thank you, mr. chairman. >> senator mccaskill, i think as you know the purpose of this hearing is set forth which is to see what happened here, specifically and what was done to attempt to remedy it. the broader questions which you raise are appropriate in different form for that to be argued at a different time. these witnesses in all fairness to them are not called for that purpose. >> and i certainly understand and i don't need to be in any way critical of these witnesses because they are not prepared to handle these questions. but they are on my mind and i

needed to express them. >> which is your right. thank you very much. senator sessions. >> thank you, mr. chairman, and i would just like to say first that the air force did start off with this process in a very, very unfortunate way, people from both the boeing company and air force went to jail. senator mccain smelled a rat early on. this committee was the one committee that wasn't really consulted in how that original contract was awarded. and senator mccain, supported by senator levin and senator john warner, challenged the situation and what we decided to do was read the competition. it was the right decision to do. and it saved $7 billion. i remember declaring senator

mccain to be the $7 billion man to save taxpayers $7 billion as a result of having a competition in this process, and fair objective competition is what we need and what we have committed to as a committee, as a congress. now on the eve of this final decision, we have got people with political interests and local interest trying to destabilize the process. now, i am just not happy about that. i wish it had not happened. i understand how important it is, because it would mean a lot for my state just like it would mean a lot for other states if it would go another way. but we have to be sure that we are not doing anything that says that we expect the air force to do anything other than what we have directed them to do. and the question of subsidies in

all of those matters have been discussed for a decade as we've gone forward with this. we decided how we need to proceed with the competition, and we need to proceed in that way. i suppose it's appropriate to ask about whether or not it's possible information error infected the process. i'm not comfortable that it is. i asked general schwartz, the chief of staff of the air force earlier about it and he assured us all that there had been no unfair advantage gained through this process. mr. chairman, thank you for your leadership. i really believe that all in all i know you've got members on your side and others that want you to do this, that, and the other. all in all it's a thankless task you've got, and i think you have conducted in a fair way. i just would like to say, i

think producing these documents is a bad idea. just because they have been redacted to exclude source selection sensitive and proprietary information doesn't mean that releasing them might not cause disruption to competition which is taking place right now, and coming to its conclusion. so in my view, not disrupting any way politically the competition would reflect poorly on our committee. i understand the department of defense doesn't object to the committee's release of the documents. while that fact is relevant it still doesn't mean that in the exercise of its discretion that they should be released before the contract is awarded. so i do object to that. >> they've already been made a part of the record, senator sessions. >> mr. chairman, general masiello, i asked general

schwartz in this room last fall, last year about the documents, and he responded quote, that both offerors responded in a responsible manner and returned the discs that were mistakenly forwarded to them to the air force, and we've confirmed that by forensic evidence. so i would just like to ask you today whether or not you or -- you have any information that would indicate that either competitor has acted inappropriately when they received the data that should not have been sent to them. general? >> by reading the statements that came from both companies i was really quite impressed by the responses on both companies part when they realized they had data that they shouldn't have had. so my assessment is that all acted very properly and have certified to that effect.

>> mr. shirley you've examined forensically the disc and information. and have you been able to conclude that both offerors responded appropriately with senator, yes or. what we found on the computers was consistent with what they said that they did in each case. >> general masiello, what action did you take once you realized this error had occurred? >> sir, once i read the data come which aired was she pulled out the packaging of any of the ticket desk right back to the air force. and then they instituted independent review team. they went over to look and see what happened and what went on and air force dissipation process so that they could correct that immediately. they pulled in the defense service to examine the

computers, and got the ceos to certify to the details that came from each incident on the company's side. it was very thorough. >> and do you think that the process as a result of this disclosure was injured in any way? was fairness in the process damaged in any way? >> from what i read here and from the decision that the pco had validated by the head of the contracting activity, and fairness and sharing, the same snapshot with the companies, i would come to the conclusion that it would not affect the source selection process. >> either one of the companies, either one of the companies felt they had been unfairly

affected by, what action if any could they have taken? >> sir, a company can protest that any point, either pre-or post-award. they still have an opportunity to protest if they think anything has been in a properly managed. >> how long did the companies have, the offerors have to lodge a formal complaint as a result of this event? >> they could even, it could still be a part of a post-award protest, should they choose to do that. >> and have either one protested? >> not at this time. >> throughout this whole process there have been opportunities to protest, and neither company has? >> that's correct. >> and no formal complaint has been lodged? >> that's correct. as far as i'm aware. >> i suppose then that we have to conclude that both companies feel that is inadvertent disclosure did not affect them adversely, to the degree that they should ask for, would you agree with that?

>> at this point, sir, i would. >> november 30, a "new york times" article indicated that an air force forensics expert inspected both companies computers and found that one of the firms had mistakenly opened a computer file containing information about its rivals airplane while the other had not. the redacted a forensic report presented to the committee yesterday a search that both companies inspected their own and their competitors discs and opened them.

general, mr. shirley, to which statement is correct. a "new york times" report of the matter what the statement by the air force spokesman forensic report, defense cyber crime center? >> sir, both disks -- both companies put the other companies disk in the computer. one of the companies realized the disk -- what they saw on the disk right away was probably something they shouldn't look at. the second company opened one of the files on the disk, and that's the 10 line approximate and described in here spreadsheets snapshot that was then swapped between the companies. both companies did put the disks in their company from what i read. one opened a single file and that is the snapshot of the ifara data that is in question. >> mr. shirley, do you agree with that? >> yes, i do. >> you explain the fact that, you know, so we have heard the

fact that nothing significant was disclosed, not unfair, did not affect the competition. and that neither company have protested. mr. chairman, there's a lot more we could talk about but i would just say it's very important, i know it's important to every area in the country that has an interest in the outcome of the contract, but it's really important for us on this committee not to politicize this process. every one of these issues, the trade issues and all we have discussed for almost a decade. and we have made the decision to go forward, and we shouldn't on the eve of this competition take any action that would suggest we want the air force to do anything other than try to select the best aircraft at the best price for the men and women who defend our country. and thank both of you for the effort you've taken to get to the bottom of the error, and

establishing i think conclusively that there was no unfairness arising from it. thank you. >> thank you, senator sessions. senator graham. >> thank you. i have a completely different take than senator sessions on this. i think this is something we should be looking at, something we should be talking about, and quite frankly, this is senator mccaskill said, is not the finest moment for the air force. and i happen to be a member of it. bottom line, the sheet of information we're talking about, was it the price proposal that the companies were making? >> no, sir. the disc and information that was presented and viewed was not proprietary, and it included no pricing data. >> well, why do we even care about this? >> sir, it's an element of the decision process, as i understand it. it's information that was asked for. >> was it an important event in the whole process?

