>> well, let's see here. well, you expressed concern that it would take too long to arrive at solutions that will be amenable to independent providers, excuse me. i was wondering what specific proposals you might have to offer that would benefit customers? >> well, my view, you know -- and i think it's bourne out by this panel is there's not a broad consensus on the gateway approach, right? mr. shanks is going to need a lot of convincing. mr. young is going to need some convincing. cable industry is more on board than the rest. sony is on board. but, you know, my experience in this industry over 20 years is that things take a lot longer than we think are going to take. and the fcc may say 2012 but i don't believe it. but in the interim cable cars --

what we rely on, the tivo box does not work if a cable card does not work, end of story. and we're the only people who depend on it. we need to make it work this year and we're glad the fcc is determined to make that happen. so, you know, we need access to programming, installation has got to work and we got to end this pricing discrimination. that's what we need today. >> so you're saying the best thing to do then is to go after cable cards and make them work as soon as possible? >> yeah. >> okay. mr. chairman, if you'll allow me one more question. >> one more question, mr. mcnerny. >> mr. shanks, you certainly seem to voice concern about the bias in the current program. do you think universal gateway device can be developed that would be unbiased? that would allow you to offer services that can be available by the universal gateway device? >> i do believe there are -- there are mainly concerns on our

part when it comes down to the economics of gateway and the advantage cable would have over satellite and, therefore,, you know, what that would do to the market place of a gateway and third-party devices. >> okay. thank you. >> thank you very much, mrmr. mrmr. mr. nerney. we are going to keep the record of this hearing open for three weeks. and during that period of time, members may well be propounding and writing some additional questions to you. when you've received those, please respond as promptly as you can. and help illuminate our record of this hearing with your answers. our thanks to each of you for taking time with us today and this hearing stands adjourned.

[inaudible conversations] [inaudible conversations] >> i'm confident that we can come up with a nominee who will gain the confidence of the sena and the confidence of the country. >> as the president considers potential nominees, learn about the nation's highest court

through the eyes of those who served there in c-span's latest book "the supreme court." "the supreme court" available now in hardcover and also as an ebook. now comments on the financial industry and the u.s. economy he was introduced by the school's president. this is one hour. [applause] >> so it's a great honor for me to welcome you here to this spring form event sponsored for the program of economic research

and the world leaders forum. my name is david weinstein. and i'm the executive director. per's main function is to project ideas from acdeem into the policy and business worlds. as such to bring business leaders to columbia in an effort to help stimulate and interact with our academic faculty. i'm delighted to finish off the year with today's event. finance has been at the center of much of the news over the past year and not surprisingly, it has also been at the center of much of economic research. it's hard to think of a field in which economics has not had more of an impact. 50 years ago, modern statistical

finance was created through the work of academic economists like miller, sharp and others. it's hard to imagine that until the academic work of black & shulls, no one on wall street had the ability to properly price stock options and many of the other derivatives that have been the center of the financial crisis. moreover, as fed and treasury officials intervened in the markets following the crisis, many of the terms of the t.a.r.p. were determined by pricing models which are taught in our finance classes. hand-in-hand with the rise of financial economics has been the rise of finance itself. in 1947, the finance industry accounted for only 2.3% of u.s. gdp. today, it has more than tripled in size to 7.7%.

in 1990, there were 610 hedge funds with $38 billion under management. by 2007, there were more than 7,000 funds with approximately $1.9 trillion. under management. while world gdp in 2006 stood at approximately $47 trillion, the capitalization of the world's stock markets was 10% larger or $51 trillion. the value of all derivative contracts outstanding was ten times larger in gdp than in 2007. so it's therefore not surprising that financial crises have global implications. perhaps what is most surprising is our own surprise at the onset of the crisis in 2007. far from being rare events, there have been 18 major banking crises in the developed world alone.

that's the developed world since the end of the second world war or one roughly every four years. with mainly crises hitting countries like spain, norway, finland, sweden, japan, et cetera. our surprise perhaps reflects the parochial nature of americans who ignored crises in other countries with a sense that we were too smart to let something happen here. understanding what happened and what we should do to prevent further crises is therefore critical in order to maintain stable growth. in the spirit we're delighted that president has made this lecture part of the world leaders forum. the president is here, obviously. and will introduce our distinguished speaker. thank you. [applause] >> i'd like to extend a special

thanks to david and his colleagues at the program for economic research, tonight's cosponsor as you just heard, for playing a critical role in bringing this together. one of the things we hope for students when they come to columbia is they check their preconceptions at the 116th gate. and open their minds to new perspectives, new experiences and new people they might never have encountered or considered. it is one of the best and most attractive arguments for coming to the greatest, most global of american cities for college or graduate school. it is our essential role and responsibility to provide a venue for open conversation on almost any topic in a society that has chosen to make free speech and debate a higher value than any place else in the world. and perhaps ever. our world leaders forum are just one way that we do that at

columbia, which is in the span of a single month can mean an open exchange with one of america's allies and french president nicholas sarkozy and with the nation's military officer chairman of the joint chiefs of staff admiral mike mullen or tonight the economy's most important business leader citigroup ceo vikram pandit. today is our third topic on the economy a topic that is right at the top of concern not only across our own country but across the globe in the wake of the worst financial crisis since the great depression of the 1930s. just two weeks ago on this stage, columbia economists and nobel laureate joel stiglitz a conversation with the trading commission chair gary gentzler and former sec chair arthur

leavitt and earlier this year we listened to bill dudley president of the federal reserve bank of new york. and, of course, there have been many conferences and seminars, classes and conversations across the campus over the past year at our law and business schools, our schools of journalism and public affairs college and engineering school seeking to understand what happened to our global financial system. and why? and what should be done about it now? our distinctive role is to bring scholarly perspective to this historical moment but we're obviously not alone in asking these important questions. indeed, since the moment of the meltdown, in september, 2008, and perhaps even more today with the benefit of hindsight, those responsible for our most powerful financial institutions have come under a new wave of much-needed public scrutiny and discussion. as this week's hearings and

debate in our nation's capital amply we are at a real flexion point in history. and a change of heart after a long period in which it became widely accepted, let us recognize that free markets should be left free to correct themselves and that they would, in fact, do so. there were voices of dissent to be sure, contrarians to the housing bubbles, regulators and legislators repeal the glass-steagall more than a decade ago and the increasing leverage, academics who saw the bubble and predicted its bursting and early warning shots of enron and worldcom. andiet over the past decade what we saw was a broad failure of knowledge and information. a failure to understand the

realities of economic realities. and a failure to see linkages and connections. and a failure to understand the elements of mass psychology. these are the kinds of questions the universities are supposed to be concerned with. and so from a positive perspective, there's still a lot to do. and thank god for columbia. into this heated malstrom comes the measured, voice of vikram pandit who had the impeccable timing who was named ceo in 2007 when the troubles in the global financial system may have already become manifest but not to their disastrous scope. the challenges vickram inherited came to a head on his watch and citigroup appeared at one point to be on the brink of collapse.

stock prices plummeted from $50 a share in 2007 to briefly trading at under 1 dollar a share. the banker was the recipient of $45 billion in federal funds of t.a.r.p. for which we the taxpayers took on a more than 27% ownership. while the strategies and positions precipitating citigroup's troubles preceded vickram's leadership he came under fire for not moving fast enough. some openly questioned whether he was the right person to tackle the enormous challenges of such a large company which frankly all came as a surprise to those of us familiar with vikram pandit's powerful intellect and enormous capacity for strategic thinking. as the "new york times" business section recently said, there was even talk of nationalization, a

move that would have wiped out shareholders and cost mr. pandit his job and his legacy. fittingly, the story goes on, "new york" magazine called mr. pandit the most powerless powerful man on wall street. today, mr. pandit is still at the helm and important moves the article goes on he is quietly asserting his influence. piece by piece he is shedding complex businesses like the insurance and retail brokerage units, shrinking the bank's balance sheet and stabilizing its finances, closed quote. just last week citigroup reported a $4.4 billion profit for the first quarter. and according to news reports, had its calmest, quietest shareholder meeting in some time. now, citi has repaid $20 billion to the taxpayers with interest. and the federal government has

begun steps to sell its citi stock and many expect it will earn a profit on the taxpayer investment. we all see this -- we all have an interest in seeing this institution continue to return to vitality. here it is important to point out that vickram has taken a notable stance in his pierce in the industry by publicly supporting the white house's robust financial reform proposals. as was reported yesterday, he sent a letter to president obama also a columbia graduate stating as he did before congress last month, quote, this is vickram speaking, i believe banks should not speculate with their capital. i believe in transparency of markets. i believe derivatives should be cleared and settled centrally. i believe there should be a strong federal consumer authority to protect consumer interest. we must have a strong systemic regulator. with respect to compensation we

need a merit-based system driven by long-term performance and it's essential to have a level playing field across the global financial industry. all of believe, i'm sure, and more we will hear this evening. before joining citigroup vikram pandit was the founding member and chairman of the old lane, a hedge fund and a private equity fund manager that was later acquired by citi. has served as president and ceo of morgan stanley's investment banking businesses. but most importantly before going into the business world vickram was an accomplished psychologicalar. -- scholar. he received undergraduate and master degrees in electrical engineering here as well as a ph.d. and mba.

