through the aqua fer which provides drinking water for not only our state, but for the very food that we eat every day as farmers and ranchers to read and so we are begging do not stand for the foreign oil corporation. stand with americans, stand with nebraska anand with nebraska and, with our families and please denied a permit. >> we are going to break away briefly with a reminder this continues at c-span.org. the senate is battling in for a the presiding officer: the senate will come to order. the kwhrerbg will read -- clerk will read a communication to the senate. the clerk: washington, d.c., october 7, 2011. to the senate, under the provisions of rule 1 of the

standing rules of the senate i hereby appoint the honorable mark r. warner, a senator from the commonwealth of virginia to perform the duties of the chair signed daniel inouye. the presiding officer: under the previous order, the senate the previous order, the senate >> we will now take you back live to the state department hearing on the oil pipeline from canada through the u.s. >> i urge the president not to put this pipeline in. thank you. [applause] >> thank you very much. we will submit this armband and you can do all you want.

we will submit this for senator clinton president obama to join us and be pipeline fighters and the santa lovers and be ogallala aquifer lovers. we are depending on you. we are counting you. [applause] >> i'm here today as a citizen concerned about the future of my country and particularly about the world that my two and a half year-old niece will inherit the achieving the stories of people who have been surfing from and fighting to tar sands to government which is endangering their way of life as well as the fact that nafta scientist doctor james hansen has called development of the tar sands game over for the clever. i knew i had to take a stand. along with 1252 other people, i

was arrested outside the white house last month to let president obama note i want him to stay no to the tar sands keystone xl pipeline. ike skelton support our friends in canada who are fighting to keep the dangers tar sands development. there's a lot at stake today. we are at a critical juncture and we have a great opportunity to change the path we have been a. approving the keystone pipeline would perpetuate the broken system in which corporations do not seek consent to extract wealth from people and the earth but in this dirty fossil fuel-based system profit is privatized over people. building this pipeline creates clear winners and losers. the winners on the tar sands industry and their investors. the losers are the rest of us, our children, future generations and all life on the planet. many people include and president bush and obama have discussed our addiction to oil. the way teacher and addict is

not by giving them an even lower grade dirtier version of their drug of choice. renewable energy is clearly the better option. we don't want to wait, we don't need to wait 20 years to deploy a silver bullet technology. we can deploy currently existing technologies. we simply need the political will to make the necessary changes equal to the magnitude of the problem. no one can deny the tremendous power of the fossil fuel industry. the industry takes just taxpayer subsidies and repays the public by giving our children asthma, poisoned water, polluted air, misinformation campaigns and irreversible climate change. this influence extends beyond human and environment and reaching into our political process. a contractor for transcanada ran the public hearings along the proposed route of the pipeline. this same contractor even drafted the state department environmental impact statement, an obvious conflict of interest. if you do that we all share depends upon the moral choices

that are made today. as you take this opportunity to set the u.s. on a renewable energy path, by rejecting the keystone xl pipeline, remembered ecology is the foundation for our economy and all life. say no to the keystone xl pipeline and move us towards a just and equitable future for all. thank you. >> thank you very much. [applause] >> thank you. the person who held number 34 gave their place to me. my name is susan left to which. -- left to which. i am here representing the 1.3 million members and activists of the natural resources defense council. i want to first applaud the many speakers with her today. these are clearly the issues on both sides that a pipeline like this raises a. i'm going to speak to just one very specific point. and that is that yesterday, 218

business leaders from across the country sent a letter to president obama calling on him to reject the keystone xl pipeline as not being in our economic interest. business leaders and investors with a stake in a clean economy are sending a clear measures. the keystone xl tar sands pipeline will undermine our efforts to move forward with clean energy, jobs and investment. it is not an economic interest to support expansion of the tar sands oil industry. providing input into national interest determination process around the pipeline in this letter, these business leaders find, and i quote, permitting the keystone xl pipeline is a long-term investment and tar sands oil, one of the most carbon and water intensive fuels under development. if constructed, this pipeline will undermine u.s. commitment to a transition to a clean and sustainable energy future. the letter provides the solution. we urge you to reject projects

that are so detrimental to america's clean energy economy by funded keystone xl tar sands pipeline is not in our national interest. coming from business owners, investors, economists and many others who are deeply committed to american clean energy economy, this letter should carry a lot of weight. the signatories of the letter are members of a group called environmental entrepreneurs, with which the natural resources council works very closely. it is a nonpartisan community of members who manage over $90 billion in private equity capital that nurses our economy. e2 members ever real stake in this issue. they are the ones on the front lines in the united states telling us to achieve a clean energy economy by investing in companies and creating jobs. e2 mbs are concerned with tar sands expansion that america would go after source of wealth as you've heard actually undermines jobs in our country.

they are concerned that tar sands will increase our dependence on ever more expensive and risky forms of oil, and they're concerned that despite the energy security arguments made by the pipeline proponents, this pipeline actually endangers american economic interests by exporting tar sands abroad. and i know from the own investment and experience that this is the time for us to stay committed to american ingenuity and an american clean energy business jobs and investment. the business community is sending a clear message to the administration. thank you so much for listening, and we'll be submitting the letter for the record. thank you very much. [applause] >> now we will call 35, bill. and then 36, 37, john elwood, and number 38.

thank you. >> thank you. my name is bill. i'm chief. i come from northern canada, north of the tar sands development. we are downstream. we have 30 communities and a population of our era is approximately 50,000 people. we are party to peace and friendship trees with great britain. as original peoples we entered into those agreements because candidate as a young country didn't have the authority to sign treaties. canada was part of the commonwealth, and they have to adhere to the legal agreements that we have. and, in fact, the resource that you talk about here is still in question because when we entered into those agreements there were peace and friendship. we never extend with the oil or the other resources that are on those lands. those are part of treating number eight which i have a member of.

thank you for this opportunity. i want to present to you when i'm finished, and a cord that was put together called the mother earth accord. it was put together a month ago on the rosebud indian reservation with tribal leaders, first nation leaders, the canada site, and property owners from the u.s. because of the current -- the concern we have. attached to this there are 60-70 endorsements, letters in support from across the country, and actually internationally. the accord outlines our concerns will i will give that to you formally. what i want to say is that we have some of the largest freshwater in the world where we come from. as i said, the water comes downstream from the tar sands. and what happens through the

process is that a large amount of water is used to process the oil. and the water then is no longer usable afterwards because it's put into pond with very toxic waste which been comes downstream to us. we are finding the amount of water used, our water levels have dropped at least 10 feet. we also are very concerned about the quality, and other people have spoken to that. what we want to say is that this is not in the canadian interest. this is not in the american interest, in our view. this oil will go to the refineries in texas, then out to the world to the highest bidders. that doesn't exist any of us. we believe that president obama has an opportunity here to put the bush administration plans a side and today again in a new way. the final point i would like to

make is that we are very concerned that the canadian industry and canadian government in particular are promoting this project. they should not be doing that. if this project is sound and has merit, it will stand on its own. thank you very much. >> thank you very much. [applause] >> i'm the senior vice president for government affairs at the league of conservation voters which turned values into national priorities. thank you for the opportunity to testify today on half of our members across the country. we join mayors, scientist, nobel peace laureates, unions, landowners, religious leaders, and millions of others from across the country in addition the state department to deny the permit to develop the keystone xl pipeline. is harmful pipeline would transport tar sands oil, the dirt is well on the planet, which is why as i speak there's

a large rally right outside this very building protesting the construction. this pipeline would threaten the environment with far more global pollution than conventional crude oil. it is in direct conflict with the many positive steps this administration has taken to reduce global warming solutions. for example, the bimetal protection agency has estimated this pipeline could add an additional 27 when i took tons of greenhouse gases into the atmosphere in 2018, which is like adding an additional 4.8 million cars to the road. this would clearly offset the reductions achieved by the epa recently proposed tailpipe standards from being a light duty trucks. in addition to being disastrous when it comes to combating global climate change, this pipeline would also jeopardize surrounding communities, ecosystems and watersheds. there have been all to the recent reminded of the threat from oil spills which are exacerbated by tar sands oil since it is more corrosive than original oil.

it has had already 14 spells in the united states in 19 intend to. a serious bill could contaminate the midwest ogallala aquifer which others have all responded to. for the reasons i've mentioned and for so many others this pipeline is something not in the national interest. to the contrary is is just another harmful proposal of big oil and its allies in congress ever to promote the failed energy policies of the past. rather than pursuing clean energy solutions that will create jobs, improve our national security and protect the planet from global pollution. it is time to break our dependence on dirty and dangerous fossil fuels once and for all. we urge the state department to deny transcanada permit to build the keystone xl pipeline. thank you. >> thank you very much. [applause] >> good afternoon. my name is john elwood. i'm an evangelical christian, an

elder the presbyterian church in america, a board member of the evangelical environmental network, and today i represent the institute, green faith new jersey, and national interfaith power and light. roughly 100 million americans identify themselves as evangelicals. we believe that the gospel compels us to care for the created world. that god created all things, that he made mankind with a special mandate to care for all that he has made. that the creation, whether cure or the spoiled is the inheritance of our lord jesus christ. and in a world where degradation of the earth is responsible for much hunger, sickness and conflict, we hear the command of jesus to serve the hungry, the homeless and the oppressed as the least of these brothers of mine. for these reasons, our faith

compels us to urge our leaders as we follow christ, not to proceed with a proposed pipeline project. we take this position for the following reasons. first, the exploitation of the tar sands threatens to severely harm human health, especially amongst indigenous peoples, both by the devastation of vast tracts of canadian and ancestral lands and waterways, and by highly likely due to threats to american waterways and aquifers. second, the tar sands are among the most carbon polluting known to man. with lifecycle greenhouse gases that the epa has estimated to be roughly 82% greater than culpable emissions from conventional petroleum. as such they harm vulnerable people all over the earth. third, at a time when we need to invest heavily in non-carbon polluting energy solutions, the

last gasp exploitation of nonconventional fuel, such as the tar sands, represents a huge step backward, letting our economies to unusual dirty fuels for generations. forth, without this pipeline the damage from tar sands operations will be restricted for years into the future. its expansion depends on this project. fifth, the job creation in the energy independence data by promoters of the pipeline are illusory. among scores they ignore the job killing impacts of increasingly severe droughts and floods, and the clearly stated plans by multinational oil companies that export the tar sands products, not use them in the united states. when we consider these factors, they keystone xl pipeline directly or indirectly contributes to results which are

contrary to the kingdom of god, harming his creation, and threatening the balances to which he has blessed the earth and its people. thank you very much. >> thank you for your comments. [applause] >> hi. my name is doctor skinner. i am with cornell universities global labor school of industrial labor relations. thank you for the opportunity to speak today. cornell released a report last week. transcanada, the american petroleum institute and other proponents of the pipeline claim keystone xl is a 7 billion-dollar project a great 20,000 track construction and manufactures jobs and 119,000 indirect jobs. however, cornell's analysis of keystone xl has found transcanada's numbers are unsubstantiated and that the project will produce far fewer

jobs than they claim. in fact, cornell's careful and more comprehensive analysis reveals the construction of keystone xl may destroy more jobs and agreed. i want to underscore four main points that explain why construction of keystone xl may destroy more jobs than it creates. first, transcanada claims that keystone xl is a $7 billion project could actually keystone xl's u.s. project budget is only 3.3 billion. transcanada hasn't played the u.s. project budget by including 1.6 billion that will be spent in canada and approximate 2.6 billion that has already been spent or committed to the project. in reality keystone u.s. project budget is less than half what transcanada claims come and this means a lot less jobs will be to a. second, fuel type is an immature input for keystone xl. today transcanada has already manufactured almost 50% of the pipe outside of the u.s. even though they claim keystone xl will create 7000 manufacturing jobs in the u.s.

transcanada has made a significant investment in the type that is larger creating economic activity in jobs outside of the u.s. third, according to transcanada's own data supplied from the state department the project will create no more than 2500, 4006 and 50 temporary direct construction jobs for two years. and only 10-50% of the total keystone xl workforce will be hired locally. forth, because of the pipeline midwest consumers will pay 10-20 cents per gallon more totaling two to 4 billion additional cost to midwest economies. is one year of fuel price increases are as a result of keystone xl, would cancel out some or all of the jobs created by the project. transcanada has also ignored the fears that china not a series impact on our environment and our economies through spills, spills into fresh water supplies are increase in greenhouse gases

and other pollutants. put simply, pipeline spills, pollution and climate change in courage that you incur huge costs and destroy jobs. the number of jobs that would be great by the construction of keystone xl is by no means insignificant. especially to the working people that receive these jobs. however, the u.s. is currently facing a serious unemployment problem and this problem should not be trivialized by transcanada corporation vastly overstating the number of jobs that will be committed by keystone xl. [applause] transcanada -- >> if you could -- >> just one more. other proponents of keystone xl it done an injustice to the american public by raising expectations for jobs that simply cannot be met. the u.s. needs a jobs plan by keystone xl is not it. thank you. >> thank you very much. [cheers and applause] >> now i'd like to call number 39, susan connelly.

40, marty. 41, debra lynn. and 42, david friedman. thank you. >> i'm susan connelly, a resident of marshall, michigan where close to 1 million gallons of tar sands crude spilled into a creek in the kalamazoo river. i'm here today as a voice of the community that has been affected by this spill. the spill occurred right in the of some of the sensitive wetland areas in the state. i'd like to present a cd to you that illustrates the impact of a tar sands spill. 14 months have passed with questions left unanswered, and residents concerns linger to this day. when? it's not a matter of if but when, when will the next pipeline break occur and where? these questions must be on your mind. when a spill occurred first responders, health officials were caught offguard. a lack of training, lack of the medication and a failed to

properly let -- led to this tragic event. i say i know because this bill was the first of its kind. i find it unconscionable that the health and well being of the environment and our citizens, and my children, have been set aside for the sake of the transportation of tar sands oil. when spills occur an accusatory finger is pointed at the pipeline company but should be focused to our government as well. state and federal governments fail to protect the people and the environment. the department of transportation was aware of violations eight years prior to the michigan spill. what good are corrective action -- action or as if not enforced? it is a shared negligence. i ask you why? why would you approved the construction of yet another pipeline when the existing line assess his defects which have not been corrected and a regular by federal policies that are lacking. why? why would a government allow

materials like tar sands crude, to those who pipeline, new or old when no one has any idea how to clean it up. they are still can't figure out to this day in our town. fiercely to long-term health, the destruction of our ecosystem and the potential of thanks to our infrastructure are all on the list of unknowns. before you vote on the keystone pipeline, i invite each and every one of you, and your families, and your children, please come to michigan. come to my hometown. look at our river. look at what it has become. i ask you to walk on our riverbanks, swim in our river. and then tell me how seek you feel. thank you for your time. >> thank you very much. [applause] >> am i ready? >> yes.

