transparency and accountability to finance transportation

projects throughout america. today i want to share our accomplishments and plans for the future. today the department has made nearly half of its funds, $22 billion available to states so they can greenlight priority projects to rebuild and modernize roads, bridges, transit systems, airports and seaports. we have improved over 6,600 projects for highways and other transportation projects nationwide. of those, more than 3,200 rhodes, transit and airport improvement projects are underway right now. with our model agencies are doing an outstanding job of making recovery funds available as quickly as possible. so far, the federal, aviation administration has allocated virtually all of its stimulus funds, more than $1 billion to airports all over the country.

the federal highway administration is obligated nearly two-thirds of the $27.5 billion appropriated by congress. more than $1 billion in new amtrak projects have been approved. and for public transit and unprecedented $3.2 billion in grants have already been awarded and another 5 billion is in the pipeline. in the coming months we will begin awarding grants from the 8 billion-dollar fund to develop a high-speed passenger rail corridors, which has generated a great deal of interest and excitement around the country. and our discretionary $1.5 billion tiger grant program will investing priorities which are multi modal projects to make sure more competitive and enhanced livability and sustainability. thanks to the excellent staff work and productive relationships with state dot officials every state that the

congressional deadline to obligate 50% of the highway formula funds allocated to them within the first 120 days which is what congress asked us to do. transit agencies around the country are on track to meet a september 1st deadline for the same milestone with 50% of the formula funds obligated. and speaking to governors, mayors, state transportation officials and private contractors all over the country i have been, since i was sworn in on january 27, 24 states and 41 cities, and i have found there is widespread agreement that without these well timed federal investment in the infrastructure and state services, our economy would probably be in much more worse shape. while the recovery act cannot make up for all the jobs the economy has shed every single job and helps protect or count as a victory. over 5,000 jobs have already

been supported through spending on transportation projects and we estimate that over 500,000 jobs will eventually be supported once the full effect of the recovery act is felt in the transportation industry. 500,000. i also want to highlight the success in overseeing the complex program while keeping the promise to america to meet the highest standards for transparency and accountability and i am happy to report that in all 50 states and territories not a single case of serious abuse of funds has been identified. that is a remarkable achievement for a fast moving program of this scope and i'm very proud to say no earmarks, no sweetheart deals, no boondoggles. a share of the credit goes to the d.o.t. management team for the recovery act known as the tiger team to help keep on our implementation on track, keep the funds flowing and create a

system for meeting all congressional requirements. in addition, we completed three phases of risk management plan for all recovery act programs and we will continue to update plan to insure all dollars are spent effectively. as a part of this plan we've developed a new list assessment tool that's been adopted by the office of management and budget for government wide use. this tool provides a strong foundation for managing our internal control process. and our accountability executive board continues to work with the d.o.t. office of inspector general and the government accounting office to maintain open lines of communication with all the tears so we may identify and address any concerns as early as possible. i am confident that years from now when we look back on the american recovery and reinvestment act we will recognize the investments we've made and infrastructure, energy conservation, education and other vital needs market turning

point in our economy. the american people have said loud and clear they want us to rebuild the roads and bridges, build clean and green public transportation systems to help ease traffic and justin. we are putting americans to work doing just that. i look forward to any questions any of you may have. thank you, mr. chairman. >> let me just review the bidding so to speak. the recovery act provided $787 billion in spending and tax relief. 183 billion of that has been obligated on july 10th. which means 28.8% has been obligated. nearly one-third, nearly 30%. but if you go through -- and you've made powerful testimony, each one of you with concrete evidence and with anecdotal illustrations to the effect -- the fact this is working and if

we have not donner we wouldn't be suffering severe consequences or catastrophic conditions. but in mainstream american people are still saying i don't see the relief yet. i don't feel it. when can we tell the american people that more benefits than more effect of this particular project recovery act are going to be felt and seemed in our daily lives and their job and work and things of this nature? can you give any sort of expectation like that that we can carry back to our constituents? >> mr. chairman, i would say first of all we are already seeing the effect on the ground through the illustrations that i and my colleagues had. there are already people who otherwise would not be working if the congress had not taken the action that it took and the president's leadership and that resulted in the stimulus package so i think the effects are already seen on the ground. secondly, this is a program that is supposed to work overtime.

it was not supposed to essentially be the magic one that from one day to another would take the economy out of the deep ditch it had gotten into, and so the congress right fully set forth in a longer-term program or 18 months to get the money out. and so you will see jobs created during that time period but also into the future. and our own process and the department of interior we recognized in the contracts we are letting out we will have people employed now and into the future but also there is a very positive economic impact of these investments because they will create jobs long term. the kind of projects we are investing in are going to create a part of the economic engine for ten, 15, 20 years down the road but i think the american people are going to see the effects in a very significant way. >> thank you. >> mr. chairman, i'd start by saying 33 million americans are today receiving the benefit of

increased payments and food assistance payments. as i indicated in my testimony family of four on average will get about $80 more to be able to spend at the grocery store and because it generates economic activity by virtue of the fact that 97% of those resources are spent in the first 30 days, it means more rigorous the items have to be stocked, more have to be trucked and processed. more product has to be sold in order to process the additional food that's being purchased. so 33 million americans are getting benefits right now today and have been the last several months. i would also say that if you spend any time at all and food banks as i have, you will see that the additional emergency food assistance that the recovery act provided is helping a lot of families have nutritious meals particularly for america's children. we have unfortunately still today in this country 600,000 children who are hungry. these food banks make a big

difference in the lives of those youngsters. third, i would say that when you are looking at, as i've indicated, several hundred facility project these are for the most part construction projects putting people to work and the chances are very good these are local contractors. they are expanding libraries, building day care centers, they are working on expanding health care facilities in several communities. at the same time those activities are taking place, several thousand people are already working today on the forest service projects and roughly 3700 folks are employed because the watershed work that we are doing and the water treatment plants we are building. in those communities, and there are roughly 40 states that have been impacted by these benefits, in those 40 states when people turn on the tap in many of these communities they are going to have clean drinking water. so, while there will be time for additional jobs being created as a result of our investments i think it's important to see this

recovery act in three components. first, allowing people to transition for tough times. that's why you expand on and limit benefits and provide tax relief to 95% of working families and increase net benefits. at the same time we are doing the work americans want on the want their roads improved. they want bridges to be safe. they want dams to hold the water. they want to improve their community facilities in rural areas. that is taking place, it will continue to take place the next 15 months. and at the same time, americans understand we wit to our children and grandchildren to build a foundation for a 21st century economy which is why high-speed rail, the broadband initiative, the smart great investments that will be made will build a much stronger, long-term economy for this country. so, it will take some time for folks to see on and when rates drop. but the fact that the stock market stabilized, the fact that credit is a bit more available, the fact that there is a better attitude in terms of long term i

think is a reflection some of the work of recovery act has done. >> i will add to this question to you think that we undersold boosting expenditures in the projects in particular surface transportation project -- to think the request was $32 billion of the amount that finally came through was $20 billion. there was some dispute whether or not the highway money could be schoeppel ready and put a quick use. do you think we undersold the potential of the highway -- highway investments? >> mr. chairman, i will tell you what the reality is that the money is -- much of this money is out the door. as i said, i've been to 24 states and 41 cities around the country and everywhere i go i see orange cones all over america and i see thousands of people working. and i talked to these people. all of these people i talk to,

without exception, were on unemployment in january and february and march and they are working today. they are building roads, building bridges, buildings runways at airports. every airport i've flown into this taken advantage of the billion dollars that is now out the door and people are resurfacing runways, resurfacing roads. part of the problem for us at the dot is that we said we wanted projects that were ready to go. well, in order to have the states to spend the money the legislature had to meet in some instances legislatures had to appropriate the money for the project and some legislatures have taken their time doing that. other legislatures had to pass capital budgets in the instance of illinois which the governor just signed, which is to match money where some projects under t. lu. there was no match under this. so, whatever delays were caused were caused by the fact that legislatures in some states wanted to have their say on how our money was going to be spent.

but there are a lot of projects going on in america. and there's a lot of money out the door over $20 billion is out the door and almost 7,000 projects are funded and many of them are under way. i just met with some folks from the michigan delegation where they don't have the kind of match money they need for some of these projects under the team will bill and we figured out a way to help them soak in instances where states have had difficulty we've worked with them but i believe we've made a difference. i believe that if you look around your districts, and i say this to every member. and you go to these projects and talk to people that are working what they will tell you is they were on and on and play that role in january and february and now they can make their house payment and car payment, put food on the table for their families. that could not have happened without these funds. and i thank converse for the

courage to pass this kind of opportunity for america. we are putting people to work. >> thank you. >> in gainesville wisconsin which is my hometown and a town i represent the admin plenary is 13.2%. it's just about at that level in every other county represented. so we all want to get this right. this is the worst we have seen in most of our lifetimes. so, getting the stimulus and getting the recovery might really matters and that's why some of us are concerned we are not applying the right medicine at the right time for the economy to get jobs growing. that's why we are concerned about the forecast of many economists that we are going to have a jobless recovery and that's why we are also very concerned even though the stimulus is starting to possibly be can write a around the corner at the end of next year massive tax increases are already coming into the law. tax increases on investment capital, tax increases on

workers, tax increases on small businesses, and now we have a proposal that we may be voting on next year that's going to put more tax increases on business is bringing their top tax rate above 50%. so we think the fiscal policy coming out of congress, this can't we is the wrong fiscal policy. a week ago i went over to the bureau of public debt. ms. loomis and i did this, and we spent about five minutes watching smart employees of the treasury department in a room with a bunch of flat screen tvs sipping coffee borrowing $40 billion in about four minutes. and we are doing this every day the treasury department. and we are being told by economists and bond traders there is going to come a day where we can't keep borrowing all this money. there will come a day we are not going to feed be able to fill a bond sale or there will come a day when our finance years, 48% of whom are foreign governments namely china and japan are now

going to do it. and so, doing this on all of this borrowed money has its limitations. so that is just a real concern that we have on this side of give and we were led to believe that this would cap the employment at 8% and now we are at 9.5 and going to ten. we are worried that this isn't working so have a quick question for each of the three of you. secretary salazar, one of the areas where we think we can get shuffle ready projects or we think we can get good jobs and one of the concerns we have with the federal reserve and what it's doing is we are fueling another commodity bubble. that means we will have higher gas prices around the corner just like we had a year ago which will dampen economic activity. we've got trillions of cubic feet of natural gas, billions of barrels of oil on hartel in the country, under our own ground most of which are federal land. will the administration, whether it is the intermountain region for gas and oil, eckert continental shelf or alaska,

while the administration this year lift the moratorium on this drilling and accelerate and move toward increasing the leasing so we can drill for oil and gas in our own country, create all those jobs and try to reduce not only the dependency on foreign oil to keep prices low. >> thank you very much, ranking member ryan. let me first say on your comment with respect to the debt issue, the fact of the matter is this is a challenge which was inherited by president obama and this congress. >> absolutely. >> you were here at the time and remember the conversations about the amount of debt created as medicare part d'huez past and acts taken that created this mountain of debt -- >> i will simply add we passed a budget resolution that triples that did in the next ten years. >> i would just say to all of you here i think that it is an opportunity for this nation to come together and address the

fiscal reality that we have to face because it's been ignored for far too long. and as you heard from the president as he was in no how you yesterday and other places he is focused on making sure that we have accountability, accountability and we invest the fiscal challenge including with a huge deficits that have been built up and so it's something that is very much on the mind of the president and on the mind of the administration. with respect to your question on energy we are working and have been working hard on a plan. we don't believe is a one-way highway to energy independence in america. i think that one-way highway is proven to be a long highway and the consequence of that is it has made america vulnerable to the dangers of over dependence on foreign oil to the dangers of pollution to our children and has threatened the economy of the country because of the fact we export so many dollars to bring in oil from places like the middle east and other

places. so what we have been doing is working as a team. people like secretary lahood, vilsack and a host of loss in the government to develop the president's vision for comprehensive energy plan. and you will see in that congressman ron income there have been production components of what we are doing and we continue to lease swaths of land, over 1.5 million acres of land for oil and gas production and we have held leases in the gulf of mexico where over a million acres have been leased and we continue to look at opportunities for developments. so we will have a comprehensive plan that includes the resources but also at the same time he charts a new beginning with renewable energy that addresses the new energy frontier that ultimately will address these long-term systemic challenges. >> just real quick dee dee colquitt on the moratorium will the administration and comprehensive energy plan to lift the moratorium on the land that are now prohibited from jeweling? >> we are looking very

comprehensively at the outer continental shelf and areas that are under existing moratorium and those areas where the moratorium is lifted and we will have under the plan we have in place we have provided until september 20th for public comment on places that are inappropriate for drilling and exploration and those that are not. >> you haven't decided yet, is that not decided answer? >> the answer is that there are places where the d.a. has been very theoretical and hypothetical debate in large part because we don't have the information to make decisions for example of the atlantic and so we are being thoughtful as we move forward and the time that we've taken that will take us to september 20 it will help make sure we are jeweling in the right places. >> so stay tuned you're saying? >> stay tuned. >> secretary vilsack, you come from iowa, i come from southern wisconsin. we have similar agricultural economies, so i feel i can relate to the kind of economy we have agricultural life. the administration had what i

thought was a good proposal in its budget to capitol direct payment for farmers with over $500,000. but resigned when 7 billion in savings over ten years. mr. blumenauer and i come here on the budget committee tried to pass that amendment and failed to do that in the budget resolution. i encourage you to continue advancing these things as we have got to find savings. what is the administration's proposal to continue on this and have you had other success in other committees suggest agricultural committee? >> representative ryan, we are working hard with the treasury department to try to make sure we first and foremost in sure the payments that are to be received or received by those entitled to them. as you probably know there were reports on anecdotal reports of people who were not farmers receiving payments. we are working with the irs and we hope to ensure and verify people receiving payments are in fact entitled to them and we think there will be savings

there. we are in the process of looking at a number of other ways there could potentially be savings. this year is the year which we will be discussing crop insurance in the deal we have with insurance companies. we think that deal needs to be examined and looked at so the taxpayers receive a fair share and farmers receive a fair shake so there are opportunities there as well as we are continuing to look for ways in which we can do a better job shepherding taxpayer money. the president challenged his department's to begin that process with $800 million challenge. i can tell you at usda just in our department alone we can beat about one-third of that challenge in the first 60 days in terms of resources that we are saving and resources we are not spending as have been planned. >> i know we are made for build this proposal was made mid farm bill to cap direct payments over 500,000 a g.i.. i just want to get clear because

i support this and i think you're in the right direction. are you going to be advancing this in the next budget solution? >> there's been criticisms about the format and we are going to continue to work with folks to look for ways in which we can ensure that the assistance and the safety net farmers rely on and depend on and clearly we have seen a need for this this year. you mentioned your state of wisconsin. i was in wisconsin recently and as you well know there is a serious problem with dairy farmers in the state and we've been spending a great deal of time figuring out how to help and assist them. i would ask you since we are sort of neighbors, you might be helpful to us in terms of being able to respond to those kind of crisis if you gave a little more flexibility in terms of section section 32. if you didn't quite direct as much of it and gave a little bit more flexibility we might be able to have responded more effectively than we have.

