quorum call:

vote:

the presiding officer: is there anyone wishing to vote or change their vote? if not, the yeas are 93, the nays are 0. the bill asnded is passed. a senator: madam president? the presiding officer: the title amendment at the desk is agreed to. the senator from west virginia. mr. rockefeller: madam president, i ask unanimous consent that notwithstanding the adoption of the amendment numbered 3479 as modified, it be corrected to reflect that the instruction line was modified.

the presiding officer: without objection. a senator: madam president? the presiding officer: the senator from north dakota. mr. dorgan: madam president, the vote just taken was unanimous, which is interesting. we were able to work on this for five days here on the floor of the sena -- floor of the senate. but i also wanted to say that we always talk about good staff work. we really do have a an exceptionally fine staff on the commerce committee. and i want to say that senator rockefeller's work and senator hutchison's work was exceptional in order to move us to this place to get this completed. but i think they would agree as well that the staff director, ellen reskvie, galley swayzey, and anne begiman, staff director, and tom jones, senator demint, it really is a fine staff. and this piece of legislation,

the reason i wanted to say a word about it -- i just got off an airplane myself, just came back from north dakota -- but i wanted to say that this piece of legislation, while not getting the attention that some other pieces of legislation are getting these days -- notably health care, among others -- is a very important piece of legislation and it has some very important, critical changes that i think will be beneficial and will save lives. and i wanted to just mention a couple of them. number one, just for the irritants that exist in air travel these days -- and there are a lot of them -- this includes the passengers' bill of rights. a lot of people probably don't know that, but just commonsense, sound thinking about what are the rights of passengers here. and we worked with the airlines and the passenger groups and so on, and this includes the passengers' bill of rights, the three-hour limit, if you're on an airplane someplace and they want to have you sit on the end of a runway or on the tarmac for five hours, six hours, it's not

going to happen. not when this legislation pass passes. we have a three-hour limitation, and that's just the start of it. but the passengers' bill of rights is important. most important to me is the -- are the safety issues, and i held a number of hearings on safety in our subcommittee, and i appreciate very much again the work of senator rockefeller. he was very interested in making sure that we pursue these safety issues in order that they can become a part of the f.a.a. reauthorization bill. a significant part of this bill is modernization of the air traffic control system, but this bill also is about aviation safety. and so i want to just mention the safety provisions. we held a number of hearings to try to understand what could we learn from the tragedy that occurred at the colgan crash in buffalo, new york, and we learned a lot. and a lot of things that were, frank willing, to -- frankly, to me very troubling. and we addressed a number of those provisions in this legislation. pilot training and experience.

frankly, were it not for the families of the victims of the colgan crash who have witnessed here at every opportunity, in every circumstance where there's been a hearing or something in which aviation safety was discussed, they were here pushing and prodding and asking the right questions. and -- and we really do advance the interests of aviation training and experience in this legislation. the f.a.a. must revise flight and duty time limitations to address pilot fatigue in this legislation. we do not yet and have not addressed the commuting issue, which i think is an issue, but we have not yet addressed that and could not in this bill. but that will continue to be an issue that we will work on. we have an f.a.a. required report to the congress now actually, every year, of all of the safety recommendations from the ntsb and which have been followed and which have not. i mean, this issue of the "most-wanted list" of safety recommendations that in some cases have been on the list for

10 and 15 years, it's unforgivable that that has happened and we're not going to let that happen again. obviously we probably the use of wireless communications devices and laptop computers in the cockpit that resident used for purpose of the operation of the airplane. when i say "obviously," an airplane that overflies its destination with a couple of pilots working on laptops, overflying the destination by 150 miles or so, doesn't make much sense to me that we don't have a prohibition in the f.a.a. manuals to prohibit in every circumstance the use of these kind of personal wireless communications devices for personal use in the cockpit during flight. we enhance safety oversight of foreign repair stations, which is very, very important. it mandates two inspections per year by the f.a.a. and a lot of people don't understand that a lot of the -- the maintenance now is being done in some cases overseas but in other cases just -- they're being done farmed out and

contracted out to someone outside of the aircraft carrier -- the airline itself. we require the disclosure of the airline operating flights when a consumer buys a ticket on an airplane, we want them to understand what's the company that's carrying them. not what's the brand on the airplane, but what company is this so that they have some sense of who really is in charge of that flight. access to all pilots' records. you know, the captain in the colgan flight, the c.e.o. of the colgan company said had i know the failures of that captain in certain exams and tests along the way in certifying his various licenses, we would not have hired that captain, and yet the company did not know. that will not be the case in the future. and so those are just some, not all, of the safety issues. they are very important. i am convinced that lives will be saved. i don't suggest this is the

entire set of issues that have to be resolved. more remains to be done and we will remain on the case to do that. we will continue even now with additional hearings. finally, i want to say on the issue of modernization, this, too, is so important and it relates to safety but it relates to other things. it relates to the reduced use of fuel, more direct routing, better time lines for trips for passengers because they'll get to this destination more quick quickly, less spacing between airlines or airplanes in the sky, i should say, and that's because rather than fly to the old ground-based radar system where you know about where an airplane, is you only know about where it is when the transponder flashes a dot on the screen in front of the air crask controller -- air traffic controller and the next seven second or so the airplane is somewhere else. well, using the g.p.s. in which all of us -- well, at least some of us use, i don't, but many people used it on their cars, their cell phones, the common

use of g.p.s. is also over the world these days except we don't use it by and large for commercial airlines and we should. air traffic control modernization means ground-based systems that need to be built, it means protocols that have to be developed, it means equipage in the cockpit. but we must get there, not in 15 years or 20 years. we must get there soon. and so this piece of legislation dramatically advances that. and the -- you know, some talk about waiting and finishing this job in 15 years. we've substantially truncated the time to say, no, let's get this done. so those are the -- the significant issues. and, again, i want to thank margaret mccarthy on my staff, along with the other staff i have previously mentioned, and i especially again want to say i've served on the commerce committee for a good many years and we work on a lot of issues and it's such a wide jurisdiction, a wide range of interests and issues. and senator rockefeller assumed control of the commerce committee just this congress and

i think has done an extraordinary job. i appreciate his leadership, appreciate fact that he gave us -- appreciate the fact that he gave us not only directions but the reins to work in the subcommittee and then he and the subcommittee worked very hard in the full committee to put this legislation together. it is rare, indeed, in this thy and airnlings to find a piece of legislation that passes the senate in a record vote, that passes a piece of legislation in great consequence, that deals with many issues, some o some om controversial, that passes the senate with no negative votes at all. think of that, no negative votes cast on this bill today. wouldn't it be nice if we could see more of that kind of togetherness, coming together on public policy that all of us think is good for this country and its future? so, madam president, i wanted to again say how proud i am of this legislation and how important it is to this country and i'm pleased that this is the next step, a very important step, and then we have a conference with

the house and bring a conference report back and it will be signed by the president. we will all have done something to advance safety and modernization in aviation in this country. not just for commercial aviation but for general aviation, which is an increasingly important part of our aviation system. madam president, i yield the oor. and i make a point of order that a quorum is not present. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: without objection, the senate will proceed to the measure. mr. rockefeller: madam president, i ask unanimous consent that the resolution be agreed to, the preamble be agreed to en bloc, and the motions to reconsider be laid on the table en bloc, that any statements receipting to it -- to the resolution appear at the appropriate place in the record as if read. the presiding officer: without objection.