>> marty. >> my name is marty. i am the pipeline organizer for the indigenous environment for network based in minnesota. indigenous tribes in u.s. and canada stand united in opposition to the keystone xl pipeline. we agree the mother that the chief earlier presented to you. in which support has come from national, regional and individual tribes, along with numerous individuals from nebraska, basically all of nebraska has signed the agreement. yesterday we met with state department, assistant secretary doctor kerry and jones, who told they're having an independent risk assessment being conducted on the keystone xl pipeline. we see this as a direct result of recent allegations and e-mails of corruption between the state department and the applicant, transcanada. the state department would not give us, the state department

would not give us in the other further information such as he was doing the assessment, if the result would be made public for comment, but they did state if the results, the results would be completed prior to the presidential permit decision is decided. if this is to a transparent goodwill offering, these results should be made public and we should have comments, have the ability to have comments on it before the decision is made. and, of course, to the united nations declaration of the indigenous race, and the executive order by president obama, they're supposed to be prior consent with drive. this is not happen in the united states with the state department yet on this issue. state department has failed to meet that commitment with tribes along the route. state department has threatened to withhold funds for tribes to monitor on the pipeline proud if they did not concur with program aggregator that also failed to meet government to government

level about the water pipeline that was talked about earlier. that supplies water to tribes and rural communities in south dakota where waters are already hurt. ogallala president questioned that the tribe would be held liable if the water pipeline was polluted. he did not receive an answer. in the words of the great chief, red cloud, they have made many promises to us, more than i can remember but they kept one. they promised to take our land, and they did. we also would like to make it known that we, the indians, unquote stand in unity with the cowboys, the ranchers and farmers along the proposed route. we sympathize with them, as they are the modern-day indians to their land is being taken away for pennies on the dollar, just as ours once. we feel the state department has backed into a corner right now

with all the corruption allegations and was there to meet with tribal governments on this issue. therefore, the only way to clue them of themselves and with the nation is to deny the presidential permit and to say no to the keystone xl pipeline. thank you. >> thank you very much. [applause] >> hi. there was a mixup with the numbers. i'm number 41. my name is arthur. >> thank you. >> i have four main point. the first i would like to thank the gentleman from montana with a fun hat for his honesty. i am pleased that he said what many others have a hard time saying. those wars we are fighting, they are about the oil. labor community members, i'm from wisconsin, i occupy our state capital for three weeks

fighting scott walker attacks on workers and wisconsin people and i have fought every day for the past seven months for your right. you are being lied to in used. this pipeline is dangerous, violent substitution for the millions of clean energy jobs we were promised and deadly need in this country. if you want sustainable long-term jobs, this is the wrong project. i have been to fort mcmurray in alberta, canada, where most of the tar sands extraction takes place. simply being in the area make, sir, may be sick. i'm not saying that as a metaphor or hyperbole. it made me literally sick. go there, drink the water and breathe the air, and i promise you will become sick as well. obama, in your campaign you promised me a clean energy future. that featured is impossible if this proposed pipeline becomes a reality. this pipeline will solidify our

addiction to dirty fossil fuel. obama, please uphold the very vocal promise you made to me and millions of others when you campaign for my vote. a clean energy future takes real change in leadership now. finally i said i was from wisconsin, and right now there's an ongoing ongoing john doe fbi investigation about the pay to play politics and inappropriate corporate cronyism of scott walker and his administration. secretary clinton, i would've thought you were above that type of leadership. your personal and professional relationship with transcanada are inappropriate. regardless of this pipeline, it is definitely a conflict of your interest. arrest of scott walker, deny this pipeline. thank you. [cheers and applause] >> thank you. >> good morning. i'm david friedman.

i am with the national petrol, npra. npra appreciates the opportunity to bring to provide comments on the keystone xl pipeline project. npra represents more than 450 businesses, including virtually all u.s. refiners, their suppliers and vendors. our members supply consumers with a wide variety of products aid in their homes and businesses, including fuel, lubricants and chemicals that serve as building blocks for everything from plastics to clothing to medicine, to computers. npra supports the keystone xl pipeline project visit will strengthen our country's national and economic security. our members depend on such a secure and reliable supply of crude oil and its the first purchases the vote in the market are significantly affected by volatile crude prices. this byte advancement and other forms of energy, everyone agrees the united states and the rest of the world will continue to

rely on petroleum for the distant future. as our economy continues to struggle out of the recession, the keystone xl pipeline will create and sustain thousands of u.s. jobs through increased business activity and tax revenue. the canadian energy research institute estimates the pipeline would provide close to 85,000 u.s. jobs by 2020, and could support 465,000 jobs by 2035. also as americans struggle to fill their gas tanks, the depletion -- completion of the pipeline can make an important contribution of lowering oil cost by increasing the crude supplies in north america. candidate is currently the largest resource of detroit insource providing 2 million barrels of oil a day. allowing u.s. refiners to use more canadian crude will make our nation is reliant on oil

imports from unstable regions of the world and less vulnerable potential supply disruptions. if america chooses not to accept the canadian oil, china and other nations across the pacific will be more than happy to buy it. that would require shipping canadian oil across the ocean and would force the united states to shoot it oil from elsewhere. this transoceanic traffic could cause a lot more energy and would increase the carbon footprint transporting the oil, which is actually increased global emissions. for all these reasons getting more oil from canada makes sense. if we turn our back on this important source of energy we will be opposing economic sanctions on ourselves. thank you. >> thank you very much. [applause] >> now i would like to call the next four. it looks like joe well, number 44, daniel, number 45, dean hubbard, and number 46, lawrence

stockman. thank you. >> i am with interface power and light. through interfaith power and light 14,000 congregations of all religious traditions around the country work together on energy and climate issues. and i am submitting into the record today hundreds of comment cards from local churches and synagogues where good folks have concluded that the keystone xl pipeline would do great harm and that their religious tradition called them to speak out. these cards join thousands of online comments that for religious folks from the country and to join the testimony of religious leaders at previous hearings in kansas, nebraska and new mexico. when the sunset this evening i will join millions of jewish americans in marking the holiest day of our year, yom kippur, the day of atonement. for me this is a day to tune out distractions and to be honest with myself about whether or not i am on the right path.

a "new york times" editorial this week spoke against the keystone xl pipeline, the papers cite concerns i share about the damage tar sands distraction does to canada's force and the rest of pipeline poses to america's drinking water. the editorial concluded with a larger question, should this country keep conducting business as usual? or will we seriously grapple with the reality of climate change? this is the choice before you today. this is our nation's yom kippur moment. the concentrations of trapping gases in our atmosphere are already higher than they've been in hundreds of thousands of years, and warming temperatures are already causing stronger storms, devastating droughts and great suffering all around the world. the path we're on is treacherous. if we build this pipeline to extract every last drop of oil from the tar sands and push the concentration of pollution in our atmosphere to the point that we permanently damage our earth's climate, any argument

you've heard today in support of the pipeline short-term benefits will pale in comparison. [applause] the human suffering that will be caused, the human suffering that will be caused by our nation continuing along the fossil fuel path we are on is catastrophic. every single person who works at the state department is also a human being who lives on earth, and to hopes for their children and grandchildren to also live on earth. you surely know in your hearts at some point our nation will be forced to shift away from dirty fuels, no matter which foreign corporation stands to benefit from further delay. and to turn instead towards investing in clean energy and repairing our climate. but it matters when we make that decision. as bill mckibben has said, physics and chemistry don't bargain. they don't give us much time and they are back at haggling. we cannot wait to turn back until after this pipeline is

built. we must turn back beforehand. on this yom kippur, this day of moral clarity, please tune out distractions, please have integrity instead to simply make the right decision for the people of the united states and the people of the world. please do not approve the keystone xl pipeline. >> thank you. [applause] >> i traded an earlier spot to speak now. i am ruth. i may committee chair for the sierra club and i chair a national campaign defending water for life for democracy. i'm not here today to argue about psi pressure or parts per million. i'm not here today to say move the pipeline one mile in one direction or the other. i'm not here to say that the inspectors along the pipeline

every 10 miles or every one mile. i'm here today to speak for my godsend, farm my grandson, for malia, sasha and chelsea. and so i will read to you part of what my godsend's mother wrote after being arrested in front of the white house protesting the pipeline a few days before i, too, was arrested. she said as i stood before the white house gate listening to the police issue their warnings of our impending arrest, to our group of over 100 demonstrators, i thought i would say as they carded me away, what crime? i wanted the president to hear. and i recalled the day obama stood before the american people in those days and months, as bps deepwater well spilled millions

barrels of oil into the gulf of mexico. i remember him remarking that yes, he was concerned about this bill, because while he shaves one morning, his 11 year old daughter malia said, did you plug the hole yet, daddy? children have a way of speaking to our heart. and so i am used in its present obama didn't hear the songs and the chance of more than 1000 people who were arrested over the course of two weeks, even if the prayers of religious leaders and native american elders went unanswered, even if he didn't read the editorial opposing the keystone xl pipeline and "the new york times," even if he the advice of his very own epa, perhaps in this instance, sasha or malia might see us outside the white house gate and ask of their dad, did you stop the

pipeline yet, daddy? as the police handcuffed my hands behind me and let me off to a white school bus, i shouted, for sasha and malia, i don't think obama's daughter certain. i thought as i watched my fellow protesters be, search and photographphotograph, but perhae keep this up they will. and i am here today to keep this up. mr. president, do this for malia and sasha, not for your former national delicate director and current lobbyist for the keystone xl pipeline. secretary clinton, do this for chelsea and for her future children, your grandchildren come and not for paul elliott, senior official for your presidential bid, and now lobbyist for keystone xl

pipeline. did you stop the pipeline today, daddy? i hope the president hears us. thank you. >> thank you very much. [cheers and applause] >> good afternoon. my name is daniel and them with a national resource defense council and had to talk to you about how the keystone xl pipeline is not a national interest because it is wholly inconsistent with the obama administration's bill to combat climate change and reduce greenhouse gases. approving keystone xl pipeline woodlot the u.s. into high carbon infrastructures lasting at least 50 years. tar sands are significant more greenhouse gas intensive than conventional oil. the is department the usda department has acknowledged this much. stating that tar sands is more greenhouse gas intensive than conventional oil and more greenhouse gas intensive. including mexican and fences

with her baby is estimated the admission between 7 million metric tons. the equipment greater than their u.s. crude. these are additives emissions above and beyond what would occur without the pipeline. it is equal to the emissions of seven coal-fired power plants every are putting 5 million cars, more cars on the road. it is notable that if the u.s. approves the pipeline they will be effectively undoing the games that would occur from the recently finalized car and light truck greenhouse gas regulation. and it would also threaten gains made with a long-term goals of the medium and heavy-duty truck rolls. but the state department significant errors in its analysis i in the final environmental impact statement the keys and with that result in greater greenhouse gas emissions. they are relying, you're relying on faulty analysis, complete that if tar sands did not for the keys to find its way to market by other means.

this is a false argument. in the end of these other means are speculative, uncertain or much longer-term options. in short, alberta's tar sands industry, this is their best hope for their expansion plans and a tar sands, and just got to acknowledged that. but more to the point that the state department cannot simply, the state department can't simply avoid evaluating the possible impact of this or any other project by speculating about whether other projects can move ahead. this violates the very core of the national environment of policy act. in short, the state department has an obligation to listen to the environmental protection agency and acknowledged the keys on will, in fact, add to global greenhouse gas emissions. but the concern doesn't stop there. canadian tar sands expansion plans are directly linked to whether keystone xl moves ahead. industry has announced their plans to expand tar sands productions as much as 7.6 million barrels a day. the tar sands industry, the

canadian government, the alberta government have all been vigorously fighting because it is so essential to the continued expansion of the upstream canadian tar sands industry. the emissions greeting from producing this much tar sands compared with the equivalent amount of conventional oil would be an additional 228 million metric tons. because jesus is completed contrary to the obama administration's goal to combat climate change, keystone xl should not be found to be in the national interest. thank you. >> thank you very much. [applause] >> next. >> i'm research director for all changes national research and advocacy group working on energy and climate here in washington, d.c. we've heard a lot of talk about energy security. people said it's a choice between canadian oil our saudi

oil or venezuela. that's a false choice. it's a false choice because keystone xl is an export pipeline. we have studied this issue. we produced a report a few weeks ago. i submitted that into the process. the refiners in the u.s. gulf coast or at the forefront of the increasing u.s. petroleum product exports since 2007. latin american and european markets need diesel and the gulf coast refiners are the ones that are providing it. in fact, with u.s. gasoline demand set to decline over the long term, the refiners that were received keystone xl crude can refigure their refiners to maxima diesel production from heavy crude such as that from the tar sands. this means the keystone xl is serving growing global demand rather than u.s. domestic need. it will therefore the oil deliver from canada will therefore be as well as not instead of other sources of heavy oil such as pat asante arrayed in venezuela.

even if that were not the case canadian oil has not and cannot insulate america from the global oil market there can be seen it last few years. canada has been america's largest source of imported oil since 2005. now america now imports twice as much oil from canada as it does from saudi arabia with 38% more than does from the entire middle east region. yet this increasing blinds on canadian oil has not protected america for oil price spikes or energy supply disruption. and 2008 as it $147 a barrel, u.s. gasoline prices spiked. this year in march and april as the living crisis as the living passionately been a civil war stricken 1.6 men girls adult of very came out of the market and u.s. gasoline prices spiked again along with the global market. the international energy agency is forecast over the next two

decades even with canadian oil and tar sands oil being produced according to industry ambitions, opec control over the global market will increase to over 50%. the only way to make this country more secure, more energy secure is to reduce oil demand. president obama said is on the road for that through the act. it is a small step for. we need to do a lot more to it would reduce demand in line with the limits of our climate system and the iea has shown, we will send $5 trillion less the opec over the next two decades. that's energy security, and i implore the state department to deny the permit to this pipeline. >> thank you very much. [applause]

>> is a dean hubbard here? then i will move along, please, to number 48, rebecca. excuse me, number 47. patrick. 48, rebecca. 49, mr. jack gerard, and number 50, kim ricard, please. >> i'm jack gerard. is it my turn? >> you may go ahead. >> thank you. i'm jack gerard, president and ceo of the american petroleum institute, api. let me say we represent 480 large and small companies all across the united states that

develop various aspects of the oil and gas that her country and our economy rely on. we support 9.2 million american jobs, and if given the opportunity to generate and produce other oil and natural gas in this country, coupled with the approval of the keystone xl pipeline, could create another new million american jobs here in the united states. so we want to thank you for your thorough review, to make sure this process is thoroughly vetted. opportunities are given to all, much like today, to hear their views. but fundamentally it comes down to the one direct question, is the approval of this pipeline in the national interest? in our view is a, the answer is overwhelmingly just. this pipeline has two key aspects i'd like to touch on just briefly. first, it provides energy security to the united states. as many know, canada is our

largest trading partner. we bring in more crude oil from canada than any other nation in the world today. by expanding this opportunity we can become more secure as a nation and as a continent here in north america to have our resources locally, to fuel our economy and to provide for what it is our american citizenry need. so this makes us more energy secure as we look to the long term. recent analysis shows we combined a canadian production bringing us together with the keystone xl pipeline, coupled with the velvet of domestic oil and natural gas here in the united states, we could be energy secure in north america in 15 years. that's energy security. that is clearly in the national interest. [applause] >> second key point i would like to make is job creation that is clear in the national interest at a time of over 9%

unemployment. your approval of the keystone xl pipeline will almost immediately create 20,000 new american jobs here in the united states. there are over 2400 u.s. companies that are currently involved with the development of oil sands from 40 different states. this is not a regional impact. it's a national impact. and if the approval of this pipeline would come too, that would help stimulate our economic recovery. it will put us back on our feet, and many here today focus on job -- >> the man is lying. spent we will have the opportunity to have some of the best paying jobs here in the united states. [applause] so once again -- [applause] in summary, this is in the national interest. it's a job creator and it provides more energy security for the united states. we strongly endorse it and hope you will approve it quickly.

thank you very much. [cheers and applause] >> hello and greetings to the state department and all our relatives here. my name is pat's beers. -- pat spears. i know serve as the president of the intertribal council on utility policy. i represent the renewable energy policy and development interests of the 15 drives into great plains of northern plains area. it's primarily that could -- primarily the dakotas. i also live along the missouri river where we get our drinking water. along with many tribes along the river, there's probably 10 more, other tribes that are away from the river that are provided

drinking water through the water system which is rosebud and other tribes. they great plains tribal chairman association and the oklahoma tribes are opposed to the construction of the xl pipeline. [applause] >> also resource impacts are important to the tribes that soar the environmental damage potential, the economic and health impacts to our people and tribal populations. there's an executive order i know that creates presidential approval of this process year. but there's also executive orders that had equal status that demand consultation directive with the tribal governments on a government to government basis. and the tribes want that to be upheld, and practiced. finding no significant impact on the environment is just incredible.

we are told that state department is going to review that eis relative to risk assessment and liability for oil spill's. we are hopeful that this will be an independent study and the tribes also have input in that study and be consulted by whoever the contractor is. there's further scientific analysis necessary on this corrosive acid content, pipeline material, workmanship, et cetera, that people who put the spikes in the ground. we've heard from one of those inspectors here about some of those things that which is buried and paid no attention to. should contact a number of those other inspectors i think. the cost to climate change must also be considered. the tar sands oil development will just push us over the carbon limit.