>> that is a good suggestion. secretary ray lahood, comforted that you're in this job because i know you are a man of great integrity who is going to watch how we spend our dollars wisely and on transportation. i support the highway program and it's important to our state. the highway trust fund was intended to be user financed and that was the idea and most people support that concept but it's broken and it needs to be fixed. last year we transfer 8 billion to pass the shortfall we provided 27 billion in stimulus funds and the general fund now the highway trust fund needs another 20 billion. we have two seasons in wisconsin. winter and road construction season. so, timing of these fixes actually matters. so, what is the administration's proposal to fix this problem. was the timing in your mind in to your support general fund financing of the highway program? >> well, we have put forth a proposal to the leadership to

extend the current highway bill for 18 months which we believe would cost $20 billion we have told congress that we would find the money and pay for it. so we are not for the idea just taking money from the general fund and watching it over in the highway trust fund. we think we should pay for it. the senate has passed the extension. there's three committees of jurisdiction in the senate and all three of those committees have passed that. we're looking now for the house to do the same thing. we think the idea that congress could pass a very comprehensive robust transportation bill by the time this one expires is just not possible. you all know it's not possible to do it by september 30th. so rather than doing these three months six months or whatever extensions and just kind of, you know, leading people along that we are going to get somewhere we think and 80 month extension

gives the chance to work with all of you on a very robust bill that helps find the resources not only to use the highway trust fund which is deficient, i wouldn't call what broke, it is deficient though because people are driving less, driving more fuel efficient cars and so not as much money is going to the trust fund and we've offered some sort of think outside the bachus ways of paying for our roads and bridges including tolman and infrastructure bank and including public-private partnerships and some other mechanisms for using the highway trust fund. our idea which we think is a good one is given a 80 month extension. we will find the $20 billion to plug it. we are all going to transfer money from one fund to another to do it, and that gets to the opportunity willing to work with all of you on a very good comprehensive transportation bill. >> thank you. >> we have a vote as you can see

and i am going to miss the first vote so we can keep going but the second vote we will recess so we can go vote and cast four votes to be a i understand mr. salazar you may need to leave by 11:30 and it so we appreciate you coming. if the other two witnesses could stay until we return we will make available office space to you so you can make use of the time. thank you very much and those of you who've been in congress understand the situation i'm sure. >> thank you, mr. chairman. thanks to each of you. you have had about six months to clean up a great mess that took years to accumulate. and some of those who have had little to say about this economic recovery act but varying forms of the phrase no, never are ironically now complaining both that we are spending too much money in washington but we are not spending it fast enough i think

that you and your employees could stand at the front door with a shovel koschel voyles i guess, and shovel out government money as fast as you could and really listen to some of these cable shows people are giving the impression that's exactly what you're doing. but that of course would be outrageous. and i salute you for your efforts to see that we not only speed up economic recovery but we do it in a way where we are accountable to the taxpayers and i want to encourage you to continue spending that money as quickly as you can bet spending it as if every one of those dollars was coming out of your wallet and i think if we do that we will get economic recovery and be responsible for the taxpayers. secretary vilsack, i want to talk with you about what is in the situation we have in central texas. i have farmers and ranchers and a number of counties that are suffering from what is almost 2 feet low in the amount of

rainfall. it is a very serious drought and i just had communications while we were in the hearing from judge ronnie mcdonald talking about the widespread and serious injury and damage to farmers and ranchers in his county. i know the same is true in caldwell and gonzalez and love baca county's. day after day we are the only question on the temperature will be hot or hotter and 100-degree plus weather just one day after another in colorado county some of the royce fields are about to draw a up because of a shortage of water. it's estimated across the state of texas we have over $3 billion of agricultural losses. it was to anticipate problems of the nature which could strike on the one or texas or arizona or any other part of the country that we enacted the provisions of the farm bill last year and i would just ask you to recognize

how urgent problem is in central texas and to tell a little bit under the program under the livestock program when our farmers and ranchers can expect relief and what form it will take. >> we are acutely aware of the situation in texas received correspondence from your office and from the office of a number of members of congress as well as the governor. a number of counties i suspect, i don't know but a number of counties you mentioned have probably already been declared disaster areas. >> they have been. >> by virtue of what action the president has taken an action i have taken. i will tell you we recently concluded the rulemaking process on the livestock program. that is available for the disaster and i know the payments are beginning to be made from that program immediately after the rules were promulgated.

>> so it just about everyone in my area, they can go now through their local farm service agency and make an application and begin to receive payment? >> there are a number of different livestock and disaster programs. the forge program is still in the process of rulemaking. we anticipate that being concluded this summer. and so, opportunities will be available under the specific program as it relates to forage mostly this fall, but if they fit within the program they could begin making application today. as it relates to the short program which is more of a general disaster relief program that congress sought to create the farm bill, we were somewhat pushed back in terms of the time table and on shore because of steps taken within the recovery act that altered the calculations that would have to be made. we anticipate the rules being insured this fall. the calculations and the data

that will be required in order to calculate payments would be available this fall and we anticipate later this year the first part of next year payments be made. >> i believe under the livestock compensation program previously you got one month of losses and now you will get three months based on the price of corn which i believe has been rising. does that mean that farmers and ranchers who are eligible under the program can expect to get as much as three times what they would have gotten previously? >> i think they can expect to hopefully get what they need to basically transition to better times so that they can stay in business. our goal with these disaster programs is to keep people in business and not force them out. i might also add to the extent of those farmers may have a direct operating alone with the farm service administration we've asked the farm service

administrators throughout the country to take a very close look at refinancing possibilities, extending payment period of time. this is particularly true for dairy farmers as well, taking a look at interest rates could be reduced. payments that could be reduced or deferred and an effort to make sure we are providing as much assistance and help as we possibly can and then finally we are continuing to encourage institutional purchasers of commodities and goods to continue looking at areas where there are problems to see if we can boost the market rates a little bit to help those who are struggling. >> thank you so much for your leadership. we do have a pricey situation and i hope you will be spurring all will all of your employees to try to address it. >> mr. nunes. -- before mr. chairman. mr. lahood is always good to see. congratulations on your new post. mr. vilsack, congratulations to you and i want to thank you for the work you're doing with mr. petersen to help the dairy

industry and i appreciate the comments you made on that and mr. salazar, good to see you again. i want to draw your attention to this live here. it's a state you guys all recognize as the state of california and as you are probably aware there is a government imposed drought that's been occurring where we've lost 40,000 jobs. this is an area the size of the state of rhode island that's out of production, even been abandoned or followed. the unemployment in this area is close to 20% with some enclaves as high as 40% or even higher. mr. salazar, you visit this area on april 15th to toward the economic devastation and on your visit you announced $260 million in stimulus funds and i will quote from your press release to mitigate the effect of the devastating drought that california is currently experiencing, unquote. mr. secretary, we talked about this before.

we've had 95% of average rainfall. what we have is a man-made government imposed a drought because the endangered species act as you are well aware. but you did take some action and provide recovery act funding and i would like to draw to your attention to the next slide. as you can see on the monitor, the ex mark where the stimulus funds went to and you can see those x's are nowhere close to where the 40,000 jobs have been lost. after this was sprinkled over northern california for environmental purposes the crisis got worse in the valley and mr. sells or, you return to june 28th to hold the town hall with the victims of this man-made catastrophe. i'd like to show you the next slide. you issued another $130 million in stimulus funds, and according to the testimony today, the funds were for free use projects

to help alleviate some of the devastation in the region. you can see that this, where the x's are we still have no stimulus money. in full disclosure, your press release also included 20 million for small water infrastructure projects and 40 million in drought relief. they are all reflected on this because we don't know where the money has went. mr. secretary, in the testimony said over the next 18 months we will then begin approximately $1.8 billion in creating at least 19,000 jobs. mr. salazar, it doesn't take stimulus money to port 40,000 people back to work. as you know all we have to do is get these pumps on and get water back to the valley. it's free. it doesn't take a dime. so i would ask one question of you, simply you know the situation with the biological opinion. so i'm going to ask very specific question and that is do you plan at this time to conduct a week-long assault on the delta

smelt biological opinion that would put folks back to work? >> congressman nunes, first let me say i appreciate your passion and desire to address this issue which is causing a lot of pain in central valley california and we are aware. i've been in the area twice with a donner sports an acre and a meeting we had with you and other members of the congress in fresno. there are two things we have to do want to take some short-term action including dealing with some of the projects you and others here have suggested and we are trying to move this forward as expeditiously as we can and secondly, we have to look at the long term issue in california relative to water supply we have a system built for about 18 million people and actually california has over 30 million people and we have the kind of challenge is to require us to take a systemic view of the water supply and other demands that are creating

the major problems that we are encountering. with respect to the recovery dollars going to california, if governor schwarzenegger would not want to take these moneys you might have the option of the white don't think it would be in the best interest of the people of california but we have to hundred $20 million -- >> mr. sells or eight a place i have to interrupt. mr. phill said i want to ask one simple question, you are a form guy from a foreign state is it possible to grow crops in iowa without water? >> you know the answer is no. i want to yield the remaining time to ms. lummis who has a question for mr. salazar. >> thank you, mr. nunes. mr. salazar, one quick question on behalf of the natural resources committee republicans. we haven't seen you yet in front of that committee and we would love to have you come and visit with us about health stimulus

money is being spent on other issues. can you tell me today whether you would be willing to come and testify in front of the natural resources committee. >> the answer to that is yes and i would be remiss if i didn't say that i've worked closely with the chairman and will continue to work closely with him and if he were to request me to come before the committee i would be honored to do so. >> thank you very much. i thank the gentleman for yielding and also want to add my concern about the situation in the valley. there are rare and i do mean rare circumstances where the endangered species act should not be allowed to destroy people's lives, to destroy them and that is happening in the valley. i am a person who has a state that is very impacted by the endangered species act including wolves and humpback chub and other species. but nothing we are experiencing

in wyoming is as bad as what i see in the valley and i do agree with mr. nunes that there have to be alternatives to this man made drought. thank you for your time, secretary salazar. and i will be back after we vote, mr. vilsack and mr. lahood, to ask you questions as well and i want to thank all three of you very much for appearing before the committee today. >> thank you. mr. chairman may i respond for purposes of the record? >> absolutely. >> both you and congressman nunes, we put the label on this as a man made drought peak and i beg to differ. we have been seeing very significant changes on a water supply in california, including the changes in precipitation and timing of precipitation, so this is an issue which has been going on for several years and it's gotten worse over time. we are all hands on deck trying to figure out a solution to the

problem. at the end of the day as i've said to mr. nunes on several occasions when need to figure out a way moving forward together and frankly labelling in terms of man made drought versus the reality brinkley not helpful. we had to come together because a lot of people were suffering in the valley. >> mr. chairman, i will pass your comments on to mr. nunes and i thank you very much for being here. >> thank you, miss lummis. >> i have a couple questions before we recess for these votes and i'm going to take advantage of the chair but i want to as a representative from massachusetts i'd seen this stimulus work. i've seen what the reinvestment and the recovery act has done. we are seeing more infrastructure projects being built and, you know, in my home city to give you one example the stimulus -- the recovery money

that have come for education alone have prevented the layoffs of over 500 teachers and support staff. you don't get any credit for at averting disaster but the bottom line is my city of massachusetts would have been devastated if that recovery money had not come. and of all the cities and towns i represent the same thing is true. what would have been the impact if be laid off, fired 500 teachers we would have larger class sizes, the education, the quality of education would have suffered, it would have been a disaster. the same for all enforcement. the park's and so many other things. so i mean, i think maybe there is a probable message here. maybe some things are actually happening but people need to understand without this stimulus package i think secretary lahood put it very clearly, you know,

