bank. >> thank you. my last question is for mr. mcraith. the just become a delaware corporation at the time the executive vice president mr. weatherford explained delaware laws were conducive to corporations. why does the neic believe they should be able to choose where to incorporate based on what is the best interest but but insurance companies with

nationwide offerings shouldn't have the option of a federal charter to streamline their operations and better serve their customers? >> well, excellent question, congressman. let me first comment on the reinsurance collateral issue with this very brief anecdote which is that the -- my colleagues on the panel to my left almost uniformly would oppose the release of collateral on reinsurance transactions is interesting to have this diversity of opinion on this panel although i appreciate the e.u.'s perspective. in terms of the delaware incorporation by the naic i don't think it is a mystery to anyone in the country that delaware is a home place for corporations to incorporate. the naic, as you elude to earlier is not in and of itself a regulator. and in that sense, it is not delivering directly to consumers

the products. it's also not a company so it isn't delivering products it doesn't have solvency requirements, it's not something complicated insurance policies to people in every state around the country and for that reason companies should be domiciled within states and subject to the regulation of those states in which they sell products. >> i appreciate your response and yelled back. >> thank you very much, ms. ms. bean. you have further questions mr. posey? >> thank you, mr. chairman. i want to thank each and every one of you for your time and forthrightness especially is appreciated. mr. skinner you are right there has been a big disparity between the requirements for domestic and non-domestic reinsurance, and i think just in the last couple of years we have been so plundered and abused by the

reinsures that have done business with some of our states all of whom happened to have the exact same rates that you will see some of the states are dropping those requirements. more than protectionism, the purpose of that was so that if we caught them misbehaving theoretically we could put them in jail and hold them accountable if they were domiciled in this country. if they were domiciled some other place in the world that becomes a little bit more problematic. and doubles the more as a matter of accountability than it was protectionism hopefully. when we talk about a systemic regulator, i wonder, and you've come the furthest, mr. skinner and might have the best ideas on this. how in the world could we expect a systemic regulator to regulate derivatives, complex derivatives?

i mean, from a practical application i have not heard anyone yet explain how somebody could evaluate them and then regulate them. i mean, in theory we say we need somebody to regulate this stuff and make a right, but i haven't heard a practical example given yet of how they would regulate complex derivatives for example. >> it is a good question. one of the things these problems went ahead with one of the regulators who were meant to be regulating them and some of the boards of the companies who are actually in charge of these particular products. you also have the combination chinese laws dittman agencies meant to rate them and also are designing products and banks are doing the same. everybody made money in this. it was the wrong incentives for any of these so in terms of having oversight clearly one of the things we have done certainly amongst banks and said if you start off with a derivative we think that you

should retain some of the derivatives of that we can spot if there's problems down the line where it came from and one of the things plus there was no originated principal in derivatives so we just introduced the law, the capitol requirements and banks to insure up to 5% of all such derivatives to our started have to be maintained in those banks. this is something i know that is being discussed elsewhere and you probably have heard about it already but clearly from our perspective it is only with that particular type of start we can hope to look at this market but one thing is sure we clearly need securitization industry to build capacity. insurance depends on that just as much as banking but we have to stop the unethical behavior that was behind a lot of this and certainly some of the greed which unleashing a markets. >> mr. mcraith? >> ,, i think you're asking the multibillion-dollar question but i think that the chicago

exchange if i can be a little provoke you had an excellent proposal and that is to have an electronic trading platform and clearing functions of that there is pricing transparency and counterparties certainty and those two things in conjunction would have prohibited or limited the impact of the crisis we have seen in our suffering through now. >> mr. posey. >> i want to come back to the reinsurance comment but i will be glad to defer to some of the were responding about credit-default swaps first. >> i would like to make one point. credit -- the critical part of a regulator like anything perhaps the fed is to analyze the instruments themselves. the difficulty with credit-default swaps with aig was leveraged, and a huge number of transactions they did and leverage and it did in each one of them.

it's critical what mr. mcraith would say about this, but the amount of staff it takes to analyze these financial instruments to regulate them and try to make sure which things are permissible and not we think is more akin to what the fed does than what eric or the one of the state regulators would be able to do with staff analysis and stay on top of that particular financial the instrument. >> so does anyone think that the people that are putting these together or highly valued making tremendous sums of money. does anyone have the slightest notion the we would be able to afford to hire those people and that they would want to work for the government at evaluating the profitability of these derivatives throughout the world? i mean, i don't believe in the tooth fairy or the easter bunny and i don't believe we are going to create something like that either. if i'm wrong, somebody tell me

why you think that is a practical idea that we are going to get somebody that is that expertise that they are going to be able to evaluate the complex derivatives throughout the financial markets and they are going to work for the government and tell which are smart and which are done and which are going to make money and which aren't and which are risky and which aren't. i just think that is absolute absurdity to think that could happen. >> congressman, as the one public sector employes e on this panel i would like to offer this perspective that there are many smart bright committed regulators who sacrifice short-term compensation so that they can provide a contribution to the greater society. >> well, we are going into the new order now and i think with what we have already discussed with the sec and all the agencies that field to investigate and prosecute, enron

is one of the one we can see and for every enron i can show a state regulator that put somebody to jail, jr t the best example i can think of but to start from scratch this epoxy is going to solve all these problems and i think it is an unrealistic expectation i'm not saying there are all good people that work for government. i'm saying the level of expertise required that the person could have his own independent evaluation for the rest of the world and maybe serve a greater good than trying to have the government do it and there is nothing wrong, certainly nothing wrong with having a database. we talked about that and thought about that before that if you have a derivative, you filed a derivative and list every component and put back on the index you can get online and everybody can see online for transparency but then of course the word is we are registered with this implied value to that

unwary consumer that we are looking now for my not understand. thank you, i think you gave me extra time and i appreciate that. >> mr. chairman, if i might comment, esters posey's comment on reinsurance one reason we support a regulator the federal level is in fact much of the reinsurance market is in on your best based market and five lack of expertise and capability as well as the legal framework between companies that are major trading partners within the united states is the reason we think it's appropriate to have a federal regulator. mr. mcraith commented earlier that the lack of the constitutional authority for states to enter into trade agreements with other countries is an impediment with dealing with that and i would also disagree with your characterization of the market and its contributed enormous amount of money to refinancing after 1911, after hurricane katrina and wilma, after the hurricanes last year it has been a very responsible market in placing its claims.

>> mr. chairman, i didn't say they were not responsible and i didn't say they didn't play claims. i said they all had the same rate in my state which seemed a little quince and dental -- the coincidental >> the chair notes members may have additional questions they must submit in writing. without objection the hearing record will remain open for 30 days for members to submit written questions to these witnesses and place their responses on their record. before we adjourn the following written statements will be made part of the record in this hearing. the center for insurance research, the property-casualty insurance association of america, the cea, trade association of european insurers without objection it is so ordered. i want to thank this panel for their contribution today and we

did it in three hours, pretty good and maybe next time we can keep you for five. it would be another opportunity to visit with mr. skinner if we call him over here to enjoy that. i think we gained a lot from the international exposure of having mr. skinner as part of the panel but all of the participants on the panel were extraordinarily contributing today and i think the greatest on the committee may tend to say that we moved the ball down the field a little further would be the result of this hearing. i want to thank you again for being part of it and i look forward to future hearings on this subject and now the panel is dismissed and this hearing -- >> before you adjourn coming to enter something into the record from the letter of june 5th to larry summers.