so we, we think that the economics of mining and processing of tar sands will include the homeland of the nation's in canada must be considered as well, as was the human health costs were tribal and non-tribal lands considered. so the tribes in the u.s. and canada stand together with other land owners in opposition to tar sands of development for the pipeline construction as would to the accord. a huge temporary jobs are not with the environmental risks and human health risks. the development of tar sands oil is a huge step backwards. we need the government to support all forms of renewable energy, biofuels and electric vehicles, powered by the wind and the sun. spent mr. spent mr. steel, could you wind up your remarks? >> it is a step forward and create real clean jobs and restore the economy to tribal nations. so we urge the state department

and the obama administration to be remembered one that respects the earth and all people of the earth. thank you. >> thank you. [applause] >> good afternoon. my name is rebecca. i'm from billings, montana. if i stumble a little bit, i've been up since 3:30 a.m. yesterday morning. as i said, my name is rebecca and i'm a field agent on the laborers in montana, local 1686. [applause] i begin with the laborers in 2008 just as the housing market and the credit industry began to crumble. but prior to working for the laborers union, i was employed

for 22 years with the afl-cio working with dislocated workers who lost their jobs due to various plant closures, trade readjustment, or trade deals and whatnot. so i have unique understanding of the hopelessness that all the unemployed americans today are facing, and how they feel. the difference between now and then, as an employment training specialist, was there were lots of resources available to assist them. trade readjustment act money, but today with the looming deficit and the federal government facing all sorts of cats, there isn't enough money to serve people better unemployed right now. the actual unemployment rate in many calculations is actually closer to 17%, when you add in all the people that have

exhausted their unemployment or are no longer looking for work, or are underemployed. the country is never seen in unemployment like this in, you know, since the great depression. and it was very difficult to work with people all those years who lost, you know, their jobs. better job for 20 years. they thought for sure they're going to retire from there, and life would be good. but they worked hard and would lose everything because they lost their job. so that's why i am here today, to fast-track the approval of the presidential permit for the keystone xl pipeline. this project requires no tax dollars, would provide infrastructure that is much needed to help develop the oil fields and the construction of this project will get thousands of people back to work very quickly. this project is about as shovel-ready as you can get.

the unions involved in building pipelines have the ability to quickly train a large workforce. our members will be trained not only in the pipeline construction, but with heavy emphasis on safety. our history shows that unions are the best training program and the best safety records in the world. never before has there been so much prime opportunity to make a big impact for jobs quickly at no cost to the taxpayer, and with the unions providing the training. the country needs these jobs. this pipeline, and, therefore, it needs the presidential permit to be issued without delay. thank you. [applause] >> good afternoon, secretary of state clinton, and u.s. state department hearings panel.

my name is kim record. and i am the business manager for laborers international union of north america, local 1686 from montana. .. project will enable these workers to be able to provide health insurance coverage for themselves and their families in

addition to a living wage which will in turn support the small businesses within our communities and create thousands of lost jobs. montanans will once again be able to provide for their families and communities. building this pipeline will pump over $420 million into my state's economy including over 285 million into the wallets of working families throughout montana. this will be a fundamental component in restoring what has been lost within our communities of the great state of montana. the people opposing this pipeline don't understand the facts, and they don't understand what it's like to go months without a job not knowing how you're going to support your family. [applause] 1686 also agree we need to deal with climate change and expand the use of renewable energy but the reality is we still need oil. we need it from nations we can trust and we need jobs. our members believe in support of reasonable concept to build

the pipeline, create jobs here and reduce our dependence on oil from a hostile regime instead of extremists. the on ramp construction and baker montana the the supported by our governor will allow 65 barrels of crude oil each day from the region to be transported efficiently at a reduced cost and this will again result in $2 million annually to property tax revenue to the county. yet another example and longer-term positive effect to montanan's working families by building the pipeline montana and americans will benefit. if we don't build the pipeline the oil will be shipped to china and no jobs will be created here. do we help ourselves and montana and the united states, or do we help china? we want to help ourselves. the pipeline will give the u.s. access to oil from one of the most trusted allies and reduce dependence on oil from countries that wish to do us harm.

while the economic benefits are many they would mean little if we do not do this pipeline safely. one of the trimmings and priorities is to maintain pipeline safety by ensuring it provides a qualified work force for operators and contractors to comply with federal pipeline safety regulations. >> i need to ask you to finish up. thank you. >> thank you after a much for letting me speak on behalf of the labor. [applause] >> again i remind folks if you have comments that you already written out you are very, very welcome to either bring them up to the table or to the table in the back of the room and they will be considered fully. thank you. number 51i think michael clink has already spoken it. if i'm wrong then you are up. are you michael? >> i am not but i am number 51. >> that's interesting. [laughter]

anyway, will you please go ahead and state your name for the record and your affiliation. >> my name is carol m-u-f-f-o-u-t for the center of environmental lobby. for the not-for-profit organization that uses the power of the law to protect the environment, promote human rights and ensure a just and sustainable society. i am speaking on behalf of earth justice and greenpeace. under executive order 13337, the area of state may not grant a presidential permit for the keystone xl pipeline have sent an expert finding that the pipeline will serve the national interest. it will not. approval of the keystone xl project would contribute to substantial increases in greenhouse gas emissions by both the united states and canada with significant global climate impacts. as a result, it would violate

our country's obligations to lead the international community in taking urgent action to mitigate climate change and it would undermine the key national policy priorities in transitioning klan energy economy and would facilitate canada's own violation of its international climate obligation and in doing so approval of keystone xl would exacerbate the real and very serious risk of climate change to national security and international peace. risks that the secretary herself has recognized as a clear and present danger to the united states, the international community and the world. for these reasons, the state department must find that the keystone xl project does not serve the national interest. the u.s. has a clear commitment to the american public and the international community that it will lead in a global transition to a low carbon economy.

however, if approved, keystone xl will facilitate the extraction, production and use of one of the world's most carbon intensive fuels and undermine our commitment and our ability to show leadership on climate change. as a party to the u.n. framework convention on climate change, the u.s. is obligated under article 4.2 a of the convention to adopt national policy and take measures that will demonstrate that it is taking the lead in addressing climate change consistent with the objection of the convention. as such, the u.s. must show progress toward achieving the objectives of stabilizing greenhouse gas concentrations at a level that would prevent dangerous human interference with the climate. for more than two decades, the u.s. has failed to deliver on that commitment in any meaningful way. approval of keystone xl would continue and compound that

history of failure. to date, this administration professed commitment to meet international obligations and the lead on climate change in various forms -- thank you. [applause] >> willhite like to call mr. mr. brinton booker and then we have more hughes and rachel who i thought spoke earlier and jack reid please but go ahead. >> brandt b-o-o-k-e-r. i stand here proudly representing the labors of the union and north america to speak on behalf -- [applause] the state department to issue

the presidential permit because it is vital for the country's national security. it's vital for two reasons first of which it will reduce our dependence on foreign oil. but more importantly, i'm here to talk about jobs. talk about jobs for americans and canadians this project of transcanada is going to provide for americans. transcanada partnered with the union several years ago. they came to us because they knew that we were the best trained and had the best safety record of anybody building a pipeline in the united states. we have hundreds of training sites across the united states of america and in canada. we have dozens along the route of the pipeline. hundreds of millions of dollars are spent on an annual basis between the laborers, the united association, the international union of operating engineers and the international brotherhood of teamsters. this money is used to train the workers who are going to build

this pipeline, who are going to build the pipeline safety and build the pipeline effectively. we commend the epa, the state department, and more importantly, transcanada, for partnering with the unions and using their own vigorous safety standards that far exceed the regulation that has been put forth through the epa and the state department. we feel that these hearings have been fair. we feel these hearings have had an honest dialogue that allows both parties to put their issues forward. but the bottom line is americans need jobs and transcanada -- [applause] transcanada is going to provide those jobs throughout the land and construction of this project. in the last four years, over 2 million americans have lost their jobs in the construction industry. construction unemployment is nearly twice as much as the national average which hovers around 9% currently. this project will put thousands

of workers back to work, and they will do it quickly. it's a shovel ready project that's going to allow our members who are currently unemployed, some of which might be a couple of weeks more than likely months, and some possibly years who have been trying to figure out how they are going to put the next meal on the table, how they are going to pay their mortgage, how they are going to pay their car payment. [applause] these workers need this job. these workers need the keystone xl to unlock these good jobs. transcanada has committed to paying a fair living wage, to pay health benefits for workers who are going to work on this pipeline project and pay attention so that when our workers retired they can retire with a fair living wage. we implore you and ask you, we

need this job. thank you for your consideration [applause] [cheering] >> next i have laura hughes. >> hello again mr. steele. my name is laura hughes, h-u-g-h-e-s and i the pipeline representative for the laborers' union of north america. [applause] i spent many years working on these projects years i might add provided me with a steady employment with a living wage and decent benefits. now i have the honor to who represent these workers and today i speak on their behalf. the workers that build these pipelines have studied careers in this industry, and we build these lines according to the lead standards of construction. we are proud of the work we

accomplish. we are not afraid to speak up if we see something that is improper to really produce a call the product because we live and work in the areas these pipelines are built in. local residents will be employed on these projects along with the experienced industry proven american laborers that follow the industry. we provide the qualified, trained and experienced labor that our international contractors need to have a call the result. currently the construction industry suffers anywhere from 13-18%, depending on who you ask. unemployment, more so in the rural areas, were traditionally where we leave these lines, the small communities we enter and perform the work in gets a huge shot in the arm from us. we can turn a paycheck over in 24 hours. the local grocery stores, gas stations, hotels, restaurants and any other item one might need while living away from

home. the resulting economic impact invigorates the local community. our contractors also believe in the body and locally. when the new work supplies and many other things, they will buy from the community. shovels, since the materials, chainsaws, water jugs, fuel, groceries and the list goes on and on. this is about jobs. jobs that the american middle class workers back to work. the middle that is disappearing and shrinking that supports the tax base for all of the structure communities that need to survive this job is schoeppel ready and we need these jobs. we are better to come from the and our neighbor to the north and as an added bonus, montana and north dakota will have an on ramp to transport the oil to market making this an additional shot in the arm for the statewide government. we still are a fossil fuel society. but we can be environmentally correct society that enables the slowing to go through the complete process of to

environmental impact statements with the site being the lead in the most environmentally stringent country in the world by the best international best practices contractors in the world and the most qualified and trained employees available. we understand the need for a renewable energy. we are not there now. we need to feed our families now. it's about jobs. [applause] >> thank you very much. we appreciate you allow the speakers to go ahead and speak without interruption just because it takes additional time away from us. mr. reed. >> my name is michael, number 54 w-h-a-t-l-e-y and by the executive president of consumers alliance. we are made of more than 300,000 individuals and over 165 organizations the representative rice sector of the u.s. economy including truckers, farmers, highway users, shivers,

manufacturers, iron and steel producers, chemical manufacturers and energy producers. we strongly support the keystone pipeline because the economic benefit not only to the six states in the corridor for the nation as a whole. the pipeline will create more than 120,000 jobs across the united states. even more, this project will create hundreds of millions of dollars in government receipts, help balance the budget and create $20 billion in economic growth nationwide. that's a lot of money will go to improving our schools, roads and hospitals. the keystone xl pipeline project will also strengthen our national energy security. the 700,000 barrels of oil per day that this pipeline will bring to the gulf coast refineries will be coming from places like oklahoma, montana, the dakotas and canada, our closest neighbor, l.i.e. and largest trading partner. this oil is not subject to

violent revolutions like we've seen in egypt and libya. it cannot be used as a political tool like russian oil can. is highly discounted from the price we pay for the persian gulf and will help track down fuel prices for both our military and american drivers. there's been several allegations made by pipeline opponents that oil from the keystone xl pipeline will be exported through asia or will drive a gas and diesel prices. these claims cannot be more unrealistic. as of this morning the united states has imported 2.65 billion barrels of oil this year and according to the eia at a total cost of $81 billion. to suggest that we will become an exporter because of this capacity or that adding 700,000 barrels of oil to u.s. markets will increase prices is completely unrealistic. further, there is already access pipeline capacity to get crude oil from the alberto santos to the coast which is about a 500-mile journey.

suggesting producers would send a 1700 miles down to port arthur, loaded on a tanker and sent through the panama canal to get to markets is ridiculous. not only will pipeline bring great economic energy security benefits to the united states, it will do so without harming the water or environment. the state department's extensive environmental review of the pipeline and put it there was no scenario in which the northern high plains aquifer her defeat could be objective. they have other routes for the pipeline and found that the current route is the safest alternative and the other alternative routes would, quote, disturb more land and cross more bodies of water in the proposed route. over 25 tawes and miles of pipelines all across the aquifer and each will be built with state-of-the-art technology and pipelines are the safest most efficient way to transport oil. to conclude, it is clear that it is in the national interest to allow construction and the support of the pipeline because it will be environmentally safe, because it will create thousands

of high-paying jobs, because it will significantly boost the u.s. economy and enhance energy security, cea requests on the behalf of energy consumers nationwide this the department and the have fenestration to grant the presidential permit and allow construction of the keystone xl pipeline. thank you. [applause] >> mr. reed? >> good afternoon. i appreciate jack ulin to be. my name is rodney s-e-w-e-l-l and i am a member of the local union 675 right here in washington, d.c.. [applause] and i also the president here of the laborers' union 657. i am also a leader within my church, where a lot of our union members, construction men and women are out of work and the

community which i live in there is a numerous denominational churches and a look to us to provide jobs for those construction members within their church. so we are reaching out to the communities within our own community to put people back to work, and we need a construction jobs like this pipeline to put members within our churches to work. building the keystone pipeline creates thousands of good jobs here in america. it will allow men and women to provide for their family, to pay their bills and support local business. this pipeline will create prevailing wages, health benefits, and the key thing to a lot of our construction workers is held off the top benefit insurance for members. to go without insurance, we know what it's like and this

construction pipeline will help benefit the wages and pensions for members. the jobs are desperately needed to read the market has lost over 2 million construction jobs in the last four years and more than one in seven construction workers can't find work. these are careers for the unions brothers and sisters. thousands of jobs will be created if this pipeline goes through to read building this pipeline would pump billions into our economy, much of that going directly into the wallets of working families men and women. we agree that this pipeline needs to be done safely. that's why we have those skilled men and women, the laborers that can do this pipeline safety.

of the people pulling the pipeline may not understand what it's like to go months without having a job, feeding your family, putting food on the table, we know what it's like to reply in the third generation pipeline worker, lived around the pipeline all my life used the pipeline to put my kids to school, a graduate, so i know what it is to be out of work. so i'm saying to you please, let this pipeline go through so i can continue to provide for my family to put food on my table. [applause] also the pipeline has ran through my family's backyard within 100 yards. we need this point, we need this work and we are definitely in support of this pipeline. >> thank you. [applause] >> i would like to call police michael reed, bill stevenson and

greg davis, please. >> i believe this afternoon. my name is michael b-a-r-r-e-t-t. thank you for the opportunity to speak today. i stand before you as a representative of the laborers' international union. [applause] a union that's working for working families throughout this country and in canada as well but also a lifelong environmentalist, and i take it seriously. i have attended countless rallies, demonstrations, meetings over the years over an frear mittal causes including an early attempt to shut down wall street over its support for the nuclear power industry.

