welcome. we are glad you think budget and the economy is as ex siting as we do. as a reminder, plenary sessions are on the record, but panel discussions or for background only. i would request that you silence your cell phones. while you do, so allow me to introduce our head table today. beside me is me lays is merril, longtime board member, joe call. i would like joe to come up and

introduce our morning speaker. >> good morning. i am with pricewaterhouse coopers, we are now known as pwc, just to set the record straight and it's my pleasure this morning to introduce danny werfel. danny was confirm as the controller for the office of financial management at omb on october 13, 2009. as the controller, he is responsible for coordinating omb's efforts to initiate governmentwide improvements in all areas of financial management, including financial reporting, improper payments and real property management. in addition, he's responsible for coordinating the development of governmentwide policy on financial accounting standards, grants management, and financial systems. prior to his current position, mr. werfel served in multiple capacities within omb, including deputy comptroller, he was also

the budget examiner in the education branch and served as a policy analyst in the office of information and regulatory affairs. prior to that, he was a trial attorney in the department of justice's civil rights division. he has an undergraduate, and this is a pedigree, folks, cornell university, labor relations, he has an mpp from duke, and he has a j.d. from the university of north carolina at chapel hill. a good pedigree, but i don't know who he roots for in basketball. with that, i turn it over to mr. werfel. [applause] >> thank you, joe. thank you, jonathan. the answer is duke. i know that probably makes me more unpopular in the room. usually does when i mention, a lot of teams i like, people don't like, like the yankees and duke, but that's just who i am. and i want to thank jonathan and

aabpa for having me today. you know, i'm sure you noticed the camera in the back of the room and the fact that we're being broadcast today. this is the second time that's happened to me, where i've showed up at a conference like this, and was surprised to find that we were going to be broadcast. and the last time that happened, an interesting thing happened. someone in the audience asked a question, an unusual question of someone i knew and they asked me to go over the statistics for my son's little league season so far. which i happily did, but later that night, when we were watching, because c-span reshows, we're sitting with my wife and my daughter and my son, and the question comes up and i proudly recite my son's baseball statistics, which was fine, except my daughter was very upset because she didn't get any

mention at all. nobody asked the question. so i'd like to mention my daughter molly, you would not believe her report card. i almost put it on a power point slide and was going to show it, but i think the privacy act prevents me from doing it, so i will not. but anyway, i'm really glad to be here. one other important note about watching yourself speak, and this is where i need your help. every once if a while, the camera will pan on you, and it was disappointing how many people were sleeping during my remarks so i'm going to try my performance measure here is to try to cut that down, so hopefully, you'll be smiling and laughing throughout. so what i wanted to do today was

give you some perspective on where we are and what i consider to be a very important world of financial management and the role of the chief financial officer in government today. in particular, this is a timely topic. on friday of last week, we celebrated the 20 year universitiry of the chief financial officer's act. this act, enacted in november of 1990, not only created the division for which i work in and my position of controller, it also required for the first time a cfo to be placed in every major federal agency, and started the requirement for audited financial statements to be produced each year. prior to that, the requirement for a cfo and the requirement for audited financial statements

did not exist in federal agencies and what we did last week was look back at the journey that we've taken over the last 20 years and looked at some of the challenges we still have today, and where we need to go forward, and i think that some of the themes that emerge from a look at the journey of the chief financial officer in the federal government have broader applicability for government more generally. and i think some of the thoughts that i'll share with you will resonate with you both in your work, when pure working directly on financial management issues and more broadly when you're working on budget and program. the first reflection, and there was kind of a -- it was timing was interesting, last week was when the audited financial statements for all the federal agencies were due on monday. and that just so happened to be the same day, november 15th, that the cfo act anniversary

falls on. and so it was a good opportunity for everyone to have crossed the finish line of producing their financial statements and then coming and celebrating not just that, but the past 20 years. one of the first reflections that i have and i'm sure this will resonate, is that it's hard work. we work really hard in financial management to do this activity. this past audit season, with the audit season really starts basically in april, so really -- it's a really long process, but in particular, it really ramps up at the end of the fiscal year on september 30th and then november 14th, we have 45 days to produce them. this particular ought audit season, i never experienced the amount of stress and workload that i sauve hit the federal agencies. a lot of late nights, a lot of weekend work, you know, the e-mails at 2:00 a.m., 3:00 a.m., stories of agency financial

shops working 16, 17 hour days to try to get the work done. and all across government we successfully reported, so these -- when you hear something like this, it draws two reflections for you. first of all, we need to get to a place where the work that we're doing to produce these financial statements is more routine. that it's not this hero being effort and -- heroic effort and that's something we've been striving for for a long time but even after 20 years, we see the heroic efforts in place to get something done and that's something we have to reflect on and try to figure out how to get the environment more stable and more standard, but the or thing that i think is promise something that the audit still drives the type of accountability that will have federal agencies and federal employees working through weekend, working into the late

night, to make sure that they cross the finish line on time. and for that, i think is -- i'm encouraged by that and i think it's an opportunity. in particular, imagine harnessing that energy and those activities and the fact that we have the federal work force singularly purposed for a specific objective over the course of months, weeks, and then days and then hours to get to that deadline. and if we could harness that, and make sure that we are applying that type of accountability and that type of energy on things that have the largest return on investment for the taxpayer in terms of cost, and eliminating waste and i will proving government performance, -- improving government performance, if we could make sure that the environment that we work in is having it so that the agencies are lifting and pushing and driving in those most critical areas, well, then i think

government performance and the landscape can change and trance form over time. and so from a financial management and a cfo perspective, we need to think about the question of whether our activities today, what omb requires the agencies to do, and what congress requires the agencies to do, and all of these various things that are causing the 2:00 a.m. e-mails and the weekend work, are they maximizing the impact of government on behalf of the citizenry. that is a question that we were retrospective and introspective on as we hit the 20-year anniversary, and probably not to your surprise, we found out, in talking about it and studying it, that in many cases, we're not hitting that exact sweet spot of where we think we're getting the maximum return on investment. and so our challenge is to make sure that we are reharnessing

that same energy level towards a set of priorities and activities that have that more positive return on investment and that higher impact. let me give you a flavor of what that could look like and what that means and what we've learned. if you go back to 1990, when the cfo act was passed, you can basically summarize the objectives of the act in three basic ways. the first objective was to make sure we were making the government's finances and agency 's finances transparent to the public. that was the notion of the -- of creating a cfo and having financial information flow out to the public in the form of balance sheets and financial statements, similar to what shareholders could see for corporations. so public transparency was the first objective. the second was to put in place a

set of internal controls at the agencies, or emprofessor those internal -- improve those internal controls that were there to mitigate risks such as fraud and error and waste. the notion is, and continues to be, that millions and sometimes billions of dollars are flowing in and out of your agencies on a daily basis. and the question is, and what environment -- in what environment are they flowing in and out of your agencies. are they flowing in and out your agencies in an environment where we have an accurate accounting and tracking of those dollars, in a way that we are mitigating situations where funds are wasted, are misspent, etc.? that is the type of internal control environment that the cfo act envisioned. and the third somewhere decision support. some historians of the cfo act say this is the most important and that is making sure leaders,

whether they be government leaders or policymakers, have the information that they have need timely to manage both the short-term and longer-term objectives of federal agencies and the federal government. getting that information in place to make informed decisions. transparency, internal controls, decision support. those were the three basic objectives of the cfo act. an you can go through each of those today, and do a gapp analysis and saying how are we doing in terms of making that information transparent to the public. how are we doing in terms of focusing our efforts on internal controls to mitigate risk an error, an are agency leaders today getting the financial information that they need to drive results? and from our standpoint in the financial management community, we think we have a lot of work to do on all fronts, but i think there are important trends that have developed, in particular,

recently, that not only help close that gap, i think, you know, we were going along for about 16 or 17 years at a pretty stable gap and then over the last two or three, that gap closed in major ways along these three areas. and what i have want to do is talk to you about today what those areas are, and how we start to build and reinforce them going forward. let's start with transparency. how many of you have recently reviewed the balance sheet for your federal organization that you work for? a show of zero. oh, no, there's three, four, five people. that's actually better than i have usually get. one of the lessons learned that we've seen is that we produce financial statements, corporate style financial staples, which have -- statements, which have numerous benefits in terms of

the disciplines that go into producing them, but we get very, very small foot traffic on those financial statements, on our web sites. actually, the fact that financial statements are now posted on the web and of course they weren't at the beginning of the act, because the worldwide web didn't exist back then, but the fact that they are posted on the web is very helpful, because we can actually track how many hits these financial statements are getting an one agency, who i won't name told me recently that they had less -- they had about 300 horso hits or 400 hits on their financial statements on their web page. we were able to track that. that's about the same number or less of the people in the cfo shop for that organization which is interesting. just to give you a sense, to take that number, 400 hits in a

year, the web site, recovery.gov, got 400 million hits in the first three months that it was up and running. and so what do we learn from that dichotomy? well, the balance sheet, just to pick one of the financial statements, tracks what we owe and what we own as a federal government. that's the rallying principle around these sets of financial statements, both corporations and federal governments produce, is a balance sheet and it answers that fundamental question, what we own and what we owe. own being assets and owe being liabilities. what recovery.gov does is it answers a different question. not what we owe and what we own, but where is our money going? which is a very different question, with very different data, and requires a very

different set of disciplines to report and track. and this is something that is extremely valuable, this 400 versus this 400 million statistic. because for years, under the cfo act, and i've work in this community since 2003, we have lamented the fact that people aren't reading our financial statements. i think, joe, you actually wrote a property called -- that theser the reports we hate to love approval rating one of the corn collusions was we are not reading them and so we spent a lot of time in the cfo community, between what is the the public and -- because they're not reading the asset liabilities information in a way which is commensurate with the effort that we're producing them and' long came the recovery act

and along came the transparency act. the transparency act requires -- this happened in 2006 when the transparency act came to light, requires that federal agencies report on a web site, usa spending.gov, all payments they make greater than 25,000, whether it be a grant, a contract or a loan, and for both recovery.gov and u.s.a. spending.gov, the user has the ability to go in and run searches approval rating queries. they can type in harvard university and figure out exactly how many award and for what purpose and from which agency hard verdict university has received payments. the reality is is is that the public is extremely interested in where federal dollars are going and for what purpose. if you were to go on

recovery.gov today and i encourage you all to do so, because from the time the recovery.gov web site was launched until today, it's dramatically different and has significantly more functionality and significantly more graphics and different keeps of interesting tools that can be used. you will be i think amazed with all the different ways in which you can search the data, in particular, some of the mapping functions, where you get so many different presentations of the map of the united states and you can drill down to your location and figure out exactly who in your neighborhood is receiving federal money under the recovery act and for what purpose. it's really changing the way the public interacts with federal financial information. and it's extremely useful to the cfo community to see this growing demand, because it let's us know where we need to focus on one of our fundamental

responsibilities and that is the reliability of the information being reported. because that same agency, who had 400 hits on their financial statements, invests a tremendous amount of time and energy and blood, sweat and tears to make sure that the the information on those financial statements is reliable. they invest in systems, they invest in people and training, and then they have an independent auditor come in, as required by the act, the cfo act and scrub these numbers and they scrub them hard. they scrub them down, not to the first decimal point, but sometimes to the fifth or sixth decimal point, to make sure that that information is reliable. and that information is going out into a public sphere and as i mention, with limited readership from the public. yet, that same agency is producing information for usa

spending.gov or recovery.gov and there is no independent auditor coming in and scrubbing. we don't have years of investments of system and personnel and skills and training. to validate the reliability of that information that's going out in to the public sphere, and so from the cfo perspective, we have to reconcile this discrepancy. we have to rethink, i think believe, where -- an make sure that our investments are aligned, so that we are scrubbing and scrutinizing the data that's moving into the public sphere and is being relied on for a sense of where our money is going and how we're being held accountable for that money. so in particular -- so that's transparency. and what i tried to do as i mentioned earlier is give you that gap analysis of what the act's intention was and where we are today. and i think it's a very positive development because five or six years ago, if i was standing up

here and someone went to that microphone and asked me the question, where do you think the touch point is, between the public and financial information, of the federal government, i would have not known. i would have say, we are still searching for the answer to that question. and now we know so much more than we did. we know how important it is to the public that they understand not only where financial -- where federal taxpayer dollars are going, where they're ending up, what they're being used for, and a real challenging question that we have on the horizon, what we're getting for the money. because in particular, with the recovery act, what was so incredible and enlightening about the recovery act, is that it not only asks us to track where the money was going, down to the recipient and the subrecipient, extra, to the vendor, but it also said how many jobs are being created with this money. and so we had not just the layer