mr. rockefeller: madam president, i ask unanimous consent that the senate proceed to the immediate consideration of s. res. 464, submitted earlier today. the presiding officer: the clerk will report. the clerk: senate resolution 464, recognizing the 189th anniversary of the independence of greece and sel celebrating gk and american democracy. the presiding officer: without objection you the senate will proceed to the measure. mr. rockefeller: i ask unanimous consent the resolutionen agreed to, the preamble be agreed to, the motion to reconsider be laid on the table, with no intervening action or debate, and any statement related to the resolution be placed in the record at the appropriate place aif read. the presiding officer: without objection. mr. rockefeller: madam president, i ask unanimous consent that when the senate completes its business today, it recess until 2:15 on tuesday, march 23, following the prayer and pledge, the journal of proceedings be approved to date, the time for the two leaders be reserved for their use later in

the day. the presiding officer: without objection. mr. rockefeller: madam president, tomorrow we will begin consideration of the health care and education reconciliation act. there will be up to 20 hours for debate under the rules. senators should expect a busy week with roll calls -- votes throughout. if there is no quarter business to come before the senate, i scha it under the previous order. -- i ask that it recess under the previous order. the presiding officer: the senate stands in recessful 2:1 2:15 p.m. tomorrow.

well senator is bring up the so-called of expert bill? >> it sounds like tomorrow there will begin debate and have 20 hours debate which is all that is allowed a and a reconciliation rolls and then begin this vote on eminence and as you know how seven democrats are hoping to get the bill passed by the end of the week. it's clear at the moment whether that's going to happen. >> what might have the first couple days of senate debate look like? >> i think it will start to pretty much what we've heard a whole lot of annunciations in the republican side of

democratic tactics and reconciliation, democrats likely focusing on the things they think are good about the policy in the bill. in that 20 hours. is client -- we've heard debate we will likely hear anything incredibly new. republicans will double down on their threats to not cooperate on the other bills this year, that democrats hope to be bipartisan due to the use of reconciliation. and then once we get into the amendment voting there's not going to be much debate because there's really no debate at a loud and that is going to be a lot of voting. >> democratic and republican staffers met with the senate parliamentarian today. talk about like a procedural challenges to the bell. what happened at the meeting? >> both sides presented their arguments regarding some other procedural challenges and i've been told the parliament terry listened and didn't say how he was going to rule on those who bet they're basically sort of

like what the judge making their case and he's listening enough line of his opinion when he makes a ruling on the floor. >> was at stake? what could his opinion be? >> what is at stake is the health care overhaul bill the one the senate pass has passed and there are changes that the house and senate have agreed to make so at stake is what -- which changes to that will become law. republicans are going to try to knock out the entire bill three section of the budget act that says if you make any changes to social security that's not allowed under reconciliation. to say that because the so-called cadillac tax changes in this reconciliation bill would affect social security revenues and therefore it shouldn't be allowed. that's going to be argued and so they're saying that should not have the entire bill as well as the individual section. it doesn't make a difference if it does either the mother would

have to again. in any event it doesn't affect passage of the bill the house voted, but it does mean that these changes that both sides are trying to make to the bill that the house and senate democrats are trying to make are at stake. >> daniel friedman, thank you. >> thank you.

>> it's a guidebook and a mini history worked of biography of each of the president's and what someone can tell about people at the end of their lives. a year ago last month president to, economic stimulus bill into law.

the senate banking committee begins marking of financial regulation overhaul with more than 470 amendments. live coverage begins at 5:00 p.m. eastern on c-span 3. an online at c-span the door. and our regional federal reserve bank presidents describe their supervisory roles and one against proposals that would remove their authority over smaller banks. from the conference was a by the

american bankers association. this is just under an hour. >> wamp steve wilson, our chairman allied to will moderate the next portion of our program, the topic is the role of banking and local economic growth. this interactive question and answer session with three federal reserve bank presidents who have both national and regional responsibilities will want to know these folks what's on your mind and they're going to be glad to speak candidly about that, however, they cannot talk about future monetary policy or interest rates so please call back for another day. i would invite steve and the panel members to come back up while we talk about the question portion of this. on your chairs there are a little white cards. we would ask that you write your cards -- questions on those cars, hand them to the nearest staff member who will bring them

up and hand them to our moderator. we can ask the questions for us. please welcome steve olsen who will recognize our panel. [applause] >> good morning, this is a rare opportunity. i have the pleasure to serve on but reserve board of cleveland's with sandy and i know when patton said president and said governors are very skittish about being in this and vermins. now they look relaxed but i imagine they're just a bit concerned because it's an awkward position that there in. of being so involved with monetary policy they have to be so careful what they say. i reminded him of a cartoon i saw when i was on the federal reserve board in that cartoon showed a chairman greenspan at that time in office and he said of his desk and there is an aide

standing beside him. out the window you see all these people, jumping out of windows when plummeting down. and the aide said his and tights, mr. chairman. [laughter] so they do have so careful what they say and rear guard of honor that today. we're not where to put them in a position where they have to be concerned about some statements they make. been taken at of this room in a way that with indicates where signal something about monetary policy so we will honor that. this is in respect of what is a group of led presidents, we've taken a very strong position in the current legislative and fermenta along with five other trade groups beat wrote to a letter to senator dodd and shall be emphasizing the 12 regional banks are a source of strength and our economy and how

important and independence federal reserve system really is. and i appreciate the fact that -- we know how important their role is the place in the crisis. reno they provided this stability that we needed to and how important it is two have that independent agency. so they are under attack and we need to support them when and we are going to support them so we do appreciate that. let me introduce the panel to you. sandy is from cleveland, she's been there since 2003 as the president's. jeffrey is from richmond, federal reserve and has been there since 2004 as president. thomas is from kansas city since