i understand that some environmental groups are opposed to the keystone xl pipeline. i respect their passion and their fundamental concerns. mauney union works with many of these groups to find common ground in creating sustainable good paying jobs. but the opposition to this pipeline is a mistake. this is not a question of whether canada will extract its oil. this is a question about whether we are going to construct a pipeline to take that oil into the united states. opposing the pipeline will not reduce carbon fuel emissions since it will simply be burned less queenly and china if we don't build this pipeline to be opposing this pipeline will not reduce oil spills since the pipelines are much safer ways to transport oil than the tankers which would carry this will to china. environmental opposition to this pipeline is a knee-jerk reaction

rather than some strategic decision. you cannot reduce global warming by opposing this pipeline. on the other hand will generate jobs for thousands of unemployed construction who desperately need them. jobs that will support their families and their communities. make no mistake, unemployment kills. unemployment kills workers and kill similes and it kills communities and it's killing them right now. this pipeline can and should be built safely and well. north american union trained construction workers are the best pipe players in the world. we can and will build a safe pipeline. we need to be rational about the trade-offs of a project like keystone xl. we need to think about the alternatives if this project isn't built. the reasonable thing is to build the pipeline, create jobs here

and reduce dependence on foreign oil from other parts of the world. that's why the final environmental impact statement concludes that the alternative to the pipeline are not reasonable or environmentally preferable. please, find that the keystone xl project is in the national interest and improves the presidential permit as soon as possible. thank you for today's hearing and the opportunity to comment. [applause] >> yes, i am michael leaves, president of the alliance is a grassroots organization chamber of commerce economical the organization along with 2300-mile border that runs from canada to mexico. we have members in ten u.s. states, alberto and sustention on county as well as mexico. keystone xl is reduced to an

through the region and will have an impact on many of our members was positive and negative impact that the ocher and i encourage you to improve the president's grumet for the pipeline and i submitted a letter which the dignitaries of more than about 50 mayors and county officials joining on. keystone xl provide significant economic benefits for the region and is particularly important for america's heartland and is continued to see population declined to the pipeline is projected to create more than 25,000 a factor in construction jobs on pipeline xl and more than $5.2 billion of tax revenue to the states. at the time when our state and local governments are facing budget cuts and therefore job cuts, these revenue and employment benefits are crucial. most members don't include the number of jobs american jobs supported by the production of alberto oil what is drilling and oilfield equipment manufacturers, trucking companies and other american industries that provide jobs for lots of americans by the

trucking company called a couple weeks ago looking for the potential back because they are imported steel from alberta. they are looking for more trade that we. keystone xl will be a key component for america's effort to end dependence on middle east and venezuelan oil by increasing access to supply from the neighbor and ally in canada as well as domestic supply in the formation in montana and north dakota rely and other regimes in many cases that are unstable and unfriendly to the united states with that energy, economic and national-security policy american troops have not called on to defend the oil development from saskatchewan. we know the money we spend in canada will not go to fund insurgents were terrorists. when political uprisings and revolutions past the government in earlier this year we sold a harmful spikes the effort and our fragile economic recovery. and today elberta is swearing in new. we see no impact on the global market of all. the pipeline will displace about half the oil the united states

currently imports in the middle east and by decreasing the u.s. reliance on middle eastern imports we have a greater capacity to pursue a foreign policy that is not a subject to the whims or producers of the persian gulf. the world's largest trading partners canada and the united states developed the infrastructure in policy necessary to ensure security and efficiency of exchange of goods and services. the relationship has led to a strong political cooperation between the two western democracies. any scenario in which canada would prohibit oil exports to the united states is highly unlikely to read other nations turn off this spigot to the u.s. and other countries in hostile moves that have caused significant damage to the u.s. economy and left our armed forces without reliable sources of fuel. in the words of energy secretary steven chu back, have in canada as a supplier of the oil was much more comforting and than to have other countries supply or oil. thank you very much. [applause] >> bill stevenson. >> director of pipeline for the

united association. you've heard a lot of testimony to date regarding energy, energy independence, our allies and our trading partners that are not so friendly to us. you and your numbers about jobs? some true and some are made up. you're going to hear about these products being exported. how horrible is that? and export from the united states with american jobs. it's just horrible. i'm going to tell you that most important concern to us is economic impact it is time with high national unemployment, some areas of the industry that's nearly 40%. i'm going to tell you there's 13,000 jobs for construction to be we can argue about water, we can argue about error and we did our due --

>> [inaudible] >> can you please not react? >> i wish dr. skinner was still in here. i don't know if she is or not. the cornell study that was put together -- i don't know where they came up with their numbers -- you can tell me a lot of things but you're not going to tell me about man in a pipeline job. [applause] [cheering] there is 22 spreads on this pipeline from the canadian border to port arthur, texas. each individual spread will average between 750-1000 employees. i assure you that is the true number. there are 30 pump stations between the canadian border and port arthur, texas. each one of those pump stations will employ 80-120 construction employees. [applause] these are real numbers.

>> kill the pipeline! >> get a haircut. [laughter] [applause] >> i would appreciate -- excuse me, you'll get more time added onto this. i would appreciate it if those who are in their room would allow the speakers, every single speaker whether you agree with his positions or not, to finish his remarks, treat the individual with respect, and in return you will get the same treatment. thank you. mr. stephenson, please, go ahead. [applause] >> to my good friends from nebraska, if you are running those giant john dever and ferguson tractors on oil that is on water that you can't pumped out of the aquifer and you are burning buffalo chips to run those tractors, god love you. but i did that you are probably using thousands of gallons of

diesel a year. to the general the spoke earlier about transitioning to alternate forms, unless he knows something i don't know, as our good friend bobby put so eloquently, he's never seen a wind mill on a fighter plane or a solar panel on a submarine. please come and get this permit past. thank you. [applause] >> are you at 57 yet? >> i'm number 57. >> what is your name? >> ray. p-e-r-r-y-m-a-n, economist from texas, former professor and the source of a lot of numbers people have both praised and

maligned here today. i and the source of the 118,000 total jobs for the construction process, the 250,000 jobs once it is built. the 9.5 billion gross product and other things, and i just want to briefly talk about a few issues. those numbers are final written testimony is that have the numbers in them. i don't want to repeat those numbers. i would briefly in response to what dr. skinner said earlier -- we were careful. we did our analysis for 30 years. we've looked in every county. the number of workers in every county where they live, that sort of thing and doing this analysis we didn't count the money spent in canada, we didn't spend to the count the money on overseas. the bottom line is there are billions of dollars to be spent on this pipeline in the united states. it should be built safely to the highest standards you have a lot of folks in this room that know how to do that and it will generate substantial economic impact. it's impossible to spend billions of dollars on construction and not generate the economic impact. you can't do it.

beyond that, once the pipeline is built i have heard several people say we will raise the price of oil and we analyze carefully the standards using the best available in the world and the bottom line is you can look at the first ten pages of any high school economics book and they will tell you when you have more supply the price goes down, not of and in this case we are talking about supply coming from a politically stable labor as opposed to alternative coming from an unstable region of the world. people sector risk enterprise and quantity enterprise and all those things say the price is right to go down when that happens all the companies have to buy petroleum have additional money they don't to spend on petroleum the consent of other things they can invest and innovate and create jobs and to all the things the company's two. i am a very, very big fan of the environment among the study's a accompanyist on the last 30 years are the -- the studies last 30 is including the apollo project which is a mess of green

energy investment over billions of dollars in invested renewable energy we need all that but it's part of an over our portfolio of energy that we need and part of that is petroleum, we need it now where we have infrastructure issues, infrastructure out of date to the it this project both 6 cents from the construction standpoint with the stimulus package want to exit it doesn't require taxpayers money and it also creates jobs on a sustained basis because it's going to give more stable energy future so for all those reasons i would ask you to support the pipeline both to the is there a little perspective and most importantly the economic perspective it comes down to just plain common sense with billions of dollars and lowering the price of oil will have a positive affect on the economy. thank you very much for your time. [applause] >> took my name is greg

d-a-v-i-s representing the labors union of north america. [applause] more than three years in the permit process is critical the state department move forward to of both and approve the keystone xl project. the construction industry needs this investment. right now for our economy toch dhaka of and security of the country. the construction sector has had a depression and unemployment levels over 1 million workers are unemployed during the peak week of the construction season this year. people losing their houses, their cars and health insurance. times are tough right now for the u.s. construction worker. these are not short-term insignificant jobs for construction workers that some have referred to. we survive in this industry by stringing together jobs of march shorter duration on average to make our living and raise our families. in this industry most workers do

not make 2,000 hours a year. the construction worker averages about 1200 hours a year for the holds your we do not get to go to an office every day. we do not get to work in a controlled climate and air-conditioning. we are subjected to when the and rain and all types of the adverse weather conditions. we do not get paid when this happens. we only get paid for the hours we actually work and many of us haven't seen work and months and some people coming years. these jobs are needed and the jobs are needed now. [applause] it's time to move this project forward. we need to see the economic benefits of this project for our communities and the construction industry. we will employ thousands of construction workers and provide wages for them to rebuild their lives and make their car payments, buy groceries, the mortgages, taxes and create revenue to revise our

communities. is a veteran of the u.s. armed forces and a proud parent of a child served in the national guard units with our national security are of great concern to me and my family. the united states imports millions of gallons a day. america is a consumer of energy and we are going to need all the energy resources we have. building the keystone pipeline should not slow down research and the battery technology. slow the expansion of wind farms or solar energy. our reliance on foreign sources of oil makes our economic and energy security for trouble. there are a government that should control oil supplies whose philosophies are at odds with the interest of the united states. energy independence will reduce the potential to threaten the u.s. economy and will provide our military with a better ability to protect our country. until the day when our soldiers can go into battle and in tanks

and humvees that run on just batteries and solar panel, our country will need oil. to these reasons, the keystone xl project and the approval of the presidential permit are in the best economic and national interest of the united states. thank you. [applause] tim, brenda and drew, please. >> thank you. my name is liz b-a-r-r-a-t-t-b-r-o-w-n with the nrdc and i would like to get my time to catherine. >> hello. - kathryn s-o-l-o-r-z-a-n-o-l-o-w-e-l-l in support of the actions and the action to triet and i am

currently seeking. i spent about ten hours in line on that floor with social justice and environmental justice advocates that support union rights and with union advocates that support green energy and all of them were in support all of the ones i spoke to of the occupied wall street movement and the occupied movement across this country. [applause] the only reason that we are all here is because other infrastructure projects have been stifled and these people need jobs the pipeline is of the answer because the need for jobs now. [applause] we need to support each other

and like many have said i don't know the exact but as the top are paying with our unions are paying for taxes i think there would be a pretty good start. thank you very much. [applause] >> when president obama was elected he promised in his own words to end the tyranny of oil. in a speech last march, the president said, and i quote, "the united states of america cannot afford to get a long-term prosperity, our long-term security on a resource that will eventually run out even before it runs out we will get more and more expensive to extract from the ground. we can't afford it would cost to the economy, our country and our planet are so high. the only way for america's energy supply to be truly secure is by permanently reducing our

dependence on oil." [applause] [cheering] and he finished "we've got to do it quickly." approval of the keystone xl pipeline would take the country in the opposite direction by increasing our dependency on oil. that's why you met leaders like general anderson today speaking out against the pipeline. the understand it will lock us into 50 years or more of the dirtiest oil on the planet. the fact is u.s. oil consumption is in decline. that trend is expected to continue as our auto and truck efficiency increases. the u.s. already has 2 million barrels a day of tarzan pipeline capacity that imports only a million. this pipeline is not needed. so why the big push? with the oil industry really wants is to get tarzan out of the midwest where there is a

glitch and to the gulf coast where there is more refining capacity for the dirty crude and it can command higher prices. according to the transcanada's own testimony, there is $4 billion more a year in profits -- >> go ahead and finish. >> if it can move to the calls coming out of the pockets of midwesterners. there are much better jobs and a better future and clean energy. on behalf of our millions of factors and members we ask you to not sign the pipeline in the national interest. i am submitting for the record letters, resolutions come statements and testimony asking that this pipeline be denied. thank you very much. [applause] [cheering] >> please, can we allow the next speaker upon his next on the list to him.

>> how about brenda? >> thank you ladies and gentlemen. my name is dr. brenda k-e-n-n-y and i president of the canadian energy pipeline association. this is an association that represents a major pipeline transmission company in canada. you're faced with an important decision for your nation and i hope i can provide a few points of clarification and information to assist. collectively the company's i represent operate more than 60,000 miles of pipeline throughout north america. these pipelines or critical energy highways that connect oil and gas reducing regions to consumers. the keystone xl project is just one link in an ongoing improvement of infrastructure in north america began decades ago. in keeping with our industries commitment to safety and continue to improve this project will be using the best available

technology and adopt the most stringent safety procedures to ensure safe and reliable transports to the refineries that can assist your markets in the u.s.. there's been some allegations that this pipeline has had a number of leaks to the pipeline itself has had leaks. there have been working minder leaks within station properties that have not affected any private land owners, of it all of that has been cleaned up and the volume is less than any would have spent in a year filling their own vehicle. the time of significant political people and rationally in the recovery of north america this pipeline project offers a number of benefits i would like to point out dhaka its long-term access to energy the is being

developed cox and the short term economic benefit for construction jobs in the purchase of local goods we're american businesses can capitalize on tax revenue for dozens of counties what they choose to invest in schools, health care, rhode refurbishment or what have you. but this time of incredible economic volatility where a market has difficulty making long-term investment test decisions this offers a relief. projects such as keystone xl are in the public interest because they meet the energy needs of your nation and the capacity represents about 4.5% of your overall u.s. demand. it's an important incremental part for reliable energy, creating a choice but in this context of this in no way is a linchpin to continue fossil fuel

reliance. indeed, this is a transition to a better supply connections of security as. thank you very much. >> drew, please. >> my name is drew v-e-y-s-e-y and as a proud canadian american, and when will say that the keystone xl is not in the national interest of the united states of america. [applause] [cheering] we, the 21st century economy in this country isn't shackled to dirty fossil fuel. there will be thousands of additional miles of steel chaining the country to an antiquated fossil fuel economy if we fill the keystone xl pipeline. we have to choose. we have to choose between energy economy or dirty economy. and we've had and all of the

above energy policy the past 30 years, and that is an obvious failure. as part of the 99% of americans, the common decent people of this country, we must resist further extension of fossil fuel economy. the richest 1% can cope with climate change by volume themselves safety. it's the 99% to suffer from the deadly and damaging effects of climate change. [applause] [cheering] that is why i urge you to deny the keystone xl pipeline permit. if this government still works to invest interest of the american people, you will deny this pipeline. thank you. [applause] [cheering] >> okay. we are going to call the next numbers however, i do want to tell you that our time has

passed very quickly. there are many people who signed up. we were going to end at 2:00. we will go to 2:15, because we have our introductory statement but we do need to bring our meeting to an end at 2:15. so if those recall could speak as effectively and efficiently as possible, we will try to get as many in the 42:15. thank you. number 64, michael. number 65, clinton james. number 66, gloria. number 67, danny morgan. thank you. >> taking spot number 64 for michael my name is richard m-o-s-k-o-w-i-t-z- of the american trucking association. no matter what side of this debate you moron, trucking is essential to your way of life. the food that you eat, the

clothes that you are wearing, the medicine that he'll your family are all brought to you by the truck, and the importance of fuel to the trucking industry that the u.s. economy cannot be overstated. the trucking industry burns 35 billion gallons of diesel fuel and 14 billion gallons of gasoline to deliver life essentials to refuel is the second-largest expense. in 2008, when oil hit $148 a barrel, 3,000 trucking companies went bankrupt. over 140,000 trucks and even more jobs were lost. no the trucking industry believes in alternatives to the we are looking at biofuels, natural gas, we are looking electrification. but each of these alternatives has challenges associated with its use in the trucking industry. they are just not quite ready to slip the switch to get completely off of the fossil fuel. so we encourage research to overcome these challenges, but we are faced with the reality that for the foreseeable future

we are going to continue to depend upon fossil fuels to deliver life's essentials. let me turn to energy security. we import 51% of the crude oil in this country from foreign sources. if we turn our backs on canadian oil, we are still going to demand the same amount of fuel. the only difference is we are going to have to get it from elsewhere from less secure places of the globe and that will adversely impact our energy security. the ongoing crisis in the middle east should serve as a wake-up call on the need to improve our domestic energy security. and the keystone pipeline is a critical component of that infrastructure to improve our energy security. i want to address environmental concerns briefly. the trucking industry believes an environmental stewardship. we have a robust sustainability plan which we will go into more detail in the written comments and i encourage you to read them. we'll understand one of the primary objections to the

keystone pipeline is carbon emissions. and i find it very strange because i think there is a carbon paradox going on here. if we do not build the keystone pipeline, we are actually going to increase in global climate dimensions. and here's why: canada is sitting on $17 trillion worth of oil. they are going to be sold that oil with their we build this pipeline or not. the only difference is that if we build this pipeline the oil comes to the united states and it comes to the united states in a way that has less carbon emissions associated with it. if we don't build this pipeline it goes to vancouver by train or by truck, and as much as i would like to see it go by truck the fact of the matter is there are more carbon emissions associated with those other modes of transportation than with pipelines. i see that my time is up. thank you for the opportunity. >> i appreciate. thank you. [applause] >> good afternoon. my name is clinton james and by

the national director for the collision the arm of the sierra club and i'm proud to join and representing over 40,000 members and supporters of the sea of a student coalition. when i say that we are probably opposed to the keystone xl pipeline. [applause] i'm also happy to stand here today and joined the national farmers union, the transit workers union and the transit union and various other mayors, scientists and nobel peace laureates when i see that we are again opposed to the keystone xl pipeline. [applause] i'm here to submit testimony based on three key points. the keystone xl pipeline is not the answer for american jobs. the keystone xl pipeline would not create energy security for the united states, and in lives lost to the oil industry is one life to many. to my first point, the keystone xl pipeline will according to the cornell university global

leader institute only trade around 6,000 jobs. so the claims by transcanada and the oil industry cannot be sustained she needed -- substantiated. it's easy to talk about facts you create these jobs cannot be substantiated by real studies. based on the study coral found that nearly 6,000 jobs would be created and although any job is better than no job, none of us or against a jobs, the reality of this the state department in its own study found that these jobs would be on local and would be temporary jobs. i will say that briefly. the state department in its own study says the jobs the pipeline would create would be non-local temporary jobs. [applause] thank you. [applause] the other reality that we know is that the jury material that this pipeline will be made of are not even from this country. they are imported from italy and china comes of thousands of american jobs could have been created if transcanada decided to use american products and