of where the money is going. we had this critical performance measure, associated with the recovery act. is it creating jobs. and so now, you have a really multidimensional full view of taxpayer dollars and what's happening, the fullest view we've ever had, and the results are people are paying attention, congress, gao, federal agencies, the public. everyone is much more informed and important debates are occurring on the recovery act. that would not have been able to occur if not nor this effort. so it's really a great example of the cfo act as it was originally envisioned. i think this is exactly what was envisioned in terms of having that information to spur public debate and to allow the public to at least have the knowledge and the trust that they can see

where their taxpayer dollars are going. how they're being put to work, and raise concerns or celebrate or however they want to react to where the dollars are going, but the knowledge is there, an i think that was what was intended by the cfo act. let's move down into internal controls, which was the next item i mentioned. transparency of the nation's finances was the first, and as i mentioned, i think we have a good sense of where to take the communities going forward and internal controls is the other area. i think when we're fully functioning, and at our highest level, we're investing in of the internal controls that reflect the highest risks that we face in the federal government in protecting taxpayer dollars effectively. and for that, we have to figure out what the government's bottom line is and how we can protect that bottom line and make sure

that the internal controls are in place to reinforce that bottom line. one of the things that happens with a financial audit is an agency can lose its clean opinion or get a material weakness or a red flag is raised around a whole host of different areas within the accounting world, that one could argue are not exactly aligned to the bottom line and protecting taxpayer resources. examples of that are really if an agency gets an audit issue, because they haven't valued a set of assets correctly, we're not accurately reporting value of a particular set of assets or inventory, and that's an important question. it's important to know the value of the assets we're valuing as a

federal government. but other critically important questions as well. let's say the issue is a fleet of aircraft, that the agency owns and the auditor is saying that this fleet of aircraft are not valued correctly, the internal controls for the agency has not enabled an accurate value methodology. so they'll get a red flag on their audit, or whether they get an internal weakness, things start hang. agencies start investing resources and spending taxpayer dollars to fix this problem. my question and i think a question we need to raise, are there other elements about the way we hold these assets that are more critical that need to be examined more thoroughly. for example, do we need to own these aircraft to begin with, are we fully utilizing them. when we purchase these aircraft, did we purchase them fairly, with no conflicts of interest. did we get the right price for these aircraft. what cost is it costing the

taxpayer to maintain these aircraft effectively, and has that cost been appropriately bench marked against other agencies who maintain aircraft and against the private sector who also maintain aircraft. these are the questions that one could argue are equally, if not more important than the value of those aircraft and how we carrying it on the balance sheet and the question are, are we investing in the internal controls, do we have a robust set of internal controls to make sure that we know exactly when our aircraft are surplus and we can start offloading that inventory, that we understand the cost of what it takes to maintain the aircraft, that we can drive and hold managers and facility managers accountable to drive the cost of maintaining those aircraft down. i think in our environment today, we are not where we need to be in terms of making sure that the internal controls that we're being held most accountable for, have that

closer nexus to the bottom line of being an effective steward of taxpayer dollars, which i think means controlling costs. and making sure we're eliminating waste and inefficiency. and so that's a question that we need to be asking ourselves and i think the federal agencies across the board need to be asking themselves. when you look at yourself as an agency and you try to find out where your processes and your disciplines and your rigors are all in place, are they in place and are you holding your people accountable to answer the right questions about the way you're operating your agency. that's something that all agencies should be continually asking themselves. we're certainly asking ourselves in the financial management community and we think we need to potentially look at modifications to the way we track our finances and the way we audit ourselves, to make sure that we're driving to that exact right question.

the last area is decision support. and this is a challenging one. this is one where you have so much difference amongst federal agencies in terms of the type of financial information that would be most relevant to drive decision making. if you recall sitting down with a deputy secretary, secretary of hud, and then turning to talk to the deputy -- or secretary of labor, they would likely have very different needs in terms of information to make sure they are managing their agencies effectively. one of the benefits of my position is that i work very closely with all the cfo's and the cfo's tend to turn over, because it's often a political decision. when the obama administration came on, we had a whole new group of cfo's that were

recently confirmed by the senate and joined our cfo council, so i can talk to them and get their early reflections. a lot are either coming from state government or from the private sector and talk to them and get their reflections about what they see and these very complex efor must agencies that they are -- enormous agencies that they are now the cfo for and one of the constant themes i have heard from the cfo's, there are struck by how much data there is within their own organizations. enormous, enormous quantities of data, but how difficult it is to pull from that data in a strategic, in a seamless way, the relevant information to help them inform on both the day-to-day and the long-term decisions that they need to make. and so we have this new challenge of trying to figure out how do we cull data differently, how do we pull data

from various data bases in a way that helps us answer some of the key questions. again, i think the recovery act has been an informative situation for us to learn from. i'm going to give you an example. the recovery board, which is made up of approximately a dozen inspector generals, it was created by the act, to be the watchdog. it was like a special inspector general type arrangement, and the recovery board was established, earl devaney, who set was the inspector general of the interior, was made the chairman. a very wise choice because earl is excellent at what he does and that is being an effective watchdog and holding people accountable, and the board was given tools and resources to go ahead and do its job.

one of the things which they did, which has been extremely eye opening, is they deployed a forensic data mining tool. and what this tool does is it takes enormous quantities of information from both public and government data bases, and it runs algorithms, or questions or queries of the data, that are strategic and targeted to help earl and the inspector generals meet their business need or their objective, which is to find fraud and error. and what high learned in watching this process unfold is that it's really important for us as a federal government to do a couple of critical thing to make sure that we are managing information better than we have in the past. the first is to make sure that

we -- keeping up with technology and with best practices from the corporate environment, and we know exactly what technology can do. because it is quite remarkable how some of the data mining and forensic tools that are out there, what they can do today in terms of drawing enormous quantities of information into different business intelligence formats, and allows us to identify trends, or spot problems, in ways that is ever evolving, and if you have settled into a way of looking at data and analyzing data that kind of came about two years ago or three years ago, or maybe even 18 months ago, and you're not paying attention to some of the advances that are going on in private industry, then you're already behind the curve. and we have to be dedicated to being on top of how the

technology changes and how we look at and utilize data. so that's lesson number one. lesson number two is we have to know what we're asking. we have to understand what the keefe questions are that we want to focus in on, because i -- i use the word algorithm or query. it's so critically important to know what to ask the data and a corollary to this is it's important to bring a diverse set of expertise to the table. because if you're trying to identify fraudulent patterns, in an agency program, and you just have the program experts in the room, that's helpful, because the program experts are going to know where some of the potential weaknesss in the program are, and where some of the risks are, and they might have a historical perspective on where fraud or error has occurred in the past, to try to drive and ask the data

what it is we should be asking the data to find these problems, but you need other expertise as well. you need more general expertise. people that have an understanding of how fraudsters or schemesters may operate. things as a program expert, you might not have thought of. trends in different sectors of criminal behavior that you might not be privy too but someone who is more in a criminal -- has a criminal enforcement background and keeps up on these things might be panel to help you with. because what the recovery board tool, as we study it, what we realize is that is -- the 16 they ciesation of the -- synthesissation of the program, from law enforcement, from different areas, that help to figure out and pull out of the data where the problems are. it's got to be multidimensional, and so this is another lesson learned from me in the area of decision support. what's out there in terms of

technology, that can help us take this enormous amount of data and move it into more useable chunks and usable frames. are we asking the right questions of the data? because spending time thinking about what to ask the data is really a critically important part of your job in terms of better managing data, and do you have the right expertise in the room. if you've got a sense that everyone around the table has the same background and set of interests and stakeholders, then you might not have the right group in the room. it's one of these things, just like in the other areas, where i talked about transparency, internal controls, it's a mixture of the sense that we're not where we need to be, but recent advances or recent developments or unstandings are helping us -- understandings are helping us figure out where to

go and we can build on those successes going forward. i want to spend a little bit of time talking about one area, kind of do a deep dive on one area in particular. because i had been talking about fraud and error. i want to talk about improper payments for a little bit, and then i'll turn it over to questions. from the audience. improper payments is, i think, an interesting case study and everything that i've been talking about so far, it has a little bit everything. so what is an improper payment? it's a payment that goes to the wrong person, in the wrong amount, at the wrong time, you know, someone should have been -- a class he can example that i often use is that medicare reimbursement, that reimbursed mri, but it was really only a chest stray that occurred, but sousa we reimburse $4,000 for a $1,000 procedure. that's an example of an improper

payment and last year, we made $125 billion in improper payments across government. that is an enormous number and is an area that needs to have tremendous focus and attention going forward. one of the interesting things about improper payments, going back to my questions about, are we focusing on the right place, is this question of, you know, payments. on the one happened, we need as a foundation, understand all the payments that we've made, record them correctly, understand the audit trail associated with them, but if we don't layer that performance elements on top, if it's just being audited and tested, that we made 100 payments in the months of april in this amount, yep, he

reconciled it, i validated it, i'm done. thank you, i can now go home. if that's the end of the discussion, then we've missed a really critically important question of was the payment correct. and that's what i mean when i talk about evolving into areas of performance and focus and bottom line impact. you can't ignore that foundation. we have to make sure absolutely that the number of payments that we made in the month of april can be reconciled and audited and we know exactly how much got paid out. all of that goes without saying, it's critically important, but the thing is, our work is not done. there's a performance elements associated with those payments and we have to attack that performance element, because at the end of the day, the risk to the taxpayer is greater if we fail on that performance. than if we fail on any other he will. of the -- anier element of the

payment life cycle. so more needs to be done in my opinion, more auditing, more scrutiny, more review, harnessing its energy. cfo's to work through the night to produce their financial statements. harnessing them around the improper payments, question and challenge, is something that i'm interested in working with the entire government, in particular, cfo and community around. now the improper payments procedure is ago i've been working on for a long time and i'm proud to say it is now as prominent as any issue that i've ever work on. we started back, the law was passed in 2002, the first time ever congress required federal agencies to track and report on improper payments. and we spent about eight years trying to do more and more measurements and figuring out to measure the program for error.

that's often a real challenge in these programs. if you go out and pull samples and have to audit the payments and extrapolate and you're working with state governments and states often administer programs differently, because a lot of these programs with large errors are state administered social benefit programs, whether they be the food stamps or snap or medicaid, programs like that, and so it's a lot of work and partnership that goes into just the first question of measuring what your error is. when the president took office in 2009, and we first presented, i had the first opportunity to present to the administration, the new leadership, the improper payment results for 2009, their reaction was both inspiring and humbling at the same time. it was an unacceptable amount, and it needed quick and

effective and comprehensive action. and so the president almost immediately signed an executive order, which we tried to take all of our years of worning on this issue and -- working on this issue and try to put in, again, what are the things that are going to have the most positive return on investment if we try that, and that executive order required us to do a number of things, agencies now have senior accountable officials for emproper payments at every agency. we now have a public dashboard, payment accuracy.gov, which lists all of our improper payments. each agency's performance target how we're doing against those performance targets, so accountability through transparency. the executive order has us doing things and the executive order predated the recovery board's forensic tool. it required that very type of forensic analysis and it required us to kind of push deeper into the questions of where are our errors occurring

and how are we using data to pull out that error, and analyze it and see it in new and different ways. so executive order required us to look at incentives for both grantees and contractors, to do a better john in terms of helping the government manage the error that's existing today. so the executive order gets issued, very exciting to have the president issue an executive order. just a few months late, the president issued another directive, this at the time on payment recapture and the focus here was are we getting the improper payments back, are we recovering, so the executive order was really focused on prevention. the next presidential directive, which occurred in march of 2010, was about recapture. in particular, if we were recapturing improper payments to vendors.