>> without objection, so order. >> don't mean to hold you up an additional 30 seconds but want to make sure that gets entered in as well. >> thank you mr. chairman. >> thank you. [inaudible conversations]

helpless c-span's funded? >> publicly funded. >> donations may be i have no idea. >> governor? >> c-span gets its government through the taxes. >> federal funding. >> should sort of a public funding thing. >> mabey. i don't know. >> cahal is c-span's on that? 30 years ago america's cable companies. it's used as a public service. she private initiative, no government mandate, no government money. according to a new opinion poll most pakistanis view al qaeda and the taliban as a major

security threat. at the same time most of those polled in pakistan are opposed to unmanned ariel sharon sing said the country. more on the survey from a group called world public opinion. this is about an hour and a half. >> why don't we begin. thank you for coming this morning to hear about a discussion of public opinion in pakistan and what it means for pakistan and u.s. policies. my name is steve webber with the program on international policy attitudes. and we manage world public opinion .org. this is a network of organizations around the world that conduct research on international policy questions. and this study along with all of our other work can be found on our website, worldpublicopinion.org as well

as the stations and so forth. we also have earlier studies on pakistan and south asia that can be found as well. this morning, we will be looking at the findings from a national survey to the people of pakistan that was conducted in late may slightly over a month ago. the specific dates were may 17, to 28. to put this in an american context, this was four months after president obama was inaugurated and about one week before his speech in cairo and which he addressed the muslim world. late ramsey on my right will present the findings on a set of issues including the public's views of conflict in less what valley and of the pakistani taliban. also add to its about the war in afghanistan. and attitudes about the role of the u.s. in the region. play is the director of the researcher and has worked on

studies of public opinion in south asia, recently a study of attitudes about the conflict in kashmir. christine will present some particularly interesting regional differences in pakistani attitudes. pakistan's ethnic mix is crucial to understand its politics and its relations to its neighbors. we will see it is important to understand attitudes towards the u.s. and to the taliban as well. christine is a specialist in south asia, she has traveled many times to both afghanistan and pakistan. she speaks urdo and is a scientist at the rand corporation and previously was at the u.s. institute of peace and some of her good ideas went into the development of the questionnaire for this study. ..

in randomly selected, urban and rural sampling points in all four provinces. let me add quickly that for baluchistan, which has only

about 5% of the population of the country, we over sample and then waited the results, backed down so that they would be proportional to the rest of the country. the margin of error is plus or minus 3.2%. these are the topics i will cover, which steve has already run through for you. swat selee conflict, the war in afghanistan, attitudes toward president obama in the u.s. and al qaeda. so, a major shift has taken place in pakistani's perceptions of religious militant groups in their country. 81% lcv activities of islamist militants and taliban in the fatah in areas as a critical threat to pakistan, while in fall 2007 when we ask the same

question, only 34% saw them as critical. more broadly, the activities of religious militant groups in pakistan as a whole are seen as a critical threat by two-thirds, up from 38%. when they are asked where their sympathies lie in the swat conflict, seven in ten are supportive of the government. 10% volunteered on the fence response, both equally or neither, but only 5% said the pakistani taliban. confidence in the pakistani government and army to handle the situation is that majority levels. they have a lot of confidence, and seven in ten say they have at least some. the public seems definite that the pakistani taliban represents a road they don't want their country to go down.

we ask them to think, what the pakistani taliban were to gain control over all of pakistan? how would this be an 75% called this bad. 67% said it would be very bad. at the same time, a majority sees such a takeover of the whole country as unlikely. about half say it is very unlikely. we ask people whether they thought the pakistani taliban actually has the ambition of taking over the whole country and imposing its form of sharia or whether it means to just run the northwest, which of course is a sizable goal in itself. a fair majority, 51%, thinks the pakistani taliban is focused on the northwest, but a sizable minority, 36%, disagrees and thinks its ambitions are national. now, the public leans slightly toward feeling even though this

what, the government was still bright to attend to compromise. we have i reminded them that government forces agreed to withdraw and allow the taliban to establish a sharia system in swat while the taliban agreed to shut down their training camps in turn in their heavy weapons. a 45% plurality said the government did the right thing in making the agreement, while 40% said the government made a mistake. this is another sign of a shift in opinion because just before the agreement in march, a poll by international republican institute found 72% then supporting a peace deal. further, the public has judged the pakistani taliban definitely broke the agreement by its actions when they were asked, to think sending their forces into more areas the onslaught violated or didn't violate the agreement? two-thirds said yes this was a

violation. a large majority does not even think the pakistani taliban would submit themselves to the jurisdiction of the sharia court they were demanding. 71% think the pakistani taliban will not accept the sharia court having the power to try taliban members and this may seem a small point, but it can be important for how militant groups are perceived in the future because the willingness to accept a role for yourself if you want to impose it on others is often basic to people's perception of fairness. there is a big divide between the majority's view of some aspects of sharia pandith pakistani taliban's you have sharia. we ask people what they think sharia allows and then later asked what they think the pakistani taliban allows. so, are women allowed to work according to sharia law? 75% said yes. will the pakistani taliban allow

women to work in areas they control? 81% said no. our curls allowed to go to school according to sharia? 83% said yes. will the pakistani taliban allow girls to go to school? 80% said no. very few think the pakistani taliban has in the competence to govern and deliver public goods but this does not mean that people necessarily have faith in the government's competence. people were asked which would do a better job in three areas. what about providing effective and timely justice in the courts? only 14% think the pakistani taliban would do a better job. the majority, 56%, thinks the government would but 26% of that out and said both or neither. preventing corruption in government. just 9% preferred the taliban but fewer than half, 47% prefer the government, a large 38% said

both or neither. helping the poor. 7% said the taliban, 44% the government and another 44% said both or neither. so, since we see this shift of that suits about pakistani taliban, does this change carry over to views of the afghan taliban and it so, to what degree? nearly all pakistani's say that in principle, the afghan taliban should not be allowed to have bases in pakistan. 87% thought this. at the same time, many pakistani seem unwilling to face the prospect that the afghan taliban to operate from sanctuary bases on the pakistani's side of the border, so 77% said telebennie groups trying to overthrow the government and afghanistan are not operating from bases in pakistan, however pakistani's do

seem willing to follow their government if it were to take the lead in clarifying the issue. asked, it's the pakistani government were to identify bases in pakistan of taliban groups were trying to overthrow the afghan government, do you think the government should or should not close these bases even if it requires the use of military force? 78% said the government should close such bases. only 13% disagreed. this appears to show a considerable growth in support for pakistani military action to secure its western border. ours the december 2007 poll did find a plurality that favored allowing the pakistani army to the pursuing capture taliban in surgeons who crossed over from afghanistan. 48 to 34% but the support was not at maturity level. if the afghan taliban were to succeed in its cooling takeover

afghanistan three and five pakistani's would see this as a negative outcome. 61% said that if the taliban were to regain power in afghanistan, this would be bad. 54% called it a very bad, 24% said this would be a good outcome and another 10% volunteered it would be neither good nor bad. when the united states is brought into the picture, this overlay gives rise to some very different attitudes. asked about the current u.s. drone aircraft attacks the strike targets in northwestern pakistan, 82% called them on justified, only 13% disagreed. if the u.s. were to identify afghan taliban bases in pakistan, 79% say it would not be justified in bombing them, though as we have seen this type of action is supported now when carried out by pakistan's own government. we ask the question that would

remind respondents that the international community, not only the u.s., originated the military presence in afghanistan. it read, as you may know, the u.n. has authorized the nato mission in afghanistan and by forces from the u.s. and other countries. this mission is meant to stabilize afghanistan and helped the government defend itself from taliban insurgents. do you approve or disapprove of this mission? 72% disapproved of the nato mission. only 18% approved. do you think the nato mission in afghanistan should be continued or do you think it should be ended now? 79% said it should be and it now, 13% that it should continue. the recent decision by the obama administration to send up to 17,000 more u.s. troops to afghanistan this year is widely rejected in pakistan. 86% said they disapprove.