he has taken at this institution and served with great distinction as an actively, engaged university trustee since 2003. i apologize for those long introductions to get vickram up to the podium. but we are grateful for all the quiet ways he engages with columbia. we're proud to have him back on campus in this more visible role. please welcome me -- or join me in welcoming our friend and our alumniist and one of the most importa important, vikram pandit. [applause] >> thank you for that wonderful introduction. thank you for making me relive the last two years. and i really think the introduction is rather complete. should we go to q & a? what do you think?

it's wonderful to be here back at columbia. this community holds a very important piece in my heart. when i came to the campus in 1973, i was 16 years old. and so i literally grew up in morningside heights. now, i've got to admit it took me some time. i spent nearly 10 years here. i really do want to thank the university for its patience. what struck me about columbia was that you were really never far from the real world. and lee is correct that columbia is a diverse place, a global university and by the way there was never any pressure to conform here. and sometimes there were endless debates. and each of us had to find our own way and in many, many ways i left the university extremely

well trained for the world that i'm in. i was also one of those people who was fortunate enough to find my calling early in life. i didn't really have a game plan but i guess good things happened if you're well trained by university and doing the kind of work that you like. and so today i'm here as a grateful alumnist of the university and the chief executive officer of citi which is one of the world's great financial institutions. we're a company of 265,000 people. in 160 plus jurisdictions. we have more than 200 million customer accounts. we serve clients big and small including 99% of the fortune 500 and we call ourselves america's global bank. and by the way, most days it's a great job. but every day it's an exciting and challenging job with a sense

of purpose because citi has the ability to open up opportunities for millions of people around the world. and to be a force for positive change. as lee said, i've had this job since december 2007. during a trying and difficult period for millions of people. i came aboard during the financial crisis. citi lost billions of dollars. we needed help from the u.s. government. our shareholders suffered, so did our employees. and sadly, we had to let thousands of good people go. a lot of americans are hurting these days as well. and for many, many of them, their pain is worse than anything we've had to deal with at citi. they're hurt. they're angry. and much of that anger is directed at the financial services industry. and i don't blame them. it's easy to see why.

the industry contributed to our nation's economic slump, which has brought about a 10% unemployment rate and to foreclosures that forced people out of their homes. ordinary americans think bankers don't understand them. worse, worse yet, they believe we don't dare about them. that's not a good place to be for anybody, for our country, any of us here in this room. so over the last two years, we've been working very hard to remake citi from top to bottom. and we're making much progress. we've got much to do. but we've also done quite a bit. and to fully succeed, we must take the responsibility for showing them, showing the american people that we do care. citi is committed to serving our clients interests, helping individuals and families in financial distress, promoting economic recovery and supporting the reform of our financial system.

today, we find ourselves in a very new position of financial strength from which to pursue these goals. so this evening i would like to share with you how we got to this point. one bank's journey through the financial crisis. i want to share with you what we've learned, how we're difficult today, our views on how regulation needs to change and our commitment to what we call responsible finance. and i fully realized that we have to live what we say and make our words become actions. but that's my job. let me start by addressing what i think went wrong in the markets leading up to the financial crisis. citi, like other financial institutions, was a creature of its environment. that precrisis environment was characterized by a vibrant financial market.

it seemed to offer abundant bottomless pool of financing and capital. thanks in large part to securitizations, the rise of the shadow banking system and the acronyms they spun off like cdos, sivs and others. in that environment, aggressive procyclicalality defined the mentality. very smart people defined and measured risk in ways that made traditional time sets appear primitive. the markets convinced themselves that risk was actually declining. shareholders came to expect their companies to generate the high returns they saw other companies churning out. consolidation became synonymous with strategic success. and size mattered more than ever. market players even assured themselves that there were certainly new financial engineering that could transform illiquid assets into liquid

form. and all the while, we were assured that this time is different. and david weinstein talked about this. this is a phrase that the world has heard and heeded all too easily. not only since the second world war but all through the 1800s and 1900s and each time on the eve of a major upheaval in the markets. citi rapidly grew both its balance sheet and off-balance sheet assets to historic highs in both size and leverage. and the wisdom of asset diversification gave way to concentration in ever larger amounts of real estate and consumer lending. as a result, at the peak of the housing market, citi, like many others was highly exposed to u.s. housing and the u.s. consumer.

citi and many other financial institutions took comfort from the fact that many of the securities that they held were highly rated and they were insured. and in retrospect we know this was false comfort. so what did we do at citi? to pull ourselves out of this crisis, to build a new city and to learn and to remember the lessons of the turmoil that we've lived through over the last two years. after i became ceo, my management team and i focused on three immediate priorities. financial strength, strategic clarity and cultural change. we moved extremely fast to shore up the financial strength of citi. and we succeeded. we raised tens of billions of dollars of capital. since our peak in 2007, we reduced our assets by over half a trillion dollars.

we completed 43 divestures. our annualized costs are down $13 billion. and, unfortunately, we had to lower our head count by 110,000 people. and by the end of last year, citi was amongst the strongest banks in the world by most of the credit loan measures on capital and liquidity. along the way, we received additional help from the u.s. taxpayers in their form of t.a.r.p. investment and citi. by the end of last year we had paid back that investment with a substantial return. for taxpayers. however, and i've said this again and again, i will continue to say believe publicly, we still owe the taxpayer a large debt of gratitude in the communities that we serve. to be a bank means to take deposits and make loans, provide

payment systems and custodial services, finance, great capital flows all with confidence and trust. by focusing on banking basics citi will be ultimately 40% smaller in size from its peak in 2007.bw. we also resolve to concentrate on why we're distinctive and why clients need us. our most competitive advantage is our unique unparalleled international look. we changed our business model from one of capital deployment to client-centricity and client interests, and that's much more than a platitude because banks and financial institutions because citi and others strayed from this principle.

and often with an emphasis for creating on the bank's own accounts. a best bank serves the interest of its shareholders and employees. by concentrating on what is best for its customers and on building relationships with them. and that is the clear, clear lessons of this financial crisis. we also recognize that our strategy could only be as good as our people. financial services is a people business. we had to make some critical changes in personnel and senior management and in the leadership of our businesses. we had to have a world class team sharply focused on the basics of banking in addition citi made changes to its board of directors including the recruitment of individuals with deep experience in banking in other fields. and finally we resolved never to compromise our financial strength again. it has to be at the core of our strategy.

we made extensive changes in citi's risk management systems, established tough new financial discipline and returned to traditional, more conservative assessments of risk. let me talk about our third priority, cultural change. clearly, something that's much more intangible but to me it's absolutely essential. and it is at the center of what i'm going to talk about next. of a sound culture internalizes strategy and drives constructive behavior every day. a culture of responsibility is a very powerful force beyond rules and beyond regulations to help guard against bad judgments, temptations to push the envelope and the impulse to act in self-interest first. so we at citi are creating a unified culture that's built on the values of responsible finance. no one, including me, wants to

see a repeat of 2008/2009. but here's the problem. in five,ez ten, twenty, or thir years, people in the midst of a volatile economic bubble are unlikely to see beyond the illusions it creates. their memories of what happened in 2008/2009 will be dim. maybe even nonexistent. and they could repeat history. they could succumb to all too familiar pressures that we just saw over the last many years. to them, risk and market will appear to be coming down, creating pressure to increase risk leverage and take more risk. shareholder will demand more and more profits as they view mounting returns for other shareholders. clients will say to their financial advisors what's wrong with you guys? my friends, advisors are getting