what we were able to demonstrate in looking at best practices, when you hire an auditor, a specialized auditor and pay them based on the amount of recoveries they get, pay them on the contingency basis, then the right incentives are in place, because they're going to get paid based on what they find. and we started to see throughout government that this works pete tiverton effective -- works pretty effectively, so this march directive required federal agencies to make sure they were leveraging this important tool and enhancing it, so we set a target that we would essentially double our recoveries by 2012. double the pace of our recoveries on improper payments. and so that was in march. and then what occurred in june was yet another presidential directive. three in eight months, just to give you an idea of how important this issue is. this presidential directive required the federal government

to create a global do not pay list. what is that? that is the recognition that there are various data bases out there that can let you know whether an individual is eligible or not. things like the excluded party list, has the entity been suspended or debarred. things like the incarcerated database from the -- bureau of federal prisons. the social security master death time, are these individuals deceased and therefore not eligible, because we do as pointed out in numerous gao and i.g. reports, continue to make payments to the deceased, to the incarcerated and to the suspended and debarred. other databases are also relevant, like delinquencies, those that are delinquent and debts owed to the federal government should not be paid or

debts offset and all these data bases exist in different spheres and federal agencies have had mixed results in terms of their ability to interface with the data bases, so what the do not pay directive did is it required us to bring these various data bases together in one platform and figure out a way to enable federal agencies to more seamlessly tap in to that data to help make sure at least for these more basic instances of error, the dead, the delinquent, the incarcerated, the suspended, that were preventing payments in those cases. and so that occurred in june. and then last week, i missed one thing, and then in july, the president signed new legislation. the improper payments elimination and recovery act. this was in a -- it wasn't a quiet signing, it was a signing done in the east room of the white house,, packed room with

bipartisan senators and congress people there, improper payments has arrived. apparently. and that has, again, it's both humiliating and energizing all at the same time. because we need to do something about this number, but the fact that we now have the highest level of engagement and attention, and what this new bill does, is it drives more accountability, has us drive even more scrutiny at lower thresholds, making sure we're pulling out errors, strengthening audits. it also expands this authority for federal agencies to hire auditors on a contingency basis to get recoveries, so just about all activities now have the authority to do that, so we have to ramp up all these activities. just last week with all the financial reports coming in, we had the opportunity to report the first year of results for fiscal year 2010. all of this activity that the administration generated around

improper payments started as a result of the 2009 result, which were troubling as i mentioned and there is some good news to report. i think the bottom line coming out of this year's financial reports and improper payments is a step in the right direction the governmentwide error rate which is the most critical metric, went down, which is really important signal that our work is being effective. it wept down in such a way, if it had not gone down, it wasn't a dramatic decrease, but a decrease nonetheless. if it would not have gone down and we would have stayed the same, we would have made $4 billion more in improper payments if we did not achieve that rate reduction. the president set a goal to reduce or avoid $50 billion in improper payments by 2012. so we're $4 billion in and in two years, we've got to make up the next $46 billion an i've got

to tell you, i'm confident we're going to do it, because i think things are coming together. it's taking us a little bit of time to use all these authorities and hall thighs accountability mechanisms that we launched in 2009. they started to bear fruit in 2010. i think in 2011 and 2012, we're really going to start to see the effect of the activities that we're taking them. more dramatic is our recoveries. we set a goal to double our recoveries. in 2010, we tripled the amount of recoveries made from 2009 to 2010. that $6,807,000,000 -- $687 million were recovered in improper payments in 2010 and that represents a 300% increase from where we were. so why did i want to drill down on improper payments? first of all, i think it's important to recognize that this is probably the most critical metric we have in financial management.

you know, we could get clean audit opinions at every agency and have very reliable balance sheets, but if we continue to have an improper payment problem and challenge, then that's going to erode the public's trust in government and continue to do so, so it is something that resonates outside the beltway. it's something that's easily explainable. it's something that people have experienced and know about, and it's fundamental. it's fundamental to our work, so it needs to continue to be a priority. it also fits the overall theme that i've been sharing with you today. it's about what information is most relevant to the public, it's about are we scrutinizing the right set of activities, are we driving behaviors in a way that's going to maximize the return on investment in both protecting taxpayer dollars from waste and earning public's

trust? and it's about getting information for decision making, because the only way to tackle the improper payments challenge is to understand the problem better than we've ever understood it before. we need to enable ourselves to see the trends, understand the weak spots, understand the root causes. i have witnessed through the recovery act, an one thing i didn't mention about the recovery act, the recovery act has had an unusually low amount of error associated with it. dramatically lower than what we see with other government programs. this is not something just me saying it. earl devaney, the government's watchdog, i testified before the senate and he talked about how well the fraud and error rate is in the recovery act. and we're trying to look at why that is. and understand it, to make sure that we're drawing the lessons across time. and i'll close with the thought on why that is. in particular, i was glad to see that the recovery act is one of

the themes of your event today. a couple of things i think. first, i already mentioned the fraud detection tools, which is really impressive and powerful. it really does change the way we look at data, it allows us to see connections. an example would be we found entities that were suspended and debarred that reincorporated under new name, and under old practices, we would not have caught that connection, but this they'll that the recovery board has deployed goes deeper than just the company's name. it goes in to who works for that company and what other company affiliations have they had in the past and then you can build these networks of connections of the individuals working for these companies to see, have any of them been involved in fraud and any other situation by pulling information from public source data bases an other data bases, and there you go. you start to figure out where

the error is occurring before you even need to make the payment. the other point, in addition to the tools and staying up on technology, is to focus on the accountability. and there was a recognition early on in the recovery act that there were risks associated with spending out a significant am of money in a shorter period of time. because there's always that tension, in particular, with the recovery act. we want to get the money out quickly, into state and local economies, to start creating jobs, to start rebuilding infrastructure. we don't want bureaucracies to hold that money back with it can be doing effective work for the citizenry. so we want to get that money out the door, but we want to do it wisely. in some cases, the money was going out at greater rates. the program might have seen a 50% or 100% or 300% increase in appropriations for the year. so you had a lot more money going through the same administrative approach and what did that do?

all of those urgencies created what i call a healthy stress on the prepayment environment for federal agencies. more people started looking. more people started scrutinizing, more deputy secretaries and secretaries started setting the message down that we're not going to tolerate error. we're not going to tolerate mistakes being made. we have to get this right. there are increased risks associated here and we need to raise our game and get it right. and that's what happened. and i've talk to many federal agencies and their senior leadership about this, and they really rethought how they did their payments, how they made their awards, how they tracked the money in ways that had not been done before. so major, major lesson learned here. something that we can certainly carry across government. so i think i'll sum it up by saying over the years, we've had

an ongoing debate in the cfo community. what is the role of the c. a common economy has been, is the cfo stuck in the back room when they should be in the boardroom and we've challenged ourselves as a community to figure out how to move the cfo from the back program to the boardroom and establish their role and their prominence within the communities. and i've reached the conclusion that we don't need to do that anymore, that that job is done, and i don't know if we made it happen or circumstances made it happen. but two things in particular. are realities that we face that are going to keep the cfo in the boardroom for the foreseeable feature. one is the public's demand for financial information, is at an all-time high and i don't see it ever going back to a low. the new standard in terms of the type of information that we have to produce on federal activities and the cfo has to champion that within the agencies and be success it would, an second, we

have to figure out -- successful and second, we have to figure out who to do more with less. cost cutting is going to be a primary theme for every federal agencies for the foreseeable future and if the cfo is not in the room, that's a major problem, because of the cfo has to be leading the government and the agency's efforts to drive costs down, to measure the costs, evaluate them, use data effectively to understand where the best impact of new activities will make place to drive those costs down. that's the challenge for the federal cfo in the years to come and i'm looking forward to working with them on it. so with that, i'll close my remarks. i don't know if i have time for questions, but thank you very much for your time. [applause] thank you. i do have time for questions. >> there's a mic in the center of the room.

>> hello. when the chairman's draft commission on the desk came out, immediately went on google and i was able to find out within a matter of a few 2nd and look at the power point an the narrative, and going through that, you know, they had various proposals on there, so my question to you relates to two of your main points, transparency and giving of the public tools and ultimately decision making. would it be feasible for some government entity in the executive branch probably, to create a web site where you could model those proposals, because when i looked at them, you know, there was reduced improper payments, reduce defense spending, freeze federal salaries for three years, eliminate $250,000 civilian contractor jobs, but what about

freeze federal value resilient -- -- freeze federal salaries for two years, but do you think something of that nature would be feasible? i imagine you would get a lot of hits on that. what is your idea or comment on that kind of tool? >> it's a very interesting question. it reminds me of something that high learned in terms of -- i've learned in terms of government transparency and there's two ways to do federal transparency, i think. and this is, i've got to give credit to my colleague at omb who is the government cio who taught me this dichotomy. he says that you can either do the restaurant approach, where you come in and the meals -- you have to choose from a set of meals, and so you choose from a set of reports that the government hands you, or there's the supermarket approach. where you go in and you build the meal you want by buying the ingredients and that's

interesting the raw data available. my answer to you is i think it needs to be a mixture. i think we need to be able to, through transparency efforts like data.gov and other efforts, to make hall that information available, allow the public think tanks, educational institutions, to do the type of modeling that you described, to inform the policy debate on whether a freeze for three years versus five years is going to have this impact on the deficit versus cutting defense spending or doing something else, would have this impact on the deficit. i don't know, i think it's going to take some time, if the federal government is going to sponsor those types and going back to my analogy and the menu and give you have this report or that report, it's going to take a lot of team for us to sort out how to fairly present that information, to do it in a way

that the public can rely on it and there might be questions of whether it's been politically influenced, and there's a lot of nuances and challenges to it, so i would start from the perspective of is the raw data there to enable a policy debate to occur and people to model that information. that's where i think we need to focus. next question. : >> it's a very good question. and i will certainly emphasize

the important role of the council place. and i appreciate the question because i should have mentioned it today in my remarks. and if we attack these issues, agency by agency, and not bring together the combined knowledge and expertise and shared perspectives, then we are really missing a huge opportunity. that's just within the cfo environment. so one of my jobs is to make sure we have a robust cfo council agenda, that i'm bringing people together around common challenges, that i am creating networks amongst cfos and deputy cfos, and that we're taking our agency hats off and putting our government wide hats on, as needed, to tackle problems more globally. but the question that you raise is a good one, which is we have to take a more of a multidimensional approach across councils and across government. if we try to attack things only

with our audit and our finance tool bag, we are going to miss -- we will swing and miss, if we don't have i.t. and procurement and program all working together. and one of the things i'll mentioned is that, one of the major elements of this administration's management agenda, which is called the accountable government initiative, one of the major elements is to try to focus on that sensitization and really the high priority goals for the federal agencies, which is a huge part of this initiative, i think helps drive that. because i think at all flows down from there. each federal agency onto the accountable government initiative was asked to develop a cities of high priority goals, a limited number of the things they're going to focus on going forward. and it doesn't have -- these things to achieve them, whether it's reducing the homelessness rate at hud needs to be attacked with multiple tools.

it's got to be a combined effo effort. and so i think you start fostering better integration among the councils and amongst the areas by setting the right goals, and the goals will be held accountable for. i think those high priority goals by focusing on the bottom line, allows things to come into place rather than just saying my high priority goal is to make sure that this particular activity runs more efficiently so i'm going to bring in just the cfo that it's got to be the cfo, their procurement executives, i.t., the program people, all of these to figure how to make a program work more effectively and efficiently. so i think it really starts with the goal. >> this will be the last question. >> i work in d.c. government. i like the ideas you mentioned about the auditors who are paid on a contingency basis. i just know for my own experience in our government with often not done well with

that approach because the contractor comes in and takes the easiest cases, the ones we might have been recovering on our own. so how did you deal with making sure those auditors that you either are really adding true value, soaking up the easy cases, getting paid and i really adding much? >> that's a great question. it has to do with the fact that nothing is easy, and you have to be strategic, and you have to be business oriented. if you just say, okay, here's this framework, i'm going to hire an auditor on a contingency basis, they will all go out and get the recoveries, and then you go on autopilot. and you just hope that basic infrastructure in the framework is going to work in and of itself, then you're likely to not be hitting the sweet spot in terms of your return on investment and your efficiency's. you need to be successful to understand a parent lifecycle, where is it that i can deploy

these auditors more effectively. i'm not going to deploy them in this part because that's either low-risk or we can handle that on our own. i'm going to deploy the auditor on this particular part of my payment lifecycle. i'm going to so much incentive structure in this particular way, to make sure that relationship, and it's a symbiotic relationship is most effective. so it becomes going back to my earlier issue, of making sure you have the right expertise in the room, that you are thinking about things multidimensional way, that you have your ceo and your business hat on to make sure that you are staying ahead of the curve in terms of managing your contract, and managing their activities. it's one of those things. it's not easy. and it has to be done very deliberately and very smartly if we're going to be successful. so with that, i will, the last question, i just want to say i looked around during my entire remarks, i didn't see one close

eye in the realm. so thank you very much for staying awake, and i appreciate your time. i enjoyed the discussion. [applause] >> thank you very much. thank you, danny. we have, for you, a very nice mug to take with you so we really appreciate it. when you came in the sport, we had the opportunity to donate for for tots. this is our second time partnering with the. i'm going to invite up to lance corporal gonzález and corporal. lance corporal gonzalez is just back from afghanistan. [applause] >> so we welcome him back. as they make their way to the podium today, -- [applause] >> will introduce them for twice for taught. >> good morning, ladies and gentlemen. my name is lance corporal lance comes off and i've been in the marine corps for two and half years. no, though i just came back from

homeland -- afghanistan. now i'm volunteering for toys for tots. for a little speech or. bitches to me under the bus just now. [laughter] >> the mission of the united states marine serves -- reserves is to collect new and wrapped oyster in october, november and december each year. and it should those toys as christmas gifts to needy children in the canary in which the campaign is conducted through. a shiny new toy at christmas is a message of hope for needy youngsters that will motivate them to grow into responsible, production, patriotic citizens. thank you for coming out and for helping us make this goal possible. [applause]

