how is the sec expected to police wall street when its entire budget is hess than the marketing -- less than the marketing budget of one wall street bank? in a may 2010 report, the minority staff of the oversight committee found that the commission's security disclosure procedures are technologically backward. yet under the house-passed cuts, the sec won't be able to continue any improvement of it i.t. systems, and the budget is reduced to 2008 levelses, the sec would have to lay off 600 workers. my point is this: just a few years after the madoff and the worst financial crisis in recent history, should we really be talking about taking 600 cops off of wall street? let's strengthen the sec, not weaken it, and let's also insure that the sec undertakes common sense reform to avoid past mistakes. put another way, after 9/11

despite our intelligence failures we didn't cut the intelligence budget. we doubled it. it's my understanding that the sec has already reorganized, brought in a coo and designed a new tips referral system. these are all commendable steps. in the end, our country will be safer from another financial crisis if sec is well organized and well funded. i look forward to hearing from our witnesses who i hope will provide some constructive ideas on how to improve the sec's oversight of financial markets. thank you, and i yield back. >> i thank the ranking member, and with agreement -- private agreement on our side, dr. gosa, from arizona will have five minutes for an opening statement. >> thank you, mr. chairman. let me preface my comment with the following: i am not a financial analyst, i am not an accountant, i am not a lawyer. but i do have skin in the game

as do most americans. most americans are compelled to invest in the markets through their employer-sponsored retirement plans whether they are 401(k) plans or public or union pension plans. the money largely goes to wall street. the public needs assurances that those who handle our money and our retirement futures are playing by the rules and are being fair and are honoring their fiduciary responsibility and obligations. the public assurances come from the securities exchange commission. the sec is supposed to be guarding the hen house. this hearing raises troubling questions. who is watching the hen house, the fox or the guard? mr. chairman, recent news reports have focused on david becker's conflict of interest. but this hearing is not about a single incident. this problem is actually far deeper and goes to the very heart of management practices at the sec. every organization needs a set of mechanisms to prevent or

detect fraud, waste or mismanagement. these are commonly known as internal controls. it would appear internal controls at the sec are not functioning properly. one, the government accounting office tells us that the sec is unable to reliably track its finances because it cannot control its own financial reporting. two, the sec's inspector general tells us that 30 employees, including an assistant regional directer, viewed sexually-exlis sit materials at work, and only one was actually fired. was anyone else ever disciplined? three, now the news media tells us that the sec's general counsel was allow today advise the commissioners on the madoff case when he had a personal financial interest. all of these matters represent a breakdown in oversight and management, a failure of internal controls. the sad irony is that the sec is the federal agency in charge of making sure publicly-traded

companies have effective internal controls and public governance structures. in fact, mr. chairman, if these events happened at a publicly-traded company, the sec would be investigatorring itself, and -- investigating itself, and what would be the penalties? the federal agencies are subject to the financial integrity act which dictates that they provide annual assurances to congress that their internal controls are adequate. this law has been in effect since 1982 and governs not just financial management, but program management as well. the federal managers' financial integrity act is within the committee's jurisdiction. therefore, this hearing has an important legislative and oversight purpose, the commission's compliance with the law and others. mr. chairman, the anecdotal examples of internal breakdown are symptoms of a much larger systemic breakdown. since there is no sec to investigate the sec, today i

challenge my colleagues. thank you, mr. chairman. i yield back the balance of my time. >> i thank the gentleman, and i now recognize the ranking member of the subcommittee on government organization of efficiency and financial management. mr. towns, former chairman of the full committee, for five minutes. >> thank you very much, mr. chairman, and thank you for holding this hearing today. the sec is at an important cross road. it is successfully emerging from a troublesome period leading up to collapse of the country's financial system. and it is poised to take the lead in reforming wall street and preventing another financial meltdown due it enforcement of the dodd-frank act. this hearing will examine financial management, the work force and internal operations at the sec. it is encouraging to see all the new initiatives chairman shapiro has put in place in the last two years. the sec hired it first chief operating officer to oversee the

accounting functions and financial reporting and internal controls, and we salute you for that, madam chair. the sec has also hired a new chief information officer to oversee it information technology functions. the chairpersons has restructured the entire enforcement division, recruited experts and putting a new governing structure in place. this is commendable as well. as with any organization, lapses can, do and be will occur. i understand the sec has taken disciplinary action against those who have been accused of misconduct at the commission and that greater accountability has been integrated into the disciplinary process. the sec is responsible for safeguarding the confidence of american investors in the financial markets, and i hope our hearing today will help our financial watchdogs fulfill its mission. i now yield the balance of my

time to the ranking member of the full committee. >> want to thank the gentleman for yielding. this committee is responsible for insuring that our government operates effectively and efficiently. that means holding public officials to the highest standard, demanding excellence at every turn and eliminating even the appearance of impropriety. today the committee intends to examine allegations against david becker, the former general counsel of the sec. i do not know mr. becker, i have never met him, never talked to him, and the minority was excluded from mr. becker's interview when chairman issa's staff interviewed him. but i do want to make sure that everyone who comes before this committee is treated fairly, including mr. becker, chairwoman shapiro and others. if i understand the facts correctly, mr. becker's parents invested about $500,000 with bernie be madoff in 2000. mr. becker's mother died in 2004, and when her funds were

divided among mr. becker and his two brothers in 2006, they had increased to about $2 million. when mr. becker joined the sec in 2009, he notified the sec officials about his inheritance, and when issues arose relating to his inheritance, he sought advice from ethics officials and received clearance to proceed. some have suggested that mr. becker may have benefited financially from the sec's decisions, but it appears the opposite may be true. the basic question the sec faced was whether to support a method used by a trustee represented by the madoff victims or a different valuation method called the last statement method. under the first, mr. becker's inheritance would be subject to lit dpaition to recover or claw back assets on behalf of the madoff victims. under the second, it appears that it would not based on the court findings, the sec chose to support the first method.

this meant the trustee could sue mr. becker and his brothers to recover some of his mother's inheritance which is exactly what happened. mr. chairman, in your briefing memo for today's hearing, you acknowledged that is the sec's decision was, quote, detrimental to mr. becker's interests. nevertheless, i have serious questions about the conclusion of the sec's option that these issues had no effect on mr. becker's financial interests. someone else of questionable character might have tried to take advantage of this situation. i also have questions about whether mr. becker's interests should have been disclosed more widely within the s everything c -- sec, and i hope we can learn more about this process today. i also invite my republican colleagues to join us in making sure that the sec has all the resources it needs. the proposed cutting $148 million from their budget, and we do need a robust sec.

chair can woman shapiro, i read -- chairwoman shapiro, i read about what you have done and accomplished. you inherited a mess. senator mccain said the former chair should resign. and so we understand that. and so, again, i'm looking for a fair hearing and one where we can get to the bottom of all of this. i yield back. >> i thank the ranking member. and all members may have seven days to submit opening statements for the record. we're going to now recognize the panel. we have the honorable mary schapiro, the chairman of the securities exchange commission, mr. jeffrey risinger is the directer of the sec's office of human resources. mr. jonathan jack katz is the former secretary of the securities and exchange commission for 20 years. mr. steven krill especially serves as deputy chief

litigation counsel from 1993 to 2001, and ms. helen chapman is the attorney representing approximately 350 investors in mr. bernard l. madoff's investment securities firm be. it is the policy of the committee that all witnesses be sworn in before they testify. please rise and raise your right hand. do you solemnly swear or affirm that the testimony you are about to give this committee will be the truth, the whole truth and nothing but the truth? the record -- you may be seated. the record will reflect that all the witnesses answered in the affirmative, and with that, i thank you. so we will begin at this time. chairman schapiro, i think you've heard members' opening statements, and we'd love to hear your comments about this conflict that has been discussed.

>> thank you very much, chairman mchenry. ranking members and members of the subcommittee, thank you for inviting me to testify today regarding the financial management, work force management and internal operations of the securities and exchange commission. i'm joined by jeff risinger, the directer of our office of human resources. when i arrived at is, ec two years ago, the agency was reeling from a variety of economic events and mission failures and in need of across-the-board reform. we needed more experts, better training, improved communications among our divisions and offices and an effective strategy for handling tips and complaints. and these challenges were exacerbated by inadequate infrastructure, material weaknesses in financial management and a culture that had failed to keep up with an increasingly complex financial marketplace. and so we immediately and comprehensively set out to change the way the commission worked. my written testimony details the reforms of the last two years, but i'd like to highlight a few.

we've brought new leadership and senior management to virtually every office and hired the commission's first chief operating officer. we revitalized and restructured our enforcement and examination operations and revamped our handling of tips and complaints. we broke down internal silos and created a culture of collaboration. we recruited more staff with specialized expertise and real world experience b and expanded our training. and we enhanced safeguards for investors' assets through new rules and the las vegassageing of public accounting firms. although we have made significant progress, we can't to seek ways to improve our operations. after all, our correspondents -- correspondents, overseeing the largest capital markets in the world and inspecting the activities of thousands of financial intermediaries -- are essential to restoring investor confidence in the wake of the financial crisis. but our funding has presented challenges. from 2005 to 2007, the sec experienced three years of

frozen or reduced budgets force ago 10% reduction of the agency's staff. similarly, the agency's investment in new or enhanced i.t. systems declined approximately 50% between 2005 and 2009. while sec staffing levels are just now returning to 2005 levels, the securities markets have undergone tremendous growth sin then. indeed, during the past decade trading volume has more than doubled. the number of investment advisers grew by 50%, and the funds they manage increased to $38 trillion. and operating under the continuing resolution only exacerbates the imbalance between our resources and the magnitude of our mission. at the same time, the dodd-frank act is significantly expanding the sec's responsibilities. in addition, we are also charged with enhanced supervision of rating ago says, heightened regulation of asset-backed

securities and the creation of a new whistleblower program. for these reasons, i'm concerned without additional resources we will not be able to fulfill these responsibilities in the manner which congress intends and the american people deserve. finally, i would like to address the issue of former general counsel david becker's role in light of his mother's ownership of an account at may dow that was closed years before the fraud was revealed. mr. becker informed me, i believe shortly after he arrived in 2009, that his mother had had an account with madoff before she died, and it had been closed a number of years before he returned to the agency. it did not strike me that his mother's account, closed years ago, would present a financial conflict of interest. mr. becker was and is an experienced attorney who had served as general counsel under three chairmen, and i relied on him to present ethics-related issues to ethics counsel and follow ethics counsel's advice, and i understand that is what he did.

when i returned to the agency in 2009 having served there in the late '80s and early '90s appointed by president reagan and president bush, i read many letters from madoff's victims, people who had lost everything. my entire focus was on how to fix the sec to insure that another tragedy like madoff could never happen again and how to make sure within the contours of the protection act that we could get the most money to people who were literally losing their homes. i'm proud of how much we've accomplished in the past two years working tirelessly with an extraordinary staff to improve the operation of the commission and enhance the public's perception of the integrity of our work and the fairness of our decisions. but while mr. becker did solicit and follow advice from the ethics counsel, i realize in light of this incident that as chairman i have to insure that we go beyond what may be required in my particular situation. on matters like these, i have to be looking around the next corner, looking beyond the

horizon and thinking above and beyond what may be appropriate advice from ethics counsel to make sure nothing occurs that could raids questions about the commission's -- raise questions about the commission's mission or processes. to insure this matter's fully reviewed, i requested that the inspector general conduct an independent review and analysis of all of the relevant facts. in addition, under the leadership of our o new ethics counsel, we've been performing a top to bottom review of our ethics program. i look forward to answering questions about this matter to the best of my recollection, but i can say to this committee with assuredness, we will learn from this experience, and we will take all actions mess to earn the trust that the public places in us. thank you. >> thank you, chairman. and i would counsel the committee that the lights before you, at one minute to go it'll turn yellow, and red means stop. so with that, if you could keep your comments to five minutes, we'd certainly appreciate it. mr. risinger. >> mr. chairman, i'm happy to be

before the committee today, i look forward to taking your questions. i don't have any further statements. >> five seconds. that might be a record. [laughter] thank you and congratulations. mr. katz. >> good afternoon, chairman mchenry. chairman platts, ranking member quigley, ranking member towns, members of the two subcommittees, it really is an honor to be invited to testify in the operation of the securities and exchange commission today. it's a matter of great interest and importance to me personally because for most of my career i was an employee of the sec. for 20 of those years i served as the commission's secretary which was one of those unusual positions that afforded me a rare opportunity to participate firsthand in virtually every aspect of the commission's responsibilities. i retired from the commission in january of 2006, and in the five intervening years, i've really been fortunate. i've served as a technical adviser to a variety of

securities commissions in the governments and emerging market countries, and i've also had the opportunity to speak and write about financial regulation in the u.s. in 2008 the center for capital market competitiveness at the u.s. chamber of commerce invited me to conduct a study and write a report on how to improve the efficiency and effectiveness of the sec. i wrote this study based upon interviews with more than 50 current and former sec staff persons and commissioners who agreed to be interviewed and who gave me their ideas, insights and criticisms. the best of which i shamelessly stole. in addition to this report, in 2009 with i wrote a second article, it appeared in the university of pittsburgh law review. this article focused primarily on the enforcement division of the sec, a subject i did not discuss in the chamber report. unlike the chamber report which reflected the collective views of a wide range of people, this article's really my own personal views.

in both documents i attempted to identify what could be done to make the agency a more effective capital market regulator. now, today i am aware that one of the focal points is, of course, the sec's budget and the question of resources. well, i have to answer that i, like most people, agree that the agency does need more staff to carry out its responsibilities. but while more money and more staff is necessary, i don't think it's sufficient. to do the job well, the agencies has to re-examine how it does that job, and i think it has to make changes. i think it's time to critically self-examine core functions and recognize most of them just haven't been very effective. my concern is that just having more people do more of the same thing in the same way is not the best solution. i think we need fundamental changes in organization, management and mission definition.

chairman schapiro has identified a number of the initiatives she's undertaken. i worked for seven chairmen and four acting chairmen and with the possible exception of the first chairman i worked with, chairman schapiro has probably focused more attention on management and organization than any other intervening chair mesne. but, again, these are first steps, more needs to be done. i want to highlight five points that are contained in my written statement, and i don't have time to go through all of them, but if people have questions, i'd be happy to do it. i think the agency needs a possible reorganization. i advocate what is referred to internationally as the twin peak approach. one vision that deals with financial services regulation and another division that handles the so-called safety, soundness and stability functions. i think the agency needs a chief

operating officer. i applaud chairman schapiro for appointing one, but i think you have to go further. you need a chief operating officer who really is that and has more than the title. the way i distinguish it is when you try and build a house, the architect and the owner design the house, but you need a general contractor to actually get it done, to build it well and keep you on budget and on time. i see my time is almost up, so i'll quickly identify two other things. i think there needs to be substantial changes in enforcement. when you look at madoff, you understand, in my opinion, this was not a question of culpability, of a few bad people doing bad things. madoff is similar to other failures of the commission in the past. these are structural issues that go with how the division enforcement frames it responsibilities and conducts those responsibilities. it has to be proactive, not reactive.

