rather the intermediaries who buy and sell the securities for investors. our recent sec proposals require disclosure concerning variable rate debt and obligations about ratings downgrades and other events in the life levine and our statutory authority in this area so we will work with congress to promote a more robust disclosure information regime for the future. yet again it is a little bit of information for investors who want to make an informed decision. and finally we are trying to open a window into the world of short selling. just this summer the fcc set out to increase public availability of short sales related information. as a part of this initiative the self-regulatory organizations or publishing the aggregate volume of short sales that occur on a given day for a given security

and they will be publishing on a delayed basis the data on individual short sale transactions as they occurred in real time. this, too is a little information that can help and foreign investors as they consider what stocks to buy and sell pubic in each of the cases involving corporate disclosure you can see we are not necessarily dictating how a firm should act. but i believe when corporate disclosures mandated, corporate actors may think twice. it's simply a by-product of disclosure so we might not be able to force a credit rating agency to make good ratings but we should and that encouraging them to be more rigorous and how they rate and avoid conflict of interest. we might not be able to force investors to minimize their reliance on ratings but by disclosing the rating shopping we hope we cause them to think about the true value of the reading. we might not be able to get companies to only nominate warren buffett to the board but we could end up encouraging them to reconsider nominating someone

with little qualification. and if that is what happens it's not a bad thing. of course it is not just investors who need information to make good decisions. it's the regulators that need it, too and the entire regulatory reform effort is in part about just that, gathering more information. many proposals will help regulators answer questions such as house table are the hedge funds that are not even regulated right now are an enormous presence in the markets? what type of risks exist as a result of credit-default swaps and other over-the-counter derivatives? what are the systemic risks emerging across the entire financial spectrum? however congress decides to monitor system be it through a single entity or council of regulators or hybrid approach, they will have to understand the risks, take steps to minimize them before the crisis develops and be ready to act fast. they will have to be able to make good decisions and they will need good information to

make the right ones. in this interconnected global financial system, those decisions can have a worldwide impact. so that is why we are all about disclosure and transparency and that is why is that the core of what we do. for those of you here who are students training to become the future business leaders of america and the rest of the world i would say this, gathered the information, get the right information, understand that information and then no matter how complex the decision, and you will be likely to make a good one. but in the process please don't forget investors deserve good information as well. thank you and i would be happy to take some questions. [applause] >> we are a little behind schedule so we won't get all the

questions but here are some late arrivals. the first one is kind of an interesting question. do you feel hedge funds should disclose more information? that more disclosure hurt investors by dtv reading the funds strategic position? >> that is a great question and one that we wrestle with a lot in the abstract because right now we don't have authority to require disclosures either to the regulators or the public about hedge fund. but as legislation advances that would give likely the sec the authority to register hedge fund advisors those are the issues exploring and we are aware of the tension between the need for transparency and hedge funds to be a to have an investment strategy that is in front ron by other investors. we are likely to end up i think with some fairly detailed reporting to regulators and some level of public reporting of hedge funds just as we have now

from mutual funds and would be hard to draw too great a distinction between the two belong what time basis and so forth, i think our issues to be resolved. >> the next question, an accounting question can you provide your thoughts how one global standard under ifrs will disclose across borders and of this would in any way improve corporate governance? >> call i am a lawyer and i cannot tell you how often i answer accounting questions. it's been one of the revelations of taking this position by and happy to talk about ifrs. my view and the commission's view is to be ideal if we could have a single set of high-quality accounting standards that worked globally. and the reason for that is that it would allow for comparability for very large companies in particular and give investors the ability to make comparisons

for business sectors. so i think it is a very laudable goal. the commission itself has published for comment last spring, this past spring eight road map for sprick -- ifrs and those standards. the comment period closed this summer. we are working through those issues and i expect we will speak later this fall with our expectations are with respect to ifrs. in the meantime, the u.s. standard setting body and isp in europe are working together on a number of initiatives to try to achieve convergence of particularly important accounting standards. they have an animal you they are working through a long list and the goal is to achieve as much convergence between u.s. gap and international standards as

possible. i would want to circle back to what i said at the beginning, high-quality standards are what is so critical here. financial statements exist for investors to make rational decisions good information to make decisions about capital allocation, and sell the underlying premise for anything we do has to be the standards present truthful, natural, clear and honest information about the financial situation of a company and that is going to be our guiding light. >> next question as it stands the cftc that in the sec will remain separate entities. however will separate regulatory bodies be effective in being able to keep up with inflation and financial products given how challenging former regulatory authority is divided between the sec and the cftc?

>> the cftc was created in 1974 and the day after the bill was signed to create and see people started to argue why it wasn't part of the sec from the beginning. and the debate has gone on for 35 years at this point and i had chaired the cftc. i am honored to now chair the sec so i have argued from every direction this issue whether the agencies should be merged. my current view is [laughter] p5 plus 1 it has been for a while there would be tremendous efficiency for both industry and investors and the merger of the agencies. clearly not going to happen anytime soon. so we have embarked on a program with the cftc to work together as effectively as we can for those categories of products that are very similar under each of our jurisdictions. as we have held two days of harmonization hearings to talk about some of the big issues.

we have a very robust work plan as we begin to look at where it won't be appropriate in every instance to harmonize the regime and work together more effectively and if you look at the administration otc derivatives regulation legislation, you will see it calls for a significant amount of joint rulemakings between the agencies, and it's hard enough. we have done nine rulemakings this year. it's hard enough to get commissioners to agree or a majority of five commissioners to agree to move forward and now we will have to get tend to move forward coming from different philosophical place is. but german goods were and i are highly committed to making this process work as effectively as we can. it's not about the agencies at the end of the day. it's about how do we protect the american public, how do we let commerce precede any rational

and well regulated effective way so we are committed on this. >> and we have a question i think would have a short answer. >> i'm sorry. [laughter] >> is the proposed rule one rating agencies' performance retroactive? it doesn't have to be yes or no. >> i believe it applies to ratings after january, 2007. you can all read about in federal register. pretty sure it is 2007. >> i should add the performance history will be on a delayed basis and that is an important point. there are basically two models of rating agencies, if you were paid on productive and subscriber paid where the investor pays for the rating. and we don't want to disadvantage of the subscriber paid model by having their intellectual property out there for all to have on a free basis

nobody ended up paying for it at all so we encourage a lot of competition >> a long answer to question what role should fannie and freddie play going forward and in what form, public private or broken up into pieces? it's beyond my pay grade to tell you the truth. even the administration and white paper pushed this issue off for a decision at a later date. it is a very difficult call to make and there are enormous competing interests of the policy side with respect to the capitol markets, competitive issues and i know there has been enormous amount of careful thought gwen on the treasury and fha and throughout the government so it is too early to signal where that might land.

last question? let's and with something on controversy. this is not my question. this just came in the mail. the sec has notoriously hard to change a culture that is stymied previous commissioners. what are you doing to change that culture? [laughter] something easy to end with. >> it is a fair question. the sec has an enormously proud 75 year history and there isn't another agency in the federal government whose commitment over a long period of time to investors, to a fair and free and open markets, to a level playing fields, matches the sec. i wouldn't have come to the agency if i didn't come back to the agency. if i didn't believe it was

critically important to the success of capital markets and well-being of our citizens. over the last several years i will say the agency has been caught up in issues that i think are a little less front and center particularly post economic crisis so while we care about competitiveness issues our focus must be back on investors. our focus has to be back on market integrity level playing fields. i have found in my seven months or so at the agency that message resonates enormously with the staff, so changing the cultures doesn't happen overnight but the deep culture is actually a wonderfully strong pro investor culture and we have to take away some of the shackles that have been put on the staff. we have to empower people to do things, to take the evidence to the very end of the process, to write the rules that will not be liked by the industry.

we've done nine majeure rulemakings. i don't have a friend left in the world as a result. [laughter] but we have to be willing to do those and i have to be willing to send that message every single day not just words but deeds and i think the commission has been trying to do that with a very aggressive agenda. we are trying to bring new leadership and skill sets, new training programs, and some frankly new ways of doing business. so if i could give you just one tax people, we created for the first time in the agency a division of risk, strategy and innovation. we brought in henry from the university of texas who has written a lot of work on the intersection of financial innovation and the law and the whole idea is to bring a lot of smart people in who can help us throughout the agency think about risk, think about new ways to do things come and bring a fresh perspective. that is just one small example but we are planting many seeds

to focus people back, but the core mission must be in protecting investors, and maybe he will invite me back in a year and i can give an update how we are doing. it is worth every single day. it doesn't change direction overnight. but we are doing i think all of the things that we human we can to make sure that his agency is worthy of the confidence of american investors. thank you. >> mary, this before so much. >> it is my pleasure. [applause] >> we will start our next panel and five minutes.

c-span's supreme court week is two weeks away with an insider's view of the court threw historians, reporters and supreme court justices past and present. >> this is the highest court in the land, and the framers created it after studying the great law givers in history and taking a look at what they thought the world wide was important for the judicial branch to do. >> supreme court week starting october 4th on c-span. and go on line now to c-span or/supreme court for a virtual

tour, historic photos and to other science. senior white house economic adviser lawrence summers was the keynote speaker of this conference on global finance, hosted by georgetown university school of business. his remarks are about an hour. >> [inaudible] it is my pleasure to introduce john jay, 40 president of georgetown university who will introduce our next guest. [applause] >> thank you very much, george. many george town board members particularly cathie our purpose of aiding in today's conference as well as finance faculty, outstanding efforts have made

this possible. it is my pleasure to be with you all today in the auditorium as we host our first official agent in the building. this facility provides a home for the school business, home that will enable the of students to meet the challenges of the world where people are increasingly interconnected in nations and interdependent. so it is very fitting we hold this conference on the future of global finance here and it is very fitting we hold it now. as we know it was exactly one year ago in mid september that the global financial crisis of 2008 became particularly acute, international stock markets crashed and entered a period of extreme volatility. banks and other financial institutions in the u.s. and abroad began to fail. the global community faced the greatest crisis since the great depression. all of us gathered here today whether in government, business,

the media or academia are involved in discussions or engaging ideas about what economic reforms are needed to prevent another global financial crisis. in order to do so, this conference ecologists it's particularly important to focus on the regulation and restructuring of the global financial markets. and all of these discussions in very much the spirit of service that is live at georgetown for over 200 years we also need to remember one thing. we need to remember premarket wealth creation that economic relations between individuals and nations the distribution of profit and wealth must be conducted in concert with concern for the common good. if we forget this, all of our work means little. one person who has long worked for the common good is the keynote speaker today, larry

summers. dr. summers is the director of the white house's national economic council and until his appointment in january this year he was the charles w. eliot university professor at harvard. throughout his career, he has shown both an extraordinary capability to address the challenges presented by modern capital markets compassion for the needy community. he had an to leave to distinguished career teaching at harvard and mit. he served as chief economist of the world bank where he played a role in designing strategies to help developing countries. leader as under secretary and deputy secretary of the treasury, he was instrumental in creating u.s. support programs for mexico in the wake of its financial crisis and crafting the international response to the asian financial crisis and