1991 so is a veteran. we really have three diverse areas year. i know because i live in the fourth federal reserve district i knew that the challenges that sandy faces with heavy manufacturing economy that's running a little behind the national economy at this point in time is the real challenge. then we have rich friends more in the east -- richmond in the east and there are challenges there as well and we will talk about that and then, of course, kansas city and heartland of america unworn and probably an area that's fearing a little better than we are in the east but they will talk about that. so to get this started allied to just ask them an open-ended question so they can make some open remarks. after they do that to you are going to participate by filling out these questions parts of

better on your seat one. if you have a question to submit to their staff members there standing in the i also, pass them and will get them up and be will ask whatever questions you want to ask with the exception of monetary policy questions. wamp so sandy come i'd like you to start. but one thing which you like us remember from today or take away from today about federal reserve? >> mw well, thank you. first of all, let me think stephen and the aba for opportunity to be here today i've been spending time meeting that with bankers and business leaders better districts and is wonderful to have an opportunity to meet with almost a thousand bankers in one place. because this is a challenging time wanting arrow like everyone to leave west in general who and

that is that a healthy banking system is just so essential for economic growth and as i said i've been meeting -- stepped up meetings for the district and the one question i get asked the most is almost always the first question i get asked and that is why aren't banks lending? and so i've started to ask that question to bankers, but also i've been meeting with businesses, small and large, and it tells you i think that perhaps i get that question tells how important banking and the banks are two our economy. what i have learned is from the strong businesses they are not borrowing. they are paying down debt, sitting on cash, and there are being very cautious. there is uncertainty and their uncertain how the economy will is called an uncertain about a lot of issues we've been talking

about, regulatory, reform, health reform, etc. so the stronger businesses aren't borrowing which is putting him in tampering on the bank lending. the weaker companies are the banks being cautious, they are tightening lending standards and so therefore the weaker companies are creating more cautious -- caution on the bankside and so we clearly the important banking system and and a stronger economy will help that situation and our policy is at the federal reserve, they did monetary policies are geared toward a strengthening economy. in all so go for a strong banking system regulatory reform has to be done in the right fashion. we have learned to the financial crisis there are weaknesses in our regulatory structure. we need to make sure though as we proceed with regulatory reform that its done appropriately, that we are matching it risks and the

appropriate regulations. we can comments during the q and a on some of the thoughts the cleveland the fed has on that reform and when when you ask what are the messages i want to leave about the fed and other critical one factor to have strong economy and strong banking system is that this be one has to stay involved in supervision. we have to stay involved in the supervision of a small and medium and large banks because our contact with the banking system, our contact with banks as i mentioned all of us are always meeting with these committed to supporting information for us to conduct our monetary policy and also is in progress as lender of last resort. as steve mentioned to the process we stepped of our activities and were there and having that access and information on all sides is critical to that function. finally, and i think this is

key, we have to have independent central bank. we have to be free from short-term political thoughts and issues and we have to stay decentralize and independence so those would be the messages. i know it's more than one but they're all connected and they're all very important. >> that is fine, thank you. thomas. >> let me make my main point i have been asked, is the federal reserve system actually owned by european combo. [laughter] i've been asked is said to one of truth that the rockefellers own more than 50% ever sought. but i think more recently the questions have really gone outrageous because i have been asked this is a true statement i have been asked is the community

bank modeled important and shouldn't this be one be supervised as the largest institution. ladies and gentleman, that's a conspiracy. right there. because it's absolutely based on from individuals who have never been in a community bank, who have never been involved in how community bank lends it to agriculture or energy, or for consumers as we go forward. and i would say that if you look at the present of deposits -- deposits and it took a map of the united states and you compared it to 16 states have majority of the deposits and nearly the majority of lending from community banks less than 10 billion which today is definition of hearing to bank apparently in 26 states have majority of deposits and loans generated by institutions less

than 50 billion. so the community bank is extremely bible, is relationship banking. i've been involved with this is actually in 1973 and i'm confident going toward that end has a role in that as things change it will continue to have a role. right now, yes, commercial real estate is putting pressure but i would also point out the following and we looked at the data in 2009 while all this pressure is going on the community banks less than a billion dollars, 44 percent of them increase their loans to small business. you can say that for some of the others. so i think that's extremely important to remember. the second thing is and i will repeat of a little of a sandy set and that is the role of the federal reserve going forward. for me it's just -- it's a travesty to think and this is my personal opinion -- to think

that the federal reserve should be pulled at of supervision of force since a tender banks have been cold and companies across the country and focus on 23 or 25 or whatever the number is because when it's absolutely disenfranchising our relationship with a very important fuselimportant sector outside of wall street across the united states. [applause] and even more telling is the fact that it will 50 billion prepackaged, institutionalize is too big to fail and makes the central bank wall street and not the united states and that's what my major major objection is and i would hate to see that after all this turmoil in this crisis that we find that wall street wins at the expense of community banks. [applause]

thank you. >> my esteemed senior colleague, tom, is a hard act to follow. let me first thing to offer in writing me here, is a pleasure to be. this district. i think the thing to remember about the federal reserve is that it has this unusual decentralized federated hybrid government with model that was crafted after a tortuous legislative process, probably as tortuous as the one we're witnessing now but it finally balances and number of very distinct forces and, very distinct interests and distinct purposes and has served our country well. it has done so because the system due to its decentralized nature and the way it's governed has become deeply rooted in the local economy is all around our country and i think those of you

who have had any interaction with the federal reserve either serving on our advisory councils or bores or interacting with your federal reserve examiners, if you have the privilege of doing so, or understanding that, it's something that is underappreciated inside the beltway. i think that it's ironic the type of proposals that are being considered regarding state member bank supervision because the decentralize structure of the system originated to because of hathaway financial distress was managed before the federal reserve system. it was managed by largest city clearinghouses end of those times large banks would cut off the flow of liquidity to small community banks around the country this was designed -- we are designed as a system of regional clearinghouses to assure fair and even

distribution of liquidity in the event of of an increase in demand for funds in increasing demand for liquidity and financial distress so it would be highly ironic if that's robust role that we have been committed to making around the country or in any way diminished and i think it would be a great mistake. times like this, this time in the business cycle, first let me say that it's hard to overestimate the importance of banks for local economies. i'm sure that's something you'll appreciate but at times like this the american public seems to do that, over estimate the power of banks and local economies and to hear some critics talent. you'd think the entire economy recovery was weighted with bated breath for everything to begin lending to which should. what i think that misses is the effect of the economy on

banking. any bar were with a given balance sheet, given revenues coming given demand is a riskier prospects and the downturn. riskier prospects in a recession and they are in the midst of a roaring expansion and i think that you bankers all understand that, you see it on the ground, you see it in the markets you are in any were there to make those discriminating judgments, those calls about credit worthiness that are so important to our economy. we recognize that in the federal reserve system, we realize that at times like this farmer credits fall into this intermediate category were it's difficult to make discerning judgments but you have to put in the effort to make those judgments. we have been undertaking extra efforts, betsy describe these -- governor duke describing the use articulately in the breakfast

session next door. we have been undertaking special efforts to make sure our examiners understand this and are using common-sense discretion in a judgment and the bystanders to credits they see. so again when federal reserve has had an important role to play in our economy. in local economies around the country and i think we should tinker with that with great, great care. >> very good, thank you. the questions started to come in and they are really coming down to two themes so i'm going to lead to continue now that you've had your support water in jeff, would you comment on too big to fail because there is a big concern about number one time getting that behind us so that's out there any longer and never to come and how they're going to do that too. so what are your thoughts on too big to fail and what the resolution of that should be. >> great question.

i think this is the central issue that financial regulatory reform needs to face and it is the central issue on good to judge any legislation by. so too big to fail is just the perception that some institutions will receive parents support in the event we become financially distressed to hear it but it's important to distinguish between explicit federal safety net which you are familiar with in the form of deposit insurance but it also includes in the financial sector guarantees for pension liabilities and the like. that's a store to buy the implicit safety net that's grown up in the last several decades of. the idea that some institutions that don't have formal explicit legislated government support are going to receive governance support nonetheless. they may and freddie mac, the

house and government sponsored enterprises were probably the leading case of this but there were others as well. estimates by economists at the federal reserve bank of richmond and suggest that about 10 years ago about 45 percent of the financial sector's liability is more explicitly or implicitly guaranteed or viewed as guaranteed by the federal government. that crash and has grown to release 58 percent now. as a result of actions taken in this recent crisis, the precedents that have been set in this recent crisis. the reason that that expansion takes place is because of the ambiguity of this implicit support to end in a crisis policy-makers are always afraid that failing to support one institution who will lead to creditors to lose confidence in whether the government will come to support some other institution and so they end up

airing on the side of intervention rather than not and that's what leads to this expansion of the implicit sating and overtime. the explicit purpose is actually shrinking over the last decade according to our estimates. from 27 down 222%. i think that policymaker discretion in the ability to use discretionary interventions to support to some creditors is dangerous, it leads to financial market volatility, and ambiguity leads to speculation for and against weather event will take place and end up forcing the hands of policymakers the next time a crisis will come around. ..

but i want to address the last question as well because i am an outspoken critic of too big to fail and just in case you think i'm just a critic i invite you to go to our website, www.kcfob.org and we have a proposal that addresses to big to fail that brings it under the rules law that says you cannot be billed out. you have to take these steps but there is no discretion, and if

you don't take the discretion way you won't take too big to fail away. there is an old saying from examiners and maybe it came from somewhere else listened to what i do, not to what i say if you want to know what is going to happen. so whether it is -- [applause] -- whether it is 22% explicit or not, we know very well that too big to fail is not going to go away without legislation that brings them under the rules all and the other thing that bothers me is the tremendous this allocation of resources that causes and for every community bank in this room and in this country it is a competitive disadvantage to you because every one of you know it or not too big to fail and every one of your customers know it, too, and that means that vantage to the too big to fail. so we got to address that. number one, a lot more important than whether or not we try and

change who the supervisor is. we've got to take care of the problem first and the problem is too big to fail. >> thank you. sandy, let's stay with that for a minute, too big to fail. there's a lot of bankers that are very concerned about the part of the proposal where they prefund to big to fail. is it prefunding to be to fail simply making them too big to fail? >> well, i mentioned in my opening remarks that regulatory reform is important but it has to be done right and addressing this issue, too big to fail, is critical. but the way we have approached it at the federal reserve bank of cleveland there are three elements i feel are important, to regulatory reform. the first is having a tiered

purity approach to supervision, dividing into perhaps three categories the financial institutions, the banks. the top tier would be those that are more complex and our systemically important, and they would have a tougher set of standards, capital standards, leverage standards than a middle group that are more moderately complex and proposed moderate risk, and again with a different set of standards and it than a third group, the less complex community banking group. again, a different set of standards because of the complexity and the risk that they pose. so you're sitting at a regulatory structure. that takes care of the banking system. but then there is the institutions that aren't part of the banking system, and we need a more macroprovincial supervisory approach so that you are dealing with risks in these

institutions and especially those that are systematically important and therefore addressing those issues before they get to the point of failure. making sure appropriate supervision is in place, macroprovincial supervision so that would be the second element. and the third element is resolution of 40 which is where i think the question comes in about funding. we do -- we have resolution of 44 banks. we know the steps that have to be taken when a bank is failing. we need similar steps for these large non-financial institutions so that there is no question about standing in when they are feeling. there is a process to online them in place and the issue of the fund, i know that house, and i haven't -- i don't have a specific answer other than to

say the funding would come from those institutions that are considered systemically important and large. you know, i've talked to individuals who say that in and of itself would prevent an institution from wanting to be of that size, of that complexity and having to fund a fund like that so i think it's an issue that is open for discussion but if you take care of having the appropriate supervision structure in place then you don't have to deal with that issue in the end. >> thank you. a couple of questions have come up here for each of you to comment on. as the economic conditions in the region very briefly and then what you see as the obstacles to lending and how we can be more effective as bankers and lending within your districts. why don't we start with you again, jeff. >> sure. so i have a diverse district.

the area of routt washington, d.c., west virginia to the west and then south side virginia and the carolinas and of course the tidewater area. the carolinas have been hit hard, heavily manufacturing, export-oriented area, and so on employment is fairly high in addition financial-services and employment are not sure what is diminished slightly. and then along the coast a lot of land development and around the coast for second homes, retirement and the like left some problems, some problems in its weak for the banking community down there. signs of turnaround beginning to become evident in north carolina, south carolina lagging a bit. in the d.c. area it has pared relatively well compared to the nation. unemployment, maryland, virginia, not as high as the u.s. and they are benefiting from a steady flow of federal

government dollars in various sectors, defense, life sciences, national security and the like that's providing a good base, good for coming and the alignments are helping in central maryland. out in west virginia for a while in 2008 it looked like they were going to miss the recession entirely then energy prices did what they did in the millo of 08, and they've been suffering tremendously. steep rising unemployment rates out there and so, they are struggling as well with a great deal of uncertainty as a result of the transition in philosophy at the -- at the environmental protection agency and other areas affecting environmental regulation. and number of things have sort of been put on hold while the administration reconfigures its approach, and so a lot of -- a

lot of investments are just on hold until this regulatory uncertainty is cleared up, and that's an area -- it's true a lot of places in the district but it's acutely in west virginia because of so much of the economy relating to the energy business. so this kind of a in a nutshell. islamic in the tenth federal reserve district, kansas city district, you go west from kansas city to denver. so you have the agricultural states, nebraska, kansas, oklahoma, energy wyoming, colorado, and the northern mexico. and we actually, this area actually entered the recession leader because of the energy and the agriculture, and then it came in and really accelerated about where the rest of the country was. now it is like the rest of the nation coming out slowly. energy has improved partly because some stability in the natural gas production which is

seeing activity pickup. agriculture is doing relatively well compared to other times particularly. and then we have a lot of small manufacturing which supports some of the larger main factor in both durable and nondurable because of the agricultural orientation. and those are also coming out just slowly but steadily out of this recession. the other thing kind of pointing to is the fact in that region there is about 800 plus community banks that operate, so while we don't have one large institution we have these 800 that are oriented towards agriculture, oriented towards energy, towards some of the manufacturing support that goes on, and that's why when i talk about systemic, i don't talk about one institution, i talk about 850 who are in these particular sectors, and they have done -- they have been

affected. the commercial real-estate has been particularly hard on some of our banks in our urban areas, but beyond that though, our rural banks have been fairly steady. those in the urban who've been making business loans, have had hard times but those are coming back and so we are seeing more of a steady climb out both as it relates to our banks and then as it relates to these particular industries and i think we will come out about the same pace as a nation as a whole, hopefully with the help of those banks. >> thank you. sandy? >> the fourth district is ohio, the eastern half of kentucky and of and my district is lagging the nation in terms of the economic growth. but hall we as in the district have issues that are more than just a cyclical issues that we are facing now.

we have some structural issues the we are dealing with, so as the state of ohio for example which is the largest part of my district, we didn't regain the jobs that lost in the 2001 recession. and so, we went into the recession earlier and we are obviously going to come out leader because of these structural issues. when i -- steve mentioned i became president of the cleveland fed in 2003, and at that time -- and each of our federal reserve meetings, the markup meetings, the 12 presidents come to those meetings and make comments about the district's economy so that we can have a sense of what's happening nationally. and so, in 2003, the country was coming out of the 2001 recession and we were in a recovery. but my reports continued to be on the negative side, and so, you know, i have a sense there that there is something different going on in my district and the rest of the country. so the research staff began to

do some work looking at what drives differences in income growth across the 50 states, and we looked at the 75 year period of time. and the two most critical factors driving income growth there for economic growth in states, there are two factors and they've stayed the same over the 75 year period of time and the factors were the knowledge base for the educational attainment level of the work force in the state, and the second was innovation. and we measured innovation by the number of patents per capita a state held. well, 75 years ago ohio was in the top tier of the country on both of those measures. but today, we have fallen to the 39th out of the 50 states in terms of educational attainment. and we measure that by the number of people in the state that have a college degree at this time because again, most of the job -- will, for 30 plus of the jobs that are created a need a high school and education. and second in terms of patents, we've fallen to the average,

where we were at the top of the ranking over the years. so, because i didn't want to end on this negative note of you know, we are going through some structural problems, we are heavily dominated in manufacturing that's providing less jobs, but i wanted to end by, you know, there are -- we have to start focusing on these types of issues. how do we get a better educated and skilled work force in the region, and second of all, making sure that we are making investments, whether they are government dollars or private dollars in terms of innovation. and we are starting to see some progress in that result -- in that regard. the medical device industries, biosciences are starting to pick up and have a stronger foothold in our district. but our issues are going to be -- they are going to take longer to resolve than just a stronger economy to be we've got to deal with some of the structural issues that we are dealing with. >> thank you. we have new themes developing

here. tom, i'm going to start with you on this one. and the presumption is for this question that the consumer protection agency passes, it is housed and fed and they give you some authority on how that's going to be run. how do you see that you could reach them on bank sector from a regulatory standpoint? >> welcome that is a good solution i will say that. the elements of that, the first element of that is rule-writing. so you're going to have the rule-writing coming you want it to comply consistently across banks and non-bank to read >> you all really know how to do that. [laughter] >> de rule-writing, you mean? we have huddled of practice. [laughter] so, but you want to make sure they apply consistently so that

part of the legislation has to be assured. you have to be able to identify -- it's easy to identify with the banks are. this is why you are always first in line, but you have to be able to define the non-banks are going to apply this to and that's going to take a fairly dynamic process because it changes all the time as we know and have learned. then you're going to have to decide how you're going to address these non-banks. mauney view is the banks are being addressed. we know the majority of the complaints are about credit cards and overdraft fees issues that have come up and we have that systematic on the non-banks rather than create a new agency you do have the federal trade commission to you ought to decide if you're going to use its because you already have the bureaucracy there and you move it forward so that you -- they

are subject to enforcing the rules systematically just as we are where the fdic or the controller is with the banking industry. and then hold them accountable just as we are held accountable for enforcing those rules so that's how i would do in a way that would not create a new bureaucracy. it would allow a single writer that gives a consistent application, and then i would have measurements and accountability for follow-up as to whether they are being implemented in these non-banks that are involved with that, you take a look at them and then if the fdic or whomever you assign it to isn't doing the job than they are held accountable for that. so that's my approach. >> sandy, how do we reach the non-banks with regulation? >> welcome a few -- it's not -- it's not regulation. it's the enforcement.

and you're right. well, i agree with tom. you have to have -- the rule making is not in force but it is the supervision. we for the supervision side as tom mentioned for the banks, that's pretty clear. it's the supervision of those non-banks, and in the enforcement side, enforcement right now is in different agencies. some of it goes to justice and some of it goes to hud and would be important to line up the rulemaking with the enforcement, and then the supervision depends on what the institution is. and as tom said, we've been taking the supervisory part of it as it relates to the banks, and we've been very diligent about that. it's been -- those non-banks. i think it's going to have to be a good definition of -- we are going to have to figure out who is the appropriate supervisor

for those institutions, and it has to be consistent across the across the board. >> i would agree with my colleagues. i think no matter how far brought the reach of rule-writing, without regularly scheduled examination by an agency with accompanying enforcement power you will have an uneven playing field. >> there's a lot of questions about regulation, and i know you will say i have people to do that. but the bottom line is if in fact examiners of being overzealous as those in this room believe, and if they are coming in and because they are concerned about economic conditions now doing things they haven't done in the past, like classifying performing loans, things of that nature, the imam performing, performing initio, what can you do at your level to

promote good economic activity and lending by a reigning in if he will those examiners you have in the field? what do you see your role on that regard? >> i will start with that. first i can only speak for the federal reserve system and the richmond fed and what we've been doing. first, this is not an issue that caused us to slap our forehead and say in a downturn may be regulators and examiners get overzealous. this is something we went through in the early 90's and we were aware of it coming into this recession and we are aware that in a recession a larger fraction of credits are in categories where you need scrutiny and need to make some hard judgments. we took up the guidance from number one escobar duke

explained and we dusted off and looked at it and made updates, made changes and clarifications and we went out and trained the examiners on xm kleeb demint and what we expected so i have a lot of confidence in our folks and in the systems folks more generally. but again, as i said i can't speak for other agencies. >> let me try and give you a perspective that the examiner is always in that difficult position of being asked to call with as he or she sees it and yet being not overzealous and it's not an easy job as you know as you deal with customers under pressure. the first thing i would say sometimes there is a little bit of a credibility issue when i say this but i say it absolutely confident we that the examiners that i know, and i spend a lot

of time with examiners do not want to see a bank fail. it's not in their interest to see a bank fail. what are the incentives? the incentives are -- i'm going to be held accountable for doing this job, calling it as i see it. if the bank fails the examiner does know the inspector general will be walking in the door the next day looking at everything they did so they want to be precise and they are going to have that incentive in place. that's an important fact. secondly, though, and this is where you asked me the question what can i do and here is what i have done with our examiners. i met with them and we said we all know the guidelines are on commercial real-estate particularly right now because that's where the pressure is. i am telling you that if you follow those guidelines carefully and use your good judgment the examiner in charge who has experience and july of

confidence in i will stand behind you and defend you i don't care what the ig says or what goes on to read if we mess up if we don't do our job fine, i will be right there. holding accountable and holding myself accountable. but if you use good judgment and implement those guidelines and work with that bank for the best outcomes then i will stand behind you 100%. [applause] and that's what you have to do. the one thing, the one disadvantage or advantage i have is being the veteran i guess or the old man in the crowd, whichever you prefer, is i was -- i started in bank supervision. so i was in the crisis of the 80's, was in the agricultural crisis and went through it, the energy crisis, the first commercial real-estate crisis, and they are very difficult.

but you can't ask the examiner to change the facts just like you can't ask -- you can't be asked on your customer to change the facts so what you have to do is find the best route through the workout and hopefully have the bank first of all if it isn't under pressure and is in trouble that it survives and second of all, that it than can begin to land again and that's going to be dependent on capital and dependent on the portfolio that you hold, and that is the approach we have to take going forward. and i hope -- i think the federal reserve system brought lee has taken as we progress through this terrible crisis. >> i'm going to agree obviously with my colleagues on these issues. you are going to go away thinking federal reserve officials agree with one another and i can assure you that isn't true but on these issues there is agreement and i just want to reinforce that. i've done the same. i met with our examination team,

our supervision team and have emphasized and talked but these issues about it being prudent but also using good judgment. jeff mentioned we've looked at the guidance and what we've done differently this time has not only given them guidance, it's usually written now. we also conducted training so that they understand the issues and that's important. and then i will add one comment it's a bit different and that is going back to the role of the fed and supervision. the fact that the three of us sit on the fomc we have a good understanding of the economy and economic conditions. we then can meet with our supervision team and help them understand the economic conditions as they go out in and supervise institutions so it is a two-way street. we learn about the economy through the supervision of the banks we supervise large and small but we also then can take what we know about the economy and economic conditions and the environment and use that in our

supervisory role also so that's why it's so important for us to stay involved in mad. >> thank you. another thing that is coming through very clearly in these questions has to do with the five months and work connecticut known as fasb, and we get frustrated as bankers and i see that in these questions with the pronouncements and the changes in accounting rules and the concept of treating banks and now talking about loans being marked to market etc. these tools keep up capital. these rules cause us a tremendous amount of time and energy and staff. could you comment on accounting rules and how today they are created and how maybe betsy getting some control over that

may be from a systemic risk standpoint or whatever? i've kind of developed a team starting from the farthest and working down. >> if that works for you, steve. accounting rules and interaction with regulatory practice and supervisory practices is something where i see room for constructive evolution and i don't think -- i don't think the approach should be for the regulators to dictate to fasb how to do things of the we obviously have views from time to time. it's more constructive to figure out what we want to accomplish and get the information we need to accomplish that saw a good example is stress testing. the stress test last year where would we were facing was a situation where we understood about two more years of the economics at first economic conditions were ahead of us get

the accounting rules for the loan loss reserves prevented the loss is more than 12 months out being brought into full recognition so we sort of knew there was like a predictable discrepancy between the accounting measures and the stress was designed to get around that. and we didn't -- it was and that it created a new capital standard. it's just that it was a forward-looking way of using the accounting measures and of the numbers we knew about and looking ahead and doing capital planning on a forward looking basis and not just relying on the current capital ratio as the be all and end all measure of the financial condition and institution, and i think you are going to see more of that kind of forward-looking emphasis on capital planning. maybe not using all of the econometrics we used for the big 19 institutions but i think that would be really constructive approach to this to read a way

to reconcile, the accounts so you have to do this but we know the reality is this so let's go on that basis. >> i had one other question or actually a note this is do you realize what time it is. [laughter] so we are going to have to wrap up and i know we wish we had a lot more time. this is been a great dialogue. but i wonder, in answering any question that you want to about the accounting rules would you also beginning closing statement that you would like to make? >> let me on the accounting rules governor duke was asked this morning and if the answer was appropriate and that this week the federal reserve appreciate our independence and respect the accounting industry's independents as well but i would say that i would hope because i listen to you and

other interests as we think about monetary policy and supervision policy i hope the accounting profession will listen to do and us as well for example. the accounting fury is a little bit like economic theory. it works in theory. in practice it runs into a lot of difficulties and we well better listen to people who are on the ground and as jeff said is as practical. so that is where i would leave the accounting for right now. as a final comment i would say simply that i want to end where i started and that is the united states -- i've had a lot of people tell me that the united states has too many banks, too much capital. why aren't we more like canada or more like europe and i asked a very straightforward question why would i want to do that when we are already the greatest industrial country in the world, and it happens to be -- [applause] -- really -- related having many

advantages and one of them is a banking system from the largest to the smallest and that is what i am. thank you. [applause] >> i guess i would conclude with actually a comment, made in his opening remarks, and that is there is just so much misunderstanding about the issues we've been talking about today but is easily the issues related to the federal reserve. so, this opportunity -- i spent time yesterday meeting with some members of congress and as also y set speeches, meetings with business leaders you get questions that really points out there is a lack of understanding so i applaud all of you for spending time to be here this morning to suspend a few days educating yourself spent listening to some of our

comments but also helping to educate some of our elected officials there will be making decisions on some of these issues and i hope that our comments today have given you a bitter understanding of some of of use of these important issues and to identify the emphasize as the important role the fed plays in supervision and we want to maintain that role. it's important as small only in helping restore confidence to the banking system and our economy but it's very important to us in conducting our monetary policy. so that is something that again i hope he will take, you will think about and help educate others on and the final it again is on independence. my colleagues have done a very good job of articulating some of the history and the importance of this decentralized structure

and independent structure. wind week make -- when we go to the federal open market committee and talk about the economy and a vote on the course of monetary policy we are independent. there is no constituent that is requiring us to vote for political reasons one way or another. we are voting based on our judgment of how the economy is going to unfold and to meet the mandates that we have and that is sustainable economic growth and price stability and making that process political life think would be devastating to our country, financial markets around the world would move, would become concerned about the credibility and integrity of our system and economy and the would be devastating. so those issues i.t. are so critical for not only just for our country and our future. so please help us educate people

about those important issues. thank you for the opportunity to be here. >> iou one last word. >> i will be brief. let me in doris in flocks of and their role of the comments that my colleagues just made. also endorse something senator shelby said to commend you for your engagement. the history of the politics of banking in the united states is one fraught with powerful crosscurrents. it's unique going around the economy the way the political system, the way the government interacts with the banking system is unparalleled. it's widely recognized banking is a powerful engine for growth yet inevitable crosscurrents emerge. we are at a critical time in that history the politics of banking in america and i commend you for your engagement and devotion and commitment to the

efforts to insure a sensible and healthy outcome for the american economy. >> i know you want to join me in thanking them for being here and being candid with us this morning. [applause] >> the senate banking committee approved legislation today to overhaul the nation's financial regulatory system by 13-10 vote along party lines. the bill would establish a durell inside the federal reserve to write and enforce rules to protect consumers and the council of regulators would be set up to a survey threats to the financial system. the legislation also bring complex derivatives under government oversight and in power officials to take over and shut down the biggest financial firms if they face collapse. >> a few announcements before

getting started with questions. secretary clinton will meet this afternoon with israeli prime minister benjamin netanyahu at the mayflower hotel falling on their discussions over the past two weeks and the prime minister is meeting with george mitchell yesterday. george mitchell met with president of knous earlier today as he works to keep the proximity talks moving forward. he is in route back to washington now. the secretary spoke this morning to a packed greenwashing tin and stressed that the status quo is unsustainable for all sides. the two state solution is the only viable path to remain with a democracy and a jewish state as the secretary said our focus is on getting the parties to the table creating and protecting an atmosphere of trust praising both sides when they showed courage and getting more central role in the process being unequivocal when we disagree with actions on either side. she also reiterated the cut to the israel security and future.

as she also stressed a nuclear-armed iran is unacceptable to the united states come to israel and the international community. the secretary tomorrow will participate in the net and u.s.-mexico high-level consult group in mexico. narrative is emblematic of the partnership between the united states and mexico. it is grounded in the recognition of our shared responsibility for addressing the challenges such as counternarcotics and the importance of building institutions, respecting will flock, human rights and trying to help create secure and prosperous societies on both sides of the border. this afternoon before she departs for mexico the secretary will participate in a video teleconference with personnel from the embassy and consulates in mexico as many of you have

traveled with the secretary knows she normally is part of the truffle does the meet and greet with local embassy or consulate staff scheduled tomorrow does not allow that, so she will do a vtc this afternoon where she will reiterate our thanks for the personnel in mexico for their service and their sacrifice and assure them that we continue to work steadfast on their security. she will express condolences to the families of those who were killed recently in juarez and she will reiterate we are doing everything we can to help not only with the investigation but also with security improvements, the mexican government has increased protection for our consulates as they continue

along with u.s. authorities with the investigation. >> mardy along with the organizations, mr. brimmer and special representative for the global affairs lewis and others will participate later this week in the world urban form joining the secretary of housing and urban development sean donovan and rio de janeiro. rapid global organization is a phenomena that requires the attention of the united states and all nations concerned about addressing these as yet challenges, experts say that two-thirds of the world population will live in cities by 2015 with most of the cities in the developing world. the united states is committed to working with united nations, donor nations and local leaders to address the security challenges posed by rapid

urbanization. assistant secretary of state for political and military affairs, andrew shapiro, and assistant secretary defense for international security affairs, sandy, will travel to bahrain and oman this week to plead the fifth round of the gulf security dialogue. the gulf security dialogue is a u.s. government principal security coordination mechanism with the nations of the gulf coordination council. this supports hour in bring interest in the region focusing on a wide range of political and military issues including shared strategic challenges and the wide region and enhancing partnership in the area of security cooperation, counterterrorism, border secured, nonproliferation and maritime security. >> [inaudible] >> 23 and 24. assistant secretary bob flake continue his travels through south asia.

he is in afghanistan today visiting provincial reconstruction team and he also met with local officials there. he was in india on saturday where he reviewed a wide range of bilateral issues with the minister of external affairs counterpart and helped prepare for the u.s.-india strategic dialogue he had earlier this summer. he also discussed regional issues in the meeting with foreign secretary. with that i will take questions. >> why was the meeting move to the mayflower? >> i am assuming that the request of the israeli delegation. >> well, i mean, is there a -- it's gone from a meeting here at the state department with federal in the treaty room to closed event basically at the mayflower. >> correct me if i'm wrong there

is still -- they're trying to figure that out? i learned about this list and 30 minutes ago. so i -- >> [inaudible] >> well we learned about it while we were sitting in here during the briefing, this is why i left. can we try to find out is there some kind of problem? do they not want to be seen together? is it that bad? >> i don't know the reason for the change. >> will it doesn't -- you can see that it doesn't look particularly good when you have the leader of the top l.i.e. in town and a meeting that was supposed to have some kind of public atmosphere becomes closed. >> first of all, the prime minister is usually buy part of his choice of the meeting site we are sick to welcome at the state department.

i don't know the reason for the shift but that is an israeli proded it and of course this meeting this afternoon is a preliminary to the meeting at the white house tomorrow. so i wouldn't read anything into the change in venue or the change of the media coverage. >> you wouldn't read anything into it at all? did you get the last-minute nature of it? >> i can say for the third time as to why the shift was made i don't know. >> but it does have an almost symbolic effect because you have secretary clinton going to see the prime minister. after he essentially not getting what she wanted out of him and the discussions and certainly, you know, there is a stalemate. he is not backing down, she's not backing down. >> there's a presumption behind the question i wouldn't necessarily share. this is an ongoing process. our reason for the call two

weeks ago was to follow-up on the announcement that haven't miles vice president laws and israel. we do not use the word condemnation likely. the secretary laid out for the prime minister the concerns that we have, outlined some specific steps that she thought was important for him to take as the secretary indicated in the speech today the prime minister has responded and she views that as a positive development just as george mitchell that with the minister netanyahu the secretary will continue the dialogue today to read the president tomorrow as we continue to look for ways in which we can move the talks forward. this is an ongoing process and i wouldn't suggest we have particular concerns of this point.

our task in front of us is to get parties into the proximity talks and direct negotiation and towards a comprehensive agreement. >> is it correct to say that he hasn't backed down on with the united states wanted? >> again i'm not going to get into the specifics. the secretary made a request with him. he has been responsive to her request and we continue our conversation with him. >> if you're not singing to read anything into it than you can give a simple explanation i take it pretty quickly? >> i mean you haven't given an explanation for why the venue has been changed >> i can't give you something i don't have. >> but you will be able to give it to us i assume if there is nothing to read into it. >> if there is something different than just simply the prime minister asked that the meeting be shifted to the mayflower i will let you know. >> i was wondering was the text of this address address this mine to the unit come date to

the israelis and primm minister before she made the address? did they have that on hand before? >> i have no idea. >> you don't know whether or not there was surprised by what was and it? >> we cleared the speech with them if that's what you're asking. >> would you expect it today and tomorrow's meetings after prime minister netanyahu refused to freeze settlements in the east? >> again this is an ongoing process. we've raised our concerns. we have said clearly with the u.s. position is, and we will continue the conversation to read our goal is to create a climate of trust, push both sides to provide confidence-building measures that give momentum to the proximity talks. we recognize the importance of these complex issues and our

bottom line is jerusalem is a final status issue. the sooner we get into the formal negotiations the sooner we can address the specific issue and make progress and hopefully reach a successful peace agreement. >> as the dollar is concerned the foreign secretary was here as she met with the secretary. we don't have much of what took place or what happened before meeting the secretary year she told the the group's behalf think tanks it very blunt warning to pakistan that they must do more as far as if they want to continue dialogue with india and pakistan to start terrorizing india and close the borders. do you have any idea of what

happened between the secretary and the secretary of india? >> the secretary did join undersecretary bill burns recently in a meeting that was charting the way forward on the u.s.-india dialogue. i think we are satisfied with the level of engagement that we have across a wide range of issues with the indian government. we will have a similar conversation with pakistan this week on a wide range of issues from agriculture, water and energy, economic diplomat and finance, defense and security, social issues and public diplomacy. we are broadening and deepening the relationship with india and pakistan and are looking for ways in which we can continue to encourage the countries to increase their dialogue as well.

>> follow up to the question asked last week. pakistan and iran signed a plan last week. are we supportive of the plan between the two countries? >> this is a decision for pakistan to make to read our concerns about the world that pakistan please in the region and beyond is well known. we continue a wide range of discussions not only in the region and around the world in the nature of the future economic transactions between pakistan and iran and we will continue that conversation. >> will that -- second the in afghanistan the have had peace talks with the leaders yesterday that had links with al qaeda. how do you see the peace talks with these leaders? >> these are primarily issues

between afghanistan and insurgent groups as a part of the reintegration and reconciliation process. we do support the afghan government's interest of reaching out to the members of the insurgent groups. our concern shared by afghanistan is d.c. support and live in accordance with afghan constitution renounces violence and have no ties to al qaeda or terrorist organizations if they are any group that is willing to accede to those conditions can play a role in afghanistan's future. >> could you back on the middle east again, this would be the second time the united states backed down settlements. you had it in september and a similar thing the u.s. pushing that and then back down. now what can you tell that would

convince us that this was not a sign of u.s. inability to convince israel that it should freeze the settlements at least in east jerusalem? >> i would challenge the assumption -- this is a dynamic process, so notwithstanding public statements that have been made and we certainly understand the government of israel has a different view of these issues than we do, and we will continue this conversation. i think we have conveyed successfully to the netanyahu government that these things are important. it's important to this palestinians and to the region. they are directly related to our ability to create confidence in the process that we are starting to move forward within and that the government of israel has to

take responsibility for and get control of the process so that we do not see these kinds of announcements in the future and we -- and they will have the obvious impact on the process. so our goal is to move the process forward and moving the process forward both sides have to avoid the kind of announcements, actions that will inhibit further progress. >> do you have a different view than the government of israel does on this? the entire world has a different view than the government of israel. the europeans [inaudible] -- with exception of the 243 south pacific islands that voted with the u.s. against the resolutions condemning in israel i can't think of any other country that actually holds the same view that israel does on jerusalem

when is it going to be time to put your money where your mouth is on this and to do something beyond complain and carpet about that will get through to the israelis, the fact that they are incredibly isolated on this position? >> we are doing exactly what we think is necessary at this time. we want to see the parties getting to the formal negotiations where these kind of fish used can be put on the table and wrestled with and hopefully resolved. the sooner the better. we've made that clear. and that is exactly why we raised our concerns publicly and it is exactly why george mitchell was in the region yesterday and why the secretary and president will meet with the prime minister netanyahu today

and tomorrow. the sooner we get into that negotiation, the sooner we can see a resolution to these issues as a part of a comprehensive peace agreement. absent a formal negotiation it is quite unlikely that these issues are going to be resolved just by posturing phone calls or meetings. it's the formal negotiations going to enable the parties to actually wrestled with this and find an equitable resolution and our position has been clear the sooner we can create the conditions for formal negotiations to begin the better and that is what we are doing and will continue to do today. >> what was the purpose of senator mitchell's -- the latest one and when did that -- what did he achieve? >> i haven't had a readout from him. he was in moscow last week as part of the court that meeting. our goal is to move the proximity talks forward and we were encouraged by the support

we received last week and the quartet state that they were very supportive of the proximity talks and very supportive of the broad goals, and everyone understands the bottom line here is getting the parties from where they are today to a formal negotiation, and we recognize that in a central element they are doing that is to have the right atmosphere that includes making sure that the parties are taking constructive steps that move the process forward and avoiding negative steps that impede progress. >> do you have any comment that north korea will be put on trial [inaudible] >> i don't have a particular comment on that. we have through our friends, this the swedes had a couple of meetings with an individual being detained. there is no privacy act waivers

of can't provide specific information on him. we are concerned about his health and welfare. we are obviously concerned about whatever legal process he might face. we have concerns about traditionally within north korea about the lack of transparency get their judicial process these. we will continue through, you know, the embassy, swedish embassy in pyongyang to make sure that he is appropriate representation should north korea follow-through with any legal proceeding. and we are obviously always grateful for the work that sweden does on the protective power and we will continue to encourage his release. >> a follow up on that. >> go ahead. >> last time they entered with north korea north korea released him without a trial but this time they announced a trial, so

do we have additional concerns on this case? >> again, our primary concern is obviously we want our u.s. citizen back. we want to be sure that to the extent there is a suggestion that he has broken the north korean law that he be given appropriate counsel and have a fair legal proceeding and we continue to press for appropriate consular access, full rights under north korean law but most important we want to make sure that as soon as soon as possible he is returned to the united states. >> what are the charges on him? >> just again, we have to go through our protecting power. i'm not aware that we have been advised of any charges. we've seen the reports and are going to follow up but we haven't had consular access to the individual in several days. >> [inaudible] >> we are not aware there is a trial at this point. should there be one, we would

hope that it is a fair proceeding, a transparent proceeding. he has access to appropriate council. >> [inaudible] -- fair and transparent trial in north korea? >> i'm not a number three in a legal expert. >> the reports cannot just the other day. >> we have as i stated a great concern about the lack of transparency in north korea over all and lack the transparency based on the past experience with legal proceedings involving u.s. citizens. >> some japanese press reported china has proposed a preparatory meeting to the six-party talks, which it seems at this time all six members will be attending including u.s. and north korea. can you confirm you have received a notice of some preparatory meeting? >> we will take that question. >> more on china. i know there is an expectation

that they are going to announce the decision on whether or not when they made the first announcement in january they gave a couple days of heads up. i wonder if you've received any communication on this if they told you with a plan to do and if the state department takes any position on the wisdom of withdrawing from the china market should that be their decision. >> well, i feel we are aware that there is a strong indication of the announcement by google this afternoon. and as we have said throughout this process, this is a decision for google to make. >> and do those come directly from google to do? >> i'm not to comment on whether we know about what google is going to say. let's wait for the announcement, and we will talk afterwards. >> on the announcements starts? >> no change from friday as the secretary said a high-level

russian officials we are close to use your own analogy the secretary had one of foreign minister lavrov had one about being close to the finish line. the team continues the hard work and we are making progress. we are down to what we think our small details. as the secretary said on friday, we think that we have resolved the major issues in the start negotiations and we look forward to reaching agreement but we are not there yet. >> they said kim jong il will visit china later this month. do you have a comment on that? >> we wish him say truffles and i hope when he of lives in beijing he will ann