and its results have to be aimed at remediation, not penalties. penalties are the function of the justice department. and in that respect, i would advocate very strongly beefing up a criminal security office in the department of justice so that the agency doesn't have to rely upon southern district of new york which has limited jurisdiction. and just in closing, i want to mention what i think is the most important recommendation of all. the need for a special study of the security markets. in 1961 the sec was similarly troubled, the markets were in similar upheaval. congress appropriated funds to create a special study of the securities market. a group of technocrats, experienced people from government and from industry who spent 18 months studying the markets and how the sec functioned. they issued a five-volume report that literal hi for 25 years -- literally for 25 years was the touchstone for everything the

sec did. i think we need another one. thank you very much for the time, and i'm happy to answer questions. >> thank you, mr. katz. mr. c rickd krill monos, you're recognized for five minutes. >> thank you, mr. chairman. chairman mchenry, ranking member quigley and ranking member towns, thank you for hearing us today. we've seen an explosion in the size and capacity of our financial markets, trading volume, workers doing thousands of trades in a few seconds instead of maybe a hundred trades a day, high-speed computer-driven strategies, fragmentation creating away from the exchanges and into dark pools, 24/7 globalized stock trading. we've seen investment products become so complex that the sophisticated traders who trade them don't fully understand what they are. and scary systemic risk that threatens recurring crises. now after the crash we see many

investors pulling out and staying out of stocks and mutual funds. investors are still scared and sidelines with their decimated 401(k)s. investor perceptions are critical. these people will be unwilling to continue to risk their capital or risk their capital again if wall street's cop on the beat becomes a cop on furlough. last summer in the depths of the worst financial crisis in 80 years, congress recognized that the securities and exchange commission needed twice the budget to be relevant in today's hypercharged markets. whatever issues anyone in congress has with the sec, i would respectfully suggest that the answer is not to starve it in the wake of the crash. of the answer is not to create an environment where it will be easier for the fraudsters to prey on investors. instead, the answer is for all of us here and now to commit firmly to do whatever it takes to make the sec the strong and smart overseer that our capital

markets deserve to recover and grow. one thing that's of paramount importance, nobody's asking the taxpayer for one dime to fund the sec. what is often forgotten in the discussion is that american taxpayers pay absolutely nothing to run the sec each year. under 1996 legislation adopted by a republican congress and a democratic president, the money to run the sec comes entirely from wall street transaction fees and assessments designed to cover the entire cost of the sec's budget. because of this substantially increased sec appropriation paid for with this successful 15-year-old mechanism would require no tax dollars whatsoever, and it would add nothing to the deficit. in short, the wall street user fee money is already there. congress just has to let the sec use it to police wall street. maid dawf was a strategy --

madoff was a tragedy. the sec missed it and they have not tried to run away from that. but so did finra whose predecessor installed madoff as vice chairman, and so did the new york attorney general with madoff right in the his own backyard, and so did how many others including the financial services firms that regularly interacted with him. madoff was an industry icon and idol, and nobody knew that he was really a crook. yet through thick and thin the sec was out there bringing almost 700 complex cases for enforcement every or year against almost 2,000 defendants every year and with greater funding could have brought far more. we hear criticism of the sec's recently-departed counsel, david becker. he was not the secretary of some cabinet-level department. instead, he was the general counsel, one of multiuntil senior advisers, in a

five-member bipartisan submission composed of two republicans, two democrats and one independent. but whatever his power, the point is he did not use it to benefit himself. the month after he left the agency is still to this day remains unclear exactly how any of the madoff-related claims are ultimately going to be calculated. and in any event, the madoff trustee, irving picard, reports to the court, and he'll make his own decision on what he wants to claim. finally, we need some perspective. what we're talking about is whether the dorothy beck or's -- becker estate will get to keep the 500,000 originally invested or will get to keep some small amount on top. that seems to be where this is all breaking down and being discussed. the senior ethics official that becker consulted with ruled that whatever theoretical conflict this may actually have presented, it did not create such a conflict that he needed

to recuse himself based on what was known at that time. the possibility of a claim against the estate of a particular type was at that time too speculative. now we know more, of course. and the amount -- i'm sorry. >> thank you for your testimony. >> thank you, mr. chairman. >> ms. chapin, you're recognized for five minutes. >> thank you. >> if you'll pull the microphone to your mouth, it's directional. >> thank you so much for giving me this opportunity to speak to you. i speak on behalf of approximately 500 madoff investors whom i represent, and i speak as well on behalf of every american who hopes to save enough money in his lifetime to retire on that money. i speak on behalf of every american who relies upon the brass plaque on his broker's desk, sipc. we are told when we invest that

every account is insured up to $500,000. and yet sipc has taken the position in the madoff case that the law doesn't apply to it. and if i had to grade the sec's performance with respect to it essential function of protecting investors with respect to the madoff case, i would give the sec an f. the sec instead of enforcing the law against sipc which it is charged by congress with the obligation to do, instead of enforcing the law we now know that in january 2009 the sec agreed with sipc that for the first time in it history -- it history it would not pay sipc insurance to each madoff victim based upon the investor's last statement. sipc is an insurance entity established by congress which

has the power to assess the wall street firms to raise the funds to protect investor. investors. the statute doesn't give sipc the right to define how it's going to allow a claim. the statute mandates that a claim is based upon the customer's last statement. and yet the sec joined in sipc's violation of the statute. this is not just my opinion, this is the opinion of chairman garrett who has proposed h.r. 757. and in proposing h.r. 757 which is simply a clarification of the law, one could view h.r. 757 as a statement to the sec, you cannot avoid the law. and sipc cannot avoid the law. mr. garrett made a statement when he introduced this bill that sipc has violated the law, and the trustee in the madoff case has violated the law.

if you recall, in 1970 when sipa was enacted, investors were encouraged to relinquish the protection of having certificated securities. that was something that wall street wanted. and in exchange for relinquishment of that protection, investors were promised sipc insurance. sipc insurance was raised to $500,000 in 1978. it was never raised thereafter. but in the madoff case sipc decided that was going to be too expensive for it wall street members, and so it was going to try to come up with an entirely new basis for insuring accounts. for the first time in sipc's history, it decided it didn't insure the balance on the last statement. it only insured the net investment over the life of the account which might have been 20 years, 30 years, 40 years.

there is no evidence that any investor in today's stock market has of what he owns other than the statements he receives from his broker. we don't have the luxury of going back to certificated securities. the internal revenue service relies upon those statements. every investor relies upon those statements for planning their retirement, for planning their estate plans for their children. there is no basis in law for what the sec did in this case. and this is not a question of insufficient funding for the sec. this is a question of doing it mission which is to protect the investor. now, i'm not here to pine on whether or not mr. becker had a conflict of interest. i don't think there can be any be doubt about it. but whether he advocated the constant dollar adjustment which, obviously, reduced his own exposure or or whether he said to the sec when he came

onboard in february 2009, you have made an illegal agreement with sipc which would have worked to his advantage, his judgment was clouded because everyone in the sec forgot the law. there is one way to remedy this and to restore confidence in the capital markets for the average american, and that is to enact h.r. 757. thank you. >> thank you for your testimony. i thank the panel for their testimony. with that, we will begin questioning on our side by dr. xosar -- gosar of arizona. he's recognized for five minutes. >> chairman schapiro, when david becker first came to you in february of 2009 and said my mother had an account with bernie madoff, why didn't you ask him any questions about it? why not even simple questions like how much money? >> congressman, to the best of

my recollection and just so i can be clear, i haven't looked at any e-mails or whether there might be any contemporaneous notes, so i'm recalling back because our inspector general is looking at all this, so i'm recalling back two years ago. the best of my recollection was that mr. becker told me that his more, who had passed away years ago, had had an account at madoff. i did not -- because the account was closed years before, i did not think that the account of a long-deceased relative would raise an issue of a conflict of interest in mr. becker's work. i did expect that he would go to the ethics counsel. he's an experienced government official, government lawyer, served under three chairmen at the sec. and we use our ethics counsel all the time for their advice. i expected him to run it by the ethics counsel and to follow their advice, and, and that's the way it went forward. >> it seems that if same

situation existed in a publicly-held or traded company that you were investigating, would you turn such a cavalier approach to that? >> well, it's hard for me to imagine this situation. i mean, these are the government ethics rules and the concern about -- >> an ethics rule, nonetheless. >> it's very hard to answer in the abstract. it would depend -- >> it just seems that there's a very different aspect that what's good in the private sector and publicly-traded situation is not going well for the government. let's go to my next question. ms. chaitman, do you believe the account valuation method that david becker recommended would have benefited his personal financial interests? >> there is no question that the constant dollar approach which apparently mr. becker invented would benefit him personally and reduce his clawback expose o your. but the more significant problem

with the conflict of that mr. becker had is that it clouded his judgment. the law is absolutely clear that every investor is entitled to sipc insurance paced on his last -- based on his last statement. and mr. beck or had an obligation as the general counsel of the sec to make sure that the sec complied with the law and enforced it against sipc and that's the great failure which has caused devastation to all of my clients. >> chairman schapiro, your agency's inspector general compiled a report about the sec's failure to uncover madoff's ponzi scheme. that report devotes two sections out of 11 to describing in great detail every possible connection between sec employees and madoff. do you think that your general counsel's receiving funds from a madoff account would have been appropriate material for the inspector general or not? >> that would be a much better

question for the inspector general. i have a pretty high level of confidence that he did quite a thorough report on the agency's failures with respect to madoff. >> the inspector general's madoff report mentions on page 382 that two family members of an employee in the office of the internet enforcement invested 1.5 million and $500,000 respectively with madoff. the inspector general found it necessary to make sure this employee had no involvement in any madoff examination. do you think that the inspector general would have been interested in a similar situation involving your chief lawyer, a senior sec official who served as general counsel from 2000 to 2002 while the sec was ignoring whistleblower complaints about madoff? >> i can't predict. i can imagine that he might have been and, of course, he's looking at all of these issues now, and i i expect that he'll thoroughly explore that. >> well, i understand that you inherited a horrific problem,

but that -- it always starts with top down, you know? private sector, businesses always look at accountability within the hierarchy. and it seems like we have a two-edged sword here that we should have demanded better accountability. would you agree? >> congressman, i would agree that as i -- from where i sit now and understanding all the things that i understand now that i didn't want understand in 2009 having arrived at the sec and discovered that i had an agency in absolute ruin in some regards on my hands to manage and not knowing, obviously, all the steps that would be taken by the trustee or the decisions the commission would make down the road. but knowing those thing now, i wish that we had -- i wish that mr. becker had recused himself, absolutely. >> gentleman's time has expired. the gentleman from illinois, mr. quigley, is recognized for five minutes.

>> thank you, mr. chairman. madam chairman, "the new york times" reported on march 5th of this year that the sec has declined to enforce the requirement from dodd-frank that would make rating agencies subject to expert liability under the securities law. this would make rating agencies liable for faulty ratings. could you

>> all public offerings of asset-backed securities and pushing them into the private markets which we felt were not as good for investors. we are right now our staff is working through reconsideration of our disclosure requirements, and i believe that they will recommend that we eliminate our pre-existing requirement for including the ratings and, therefore, the liability provisions can go forward. we're also hopeful that some of the newer rating agencies that have indicated an interest in becoming registered with us will actually be willing to consent which is, i think, how congress hoped the law would work. >> could you guess on the time frame for that? >> i can't, but i'd be more than happy to -- i would say over the

next couple months, but i'd be happy to get you a more definitive answer right away. >> thank you. and you talked about the agency ha you inherited and you talked about, to a certain extent, the reforms necessary, those you've implemented. but at mr. katz point, whether or not more assets -- and i think you need the assets to do your job -- help more than the need for, in a sense, restructuring, reforming, reinventing yourself. are you looking at the agency from that perspective in the broader picture? if you were to start over, what would you do and how would you do it? >> absolutely. i actually would do, again, many of the things we've already done. this has been an agency that's sort of been taken upside down and shaken pretty hard over the last two years. so new leadership across the board in every major office and division. a new chief operating officer, a new chief ethic counsel. our first-ever chief compliance officer. we restructured our enforcement

division and put people into specialized group where they could get deep expertise to bring enforcement cases more quickly in the foreign corrupt practices act or insider trading. we've restructured our examination program, enforcement and examination largely in response to the failures that were so vividly demonstrated in the inspector general's report on madoff. we've also brought new technology which is going to be critical to us. we have too many people doing low-value work was we don't -- because we don't have the technology -- >> what do you mean low-value work? is. >> for example, when we bring in enforcement cases, we bring in massive amounts of electronic data so we can look at trading records or e-mail transmissions between parties who might be sharing nonpublic information. we need to be able to use data analytics to find the important information in all of that, not have poem plowing through -- people plowing through all that information. when the markets failed so

dramatically on may 6th, it took us five months to reconstruct trading data because we don't have the capacity in the sec -- >> and that was the final question given we have limited time. i mean, are you a technological match for those that you are regulating? >> not at the moment, we red light. we have a phenomenal new chief information officer. he's making real progress, i think, but we are a long way from the people that we are regulating in terms of our technical capability. but i think we can get there. i think we can -- >> thank you. >> -- put up a good fight, anyway. >> thank you. i yield back. >> i thank the gentleman. i now recognize the vice chair of the t.a.r.p. and financial services and bailout subcommittee, of new hampshire, for five minutes. >> thanks very much, mr. chairman. thank all of the witnesses for being here today. in your testimony you talked about the size, structure and complexity of the u.s. capital markets and financial companies

that have grown substantially in the past 30 years, and i think what your position is that you're comparing the sec over that same period of time of and the fact that it has not grown or changed or modified substantially. but i wanted to get a little clarification on that first, if you would. >> yes, thank you very much. obviously, i think everybody would agree that the capital market of today are, you know, exponentially greater. but my point was more directed to the way the sec structured. and it's not just a question of size, it's a question of a structure that corresponds to the entities you're regulating. and the point i was making that in the early 1970s when, basically, the current organizational structure of the sec was last reformed, that focused on stock exchanges and broker/dealers. and you had a division of investment management regulation which focused on mutual funds and invest piments advisers. and there are two very separate

components of the industry, and there really was very little overlap. that no longer exists. because of consolidation in the industry and the blending of the roles, the fundamental distinction between a stockbroker who is a commission-based seller or securities -- seller of securities and an investment adviser who is an under management adviser on a comprehensive portfolio is a historical artifact. it doesn't exist. but because you have two decisions applying two -- divisions applying two different laws according to a model that no longer exists, you get these anomalies. the fight over fiduciary responsibility, that was embedded in the laws. you had two different divisions that had different ways of thinking about it, and neither one of them wanted a compromise. they both wanted to maintain their piece of it. >> and does that speak to the silo effect that you've been

referring to? >> absolutely. you know, i used to joke that the silos at the sec were so real that, in fact, they had locked doors. and that because all the paper in the agency had to come from my office. i had a skeleton key that occasionally allowed me to lock the silo doors and get inside it. most people don't. and it's a real issue in any organization no matter what the size. and it's compounded because, remember, you've got different security laws that were written at different points in time for different segments of the industry. and each division sort of jealously guard the law that it controls. the market's changed. >> well, i listened to what the chairman mentioned in her earlier comments about some of the improvements and modifications and changes that she's made, and they sound laudable and responsible. that being said, i wonder what

type of congressional action may or may not be necessary given the systemic problem that we have seen with, within the sec. and i don't want to get into specifics, but the things we've been talking about here. we have to prevent these from happening again. people in our nation need to have confidence not just in the sec but in the markets as well with. and i wonder, sir, what you could say about the type of intervention you feel congress should be considering. >> well, that's a very difficult question for me to answer. and the reason is because, look, i spent virtually my entire career at the sec. and i think it's very different for congress to micromanage the internal organization operations of a government agency. you can set policy, you can give direction, but i think it's dangerous when congress tells the agency this is how you get it done. i think the agency really has to

take this responsibility on. and chairman shapiro's brought in an entirely new team of senior people. i don't know most of this them. they seem very competent. my hesitation is this: if you rely exclusively on a team of people come anything to effect change, when those people walk out the door, the change walks out with them. you need to change the structure, you need to change the culture. and most importantly, you need the agency to define what it is it's trying to do and how do you measure t gotten it done it's gotten it done. you need that discipline. >> chairman, what assurance can you give us that that new management team is effectively managing and maintaining the necessary changes? >> well, i have to say i think change starts with leadership, absolutely, and having a whole new leadership team makes an enormous difference. but they are very committed to working together and

institutionalizing cooperation and collaboration among all the divisions. so, for example, we now have colleges of regulators for the largest financial institutions. it's no longer just the trading and markets division that looks at them, no longer just the examination group. there is a group of people drawn from all over the agency who could have potentially an interest in the health of that financial institution who meet regularly to talk about what's going on in that company, to look at the financial, the meet with the staff of that financial institution. so college of regulators is just one example. we have task forces across the agency. we're merging in the some of our offices and will eventually in all of them our programs for investor advisers and broker/dealers which katz mentioned. and i should just mention we have commissioned dodd-frank required us to hire an independent consultant to do a very in-depth study of the sec's organizational structure, and that will be released today, and

i fully expect there will be some helpful ideas there for us to further improve how we operate. >> gentleman's time has expired, and with that i recognize the ranking member, mr. towns. >> thank you very much, mr. chairman. let me thank all of you for being here, really appreciate you taking the time to come in. chairman shapiro, the sec plays a critical role in protecting investors and insuring that our financial markets operate effectively. you have stated that freezing the sec budget impedes the agency's ability to meet its mission which is to protect investors, maintain fair, orderly and efficient markets and facilitate capital information. can you put that in concrete terms for us? if sec -- if the sec does not

have the budget to properly oversee capital markets, how will it effect your staffingsome. >> yes, sir, i'd be happy to. i think the two things that are most severely impacted by a limited budget are capability to hire the new kinds of talent and expertise we need. economists, people who have worked in hedge funds on trading desks, financial analysts. the new expertise that will help us keep up with what's going on in the marketplace. and the second is the fact that it will slow down and really hurt our efforts at reforming our technology at bringing it up to speed and giving us the capacity to do the things we need to do in order to keep up with wall street. i know we'll never meet their budgets. i understand that, i have no expectation and don't believe the american public should pay for us, but we have to do much better than we've been able to do. so i think those are the two primary things that are really impacted. it plays out in lot of other

ways. when examiners, when we don't have a sufficient travel budget, examiners can't travel to go into that mutual fund where most americans hold their investment wealth and examine the books and records. they can't go to the investment adviser or to the broker/dealer. so in little ways the lack of resources plays out, but the really fundamental ways are bringing in those people that we need to really reform and transform the agency so people know that we have at least a fighting chance at staying on top of what's going on on wall street. and so we can also respond when the emergencies come along as we saw on may 6th when the market just absolutely fell apart, scared people very badly in the retail investing public and in the institutional investing public as well. we need the capability to respond to those thing very, very quickly. >> what about the flexibility, do you have that? for instance, if there's a crisis situation and you need a

specific kind of person and in order to get that person you might need additional kind of resources to track who you need to do the job at that particular time, do you have that kind of flexibility? >> we have had some flexibility over the last two years because congress has been generous in our budgets, but if we continue at the cr level or are cut, the answer to that is no. of i mean, may 6th required us to go out and bring in experts to help us analyze and go through all the trading data so we could reconstruct for the public to see what was happening every second in the marketplace when the dow dropped 900 points or 500 points in just a matter of a few minutes. t responding to emergencies -- it's responding to emergencies is one of the things i do worry about, and that's where we lose flexibility if we don't have a sufficient appropriation. >> thank you very much.