>> if you have not yet picked up your raffle ticket, please see melissa higgins or julie in the back for bringing in your toys. i'm very excited to take the last couple of minutes here and talk about some things that aabpa is doing to move forward. we are launching in 2011 a member online portal and opportunity to look at a revised website. it will provide a lot of features to you and to the community to begin that interaction. echoing what danny was saying are there, if we don't talk to each other, talk across government, find out what the best practices are and how they're going on, we get leverage the full knowledge base and move it for. aabpa is taking that next role and i'm pleased to unveil for the first time with a new website will look like. it will be like in 2011. you have the opportunity log in, connect with other members of this organization, have discussions, share information about what in the field is

happening, and navigate and connect to other analysts. we are extremely excited about this venture, a look more for coming in early 2011. as we wrap up to this point i've a few additional announcements. your packet contains several important items. if you are not presently a member of aabpa, you can use the enclosed form to join. please drop your membership off back at the membership desk in the back corner of the ballroom. we will be having a drawing for everyone who becomes a member today. this year we will be doing an online survey instead of usual paper survey. i don't who attended today will receive an e-mail link tomorrow to the survey. please be sure to fill it out. we will be giving away two tickets to the washington capitals/florida panthers game as part of our survey incentives. if you're interested in containing professional education credits there's a form in here to help you fill that out. there's also a map. as we later this morning, we will be headed out those doors to the left to the end of the hall where they send it a, as

well as the restrooms. please keep your laptops and other personal items with you at all times. unfortunately, as we know, these can work quickly. for all those who volunteer to be mentors or any student reporters, these join me at the front of the put. see you back here around 12 in the ballroom opens for lunch. please be sure to visit our sponsors. food is over to the left as well. thank you very much, joe. thank you, guys. [inaudible conversations] [inaudible conversations]

>> will have more later when the panel of current and former federal budget officers on changes in federal budget management over the last few decades, and possibly remedies for current budget balance is. live coverage will resume at 12:30 eastern right here on c-span2. ?÷???ñ?

>> the british government has agreed to compensate 16 men detained by u.s. forces at guantanamo bay. 12 of the men, british citizens and residents, had filed suit in british court charging the government did nothing to stop their detention and torture. details about the settlement are confidential. memos have requested an independent inquiry into the torture allegations. up next bridge justice secretary

kenneth clarke on the government's decision to settle the case. after his marks he answers questions from members. this event is just over 40 minutes. >> order. statement or justice secretary, mr. kenneth clark. >> with permission, mr. speaker, i would like to make a statement. on the sixth of july the prime minister told the house that the legacy issues, the government had inherited around the treatment of detainees held by other countries, needed to be addressed. our reputation as a country that believes in human rights, justice, fairness and the rule of law, otherwise risk being tarnished. it was also the risk of public confidence been eroded, people doubting the ability of our security and intelligence agencies to protect the questioning of the roles under which they operate. that government is absolutely clear that national security and protection of the rule of law go hand in hand. the prime minister has repeatedly made clear that this

coalition government is unswerving in its opposition to torture. of the ill-treatment of prisoners or detainees. we do not condone it, nor do we ask others to do it on our behalf. we recognize that our longer-term security interest require that we defend our values of the rule of the come and any allegations which threatened this must be treated seriously. in tackling the challenges posed by the serious allegations, the government overriding objective is to ensure that the security and intelligence agencies are able to focus on their final task of protecting the security and interests of the united kingdom. that the serious allegations which threatened their reputation and that of our country are examined properly. the security of this nation is the first concern of any government. the security of intelligence agencies play and in viable part of ensuring our security, and the governments determined they

are to do the final job we need them to do. in his statement the prime minister said that the single authoritative inquiry was required to investigate the serious allegations the government complicity in the mistreatment of detainees held by other countries. the right honorable sir peter gibson was appointed to head back into pending inquiry. the prime minister also made clear though that the inquiry could not begin while related police investigations were ongoing, and while so many of the guantanamo cybill ross -- lawsuits were brought against the government remain unresolved. to help make the way for the inquiry to begin, government committed to entering into a process of mediation with those held by the united states in detention in guantánamo bay, with brought civil actions against government. today, i can inform the house that the government has now

agreed a mediated settlement of the civil damages claims brought by detainees held at guantanamo bay. the details of that settlement had been made subject to illegally binding confidentiality agreement. they have been reported in confidence to the chairman of the intelligence and security committee of this house, and to the national audit office. and i think to the chairman of the public committee. no admissions of culpability have been made in settling these cases, and no have any other claimants withdrawn their allegations. this is a mediated settlement. confidentiality is a very common feature of mediation processes, as in this case. confidentiality was agreed by both parties, subject to necessary parliamentary accountability and legal requirements. i hope the house will understand that i am unable to comment

further on the details of the settlement, without breaching the confidentiality and the claimants. the alternative to any payments made, would be protracted and extremely expensive litigation. in an uncertain legal environment to which the government could not be certain that it would be able to defend departments and the security and intelligence agencies without compromising national security. the cost was estimated at approximate 30 million, 50 million pounds over three to five years of litigation. and then argue there could have been no gibson inquiry and tell that litigation had been result. the government will make a further statement to the house with the peace process are being completed, and the inquiry is in a position to beginning to work. the mediation settlement action represents a significant step forward in delivering the governments plan for a resolution of these issues in

interests of both justice and national security. the settlement has the support of the heads of the security service, secret intelligence service, and whiteboard departments involved. security service and s.i.s. are issuing a public statement to this today. in his statement, the prime minister also announced plans for a green paper on the use of intelligence in judicial proceedings. we are hoping to publish the green paper in the summer of 2011. it will examine mechanisms for the protection and disclosure of sensitive information, a full range of civil proceedings, in class, and inquiries. we will also consider complementary options to modernize and reform existing standing intelligence oversight mechanisms. the governments engaging with relevant parliamentary bodies, key stakeholders, and our international partners in developing these proposals

further. so, mr. speaker, today's announcement is a very important step forward and we are getting closer to being able to get the important gibson inquiry into all these allegations finally under way. >> sadik khan. >> thank you, mr. speaker. i think the justice secretary for advanced sites of his statement. i get word of his decision this morning to make this statement to the house rather than a written statement that was originally planned. i doubt the capital record, mr. speaker, that up until novembe november 2004, when i was at a law firm, we could not have detainees. mr. speaker, desi secretary of state agree with me that statement as significant as this should be made first to the house before they appear in the media? 20 therefore join me in raising concern that it is explaining

important announcement the house was leaked last night? mr. speaker, moving on to the substance of the right honorable gentleman's statement. this house is united in its complete rejection of torture and mistreatment. that goes to the practice, collusion, or complicity in torture. no government should have anything to do with it. on this side of the house we have and will remain completely opposed to guantanamo bay. which action -- removes all british subjects to my right a boyfriend, for south shields, in short, british government was the first to get all of her citizens out of guantanamo bay. can i ask this sector is say what steps to get together is taken to secure the release of the one resident in guantanamo,

shaker aamer? and i note his family is in her place. mr. speaker, they are required to devote to the highest standards while protecting our national security. they did an incredible job. they work is really recognize for obvious reasons, for secrecy. but they save lives. we should always remind ourselves of that. we should also place from in the record the human rights policy of our security services, and be proud of its start as john sawyer, the head of the secret intelligence service said last month. as we know or believe actually to torture taking place, we are required by u.k. and international law to avoid that action. it makes us strive to find different ways to insist, consistent with human rights to get the outcome we want. to sustain the intelligence agencies and to make sure it is vital that whenever allegations are made, that fully

investigated. mr. speaker, you noted the previous government noted, guidance given to our intelligence, intelligence officers and, of course, is finished by the current government earlier this year. it was and remains our view that all measures possible should be taken to set ourselves, the public and our allies, that if any wrongdoing is alleged and is fully investigated, that any evidence is gathered, and is dealt with to conclude. that's why the previous attorney general refer to two cases where concerns had been raised. and that is why we look forward to the inquiry into allegations of torture, not a civil cases have been settled. mr. speaker, in the right honorable gentleman confirm that police will be able to concluded their investigation before the judge the inquiry begins? obviously, the house has not

been privy to the settlements and the negotiations. the honorable gentleman will know that there are questions about settlement the government has come to, which means these cases will no longer be the result of individually in the courts. we understand the government try to consider this, and can the secretary of state confirm to the house that the settlement reached do not prejudge the inquiry, or pass judgment on the action of our security services in advance of a full investigation? could he tell the house whether the agreement will prevent him telling the house or the public the amount of money involved in the settlements? if so, will he agree with us there's a public interest in knowing the total sums involved in this settlement? and will he commit to scrutiny of the settlements from both the intelligence and security committee, and the cpa seek?

he said, mr. speaker, it would be up to the gibson inquiry, can he tell the house what investigation take place within the scope of the inquiry and the allegations raise any specific cases? will the inquiry pass judgment on each individual case? can he say, mr. speaker, whether the spoke of the inquiry has changed since the prime minister's statement to the house in july? finally, can he also tell house where there any other cases remain unsettled and what decision has been taken after their of fact to the? mr. speaker, it's important that the inquiry can be thorough and have full access as the court would've had. can he confirm that the gibson inquiry will have access to all the same information that has been and would be available to the courts? mr. speaker, everyone will appreciate to assure the british

security is not optimize, and, of course, that must be reflected in the way this inquiry operates. however, it is important as these allegations are comprehensively address, the public in the process and its outcome. and we say again, there is no place for the torture or mistreatment of detainees. >> well, mr. speaker, i do regret delete that item hearing about wikileaks edited a statement about yesterday which ability to last weekend. i was again and i was told they had details of this. it's the early days of the government to have them. but i will do my best to make sure there are no leaks of this kind in future. on shaker aamer we're continuing to press the americans to get israelis and their constant come in contact with them. as far as the other allocations are concerned, the determination of the government, if you try to draw a line under these and move

on. in the light of the policies we see he supported on all sides of the house. this country is against torture. this country is a very good high quality security and intelligence service which which to make quite clear must not be complicit in torture or ill-treatment of detainees. so the sooner we resolve these come and enable us to get on with the proper job of intelligence, the better. we were bogged down in litigation and compliance, which were going slowly, going, not nowhere, but could have taken years to resolve because all the difficulties about the admissibility of the evidence and hearing evidence in public. for that reason, we sought to rely. republic -- published, as he said which is the first that we have taken that we have now resolved these issues in a way which enables us to move on. we still have to wait for the police inquiry which he referred

to. now, no one, it's an entire matter of the plea. know mr. or anyone else would intervene, instructing the place of how to conduct these increase. and we can't get the gibson inquiry underway until police inquiries have been resolved. i don't know how long it will take. i hope it won't take too long but that is a matter for the police. we will have to wait for the resolution of those prosecutio prosecutions. if there are no prosecutions then we will really be clear to get on to the inquiry that lies beyond. the settlement which has no concession liability, no withdrawal of allegations, does not prejudge the gibson inquiry in any way. it will be entirely for his colleagues to decide of course on the inquiry once the terms of reference have finally been settled. we see at looking at the problem in general. of course, looking at history, deciding whether there were

problems or not, whether there is any lessons to learn, making inquiries about how we may ensure that the whole house wants to uphold, will be on doubt for future. we haven't altered the scope of increase since the prime minister made his statement, and we expect him to have access to a very wide range of information, indeed, all the information. the problem with the courts is they can have access to a lot of information because of all the security problems, or they can't share it with the complainants and the public. so far as i'm aware, these settlements could come up all the british residents and citizens, making complaints out of guantanamo bay. we are not aware of any other cases that could be raised on all fours with this. but the actual settlement reached, which is my but most importantly saves us time, stops

intelligence service, man-hours, sifting through evidence, and coping with litigation, have enabled to move on. but has to remain confidential. it's legally confidential. the settlement could be reopened if i decide to start breaking the confidentiality. so i'm afraid i'm not able to tell the precise sums of money involved, but i think the game that has been achieved to mediate these claims is very considerable and is in the national interest. >> there is much interest in the subject that we will have a rule motion filed by the first eight and committee of a very important constitutional bill. therefore, there is a premium upon brevity from backbench in front of my. >> i have been a member of the injustice committed for the past five years. if there is to be a total breakdown in the intelligence sharing relationship of the united states, we reach the right conclusions. however, having said that, we

agree that he now has to find a way for the occasion of this type of that copper mining national security, has he considered the scope of the green paper and civil cases to criminal cases? >> i'm grateful of my honorable friend. i have a sensible proposition. issues arise. i will certainly take his suggestion. it is cropping up and over and over again. we currently have an inquest which is, an inquest into highly important matter of the explosion of the seventh of july. to extend itself into an inquiry in the activities of the intelligence service informing themselves about possible risk to security across the country. and wholly foreseeably, it's run crashed into the problem of exactly what evidence is supposed to be induced about that in public. and i have no idea, where we move on in that particular case.

and the green paper will be difficult. it will be difficult to read, to draw conclusions, but we wish to do so as quick as possible. the green paper is intended to address these problems so we can be sure that justice is done without compromising national security. at the moment what happens is, there's a tendency to get claimants and secret service, everybody else get bogged down in litigation and judicial review. this has to be resolved. >> mr. jack straw. >> may i welcome, mr. speaker, the right honorable jones statement and the marks of a honorable friend from the front bench. is picking up on the remark the one about the chairman of the foreign affairs. may i ask my right honorable gentleman whether, to see it to its important work on the green paper on the use of intelligence and judicial proceedings?