so, there are a few signs of a wash over a public support from the fight with the pakistani taliban to the war in afghanistan. but, to the degree that the war in afghanistan is brought on to pakistani soiled by either side, there's a strong public reaction. let's look at what whether it be arrival of obama has brought any signs of attitudes toward the u.s. and i should say this poll was conducted just before the president's speech in cairo. he did briefly mention the war in afghanistan and u.s. plans for economic and humanitarian aid in pakistan. ask how much confidence they had been president obama to do the right thing regarding world affairs, a 62% majority have low confidence in him, 41% said none it all, 30% expressed some or a lot of confidence. now, when pew at the same

questions about president bush in 2008 if found even fewer expressing confidence, 7% but you have the same number, 61% expressing low confidence. so, tomorrow pakistani's expressed confidence in obama then did in president bush but the majority expressing a lack of confidence in a u.s. president is really the same as before. we asked pakistani's to consider what president obama's policies may mean for their country. 32% said the policies of barack obama will be better for pakistan. 36% said they would be worse than 26% said they will be about the same. so, three and five think obama's policies meaned things will stay as they are or perhaps get worse. now, 69% feel the unfavorably toward the current u.s.

government and 58% are very unfavorable. on the 27% have a positive view and this is roughly similar to responses in 2008, when 56% were unfavorable and 17% favorable. attitudes are little less lopsided win pakistani's think about the u.s.'s efforts to promote international law, and this question which we have asked before, has shown signs of moderation so respondents chose between two statements. on the right you see the u.s. has been an import leader in promoting international laws and set good examples by following them or, the u.s. tries to promote international laws for the countries but is hypocritical because it often does not follow these rules itself. and, a comparatively moderate 2/3 the critical view of the u.s.. this is down from 78% in 2008. a significant minority chose a

statement which praises the u.s., perhaps some thought little full somalia, a could not have been easy. the u.s. is perceived as showing disrespect towards muslim countries that the majority think is purposeful. given three options, only 7% said, the u.s. mostly shows respect to the islamic world. a substantial one in three said this is not intentional. the u.s. is often disrespectful to the islamic world but out of ignorance and insensitivity. however, a 55% majority thought the u.s. purposely tried to humiliate the islamic world, so this image of u.s. actions towards muslim countries seems pretty entrenched. but, if broader attitudes toward the united states have shown little improvement, what about attitudes toward al qaeda, the u.s.'s adversary? there has been a major shift in pakistani opinion tort al qaeda,

so far as it regards pakistan itself. in late 2007, if you look at the bottom bar, a 41% saw the al qaeda's activities as a critical threat to the vital instances of pakistan in the next ten years ago in the current steady, 82% called the al qaeda's activities a critical threat to pakistan, so this double. an overwhelming majority thinks al qaeda should not be allowed to bun training camps in pakistan, 88% said this. however, most say al qaeda is not operating training camps in pakistan. 76% thought this was not the case. nonetheless, if the pakistani government or to identify the al qaeda training camps in pakistan, that is how it was put to them, 74% said the government should close them down even if it requires the use of military

force. 17% disagree. and this shows a shift in attitudes from 18 months ago. for comparison, in their 2007 poll, just a 44% plurality in favor the pakistani army entering federally administered tribal areas to pursue an capture al qaeda fighters while 36% were opposed. even if the u.s. were to identify the al qaeda training camps operating in pakistan, four and five pakistani's to not think it would be justified for the u.s. to bomb such camps. 81% rejected this. similarly, back in 2007, 80% said the pakistan government should not allow american or other foreign troops to enter pakistan to pursue an capture al qaeda fighters. only 5% thought the government should permit it. so, pakistani's u.s have changed

a lot with their own government's actions are concerned but where u.s. actions are concerned, pakistani's views have barely changed. one way of understanding all of this may be that we are seeing a rising of pakistani national feeling directed at both extremist groups within the country that are increasingly seen as army the integrity of the state and against the outside forces that are also seen as harming the integrity of the state. many in the pakistani public see the pakistani taliban, the afghan taliban, the u.s. and al qaeda as all farming pakistan's data integrity. so, the image of the u.s. does not benefit from this ship and this rise in national awareness, overall, i think this change should still be welcome to the u.s.. >> thank you clay. christine will take another

slice at this. >> so, when you hit the button that makes them appear. >> it is so complicated. alright, so let me give you a brief overview of what we are trying to do with this next presentation. this next presentation tries to disaggregate with pakistan looks like so that the preceding presentation of that the country overall, so we tried to kinds of the segregation of this data. the first that we looked at was the urban, rural and we didn't find a lot of variation between residents of do rural parts of pakistan and those in urban areas, so we are presenting interprovincial differences. i think it is important to say up front that in pakistan there's often more variation within a product then there is between provinces, so the only way we can really look at the

determinants of variation within the country's three regression model. that is obviously not something we are doing here. another caveat is that this sample it cites only 1,000 the sample was drawn to be nationally representative so we are very cautious in presenting interprovincial differences because the sample was not drawn to be represented at the provincial level, so what we are going to present here are only those variables that have a substantially interprovincial difference that the phil confident that those differences are sick this is a klee significant so we can asim if we don't have a specific slide addressing the previous vary boles, there's no significant interprovincial differences or least a difference we felt confident in sharing with you. i also want to point out that in this particular round of survey, pip used a different firm, and i have another survey i'm doing with jacob schapiro at princeton in neal at stanford that uses

the same firm and we are doing 6,000 people so some of the interprovincial differences we point out here we will be tracking in the 6,000 person survey. before i go further think it might be interesting to share some anecdotes so before we signed up with this firm to do the survey, jacob and i went to pakistan to do an enumerator training and i think it is important to understand that the vernacular you see presented here has been distilled out and one of the most interesting things we found when we did the enumerator training and by enumerated training i mean those people going out to interview the participants in a survey, we went there every single question and in my new die chialing questioned them to make sure the enumerators understood the question. what we found in our previous sample in 2007 that there were a lot of respondents said they did not know or did not want to respond in trying to figure out whether they don't know or don't want to respond is an important issue, so to minimize the don't

know's, we made sure that ander stood terminology. when of the interesting, there were two interesting findings that jacoban i had and that is when you actually ask people, the no what al qaeda is, most of the enumerators who were dealt-- well educated all of them had the ten plus two in the pakistani system, almost all of them had m.a.'s and almost all of them had five or more experience doing direct learning, so in other words these folks were very well educated and they could not tell us what al qaeda was selee trained the enumerators to explain to the respondents who also may not know that al qaeda it is osama bin laden's organization and one of the funniest things that cannot of the training was when we were training the baluchistan team and we said what al qaeda is. can any of you tell us what al qaeda is? a woman raised her hand and this was really funny because women almost never know what al qaeda is uncertain never offer an