on that note, mr. chairman, i yield back. >> thank you, mr. chairman. and with that i recognize mr. mack of florida for five minutes. >> thank you, mr. chairman. and i also want to thank the panel for being here today and giving us an opportunity to get your insights and ask a few questions on a very serious topic. and i would like to start with chairman scha pix ro, if i might. do you feel as chair of the agency that it ultimately is your responsibility to insure that all of the employees are acting in accordance with sec employee conduct standards? >> i have responsibility for the agency in that sense. i cannot tell you that with 3,800 employees i can take individual responsibility for each and can every one to insure that they're following the requirements the way they should be. >> but it is, ultimately, t your responsibility -- it's your responsibility as the chair of

the sec. >> ultimately, i am responsible for the agency's conduct. >> okay. if you do, if i could direct your attention to slide number four, chairman schapiro. are you familiar with the rule that's being presented on the screen? >> yes. >> um, well, after reading through my material and hearing your testimony, it seems to me that you with respect completely knowledge -- you weren't completely knowledgeable of in this rule at the time you hired david becker. so please allow me to read it so everyone in the room can understand the entire rule. the securities and exchange commission has been entrusted by congress with the protection of the public interest in a highly significant area of our national economy. in view of the effect which commission action frequently has on the general public, it is important that members, employees and special government

employees maintain unusually high standards of honesty, integrity, impartiality and conduct. they must be constantly ware of the need to -- aware of the need to avoid situations which might result either in actual or apparent misconduct or conflicts of interest and to conduct themselves in the official relationships in a manner which commands the respect and confidence of their fellow citizens. chairman schapiro o, were you familiar with this rule at the time that you received david becker as your general counselsome. >> i can't tell you whether i had read it. i've been in and out of government most of my career, so i'm generally aware of the ethics rules. but i will tell you -- >> hold on, i'm sorry, because i only have a little bit of time. >> i'm sorry. >> a moment ago you said you were familiar with the rule -- >> well, i am, but you just asked me had i, was i aware of

it at the time david becker arrived at the commission, and i'm just telling you i can't recall whether i had reread the rule recently at that time orbit. >> but throughout your time in the '80s and '90s, you're familiar with this rule? >> yes, and that it is each employee's obligation -- >> and do you believe that mr. becker was sufficiently aware of the need to avoid actual or apparent conflicts of interest? >> i believe that he -- i want to be very careful. i believe he did what he thought was appropriate and what was required of him, going to the ethics counsel and seeking advice, getting that advice and following it. do i wish now that he had been more sensitive to the potential for this issue to raise an appearance of a conflict? yes, i wish that that had happened. >> all right. just a few more questions. do you think that you were sufficiently aware of the need to avoid actual or apparent

conflicts of interest? >> on my part, yes, i believe i am. >> you've said now a couple times, i think, that you wished that mr. becker would have recused himself. is that because of the fallout, or do you really believe he should have recused himself? >> i believe that, as i said, at the time from my perspective a closed account from a long-since-deceased relative, it didn't appear to me to raise a conflict of interest. but i believe now knowing what we know now not because of the fallout -- though that's very real -- but because if we could connect the dots and look ahead and see what all the steps would have been that, yes, it would have been appropriate to have recused. >> let me say this, and also i heard you say earlier that you kind of referred to the budget as kind of the reasons why some of these mistakes happened. how much does it cost to follow

that rule? >> that's a, that's a personal initiative. it doesn't really cost anything. but -- >> so the argument about the budget is, as it pertains to this rule doesn't hold water? >> and let me be clear -- >> let me, let me -- so the argument about the budget in your opening statement that you talked about really doesn't pertain to this rule? >> no. no, and i didn't mean to suggest in any way that it did. >> thank you. of. >> gentleman's time has expired. with that, i recognize the ranking member of the full committee -- >> i don't want that to be left hanging. i never heard you, and identify heard all of -- i've heard all of your testimony and read your testimony, ms. schapiro. you never made that allegation, i want to make that clear. i think it's a very unfair statement. ..

that shows you why and i am sure you see it, while we have to make sure we don't have the appearance because what happens is every decision made by mr. becker then becomes suspect. it is my favorite author in his book the speed of trust says that once trust is lost everything moves more slowly. i cannot begin to tell you how

pleased the was when you walked in here today and said we will go beyond what may be required. that is so very important. in my office i have five people. whenever there is an ethics question they all have to agree. one veto is out the door. why? because the public is looking over our shoulders. we wanted to do the right thing and we want to make sure it is right. this has been a major wake-up call. it is so easy for us to get into a gotcha mode but i must tell you after a read about but you had an and the sec since you have been there and having sat on this committee and watched mr. cox and what he did with this organization and how it went down under him to see you

come and try to sweep up the mess i must commend you. but the sad part about it is one of these little incidents basically can almost destroy the trust. to you understand what i'm saying. is the mike on, island you to commit to this committee if you will, tell me if these incidents come up again, tell us the difference of how you might approach it. i understand why you do what you did. he tells you look, years ago, he wants to know about a conflict that you listen for a while and get 3,800 employees to deal with, you hear him and you say the expert on this is the ethics guy. make sure you check with him. and he's got an opinion. how would you deal with this

differently now? looking backwards. >> we have a new ethics counsel. the top and bottom review of our program. i need to work with all of our employees about a heightened sensitivity to issues like this. that we have to be -- i worked so hard in the last few years to put this agency back on the right path and earn the trust of the public and you are right. a small thing like this is not a small thing like this and can release status back. is not fair to 3800 hardworking employees. it is just like when someone mentioned in their opening statement, employees viewed pornography of the sec it. infuriates me because most people are working their hearts out day and night to do the right thing and it hurt the reputation of everyone of us. i have to work with our employees to make sure we increase the sensitivity to issues like this and with their new ethics counsel when their

review and of the program and how it might be strengthened we will get some good fights and the inspector general is likely to have some recommendations that are helpful. >> i read in your testimony talking about technology and trying to keep up with these ever-changing transactions and how complicated they are becoming and i want to make sure you have all the resources you have to address this because so many of our constituents on both sides lost a lot of money and they need confidence to re-enter the system starks. >> i agree. >> thank you. >> i think the ranking member and with that we yield five minutes to mr. ross. >> as a kid i always wanted to be a lawyer and i found a law school that would take me.

i have a deep-seated respect for the sanctity of the law. so much so that i was gratified the american bar association and my state bar association require not only recourse the examination of professional responsibility. diana state you are lawyer and even though you inherited quite a mess at a time of great disarray and the sec it begs the -- my question is as a lawyer when mr. becker came to you did you not think a further investigation should be made? as a lawyer -- we make sure of that. it seems to me for inquiries had been made at that time this might have been avoided? >> i don't disagree with you that a further inquiries might have been made this might have been avoided. i could only sit with us and beginning, when he raised it

with me a closed account. if it had been a net winner account or anything else from a deceased relative didn't raise the conflict of interest -- >> the fact that he asked for a waiver from his support in that is indicative of an inherent and turtle problem from an ethical standpoint. >> a don't know that he asked for a waiver and have no access to any documents of any sort. he asked whether or not he had a conflict and we decided he did not have a conflict. >> do you know who was advising him? >> the ethics counsel of the sec at that time. no longer the ethics counsel. >> the general counsel under him. >> that is the case. >> did you feel this would be avoided again in the future?

>> i would love to say absolutely without a doubt. it would be my hope that with the strong ethics counsel hired from the treasury department that with government experience clippers the revamping of our program and additional education training for our people i would hope and expect that we could afford -- >> the american public needs that assurance of credibility. with regard to human-resources, are your employees part of the general schedule in terms of compensation? >> we have a separate schedule we receive from legislation from congress in 2001/2002. >> we subject to the pain-free is the president issued? >> yes. >> so that really just affect cost-of-living increases. >> the effect that. >> what about a greater step increases?

>> we have a merit a process that is the equivalent of increases for the rest of the government. that is technically not affected by the pain-free is. >> in your disciplinary procedures what is the probationary period? >> a year. >> after one year, if there is a disciplinary situation, is there a presumption in favor of the employee if they have been found a violation or lead to a violation of any personal policies? >> the federal laws we have to follow in terms of discipline in employees set out the number of standards we have to go through the biggest inflow factors to issue and one of them is a factor that says this level of discipline that is necessary to stop the behavior and not more than that. there's a presumption that you are taking a preventive or corrective step and unnecessarily -- >> these would be the same procedures employed by those

viewed by port -- only one person was fired as a result of that? >> of the cases we had since 2005, 50%, 51% have resigned, retired or moved into place. we had some reprimands. >> what is the attrition rate in your department? in your agency? >> in normal years, 7% to 8%. the last couple years because of the economy. 3% to 4%. >> how does this compare with other rates in the agency? >> we're talking just attrition in general, that is pretty equal and with other agencies. >> last question, with regard to the bernie madoff situation, you put them on notice and what was going on, what action would you

think was necessary in order -- for -- what action would you have requested be done in order to avoid this conflict? >> under the statute congress mandated that the sec go to court and enforce the law against it and that is precisely what i asked ms. schapiro to go -- when mr. pierce testified on july 14th with the subcommittee and capital markets that she would do everything in her power to provide the maximum coverage for all investors i assumed she was in fact going to follow my request but now i have learned that in january of 2009 the sec had already agreed with the denial of insurance to half of the victims. >> i yield back. >> for five minutes. >> thanks to all the witnesses for your testimony. per the last couple weeks i have been plow in my way through the

financial crisis in report which is anything but bedtime reading. i am sure chairman shapiro, you are what the report concluded particularly with regards to the sec and the was interested in an assessment of where you think you still need to go to make sure the failings in the system as it concerns your agency won't record? >> i have not looked at the report recently but it obviously focused lot on the failures of the consolidated supervision program with the five largest investment banks in which the financial crisis disappeared with the bank holding companies and regulation of the fed. there are a lot of lessons. testified before the fdic about failures of the agency with

respect to that program. there are a couple things. one is an involuntary regulatory program which in my view doesn't work very well. we had not sufficient resources devoted to the regulation of the five largest investment banks. we didn't have people with the right kind of expertise and in some way the most important thing is it required different kind of supervision and the sec has traditionally done. it required credentials supervision as opposed to going on-site and doing an examination and bringing in the enforcement case. we didn't have the right mindset with and the agency with that kind of constant prudential oversight approach that was really necessary. parasailor active management focus with respect to the program and they will invest to believe what our people were being told by the leaders of

those financial institutions that fail. lack of skepticism which really hurt us well. that program was discontinued by my predecessor chairman cox. >> with regard to the present situation most people who observed the situation agree that the situation in terms of too big to fail, largest investment banks have gone larger and the wild west atmosphere in terms of risktaking may have not been curtailed all. is this a concern that you share anybody else on the panel is welcome to respond as well because looking at the wall street profits it looks like there hasn't been a lot of change in behavior.

>> i can speak most particularly to the over-the-counter derivatives market where we have a direct responsibility the much progress has been made with respect to accounting standard and other measures but getting over-the-counter derivative markets into a transparent market place so that regulators can understand a buildup in concentration of risk in financial institutions is going to be an important piece of this. we are working through those rules as is the commodity futures trading commission. half of them are being proposed and i suspect we will miss the july 21st deadline but we will get him over the finish line over the course of the rest of this year and there will have to the implementation and facing periods to go through but that will make a difference. the work the ftse is doing with the fed and others on living wills and plans for financial institutions to wind down their visions appropriately will also

make a very big difference and close the capital requirements. >> final question on that subject. are you confident -- we were talking about the danger that would ensue if your budget was cut but are you confident that the legislative action taken by the dodd frank is sufficient or are there things we yet need to do to make sure that we don't have a situation record. >> it makes large strides toward filling the gap in the regulatory regime. one of my concerns about the budget is we don't have the capacity to operational was the rule. getting sloppy market participants registered and analyzed and taken care of. those are things we will have to put off. it is incumbent upon all of us

as regulators to get these markets close up and tell congress what the issues are. perhaps dodd frank was not the right approach. >> thank you very much. >> i yield five minutes to chairman of the full committee, mr. issa. >> thank you. madam chair, i went over the business roundtable. i had the opportunity to see one third of corporate america's profits in that room. almost all public companies leaders will probably all public companies except one all regulated by the fcc. i was talking about impediments to job creation. i will give you a little relief from the question of the day for the moment that ask, dodd frank is not perfect and it was not what you might call a low-cost low-budget way to get better

performance with less cost. you asked for 28% budget increase. in fact, if you had only the budget increase necessary to do the work you were not doing as well as you wanted to without all the new laws what would that increase be in your estimation? what would it cost to do it right without piling on new regulation when there's no question there have been problems in your existing portfolio? >> i would have to actually do the math. maybe this helps. when we get our 2012 request we viewed 40% of the positions and it was a total of 780 positions or 584 full time equivalents. we use 40% to are ongoing program. that is 312 positions at 60% going through dodd frank implementation, hedge funds,

oversight, over-the-counter derivatives, lower programs, clearing agencies and so forth. >> a follow-up on that. currency elements that were asked for and agreed on by fcc and other agencies never got into dodd frank. you don't have a common mandate for reporting transparency that had been worked out in the conference and didn't happen, how much from this committee standpoint, how much more efficient if you are not completely ready, how much safety did you get if in fact it was transparent interoperable the both inward and whenever possible out to the public for oversight? >> that was a great question that i would like to hansard. it is important that particularly when you have a market with over-the-counter derivatives the two regulators in the same vein that we try to be as consistent as we can and

leverage each other, if i could come back to that. >> i appreciate that and the want to give you an opportunity. that is the major initiative on a bipartisan basis that didn't happen and we would like to review it and take your input and i guess that remains two minutes, i want to ask, mr. becker's conduct in retrospect was not a good idea. it has not led to confidence in transparency and non biased behavior of the fcc when we look for the tail. how do we know the changes you're asking to be reviewed are going to clearly eliminate anything like this? where do we get the confidence of that? >> it is a fair question and you and i have had many conversations and i try to be transparent and upfront.

we will be public, recommendations that he paid and what new councils on, recommendations she made and we will be happy to come back and talk to congress about what is in those recommendations and see if we can develop some metrics that will help us figure out if we are getting it right. >> your ethics counsel served under the general counsel career position and the the general council. would you consider moving that to the independent direct report so there would only be one person, political appointee like yourself that would be between public and ethics questions rather than having general counsel who had a number of jobs. you don't have to answer that today but i would like to consider that. so many different situations in the private sector, there is a clear independence of h.r.. with more than a legal question

particularly when it included somebody who was the boss of the person we went to for this 25 minute session. and won't ask for an answer today. finally as time runs out, we are on the committee want to work to try to be helpful and realize we have a portion of the portfolio, the financial regulatory and financial oversight of the committee, question i have for you is in our conduct of this investigation as we look at the -- mr. becker's total portfolio, other things he may have done and how this might have affected or not affected bernie madoff's stress, will you promise your cooperation? >> i promised my cooperation to the fullest extent i can. i don't know that i could tell him to do anything. >> he is coming voluntarily and we will tell him.

is really making sure we have a quick and transparent, it was not directly related to a refered criminal referral and so on so anything you can do to help us will allow us to move from where we are as quickly as possible and to something else. i thank you for all indulgence. >> chairman schapiro, argue the one who investigated mr. becker? >> no. he was appointed by my predecessor. >> that investigation continues? >> i requested -- >> you requested. >> i requested the investigation. >> you requested it. we just heard -- asking you to look at a budget without

additional regulation which was burdensome and so forth. the dodd frank legislation added some regulation in areas that here to for had not been regulated at all. >> absolutely correct. >> take derivatives. how big are derivatives. what is the value of the derivatives market? >> $600 trillion. >> did you say trillion? it is entirely unregulated. what ever could go wrong with an entirely unregulated $600 trillion market? >> we saw something that went wrong and presumably that motivated -- >> maybe that is one of those burdensome additional pieces of regulation we are just going to have to put up with. that burdensome additional

regulation requires sec to step up, and requisite expertise, is that correct? >> we were able to do the rule writing, and we need additional stats. >> we heard mr. katz say having more sec stats do the same thing, with capital formation. how many areas of new regulation are requiring new to ramp up expert staffing? >> we have derivatives, hedge fund regulation, a new whistle-blower, and we need more help but it is not unknown to us. and credit rating agencies and a new category in municipal

advisers. new areas for us. we undertake new regulation. >> listening to you take off that list none of those sound like, additional regulation, and thoughtful additional regulatory framework in light of the biggest meltdown on wall street. would you share that view? >> these are areas that as we write the rules, we are -- we make sure we write a sensible rule as we possibly can. >> will you share this view? is this just an example of more -- >> there's a difference in what

we said and characterized. to was an enormously large area of regulatory authority. when we talk about regulating hedge funds with the municipal market, when you regulate hedge fund deregulate investment advisers which is arguably what they are or investment companies which is a close cousin. when the regulated mutual-fund, hasn't been terribly effective. was a new substantive responsibility with a new -- >> would you say that some of the problems in the wall street meltdown in december of 2008 had to do with a quality appointees, namely a bunch of people who

didn't believe in regulation in the first place and therefore didn't do it. >> i have to tell you the same thing with the sec, commissioners decide the policy but ultimately the staff decided what it needs and how it is done. the interesting thing about the relationship, a close relationship, and the bipartisan body, five people with divergent points of view. who will disagree with the stat? i can think of an occasion where you have five commissioners on one side of the table and staff on the other side at loggerheads. that doesn't happen. you invariably get some

commissioners critical, and the staff. financial regulation is never a question of identifying a single right answer. >> my time is up. i would love to pursue this further. i certainly believe the narrative that sec is treading into waters that it has no business treading into his salacious. if anything we needed more people guarding the hen house, that may have been true in the 2008 period, i thank the chair. >> one quick point i wanted to make. it was regulated toward that. does a lot of confusion about

that. and the sec, and the commission sought from congress, and it was part of this was widely billed, congress explicitly prohibited a mandatory process. >> i thank the gentleman. i'd share this subcommittee on government organization, i am going to focus on a related but different area, i have a privilege of chairing the same subcommittee in 2003 to 2007. we have a subcommittee about we have a subcommittee about this, the world financial management about in turtle controls, we heard testimony

that they put in a new financial management system in 2002, the executive director at the time in july of 2003, was going to be certified, january of 2004 for audited agency. here we are seven years later, talking about the same thing. and put in place a new system. my first question, we appreciate the changes the new chief operating officer and new changes and systemic changes within the sec, why should the american people believe when we were told seven years ago we got it right, how is it different

today? >> my understanding is it was the momentum system which was deployed in nine or ten years ago, did it in the beginning, and the agency deferred over many years, lacks functionality that was necessary to do the job, and a result of the sec ending up with two material weaknesses over financial reporting in our audit which was a disgraceful position, and with the new chief operating officer, chief financial officer and chief information officer we made the decision that rather than incur the risks of developing a new system that the fec, not core competency for as we would be better served by outsourcing financial management. we went through a process and

identify the department of transportation, which is an transportation, which is an authorized federal service provider used by the gao for their financial management and made the decision that the best way to mediate our material we generate the kind of reporting that we need, minimize manual work in all of this to outsource work in all of this to outsource to them and it is the right decision for the taxpayer and the right decision for the sec. >> the following related to that is the audit that was done at the end of this past year, clean opinion but failure to sign off on internal controls. two related questions. how would you describe the internal effort to get a clean opinion other than interim control in the sense of in july of 2003 the sec said it was a heroic end of the year offered -- effort. did not just allow the data, here are ready to go. was very hero end of your effort to have that audit?