did the information that was disclosed and viewed by one company, not the other, doesn't matter at all? >> sir, it matters to me fairest perspective. whether it is important not, the important thing is -- >> do you know whether it is important what you said you didn't know. do you know? >> i don't know. >> so what is this whole hearing about? you can't tell us whether it was important or not. and at the end of the day, the whole process has a conclusion to it. we are about to spend $35 billion of taxpayer money here, and quite frankly i think it is important, and it's not your job to answer this question as to whether or not we want to award a contract to a company that received subsidies from a foreign government. we are setting precedent here. and i think the committee should

be looking at this, it's hard enough american companies to compete already. the chinese yuan is 40% undivided of are going to start awarding public contracts. by one side gets government eight and the other doesn't, from a foreign government, that's something we need to think about. so that's not the purpose of this hearing that we need to have some discussion about that. now, mr. shirley, the person at eads said they looked at it for 15 seconds, is that correct? >> yes, sir. >> how long was the computer on? >> roughly 20 minutes, sir. >> now, how can you say that a 15-second statement and a 20 minute gap in the computer is roughly consistent? >> well, - what i would do is i will ask -- >> we sit in recess and you'll see very clearly there's a long gap in time between 15 seconds and 20 minutes. >> what we are judging is based

on the statement presented by the employee. >> do you know -- the computer was on for 20 minutes. do know is on the screen for 20 minutes? >> yes or i believe we do. and you're right, sir, we can't assert what that employee did or didn't do. all we know is what the company -- >> the point is, i'm no forensic expert, but the difference is 15 seconds in 20 minutes is a lot. >> we know, we can tell -- >> thank you. i haven't -- >> how long a file is opened, sir. >> mr. chairman, if the witness could finish his answer. >> do you know what they looked at for 20 minutes? >> who are you asking? >> i'm asking anybody who can answer the question. >> can i finish? let me say this way, sir. our lab found no evidence in conflict with the offer, either offers written statement that the only files open were --

>> i know your findings, but i'm just asking a factual question. can you tell us. the computer was on for 20 minutes. the person said they look at it for 15 seconds. the point i'm trying to conclude here is, this whole idea that it doesn't matter, we can't really get too because y'all don't know. i'm not complaining about the fact that you don't know. that's not your problem. that's my problem spent if i can clarify here. the files -- our examiner concluded that the files were open only for the time suggested by either offer. >> i just wonder how you got to that conclusion. >> he can judge from examination of the media whether a file is open and when it was open and when it was closed. >> are using was only open 20 minute? >> yes, sir. >> can you say that this file is open for 15 seconds? >> i would take that one for the record and we'll send you the

precise times. >> thank you. >> senator bachus add something to this while the individual look at the data, that individual was moved off of the program team into an administrative holding tank and was not allowed to participate in the program until the pco released them to -- >> i will submit questions for the record why boeing couldn't use landing sites and transport could. this is not, you don't know anything about this, but there's a bunch of problems of how this contract has been changed. some people went to jail. they should've gone to jail. before we award this contract i want to make sure we're doing here, mr. chairman, doesn't set a precedent for the future. because if this is the way we're going to do contracts or one company gets subsidies reform country and others doesn't we need to think about. and the process you of what information was shared and what outcome it had its precedent for

the future. so i'm glad you had this hearing, and i hope we will think more about what we are about to do, not less. thank you, mr. chairman. >> just clarify one point because we've had three different statements it seems to me, mr. shirley, from you. one, we know from the record that the person who opened up that file said that they looked at it for about 15 seconds. when i talked to you earlier today, when i asked you the question can you said you determined forensically that it was open for a few minutes. a few minutes. now you're saying that the computer was open, not necessarily the file, but the computer was open for about 20 minutes. >> yes, sir. >> do i have a straight? if not straighten it out right now. >> the computer was powered for about 20 minutes. >> how long was the file open?

>> the process of -- >> that page, how long was that page visible? >> my recollection was roughly three minutes. >> okay. i think it's important that we get our terms straight, okay? >> to add to to that as well? >> upcourt. >> from what i read any documentation, the person was responsible for opening the file and realized that he shouldn't be looking at a come and their procedures are that when they see something they shouldn't, and what i have seen here is that a two-person rule comes into play. and they saw it and they're in a skit, they couldn't use their phone to get the other person there to come help them close it and follow the procedures. so they went outside of their classified area to use the phone to get hold of this person to let them know that they had discovered something that only, they were all going to get in trouble for and he didn't want to get in trouble for.

so the screen might have been opened but he was the only person in the room. he left the room to get the other person to come help them follow their procedures to close the data. >> that's the statement of the person who opened the file, but in terms of how long the file was opened to get it straight, forensically three minutes, is that correct? >> yes. >> mr. chairman, the air force is trying to make sure this is not a big deal. >> i'm not saying whether it's big or small, it raises significant questions. or we wouldn't be here. that's why we are here. i just want to -- i'm not trying to defend, attack. i'm just trying to straighten out facts, because we've had a here that seems to me we've got to be very clear on your mr. shirley. the computer was powered for perhaps 20 minutes, the file was opened for three minutes. the person who opened the file

said they looked out for 15 seconds. that's the statement which the person gives. those are the times we're talking about. now, the significance whether or not it is significant that eads had that information for some period of time, longer -- or that the person -- excuse me, whatever the information was that was seen by the person, existed for some period of time before the two files were exchanged, right? and the significance or lack thereof seems to be an important issue which we will get you a little bit later. but for the time being, that's the time, okay? i just think -- thank you, senator graham. now, forgive me, senator wicker. i -- intervene before i called on you. i wanted to straighten that out. thank you, senator wicker. >> i thank you for straightening that out. i think that was very helpful,

and i appreciate the chair actually getting mr. shirley an opportunity to answer the question. this is not a jury trial or trying to play gotcha. we are able to leave the record open to get a full explanation. but i think i see what's going on here, mr. chairman. there's some people in this town who believe that the company that they favor may be about to lose a bid again, as they did in 2008. and the foundation is being laid for how to protest. i don't have any idea who is going to win the award. i do know who won it in 2008. and i regret the department of defense didn't go forward with that contract within.

we would be very, very close to having a tanker that we could rely on here but i see what is happening with this hearing. and, of course, it's no wonder that general masiello and mr. shirley can answer these questions because they are not involve any actual award. i thought this is going to be a hearing about how the information was inadvertently released and how that has been corrected. but let me see if i can get to this procedure with regard to the computer being on for 20 minutes, the file being opened for about three minutes, and the statement of the individual that if you do for some 15 seconds. do i understand, general, that the eads procedure is that once an individual realizes he has opened a file, then he must go

and get a second person to come in and verify that before it can be closed? was that your statement? >> sir, i'm not sure what the procedures are. what i read was they had to have another person -- to institute a two-person rule, that together they close the data, they seal the data, and they took the desk and put it in a safe separate from any working documents. isolating it completely from the rest of the specific bit information. >> mr. shirley, is that consistent with the file being opened approximately 15 minutes? >> sir, part of what general masiello talked about, we were given to understand at the lab that when the employee opened the question, they were very opened -- nervous about what occurred, realize they shouldn't be looking at that particular piece of data, and they went