answer. she says, i know. she explained al qaeda was hamid karzai's organization. we spend a lot of time with these enumerative is making sure that when they ask their response, do you know why don't qaeda is, that they actually knew what al qaeda was so there were many more and it does. surprisingly people and baluchistan could not give a current explanation so i'm really cognizant you have to be careful about the translation and folks understand them so with the big cubby atsa mind we are going to prevent the interprovincial differences. i do want to say one quick thing about baluchistan. baluchistan is interesting. >> macbook baluchistan you ethnic-- first of all it is only 5% and it is the biggest territory so statistical sampling is this is a little bit like a lump the soup. to get an idea put the soup tastes like if the soup is not well stirred you have to take bytes all over visit so baluchistan is like a lump the soup. we don't exactly know whether

the results we are seeing is an artifact of the lumbee soup problem or in fact it reflects baluchistan results so you are going to see it as an allied air and we will be tracking this in the 6,000 persons are read that we have we are going to present to baskets of attitude. the first is about pakistani threat assessment and threat perception and the second basket is about attitudes towards american policy in leadership and so forth. so, turning to the threat assessment and this is a slides you have part of seen we asked respondents whether not they see these as a threat or not and gave them a variety of potential threats. this particular slide looks at the activities of militants and local taliban in fata in several areas and this is what we find. what is really interesting, we are looking at a critical threat, critical and not a threat. likud the differences between

nwfp and punjab. people in these provinces are much more concerned about these activities than those in baluchistan and the same in the high threat categoryed. i think there's probably a fairly straightforward explanation if we can assume these baluchistan figures are reflecting a baluchi attitude as afford to the lumbee sip problem and that is, while baluchistan is the home of the afghan taliban it is really about insurgents islands. you haven't really seen the taliban in baluchistan. so, maybe the afghan taliban are pretty clever and not going to make a problem but you have much moore's islamist violence across these other three provinces so maybe that explains why baluchistan is really an allied air here. we also ask pakistani's about the activities of religious militant groups in pakistan as a whole and again, we see interesting provincial differences.

with both and nwfp and the punjab being the most concerned and if you think about this certainly since 2006 when the afghan taliban really began a concerted campaign of suicide bombing throughout pakistan they were really concentrated in the punjab, fata as will's nwfp. with a few exceptions like bombings and obviously the attack on benazir bhutto, in recent years it has been spare the ravages of this kind of violence and i think you see this reflected in the interprovincial differences. going back to the question of the pakistani taliban goals and again. we are talking about the pakistani taliban, we asked them whether it's the taliban were to take over all of pakistan out with this outcome be ranging from very good to very bad. again you see it is fascinating interprovincial differences with people in the nwfp and the punjab which have been most

affected by the activities of the taliban in pakistan they much more worried and apprehensive and baluchistan which has been scared almost entirely with the exception of some important sectarian violence which many pakistani's don't necessarily view in the same way as the pakistani taliban all the people know about the ttp note there out sources of violence are-- but the provinces are much more apprehensive about the outcome of a ttp takeover. we also asked folks about pakistani taliban's goals and i am not going to read the question. this is the second time you have seen this slide. again, fascinating interprovincial differences. so, even though folks and nwfp anda punjab, they have borne the brunt of this violence, they are much more likely to believe that it is their goal to take over

all of pakistan. i think it is important we remember when this survey was taken. the survey was feel that after the taliban moved into buner in a complete violation of the peace deal in my interpretation is that folks in the heartland of pakistan which is nwfp and punjab, there's the sense that as long as the craziness happens in the nwfp and the punjab we can live with that. there is and we have to be very frank, many pakistani's view pastuns in the tribal areas as being a secondary citizen and constitutionally they are not come they don't have the entitlements of the rights and also the obligations of the pakistani citizenries so it is illegal stavish which pastuns and the thoughts i have but also very different social status of my interpretation is that when buner felt, that really change the world view of people, because if you actually go and look at the i r i dated that was

feel that in march, right before the deal was finalized and the subsequent events, people at a very different opinion about the pakistan taliban and what its goals and what the likelihood is they would succeed in those schools. again, baluchistan which is largely vince baird the ravages of the ttp are really, they think that taliban will just thought that the northwest frontier province. so, when we ask them about the likelihood of a pakistani taliban takeover, there is very striking interprovincial variation whereas in the previous leidy's of the and the bp and punjab beating similarly. hear what you see is a very different provincial grouping so folks in the nwfp and perhaps given their experience, because they are at ground zero of the ttp, they are much more of the belief that they will actually take over, particularly if you

include the somewhat likely. folks in the punjab are much more skeptical. that this is going to happen. and that come up folks in the punjab and sindh were the most skeptical and again you see they are a little bit more ambivalent about how things might turn out. we also wanted to understand how folks in the different provinces you the government as well as the pakistani taliban with respect to this what conflict. ansel again. you see folks in the punjab and nwfp, their sympathies lie much more strongly with the government and again in baluchistan and send mekdeci a different view. there any number of interpretations. i think one way perhaps of interpreting this and the only way we could no if there was some sort of an ingression model is in both baluchistan and sins there is this longstanding, they would say disenfranchisement from the federal government and we see that in baluchistan.

.. i personally found the results to be absolutely baffling. i have no coherent explanation because they are the ones that have borne the brunt of both federal and as well as provincial and military's handling of the situation again,

baluchistan. if you just add the allotted some it falls somewhere between baluchistan but the nwfp finding for me was action league extra nouri and i have no cohesion why that might be so if you have thoughts as we right up the findings let me know because i have no way of rationalizing that. so we asked books about their confidence in the army's dealing with the ttp, and again the wfp looks how it looks in the previous night so this makes me believe this is a consistent opinion and not a freaky error in that one point estimates. so again, nwfp is looking strange. penn job is confident, but again, look at sin, it is an out lawyer more folks are just -- if you took the numbers and distributed but folks are much more likely than the folks in

the other provinces to have no confidence on the way in which the army has been handling the ttp situation. so now we are going to turn to the second basket, and again if you don't see an interprovincial characteristics versus the ones that kleeb presented because we have no significant differences to share the next basket is when to be looking at how folks view of the u.s. leadership policies and so forth. so first we are going to revisit their beliefs about whether or not obama is any better or worse for pakistan. and again in analyst differences, and baluchistan being more optimistic this is going to be a better outcome. i want to talk about nwfp again because it is being in a way i think it's counter intuitive. so, before president obama became obama when he was on the campaign trail, much more than bush he was very transparent about the utility of predators

strikes and he said we are going to continue doing this, this is an our national interest. if you look at president bush how he handled this this is a situation of denial until the end of his elected term. the first several years of predators text the u.s. was in denial and you look at the earlier press reports when journalists would say these were american strikes stripsach chollet silence if not maybe, maybe not we are not going to confirm orders confirmed the end of the presidency mo obama more so than bush was clear this is a tool that is useful. despite those clear proclamations, folks in the nwfp think things are going to be better and i'm going to say as an aside, in this survey the overall -- the overall survey pakistanis were uniformly opposed to the predator strikes. but if you look at the data collected by arianna that only focuses on fata, remember, we