workers but we know they only care about profit before people. [applause] [cheering] also my second point. the keystone xl pipeline would create energy security for the united states. the only way to create security for the united states is reduced demand for oil and that's the largest consumer for oil what we do impacts the entire world. we know that s to this day 2 million jobs have been created by the queen energy economy and if the investment of the economy could create 2 million more jobs so the answer is not to permit the pipeline to be created for the security but it's actually to invest and to reduce our demand on oil celeste i want to ottilie story about shane. if you this -- if was with us today would be 26 or sold to read a father, husband and hard-working american to the it shane woke up one day just like every other workday. he went to work for the oil industry off the coast of louisiana but last year he lost his life because so many people said his place of work was safe. so many people said his place of

work was a place where he could make a living and support his family. but today we know that shane lost his life because of bp, because our government said these places are safe. so i urge you to think about people, real people who go to work every day and who demand more from us that if we would invest or permit a pipeline that we would assure that pipeline is safe to be a thank you. >> thank you. [applause] >> that afternoon. my name is laura, and an attorney and consultant and i reside in austin texas and it's my pleasure to be here today. thank you for the opportunity. i traveled from texas because i thought it was very important to tell you a little bit about my client and who we represent. we support the granting of the presidential permit in support

of the pipeline. i represent the texas alliance of energy producers, texas oil and gas association composed of over 3,000 members of independent producers in the state. our members are small producers of fewer than ten employees, what we do have about 5% better public corporation. we drove approximately over 90% of all well in texas and the united states. we do not represent pipelines marketers, retailers or major into greater companies, which is mostly -- and we do not represent a big oil although we do support the building and the granting of the permit within on these issues. pipelines are essential to our members and the operation of the domestic oil and gas industry. pipelines are the purchaser, the shipper, the transport of our product, crude oil and natural gas. our producers explore and drill with other zero nomani puna pipeline sar and interpol part

of the operations that allow white wine and independent producers access to the market and to make sure that those products are delivered to the consumers. the texas alliance of energy producers supports the pipeline. we support the creation of jobs. we will take those jobs, 300, 500, 3,000, 5,000, 10,000, we will take them in texas, okay? we support our neighbor to the north, canada, which is unstable neighbor. we prefer that the oil and gas is then to be developed, we prefer that it comes to texas through pipeline then go somewhere else. no one has talked about the environmental factor of the waterborne imperils that would be produced if there is a pipeline as opposed to coming through the gulf coast. transportation by land and by pipeline is safer than waterborne beryl's, barges and tankers. we also appreciate that busbee

av pipeline has agreed that the initial construction of the pipeline if you look at that map would be the section of port arthur texas already stored at cushing is fully and more is being built. it is imperative that that bottleneck of cushing believed prior to the canadian crude oil into an already market. the discounted price of west texas intermediate versus brent north sea is evident that domestic independence has been and would be adversely affected if this is not the case. on a personal note, i am south texas, fifth generation. my father was a veteran, my brothers, three of my brothers were in the service, like cousins are in afghanistan and iraq, my brother-in-law is there. i do not want my brothers and sisters, cousins, uncles, friends, texans, americans to go to iraq and afghanistan. i support the building of the pipeline from canada to texas.

>> thank you. >> thank you very much. [applause] >> yes? mr. morgan. >> my name is danny morgan m-o-r-g-a-n i serve in the oklahoma house of representatives and represent district 32 which also takes in much of the area in cushing, oklahoma, which is a crossroad of the pipeline in the world. more pipelines across through cushing, oklahoma than anywhere else in the world, and i would challenge any of you to find a story of any pipeline accident of the catastrophe that's happened and that junction of our pipelines across the country. ..

>> working to build those towers. and those are quote, temporary jobs that i've heard so much about. same way with this pipeline. this is an opportunity for us to continue to blend a good mixture for the energy needs of this country. but why in the world would we say no? why would we say no to millions of dollars of investment coming to this country? these are not our tax dollars. these are foreign countries.

canada saying i want to make an investment in your country. why would we say no? why would we say no to the job opportunities that we see? it's like us in oklahoma saying no to the wind industry, we don't want your money. it's a great segment of our economy and we've seen the increase. i'm already beginning to see the real pickup in our communities from those products coming in from the wind industry, and i will tell you today that you will continue to see real pickup in our state because of the pipe that is coming. you will continue to see an increase in the construction workers with backhoes, bulldozers, the beauty of moving that oil is that we take it off of the infrastructure. that all will move and move into this country. we want to put on the roads and highways or do we want to put it in a safe pipeline that has proven itself year over year over your? i would rather put it in a pipeline. lastly i want to say this. a good thing about a pipeline as

well as other forms of energy including wind energy, is the excise tax that is paid to the local schools and local counties and local cities. that money stays there forever. that excise tax is paid on the pipe stacy lewis educational institutions as long as bastille is in the ground. it will be a tremendous boost or educational institution in our state and all the states around the route. thank you very much. >> thank you. [applause] >> sixty-eight, please. daniel gallagher. 69, alberto gonzales. 70, geraldine miller. >> hello. my name is diane gallagher. i am the green party chairman of lancaster counties green party. i represent 900 or so of those in the county, but i speak for

tens of thousands in the country. and i would say unequivocally this is all of these people, all of the greens, we deny this, we would like to ask that the panel denied the permit. one of the advantages of going last is actually to see the interaction in the room. and i think i had a prepared statement others have addressed very well so i will try to cut my down, really just an observation. we have what i think is a manufactured complex industry. with a conflict that -- [applause] we have a conflict that corporations in somewhat in cahoots with the government has said, you know, let's get the people who are really working and doing a great job for our country and our labor unions against the people who are really thinking about our environment and thinking about

sustainability. we really are the same people. i mean -- [applause] we are the same people. once we realized out and once we can work together, i think we come out of this of the game. so really my advice, really, i took advice and i thought really the labor side and then environmental side, on the labor side, really i that we should consider, they need to consider more of the sources. where's your permission coming from? you know, don't accept the claims made to just because they sound good. on the other side, the environmentalists tend to think we are always right. so, we have to accept sometimes we're wrong. sometimes there are situations and environments where people need a job. we all need a job. so, you know, this is really a manufacturing conflict. from there i think others have

stated that points very well. there's a term that i had come across recently that expresses this concept a little bit, that i haven't heard today, and that's corporate soap -- corporate socialism. i think this pipeline is supporting corporate socialism whether corporations are able -- [applause] -- to privatize the profits. they're able to take something that should really be a common good, which is oil, and and taken for the private profit and then have the cost of that activity, pollution, climate change, any local health effects, be borne by those citizens in those areas. so we have privatize province, corporate cost and i don't think it's a good situation. thank you very much. >> thank you very much. [applause]

>> mr. gonzalez. >> yes. my name is albert gonzales. i and the national command of the american g.i. forum congressionally chartered veterans organization, and a lot of people have stood up here and thank the panel for allowing them to speak. i would like to try to change that a little bit and thank the men and women that wore the uniform that allowed democracy to actually work. we have individuals on both sides of the issue -- [applause] -- to be able to come and express their opinion. will he ever be opposed to reach a unified opinion? maybe never, but i would ask you to go back maybe 10, 15 years to china when they were building the dams on the river there. did they have an opportunity to

have public access to our government officials, to oppose their views or say, give their opposition? i don't think so. because of the fact of the men and women that wore the uniform that gives us this great democracy. so i want to thank those men and women, not only those that served, but those that are serving today and put themselves into harm's way. [applause] >> and i'm not going to argue with a gentle, but i still think energy is vital to the country's defense. and it is important part of our diverse national economy. our continued dependence on oil from venezuela and the middle east has increased energy costs and volatility. contributing to high prices at the fuel pumps.

u.s. department of energy, another one of our government agencies that people argue with that these numbers are not correct, estimates that the north american keystone xl will allow us to reduce exports from these regions by up to 40%. i see my sign is almost a. let me just say, our nation's veterans deserve nothing less than good jobs and good business opportunities. and they are not at a disadvantage that keystone xl will help solve. unemployment rates for young veterans are substantially higher than those of the general population. keystone xl will provide sufficient short and long-term jobs and other economic opportunities for those who put their lives on the line. as well as the americans in general. we understand the department of states basis for decision is whether the pipeline is of

national interest. i say it's also national security. clearly it is. reducing independence on oil from volatile regions that do not share our values, increasing energy national security, and launching a shovel-ready job will provide plenty of jobs for our young men and women that are returning from harm's way. >> thank you so much. [applause] >> number 70, yes. >> jerry lee miller. i'm from lancaster and so then you. [applause] >> thank you. hello. is a four letter word, like many of you i have been taught to love my neighbor as myself. in 30 years as a pastor i made the principle of neighbor love, the heart of my ethical message. i don't know if you would consider love as the basis for our national interest, but you consider it for just a moment. i'm sure you will be persuaded.

in my ministry i visited thousands of hospital rooms we are hurting people went for treatment. people like you and me subject to bodily breakdown due to a host of causes, known and unknown. i've also contacted hundreds of funerals for people whose earthly lives ended him as all human life does, and each year someday will. i have seen each of us, each entry and each death impacts of the people. those who afflicted people love and those who love them. you and i suffer as individuals, but our suffering causes others to suffer as well. and it is good we are connected in this way. because we are connected we don't want to inflict unnecessary suffering on others. we also realize it is undesirable for some of us to profit at the expense of others' sufferings. this brand of profiteering is the opposite of neighbor love.

we all agree that it is plain wrong. love says this is in justice. i'm sure you know about the immense amount of money a few corporations and investors stand to make from this pipeline. so do the citizens currently occupying wall street, freedom clause here in d.c. and a host of other u.s. locations. they are now in the street crying for justice and seeking a country governed by neighbor love rather than money love. [cheers and applause] >> love says people over profits. i'm sure you know about the suffering of indigenous peoples in alberta who have seen rare and deadly diseases skyrocket since the tar sands begin their costly toxic extraction process. love says no more poisoning innocent people. [cheers and applause] i'm sure you know the

acceleration of climate change from tar sands oil use will wreak untold suffering on our people station, perhaps even your own loved ones in my. the number of billion dollar weather disasters in u.s. this year such as flooding, fires and tornadoes are unprecedented. and this trend will likely grow worse. love says stop climate change while you can. [cheers and applause] >> the likelihood of bp tax bills of a ruptured pipeline over the nation's heartland threatens the freshwater drinking supply for 20 million people. love says find a better way. [cheers and applause] >> thank you. thank you. we can have one more speaker.

71, susan casey. >> my name is -- excuse me, susan left and give her time to me. i'm a policy analyst with the natural resources defense council. i am from a fourth generation family in the oil business from west texas. and i know i speak for that family when i say when presented the choice between safety and saving money, safety always comes first. however, when presented with that same choice it appears transcanada has consistently chosen to save money. president obama told the american people that his administration would do the necessary science to ensure that keystone xl would be operated safely. his administration has not yet followed up on that promise.

early in its assessment of keystone xl the state department promised congress that its environmental review would include a study of pipeline safety by regulators at the department of transportation. no such study has ever been done. transcanada claims it has said 57 conditions to address the safety risks posed by keystone xl. however, a close analysis of those conditions shows that all but 12 simply reiterate safety standards that are already required. moreover, recently released e-mails between transcanada and the state department confirmed that these conditions are meant to only support a special permit that would allow keystone xl to operate at higher pressures than minimum safety standards allow. transcanada a great resemblance a great resemblance that conditions for its high pressure keystone pipeline describing the pipeline system as one that would meet or exceed world class safety and environment of

standards. in just its first year of operation transcanada ski still one keystone pipeline had 14 leaks in the united states, spilling nearly 22000 gallons. earlier a speaker wagered that that was less than we all still feeling our cars in the year. i think everyone in this room would take that wager. [cheers and applause] >> the nation's first major tar sands spill in kalamazoo, michigan, industry the tar sands present, tar sands spill's present significant challenges. in addition to the potential increased spill frequency, and assessment of its physical properties indicate that it will behave differently than conventional crude when spill. recent experience with this bill in kalamazoo, michigan, show that cleaning these skills had a significant new challenges that have not yet been surmounted.

906 e. 6000 counts of tar sands crude into the kalamazoo watershed in july 2010, the environmental protection agency originally set a two-month deadline for completing the thing. 14 months later, it has nested second deadline. the obama administration has speeded sir, i wish going to ask you if you could kind of you to your final sentence. >> certain. of bomb administration has not been assigned straight i would risk these pipelines post. and report on keystone xl without more due diligence puts the communities, water and environmental resources to the united states at unnecessary risk. [applause] >> thank you. ladies and gentlemen, i regret that the time has passed so quickly and we have had a chance to hear from all of you. so we want to reiterate that we welcome your comments.

they willyour forums, faqs and accept them, tell you how else do. pages aolswant say f my that it was a prilege it be here and here l ofhese and s g o 1950-2006 before got a little crazy and are lending. we require people have a job and have it verified by a third party. we required to income ratios be substantial in terms of being able to reduce the debt. their credit score be reasonable and if their down payment with less than 20% to be a credit enhancement to protect the down payment level which was addressed by the panel. somehow the six regulators came together and decide if it wasn't 20% down by the borrower he wasn't going to be a qrm qualified loan. that is a dangerous will if it ever goes into effect it would probably impact at a minimum 40% of the housing market. i think more like 60% of the housing market. i lived with 95% financing as a

realtor in my lifetime. to give you background on the i went into business in 1968 and that was my first. i'm glad i started in the recession because it made me appreciate better times. 90% loans were a part of the 19 cd8 housing slump. they were piggyback loans were save you loads made 75% first mortgage and a secondary litigating and maybe 15% piggyback with a courtesan interest differential. that became the loan. 2% discount point on the full amount of the night isn't going to protect premiums of the pmi. those laws perform and they performed well because they were underwritten by two barbers, to lenders not one. first the primary and second the private mortgage insurance lender. in the 1980s or later on in the 1970s, 95% financing came along. it had stricter difficulties in terms of requirement in terms of the benefit of the 5% down. they performed well triggered only when we got into subprime financing we prize at a premium of bad borrowers, bad credit, packaged and sold it around the world didn't really get into bad

problems. our housing slump is not a problem of down payment. it's a prime of under what appeared we got into shoddy loosey-goosey underwriting the district housing market. we have a pen and that's going back so far, the underway said is impossible. the long-term impact on our country is going to be devastating. i have done a number of audiences and i will tell you that in my 33 years in the real estate business that was generally accepted the average family bought five houses during their lifetime. startup house, and move up, the statement has come a second home and the last aspect my judgment because of the draconian effects of financing that are being applied because the front in the marketplace for owning a home that goes underwater in terms of loan to value, the average immigrant and right now is probably with two of those purchases from their plan. if you think about that for a second if the average american family in the next 50 years eyes to less houses in an average family did in the last 50 years that's a 40% reduction in demand

for housing in the united states of america. that impact is going to all the way through the economy because housing is a real key to economic prosperity. there are some things that have been proposed i think in washington that will help. some of have have been talked about. i was pleased to join with barbara boxer from california. we're great friends and she had a great idea and came to me and i was glad to join and be a part of it in terms of the heart program. were if you have been underwater borrowers who is performing, their time in the famous but there are underwater, hac sponsored loan, let them refinance at current rates without a lower limit payment adjustment or fees on the closing. it only makes sense as our panelists said that the obligations are already there. you've got debt on the books why not give them a chance to get out of that bed and perform rather than be a strategic foreclosure which is a term i absolutely aborted but it's

going on more and more in the united states of america and is making things worse and worse. so that's number one. number two coming we've got to understand that you got to get more flexible for people within the law to use their own money in whatever way possible to reduce their indebtedness and get the real estate back to some degree of common sense. one of those is a bill that tom grace and i sponsored. it's a bill that allows you to withdraw up to $50,000 or 50% of your 401(k) balance, whichever is less, and apply towards your home mortgage or if it's your primary residence and is the first mortgage. allowing people to recover in some ways if they're underwater or if they're having difficulty on making those payments because heaping people in the house as they are in, particularly those people who are performing is going to be essential to helping us reach a plateau where we begin to build. we need to be sure and i think richard smith said this when i was walking in the room and i commend precisely what richard says, the investors are there in the marketplace to absorb inventory. we need to do what we can to

promote that absorption because a house that is vacant depreciates one and half% a month in good times and bad times its and accelerate him out. if we get a good investor buying a house and put a good tenant in the house that helps the economy stabilize housing values and hopes that neighborhood. that's what we need to be creative. i want to talk out the long run which is i wasn't around during the depression, but i've read a lot about it because i think we're as close to an as i've ever seen. and housing is particularly in about the same shape was at the time. in the 1920s you could borrow 50% of the value of the house and you piggyback on a 20 year amortization over five your boat. that was basically conventional financing. and that when we went housing market dropped in the depression. it was the government he came back and create mechanisms for people to buy houses again one of the known as fha. fha has served this country well for almost a century. the second thing happened is we begin to develop private capital

going into borrowing on houses and loans called a savings and loan association. then the government gave s&l a preference on a quarter percent on deposit of 10,000 or less above a bank so savings and loans with a place where people put their long-term savings and that was the capital base because the only place savings and those who put their money was first mortgage. government took away the quarter percent preference on deposit, the banks when after the money and them in an office in savings and loans had to go into great ways to stay in business. they form service corporations. they got into development and the ultimate collapse. we came back and housing market however after the 1990-91 recession because gses came into prominence. securitization became the capital base of financing mortgages and it served his country well until we got into loosey-goosey underwriting, sorry ratings by moody's, standard & poor's and fitch which have never invested -- rated to start with. but i want to get rid of the bad

parts of freddie and fannie freddie and fannie as much as anybody else but let me tell you something. for the long-term future of this country, we are going to have a dramatically bad impact on our country for a long period of time. we are going to have to be creative and politicians are going to have to be honorable. publics going to have to be great and will have to find a mechanism to have a new backstop for single family residents for mortgages. fha cannot stand the pressure is on today. because it's exam from all the dodd-frank rules and because there isn't a down payment requirement of less than 3.5%. everybody is going for fha. they've gone from the 2% of the market 15 years ago, to 40 or more percent of the market today. they can't stand the pressure. we've got to great a way non-government insurance financing, maybe government-backed financing, for the marketplace to come back either 95, 90, 85% level or whatever as long as its minimum