1997. during his tenure as the secretary of the treasury, and the clinton administration, the united states marked the longest period of sustained economic growth in the history. internationally he focused on addressing the challenges presented by bader capital markets. his work with international monetary fund contributed to a more effective surveillance of financial liabilities, greater transparency and the global financial system and the introduction of new lending facilities to deal with capital account crises. he was also a key figure in securing the sycophant expansion and debt relief for the world's progress most indebted countries. this led to increase in available funds for health care and education and a number of the world's neediest nations. at the end of the clinton administration, dr. summers returned to cambridge where he served as the president of harvard university. he has a bachelor's degree in

economics from mit, ph.d. from harvard. his research contributions were recognized when he received the john bates clark medal given every two years to the outstanding american economists under the age of 40. he was also the first social scientist to receive the national science foundation's alan t. waterman award for outstanding scientific achievement. he's a member of the national academy of science and has written extensively on economic analysis and policy. on a special day like today for the georgetown university community and when we inaugurate this extraordinary building in this hall this very special conference it is a privilege for me to have him with us today to provide his insight. ladies and gentlemen, dr. lawrence summers. [applause]

>> thank you very much for those kind words. you described a number of different areas, and which i have worked. when i first came to washington people asked me what was different about working in the treasury department from researching and teaching economics at the university. and i used to say as a professor of economics the single worst thing you could do was to sign your name to something you have not written yourself. on the other hand, as a government bureaucrat, he was considered part of effectiveness. [laughter] to do so as frequently as possible. [laughter]

and then i went back from washington to serve as harvard president. people used to ask me what is different about being harvard's president and working in the government in washington? and i gave an answer. as i think about it today it was breathtaking. i used to say washington is so political. [laughter] not everybody is rooting for you to succeed. of an objective. i might get a slightly different answer today. [laughter] but any event i am grateful for the opportunity. i am now serving as director for president obama's national -- [laughter] president obama's national

economic council and especially glad to have this opportunity to participate in this celebration of a great business school that's part of a great university. and an absolutely critical time. after we have seen, i think we can probably agree there may have been no lament the last half century when the set of subjects that are studied in business school, finance, effective organizations, productivity and efficiency. probably has never been a moment when those subjects were more important to the national and global interest. but i would like to do today is talk about one aspect of what is very much a focus of study here which is the functioning of a

healthy financial system. you know, in many ways we all take what the financial system does for granted. but if you have never thought about it before you would think that it was slightly something remarkable. in our society, we had millions of households who want to save for a rainy day for their retirement or send their children to college. we have business that need financing for their inventories that have great ideas for entrepreneurial visions that want to refurbish a depreciating plant. and what the financial system does is performed the important task of bringing them together. of providing the business with

the capitol it needs while at the same time providing the household with an opportunity to hold their savings in a secure form where it multiplies with the passage of time. there are few more questions in any economy than how well this job has done. when it has done better households earned more on their savings and for investments can take place because businesses can borrow at lower cost. think about this. in a typical economy like the american economy, where the capital output ratio and prevent financial system even a little bit so that projects invested in

earned an extra 20 basis points is enough to raise the gdp over tire by 6% and there are not many economic issues that loom that large. and so, the question of the financial system is a profound importance. the question of financial innovation and its management is critical. some time ago when i was last in a government i compared the modern financial system with all to a jet plane. the invention of the jet plane got people where they were going faster and more comfortably and that was a clear improvement. but the crash is when they happened or that much more damaging and spectacular. we are seeing something similar with financial innovation.

after the last two years, it is increasingly appropriate to ask whether this particular budget plan should be kept in service with the same set of controls or at least with the regulatory regime is adequate for the future. because we have been reminded of a great deal about financial instability. ..

>> the basic idea which is how prices fall and people grow less and consume more and the market equilibrates that is what adam smith had in mind when he talked about the invisible hand as a metaphor for the property of the market is a thermostat. it once things return to the natural bubble and that is the right way of thinking about the market's. the vast majority of the time. but it was keynes in sight the properties of markets breakdown.

and stabilizing mechanisms are overwhelmed by a mutually reinforcing the vicious cycles it ceases to be a thermostat and becomes an avalanche. consider some of the vicious cycles we have seen in the last few years same liquidation cycle where financial assets fall which force the sale which porsche the price even more. 80 leveraging cycle where of lower prices on institutions cause institutions to have less capital which the two less lending and even more ass said devaluation continuing the downward spiral. a credit accelerator cycle in which a weakening economy leads to less lending which leads to a weaker economy that keynesian cycle which lower spending leads to lower employment leads to lower income and lower

spending continuing the cycle and a panic vicious cycle which individuals the financial institutions in trouble and rush to withdraw the funds putting those institutions and more trouble crossing others to rushmore to withdraw the funds. starting in the summer of 2007, and accelerating when year ago this week, these five in mutually reinforcing vicious cycles created a situation more dangerous than anything most of us have ever seen. it created a situation in which we could not rely on market's capacity to act in which there was no alternative to strong public action. president obama economic recovery and financial stabilization program was promised on the idea of

containing vicious cycles and supporting spending and come and the real economy in order to support the financial system three direct program of spending of increased spending and reduced taxes through the recovery act. and supporting the real economy by supporting the financial system through clear commitments to stand behind major institutions and through a major emphasis on transparency through the stress test that ultimately forced substantial raising of private capital. the results are becoming clear, the recovery program the fiscal stimulus and stress test have served to quell panic and drive capital and ultimately turned vicious cycles and to virtuous circle stand today

instead of money going into financial institutions from the government we see the money come back to the government. with a passage of time these efforts should prevent the normal process of economic growth to be engaged, raising and comes greater credit flow and increase spending and stronger american and global economy. the consensus among private sector forecasters we should expect to see economic growth during the second half of 2009. yet despite the normalization of financial conditions, despite the indications of economic growth returning from a we must remain vigilant vigilant, concerns remain such as commercial real-estate and the

availability of capital and credit remain too tight for too many. as obama has centcom the crisis has been a long time in the making and we know we cannot turn around overnight for recovery will be measured in years, not weeks or months. but we also know that our a economy will be strong for generations to come if we commit ourselves to the work needs to be done today. we will not make the mistake of prematurely declaring bankruptcy or withdrawing public support for the flow of credit. such mistakes remain in the united states in 1937/38 were made in japan throughout the '90s and provide a cautionary tale. and yet even as we remain

vigilant to ensure continuing expansion, it would be irresponsible for us not to learn the lessons of what took place. and focus our efforts on assuring that our system becomes much less vulnerable to this kind of instability in the future. whenever plausibility to review the right posture for policy, is to not seek to prevent prices, but simply to respond aggressively after the crisis takes place but whatever possibility you may have had come it is much less plausible after the events of the past two years. just with the cuban missile crisis spurred a focus on arms control and a

reconsideration of the prevailing system of mutually assured destruction the events of the past two years have raised grave concerns about the soundness of public policy toward the financial system. these concerns are framed often as the need for regulators to do a better job and they do need to do a better job. but to frame the issues owned and terms of the quality of regulators judgment, that maybe too narrow. consider this. much financial instability is the result of a very simple and natural human phenomenon. people do today what they wish they had done yesterday. less on the upside of every financial bobble are a large number of investors not based on fundamentals but instead, based on

extrapolation for future past price increases to future returns. financial crisis are the results of the overly prevalent and complaisant conventional wisdom. complacency, and this year, is where robert martin called a self larry summers prophecy. has the expectation that assets are safe continue to rise in value results in excess of investment and excessive lending. that has the sense of inevitable gain and gives way to collapse. i stress this point* because it is important and thinking about the regulatory context. fajita the most able and dedicated regulators

indebted and the environment that comprises those they regulate in a broadly political community cannot be relied upon to be unfailing stalwarts against misguided conventional wisdom. experience suggests that rather than trying to perfect human judgment judgment, policy can succeed by making the inevitable imperfections last -- less costly i 40 compared the financial system when the suggested different transportation analogy, automobile safety from the time of henry ford through early 1960's we had a paradigm in this country to thinking about automobile safety drivers need to be better with have more driver

education and better deterrence or unsafe and driving and if we just got drivers to be better than we have more automobile safety. we had that paradigm for many, many years and every single year we have that paradigm the number of automobile fatalities increase in the united states. the late daniel patrick moynihan first important contribution to the public policy debate was a paper he wrote on automobiles safety in the late fifties in which he urged instead the epidemiological approach approach, the recognition that improving human performance was a necessary but insufficient strategy much better results, from assuming improvements in human performance alone

could not make the system safe against crisis prevention suggested points much less focus on managing the consequences rather than changing human psychology his conclusion the one that we have followed in the last 50 years around the world with enormously beneficial results was a much more effective approach to automobile safety is one in which the automobiles and highways would be built to be much safer in the face of the human imperfection and errors and were inevitable. in addressing financial regulatory reform and i would suggest as a first crucial and site that will

not focus on making people better but human psychology is what it is and what we can influence with public policy is the incentives that people face and the consequences of of the errors that we will inevitably make. in creating a safer system, the paramount issue must be incentives, issues that economists refer to under the moral hazard. consider the consequences of enabling an institution to borrow and a free-market system with a government guarantee either explicit or implicit the incentive to reduce capital since march capital reduces the return

on equity it encourages risk-taking because small amounts of capital and a government guarantee increased risk taking is a win lose proposition in. its attenuates what would otherwise be a strong incentive for people to monitor how financial institutions use their money and creates a lowest common dynamic -- denominator dynamic for those who were willing to lend to overpay for assets or operate on too thin of a capital margin make it difficult or impossible for competitors with better intentions to take the prudent course. we cannot discount the risk the reliance on too big to fail may lead to financial

institutions that are too big to save. with disastrous consequences it -- consequences for the new regulatory approaches have recognized the importance of incentives that recognize what is inherent in human psychology is what we believe is essential and we believe it is critical to move rapidly while the offense of the last year are clearly in mind to put them in place. following from this philosophy, there are five common-sense principles president obama believes any regulatory reform must meet first. of systemic important financial institutions must

have adequate capital substantial capital requirements attenuate any more zero hazard problems by ensuring that lenders are relying on capital rather than the perception of guarantee. they reduce the ability of shareholders to rely on the wind lose dynamic. they provide a caution or a reserve that even when mistakes are made, the result is not to threaten the ability of institutions to meet the debt obligation so who support systemic stability raising capital

requirements in the enduring way is a subject of an important paper that secretary geithner discussed with his teetwenty colleagues a few weeks ago and it will be a major issue on the agenda of the g20 when it meets in pittsburgh this week. i do not believe that does not succeed in raising capital levels will meet the challenges of this moment. the second critical issue is resolution authority of our financial system will not be fail-safe until it is safe economic and financial