you would have had a lot more people unemployed and the state of the economy would be much worse. i have - questions. first for secretary vilsack. as chairman spratt made clear at the beginning of this hearing the economy and was broken when president obama took office and it has taken an enormous toll on jobs and families and because so many families circumstances have taken a turn for the worst many more now qualify for federal benefits like unemployment insurance, food stamps and school meals. we've seen the numbers of people participating in the food stamp program planning. april of this year 34 million people were on food stamps, that includes one in four children in the united states, 20% climb over last year. i would think this means billions more children are now eligible for free or reduced school meals but we haven't seen a rapid growth in those programs. since all children of food

stamps automatically qualify for reduced or free school meals i would have expected to see an increase, and i wonder if the families who are now who are new to receiving unemployment benefits or food stamps might not be aware their kids are eligible for free or reduced school meals so my question is can you tell me what steps the administration is taking to educate parents who may be recently unemployed or new applicants to food stamps about the free and reduced price school meal program and is there going to be an outreach campaign in the coming year to make sure all eligible children are enrolled? and since we expect employment to continue to rise how is the usda working with states and schools every month in an ongoing way to make sure we reach new the eligible children with this benefit? and i raise this question because my two sisters are schoolteachers and sometimes kids come to school and they don't eat, can't learn with a

hungry stomach. and so, i'm curious to the answer that question but let me ask my other question of secretary lahood and then we can recess here and that is its great to see you back and we miss you in congress. we miss your civility in particular, but mr. secretary as you know the benefits eckert act was in the community act and the provision increased monthly limit of transportation fringe of benefits of $230 making with the parking benefit the next two years. this helps get people out of their car and into mass transit and provides families with much needed relief for community costs and gives local companies and the benefit as a recruiting tool. so as we continue to invest heavily in the public transportation and this stimulus package does provide that do you think the benefit equity act should be made permanent and do you have any other ideas on how to provide incentives to workers and employers to increase their use of public transit?

mr. vilsack. >> thank you, mr. chairman. the usda is working with states and local communities and school districts as well as advocacy groups to make sure the message does indeed get out about the opportunities these programs can provide for families. i will tell you one of the most important recent changes we've made in the school nutrition programs is to have a direct certification process allows families applied for and qualify for tanif and qualify for free and reduced lunch. we are making sure the word gets out and school districts to a good job of providing information on the direct certification program. we are mandating or requiring schools to provide applications for these programs for children when school begins. many schools in fact most schools probably have a parent kitt and within the kit will be

information relative to the school nutrition programs as well as other assistance programs. we are also issuing this february guidance to schools to develop strategies including simplifying the process for allowing families to synnott, rapid action on benefit applications conducting direct certification as i indicated and aggressively encouraging them to focus on outreach efforts. additionally we are working to make sure these programs are also people are aware of them during the summer as you know they are summer feeding programs we are continuing to figure out ways and strategies for expanding those opportunities and we can assure you we are also using every tool, technology tool available, our web site promotes this. we are developing products and programs for schools, online

tool kits that make it easy for them to develop programs for all creatures all of this is being done -- >> i appreciate that. mr. lahood? >> first, mr. mcgovern, let me say that nobody in the congress has been provided the leadership you have on hong durham and antihundred and the coalition that you co-chair. you've done an extraordinary job in highlighting it every day that you are here and i know of your deep interest in that because i served with you on that question. thank you for continuing your leadership and being very vigilant about it. in our department people think i have a lot of power but most everything that gets decided has to be run up 14 flagpoles before it can be decided. i like the idea of the commuter benefit equity program because it gets people out of cars.

it certainly works in cities like washington, d.c. and other cities. i'm not going to say definitively, you know, that -- look, if it was up to me, you know, it is a good program and we are going to do all we can to work with you and others in the congress to promote that as a program that -- it goes to everything we talk about in terms of livability creating opportunities for people other than just an automobile. seabeck i appreciate that and your answer is good enough for me. i've always found it somewhat strange we talk about the need to try to get more people to utilize public transportation yet we provide more incentives for people to drive to work and take public transportation. i appreciate your being here. we are going to without objection the committee will stand in recess subject call of the chair. in of conversations

[inaudible conversations] [inaudible conversations] i recognize mr. garett of new jersey. >> thank you, mr. secretary. just a couple of questions actually. there were articles as i am sure you are aware in the "washington

post" the short time back and it talks about the republican proposal to hold spending on the project has prompted a partisan dustup. it refers to the senator kyl who called president of hamas economic plan and effective and following that apparently several letters were written from the administration to a state governor and one apparently came from you and in it as far as i know, you can correct me if i'm wrong it says to the governor if you prefer to forfeit the money we are making available to your state please let of snow. is that correct? and blight would you pick his one state to send that letter to? >> it is correct that i did send the letter to the governor. the money from our economic recovery portion is going to the states. it's not going through congress.

it goes to state the ots. >> supplied to pick his states and not all the states saying one senator doesn't want this spent so we're going to ask all the senators. was this just done because you are trying to make political hay out of the situation? why would you pick just one state? >> because senator cardin who is a friend of mine was on national television on sunday talking show saying that he thought that the money didn't need to be spent. if they didn't need the money maybe we should send the money back to washington. i just wanted to double check with the person in charge of the money. senator kyl -- senator kafeel is not in charge of the money, congressman. the governor is and i wanted to be sure the governor wasn't in the same line of thinking as senator kyl and the reason i did it is because -- let me finish on going to answer --

>> it's my time. >> it's your time but do you want me to answer or not? >> i will ask the questions and he will answer. >> i haven't answered yet. >> why did -- did he say he didn't want the money going to his state? >> if you go back and look at the transcript of that program, but he said is that we should send this money back as not being spent. and i wanted to check with the person responsible for spending the money. that's why i sent the letter. >> so he wanted the money sent from his state. >> he was talking about arizona. >> and he said the money is being used effectively. regardless whether he's talking about his state or all the states is inappropriate for a cabinet secretary to contact the governor of that state to request whether the money should come back. could you see if you're sitting on the other side if you're wearing your head is a congressman could see that as a threat from the administration would you have considered that

if you remember, chris? >> not at all. >> he wouldn't think that? >> not at all. >> should have any concerns that i would get a letter sent to governor quote of new jersey singing the congressman voted against the stimulus and so therefore we are wondering whether you want to receive the money? >> congressman. it will send because of a statement made on national television about maybe we should send the money back and i wanted to check with the elected official in the state that has responsibility. it had nothing to do with anybody's vote and by the way i've worked very closely with governor course lined and as a result commodore state congressman, has received millions of dollars for projects putting people to work or working today that were on unemployment in january or february. your government has been a leader in this by the way.

>> so there is legislation out there right now that suggests the rest of the money hasn't already been spent should go back to treasury so if i got out publicly and support that legislation, i have not voted on it, would that lead -- anybody else the supports the type of legislation make public statements would that lead anybody from the cabinet? >> we don't base our decisions how people vote. >> do you base than by public statements apparently? >> i wanted to check to insure arizona wanted to make spend the money and by the way we allocated $20 million for the transit program >> did anybody else in the administration or outside encourage you to write that letter? >> i don't need any encouragement to write letters to the vendors, congressman. >> did anyone in or outside of the administration contact you? >> i don't need encouragement from anybody to write letters. my job is to -- >> just answer did anybody inside or outside the administration encourage you to write that letter? >> congressman, my

responsibilities to work with governor -- let me answer it. >> it is yes or no. did anyone inside or outside the administration to encourage you -- >> i don't need encouragement. >> can you answer the question whether you need encouragement or not -- >> i don't need encouragement, that is my answer. >> mr. chairman with the witness please answer did anyone inside or outside the administration encourage you to write the letter whether you need the encouragement or not did anyone encourage you to write that letter? >> nope. >> did anyone talk about writing the letter? >> nope. >> it was entirely your decision? >> ,, you want me to answer or go on? negative answer is we work with governors all the time. that's our job. and so we wanted to contact the governor of arizona because of what the junior senator of arizona had said on television. >> thank you mr. chairman.

>> ms. tsongas. >> thank you for your testimony and your hard work to help our economy recover and get the country back on track. we've heard today and we will continue to hear claims here and in the press that the recovery act has failed and while we are not specifically discussing the education fund in the recovery act i did reach out from across my district and wanted to share some quotes from school superintendent because i think they reveal how critical this funding has been and will continue to be. the superintendent of the school district which is the largest city i represent the less, quote, thank goodness for the stimulus and for stimulus money next year. without we would have had to cut 120 teachers. 120 teachers represents roughly 10% of the staff. at a much smaller community we heard, quote, without the

stimulus funding we would have had to lead eight teachers go with funding we were able to keep them. and in a mid-sized suburb, quote, we were able to replace outdated textbooks, replace science equipment, trained staff and maintain 14 teacher speed these communities and others i've heard from have had to make real sacrifices and suffered deep cuts and while these numbers are not large in and of themselves given the tremendous loss in jobs we could imagine how important they are to each community and how multiplied across the country what a difference it has made in saved jobs and in preserving education for our young people. furthermore, for those individuals who have lost their jobs in my district the communities of lowell on the planet is in the double digits while and warrants, mid-sized city, on employment is over 17%. almost twice the national average. and unemployment compensation food stamps and other forms of

nutrition assistance funds included in the recovery act have been a crucial lifeline. and i thank you, secretary vilsack, for your work in getting that finding out. but i have a slightly different question. when we pass the recovery act we committed to closely monitor the use of funds to deport waste, fraud, and abuse. very important, and the in massachusetts have learned a hard lesson with a big date of not closely monitoring how we spend public funds. as a result, the recovery act has been one of the most transparent spending bills passed by congress. but unfortunately, one side effect of that is that the administrative burden required to get the recovery funds quickly is very high on local communities and agencies. in fact i have communities that don't even have great writers. ..

we won't even as the folks to determine whether they want to apply for usda or the commerce department money. we will do this by zip code and by virtue of the information that we have. we will make sure it gets funneled to the right department. this is one way of trying to get resources to people as quickly as possible and to have them be able to apply as easily as possible. we are also very committed to

transparency. we at usda creed the geospatial map of the country. you click on to every state and find the precisely what usda has been doing and what has been doing and other departments will be joining as well so over time you will have a single u.s. map that will allow you to have a sense of all of the projects and where they are located. >> thank you. >> i was just going to, if you don't mind mr. chairman may i just respond because i just want you to know that in those areas where people don't have the ability to have grant riders or if, even if they don't have access to-- some of these areas have access to metropolitan planning groups who do have grant riders who can help the communities but in the event, there is a community that doesn't have anybody may be what we could do is try and be

helpful to them and reach up to them through our offices and put them in touch with people that can be helpful. i would think that some of these metropolitan planning organizations would have people that could reach out to them, but we have relationships with them also, so maybe what we should do is get the names of some of these folks and see if we can be helpful in identifying people that can help them jump through the bureaucratic hoops to access some of these dollars. >> we have been a resource to them and they have worked with planning agencies but i was just on the floor of the house today talking to a member from arizona who was saying in communities that are very isolated, they really suffer in many ways but one is that they just don't have the capacity to stay on top of it and it is obviously our role as members of congress to do everything we can for our communities. i think it is important you hear it and be aware of it from your

point of you. >> good point, thank you. >> thank you mr. chairman. secretary vilsack, thank you for coming to the ag committee earlier this year on several occasions. it was great to have your testimony there. that said, i do have a bone to pick with you about forest service stimulus funds. as you know the u.s. for services as this should be did 940 million or over 80% of its total stimulus dollars. the portion of that spending that has gone to the rocky mountain region and almost a noticeable amount his reach our national forest in wyoming. the media has assumed that wyoming may be getting punished as a congressional delegation voted against the stimulus bill. i am willing to assume that your department is more aboveboard than that. but, can you please explain to me and to my constituents the

disparity between forest service stimulus dollars in wyoming compared to our neighboring states? >> congresswoman i would be happy to do that, but i should tell you that as you probably know, we are in the process of continuing to make decisions about forest service projects and while this is not public, i can tell you that i am fairly confident, based on what we have planned, that there will be about $6.5 million going to wyoming in this next allocation. the reason why we haven't gotten to wyoming until now is the selection criteria was based on the condition, the unemployment circumstances and conditions of the state and so we rank programs and projects based on the capacity to try to help folks get through difficult times. your state, because of the good leadership that it has with governor freudenthal and others,

obviously did not have the unemployment rate quite as high as other states so we went through the process of making sure we got the money to the states that were most in need. so, but money is coming as has been the case with all of the other programs that i talked about earlier. as i look at this, you see close to $50 million in money. >> mr. chairman? i would like to point out that right now, utah which is receive $12 million in forest monies has a high are, or rather excuse me, a lower unemployment rate than wyoming. we have more forests and we have an enormous problem with barken eagles. they are projected to destroy between 90 and 100% of the pine in southern wyoming and northern