5% down payment. there are many things that could be done. we could take all the agencies that deal with housing, fha, va, freddie, fannie, roll them all together and get the consolidation, the economies of scale but have a government entity that is a single one-stop shopping for backing or securitizing or ensuring loans. that's one. cycle you could take a declining balance sinking fund were you actually charge fees set by the early panel and terms for the government sponsorship. you let those build up in a sinking fund and develop the cash reserves sufficient to back up the insurance so overtime to insurance on the paper dissipates 10% a year down to do. after 10 years you have a sinking fund large enough to absorb the shock wave of a decline in the marketplace which didn't really exist in this last decline. we had the implied guarantee of the government which now is the absolute burden of the government. we need to find a great way for that not to happen again but we

will have to bridge our way from where we are, where that is a we have got the creative in doing it. my remarks today are very simple. we need to do in the short run but we can to keep people in ine houses that their income particularly those that are forming in the payments, their service and their loss but they're underwater. and i think the 401(k) program are two good ways to do that. secondly, we need to get this overhang of what is qrm going to be like over. i have heard that the regulators are thinking about waiting until after the 2012 election to finally publish the qrm will appear that tells me they're waiting until the political pressures over to then pass the rule they're trying to pass right now. and if they do you have another asean conference in 2013 about the very subject we're talking about today because the housing market cannot stand the qrm rule as is written. it is time for the administration and the regulators to understand governments job is to mitigate risk but you cannot eliminate risk. if you eliminate risk you

eliminate capitalism and private investment. and investment. individuals are being written so strictly that the private sector will go to other forms of making money and get out of the real estate is one of financing basis which would be a disaster for this country because homeownership is been an american dream. and it was the best investment you could ever make. we did a bad job of underwriting loans for about five years and cost ourselves a dramatic decline in terms of the american housing. we need a national housing policy. we need republicans and democrats to recognize the solution to our unemployment problem as housing and bringing construction back. the way you solve our consumer confidence problem in this country, which is dramatic is by having people with equity in the home and confidence they will live there and raise their children and be happy. that's the american dream but it's also the underwriting and undergirding of the american economy and the foundation of the future of this country. this meeting today is called by the private sector. the type of thing that ought to

be going off on pennsylvania avenue and in the capital of the united states of america. there's no single greater, than the uncertainty and housing and no single better solution for housing in the future than to give us a certainty of what's going to be there so we know the markets know what to do, capital flows and the trade housing market over time and it will take a while, probably take five to seven years but the recovery has got to begin somewhere. begins with stability in regulation, dealing with a problem, moving toward and giving american people over time the confidence they need to go back home to homeownership, backed investment in was always been a great goal, the american dream of the single family home. with that said i will try to answer a question or two. >> wasn't that good a speech. [laughter] spent i thought it was very incisive. thank you very much, sandy. i want to pick up on the

conversation from the previous panel. i'm a layperson, but it seems to me that you have to look at both sides of the equation. financing and equity. if you're going to deal with this underwater problem. so you've got an idea, for how to bring interest rates down and make a casual better. that doesn't really get to the loan balance issue, which they still go. what do you think about these kinds of debt for equity arrangements that would break down the loan balance, kind of get at the core of the promise to? first of all the 401(k) withdrawal would get to the core, where the penalty for withdrawal for housing principal reduction for the first mortar shell on your primary residence. that would very much addresses that product i think richard was referring to the concept that's been floated around with a homer and the lender become a partner. the lender writes down the loan

and in return for that the borrower gives them a% of the upside in the future of the market returns, isn't that correct? i think that's an outstanding concept. i'm not smart enough to know i can figure all the details one way or another, that it's the type of creative deal you're going to have because housing will come back. and you can mitigate your future losses by stopping the bleeding that we've got going on right now. one of the ways to do that is to keep people in the houses there and are able to perform and give them an incentive to do it rather than right now the incentive is to strategically foreclose and civil, i'm making my payments, but the house down the street now is on the market for 50% less than what i paid for my. i think i will let other have mine and go by the houston industry and reduce my obligation by 50%. that's a bad incentive for america and it's a bad habit to get into and the idea giving the lender and the borrower both skin in the game in return for reduction and indebtedness at the current rates, or the current values, makes a lot of

sense. [inaudible] >> even though we hear that a lot, how to achieve it is -- >> i said at the beginning of my speech driven very short, a far -- a four letter word called jobs. you have pretty good consumer confidence but if you don't have any equity in your house, if you sure you keep your job, if your neighbor lost his, you don't have a lot of confidence. and right now there's not much confidence in the united states of america. i am a proud father of three kits and nine grandkids and all of us were at my daughters house for my wife's 65th birthday sunday night, and i never dreamed in a million years i would be sitting down over a birthday kick with my kits

talking to some the things we talked about. in terms of the struggles they are having. they are all three in real estate by the way. the same bad habit i had. which i loved every minute of it but these recessions will dampen them. but them. after having discussions about future plans, paying for college for those nine grandchildren, about what we are going to be given the current situation. and the im as a father, want to be which always do, invested badly on us, but show them the rainbow and show them where you're going to be so they can get past the bad times for the good times and quite frankly we continue in washington to kick the can down the road which we are doing right now on so many things, we are protecting that uncertainty and those number of discussions that families are having around kitchen table. so my message to all, and i'm a bipartisan group by the way. i criticize my site as well as the other side. it's time we did in washington what every american family has had to do including most everybody in this room. that is sit around the kitchen table, we prioritize how they

spend the money, adjusted the current economic times and keep their books online. america's got to do the same thing. we shouldn't extend ourselves in the government of what we require everybody else in the country to do. that a we do that is the day we would begin and end will bring back the confidence of americans used to have. >> did you have a question? >> senator, as you know the unemployment rate is 9.1, 9.2 the purpose of consumer spending is really not the employment rate we should be focused on. the u.s. bureau of labor statistics underemployed and unemployed currently stands at 16.2%. so with respect to housing that's the number we focus on. in the context of the broad economy, said housing aside for a moment, how do you view the

current efforts to create jobs? and what would you in a broader context, what do you think the right solution is to create jobs more broadly, and not just in the context of housing? >> a number one thing we need to do is have a predictable regulatory regimen in this country. right now most of the capital invested by the private sector and the company is in compliance with federal regulations, not in investing money in a future, anticipation of future return to one of the reasons you have a high unemployment, which enemy that water down there, i have a frog in my throat. one of the reasons we have that high level of uncertainty right now is you don't know when the next she was going to draw. look at qrm. qrm is just one of a plethora of potential regulations coming from dodd-frank that are not yet impose. go talk to any banker and the bankers are struggling.

they don't know, they thought sarbanes-oxley was bad. i was a picnic compared to dodd-frank. dodd-frank's only about 50% implemented. the first thing i would do is i would make regulation predictable and i think the best way to do that would be to say we will have an across the board moratorium on regulation and will take the next two years trying to absorb and digest the regulations we have already imposed on the american people and see those that are making sense and those are not making sense but as i said, i think it is governments responsive to mitigate risk on the american people but if you get into this of trying to regulatory intimate risk people just won't get out of bed in the morning. number one is i would stop the overly oppressive will of regulation. number two, i do the hard things. you can't put everything off until january 1, 2013. we've got 16 more months before get to that point, or 15 more months. we had to be having a having some in the united states of america and the government had to be coming in with a precise

recommendation that they can do some of which i think i outlined in my remarks. that's number one. number two if the agencies are focusing on analyzing regulations they passed rather than turning up new regulations to come, that will have a major effect. and then third, to the president everlasting credit, yesterday he said the three free trade mr. nye state senate send. those free trade agreements are going to be imported economic development of enough states of america and the come from agricultural state. free trade agreement with south korea on loan is one and a half billion dollars from for the cattle industry are the types of things europe and canada have been eating our lunch in trade for the last 18 months because they got aggressive in free trade agreement and we remain stagnant. we need to do those proactive things is a long answer but you asked for to you're going to get it. [laughter] >> and then probably fourth is we would do have to learn tax cut on the table. i'm not one of these who says i'm not going to talk about the tax code.

i'm of the people that recognizes that 25 years the united states tax cut was put on the table, the reagan administration, it was reform, they removed a number of marginal rates mr. levin to three, top rate from 70% to 28, the economy came back and win prosperity. they made a terrible mistake because they applied some of the treatments retroactively and laws which destroyed the savings and loan. it was the last nail in the coffin. but if you realize tax form should be prospected so it applies in the futures of business and knows what the code will be in the future to invest its money, not retroactively, go back and invalidate an accountant's that was made you would have a much more robust investment of money. and i think you have a combination of lower revenues at the top marginal rate and corporate rate, and all the way down the marginal rates but you have a high revenue system because you take all those tax benefits which have been financed into the system and repealed an awful lot, some of them you wouldn't but a lot of them that you would.

you have ethanol, all these things that have been done to cause business to make investments. what were considered to be good public policy at the time. i think trying to reduce the unfortunate, but what happens a week increase foreign oil and ethanol doesn't work in two cycle engines and cost of $60 million a year to subsidize its production. maybe it's time to the ethanol mandate in place to stop the taxpayer from subsidizing the development decision. those are the types of things i think we need to do. [inaudible] i started this morning saying do no harm. i would ask what you think will happen in the next two months and then the next 18 months? >> first of all you have to be true to your work. and i am an equal opportunity critic i'm also a bipartisan solution guy. i don't think you can talk about reform the tax code and say but,

and start taking off all these things you want. but i think you let everything rise to the top. queen will use a rise to the top. dishes the tax treatment that served his country well. good social policy and good government policy. but let's let everything compete on that basis. i think the mortgage interest deduction can be very favorably iif you compare it to a subsea for solar panels or comparative ethanol or compare it to any of these other types of things. that it should not be taken off the table because the problem we got right now is republicans will say they don't want to talk about the tax code and democrats will save you want to talk about entitlements. you can't solve deficit and debt from if you don't talk about both. i'm just not going to say i'm not going to talk about any subject, but i am going to say if it's a fair debate, if it's a fair discussion, a fair comparison, there are parts of our tax code that exist today that will be perpetually because they make good sense for america. there are a lot of them that under the light of day will not

make goods sense for america it will give us the opportunity to raise our revenue and lower our rates which is the ideal combination possible. and hopefully we'll be able to do that. so i'm not going to tell you anything off the table for discussion purposes but i'm going to let those things i believe in compete in a favorable environment, and and y because they make sense. >> is there anything you have done to call a truce with regard to political attacks on the lenders? both the president and the majority whip, senator ben, yesterday specifically singled out bank of america for raising the monthly fees and debit cards. essentially abc almost lead last night with a political coverage with senator durbin essentially telling americans to vote with their feet and leave their bank of america and accounts.

and, frankly, they had a bit, almost a crash on the bank of america website. stock was down almost 5% this point. i don't see how anybody thinks that could be constructed for the flow of credit. i don't want to put you on the spot. spent i think you just did. [laughter] >> i'm sorry. >> that is a problem. does anybody on the hill worry about that? >> i'm trying to get all the spots let me answer the question by doing a diversionary tactic. people in public life, particularly members of enough states house and senate, and the administration for that matter, need to understand that words have consequences. nd mac field in large measure because of a public statement made by an american politician. nd mac it serious problems but the run on nd mac which started a whirlwind decline of a lot of, also wachovia started with an

ill-timed inappropriate statement by an american politician that hit wires on a slow news day and cause an adverse reaction in the business. so i think everybody has to be very careful in my line of work of understanding the impact that you can have as a public figure on the private sector. and so i think, your statement begs a good time out and i'm going to a policy meeting at lunch after this speech. and that will bring that subject up with my colleagues because we have to be very careful. you always want to tell the public the truth. you always want to make sure that you're doing the right thing, but you never want to take a liberal use of the first amendment and this microphone as a politician try to demonize somebody that is producing and contributing to the united states of america. it's tough enough to run a business without having to do with somebody who's unaccountable few but trying to give election based on making you a demon and then a hero. i don't believe in doing that no

matter who the individual is or what part they come from. words have meaning and have consequences. those of us who live on words for a living have to use temper our judgment when it comes to the effect is was met on the competence of the american people are either in the country, the government or the private sector they do business with. >> dodge that pretty good, didn't i? ask i didn't dodge it. [laughter] anybody else? thank you very much. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations]

>> good morning, everybody. i'm president of the progressive policy and on behalf of ppi and e21 i want to want me to today's forum on new solutions for america's housing crisis. it's a great pleasure to team up in a kind of post-partisan, excuse me, partnership, with e21. it's a new free market think tank that analyzes policy issues to the prison of rigorous economic reasoning, not ideology. i want to thank keith, the managing director, and jennifer who is here somewhere. 14 up with ppi to give this event a post-partisan ballots cast today. we're going to diverge on our

policy choices, undoubtedly. the cute think tank that we share the conviction that fixing america's broken housing markets has to be an urgent national priority, much more urgent than it is today. i think we should hope that the kind of rabid bipartisanship that so often disfigures the political debate in washington will not get in the way this time. there is a lot of talk in washington about jobs but not nearly as much about housing. in fact housing barely rated a mention in president obama's recent job speech before congress. and get the jobs crisis in housing prices are intimately linked. the "national journal" recently did a survey of the general economic conditions in the states, the article is called the geography of pain. and it found any 25 states where housing prices have fallen the most dramatically, those same states have also seen the highest unemployment rates in the steepest drops in household income.