historians will debate for a long time the wisdom of the choices, the alternatives that might arise not have been available to the authorities as they face problems at lehman brothers and aig one year ago. what is beyond debate is the unsatisfactory character of those choices it is wrong that taxpayers thousands of miles from wall street should be at risk because our system gives authorities no choice but to commit taxpayer money, or accept collapse and chaos. it is essential that we develop means of managing the failure of financial

institutions because without the prospect of failure, it is difficult to contemplate the application of market discipline. there is a very good line that makes this point* if the about financial institutions and failure not being like religion or dead but at eight m. at georgetown and divest not tempt fate. [laughter] not to going to last year. third principle, thinking about incentives and human imperfection come eliminate regulatory arbitrage. financial institutions should not be able to choose

among the key regulators if they can choose among competing regulators say well on the basis of who regulates least. who sets the lowest standard. it is not reasonable to expect that regulators will happily see the seven institutions that will go under their jurisdiction shrink dramatically so it is inevitable if regulatory competition as possible, either between their regulatory agencies within a central country or between regulatory authority in different countries countries, competing to regulate particular institutions that you will see the race to the bottom. number four, with the automobile analogy comes to

mind, regulation needs to be approached from the viewpoint of the system. how should speed limits we set? should they be set only with a few to how fast cars can go without excessive risk they will go off the road and hit a tree? coerce should speed limits we set with a view of with the possibility that if all of the cars go too fast that when one car has the accident a pile up will be too harsh? no one would imagine setting speed the immense without thinking the possibility of the multi car accident yet to our traditional paradigm for regulation has focused on the regulation of individual institutions

rather than the interconnection to come from their functioning together as a system they can no longer take the institution by the institution approach similarly any market such as the derivatives market that is so large and interconnected the breakdown would threaten the stability of the financial system must also be subject to comprehensive authority. finally, it is in our judgment, it comes from the same kind of reflection on incentives, the consumer financial issue must be carried on by a regulator who is interest is to mandate the consumer rather than the profitability or health of particular financial institutions.

in light of the recent events in the mortgage market, the prevalence of predatory lending practices and the problem of practices in the credit-card market, we have become convinced as consumer financial regulation be carried out by the independent body whose mandate is exclusively consumer protection. this idea which one might not have supposed would be the most controversial among these principles has generated a substantial controversy. advertisements are being run on behalf of florists and other mainstream merchants suggesting the some how we envision a regulator that would make it impossible for

the right florist to extend the credit into one of their customers. i doubt very much that any florist is paying for those ads and i would suggest those ads are the financial regulatory equivalent of the death panel that they're being run with respect to healthcare. close with an argument, make it. those without a good argument try to scare people. that is what is happening here. this is a critical issue and one that the president is determined with a separate consumer regulator will do much to protect consumers from the abuses that have become all too clear in

recent years. taken together, we can adopt this philosophy and implement a program based on these principles and we can have the same time address other issues like compensation where incentives are a crucial aspect of incentives. i believe we can create a system that is much less vulnerable than a system that we have today. and we can create all bad and strengthening the very great benefits that a financial system performs in

terms of allocating capital and in terms of permitting the sharing of risk. that is a grim challenge in the years ahead for all of us who are involved and finance and it is a crucial challenge for spurring the economy and it is one piece of what ultimately is the mission of this presidency to establish a foundation for stronger more inclusive laid growing american economy than we have seen in the last generation. if you think about it, the boom of the '80s ended with the 87 stock-market crash and the stock-market debacle the 90 was the bursting of the internet bubble and the boom in this decade ended with the financial crisis

that began in 2007. and our challenge is to create economic expansion and growth, not based on financial baubles but instead based on real production of goods and services for the benefit of all of the citizens of our country. there are many parts of this agenda. the new american economy needs to be more export oriented and more environmental oriented and less energy production oriented. more bio and civil engineering and less financial engineering. more oriented to the interest a stronger better

regulated financial system is crucial for all of that and all of us together can do much to bring about a financial system. thank you very much. [applause] >> we have time for a few questions. let me begin with one. in retrospect, was a good idea to repeal the glass-steagall tradition separating traditional banking from investment banking and insurance? >> i have got to go meet my plane now. [laughter] i should say before anything else, i meant these words very sincerely about georgetown university i

should also knowledge my friends at "the financial times" two or a co-sponsor of this conference. i do say this with some hesitation having briefly been a columnist but "the financial times" and no five all-out but i will say it that look at my staff is sitting there in agony wondering what i will do next. [laughter] for those of you who are interested in following fed debates that i talked about, there is no daily in the world that is a reference of nearly the quality that "the financial times" is and provides a major service to the world in the way in which it covers these debates. of course, i would give you the interview after words. [laughter] now but i am distracting from a question. . .

second, the available evidence and in many ways suggests that accept insufficient diversification was a crucial problem. but after all were the critical problems and? lehman brothers which was a stand-alone investment bank, bear stearns which was a stand-alone investment banking. the gap the countries that escapes the majeure carnage the united states escapes and canada is a good example in this regard because they have suffered in the recession they haven't had nearly the financial dislocation we have had despite the

experiences. they establish a diversified set of institutions several years ago. indeed part of what enabled him stability at the moment was conversion of morgan stanley and goldman sachs to enable them to get access to the discount window, the combination of merrill lynch and bank of america. so i don't think the argument that somehow if you separate investment banking and activities it doesn't mean activities and commercial banking activities you wouldn't have had the crisis. these are very plausible and if anything excess of separation the of lead to more.

at the same time it is important to recognize the concern the discussions behind glass spiegel is a real one and that is the necessity of if you're going to have financial institutions that have access to a discount window that have some potential of support the need to control their risk-taking and a major way and so that impulse is the right one. its failure to take place to a sufficient extent is obviously a critical part of the problem. but our judgment is the right level of control on the capitol

and leveraged, the right kind of capacity to create chillier, the taking of a systemic approach is probably a better way to contain those risks than to put restrictions on a type of activity and institution engaged in no one thing can also engage. >> thank you. the next question has to do with china's appetite for treasury and what that might do in terms of the policy and we wonder your concern about that. >> yes. [laughter] we have a substantial appetite to borrow, and they have a

substantial appetite to hold reserves and lend to us and that is the relationship that has been very substantial and our mutual interest and is very much a source of support for both economies. i think it raises what is the question of whether china holds the debt or whether anybody else holds the debt how we think in the united states about the accumulation of government debt. i believe very strongly that we did the right thing. we did a necessary thing by substantially increasing the

budget deficit as a part of stimulating the i economy. if we had not done that, the consequences would have been much more serious economic collapse, collapse in tax revenues, far greater need for government spending in many areas and ultimately much more debt. so the steps that were taken to protect the economy, the financial system and the health of the national is very important. but as the economy recovers, as private sector borrowing increases again it well as the president has said many times be necessary to bring down the budget deficit in a substantial

way to contain government borrowing and limit the size of the federal government role in the debt market. it will be important in terms of financial relations with china but equally financial relations with the world and both public and private sector. so that as quinby a crucial objective of government policy as well. i would say this is just one of the reasons to pass. you cannot construct the scenario which the federal budget is healthy in 2013 and the growth of health care costs has not started to be contained. you just can't do it.

and if you bring down the cost of health care costs by one or 2% to have a profound impact on the federal budget picture. so addressing the issues in our health care system is critical not just as a moral issue for americans, not just because of the contribution that will make to health, not just because of what it would mean to the competitive of businesses being such a burden for health care, but also because it touches things as seemingly remote as our financial relationship with china by enabling us to go after the budget deficit so this is why it's become such an

important issue for president obama in the first year of his presidency amidst the economic crisis because whether it is the competitiveness of american firms, the security of american families or the standing of the united states and the global capital markets, addressing health care is of absolutely critical importance. >> this will be the last question. many believe the commercial real-estate bubble is just starting to correct itself. how do you see this affecting financial markets in the next few years and how do you think we should go about appearances on? >> jpmorgan was once asked a question of the same kind where he was asked what he predicted would happen to the stock market's. and he paused and he leaned

forward towards his audience. i was going to say leaned into the microphone and it occurred to me they probably didn't have microphones. [laughter] he leaned forward and he said my judgment based on my years of experience in the markets going forward into the future there will be fluctuations. [laughter] and i think that is a reasonable prediction. [laughter] with respect to -- with respect to commercial real-estate. i don't think there is a substantial distress in that

sector. you have already seen substantial price adjustment unlike in the yearly 90's there is much less evidence of very high vacancy rates were very large overbuilding the problem appears to be more financial. unlike in the 1990's, it appears to be a problem whose locust is less towards the major most systemically important financial the institutions and more towards regional and smaller banks and other financial

institutions and it is something that is going to require -- that is going to receive attention. the treasury through its various credit facilities and has provided some increased liquidity into the market. the treasury made an announcement of mind-numbing complexity i will not seek to summarize yesterday's having to do with a tax treatment of that will affect the working out of distressed real estate then was possible previously without

triggering tax penalties, and we are going to -- these issues are going to require continuing attention by bank regulators. but ultimately, there is all of those vicious cycles i talked about or operative in commercial real-estate, and there is the potential for them to become. as the economy starts to recover, the demand for space will increase. that will provide support for cash flow. that will provide support for asset values. that will provide support for lenders. that will provide support for asset values. and this is how the situations

work. so it is a matter of real concern and something that we watch closely. but i believe that if the broad economic strategy is successful it will provide considerable support in managing the challenge associated with commercial real-estate along with specific targeted measures like the ones i mentioned. thank you very much for the opportunity to be with you. [applause]

[inaudible conversations]

this is the highest court in the land, and the framers created it after studying the the great law givers in history and taking a look at what they thought worldwide was important for the judicial branch to do. >> supreme court week starting october 4th on c-span. the long line now to c-span.org/supreme court for a virtual tour, historic photos and links to other supreme court cites. secretary clayton of state hillary clinton was at the brookings institution today where she spoke about the of coming united nations general

assembly meeting. she also discusses iran's nuclear program. this is one hour. [inaudible conversations] >> good morning to all of you. im strobe talbott. it's my pleasure to welcome you to the brookings institution this morning and particularly to the distinguished members of the diplomatic corps who are with us this morning. it is a great honor for brookings to have secretary clinton with us. the entrance of all of you came in this morning may have swinging doors, but it's actually to do to flee speaking a revolving door. over the decades, brookings scholars have passed both directions. they have gone into and out of public service. since inauguration day eight of our former colleagues have gone to work and foggy bottom and embassies and other diplomatic

missions around the world. i am sure, madam secretary, they are proud to be helping you and the important tasks that you're doing and all of us at the brookings are proud to be associated with them. starting monday the secretary is going to plunge into an annual week-long marathon of bilateral and multilateral diplomacy. at the united nations general assembly. known as the unga. she will give a preview of the challenges and objectives that are most of her mind. i haven't read her speech, but this much i can predict. because it is already a signature theme of her stewardship of american foreign policy, and that is her conviction promoting human security is integrally related to the strengthening of national

and international security. from her first remarks at the department of state after her confirmation back in january, she has included reference to development almost every time she refers to diplomacy and to defense. one other point. 13 years ago she made famous and made into a personal malveaux the ancient african proverb it takes a village to raise a child. a variant of that might be it takes a strong community coming together to ensure the well-being of its weakest members. in putting its children who are after all the vanguard of future generations. the u.n. represents the larger community which we are all part. our country is fortunate to be represented by secretary clinton at the unga next week and we are grateful to her for being with

us today. after her opening remarks, i will come back up. join her while she takes some questions from all of you. madam secretary, over to you. [applause] >> thank you. thank you very much. well it is a great delight to be back here at brookings. through the revolving door that does go both directions, i spoke with strobe shortly after i was asked to take this job as the secretary of state and began thinking about who needed to be in this new administration, and he will foley said i know you are going to decimate the place.