through some sort of internal process to see how should we walk back from this, and essentially find another witness or a second party, to sort of constructive okay, what do we do next? we're into something that is awkward. and so that was why the computer, we were given to understand, was left on while they figured out that internal process. and as they did, then they shut the computer down and went through the process that general masiello just described. >> the general, the air force, after -- looking at this, after understand what had happened, decided to level the playing field. now, once again, tell the committee what information has been shared to both of these competitors, each of these competitors, to level the playing field. >> as i understand it, it was a snapshot screen of the

spreadsheet that the contractor saw. and they took a picture that had that information and took that same picture of the screen from the other competitor and swapped that information. it's just a single piece of paper that had the spreadsheet. and it's the ifara data. >> so it really wouldn't matter if the person from eads had looked up that file for 20 minutes, would've? because now both competitors could look at each other's snapshot of that spreadsheet for an infinitely long time, is that not correct? >> that's correct, senator. >> i really don't think there's anything more to ask about. did either competitor change

their proposals after this information was shared? >> sir, i have no way of knowing that, but right now they still have the opportunity to change it should they choose to. >> all right. my friend from missouri mentioned a protest. with regard to this release of information, is it a fact that neither boeing nor eads has posted at said this? >> that is correct. >> and as a matter fact i would observe, mr. chairman, that the statements from both of the companies that are before us, both relatively straightforward and relatively relaxed about this, is that either company has -- had an opportunity to file a protest, has done so.

do either of you have, can either of you answer this question, and i suspect you cannot because you are not involved in the contract. but this is not -- the testimony is this is not proprietary information. but in previous competitions, hasn't this exact data been provided in 2008, and isn't it already sort of part of the public record? >> sir, i'm sorry, i can't answer that. >> i suspected that was the answer. mr. chairman, you had no choice but to call the hearing. until i see a protest of either company, i'm going to conclude that the air force saw an example of human error, and they

responded correctly, professionally, and properly, and have now leveled the playing field. and we should go forward, and hopefully not see further delays in this very important program. thank you. >> thank you, senator wicker. senator brown. >> thank you, mr. chairman. all i can say is thank goodness it wasn't highly classified information. like we've had in other circumstances. being in the military, i understand the scenario that a follow-up, the checks and balances where you try to identify the problems, where they were. and you move forward to make sure it doesn't happen again. i appreciate that. i guess are you able to guarantee the to the committee that the unauthorized release of this information did not give one contractor an unfair advantage? >> sir, i can't guarantee anything like that. i don't know enough about whether to judge or not, but

what we have done is provide the same type of information to both contractors now. so, from what i can see and based on the air force having taken that action, it appears that they have leveled the playing field. would not give another an advantage. >> i'm not quite sure why we are actually your. i understand that there may be other things happening but i understand they're forcing us to be here. but i don't think -- we appreciate your statement could've been given to me off-line as to what you have done, and if i had any other question, i understand sometimes we need to try to politicize things a little bit more. the one thing i'm kind of surprised as it takes 10 years for the federal government to issue a contract. i mean, it's only the federal government that it takes 10 years -- it's amazing to me. being not as new as i once was, but i'm amazed when i learned

about these breakdowns, not only is it not cost effective but we're wasting taxpayer money, we are losing the confidence of the people that we deal with, and not only the average citizen but the individual businesses that we deal with to the point where why bother? it will take 10 years. will have to file a bunch of protest. it will go on and on and on and on. it just makes no sense to me, but i want to thank you for braving the elements even the in massachusetts this is kind of relates know, and taking the time to come in and thank you for your preparation. thank you, mr. chairman. ..

was one contractor's data made available to the other contractor as a result of the purchase process during the previous competition? >> the intent to the question. i don't know. >> that is a question which is factual and not in any way inappropriate to know because it gets to the question of whether this data is relevant. it may not be proprietary but it could be relevant. i'm not saying it is but it

could be relevant. assuming that this data was known to the person or understood by the person or remembered by the person who saw it somewhere between 15 seconds minimum and a few minutes maximum according to the experts here, whether the data gave an advantage because it was available to the one contractor or whatever it took before the switch took place, ask the question whether or not that would give any advantage to have that data assuming it was remembered to have that in one's possession for the period of time between november 1st and the time that the data was exchanged. do you know the date of the

exchange? >> i don't recall what the date is. let me find that date. the other -- unlike another point -- here is. number twenty-second. >> whether or not that gives an advantage or not to have the data as toomey was remembered for that 21 day period is not as i understand it for you to say. is that correct? >> that is correct but if i was looking at a snapshot of the information volvo did was have a snapshot so they wouldn't have known what was going on behind the data to get to the point and the person who did have that information who had seen that screen shot was removed from the programs so they were not allowed to talk to anyone assisted with the program and according to their certification certified by the ceo, talk for told anyone in the company what they saw on that data but now that it has been exchanged --

>> you say it is level. i think you should be a little more conscious. it is an attempt to level playing field and it may be a successful attempt. >> fair enough. >> unless there's some advantage to having their data for 21 days in the possession of somebody who has said they didn't share that date with anybody else, versus an attempt to lay in a playing field. may have succeeded. general. a couple more questions. the remedy, the attempt to level the playing field which may or may not succeed, some people may want to argue that, what other options were considered by the air force to remedy this

mistake? >> i don't know. >> that is fine. you have been called here for a specific purpose and you have given us the information to the best of your ability. same thing with you, mr shirley. we have to be fair to as to what you were called. it is important we get this informational record although it may be -- i emphasize may be of limited value. is part of an overall picture on this contract which took ten years by the way because there was fraud and corruption involved at one point during this process where someone landed in jail. there are a number of reasons it was extended. the last thing on one to do is inappropriately extend the period. this hearing is not doing that. we are simply getting information. whether it is information is usable, whatever the value is, in advance or afterward, you can debate that too. i have to think it is useful to get it out in advance for a number of reasons.

the clear the air is going into that decision the better off we are. this is intended to get factual information whichever way one wants to argue with to get that on the record prior to a decision. we don't know if it clears the air. some may argue that it gives weight to one side or the other. i am not arguing that. it is important that all of the appropriate facts that can be made public are made public before the decision. there may be a lot of argument after the decision but at least before the decision it seems to me we ought to get as much on the record as we can. so you don't know what other options were considered by the

air force. i will ask for the record, acquistion about whether the previous protest, best information was made available to the competitors. will you take that for the record? the previous protest process. okay. senator sessions. >> let me just say in defense of the air force thousands of decisions and interactions and communications have been undertaken in this effort. after the last incident in which fraud was discovered and boeing officials went to jail, the effort redoubled to do this in the most fair way possible in the extent to which the greater

capabilities of an airplane to be built in alabama were not considered in the bid. basically a low bid contract. to make sure whoever comes to the lowest price to get the contract no matter who is more capable in every single area of evaluation. they get very little credit for that. i know the air force has been over backwards to be fair about this and whenever human error occurs are don't think it should be smirch the reputation of the air force and led to believe that you took appropriate action. general masiello, didn't they send an independent review team to evaluate the accident independently on people who were supervising the contract? the air force did what they could to notify everybody.