>> there were some heroics involved. i can compare to 2003 but we did i can compare to 2003 but we did put together a team of people to shepherd the process through. they would diligent and stuck with it but they're very much on board with the decision to outsource. >> internal control is not last year. dodd frank required the order to sign off but for almost 20 years under the federal manager financial integrity act, we said -- over 20 years -- we had to have strong internal controls. was not required to sign off on but i assume you are referring to the fact that it wasn't a new requirement to be purchased in requirements sign off by the auditor and whoever has been overseeing those systems clearly were not fulfilling their responsibility. >> absolutely.

under the chief operating officer we will both the with the audit issues in internal control and also the processes so it is not just technology but how to be business process and engineering process as well. >> try to cui's in two more questions. you talk about follow-on person that you have for the audit recommendation of your gao and in your testimony you state that you appointed an artificial and agency managers are held accountable for the time responsible. how are they held accountable? one thing i get frustrated with when things go wrong and i ask for many years now, was anyone fired for not doing what they're supposed to do? in what way -- >> we are closely tracking audit recommendations. i will tell you that in my two years as chairman we

successfully closed 360 recommendations compared to 190 in the prior two years. we are aggressive about doing that and the inspector general in his semiannual report often talks about our progress with respect to closing recommendations and whether it has been any agreement with recommendations and quite a on top of it. >> that is critical going forward. staying on top of those recommendations or in turtle controls and goes to broader issues and if you don't have internal controls, that is the foundation, not just financial foundation, not just financial management or ethics undarelate' g

to look at. >> can american taxpayers trust the government to manage itself and the interesting to and the interesting to substitute congress and ask the same question as well. having served over two years on the financial service committee and have what she you and you are duly committed to doing the right thing. before you came back as chair under chairman cox, the number of enforcement actions at the

fcc was reduced by 80% and the number of discourse in action was reduced by 60%. was reduced by 60%. it was a stunning failure at a time when all what mischief was going on with wall street. we look back at the savings and loans prices and recognize referrals from various regulators, there were 10,000 of them. there were those that turned into convictions, for and they went to jail and these were ceo level folks. american people are looking at congress and you and saying who is going to jail? who is being charged? it hasn't been a lot and have you made any referrals to the justice department and the u.s. attorney as a result -- >> i am confident that we have.

i don't know the numbers for details because we don't have criminal prosecutorial authority but we continued to bring a relatively high number of cases in and very large impact cases coming out in the past year. >> we will get back to the committee and tell us how many referrals you make. >> the ceo of galleon is being tried now. the director of a significant wall street firm being looked at as sharing insider information. have any actions by the sec been taken? >> we are proceeding against him last week and filed multiple proceedings coming out of the

investigation. >> in 2004/2005, take a look and close the revolving door. the sec then reported that it had done that although the gao says that never happened. you have staff that worked with the sec and they are lured away by lucrative salary outside and oftentimes people that our lord away our lord away by the companies they were investigating. we need to do something about the lack of a revolving door and i want to know first of all, to it is revolving door -- >> we instituted senior employees speak at this counseling before they leave the

agency and require all employees to have post employment briefing so they don't violate ethics rules and we are subject to wide restrictions which is unique to the restrictions but our inspector wrote -- inspector general looking at that has given us last week some additional regulations for tightening up our rules to go forward with them. >> what about a cooling-off period? and persons with and the commission that have the authority to make determinations, are not allowed to be hired by those they investigated for two years? >> there is a lot of appeal to that and the only hesitation i have is people come to us for a

few years to bring current industry expertise, we get the balance right. >> that is precisely the problem. >> the gentle lady's time has expired. a recognize myself for five minutes. i want to get this out of the way. there are questions about the david becker conflict of interest. i have a couple questions here, just yes or no. have some other issues i want to touch on beyond that. after david becker told you he receive proceeds of a closed bernie madoff account did you suggest he recused himself from the bernie madoff case? yes or no. >> the premise isn't exactly right. my recollection is he told me my recollection is he told me that his mother had a bernie

madoff account before she died and has been closed. i don't recall whether he told me he receive proceeds or not. he may have. i just can't recall. i haven't been able to look at any. >> but he brought this up as you perceive proceeds from the bernie madoff account. >> he brought up that his mother had an account. >> in light of that did you suggest he recuse himself? >> no i didn't. >> did you suggest he settled with the trustee as other investors were doing? >> no. >> did you suggest mr. becker disclose his interest to other staff or commissioners who relied on -- >> i did not. i expect him to go to the ethics office and ethics counsel. >> you are aware of the ethics counsel reported to the chief counsel, general counsel?

>> career employee. >> direct reports. >> did you suggest he do any research to do the amount of character that he had? later, when becker was providing advice about equity valuation method, did you direct him to look at potential conflict of interest? >> it didn't occur to me that this close the account would be impacted? >> it didn't disclose to you >> it didn't disclose to you that he was a trustee who closed the account? >> i don't recall. a am trying to get to the heart of this. this raises major questions and you understand the public's interest and investor's interest. to the same degree, when mr. becker was briefed in court and

took recommendations in terms of net equity decision valuation method, you didn't direct hit me to accuse himself. get those out of the way. we care about transparency and disclosure but here in congress with regulars, chairman shapiro, thank you for public service. i am not here. we need to get to the heart of this issue. >> i agree. we do a review to get all the information -- >> you wish knowing now, had u.s. penny of these questions you would have known it then. that is at the heart of this issue.

that is disappointing. and really, of great concern. in dealing with the bernie madoff evaluation question, what has changed your dealings with the legal counsel, had you known that he was the trustee of the bernie madoff account? >> if i had known that i would have demanded that he recuse himself and let the sec take steps to clarify its position. both congress and derek and i believe the sec had taken an illegal position and had 9 known that mr. becker had a personal interest, asked him to do something. >> this raises a larger management issue.

we are talking capital formation. we are trying to be the world market which we have been and when you have a dysfunctional agency with these management problems you describe, you said they were never engaged in they were never engaged in serious self examination or use appropriate measures of performance. is that still >> not having seen this report that is due out, that is the case. it has been a long time since the agency took a hard look at itself in the mirror. >> my time is expired and recognize ms. maloney. we have 11 minutes remaining and so i would defer to my colleagues on that side of the aisle if they want to work something out in terms of time. we have two minutes in.

you are recognized now. >> i would like to welcome all the panelists and thank you for this important hearing and certainly honesty and transparency is important and i would like to get further clarification from chairwoman shapiro. in the controversy around mr. becker's alleged conflict of interest is about an sec decision that could be against his financial interests. as i understand it, prior to mr. as i understand it, prior to mr. becker's return to the sec he was working at a private law firm. is that correct? when he arrived at the sec, he took steps to notify both you and the sec ethics counsel of his inheritance from his mother

that had been liquidated long before bernie madoff's ponzi scheme was discovered. is that correct? >> that is my understanding. >> and the ethics official said >> and the ethics official said it was ok for him to work on bernie beam -- bernie raid -- bernie madoff related issues from the information that i read that the ethics committee was consulted. he consulted them and said there was no -- go to work. is that correct? is that your recollection and? your memory is the same as the ethics committee? chairwoman schapiro, it appears the basic question the sec faced was whether to support an asset to valuation method used by the bernie madoff trusty called the cash in cash out method or a different evaluation method used by several law firms called the last statement method. is that correct? is that correct? >> yes.

>> under the first method, mr. becker's inheritance would be subject to clawback litigation and under the second method is inheritance would not have been subject to clawback. the sec chose to support the first, the decision was against the financial interest of mr. becker. this meant that the trustee could sue mr. becker and his brothers to recover some of his mother's inheritance which is what happened. correct? >> that is right. they took a position on the cash in cash out in constant dollars to reflect some elderly people who had long held bernie madoff accounts to be able to get more money from that formulation but it was not the final statement

approach that you mention that approach that you mention that would have potentially prevented the clawback. >> but the decision was to allow the clawback. i assume he participated in the decision that was against his financial interest. >> the decision to clawback as one of the trustees and the sec. >> the sec did not make decision. [talking over each other] >> it was a decision that affected mr. becker. i would like you or mr. clemens to answer. basically mr. becker or the sec sided with the bernie madoff trustee. the sec took action that was potentially detrimental to mr. potentially detrimental to mr. becker's financial interest opening of financial litigation worth $1.5 million because that was the proceeds on addition to

the $500,000 so everyone seems to be criticizing mr. becker. mr. becker and the sec's decision appeared to have been completely against his financial interest. you got a id coming out that would clarify things more but first reading the information it appears that the decision made was against him and against his financial interest and what he thought was the right way to go. if the sec supported bank interpretation or the law firm's interpretation instead of the trusty's interpretation mr. becker might have had no exposure at all. is that correct? >> yes. the point is the five hundred thousand dollars that started

the becker investment was going to come back. as you indicated, it was for fictitious profits that would be the claim as a trustee independent reporting to the court, not the sec. it dealt a little difference whether this should be a modest way to return or whether there should be some adjustment for inflation. that is still not determined a month after he left the agency to scroll down and individual compensated to give that up with no public service. i respectfully submit to the subcommittee -- >> may i just have one observation for two seconds. someone in mr. becker's position wanted to help himself financially he would have taken the opposite point of view than the one he took.

>> we have votes on the floor. >> i look forward to the id report. >> we all do. i appreciate the gentlelady wrapping up. we have votes on the floor. i want to thank the panel. >> i am so sorry. i want to say one thing. i don't recall specifically whether mr. becker told me he inherited from the account or if he just -- his mother had an account and i made that assumption. it is two years ago. i don't recall and want to be clear about that. >> we will let the record reflect -- certainly. i think it is important that the record accurate -- accurately reflect what happened. the finding of this hearing, we were interested in management issues. the members took a specific direction to date dealing with this conflict of interest. mr. becker, the general counsel

for the sec, because he was a for the sec, because he was a trustee of a bernie madoff account a few years before and the decision as chaitman mentions, was a very different valuation, that then was existence under law. the decision that he made that in some ways benefit him disproportionately and the other two methods. in terms of the budget i think it is appropriate that the sec have a sufficient budget and we have strong management practices to make sure there is transparency and disclosure, safety and soundness investing in our markets but in the wake of the enron scandal, in february of 2003, the largest spending increase in history. the gao says in testimony before this committee in 2003 it was a

45% increase. this was supposed to prevent a future crisis and yet bernie madoff still occurred and the excuses cannot always be based on money. we have asked we tighten up management practices and do what is appropriate in terms of bringing technology to the 4 and do the best possible of any regulator and so it isn't wrong type use a crisis -- it is wrong to use the crisis to request more money. with that the committee stands adjourned and thank you for your testimony. [silence]

[science] [inaudible conversations] [inaudible conversations] a

[inaudible conversations] >> the u.s. senate gavels in at 2:00 eastern a few minutes from now. , in today's action a judicial nomination and continuing two programs to help small high-tech research firms. votes begin at 5:30 eastern. we have live coverage shortly. the house also gavels in shortly and members are to consider this week a temporary spending plan to keep the government operating while negotiations continue on funds for the remainder of the budget year.

the house rules committee meeting at 5:00 eastern to consider possible amendments to the temporary spending measure and set parameters. you can see live coverage of that meeting on c-span3. >> tonight technology and telecommunications policy with chairman of the house subcommittee on communication representative frank walton on the communicators on c-span2. >> on television, on radio and on line c-span, bringing public affairs to you. created by cable, it is washington your way. >> the u.s. senate is about to gavel in to begin work for the week. senators will begin the day with a general speeches. at 4:30 eastern they will turn to debate on the judicial nomination with votes scheduled for 5:30 eastern. senators will then vote on whether to begin work on a bill

continuing to federal small-business research and technology programs. some senators are bound to block all legislation not dealing with the federal budget. live coverage of the u.s. senate now on c-span2. senate will come to order. the chaplain, dr. barry black, will lead the senate in prayer. the chaplain: let us pray. eternal spirit, we praise because of your righteousness and lift our hearts in adoration to you, the king, most high.

pour eternity into these brief lives of ours and use us for your glory. lift our lawmakers to the heights of noble living, renewing them with your hope and strengthening them with your power. lord, show them how to make wise use of their days to become the people they ought to be and to do the things that make for peace in our nation and world. may their highest motive be not to win over one another, but to win with one another by doing your will.