colorado by 2012 so we are in a desperate situation with regard to bark beetles and our unemployment rate now exceeds that. of utah which is receipts $12 million. i am however encouraged to hear that we will be receiving 6.5 million. can you tell me when that will occur? >> it is in the process. i think it is in the process of being reviewed by either my staff or omb so it should be relatively shortly. i should also indicate to you that there were other criteria in addition to the unemployment. the risk of forest fire, the capacity to create sustainable jobs, the capacity to use biomass. the opportunity to create jobs for recreation sites, roads, trails. there were 2700 projects submitted to us. we did our best to try to rank them based on a variety of

criteria. i can reassure you that there was absolutely no determination relative to votes. until you told me you voted against the stimulus i had no idea that that was your vote and frankly in terms of my job, i don't care. my job is to make sure that these resources are used to create jobs and to help people transition from that time to better times and create that 21st century economy and we are very focused on danette job. >> thank you mr. vilsack. i appreciate that because it was adjusted their votes may have something to do with the fact that wyoming has not receive the funds and i'm pleased to hear they are coming. briefly, secretary lahood i would like to make a comment. because wyoming has 29 people per lane bile and the national averages 128, while migs per capita contribution is $314, where the national average

contribution is only $109. i want to tell you i am grateful for the stimulus funds we have received for highways in wyoming. that has been an area where we are pleased. but come in terms of the long term trust fund issues, i just wanted to suggest to you that, because of our small population and huge amounts of highways, a tremendously important economic and transportation corridors and the fact that our small population puts a higher burden for lane mile than other states, that as you are coming up with a long-term resolution to the highway trust fund issues we hope he will take that into consideration. i want to thank you for being here and i want to thank you mr. chairman for holding this hearing. >> mr. chairman let me say in response to the congresswoman, i know this highway trust fund for me let is an issue for many, many members. it was during that time that i served and continues to be. i have talked to both of your

centers from wyoming about this and i think you will be in a good position along with your senators to really work on this as we work through how to really make the formula fair. there are issues and i know how important these wrote are to states like wyoming. i really do. i mean they are the lifeline for economic development and opportunities and, so we will work with you on that. >> i look forward to it. mr. chairman think as a lot for holding this hearing. >> mr. secretary include me in south carolina among those who want to see. >> thank you mr. chairman. secretaries, thank you very much for being here and thank you for all you have done. i guess you read the fine the term hit the ground running and what you are both experts in your respective fields, i know that you can count on having to jump in to this level activity in this level of response.

i know the public officials of my state of kentucky, both parties are gone very grateful for the assistance corporation we have gotten from you. i particularly am impressed by the evidence that you have provided today about the job creation and the economic stimulus that has taken place because there's a lot of cognitive dissidence out there right now and the other day we sat and listened as 135 republican colleagues were on the floor repeating the mantra that where the jobs come aware of the jobs, where the jobs? you have vividly demonstrated to us where the jobs are. i would like to add one example0 because of directly as a result of energy stimulus funds, general electric's appliance barken lillyville, which is the head of their consumer products division has announce that they are bringing back 400 jobs from china to manufacture it

revolutionary energy saving water heater in our district, would not have happened without the recovery funds that we provided. and, one other point i would like to make about this and we talk about legislation to rescind part of the stimulus. mr. ryan also reference the tax, all these mythical tax increases that are going to occur. we never hear much about from the other side, about the tax cuts that were in the recovery act package, $288 billion. every american family, a 95% of american families receiving about $80 a month, which basically pays for their gasoline for most people, and i wonder if the colleagues from the other side want to risk the that part of the package? so i will ask a question eventually. one of those is, and i think

secretary salazar referred to this, and that is that these jobs are not only jobs for this period but they provide sustaining economic benefits, and my question to both of you is, is there any way we could have spent the nontax cut portion of the stimulus money in a way that would not only create jobs or any of the way that would more effectively created jobs and provide sustained economic benefit for the country? >> i don't know of another way. i think when you look at what the president was talking about during the campaign, i mean he continue to talk about the idea the quickest way to get people to work is to rebuild the infrastructure in america. it is no secret around here or anywhere in america that a lot of our infrastructure had been ignored for a long time. there just weren't enough resources. every stay was either going broker didn't have the money and i think we have proven that

d.o.t-- if you just look at the airport money, $8 billion is out the door. is bent. as i said, i have been through 24 states in 24 cities. every city that i fly into there is the runaway either being resurfaced, rebuilding lincoln. that could not have happened and there are people out there working. you go out on the highways and these are real people. these are people that were on unemployment that did not know whether they were going to have a paycheck by june or july and now they do. this is real results and it could not have been done any quicker or any better and you know congress put some tough deadlines on us and we all met them, thanks to the professional people at d.o.t. and our relationships with airport officials with highway d.o.t. secretaries, with transit officials. we have over $3 billion out the door now so people can buy buses. there is a company up in st. cloud, minnesota. they put on a third shift

because of all the bus orders they have received from transit districts that are now ordering buses as a result of the stimulus money. there are people building buses, so we see it working all over the country. we really do. >> secretary vilsack i know you talked about the 33 million families having increased assistance through this map program and so forth and the economic spin-off of that, one paint it-- 1.4. it may not create new jobs but have is that preserve jobs as well? >> if you think about what happens with these snap payments, they get placed on electronic benefit carts. it gives families of four on the average about $80 a month more a month. 97% of that is spent in 30 days so if you want to talk about putting money to work quickly, there is no better, no quicker, no better way to do it than the

food assistance program. that family does into the grocery stores and purchase additional items which means that grocery stores has to stop additional items to replace the ones that have been sold. that means that they are able to maintain their workforce and it puts a little more money into the grocery stores's bottom line so perhaps in distressed areas and areas where we are concerned about food deserts', grocery stores can make it. i was a shop in philadelphia that just got started during the toughest economic times and they are making money in large part because of that $80 a month for a family of four and i will tell you they employee, this is a company that employs 2700 people. because there has to be more stalked it means there has to be more trust and that puts trucks on the road and gives people the opportunity to continue transporting goods. if more has to be attractive means more has to be processed and if more has to be processed and that means people have to continue to work to process that

food coming to canada, to freeze it would never. that means more has to be purchased and that ultimately helps people, our french-- farmers and ranchers who are just extraordinary individuals because they have the capacity to create not just enough food for us but enough food for many millions of people around the world. it is a process that basically cascades through the economy and does it quickly. it is sort of like and i'd be-- i have bolles of lidocaine if your heart is standing still. that food assistance is getting your heart pumping again. >> thank you for your service to the country. >> thank you mr. chair. i appreciate both of you being here. you do wonderful work in this country needs it in the most impressive way. i wanted, someone at the hearing here talked about meager benefits of the recovery program and when i look at the department of transportation's

results as of today, with looking at the aviation administration, secretary you have talked about the billion dollars that is out there, 30047 projects with tons of jobs for americans. the highway administration already 5,700 some odd jobs in all 50 states, 64% of the funds are already held the door. i looked at the rail division end another $1 billion worth of amtrak grants, very big in my part of the country quite frankly, and then i looked-- colleges think this seems to me to be a little bit more than meager results and i am impressed with how the department transportation has put that out there and i appreciate you coming to oregon in particular. i can speak personally that the jobs created in my county, the innovation with the american streetcar that is being born if you will in my state puts us on

a competitive basis that we have never had before. it is an innovation that would have never occurred without this recovery package. if you can comment briefly on how you are able to meet these deadlines. based on the lack of rod you have testified to in the deadline to seem to be meeting i think you are doing a heck of a job. can you comment on that? >> thank you congressman. i appreciate the chance to come to our beautiful state and i have told many times, as i was riding in a vehicle to the streetcar it then when we inaugurated the streetcar, i saw, i would say between 50 and 100 people riding their bikes to work. you all, i mean he or the model for livable communities. you are the model for what i think people all around the country would like to replicate, and you have been way ahead of the curve on so many things.

so, we have, we have had great fun in your state and great opportunities to meet very, very innovative people. the way that we have been able to meet all of the deadlines, beat-- node ali meet them that beat them because of extraordinary professional people we have the d.o.t.. they have been waiting for a long time for this kind of opportunity. they love their work. they love to help people build roads and runways and create opportunities for jobs and all of this is done by the professional people led d.o.t.. they have done the work. they deserve the credit for getting the money out the door and keep the timeframes within which congress gave us. and, again i want to repeat this. no earmarks, no boondoggles, no sweetheart deals. if you look on recovery.gov what you will see is where the money is being spent, how many jobs,

state-by-state, and we have come of this was really established by the white house. the president stated it. get it right chemist then the money correctly. this is a lot of money, and their people left done it and we are grateful to them for carrying out what the president's vision is for transportation, and we are going to be doing it with high-speed rail, we are going to be doing it with our discretionary grants. people are working very hard to make sure that is done right t. >> secretary vilsack i appreciate you coming before the ag committee and all the hard work you are doing a specialist in ture having trouble getting appointed to actually do the work. you guys are doing yeomans laborer think in the department. kiki comment again, i am impressed with the fact that a lot of the projects are coming in at 20 and 30% of their budget. that sounds like excellent work.

which privates industry could get that. >> thank you for the opportunity to talk about the hard-working folks at usda. one of the things we attempted to do is try to partner with local governments and state governments to try to streamline the process. we have linkers our folks to take a look at ways in which applications could be simplified and reduced. without sacrificing quality evaluation. we have had people work long hours. oftentimes it is not appreciated. this is not a 95 jaw abed usda. we say every day, usda. because we have 3,000 offices between our rural development offices and our farm service agency offices we have got people working overtime and all of those offices are at the ground level try to help people understand these programs to be able to apply for them. through partnerships, to process improvement we have been able to get the work done. we are very pleased with the

progress and we are going to continue to push forward. the fact that we have 43,000 people, 43,000 families who have the opportunity to have homeownership and rural communities means a lot to me. arra committees have suffered from depopulation in having our byrne people be able to purchase homes. we have got a lot of forgets to do. >> it is working well in oregon, farm loans in the adjustment-- adjustment assistance is working well. >> thank you mr. chairman and thank you for holding this hearing. i join the others in thanking you. i have run the agency before you got there and it is not easy because everybody else thinks they can do a better job than you can and they don't have to do it on a day-to-day basis so thank you and the mean that sincerely. let me just share a couple of things and then ask you a question because north carolina is one of those unique states

that when unemployment comes they seldom get hit. unfortunately this time we are the fourth highest state in the nation in terms of job loss than the last 12 months. the unemployment rate is over 11% statewide in knife that counted in my district approaching 15%. that being said let me also turned to one other point. the administration just 32 offices in education has announced $2.3 billion, made available 1.5. the department agriculture is announced 26 million made available. 98 come i think that may be off a bit since the 98 million is more than an ounce, but be that as it may, fdot 844 million announced, four anderton 16

already made available. the only thing i would say to you secretary lahood, all we can do is give you more resources so we can get it done in cal me and on that group because i really think where some of these projects we have put a lot of people to work. the reason for that is our state and the states are suffering from a bad situation a shortage of funds so if it had not been for these funds they would be in deep mud. we are one of the few states yet to adopt a budget. they sent one to the governor yesterday at almost a billion dollars and that was not enough. secretary vilsack you understand that. now they have to go back and do it again and they have a lot more money to make things me. let me thank you for your help and what you are doing. mr. secretary let me ask you a question because i visited a number of our emergency food assistance programs and shelters and food banks. and, there are a lot of vulnerable americans out there.

we made money available in this fund as well as the other funds. i would like to comment on the resources those are distributed and what impact it is said and are there more in the pipeline simply because of the increasing unemployment, more people now turning to food banks and other help just to be able to sustain where they are. the second question for you, i am sorry but this is all agriculture. we are in a situation where north carolina we have probably the most diverse agriculture in one of the most diverse in the country as you well know. in our pork and poultry operations they are suffering big time. exports are a major part of it, but i want to as a change of operation to the economic times, i would like for you to commandante direct loans in the recovery act. how many of those loans have been made so far and are there more loans in the pipeline?

specifically, we have a number of farmers in my district but in our state but there really spread across ten states. as a result of the economic downturn, a lot of these corporate contractors have pulled those contracts. in many cases these farmers and you have been trying to help us, i will go ahead and say that of front because we need to do something to get it resolved because they pulled the contract because these guys are sitting there and we are protecting the homestead. the home has obligated all of the land of livestock and i think it will come back but over the next 18 months for those who cannot get it refinance they could lose everything they have got and be out of business and that is devastating to some of these communities. i would hope that we continue to work with their office to find a way to give them a bridge over the next 18 months because nothing more than the interests of they can get back to where the cover comes and save them and i would appreciate your

comment on the food banks and the overall aspects. >> representative, as you indicated, you have seen directly the benefit of the recovery act on the capacity of food banks to meet ever-increasing needs. i am sure you have seen the stacks and stacks of food products and many of them wholesome foods. i have seen chicken and pork. i have been to food banks where people have said thank you for the stimulus money, otherwise we would that be able to provide hundreds of thousands of additional mills for families who are struggling. we have essentially announce most of not all of the emergency food assistance money that the stimulus provided for. there may be just little left but for the most part it has been distributed. we try to get this out as quickly as we possibly could on a state-by-state basis and putting it to work as quickly as possible for two reasons. one because there was a need in

two because more product being purchase helps those poultry farmers and for farmers and all the farmers in the country. we are certainly aware of the stress that poultry farmers have undergone and pork farmers in your state. we are kealy aware. one of the reasons we have done that is that we have been able to, we have been able to use some of the powers that you have given us to purchase more product and we have been able to encourage our institutional purchasers to think about purchasing more poultry. we have constructed the farm service agencies and offices. in effect we recently sent an letter out to all of the, all of the direct loan borrowers, asking them if they are having difficulty to consider going into the farm service office and instructing the farm service folks to look for ways in which those loans can be restructured, refinanced, redone so interest

rates are reduced so that payments are deferred so principle is reduced that that is appropriate and an effort to try to keep folks on the farm. now we have also sent a similar letter to the commercial banks that have been working with us there are guaranteed loan program encouraging them to do the same because it is then their long-term interest to keep their customer on the farm. so we have also suggested a capacity of loans where collateral has been provided, which is, has to be sold. the calabro when it is sold instead of the money going to us or the bank is allowed to be used for essentials for farm families or to be able to put a crop and/or to be able to survive in transition. as it relates to the operating loans, we put into place to thousand 636 direct operating loans, 1,081 of them to beginning farmers, 600 of them to socially disadvantaged

farmers. that use of all of the resource and the stimulus proposal. we obviously have barboni appropriation and it was recently supplemented and we are in the process of getting those loans out the door as quickly as we possibly can to as many farmers as we can help as we possibly can. so with the relates to direct operating loans, there is still supplemental money available. >> thank you chairman bill sought. >> ms. kaptur. >> thank you mr. chairman, welcome mr. secretary. thank you for your service to our country. it must be very difficult to inherit major departments of our government at a time of exceptional economic need and try to keep your staffs motivated and all pulling in the same direction. i really admire you both for the work that you are doing.