don't have fata, most people don't bother because its owner is to get a good sample in fata but arianna did a sample of fata and what and say it's a scientific sample. but nonetheless when arianna went into fata and asked about padron strikes they were on the name supportive so in other words people their living next to the ttp who say every day with these guys are up to as well as al qaeda, using the ariana's data is a metric. folks were more positive about the drone strikes and i do know that iri using the same we are using is a large survey and fata. the results are not public yet and i believe one of the issues they asked is drone strikes. swished keep an eye called for the iri. but the punjab is on the range things are going to get better. in fact more people think things are going to get worse and similarly in the punjab, the

residents of punjab are also more devious than nwfp or will it just on. now the next set of questions i understand you guys asked these questions of a lot of countries and so -- these particular questions. so these may kind of scene kind of strange they are included here that they routinely ask these questions of the countries which it operates calibration how pakistanis view these particular issues and because they asked this question in pakistan it gives a trend line how pakistanis see this like to my knowledge you guys haven't productive forces on the variables so we don't have a trend line with the differences. but we did ask pakistanis what they believe to be a u.s. goal and the first question included here is the creation of a palestinian state. now, again, the nwfp is a complete out liar. i don't know and body in the world people in the nwfp would have this view. obviously, overall there is not a lot of optimism in the punjab

or sin that this is a goal and in those provinces vast majorities think it's not a goal. again, baluchistan folks are more ambivalent than the rest. now there is a reason this question is important in pakistan. i spent a lot of time looking at militancy in that country and even though the militant groups haven't sent folks over although there was a side on and i think in 2004 that involved pakistani -- they were brits but they were pakistani origin that it and it is beside bombing and on the mean that pakistan militant groups are contained in the theater and in the theater i mean afghanistan, pakistan and india with few oddballs popping up in iraq and elsewhere. but what i have found in the literature of the pakistani militant group the palestine issue is a huge motivator so if you look at that type of poetry and posters of been collecting the magnum-opus and the palestinian issue is a recurrent

theme across the militant groups. so if you are thinking about what might be in metric of support for some of these militant groups this actually is an important question even though it's also useful in benchmarking pakistan. and so with that caveat as i said, nwfp is certainly an outlier. going back to the u.s. goal to define islam, again this is a question that this be in line asks over the years and when you see overwhelmingly folks seem to think this is a goal. but again, nwfp is and how lier and because we see nwfp appearing in a series of questions is an outline your it makes me more confident we are measuring the opinion of people as opposed to this being some sort of freaky point estimate error. and again, baluchistan is an altmire again, very similar in fact to nwfp as we have seen in previous slides. now, the wingback we should

perhaps reorganize this, should have gone with the first batch but looking specifically at al qaeda in the activities of bin laden and again, this is framed because many folks don't know the word al qaeda but they certainly know osama bin laden has a lot of brand name equity now. again variation. with the largest on generally being an outsider and again i suspect that is because they haven't borne the brunt of islamist violence. that being said you're looking at variations among those who say it's a critical threat a vast majority of folks think that al qaeda and bin laden are bad news. returning to the question of afghan taliban bases in pakistan and whether or not the commission closed on the space is even if requires the use of force, again, you see pretty strong provincial variation. nwfp and the punjab as well as sindh are very well of the

belief that it should also in the nwfp also have one in three say that they should not. baluchistan again is really ambivalent and sindh overwhelmingly supportive they should shop these guys down. al qaeda training camps in pakistan we ask the same question whether or not pakistan should close them down even if it requires force. again we see a similar in our provincial variation. sindh much more vocal than the other provinces. baluchistan much more ambivalent and again nwfp in little bit more than one in three think that the pakistani authorities shouldn't shut them down so the break out here is rather similar to the question posed about the t teepee. so this is an interesting question. pippa has asked this and other questions and correct me if i am wrong but i think the motivation of this is what pippa is trying

to do is -- you could certainly i imagine that you support a tax on the united states and support al qaeda's goals, but al qaeda schools are much more expensive than simply attacking the united states, so it's also possible that you could share many of al qaeda as other goals but reject a tax on the united states and then there's the basket of people you would like to see large numbers on, those that don't share al qaeda as views on the rest of the world and also oppose a tax on the united states and again you see interesting variation against the provinces. the punjab has the highest percentage of people in the category that we would like to see more of. they oppose al qaeda and attacking us. in the nwfp and this is contradictory to the findings we found on the other slides, they are more likely to support attacking the united states and more likely to share the attitudes, al qaeda attitudes

towards the united states. baluchistan interestingly enough opposed the attacks on americans and shared many of the attitudes towards the allied states, so this gives you a good flavor how people in these different provinces align themselves to the other goals of al qaeda specifically in the violence al qaeda seeks to perpetrate on the americans assets, people and so forth. again, turn to osama bin laden, over the years when you see polls on pakistan it is difficult to get a solid trend line with the think about bin laden and clay can give you a sense of the previous years of asking this question. but again you see interesting variation. so the majority, slight majority actually a positive attitude that there is some considerable ambivalence, 40% are mixed, 47% are actually negative and the punjab is where you see the least level of active support or belief that bin laden is an okay

thing or an okay guy and actually along with baluchistan you see the largest number of people who have an explicitly negative view of him and in sindh using more ambivalence going on. and that's it on the in their provincial differences. thank you. >> thank you. >> good morning. when i was asked to participate i told like as it blows clay i am not a big fan of public opinion polls. this was back to college pulling potato chips and highways. we simply manufactured the data in both cases now. so very skeptical of the process but i do find it important and useful in some ways and perhaps looking from a policy

perspective in unexpected ways and i think of once when i briefed bill casey about the first war in afghanistan, the first american war in afghanistan, the head of the cia and somebody said well, in punjab they don't do this or that and he said where is punjab and i thought we have a problem here is the director of the cia doesn't know where punjab is. so i think that polling is useful if it cancellara the education process and i would particularly like chris's add-ons because it forces you to think about the differences between parts of pakistan. but i am deeply concerned about is the notion of pakistani public opinion. there is no stand public opinion excepted is manufactured by the polling organizations which may be useful in a sense if there's a pakistani opinion as identified by the polling organizations that gives us and

pakistan governor something to talk about and to the degree pakistan emerges to words being i want a space but more participatory state that's useful in a sense the pakistan government may have to take account of its own public opinion as defined by american pollsters perhaps in its policies which i think is a step forward so from the point of view of american policymakers who often know nothing about a region or country polling forces them to think at least generalize about pakistan and in chris's caisse what he's done with this data critical difference between provinces. i think my analogy in india the attitudes of more than the ins and south indians or indians in the east and indians in the north towards kashmir are enormous and they don't even know where it's at and punjab and it's in the vital interest and concern for them so there are important regional differences in pakistan and i like chris's use of this data to

bring these out. and her theories and explanations why the province is different. however the polling itself, and we simply sat down and manufactured and i know in my experience in india in lot of the stuff is fabricated to suit the customer. that is what we were doing in fact. so let me talk about policy implications and then be brief and move on. what he moved on to questions. i think polls are an educational tool in the sense for the policymaker if you get them to sit down and look at them especially if you have nuances and differences and if you can do them over time and what struck me about this was that the earlier numbers of don't-knows and no answer for much higher than the lighter when you explain why, but i think that is a critical issue and when the daytime series it was interesting.