and, lord, we ask that you would sustain the victims of the seismic devastation in japan. we pray in your great name. amen. the presiding officer: please join me in reciting the pledge of allegiance. i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. the presiding officer: the clerk will read a communication to the senate. the clerk: washington, d.c., march 14, 2011. to the senate: under the provisions of rule 1, paragraph 3, of the standing rules of the senate, i hereby appoint the honorable christopher coons, a senator from the state of , to perform

the duties of the chair. signed: daniel k. inouye, president pro tempore. mr. reid: mr. president? the presiding officer: the majority leader. the presiding officer: under the previous order the leadership time is reserved -- mr. reid: mr. president? following any leader remarks, there will be a period of morning business until 4:30 p.m., senators allowed to speak up to 10 minutes each. at 4:30 the senate will proceed to executive session to consider the nomination of james boasberg to be united states district judge for the district of columbia. there will be an hour of debate prior to vote on that nomination. senators should expect two roll call votes at 5:30 confirmation of james boasberg and the small business reauthorization act of 2011. a current continuing resolution

expires this friday. expect the house to send us a three-week c.r. on tuesday or wednesday. i hope we can work out an agreement to consider the bill before the end of this week. mr. president, my thoughts and those of the entire nation, and certainly every member of the united states senate, are with the people of japan. the earthquake that shook that nation has made the entire world tremble and the tsunmai -- really heartbroken at the images we have seen and the stories we have heard. we share the agony of the families who have lost loved ones and anguish of those who are still searching for the missing. the earthquake, tsunmai and subsequent catastrophes have created humanitarian crisis of the first order and the united states will do everything that we can to ease japan's pain and help it heal. as the devastation res. are cue efforts both -- rescue efforts

continue, we know that japan will meet this with tenacity and respond to the immense loss with hope. this disaster is not stronger than the people of japan's resolve to recover and rebuild and no match to america's determination to help a friend in need. mr. president, it's really difficult to think of senate's business at such a time as this. but we must. it's difficult to think of the senate's business after hundreds of thousands of lives have been forever changed in an instant. every matter seems immaterial in comparison and our use of the adjective emergency when discussing budget concerns seems so misplaced. we must also focus on the business of our great country and that's what the senate will do this week. i hope both parties and both houses will find the courage to come together before the

weekend. i remind my republican colleagues, once again, that this friday's deadline is one that they set. we didn't. we asked for four weeks to work and they demand two weeks. they asked for march 18. march 18 awaits us at the end of this week. so it's really time to get serious. last week budget votes proved what we've been saying throughout this negotiation, we must meet in the middle. the distance between democrats and republicans is not measured in money only. i regret to report that so far we remain far more divided in the willingness to compromise. democrats have made it crystal clear that we're determined to pass a budget, we recognize the reality that one party alone will not reach a resolution without the other party's cooperation and consent. we've accepted and knowledge that we need to share that sacrifice. democrats are willing to find reasonable ways to that and we've offered necessary cuts will strengthen our future

rather than weaken our future. we're still waiting for republicans to do the same. they're pretending last week's votes didn't happen. they're covering their eyes an ears to the reality that their proposal, the short-sighted bill, the tea party, the republicans in the house of representatives continue to support was roundly rejected here in the senate. we're still waiting for them to bring something, anything now, to the table. and not only something, but something new. they haven't done that yet. listen to the republicans' speeches and sound bites, you will hear to serious offer, no willing to compromise and no sense of shared responsibility. you'll hear no new ideas. we cannot afford another week of these games. we cannot negotiate through the media and we cannot negotiate if one side is unwilling to give any ground. we can't keep funding the country a couple of weeks at a time. how many times have we heard our

friends claim that it hurts inflation. so, mr. president, it's time to lead. on this point democrats have been very clear. i hope a solution is at hand. but if no budget passes, we cannot keep the country running, we're clear which side will tbhair burden. this week we'll also start debating a jobs bill -- another jobs bill, we did the f.a.a. bill, the patent bill, we're told by the experts that's almost 600,000 jobs. the job we're going to take up now will help small businesses do what america businesses do best, imagine, innovate, and invent. the bill will -- we'll soon discuss will help a research program to create jobs and shape the future since president reagan started this program three decades ago. these investments work. they've helped get new ideas off

the ground. everything from the electric toothbrush to satellite antenna that helped our first responders in haiti to technology that keeps our food safe. one company in carson city, nevada have used this small business innovation program to support a technology that helps firefighters reach people on the highest floors of burning buildings. another nevada company from henderson, nevada, has developed an advanced rechargeable battery that our troops are using on the field. there are success stories like this in every state because of this legislation that was enacted initially almost 30 years ago. small businesses are the laboratories of visionaries who create jobs and cultivate ideas. we, in turn, must help these businesses grow and succeed. that's what this week's bill will do. finally, mr. president, let me say something briefly about gas prices. this budget debate has shown a

stark contrast between our nation's serious challenges and a lack of bipartisan agreements on serious solutions. the same is true when it comes to energy. drivers across the country are watching gas prices go up, and up and up. they're worried about how expensive it is to drive to work or pick up their kids from school or get to the grocery store and back. it's really a serious challenge. but i'm disappointed, mr. president, that the republicans refuse to join us in offering a serious solution. we know why gas prices are going up. first, the middle east, nations from which we import the vast majority of oil are in turmoil. that hurts production and exports. second, opec, and greedy investors control a widely speculative market and big oil cannot quench its thissist for -- thirst for the market. it is something that we have

seen time and time again. the demand is more drilling, as if that will instantly relieve the price at the pump. it's an easy argument to make. it sounds simple, but as a solution to high gas prices, it's plain fiction. here's a little know fact, the united states produces more oil in 2009 than in any year since 2003. so for all the right wing's finger pointing at president obama, it's worth noting that we've drilled more oil since president obama has been in office. when president bush was in the white house, production of crude oil dropped every single year. in his last year in office, prices and oil company profits rose to record heights. let's retire the tired talking point that president obama is sitting on the solution. in fact, the same big oil companies are quite literally sitting on that oil that republicans demand. big oil is sitting on more than

60 million acres of federal land and water that they have leases that they have the right to drill on. that means nearly 20% of our nation's oil refinery capacity sits idle. they've shown more interest in making profits than in making oil. let's pretend for a minute that they did do the drilling. even if big oil drilled on all of its offshore leases, it would have no impact on the price of gasoline during the whole next decade. by 2030, it might lower those prices by three cents a gallon. and that's something -- that's not my calculation, it comes from the energy information agency. let's not forget the big picture. the united states consumes nearly 25% of the world's oil. we have less than 3% of the oil's reserves and they're rapidly declining. we're addicted to oil and we're at the mercy of big oil and opec for the price. let's use the alternative that's we have right here at home. alternatives like solar, wind,

and geothermal energy which are abundant in places like nevada. let's encourage these investments. their budget plan would drastically affect the ability to do more with renewable energy. these renewable energy sources are cleaner for environment, wiser for national security and more stable for our economy. best of all, they're made in the u.s.a. and will create jobs here in our great country. the chair can now announce morning business. the presiding officer: under the previous order, the leadership time is reserved. and under the previous order the senate will be in a period of morning business until 4:30 p.m. with senators permitted to speak therein for up to 10 minutes each. mr. reid: mr. president, the morning business time is not divided. it's under the control of whoever gets here, is that right? the presiding officer: the senator's correct. mr. reid: i would note the absence of a quorum. the presiding officer: the clerk

will call the roll. quorum call: quorum call:

quorum call:

a senator: mr. president, i ask to dispense with the reading of the roll. the presiding officer: without objection. ms. landrieu: thank you, mr. president. i'd like to speak for up to is 5 minutes. i understand that senator kyl will be joining us shortly. the presiding officer: thank you, mr. president. i come to the floor -- ms. landrieu: tourings mr. president. i come to the floor to urge my colleagues to vote "yes" on cloture this afternoon at 5:30. vote has been called to precede to the debate on a very important federal program that comes under the jurisdiction of the small business committee. i know the president has been a leader in his state on this

general subject matter, and our committee has worked very hard here in the senate and in the house, i might add, to get this program ready for reauthorization because it's the federal government's largest research program for small business. and, as you know, mr. president, i've said many times on the floor as chair of the small business committee, i really want and hope that the federal government itself could be a better partner with small businesses in america to encourage innovation, to encourage appropriate risk taking, and we can do that in a variety of different ways. of course, we have authority over banking systems and capital systems and financial systems. we sometimes do that with just big business in mind. we need to think about the 27 million small businesses in america, giving them opportunities for capital through the banking system, through nonbank lenders, our committee has been very busy trying to do our part of helping

our country out of this recession by continuing to focus on capital access for small business. we also keep a close eye on hrelgss -- eye on regulations that might be dam -pg small businesses from accelerating, whether it comes out of the small business sector or e.p.a. or whatever. we try to keep an eye on the small business administration itself in fact as an independent agency. we're going to take a hard look at any rules and regulations that miss the mark or fail to recognize the impact some of those regulations may have on small business. if it's too onerous we are going to comment and push back. burr another way that our -- but another way that our federal government can be a better partner to small business is to make sure they have access to

some of the federal government's research and development and technology funds. we think from the department of defense -- we don't think, we know, from the department of defense all the way to health and human services, to the department of energy, to the department of commerce, the federal government spends literally billions of dollars in research and development. and that's good. only a small percentage of our budget. some people argue those research and development dollars are too low because the federal government, by investing in research and development wisely, really generates and promotes patents, inventions, discoveries, expansion of business large and small. in fact, america does this better than any country in the world and we're proud of them. the federal government has a role to play. this particular program was started by senator rudman over 25 -- actually almost 30 years

ago now. senator rudman was a senator from new hampshire, and from a small state like new hampshire he was of course very familiar with the great universities and the great small businesses there, and he was just actually shocked and i think dismayed and saddened to find out that small businesses in his own state had really, even if they were inventing some of the best products, some of the best technologies, couldn't get their foot in the front door to an agency like the n.i.h. they didn't want to talk to a small business. they wanted to talk to the big pharmaceuticals, or they wanted to talk to the big companies. and i think senator rudman got a little frustrated, and so he said you know what? i think we need not a ceiling but a floor for the agencies to look to the small businesses in all of our communities on main streets all over america and say what do you have to offer, and we'll give you an opportunity.

you know, this works two ways. one, it's good for small business to be able to have access to some of these research and development dollars. but, mr. president, as importantly, it's important for the taxpayer to get the best bang for their buck that they're paying in taxes. and they want the best technology, not just the easiest to access. they want the best technology. and these companies, having invested in this program now over 25 years, we have evidence upon evidence upon evidence to suggest that the taxpayer has in fact gotten the best bang for its buck. in fact, this company that i'm going to show you will prove beyond a doubt what i'm saying. this company, qualcom is a very famous company now.

qualcomm is a company based in san diego, california. its owner -- it's publicly owned now, but its founder testified before our small business committee just last week on this program, urging us to do this reauthorization, which is going to take the bulk of the debate on the floor this week, this particular program. he said absolutely positively, qualcomm would not have been able to launch as a small business that started in his den with about 35 of his friends and associates that had come up -- not 35 in the beginning, but even a smaller number than that, that had come up with the initial technology that made wireless communication possible. and so with a small grant from one of our research and development programs, up to $150,000 initially, then you can go back for a second round up to $1 million or a third round up to another $1 million, without

that patient capital invested very timely in this particular company, they would probably not have been able to make what they eventually turned out to, which is a company that contributes approximately $5.5 billion to san diego's economy every year and pays in taxes, mr. president, over $1 billion every year to the local, state, and federal government. that's half of the cost of this program. so one success story out of this program generates enough tax dollars to pay for almost half. and this program really doesn't cost the federal government any because we're already investing in research and development. what this program does is say you're going to push aside or set aside 2.5% of your research dollars, up to 3% over ten years to invest in small businesses just like qualcomm once was in

the hopes that it will develop into a large business. but even more importantly, that it will develop something that improves the quality of life for americans and for people of the world. and most certainly now that everyone is walking around with wireless technology, using it for any number of things -- staying in touch with spouses, with kids, from tracking threats to general business being used -- we know that this technology has become now just a part of everyone's life. that is only one example. others involved the alert system for the b-52 bomber. that technology, again, came out of the sbia program. so reauthorizing this program is something that we know is important to do to create jobs, to begin to create the kind of jobs that will lead us out of this recession. innovation equals jobs. technology equals jobs. another program i want to share,

this one is actually from louisiana, and there are actually success stories from every state in the union. mezzo technologies has created, with the help of l.s.u. and a small business, dr. kevin kelly started with two employees. now his payroll exceeds $1.2 million. we ran into problems, mr. president, when we invaded iraq and afghanistan trying to run our tank in places that were extremely hot. the radiators that we had designed were not sufficient, and we were running into a serious equipment challenge. it was the small business, this small business at l.s.u. with the help of the university that began to develop new kinds of technologies that now can be used for our military. but it also has potential for significant commercial application potentially in the race car industry, or potentially in the general

automotive industry. that's an example of how technologies needed for a specific problem that the federal government's having responded to by small business -- not a big company, a small company and new technologies can create the new radiators of the future. so, small businesses are key to putting americans back to work. they are the innovators. in fact, small businesses account for 13 times more patents than large businesses. and small businesses employ almost 40% of american scientists and engineers. studies show sbir-backed firms have been responsible for roughly 25% of the nation's most crucial innovations over the past decade. unfortunately, mr. president -- and this is why i'm on the floor today -- this important program that does so much to give taxpayers the full measure and

worth of their tax dollar, that gives small businesses the opportunity to grow to, create jobs right here in america. not in china, not in france or in spain, but right here in america. these programs have been sputtering. this particular program has been sputtering on short-term extensions. every three months we authorize it, or every six months at last year's levels. we need to move forward, provide a longer-term extension. the bill we're going to be debating this week provides an eight-year authorization which gives some certainty, it gives some stability to the 300 labs in the united states of america that do primarily research and development for the federal government. it sends out a clear signal to innovators. the federal government has challenges. the federal government has problems, and now we're putting

some money behind those challenges and problems. we want you to be part of the solution. we believe in this program. i want to thank particularly senator tom coburn for negotiating this eight-year extension a blitz longer than a normal five but a little bit less than some of us wanted initially at a 14 year authorization, because we think long-term stability is so important for these programs. the agencies have to do some more work, our federal agencies to step up their administration of this program, to get even better at putting out the needs of their agencies, identifying small businesses. so we want to give them the confidence that this program is actually going to last for more than two years or three years or even four. so this eight-year authorization is important. i am very proud that under my leadership and also with senator snowe and senator kerry have worked very hard together to get

this bill into its current form. in the very last hours of the last congress, we were actually able to negotiate with the biotechnology industry, form early known as b. -- formerly known as b.i.o. and the small business energy coalition. they had been at odds on this reauthorization. because we worked very hard and in good faith and both sides came together, we have now achieved a compromise which has the support of the national small business administration, the u.s. chamber of commerce, the nfib, the national venture capital association, local technology groups, many universities, many universities throughout the country, including my alma mater, louisiana state university. louisiana tech, the university of ohio, just to name a few.

so i wanted to make sure that people understand some examples of what this program will fund in terms of qualcomm, which was an earlier example, wireless technology, or whether it's a radiator used in our military equipment, both in our tanks and sometimes used in our other platforms. but also this technology can be used potentially in the racing car industry. no other sbir and sttr reauthorization bill has had the support of this many organizations this early in any congress. and the compromise is represented here in the bill that we've laid down or we will be passing forward today. i want to just say, mr. president, that the agencies have been extremely cooperative, particularly the department of defense, usda, department of

health and human services, and the department of energy. they have the lion's share, health and human services, of these research budgets. d.o.d., it's not an insignificant amount. it's over $1 billion. the department of defense will invest in small businesses to get the best technologies available, like the radiator technology they need for our tanks. h.h.s. has 615 million dollars. it's a very small part of their total research budget but an important part. when they put out the challenge to small businesses in america to come up with the next newest vaccine or the next medical technology or information technology that saves taxpayer money and helps provide better quality of life for all americans, that word will go out from h.h.h. d.o.e. has $150 million available to invest in small

business. nasa, $125 million, just to name a few. so not only will the taxpayers benefit, but small businesses as well. many of these advanced technologies developed by businesses that could have started in your garage or your den like qualcomm could not have existed without these programs. they are the brainchild with the dreams who took his or her idea to the next level and had the program to get that first $150,000, that first $1 million. i'm urging all of my colleagues to support moving to this bill this afternoon. it passed out of the small business administration last week nearly unanimously and has continued to gain large bipartisan support publicly and privately. the c.b.o. estimate estimates $150 million over five years. we've made changes that have decreased the estimate from last year's cost of $229 million.

so we have trimmed the administrative portion of this program. we believe that thi this $150 million is a fantastic investment for the federal government to place research dollars in the hands of some of the best, most dynamic, most innovative entrepreneur on the face of the earth today. we want them. we want to give them opportunity, particularly in tight credit and capital markets to access these funds at the federal level to produce the kind of goods and services and most importantly jobs for the future. i see that my time has expired. so, again, mr. president, i look forward to coming down with my members of the small business committee to talk more about this bill as the week unfolds. but, again, i urge my colleagues today at 5:30 to vote yes for cloture on this important bill so that we can pass it out of the senate today, get it over to

the house as quickly as we can and to the president's desk for signature. and i yield the floor and suggest the absence of a quorum. quorum call: mr. kyl: mr. president? the presiding officer: the

senator from arizona. mr. kyl: mr. president, i ask unanimous consent that further proceedings of the quorum call be dispensed with. the presiding officer: without objection. mr. kyl: mr. president, i ask unanimous consent to speak for 15 minutes. the presiding officer: without objection. mr. kyl: thank you. mr. president, we're going to have a vote a little bit later this afternoon to proceed to a bill which i don't happen to think is a very good bill, but i'm going to vote to proceed to it because the majority leader has made clear that we will have the opportunity to offer amendments and i know that some of my colleagues specifically would like to offer amendments to get to the heart of the subject that should be most on our minds today, which is reducing wasteful washington spending, to get our fiscal house in order. and in order to provide that opportunity, we should, in my view, proceed to that legislation so that we can offer those amendments. we should be laser-like focused on the deficit, the debt, the spending of the united states congress, and what we can do to get a handle on that spending so

that we do not mortgage our children ate future. -- children's future. it starts, of course, with a budget. just a few weeks ago the president submitted the budget to congress, but it seems the message that budget sends is one of more spending, and one that trumps america's concerns about this huge debt we're piling up and how it jeopardizes our future. the debt held by the public will double by the end of this president's term in 2012 and then triple by 2019 to an astonishing $7.3 billion. think about that for a moment. in all of our history from 1789 from george washington through george w. bush, we accumulated roughly $5 billion of debt. this president's budget in his first term will double that. so in just the term of president obama, we will accumulate as much debt as every president of

the united states combined before that. that's too much -- before that. that's too much. and it will triple in the next five years. that's what we're talking about on this -- with regard to this budget. the debt is actually going to be larger than our entire economy. and think of the intended consequences of that. it not only undermines confidence in our economy and affects job creation. this budget punts on everything serious that we need to do to bring down the debt. it accelerates our path to national bankruptcy, it ignores all of the components of the president's debt commission, deficit financing or reduction plan and punts on entitlement reform. in fact, "the washington post" editorialized the day after the budget was submitted calling the president the punter in chief. it's a failure of leadership and

it indicates to me that the president has not taken the debt problem seriously. as erskine bowles, who was the democratic chairman of the president's fiscal commission said said that the president's white house budget request goes nowhere near to where they have to go to resolve our fiscal nightmare. end of quotation. we cannot spend and borrow our way to prosperity. unfortunately that's what the budget request proposes to do. let me review a few refacts. under the category of it spends too much, the size of the federal government will nearly double since the day president obama took office. let me say that again. under the president's budget, the size of the federal government will nearly double since the day he took office. now, you can't claim with a straight face that that represents anything close to fiscal discipline. over the next 10 years the