thank you very much. i represent one of the ten most economic the challenge committees of over tuner and 50,000 people in the country. i also have an unusual district in both industrial and agricultural. the unemployment rates in the agricultural regions are now over 18% and in the major city i represent a minimum of 15.4%. i want duest secretary vilsack, i don't know if you have traveled through cleveland, toledo or detroit but all along lake erie we have the series of communities that are in deep economic distress related to the wash of the automotive steel and machine tool industry's. i vote for all the programs for food stamps and no renamed snap and so forth, and we appreciate the emergency assistance but i would strongly encourage you and we just met with secretary this

morning, to look at the tanf program as well as your own authorities to think about the following. in communities like ours devron the great lakes we can grow our own food and we can harvest what is likely to be plowed under this fall. we need that food. we have food banks with the increase has gone up anywhere from 50 to 100%. we have volunteers serving food were worn out. we have to find a way to supplement the emergency food efforts going on in our region and we can put some of the unemployed to work helping us. it would literally flip spirits' in regions like ours where-- because of the continuing washout in jobs. i understand you have hired someone they are obreck your department, who came from the rc in the. you could not have a better person because she comes from

the midwest, and enormous experience. we need somebody over there to think out of the box on how to meet the rising problems. call last year from one of our companies saying how my going to get it picked? okay so i call supper queen in call the form pure. they helped us get trucks up there and when we can. what we can process, we can pick and grow a new vertical systems that we have put up but we need usda pull in with us, not fragmented and one of the programs i want to mention to you is under the 2008 farm bill, section 6 of 15 which is the rural cooperative loan program we authorized over $3 billion for arby eft's shanta date not a single penny has been spent and that program can be directed to help the hander sir. we would very much like to see that programs muscle used as will's the other federal

agencies in helping us glean what we can, not waste when piece of fruit, one vegetable this year to process that and i think if we work across the government we can get it then. would you be willing to work with us in ohio and in michigan looking at your broad authorities in order to do that? >> represented absolutely and i would tell you that we have been working on a program within usda which is indeed thinking outside the box, which will be entitled, know your farmer, know your food and the purpose is to try to directly link local production of local consumption and not just farmers markets but institutional consumers. when you do that, in fact i was in philadelphia yesterday visiting with folks about this program that they have been philadelphia. what you do if you have to take a look at the entire supply chain and you have to figure out how you can create sufficient quantities and be able to store due process event truck it and

distribute it. we are and will be using our resources to create that supply chain to better link production with consumption. it is one of the wealth creation strategies we will be adopting as part of a new rural development initiative within the department. we wanted to make sure we have the structure right before we begin. >> mr. secretary come up please look inside the urban areas where we have so many hungry people. we have got them out in the rural areas as well. we were talking from members about that. and i would urge you to invite the members to usda who represent communities with over 15% unemployment now in both urban and rural america. there is a discrete number of those. we have thoughts about what we need in our areas and how to link them to the employment programs and the tenet programs across the government. it is unjust your jurisdiction but this who do this release of their and their helpers are wearing out. i also, i know my time has expired mr. chairman but let me

say on the mediation program we are going to lose 10% of our tree cover. we have been trying to work with usda, department of interior, the department of labor to hire people from the ranks of the unemployed. it has been almost impossible to get these big nasa departments to work together to create jobs for the tree replanting programs and we would like to draw that to your attention and hopefully get a better response out of the agency. >> i would be happy to take a look at that. i will tell you we have not been a team for very long but i think secretary lahood would probably agree with this. we are working across lines. we are not trying to work in our individual silos. their benkovsi meetings with other cabinet secretaries to try to coordinate. that is one of the reasons why on the recovery act we are working with other departments to provide the transparency that the president and congress wanted. we are continuing to try to break down those barriers. we recognize we can leverage

resources more effectively when we do. >> thank you mr. chairman. >> ms. dillar roe. >> thank you very much mr. chairman and i want to say thank you to the secretaries for being here. itis wanted zaidis secretary hud-- lahood we miss you. i am going to try to talk fast mr. chairman and gideon a couple of questions to each of the secretaries for the secretary lahood, this is about the recovery program and maintenance of the efforts that the governors have to certify to. about not cutting their own transportation investments efforts. in our state of connecticut the governor has made such as certified. the first question is have all the governors made that commitment, what is the department do to make sure states are maintaining that investment, their own investment plans and second to that come again with connecticut, $440 million made available,

262 million has been obligated, 71,000 to date has been thalade come end is that accurate from a perspective of looking at this as to whether or not outlays as a measure of economic activities, or should we look at that as a measure of economic activity or should we few outlays as a lagging indicator? >> well, i think the maintenance effort has been a problem and we are working with the states but every state is required by law to meet it. we are holding people's feet to the fire but we are working with them because we know it is somewhat of a problem but it is required by law. we talk about this every week when we talk about recovery activities and we are working with folks. we can check of the boxes. we can improve projects and then the states have to hire contractors and then the money begins to flow and a lot of money is beginning to flow now

because we have checked a lot of boxes, a lot of projects have been approved, the states have to award the contracts and then people began working. bile look, we know the unemployment figures are the lagging indicator and, the reflection of unemployment a couple of months ago is what will be reflected in the figures and, we think unemployment has come down in the building trades. people that build roads, bridges and roadways and buses and all of that but it probably won't be reflected for a couple more months. >> thank you very much. i tried to explain for this institution-- the effort that we did in nano you have gut newspapers an editorial saying where is the federal government? so we just need to move there and i will submit questions for the record on how to deal with

the federal highway, the requirements. >> yes, we will answer them. >> secretary vilsack ipers cheated your comments to congresswoman yarmuth and walking terrell that 1 dollar triggers dollar 83 if you will and economic activity. and, quite frankly real excitement about the opportunity and what kind of a stimulative effect food stamps and food assistance can be whether it is food stamps or emergency food aid. let me ask a couple of questions related here. we also provided some administrative funds, additional of administrative funds to address the rising demand for food stamps, and can you give us a sense of some of the ways in which states are spending those funds, and secondly with regard to the emergency food assistance program, how, you talked about

the states, how was that being distributed? is it competitive, is a formula? what is the story on how those and how are those funds being spent? >> i mustin met imo little confused here because i usually referred to u.s. madam chair but i guess i can't right now. representative, as it relates to your first question, the administrative expense money is going to states, and is in the states are very, significantly strep requested former governor, what you generally do when you were faced with that is you take a look first and foremost petrostate employment base. you try to determine whether not there's any way you can ride out the storm retirements, not filling vacancies. the problem with that is that the work that was otherwise to be done by those individuals is not being done and you have to

push it aside. and times of crisis the last thing you want to do is reduce the workforce in your department human services or whatever it is called in various states to the extent that we provided additional administrative money, states are using those resources to do two things. one is to maintain step into is to make sure that they have adequate technology to properly fund can properly can-- keep track of these resources. ebsen those monies which he would probably see are delays in the distribution of those resources, the glitz is in the technology, families who are applying not getting permission as quickly as possible, the emergency food assistance not being given out as quickly as possible and families suffering and we would have lost the stimulus effect of 97% of those monies being spent in the first 30 days. i must admit that i have lost you, your second question. >> at the gentlewomen woodfield

for just a moment? i does want to say i have to run for a conference call but i would be happy to yield my five extra minutes. i would be happy to do that congresswoman delauro who has been very kind to me over the years. i went to thank both of the secretaries very much. they both been in philadelphia and secretary as recently as yesterday. i can say the pennsylvania 13th congressional district for philadelphia and southeastern pennsylvania, the resources and support you provided secretary lahood at the airport was the very significant dollars, significant projects that are really helping us. we would love to see more. we would love to see more people get back to work but we look forward to working with you and i would be happy to yield the remaining minutes i have. >> i will not take the full five minutes. i nowak nothing here for a long time and i want to be cognizant of the german. >> the tfap monies were based on a formula each state receiving

an amount. connecticut for example receive 221,000 but 884,000 in additional resources. the use of those monies has been predominantly to allow for transportation and storage of resources and the purchase of additional commodities. i can tell you i have been, as i said earlier i have been in a number of these food banks and it is amazing they have segregated the stimulus purchases from the regular purchases and is remarkable how much food has been purchased from stimulus dollars. and then they will turn to you and they will say, this is feeding and providing hundreds of thousands of meals, hundreds of thousands of meals. and then you see folks who have never have to have the assistance before, never have had to have assistance before

the war going to food banks. thankfully there are volunteers, thankfully there are people who are concerned about this who are manning those food banks and volunteering. i know i come as part is the president's united we serve i did some voluntary work sorting some of the cans that were donated in it is a remarkable reaction by a very gracious and compassionate nation. >> you say it beautifully. i read a quote from a man who had a job, lost his job, a professional job and his quote was, i never felt so humiliated. ifill like calo live come up but i had to go to the food bank because it was the only way i was going to be able to feed my kids. first of all we should never make anyone feel that way about struggling with real challenges in their life, and having to

reach their handout for need. but, it is remarkable, the role that these food banks are playing in today's difficult economy and making sure that people have food on their plate for themselves and for their kids so let me just say a big thank you to the two of you for your commitment and your own personal vision and compassion for what is happening in our country today, regretfully because. >> thank you ms. delauro and secretary vilsack, secretary lahood, i know the demands and your time are enormous this time of year. >> may i interrupt? ms. sematic question for the record for the secretaries? >> all members including the ranking member will have seven days without objection to submit questions for the director. once again, i know that the demands upon your time are

enormous but it speaks volumes for a commitment in this administration's commitment to turning this economy around to, gillis these forthright, clear credible answers. i think we leave here believing the recovery act is working and will continue to work by design and will help pull us out of this worst slump since the 1930's for the thank you very much indeed for your contribution. [inaudible conversations] [inaudible conversations]

next week the senate judiciary committee is scheduled to vote to confirm supreme court nominee sonia sotomayor.

on friday to senators talked about judge sotomayor. we will hear from senator ted kaufman in favor of for confirmation and center john cornyn in opposition. this is 20 minutes. >> mr. president i rise today in support of the nomination of judge sotomayor to be the associate justice on the united states supreme court. less week the committee held four days of hearings in judge sotomayor's commination including two and half days of testimony from the judge herself. i came away from these hearings deeply impressed with judge sotomayor's intellect, and thoughtfulness, demeanor and integrity. these characteristics already play aegis a record and the last time accomplishment show even more briefly in last week's hearings. i respect for the law, president and the congress will help insure the supreme court is a place where the party, whether power for zero or powerless get a fair hearing.

in short, the hearings confirmed judge sotomayor has all the essential qualities that will enable her to serve well, all americans and the rule of law and our nation's highest court. mr. president my support for judge sotomayor is even stronger given our current economic circumstances. you might ask, what is the connection between our national economy and the supreme court nomination? the answer lies in the fact that today what we have-- when we have a need for significant financial reform we also faces a precourt thubron to this regard congressional policy choices. i raised the economic crisis in the regulation will be necessary to prevent the next crisis because i am concerned that the current supreme court is overly protective of corporate interest at the expense of everyday americans for guys that what this court, i am reminded of the reason observation by commentator jeffrey toobin.