is a link between bat housing sector and a slow recovery shouldn't surprise us, given that the class of the housing market is sort of the original sin in this financial crisis. it all began last week to get with the subprime lending debacle. and two years after the recession was officially declared over them we are still mired, deleveraging, 11 million homeowners who are underwater and still stuck with weak housing markets that are a kind of millstone around the recovery net. and considering the shear size of housing, this is a sector that is bigger than health care when you add all the ancillary businesses and industries to be. revived in the sector may be the single most important thing we can do to stimulate demand, to stimulate job growth. so we really think this question has got to be elevated on the national agenda. the revenues we have applied it thus far in washington unfortunately have obviously

fall and fall short of what needs to. they failed to stem the tide of foreclosures in a serious way to cut the inventory of unsold homes or to stop the slide in housing prices. it's time for new solutions and not finger-pointing. and so we have with the e21 partners assemble a really stellar array of political of business and finance lease in housing experts, housing advocates, housing all stars here today to highlight pragmatic steps that we can take despite all the political and fiscal constraints that we know we face, but pragmatic steps we can take to speed the recovery of our stricken housing market. ppi is proud to but two discrete ideas on the table today. i hope you will grab copies of them out there. one is home k. accounts but this is an idea that is the brainchild of jason and others, and they call for giving families new incentives to save for a down payment on a first home as well as retirement in a 401(k) style savings vehicle. the second idea is by bob, a

brilliant one, homeownership voucher to guide you to take advantage of this unprecedented glut of low priced housing to put 1 million low income families via vouchers into housing which turns out to be actually cheaper than rental vouchers are not because their market rental values are higher than the carrying cost of ownership. many, many american communities right outside commend that. bob had a death in them and was supposed to be here to talk about but you can't join us today. and beyond these concrete ideas, for strengthening housing markers and we want to pose very fundamental questions about whether in federal housing policy. we had to take advantage of this crisis if you will to ask very basic questions about the purposes, the goals of the federal housing policy once we've gotten this emergency past. so we've got to cover a lot of ground and i want to stop now and turn things over to our keynote speaker.

you've got a collection of biographies of our chief speakers today, so i'm going to practice a little bit of introductory mentalism here and you say a few things about jeff merkley, it was senator from oregon, elected in 2008. senator merkley's passion for housing preceded his entry into public service. he was at one point the portland director of habitat for humanity in oregon. oregon. he launched oregon's first individual development account which helps low income families safer housing among other purposes. this is an idea that ppi actually endorse way back in 1990. and as a state legislator and later speaker of the house in oregon he was a champion for the funding of low income housing. and on the senate banking housing and urban affairs committee his bench as a leading voice and a consistent voice for stop burying our heads in the sand about the housing emergency and coming forth with creative ideas for what we can do to

confront and solve this problem. so without further ado, senator merkley, over to you. [applause] >> thank you very much. it's a pleasure to come and help kick off this gathering. i hope by the end of the day you will have it all figured out. the administration we signed onto it and we will go fiercely forward to let's turn the clock back to the start of the administration, in the week before the president was sworn and there was a lot of debate over the extension of the second half of t.a.r.p. and/or a lot of concerns raised by a different legislator including myself. and i was asked the question by the administration, what could we possibly do to have you support the second half of t.a.r.p.? and i said there has to be a

fierce aggressive program to help homeowners, magnitude of around $100 billion. and the administration took my comments and other comments that people made and sent a letter to congress, january 15, 2009. and that letter said the obama administration will commit substantial resources a 50-$100 billion to a sweeping effort to address the foreclosure crisis. we will implement smart, aggressive policies to reduce preventable foreclosures by helping to reduce mortgage payments for the economically stressed. we will reform our bankruptcy laws and strengthen existing housing initiatives. and the banks receiving support under the emergency economic stimulation at the root quire to implement mortgage foreclosure mitigation programs. and it goes on to mention that the feds actual also be an

initial element of this plan. it was a fivefold plan. aggressive new policies, reform bankruptcy laws, strengthen homes and other existing probe ends, use leverage of the economic stabilization act loans that require banks to implement mortgage foreclosure mitigation, and that the fed would take action to reduce the cost of conforming mortgages. that was more common than what the fed had done since that cannot be an executive driven. and a letter summarizing the splicing together, these efforts will constitute a major effort to address this critical problem. so here we are almost three years later. ..

take this on. the treasury spent about $2 billion on the affordable modification program. that program has made commitments to monthly fees that will constitute a greater commitment over time but not in terms of immediate impact. about 660,000 homeowners are in permanent modifications far short of the millions that were anticipated. the administration has developed the state hardest hit program

and has sent out funds to many different forms of projects in the hardest hit states and the result of an analysis of what has happened in those states would be helpful of finding perhaps ways to go forward that might be effective across this nation. fha launched a short refinancing program and i think that we are at about 250 borrowers that have refinanced over the past year. and so, we are essentially not very far in passing this major national challenge. we are looking to five to 8 million additional foreclosures over time. one recent estimate said 10 million. and the forclosures and the the lack of equity are a suffocating blanket over our economy. forclosures that account for 41%

of the sales according to the royalty track. home prices are continuing to decrease. the kit shuler index for the and metro areas said we have had a 4% drop over the last year year-over-year. in that dropping house price or house value families continue to lose equity. american homeowners have lost $7.4 trillion in housing equity from the high of about 13 trillion. so american families have lost half of their home equity which is a major source savings and wealth in this country. and i know that all of you understand that housing is absolutely essentials to our economy. to read if you have mt for close homes it isn't just that it continues to drive down the housing crisis which is bad

enough it also decreases consumer confidence and makes other families on the street reluctant and concerned about their future and holding tight to their cash. the housing market means new construction is virtually nonexistent and that has a profound impact on the economy. in my state, lumber is a key export. and you don't sell lumber if people aren't building new homes another exporter of the state nursery stock is another important export, and all of these are severely compressed by the failure of the housing market. in other states there's many other related items that are key to the economy so it's about our homeowners and the wealth of american families, the ability of american families and about

the recovery of the economy. indeed, homeownership is key to family success. there are three primary pathways into the middle class. one is education. second is small business and third is home ownership. i saw this directly as the head of habitat for humanity in portland where families that had been renters and became homeowners really had for the first time a piece of the american dream. they had a form of stability they never had as a renter. they had their housing expenses walked in for decades to come as opposed to facing increasingly high expensive and chasing that with an effort to earn more income. and every study has shown homeownership has huge additional benefits to society. children more likely to graduate

from high school, more likely to go to college. they have higher earnings, the have less crime and less dependence on social programs. in all these ways homeownership returns an enormous amount to the success of american families and the success of our economy so let us not make the mistake of saying that homeownership is overstressed because in that case we would be throwing out the baby with the bathwater. july 7th the president had a twitter town hall and he said in that town hall the of mr. and's efforts on housing were, and i called, were not enough, and of "and he then said so we are going back to the drawing board. so, this is the time when the administration is re-examining its housing and therefore why this conference is so valuable

because as a receptive team looking how to decide to relaunching successful housing program. i think in the context of that it would be useful to remember franklin d. roosevelt's quote from 1932 giving a commencement address and he says the country needs and unless i miss tickets temper the country demands full persistent experimentation. it is common sense to take a method and try it. if it fails admit it frankly and try another. but above all, try something. we need enthusiasm from imagination, and the ability to face facts, even unpleasant, briefly. we need to correct by drastic means if necessary the faults in our economic system for which we now suffer.

franklin call for bold persistent experimentation and i think that sets the tone for what we should be doing right now. leader in that town hall, the president was asked about help for families under water but can't sell and which is the ability for people to take new jobs in other areas. and the president responded to some folks just bought more homes than they could afford and they continued probably they are going to be better off renting. and he said given the size of the housing market, no program is going to be able to solve the problem. quite frankly, i don't think that that is the right approach. it misconstrues how we got into the current mess. this wasn't primarily about families by a more home than they could afford. although that may have been a piece of the problem.

but the heart of the problem was deregulation and failure of regulation that allowed a predatory subprime mortgages to grow exponentially from 2003 to 2008. the chart -- i have a chart in my office in which we map out the growth of the sub prime from 2003 and the drop of ordinary images and the lines cross the is an extraordinary period and if we had a systemic risk council following this charge would have been saying what is going on here? what is different now? what is different is the new mortgage, the two year mortgage with a prepayment penalty that locked people in and a mortgage origination system in which the originators were paid undisclosed to the wire large bonuses for steering people in to the predatory loans when they qualify for a prime loan.

wall street study, wall street journal study 60% of the families in the sub prime qualify for the crime and loans to the use of that combination of teaser rates exploding interest rates come pre-and penalties and steering payments constituted a predatory scam that turned the most valuable financial contact families have into a family financial tragedy. it is fair to say i think that while the bush administration was talking about an ownership society, they allowed through the failure of regulation they allowed a situation or a process that destroyed more ownership equity than any president in american history. there are many things you all are going to be discussing today of how we can go forward. one of the things i tried to

stress is let's make that modification program work better, the hamp program. i and others have been talking about a single point of contact because people were talking senate offices in case workers that they were getting confusing conflict in information. i had a conversation with a person has modification program at one of the major banks and this individual said to be the biggest mistake is that we thought we needed call centers to handle this when what we needed or not people with call center skills we need people with low of origination skills and we didn't have people that i understood the product they gave all kinds of varying advice and of course a person talking to a different person every time they call getting different advice it is enormous confusion and i get what that particular bank that is now overhauling doing everything they can to bring in trucks to replace the call center mentality with the

expertise of those that have a loan origination skill. we need to end the double track in which foreclosures are pursued simultaneously if modifications to another source of enormous interest, distress and confusion in the process. we need to have a third party review because the fact that not all the people in the one incompletely understood the options families had come to make sure families are able to see any viable program will option available short of foreclosure. these constitute national loan servicing standards. many banks are moving to adopt them at various degrees and i applaud them for this that that they have taken in that direction and encourage them to do more. there are two points at which a major modification of the balance of a mortgage is possible. one is that foreclosure and one

is that bankruptcy. foreclosure a bank has already written off the loan. they don't have to worry about it being held to the inventory of loans they can continue to hold they are going to sell it at a loss, a five-year sale price. why not enable the family in those cases where they have enough income to do so and appropriately underwritten levites that house back? keep the family in that house and not have the empty house with the maintenance cost of maintaining it or the repair cost of vandalism, not having the marketing cost of putting it back on the market. it's a win-win. concern and strategic defaults but filters to make sure the family truly could not afford it at the first higher interest, higher balanced loan and can't afford it at the lower address. the national refinancing program, bankruptcy reform. recall that the president's letter that she would fight for bankruptcy reform, reforming our bankruptcy law. well, that didn't happen.

but its bankruptcy judge can modify any given contract except for your primary home. we know the impact. it's rarely used. it's a motivator for people to come to a deal. a motivator would help the modification program work much better. it doesn't hurt to return to solutions we decided not to pursue earlier and ask ourselves again now that we've tried other things is this now inappropriate to reopen our mind to that possibility to do it as perhaps a state option and give states a choice if we need to do it in some other form. how about a down payment? in fact wolf mentioned a strategy for down payment vouchers to revive the arguing we should have a permanent down payment programs, $2,500 per person, $5,000 for a couple. it's a matching document so their skin in the game. and if you think about working families, $200,000 homes, 10%

down, $180,000 of 5% that's $9,000 of interest. the family's interest does not exceed the standard deduction they won't get a dime of help from the mortgage interest deductions. so why not in addition to the mortgage interest deduction which was a lot of value in helping families over time will not help working families get in their first home? and i like the idea of calling it a voucher it says is rigged to be limited number of them - i also feel like we should recognize that there is a long-term value to having matching down payment grants to get families and homes and may be an extra effort right now when so many families can help of some of that excess inventory of vacant homes and by ian holm's at this point when they are low in price when interest rates are very low because every family under these circumstances has a high probability of success and a high probability of their equity and growing substantially over time as a

home appreciates and that is putting the foundation, that is recommitting ourselves to an ownership society. there have been various other strategies that flowed for helping to finance homes. boxer and i isakson have teamed up in a bipartisan fashion to essentially laid out a program that is a stronger form that is a refinance program with current low interest rates and that gets rid of the hurdle of the amount under water and gets rid of the fees as well so it paves the path to make a refinance more successful. senator menendez has called for a shared appreciation strategy at which banks -- and this is essentially plays like the short refinance sissy essentially if you think this family is going to fail, then you are going to lower the loan when you resell the house why not over it now

but you'll get as an incentive 25% of the appreciation that occurs in the future, and that strategy with loan servicing has been using that as a pilot and it seems to have a lot of promise, so that's a strategy. jack reed, senator reid has said let's look at right to own a family being able to rent a home, stay in their home perhaps the option to repurchase. cities are important and valuable ideas. we need to some in the spirit of president obama in 2008 when he talked about fierce urgency of now. because this broken housing market is absolutely critical to putting american families that on their feet and put this economy back on track.

we need to some in the spirit of president roosevelt to talk to a bold experimentation. we need to think about the willingness and the appropriateness of committing substantial resources as president obama talked about in his letter with 50 to $150 billion in helping homeowners and that we still need to commit resources to help this critical area. for the american family and for the american economy you'll have terrific panels today. figure this all out and develop an agenda to take this nation for laconic. thank you. [applause] >> thanks for much, senator merkel. senator merkley says he has time for a few questions, please

formulate them and hold on for eric who has a microphone back there if you will and identify yourself for the benefit of us and this he's been audience, please. >> senator, thank you. i'm judy kennedy commercial season affordable housing lenders to be in your office had been really helpful in the small business jobs act and allocating about $40 billion for lending on main street community banks up to 10 billion community development financial institutions. the treasury department just returned 25 of $30 billion unused. it's expired. so clearly the work was in the administration still has to get out that it's important to have capital for lending on the street. i'm just wondering if you see any vehicles for restoring that $25 billion that the democratic

congress are located. >> not think you, judy. this program, small business loan fund can out of town halls and was holding an oregon, and in this town halls businessmen and women were saying our credit lines have been cut, our local bank is healthy but it has an fdic leverage problem it can't do additional lending. we need help. we can't seize business opportunities unless we can borrow. and so my team what i andy green and will brought together of folks to be altered the katulis of the main street banks that could do to 300 billion in additional lending. this had an interest in congressional taft believed to task because was in a bill that came out of committee. folks on the floor saw that it had to do with helping banks and

they got very nervous, and so they said well, let's take it out of the bill and put it back and if you can pass it 60 votes and mary landrieu and i agreed to that and we got 60 votes of bipartisan support to put it back in, and i must say i am a very disappointed in the administration of this many healthy banks to apply have been turned down. the whole group of banks from my state were turned down, and it's not -- there was a lack of enthusiasm and the treasury department for the program. i quite frankly don't know what to do because the framework was laid out, and the executive branch has to execute, has to implement. so i and my town hall have been really in this story saying what other strategies can we undertake to try to make sure that the lending is there?

we have worked with the extending small business loans from sba loans keeping the 90% guarantee. that was very important, so that peace. what else can we do? and so, i and my team and the folks on capitol hill i think have a like mind to see this as a critical part of the economic recovery and are open to additional ideas of how we can push forward and i'm sorry i don't have a good answer for you at this point but i'm hoping that we will have good answers as the day progresses. >> senator good morning. i'm the managing partner for the secure content group in northern virginia. a phrase that we hear a lot in washington is the best interest of the taxpayers. we are here today to talk about

macroproblems. about an hour from here in the town of beller maryland there's a community of about 115 homeowners. a year ago the properties were worth 180,000 apiece and then hud and fhfb began to sell off their inventory. today they are worth $105,000 apiece. you mentioned in your remarks we've got eight to 10 million forclosures still to come. how are we going to manage the disposition of this supply to preserve the markets as well as the capitol of the agency's? >> thank you. you can't simply have an inventory of the fda empty houses but one strategy that has been put forward is to say let's

package substantial numbers of houses and sell them to investors who are going to put them into the rental world so that they bypass if you will be in direct competitors on a the retail housing markets. i think that could be helpful but also when this is in the past they've been sold a large discounts. and i hope we will also if we are going to sell at large discounts powerful investment groups would also be willing to sell at discounts to individual families to help of sort that inventory. there is no easy path through this because with homes that are in their reserve inventory have put on the market, with investors or homeowners there is going to be a depressing impact.

but, less depressing is when you can keep the original family in the homeland the home is never vacant and that is where in my mind the best strategies are ones in which either that family is able to repurchase this, a short refinance so it never goes on to the market to compete with the general inventory. or they are able to rent the home with an option to repurchase on their economic situation improves. i think it's a good question to put to all of you, but those would be a couple points i would make on that topic. >> thank you for kimmage. >> thank you very much for inviting me. let me just say let's have the same passion and determination to apply resources as needed to tackle homeownership for american families as we have to help major financial institutions around this country. [applause]

before the presidential election of 1916, charles hughes was a lawyer and professor committee to term governor of new york and though he lost his bid for the presidency, his impact on political history remained serving as a post war secretary of state and ultimately chief justice of the u.s.. he's one of the 14 men featured in c-span's new weekly series, the contenders. life in the supreme court building in washington d.c.. friday at 8 p.m. eastern. for a preview, what a number of videos about him and our special website for the series c-span.org/thecontenders.