president proposes $8.7 trillion in new spending in this budget. with $46 trillion in total spending. spending in the 2012 fiscal year is projected to be a recor record $3.8 trillion or 25.3% of the gross domestic product which is the highest spending ratio to g.d.p. since world war ii. i'll note while the president has how thed the five-yea five-year $400 billion spending freezes in his budget, those freezes merely lock in spending levels reached after the massive spending binge that occurred on his watch. and, in my view, the status quo is not good enough. it's like closing the door to the bar after the horse is already -- barn after the horse is already gone. the president says his spending would cut $1.1 trillion in the coming decade. yes, that's true. but that's what he planned to

spend. if he made an extraordinary irresponsible request for spending and cuts it by $1 trillion, it's not something to be cheering about. the figure is smaller than the projected $1.5 trillion deficit just for the year 2011 alone. we need to do and we can do much better. under the category it borrows too much, the budget adds $13 trillion in new debt by the end of the decade. gross debt by the end of the decade will reach $26.3 trillion or $1 -- 107% of gross domestic product and that figure eclipses the size of the entire economy. gross debt is projected to remain 100% above g.d.p. every following year. the effects are well known, it includes fewer jobs, less investing and a lower standard of living and that's not acceptable. under the category of taxes too much, in total the president's

budget includes $1.6 trillion in new taxes on families, small businesses, and job creators. much of that is new taxes on energy including on the gasoline we buy and new taxes on obamacare, the health care reform. in fact, the president's health care bill is mentioned more than 250 times in the i.r.s.'s fiscal year 2012 budget request. the i.r.s. has said it will have to hire thousands of new workers just to implement the new taxes in the health care law. let's remember, we're not in our current predicament because we're an undertaxed nation. it's because of wasteful washington spending. i'm deeply disappointed that the administration does not put together a more responsible and serious budget proposal. hi hoped that the white house had received the message that americans sent in the last election about spending and debt and the size of our government. it's time for us to make tough choices. we need to focus on pro-growth

policies which include much lower levels of spending an borrowing and leaving more money in the private sector where it can be put to good use including job creation. republicans want to work with the president to seriously cut government spending and bring down the debt. house republicans took the first step by putting together a proposal that will cut spending to 2008 levels. that's the levels prior to the obama era spending binge. a binge which included, among other things, the failed stimulus plan and other massive spending bills. that's the kind of meaningful action that we need and i asked the president lead. work with our leaders on both sides of the aisle to do a better job of promoting prosperity through much more sensible fiscal policies. as said, my colleagues will have amendments that they will be bringing to the floor this week in an effort to point in the right direction. another thing that is of concern to americans and that we ought

to be doing something about here at the federal government level is the problem of energy production and the implications of that through things such as higher gas prices. notably the energy department recently estimated that the average american household can expect to spend $700 more at the gas pump this year than it did in 2010. in fact, since president obama came into office, our gasoline prices have doubled. in a tight oil market, new domestic supply can have a very positive impact on gasoline prices an developing that supply would create many well-paying american jobs. so what i'd like to suggest today is we should have a national policy in support of affordable new domestic energy. this is an opportunity for government to set the stage for job creation in the private sector rather than continue its attempts to create jobs through its own costly government legislation. although we import 63% of our oil, america actually has a bund

ant supplies of -- abundant supplies of oil and natural gas here at home. in a "washington post" op-ed published in 2008, robert sandleson wrote, that it may surprise americans to discover that the united states is the third largest oil producer behind saudi arabia and russia. we could be producing a lot more but congress and the administration have put large areas of potential supply off limits. they include the atlantic and pacific coastst and parts of alaska and the gulf of mexico. so why haven't these energy development projects moved forward? let me provide some background. before leaving office, president george w. bush lifted an executive moratorium that previously barred in the deep water of gulf of mexico. congress had a statutory moratorium that year. that was intended to open an

estimated 5.8 million acres in the central gulf to oil leasing and to make as much as 16 billion barrels of oil available. after the deepwater horizon oil spill in the gulf in 2010, the president obama administration imposed a new moratorium that all but halted deepwater exploration. a number of investigations were done to determine the cause of the deep water horizon accident and to protect against similar accidents in the future. it was neither necessary or wise to halt all offshore energy exploration and development. the country needs a reliable supply of oil to fuel our cars, homes and plants. locking away the vast supply of oil in the deep waters of the gulf merely increased our nation's vulnerability to the oil shocks emanating from abroad and put customers at a risk of higher gasoline prices.

despite federal court orders it was not until the end of february 2011 that the interior department finally issued the first permit to allow the reassumption of energy exploration an development. unfortunately that permit was just for a single project. essentially the moratorium has become a permanentatorium. this slowdown has included delays, suspensions, revocations and cancellations of lease permits. these moratoriums have caused six deepwater rigs to depart the gulf for other countries taking valuable jobs, revenue and income with them. others may soon lead as -- leave as well. former president bill clinton understands the damage this has. last fry he called the -- friday he called the continued delays ridiculous. just as we should open the deep

waters of the gulf of mexico, so too we should lift the moratorium on resource rich areas such as alaska's outer continental shelf as well as oil shale in various western states. senator murkowski has pointed out that her state has oil in excess of 65 years of oil imports. as alaska's governor wrote in a recent "wall street journal" op-ed, if americans wonder what our economic achilles' heel is they need look no further than the permits that allows for exploration an production. the federal government estimates that alaska's outercontinental shelf holds 132 trillion cubic feet of natural gas. we could be drilling now in the arctic ocean off the coast of alaska if the environmental protection agency would speed

things up and issue an air permit. developing these resources would not only generate vast new supplies but translate to a lot of good jobs. in fact, a new study by the northern economics and university of alaska anchorage's institute of social and economic research shows that developing oil and gas in the buford and alaska's outer continental shelf would create 55, 700 jobs. an estimated $63 billion would be paid to employees in alaska. and another $82 billion would be paid to employees in the rest of the united states. as the report notes, and i quote, domestic energy production is important for the security and prosperity of the united states. the money spent on domestic energy cycles through the u.s. economy thereby increasing domestic economic activity and jobs, end of quote. another resource-rich area in

alaska is anwar. despite being one of the largest producers -- or resources, rather, of oil and gas in the u.s., alaska's anwar is off-limits for energy development. tapping oil and gas supplies in anwar would require opening up just 2,000 acres of the 19 million-acre arctic plain to such development. and remember, anwar was by congress specifically set aside for oil and gas exploration and development. it was specifically created for that purpose. this 2,000 acres would be the equivalent of the airport in phoenix, which is called phoenix sky hash, inside an -- sky harbor, inside an area the size of south carolina. hardly noticeable. using directional drilling with a small environmental footprint, at least a million barrels of oil a day could be obtained from just this one area, this 2,000 acres -- one area for the next 20 years.

the u.s. geological survey has estimated that the area could have up to 16 billion barrels of recoverable oil, an amount that's equivalent to 30 years of saudi oil imports. and analysis from the arctic power shows that opening up anwar to oil and gas production would create approximately 730,000 jobs. those opposed to developing these resources often make the argument that it will take ten years to open anwar, but if president clinton had not vetoed legislation authorizing arctic development in 1995, oil would likely be flowing from the area today. easing prices and helping to insulate our economy from the whims of opec. continued delay will only put our nation further at risk. a few final points about abundant onshore oil shale resources, permits which have also been blocked by the administration. in 2009, the administration canceled 77 oil and gas leases in utah. in 2010, canceled another 61 in

montana. it's been estimated that the united states has approximately 800 billion barrels of technically recoverable shale oil, which is roughly three times more than the proven resources of saudi arabia. three times more than the proven reserves of saudi arabia. again, it's all off-limits. finally, a note about the strategic petroleum reserve. in recent days, some of my colleagues have called for tapping into america's strategic petroleum reserve to bring down gas prices, but this strategic petroleum reserve is a national security tool to guard against an economically threatening disruption in oil supplies. it was never intended to be used to lower gas prices. our problem today is not a matter of supply. we have plenty of supply. since its creation in 1995, a presidentially elected release from spro has occurred only once.

in 1991 at the beginning of operation desert storm and in september, 2005, after the devastation hurricane katrina caused in the gulf of mexico. the went spro inventory is 34 days of oil. at current daily u.s. consumption. tapping the reserve is nothing more than a short-term political solution to a problem largely of the administration's own making. its continued refusal to allow access to our nation's plentiful resources. mr. president, the benefits of increasing domestic energy production are unquestionable, especially at a time when gas prices are soaring and good jobs are needed by many, many americans. i urge the administration to move swiftly in favor of issuing more production permits and urge my senate colleagues to support policies in favor of increased domestic energy production. there is no reason for further delay. and i would note that one of the most eloquent spokesmen for the

same point is on the floor, the senator from louisiana, and i would be happy to yield to her. ms. landrieu: thank you, mr. president. the presiding officer: the senator from louisiana. ms. landrieu: thank you, mr. president. i would like to follow the remarks of the senator from arizona and associate myself with part of his remarks that have to do with the energy policy of our country today. i am, as he is, disappointed in the administration's reluctance to get the gulf of mexico back up to work. we did have a terrible tragedy. in april -- almost, it will be almost a year, april 20, the deep horizon catastrophe. but i would like to note, mr. president, that for 40 years or longer and 40,000 wells have been drilled safely in the gulf, in the shallow water and in the deep water since 1940, deep

water coming into play in about 1985. and up until the deepwater horizon accident, this industry had acted responsibly in large measure with cutting edge technologies. yes, we have to continue to investigate what happened, but, mr. president, shutting down so much of our domestic drilling with the unrest in other parts of the world is just, i think, not the right policy, and i want to associate myself with the remarks of the senator on the energy piece as well as tapping into the strategic petroleum reserve. this is not a crisis of -- it's not a crisis of pricing, it's a crisis of supply -- i'm sorry. it's not a crisis of supply, it's a crisis of pricing, and that spro should only be tapped when there is a supply issue, and we can get back to drilling more at home and be efficient in

other places. but what i really would like to talk about just briefly, and i know senator durbin is coming to the floor, is just to give my heartfelt condolences to the people of japan, mr. president. we have prached all weekend my husband and my family and i in horror watching the scene unfold with the terrible catastrophe that struck japan on friday afternoon, followed the creak 9.0 now on the richter scale, followed by a terrible tsunami, a wave of water in some places 30-feet high that devastated coastal communities. some of the pictures are reminiscent of what happened to us on the gulf coast about five and a half years ago with a 30-foot wave coming on shore right into gulfport and biloxi, mississippi, and then a catastrophe of man made proportions, in our case when the federal levy -- levee system

broke and 1,800 people lost their lives. but this situation in japan as we now know is the worst crisis, according to their prime minister, since the second world war. it's going to take all of our best efforts, governments around the world, individuals, corporations and businesses to be generous. i know and i hope the people of louisiana and our skis and communities will be generous because we were so benefited by the warm generosity of the people of japan and many, many volunteers that came from all over the country and the world. i hope that as this week of just search and rescue comes to a close, that then there will be time for debris cleanup and rebuilding and mental health counseling and all the things that have to go into helping an area of the country survive and grow back, and i know the people of japan were as prepared as any

country could be for a situation like this, but the events of that day have even overwhelmed one of the best and most organized governments in the world. and i just am heartbroken to hear the thousands of people that are yet unaccounted for, and our hearts go out to them. i hope that our nation will be generous in this time, not only from just a charitable and moral standpoint, but, mr. president, japan is the -- one of the strongest economies in the world. from the state that i represent, louisiana, we are their second largest trading partner as a state. so for the people of louisiana and all of our states have a vested interest in japan getting back up on its feet, building better and stronger. we're still in the process of rebuilding new orleans and the lower ninth ward and new orleans east and other neighborhoods that were hard hit along the gulf coast. gulfport and waveland are still

struggling to come back. an important economic center for our country, but most certainly this coastal and industrial community around sendai and other coastal communities are very important, not just to japan but to the world. so i hope with this 9.5 earthquake that hit, i hope people know that this is a thousand times worse than an 8-point on the richter scale. it's just not slightly worse. it's a thousand times worse. this was a -- it's a huge earthquake and shift in the earth plates, and then the subsequent tsunami. so our -- on behalf of the people of louisiana, we want to say a special condolences and best wishes for the people of japan as they recover and bury their dead, those that have lost and heal their injured and begin to rebuild their cities and communities even stronger than they were before, and i hope

that we'll all be as generous as we can. and one final point, mr. president. this is a wake-up call to our country, and as chairman of the homeland security committee, i'd like to get this on record this week. this is a wake-up call because we have not funded adequately our disaster response fund, the d.r.f. we are actually about about $1.6 billion below where we should be. this is not a wise policy, given what happened over the weekend. catastrophes can strike without warning at any time. if we leave just the amount of money that's in the d.r.f. and something like a katrina or this event would happen, that money would be used up in three days, and we have not replenished that fund. i've called on the president to send a supplemental emergency

bill. we can't pay for current disasters out of future preparedness money, and that's what the continuing resolution in the house basically does. i strongly object to taking money that we have to set aside in the event that catastrophes happen to pay for past disasters. so that's another reason that i voted against the house concurrent resolution, and now with this visual of this horrific tragedy unfolding in japan, with the tsunami, the destruction of the cities, the two nuclear power plants that are under extraordinary pressure, it does us no good to take money out of paying for current disasters, paying for the past damage. so i've sent a letter to the president asking him to send up an emergency bill. it would be wise for us to pay for past emergencies off budget, and then to use our homeland

security bill to budget as effectively and as appropriately as we can for disasters that may occur. i'm proud to say that the democratic leadership has doubled the amount of money that we're setting aside just in case these things happen. it used to be only $800 million a year. now we're budgeting close to to $1.08 or $1.09, thinking if something happens we want to make sure. this is -- in 48 states, disasters have been declared in the last two years. not just along the gulf coast. we have had flooding up in the northeast, flooding in the midwest. we could potentially have -- we had some flooding this weekend. i'm not sure how widespread it was, but in new jersey, there were scenes throughout the weekend about rivers overflowing as the spring approaches. so, mr. president, let us, you know, as we mourn for japan and are in solidarity with them through this crisis, let's use this as a reminder to get our

business straight, to get our budgets straight and not mess around with our disaster relief fund. let's pay for past disasters that we owe the communities. we have pledged to help them rebuild and set aside the appropriate money in the regular budget to take care of things that might happen this year as we advance. mr. president, i yield the floor and suggest the absence of a quorum. officer the clerk will call the roll. the presiding officer: the clerk will call the roll. quorum call:

the presiding officer: the senator arizona. mr. mccain: ask unanimous consent that further proceedings under the quorum call be suspended. the presiding officer: without objection. mr. mccain: mr. president, i i ask unanimous consent to proceed in morning business for 20 minutes instead of the 10. the presiding officer: without objection. mr. mccain: and, mr. president, i ask that after my opening statement, that my colleague from connecticut be allowed to give his statement and then i ask unanimous consent that the senator from connecticut and i be allowed to engage in a colloquy, and i understand that the senator from connecticut may be using his 10 minutes; is that correct?