>> mr. gibson is still, you have to give it up probably, if he takes office inquiry. but yes, if he wishes to give his views on this very difficult question, i'm sure they will be welcomed because the right honorable gentleman knows he is a very considerate expert on the whole subject. >> is this a reasonable assumption that the u.k. government would not agree to a mediated settlement if there is no evidence whatsoever of the uk's involvement? >> no. the settlement is not to be taken in any admission of liability, as it were. it was not in the interest of either party to get them stuck, get themselves stuck in civil litigation with a wholly unforeseeable outcome. as i've always said, it could have taken years. it could have cost tens of millions of pounds. its resolution was holding up the way of the prime minister and the government to get on

with sorting out these allegations and having a proper inquiry into them. it has cost us quite a bit of money to mediate them because the complainants were pressing their claims. but it's obviously a very difficult an unusual situation. but it was the right thing to do with the public interest to pay this money, and the idea that we just decide to carry on arguing for the next five, six years, it could have taken that long, and fighting with computer, a reflection of the saville inquiry running on a non-would not do anybody any good at all. we paid up the money so we could move on, and i think we have saved public money compared with continuing to contest the claims. >> david miliband. >> i think that will be natural concern on all sides of the house about government payments of compensation when culpability is not admitted. but i think there is important to welcome the honorable gentleman's statement that i also welcome his reputation word

for word if memory serves the right, the previous government's position in respect to torture and other cruel and inhuman treatment. can i just bring him back to the police inquiry, and in the place into, and then the gibson inquiry. like him, i hope for a speedy conclusion to the police inquiry's so the gibson inquiry can get on with its work and get to some facts. would it be possible for the mr. gibson and his team to start work now, even if their public working to going? it would be a pity if the police inquiries dragged on for many more months, and that delays bringing clarity to this area. >> well, i share the right honorable gentleman's statement of his size of this country as far as torture and ill-treatment is concerned that and i share his in patients to see the gibson inquiry get under way. but it seems the government, we cannot have the inquiry proceeding in parallel with either civil or criminal proceedings on the part of the same subject. for that reason, i made clear,

both have to be resolved before we can proceed. so, i think first, if say the prosecution arising out of this, you could have a criminal trial running in parallel to the inquiry, and i think that would not be possible. we wait to see what the police say and the moment it is resolved, peter will be able to begin his work. >> the particular facts of this case, can my right honorable friend confirm that any acts of torture for conspiracy to commit acts of torture by any citizen, any u.k. citizen, anywhere in the world will be a criminal offense? and that's a matter of public policy, any evidence obtained by torture will always be inadmissible in u.k. courts? >> yes, i can get a straightforward answer to both those yes, that is entirely the

case. my honorable friend has stated the position. >> given the need to preserve confidentiality in relation to the settlements, how long does he think that confidentiality will preserve? there are two serious leaks from his department this week's pick exactly the same thoughts have crossed my mind, but i am bound by the coverage of agreement and i must hope that everybody abides by the legal obligations. i share his uncertainty. >> mr. kris hopkins. >> can i ask the secretary say, am i to be appropriate that would -- recoup the costs on those individuals are responsible, in particular, the former labor prime minister tony blair who has made tens of millions of pounds since leaving this house? [shouting] >> well, the cause have been

occurred is between the detainees and the government, and we have settled it. i don't think, no, i don't think would be proper, i don't agree with my right honorable friend's suggestion and i don't think there's a slight his claim against the previous prime minister. >> george how it. >> with a state except that many people will find it is a very great difficult and difficult pill to swallow. but with the concern that if our intelligence relationship with the united states were to break down, which there's a real possibility, then that would in paralyzed many citizens of this country? >> i agree, trying to do that the government's relationship with the united states and close relationship between our intelligence services and those of the united states serves very, very vital part of contribution to our protection of the security of this country and the lives of individuals of this country. it mustn't be jeopardized.

>> mr. tuohey and louis. >> will he agree that it would be wrong to -- there is a coverage of agreement about that, that that confidentiality agreement or impose that on the half of one side rather than perhaps the other? >> yes. the other side wanted confidentiality, and i'm sure as well. and it's not at all unusual when you mediate an action of this kind of both sides agree they wish to have confidentiality. and my honorable friend is quite right. there's no point in trying to read into it, outside this i at that anybody has been involved in any kind of civil litigation of a list matter, does quite often some party that is protesting in sight of the argument. can be quite will advise to stop wasting time, stop wasting management time, whatever it is, and make some reasonable offer to get out of it.

in this case the consideration are much more important than the public interest, how much longer in the man-hours of sort in the intelligence services come and have made tens of millions we were prepared to spend on medication. >> mr. david winnick. >> can i say to the secretary, that i find, many people find it difficult to understand how compensation could be paid unless there is one, substantial substance to the allegations made by those who claim they were transferred illegally and tortured abroad was and is not the lesson here, mr. speaker, quite clear, a state like ours based on the rule of law must ensure that all observed the rule of all and not be complicit in any way with agents abroad to carry out torture? >> well, it's not unusual, for a settlement to be reached with

neither party comes to making any concessions on their arguments. both people agreeing it's a sensible way of compromising the dispute without going for the. having said that, the honorable gentleman statements or principle the second half of this question, i entirely agree with. this government is opposed to torture torture is a serious offense. we are opposed to the ill-treatment of detainees, prisoners in any circumstances. and we will not condone it. we will not be complicit with it, and i think the values, we have to defend even when we faced such dangers as we do from terrorism as well. >> mr. speaker, i welcome my right honorable friend statement today. and for the his comments about shaker aamer. does he not agree with me that if we are to seek a -- closure, it is important that shaker aamer is released? >> yes, i agree.

and i know that there are people who feel very strongly about the shaker aamer. we continue to be in contact with the united states that we are continuing to hope that he will be released and returned to this country, as my honorable friend has been ongoing for some time. but i agree with her. >> mr. mica get. >> secretary of state comfortable that the weekend in which he is announcing big cuts to the legal aid budget, millions of pounds have been paid out. and should we actually be making sure that if those who receive this money themselves breached the confident young agreement, or their lawyers do, but that money is then taken back from them? >> well, that might involve a rare summit which i wouldn't agree to do. but i say, once got to be careful about the confidentiality is in principle it could reopen the settlement. i mean, there are quite a lot of aspects of this which i quite

understand everybody is uncountable with. and some people feel quite strongly dislike. but we have to keep our eye on the ball, what is to in the national interest, what is clear in the national interest is the intelligence services to get on with her job. i like is to put the repetition of this country beyond doubt, and to learn any lessons that have to be learned, we don't know yet, from sir peter gibson put forward. and in a legal a proposals, i mean, legal aid was to be available to anybody who wishes to challenge the state by way of judicial review. but other claims, you know, have to be exceptional public interest in golf. >> i say we didn't know to speak out against guantanamo bay. everything it stands for. it allowed the nation and the world to eight geneva convention. cut as i the right of a french return to the issue of compensation for victims of terrorism overseas. he will be aware of those caught

up in seven-seven mr. speaker who are compensated by the citizens abroad, there's no support whatsoever whether it be in mumbai on whether it be held that this mr. speaker, is wrong. it needs to change. >> well, i know my honorable friend is continuing interest in the subject, and although we are as part of policy considerations in the light of public spending review having to have a look at the criminal injuries compensation system, and at the proposed terrorist injury compensation system, indie citing how we should judge the government responsibilities for compensating those who have been injured by a crime, either at home which we always have, or abroad, as i know my honorable friend has been campaigning for. >> mr. speaker, a year ago i wrote to the slick committee to the previous general asking

about the police increase. i see today is surrounded by law officers. while not seeking to influence the police, or instruct them, which would be totally improper, surely it's in everyone's interest that we notice there's a timetable, or what is holding up this inquiry? this has gone on for several years. >> well, i'm sure that the please follow these exchanges. they were noted in patients of the honorable member to move on and to get some resolution to increase. i think it again about 15 to 18 months. he knows, because he is involved in these discussions that actually quite improper for anybody to start approaching the police and putting pressure on them to put a timetable on it, or start pressing them one way or the other. >> certainly smith. >> thank you very much, mr. speaker. i very much welcome the gibson inquiry him and also the fact that this is necessary for the sake of our national security.

but will he not acknowledge the consent expressed by many, in particular regards to the non-british citizens that settlements have been paid using british taxpayers money for foreign nationals in a foreign country by a foreign government speak was yes. the cases involved, british nationals or british residents. there is one actually where that is slightly doubtful statement, but it had already got underway before we got to office. there are 12 already before the court, and for that would have come before the court if we hadn't proceeded. but we haven't started compensating people at large for what happened in guantanamo bay. we have only dealt with the british residents and british citizens. >> dennis skinner. >> have i got this right here? that it is paying out large sums of money, he won't tell us how

much, to people who have have given no guarantees about breaking confidentiality? i mean, can it be true that he can't say to the house at all that this matter is ended? isn't he buying time? it sounds like money for old rope. he will be giving them lottery millions. has he discovered the soft underbelly of this government already? >> i can into the ottawa gentleman's question. no, he's not right. the confidentiality is binding on both sides, and the people who brought the claims have bound themselves by confidentiality. and so have the government. and it is perfectly usual term of a mediated settlement of what was going to be a hugely expensive problem for the british taxpayer which if it hadn't been result. >> thank you, mr. speaker, pic and i look in the statement that the mediation is designed to

address the potential cost of litigation arising from the guantánamo cases, and it is estimated to be between 30 and 59 that the inquiry is why seth dikun will deal with cases outside of guantanamo or individuals have been detained in every country. what s. which will be made of the cost of potential litigation in those cases? >> well, it's easy. the gibson inquiry does have wide terms of reference that i agree. although they finally got to be settled. it's looking at the whole question of your treatment to detainees, generally. of course, cases not on whether are some of british involvement, where some allies or theater we have been engaged. my honorable friend has been on the telephone. he can't be here today. rendition should be included also in his interest in these allegations? i can't give an estimate of the cost. we are anxious that he should have a reasonable time frame.