him 30% a year and media and pundits on ceo you are risk averse. you are living in the dark ages, gelt with it. managements, board of directors, and governments will feel these conflicting pressures and when they react they will turn up the heat within the whole system and that client pseudoexperts and even people who are generally smart and wise will reassure everyone this time it's different. just as they have repeatedly done in the past. we know it won't be different. so what do we do? does history have to continue to clone itself? how can we make sure the lessons that we've learned are embedded in our collective memory so that we can at least mitigate a future crisis. now, we've thought about this a lot. i spent a lot of time thinking about this for citi. how do i create an institution for the future? we thought about it for the

system. how do we make sure the system internalizes the learning and i know of only two answers? one is regulation. to try to hard wire the learning from this era into the financial system. and the other is culture. each financial institution can create a culture of responsibility. well, let's be honest. neither answer is likely to be complete. history has clearly shown that there is not a correlation between the enactment of moral laws and the end of great financial crisis. and by the way, smart people with self-interest will always find a way around the letter of the law. we do need a new global order for regulators, bankers, administrators that will either substitute or supplement existing frameworks with the goal to stay ahead of crises. realistically the goal is not to stop crises but to mitigate them

and have the tools necessary to effectively manage of them. -- manage them. so one of the reasons i'm really here tonight is that we're -- i'm at the right university with the right group of people, the right minds. some of the best minds anywhere for addressing the question and the world and the country needs your best thinking on this. how do we create a global banking and regulatory structure that constantly enables us to learn and stay ahead of crises. how do we ensure that there's clarity of principles by which to run the system with continuous updating of laws, regulation and other tools to take into account new products, new ways of doing business and new technologies. can we change the approach to evaluate whether this time it's really different? can we even hope to? let me go back to citi's responsibility. i believe a strong culture of

responsibility is a significant part of the answer. its purpose is to ensure we serve client interests and we're a force for positive change in the world. i should point out that in my experience, the type of business you are in significantly affects culture. there is truth in the notion, for example, that banking has one kind of culture and retail brokerage has another kind of culture. it's very different. with interdiversified financial services company you can find a variety of different cultures. and i think, therefore, by returning to the basics of banking, we're helping set the fundamental tone for the culture that we want at citi. i believe that the systemic -- that the systematic is at way to embed in citi an institutional memory that deeply impacts the behavior of both current and future employees in all our businesses and at all levels of our company.

it is intended to guide citi's behavior. when private economic interest conflicts with public interest. and its precise meaning will evolve with changing times and changing definitions of what's in the public's interest. and perhaps it offers some basis for culture change on a larger scale and the system as a whole. today we have three core principles that are responsible finance. first, citi's activities must contribute to the economy and to the global economy and today citi must contribute to america's recovery. by practicing the basics of banking we assist people in distress, help businesses grow, support the financing of public projects around the world. for example, since the beginning of the u.s. housing crisis in 2007, we have helped 900,000 homeowners in their efforts to avoid foreclosure.

we lend actively to businesses of all size with a special focus on small and midsize companies that have trouble obtaining the financing they need. where leaders and financing to export american goods and services and we're one of the biggest sources of financing for schools, hospitals, and other vital infrastructure projects. the second principle is that our businesses must be all about our clients. our products and services must promote customer choice and control over their financial lives. that's why, for instance, we've had some of the industry's most proconsumer policies on fees and overdrafts. it's why we invest tens of millions of dollars in educational programs that provides scholarships for college education as well as counseling and instruction on financial matters for low-incomed individuals and families. and it's also the reason why our

strategy and business model are designed to use our capital for clients versus proprietary trading. the third principle is that we'll be a strong advocate for systemic safety and for forward-looking global reform. that starts with making sure our house is in order, always. and that we run our businesses pursue dentally. -- prudently. i have enacted reform that will strengthen confidence in our financial markets and institutions. the entire city organization around the world has joined me in this endeavor. and the fundamental principles are formed that we advocate today are exactly the ones that the president talked about last week. and i think lee mentioned some of these a little bit earlier. but banks should be banks. focused on serving clients. banks should not speculate with their capital.

markets need to be transparent. derivatives should be cleared centrally and settled centrally. we need a strong federal consumer authority to protect consumer interests. we should end once and for all the phenomenon of too big to fail. we should have a strong systemic regulator. it is essential, absolutely essential, to have a level playing field across the global financial industry. and we need a merit-based compensation system driven by long-term performance. we believe these principles, the regulatory reform can create a stronger financial system. and bring wall street and main street closer together. still, the broader challenges to create a global banking and regulatory system that constantly learns from experiences and stays ahead of crisis and let me remind you again, that this is where i hope

the world gets help from some of the superb and well-trained minds here at this university. and obviously we're thinking long term. now and then i contemplate what citi would have looked like in five years, 10 years, 25 years, 35 years from now and i don't know what the markets are going to look like. or who our competitors are going to be or how the economy will fare in 2020 or 2035. but i do believe the right culture will serve us well. someone said that a corporate culture is nothing more than how we do things around here. and our culture will be shaped by responsible finance. my responsibility at citi is to build that culture. and that will be my most valuable legacy. at the institution. both citi and columbia are great institutions. and they've been around for a while. and our histories are quite intertwined.

this world renowned university was started at king's klen in lower manhattan. it's students included alexander hamilton. our nation's first treasury secretary who went on to found the bank of united states. when that bank lost its charter in 1812, a group of merchants formed the citi bank of new york. today citigroup and took over the bank's national headquarters in 1812. columbia and citibank survived the war of 1812 opening its doors two days before the war. the financial panics of the late 19th century and the great depression because they were blessed with leaders who acted as stewards of great institutions. during hard times, people who feared bank failures brought their money to citibank because

we were known as prudent bankers. our reputation was quite literally our most valuable asset. so city whether we study or teach at columbia or work at citi, we do so because of the integrity and dedication of those who came before us. we can repay that debt by enhancing the quality and reputation of these great institutions. and by using their power to make the world a better place. and at citi, that is my purpose. as we move forward. so, mr. president, thank you for inviting me to speak here today. this wonderful group. i thank you very much. all of you. and i'm ready to take questions. [applause]

>> so thank you very much, vickram. i think i'll just ask one or two questions and then we'll open it up for people to go to the microphones. i have a complicated question to ask at the beginning, not surprisingly, i suppose. i'm very struck by the way in which you characterized how the world got to the point it did in 2007. and how that world is likely to come again. so what you described was a world in which actors, whatever they thought, initially convinced themselves of things that turned out to be not true. or they felt trapped in a system where they had to act contrary to what they thought and hoped

they could get out early enough. so that's the bubble. it's a mass hi-tara. -- hysteria. it's a psychological problem. and to the people like me who think about constitutional law, this is not a new phenomenon. we have a bill of rights because democracy loses its bearings. people become frightened. rather than ebullient and create market bubbles, they become fearful and they oppress minorities and treat people badly. and as a way of dealing with that, we put the bill of rights to a constitution. we took the power to enforce that or deal with that problem out of the political system almost entirely. lifetime appointments for judges.

a culture of supporting the constitutional rights and so on. my question to you is, if you were sort of in an ideal world -- forget about the politics of the moment and you were trying to have a constitution, a bill of rights for the financial bubbles, what kind of social structure do we need to help us stop that from happening? now, the fed is not there. what kind of structure do we need and what tools are there? >> well, i would start by recommending against lifetime employment for ceos. i don't think that's a good idea. [laughter] >> but i think that is the question. and there are a couple of different aspects of bubbles we need to think about. there is the psychology part. but there is also an informational counterpart. somewhere along the way the markets just did not have the

information necessary it off absorb what was going on. and, therefore, give the markets a chance to succeed. and we found that out here. we knew nothing about the extent of the c credit swaps. by the way, lots of issues against transparency in the securitization markets. so there are issues about social structure we can talk about. but there is one fundamental principle i think that's absolutely critical, which is that around the world, we have to endeavor to always change rules, always change laws to ensure we have continuous transparency. now, that's easier said than done because there are lots of vested interest behind not wanting transparency.