the presiding officer: without objection. mr. mccain: i thank you, mr. president. today my colleague, senator lieberman, and i are introducing a resolution on the situation in libya. mr. president, is it allowed to send to the desk a resolution, even though we're in morning business and its consideratione delayed -- and its consideration be delayed until the appropriate time? the presiding officer: the resolution will be received and appropriately referred. mr. mccain: on behalf of myself and senator lieberman, i send the resolution to the desk. mr. president, the wording of the resolution is a sense of the senate. it is pretty simple and straightforward. it calls for a recognition of

the provisional revolutionary government in libya, and it calls for the placing, as rapidly as possible, a no-fly zone over libya. it has some other language associated with it, which i would go into later on, but the fact is that what it does is it urges the president of the united states to take long overdue action to prevent the massacres that are taking place in libya, as we speak. at this moment, opponents of colonel qaddafi and his supporters are fighting for their very survival. the demands of the libian people began -- of the demands of the libian people began much like those of their neighbors in africa and the middle east for the protection of their rights and greater representation for justice and opportunity. the response of qaddafi and

those still loyal to him stands in stark contrast to the inspiring events of what some are calling the arab spring. qaddafi has unleashed a campaign of violence against the lybyan people including noncombatants using every tool at his disposal from artillery barrages to airstrikes to th -- it is not a fair fight. now the hour is growing dark. over the past week the momentum has increasingly shifted away from the opposition and toward qaddafi. showing once again what a lot of us understand about warfare, that a smaller, we will-trained, we will-equipped force can usually prevail is over a larger, less trained and less equipped force. one by one, towns that have been

liberated by the opposition are now falling to qaddafi's forces. we're only now beginning to learn the savage cost of those losses, especially on the civilian population -- the women, children, and elderly who can neither fight nor flee qaddafi's rampage, and of course those brave lybian rebels, who face death, or perhaps a fate worse than death. weaver a horrified about what we have learned already but what we have yet to learn and what we could still witness if qaddafi's forces are allowed to finish this unfair, shock and offend the conscience of the entire world. last week in a hearing in the committee on armed services, the director of national intelligence said that absent outside assistance to the

opposition -- quote -- "i think over the large term that the qaddafi regime will prevail and yet it is the policy of the united states, as stated by the president, and i quote, "qaddafi must step down from power and leave." that's the right policy. but it is increasingly at odds now with the facts on the ground. so we face a stark choice: either the president and the united states takes greater action to achieve the objectives he has laid out, or we allow events to play out as they are, meaning that qaddafi reclaims control of his country. the resolution that senator lieberman and i are introducing calls on the president to take a number of steps immediately to reverse this impending disaster. first the president should recognize libya's transitional national council which is based in ben gaszy which representative of communities

across the country as the sole legitimate governing authority of libya. just as the government of france has done. president sarco disee and the french -- president sarcozy and the french recognize the sole legitimate government of libya as the provisional government based in benghazi. some continue to say we don't know who the opposition is and, thus, we can't assist them. that's ridiculous. they've been organized for weeks. their senior leaders consist of long-standing critics of qaddafi as we will as officials who recently broke with his regime. they even have a web site and they are asking -- they are pleading -- they are pleading -- for international support. qaddafi has forfeited the right to power through his vicious actions. we must recognize the opposition government. second, the president should take immediate steps to

implement a no-fly zone in libya with international support. not only has the lybian opposition government called for this. the council has called for a no-fly zone. the head of the islamic conference has exawld for a no-fly zone and on sat day, the arab league called for a no-fly zone shall, the french and british governments have voiced their support and have draft add u.n. security council resolution to implement a no-fly zone. it is long past time for the president of the united states to answer these calls for international leadership. the united states of america must lead. a no-fly zone was never going to be the decisive action that timed the balance against qaddafi, even when senator lieberman and i called for it nearly three weeks ago. but it remains the case that a no-fly zone would take one of

qaddafi's most lethal tools off the table and thereby boost the confidence of libya's opposition. it is libyan's themselves who want to do the fighting against qaddafi but they want it to be a fair fight and so should we. finally, the president should develop and implement a comprehensive strategy to accomplish the stated u.s. objective of qaddafi leaving power. beyond a no-fly zone and beyond the actions like sanctions and humanitarian assistance that we are already taking, there are many actions that we could consider, from sharing intelligence on qaddafi's forces with opposition to providing them with support for command-and-control, to technical assistance and even forms of security assistance if they request it. we could jam qaddafi's communications and his television, and if we can provide it in a responsible way.

our window of opportunity to support the libyan people is closing quickly. and this country has a choice to make. are we going to take action to support the people of libya in their fight for freedom? are we going to stand by doing more than nothing but less than enough to achieve our states goal of qaddafi leaving power? we all say that we support the universal rights of the arabs and muslims in countries across the middle east and north africa who are inspiring us all in their quest for greater freedom, opportunity, and justice. but libya is the real test. it is the test of whether we will provide our support not just when it's easy but when it's difficult. and it requires more of us than just speeches and sphretion expressions of solidarity. if qaddafi is allowed to prevail

in libya and crush his opponents, it will send a significant until throughout the region that force is the way to respond to peaceful deanand dema better life and will cause all of our expressions of support for the universal rights of all people to ring far more hollow. before i yield to my friend from connecticut, i would just like to point out, now we have former president clinton, we have the arab league, we have the french, the british, other nations flute the flute the world -- throughout the world and they're saying, crying out, we need to help these people. when president obama says the noose is tightening around colonel muammar qaddafi, in fact it's tightening around the libyan rebels. the way he is doing it and what

he is doing to his own people are crimes against humanity. it's time that we stood up. it's time we read from "the new york times" this morning by ann marie slaughter entitled "fiddling while libya burns." it's time we read again on saturday the "wall street journal" lead editorial entitled "the obama doctrine: libya is a what a world without u.s. leadership looks like. this is the obama exception of the u.s. work in the world. make sure that the steps we are taking it amplified." that was by national security council spokesman ben rhodes has reported in "the washington post"." missiles dmg from every direction, we need international support at least a no-fly zone.

why is the world not supporting us? that's from libyan rebel mohammed on march 10 as quoted in "the wall street journal." people are crying out for help. they are fighting for freedom. they are fighting an unequal situation on the battlefield. the least we can do, the very least we can do is recognize them in their struggle for freedom and give them some assistance. otherwise, as the president's national security advisor stated on friday, qaddafi will prevail. that will send a signal throughout the world that we will have tiananmen squares in this world, not tahrir squares. i yield to my colleague from connecticut. mr. lieberman: mr. president, i thank the chair. i thank my friend and colleague from arizona. it's my honor to join with him

in submitting this resolution. i hope in time we will gather support -- gather the support of members on both sides of the political aisle and that we will make a statement, an urgent statement, that the members of the united states senate are ready across party lines to take a stand here because we understand that we are at a turning point in history, and we can't stand back and hope it goes in the right direction. in fact, tared, as we watch events -- in fact, today, as we watch events unfolding in labor yarks i think we have reasons to believe it is going in exactly the wrong direction. mr. president, let me read the first two paragraphs of this resolution that senator mccain and i are introducing today, because i think it sets what's happening in libya in a context and also explains why we think america has a national interest

in how the conflict in libya ends. first paragraph of the resolution we've introducedious now: "whereas peaceful demonstrations inspired by similar peaceful demonstrations in tunisia, egypt and elsewhere in the middle east began in libya with calls for greater political reform, opportunity, justice, and the rule of law and quickly spread to cities around the country." second paragraph: "whereas muammar qaddafi, his sons and forces loyal to them responded to the peaceful demonstrations by authorizing and initiating violence against civilian noncombatants in libya including the use of air power, foreign mercenaries, helicopters, mortar, and naval assets, snipers and soldiers." mr. president, i read those two

pray paragraphs because they set exactly in context what's happening in lib yavment the fact is that libya is occurring in the context of these extraordinary peaceful democratic uprisingrisings in ta and egypt that have been described and i think correctly as the arab spring. for too long we accepted, i think, an argument that there were only two choices for the united states and most of the rest of the world in the arab world. there was a choice between secular dictatorships that were cordial to us on one side and on the other side radical islamist regimes that despised us and were threatening to us. and we made our peace with those secular dictatorships. but it was inherently uncomfortable and inconsistent with our basic democratic

values, going back to the declaration of independence. and now, beginning in tunesia and spreading to egypt and then to libya and other countries, the arab people themselves rose up and said, no, there's a third way, and the third way is democracy. we want political freedom. we want economic opportunity. we want into the modern world. we don't want extremism of any kind. those revolutions, those uprisings resulted in the end of the rule of two long-standing rulers. ben-ali in tunesia and mubarek in egypt. they happened for reasons. part was those leaders did not

order the military to turn on their people. that is the arab spring. in libya, because qaddafi has taken exactly the opposite position and turned his guns on his own people as they peacefully demonstrated for change, for universal human rights, there's a danger that what's happening in libya is essentially a wall being put up which says this peaceful democratic revolution in the arab world ends here. to put it another way, the arab spring may be going the way of the prague spring of 1968, when the people of then-czechoslovakia rose up and soviet tanks and armaments suppressed their revolution. we simply cannot let that happen. senator mccain and i were in tunesia and egypt a couple of

weeks ago. one of the messages that we got, particularly from the young people who have been at the head of this remarkable uprising in these two countries, was don't stand by. please, america, don't stand by and let qaddafi bludgeon his own people who are asking for the same rights and opportunity and freedoms that we have been asking for. because if you do, it will end the movement of freedom and opportunity across the arab world. and in some sense the tunesians and egyptians said to us, it may setback our own cause, even though we have been successful thus far. and that's why it has been so frustrating, really infuriating to watch as qaddafi has moved with increasing brutality and force against his own people,

pushing his opponents back, threatening really to totally suppress their uprising. and i have been struck as i've watched the world community, most of it, is spending so much time discussing and debating. and as the world discusses and debates what to do in libya, libya desends back into qaddafi's darkness. we simply cannot let that happen. the libyan people are not asking us to come in and fight for them. the libyan people don't want our troops on the ground, and that's not what this resolution would authorize. the libyan people want us to come to their aid in the sense of enabling them to fight qaddafi's forces and qaddafi, to

carry on as freedom fighters. they want recognition as the established and legal authority, sovereignty for their country. they like some military assistance. they like weapons. they like the kind of intelligence and electronic assistance that we can give. and they like us in some way, a no-fly zone or using our capacity to fire missiles from offshore, to protect them from what has turned the tide in their struggle for freedom against qaddafi and libya, which is the brutal use of libyan air power against the libyan people. if we don't do this, i fear that this arab spring will turn to winter, a winter of darkness and suppression again too quickly, and the world will regret it. people have said to senator mccain and me, what's the american national interest in

getting involved in libya? let me just give you a few reasons why i think we do have an interest. first, we have a clear national interest, a humanitarian interest of not standing idly by and watching tens of thousands of people slaughtered by their own government. as i've said, if we stand by and do nothing as this happens, it will be devastating to america's image in the arab world and to our moral leadership throughout the world. some people have argued why would we want to get involved in yet a third arab or muslim country, thinking of iraq and afghanistan before that. but this is really more like 1990 and 1991 and the first gulf war. when the arab world tp*s was calling -- world itself was calling out to us please help us, get saddam out of kuwait. the arab world as senator mccain said is pleading with us, help stop qaddafi from

slaughtering his own people, the blood of our brothers and sisters in libya. second, we have a clear national interest in preventing libya from becoming a failed state that al qaeda and other islamic groups will exploit. and that is precisely what will happen if this becomes a bloody and protracted civil war and then desends into chaos. third, if qaddafi is able to gheit this uprising -- able to defeat this uprising, it will send a message, as senator mccain said, to every dictator in the world that the way to stop peaceful democratic protest is through brutal violence. fourth, without -- i don't mean this quote literally, but remember the old phrase, from earlier times in history, if you go after the king, make sure you eliminate him. don't leave him wounded. if qaddafi survives this, he is going to cause no end of trouble

for the united states and anyone else in the world that stood with the freedom fighters. so let us not think that we can stand idly by and that we will not pay ourselves the consequences of qaddafi surviving. then finally, there is a relationship between what's happening in libya today and the instability it has caused throughout that region of the world and the skyrocketing price of gasoline at the pump that does the american people every day. in fact, with all that's been discussed, i think the best thing we can do to stabilize the price of gasoline in america is to stabilize libya and to enable the libyan opposition to qaddafi to fight the fair fight that they want to fight. so that's the intention of this resolution.

it's a, as a french would say a c r*eu -- a cry from our hearts because i fear we've let so much time go by that it would be impossible to enable the freedom fighters of libya to wage a fair fight. i hope their cause is not lost because it is our cause. and the least we can do is help them fight for that cause against the man who has suppressed that cause in all his rule. i thank the chair and i yield the floor. mr. mccain: mr. president? i would ask my friend from connecticut if we couldn't review a few of the facts as they are now. despite the fact that the president made a statement that i am still bewildered by, i

believe it was saturday or friday the president said the noose is tightening around colonel muammar qaddafi. i think the facts on the ground indicate that with superior firepower, ability to strike from the air, even if those strikes are not particularly effective, although apparently they are becoming more effective, and well-trained and well-equipped small forces, colonel qaddafi has been able to reverse the tide on the battlefield rather dramatically. all the news reports are that the military situation on the ground has shifted dramatically in favor of qaddafi's forces, just as general clapper, our

director of national intelligence, said on thursday, that qaddafi is likely to win in the long term. yet, on the other side of the coin, the president of the united states has said that qaddafi must go. i guess my question to my colleague, the first one is, as the "wall street journal" says, if qaddafi survives as mr. obama has told him to go, the blow to u.s. prestige and world order would be enormous. dictators will learn that the way to keep america from acting is to keep its diplomats and citizens around while mowing down your opponents as the world debates contingency. by the time the babblers make a decision, it will be too late. this is a dangerous message to sends at any time but especially

with the middle east in the throes of a revolution. the american prestige is now on the line. the battlefield situation, the tide is obviously against the progovernment and pro-democracy forces. and wouldn't the message be sent to any dictator in the region of the world, rather than accept a situation such as what happened in egypt and tunesia, send in the tanks, send in the military. slaughter people without consequence. is that the lesson we would be sending here, i ask my friend from connecticut. mr. lieberman: i thank my friend and colleague from arizona. i fear that is exactly the message we would be sending if the united states and our allies stand back and let qaddafi, through the force of his arms, sue president political descent

from his own people. one of the inspiring qualities to the uprisings in tunesia and egypt was that they were peaceful. incidentally, they were not anti-american. they were pro-tunesia. pro-egypt, the people of tunesia and egypt pleading for a better life. the model there and one of the most powerful examples of peaceful protest which is really part of american history, is established. and it changed those two governments in tunesia and egypt. now you've got another model being set here which is when your people rise up and peacefully protect, you don't respond, you don't negotiate, you don't listen to them, you don't react. you turn your firepower on and kill them wantonly and you keep doing that until that dissent

ends. one, in a world that's increasingly dangerous, that's a terrible message to send. two, in a world in which -- let's go back a little bit to what i said earlier about the choices we thought, and they were false choices, in the arab world. in the uprisings in tunesia and egypt, there has been expressed the strongest possible repudiation of al qaeda, on the one hand, and iran on the other, both of whom -- that is the government of iran; both of whom have followed islamist extremist ideology and used violence to achieve their ends. you've got the tunesia and egypt model of peaceful protest, democracy, economic opportunity and now the other model, qaddafi violence.

what will it beget? it will beget more violence and will cost us dearly. i want to say to my friend in arizona, as we say in our resolution, president obama has made clear that he believes qaddafi must go and if after that clear statement of american policy by our commander in chief, qaddafi does not go and it is seen, not just in the arab world, but throughout the wider world, that the united states was not able to mobilize action in -- in the world community to make sure qaddafi went, but, in fact, he stayed, it inevitably has an effect on the credibility of american leadership and the world. none of us want that to happen, including president obama. it's not too late, but the actions that we've taken,

significant as they are, sanctions on qaddafi and some people close to him, the threat or the plan to refer him and others close to him to the international court of criminal justice, all important, but -- but, unfortunately, what is more important now is what is happening on the ground in libya. and on the ground in libya, the power of qaddafi's forces are winning over the forces of freedom in a fight that is not fair. mr. mccain: i'd say to my friend from connecticut, that's a very strong and eloquent statement. and, you know, there have -- i admit to the fact that the terrible tragedy that's transpiring in japan is one that has riveted the attention of our nation and the world and our hearts go out to the japanese

people and government in this terrible time of trial. and there's no way we can diminish the tragedy that they're experiencing. but it is a natural disaster that was the catalyst for this terrible situation. meanwhile in libya we have a human catalyst named muammar kaddafi. and i will admit, i will confess to having such a dull life that i watch a lot of cable television. and i see expert after expert come before the cameras and give us reasons why the united states should do nothing. so i commend to reading my colleague's -- an article in today's "new york times" by an mary slaughter policy planning in the state department i understand in this administration or in another, and it really does respond to

what you will hear continuously. the article's entitled "fiddling while libya burns." and at the beginning she points out that the organization of the islamic conference, the gulf cooperation council and now the arab league have all called for this opponent -- this imposing a no-fly zone. and she runs through the objections that have been made by various individuals and experts. one is entitled "it's not in our interest." another one, it will be counterproductive. another one, if it does work, we don't know what we will get. let's arm the rebels instead. and it addresses most of the -- of the main arguments. what it -- the only one that it -- i think that should be added to this list is the likelihood -- the likelihood

that things are happening in libya today as we speak that will remind us that several times in the last century, and even in this, we said never again. we said never again after -- we said never agai rwanda and never again after the holocaust. is there anyone who believes that qaddafi has not practiced in the past and is practicing now and will in the future unspeakable cruelties inflicted on his people who dare to stand up to him? so, i say to my friend here we are, we know what's happening in tripoli, we know what's happening with air attacks

taking place on defenseless individuals, and we watch these brave, young people go out there fighting against tanks and air power. and as former president clinton said so eloquently, it's not a fair fight. it's not a fair fight. so i guess that there will be other consultations with our allies that we will -- that i'm glad to see that the secretary of state is meeting with the leadership of the provisional government. i hope that she will, as a result of that meeting, ask for united states recognition of that organization as the legitimate government of the -- of the country of libya. and i hope all these things will happen. but meanwhile events unfolding on the ground every second and

every minute we wait to act more libyans die. this is a preventible situation. the events in tokyo maybe we can argue and japan were not preventible. it was an act of god. what's happening in libya is the act of a brutal tyrant, sadist who is willing to butcher his own people. and we're doing everything we can and will do everything we can to help the people of japan. we ought to be doing what we can to help the people of libya from the fate that, in some case to some individuals, may be worse than death. so i hope that my colleagues will -- i hope the majority leader will allow a vote on this sense of the senate resolution as soon as possible.

i understand that there will be those who may like to see slightly different language. we'd be glad to -- to change the language somewhat. but we won't change the message. the message is, the united states of america, the senate of the united states of america is standing on the side of people who standing up for freedom and democracy, a universal value that we treasure. and we will not -- we will not stand in our obligations. and those who say that the most powerful nation in the world is incapable of helping these people by installing a no-fly zone, i think are not substantiated by the facts. general odenerio just the other day said we could install a no-fly zone in just a few days.