let me say first pakistanis have been bombarded by propaganda of all sorts for generations right from the beginning of the country. this is a country that is grew up on anti-americanism and you can buy the elders of zion, freely in the bazaars and a lot of this was state-sponsored in fact even recently yet the government of pakistan accusing the indians and americans of colluding against pakistan to break up pakistan. so a lot of this is a country that's been subjected more than perhaps any other country i know to systemic systematic brainwashing of its own population. so i think that that didn't matter in a sense we didn't care about from a policy point of view because we subcontracted sweet didn't care what they thought. the rig is entrusted with the polls said because we didn't -- the people didn't care. it didn't matter and who knows

what the people are. craig had people who don't count, they don't have uniforms, they are not aware friends. so the polling was irrelevant until recently but i think pakistan has sort of a democracy of living the direction of democracy are participatory system. the opinion of people does matter as i said earlier we may be creating a pakistani identity or public through these because i am not sure if the pakistan government itself has any kind of measurement that's interesting. >> [inaudible] >> they do. then i wonder if there's correspond with hours or if the of people like me doing their polls which means forget about it. so this has changed now. is a radical change in attitudes towards pakistan and this began the last year or two of the more recent bush administration that it wasn't simply with the military fault president general musharraf fault. it was with the pakistani people were thinking and where they were going and i think the

realization occurred that pakistan could be and is in fact now one of america's biggest foreign policy problems. this wasn't american policy in the executive branch but it certainly became the policy of congress and now the kerry-lugar bill epitomizes this concern about the future of pakistan and added the pakistanis towards their future and a whole range of issues. so i think that public opinion polling is now more relevant, but again, i caution policymakers about taking it too seriously. well but be useful in my point of view would be if you could to construct these polls in some ways to look more carefully at age differential and class differential among those who respond you might need a larger sample by and very interested in what this 17, 19, and 200 votes, even 15 to 20-year-old is think about the future of pakistan. that's going to be my next project and a sense. how do they see pakistan, how do

they see america? the people are going to be running pakistan ten or 15 years from now particularly in punjab frontier, the critical power in pakistan and military power in pakistan. how do they view the future so i think would be useful for the future to do questions and say and the list of all the possible futures for yourself and for your country, for your province what do you see as most desirable or least desirable? i'd like to see that, it would save me english trying to figure this out myself. so i think that polling, that kind of question might give policymakers a little bit better idea what are the deepest concerns of pakistanis of all sorts especially young pakistanis decides to you like the taliban comedy you like the taliban and so forth. that seems to follow headlines. with the anti-americanism is deep and persistent and would be useful if we could figure out why besides having been

subjected to propaganda from long time and which sectors hold these views more intensely than others. frankly i think american policy should now only address this question directly through much greater expansion of libraries and exchanges and so forth but when we come across people systemically lying about us for one reason or another i think we should confront them as a matter of policy and not give them a free white challenge i think openly and publicly to why do you say this, why do you believe what was it, colonel ralph peters, director of american policy, that's one of the fantasies that circulates among the highest levels of the retired colonel. subways in virginia somehow shapes policy towards pakistan along with the indians inclusion. so i think the polls will show this is widely held belief even among educated and influential pakistanis i think is a matter of policy we should go after these people and come from them

with what we know. second, clearly, we have got a huge weapon in our arsenal. president obama. and i and my son writes about these kind of things, how you monetize or establish the value of an intangible asset. i would see the obama speech in cairo was at least $15 billion his interview which hasn't been publicly commented here the certainly had an impact maybe that is a 10 billion-dollar interview in other words when we but have had to spend that kind of money to get that result couldn't spend any amount to get that result so i think the educated and affluent pakistan into and so we have this great arsenal and he should be used judiciously but clearly his statements of other american leaders when holbrooke went to a refugee camp and stood there and talked to people these kind of direct actions by american politicians and leaders and diplomats are critically important and worth more than

billions and billions of dollars so i am not sure if you can measure this but i think from a policy point of view it is worth pursuing. a few other final points. now do we need to worry about pakistan in terms of where public opinion and public is going in pakistan? yes, i think the administration is coming to the conclusion that it is perhaps more important afghanistan. as with the pakistani people think, what people said fink, different kinds of pakistanis, i think is going to be important for american foreign policy for the indefinite future. that's why this has to be from our point of you and not simply one time effort one time shot but more enduring relationship. that gets us into other issues but polling provides one window into the attitudes and minds of pakistanis, different packaging publics and therefore i look

forward to the next performance. thank you. >> thank you. we will run as long as we like for 20 or 25 minutes on questions and discussions, and i know that christine has an observation and while you think about and prepare your thoughtful brief question for the panel, and i would like to pose a simple question for the panelists. all of these people have to go back to their office today probably, you will go back to your office and someone will say where were you this morning and you will say a presentation on public opinion in pakistan and you should be able to tell them one interesting and important thing that occurred to justify this 90 minutes, and i would like to ask our panelists if

they could help the audience with one thing they found interesting or important from this public opinion research. would anybody like to start? christine? >> to all these folks that work on public diplomacy you can't change what pakistanis think until you figure out what they think and why, and i feel we have to move away from this idea of pakistan as being this coherent thing where everyone thinks alike because when you actually look at -- the other survey we are doing we are looking at age differences because we have a 6,000 persons samples we can do that. we look at gender, urban, rural, province, age. when you find as views are held differently across the country's public diplomacy folks have to figure out what they think, what sorts of information to the consumer and they have to stop thinking about pakistan because they are multiple pakistan's.

>> any observation, clay? >> well, to me the thing i have gathered from this whole process is that many observers and reporters of the pakistanis seen over the last few months have said they're seems to have been a change in the pakistani public opinion and for good or ill the tools of social science turnout to say the same thing. so, either both modes of knowledge are wrong or both moves are right now. the other key thing for me is to understand this greatly increased negativity and skepticism towards religious militant groups in the country

does not bring with it any sort of automatic reinforcement of other attitudes that the u.s. would like to see for its foreign policy reasons and so, this should always be very clearly distinguished in people's minds. >> thank you, clay. >> i think pakistan is evolving a new identity and there's a new idea of pakistan. and that idea certainly now does not include any favorable attitude towards the united states accepting commercial you give us this and blight do that relationships why think it's important we understand what kind of pakistan may evolve in the future. the polls are good and offer some trends if they are well done degette the deep reasons for attitudes. so i think it's important we understand pakistan may evolve in a way which is clearly

pakistan identity but we may not like that is you may have a more coherent organized pakistan but pakistan which in some ways rubs up against american concerns and interests. >> thank you. >> can i make a few comments? terrie briefly. i share skeed skepticism about polls and going through the train i will not trust any poll but i want to show how polling has changed even to and pakistan. my favorite story is the international public institute who uses the same firm that we use here collected as you know since 2007 live data about the use of musharraf and they asked a question what are your views about the army and what you saw is the public opinion about the army actually declined throughout 07. everyone knows that. the asked another question to what extent do you think less of the army because of president

musharraf? majority of people said this that this was their view and musharraf was so angry about these polls he said you pollsters are destabilizing the region. he went on and on and on and he actually kicked out the chief of mission to iri starting others interesting dialogue and you're point was absolutely spot on the fact that you've got folks talking about -- you have folks collecting data but pakistanis think feed into that government and even a military dictator like musharraf and the end was brought down through mobilization of civil society and what people thought so as a barometer i think these polls are important even though any point estimate should be taken with some dubiety. >> thank you. one of our assistance will bring you a microphone so that viewers can pick up the question. copperhead come investor. >> thank you. thanks very much.

it's a very interesting set of results. i have some questions about the questions that you asked. those focus on bases in pakistan struck me as not really focusing where their real problem is. i don't know whether there is pulling history that dictated that and the question on the goal of the taliban was binary, either take all of pakistan or take over only the nwfp. there are lots of other possibilities. but it also seems to me there's an interesting timing question that you didn't mention and that may help explain a lot of your results and that is this happened ten days after the government's highly visible decision to go in militarily in swat. to me that sets up where you have the maximum on popularity of the taliban and i was struck in the regional differences by the fact that taliban were on a popular everywhere.

it's just a question how much and how intensely. it struck me also that that might explain this otherwise this are finding in the nwfp about having highñi confidence n the government army to handle things. i think this may have been so wish father to the thought i worry about answer would be to the same question in this day august if the displaced people are still away from home. ..

they would say these pashtun the different values and cultural commitments and they are more religious than we are, so even when we are redoing the enumerator training in april pakistani's for already registering concerns about what the impact would be on the idp's throughout pakistan and many of them actually drew parallels to afghan refugees in 80 so i know my colleagues and i, we are doing our 6,000 person survey which does address my other question that steve vast, we are interested in what do people think about their future, not just their past but i know we are interested in doing surveys. i am pretty sure i iri's is doing questions on the idp's. >> thank you. a question here. anda microphone will be with you

in a moment. >> thank you very much, for an excellent report. i have certain observations. i have been a professor of sociology. currently and in working on a demography project here at the center. i have certain observations. first of all, i think i do agree with professor cohen's remarks because i work in the field and then know quite a bit of problems which have happened. i am from sindh, from karachi years i was there, and i think that the observations you have with sindh are very striking.ko i think there areñryis÷ liberalççç province, 50% of ç population live in urban areas.

yes there are a lot of pashtun pekingese--t( speaking people, pastuns, because apparently reflecting their views,

would be in favor of the al qaeda. or some very high percentage, and 90% of them would be not excepting obama's these because i was there immediately after the last elections and i did some work with the opinion polls for local magazines and i talked with the people and 40% of the senator population are extremely fond of obama because they have spent time there, so that this what i was interested in knowing. what i think my solutions are, that when you do these surveys and i did a survey of 100,000 households in pakistan including in fatah about mental health and child health, and we used to do 5% rechecking, and it was about 5,000 revisits and if you are doing positive interviews you can at least have 100 dues.

using the same forms but to different renditions would be problematic because they may tally their previous results, just reminding you about the problems, because-- my solution is that agreeing with professor cohen's remarks. as a demographer and i know there's a huge push. 60% of the population are the future leaders of pakistan and many of our countries. there are more younger people in pakistan, the ages 15 to 29 then iran and afghanistan. also people who matter, educated people, they are the ones who writes in english newspapers. they have been the opinion. the majority of the population, 60% right. i don't know if they would know all of the intricate questions

you have asked. thank you very much. >> i just have wondered to observations in a broadway about polling in pakistan in general polling in the muslim world. something that we have found is that our samples tend to be slightly more educated than the population as a whole, so i think the issue that we find challenging is not, not representing the lower income, less educated people because we tend to find that it is easier to complete interviews on topics like this with better educated people. this issue of what the young people think in the islamic world comes up a lot, and i am sure it varies from country to country a bit. generally, we haven't found when we have done analyses of young people that they are

substantially or dramatically more positive to american or the west than the population is as a whole. those are broad generalized statements, but i think that represents at least our experience at looking at the demographics of our samples in the muslim world, and also trying to understand how the young people are approaching international issues. >> whenever i go to pakistan i try to visit classrooms, professor friends and talk to students there, and i would get the opposite conclusion. in fact, students that i met both in karachi and locore and islamabad were anti-american. this seemed two of sorbic more of the anti-american propaganda an internalized it then the rest of the population. >> i think that is reflected in these provincial distributions as well, that is one possible explanation for some of the

things that chris was pointing out is puzzling is that in questions that are just focused on the u.s., in the provinces that are more urban and better educated, they are tended to be larger majorities giving anti-american answers then in those provinces that were less so. >> i have a couple of concerns. i really take your point and that is why i said this is not a sample that is selected to be provincially representatives of that is why we were cautious in which ones we presented. in the sample, the survey we were doing with jacob schapiro at stanford, we are going to be looking closely at the issues that you noted segui at actually asked to see the enumerators-- the grid by which they select homes. we were also asking to see household by household what the

refusal rate to participate is and one of the characteristics that are observable because i think if you are not going to-- are you in an apartment building, are unan urban or rural area so in the 6,000 persons sampled we would ask me paid for because you have to pay for these things come to get the information about the super dissipated and does it didn't so we can precisely look at that issue but we are very cognizant sell at the sixth person-- and so some of the issues that came here because we have similar questions we are going to be looking more robustly so i'd definitely take your point on the sampling issue. i guess, and i think sindh has that lumbee soup problem that you have an baluchistan particularly in the urban areas the constitution of the urban areas are quite different but on the age thing, this is why i am very skeptical of tabulations. i think the only way you can look at the impact of the urban,

rural age or of the demographic information as to do an econometric regression, and so my colleague jacob, because of the things-- is that urban rural or interprovincial because the percentage of urban rural is different with the provinces so the interprovincial difference up the urban world? we don't know so the only way you can do that is their regression. when jacoban and i looked at anti-americanism, i hope i am not distorting the results because they are different results but we found similar things about youth being more, they are certainly not more pro-american and limited the ron survey, if i remember correctly young people were somewhat different in their views. i know when we looked at this in the regression analysis there were and the-- but you can only do that, he could only say definitively what is the impact of age by doing a regression analysis. >> okay, questions?

>> thanks. i am a foreign service officer and i spent two years in the foreign service in 30 years in afghanistan. >> i think it is working. >> i also did a lot of work on research. i am skeptical of your pole dating. i think it is very difficult to come to conclusions based on a broad spectrum. if you take all these people in this room he would come up with all kinds of problems in poland. anyway, i have two questions if you don't mind. one is the speculation on what are the sources of these impressions you have tested four, and i wonder, to what degree, since the two groups split between the border provinces with afghanistan and the rest of the country are pretty pronounced, to what degree is the effect of pashtun

phelps in these statistics? it goes much deeper than islam, and it is the traditional code of ethics and conduct. for example, osama bin laden is a foreigner, just like americans are. and that effects, and certainly did in afghanistan and continues to do that in afghanistan, fix the impressions of the afghans of anybody who does not belong there and therefore they should leave. that is pretty fairly standard and i would expected to be reflected in the pashtun population. the second possible x blanding factor that i did not hear very much up in the result what is the impact of literacy and help people get their information, which formed these attitudes. most of the block of border peoples are the good illiteracy

brings much lower. i think the gentleman here would agree although it may be 60% in the big cities, you get out in the border, it goes, falls down to 12% and women in particular are not educated. for the same reasons, everything is intertwined. aidid aref best, but i wonder on the causality is as important as the findings of would suggest and i wonder if he might comment on that. >> in the way that you are scheduling polling data i love this idea of pashtun qaly. i think it is so reductionist and it really assumes that this thing is actually not changing, and when you actually look at pashtun qaly by the metrics that were ordinarily considered it is changing. the sidey of traditional hospitality is utter rubbish. it is a pay as you stay phenomenon and people have bridge themselves by taking money from hosting foreigner so i think this question-- cost in

qaly notion to explain the unusual behavior needs to be interrogated very seriously because across the belt, this is interpreted differently so for example in swat americans love to talk about jirga as. so, this idea of pashtun qaly obfuscates, and there are enormous, within provincial differences between literacy rates overall and between male and female. and that the fund a variation within provinces to be much more significant than differences between provinces and actually if you look at the data, folks and baluchistan are less likely to be literate all else equal compared to people in the nwfp, so i encourage people to not assume because the border areas, because-- that they are less literate than folks elsewhere in a few actually look at world bank data, a team at rates, you

see families are making different choices. families are investing in children in a very rational way so it is true that in the tribal areas women are less likely to be educated but this is not necessarily-- asim this. it is in that artifact education is dependent. in parts of the country people world spent-- send their daughters to school only if there's a school nearby and the biggest determinant, and this is true of the pen job as well as the nwfp and bateh. they will not send their girls to school if the school as far away as though i think you really have to think again not about these reduction is categories, because when pastuns are behaving in other parts of pakistan, they behave like pakistani's allosource so i don't think that is really what is explaining it is the short answer. >> let me add a reminder that we showed some provincial breakdowns because for purposes of policy, it is really

important to understand how attitudes might be distributed differently in places where there is a war, then places where there is not. it is just putting it very crudely. the great majority of findings over all in this study do not show these big differences. the other point i would like to make, has to do with this idea of identity, that somehow, if in fact, across four provinces everyone winds up with the majority of agreeing, saying the same thing, that that means that some kind of identity of pakistani's is being manufactured here. since we polled the internationally, we document many, many questions in which people are on opposite sides of the world, happened to have

majorities that answer question the same way. that doesn't mean that they are sharing an identity. it certainly means they are sharing something but because they are in a big-- worldwide they all have some impact from media, which is in turn worldwide, they are sharing the same universe. they don't have to share the same my dignity to do that and that is equally true. >> we have had a particularly lively discussion this morning. and i think we have time for perhaps one more questions or two. why don't we ask them together and try to address them. >> thank you. particularly interesting to me to see the variation across pakistan in the attitudes. i have hopefully a brief question. this survey along with several recent sure bates show pakistan

attitudes towards the u.s. are exceptionally negative. usually pakistani ends up at the bottom of the heap. your recent w poc gray-- obama's surprisingly is 2-1 negative orice the 20 countries are 2-1 positive so with one thought, if only we could present pakistan in the world, president obama would help us. that doesn't seem to have worked so much. my question is, what might work in terms of this survey, what might turn pakistan attitudes in a more actually normal direction as other questions? >> thank you al and the lady in a brown top. >> i am interested in what you said about the nwfp and if i remember correctly-- you said the poll data show that there

was some inclinations toward the u.s. policies in fought tougher joint attacks compared to other provinces, and maybe some sympathies or more optimism about nwfp, and but at the same time, there are some more sympathies toward al qaeda. do you think that the shift in opinion kind of presents an opportunity diplomatically speaking? >> okay, to slightly related questions. would anybody like to-- >> i think i can go first, and let me take the last question first. one hypothesis, and i am saying this is somebody who is not and have never been a full-time student in pakistan, is that there is a, the people who are

farther away from what i will call the pakistani metro polls have let's or a different mix of education and that they are less ideologically formed, that their views don't necessarily all line up in a row properly, certainly less so then someone in an urban area. so, you could postulate a person who says, americans should get out of our neighborhood. that obama, he does not look so bad. maybe it could be better. perhaps this all tumbles down in one breath for someone, and that is, you know, a much looser in that kind of way of thinking relative to ideology.

i am sorry, let me give you some time. just briefly, steve can also hot in here, americans when dealing pakistan it had a lot of false by nares. they assume that if you are anti-militant you must be for america, viewer pro-musharraf you must be pro-american and what i have seen both in hanging out in pakistan since 9/11 as well as the poll data, that this is in fact the fate by mary. you can think al qaeda is great and that is absolutely uncorrelated to you you americans except an econometric models where we find, gallup'sesque folks, the fine radicals, and then they looked at what explain that belief and they found it was not religious-- reo at religiosity. it was their beliefs about america, so only in these

econometric models to you find these kinds of correlations. in terms of opinions about any particular question, that they are absolutely not collected, and wendy chamberlin made a really interesting remark about the cairo speech, and i went and sure enough she was right. he never mentioned kashmir, and in the indian press, it was we won. he did not mention kacmarik and in the pakistani press it was like, he did not mention kashmir. so i think obama for pakistani's is a mixed bag, but one other thing about obama that i think is really important, and i think it matters. the last two trips i have made people were not happy about this. obama the candidates talked about kashmir being important. we talked about a regional approach. we talked about a special envoy and in the original formulation of that, india was involved,

kashmir, there was this idea that to stabilize afghanistan had to stabilize pakistan and to stabilize pakistani had to get and yet to be nice. when the special envoy caymen, the well-heeled indian lobby threw up a storm of the word i won't say in the next thing inouye ndn kashmir were removed from the portfolio, and that was a victory for the indians but in the zero-sum game of pac in d.o. relations it was seen as a, evidence of the indian influence. so the fact that they could get out of holbrooke's mandate, kashmir in india, this was seen as very disappointing and its, it emphasized ord reinforced this idea that the u.s. has a strong come a long term relationship with india and a very short term transactional focus on pakistan that is really about stabilizing our war effort

in afghanistan so i think that is partly why do you see these very strange figures about obama were elected to obama standing in other countries. it is very particular. >> stephen a few final words. >> i think part of the problem is the pakistani identity and the pakistani people have not had much to boast about recently in their victory in the world cricket cup really made more than all of the things we have been talking about in a sense provided pen pakistani deadended the about the health the future. itis student that did a study in indian national and she concluded it was bollywood-- so pakistani the film industry as well as a cricket team and i think we perhaps this is an opportunity for encouragement. >> i will go watch that. >> nobody answered his question. how can it be improved? >> i just said it.

[laughter] [inaudible] >> well, i think chris's answers the correct short-term point myself. >> and what steve said. we made deceptive use to the fact that we have a historical legacy and the future we should be happy with the category where pakistani's reject militancy but still think we. >> i do think that kashmir has to be in the discussion and if it is ostentatiously excluded, than that is a real negative and if it was brought back in, it would be ostentatious whether we like it or not, but i do think that is-- that would have some impact. >> i think we of to understand the terms of the pakistani self image audacity in dma play a larger role than we do and the indians can do more to help or hurt pakistan then perhaps we can and we should stand back and

let the indians work it out themselves with pakistan. >> thank you all very much for your attention and a lively discussion. [applause] [inaudible conversations] [inaudible conversations]

[inaudible conversations] [inaudible conversations]

>> over the july 4th weekend notable americans on c-span, stories from inside the white house, domestic policy advisers on the president from richard nixon to george w. bush. honoring president ronald reagan, can burns on his career and the upcoming series on america's national parks, a tribute to the late writer john updike, a two-time winner of the

pulitzer prize and a reunion of the apollo 8 astronauts and there are more books and authors this holiday weekend starting friday morning on c-span2's booktv including in depth sunday with historian and author john ferling. find out what is on any time at c-span.org. >> these places remind me of modern cathedrals that donors would build wings on, hoping they would go to heaven. >> walter current, crenson questa 83 would like to see a few changes to the higher education system. >> i think crenson philosophy would be on the web. i think these wonderfully concentrated islands of talent and wealth and area addition should be opened up to the larger society, not cultish lee kept separate, which they still are and i can understand why. >> walter kern, the