so is peter. we don't want this to go on forever. he will take a general look at the petition. he will take such evidence as he sees fit. but beyond that, i can't go because that would be a matter for peter and the two colleagues he has on the panel. >> we know that the seventh was under 30 million because that's what he said was the minimum cost of the alternative. what i don't understand him and i'm not a lawyer, most british people aren't large is why the government took the view in making this settlement, that it wanted to keep some money involved secret from the british people could ask why was that the government's position in this case? >> it was negotiated, and the other side wadded confidentiality, and it was settled on the basis of confidentiality, subject to parliamentary accountability. now, i stand, i anticipated this question. the question was going to occur

by other people. we settled on the basis of coverage. we have settled it. we have notified the national office that i think we offered briefing to the chairman of the public committee. we have briefed the chairman of the intelligence select committee, but we would be wrong to break the legal coverage of which is part of the settlement if the result is to jeopardize the settlement, to put us back where we started. >> thank you, mr. speaker. mr. speaker, i'm sorry to strike a discordant ordinary decent people out there was think the world's.net. we have people making wild unsubstantiated bases on allegations of torture. getting more money than victims of terrorism here in london. if as he says the law that has forced him to do this, then they will want to hear assurances from him that he will accelerate proposals to change the law and

ensure that we never had any of this nonsense ever again. >> it's the rule of law, i'm afraid, mr. speaker. the honorable gentleman is prejudging the claims with which were being sought out before the court. the claims were compensation for serious problems, the detainees suffer. but which the are you it was about complicity of the british security services which was not admitted. and this is not admitted. and they were bringing illegal action. and it might be that the court might have come to the conclusion the honorable gentleman that these were baseless but we will never discover now because we have settled it he cuts it wasn't discovering. because of the bigger public interest was getting on to making sure we could put a line and all this, get back to having the reputation of our intelligence services restored and getting to the gibson

advisors to have to make sure that reputation remains impact in future. >> mr. robert butler. >> my right honorable friend can sure make that if these allegations were wild and unsubstantiated as has just been suggested, the government would not have been keen to settle these cases? >> i think in all forms of mitigation, these -- settlement was made without mission on one side and the withdrawal of allegations on the other, does this indicate which side was winning? it doesn't necessarily. the fact is these two sides were locked in litigation which was going nowhere fast, because of the very difficult legal problem, how, of what evidence can be admitted, whether that evidence should be admitted publicly. and so, if you want to read into it that once i was admitting it, or the other side was producing from this claims to get away with murder, the court was passionate there were 12 civil actions under way that i think

everybody understands, with exporters circumstances of this case, it was better to settle it and just let it go on to see who eventually won. but no one should read into this admissions of liability. no one should read into the is that once i packed up their claims. we just agreed to come to a very sensible mediated settlement. >> as we demonstrate that we have learned the lesson of the damage done to our reputation by the protracted nature of these investigations by guaranteeing that when fresh allegations are made of bad behavior such as the 21 cases quoted by "the guardian," that those present and future obligations will be investigated swiftly and publicly? >> that's why we need the green paper to try to establish some rules on the admissibility of intelligence evidence, or evidence that maybe irrelevant

to national security. as i said, i think an antidote earlier question, it is cropping up with ever more frequency. and we just need to resolve it. but it's not just was something we can gear, you know, we can just as a government or parliament declared we are going to do. we have to resulted in a way which is compatible with the rule of law, with the judgments of the british courts are likely to come to, and the opinions held by the judiciary in this country and the role of defending our fundamental rights and the rule of law and independence of the courts, have to look at our international obligations. it's not going to be easy with the green paper but that i think is the secret to getting back to resolving this matters at a decent pace. i entirely share the honorable gentleman's wish that we could do that so they could be sorted out pretty clarity, fairly, straightforwardly, whenever these matters arise. >> thank you you'll know that my former constituent was held for many years in guantanamo bay in horrible conditions without

charge and later freed. may i ask the secretary, if members of mi5 or mi6 are found of torture, what penalties will they face no? >> good question. well, i should make clear that the allegations of these cases were not, so far as i'm aware, that any member of the british security services had directly been involved in torture or ill-treatment. the argument is complicit, they are to be complicit. that is, others were doing this and they were somehow being complicit, which is not admitted by the security services. that was the issue. no one has been accused of torturing pig would be a very, very streets matter in deed if anybody in the british intelligence services were ever found to have taken part in torture or the deliberate ill-treatment of a detainee. >> order. >> every wednesday while parliament is in session,

british prime minister david cameron takes questions from the house of commons. you can watch live coverage tomorrow at 7 a.m. eastern right here on c-span2. >> academy award-winning actor jeff bridges talked about his work to reduce youth hunger. jane goodall on her love of nature and animals. chief justice john roberts and the role of the supreme court. and later boys discuss the impact of retired supreme court

justice john paul stevens. and former president bill clinton presents the liberty award medal to tony blair. thanksgiving day on c-span. >> and now a panel discussion looking at the constitutionality of frank dobbs financial services reform act, sinai president obama on july 21. the law establishes new financial regulations. notable speakers include peter wallison, a member of the

financial crisis inquiry commission, and c. boyden gray. hosted by the federalist society this last about an hour and a half. .. >> is the dodd-frank bill and financial regulation and it constitutionality. if you like the size of the code of federal regulations before, you should be very happy. last week at stanford we had a conference regarding the

constitutionality of the act, and a professor from harvard lifted everyone's spirits by informing us what awaits us by july 2011 when the regulations are implemented. the act itself has about 2300 pages. of the several professors at the conference, one former member of the obama administration actually claimed to have read it. [laughter] the act identifies 243 areas of rulemaking for 14-15 agent is -- agencies, some yet to be created, and he projected the regulations to add another 43,000 pages to the cfr. as far as the motivation of the dodd-frank act, there were some views that it serves a very important function in that it creates an excuse for the regulators who fail to exercise

power the first time around. the act also creates the opportunity to flesh out the 2300 pages through granting the administrators vast discretion which will be discussed today. we will also discuss the provisions of the act which allow the fdic to take over companies and the judicial review. to discuss these several issues, we have commencing on my right c. boyden gray of the district of columbia, the former ambassador to the european union and former special envoy for eurasian energy diplomacy. he served in the former, as former special envoy for european union affairs and as a white house counsel for the administration of president george h.w. bush in 1989-1993. mr. gray was a partner for many

years in the willmer, cutler and dale law firm in washington and now heads his own firm. following his graduation from university, he served in the u.s. marine corps, and after law school he clerked for earl warren, the chief justice from 1968-1969. to his left is is professor ronald levin who's the henry hitchok professor of washington university in st. louis. he was 2000-2001 chair of the section of administrative law of the american bar association. professor levin served from 2007-2010 as the ab adviser to the drafting commission to revise a model state administrative procedure act. he'ses also served from 2002-2005 as a member of the aba standing committee on amicus curiae briefs and as a reporter on judicial review for the aba.

he has written extensively in the field of administrative law. to my left only geographically -- [laughter] is peter j. wallison who holds the chair in financial policy studies and is co-directer of the aie's program on financial policy studies. before joining aei, he practiced banking corporate and financial law in washington, d.c. and new york. mr. wallison has held a number of government positions. from 1981-1985 he was general counsel of the u.s. treasury department, and during 1986 and '87 mr. wallison served as white house counsel to president ronald reagan. he's also the author of the book, "ronald reagan: the power of conviction and the success of

his president is si," published in december 2002 and available on amazon.com. to his left is professor art wilmarth, professor of law at the george washington university law school here in washington d.c. he joined the law school's faculty in 1986 after 11 years in private practice where he was the partner in the d.c. office of the jones/day law firm. he is the author of numerous law review articles and book chapters dealing with banking law and constitutional history, and he is co-author of a book on corporate law. in 2005 the american college of consumer financial services lawyers awarded him it prize for the best law review article published in the field of consumer financial services law during 2004. the format of today's presentation will be that we will go from right the left. the speakers will speak about

ten minutes on the subjects of their choice, and then we will open up the panel to ask questions of each other. maybe i'll ask a question or two, and then we'll turn over the questioning to members of the public. so without further ado, mr. boyden gray. >> we decided on this side to do this seated. this doesn't prejudge what you may do on your side, but we're going to do this seated. [laughter] ron and i have been friends for a long time. we're going to disagree, but i couldn't find i have a better person to disagree with than ron, so we're going to start out by agreeing on the seating. when i was in the europe, i worried that if we didn't watch out in this country, the aggressive rulemaking coming out of brussels would drown the rulemaking here because of

international, you know, the international nature of our global economy. and i used to warn the d.c. circuit judgements that, you know -- judges that, you know, in five years they might not have a job. i was reminded this summer by the former chief judge who said, boyden, i'm gonna -- i've got a job for the rest of my life, meaning, referring to the health care regulations that are going to be coming down the pike that judge bea referred to. presumably, he'll get his share of this. there's more than enough to go around for every circuit. the one word, i think, that characterizes this legislation has legal significance is vagueness. it is incredibly vague, uncertain. alan greenspan remarked in the paper which, by the way, is available to everybody, so i'm not going to go into great detail about it. and vagueness tends to connote

and when you think of the nondelegation doctrine which is the first sort of principle that comes to mind, but it is true that nondelegation hasn't been formally invoked since the scheckter case in the '30s. and what the court has done since then is use a doctrine of constitutional avoidance at times to, now a statute's in a way to avoid the issue. the opinion in american trucking, one of the most recent cases, points out that maybe delegation problems will rise and level of concern is broader, the scope of the economy that's covered. i'm not sure that's even here enough to overcome the reluctance on the part of the court to actually knock a statute out on this ground. however, i do think there are other grounds that are inescapable that could cause a court to and the supreme court to take a very careful look. we, we go over three titles that

all are related both by subject matter and by potential legal infirmity. and they don't all share exactly the same judicial review provisions. for example, section 202 of the resolution authority is probably the most, the most questionable and unique, but they all share more or less the same principles that i'm going to run over very, very quickly. one of the problems here is that whereas in a typical nondelegation case we have a very vague vein of authority, the courts are there and able to construe the statute in a way that might avoid it. and this is done frequently, as i've said. it was done, actually, in american trucking. but in this case the court's ability to issue interpretations of the law is dramatically curtailed. in some cases under the law, especially 202, courts are ousted of jurisdiction altogether for any issue, and others they're limited arbitrary

and capricious debut, but to me that says the usual arguments about statutory interpretation may be off limits. you may be limited to a state farm type of review, does the opinion have any internal logic, but you can't link it to what the statute might mean. in addition, i mean, for example, the arbitrary and capricious review runs through all of the provisions in the title ii resolution authority it goes beyond that and says the courts have to deal with this, or the district court does, in 24 hours, and it has to do so in secret if received seized entity doesn't submit voluntarily to it, and there are even criminal penalties for disclosing what might be happening behind closed doors. maybe that's a violation of the first amendment, i don't know.

the penalties run against the leakor, not the leakee. and i haven't studied that aspect of it, but that raises certain questions. the seizure standard says does the bank pose a risk of failure and then, secondly, does that pose a risk to the financial standing of the united states? the second standing seems to be the key, but that is for the courts under the second title. so the courts are maybe not completely stripped, but are severely compromised in their ability to construe statutes, these provisions narrowly. and then to add to that the congress is kind of cut out especially with the consumer bureau, the title x, because the funding comes from the fed, and the appropriations committees are purportedly prohibited from

. >> as though he or she were the agency in charge of the particular statute in the first instance. and there are 18 consumer statutes run by i don't know how many agencies. she has the authority to rewrite all of the rules pursuant to anything she wants to do, and the courts must give it deference. so in some instances there's just no oversight at all. for title ii takings, if that's what was claimed, there may be collateral review, but the damage to the financial system would have by then, i think, already been done. and then you add all this up with no clear dividing lines between the plan. s -- branches or the functions of the branches as they might operate with the consumer protection bureau or with the, or with the financial stability board, many with common members, common goals, you have what i

worry about which is a disappearance of the line between the government and the so-called governed. a line gets dropped out of the paper where the new york time t describes -- new york times describes a meeting of the government with, with wall street. the article says the most powerful executives in the banking industry did not go to the government. the government came to them. and where the government -- without any distinction between which branch -- the government came to them and the secret hideaway in the willow hotel. my thought about this is, you know, the founders might have known about the willow hotel -- well, i'm not sure it was built then -- but they might have known about some tavern in washington, d.c. at the time, and i don't think they would have approved of this kind of

gathering in the nest. and you worry about adam smith's warning that, or observation that a government made up almost exclusively of merchants is one of the worst form of governments of all. and the obliteration of all of these lines does pose the threat, it seems to me, that you have the kind of risk of agency capture, of rent seeking, of compromise that is to be avoided was the main reason for creating the separation of powers, dividing it up to begin with to keep the power down to the lowest possible -- the exercise of power down to the lowest possible level. i don't know what's going to happen, but lawyers are going to do very well with this, and so i'm proud to be a lawyer. [laughter] [applause] >> [inaudible] >> okay. well, thank you, and i appreciate the invitation to speak to the federalist society. i've spoken a couple of times at

the national lawyers' convention before, and i always find it a gratifying experience. it's always kind of intimidating because i come here as kind of the squishy, pragmatist, liberal-centrist type. and then i'm here here in a rool of whom with people who have better clarify than myself. it's a little like being a lion thrown into a room of daniels. i'm not here as a banking expert, but i do know a few things about the delegation doctrine which will be an important part of our discussion, and you have at your tables a short clipping which i i wrote as chair of the is ex-in 2001 -- section in 2001. immediately, the reins of the session over to boyden, so we have worked closely together for a long time with pleasure.