[laughter] i said well, guess, we are, but that's all part of the revolving door to the lead. people who go in and out of administration's and do the work that is done every day, a high-quality work in many respects visionary as well as analytical, and i am very grateful for the team that you have led so well for so many years and a opportunity to work with them now in this capacity. i also want to just say a word of personal appreciation to strobe. as most of you know, he has been a friend of mine and my husband of course starting with my husband at oxford and then afterwards, the wonderful book, we our dear friends over all these years and i am pleased to look out and see adrianne and

devin, the next generation. i also want to thank martin indyk and john thornton for their leadership as well. and to all of the diplomatic corps, the ambassadors who are here with us today. hi thank each and every one of you. i've had the opportunity to do bilateral meetings with most of you with foreign minister since the head of state, and i appreciate your being with us today. i also see some of the wonderful people who have joined the team the state and usaid and express my appreciation to all of them. i thank brookings for this opportunity to join you on the eve of of unga. it is a strange acronym, and it pauses a lot of moaning and groaning in some circles. henry kissinger once famously critical of unga, and others

have been expressing over the years their concern and disappointment with the united nations. but i believe that at its best the united nations is not only a critical center institution but one of which the united states has a lot of equities so i am actually looking forward. it has nothing to do with the fact is a new york and i get to go home. [laughter] it is personal as well as officials obligation i am looking forward to. let me begin fell by echoing the president's statement yesterday, concerning his approval of the recommendations not only of the pentagon that his entire national security team to deploy a stronger more comprehensive missile defense system in europe. this decision came after a lengthy and in depth review of our assessment of the threats posed particularly by iran's

ballistic missile program and the technology we have today and what might be available in the future to confront. we believe this is a decision that will leave america stronger and more capable of defending our troops and interests and our allies. let me be clear about what this new system will do what it to the previous program, which was many years from being deployed. with the president's decision we will deploy missile defense sooner than the previous program. we will be able to swiftly counter the threat posed by iran's short and medium-range ballistic missiles. we will deploy a missile defense that is more comprehensive than the previous program with more interceptors in more places and with a better capacity to protect all of our friends and

allies in the region. we will deploy technology that is actually proven so that we do not waste time or tax payer money and we will preserve the flexibility to adjust our approach to the threat as the threat evolves. so make no mistake. if you support missile defense, which i did as a senator for eight years, then this is a stronger and smarter approach than the previous program. it does what missile defense is actually supposed to do. that defense america and our allies. i know we've heard criticism from some quarters but much of the criticism isn't yet connected to the facts. we are not shelving missile defense. we are deploying it sooner than the administration planned to do so and we are deploying a more

comprehensive system. we are not reducing our capacity to protect our interests and our allies from iran. in contrast we are increasing that capacity and focusing it on our best understanding of iran's current capabilities. and most of all, we but never, never walk away from our allies. we have recommit ourselves to nato. we have said that mission to become a surgeon bilateral multilateral secessions from the president and my trip to every other encounter this decision

was not about russia. it was about iran and the threat

that its ballistic missile program poses. and because of this position, we believe we will be in a far stronger position to deal with that threat and technology that works and a higher degree of confidence that we pledged to do we can actually deliver. my main reason for being here today is to give you a brief review of our agenda next week in new york. before i get into specifics i saw a cartoon from the new yorker. issued a delegate on a seat at the united nations passing a note to the delegate next to him in the caption read -- but as

with most humor this cartoon is also a commentary. it represents one view of the united nations, the caricature what multinational, multilateral organizations spend their time doing. s president obama leaves our u.s. delegation at this year's general assembly i hope we can demonstrate the united nations does not have to be just a diplomatic talk shop on first avenue. at its best it can be an institution that brings the world's nations together to solve global problems to adherence to rules and principles set forth in the u.n. charter and it is the responsibility of the 192 member nations to bring the general assembly and beyond to capitalize on the opportunity for global cooperation and progress the united nations affords to each of us. i outlined earlier this summer at the council on foreign

relations the obama administration's efforts to solve today's problems through a global architecture of cooperation and partnership and we must begin by taking responsibility ourselves. something that under president obama we have already begun to do on issues from climate change to non-proliferation and we have called on others to do the same. by building and strengthening partnerships, institutions and international regimes we can forge a global consensus and use that leverage to offer clear incentives to nations to cooperate and live up to their responsibilities, and we can also defies strong disincentives for those who would act in isolation or promote conflict. the united nations in this month's general simply offer a forum for nations to work together to live up to that

founding charter and abide by and enforce international rules and service of global peace and security. i have in my office in the state department a picture of eleanor roosevelt, one of my particular pair of -- heroines. she's sitting at a desk working on the declaration of human rights. i said this before, but i think that channelling eleanor roosevelt is not a bad idea. it reminds us what is at stake as we move forward with responsibilities as does strobe talbott's new book, "the great experiment." we have to have effective institutions. that is not a choice, that is an imperative. it is up to us to determine how to make them effective. united nations is a building.

it is not able to act in the absence of decisions made by those member nations. in my view we ignore it and walk away from it at our peril especially in the 20th century we're interconnectedness gives voice and prominence to the viewers that could have easily been either ignored or marginalized in the past. few issues reflect the need for global architecture of cooperation more than a nuclear non-proliferation. no issue poses a more serious threat to security or the world and will be a main topic of discussion and beyond. now, the president outlined a robust and ambitious arms control and nonproliferation agenda in prague earlier this year, and we believe it sets the template for what we should aspire to, moving toward a world

of zero nuclear weapons. we understand that won't be easy. we understand it is a generational commitment. it might not happen in our lifetimes. but as long as nuclear weapons exist in the world, the united states will maintain a safe, secure and effective deterrent capability that we want to both be on record and use our best efforts to move towards more effective non-proliferation and more effective cooperation toward hopefully arriving some day at that future goal. next week the president will chair a meeting of the u.n. security council on non-proliferation and disarmament and we will emphasize the importance of strengthening the international nuclear nonproliferation regime and the critical role the security council must play in enforcing compliance with nonproliferation obligations. the president asked me to lead the u.s. delegation to a

conference on the comprehensive test ban treaty. this will be the first time a secretary of state has attended. it will give me the opportunity to underscore the importance of the ctbt to the global nonproliferation efforts and brought in human security interest. if strengthening the nonproliferation regime means working to bring other nations into compliance, and this of course includes north korea and iran. and let me take a moment to say a few words about iran which will be another key topic on the president's and my agenda next week. to begin, it is important to recall what is at issue and what is really at stake. iran has refused for years to address the international community's deep concerns about its nuclear program. those concerns have been underscored repeatedly by the

international atomic energy agency and the u.n. security council. iran's continued failure to live up to its obligations carry profound consequences. the security of the united states and our allies are progress on non-proliferation and progress toward disarmament for the credibility of the iaea and the security council and of the non-proliferation treaty. and of course, for stability in the persian gulf, the middle east and beyond. our concern is not iran's right to develop peaceful nuclear energy. but its responsibility to demonstrate that its program is intended exclusively for peaceful purposes. this is not hard to do. elon's continued refusal to cooperate has damaged the

credibility of its claim that it does not seek a nuclear weapon. so iran faces a choice. the international community has made abundantly clear what is possible for all i radiance if iran lives up to its responsibility on the nuclear issue. the benefits of economic connection to the rest of the world, cooperation on peaceful nuclear energy and partnership and education and science. but there will be accompanying costs for iran's continued defiance. more isolation and economic pressure, less possibility of progress for the people of iran. if the obama administration has clearly conveyed our readiness to engage directly with iran. we know that dialogue alone doesn't guarantee any of, let alone success. but we also know that our past

refusal to engage yielded no progress on the nuclear issue. nor did it stand here on's support for terrorist groups. of the past eight months, the president has reached out both to the iranians government and people. we have made clear our desire to resolve issues with iran diplomatically. iran must now decide whether to join us in this effort. yet, since june we have seen the irony in government engage in a campaign of politically motivated arrests, show trials and suppression of free speech. the of iranian government seeks a sense of justice in the world. but stands in the way of the justice it seeks. nonetheless, we remain ready to

engage with iran, not in an end of itself but as a means of addressing the growing concerns that we and our international partners have about iran's factions, especially on the nuclear issue. and new york next week, i will be meeting with my counterparts from the united kingdom, france, russia, china and germany in the p5 plus 1 context to discuss the way forward and prepare for talks that javier solana is arranging. we are serious and we will soon see if the iranians are serious. this is not about process for the sake of progress. we will work with partners to put iran's choice and to focus and stress that engagement must produce for real results and we have no appetite for talks without action. let me highlight a few other

issues the president and i will be addressing at the general assembly and months ahead. iraq, afghanistan and pakistan, development and women. iraq has made important strides with the support of the united states and international community to build a more secure and hopeful future for its people. we look forward to the parliamentary election next january as an important milestone in this journey and we pledge to work with iraqi is in the international community including the indissoluble u.n. mission to iraq to make the selections a success. as a result of our common effort, our relationship with iraq can enter into a period of transition. as our military drawdown and the law will civilian agencies increases to better meet the needs of the future and ensure a stable, sovereign and independent iraq that contributes to peace and security in the middle east.