and by the way, some of the dealers who deal in these markets are the first ones to say, how does it help? but if there is one principle that we have to abide by, it is give capital markets a chance to work. and they have no chance of working unless they have information that they need to clear. that's the first thing. now, it gets very complicated. the reason it gets complicated is that we do live in a political economy. and you will know also not only as a student of constitution but a student of history some of the biggest changes in the constitution happen around economic disasters as well or the biggest changes in laws or regulation happen around when economies turn. so the question of how you institutionalize some sort of learning. you use the bill of rights, et

cetera, to make it happen is incredibly difficult because we live in a global market. each country is going to have its own ideas about the kind of political economy it wants to run. witness what's going on in europe today. and in that scenario it's very difficult to come up with something that works. to the closest thing we have in the federal reserve bank. the closest thing we have is the central banks around the world but those two are a bank in every country. could we hypothecate a global central bank or how would it work? these are some real practical issues. these are not questions of theory. these are questions of practice. and i keep coming back in saying if we follow one principle, which is the principle of transparency, and take the pain that goes with that, we can be a lot better off than where we are. it's not going to solve all the

issues 'cause there are going to be market failures but we go a long way down the road.í] >> you are a person who i've always felt, vickram, really understands the grasp, the kind of essence of what's happening, the forces at work. and sort of is able to think about how they will play out or should play out. and when you say -- i was also struck by you saying we need a level playing field in the global economy. and what you just said about the need for coordination across countries. obviously, sovereignty and our notions of sovereignty refuse a major part of what must give way. i mean, it's not possible to build the kind of global economy we're doing with the same degree of sovereignty that states assume.

a, do you think that's right and b, how do you see that unfolding? >> obviously sovereignty is a political question. and it doesn't matter what i think. it's a matter of what the people in the country think. what they want. and so that is always going to be the case. that's not going to shaping. but think about -- think about sovereignty or governance in a very different way. what are we learning from the capital markets? now, here there's -- there's a wonderful real life example in europe where a group of companies no individual currency, one, we've given up national sovereignty of printing local money but we are adapting one currency and then we have examples of certain countries who actually have lost control, therefore, of their credit ratings, their financing because they can't print money. they are part of the euro. >> yeah.

>> now, the ultimate government's mechanisms in some ways here is the bond holders who own sovereign debt of certain european countries are telling them what they need to do. and so ironically, yes, there's political sovereignty. but the capital markets tend to take over economic governance very well. and that's the phenomenon we're going to have to live with. and, therefore, the need for global coordination and the need for really thinking about the financial side of the equation for countries around the world is that ultimately the capital markets will speak. and as they speak, they will control your economy. and they'll control what you need to do. but learning through that and getting there is a difficult process. i must say that having gone from g7 to g20 is absolutely terrific. >> right. >> and that's a great vehicle to start with. it may not be complete. it may not be perfect. but it's a very positive step.

>> but your thought here is that sovereignty is going to give way where there's going to be huge pressures on sovereignty but it's not going to come from a global financial system to respond globally. it's going to come from markets demanding that countries behave in certain ways that they may not want to and they're going to cede some of their sovereignty. i mean, that's what you -- >> i think the history is clear when you look at some of the countries in latin america, some countries in europe. and bond markets say here's how you manage your economy. and all of a sudden it's more about what the population thinks. it's about what it is that the capital markets think 'cause you need the capital markets for financing. >> let me ask one question from me and it's a light question. >> just like the others. >> yeah. do you enjoy your day? i mean, do you really like going to work?

and is this a -- okay. let's go -- >> let's go to the next question. [laughter] >> yes. >> yes, thank you. i was very gratified, sir, to hear your opinions of how banks should be run. at the same time, if you listen to yesterday's hearings in congress, it seems to me that goldman sachs has the exact opposite views that you had. if you could a, explain that and b have some benevolent influence on the thinking of the executives of goldman sachs which i frankly think are rather criminal. >> well, you know, you're not going to be surprised if i i don't comment on that. what i will say, though, is that we got to go back to the regulatory principles that i spoke of, that i talked about, that lee talked about them, that is the closest thing of a bill of rights that you're going to get.

what it said is transparency matters, disclosure matters, responsibility matters. and by the way, the sec and the regulators are really thinking through the concept of information. 'cause when you look at the global financial markets it's not only about regulating products, regulating structures, regulating institutions, ultimately you need regulation of information. and so i hope through this process as we go through it, when you get to the other side, we'll get to a better market. >> thank you. >> thank you. yes, on this side. >> thank you for coming today. you mentioned a few times that banks should not speculate. and there's one lesson at columbia is, there's no -- there's no difference between speculation and investment. and you seem to have a clear definition of the boundaries between the two. so i wonder what's your definition?

and do you consider this speculation? >> that's a very interesting question. and an important question. and by the way, exactly the kind of area that thoughtful academics can really talk about. there's a difference between speculation and serving clients, clearly true. if you commit capital to help clients, that's clearly in the context of the business that you're in. and that's true if you make a loan. that's true if you provide them liquidity if they want to sell something. if you commit capital to markets because they're dis -- dysfunctional. that's part of business model that you have. what's not consistent is using the bank's capital in deal with

everybody else on the street and running portfolios of investments because they believe by doing that you can earn a rate of return. now, you know, i don't want to get into philosophy but i look at that and i say that is not the purpose of the bank. there are lots of other investments. there's lots of different places that can happen. it doesn't necessarily have a role in the bank. now, if it has a role, it's a limited role in the context of using your capital to really understand how markets work to create strategies to create products for clients. it's the ultimate client oriented role but that's a very clear distinction in my mind. there is not a confusion on that >> yes. >> dr. pandit thank you again for joining us here. i have two questions that relate to the financial industry reform. one is internal with regard to corporate governance and one is

with regard to specific proposals. i wonder if you could comment banks can take to resolve the tension between risk managers and those of profit seekers within the bank itself? and then the second question about the specific proposals, both the house bill and the dodd bill contain proposals for resolution funds that could aid in the crisis management. i was curious if you can comment on those and what your thoughts are on those? >> yeah. i think compensation is a significant question. again, it's not the theory. it's the practice of compensation. the theory is very simple. design a compensation system as economists that avoids moral hazard. i get it. we understand that. and by the way a , the last time it worked when they were private companies. when they were private companies governance and moral hazard worked beautifully well. and the intention of where one

has to go with this given that compensation levels can be large is to see what can you do to mimic some of the private partnership aspects and compensation so you get those handcuffs. and it is long-term performance et cetera but ultimately it comes down to subjective evaluations and that it is exactly the kind of process which we're spending a lot of time on. the regulators are spending a lot of time on. that's important 'cause what they're going to do is look at the structure and say i like it. i don't like it. if i don't like it you can do it but your capital requirement goes up dramatically 'cause you're a riskier firm. but again, it's not the theory. it's the practice. it's difficult. but we're going to evolve to the right answers on that. your second question was about the fund or -- you know, that's probably one of the areas that evokes a lot of difficult reactions from people in the g20. and for a variety of different reasons.

because, you know -- by the way, there is -- there is lots of questions around that. even in academics, should you have an ex-ante funds or an ex-post funds. how are you have no moral hazard. it's really complicated to think of that in the right way and, therefore, it is one that is probably going to take the most amount of work to think through. to the extent that we've been through this crisis, to the extent that everybody has kind of learned and it's fresh, i don't think it's an issue of urgent decision-making importance. it is an important one. but i hope they will take the time to think through it rather than rush to judgment. >> with regards to the

supervisory capital assessment program, did the $5.5 billion offer aid citibank in its recovery? every two years or just one of the major players feels like lehman brothers and the recent financial crisis? >> i think that -- let me see if i can answer all together. one of the -- one of the good things to come out of this crisis is the need for a system x regulator and again you have sovereignty issues one for every country those are important issues but let's say that systemic regulators that can actually gather the information. again it is about transparency. and not everything it needs to be transparent may be transparent in the market but it could be transparent to somebody. even that's not perfect but it is the closest thing we can get

to an information based sort of decision making process. that information is best understood when you run scenarios. so stress tests but they are nothing more than what if scenarios. and i think that good banks and financial institutions running scenarios constantly >> the thing is, do you think you need an outside player to look at what if scenarios that might not be as comprehensively just matched by the banks and internal risk departments? >> yeah, i think that that is an answer that is a solution. on the other hand, i don't think the problem, the banks of georgia within some else's numbers. in some cases they are just wrong. in some cases nobody expected housing prices to go to a 40.

by the way, if they did you would never have a bubble. i think the process is really important. running the what if scenarios, there's always going to be a scenario you miss, we know that. which is one of the points that makes this such a difficult exercise. but i think it's a good move and it's the right thing. the what if scenarios are not only about risk, but one of the issues is you have jurisdictional issues aroun aroe world work laws are different. if something goes wrong it's not clear the same bankruptcy law applies around the world. and the what if scenarios are also against where is your capital trap, where is the money trap, how are these context going to be -- a lot of issues surrounding that. but it's the right approach. >> two more questions. >> i have to question. the first -- [laughter] >> for a bank like citibank which was sort of rescued by the government which ended up

deluding their shares, what do you think is the best method for companies that had to have their shares, in terms of things like reverse, stock buyback, what's the best method to fix that or to change that? and my second question is, should financial regulation get passed in some form, what do you think the role of big banks in the future will be? do you think you have to be some equilibrium between the number of small banks and big banks in the world? >> let me start without. i think the national services, there is one constant consolidation. yes, you will reach equilibrium. and by the way, we need stronger financial reform. we needed and we need it fast. talk about citi how we're going to get a stock of, speak how to deal with stock dilution in general?