they did everything they could do. fortunately nothing serious happened that jeopardized this contract. that is pretty plain. mr. shirley, the examination report from the defense cybercrimes center, a unit that takes pride in its independence and integrity. >> yes. >> you were brought in to independently evaluate what happened. you concluded there were no signs of network connections, no signs of network connections were disclosed and no signs of a catch storage devices were found. that was one of the findings. no sign of any documents being

printed were found. and no trace of data other than filenames was found on the server hard drive. that would indicate nobody downloaded, copied or stored this information. that is pretty conclusive, your ability to determine that. i think that is important. and i think, general masiello, senator wicker ask you an important question to document, the document was revealed when it was opened in that file. did that include dramatic important evidence? or fortunately was it something that was -- did not impact the

fairness of the competition? >> i don't know the relative importance. but whether it did affect or establish or create at minimum an appearance by swapping the same snapshot, the same type of information between the companies that established by the air force perspective reestablished fairness. >> with regard to the parties aggressively competing for this and i hope submitting lowest possible bids for the benefit of america and taxpayers they can submit because that is what it will take to win this contract, i understand there was a ten they formal complaint period. maybe i am wrong about that.

neither competitor has filed any kind of formal complaint about this mess. >> that is correct. >> the individual as you know, that was removed from the process. mr. chairman, i think it is fine that we have the hearing. we were briefed on it by the air force. general schwartz has testified to it in december last year. and i believe they responded well. both parties understand what happened and are prepared to accept the air force's decision or else they would have protested. this critically important contract is on the road to a final decision and i just hope and pray and expect that the air force will do so fairly and objectively and award the

contract to the competitor that deserve to win. i would repeat one more time, when we directed explicitly as part of the defense bill that this award of the tanker contract would be completed, there are only two competitors in the whole world that could provide this. at that time people raised some of these issues. there are arguments on both sides and we made that decision moving forward to the final decision going forward with two competitors aggressively submitting bids to produce and aircraft hopefully that will meet the standards they have for us at the lowest possible price. our committee has not been shy about it. we have done our duty without politicizing the process and i hope we can continue at that

rate. >> thank you very much. senator mechanical? >> i want to take a moment after my friend from mississippi said what was going on i want to explain very clearly on the record what is going on from my perspective as a senator. m i unhappy about the notion of subsidized company from another country is going to compete on a level playing field with a country that is not subsidized? i am unhappy about that. i heard a lot of lectures about socialization and the notion that government should not be subsidized private companies and the idea, the idea that all of a sudden we could ignore that completely ignore that and decide socialization is okay if it is being done in another nation, and a company that seems subsidized by the government of

another nation will compete on a level playing field with a company that is a free market company i think is absolutely wrong, especially in the department of defense. what if this company was owned by china? would we take that into consideration? they are only subsidized to the tune of 10 or twenty billion. we don't take that into consideration? i don't want any more lectures about socialization or subjugation of american companies. if this is not relevant, we should be complaining about it. if it is not relevant. these jobs aren't going to missouri. this tanker wouldn't be built in missouri. it will be built in another state. there was fraud. there were criminals. the process was not fair with all due respect. it wasn't -- they hadn't bent

over backwards. after the fraud was found because in a very unusual move on of our major defense contractors filed a protest and independent auditing agency said it was very unfair and that happened in 2008. they stacked the deck and from my standpoint they were embarrassed. pierre force was embarrassed that they allowed fraud to go on in this kind of competition and overcompensated and said we are going to make sure you don't get it and they put out a proposal that the gao said every single basis was unfair. that is how we got here. we have an independent evaluation. i want to make sure the record is clear because i don't care

where the jobs were going to be. i don't think the department of defense should treat companies equally if one is subsidized by a foreign government. it is a bad precedent. i don't think we should be doing it. most americans don't think we should be doing it. i know there are jobs to be had here and we do this around here. we are competing for jobs like american companies are competing for jobs. at the end of the day we should do everything we can to take that into consideration. the lowest and best price is relevant to whether they are subsidized. it is relevant. i want to make sure the wanted to explain what is going on from my perspective. these are not missouri jobs. this is a process that is terribly flawed. this isn't a trial because if it was like as case series of leading questions that would highlight what i think is the

case. a lot of what you testified is you couldn't prove that they didn't do what they said. you can't prove, other than the man's testimony whether he looked at it for 15 seconds. >> it would be wise, to clarify that. i did not read the employee's statement or see that material. it is something from the

conversations. we did see -- let me phrase it this way. we saw each company's computer forwarded based on agreement of the companies and program office and was delivered to our lab and we subjected each of those company computers to a detailed forensic examination that is outlined in a very exhaustive technical report. i did not review specific details of the entirety of that report because i can't say specifically, but out of a concern it had source selection or other proprietary material. i wanted to understand in directing the process, computers in the right fashion, we looked at those with the right subject

matter experts, technical report consistent with processes and procedures and under the specific direction of our lab director of that process was conducted and we generated the technical report and process and result of that process. the only files from that report, the only files that were identified in each of the written statements that the files were all we open for the time by each of the respective companies. >> hi understand they were open for that period of time but the only knowledge we have about how long the screen was looked at is what the individual said. we have no way of knowing if they looked at it for 15 seconds

or three minutes. >> you are precisely correct. >> could have eads adjusted its best offer, a yes or no question, based on that data? >> now that they have an exchange of information, both could adjust their proposal. >> let's assume after someone looked at the screen could they have adjusted their data? could they have adjusted their final and best offer? >> i don't know because i don't know how much information is revealed in that quick about of time they looked at the information. >> do you believe based on the data that was on the page that three minutes would be enough time to memorize that data? >> i can't speak for the individual. >> i don't want to ascribe

mysterious motives to the company because i am embarrassed at harvest process has happened from the beginning to this moment and i am very exercised about the notion that we will not have a policy in this country that doesn't take into account when we are having a competition that it is a company that is subsidized to a very large extent. if we were subsidizing boeing to this extent there would be press conferences going on around here about how this is a subsidy asian, bailout, government shouldn't be in private companies but somehow it is okay now. i don't get that inconsistency. thank you very much, mr. chairman and thank you all. i understand you are here. my passion about this has very little to do with the fine work

you have done and the efforts he made after this unfortunate incident but very important that i explain what is going on. thank you very much. >> mr. chairman, could offer for the record the gao report on the protest previously, it found eight violations out of 111 complaints. very close questions for what my view should have been uphill. i don't think the air force deserves much criticism as my colleagues suggest and i was referring senator rick rascal to bending over backwards i meant that post protest and final competition -- >> i would agree with you on that. >> that will be made part of the record. >> i appreciate senator sessions making that part of the record or offering to make that part of the record with the committee accepted it without objection.

i have information. someone should correct me if i am mistaken. information provided to me by my staff is in september the wto rules that in fact going received illegal laid from the united states government and wto has made findings against both of these competitors with regard to improper ahthaebkedqd iis tño th1 oheiro cf1 o

and also had a bid for the best aircraft. and i thought the criteria should be what is best for the united states air force, what is best for the fight in men and women who depend on this, what is best for national security and in my judgment that decision was made independently and correctly. by kicking the can down the road

to 2011, there is a real risk, mr. chairman, that the acquisition for major projects such as this will always be called into question and i fear we have done great damage to the future. let me make a final point about three minutes versus 20 minutes versus 15 seconds. that information has now been shared with both companies. is that correct? >> that is correct. >> so it wouldn't matter if the eads employee had looked at the data for three hours or for three days.

each company now has that one little bit of information from the other company and they had it and could analyze it until the wee hours of the morning. is that correct? >> that is correct. >> i appreciate what the air force has done. human error is unfortunately going to happen. any time an organization is shot through with people you're going to have human error occur. the appreciate what the air force has done. they are my branch too. i love them all. i am an air force veteran and air force reserve veteran and i think that the air force acted very professionally and has corrected this inadvertent mistake. thank you, mr. chairman. >> let me put in a chronology.

because of this committee has been following the tanker modernization program closely for in number of years. in 2002, and 2003 we directed a series of reviews and held hearings that are identified serious problems originally proposed by the air force. ultimately this helped lead to the cancellation of the contract at a time when the corruption was discovered and that was ascribed earlier in the day that this committee played an important role in uncovering that and senator mccain particularly took the lead on that but a number of us supported that effort. 2007 to 2008 closely followed the air force's unsuccessful second attempt to award a taker contract. it was unsuccessful because the general accounting office upheld the protests to the award.

now we are trying to do what we can for consideration. the fact that surrounded this release of information and obviously never should have taken place. he lead to this release, it shouldn't have been and whether or not the effort in the air force. this is not a matter for this deliberation. and it may or may not be debated. that would be the issue. whether or not the playing field has been leveled but an attempt to level it. whether it has been levelled or winter fare was some advantage

during that 21 day period that existed assuming the information made available beyond that one person's mind, also the question as to whether or not this information in the possession of one party or the other even though it is in the position of both, it advantages one party more than the other party. i don't know if i said clearly what i meant but you can give somebody who's analogy doesn't work at all but somebody who is wealthy $1 or somebody who is broke $1, clearly advantages the person who is broke more than wealthy. but you give them both.

it could be an issue as to whether or not the same information, advantages one party more than another, the attempt to level the playing field is clear. that is clear. the attempt to do that is the right thing to do. whether it succeeds or not is a different issue. i am not able to expel on that. it leaves open that possibility. >> i want to thank our witnesses for their presence here today,

this challenge, i know you had no sleep and i won't identify which of you it is because you deserve credit for your testimony. we will stand adjourned. [inaudible conversations]

[inaudible conversations] [inaudible conversations] [inaudible conversations] >> coming up this morning president obama -- >> my most important job was to

protect the country. i made a lot of controversial decisions to do that many of which i described in the book. if i had to do them over them i would have done them. >> former president george w. bush talked about his memoirs decision points with students from southern methodist university sunday at 8:00 on c-span's q&a. >> french president nicolas sarkozy talks about the euro and outlines economic and financial priorities of the g 20. this is an hour and 10 minutes. >> translator: mr president, it is both a pleasure and a privilege to be able to welcome you here for the second consecutive year. last year i emphasized your

dynamism and your capacity for innovation and these two qualities are more necessary than ever to resolve the problems and face the challenges. i could add a third quality. and unfailing will to make france's voice heard amongst the community of nations. more involved in the multilateral forum in which the world economic forum is one example. you said last year that you would return to davos. you have been true to your word. but it is also and above all the president of the g-8 and the g

20 that we are welcoming here today. it is an immense task which is facing you and as you yourself emphasized on monday at your press conferences there is no shortage of challenges. however, you have chosen and you will explain this to us in a moment to focus on three subjects which concern us here. for example, monetary imbalances, the issue of commodities and the matter of reforming global governance. you can rest assured that you can rely on -- this summit in

davos and the entirety of the communities of the world economic forum to and nourish your reflection and the debate in order to find together tangible solutions and it is in this spirit that the world economic forum, the chamber of commerce and in cooperation with other organizations is at your disposal for this process. mr. president, this section will be divided into two parts. first of all people and we will hear you speak to us and out line your current policy. in the second part, the

tradition here at the davos we will have an open dialogue moderated by a member of the world economic forum foundation with a number of individuals from the audience. this dialog will be oriented around the priorities that you outlined during your press conference on monday. and the initiation for the g 20. once again, thank you for having replied so willingly to our invitation. it is a genuine pleasure to have you amongst us here today. mr president of the republic. [applause] >> translator: my friend professor schwab, thank you for

having honored me by inviting me today. i honestly think you for giving such an internationally positive image of france. i indeed promised i would return. frankly this wasn't the most difficult promise i have had to keep. especially such exceptional weather as we are enjoying here today. but above all it is important for me to be here because the financial and economic factors from all over the world, and i have a message to put across. the issues we have to tackle are of such complexity, of such difficulty, are so numerous, that we must at all costs

refrain from getting bogged down in misunderstanding or ideological disputes. i would even go so far as to say we refrain from reacting, all of us, simply by virtue of the way we were taught to think in the 20th century because things have moved on. looked to tangible, concrete results. let us come up with new ideas and new solutions to issues which are unprecedented in their complexity and scope. let us put our heads together to think of these solutions and come up with these solutions because there is no one at the g 20 table who could even imagine

that they could roll up their sleeves and solve single-handedly what we are facing. these are no empty words. these are things i believe. i read in the world press, what positions are adopted by a this battle as head of state or government or others. let us stop reacting on the spur of the moment. let's stop looking at differences between europe and the anglo-saxon world the berlin terms of the ride between the rich country poor country divide. let's try to take a different approach. adopt a different angle. the second preliminary remarks i wish to make is last year i had spoken very freely, very openly

because i spoke as president of the french republic and of course as president of the g-8 and the dirksen senate office building 0 will be as open, as free. and also takes account of people's red lines and interests and the objective of the fringe presidency of the g 20 is to bring about a convergence between people on the world scene who must learn to talk to one another and listen to one another and understand one another. all that i must say and do must be said and done and put into service for collective common interest. we were pulling out of an

unprecedented crisis and the forecasts were acutely pessimistic, remember? for 2010. now let us try to keep a cool head here and look calm we at the difference between what was forecast and what actually happened. i know how difficult that task is. i must say i would like a special tribute to be capable of revising their forecasts. i wish we could revise our commitments anyway. for 2010, forecast has the possibility of reviewing, revising the, updating their forecast until november of 2010

which is just basically at the brink of the end of the year or what would have been the point? we have the action will result. what have they forecast? a double dip? what we have seen is more growth on the order of 5%. in the last ten years, average world growth rate was 3.5%. i am not saying we put the price behind us once and for all. there was too much. particular young people or over 50. there is a lot of risk that needs to be overcome. we have a 5% growth rate. it is not spread evenly from one country to another. that is already a lot. the most serious polls imagined