this reflects no lessening of our commitment. on the contrary, it demonstrates that we have entered a new sustained and more mature partnership that will serve both our countries far into the future. i am pleased vice president biden, accompanied by deputy jim steinberg recently returned to iraq to continue robust engagement with iraq's leaders. the partnership between the countries will of course continue to build security cooperation. while strengthening diplomatic relations, but also it will help to build stronger ties and commerce, the level of all, good governance, science, culture, health care through our strategic framework agreement. i even share a coordinating committee along with prime minister maliki. we had our first full meeting in july and we will continue to be engaged in working on this broader agenda. also on the docket for the

general assembly will be meetings related to afghanistan and pakistan. president obama has stated our four goals, to disrupt, dismantle and ultimately defeat al qaeda and its extremist allies, and to prevent their return to either country. this is a goal we share with afghanistan, pakistan and with the international community. in fact, pursuing al qaeda and the taliban was the basis of the original u.n. resolution that authorized u.s. military action after the september 11 attacks and created isaf, international security assistance force of 42 nations helping the afghans secure their own country. our friends around the world are connected to the security and well-being of the people of these two countries. to effectively squeezed the extremists fighting to destabilize both countries, the afghan and pakistani government must be better able to secure

their territory from these extremists and meet the basic needs of the population. the recent afghan elections at once illustrate the promise and the challenges of afghanistan. alongside our partners and the united nations we will continue to encourage all parties to respect the international and afghan electoral institutions charged with determining the final outcome of the election process. when the next president is inaugurated, we will work to step up the level of international engagement and expectation with that new government in a strong partnership to strengthen government at all levels. as we address these urgent challenges we will also work on other issues that have implications for american security and interest. following my trip to africa last month, and the president's visit to ghana, he will host a lunch

for leaders of sub-saharan africa during the general assembly. i will meet with co-star rican president oscar arias to resolve the conference in honduras and help the country restore space constitutional order. i will also be meeting with donors and other stakeholders committed to helping haiti respond to the economic dislocation caused by the global economic crisis for hurricanes, and a history of challenges. and i will continue discussions with our allies and other partners in asia about the situation in burma. and now it's a global architecture of cooperation, the ants responsibility of office and our partners. it also offers opportunities. just as we are focusing intensively on urgent challenge is like iran, iraq, afghanistan, pakistan, so too are we pursuing a positive agenda devoted to expanding opportunity so more people in more places can fulfill their dreams and live up

to their god-given potential. and i will focus considerable attention on two areas of opportunity: development and women. they go hand in hand but we are talking about each of them because each in and of itself is critically important to the point that strobe made if you and security, national security, international security ultimately rests on development and of the role and rights of women. many of you have heard me describe the plan, and tikrit diplomacy and development as two of the three pillars in the foreign policy along with defense. i talked in different venues about the obama administration's commitment leading with diplomacy and engaging other asians. next week i will outline how we will approach developed in tandem with diplomacy to be effective and efficient and enable the state department, usaid and of the millennium challenge to pursue and execute 21st century foreign policy

goals. the foundation for our approach will be principles there will move us away from top down assistance that too often fails to meet the needs. to solve the complex problem, poverty, health, climate change, where they intersect, we want to focus on the root causes and look for approaches that really change, transform the environment in which people are making these decisions and an image of government are held accountable to a higher degree of performance and transparency. we will be looking for ways to model the explain our approach to highlight issues. i will be for example participating in an event with secretary-general bon ki-moon hosted by the u.n. and united states government on security. we have launched a quadrennial

diplomacy and development review. unfortunately that adds another acronym to the state lexicon, the qddr led by jack lewin and cochaired by ann marie slaughter and a director of usaid. this is broad examination of the structure policy and budget and will lead to better accountability and measurable results. finally our delegation and i will work to advance international efforts to recognize women as key drivers of economic progress and social stability as well as addressing impediments to women's empowerment and advancement particularly sexual and gender based violence. i will chair a session of security council and speak on behalf of the adoption of a resolution on the women and security which will indorse concrete measures to implement security council resolution 1820

and address sexual and gender based violence of a tactic of war. i saw this skill of misery caused by the violence on my recent trip by the democratic republic of congo. having met many different settings around the world over many years with the women who are the victims of the worst humanity offers but with women who are the strongest said lars of what humanities offers. i sold that very vividly on this most recent trip. next week i will be speaking with other foreign ministers and heads of state about strategies are prosecuted and not treated with impunity. i will work with women leaders, heads of state, foreign ministers at the general assembly to highlight the importance of raising the status of girls and women and investing in their potential through education, economic diplomat and health care. if women are free from violence they can contribute to local

economies and become change agents for greater prosperity and stability. our agenda is ambitious. it is full from northeast asia to sub-saharan africa to europe and the americas, and we will remain vigilant and proactive about all of them. at this time of year as we contemplate unga next week it seems only fitting that it occurs at a time we are celebrating the end of ramadan and the beginning of the jewish high holy days. we will obviously also be focusing on the dream of a comprehensive peace between israel and the palestinians resulting in a a gerrans of the security of israel and a state for the palestinian people. this is a time of reflection and rita will for hundreds of millions of our fellow citizens around the world.

a time when we can take stock and reassess and hopeful we commit ourselves to the values and ideals that move us forward. and it is in that spirit i am approaching not only next week's general assembly but the weeks, months and years ahead, and i very much appreciate the excellent work and contribution of many of you in this audience and capacities in which you, too, serve and wrestled these difficult problems that confront us, and i hope that we will not only continue to have a partnership enables us to speak of our hopes and aspirations put together produce solutions to the problems we confront. thank you very much. [applause]

[inaudible conversations] she can handle that herself but i'm not allowed to. [laughter] thank you so much, madame secretary. we have got a little over 15 minutes or so, and why don't we go immediately to martin indyk who will ask the first question. >> there he is. >> thank you very much, strobe and madame secretary as leader of state. you seem to in your speech to make clear to the iranians they have a choice to make. but i wonder, you know, today president mahmoud ahmadinejad said the holocaust is a lie and stole the elections and he is pressing a position and he's also made very clear that the nuclear -- their nuclear program

isn't something up for discussion and he wants to kind of talk to the p5 plus 1 about dividing the world and recognition for the superpower status. how do you affected his calculus? what is the strategy for actually getting him to understand that he has to address the nuclear program and he has to reassure the international community of iran's peaceful intentions? >> well, you know, martin, as i said there are no guarantees of results let alone success in many of these difficult engagements we are undertaking. but we do believe that the opportunity presents itself for the kind of face-to-face discussions that the p5 plus 1 with full participation with undersecretary bill burns leading our efforts there, to

export a range of issues as you i am sure notice the irony and said they have a lot of issues they want to discuss the did not include the nuclear program we obviously said that is the issue we want to discuss. i am not going to prejudge this. we made it clear we are on a dual track. that track is the process of engagement that we have said we would pursue. we are about to commence that. but the others are the consequences. so, i am not going to speculate what comes of this effort. we have underscored as i did again today that we are not just in this for the sake of talking. we don't check a box, we are engaged in something and are going to keep talking forever, that isn't our intention. the president said we would take stock of where we are with respect to iran and the international community response a around the time of the g20

which is the end of next week that we would want to see some movement by the end of this year. i am well aware of all of the problems that you have briefly alluded to but we are going to move forward and see what, if any, changes in approach, attitude, action. the iranians are willing to entertain, and continue to work with our allies many of whom are represented in this room for their ambassadors on the consequence of sight of the ledger. >> andrea, i am pulling on usa of member of the virtual brookings. >> she looks pretty real, not a virtual. [laughter] what are the consequences? are their deadlines? because we have seen this kind of diplomacy with all due respect, previous administrations, secretary rice

tried to negotiate with iran, and there were objections by russia and others at the security council that meant the threat of sanctions ever could be carried out as aggressively as the united states wanted. so, i know duke said the missile defense decision was not about russia. but is there any indication russia might take another view toward iran, that there is a time limit and are there other threats out there? thank you. >> i think it is fair to say there has been a much more concerted out reach to both the pyrenean leadership and i read and people under president obama than we have seen in 30 years. it's not that other presidents did not look for ways to engage iran, but from a variety of reasons it was never carried

through in a long term consistent manner. we, as you know, did not participate fully as a p5 plus 1 member until very recently. for many years we outsourced our policies and concerns about the nuclear program to others to try to intervene with and persuade iran to change course. so we were on the sidelines. i mean, we were pacing up and down the sidelines extremely agitated and we were, you know, trying to figure out how to get other people on the field and deal with this problem and look where we are today. we are, you know, really know where -- nowhere to read the intention of the nuclear iran and program being for anything other than peaceful use is important to us and the national community. i don't want to prejudge this. i think that we have been a very

clear about what we are looking for. the two tracks we are proceeding on simultaneously. we have certainly begun conversations with a number of international partners and with all of the p5 plus 1 members. i think if you had asked us six months ago can we get the strongest possible sanctions against north korea that have ever been implemented against a member state of the united nations with full cooperation, not just on paper of china and russia, but acted enforcement of those sanctions? i think many of you in this room wouldn't have thought that possible. why did it happen? because we have spent enormous time listening and really working with our partners who are partners on some issues and maybe not all issues, but looking for ways to broaden that

sense of cooperation, and looking to understand how our views can be more effectively communicated instead of just walking up and down the side lines being agitated. but looking to find common ground in our assessment of the threats we all face. so i think that we have proceeded in a very thoughtful way, no guarantee of any particular outcome but we are determined to persevere. >> ken leibenthal. >> you have very admirably focused on issues of domestic governing capacity. there has been a lot of attention in the recent weeks and the political and social consequences of that. what do you think we can do concretely to make a difference

on that issue? >> ken, this is something i want advice of those of you here at brookings. corruption is as big and national security threat as i can imagine. we've never posted quite that way before but this is hell i am seeing it. it's not only corruption in afghanistan which i will come back to. it is corruption almost as an epidemic, undermining government, undermining the capacity of countries to make progress and we still would grow a middle class bill would create stability and prosperity. corruption that siphons off natural resources that should be extracted for the benefit of all of the people instead of a small elite. the corruption that has eaten away at the fabric of so many

countries. i saw this throughout africa where it is tragic as wangari maathai said, got most of loved africa because africa was blessed with so many bridges but then one has to ask why are we so poor? and to go to countries which are immensely rich in natural resources from oil and gas and diamonds and gold and so much else, and the corruption is endemic but it is now a security problem. and mauney view on this is the international community has to be much more focused and it is no longer well, we pass bill law of the united states saying our companies can't bribe people the other countries and companies say that's the way you do business, how are you going to deal with these people otherwise? because we are looking at a tipping point when it comes to

the impact of corruption in so many of these countries and so many of these places specifically about afghanistan look we have to take some of the responsibility not just for the fact corruption was there predating us but that we aided and abetted and implicitly is by not demanding more and not demanding more earlier. so i am very conscious of the difficulties corruption poses but it is one of my highest priorities because i no longer see it as a good government concern. wouldn't it be nice if we could stop people from stealing from their own people and extorting from international companies? yes, it would be very nice. ..