>> it happen. it's done. therefore, the only way to deal with it is to restore value. the only way to restore about you is by creating economic value by doing the right thing. you can do stock splits and there are all kinds of pros and cons for it, but the fact that you own to shares versus watcher doesn't change what the value is what you own. there are stock buybacks and other things you can look at, but the fundamental cause of action is run your business correctly and start. that's the best anecdote to the solution. >> we have three people left. why don't we just, if you say your questions very quickly will just take all three questions and then vikram can sort of remember them and answer them. [laughter] >> thank you. my question was on rating agency, what kind of reform would you suggest for the second being blamed for the larger financial crisis?

>> next. >> citigroup was with form by a merger between travelers group and citi bank. do you think the repeal of blasting the did really contribute to the crisis or did it actually help commercial banks because they have that buffer of commercial deposits? >> rating agencies, glass-steagall and -- >> my question is what is citibank -- sorry, citigroup's position on the proposed student loan reform proposed by president obama? >> student loans, okay. >> okay. i forgot. [laughter] >> rating agencies, well, you know, what can you say? we understand, they understand that. with a really good at is a rating company with assets and liabilities and businesses and aren't. and where they got it wrong was rating financial products, but they learned from it. so i think you're going to have,

you're going to have more robust rating agencies and companies, rating agency companies on the other side. what were the other to? >> glass-steagall and student loans. >> let's talk about student loans. wherever large, very large student loan business. and the basic change on student loan is that government guaranteed loans are by the government going forward. versus going through companies like fannie mae, ourselves our people used to make it. one or the other. it really, to me, it's fine. the biggest goal to me is we have student loans and we have students who have the ability to get money. i'm happy with that. glass-steagall -- >> i bet she was asking the international student loans. am i correct or not? no. thank you. >> the last one is

glass-steagall. and regulation. you know, everything that happened would have happened, could have happened even without glass-steagall. that's the irony of this thing. so people think about that way, and i can understand why people think about it, but to me it is less about glass-steagall. but the need for strong reform in the way we just talk about. if we do that i think we get the right place on banks not using capital, not using deposits, speculate to having the clarity of what banks are in business for. i think that goes the wrong way. so less about glass-steagall, more about let's get this kind of a reform passed that really important. >> vikram, you have made major contributions to this institution over a long period of time here and this is wonderful to have you here and had the special contribution today. thanks are coming. >> thank you. [applause] [inaudible conversations]

[inaudible conversations] >> education secretary arne duncan yesterday talked about the role of parents in improving schools. he spoke at what was called congress, delegates chosen by parents magazine. this is a little less than an hour. >> it's my pleasure to be with you this morning. i want to thank you all for joining us for this special town hall on education and the role of family engagement and education reform. and i would like to recommend a special guest who are here with

us today. u.s. secretary of education arne duncan, our keynote speaker this morning, suzy kane, the editor of parent magazine, greg schuman, vice president of the parenting group, my colleague rahm emanuel, the dean of our school and the members of the mom congress on education and learning. this is a collaboration between parenting magazine and the georgetown university school for continuing studies. the mom congress celebrates, connects and supports mothers interested in education advocacy and reform. as we all know parents play a primary role in their children's educational success, and it's heartening to see so many of you who are interested in providing stronger, better education for all of our children. of course, not just parents and

educators, but all community members have a responsibility to ensure that every student has the opportunities and resources necessary to achieve his or her fullest potential. this is an enormous responsibility, but one that has transformative potential. through quality education we enable our students to achieve better lives, to overcome hurdles, and most importantly, to be thought whole, passionate, creative and confident leaders of tomorrow. education positively affects not just the life of an individual, but the life of a society. we at georgetown are committed to help ensure that every child receives a quality education. and our university, has embraced this message with our partnership today between the school of continuing studies in parenting magazine, which supports today's mom congress conference, with our partnership with the crystal network of schools which brings to georgetown a number of high

school students from around our country, including from secretary duncan's hometown of chicago. with our participation in the d.c. reads program, our local literacy campaign, and through the tutoring and mentoring of our students throughout the d.c. public school system, and even in the choice that many of our graduates make to join teach for america. it's my honor this morning to introduce someone who has made a lifelong commitment to helping ensure the quality education for every child. a man committed to confronting the pressing issues in public education, and distress and the final importance of education of the future of our nation. the united states secretary of education arne duncan comes from a family of educators. his late father was a professor at the university of chicago. his mother has run a southside to an program for inner-city children since 1961.

he began his career in chicago where he ran the aerial education initiative, an orientation which helped fund a college education for classic inner-city children under the i have a dream program. he was also part of the tenet start a new public elementary school built around a financial literacy curriculum, the aerial community academy which today ranks among the top elementary schools in chicago. from 2001 to 2008, he served as a chief executive officer of the chicago public schools, making him during that period the longest-serving big citi education superintendent in the country. during his tenure, the% of the district of entry school students meeting or exceeding state reading and math standards reached an all time high. and in january 2009, he was appointed u.s. secretary of education by president obama. throughout his career, secretary duncan has focused on innovative

approaches to education and education reform, and we're honored to have him were here with us today. secretary duncan, we are grateful for all you've done and and for joining us here at georgetown this morning. ladies and gentlemen, it is my stted states secretary of education, the honorable arne duncan. [applause] >> good morning, president, thank you so much for that kind introduction. i'm huge fan of his and his university. i feel smarter every time i coming to places like this. this is a phenomenal study. this university's commitment to academic excellence, the bows and leadership skills in stills, thank you so much what we are doing far nation's young people. i am proud to be your. i also want to thank parenting magazine for sponsoring not only the special event buffer on of

the critical importance of parental involvement in our nation's schools and allies -- and my wife and i are huge fans for what you're doing. let me start with a quick story from president obama. last fall the president went to south korea where he had lunch with a south korean president, president lee. president obama was whether south korea's economy had expanded rapidly in recent decades. so he asked president lee, what is the biggest educational challenge you face lex and presently without hesitation, the biggest challenge i have is that my parents are too demanding. now and president obama tells that story, he often gets a few chuckles. but i think presently is, is a revealing one. he was not exaggerating. south korea has to import thousands, thousands of foreign language teachers because all parents, even if they are dirt poor, insist that the children have to start learning english in elementary school if they're going to be successful.

i think we all recognize why this story might make us laugh a little bit by maybe even wins. we cannot say that our biggest education challenge is the insistent demand from all parents for excellence in our nation's schools. the south korean challenge is one, quite frankly, that i would love to have here in our country. i think everyone would also agree that americans strongly believe that good parenting and family involvement in schools are essential if children are going to flourish and fulfill their dreams. the extraordinary accomplishments of the mothers in this mom congress are testament to that belief. so there's a paradox when we talk about family engagement in schools. and it is this. americans celebrate good parenting and family involvement if they feel that all too often that parenting is a their responsibilities. to borrow a metaphor for an educational consultant rick devore, parents and educators have been looking out the window

instead of in the mirror. and adequate parental engagement is seen as a problem for others people's children, and not for our own. the debate over prattle involvement remind you a story that warren buffett likes to tell about a man who is new in debt. the stranger walks into the town square, where he sees a man sitting on a stoop reading a newspaper next to a mean looking german shepherd. and newcomer asks the man, does your dog bite? and the man replies know. so the newcomer reaches down to pet the german shepherd all lit up the dog lunch at him and care the sleeve on his coat to shreds. i thought you said your dog doesn't bite? the man looks up from his newspaper and says, i did. this is not my dog. [laughter] >> i'm here to say today that we have to stop treating the issue of family engagement as though it were not our dog. one of the best known survey find in the field of education is that parents think well of their school that their child or children attended. but they believe the same time

that public schools in general across this country are not as strong as they need to be. the same split vision of education is evident when americans are asking about parenting and family engagement at school. overwhelming majorities of parents say that their parenting skills are solid, that they are actively involved in their child's education and school. but they're also convinced that other parents are falling down on the job. other parents they believe help out too little with homework, failed to discipline their children, or leave their children alone too much after school. this cognitive this is has troubled education reform for both of the parties hoosiers. it breeze and insidious paralysis in life. most parents think their own schools and family engagement is fine, fostering complacency about challenges close to home. but the challenges that other schools often seem too distant or overwhelming to tackle.

lamar alexander, current senator, a good friend of mine and predecessor of the secretary of education during the first bush administrator -- administration, was limited i'm okay but you're not was the overwhelming obstacle to everything we're trying to do. too many people say schools are bad, but my school is good. sorry to hear about the low math scores, but my johnny is doing just fine. as rick dufour points out when educators of parents look in the mirror, they are forced to develop a can-do list of actions for how they themselves can improve schools and better support children. when they look out the window towards others, they produce and is only approach to reform. one where children can be helped if only others will take action to be better parents, better teachers, or better school leaders. the fact is, that almost every parent, every parent, regardless of race, class, social economic

status, zip code, they want what is right for their children. but how do parents figure out if their school is doing a good job of educating their children? i'm a big live at looking at data to track what's going on, with the acid test for this to me is personal. good schools engage parents and the surrounding community. the chicago public schools i could walk into a school in about five minutes and figure out what was going on and get a sense of the school culture and climate. i have an eight year old daughter and a six-year-old son. if i walk into a school and it feels good enough for my children, that i think it's a good school. if it is not good enough for my children, that's a school that needs some work. in education i think for far too long we have created schools that are good enough for somebody else's children, but not for our own. and so, this has to be personal and it is not, will simply perpetuate the status quo. as president obama points out, all of the innovative

educational programs and expanded opportunities that the administration is providing will not in and of themselves make a difference if each of us as parents, as community leaders, failed to do our part by encouraging excellence in our children. i learned about family engagement in schools firsthand at my parents each. in 1961, several years before i was born, i neighborhoods pastor and a southside chicago asked my mother to help teach summer bible study to a group of nine year old girls. the group had only one bible and my mother that everyone could read a few sentences and passed the bible to the next girl. my mother was for a fight when she discovered that not one of her nine year old girls could read. she decide to do something about that. and open a free afterschool program in june of 1961. a half-century ago after the school programs were not the norm in chicago. my mother couldn't get any school to let her set up shop because chicago schools which shut down at 2:30 p.m.

so she opened up her afterschool program in a church basement in a poor neighborhood on the southside of chicago. we stayed in one church basement or another for the next 40 years. until the time we were born, my brother, my sister and i went to my mother's afterschool program every day. when we were little, the old students tutored the younger kids. as we grew up it was our job to start to drink the younger children. our philosophy was everyone should be both teaching and being taught at the same time. [applause] >> after we were done with our study and our chores we got to play basketball together. and the one you are program was a safe haven where kids were nurtured, respected and taught right from wrong. from the corner of 46 in greenwood avenue, some remarkable success stories emerged. the teenager that the tough job of tutoring us, my group of students we were growing up, today is an ibm engineer who has made one of the 50 most

important lab research scientist in the nation. another student became a brain surgeon, michael clarke duncan pursued his dreams in hollywood where he starred in the green mile. wrong eventually helped me manage the chicago public schools. in the church basement i learned the high quality of tutoring programs could be a good thing, but high quality tutoring program run by caring adults is a great thing. it can literally help transform the lives. parents will always be a child's first and most important teacher. and parenting is the most important job that every parent takes on. no other activity in our lives carries the same degree of responsibility or influence. it also takes caring and talented principals, teachers, and guidance counselors. it takes nonprofits to provide opportunities for recreation. it takes government agencies to provide health care and counseling. it takes mentors from the community and the churches who teach children the virtues of service, leadership and

self-discipline. and just asked what it takes high quality afterschool and early childhood education programs. with the exception of my brother, sister and i, all the students in my mother's student program for african-americans. despite the challenges they face going up, my fellow students in the tutoring program just want a chance to succeed. to see these extraordinary potential that every child had, no matter where they come from, that's what i do for my mother's work and that's absolutely what drives me today. we cannot let any child, any child, fall through the cracks regardless of what is happening in their homes, regardless of the obstacles they face in becoming successful. poverty is never destiny. my vision for family engagement is ambitious. as i said, i actually want president leaves problem. i want to have too many parents demanding excellence in their schools. i want all parents to be real

partners in education with their children's teachers will quit all the way through to career. in this partnership comes to the person should feel connected and teachers should feel supported. parents can serve at least one of three roles. arbiters in learning, advocates to push for better schools, and decision-makers who choose the best educational option for their children. when parents demand change and better option for their children, they become the real accountability backstop for our educational system. parents have more choices today than ever before. from virtual schools to charter's two career academies here in our school, we need empowered parent. we need parents to speak out and drive change in chronically underperforming schools where children receive an injury or education. with parental support, these struggling schools need to be turned around now, not tomorrow, because children get only one chance at an education.

sometimes it can be pretty hard for parents to envision a brighter future, but not always. in fact, we have extraordinary parent leaders all over the country. i met one other this friday in texas, maria mendoza, who refuse to accept any excuses for her children or her school. she demanded that her high school be turned around and do whatever it takes to get her kids the education they need and deserve. just two years ago, a tough conversation with difficulties, pain, difficult with change, that school did turn around and today that school is a model of reform that every school can learn something from. and ms. mendoza is a hero who shows us all what the power of parents really means. that's the power we need to hardest if we're going to transform public education in our country. now, parenting engagement is a two-way street. parents in part disengaged because schools sometimes fail

to welcome their input, making parents feel intimidated about speaking up. often, parents come to school only when there is a problem rather than touching base regularly to see how their children are progressing. a good parent and family engagement program removes obstacles that parents face, and encourages them to be good role models for their children. in communities where adults need better literacy and language skills, more schools should be running family literacy programs for adult education classes take place after hours, with transportation and childcare provider for students can study after school as well. for families where no one has attended college, i what middle school and high school teachers and principals providing guidance about the courses and instruction children need to be college ready. family should be encouraged to be visiting college campuses, starting out in high school, but in middle school. the nature of parental involvement in schools has changed since i was a child. more parents today are single

parents, and fewer families have stay-at-home moms. parents sometimes are working to come even three jobs to try and make him speak, are desperately looking for a new job to support their families after getting laid off. as all of you know, it is tough out there today. i was so lucky to grow up in a family with two well-educated parents, who read to us each night, but not all parents grew up middle-class families where they acquired information along the way about how support their child's learning. school should be places that honor and respect families, that need parents on their own terms. and that may mean teachers giving up their cell phone numbers to field questions at night and calling back that single mom who missed a parent teacher conference because she had to work. unfortunately, that mutual support that engagement is still missing from far too many of our nation's schools. school efforts to curb childhood obesity are just as spotty. as first lady michelle obama has said about childhood obesity,

our kids didn't do this to themselves. she points out that our kids don't decided what is served in the school cafeteria, or whether it's time for gym class or recess. our kids don't choose to make food products with tons of sugar and sodium in supersized portions. and then to have those products marketed to them everywhere they turn. we have a long way to go before all schools support student learning and healthy growth. but parents aren't off the hook you're either. in this partnership between the school and families that president obama often urges parents to turn off the tv and shut off the xbox. but many parents think that worries about the impacts of heavy electronic media use aren't really for them, but again, our for someone else's children, for other parent. i couldn't disagree with that more. earlier this year, the kaiser family foundation released a study that showed the problem with heavy media use and lack

supervision as far more pervasive than many people imagine. in fact, the study's finding almost five. the average team today spend nearly 12 hours a day using the media. that's even higher for black and hispanic teenagers. and it was almost six hours of television every single day. by contrast, teens spend about 25 is a day reading a book that one of my predecessors, richard riley, once said that the eight magic words from children that could solve all of our education problems are, please shut off the tv. i'm trying to read. as you know, we don't often hear those magic words. and the days were families shared food and lessons learned at the dinner table are fading fast as well. two out of three young people usually eat dinner with the television on during that meal. this oversaturation of electronic media has been matched step-by-step by overly permissive parenting. only about a third of the

parents in the kaiser study report studying any rules on how much time to adolescents can spend watching tv, playing video games and using the computer. children can naturally rebel against the limits. said, whether it is removing sweets from the dinner table are insisting children finished their schoolwork before playing those video games. but the time-honored fact that the job of parents is to parent. to lovingly give a child direction and to set reasonable limits. and too many adults are advocating that role. now, the problems of new media is still real and potentially transformative educational he. . . watch educational tv programming. they can make connections on line. they can learn to socialize, communicate, and right through social networking sites. -- and write through social

networking sites. the hopes of those new media proponents have only been at partly realized. heavy use too often in peace student learning. in the study, though some may have use of electronic media, spend less time reading books and do poorly in school. i will admit that i was not raised in the vanguard of the technological revolution. in fact, quite the opposite. i grew up without a television in our house. when other kids were turning on the chicago bulls, we read books. my friends thought it was crazy we did not have a television. at the time, i thought the same thing. today, 3/4 of junior high and high school students not only have a television in their bedroom, but a profile on the social networking site. we will never put the electronic the genie back in the bottle, nor should we try.