the record reflects the view that the court should almost always deferred to the existing power relationships in this society. as to when reports in every major case the chief justice sided with the corporate defendant over the individual plaintiff. in business cases before the supreme court i am worried that it is possible to predict the outcome, simply by knowing the partisan nature dispute because the facts and the law sometimes seem secondary. for example in legend versus pf a.s. the court overturned 96 years of president and effectively legalized agreements between manufacturing the retailers to fix prices. annex unversus baker, the court sided with the company the recklessly destroy the livelihood of tens of thousands of alaskans dramatically reducing the punitive damages awarded that represented a small percentage of the company's earnings. in grows for zizek beil

financial services the court made it more difficult to prove age discrimination and in med break-through versus goodyear the court made it impossible for many plaintiffs to recover for the unequal pay based on an intentional sexual discrimination. so egregious was the they ledbetter decision that the congress major legislation overturning it was the first bill to reach president obama's tusk. legislation is pending that would overturn legion as well. congress should nafta passed every bill twice. it is essential for economic recovery that the congress respects the intent of congress when it acts to regulate the markets. make no mistakes, we must reform our financial markets. mr. president the last two years of give and as the final grade on an economic theory that is deeply suspicious of regulation entrusts the markets to police themselves. the grade was an f. the americans can no longer

stand for institutions to profit from risky bets and then beg the taxpayer for a bailout when those bets go bad. three decades of the regulations have gone too far. the ability of the greedy and the powerful to rid themselves at the expense of the taxpayer must be stopped. congress can and will enact a dramatically improved regulatory system. the president can and will make sure that the role of an enforcement agencies are populated with smart motivated and effective agents. my concern is that the supreme court resistance to federal government involvement in in regulation of markets could undermine these efforts. i am not suggesting that we face a return to the new deal errett court, corda truman to strike down regulatory reform is beyond the authority of congress. but a court predisposed against government regulation might chip away at the edges of reform and reducing its effectiveness. that is why my questioning of

judge sotomayor focused on her experience with business and business cases. she worked as a commercial litigator and business lawyer for eight years. for the past 17 years she has served on the most-active federal courts for business disputes for the six years and the southern district of new york and 11 on the second district circuit court of appeals. base on that extensive record, and ranchers to questions last week, we now know not only that she possesses enormous expertise in business litigation, but also that she calls these cases write down the middle without any bias or agenda. judge sotomayor, the facts of the law, not the identity of the party's drive the result. win judge sotomayor announced-- wenge visitor announced his retirement in may i suggested that the court would benefit from a broad range, a much broader range of experience among its members. my concern at the time was not the relative lack of women or racial or ethnic minorities on

the court, though that deficit is clearing. i was pointing to the fact that most of the current justices, whether they are black or white, women or men share roughly the same life experiences. judge sotomayor will bring a much-needed breath of experience to the court. unlike the other justices who lack extensive experience with private industry and inexperience on the trial court judge sotomayor understands the motivations and needs of the businesses that come before her. judging from our ability to communicate thoughts and ideas during the committee hearings last week i am confident that other justices and by extension the entire court will benefit by the addition of judge sotomayor's voice to its deliberations and business cases. as we undertake financial regulatory reform and other fixes for damage economy having judges to leave the lawmaking to lawmakers is absolutely

essential. judge sotomayor told me that she understands that quote policy making this up to the congress and that judges can't substitute their own judgment for that of the congress regardless of their view of the wisdom of the policy or regulation. throughout her career she has taken each case as it comes without predilection, giving full consideration to the arguments of both sides before reaching a decision. that is precisely the approach to judging when need on today's supreme court. mr. president judge sotomayor has the superior intellect, a broad experience, superb judgment and then questioning the integrity that would make her an outstanding nominee at any time. but given our current economic crisis and the likely role of the court in mcewing legislative responses to the crisis i submit that she is the idea of nominee at this time. her extensive experience as a commercial litigator, vistas

lawyer and judge in business cases and the passion for the law that she has demonstrated throughout her career suggests she will be a leader on the court at a time when such leadership is essential. i urge my colleagues to confirm judge sonia sotomayor. >> mr. president i would like to address the nomination of judge sonia sotomayor to be associate justice of the united states supreme court. the power of the constitution confers upon the united states senate to provide it buys and consent on judicial nominations as one of the most solemn responsibilities that we have. supreme court justices have always had tremendous power within our constitutional system, separated and enumerated powers. in recent decades, growing concern has arisen over judicial activism on the court, which

says the necessary consequence of taking power away from the elected representative sent us the people themselves, and conferring those in live ten year ajodha, the unelected judges who have occasionally used this power conferred upon them under the constitution and imposed their own views and their own agenda on the american people and substituting debt for the views of their elected representatives. we now see that five boats on the united states supreme court can invent new rights that aren't found in the constitution, or narrow the scope of rights that generations of americans have come to the u.s. fundamental. each justice serves for life, so every time in nominee comes before us, i think it is entirely appropriate and indeed require that we exercise do care and exercise in this power of

advise and consent. yes, senators must exercise the power and also the responsibility we have funded the constitution with great care and i believe with great respect for every nominee. sadly, over the recent years we have seen judicial nominees treated with the opposite of respect and fairness. some nominations have become quickly politicized before the nominee has even had a chance to speak for themselves or to answer important questions, or to put perhaps their record in context. we have seen outrageous accusations used to score political points and the damage a nominee and the court of public opinion before they have had an opportunity to even answer those concerns themselves.

second-highest court in the land. mr. estrada was filibustered seven times by the democratic minority and refused an up-or-down vote on the senate floor, something that was literally unheard of in previous times, and many senators shared my view that, had he been confirmed to the district of columbia court of appeals, that he could have been the first hispanic nominated to the united hispanic nominated to the united hispanic nominated to the united states supreme court. instead, that honor goes to the nominee we have before us, judge sonia server am i -- sotomayor. i was to make sure her process would be different from that

book in miguel estrada and others. when i first met with her in june i pledge i would do everything in my power to see she was treated with fairness and respect. when individuals and some organizations said where did things that the cheapened the process i said so. when supporters and opponents of judge sotomayor made accusations of racism are a repudiated them because i believe all such accusations are incompatible with the respectful and dignified consideration of her nomination. in the and i was pleased that judge sotomayor said she couldn't have received a more fair hearing and treatment during the confirmation process. i believe that a fair process and a fair hearing me means neither prejudging or pre-confirming a judicial nominee. fair treatment means looking at

the judge's record in quoting her public statements about the role of the judge in our separated powers of government. fair treatment means giving the judge, the nominee an opportunity to explain her record and comments and put the was in the appropriate context. so going into the hearings i found much to admire about judge sotomayor's record. she is an experienced judge with an excellent academic background she appears to be a tough judge which may be to her credit and demand a lot of the lawyers who appear in all argument before her court and for the most part her decision as a step district court judge and member of court of appeals within the mainstream of american jurisprudence. you're going into the hearings i also had some very serious questions that i thought was appropriate to ask her and i

thought she needed to answer. while else i set her judicial record is generally in the mainstream several of her decisions demonstrated cause for concern about the kind of liberal judicial activism that has steered the course in the wrong direction over the past few years. and many of her public statements reflect a surprisingly radical view of the law. now some have said we just have to ignore her public statements and speeches and just focus on her decisions as a lower court judge. i disagree with that position. judges on the lower courts, that is the district court but the court of appeals has less room to maneuver than a supreme court justice who is on subject to any kind of appellate review. supreme court justices can ignore more easily precedence or reinterpreted and. this is why judge sotomayor's

speeches and writings on judicial philosophy should matter and concern me a great deal. these speeches and writings contain very radical ideas on the role of the judge. in her speeches she said things like there is no object of pity, no neutrality in the law. just a matter of perspective. she said courts do in fact make policy and seemed to say that that was an appropriate role for the courts of appeals and she even suggested that ethnicity and gender can and should impact on a judge's decision making process. mr. president, for 13 years in my life i served as a state court judge, trial court judge and member of texas supreme court and i strongly disagree with the view of the law that says there is no and partiality, no object of the common no law

with a capital call that a judge could interpret. as to the contrary according to judge sotomayor's steegmans merely a matter of perspective and there is no impartial rules law. i don't know how you reconcile her statement but there is no objectivity, no neutrality infil all with the motto inscribed above the united states supreme court building which says equal justice under the law. if there is no such thing as object to the and neutrality only a matter of perspective, how in the world could we ever hope to attain that ideal of equal justice under the law? i don't know how you can reconcile those. despite my concerns about some of judge sotomayor's decisions as well as her statements, some of her statements about judging i went into the hearing with an open mind. i felt she deserved the opportunity to explain how she approached some of the most

controversial cases on which she has ruled and to put her public statements in context. i hope she would use the hearings to clear up the confusion many of us had trying to reconcile judge sotomayor who served for 17 years on the bench with the judge sotomayor who made some of these statements and speeches. the hearings were ultimately an opportunity for judge sotomayor to clear these things up. and ultimately in my view resulted in a missed opportunity to do so regarding her public statements about judging i was surprised to hear her say that she meant exactly the opposite of what she said, that she had been misunderstood every single time and that she really doesn't believe any of these radical statements after all and that her views aren't really aligned with chief justice john roberts. regarding some of the most

controversial decisions she refused to explain them on the merits. she didn't explain her legal reasoning or constitutional arguments she found persuasive. instead, choosing to explain those in terms of process and procedure whenever she could. she assured us hard decisions are guided by president even when many of her colleagues both on the court of appeals and the majority of the supreme court of the united states disagreed. so at the end of the hearing, i found myself still wondering who is the real judge sonia sotomayor and what kind of judge will she be when she's confirmed to the united states supreme court. mr. president, some of have argued if i am on certain or if another senator is on certain about the answer to that question that we should just go ahead and voted to confirm judge sotomayor. i disagree with that. voting to confirm a judge, this judge or any judge despite

doubts would certainly be a politically expedient thing to do. but i don't believe it would be the right thing to do, nor do i believe i would honor the duty we have under the constitution in providing our advice and consent on the judicial nominee. we all know that the future decisions of the supreme court of the united states will have a tremendous impact on all americans. the court, for example, could weaken the second amendment right of americans to keep and bear arms. and judge sotomayor's decisions on the subject reflect i believe a restricted view that is inconsistent with an individual right to keep and bear arms for all americans. the court could fail to protect the fifth amendment, private property rights of the people. from cities and states who want to condemn their private property for non-public uses. judge sotomayor has rendered decisions on the second circuit court of appeals that tend to support the views that she has

an opinion of the rights of the government to take private property for private use, not public use and that concerns me a great deal. the court could in fact invent new rights that appear nowhere in the constitution as they have in the past based on foreign lot a subject judge sotomayor has spoken and written on that she didn't settle any concerns many of us had about what role the would play in her decision making process when she's confirmed. i believe this takes are too high for me to vote for a nominee who could address all these issues from a little activist perspective. and so i say, mr. president, it is with regret and sadness i will vote against the confirmation of judge sonia sotomayor. i will vote with the certain knowledge, however, that she

will be confirmed despite my vote. and i want to say that i wish her well. i congratulate her on her historic achievement. i know she will be an inspiration to many young people within the hispanic community and beyond. and i hope -- i hope, mr. president, she proves me wrong in my doubts. the justice she is replacing, after all, has proved to have a far different impact than the president who nominated that judge believed that judge would have. and so, perhaps judge sonia sotomayor will surprise all of last. mr. president, i yield the floor.

next, a hearing on the obama administration's proposal to overhaul financial regulations. treasury secretary tim geithner and fed chairman ben bernanke testified today to a house panel on the administration's plan to create a new consumer financial

protection agency. this as two and a half hours. [inaudible conversations] the hearing will convene. [inaudible] [inaudible conversations] [inaudible] -- restructuring our financial regulatory apparatus. we will be doing hearings today. some next week. we will be returning in september with some action. i think it is very clearly the first thing we will be doing is marking up the consumer financial protection entity and

we will then be proceeding to marking up other aspects of this. our expectation is they will go to the floor as one bill because that has been dustin and's preference but i am committed to a structure which will give time to debate than title by title on the floor. this is clearly more than a one day 40 that and i will be working hard to make sure we have adequate time to debate on the floor the various aspects. we have eight minutes -- >> mr. chairman? dorcy next week we will be addressing is it executive compensation? not to the consumer? >> september triet >> ok. thank you. >> the executive compensation tuesday probably on the floor on friday. and with that, we will have our opening statements. the gentleman from pennsylvania for two minutes and 40 seconds.

>> for more than 70 years, mr. chairman, the regulatory reforms of the 1930's brought about than enacted because the and brittle access and dangerous speculation of an earlier era, safely steered our financial markets through the always rocky seas of capitalism. but all good things must come to an end. created for the economy the last century those antiquated rules failed to respond to today's realities in which financial engineering and innovation surpassed effective oversight. for our economy to flourish once again, we lost fix this problem. the administration's diligent efforts to reform our fault regulatory system have resulted in a white paper and subsequently specific legislative proposal. in particular, i am pleased the administration calls for establishing the office of national insurance. first it originated for which i strongly advocated for some time. also, i commend efforts to regulate the advisers of hedge

funds and other private pools of capital. similarly derivatives and swap markets will finally face a suitable level of scrutiny under the administration's plan. these reforms are long-overdue. while the administration's proposals for credit rating agencies represent a good start we must do much more in this field. bye sprinkling their magic dust on toxic assets, rating agencies turned worse manure into fool's gold. we therefore should no longer pursue only modest modifications and regulating this problematic industry. instead we must consider radical reform aimed at improving accountability where a fee on securities transactions. forcing a government quality assessment of rating agencies methodologies. changing liability standards for rating agencies and altering

business structures. additionally i must reiterate my deep and profound concerns about the selection of the federal reserve as the primary entity in charge of systemic risk. i believe that we need someone with real political accountability in this role like the treasury secretary. on the whole however the administration produced a thoughtful approach to financial services regulatory reform. i applaud the administration for its hard work, congress has now begun it's hard work using the administration is promising foundation as our guide for enacting new laws that put in place a regulatory system that will last a very long time and help ensure american prosperity for many years to come. i yield back my time. >> the gentleman from texas for three minutes. >> thank you mr. chairman. when you have the wrong diagnosis he will offer the will remedy and that it's exactly the case with the administration's proposal before us. economic turmoil hasn't risen from deregulation but more so

from done regulation. that and regulators and who didn't like regulatory authority that may have lacked adequate judgment. although i have a number of concerns about the plan i simply taken aback by the lack of reform of fannie mae and freddie mac, the epicenter of the financial crisis not to mention the suggested creation of an agency to abridge consumer rights. other than taking on the current status quo from these gse is the administration's plan institutionalizes the problem. when president of our referenced sweeping reform i didn't know he meant sweeping fannie and freddie under the rug. worse yet his plan actually gives federal reserve power to more systemic risk by establishing tier one financial holding companies which can simply create more fannie's and freddie's and signals to the market that the biggest institutions among us will always have a tax payer safety net. in other words the proposal enshrines us as a perpetual bailout nation.

one of the more troubling components of the proposed plan is creation of a new consumer financial product approval agency ruled by five unelected bureaucrats based upon their subjective determination of quote on quote fairness and will be in power to decide which credit cards we can receive and which mortgages we are permitted to possess and whether we can access an atm machine. the proposal represents one of the greatest assault on consumer rights i have witnessed. the legislation will stifle innovation perhaps the next online banking service or frequent flyer mile offering and worse yet it will contract credit to small businesses at a time of historic common point. there is a better way. the republican plan and drinking member bachus's leadership create a chapter of the bankruptcy code to enhance the resolution of large non-bank financial institutions. it puts an end to taxpayer funded bailouts and too big to fail. market stability and capital adequacy board will be

established in task of monitoring the interactions of all sectors in the financial system and identify risk that can endanger the stability and soundness of the system. republican plan focuses federal reserve on its core mission of conducting monetary policy and all the we've preserved its 13th exigent hours we do not mean they are of limited. once the housing market stabilized we will phase out taxpayer subsidies danny nee and freddie mac and in the current model of privatized profits in socialized losses. furthermore our proposal creates an office of consumer protection to empower consumers effective disclosure in enhanced penalties for fraud. there are choices between more bailouts and no bailout. market discipline or government control, consumer and how were met or loss of consumer lights let's hope this committee and this congress choose wisely. i yield back the balance of my time. >> i recognize myself for two minutes and 40 seconds. i want to address a startling misconception that somehow we are ignoring freddie mac and

fannie mae. the charge that fannie mae and freddie mac were being ignored was accurate up until 2007. that is before 2007 will there were efforts to legislate one which came from this committee under the chairman that proposed by president bush nothing had happened. in 2007, we did pass in march the bill to reform fannie mae and freddie mac and include every power requested by the bush administration to pass the house that summer. it didn't unfortunately passed the senate until the following year because the senate was narrowly divided but the fact is the proposal of the bush administration particularly secretary paulson for increased power over fannie mae and freddie mac did become law and it is under conservatorship so the notion there is an on bridles fannie mae and freddie mac was mystical. now it is true that going forward we will need to change the model but it isn't the case they are now the way they were. they are under conservatorship

and in fact serving as mog with the use tooby but almost a public utility because they're trying to deal with the mortgage prices and their main goal now is to help deal with foreclosure crisis and financing so they have in fact then the first step was taken at the request of the bush administration and everything done regarding fannie and freddie and 2008 was done at their request. we do have on the agenda going forward a look at what the future role should be. we will be proceeding finally with other aspects of this and i do want to say with regard to the consumer protection agency is now called the consumer product approval agency it won't be called that except by people trying to character it and it won't have the function. the notion that we should leave exactly as we have, consumer protection when it has been badly done that is a debate i'm

happy to have before the american people. the notion that the existing institutional structure to protect consumers adequately i think it's a mistake. yes i was pleased for instance on the national federation of independent business support to the credit card bill because of credit card users small business wanted that kind of protection that is what we will be doing going forward. the gentleman from texas, mr. blumenauer for one minute. >> thank you, mr. chairman. based on the principles of ending taxpayer bailouts and getting the government out of the business of picking winners and losers and restoring market discipline our plan calls for a simplification for consumers not duplicate shade -- duplication the sick and needing some firms as too big to fail and creating a permanent bailout authority doesn't reform the system and doesn't protect the act taxpayers. adding more regulation when our original wants -- regulators the original ones on getting the job done doesn't fix the problem. if they are regulatory holes we

should fill them. if we can streamline the number of agencies and reduce the overlap we should do so. we need reform that titans the ragged restructure and protect the tax payers rather than more bailouts and more bureaucracy we need to make more market discipline and more taxpayer protection available. i yield back. >> the gentleman from north carolina for two minutes and 40 seconds. >> thank you mr. chairman and i want to welcome secretary geithner and i want to particularly welcome my good friend, joe smith, the commissioner of banks from my home state, the state of north carolina who will be testifying on the second panel. in the 22 years i've practiced law before i came to this institution i came to realize that most often the definition of a good compromise is one that leaves everybody unsatisfied.

and measured against the secretary of the administration's proposal for restructuring is a resounding success because i haven't heard anybody who is completely satisfied with what has been proposed. that probably suggests that we get the right balance if we do with the administration has proposed with some minor modifications which we have to get involved in. the area in which i think we have received the most pushback has been the consumer product agency and i understand the natural resistance to change but i would just say to my friends in the industry with whom i've worked over the 18 years that i've been in this body now that if we've reached the end of this

process having given to the regulators and to the industry both of whom succeeded in really allowing a meltdown to take place in this country the same kind of structure and authority without a focus on the consumer public will be outraged and they should be outraged. so i want to welcome and encourage my friends in the industry to come to the table and sit down and talk about how we structure this new consumer protection agency in a way that does robustly what we intend for it to do, protection of consumers and does not have the disadvantage is that have been spelled out and in my opinion

and grossly overstated. i think some of the concerns raised our legitimate. we can address those but we are going to roll up the sleeves together to do so. >> thank you. i think getting to the bottom what caused the bible should be our primary objective here. and in point of fact it was the fed that came to us come to this committee and senate committee and said because of the size of the portfolio of fannie and freddie and the leverage ratio of 100 to one and leverage and the direction for them to have purchased a trillion in subprime mortgages for the political -- for the affordable housing goals and so forth that they had to be regulated for systemic risk. in 2003i put in a bill to do that working with the fed. in 2005 we in fact had my amendment on the floor to try to give the regulators the ability

to leave kuwait for systemic risk. fannie and freddie opposed. it was opposed by most members of this house. but in 2006 in the semidey at lagat it out of the committee. but again the democratic members on the senate side opposed that regulation to give the regulators the ability to handle fannie and freddie for systemic risk. that's the history of this. >> the gentleman from illinois for one minute. the gentleman from illinois for one minute. >> sorry mr. chairman. mr. chairman the administration's plan endorses the too big to fail mantra putting taxpayers on the hook for future the levels caused by the behavior of a few dysfunctional federal regulations and enforcement. it also allows the federal government to continue to pick winners and losers in the marketplace it's not fair to taxpayers or the little guys in my district. speaking of picking winners and

losers t.a.r.p. has left many banks hanging out to dry. those local banks are denied access to cdp and caps assistance. by the time any aid is assisted it might be too late. inouye banks and private equity at the door but waiting for a federal match that isn't available. some have estimated with 150 million capital infusion total of around 200 community banks could be saved. i want to hear from today's witnesses and a faction of the cost of letting them fold for less than 3% of the $700 billion authorized. why can you help our community banks? >> the gentleman from california. >> thank you. after listening to the regulators the last two weeks in these hearings on your concerned about the lack of communication and financial regulators and the recovery. financial accounting standard changed accounting only after serious market turmoil and oversight from financial policymakers yet when asking in recent hearings sec chairwoman

was unaware how the banking regulators were applying the accounting rules. it's not the job of the fcc to oversee the effort to regulate banks' financial policymakers should be collaborating on major issues that impact our economy. the fcc after all commits to a good 59 page study of fair value accounting standards and its effect on financial institutions and banks. i'm glad you are here the treasury of banking regulators to discuss regulatory reform and strongly believe we need a hearing on both regulators and the accounting policy makers in fact major change will be enacted in the credit market will be retroactive with both sas, 166 and 67. i hope i can be pro-active in examining the changes instead of responding react like we did with fair value. i yield back. >> let me just say after this i believe we will have time for the center is opening statement. mr. garate one minute. >> thank you, mr. chairman. mr. secretary, you know, general frank has been critical of the

banking industry for opposing the administration's plan. i don't think anybody believes we don't need some reform but the industry is in 21 who expresses concern. we will have a panel leader of the regulators out there and i think every one of them have expressed some doubt or concern with this efp proposal and a matter of fact bernanke was here the other day and expressed his concern with proposals as well. i know there's some of the other side ever going to say decree a whole new federal barack receipts. it's a good winter. i disagree. some may well say agree. the more we hear about it, the more problems we see, the more we realize that the bad ideas that will limit consumer choice, it will increase costs, and the most important thing, most ironic thing, is potentially decreases safety and soundness

for our banking system. thank you. >> we'll have the secretary's statement. and then we will then break and come back. mr. secretary. >> chairman frank, members of the committee, thanks for give mimi the chance to come forward today. let me first begin by commending you for the important work you've already undertaken to help build consensus on financial reform. we have an opportunity to bring about fundamental change to our financial system to provide greater protection for consumers and for businesses. we share a responsibility to get this right and to get this done. on june 17th, the president outlined a proposal for comprehensive change of the basic rules of the road for the financial system. these proposals were designed to lay the foundation for a safer, less vulnerable to fraud and manipulation. the president decided we need to move quickly while the memory of the ceiling damage caused by this crisis was so fresh and before the impetus to reform faded. these proposals have led to an

important debate how best to reform the system, how to achieve a balance between innovation and stability. we welcome this debate and will work closely with congress to help shape a comprehensive and strong package of legislative changes. our written testimony reviews the outlines of these proposals. i just want focus my opening remarks on to central areas for reform. the first is the proposal for a consumer financial protection agency. we can all agree i believe that in the years leading up to the current crisis our consumer protection regime fundamentally failed. it failed because the system allowed a range of institutions to escapes effective supervision. it failed because the system is fragmented, fragmenting responsibility for consumer protection over numerous regulators creating opportunities for each nation. and field because of federal financial services regulators have higher priorities than consumer protection. the result left millions of americans at risk and i believe for the first time in the modern

history of financial crises in our country we face an acute crisis which brought the financial system to the edge of collapse in significant part because failures and consumer protection. the system allowed this system allowed the ekstrand excess of the subprime mortgages lending boom loans without proof of income and planet or financial assets that reset to unaffordable rates that consumers couldn't understand and contribute to millions of americans losing their homes. those practices built up over a long period of time. they peaked in 2006 but it took federal banking agencies until june of 2007 after the peak to reach consensus on supervisory guidance that would impose even general standards on the sale and underwriting of subprime mortgages and it took another year for these agencies to settle on a simple disclosure for subprime mortgages. these actions came too late to help consumers and homeowners. the basic standards of protection were too weak and not

effectively enforced and accountability was defused. we believe the only viable solution is to provide a single entity and the government with a clear mandate for consumer protection and financial products and services with clear authority to write rules and enforce those rules. we propose to give this new agency jurisdiction over the entire marketplace. this will provide a level playing field with a reach of federal oversight extended for the first time to all financial firms. this means the agency would said examiners into nonbanks as well as banks reviewing loan files and intervening sales people. consumers will be less vulnerable to the type of race to the bottom and standards produced by allowing institutions without effective supervision to compete alongside banks. we believe the effective protection requires consolidated authority to both right and enforce rules. rules written by the was not responsible for enforcing them are likely to be poorly designed with insufficient fuel for the needs of consumers and the realities of the market.

rule writing authority without enforcement would risk creating agencies that are too weak dominated by those in the enforcement authority and leaving enforcement authority divided as it is today among this complicated mix of supervisors and risk continued opportunities for asian and uneven protection. now the proposal was designed to preserve the incentives and opportunities for innovation. many of the practices of consumer lending to this crisis of innovation a bad name. with the claim was innovation was often just probation but possible for future innovations to come with list risk. we want the confidence of financial investors with the authority to prevent abusive and unfair practices while at the same time providing promoting innovation and consumer access to financial products. the second critical in paris to reform is to create a more stable system. in the years leading up to this

crisis, our regime, a regulatory framework permitted access builder of leverage both outside the banking system and within the banking system. the shock absorbers and other critical to preserving the stability of the system, these are shock absorbers in the form of capital requirements, marge and liquidity requirements were inadequate to withstand the force of the global recession. they left the system too weak to withstand the failure of a major financial institution. now addressing this challenge we will require substantial changes. it will require putting in place stronger constraints on risk taking with stronger limits on leverage, or conservative standards for funding and liquidity management. these standards need to be enforced more broadly across the financial system overall covering not just all banks the institutions that present a potential risk to the stability of the financial system. this will require bringing markets that are critical to the provision of credit and capital, the derivatives markets, the securitization market and credit rating agencies within a broad framework of oversight. this will require reform to

compensation practices to reduce incentives for excessive risk-taking in the future. this will require much stronger cushions or shock absorbers and the critical centralized infrastructure. so that the system as a whole is less vulnerable to contagion and is better able to withstand the pressures that come with financial shock and the risk of failure of large institutions. and this will require strong authority to manage the failure of these institutions. resolution authority is essential to any credible plan to make it possible to limit moral hazards in the future and limit the need for future bailouts. now alongside these changes we need to put in place important changes to the broad oversight frame work. our patchwork antiquated balkanized segmented structure oversight responsibility created large gaps in coverage allowing institutions to shop for the weakest regulator and left authorities without the capacity to understand and stay abreast of the changing risk in the financial system. to address this with proposed establishing council responsible for looking at the financial

system as a whole. no single entity can fully discharge this responsibility. at were proposed financial services oversight council bring together the head of all the major federal financial regulatory agencies including the federal reserve, sec etc. this council would be accountable to the congress for making sure we have in place strong protection for the stability of the financial system, the policies closely coordinated across responsible agencies and we adapt the safeguards and protection as the system changes in the future and new sources of risk and urge that we are effective for cooperating with countries around the world and in forcing strong standards. this council will have the power to gather information from any firm or market to help identify emerging risks and have the responsibility to recommend changes in law and regulation to reduce future opportunities for arbitrage to help ensure and put in place and maintain overtime strong safeguards against the risk of future crises. the federal reserve will have an important role in this framework. it will be responsible for the

consolidated supervision of all large interconnected firms whose failure could threaten the stability of the system regardless whether the owner depository institution. the fed in our judgment is the only regulatory body with the experience, the institutional knowledge and the capacity to do this. this is a role the fed largely already plays today. and while the plan does clarify this basic responsibility and give squier accountability to the fed for this responsibility it also takes away substantial authority. we propose to take away from the fed today responsibility for setting, writing rules for consumer protection and for enforcing those rules and we propose to require the fed or people received written approval from the secretary of the treasury before exercising its emergency landing authority. now we look forward to refining these recommendations through the legislative process to help advance the process we've already provided detailed draft

legislative language to the hill on every piece of the president's reform package. >> mr. secretary if you could wind up and then we will come back. >> just 30 seconds. we welcome your committee and counterparts to pass reform this year. despite this crisis, the united states remains in many ways the most productive, most innovative resilient economy in the world. to preserve this know we need a more resilient system and this requires fundamental reform. thank you. we look forward to working with you. >> we will return with the questioning. [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> the hearing will reconvene. and mr. secretary, i will get to questions but i want to use as part of my five minutes to continue with history. i think the distortion of history we've seen particularly with fannie mae and freddie mac needs to be addressed. the gentleman of california mentioned that in 2005 when the committee declared a bill he offered an amendment he said would have resolved the problem and he obviously strongly believes that. he mentioned that it was a post. he then went on to say that in this and then there was a version that was put up with the

democrats oppose it, he did not characterize the party position this in the house so i thought i would check and see if my memory in this one case held up. it did. and the vote on the amendment offered by the gentleman of california, 153 republicans voted no, 70 voted against. the current ranking member of the committee, mr. bachus, voted no along with me and mr. oxley, the chairman of the committee, the gentleman of texas, mr. neugebauer, we all voted no, it is true the amendment was offered but it was defeated overwhelmingly at more than two-thirds of the republican members. succumb if the history as relevant it seems to me that is a relevant part of it. the gentleman of texas did the odious and soak for that. and again i would reiterate jian-li in 20 or fight the republican controlled house, republican controlled bailout passed the house some members

thought it was too weak. the president thought it was too weak. the senate passed a different version. they didn't take the bill out and nothing happened. the secretary of the treasury at the time mr. snow said he felt the bill brought forth by mr. oxley was a good bill. he was overruled by the administration. the gentleman of ohio was troubled by what the administration did. i joined him in writing a letter. i actually voted against the bill before not to freddie and fannie but housing agencies i did write to this and saying let's work this out. the senate took the bill out. the chair, the republican chair apparently felt that it wasn't at this point worth trying. probably because he had some republican object within him. but then in 2007 as it was clear that there was a crisis, as i did believe about 2005, the house did take it up when the committee organized after the election of 26 and i was the chairman the first major piece of legislation we dealt with was

to reform frannie and freddie and it worked completely with the administration including the powers of reason version of etc. the bill passed. it didn't pass the senate because that same partisan division. 51 for, 49 senate is hard to make lunch and weather is 51 d's or ours, it doesn't make a difference but i did want to say that was the history and as i said, the bill did pass in 2008 as we are not done with fannie mae and freddie mac of the past. clearly we have to do something before they can resume their role but they are now playing a different role than they had played before. and now, mr. secretary, of wants struck to know there's been debate whether we are going to have a consumer protection agency and who should be the systemic risk regulator, and it was interesting to note your critics seem to be aligned with the socialist government in london while the conservative government of london is all the

other side. i did note the conservative party line that can of for consumer regulator and for the bank of england being a single system at risk regulator which does appear to be close to your position whereas the socialist government, phenomenally socialist has taken the opposite side. so, apparently when things cross the of planted again reversed. i had not realized that that was the ideological effect of a transoceanic voyage. i think the point is this: that what we are talking about are important issues people of good will can differ about and that ideology shouldn't be driving this and in many cases doesn't drive it. it is a practical and pragmatic decision that is to be made. the only thing i would add again is why i strongly support the rationale of the consumer protection agency -- one of the members of the other side note to all the regulators are against it. now, those regulators should be happy they are getting support from some quarters they don't

ordinarily get. so maybe they should cherished when they get it. i am always skeptical when people who offer a disagreement with somebody suddenly finds great wisdom with those people but the fact is that what we are talking about are agencies that are going to lose power. and they object to losing their power. i think they have a right to make the argument that is sometimes made. they can argue that taking the power away from them and not make sense because the powers that will be taken away from them are in very good shape because they have rarely been used. yes, it is true that they are pristine powers. they have sat largely not draw upon for awhile but i think it is time to put them in use. gentlemen of texas. >> thank you. i accept your apology, mr. chairman. [laughter] secretary geithner, before we move on regulatory reform, i

hope he will at least avail yourself for coming back one more time so we can talk about that issue. because it is of extreme importance, including the gentleman just said about the new agency which will design and to determine the appropriateness of all financial products. >> come back to talk about that or gse knees? >> gse is, the whole -- i think it would be extremely helpful. my first question the chairman reminded me about frannie may which also one of the big things on the table is how much money is the government of the taxpayers a ultimately going to lose from everything that happened over the last year? and you see some figures of $20 trillion, which, you know, that would -- that would just take -- you know, i don't even use that figure. i just say we have seen

3 trillion is the amount outstanding. so -- but, i've looked at those and i think there is three big areas of floss and i want to see if you, going forward what we're going to 85 billy and the extended to feeney and freddie ai see the prospect of getting that backend would like your views on that. the second-biggest looks to be the car companies. we extended 80 billion it looks like we have gotten to back. we do have an equity share which is going to be very problematic. i see those as the biggest losses. normally people say that aig is the biggest loss but i know the property be took on board is diminished in value by 15 billion. so, i do see -- right now 50 or 20 billion-dollar loss. but by far, danny is a big one.

chrysler finance and maybe the next one. i know that of america, city, there's a lot of money. of course bear stearns and cit, we lost money there -- are there others -- in fact i see others making money -- but i see those two big ones or fannie being the biggest about 85 billion maybe all of those, 70 billion. >> congressman, i think that some of these broad numbers, actually capture exposure and they don't represent any recent loss to the tax. you're doing it right which is to look at the areas that are most damage, most at risk and build up from that. i don't believe that we are in the position today to give you even this month or maybe even this year to give you a realistic estimate yet of those losses. that's important for us to do. one of the strengths of the system is when we make these

commitments under the budget rules we are required to sort of set aside an estimate that's done independently of the administration of potential risk and loss to the taxpayer. let me just take the positive side of this for a minute. as you said, some of these programs are making money. i will give you two examples. we have had i think in the range of $80 billion in capital come back to the treasury over the last two months. >> the capitol purchase plan. >> and -- seabeck some of the lending -- >> and if you look at the value of investment the government made with goldman sachs after the warrants, the government realize 23% annual return on that investment, and that is a measure of the effectiveness of the policies congress helped put in place to try to bring more stability to the financial system with the effect of those actions the ultimate cost of this crisis could prove to be very modest, relative to the scale of the risk we confronted. but we don't know that until -- >> i would just -- let me ask another question. i think you have got fannie mae

and freddie mac are the biggest loss. maybe looking to talf. you know, or talking about the capitol purchase and the idea there is we put the money in the banks and they will lend it and you get a multiplier effect. and then it will pass through the economy and i think the philosophy is the economic term. of course they're holding on to it but that is because the capitol requirements and they are restocking their capital. a lot of them are lending it, but tell me why we didn't really see that the multiplier effect. >> i think you did. remember a dollar of capital is the equivalent to between eight or $12 of lending capacity. as if you are short a dollar of capital you have to reduce lending by eight or $12. so on a scale of the financial system just think of this. without that initial $200 billion of capital, the previous administration put into the financial system, you would have seen overall lending

capacity decline will avert a trillion dollars. one or 2 trillion. >> the gentleman of pennsylvania. >> thank you mr. chairman. we do appreciate. in my youth in remarks i refer to the rating agencies and we paid some particular attention to the white paper suggestions in the treasury. i'm not necessarily overwhelmed with the strong position. >> that sounds -- >> running through some of the alternatives we have could you give me arguments, pro or con, user pay whether or not if we take the user pay a way that will have a positive effect for straightening out some of the problem, and if we do where can we allocate them? >> you're right many people say the fundamental problem is in the issue payer model.

but having looked at that question a long approval of time and listen to experts on it, i don't see a practical viable alternative. there's been some models that don't have that structure tested. they didn't seem to work that well. but this is an important area of reform and of course we don't believe we have a monopoly of wisdom in these areas and we are happy to look at any idea and putting the ones you listed in your opening statements. >> how soon do you think we should try and get package of the items we are talking about and the white paper referred to? how soon should they be finished, would you feel comfortable that we've responded to them? >> when do we want these reforms in place to me? >> yes. >> i think they need to be done as a package. you've made that point yourself many times. we can't fix this just by looking at capital over here and looking over here. and all this system eckert including the rating agencies to have to look at the comprehensive reforms as a package and as i sit in my

opening remarks, i think it's important we move this year just because as you've already heard, given the scale of interest affected by this reform, given the amount of authority taking away from people who have it today there is a lot of resistance and opposition, and if we wait or we try to do it piecemeal it is going to be much harder i think for this committee to find consensus on something strong. >> now, we are working on something on insurance, and i know the treasury is setting something up. if we don't get a national jurisdiction of some element, how will this systemic risk regulator work? will that leave it very deficient over a large portion of the financial industry? >> i agree that as you saw in the model line of credit rating agencies, model when insurance companies and in aig, one of the things the center of the crisis is you have entities that are

not only insurance companies, with no federal oversight of any meaningful level, writing dramatically large commitments for credit protection with no meaningful levels of capital against that. and that is something we can afford to allow to happen in the future. so i think the framework we have proposed which largely is modeled on something you propose to begin the process of putting in place federal level oversight. it will be very important. very important. but of course our job is not just you know to deal with the last war but to make sure we are putting in place something that is going to capture those weaknesses more quickly in the future. but i think you are hiding one example of the we shouldn't be more than one telephone call away mr. secretary. i yield back. >> the gentleman from texas. >> thank you, mr. chairman.

welcome, mr. secretary. it's always good to see you. if i had more than five minutes we would talk about other things we agree on but given the limited time, i must add -- >> i could use my time to describe those. [laughter] >> on your time, i guess, on my time, no. let's continue on with our gse history lesson if we can, beginning in 1990, fannie and freddie's investment portfolio. in 1995, hud authorized fannie mae to securities including loans to low-income borrowers. and 24 fannie and freddie purchased 175 billion in subprime mortgages accounting for 44% of the market. from 05 to 07, fannie and freddie purchased approximately a trillion, a number that is all too common in this congress, a trillion alt-a loans and the list goes on.

that is the history. where we find ourselves today? we know that danny and freddie share the origination market is not increased in roughly half the 75%. at last look, the taxpayers have paid out i believe $85 billion that none of us expect to get back. they are on the hook for an additional 315 billion principally for helping securitized loans to people who couldn't afford to pay them back in the first place. now, mr. secretary, you have said i believe in rolling help the white paper before the senate banking committee on june 18th, quote, we wanted to make sure we were focusing on central issues of this crisis. i know you're concerned about fannie and freddie, but as a logical conclusion since there is not a proposal beyond the study of the gse and the administration's proposal that administration has concluded that fannie and freddie born of a central cause of the crisis. >> i would say that congress in

its wisdom passed legislative authority that provided for the first time modern oversight capacity of the institutions. that was done in the summer of 2008. >> so if i could mr. secretary -- i do have limited time, so it is a central cause, but do you believe to great extent it has already been remedied -- >> no, can i just finish this one thing? and i agree with you on this. as a government, we are going to have to figure out the future. what they are today isn't going to be their future. it is not in their future. >> but why not included in the legislative proposal if it is a central cause -- >> because we are rarely accused of insufficient and vision. we are taking on a lot of things, trying to solve a lot of problems in this area and we think we want to do that one, don't need to do it right now, cannot credibly began to think about that reasonably right now because they are now the entire mortgage market in the country because the failurewe