a bleak year and that is not what has happened and ultimately that cannot prevent myself from thinking of the fact of coordinating the financial and monetary or economic policy among members of the g 20 that didn't exist two years ago. there was no mention. it is the newest, youngest international organization. the very fact that 20 countries--those 25 around the table, coordinate the policies and as far as they represent 85% of world gdp, the very fact of having coordinated was the essence, it was vital, it was that ability to coordinate that made it possible to put an end to the crisis or avoid it simply boiling on. it is this coordination we have

to deeply protect and that is what we are determined to focus on. over the past two years, 18 months, proceedings and work of the g 20, and this may shock you, have been relatively easy because we have the choice. we didn't have any choice because we were standing on the brink of the principles. ether we took the positions we needed to take or the whole thing in imploded. now the going gets tough because some may imagine that we have a matter of chalets which is not my view. i will explain why i say this. that is where the risk lies. legitimacy of the g 20 depends exclusively on its ability to take a position. ag 20 that doesn't take the

decision is a g 20 that loses its legitimacy. in all good faith, may imagine the worst of the crisis is behind us and we can all go back to the way things were before. i am passionately against this position because i think it is extremely dangerous in this world of ours. however, however, the storm of the crisis seems to have been written and to some it is less urgent to take position that was the case two years ago because they believe things fought themselves out by themselves. last point. we identified three major risks for the year 2011 even though we

may be more optimistic than we were. the first is the issue of sovereign debt. we have to reduce the this and implement reform. the world cannot continue, simply continuing to mount up these staggering debts without thinking of the imbalances. i will answer any questions you have on the subject. the second point of, second risk is monetary environment, financial environment which have increased fivefold in the last few years. and which one day, one of these days will bring down the whole deck of cards unless we attend to this swiftly and strongly. to put it in a nutshell, context

of who weighs heavily on the economic scene changed completely and the monetary system has remained exactly as it was. it didn't need to adapt. in a sense we haven't had an international monetary system since 1971. is it good for corporations or those of us calling to growth? is it good? i personally have strong views on the subject. on the third point, the risk of inflation to growth of the soaring prices of commodities, extreme volatility of the cost of raw materials and commodity. a year ago, in six months a

barrel of brent dropped to $140. that is in no one's interests for that to be the case. is in no one's interest to see underwriting in various countries because people cannot feed themselves and their families. it is not in the interest of those who are producing commodities, fossil fuels or food commodities. this is the agenda we have set for the g 20. this is the program. i full week see the risks but there's less risk in talking about addressing real issue then spending an entire year talking about everything and anything except what really matters. i have been saying that. all i am doing is applying the

rules which in your company's, the companies you run, you abide by day after day. we cannot afford to turn a blind eye to the real issues that are threatening the world's economic future. we cannot afford to do so. it is with deep held belief that france will try to organize a useful presidency. i do not want to be too lengthy so i will now answer what ever questions you may have as frankly as i can. [applause] >> translator: mr. president, thank you for outlining those issues. i am going to pull up completely immediately with a question. you said global growth is the currency around 5%. there's a real return of

optimism which we can feel. does that not make your job a lot more difficult? you yourself mentioned the fact that your back is against the wall will you have no choice? is easy to act. but now we have to build the future. not only leave the crisis behind us. now that these circumstances, there is the political will among your partners to involve themselves in this immense task you are looking to undertake. >> translator: we entered into the 20 first century eleven years ago already. and we are still functioning according to the rules and organizations of the 20th

century. i have always considered -- it was madness that this should not be a single african country holding a permanent seat in the un security council. africa represents 1 billion inhabitantss. 30 years down the road will represent two billion haven'ts. this is a way of doing things belonging to the 20th-century. it is totally unreasonable that the south american continent which has undergone extraordinary demographic growth the personal and additional five hundred million in haven'ts, on a permanent basis. what should we do about india? 20 or 30 countriess, it will be the most populous country.

india holding a permanent seat edge in the aftermath of the war, there was a 1-year meeting-that is that being insulting to anyone. the only one that counted was one currency. who in this room would be so bold as to tell me in 2011 as we stand here today the world we face had anything to do with the world we face in 1945. who could possibly claim that?

i say this to friends across the atlantic. you know how attached i have to the partnership and friendship we have with the usa. nobody wants to weaken the dollar. nobody wants to weaken the dollar. the world needs the dollar. the dollar will continue to be the world's number one currency. 62% of the world's currency was measured in dollars. 82% of trade is in dollars worldwide. let me ask you this question. dominant currency doesn't necessarily spell single only currency. do you consider, a open-minded and open to the world, that there's no importance -- it

doesn't exist? is it not natural, thinking of the japanese and the americans, should act in terms of their currency. in many ways it oftentimes unilaterally. if there is no multilateral system or multilateral way of funding currency it cannot be criticized. there's an even a form believe it or not, a place where currencies are discussed. the only place where currencies are not about central banks, currency is not simply an economic issue, it is in the true sense of the word a trade policy and political issue. the only forum since 1975 where the issue was discussed with the g7 which has become the g h.

i challenge the legitimacy to speak about currency for the simple reason that china is not a member. how can we say to china we can't advise your deficit. beware. about the value of your currency where as they are not even present or represented in the only forum that discuss the issue. i will be corrected by my minister of finance who is going to be participating in the finance g-8 summit with usual talent. it makes no sense. created 40 or 42 years ago or something like that. a basket of currencies. the chinese currency. is that the way we should

continue? since 1990, the world has undergone 42 times since 1990, countries have literally seen their capital fly out of the window. we are not interested in that and we won't do anything about that. in order to come to such risks these countries build up huge reserves in currency and huge cost. are we to do nothing? korean friends, in terms of image, misunderstanding part of the media or what came out in the media between china and the u.s.. was that good or bad for world affairs and world trade? do you think that is the way to continue? should we continue pointing

accusing fingers at each other people currency reserve? and how could we possibly decide for one country to export because that is exactly -- to increase our exports. i am putting my money as it were on the intelligence of my colleagues, their ability to understand if these imbalances continue it will be to the betterment, each of us has to take a step forward, move toward the position of the architecture of the 20 first century. i know we are not going to define in the space of one year a new international monetary system but at least let's lay the foundation. no one is calling for a return to those exchange rates. let's talk about those issues and try to find answers to these

questions with an end to instability. what you do need stability. how could you possibly -- there isn't a framework to achieve that stability. it is more difficult but it is all the more urgent and indispensable and if that is the way we address these issues, we will enable everyone to make the competition to build in the future. if all we do is point fingers at one another, we will simply grind to a halt. ..