but parents can do a better job of setting limits on children's use of electronic media and work towards using it more creatively to support student learning. there are examples of using technology to better engage children in their own learning. but more and more parents are concluding that media oversaturation and addictions are real problems for their children. these are not just modern-day afflictions that affect other families. it is time for all of us to look in the mirror and not just out the window. and that absolutely includes us at the u.s. department of education. [applause] for 45 years, ever since the passage of the elementary and secondary education act, the government has encouraged states, and districts and schools to promote parental involvement in children's education. parental involvement, for

example, has been a cornerstone of headstart. yet the department has done a mediocre job of supporting parental engagement. we have been too concerned with monitoring for compliance and not concerned enough with improving student learning and boosting meaningful family engagement. part of the problem has been a parade of parental involvement policies in the last half century. at various times, congress and the department have promoted parent advisory council meetings, volunteering in school, school parent context, and helping children learn at home, yet these policies have rarely been shown to move the needle on the student achievement. it is well documented and common sense that parental involvement in taught -- child education boost student learning and improves behavior in attendance. we know that children with parents or in case are less likely to drop out. there is surprisingly little research to show what works and

does not in family engagement programs, to accelerate student learning, yet there are many promising programs all across the country. in arkansas, the national council for family literacy is running a family literacy program, primarily for latino and immigrant parents in their schools. parents spend two hours a week in class with their children learning literacy practices for use in their homes. the reading scores of both children and their parents have risen significantly as a result. in chicago, >> in chicago the comber school has boosted school scores using parent involvement as a core tenet. new york and boston as well as places like florida are empowering parents with information about their school and education as never before. new york is holding monthly parent academies for parents. they provide child care, easy bus and subway access in an

array of languages, haitian urdu and others. they can determine if they're going to college and jobs but how their college and job market performance compares to that of other high schools in the state. our blueprint to reauthorized support family engagement in a host of ways. it enhances information and transparency about academic performance and school climate for parents. it empowers families with additional high quality school options. it supports programs that actually ask families how they feel about their child's school and educational experience. giving parents a real voice and opportunity to engage. it increases the number of schools that can serve as community centers and provides $200 million for promised neighborhoods which will have excellent schools at its center

and comprehensive social services from cradle to career. as the pta thoughtfully recommended our proposal allows family engagement to be included as one measure of success in teacher and principal evaluations. and it would define professional development of teachers of school leaders to include working with their students ease families. and we're putting even more resources into this important set of activities because we need to do more, we need to do more faster and we need to do it in a much better job in this area. so today, based on what we received on the blueprint we propose to double funding from 1 to 2% in title 1 dollars. [applause] >> to bring that total to $27 million. we will allow states to use another 1% of title 1 dollars to

support incentivize and help expand district level evidence-based parental involvement practices. we want districts to think big about family engagement. to propose new strategies and hone in on the best practices that raise student achievements. lastly, we also require our parent information resource centers to compete for these funds with districts, community-based organizations and other nonprofit. we must justify every dollar we spend and ensure that it's best serving our students. the truth is we don't have all the answers yet about how states, districts and schools can effectively support family engagement. i'm so instruct by the extraordinary success stories of the delegates of the mom's congress here. it is not just so many of these moms serve on school boards and volume regularly at their schools and work as parent information coordinators. seated behind me i'm convinced is the future.

on this stage are moms who crafted programs to train teachers to work with special needs students. we have moms who create textbooks for kindergartners and detailed curricufor community service. we have a pediatric didn't who developed a program to improve literacy for boys by providing strong male roll models who enjoy reading. we have nutrition educators who are helping to get junk food out of school lunches and vending machines. we have mothers who run summer programs that provide arts education and academic enrichment. so today i want to honor these incredibly strong women here, and my own mother who 49 years later is still running her after-school program. [applause] >> all of you here have shown through your commitment, your courage and your insight that we can multiply your power many times over and over.

and build our capacity and knowledge to help parents enable every single child to learn and live to their full potential. thank you for your vision. thank you for your hard work and thank you for the example you set for all of us. as a nation, we must educate our way to a better economy. and collectively, you are helping to lead the country where we need to go. thank you uch for ng me here this morning. [applause] [applause] >> so we're going to make a quick stage change and then we'll move into a town hall portion of the meeting and secretary duncan has agreed to take some questions from the audience and from our delegates up on stage. it will take us is couple moments to get the podium out of

the way. let me say that i'll serve as moderator. it will be a little tricky because we've got questions coming from the audience as well as from the stage. there's a microphone in the middle of the stage here. if you're interested in asking a question, just move behind the microphone and we'll get to as many of the questions as we can. i ask that if you're going to ask a question, you just introduce yourself and provide some context, name, affiliation, where you're from, which will help the questions that we have. now i could invite secretary duncan and susan keane to join me in the middle. and i think we'll start the conversation with a question from susan who's the editor and chief of "parenting" magazine. >> thank you. >> secretary duncan, that was so inspiring. but as a mommy of two school kids, i want to ask, how can we

retain our energy to make positive changes to the schools when such severe state budget cuts are looming and we hear all these scary stories about 50 kids per classroom and so on. >> these are very, very tough economic times. as you know i'm pushing very, very hard for emergency legislation that would help to save teachers jobs around the country. i want to do this in a bipartisan way. the president is absolutely committed and talked about this last week. through the recovery act we saved conservatively about 300,000 teacher jobs last school year. that was hugely important. we did not want to see school size limited and before and after school eliminated. the economy is very tough. we would love to see this emergency legislation pass. and we're going to work hard to -- as hard as we can to make sure that does happen. as you said, class school rocket we see school four days a week not five. we need more time not less.

i worry about summer school and after-school being eliminated and we have to fight that. we want to see an emergency jobs bill in education and we want to push that absolutely as soon as possible. >> we'll fight for you then. >> thank you. >> let me see if there's a question from any of the delegates on the stage from the moms congress. >> well, good afternoon or is it still morning. thank you very much to georgetown. for having parents across the country. mom congress, parents magazine and, of course, secretary duncan. i have to give a shoutout to benjamin franklin school in connecticut that they took the me - they took the time to write essays for you of what they need to succeed in schools. so benjamin franklin elementary

school fifth graders. and the reason why i state that is parents and youth are the only consumers who don't have decision-making power. we need to be very clear about that. we can give our input, our feedback but the final decision for our children's future and us lie in the hands of others. and i'm looking at the law. and it doesn't matter whether you give 2% or 10%, if you don't hold school officials and school districts accountable to how they spend the money, we will end up in the same position having the same conversation. so my question to you is, when you give believe money, whether it's race to the top, school improvement grants, early learning, it doesn't matter. the accountability, the checks and balances to assure that they are spending this money effectively to ensure better outcomes is what i need to know as a parent.

and to every parent in this organization in this audience today, i want you to smile because this is a clear pathway to power as parent leaders. so smile and enjoy arne duncan. that's my question, accountability. >> these are phenomenal questions. and to me again we have to get sort of out of the blame game. and if it's parents, you know, educators or parents versus teachers or parents versus principals, it doesn't get us where we need to go. and we have to hold ourselves mutually accountable. and so we're challenging everyone to say we have to get much better. and, you know, i've said before that we have a dropout rate in this country that's unacceptable. 1.2 million students leaving our schools for the streets every single year. that is economically unsustainable. morally unacceptable. those students who do graduate from high school far too many have to take remedial courses for college. dumb -- but at the end of the

day we need to hold educators accountable. you need to hold me accountable. but we need to challenge parents to step up and do more too. and again the president has said -- you know, this story about south korea and the biggest challenge is parents are too demanding. what if we had that problem here? and so parents here should not be shy. you should speak up. your voices should be heard. wished hold each other mutually accountable. we have to do so with a sense of urgency. and again, it's an amazing paradox in this country where everyone think their schools are okay and everyone else's school is no good. these are hard conversations. and, you know, friday in houston, they had a lot of resistance to change. and a lot of folks saying things are okay and they really weren't okay. two years later dramatically better results. much safer, double number of students in one year graduating and going on to college.

we can do these things but it takes courage. and so it takes every parent here stepping up and looking in the mirror every day and being self-critical and then as hard as i'm pushing everyone else we're trying to change the business we're in. we're in a compliance-driven democracy. we're going to push teachers parents and administrators, school boards and we got to push ourselves harder. and i urge everyone here to go home and think about how we recommit and what do we do individually and collectively to get to the next level. >> i'm from baltimore, maryland. i have a question and a statement for you. i'm an advocate, a parent advocate. and what we do is we go around and we help the parents of baltimore advocate -- we advocate for the parents of baltimore. navigate through the system because we do try to help. and we do try to work with the school systems.

and when we can't, we have to get assistance. we have to get help. some of the parents -- we're finding some of the parents are grandparents. some of them are parents that are not educated and cannot help themselves. grandparents might not have graduated from high school or graduated school themselves. they don't understand the homework. some of them don't get a chance or having had the opportunity to understand the assignments that have been given to them. you talk about encouraging people or parents to assist with the schools but what about funding to help the advocates work with the school system? we have prevented so much due process. we have prevented a lot of lawsuits. the school system has saved a lot of funding for that. the grandparents have spent so

much time raising the students and helping them go through the school due to lack of parents. there's nothing there in this blueprint 'cause i've read this blueprint here. and there's nothing in here to help financially assist the education of any of these groups that i've spoken of. we talk about college-ready. you can't be college-ready if we're lowering the bar. they cannot assist and work towards our goals of being number one in the united states as we were before. if we're constantly lowering the bars and we are not building a good, strong foundation for our children. we take handwriting out of the curriculum and take everything out of curriculum and lower the bars for everyone. [applause] >> please do more questions and less statements. >> we want to double funding from 135 to $270 million to support parental engagement. we think that's a very significant commitment and want

to make sure we're funding those practices that work best. and that's always to be determined at the local level. >> well, does that engagement is financing to assist or to educate or is that engagement to work with the schools? >> it can mean, again, it's not to be determined at the local level. we want to support those best practices that are making a difference. so if your program is working, if you can demonstrate the difference it's making for students, that's absolutely what we want to support. but there are multiple ways of doing this well. and those best answers are always going to be at the local level. they're never going to come from me in washington. >> well, i have a document i would like to leave with you before i leave. >> okay. >> let me reiterate we've got only 10 or 15 minutes so if we can move questions quicker that will enable most of us to get through it. let's take one from a mom delegate here. >> hi. is this on? i'm amy hamlin from new york state. i'm the executive director of the new york coalition for healthy school food. thank you for your efforts with obesity prevention.

the child nutrition reauthorization act which only happens every five years is coming up now. and the senate ad committee has only approved a 6-cent increase which will do almost nothing when advocates are asking for 70 cents or a dollar more which still isn't enough. and so i just -- the question is, what can we do when the food industry is still really defining what is healthy in determining nutrition policy and pushing their packaged food products and claiming that they're healthy with their, you know, unscrupulous labeling practices. how can we really get to the real nutrition and the real funding to provide real, whole mostly plant foods for kids so their bodies and brains can actually function and learn? because if they don't have that, they can't learn correctly in the first place and reach their potential. thank you. [applause] >> for all of us to get where we need to go, i keep coming back

to collaboration. lots of folks think we do the school lunches in schools but it's not. it's the department of agriculture. tim vilsack is pushing very hard having the first lady champion this puts this issue at a whole different level. and i'm very hopeful. we know the challenges. we know the difficulties. i got rid of the junk food and vending machines in chicago. it was tough. i thought it was commonsense. that was a brutal fight. that's a topic for another day. i think we can get much better. and he wants to add about a billion dollars a year in the next 10 years through the reauthorization. the first lady is going to stay on this every single day. and to me there's a couple of things. you know, it's better meals. it's getting rid of the junk food and the vending machines. it's really emphasizing physical activity before school, during the school, recess, pe, after school. i speak for myself.

i was one of the young boys if i didn't get a chance to run around i couldn't made it through the day. if i had a chance to burn up my energy and concentrate i could gelt my work done. we know the challenges and the difficulties. i'm convinced this is a historic opportunity and we can break through. and if we do it now we change things in the next decade. we have a chance that hasn't existed in this country in a long, long time. thank you. >> from the audience. >> good morning. good morning to you. first i want to say thank you for allowing all the parents here to be able to engage with you this morning. and i am the coordinator for th urban parent leadership and the co-owner of arms around our community consultants. what i would like to bring to the table 'cause we don't have a lot of time, but i do want to ask you a twofold question.

number one as you spoke about parent engagement, you spoke about it extensively and the money that was earmarked for it. but my concern here is that the money as it funnels down -- and i find most thing is important to the society is getting money and doing what it needs to do but there is no line. there's no budget line for parents and engagement. there's no budget line for parent involvement. and furthermore, the statement that you said about the other country and how his problem was parents ask for too much. in our neck of the woods, when parents speak up about the knowledge they have learned and asked to play the level ground, you're blackballed. you're excluded. you are pushed out of the neighborhood. these are parents that have normally volunteered in their schools. i have a whole group with me, more leaders. they volunteer in baltimore school system extensively.

they're parents, grandparents, caregivers, foster parents. we taught them how to engage schools, how to build partnerships, to be knowledgeable what the law says, many of our parents have been blackballed from the school because they were educating other parents how to get better education for your students. that is my question, when you roll that money down to the districts many of the districts that gets their money like to play with those who agree with them. they do not want to play ball with those who want to speak up, talk about what is for real and keep it real. and i'm really concerned. you come from a grassroots organization. and you got a lot of parents out here who are grass root organizations. first of all, they're not going to meet your evidence base but we all know parents are crucial in their children, raising their bar, working with school systems, et cetera. but we're not allowed. we're stepped on and stomped if we reach your level. what is going to be done that

their budget line clearly indicates that the -- clearly because i have not seen a budget line yet. clearly indicates the amount of money to go to grassroot organizations, not just organizations and schools like to play ball with. i want to be in that same place as well. [applause] >> that's something we can absolutely look at and work on. i will say this is about all of us building a different culture. and there are many parents who feel disenfranchised by schools. we talked about changing -- you know, the money is a piece of the answer. but the money is never going to change everything. we talked about having principal gaenlment potentially being something that teachers and principals are evaluated on. we talked about this being part of the definition of meaningful professional development. and too often i think we've been scared of each other. teachers are scared of parents and parents are scared of teachers and we shut our doors. it is hard and difficult.

you're living but we have to find ways to build those bridges. i would say this is like two parents. when parents fight who loses? the kids lose. when the community and the teachers fight and the parents and teachers fight, the kid loses. they fall through the cracks and so i don't have an easy on it. we want to put resources out there and make sure resources are hitting those groups but we have to break down those barriers and that fear and get folks working together better. what i can do is use the bully pulpit to highlight those places they are taking on these tough issues, working through them is never easy and creating models that work and there are hundreds and hundreds of those around the country. i'm going to need to interrupt for a moment we got a time commitment here. i apologize that we're not going to be able to get to all the questions that we have. the moms congress has to get to work for the next couple days and i know secretary duncan has quite a busy schedule so i want to -- please join me in thinking secretary duncan for being with us today. [applause]

>> before you leave, susan kane will have a few closing arguments for us. moms congress, if you could remain on stage when you're done. susan? >> hi, everybody. i'm susan kane. i'm the editor and chief of parenting. and i just want to say to secretary duncan on behalf of all of us in this auditorium, thank you so much for coming today. it means so much to all of us. parenting and the mom congress applaud your efforts to include parents more in the education process. and we look forward to working together with you for many years. we hope we can continue to make sure that parents' voices are heard. i heard some very passionate voices today.

and these are exactly the kinds of voices that need to be heard, i'm sure you agree. but just knowing that education is one of the most important issues to this administration gives me as a mom both pride and hope. we have to give him that. i wanted to thank georgetown again for hosting this event. you've been so wonderful. to our sponsors, kindercare and leapfrog, thank you so much. and everyone in the audience, all you passionate people, give yourselves a round of applause for coming out today. [applause] >> thanks for coming. and if you want to post questions to parenting.com, why don't you do that. we'll try to get answers to you. >> i have a question.

i just want to say if we can get a picture with secretary duncan, we fought to get here. if you can take a picture with the community, of grandparents support group -- >> i'm happy to. >> please, that's all. [applause] [inaudible conversations]