and said lease the medium and long-term threat to their interests of that is what we are going to try to do. >> madam secretary thank you for the opportunity that you gave us at the brookings institute. i was looking forward to hearing

from you more about the middle east peace efforts. your husband, president clinton, has created lots of hopes in the past of bringing peace to that area. now president obama has also brought that same kind of hope after his speech in the middle east in cairo and istanbul, but now what we are seeing now is that the whole problem of peace and war in the middle east is the shrinking down of the issue of the settlement and the feeling of settlements were just actually is a much bigger issue and what we see now as snow stopped from activities of the settlement. we see israel is digging tunnels and the second holy shrine of islam and the motions in the

arab world by getting really very-- and lots of banker. i don't know what your talk is covering with the arab officials but one of your allies in the area warned me yesterday that failure for these peace efforts would lead to a result and nobody would want to see. now i would like to assure you that what seems to be senator mitchell's efforts to be, not making any progress with netanyahu, the most hard-liners so how are you going to deal with this issue an order to keep the hopes of, that the united states produced in the area after the speeches of president obama? >> well, i understand the emotion and i understand the great hope that's is that the

heart of your question, and i want to just think that-- make several points to youth. first come of this president started on the very first day with a commitment to pursue a comprehensive peace agreement premised on the two-state solution. and, i can guarantee you that president obama and i are very patient and very determined and we know that this is not an easy road for anyone to travel. i have personal experience about how difficult this road is. i well remember that sunday afternoon on the south lawn of the white house when yitzhak rabin and yasser arafat shook hands. and i well remember the disappointment at camp david, despite enormous efforts to try

to finally forged when that these agreements when it was not successful. however, i believe that the commitment evidenced by my husband and the commitment evidenced by president obama tbn this from the very beginning, never to be deterred, never to give up, and expecting both sides, not just one side, but both sides to be ready to pursue that comprehensive peace agreement. it is the best way for america to demonstrate our absolute believe that this issue is that the core of so many other challenges we face and therefore we are going to do all we can to persuade, cajole, encourage the parties themselves to make that agreement. the united states cannot make

it. the arab nations cannot make it. it is up to the palestinians and the israelis. and to that and, we expect both sides, not just one side but both sides to be actively engaged and willing to work toward that resolution. and i think that what george mitchell has done, has been very valuable in sorting through a lot of the concerns, because if you recall in the previous efforts of the bush administration through the road map, the parties were encouraged to work themselves toward a resolution. the united states was not actively engaged in it as we were in the 90's. do i think maybe we have lost some ground or maybe it is a little more difficult because of

that? i do but that is not going to discourage us a let me just reassure you. we are going to continue to do all that we can, working with everyone in vault but most particularly the palestinians and the israelis to reach that kind of comprehensive peace agreement that we think is in the best interest of both countries. >> madam secretary there is a last question that i would like to ask you about as you know well from your personal experience and that is health care. i would only put that question to you as secretary of state because many are concerned that it actually has implications for the foreign policy. >> nice try, strobe. [laughter] >> a bebe stretch? >> that is all right. i am sure you want me to talk about our global health initiative. [laughter] >> actually not.

[laughter] let's talk about our national health issue in the following context. ale lot of well-wishers, yours and president obama's both in this country and around the world are concerned that if the health care debate goes badly ken ends in a defeat for the president, it will have serious implications for his ability to get a cap-and-trade build that he can take to copenhagen in some sense orderlies progress on global warming. you mentioned you are going to be playing a role with regard to the future of a comprehensive test ban treaty and that health care goes down it will be bad for ctv ratification next year so-and-so far as you feel inclined to do so we would be very interested in your views on the merits of the issue but also on the connection between the president's domestic agenda and his foreign policy issues, which is your charge to carry out.

>> strobe, based on my own acquaintance with this issue and my previous experience in the white house, i don't accept the premise of the question. i think everyone here probably would call that we were not successful in '93 and '94, but i don't think that in any way on their-- under president clinton's ability to deal with the rest of the world, to make tough decisions in places like bosnia and kosovo and lots of other challenges and even on the domestic front, to do welfare reform and end up with a balanced budget with a surplus, so i don't see that. i just don't accept that but i don't think we are going to face that because i think we are going to be successful. i think the work that is being done and the expectations that people now have 15 years from

our unsuccessful effort back in 94 means that more people know what is at stake, more people have seen us try of the things. i remember one of the arguments that was made 15 years ago. but the hmo's kendell it. we will do something called managed competition. that will eventually cover everybody and of course that was not to be so i think there's just more real world experience that people from all walks of life have that in the absence of what is being proposed costs will continue to go up for those of us who are injured. coverage will continue to shrink for those of us who are injured. the numbers of people who have access to any form of insurance will continue to diminish and therefore i think we will be successful. now will it be everything and the one person would want? no, of course not. that is not the nature of the compromised required in the

legislative set by the ibm, i am quite optimistic. we really have an opportunity now to produce an outcome that will significantly improve the important aspects of health care reform, controlling costs, increasing quality, expanding coverage and it is interesting that what we are proposing is fundamentally so conservative compared with so many of our friends and allies around the world to do a much better job than we do in covering every but he inning keeping costs down, and get some of the political opposition is so overheated. so we just have to come down here, take two aspirin, go to bed and think about it in the morning but i am very optimistic. i think it won't be pretty. it is like sausage making but we will end up with a bill for the

president to sign and that is what i think is that in the best interest of the country, and of course it will have political benefits for the president but i think what is most important is getting this done for the future budgetary demands of our government or the future well-being and health of our people and that is what is going to happen. >> thank you for that. let me ask everybody pleas to remain seated and we will thank the secretary in just a second of i want to explain the protocol for ending the meeting. i am going to ask everyone please to remain in this ramsey did well as she leaves. i want to particularly hasco of the brookings scholars to stay because if you fall of redout i'm going to get nervous about whether you are heading back. but please join me in thanking secretary clinton for a terrific hour. [applause]

[applause] [inaudible conversations] [inaudible conversations] now an update from capitol hill reporter on the health care debate. >> jeffrey young of the hell what is the senate finance committee's markup on health care legislation expected to be

like there in the coming week? >> you can make the case this bill is going to be written and that markup would starts on tuesday. >> what kind of an mma can we anticipator? >> on the democratic study will see amendments on issues such of the government-run plan to increase the tax side of the tax credits for individuals and small business, and from the republican side rather you'll probably see some notes to strip-down the cost of the bill, abortion and immigration issues like that. >> who is likely to offer the amendment? >> senator rockefeller has made it clear he has got a whole bunch of them so i would expect to see him taking the lead on some of the more liberal issues like the public option. senator chuck presley the ranking member of the committee from iowa will take the lead for the republicans. >> what has been the reaction from fellow democrats are republicans and reactions in general from the general public to senate finance committee max baucus's draft bill?

>> i think you can summon up this way. republicans did not like it at all. lot of democrats fell the didn't go far enough to ensure the middle class and it the business community. beck templates but they certainly why did more than the other health care bill that they have seen from democrats this year and i'd think it may be too soon to say how the public at large took this because it is pretty complicated set. >> there have been weeks if not months of talks. y doesn't senator baucus appear to have republican support? >> for one thing the republican party at large has decided the structure of all of the health care reform bills is generally too liberal for them and they also seek a potent political issue here. they think the public is not ready for something this big and they think is to be a winner for them in the next round of elections. on a smaller scale their issues with senator baucus negotiating, could not come to terms with, the overall cost of the bill,

whether abortion services will be covered under these new health insurance plans, whether illegal immigrants, sticking points that can hold up in the number of issues. >> why does he continue to believe that he will-- >> senator baucus seems to fundamentally believe the american politics is that a point where everyone recognizes the health care system can't stay the way this and ultimately when it comes time to catch the boat people won't want to be on the wrong side of history. >> how was this bill likely to be paid for? >> the biggest chunk from a tax from an insurance company that sells very expensive plans. a lot of them are concerned that tax will end up trickling down to employees and making insurance more expensive. the bill assesses fees to late friday of medical providers and makes, reduces medicare spending over ten to 20 your time period having the effect eventually

eventually reducing the federal budget deficit. >> in the last couple of seconds what we'll be watching most closely at the bill makes its way to the legislative states? >> i think a lot of the success of this particular legislation depends on whether democrats, especially liberals are willing to move toward the middle where senator baucus says frank of this bill in order to get behind it. that is whether democrats are able to come together on a intendance foradil the, about because ultimately they may never have republicans on board. >> jeffrey young of the health, we thank you for your time. >> my pleasure.

>> noun national intelligence director dennis blair from earlier this week. he speaks about the intelligence community and says that september 11th terrorist attacks could it been avoided if his office existed before the attacks. his remarks come before the commonwealth club of california. this is about an hour. >> good evening and welcome to tonight's meeting of the commonwealth club of california. you can find is on the internet at commonwealth club.org. i am gloria duffy presidency eo of the club and i hold the gavel for this evening. weed very much appreciate the support of tonight's media sponsor, "the wall street journal" and editor from the journal, john bussey who is here with us as a moderator for the evening. at a time when the u.s. intelligence community has been both reforming itself to be smarter and more modern, it has

been at the center of an emotional national and international debate about methods for obtaining information from terrorism suspects. we are delighted to welcome to our podium and man at the very center of these crucial issues. dennis blair was appointed by president barack obama's the third u.s. director of national intelligence this past january 29th. this is a relatively recently created position that supervises the heads of the 16 intelligence services of the u.s. government. including the cia, the defense intelligence agencies and the intelligence agencies within the departments of energy, state justice and other cabinet departments. he not only coordinates these agencies but serves as a principal intelligence adviser to the president and the national security council. a rode scholar and a graduate of the u.s. naval academy, admiral blair is a sixth generation naval officer who has served in

many theaters and positions including commanding the u.s., the carrier uss kitty hawk. his naval thiel career culminated in his role as commander of the u.s. pacific command as it is known. prior to his retirement in 2002. earlier in his career in the mid 1970's director blair was a white house fellow and later director of the joint staff at the pentagon. the organizations supporting the joint chiefs of staff. his intelligence background includes serving as associate director of central intelligence or military support. as director of national intelligence mr. blair has continued to work in updating the methods and staffing of the intelligence committee in making his activities as transparent as possible given its mission. he he has made news prior to tonight's takfir at the club with a pre-release of his remarks in which to make public some specifics about the intelligence community's budget.

please give a hearty welcome to national intelligencer director, dennis blair. [applause] >> thanks very much dr. duffy for that introduction and it is an honor to be invited to speak at this historic venue. good evening to all of you. towards the end of my remarks, i will give you some details on as dr. duffy mentioned what made news today. we released our national intelligence strategy and their copies i brought along that are available in the room and there will be a pop quiz at the end of the, at the end of the evening but after talking little bit i would love to take your questions and turn this into a dialogue. i have been familiar with the commonwealth club over the years. your lofty ambitious mission to

be the leading forum open to all for the impartial discussion of issues important to membership, the community and the nation and when you add your modicum and find the truth and turn it loose in the world which i saw on the bulkham as we came and it is no wonder that you have been so influential that you develop such a fine reputation for the most people think my model is more like a steal the secrets to make sure the world does not find out. i believe it is an open-minded group that you invited me and i would like to turn to little bit of truth about the intelligence, the world of intelligence this evening, so let's turn to a dictionary and use it to help us sort through some of the irony and some of the contradictions in my business. i think it is appropriate that i use a dictionary that was compiled by san francisco and who disappeared in a foreign country almost 100 years ago. what happens to him remains an international secret.