and in this column spoke about the american trucking case and offered a modest suggestion which was that the nondelegation doctrine be overruled entirely. or as i guess i would now put it, rendered nonjustice bl. and with that as the backdrop, i thought i would spend today giving a few reasons why a conservative might be sympathetic to that point of view. let's start with the text of the constitution. i take it that that's what conservatives like to do. and it provides that the legislative power is vested in the congress, but it doesn't have to be read as saying anything about delegation of legislative power. i refer here to an article written a couple years ago by eric poser in and adrian -- and their argument was the whole

concept of a nondelegation doctrine is just the mistaken notion that somebody tried smuggling into the constitution. it had a little play in 1935 and since then people have come to understand that it just doesn't belong there. their argument is that the exercise of giving power to an agency isn't a dell dpaition of legislative authority, it's a creation of legislative authority. excuse me, it's an exercise of legislative authority by creating executive authority. executive authority is going to be exercised by passing rules, deciding cases, and we don't think of that as something that is giving away the legislative power. it's the kind of thing that the legislature was supposed to do under article ii. the received wisdom of the nondelegation doctrine is that such an exercise of power could be invalid if it does not have in it an intelligible principle to guide the agencies and the

courts, but you don't get that from the text. and so maybe it was just a mistake, and the law has somehow been right for the last 70 years by not giving any force to the alleged limitation on congress' power. now, i mow you're thinking that that -- know you're thinking that really is dodging the issue of concentrating huge amounts of authority in administrative hands and really too clever a notion to get away from the, the real problem out there in the world. and, of course, i don't think that settles the question. i mean, we all know that constitutions should be understood and interpreted in light of modern realities and not just in terms of what people thought of the 18th century. i mean, all pencil people understand that. so let's think about it as a current reality. the insoup rabble problem, it seems to me, with a judicially-enforced

nondelegation doctrine is the difficulty and, i think, impossibility of drawing the line between what is permitted and what is not permitted. and the courts have repeatedly said e we can't do that. there's an article written not long ago by john manning at harvard -- also not usually considered a liberal -- in which he describes the potential for a robust nondelegation doctrine as an i know it when i see it kind of standard. if i can quote him just briefly, he writes: when one asks a reviewing court to examine whether a legislature has adopted a sufficiently-precise policy, the inquiry has anker reduce my arbitrary feel to it because there's no measure of how much precision such an actor should be expected to supply. in other words, courts can make a rough judgment about how precise a statute is. they have no basis for determining how precise it should be. in order to satisfy the fairly

abstract policy through a proscribed method. so, you know, one might think that conservatives would be nervous about an open-ended, subjective judicial test. a lot of times they seem not to think that the right way to set up constitutional law, to just leave an i know it when i see it test to decide when there's too much power. i think the courts as they have tried to face questions of nondelegation and come to grips with whether they are capable of drawing these lines have had to look at the difficulty of deciding how much is too much. because you'd have to take into account the difficulty of the subject matter as well as the difficulty of reaching an agreement about it. and i think financial regulation is probably a good example of that. again, with the valve yacht that i'm not a banking law expert. i think certain things jump out

at you. this is a complicated matter. the aspects of the financial crisis the congress undertook to deal with are many and varied. they did write 2300 pages of legislation about it. i've heard very few people argue that the law is too brief because they didn't go into enough detail, but i chose suppose they could have written 6400 pages instead. but, you know, i think the courts recognize the reality. they have finite time to deal with the issue. doing nothing seemed not a credible option in the context of the greatest financial crisis since the great depression. but in the time they've got perhaps the most that you could expect would be agreement on some things. only 2300 pages worth of things and then leaving some language vague or open-ended and entrusting an agency with the job of coming -- of taking the first stab at filling in some of

those gaps with the understanding that then there will be opportunities for oversight and reaction to it. that, i think, courts have understood that that's probably what they have to do. and, of course, we're talking here only in the context of congress trying as hard as it can to get it right and all working together to produce a harmonious whole. the congress we have, however, has other difficulties, especially these days. if you have a congress in which there is a 60-vote pily buster -- filibuster rule in effect at the senate level, if you -- here i'm taking off my scholarly gravitas and drifting toward my pundit mode. if you have a substantial caucus that is trying not to work very hard for the law and making some moves to undercut it or prevent it and only three cross party

lines, it gets even more difficult to write a coherent law. because if you have to scrounge for every vote, you have to keel to the idiosyncrasies of everyone who's going to form your coalition because any one of them can bail out. and that is a formula for aggravating whatever problems you would otherwise have of trying to get a clear and coherent, never mind moderate, piece of legislation adopted. and so but you could leave that last part out as a gratuitous slur, it's all right. you can get back to the congress that's all working harmoniously and amiably to produce the law, and you'd still have the problems of things they cannot resolve. i think the nondelegation doctrine is administered in that light. you know, serious point i want to make with, you know, is that i think you have to think about

schemes of this kind as an unfolding story, something that unfolds by degrees. and the right way to think about the enabling legislation is as the first stab and then issues will arise. at that point members of congress, the courts, the public will react against whatever solution the agency makes, and there will be questions of how to limit the power that has been conferred. and i think, really, at that stage of the game boyden and i and everyone in between might come to some fair amount of agreement on what the problems are, what kinds of things look abuseive, might have turned out not to work very well and could reach constructive solutions. but i think when you look at the outset, there's all the difference in the world between looking at it in a positive light in terms of making it the

best way it can be, analyzing it sensibly to solve the problems and be fair to all persons. basically, the, you know, the approach to interpretation that justice breyer recommends in his new book and for those few of you who have not gone out and read it already, i'm sure you're going to want to do that. on the other hand, as negatively as possible with a view towards ditching it, and i do stand with the former approach. to that extent, we might be in disagreement. thank you. [applause] >> thank you very much. for perhaps another view, peter? [laughter] >> well, actually i would love to have taken on ron's question whether doing nothing was a credible option. [laughter] >> i think we will get to that. >> and, in fact, i think it was the most credible option, at least when congress acts they ought to know what they're doing and why they are doing it, and i don't think they'd had any studies to determine actually

what caused the financial crisis. the one study that they did require, the one that i happened to be engaged in, the financial crisis inquiry commission, is is not to report until the middle of december. it might actually have to extend its report into january pause it's not ready -- because it's not ready yet. but congress acted before finding out what actually caused the financial crisis. so i think it's a legitimate question whether congress did anything responsible here at all, quite apart from the fact they were able to write 2300 pages. but i will, now, turn to the subject of what we're supposed to be talking about today, and that is the constitutional implications. now, i am, i guess, old-fashioned in the sense that i had always thought that the separation of powers was in the constitution as the founders' way of protecting individuals against the power of the government. and the idea there, i thought

and maybe constitutional lawyers of which i am not one could tell me something else, but i thought the idea was that if legislative body and the executive were separated and, in fact, in some kind of adversity, it would be a little bit better in protecting the individual people and others within the united states against the power of the government. but if they are united as was true in parliamentary systems at the time that our constitution was developed, the protection of the, of the people, of the individuals was less. we tend now to focus, of course, on the bill of rights which added to those, but we have to realize that at least my limited understanding is that the founders originally adopted this

structure as what they thought was going to be adequate for protecting individuals. so what i thought i would do is, is having read what boyden and john had done, the excellent piece of work they have done, i would try to go through one element of this legislation which i think does raise very seriously this question of whether congress can delegate unlimited amounts of power to the executive branch and still stick within the constitutional limits or the structure of our constitution or however anyone would like to formulate it. so i'll focus only on the section that deals with systemic firms, systemically-important companies. and i'll talk to you a little bit about what is authorized there, and at the end you, we'll

give you the facts and you decide who says that. but that's the idea. i'll lay these things out, and you can decide whether you think that this is, fits in with the constitutional scheme. we start with something called the financial stability oversight council which is made up largely of all of the regulators and headed by, chaired by the secretary of the treasury. important here, secretary of the treasury, because, of course, secretary of treasury is appointed by the president, reports directly to the president, one of the top officers of the executive branch. the term successicly d systemically important which is what we are dealing with here, that is financial firms that are systemically important is defined in this way, and that is firms that could pose a threat to the financial stability of, presumably of the united states,

either due to the potential of material financial distress or due to the company's ongoing activities. that's it. now, there really isn't much content in those terms. it provides a huge amount of discretion to that body to determine whether a company is, in fact, a systemically important company. i might add as a kind of footnote that the statute is specific, in one respect, no doubt about the delegation here. and that is that they say any bank holding company of $50 billion or more is, in fact, systemically important. no one questions that that is an appropriate, a proper delegation. so they could do it in at least one way. but then they go on to say, oh, no, no, in addition any kind of financial firm -- we leave out the question of what is a

financial firm because i think that actually can have some content -- but any kind of financial firm that might pose a danger to stability because of when it gets into financial distress or because of it ongoing activities can be considered systemic. and what happens after that? and what happens after that is those firms are turned over to regulation by the federal reserve. and the federal reserve under those circumstances is required to establish enhanced standards or for capital, leverage, liquidity, overall risk management requirements and several other standards. and in the end the fed is told they may establish additional prudential standards that they might deem appropriate. ..

>> insurers, insurance holding

countries, securities firms, securities holding companies, finance can discover hedge funds, private equity, and any other kind of firm that might be considered financial and systemically important. now, think about this. deserved are all competing. -- these firms are all competing. they are competing with one another daily. we can leave out the policy question of whether that's a good idea for anyone to be regulating them, and whether any particular institution could have the expertise to be able to sort out all the competitive questions that arise when all these different business models are competing. but just talking about a constitutional questions and question a delegation. what this means any fact is that the crack is managing the entire financial system of the united

states. even though all these firms are competing, they can direct one firm or one industry to hold more capital than the market would otherwise require them to hold. they can require it to have less leverage than the market would ordinarily require a tool. every time they do something like that, that disadvantage is that industry, vis-à-vis all the other industries that all competing with that industry. so the fed has the ability here to completely control who succeeds and who fails in the competition for the business of the consumer. so, i think what this does, at least to me, is raise the question whether there is any content at all in the nondelegation authority. because i will raise this question and i'll ask ron to answer it. not necessarily now, but at some

point. and that is, if congress simply said, instead of i guess almost 30 pages that they have -- actually, it's several hundred pages that they have in the bill defining the activities of the fed in connection with these systems are important countries -- companies, if congress had simply said one sense, the federal reserve shall manage competition in the financial service industry, period. full stop. would that be an acceptable delegation of authority? and if we've come to that, i think we are in serious trouble. thank you. [applause] >> arthur, your turn. >> thank you, and it's a pleasure to be with you. i appreciate the invitation.

i'm going to take a little bit of liberty and say i think the constitutional issues surrounding the nondelegation doctrine have been very well get up it and i'd like to address a somewhat different question, related to some of the things that peter has said. the question is for me, does the dodd-frank act actually accomplish the purposes that were set out before congress, and that were announced as the reason why the act was passed? i will be two quotations. federal reserve board chairman and bernanke said, if the crisis is that the too big to fail problem must be solved, president obama's said upon signing the law because of this law the american people will never again be asked to foot the bill for wall street's mistake. there will be no more taxpayer-funded bailouts, period. while i wish that were true, but i think it is certainly not true. and the question is, you know, why wasn't it too big to fail problem solved?

and i think that they were too big to fail on two sides of the letter. my colleague, peter, has written many laces very eloquently that fannie and freddie were enormous too big to fail problem. they weren't even addressed in this statute. the other problem of the two biggest no problem with the enormous complex financial institutions on wall street and elsewhere, the giant financial institutions. i will call him large complex financial institutions our system of important financial institutions. in each case what you had was a tremendous exploitation of the implicit and explicit. and gross under capitalization at the risk of being taken. on both sides. fannie, freddie, on their side. so the question is does this solve those basic problems got any answer is no, it doesn't. yes they're supposed to be enhanced capital standards standards, project rely upon the

same regulators who didn't require an of capital in the first place. and one thing that i found very shocking, peter was very much involved in the federal deposit insurance corporation improvement act of 1991 which established him the cold prompt corrective action, which meant when you become undercapitalized, the regulators are supposed to crunch down on you. essentially it was extended to the top 19 firms. chairman bernanke said when i going to apply to prop corrective action to the top 19 firms. that's interesting that edition has no such discretion but they exercise it anyway. so how can we be sure that capital, will require next time, it was at this time? what about the so-called no bailout, the whole purpose is to set up this thing called an order. which is supposed to be no more bailouts which will put every one into the hospital type

situation and break them up. well, the problem is i'm not against the concept of an ordered resolution authority i think that makes it. but army loopholes left open. for example, they still allow the fed to make broad-based liquidity programs available under its section 13-3 three. one projects acquitted program was a primary dealer credit facility which was addressed at the top 20 financial institutions. there's no reason to stop them from using primary dealer credit facility again. suppose it's always posting made built a solid institutions. but as you remember when the t.a.r.p. program was announced and capital infusions were made in the nine largest banks, we were told these are all solvent institution. they don't need a capital. we are getting it to them anyway. within a month they had to infuse significant amounts of more capital into citigroup and bank of america which could be not so solvent. that's not much of a restriction