we could have naval power offshore that could enforce in a variety of ways both from the sea as well as -- as from the air. and also it is very clear to me that if libyan pilots are told if you fly, you're going to die, a lot of them won't fly. but i don't want to focus so much attention on the no-fly zone as i do on what's happening to the people of ri of libya ase speak and the repercussions that can take place throughout the globe. i hope that we can vote on this sooner rather than later and i ask my friend from connecticut, i believe we're nearly out of name a few minutes. mr. lieberman: i thank my friend from arizona. mr. president, i just want to conclude by saying this, in our history in this country we've been quite fortunate and -- and

it may be that -- a friend of mine said to me, it's hard for people to imagine themselves in a position where they would need help. they need help to rescue them from danger, from death. and senator mccain cited some of the episodes, dark times in just recent history where people need that help from outside, the holocaust, the balkans, rwanda, and we acted. this is -- this is of that same type and -- but it struck me, as we think about japan, there are -- there's this parallel to the u.s. there have been natural disasters in this country. earthquakes, hurricanes, hurricane katrina is an example. when the people of the gulf coast region pleaded with us, the central government, the

national government, the federal government for help, and we gave it to them. who will ever forget what the coast guard did in rescuing lives in -- in the gulf coast after katrina. and in some ways i think we have to perhaps see it as -- although it's a manmade disaster, a natural disaster with people asking for basic rescue. and in this case, they're not asking us to fight their fight, i repeat, they're asking us to give them the weapons, the cover so that they can fight their fight. that's the intention of this resolution, bottom line, recognize the opposition to qaddafi as the legitimate sovereign government of libya and then work with our allies in the world community including not only our ally and in the arab league to protect the libya people from qaddafi's air force.

i join with senator mccain in hoping that senator reid and senator mcconnell can bring this resolution up quickly because every moment that passes without us helping the libyan opposition to make it a fair fight is a moment in which darkness descends over libya. and, again, i repeat what senator mccain said, that we -- we're willing to discuss changes in the resolution because we'd like this to be the -- a resolution that has the broadest possible bipartisan support in the senate. mr. president, if i -- if i can, i'd like to just take a minute more to say this word that came to my mind over the weekend about the terrible natural disaster in japan. mr. mccain: before he switches, to ask unanimous consent that "the wall street journal," editorial entitled "the obama doctrine." and "the new york times" article, "fiddling while libya burns."

and the interview with the -- including "rebel leader give us a chance" the "detail -- the dailybeast.com be included in the record. the presiding officer: without objection. mr. lieberman: i thank the chair. over the weekend the prime minister of japan said, describe this earthquake and tsunmai as the worst thing to happen to japan since world war ii. and i suppose what struck me, struck probably a lot of other americans, which was that, of course, japan and the united states were at war with each other in world war ii. today the u.s.-japan relationship is extremely close. i -- i believe we don't have a better, more steadfast ally in asia than the japanese people. and it's part of why i hope that people of japan understand that the people of the united states

are with them at this moment in which they suffer so from this natural disaster and will do everything we can to help them. they're a proud people, but -- but now they can't handle this all alone and we want to help them. we're a proud people. i want to share with my colleagues a conversation i had with a gentleman who was in the american embassy -- serving in the american embassy in tokyo at the time of hurricane katrina. and he told me yesterday that japanese people lined up outside our embassy in tokyo after they heard about, watched films of hurricane katrina to offer help. whatever they could offer. and one private citizen of japan, unannounced, arrived at the embassy and wrote out a private check for $1 million for

hurricane katrina relief. i mean, this is the -- the closeness of the relationship. and i hope that -- and i'm confident that we will be as supportive of the japanese people as they respond to this earthquake and tsunmai and rebuild as they were to the people of -- of the gulf coast in america in the aftermath of hurricane katrina. i thank the chair and i yield the floor. a senator: mr. president? the presiding officer: the senator from tennessee. mr. alexander: mr. president, as the senator from arizona and the senator from connecticut have done in their ways eloquently, i would like to express on behalf of the people of tennessee my sympathy, our sympathy to the people of japan and the devastation they've experienced.

i applaud the administration and the american people for their immediate response to offer tans, charitable aid and search and rescue teams to find survivors. there is no more important two-country alliance than that of japan and the united states. the former majority leader and ambassador mike mansfield used to teach that to all of us younger governors in the 1980's and 1990's, and we will stand with the people of japan until they recover from this disaster. there is a special relationship between the japanese and tennesseans because of the location of so many japanese industries in our state over the last 30 years, so as a result, tennessee have been reaching out to our friends and their families in japan. we should also commend the japanese for their courage that they have shown in dealing with the devastation and particularly with their level-headed response to the damage that their nuclear reactors at fukushima daiichi.

in this instance, when communication can sometimes create misinformation and even panic, the japanese leadership and nuclear shifts are working with organizations around the world in responding to the danger of keeping the rest of the world informed. this is the largest earthquake in japan's recorded history, 30 times more forceful than the san francisco earthquake of 1906, 700 times stronger than the 2010 earthquake in haiti. so while the risk is no means over and the events in japan continue to evolve, the reactor's safety systems so far appear to have done their job in withstanding the earthquake tsunami power loss and sploarks -- explosions and none of the containment structures seem to have been breached in these worst-case conditions. so the lesson americans can take away from this tragedy is this:

learn all that we can from the japanese experience to make the operation of american reactors as safe as possible. mr. president, i would ask for an additional five minutes. the presiding officer: without objection. mr. alexander: mr. president, since the 1950's, the united states navy has safely traveled more than 136 million miles on nuclear power. today 104 civilian reactors produce 20% of america's electricity and 70% of our clean electricity. that is, without sulfur, without nitrogen, without mercury or without carbon. no one has ever died from a nuclear accident of any of our commercial or navy reactors. let me say that again. no one has ever died from a reactor accident at one of our navy or commercial reactors. without nuclear power, it is hard to imagine how the united

states could produce enough cheap, reliable, clean electricity to keep our economy moving and keep our jobs from going overseas. here's what we know about what has happened in japan. we have all seen the video of the explosion of the building at daiichi unit one and now unit three. i'm sure many of us thought that those were reactors exploding. fortunately, that's not what happened. a buildup of hydrogen gas in the secondary containment structures led to explosions which destroyed the buildings themselves, but the primary containment structures inside appear not to have been compromised. to reduce the resulting increase in containment pressure, a relatively small amount of radioactive vapor has been dispersed into the atmosphere. the tokyo electric power company has told us that the highest level of radiation detected on site to date is 155.7-milligram

per hour, and that level has since been reduced to 4.4 per hour. what does that mean in regard to human exposure risk? to help put that in perspective, here's a couple of facts. the average american receives about 300 millirim of radiation exposure each year from naturally occurring sources such as the sun, and another 300 mill irim of exposure from medical applications such as c.t. scans and x-rays. what did happen after the earthquake is that the ensuing tsunami crippled the backup electrical generators and batteries needed to keep cooling water circulating in the plants after they had been safely shut down. this ultimately led to the use of the last line of defense emergency, core cooling system, flooding the entire containment vessel with seawater. while this pretty much assures that the reactors won't ever be

used again, as long as the seawater continues to be pumped in, the possibilities of further damage ought to be halted. people have been evacuated, and authorities are taking every precaution, and that, of course, is what we would like to see. despite one of the largest earthquakes in the world, the world's history, with the aftershocks, multiple disasters compounded one on top of another, the primary containment reactors near the epicenter appear not to have been breached and the radioactive release appears to have been controlled and minimal. this experience has brought back memories of the 1979 accident at three mile island in pennsylvania. although we remember three mile island as the worst nuclear accident in u.s. history, it's also important to remember that no one was hurt at three mile island. as i said before, there has

never been a death resulting from a commercial nuclear accident in american history. what happened at three mile island was basically an operator failure, a valve failed, and when the automatic safety mechanism kicked in, the operators overrode it because they became confused by the number of alarms. three mile island completely changed the american nuclear industry. the kennedy commission appointed by president carter analyzed the problems, made many recommendations, almost all of which have been put into practice. the valve that started the whole thing had failed nine times before in other reactors but the manufacturer tried to keep it a secret. people in the nuclear industry then just didn't talk to each other. now safety is a top priority of the nuclear industry. the institute of nuclear power operations collectively shares best practices to achieve the highest levels of safety as well as reliability. nuclear operators train for five years before they could take over in the control room.

they spend one week out of every five to six weeks in a simulator honing their skills. the nuclear companies have special emergency teams that can be dispatched anywhere in the country at a moment's notice. a nuclear regulatory commission inspector practically lives on site. what's more, every reactor in the country is on the hook for more than $100 million if something goes wrong at another reactor. as you can imagine, they watch each other very carefully. i have talked with any number of navy veterans who had experience with nuclear commands, and one reason i am confident that there haven't been any nuclear reactor accidents in the nuclear navy that have killed anyone over the last half century is because the responsibility for the safety of that reactor goes right up to the captain of the vessel. all this wasn't the same at chernobyl, the infamous 1986 soviet accident. chernobyl involved 60 immediate

deaths and radiation exposures that according to the world health organization may eventually result in 4,000 cancers. but chernobyl was a completely different kind of accident and the result of different technology. more than that, the soviets hadn't built a containment structure at chernobyl. the containment structures at these japanese reactors 40- 40-80 inches thick concrete and steel appear, appear, as we speak this afternoon, to have withstood an 8.9 magnitude earthquake, a tsunami, power failure and explosion. mr. president, there are gas and oil fires raging in japan. water and sewer systems are damaged. the possibility of disease and starvation are eminent. there are a great many things to worry about in addition to the problems with the japanese reactor. there are tens of thousands of

people still unaccounted for. right now, the effort needs to be helping those who need help, containing further damage and risk and getting japan back up and running again. then we can take the lessons learned from this earthquake and tsunami and apply them to make our nuclear plants as safely as possible and help the world do the same. america's 104 nuclear reactors provide, as i mentioned earlier, 20% of our electricity, 70% of our clean electricity. japan has 54 reactors and gets 30% of its electricity from nuclear. france gets 80% of its electricity from nuclear power. the united states invented nuclear power, but the nuclear regulatory commission has not issued a construction license for a new reactor in more than 30 years. there are 65 reactors under construction around the world outside the united states right now, but only one of those 65 is

in the united states, and that's the construction of a previously halted project at the tennessee valley authority. the japanese and the french have surged into the lead in terms of nuclear power and are now being challenged by korea and russia on the international market, and china, with 27 nuclear reactors currently under construction, will soon join them all. nuclear power today provides about 15% of the world's electricity. there are always risks with every form of energy. it's important that we be clear about the risks that each type of energy poses, but it's also important to remember that we don't abandon -- we don't abandon highway systems because bridges and overpasses collapse during earthquakes. the 1.6 million of us who fly

daily would not stop flying after a tragic airplane crash. we cannot stop drilling after a tragic oil spill unless we want to rely more on foreign oil, one up our prices, turn our oil drilling over to a few big oil companies, and all our oil hauling over to more leaky tankers. 34,000 people die in motor vehicle accidents every year, but we don't stop driving because we have to get our children to work and our children to school and ourselves to work. in all of these cases, when there are accidents, we do our best to examine the tragedies and make our continued operation and our lives as safe as possible. that's what we need to do here. our reactors in the united states are built to the highest standards in the world. the chairman of the nuclear regulatory commission said in a

press briefing today right now we believe that the nuclear power plants in this country operate safely and securely. the chairman said nuclear power plants in the united states are designed to very high standards for earthquake effects. all our plants are designed to withstand significant natural phenomenon like earthquakes, tornadoes, tsunamis. we will take whatever steps are necessary, the chairman continued, to ensure the safety and security of nuclear power plants in the country, but right now we believe we have a very strong program in place. as we get more information from japan, said the chairman of the united states nuclear regulatory commission, as this immediate crisis ultimately comes to an end, we will look at whatever information we can gain from this event and see if there are any changes we need to make in our system. the deputy secretary of energy said nuclear power has been a critical component of the united states energy portfolio.

the white house press secretary on behalf of president obama said nuclear power remains a part of the president's overall energy plan. despite the fact that there has never been a death as a result of the operation of a commercial american reactor nor in our nuclear navy, which has been using reactors in its ships and submarines since the 1950's, our goal should be to continue every effort to try to make certain that the operation of our existing and new nuclear power plants are as safe as possible. for example, some have suggested that so-called passive cooling systems that operate on natural convection currents and don't need pumping would prevent the problems that arose in japan when the backup power to pump water was lost. mr. president, nuclear power is a demanding but manageable

technology. as we move forward, let us learn the proper lessons from this japanese experience to make sure that in the united states and in the world we are even better prepared for the unexpected events of the future. i thank the president and i yield the floor.

the presiding officer: the clerk will call the roll. quorum call:

sphoo quorum call: quorum call:

mr. leahy: mr. president? the presiding officer: the senator from vermont. mr. leahy: mr. president, i ask unanimous consent the call of the quorum be dispensed with. the presiding officer: without objection. morning business is closed. under the previous order, the senate will proceed to executive session to consider the following nomination, which the clerk will report. the clerk: nomination, james emanuel boasberg of the district of columbia to be united states district judge.

the presiding officer: under the previous order, there will be one hour of debate equally divided and controlled between the two leaders and their designees. mr. leahy: mr. president, i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: mr. leahy: mr. president? the presiding officer: the senator from vermont. mr. leahy: mr. president, i ask consent the call of the quorum be dispensed with. the presiding officer: without objection. mr. leahy: mr. president, today the senate will consider a

judicial nomination i've been talking about last year. as the clerk reported, judge boasberg has been nominated -- he's been nominated as one of two nominees to fill vacancies that plagued the district court for the district of columbia, our nation's capital, for some time. in the closing days of the last session, we were able to confirm two additional nominees to fill vacancies on this court. this is another of the nominations that could, and in my view, should have been considered and confirmed last year. judge boasberg has outstanding credentials. he was appointed to be a judge in d.c. by president george w. bush in 2002. he has a wealth of experience. he presided over approximately 500 cases. he's a former assistant u.s. attorney. he received the highest peer rather view rating of well qualified from the standing committee on the federal judiciary of the american bar association.

yet, as we proceed with this nomination, senate republicans have objected to proceeding to the nomination of amy jackson. both judge boa boasberg and miss jackson was reported without opposition by the judiciary committee last year and again earlier this year. in other words, he was -- he was reported without opposition, she was reported without opposition. then again this year, he was reported out without opposition, she was reported without opposition but they're only allowing him to go forward and not her. i think that's a mistake. i think it's a bad mistake. chief judge landbroth wrote to senator leaders last november urging action by the senate to fill the vacancies that exist on the district court for the district of columbia. we could and should have acted on both of these nominations

last year in response to that request. i'm glad we're ending the wait for judge boasberg, the refusal to act on jackson is just another example of needless delays. she, miss jackson, is a former assistant u.s. attorney with outstanding credentials and experience. she, too, received the standing committee on the federal judiciary of the american bar association's highest per review rating of well qualified, as did he. she's the representative of the district of columbia, represent tv norton has called her one of the top practitioner -- representative norton has called her one of the top practitioners in one of the district's top law firms and has strongly endorsed her nomination. in addition to judge boasberg, there's still ten additional nominees waiting for senate consideration, having been reviewed by the judiciary committee. nominees to fill two judicial emergency vacancies in new york,

the judicial emergency vacancy on the second circuit, the judicial emergency vacancy in california, and vacancies on the federal and d.c. circuit, a vacancy in oregon and two vacancies in virginia. let's debate them then vote them up or down. i consider the fact that they all came out of the judiciary committee with a solid vote, we ought to be working to confirm them before the upcoming recess. we should be working to clear the calendar before that recess. that's what a return to regular order entails. the real parties paying for these unnecessary delays -- and we had one here recently that was confirmed unanimously but had to wait for a year on the calendar to be voted on. if you have these unnecessary delays, you mean that judges remain overburdened, the american people who depend upon

them are denied hearings and justice in a timely fashionmen fashionment -- fashion. when the chief judge wrote to senator reid and senator mcconnell last november, he noted senate action to fill the vacancies in d.c. was needed so that the citizens of the district of columbia and the federal government and other litigants who rely on the court could receive the high-quality justice they deserve. he wrote about the severe impact the judicial vacancies were having. noted that their caseload of that court includes many involving national security issues. in fact, i ask consent that a copy of the chief judge's letter be included in the record at the end of my statement. the presiding officer: without objection. mr. leahy: also i ask unanimous consent to insert in the record at the end of sniement a recent article from the "palm beach post post" and the "associated press." the presiding officer: without objection. mr. leahy: thank you.

there was a crisis in south florida and the watch list for federal courts for high caseloads, high vacancies. during president bush's first term his first four tumultuous years in office, we confirmed 205 of his judicial nominees. so far in president obama's third year in office, the senate has only considered 72. i'd ask consent that my full statement be made part of the record. the presiding officer: without objection. mr. leahy: mr. president, i -- mr. president, i would -- i am about to suggest the absence of a quorum. but i ask unanimous consent that when i suggest the absence of a quorum, that the time be equally

divided on both sides. the presiding officer: without objection. mr. leahy: i suggest the absence of a quorum. the presiding officer: the clerk will call the roll. quorum call: