>> any tool we have to assist us in detecting early on, to detect, help us us us, to early on the organization that is

trafficking large quantities of multiple sales of -- >> thank you. that's enough. >> yes, ma'am. i think we're going to do this it should be a balanced approach may be to legislation but we also have to take into mind we do have second amendment rights. it needs to be balanced. we think it should be approached with caution? >> what does that mean? >> there is a common goods, but there is a responsibility for us to balance it also. >> next. >> it would help. >> yes, ma'am. i agreed. it should be balanced with the second amendment rights. we require purchases of handguns within two or more handguns within a five day period to be reported to us. however, the situation in mexico right now, at along the southwest border i think we have

some type of, well, some help along that line. >> i would disagree to some extent that that would be beneficial. i would rather have a relationship with the licensee for when an individual does come in and wants to purchase multiple weapons of any sort, handguns are long guns, that they would work with those. that would provide us with information targeting them. so i would somewhat disagree with that. >> my time has expired. >> we now go to the gentleman, mr. walberg, for five minutes. >> thank you, mr. chairman. i thank you for also giving us opportunity to go to mexico city and meet with officials down there, both our agents and agencies as well as the community in mexico. hearing some of the responses this morning, i'm kind of

surprised that mexican federal police met us with such openness in providing information to us of what they are attempting to do, when apparently we let them down. i guess, trying to get at, come ad from the other side and get answers. let me ask mr. canino, thank you for your service -- >> thank you. >> when did you first learned a large number of guns were being seized in mexico and traced back your. >> it was around november. my intel officer in mexico reporter to me that there was a large amount of weapons and the suspect gun database speed up what was your reaction to that? >> well, sir, i looked at it. i thought three things about

this case. number one, i thought that the case was out of phoenix, anybody who has ever talk to any agent in phoenix knows the u.s. attorney's office there has been reluctant to prosecute firearms cases. that's never one. number two, i thought our agents in phoenix had stumbled upon a gun trafficking group and in their due diligence were finally realizing okay, these guys beat us with these many number of guns. number three, i felt somehow our agents -- never, never in my wildest dreams would i think that atf agents were ordered or participated in actually following known gun traffickers and just walking away. that is to meet inconceivable. and to this day, i still, i'm trying to get my head around this. what happened in this case is

this is atf gun trafficking book, something we've done since 1972, and we do it well, and they went in phoenix to the shredder and shredded the best practices, all the techniques that you use to investigate a gun trafficking case. it's not rocket science. it was i wouldn't be here. >> did you receive any warning from atf in phoenix or washington about the possibility of a spike of guns showing up? >> no. talking with lauren and the folks at the office of peak intelligence, you know, okay, there's a gun trafficking case in phoenix. the first gun that i became more of that were related to the case were november of '09. where nine guns turned up in the siege of 42 guns in sonora, mexico. >> so no warning? >> once those guns came up and we trace them, now we found out there was a case out of phoenix,

but out of that case, out of those nine guns, that person who purchased those nine guns purchased close to 700 guns. so in '09 we knew, we many atf, atf phoenix, atf mexico, we knew at least one person involved in that case had guns recovered in mexico. like i said, that person was allowed to buy 700 guns. >> let me ask you the same question. when did you first learn a large number of guns being seized in mexico? >> i learned actually during the same event that mr. canino just referred to. emi chief analyst came to my office and i just arrived in early october, and this event came across, said he briefed me at that time. >> and your reaction to that? >> i pick up the phone, we

discussed it, i pick up the phone and call the phoenix field of vision to find out what was going on with this investigation. we are recovering abnormal number of weapons but and if they were aware of it, and if so what was going on. >> and you receive no warning prior to that? >> no, sir. >> in the few remaining second let me move over to mr. leadmon. >> electronic tracing system. and was the system we used to submit traces and to get the results. >> was the database useful for tracing guns, or did you find, face obstacles? >> well, within the tracing system we have a flagging system called suspect guns. within the suspect and database, it's utilized to notify case agent when they weapons they

suspect is being used in a criminal crime gun, that it is flagged and agents notify. >> were there any delays in use on this particular issue that? >> no. the tracing comes out of, especially mexicans, or the u.s. guns. that comes from the recovering officers, their agents. but the flagging system has a mechanism, or aided in the exception of gunrunners, excuse me, this project. it had a system, you know, we couldn't have it to our electronic system. >> why was that? >> it was just a matter of merging the systems together. it is now part of our tracing system and is also available. >> the gentleman's time has expired we now go to the gentleman from illinois, mr. quigley, for five minutes. >> thank you, mr. chairman.

>> i apologize, there's several meetings going on so to ask a question that's been asked, i apologize. special agent mcmahon, was it your intention to go back and get these weapons? after this all took place. people left these stores, your intent was to go back and get all these weapons, correct? >> our intention was to prove they were doing something illegally when they bought those weapons, and that's easier said than done. proving that someone is a strong purchaser means you have to prove that the day they came in to fill out that form, that they lied when they answered one of the questions. and proving that, we have to prove that they knowingly lied when they filled out that form. so, once we determine someone is a strong purchaser we want to get the weapons that they are responsible for as quickly as possible. >> did you believe you could get these weapons back?

>> again, i think our problem with this case is proven that a violation occurred in the u.s., and then determining how those weapons were being transported into mexico. we know that of all the people identified in this case, the purchasers, none of them were actually a sickly taking the weapons into mexico. we were checking board of crossings, all of those. that was not happening. there was a great unknown at the beginning of this case trying to figure what the size of this wasn't how it was operating. >> specular special agent newell -- [inaudible] in your words come in your mind, why is that? >> because i think the way i understand fire arms trafficking into mexico which is totally different of any type we've ever done before, i'm from new york. i work these cases all the time but it's different in mexico. what you have is a boss that was

guns from the u.s. you give someone in the u.s., say, $70,000 said i was $70,000 worth of guns. >> how did they find each other? >> that person -- that's an established network from the drug trade, drugs going north. so that -- >> i'm sorry, so that relationship is already there because of drug? >> that's right. that individual will recruit individuals in u.s. dubai weapons. when we start picking up one or two people, that hurts the money person in the u.s. but the person in mexico is still going to get his $70,000 worth of guns and that's what happens. so knocking off small purchasers one by one, yeah, it makes hard on the person but not in mexico. that's a key to what we're trying to do at atf. there has to be a balance. as i said, the mistakes, no way she would have ever allowed anyone to get up to 600, you

know, purchases without talking to the person, trying to find out what they're doing, seeing if they would cooperate. it again i think we learn things every case we ever do, and we are learning an awful lot from this won't. >> so they would talk about what it's like to be a strong purchaser from an economic point of view, and encourage someone else to do this. what would discourage someone from being a strong producer? >> i think obviously, you know, when we make a case against these individuals they have all clean records. the federal system is tied into punishing individuals that have a criminal history. strong purchaser will not have a criminal history. that would help us to have a hammer over the edge of either cooperate or ultimately never do this. >> we've heard the expression that many feel like this is

doing 60 in a 55 for some reference, not strongly punished, not with a jail term. is that your understanding? >> it is. it should be. every time i talk about this, whether it's the media are other people are members of congress, always try to stress that these individuals who think they're doing maybe just a paper violation are actually causing havoc in another country, or else here in the u.s. the people that need them to buy guns are not using them to protect their store, protect the residents. they are using them to create mayhem. >> the last question. editorials about second amendment aside, you go into a store, a gun store in arizona. how many ak-47 type weapons can you buy? >> as many as he has. >> thank you, and i yield back. [inaudible]

>> i must tell you that your testimony has been quite frustrating. i think for both sides are i just want you to answer one question. mr. leadmon said the way this should have been conducted. you member what he said? he said the way this should have been done. i just wanted to know your reaction to that. >> as i said in my opening statement i recognize in retrospect to mistakes made on how we handle this investigation. we should have, one of the things i said in my opening statement was it was incumbent upon me to more risk assessment throughout the investigation. i acknowledge that i acknowledge the fact one of things i should have done was more frequent throughout the investigation conduct risk assessments to ensure whether this will still a prudent strategy, but i will tell you that years and years of experience to mr. mcmahon just said, these mexican drug cartel are going to get their firearms.

they are going to get him. so we have to do everything we can in terms of taking out the infrastructure that manipulate the strong purchaser's. strong purchaser are the lowest rung in the latter. there like a street corner drug dealer. if you just focus your investigation on strong purchaser you will not have a lasting effect. but you and your question i acknowledge yes, in fact, it should've been more frequent risk assessment. i acknowledge that. >> thank you. >> we go to other question. >> thank you, mr. chairman. i think the panel for being here today. regretfully i have to attend a teleconference, but i would like to yield my time back to the chair. it's important we continue this discussion. >> i thank the gentleman for yielding to i would like to follow up somewhat along the lines the ranking member was on. 700 weapons bought, our best

guess now. for both special agents, was there a time in which either one of you were aware that, buying weapons, a total of 730 from this particular straw buyers who is on food stamps, who had no income, was there a time that you became aware that he intended on transporting those weapons to the drug cartel to sell them? you have charged 1 19 straw purchasers were all out on their own recognizance right now just waiting for trial sometime next year. you charge one person with trafficking that was there a time you became aware that, in fact, you had unknown group of buyers, including mr. patino at 730 weapons, and you knew that the purchaser, the moneyman

intended on transporting those to mexico? mexico? was ever a time that you knew that? >> there was never a time i knew that. >> there was never a specific time -- >> please, stay away from words like specific, they worry me. did you get to an understanding that you had a known buyer buying from these people with an intent to traffic them to the cartels? was there a time. >> throughout the investigation we had information. >> what was the first time that you have that information? >> that this group with trafficking firearms in mexico? >> that you had a known buyer and that the purchasers, some of strong -- straw purchasers they were buying from or in fact providing these people for the, their purchase of transporting? i ask this question very simple. you've been here, and i

appreciate that shipping it as a paid not answer. but there comes a point were i to wait a second, 730 weapons bought by a man who had no money. every penny he bought he had to get from somebody. you knew that. at some point. union who is buying them. and you allowed to continue. there comes a point where as we go through the rest of the investigation, and this was about mexico, and i want to get back to that very quickly. but there comes a point where we have to have more than just mistakes were made but my understanding is you knew from credible information your organization new that, in fact, year of fire providing the money to mr. patino and others, that he was taking possession of those weapons, and you knew with specificity that those weapons, some of them had already ended up in mexico. is that correct? >> yes, sir. >> what was the first date? '09, what was the first date?

>> sir, to answer your question, throughout the investigation we had information that mr. patino was working throughout the investigation. >> so from day one that is strong purchaser with no means of support by hundreds of weapons, providing them to his intermediary, which meant that both of them were very much part. you didn't have a bye and life situations at this point. you had an individual who could be charged with his participation in the actual trafficking of weapons. yet somebody who was trafficking for the intent of getting into the drug cartel, provide huge amounts of information. no, i'm stuck on huge amounts of money. you had that early on. we are now two years later and she's only charged 18 other people with eye and lie. the one person you knew early on was doing this. where quite frankly is any semblance of rolloff wearing

symbols of going further? it looks like you knowingly allowed these to be sold waiting to see if the other end in mexico would give you information. it seems like you knowingly allow these weapons to get out of your control, knowingly, to someone you knew was trafficking into mexico. you saw the results. you allowed it to continue. and now you're telling us we don't let guns walk. i'm going to tell you, before this investigation ends, i've got that somebody in your position or a justice admit you knowingly let guns cross. because right now your agent, both the agents here today from mexico and agents that were part of phoenix and part of this program who became whistleblowers have told us you were leading guns cross. if only you and mr. mcmahon and other people and just continue to come before this committee and say we don't let guns walk. are they lying or are you like? >> this investigation, we did

not let guns walk. >> this weekend on book tv on c-span2 from the libertarian freedom fest, don luskin matches to date business leaders to their counterparts.

>> republican presidential candidate michele bachmann told reporters yesterday that she will not vote for any bill in congress that raises the debt

ceiling or increases taxes. she also criticized president obama for not producing his own debt relief plan. congresswoman bachmann chairs the house tea party caucus. from the national press club this is an hour. >> as it was recently stated there is something going on in washington, d.c., and the american people have been paying attention. it's the national debate that is before all of us on whether or not this nation will once again raise the debt limit. and more importantly, how it will deal with the economic difficulties that are impacting literally millions of our federal americans across the nation. in january of this year secretary tim geithner sent a letter to members of congress informing us that the debt limit would be reached sometime between march 31 and may 16 of this year. we have now known for seven months that we were approaching the debt limit. and yet the administration has

failed to put forward a plan to either reduce spending or to turn our economy around. and instead president obama has asked for a $2.4 trillion link check to get himself through the election in 2012. in the wake of t.a.r.p. which let no one forget, the president approved and embraced during the presidential debate in 2008, as well as the presidents approval of the bail out of banks and also an unlimited credit card for freddie and fannie, and unprecedented government stimulus bill, the federal deficit and the federal debt both are in shambles. at least that's the way the american people see it. and still the president has no plan. it's unthinkable but he still has no plan. the american people want someone who will stand up for them. they want someone who will say stop. they're looking for someone who will say no.

i won't be that person who will say no more. a little over three decades ago, there was a visionary politician who face the economic challenges of his time. he observed that this is created by the wasteful spending again that occurred here in washington, d.c., and a responsible economic policy. it was like today at time when many americans doubted the goodness and economic greatness of our country. many argued for continuation of the same policies. grow government, does it sound similar? spend our way to prosperity. doesn't sound familiar? but this man held firm. he didn't care what the editorial boards wrote about him, all across the nation. he did what he thought was right. he criticize the liberal policies of higher taxes, and even higher levels of spending. and he called for resolve and he

called for from his indian with turning our nation around economically. and he refused to condemn millions of americans to a worse life than what their parents came to know. and provided for them. fortunately, this great man, governor reagan, became president reagan, and how different this world would have been, and how different america would have been if he had failed to win the election in 1980, and again in 1984. as anyone possibly believe that a liberal president would have turned the economy around in 1980 and reduced runaway inflation or brought down the unheard of interest rates that forced people to almost always buy a home by contract or deeds rather than pay the exorbitant interest rates at that time, or unemployment. we can factor, introduce a new term. it was called the misery index.

while many liberals try to derail his plans to reduce taxes, as well as the size of government, ronald reagan was steadfast, and ronald reagan was right. thanks to his leadership the economy did turn around in the 1980s, and we did enjoy economic growth and prosperity that has been unparalleled in american history. and i remember that time vividly. i was in college at that time and i had voted for jimmy carter. that may shock some of you here but i was in college, too, and i voted for jimmy carter. but when i saw the direction that president carter took our country and have a big spending liberal majority group government and weekend our standings in the world, and have a decrease our liberties, well, i became a republican and i haven't looked back since. as a wife, a mother, a federal tax litigation attorney who worked her way through school,

as a former state senator, who led a movement to achieve the repeal of the harmful piece of education policy in my home state of minnesota, and out as a member of the united states congress, the most wonderful collaborative body in the world, who worked tirelessly fighting against the expansion of very unpopular government programs like obamacare, and unprecedented levels of skyrocketing spending, i've come to agree with ronald reagan that government doesn't solve problems, it subsidizes problems. and governments first duty is to protect the people, not to run their lives. today, the challenges i think are at least as severe as they were when ronald reagan stood tall in this nation, and today the differences between republicans and president obama, whether it's on economics, are every bit as stark as they were

some 30 years ago. as we debate raising the debt ceiling, the players seem to have lost all sense of proportion, and all sense of magnitude of the problems that beset us. in the brief time president obama has held public office, we have witnessed the erosion of welfare reform. we've witnessed the unprecedented expansion of government budgets like we have never seen before in our history. we've seen salaries for government employees skyrocket, and we've seen payrolls skyrocket as well. the addition of obamacare and the backdoor implementation of green regulation through the agency across the street known as the epa. we witnessed an unlimited credit card bail out. as a matter of fact, it was a christmas eve gift that the treasury secretary gave the fannie and freddie, and that was the epicenter of the economic

meltdown. sadly, we have a reform the bankrupt tax spend policy that were deprived by ronald reagan, some decades ago, but we have come it is now evident, merely replace them with a new and more in cds scheme. and it's called borrow and spend. but these -- be forewarned, be forewarned, if we allow president obama to pass the proposed increase in the national debt, we will have come and catch your breath, almost doubled our national debt from the 2006 level when i was elected to congress and when i held up my right arm and swore to uphold and protect and defend the constitution of the united states. that level of national debt in 2006 was a $.67 trillion. today, if the bill is passed, we will see our debt come to nearly

$17 trillion. those numbers are beyond staggering. considering it took us 219 years to get to the first 8.6 dream, 673 in debt, and only five years to almost double that amount. i voted against increasing the debt limit. every time while i've been a member of congress. at a congressional budget office projects -- projects it was in the $25 trillion in something less than 10 years from now. now the stakes are even more serious for our country, but particularly for the people that we serve. the day is fast approaching when our entire budget will be consumed by servicing not only the national debt but by medicare, by medicaid and by social security. anyone who doubts the seriousness of our current fiscal situation simply isn't

paying attention. as we know all too well from our history, if your ship is on course to hit an iceberg, you have to make a course correction if you hope to possibly survive. that's where we are today. the current negotiations over the debt ceiling illustrates exactly what is wrong in washington, d.c., today. because president obama said unless we raise the debt ceiling there will be catastrophic results for our economy. but as "national review" columnist and author andrew mccarthy correctly notes, the problem is not the debt ceiling, but rather the problem is our debt. the lack of a clear plan from our president to substantially reduce our debt is what is giving the market and scaring the credit raiders. you can't fool the market. that's an axiom of life. that's reality.

the markets know when politicians are serious and the markets no when politicians are not. no one doubts the economic situation is dire. it's also clear to me that the administration is attempting to get its way by using scare tactics. we saw the even earlier this week in the president's remarks to the nation, but let's go back to that letter dated january 6, 2011, when secretary geithner wrote to senate majority leader harry reid and all the members of congress were cc'd on that letter that the deadline for default would occur sometime between march 31 and the 16th of this year, 2011. since then the deadline for default given to us by secretary geithner has moved several times. according to the calendar it is now july. and now or have been indications that the august 2 deadline might

not be accurate either. it seems every time we get close to a deadline the administration finds a reason or a way to move the date. first the deadline was in the spring. then it was moved to august 2. and now several news sources have reported that deadline might not be until august 10, or perhaps even in september. for the sake of the people we serve and for the sake of the u.s. economic reputation around the world, let it be clearly stated it is a nonnegotiable that we will maintain the full faith and credit of the united states of america. i call on president obama today in fact to upgrade to pay the interest on the debt. that is an amount we can pay from our current revenue. then president obama needs to exercise the leadership that he has failed to exercise, and

follow the example of speaker john boehner who is actually presented a real plan before the congress to prioritize our spending. we must also take care of our united states military, the brave men and women who are currently serving as an not only two, three theaters of war, but as well here in our country and in other places around the world. that is -- [applause] that is why recently several weeks ago i introduced what is known as the promises act, together with my fellow colleagues, congressman steve king of iowa and louie gohmert of texas, that bill guarantees that we not only pay the interest on the debt but we start making our military men and women and their salary and their families the pond and political tools of this debate. they must not suffer by

washington dithers. the president should support this legislation. he should take the option of default off the table. this must be done. instead once again on monday evening in his speech the president has opted to use scare tactics against not only senior citizens but also against veterans under the threat of default to attempt to get his way on this issue. they are several congressional plans. i'm sure you're continuing to cover all of that as they emerge from capitol hill dealing with the current crisis. and the problem is all of them, all of them begin with the flawed assumption that we must raise the debt limit. that's the flaw. the president said the debt ceiling is a term that most people outside of washington have probably never heard up. well, that's shocking because i have been traveling around the

country and i can assure the president that the people outside of washington, d.c., have not only heard of the term, the debt ceiling before, they understand perfectly what raising the death of -- debt limit will mean for them and the next generation of american, their children and their grandchildren. the american people have made abundantly clear, they don't want us to raise the debt limit whether it's a short-term raise or a long-term raise. it's the president who doesn't seem to understand the magnitude of our national debt. in his speech on monday night, he actually compared the national debt to a little credit card debt. 14.3 trillion, which is where we sit today in debt is not a little credit card debt. adding 2.7 trillion to get the president to the next election or a grand total of 17 trillion in debt is not come and i

repeat, a little credit card debt. what is most striking is that the president has failed to exercise his duty to provide leadership and present his own plan. instead the president insists congress give him a blank check for another $2.7 trillion so he can continue the reckless spending that i came to washington, d.c., to stop. instead, he has passed the baton of leadership to congress. and push for higher taxes which he now euphemistically called revenue and increased spending with nonbinding illusory, never going to happen in a million years spending cuts that are years down the road. his so called the balanced approach isn't a plan either. it's a focused group tested code language that we all understand. it's for the same approach that liberals have had for years.

higher taxes and higher spending. nothing new here. the president called raising the debt limit the routine thing that is done in washington, d.c.. i am here to say to all of you today that's the problem. it's become the routine thing that is done here in washington, d.c.. and the american people have said enough. where is their champion who will finally put down his or her foot and say no. but that is the problem. we have to start making raising the debt limit routine. the president's $2.7 trillion debt limit increase is anything but routine. is increase will be the largest debt increase in the history of the nation. and here's the kicker. we can give the president to .7 trillion in increase. it will only last one year.

only one that if we raise the debt limit more than a toy and dollars. and that increase was from $1.9 trillion. and guess what? that also occurred under president barack obama's watch. the president also invoke ronald reagan on monday night in an attempt to justify his tax increases. in 1982 president reagan agreed to $1 in tax increases for every $3 he would receive in spending cuts. accepted by democrat congress. he later acknowledged that what he actually received was the inverse. it was $3 of new taxes for every dollar of spending cuts. not a deal the 40th president of the united states would wish to repeat. i'm not fooled by president obama's math, and i'm here to tell you, people all across the heartland of this country are not fooled by president obama's math either.

in 1990 the democrats convince president bush to violate his no new taxes pledge in exchange for again other three spending cuts. and once again the spending cuts were small and the spending cuts were fleeting. how many times do we have to see this movie in washington, d.c., before we know how it will end. that's why i refuse to be a party to deceiving the american people yet again. i won't do it. i will vote against any proposal that includes tax increases or raises the debt ceiling. in the senate, kerry read -- it would also raise the debt limit by $2.7 trillion. this sounds significant but more than 40% of the cuts are completely counterfeit.

1 trillion of harry reid's cuts come from drawing down in afghanistan and in iraq. and while were all like to end these conflicts as soon as we possibly can, and with success, harry reid's saving assuming the cost of the war our endeavor. woman already start to draw down in both of these regions. it's almost like saying that we will save trillions of dollars by promising not to invade canada. it's never going to happen. i can't support any plan that begins with the assumption that we have to raise the debt limit and yet doesn't offer a fundamental restructuring of government spending habits. i won't do it. and while i embrace the principles of cut, cap and balance, the bill simply did not go far enough to fundamentally restructure the way that this city stands the american people's money. and it allowed for an increase in the debt limit, something i simply won't do. i also believe that we must

repeal and defund obamnicare as part of any solution to our current debt crisis. by? because obamacare is the largest spending and entitlement program ever passed in our nation's history. and it is widely unpopular with people all across the country. just ask, hop on my bus, you'll see what the american people are saying. the president promised the average american household would save $2500 per year in health insurance premiums. he also said the federal government would save money as well. neither promises country. that means at a time when we can at least -- at least afford it, without is revealed it will be almost impossible to have real economic reform. with trillion and a half dollar deficits, 9.2% unemployment, we need growth policies.

will that's what i'm about. putting the american people back to work and providing jobs for them in the private sector. not increasing spending. not increasing debt. the answer from the president is no. he proposes to raise taxes on job creators. and that's a prescription for a no growth policy. another of washington's answers is to create a new commission on spending. what an idea. we have had 17 rodney dangerfield commissions on spending over the last 30 years. why not number 18? we need leaders who are willing to stand by the courage of their conviction. we need leaders who will stand up and say it's time to stop. we need leaders who are willing to say no. because when leaders are willing to say no, that means they're willing to say yes to the american people. that means they are willing to say yes to growth. that means they are willing to

say yes to an economy that will, in fact, rebound, and faster than anyone thought possible. and that means we'll be saying saying yes to job creation and to the next generation. this is our goal and this is our plan and this is something we can do if we say no. we faced a much smaller version of state fiscal crisis in 1982 and in 1990. in both cases were given budget deals that promised real permanent spending cuts. instead, we received temporary cuts, they quickly gave way as everyone knew they would to new spending. and now we are supposed to trust the president who has given us three and a half trillion dollars in national debt in two and a half years. five months ago this president gave us a budget proposal that would've actually increased the deficit and now we are to trust him to hold the wind on new spending? the american people are more than a little doubtful. so it's time for washington to

come clean and in the illusion of fiscal discipline. so let me be clear. i won't raise taxes. i would reduce spending and i won't vote to raise the debt ceiling. and i have a titanium spine to see it through. several times in the last four years washington came to a decision point. each time they chose the easy path, but that's the path to financial ruin. over the more difficult plan to pass -- the path to prosperity. every time they made that decision it wasn't for the better and now the time is to answer to the american people. now is the time to make the choice for prosperity. i see that the time is overcome is that correct? can i take a few more minutes? i don't want to impede on the question and answer time. so i will finish my speech. what politicians can't make the difficult decision, which i believe they must, i believe that action in fact disrespects

the people of this country. why? because it ignores them. it ignores the please that i hear all over iowa, new hampshire, south carolina, florida, texas. when i am after the people say michelle, stand strong. don't cave. fight for us. tell me you're going to go back and encouraged the other members of congress not to raise the debt ceiling. they are pleading with us to listen to them. the question is, we'll we, will week, will the politicians in washington finally listened to the american people? because they're willing to exercise the courage that politicians are gothic raising the debt ceiling as the president pointed out on monday has become to establish way of doing things in this town. in his words, routine. but that must change because we have to restore true hope to the country. if we don't we will continue to rack up debt that at some point

we will be unable to repay. every day the president is see what our choices for the future. every day the president is seeking a way to hope and to change. and i've even more concern is the effect that this thing has had on job creation. i have seen it all across america. and it's absolutely heartbreaking when you see it, to go to a factory where just a year or so ago there were over 200 employees and today it is 100 or less. and it's an employee owned country -- employee owned company which employs have to let their fellow employees go. the more government spends the more government taxes. the more it taxes the less money the job creators have to create jobs. the larger the public sector grows, the more the private sector shrinks. our goal should not be to have every american worked for the government. our goal should be to foster

private sector growth. i'm bringing the voice of the people that i love and that i learned from when i was growing up in iowa, and minnesota, to the halls of congress. i brought it there successfully and now my goal is to take that very same voice to the white house where that voice hasn't been heard for a very long time. the people are looking for someone who will champion their value, who will champion their goal, who will speak for them when they feel like no one is, who will listen to them and speak their concern. that's what they want to know. well, we have a president who understands them. we have a president who has walked in their shoes? will we have a president who cares about them, who loves them, and he wants to see the nation turned around? and once again reengage in robust growth. the kind of growth that we saw when ronald reagan put in place

in progrowth policies. let me conclude with this. i recall back when i was growing up in waterloo, iowa, we live lafayette street. i was in my grandmother's kitchen and she was having a conversation with my father. my father was a big democratic, as our family they were all democrat. the only republican i knew was my grandmother. and they had you might say a conversation in the kitchen about the great society. i was a small little girl and during the course of that conversation i will never forget my grandmother saying to my father, but david, it will be you that pays for the great society, it will be davy and michelle, my older brother david and myself. and my grandmothers admonition was exactly right. and now we are paying for those programs. and now we're looking to the next generation and the one that isn't even born. and that's the moral question of

our time. what will we leave to that generation? will believe them better off or will we leave them with a stack of invoices? that's our question. i know what the american people have chosen. people all across the country have told me, they are forward-looking people. they love this country, and even more they love their children. they have chosen that we don't want. that's their choice. they want to go on. they want to know if the politician will go within. and if they will affect choose a future and a hope. i'm listening to them and i'm bringing their voice to you here today and i am choosing the future and hope. thank you for allowing me to be here. it's been a privilege. [applause] >> i wasn't sure where we are at on time.

>> for what it's worth of some of the predecessors have been here at the lectern have answered president stand up and sort of give them body link and i would not be about that. so we appreciate your willingness to be here today and answer questions. by looking at the e-mail traffic that we've had, the number of cards sent of your people are very curious to have a dialogue with you. we appreciate that. so i don't think we could have envisioned however many weeks ago was that we scheduled this event that we could have been a what appears to be a great time such as this. for the moment if you could, give us an idea of where you think we stand with speaker boehner's plan. if you see that passing. and secondly, predict for us or give us your sense about how you see this actually be resolved, if it is. >> well, once again i want to state unequivocally i think for the world as well as the market as was the american people, i have no doubt that we will not lose the full faith and credit of the united states.

i have no doubt that there will be a final resolve. i wish that this could have happened previously as it should have. i've gotten a letter from this treasury secretary tim geithner right here. this is the letter he wrote to harry reid were the treasury secretary wrote unequivocally we will see a need to raise the debt ceiling by march or by may 16 at the latest. the president was on notice, serving the president knew this was coming. despite that the president introduced a bill in february that increase our debt an additional one and a half trillion dollars. clearly this was a responsible on the president's part. and even today as we have gathered for this luncheon, we do not have a plan from the president. john boehner has put forward a plan. the cut, cap and balance plan. i embrace those principles.

it did not include the defense in northern appeal of obamacare and it also increase the debt ceiling. i couldn't go down that road and so i couldn't give john boehner that the. you are all well aware that that bill did pass. however, harry reid wasn't about to give that bill hearing in the senate and the president already said he would not approve. john boehner now has a second alternative that you have heard of. i will not be casting my vote for that bill and will be casting our vote later this afternoon. i cannot, i'm committed to not raising the debt ceiling. my colleagues may give the speaker that boat today. despite john boehner's best efforts, absolute fateful efforts to try to put the plant on the table, the problem goes back a canned to the president's failure of leadership. he has kicked the can to the vice president. he has kicked the can to the congress and he has failed to lead on this issue of grappling

with spending and debt and economy. now it's the presidents our. john boehner has produced not one but two planes. will the president produce a plan or will he agree to john boehner's? again i don't believe for a moment that we will lose the full faith and credit of the united states but it's time for the president to get engaged. if the clock is striking 11:59 it started it for the president to get involved but he needs to get engaged. >> how to see it being resolve from this point on? you would see would like to present to be more involved but how do we get to the point where we don't make that failure? >> i think again if, i extended an invitation, as improbable as it may seem for the present join me on my bus tour, the invitation still is open. and i think the president would speak quite clearly, there is no stomach for his current

attitude. and also people are rightly afraid. the president in my opinion with a responsible to fried our senior citizens and also our veterans by saying that they will not receive their checks. i think the more prudent thing to do would be for the present have gotten engaged last january when the treasury secretary and the president full well knew that we're headed towards this abyss. and so the president quite frankly they will need to get together with speaker boehner and harry reid and decide what they going to do. they will have to make that decision. i can i do believe a result will, and i wish that they would make up the promises act and make sure we a off the interest on the debt because make no mistake about it what will happen. make no mistake. what will, in fact, happen is that there will be no reform. there will be no reform of spending. if there's anything that we have to have in washington, it's a

reform of spending. if this bill goes through today, that's a cut of approximately $22 billion in spending. we all know the numbers. that's perhaps one after sense two-and-a-half days of spending. let's get serious. let's get serious. we are going to have, if we are european levels of spending that would require european levels of borrowing which will mandate european levels of taxation and will then lead to european levels stagnation in the economy, and high elevated unemployment levels. that's not the america i want to live it and that's not the american, the america that most people i speak with want to live in. >> should speaker boehner be ousted at the debt limit is raised? >> i am running for president for the united states. i am not running for speaker of the house. >> fair enough. what is an appropriate level of debt for the federal government?

what factors would you consider going into that formula? >> number one, less. number two, a lot less. we can't handle the current level of debt that we have. we know that. and so we need to cut back. while there may be times when we do need to increase the debt, particularly in emergencies, that is not the situation that we're in right now. this is simply a function of overspending. it's simply a function of choosing failed policies. no one today would defend the trillion dollar stems. it was a failure. the president said if we borrow a trillion dollars that we don't have and spend it, we wouldn't see unemployment rise above 8%. it's 9.2%. it has failed to come down. the president also promised us again on obamacare if we passed obamacare that each household was the approximately $2500 reduction in the health insurance premium. instead we've seen dramatic spikes in health insurance

premium. we can't believe these policies. that's why we have to attract progrowth policies. and as nominee of the republic and party i will make it my business to work tirelessly to elect an additional 13 senators that also have titanium spines who will come with me to washington, d.c., to make sure that we get our fiscal house in order. >> you alluded to this in your speech, if congress doesn't get a debt or deficit solution in place by the second of august what you think happened that day? can you sympathize with americans are dependent on the payments that are put at risk by failure to do something by then? >> i absolutely do sympathize with americans. i spend most of my time speaking with americans all across this country. and they do sympathize with them. we heard yesterday from a secretary treasury tim qaeda we ms. stabenow's over 300 americans that government is

sending out 80 million checks a month. the government is paying it seems for almost everything in this country. that's the problem. we've got to have a complete review of what government is doing and what government shouldn't be doing. that's the key. we have to have a fundamental restructuring of how we spend money. and, unfortunately, with a plan that is being offered later this afternoon we are not making a fundamental restructuring. but again i give john boehner credit but at least the speaker is putting forward a second plan. the president of the united states has failed to put forward one. the congressional budget office said they couldn't score the president's speech because the president hasn't put forward a plan. how is that leadership? >> you were critical of the process around health care legislation so you didn't get the bill and to lay before you the chance to vote on it. have the american people have an adequate opportunity to weigh in

on these debt solutions that are now before congress? >> may have had an opportunity to weigh in i believe and that they have also served with what's going on. that's what i mentioned in my remarks that it was almost incalculable when i heard the president said on monday evening, i was in iowa at the time and i heard the president said in his remarks that most americans outside of washington haven't heard about the debt limit and the debt ceiling and raising the debt limit. ..

>> that's what cut, cap and balance was about. it was an attempt to reflect what members of congress have been hearing from the people. can you, please, balance your budgets? i will tell you just this week i had a woman come up to me, and we were in dubuque, iowa, and she said, i don't get these people in washington. i have to balance my budget. i couldn't make it a month if i didn't balance my budget. why don't these people figure that out? or i was in indianola, iowa, it was over 90 degrees inside the factory. there is steel prefab ration, and in this factory i stood by the, by the time clock when a man who appeared to be about retirement age, he had worked all day, he had sweat dripping off his body, dirt was stuck to him, and he had punched out, he had his lunch bucket in his hand, and he up to me and said, michelle, will you promise me that you will give the country

back to the people? and i said, yes, i. and he asked me that not once, but three times. and he said the reason why i'm asking you is because i'm not worried about myself. i'm set. it's my grandson i'm worried about. and i said, what's his name? his name is isaac. and i will tell you if there's one thing all of you in this room should know, the bottom line of what i hear across the country is this: the american people are scared to death. that their children will have a lower standard or of living than they had. they fear that they may have lived through the pinnacle of america's greatness. and that we may be on decline. and they don't want to go that way. they want progress. they want better. they've seen every generation has done better than the generation before, and they certainly want that for their kids. that's what we have to remember. and when we increase the debt

ceiling and when we increase the tax burden on our families and our businesses and our farmers, we'll never get there. but politicians would do well to listen to the people. some are in washington d.c. i only wish the president would. >> that gets into the question of who are the people and who are you listening to and who's funding campaigns. there's a sensitivity in some quarters that says that people have been distanced from their government because of the huge amount of money it now costs to run for office and, obviously, that's going to be a challenge for you as you continue to mount your campaign. what kind of outlook do you have regarding campaign finance reform, or do you think these massively expensive campaigns are just fine? >> well, number one, i'm open to donations, and i'll be happy to give you my web site when i leave, but we've been very gratified by the level of support that we've been getting. when i ran for congress last time, i raised more money than

any member of congress in the history of congress in the house of representatives, and i'm pleased to let you know that the average donation was $45. and the reason for that, i believe, was because people felt and trusted in me and in my voice. they felt that i was prescriptioning their voice to the -- bringing their voice to the halls of congress where it hadn't been heard for a long time. we're seeing that same response across the country. people believe that i will take their voice into the white house. that's what they want to see. for campaign finance reform, i believe that it is important for the american people to be able to exercise their first amendment rights and to be able to speak out. they're trying to speak. again, it goes back to my prior answer. it's whether or not the people who represent them are listening. and, again, i want to be fair. there are excellent members of congress here who are listening to their constituents. again, i only wish the president would as well. >> so we have a potpourri of questions now on the final roughly five or seven minutes we have to go.

a question that's been in the news, and i think so far your husband has been the one to address it. this comes from a local reporter for the washington blade who says recent reporting has revealed the clinic you co-own with your husband engages in a kind of therapy that is meant to help people get over their homosexuality. do you believe the therapy can change gay people into being straight, and has any federal funding gone toward your clinic? >> >> well, i'm extremely proud of my husband, we'll celebrate our 33rd wedding anniversary this coming september. but i am running for the presidency of the united states. my husband is not running for the presidency. neither are my children, neither is our business, neither is our foster children. and i am more than happy to stand for questions on running for presidency of the united states. >> so just to be clear then, you don't believe that your personal finances are something that should be questioned by the american people? >> i am running for the presidency of the united states, and i have no doubt that every

jot and diddle of my life will be fully looked at and inspected prior to november of 2012. >> well, speaking of which, "the washington post" yesterday reported that you've called for dismantling -- >> these are the fun questions now that we're getting in. [laughter] >> don't forget, there's a prize at the end. [laughter] "the washington post" notes that you've repeatedly called for dismantling fannie mae and freddie mac which back home mortgages. the post reported that your family signed for such a loan, so the question -- and i've got a lot of questions about people asking is it fair for you to call for dismantling of federal programs that you yourself, ultimately, have been a beneficiary of? so in terms of guaranteeing home mortgages, do you think the federal government has a role in that even if you don't like the way fannie and freddie have been doing business? >> clearly, i think this is the problem. now, unlike all of you who, i'm sure, paid cash for your homes, there are people like myself who

actually have to go to a bank and get a mortgage. and this is the problem. it's almost impossible to buy a home in this country today without the federal government being involved. whether it is with the fha, whether it's with fannie, whether it's with freddie, it's almost impossible to buy a home. one thing we need to remember is that fannie and freddie were the epicenter of the financial meltdown. i sat on the financial services committee, and i watched as this occurred. what's important is that we do dismantle a number of these federal programs that everyone agrees are clearly out of control. and don't forget, not only is the federal government virtually taking over this entire industry, take a look at the student loan industry. about 25 years ago or more back when, back -- maybe even in your time when you were in college, 25 years ago or so almost all

student loans were private. today 100% of student loans are government. now, this is not a good scenario. the federal government continues to insert itself into fulfilling a proprietary function that the private sector should fulfill. this is the problem. this is an intervention by the government, ask it's altering the marketplace -- and it's altering the marketplace. we need to get the federal government out of these programs and out of these loans. >> you've talked a lot about how your faith is important in your life and for your family. a questioner asks what aspect of being a politician do you find most difficult to reconcile with your faith? >> oh, goodness. the tax collectors, maybe? something like that. really, i don't find it difficult to reconcile with my faith. i'm, i'm a christian, and i'm proud of my faith, and i'm extremely grateful to god. as president of the united states i will pray every day and ask the lord to give me guidance

as president and even more so i want you to know that i will be praying for every one of you too, every day. >> in the national press club, we're grateful for that, we had a number of questions about the media, people wonder if you feel like the media has generally been fair to your campaign and you. >> well, when my husband and i made the decision to seek the office of the presidency of the unite, we considered what would be involved, and we knew that this would be a momentous journey and that it would take every bit of our stamina and everything that we had. and we knew that it would be tough. but, also, i think that i had a rare advantage, and that's the fact that when i grew up i had three brothers and no sisters. and there is no better preparation for politics that a girl could ever have than that. and one thing that the boys in my family learned very quick is don't pick on your sister, it's not going to work. [laughter]

>> you told me that at the end of today's -- [laughter] so in if terms of when you're looking to read the news yourself, what kinds of sources do you like to look at, and to you like to look at a variety, let's say, from the left and from from the right? >> i do. as a matter of fact, usually i prefer to go to the sources from the left first rather than from the right, but i have a routine that i go through. i have an ipad, and i thank god for ipads. i love them. and also i have a smartphone that i use. and so i'm finding increasingly that more of my news is coming to me digitally, but that's also how i try to communicate with people as well, is digitally. so i receive my news that way. but we also continue to receive newspapers and print magazines at our home, and i'm a big reader. and for me i have read books on my ipad on the ibooks, but i just can't get away from actually holding the printed page. i have a love affair with the printed page, so i prefer to

read directly from a real newspaper that i hold in my hands and from a magazine because i have a habit. when i read, i usually am writing while i'm reading and putting notes in the margin. my husband is nodding, he's seen me do that forever. so that's my habit. but i'm in the process of transferring over and doing it digitally as well. but i'm a big reader, and i read everything. >> so what are your favorite liberal publications? >> well, goodness, all right. [laughter] as far as television goes, i will go to msnbc to see what they have to say, although i don't know if they would consider themselves liberal. they may not. but i go to msnbc and also the huffington post, i'll go there and take a look at what they have to say or the daily beast. none of these publications may consider themselves liberal, but i go there as well. >> arianna huffington was here just a week ago, i'm sure she's going to be glad to hear that. we're almost out of time, but we have a couple of housekeeping matters to take care of, and i'd

like to remind you of a couple of upcoming speakers, august 19th governor gary john soften, former of new mexico. on august 30th we'll have an interview with labor secretary hilda solis, and right before 9/11, rudy giuliani, the former mayor of new york, that'll be on september 6th. i'd like to present our guest with the traditional npc gift, and that is -- by the way, i'll just note we call it the npc mug, but you can drink either coffee or tea out of it. >> thank you. sweet tea. it'll be sweet tea. thank you. [applause] >> so one final question. one final question. looking back at history, can you think of two presidents, perhaps one republican and one democrat, that you admire the most? >> >> yes. republican would have to be abraham lincoln, but i have to tell you my all-time favorite president is george washington, and the reason why i admire him so much is because he was a

reluctant president. he didn't choose the job, but people around him saw his character and saw the type of life he had lived, and they had urged him to be president. abraham lincoln for obvious reasons. he had to stand tall when the country was virtually disintegrating. i have tremendous admiration and respect for harry truman. he was my be father's favorite president, and i've read the wonderful biography of truman by david mccullough, and he really is a tremendous man when you think he did not have a college degree. and yet he had to deal with the korean war, and he had to deal with the dropping of the bomb. he had so many issues that came on his plate all at once. and he stood strong. he stood strong, for instance, for our ally, israel, when 11 minutes after israel declared her sovereignty, it was harry truman that had israel's back. and that having of israel's back has made all the difference for stability in the middle east. i have great admiration for him as well as, obviously, as

abraham lincoln, but my all time favorite would be george washington. >> let's have a round of applause for our speaker today. [applause] >> thank you for the honor. thank you. >> thank you very much for coming today. i'd also like to thank the national press club staff including our library and broadcast center for organizing today's event. thank you, and we're adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations]

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>> visit charleston this weekend on booktv and american history tv featured on booktv on c-span2, confederate charleston author robert rosen on south carolina's secession from the union saturday at 5:15 p.m. eastern. and on american tv history programming on c-span2, douglas boss tick from the city's annual carolina days festival. and throughout the weekend discover more about the unique history and literary life with shorts on plantation life and the catastrophic 1886 earthquake. charleston, south carolina, this weekend on c-span2 and 3. >> like any business the postal service is subject to marketplace trends, and unfortunately, we've seen a significant long-term decline in our most profitable product category, first class mail, which accounts for approximately 50% of our revenue. >> that was postmaster general

patrick donahoe in may testifying on the financial stability of the u.s. mail. this week he announced plans to close more than 3600 branches across the country. learn more about post office operations online with the c-span video library. search, watch, clip and share. it's what you want when you want. >> with titles like slander, godless, guilty and her latest, demonic, ann coulter has something to say. now sunday, august 7th, your chance to talk to, e-mail and tweet "the new york times" best-selling author and syndicated columnist, ann coulter. in depth for three hours starting at noon eastern live on booktv on c-span2. >> the dodd-frank financial regulations law established a new wash dog agency -- watchdog agency called the consumer financial protection bureau. this new agency has just recently begun its work in

regulating credit cards, loans and other financial products. this house small business subcommittee hearing looked at the bureau's potential effect on small businesses and the economy. it's a little more than an hour. >> the committee's now in session. i would like to take a moment to mention that the subcommittee has received a statement for the record from the independent community bankers of america, and without objection, i would like to insert this statement in the record. hearing none, the statement will be inserted into the record. if committee members have an opening statement prepared, i ask that they be submitted for the record. i would like to take a moment to explain the timing lights for you. you'll each have five minutes to deliver your testimony. the light will start out as green. when you have one minute remaining, the light will turn yellow. finally, it will turn red at the

end of your five minutes. i ask that you try to keep it to that time limit, but i will be a little lenient as you finish. our first witness today is here representing the consumer financial protection bureau. dan soak love, have i got that right? is deputy associate director for research, markets and regulations. this division is responsible for understanding consumer financial markets and evaluating whether there is a need for regulation and the cost and benefit of potential or existing regulation. prior to joining the cfpb, mr. sokolov held positions with the department of the treasury and served as an attorney for the federal reserve. mr. sokolov, we look forward to your testimony.

>> [inaudible] i'd like to testify today on the summit of small -- subject of small business and the consumer financial protection bureau. the cfpb is accountable for establishing clear rules of the road for the consumer financial marketplace and, mr. chairman, you mentioned the importance of a vibrant marketplace. that is precisely what we are striving for. although the bureau's jurisdiction is very limited with regard to small business credit, we take our responsibilities in this area very seriously. we recognize that small businesses are critical to the nation's economy and that small financial services providers are a critical source of products and services for millions of consumers. today i want to provide a brief update on the stand-up of the cfpb as well as explain our efforts to reduce and avoid unwanted regulatory burdens on small providers and how we at the cfpb believe we may be able to assist small business borrowers over time. the bureau opened for business last thursday, july 21st.

inspectors general of the treasury department and federal reserve board have reported favorably on our efforts to stand up this agency. we are already at work strengthening consumer financial markets. we are working toward a market where consumers can readily see prices and risks and compare products so they make the choices that they believe are best for them. we have taken input from thousands of individual consumers and mortgage lenders and brokers on how to simplify federal mortgage disclosures and make them less burdensome. we are launching our program for supervising the largest banks and their affiliates. we are taking our first consumer complaints about credit cards, and holly petraeus has set up a strong office reaches out to -- reaching out to military families. to fulfill the mandate established by congress, we have hired an expert staff from the private, public and nonprofit sectors. they are strying to build an agency that is smart, effective and balanced. at the cfpb we have been

building into the agency's dna extensive outreach to small financial institutions such as community banks and credit unions. we believe in the importance of a financial services marketplace where small providers can thrive. we will work to reduce regulatory burdens on small financial service providers wherever possible, and we can take as an example disclosure reform. we understand lenders' deep frustration with the current mortgage forms required by federal law. they're complicated, sometimes duplicative, and more costly to fill out than they need to be. so we've solicited feedback from thousands of brokers, lenders and consumers to make the forms simpler to use and easier to complete. minimizing regulatory burden will continue to be a priority for us. often a regulation is not the best answer to a problem. congress has given us many different tools to address problems in consumer financial markets. we will strive to address problems as we see them as effectively as we can and

through the least burdensome means available to us. in addition, we will consider the potential benefits and costs of proposed regulations for consumers and covered persons including small blenders. -- lenders. we will comply with the regulatory flexibility act, and we will follow the requirements of the small business regulatory enforcement act. our statutory objectives and statutory authorities do focus on financial products and services for consumers. the bureau does not have jurisdiction over business credit except in limited cases where congress has explicitly and affirmatively granted the bureau such jurisdiction. we recognize that a vibrant small business sector is critical to our economy, and we're aware that many small businesses today report having difficulty obtaining credit. a difficulty rooted in the most severe financial crisis since the great depression. so although our role with respect to small business credit is quite limited, we hope to help many small business owners in three ways.

first, we will implement diligently the equal credit opportunity act. this law prohibits discrimination in business lending. second, as required by law we will provide the public new data that may shed new light on the demand for and supply of small business credit. we will move deliberately, and we will consult widely to attempt to maximize the benefit of these loan data for small businesses and to minimize the cost for the lenders that will report the data. third, we will work to insure that consumer credit histories are as accurate as possible. more accurate credit histories would help start-ups. new business owners frequently rely on their personal credit histories to apply for their first business loan. we believe that a fairer and more transparent consumer financial services marketplace will be a boon to financial services providers of all sizes, and a more level playing field will benefit the smaller ones in particular. thank you, and i look forward to your questions.

>> thank you, mr. sokolov. the cfpb recently sent a letter to the ceos of financial institutions informing them that they are now summit to the juris -- subject to the jurisdiction of the bureau. 26 of these lenders are on sba's list of 100 top lenders. these lenders issued a total of 5,334 loans for approximately 1.5 billion. that's just looking at sba's top 100 lenders and be only at their sba-backed loans. is cfpb considering how actions against larger institutions will impact small business lending? >> so the letter you're referring to to the ceos, mr. chairman, was sort of introducing our program of supervision.

that's a program that is by statute focused on the depository side. it is focused on depositories with $10 billion in assets or larger and their affiliates, just to put that into full context. um, and that process of supervision which is, essentially, working with the institutions by sending examiners to them and understanding how, how they operate and understanding their businesses and understanding where, um, there may be questions about, um, about their compliance with applicable federal laws. that process is focused on the consumer protections, and as i said, our jurisdiction over business credit is quite limited. where -- the main exception, the main exception is in the area of implementation of the equal credit opportunity act.

and in that area as required that will be an important part of our process. >> federal reserve chairman bernanke recently stated that there has been no examines about the impact of the new regulatory environment. will have on the overall economy. has cfpb done any such study on how the bureau, fully implemented, will affect the economy? >> mr. chairman, can you repeat the question again? >> sure. federal reserve chairman bernanke recently stated there has been no examination about the impact of the new regulatory environment, what it will have on the overall economy. and has your organization done any studies about when you're tully implemented what impact -- fully implements what impact it will have on the economy? >> well, we're still in the process of, well, building out

our processes. as i've said, we've launched our supervision program. we're taking complaints from consumers on credit cards. we're working dill gently to -- diligently, and in the regulations our focus is on regulations that congress has directed us to adopt and implement, directed us under the dodd-frank act. and so, you know, in cases such as that we're doing congress' will where congress has made judgments about the benefits of certain policies for the economy. >> one of my concerns about cfpb is that when you have an agency charged with looking for problems, they have a tendency to find them whether they exist or not. how will we know when we have a financial system that is free of abusive practices, what steps are in place or benchmarks exist to know if cfpb has achieved its

mission? >> so, um, we indeed are focused as part of our core mission on working towards a market lace that is free of unfair, deceptive practices. um, it can be challenging to identify, you know, the full range of acts and practices in an economy as large as ours. we're going to use all available sources of information, though, to see where risk to consumers may lie and where compliance risks may lie. and our sources of information will include our examination function which is one of the important tools congress has provided us to try and provide a level playing field between institutions that have bank charters and financial services providers that compete in the same market but are notbacks. -- banks. and we have a research capacity that we're building as well. we have teams that are designed to be expert in particular markets where often we're hiring people who have expertise in

specific industries. so we plan to take in if information from a wide variety of sources to best understand what is going on, to be responsive and to have a smart, balanced and effective approach. >> thank you. mr. ultimate meyer? >> thank you, mr. chairman. as i mentioned in my opening statement, with one in five entrepreneurs reportedly using home equity loans for business purposes and is nearly half of all small businesses relying on personal credit cards for capital, consumer financial products provide a critical source of capital for many small firms. how will your agency tailor its oversight of these products to insure that small businesses do not find their access to credit unduly restricted by the new regulations? >> thank you, mr. altmeyer, for that question. and we talked a bit about this in our written testimony as well. there is, certainly, some overlap. there are some small businesses

that for some periods in the life of the business do use personal credit, and we're aware of that, and we want to, in fact, as we said, to address that in our testimony. i think that the amount of overhappen varies over time -- overlap varies over time, and what we're going to look to, for example, in understanding that overlap is just as an example to what extent small businesses are using credit cards designed for consumers to conduct, to make payments, and to what extent they're actually borrowing on the card. and we bring some data on that point in our testimony based on a federal reserve study and a survey by the national federation of independent businesses. so, and we've already started to reach out to these other organizations to make sure that we do understand where this overlap might be. >> we, on this committee and back home i as well continue to hear from small firms who are

concerned that they'll be subject to cfpb oversight for financial transactions they provide to other businesses. will your agency attempt to exercise oversight over financial products when no consumer is involved? >> as i mentioned, our jurisdiction over small business credit is quite limited. there are a couple of very limited provisions in the truth in lending act where congress has extended protections to business credit cards. um, and then there's our obligation to implement the equal credit opportunity act where we and other agencies are also responsible for enforcing it. and the equal credit opportunity act prohibits discrimination in the lending both in consumer lending and in business lending. and, therefore, um, we have to fulfill, of course, and we'll fill diligently the mandate congress has given us in that area.

>> the original bill, the dodd-frank act, created new data reporting requirements that are aimed at helping regulators understand credit conditions for small women-owned and minority-owned businesses. some have said these requirements will be burdensome and could raise privacy concerns for those types of firms. how will you balance these concerns while insuring policymakers have sound and accurate information on small business credit? >> so, congressman, you're referring to section 1071 of the dodd-frank act which does require, does amend the equal credit opportunity act to add this data collection on small business lending. and this is potentially an important or source of data to better understand demand conditions and supply conditions in in the market for small business lending where data to date have tended to be somewhat limited. so we see it potentially as a boon to have these data as opposed to small business borrowers and to lenders to

better understand the market. now, inevitably, with the data collection, you know, nothing is free. there's some cost involved. congress has set the parameters for this data collection, but within that where we have discretion about how to do it, we are going to seek to, you know, make the most of the benefits of these data for the public and only impose, um, the burdens that are necessary to achieve those benefits. and we intend to make sure that the data have, you know, have integrity and will be useful in the end. and the issue of privacy that you mentioned, of course, is an important consideration, a consideration that has arisen in other data collections, and those issues are, um, are important, and we intend to pay attention to them. >> thank you. no further questions. >> mr. west? >> thank you, mr. chairman, mr. ranking member, and thank you for being here today. one of the things that i continually hear from our

district down in south florida is small business owners and the access to credit. of course, everything worth reacting to can sometimes be worth overreacting to with dodd-frank. do you think that we need to have regular review of some of these regulations to make sure that they are effective and efficient and not constraining as far as its relationships with our community banks and also our small business owners? >> that's a good question, and the dodd-frank act to some extent contemplates this because it does provide that for significant regulations that the bureau adopts that we should be assessing the regulation within, i think, it's about five years. and so that's a statutory requirement, and one that we intend to follow diligently. >> well, i'm concerned with that because with the last jobs report that came out small businesses were saying they're going to freeze hiring for the next year, 70% of them said that. so we're going to wait five

years to go back and do a review, that's really not setting the conditions for the growth of our small businesses. so can we come back and look at a semi-annual review and make sure we include some of the people that this could be affecting, community banks and small business other thans, instead of waiting five years for a review? >> so we have a process, in fact, a statutory process, the small business regulatory enforcement fairness act that actually provides small businesses the opportunity to provide input before, before we issue a proposal in certain circumstances. >> was that part of dodd-frank? >>? there were amendments, dodd-frank included amendments to the regulatory flexibility act and the related small business -- and those amendments among other things extended sbrifa regulations to us, we're the third federal agency only to be subject to sbrifa, and

that'll be one way we get input to small businesses each before we've adopted a regulation. and i think what we're trying to do is where we can go beyond the statutory requirements for public comments and be regulations, and a private example of that is how we've been handling the reform of federal mortgage disclosures. long before we've put a regulation out there that would, um, implement these reforms to the disclosures, we put initial prototype forms on our web site, and we created a channel for consumers to respond and a channel for industry to respond. and both channels have produced thousands of comments, often quite detailed comments. and we've used, you know, the wonders of the technology, we've used the internet to make it easy to comment and click on parts of the form and give feedback on specific parts. and in addition we are conducting sort of more controlled laboratory testing of the, of these potential disclosures where we're going into a room and we ask

individual consumers questions about it. and i think maybe for the first time for an agency, in any event, we have found it very productive to also include in this testing lenders and brokers. so we're asking individual lenders and brokers to sit down with us so we can test the forms with them. and we do round after round of this sort of testing, and we'll continue to use the internet to allow thousands of others to be able to give input. and as i said in my written testimony, we also intend to conduct sbrifa packages around -- panels around these forms. and then under the dodd-frank act we will, you know, when we get to the point of implementing these newly-reformed disclosures, we'll wait an appropriate period of time and come back and review it again. >> and so once again i come back to the original question, can the, you know, what i heard you say was right now that's five years. in the type of fiscal or economic situation which we find

ourselves where our small businesses are suffering, and i applaud you for looking for their input before the regulation comes in. but can we have a semi-annual or an annual review of these regulations so that once again we can go back and do the checks and balances and making sure that these things are working properly? >> with we can certainly -- we can certainly consider that. i think an important factor is that when we do sort of, when we review -- say if we're reviewing a disclosure, let's say we wanted to test the disclosure and see if it was still working in light of whatever changes in the market may have occurred, it's a pretty extensive process. it takes many months, and it can involve both what we call qualitative testing where you speak to small groups of consumers and lenders and then more extensive quantitative and statistically-valid testing, something we intend to do after we finish this initial round of testing. and that can do a while to do correctly, to gather useful

data. and when we do that, we want to do it in the most careful way, and we want to put out the results of our testing and research for people to, you know, to learn from and to comment on and to do their own research. so the process of doing good analysis on a regulation that gives you meaningful answers can take some time. >> thank you, mr. chairman. i yield back. >> with no other questions, mr. sokolov, thank you so much for your testimony today. i really appreciate it. >> thank you. [background sounds] >> i want to thank associate director sokolov again for being here today to tell us about the cfpb, to see how it's structured and for answering questions about how they are trying to

limit the burden of regulations on small business. i hope that they will continue to think about how small businesses will be affected as they begin to exercise their regulatory authority. we will continue to closely follow the impact of the cfpb on small businesses and want to work with you to reduce the regulatory burden on our nation's job creators. i also suggest that your staff listen to our second panel of witnesses so you can learn about the concerns that small businesses have about the cfpb. i'd like, now, to call the second panel of witnesses to the witness table. [background sounds] i would now like to welcome our second panel to the hearing. for the benefit of the witnesses, i will take a moment to, again, explain the light

system that you see before you. you will each have five minutes to deliver your testimony. the light will start out as green. when you have one minute remaining, the light will turn yellow. finally, it will turn red at the end of your five minutes. i ask that you try to keep it to that time limit, but i will be a little lenient as you finish. our first witness is jess sharp, executive director of the u.s. chamber of commerce, center for capital market competitiveness. this organization was founded in 2007 with the mission of supporting capital markets that are the most fair, efficient and innovative in the world. prior to becoming executive director at the center, mr. sharp served as deputy assistant to the president for domestic policy and special assistant to the president on the white house domestic policy council. welcome, mr. sharp. you have five minutes to present your testimony. >> thank you very much, mr. chairman. ranking member altmire, my name

is jess sharp, i'm the director of the capital markets shop at the u.s. chamber of commerce. i appreciate the opportunity to testify today on behalf of the hundreds of thousands of main street businesses that the chamber represents. the chamber firmly supports sound consumer protection regulation that weeds out fraudulent and predatory actors and insures consumers receive clear and concise disclosures about financial products. but we want to insure that the bureau takes a targeted approach to regulation and enforcement without making sweeping policies that would impose duplicative regulatory burdens on small businesses and perhaps even more importantly, that would prevent small businesses from be obtaining the credit they need to expand and create the jobs we need so desperately in this country. so i'm going the lay out our concerns in sort of two general baskets. first, you know, we have concerns that small businesses may be subject to the cfpb's regulation and over oversight because they engage in one of

the ten broad activities laid out in the law, directly supervised or regulated by the bureau. virtually, all of these businesses are already subjected to oversight by the ftc. these are not businesses that have been heretofore unregulated. the chamber fears that overlap will be inevitable as the federal agencies outlines jurisdiction and responsibility. second, and as has been raised here already today, cfpb regulation may decrease the availability or increase the cost of forms of consumer credit to small businesses. we've talked about credit cards. i think home equity loans as well, auto title loans. there's a slew of sort of nontraditional commercial bank lending instruments that small businesses do rely on. and this is, of course, particularly troubling given the already challenging lending environment. according to a june 30th story in the "wall street journal," quote, in the past six months only 17% of loan-seeking businesses with less than five million in revenue landed bank financing. it's a tough environment out

there, and we're concerned about any tools being taken off the table. last week the house approved an important piece of legislation that would make changes to the bureau's structure and operations to increase its accountability to congress and to insure that the bureau's decisions are based on diverse inputs, it would replace the single director position with a bipartisan multimember leadership team giving the agency more stability and balance over the long term, and would give small credit unions and banks to override regulations that harm safety and soundness. the risks of agency intervention are a risk for any regulator. if these risks are not propose r proper -- properly addressed, agencies willic evident my over time abandon sound principles. i want to speak next about sbrifa, and it's a very important point.

as has already been mentioned, the bureau is included on the list now of agencies that must follow sbrifa in in addition to the epa and osha. it's a very important requirement for the bureau to follow in order to get small business input up front. however, the panel process is not a perfect mechanism, and it's not necessarily enough to insure an independent check on the bureau's activity that affects small businesses. so this committee's role is incredibly important in if overseeing the bureau's work and its implementation. just to mention a few of the concerns we have about how this process could play out, first, the bureau itself is responsible for threshold determination, that a proposed regulation is expected to impact a substantial number of small entities, and the terms senate and substantial are, basically, subtle to the cfpb's discretion to define. pardon me. second, the bureau does not have to adopt the panel's recommendations which are advisory and need only supply a reasoned explanation for

adopting or rejecting them. third, sbrefa covers only the rule-making process, and i think you heard the first witness describe that regulation isn't always the best way to go about doing things. they can use compliance assistance, they can use supervision, they can use enforcement actions to, essentially, dictate broader policies, and none of those are subject to any sort of formal process whereby small business input is taken. and just to, again, put a fine point on it, i mean, actions do speak louder than words, and as has been mentioned here this afternoon, the bureau already does have rule makings, essentially, in progress if not technically. one, to merge these two mortgage forms, another to define the types of businesses that the bureau will supervise in the nonbank space. and in neither case has a sbrefa panel been put together. now, technically, i guess it's not required at any particular

stage, but if we want to get this right from the beginning, we would encourage the bureau to begin that process as soon as possible. so with that, i thank you all for having me here, and and i'm happy to answer questions. >> [inaudible] >> oh, thank you. i would now like to introduce our next witness who came here all the way from my home state of colorado, mr. terry jones. mr. jones is from the city of castle pines, colorado, where he resides with his wife, carol. terry jones has over 40 years of experience working in the mortgage banking industry. terry is testifying on behalf of the colorado mortgage lenders' association where he serves as chairman of the legislative and regulatory affairs committee. i am pleased that terry jones could be here today, and i look forward to your testimony. mr. jones? >> [inaudible] thank you very much. oh, thank you very much, chairman coffman, ranking member altmire and distinguished members of the subcommittee.

the colorado mortgage lenders' association is a 56-year-old organization made up of over 100 companies employing over 2500 individuals. over 75% of our members are small businesses that employ less than 25 people. in my 43-year career in mortgage lending, i've been a loan originator, a manager, a entrepreneur and a small business owner. i've always been proud to be part of an industry that helps people and families reach their dreams of home ownership. i've seen many people in the business start as loan originators and then go on to start their own small mortgage lending businesses. these people have lived their own american dream, and in doing so have served the real estate markets and the buyers and borrowers of their local communities. the dodd-frank act creates a superregulator for the mortgage lending industry in the cfpb. this is in addition to the oversight already in place by the states, fha, va, taanny may

and freddie mac. -- fannie mae and freddie mac. the cfpb is tasked with issuing over 100 mortgage lending rules over the period of the next 18 months. it will be difficult to keep up with so many new rules in such a short time frame, so it is essential for the cfpb to develop an orderly process for its rulemaking initiatives no t only to -- not only to insure meaningful input from industry, small business and other stakeholders, but to develop well-conceived and clear rules that are neither duplicative, nor in conflict with states and other agencies. the cfpb must develop a process for providing timely, relevant guy dance to the industry and for the state regulators well prior to the implementation of the new rules. we believe there's a historic opportunity to set the tone for the future of the mortgage lending industry and finalizing the ability to repay rule and defining the qualified mortgage as a safe harbor characterized

by traditional, well underwritten and properly documented loans. the cfpb can help to preserve the best practices and be products of the industry yet still curb the abuses of the early 2000s. if cfpb takes this approach, it will be of benefit to lenders because it will be a safe harbor they can rely on when making loans. if the cfpb chooses to deny, we believe the increased litigation will force many small lenders out of business. we believe a safe harbor will define the arena in which most loans will be made. the risk to smaller business in particular will be too great for most of them to venture outside the qualified mortgage parameters. consumers in the colorado and across the country need a viable small business more language lending industry -- mortgage

lending industry to provide a local alternative to the national lenders that dominate the marketplace today. the cfpb is also responsible for enforcement of the s.a.f.e. act which requires testing in financial standards while bank loan officers need only be registered. this creates an unlevel playing field and additional cost and creates unequal protection for consumers. in addition, licensed originators can move freely to depository lenders from licensed originators, but the reverse is not true. a lender or, a loan originator working for a bank will have to go through the entire licensing process in order to be able to be employed by a small business lender. we ask that the cfpb undertake rulemaking as soon as possible to create a transition alliance to allow registered loan originators to move from depository institutions to nonbank lenders for a limited

time while they complete their licensing requirements. finally, it is important for the cfpb to address the loan officer compensation rule under the truth in lending act and reconsider some of the rigid requirements recently imposed by the fed on the ability of small business to pay its employees in a manner consistent with the profitability of the loan products they produce. confusing standards and lack of official guidance from the fed has created some unusual outcomes. for example, the current rule severely impacts revenue bond programs that serve low to moderate income and rural borrowers. these programs typically limit fees that can be charged to the borrower, yet the loan officer compensation rule specifies that the loan officer must be paid exactly the same on these loans as any other. this can easily cause losses on these loans, and many lenders will be unable to offer these programs, these affordable loan programs. we urge the bureau to clarify this and other problematic issues with the compensation

rule. we respectfully urge congress and this subcommittee to carefully monitor all of these new rules to be certain they do not unwittingly harm american families, small business, the mortgage market, the housing recovery or the nation's economic recovery. i thank you very much for the opportunity to testify before you today. >> thank you. thank you, mr. jones. i would now like to recognize ranking member altmire from pennsylvania who's going to introduce our next witness. >> thank you, mr. chairman. and it is my pleasure to introduce adam, professor at the georgetown university law center in washington, d.c. where he teaches courses in bankruptcy, commercial law and consumer finance. he has priestly served as a scholar in residence at the american bankruptcy institute and as special counsel to the congressional oversight panel supervising t.a.r.p.. before joining the georgetown faculty, the professor served as

a law clerk for the u.s. court of appeals for the third circuit. the professor holds a jd from harvard law school and degrees from columbia university and harvard college. welcome, police officer leviton. >> chairman coffman, ranking member altmire and members of the committee, good afternoon. i'm a professor at georgetown university law school, my focus is on consumer finance and financial regulation. i'm also a small business owner. the consumer financial protection bureau has generally indirect connections to finance. the cfpb's jurisdiction is restricted to consumer financial products. while many be small businesses use consumer financial products like personal credit cards and home equity lines of credit for business transactions, small business owners need, deserve and want the same protections on their financial products whether they are using them for personal or business use. thus, the national small

business associate has advocated for extending truth in lending act protections to small business credit card. now, there are only two ways the cfpb might directly affect small business lending. first, the dodd-frank act requires the cfpb to collect data on small business lending. this is to insure against discriminatory lending in the small business space. the data collection requirement will impose some limited costs on lenders, but it will also provide an important protection for small businesses, particularly those owned by women and people of color. more generally though, the cfpb has regulatory authority over almost all consumer financial providers large and small. the cfpb regulations could affect the cost or availability of business credit, but i want to emphasize it is simply premature to judge the impact on financial service providers or the impact of the cfpb on small business credit costs and availability.

instead, individual rules will need to be evaluated on their own merits when and if they are proposed. the dodd-frank act imposes numerous safeguards on cfpb rulemaking to insure against unnecessary regulatory burdens. adjudication is subject to the administrative procedures act. it's also subject to the regulatory flexibility act. the cfpb is only one of three agencies required to have small, to have regulatory flexibility review panels under the small business regulatory enforcement fairness act. the cfpb is also required to consult with -- on it rule makings. additionally, the cfpb is subject to oversight counsel review for its rule makings which is unlike any other bank regulator. finally, small banks and all but three credit unions are exempt from cfpb's supervision and enforcement. i want to emphasize that this is b