either. they did not repeal the systemic risk exception under the federal house act. the systemic risk is used to. t. $300 million of assets against loss for citigroup. it wrapped around the entire holding company, protected the shareholders as well as the creditors. that a story still exists. the fdic still is $100 million of borrowing authority from the treasury for insurance purposes, which is not limited to the deposit insurance fund. that can be used. the fdic can prefer certain classes of creditors over others and they put out a notice a proposal making basically saying we are certainly going to impose haircuts on long-term bondholders. complete silence as to short-term creditors of one year or less. which i think we'll have a reverse effect of encouraging banks to load up with short-term money, more repose, more commercial paper, because long-term bondholders, or at

least faced some threat of haircuts. one of the worst things is the so-called orderly liquidation fund which is supposed to pay for resolving these failures is not funded. there's not a dime, no money in that. instead the fdic has the bar from the treasury to pay for the resolution. that supposedly you can go back against the asset, maybe the creditors. you could make exposed assessment, but there will be brick phones from taxpayers. that makes no sense. we wouldn't operate, i don't think, with a deposit insurance fund with no money in the bank. we didn't have enough this time. but we at least had 50 billion. but we have no money in the bank, and to not require to pay assessments is great that it's like saying i've got a nice auto insurance policy. i won't be any premiums until i crashed the car. not many insurance companies would operate on that kind of a basis. what that means is those that failed will have paid nothing

into the fund will accumulate profits and distributing them before they crashed. and once were more prudent and less risk-taking won't be forced to do anything afterwards. and, of course, the dodd-frank act can't stop congress from passing this under the t.a.r.p. the next time we have a systemic crisis, and if the raiders go to congress and say no, no, no. you don't understand. we can't adjust these typically have to prop them up. and the trouble is the more loopholes there are and the less you have any funds to deal with this situation, the more likely it is that congress can be panic and railroaded into another t.a.r.p. type bailout. so the question how can we stop this? obviously i totally agree with peter. the first thing we better do in the new congress is to address fannie and freddie. but it seems to me in terms of the other, the wall street and big banks, we've got to stop subsidies that continue to flow

to these institutions. how do you stop them? one thing would be, certainly frees capital, but that hasn't worked very well in the past. secondly, it seems to me that you start creating a meaningful prefunded orderly liquidation fund, paid for by these institutions. so they think they might actually put in the hospital because there's money to do it. third and most importantly is to great some kind of meaningful separation between the banks and their non-bank affiliates. so that they cannot use deposit money which is the lowest cost money but it don't know how low-cost it is, look at your bank statements. .05%, points or 1%. that's what you're getting on your deposits. that's really low-cost funding, isn't it? you can get cheaper funding than that. that funding is being used to fund the most speculative activities under existing rules. and, of course, until you repeal a system you can have more citigroup asset guarantees. we can do a lot more it seems to

me to stop the flow of subsidies across. if we don't, the same encouragement toward larger and larger and more complex and your institutions will continue. and so i wish i could tell you there won't be any more bailouts, period. i think we are far from that point. thank you very much. [applause] >> well, i think we start with a question that are then put by peter to run. what is the federal reserve limits of congress that enacted, the federal reserve show managed all financial firms. does not cause a non-delegation problem? >> to broad? >> probably passionate probably broader than it should be. boyd and i have a colleague in the energy area.

and he tells the story of speaking with for commissioner who once said to them, my problem is really with be simpler if congress would revise our statute to say section one, it shall be illegal. section two, the commission shall defined it. [laughter] the. >> yours is a little narrower. i guess on a policy level i prefer something closer to what we have because it gives people a structure. it gives people something to frame their arguments around so that if there is debate and ultimately review, you have criteria to point to. and my sense is that courts don't do that terrible of a job with other highly imprecise and vague mandates, such as the public convenience and necessity. and so i would probably prefer to have something more specific,

but i think might argue it is, if congress were to adopt about, i don't think i would say it's unconstitutional. rather, i would say one, they would never do it. into, if they did they would decided they didn't like it and they would change it thereafter because something would happen that they wouldn't like. so i think just the i could maintain some degree of consistency in my rhetorical position i would say yes, that's constitutional. but i'm not that worried about it. >> go ahead. >> well, again, i'm not anything like a constitutional lawyer, but i just had a question about whether there is than any separation between the executive branch and congress. >> yeah, because congress adopted it, and it made the decision to give such power to the executive branch. now, i don't want to go into it

much, but there is a distinct separation of power laws between where a branch grants power for itself, and what it gives it away. and wet grants power for itself is rather strict because that's highly suspect. but when they have the decisions that they're going to trust that power to another branch, where they can take it back, usually that survived constitutional review, more successfully. but not always. those of you who know the line-item veto case would recognize that there's a counterexample to that. but by and large, because we have separation from the very fact that congress decided to give its money, this power to the executive, can oversee, can resend if they don't like it, that immediate rates the separation of powers. >> can ask is one for the question before you go? and that is, simply if congress

said the executive branch shall exercise all legislative power that the congress was given by the constitution, would that be okay? >> no. [laughter] >> well, that's a very reasoned analysis. [laughter] >> boyden? >> the question that peter pose about competition, the light which you use is strangely similar to the language that was an issue in the national recovery act. it worked then but it didn't seem to bother anybody since. as ron has pointed out. the point i was try to make is, it to do with ron's fallback, plan b. yeah, i wish it would be more precise but we got these backups, the courts, the congress that can check any over reach. but the point i was tried to

make is congress already thought about that. when they took all the power away from the courts. the courts have virtually no ability to check anything here because they don't have the jurisdiction to do. congress doesn't need them because the money comes from the fed, not from congress and congress is precluded from that. and, of course, don't have any real folks to get into the. so there is no check. that's were i see the problem. it might not be called a non-delegation if and when something like, this might be done it. it would probably be article iii, that's the most prominent line of cases where it's a violation of article iii. so this would not be a violation of article one into. it would be a violation of article iii. but somewhere i think they're going to react to the over reach your and the lack total, total almost total lack of democratic oversight. >> before we go on, i want to

let everybody know that because senator-elect mike lee will be speaking at 2:00, we're going to break up at 10 minutes to to to give them a chance to get over there. but to follow up on something you said earlier, boyden, would you flush out the actual step-by-step process which judicial review has in the district court when the fs oc votes by the two-thirds majority of ago spent three step process and decides to put in nonfinancial, non-bank financial firm into receivership? and what's her protection does of that firm have from, i know it's impossible to conceive, but maybe arbitrary action by the administration? [laughter] >> well, the standard for title i for being turned over to the

fed, to the mercies of the fed, is arbitrary, no constitutional review. and again, ron and i can get into a discussion about this. i teach only partly. i teach part-time in he teaches full-time. but the cases that come to the d.c. circuit primary, some in ninth circuit and some other circuits, have to do with chevron. how do you interpret the statute of chiffon. is a clear, is it not clear. blah, blah, blah. global. but that is statutory interpretation. then there's also arbitrary review which, for lack of a better way of describing its state farm about airbag case where you look to see the internal logic of courts reason. but in this case you can't tie that reasoning to the statute. in most cases have to do with,

all right, is it arbitrary in light of the statute, which in light of the statute is irrelevant. for the seizure in title ii of the resolution authority, which hasn't been discussed really here, although i think that is most egregious, you know, unilateral arbitrary potential for action. the trigger is whether, the key trigger is whether a failing firm is, peter, a danger, poses a risk to the financial stability of the united states. that standard which is supposed to govern whether or not the entity can be seized is taken away from the courts to review. they can't look at it. precluded by the statute. bizarre, but there it is. and so i think that is a violation of our decree. >> how about the determination of whether the firm is actually close to default?

>> that could barely be reviewed. you have under title ii the district court has to resolve the resolution issue within 24 hours. can you imagine getting a district court judge up to speed in 24 hours? then the legislation provides that the district court, or there cannot be a stay of this seizure pending judicial review. well, boy, that's great. and then if it's not consensual seizure, then it's secret. it's a star chamber proceeding. and if someone leaks was goes that what goes on behind closed doors, they are subject to imprisonment. this is the united states of america. >> can i respond? i am pretty much on board with much of this. when i read the provision that

says you have to have the decision of the district court within 24 hours, i thought that is completely nutty. and if i take it at face i you, the argument, and i see the statutory language that gives rise to the argument that the court can only decide if it's arbitrary and capricious, but not whether it is unconstitutional, that is also completely nutty and unacceptable and un-ameriun-american. however, let me try to stick up passionate speak up for our distinguished branches of government. because on further consideration, i think there are probably some arguments that one can consider to offset the complete lunacy of what we have just heard about. on the 24 hour thing, that did seem really nuts. but then i read further in this section, and look at the way in which the matter is that appealed to the court of appeals.

and it says the court of appeal shall expedite the appeal, but that's all it says that it doesn't at a time limit on there. i don't know that it's very hard, you can get something of this from the legislative, and i certainly wasn't following that in the inner details. but what is contemplated here is the district court decision is only a nominal step, and the real action is expected to be in the court of appeals. and so the 24 hours stop in the district court is probably just there for some civil procedure reason. if they had just said you appealed to the court of appeals, then people would say okay, that's all right. per the statute, it is whether the secretaries determination was arbitrary, capricious. it's not reading the district court itself. so it may be the case, and i'm speculating here, that the concept here is that for some reason they want to district court to be the first point of

call, then he goes to the court of appeals and the supreme court that there are many administrative decisions that appealed correctly to the court of appeals. so we have this stop by the district court for a way station. but if you take that view, then it doesn't seem quite as nutty as it would otherwise be, just a passing step and in the real action begins. with regard to the standard, yeah, it's totally counterintuitive to say that you would review arbitrary capricious, but not constitutional. there are many statutes that are read aggressively or creatively to allow review of some issues. it's not exactly the opposite eric that, of course, will review the constitutionality of course we will see if it is violate the statute. but as with that issue that may be in the hands of the administrator. so i would suppose, i will

predict that courts will not give it the interpretation that boyden is giving it. i will predict that they would say, look, you can't decide whether something is arbitrary capricious as a reason interpretation, a reasonable interpretation of the statute without some concept of what you think the statute means. and so, presumably congress did not intend to bar us from considering what statutory issue here. one of the classic foremost of judicial review under the arbitrary capricious lot is have congress consider the relevant factors. welcome relevant factors would be in the statute that you can easily work arbitrary capricious in to encompass statutory factors. and i believe they would. it may not be the language, but i think that would be a pattern of the case law and in the american tradition, i think that's what they should do. and as for constitutional

issues, the course of a very clear that only if congress has the clearest language that they want preclusion will they not hear constitutional issues. and if congress does say in the clearest language that you can't review, they will do it anyway. and so, look at the guantánamo cases for example. i really agree with boyden that the vision that he puts forward is a fierce one. i would be more optimistic that we won't actually find ourselves there. >> if i could just make one -- the providers of the statute knew how to put in accordance with law and the statute unconstitutional they knew all those things. but they also knew what arbitrary -- anyway, the courts to say that must conclude statutory interpretation and the basics of violation of article iii here, and that's what we're going to throw out and rewrite. which is fine with me.

i also point out, the appellate courts cannot review the question of whether the treasury's determination, the fault would cause serious effect on financial stability or that stand which is the linchpin is specifically taken out of the review. it's going to be very hard to report and put that back in. >> i think it's a different issue entirely. whether it's appropriate for this sort of review. i would like your people who know more about banking, about that law than i do. think about the wisdom of that. >> i think where this came from was a gutsy leadership practice, that the idea, and this is been fought over in bank receivership that you can put a bank in receivership ask part a essentially within have to be a post, just a post-receivership hearing to handle the takings related issues. so this post deprivation review that if you look at those cases they basically said, well, that

kind of ex parte seizure under judicial control and that a post deprivation review and whether it was wrong for whether it should be compensation is based on the fact that the bank chose to be chartered by a government authority and the bank chose to get fdic insurance. so there is a trade off of benefits were fewer rights. the question is not your taking the bank receivership model and you're stretching it around the entire holding company. and the holding company -- >> hedge fund didn't have anything to do -- >> you're also stretching the people who don't even own banks. certainly the non-bank people have been chartered by the government and didn't swap less rights for deposit insurance. so it would interesting to think, see if that bank receivership model holds up when it's not a bank you're talking about. >> any other questions on the panel? chile open it to the public? by the way, one thing, ronald, we had a similar situation in

immigration law saying that we couldn't review any discretionary access of the attorney general as far as we move ability. and then the idea camera, and specifically exempted from our lack of review ability, the issues of statutory construction and constitutional rights. so that may be an amendment to suggest to this act, something like that. all right. now, there's a microphone over here, and we have opened up the session to people who would like to ask questions. so would you please go to the microphone, state your name and affiliation, and then your question. you can ask it of the panel as a whole, or to any member of the panel. ..