[speaking in native tongue] >> translator: mr. president, in the room as we saw in the discussions yesterday, there are certainly people who would express doubt about the long year or two last in the long term, how would you respond to those who have doubts for the capacity of the euro to survive. and this is the second question, what would be the role of the euro be in a reformed monetary system which you are developing a division of? [speaking in native tongue] >> translator: yes, i know, people have the doubts of the ability of the euro to survive. occupied many, many articles over many, many weeks and months and yet these articles we can't find anymore and yet the euro is

still there. remember reading the euro will be sentenced to death. it will never exist. it will never exist and it will succumb and yet the euro is there, has it not? i want to say something very simple to you. it's just that chancellor merkel and myself never -- and listen to me carefully here, never will we turn our backs on the euro. we will never drop the euro or abandon the euro and those who are european there's something very important for you to understand and that is that the euro spells europe. the euro is europe and europe has spent 60 years of peace on our continent. that's what we will never let the euro go or be destroyed.

and i speak as much to my german friends as i do for my fellow french citizens because we and the germans were locked three times in the most horrific, barbaric wars. and that wasn't in the middle ages. it was yesterday, the day before yesterday. now, if europe has become the world's most peaceful, most stable continent, it is because we -- we -- i mean, not chancellor merkel and myself but our predecessor built the european union. and the very fact that 17 countries should have availed themselves of the same currency is a magnificent symbol of that. and to imagine that we might pull out, that we might abandon the euro is to show a complete must understanding, misapprehension of the state of mind of europeans for being at each other's throats for centuries and who aspire to

wanting only and that is lasting peace. so for us it's not something economic or monetary issue. it has to do with our identity as europeans. for those who wish to wage against -- or wage against the euro and against the euro, be careful how you invest. we are determined to ensure the strength of the euro. in a structural manner we have different things. 17 countries have to be -- got to agree. i admire president obama because when he takes a decision, he has to get the white house and the congress to agree, but we in europe -- when we take a decision, we have to get 17 peaceful countries to agree with different editions and histories. and often in that situation of urgency -- now, what we've done

is to set up a mechanism to defend the euro. what we did to greece we had to do very speedily, very fast and that is what enabled us is to support and to come to the rescue of the countries that were under attacks and the countries that were under attack. and chancellor merkel and i would like to go even further because both of us believe very firmly that we have to further, deepen and intergrate economic policy in europe in a spirit of coordination and competitiveness. professor schwab what i would have to see on the euro is a very basic one. it is of such importance that we will be there whenever it needs to be defended. the results, the consequences for a failure or a disappearance to the euro fund it would be

cataclysmic that we couldn't even entertain the idea. now have i been clear enough. maybe i haven't been clear enough. [applause] [speaking in native tongue] >> translator: mr. president, you have given me the high honor of chair a discussion with my president. i hope that you will be patient with me. allow me by beginning a slight contradiction. you said it would be easy to keep this promise. coming to davos, i know you're just coming for this session today. and i don't think the blue skies that it wasn't as easy as you said to come to davos and we are all deeply grateful that you have made it.

in the world economic forum together with the international chamber of commerce, we have established a task force, a task force with the ambition, the sole ambition of feeding this process of reflection. it's not putting itself into competition with those that already work in this area. it has as its overriding goal to make a modest contribution to this debate. we will have 10 or so people who will be asking a question or making comment on the issues of the g20 which you have just outlined. so now to continue in the french language on the air i'm going to begin with who has no need of an introduction. he is chairman and chief executive officer and he's going to be talking about the volatility of commodity prices and how to counter that

volatility. chair, you have the floor. [speaking in native tongue] >> translator: good morning, president of the republic. i am president, ceo which works in the energy center. you have chosen amongst your priorities of -- or the priorities of the g20 of encountering the volume tilts of the commodities, agricultural commodities and minimal commodities. we believe this is a major issue for our economies and for our companies and our peoples as well. on the issue of energy prices, gas, oil, coal but also i don't like to dwell on this for any instance. the prices have doubled over the last 10 years and reached unprecedented lessons and if we think back to the time of the oil crisis, this volatility,

this atmosphere of uncertainty creates the difficulties for investors. and it hampers investors. and in our sector in the energy sector, electricity and energy prices in general require high levels of capital. at any level of uncertainty will cobble investment. the long term effect could be to create new bottoms and further effect prices. we believe there is a connection or, a relationship between the risk of price hikes of the volatility and the atmosphere of uncertainty. and now a number of points have been addressed. we would support measures to strengthen, enhance dialog

between producer and consumer countries. transparency on the flows of energy, volumes, stocks, consumption and transparency as well in terms of the long-term decisions which are being taken as well as transparency on the decisions to manipulate markets. now, these need to be followed. further, i would which has become an essential commodity of the area, of the energy market, the uncertainty markets which exist today on the future price of c02. it could create difficulties in europe for investment. we could see shortfalls in investment and, therefore, in the long term systemic problems in the european energy market. so, mr. president, a few

comments on these issues, and it would be extremely useful to understand the orientations which you will will pursue with the g20. thank you. [speaking in native tongue] >> translator: well, first of all, let me reassure that france is not challenging the role of the market. it's not challenging the marketplace because there again we've read pretty astonish things that were written in different media. what is the market? it's simply supply and demand set within the framework of a set number of rules. if there's no rules there's no market. a market without rules is not regulated is not a market and a market is overregulated is a dead market. but the total absence of rules -- it does not spell free market -- a free market economy. now, what's happening?

it so happens that the huge hike in agriculture commodity prices is due to a huge increase in demand. if we want to feed our people by 2050, we'll have to worldwide have been able to produce 7% more agricultural products. let me say in passing to my european friends. this is the last moment we should be thinking about dismantling the common agriculture policy. but anyway, going back to this issue of food production and energy production, why, for instance, did you -- why would you accept regulation on financial secondary markets and not for the same to apply to commodity prices? the russians and the ukrainians

who had to face huge foreign fires and drought and when they decided as a result of the last year they're no longer to export their grain, no, agriculture would have the foggiest over what level the stocks stood at. that is grain stocks. so the lack of transparency plus lack of regulation led to an increase in commodity prices in a matter of a few weeks and i've seen in the press a number of interesting surveys and articles in the press saying speculation has nothing to do with price increases. i mean, it's a particular situation. speculation feeds on shortages and shortages are made worse by speculation. take the example of cocoa. the very fact that a speculator

can in one simple put acquire 15% of the world cocoa's production without having to pay a single cent for the actual amount of cocoa that he just bought and sell that cocoa off before he's even paid for the original purchase. is that normal. is that acceptable. is that what a market should look like? and should we continue like that and i say to our countries like india, brazil who are producing food commodities that there is no question of preventing them from benefiting from price increases. i understand that. what i'm saying is, hey, be careful if there is ex poential increase in prices there's a drop in prices and that will kill off your peasants and your farmers and your agriculture. are we right to regulate or not?

i went with gordon brown -- i wish i was with gordon brown and i wish to pay tribute to him. one of the few people who actually said to the oil-producing companies that it was not reasonable for it stand at $140. actually this was going to endanger their production on a long-term basis because it would encourage countries that didn't have fossil fuels to invest more in alternative sources of energies. likewise, it was not more reasonable to have a barrel of bread at $40. we need regulation because regulation means transparency. let he who purchases large amounts of commodities put down of a part -- a percentage, a portion of the money and that be held as a guarantee.