it is diluted our best intelligence efforts since 1914. 18 advantage 271 years old baldelli edics reputation as a tough old guy. he joined the union army as a teenager, served in the ninth indiana infantry and fought in battles like kennesaw mountain and the 1986 venice final stent in the army he had by that time advance to the rank of major and he came to san francisco. he hung up his uniform and began a career as a highly respected journalist starting by publishing wartime experiences in several newspapers and magazines including the san francisco examiner. worked for william randolph hearst, drank with john lended, friends with mark twain and bret harte. you don't get more san francisco and i guess than that and then in december of 1913 ambrose went to mexico for one last story. he was going to write as an observer with poncho villa's army and he never returned to the killer left behind many fine

stories but his most popular work the one that everybody is familiar with is the brilliant double's dictionary and in "the wall street journal" there was a picture of that on one of the inside pages with a takeoff of some other definitions but original work had entries like diplomacy, the page roddick guard of fighting for one's country ended censure motto here is of the commonwealth club is not lying but finding the truth i did checking on some of those will offend definitions. wifi untruthfully hen illiterate. that is not quite right. let's check some of the antonyms. fip, a lie that is not cut its teeth. let's try commonwealth, an administrative incalculable multitude of political parasites. even worse. [laughter] irony and cynicism have their place but i would like to counter some of the cynicism that by removing some of the

mystery that surrounds the intelligence business. it may be that we can't tell the public everything but that doesn't mean me can't let you know anything about who we are and what it is we do. e in a republic the intelligence service must have the trust of the public that they serve entrust is not an entitlement, it is something you learn so i can't tell you about all the central intelligence we collected but i can tell you it is more than a billion individual pieces of data. i can tell you the exact methods we use to start-- stobbe potential terrorist from coming to our country but i can tell you we have identified scores of people with terrorist dies lung before they were able to reach our borders. and i can't tell you the methods we used to eavesdrop on suspected terrorists but i can tell you if americans or american telecommunications are involved, our actions take place are our authorized by a judge in accordance with laws that were passed by congress.

one way that i can talk about what we do it in intelligence is to talk about some of the history to bring some historical examples and although some of the details have been updated many of the essentials have not changed. it was 59 years ago today, september 15, 1950, that the united states landed on incheon in carillo one of the most daring and successful strategic operations in world history. what you don't hear about is a joint cia and military recognizance intelligence team landed seven days ahead of time and sent back essential information about enemy fortifications into rain and ties and they were key to what seemed at the time to be miraculously operation. now i have mentioned intelligence as a community, curious word but that is what we call ourselves, intelligence

community and what is it exactly? it is basically a commonwealth but and the nonsense of the word there are 16 organizations. as dr. duffy mentioned we have separate agencies. we have bureaus and other departments and altogether about 100,000 people military and civilian give up in the morning and go to work in what we call the intelligence community. the larger organizations are fairly well-known. dr. duffy mentioned some of them, the central intelligence agency, the national security agency, the national geospatial intelligence agency and the federal bureau of investigation for the cia reports directly to me, and in the justice department then there are ten more organizations that have substantial intelligence that are also part of this committee. drug enforcement emboss the justice department. each of these services have

large military intelligence components, the coast guard which has an intelligence branch under the department, the security which has its own intelligence section as well and finally the department state, treasury and energy each have an intelligence officer and if you are counting that is 16. and just that simple recitation of the number and where they are located will give you an indication of the complexity of the organization. they'll have their own cultures. they all have their own proud traditions and the trick really, the mission that i have is to bring them all together so that we work together to do the right thing for the country and i will talk a little bit about how we do that but one thing is all that diversity means there's a tremendous range of skills and expertise we draw on to support policymakers to support the field, regarding the safety of our citizens and protect the security of the country which is our prime mission. my job was established shortly

after the 9/11 commission issued its 2004 report. one of the most important recommendations of the commission was to integrate all of the intelligence elements in the government's. five months later, congress passed the intelligence reform and terrorism prevention act decorated the job i have no was director of national intelligence when president bush sign that into law in 2004. last november i was honored to receive a phonecall from president-elect obama asking me to join his team in this job. there ensued a serious family conversation with diane confine the greed once again to postpone their retirements. m.i.a. bcra ride worked with the intelligence community a few times as i should mention i was the first associate director of central intelligence back in the mid-90s and very early in my career i was the intelligence officer and my first ship which of that time was a collateral duty for a junior officer but most of my 30 years of my career

i was primarily a consumer of intelligence and frankly pretty dissatisfied one so certain irony there and being put back in this position. for all that i always had a great admiration for those who collected intelligence, this analyzed to come visit tried to help the decision-makers and other officials did their job by telling them what our adversaries were doing and what they were thinking. any military commander can tell you intelligence is extremely important to success. some commanders tell you there are only two outcomes for potential military operation either operational success or intelligence failure which is an indication of the importance of it. but, presidents, ambassadors, development workers and law enforcement officials will tell you when they are supported by good intelligence knowing what the in from this, knowing what is going on on the of the side, the people they are dealing with, they will do well and it is that much better and that forms the core of what we do in

intelligence. in particular i have three rules. the first role as the principal adviser to the president on intelligence matters. if you consult advised and the devil's dictionary you find advises the smallest current coin. i can assure you that intelligence plays a large role in national security policy. as the new administration comes and it looks to the set of policies that it inherits to determine what it wants to do in these many important areas in the future and i can tell you that in the seven months of this administration the role of intelligence has played very strong in this administration and is try to the u.n. is going on in the ground and the policies that we want to adapt for the future to support our interest. in the intelligence committee we go all out for the president, for the entire executive branch. i am responsible for president

and obama's daily intelligence briefing. eyes service the top intelligence of fisa to the national security adviser but that is only part of the. intelligence officers, their reports, the whole collection system informs the entire national security policy process would starts with the interagency groups, works up groups until it culminates in the national security meetings on the president's decisions. i also meet with congress providing them with intelligence about what is going on in the world and the status of our intelligence activities. if you look up the words senate and the empress dictionary he calls the main body of the elderly gentleman charged with high duties and misdemeanors. [laughter] i can tell you that is not so for the two committees with which ideal the most often and the select committee on intelligence and the house permanent select committee on intelligence. their members are seriously dedicated patriots and and that some of the most prominent members of those committees from this area are clearly not

elderly gentleman. senator dianne feinstein shares the senate select committee on intelligence. i can tell you she is exactly the right person for that job, smart, tough but fair, always offering critical useful guidance. shoes jessop berberich the representative and eshoo chairs the management subcommittee and the house intelligence committee. representative mike thompson chairs the terrorism human intelligence analysis and counterintelligence committee of the house committee and both of them are excellent public service and care about getting intelligence right. they are tough on us but they are fair and they have the nation's interests at heart and of course speaker of the house and to close it was the ranking member of the house intelligence committee before she became, before she became minority leader and her experience with intelligence matters is now very important to all this now that she is the third highest ranking person in the government. i can tell you they'll represent you, san franciscans,

californians will and they keep me on my toes as they should. they not only oversee all of our activities but they provide the budget for all of these agencies. this congressional oversight is crucially important in the area of intelligence because so much of what we do vital to our national security but necessarily secret and the intelligence committees have the appropriate security clearances because they represent the citizenry's of their that indispensable outside checked on all of our activities. turning to that import matter of money in the budget brings up my second responsibility as the director of national intelligence and that is to manage a national intelligence program. the current year budget is is classified but we publish the previous year's budget which was $40 billion for the national intelligence program and my job is to make sure those resources are a portion effectively across the community to meet the major challenges we are dealing with.

to get essay bones programs of the 16 agencies can fulfill their proper roles in achieving the priorities that cut across all individual organizations. we just completed the process of justifying next year's budget to the congress and they look at it hard, as they should. dell my third role as the head of the 60 members intelligence community and leading that the mincy involves setting priorities, providing leadership on the crosscutting issues that affect more than one agency and i tried to align the incentives to enforce compliance, issuing policy directives that apply across the community. i clarify roles and responsibilities and that is is there's an important for any activity that requires kaleb version by multiple agencies and the big important issues require collaboration by multiple agencies. then another important part of leading the intelligence community is to support the operations we have in the field o'bright that we have diplomats

military units, reconstruction teams who are out there working in places like iraq, afghanistan and dozens of other nations around the world in providing that support for all of these people live in the field is the key job of the intelligence community and we do extraordinarily well. disorder of precise technical intelligence we stand up to those in the field as the mama. its orders of magnitude better than the intel i remember receiving is a junior officer in the fleet and even what i saw as the combatant commander in the pacific about seven years ago. we try to keep our diplomats are reconstruction workers and unfettered advantage. they deserve it and we are proud to provide it. underlying all of these three separate roles of the director of national intelligence is the fundamental responsibility to make sure that the intelligence community is coordinated integrated and greater than some of its parts. we have to connect the dots better than ever before to do all we can do to make sure there is never going to be another

9/11. frankly before 9/11 the general attitude of the intelligence community was to share the information on the need to know basis. the 9/11 commission included the barriers sharing intelligence or one of the factors that led to the failure to stop the attacks so we have begun moving through a responsibility to provide mentality rather than a need to know and since the creation of this office of the director of national intelligence we have made tremendous progress in sharing information. that is probably true within the 16 agencies i talked about but also with other partners we have the united states, the department, and security law enforcement officials of the local and state and tribal levels and we have courts are to improve the necessary communications with our foreign allies and with those in the private sector. sharing this stuff come naturally to us spies but it has got to change. we recognize it does and in fact it is changing.

as we go about this reformation of the improvement of our intelligence business is one of the advantages and at the same time one of the biggest challenges we have and i am guessing this is of particular interest of the road from silicon valley is the growth of information technology. for our intelligence analysts it raises real challenges for terabytes of intelligence. i did not know what it petabyte was until a few years ago but we have got them. they, these analysts have to sort through these huge amounts of information to spot trends to find that what is correct to find out the pieces of the information that are in the mass of data that comes into it. many of the information technology tools that help this in the sorting process and the sharing process but these added tools, the opportunity, the unprecedented volume during a possible liabilities both for the intelligence community and for the country.

three presidents now have declared their cyberinfrastructure is a strategic national asset and protecting that asset is a high national priority. the threat to their infrastructure comes from nation states. also comes from hostile none national organizations and even from skilled individuals. aunt ours cyberinfrastructure is intertwined. the systems wees for intelligence of their security functions other government networks and private systems use many of the same cables come amid the same service providers, many of the same switches and the same applications. the united states is not vulnerable to cyberattack to the degree that country's human have read about like georgia and estonia which have been attacked in recent years. our infrastructure is so big and so complex that it does not have the vulnerability and in addition miguel lot of practice all the time dealing with hackers and with natural problems, which forced people to learn their systems and make improvements but to keep those

networks say that we have to continually improve the system's improve their skills, improve our defenses as the hackers develop new attacks and at the same time we need to share ideas and best practices so american businesses can protect their private networks which are increasingly at risk from these same techniques and they have to help us. we must take advantage of silicon valley's expertise and constant innovation that comes. it is the department of common security that has the lead role to protect the government and the private critical infrastructure on which our national life depends. in of the most import agencies working with the part in a common security is an intelligence organization the national security agency regattas the unmatched understanding of computer networks. the fsa bostick incapability zen expertise are critical and protecting our du jour infrastructure. but the idea of using nsa kepley's to protect networks and our country often cause concern

among some citizens. we most amadou user capabilities in a way that ensures our citizens that their privacy and civil liberties are protected. americans must then they can have confidence dictabelt capabilities of the intelligence community are being used to save lives and they are being used to warehouse private information about americans. we must in makanda or job under the understand-- oversight of congress. so i believe the intelligence community as a huge response abilities to help protect federal networks to warn about the threats that their insure techniques we have developed enemy can do it without intruding on the civil liberties and privacy of americans for do it to continue to cooperate with those in the private sector on news networks much of the critical infrastructure desai taimea to do this carefully, under supervision entirely within the supervision of the law with proper oversight from the legislative and judicial

branches. let me brad some of those 100 those men and women of the intelligence committee to pick up they are tremendously-- more than ever we need employees from all backgrounds, all races, all cultures and all religions because we need as the versus workforce says the world is we are trying to understand lapook of the numbers in ricci years we have done better on that line. we are not where we want to be but we are getting closer all the time. we recruit more than the brave men and women who go out on the dusty streets to gain information and hostile countries. we also need and have linguist criminal justice experts lawyers economists researchers historians political scientist cybersecurity specialist. we have engineers to work on advanced satellites sophisticated sensors, spatial recognition technology and annalistic make sense of the flood of data we receive every

day. that is your intelligence community. the partnership for public service recently selected the intelligence committee is one of the best places to work in the federal government. i think it is especially remarkable but not so much when you realize half of their work forces joined since 9/11. have of those 100,000 the work in the intelligence committees signed up after the world trade towers and pentagon attacks of their group has been expired by the patriotism that flowed from that event in which is always been a part of this country's heritage. turning to the devil's dictionary again, patriotism. and dr. johnson's famous dictionary patriotism is defined as the last resort of a scoundrel. with all due respect i beg to submit it is the first. again it is fun to be cynical sometimes but i could not disagree more with that definition. we don't have loud oyster is types but we have quite professionals to care about what they do.

they know we can't give them much public recognition and their reward is contributing to a safe america. those who serve our communities and on occasion have to go in harm's way have a special respect for their fellow citizens. the armed forces soldiers sailors coast guard moon this service country proudly police officers to keep our streets safe federal state and local and of course firefighters and first responders. i am sure those of you live in a state where-- this experience the world series earthquake of 89 the great quake of 1906, the city that sponsors flee week every year are thankful for those whose service on a daily basis but i would like to tell you about another group of professionals to protect their federal-- citizens and typically do it in secret receiving little public recognition and those are members of this intelligence committee i've been talking

about. there is sometimes viewed with suspicion by their fellow americans but like the armed forces, the police and firefighters and first responders we have lost people in line of duty. central intelligence agency's has a memorial wall which is on marble to represent those killed in action. some other stories can be told the day but others can't like the first cia employee killed in 1949. is serreze wasik knowledge in 2000 in a ceremony with his family finally made it public three years ago after 50 years have passed. in 1949 at the end of the chinese civil war when the communists established the people's republic of china as mckiernan stayed behind and to help some anti-communist leaders he made it out, survives in the himalayas and was on his way to india but was mistakenly shot and killed by tibetan border guards as he entered a cross the border. the national security agency as

a memorial wall that has even more names than the cia. the military intelligence corps has of course lost many members of different armed forces. the fbi lost intelligence agents as far back as world war ii. the defense intelligence agency has its own patriots memorial for the one of the sad stories there was in 1975 when five employees stationed in vietnam are helping to take care of 250 orphans being evacuated in their air force c5 crashed on takeoff from si gun. seven more employees were killed on 9/11 in their offices in the pentagon and last week for more wounded in afghanistan. it is a dangerous business but the people the do it do it gladly endure pratt of their country. the devil's dictionary defines feller is the soldier would compound of vanity and the gamblers last hope but i can tell you as i continue to review and approve the rewards for the intelligence community vanity has nothing to do with it. these individuals are truly

inspirational. it is enough to relieve the senate in any of us into shake their hands and i hope over time we can make americans just as proud of their intelligence community as they are of those who serve in the armed forces law enforcement first responders. what about the future for this intelligence community? amber spears define the past as a rum of song and for once i grieve the sum part of this definition because i'm quite optimistic about the future of the intelligence community. as the mentioned earlier stay my office released the national intelligence strategy and today's the first time i've had to talk about it in a public forum for code fixes are marching orders are blueprint for the next four years ago we wrote it and extensively coordinated did with the members of our organizations and intelligence community also with the national security council and it contains for strategic goals. the first is to enable wise national security policies.

we plan to do that by continually monitoring and assessing the air national security and varmus so we can one policymakers about threats that are out there and we can also alert them to opportunities for gore second strategic goals to support effective national-security action. i talked a little bit about this to offer interagency organizations and the fields domestic law enforcement organizations. our third goal is to deliver balance and capabilities so that the future intelligence community can be even more effective than that today. wit stam the cutting edge of technology and our fourth goal is to operate this and single integrated team. if there's one thing i'm positive about dector my short time on the job it is that we are far more effective when we work together as the team when we share skills and work closely with policymakers are units in the field. this strategy goes on to lay out our mission objective that is

what we intend to accomplish countering extremism countering weapons of mass destruction and proliferation and enhancing cybersecurity and it lays out our enterprise objectives or how we will get the job done improve integration ensuring improved acquisition and the strategy calls on us to become more agile, more integrated into exemplify american values. at jill because threats and opportunities in today's world come quickly and they go quickly and you've got to catch them when they are there. integration and, i told you i'd seen first-hand how the intelligence committee produces amazing results. i wish i could take you into a darkened room with a flickering computer screen and see the computer screen is a young sergeant army air force milk, female sieving clicky nevitt screen which is inside a computer halfway around the world of somebody we are trying to get information about our we are trying to make them do something more stop doing something. over here is some young guy with

the new york yankees generally baseball cap that is on sideways, a little goatee and saying hey stuck right there moved back a little bit, you have got a. on the other side is the young woman who speaks the dialects of the country that come of this computer we are working on and she is working with the young surgeon to understand the nuance of what is on that screen how you can move and what you need to do. usually there is some grizzled old person my age who has been doing signals intelligence was the overall picture of what is going on there and their three or four other people in the back working on that same problems that are helping this team with the computer we are trying to work halfway around the world. it is something that happens every day. when it happens together like that as a team bring in the skills we have together, real magic happens and willging teams together whether it is what i can do by what i do the top of

the organization or to encourage this sort of idea, nursing from the bottom of. that is that we achieve the best results in the intelligence world. our world as it will the secrets but it nei dobbee as they set a world of mystery for gore people joined for patriotic motives. their jobs are about protecting the lives and security of americans. i want you the american people to be proud of them also. so, aside from what is in the national intelligence strategy let me emphasize what they think is the real news here which is the intelligence community is transparent as possible to the american public. we do have to protect sensitive sources but we have actually published our strategy for all to read. our enemies can read it but we mainly publishes for the american people. yuca navic cubby tonight as a souvenir. why do we do that? because we believe that the public understands a little bit

more about what we do and why we do it over all we will be a stronger safer adnation four. one with confidence that we in the intelligence business are doing the right thing for the country. as we often do in this great country were conducting an amazing experiment in democracy a magnificent experiment. can we operate a large powerful effective intelligence enterprise while appearing adhering to the american principles of openness separation of powers respect for privacy? i believe we can do it. let me close with this. u.s. intelligence existed back in 1913 when beers disappeared although at that time it was army intelligence in the intelligence and they didn't talk to each other but even so if they had talked to him their assessment to him would have been had the past, not the smartest thing to go down with an old 71 to go pal and around with poncho villa.

maybe undep marva legend that way and the disappearance but personally i wish you would come back to the united states to right elisse one more story. that really brings us to today's intelligence committee. we want to keep american states of making keep writing their stories so they can keep running their businesses so they can be secure and have dinner with their families, see the giants and a's, the 49 years and the raiders play ball, drive up and down the pacific coast highway. educate their kids and go about their civic duty so they can live the american dream. that is their responsibility in trying to make that like the safest possible. we take it seriously and i think we can do it right. salote stern our monolog into a dialogue. there's a lot we can talk about. would love to your questions and your ideas and thank you very much. [applause]

>> thanks very much to director dennis blair, the director of the u.s. intelligence national intelligence director. the range of questions i received, some of you will find after this meeting these are terrific questions. and they sort of range across zone flag cybersecurity lessons learned from 9/11 anti-iraq to how to rankle the sort of far-flung bureaucracy in washington sort of into some effective sort of fighting vehicle and then at the end of all the questions and this will be for the last one to keep you here until 7:00, did you really waterski behind the kitty hawk which is something-- [laughter] that last question first, the notion of this vast bureaucracy

in washington. all of these different intelligence agencies. one questionnaire said shouldn't he just merge some of these? is that the inefficient to have so many of them and have kind of grown up in their own directions and never been pulled together. what challenges to encounter with the culture of the various agencies that you have to coordinate? are there still silos and separation of information? can we now connect all the dots or will we be playing monday's morning quarterback again and i think the one question that--- a maidique and tackle all of it, has the organization that you have now been in place pre-9/11 do you think the 9/11 would have occurred? >> this serious consideration of this question about how we organize intelligence community's was the nets a result of that 9/11 commission

and within the commission itself and as a subsequent congressional consideration of the debate, that range of possibilities for organizing intelligence was considered and on the one hand created the department of intelligence but all of these 100,000 people and 50 billion-dollar budget and put it in one department and that the problem of intelligence has the option of providing it to everybody who needs it and it was decided not to form that separate the barbon but to form more of a confederation and to give to the office of the director of national intelligence a certain key authority, but it, setting the rules for sharing of information, personnel authorities and the reason it was done that way is because intelligence is such an integral part of what many organizations do that the idea of wrapping

your own intelligence arms out of that department weathered the defense or treasury board dea would destroy the real responsiveness of the intelligence. better to leave them there working with other intelligence agencies and making it all works so that was the basis of the decision and from what i have seen that was a good solid, a good solid decision but it does put a premium on trying to work against your department will come the department will demand sometimes for the greater good and working together. the way we do that is to try to concentrate on the definition of the task, the mission example. what are the leadership intentions of the country x? goes to the seekers into the analysis to find out because a lot of people need to know about it.

example, country x maxes developing a weapon system that could be used against americans for google find out what its characteristics are so we can build counters to it. narcotics gang wide is running drugs across international borders. findable about what they are doing and tell that to the people whose job is to stop them and the rest them so when you try to organize by mission bring the team together from these different organizations that is when the good stuff, the good stuff happen so i think if we leave the agency is an and end these perron departments we give them a mission, give someone the authority to make sure that their budgets cover those things, that they can share information and there will plug in with the people who need the information and we can make the right things happen in the right way, so so far i think that is the right way to do it and yes had we have this organization,