i mean, we've seen levels of shortages that are unheard of since 1974 for some food commodities on the day that we have hunger and riots, i don't think that is going to contribute to stability? the farmers -- the farmers worldwide can no longer feed their cattle because grain prices have shot up. is that reasonable? isn't that some sense and organizing the market those who are producing and those who are purchasing, the supply and the demand. that is all france is asking for. it teams perfectly reasonable and it seems one of the major risks to broventing world growth. it's preventing world growth with energy. this is what we're trying to do. without becoming obsessed with who this -- what i was talking about, the chicken and egg. is it all about speculation? is it all about shortages? let's see a better side.

let's calmly and quietly set up reasonable rules so that we can have a market that functions normally and no one can upset the rule, the basic rule of the plan. i think that makes simple sense. [speaking in native tongue] >> translator: mr. president, we'll begin with the problem of legislation one relates to the regulation of a financial system. i'm going to ask jimmy diamond who is the chairman and ceo of jpmorgan chase to comment on the issues of financial regulation. and that will be in english. >> thank you. mr. president, thank you for coming here today. when you go to the g20, the things i would try to keep in mind that all of these problems are fixable. the world is strengthened and dramatically ready and i agree with your comment that it's not a given that that strength will continue and that the policy,

good policy, is critical to making it work. i think the single sole objective should be jobs. my friend mr. levy has mentioned it. it's for political reasons but even more than that for ethical reasons. we need to do everything we can to get jobs back which means growth. and good policies. that was book written about the last major crises called "this time is different." people generally say that the outcome is the financial crisis it took a long time getting in. it would take a long time getting out. i don't personally believe that's true. i think we have policy that's much shorter and if you read that book carefully, very often the reason it took so long getting out is because of bad policy. sometimes unintended. sometimes policy out of anger but we have to make sure we do the right things. we had an unprecedented financial crisis. and i honestly think had it not been for the act of and quick movements of the governments around the world, it would have

gotten worse. and so they are to be applauded for that. and i think it's very important to acknowledge the floor. there's tremendous floors in the financial system that needed to be looked at, analyzed and fixed and a lot of that has begun. in particular, higher capital and liquidity, resolution which i prefer to call bankruptcy for big dumb banks. you have to be able to take down a big bank in a way that doesn't damage the population, the citizens. i personally think they caused that to be charged back to banks just like the united states the cost of taking down banks is bourne by the federal deposit insurance corp. but it's charged back to the banks. i think it's appropriate to protect the citizens. but so much has been done already. more capital, more liquidity, resolution, oversight, derivatives to clearinghouses. the market has put as much leverage in the system and the shadow system where it's not gone and it's out, there's far more transparency. there's far more -- better accounting. i think it would be important when we go to the g20, when it

comes to financial reform that people take a deep breath, a lot has been done. there's a huge cumulative amount. too much will be too much. i know there were bankers. there's nothing about bankers. i think businesses and banks can be part of the system. i would urge that the population is to stop talking about banks like they're all one. they're not. there's many that are pillars that are strength in the storm. i want to mention hbdc and hundreds around the world who in a time of crisis who stood up and did what they could to help and not make money or be greedy et cetera. we got to get these policies right and at one point the conversation had become a little shrill between regulators and banks. we need analysis and that will be part of the solution if we do it right. thank you. [speaking in native tongue] >> translator: well, do we need banks for the economy to function?

well, obviously, obviously it goes without saying. but let us just think back to what actually happened. everything was fine and dandy, everything was going well. prospect to exceptionalism as a matter of fact and then one fine day, the unthinkable occurred. have we already forgotten? when major american banks went bankrupt, it went under. i'm not insulting anyone or incriminating anyone but let's remember how this all began. i mean, we haven't forgotten not two years after the event. and the world was god smacked to see one of the five major american banks literally implode like a deck of cards. what no one had thought was imaginable was actually happening in front of our very

eyes. and the banking system, which depends on one single word, rest on one single word which is trust, confidence. all of a sudden, people worldwide who had savings suddenly started thinking, should i trust? can i afford to trust? so we're talking about september, 2008. everything started to collapse. and the cost to the world had been tens of millions of unemployed who had nothing to do -- nothing to do with this. and yet we're the ones to foot the bill in the harsh and impossible fashion because between the pack of cards that came down when lehman brothers went under and the european, american, japanese, unemployed or wherever in the world, there

is absolutely no link. now, it's generated a lot of anger. a lot of anger. and a lot of suffering. and anguish. but then explanations started pouring out and what did we see? well, we saw for the last 10 years, major institutions whom we thought we could trust were actually engaged in doing things that had absolutely nothing to do with what i would simply call commonsense. i'm sorry to be so blunt and i'm sure it's simplistic and i'm sure there's more talented people who could complain things more cogently than i. this is my way of explaining things. if they collapse it's because they were making a lot of money by selling products that they

were not making money. they were not making profits on the debts that you were sell. so this game which, of course, was very interesting because everyone you passed the parcel on made money. while in the end there was no one to pass the parcel to. and everyone thought that this was an excellent idea. but it wasn't profitable. and then the whole thing collapsed. so what did we decide at the g20? we decided that henceforth, there should never be a single institution that should not have honest and regulation of rules and i'll show you a point of view but we do need flexibility. between flexibility and the scandalous things that we saw and discovered and learned about, there is a huge gap and i

would not like to be perceived as someone who is obsessive about regulation. i am calling for regulation in areas where we should have had rules long ago. there are extraordinary things happening. this idea of off-balance sheets. it's one of the most extravagant hair raising things i've ever come across. you bankers and heads of corporations had respective rule for everything that was on your balance sheet but you could take off your balance sheet, just about what you wanted. what's the point of having a rule? i mean, you could certainly circumvent them and they're full of loopholes i'm not challenging the principle of securitization. it's not that i believe securitization is essential for the world's development. but there must be a limit if

offshore countries were to guarantee 700 times its gdp. are we talking about a market economy or are we simply talking about a madhouse? i don't have issues with flexibility. bonuses, big bonuses, i don't have a problem with bonuses on the condition that there's a counterpart, in other words, a drawdown, some kind of sanction, otherwise, you got a system where when things are going well, the list of reasons why things are going well is easy to identify and those who made things go well are easy to identify and not the reverse. those who in 2007 got bonuses and even in 2008, when things

started collapsing should have been sanctioned. there's nothing wrong with bonuses but they have to be spread over time to make sure -- to ensure that the profits that are being rolling in on one year, long-term profits. now i see the risk you mentioned. if there's too much regulation you see the risk of what you call call shabanking i understand that. but what you call hedge funds who are purchasing incredible things at any price in order to sell them at ridiculous prices, who footed the bill for that? the retched taxpayers. it was a game of russian roulette with our money, with our savings. now, i'm keenly aware of the matter and the need to strike

the right balance. you know, being french, talking to an american or to a british banker i'm necessarily perceived as somewhat suspect. but i'm not being accusatory here but don't be accusatory of us. we will be reasonable. we will be wise but believe you me we will be determined. and those -- those tax havens, believe you me, where any amount of money could be simply stashed away, those are something that we are going to continue to pursue. and one of the things we're going to do is to ensure that the commitments that we have entered into have been actually implemented. it's one thing to make promises. it's another one to keep them. it's a matter of ethics. i mean, maybe the word shocks you but it seems