the economy to a next years of a new recession. but according to this morning's jobs report, hiring is still too week to bring down unemployment, which has been stuck around 9% for more than two years to in testimony to the senate banking committee, treasury secretary stevens of the biggest risk to the economy is banks and financial institutions not taking enough rest. this hearing is about an hour and a half. today we hear from secretary geithner on the first-ever financial stability oversight council congress. it was to be one system for the financial system and the timing of today's hearing could not be more appropriate as we face real

systemic threats as the european union struggles with the debt crisis. as the committee continues the oversight the dodd-frank reform and consumer welcome this opportunity to receive updates fsoc to identify specific risk and enhance financial stability as a possible impact on the european situation on the economy and financial system. in addition, i look forward to hearing about fsoc's progress as it continues to work on rules to designate large financial institutions or enhanced supervision. it's also important to know to that if this committee votes on the nomination of to be the director, he will also be the

tenth member of fsoc. this is the last remaining spot on the fsoc to be filled. all hands on deck at fsoc is important especially when we consider that our last financial crisis was caused in part by widespread lack of consumer protection. the ftc has an important role to play. we will never be able to anticipate every possible cause of the teacher crisis i believe the creation of fsoc was an important step towards better understanding of the threat facing our financial system. secretary geithner come i hope that the interagency corporation that we have seen on fsoc at this point will continue in the coming months and years.

i want to remind my colleagues and secretory geithner -- senator shall be? >> thank you mr. chairman. welcome again to the committee, mr. secretary. today, psychiatry geithner appears before this committee as the chairman of the financial stability oversight council to discuss the council's annual report. it's been over a year since the council was established as a centerpiece of dodd-frank. the council is charged with three primary tasks to identify risks to the u.s. financial stability, so-called systemic risk to promote market discipline and respond to emerging threats. to the stability of the u.s. financial system. secretaries geithner will have an opportunity to tell the committee hear how he and his counsel or fulfilling these

ambitious mandates. i had hoped the council would have provided the information in their annual report. unfortunately, the report fails to address these significant areas. rather them being a forward looking study of the risk to the u.s. financial system, the report is largely a lengthy summary of statistics with lots of colorful routes. for example the annual report does not provide much evidence that the council was the head of the year rose own crisis. the countries of spain and italy are not even mentioned in the discussion of sovereign credit debt. in addition, the report does not address or even attempt to address many of the key economic issues that we currently face. perhaps the most fundamental question left unanswered by the council is what is systemic risk. the term systemic risk is mentioned concept is invited

into the new law because any firm designated systemically significant or to receive additional scrutiny by the federal reserve. if the council cannot define system crist, it will be hard pressed to identify a growing risk to the u.s. financial system, making it exceedingly difficult to make sure that those risks do not threaten the health of the economy as a whole to use your words, mr. secretary. consequently dodd-frank and its creation of the financial stability oversight council i believe could go largely unfulfilled. in the years since the passage of dodd-frank, it has become clear i believe that the administration and the regulators exaggerated their ability to measure and regulate systemic risks in the rush to pass the legislation. the council devotes only one page of its 149 page annual

report to quote measuring system of risks and admits that directly measuring systemic risks is challenging and that the development of the systemic risk managers and models are in the early stage. 63 geithner, yourself, stated, and i will quote, you won't be able to make a judgment about what is systemic and will is not until you know the nature of the shot. i hope that we can all agree that it would be a bit too late by then. i hope not the sentiment was echoed by the federal reserve board governor dingell cerullo at a recent federal conference on systemic risk where he spoke of the need for additional academic research in this area. he admitted, the fed governor said, the complex issues will require attention by researchers who are still the early stages of design and systemic risks and

its allies in the government role in reducing it to read these difficulties arise from the fact that congress instructed the council to mitigate all systemic risk before it bothered to determine could with the they could identify such risk alone mitigate them. this is a reoccurring field with the passage of implementation of dodd-frank. practically speaking, this means regulators will be making ad hoc decisions about which firms should be designated as systemically. accordingly, you to hear from secretary geithner today on whether he believes the council can establish a framework for an effective systemic risk regulation that provides clear mandates for regulators and legal certainty for the market participants. in the interim, the president's challenges whoever the council can clearly assess the risk posed by the sensitive problems like the european debt crisis

and the mounting federal debt or the excessive regulation of the u.s. economy. it in your report is an accurate representation of the council's progress, i remain skeptical of the chance of success as i was when my friends on the other side of the aisle propose the legislation. much of the dodd-frank act was focused on the idea that if the financial regulators were given broad grant of authority they can prevent any harm and avoid any crisis. i don't believe that you can write enough regulations or build a bureaucracy big enough to achieve that goal. it would be ideal. nevertheless, secretary geithner said the head of a new government body. he's promised just that. perhaps today really my tears and fears of others in telling us how he intends to present all future financial crisis is a big chore. thank you for appearing with us mr. secretary. >> thank you, senator shelby. i want to provide my colleagues

the record will be open for the next seven days for opening statements and if there's any of the material you would like to submit. welcome back to the committee, mr. psychiatry. you may begin your testimony. i just want to start by thanking the committee for approving the nominee recommendations to act on this morning and on what to encourage you, those of you who did not vote to spend some time with him you were going to find he is an exceptionally talented and thoughtful leader and i know some of you have said that there is no reason to confirm this thought changes in the structure of the bureau, and again i would encourage you to spend some time with him and take a look at him and asking of questions and i think you'll find yourself

reassured and i would just remind you that if the senate fails to direct talks for the cpb what will happen is we will leave a vast array of non-bank financial institutions outside the scope of the consumer protection which is exactly the same mistake that left us so vulnerable to the financial crisis we went through. so deeply for the nominee does not help close the fundamental gap in the financial system and as i said you'll find an exceptionally qualified and thoughtful person. in setting of this council congress asked us to provide each year a comprehensive review of financial market development and potential threats to the financial system. let me just start with a few comments from the broad that drove the economy which of course is the fundamental determinants of the financial

stability. in 2011, the world economy like the u.s. economy is still healing from the divested effects of the financial crisis on top of those basic challenges we experience a series of additional challenges in recovery earlier this year from higher oil prices, the disaster in japan, europe's protracted economic and financial crisis added to the pressures on global growth and the district of debate we saw in the united states about whether the united states is a country should meet its obligations as was during damaging to the consumers just to give you if you talk to businesses across the country as i did in the month of august they said why should we make an investment to hire a new person crux of congress is debating whether to meet its obligation as a country very damaging to the voter confidence of the united states and you feel it now in terms of how the slow-growth phase. some of these factors as the oil prices have fallen and japan is to recover but the effect of these pressures have resulted in the slower growth in the united states and around the world and

were expectations for growth over the next 18 months to two years. the crisis in europe presents a very significant risk to the global recovery. we are working alongside the imf to encourage european leaders to move more forcefully to put in place a comprehensive strategy to save lives. the critical imperative is to insure that the government and the financial systems that have been under pressure have access to a more powerful financial backstop conditioned on policy options that can credibly address the underlying causes of the financial pressures they are facing. now in the face of the situation in europe and the general slowdown in growth around the world the most important thing we can do in the united states is to act to strengthen our economy. and in our judgment the most effective strategy for doing this to enact steps now but will accelerate economic growth and high those to the long-term reforms to restore fiscal stability. the american jobs at which the

president opposed provides assisted shall package of tax cuts and investments but according to estimates by outside economists would raise economic growth by one to two percentage points and helped create one to 2 million jobs. the president's proposal to the joint committee of congress was charged with recommending reforms to reduce the long-term deficits he of light a package of reforms to spending programs and to our tax system that would bring our deficit down to the level where overall debt burden starts to fall as a share of the economy. now this council was comprised of each of the agency's the federal level responsible for oversight of the financial system and the firms and markets that comprise to make up the financial system and it is the judgment of this council that the united states financial system is in a significantly stronger position today and better able to withstand the new risks we face on a global economy. because of the actions we took at an early stage of the crisis

to repair and reform the system, the weakest parts of the financial system, the ones that took the most risk no longer exist would have been fundamentally restructured. the largest banks in the country, the largest 19 have increased their common equity, their capital buffers by over $300 billion at the beginning of 2009. and the level of the common equity and risk assets across these banks is now approximately 10% up from roughly 6% at the beginning of 2009. banks are finding themselves much more conservatively and maintaining much larger cushions of safe and liquid assets. these improvements are very significant. together they represent much more progress on the path to the more stable and resilience financial system that has been achieved in the other major economies caught up in this crisis. u.s. financial institutions including the major rings and the money market funds of the group have substantially reduced exposure to the economy of europe that have been under the

most pressure. our direct financial exposure to these governments and their institutions is quite small but it's important to recognize that europe is so large and closely integrated in the world's economy that a severe crisis in europe could cause significant damage to growth here and around the world. this makes it even more important as the congress act to strengthen now and put our fiscal position on a more sustainable path. economic and financial development since the release of the report reinforces the importance of the council recommendations to summarize the rhythm additions quickly. first the council recommends it will always recommend this in my judgment that it's important that the core institutions in the system and the basic institutions for the market continue to act to strengthen the financial position over time. will the largest institution in the country to manage their businesses so they have the ability to withstand more

challenging future economic environments without government crisis and to the subject of the responsible regulators will gradually phase in over a per call with several years the much tougher standards we figure she did for capital could be with the other major financial centers around the world. second, the council recommends reforms to strengthen the number of key from the markets in the united states markets for a critical source of the vulnerability to take a source of contingent in our crisis. the most important of these recommendations relate to the try party repo markets and the repurchase markets and money market funds. the essence of the recommendations is to make these markets in a money-market fund is less vulnerable if and the abrupt rush for the exit forces a damaging spiralled asset sale deleveraging the broader contagion we've made substantial progress toward this objective but we have more work to do. the council recommends reforms to the housing finance system.

it recommends actions to establish national standards for mortgage servicing and the council of course emphasizes the importance of broad reforms. these reforms will require legislation to return private capital to the housing markets and strengthen mortgage underwriting, reduce overtime the government role in the housing market. as we proceed with these reforms, however, we want to make sure that we are encouraging, not underlining, the prospect for a broader recovery in the housing market. finally, the council on the size is the importance of the close cooperation and coordination and implementation of the financial reform both here in the united states and around the old and this is crucial because if we allow the large gaps to emerge as we did, in the years before the crisis, the risk will to those leaving the system as a whole more vulnerable. differences in the design of the standards create opportunities for firms and investors to take

advantage it does the act we want to minimize the chance that risk simply moves to other markets around which can also make us more vulnerable. the hardest thing in this area and this challenge lie in the design and application of capital requirements and the framework over derivatives. although our system today is stronger than was before the crisis we have more work to do of reforming the system and as we proceed with these reforms we are going to adopt a balanced approach weighing the benefits of regulation -- to recognize the fragility of the global economic recovery phasing in reforms over time so we limit the risk to economic growth. mr. chairman and closing i want to thank the other members of the council and their staff for the work they've done over the past year in building the

institution for the closer collaboration and in creating a very substantive, very strong first report to provide this overview of the potential challenges in the system. thank you. >> thank you for your testimony. as we begin the questions, i will ask the clerk to place five minutes on the block for each member. psychiatry geithner, what are the risks to the u.s. economy if the financial turmoil in the e.u. testifies are their policies that we ought to take to limit any negative impact on the u.s.? >> well, as we is already seen the big effect on the united states economy the big effects on confidence and on financial markets and we are living with the pressures today and they have hurt the growth here and

reduced expectations about future growth the three most important things we can do or the following. the first of course is to help europe get on top of this. we can't want it more than they do we can't compel them to act. but we don't want to see europe with a retractable financial crisis and they've invited the imf in and they are taking advantage by the federal reserve and we have a strong state to address this. the second thing we can do is act to make our economy stronger at home. as i said in my testimony, we have given the congress what we think is a very strong and powerful set of tax incentive investments proposals that have always enjoyed broad bipartisan support and this protection is always against the united states to act to do things to make this economy stronger, and finally of

course the supervisors are watching very closely the linkages between our institutions and markets in europe and as i said in my testimony we've seen a substantial reduction in the direct exposure in our institutions toward substantial questions in the capitol and the risks senate to get in and force it to keep monitoring closely but those are the things i would focus on. as the mexican three geithner, the continue to work on rules on a non-bank financial institutions systemically important financial institutions can you provide an update on this process? >> the council meets next week, and it will consider at that point a new piece of guidance that we would like that if a lot adopted would lay the framework for making these judgments but let me just explain what we are

trying to do. we had a financial crisis that was caused in significant part by the fact that this country allowed a huge amount of risk to build up the outside of banking system without constraints on leverage without the basic kind of protections of all financial systems require. and it was very damaging to us because when the crisis hit, markets just suck all the oxygen out of that parallel shadow financial system and came crashing down and put enormous pressure on the rest of the system and it is one of the huge excelencia and lawyers of the crisis. as a, one of the most important things the the legislation did was to give us authority we did not have to make sure that we can apply a provincial framework of safeguards on capitol liquidity leverage institutions oppose that kind of risk to the system. senator shelby is right that it's very hard to judge these systemic in a crisis, but we have a basic obligation to make

sure that institutions that operate like banks provide the same function as banks to the economy are large and leverage and vulnerable to liquidity pressures and the basic utilities markets require are subject to very strong provincial safeguards and the free market the council was going to consider on tuesday is designed to give the markets more guidance, more clarity. what types of institutions, what types of structures we would want to consider making sure that they are subject to these kind of provincial safeguards. >> in addition to the international body is working on globally systemically important financial institutions have is fsoc working with the global entities to ensure the decision guidelines both domestically and globally are coordinated and do

not the u.s. insurance companies at a disadvantage? >> very important point and thank you for raising it. there are two things need to do to make sure there's a level playing field. one is to make sure we have uniform standards for required capital ratios and liquidity requirements that are applied at the global level, agreed that the global level and enforced a a global level. that is not enough though. we have to make sure they are designed in a way that they are going to be applied in a way that is as uniform and we are very concerned that we make sure that we build an additional protection into the system so that the playing field with actual leedy level. i will just give you an example. who there is a lot of evidence that the major apply the risk to the critical determining how much capital with varying

degrees of rigor say you want to make sure we proceed and we have the time to get this right that these countries are not just committing to meet the letter of the requirement, but the actual enforcement of that requirement is as vigorous outside the united states as we expect it to be here. and these -- this proposal to make sure we have the largest institutions holding in the capitol is something we are going to phase in over time, quite a long period of time. so we have time to make sure that as we apply to the united states they will be applied as uniform as well as possible outside of the united states. >> senator shelby. >> mr. secretary, dodd-frank, is understand, established the council to, quote, identify rest to the financial stability of the united states. a knee your written testimony you states, and i quote, we cannot predict the precise threats that may face the financial system.

i understand that. but what types of threats can the council predict? i think it's a very important point. >> it might surprise you to find i agreed with a lot of what is it in your opening statement, and i agree very much endorsing your skepticism about the capacity of people who sit in my job or my counterpart in the council to look to the future and anticipate the tide of the source we face and so the basic strategy that underpins the design of the remark is not a strategy that depends on the wisdom and foresight of government officials. it's a strategy that relies on building a much stronger shock absorbers, safeguards in the system so that we are protected against a whole range of potential risks. capital is the most important of those. liquidity is another. so of course we want to do the

best we can to look at the emerging risks, but we are quite humble in our capacity as anyone would be looking at the history of the financial crisis and we want a system that recognizes the limits on the capacity to anticipate and preempt. senate and you also want to do no harm. >> there is a risk. i think that if you look at the u.s. economy today, i would say the biggest risk we face is institutions not taking enough risk, seeking to buttress that the moment that is the natural aftermath of the crises when people are so scarred by the trauma but i agree you to make sure people are willing to take risk. you don't want to lose the capacity. >> mr. secretary, chairman johnson got into this some but i will ask again what are the top two or three potential emerging threats as you see it to the financial stability of the united states?

>> the list i would say is you have to start with a european crisis and slower growth globally matters because with growth now and the united states somewhere in the 2% range it's just not strong enough and we are more vulnerable to threats, to other things happening. i would focus overwhelmingly on those two things but you are absolutely right that if the united states does not put in place if remark to reduce the long-term deficits over time that in the future -- it will not happen soon but that in the future could reduce growth and hurt the financial strength of the united states. >> so basically the failure to stabilize the federal government debt if we don't get on the right trajectory in the next few years would represent a threat to the financial stability?

>> it could. i don't think congress would do this. islamic if we didn't do our job. >> if you didn't do our job than -- >> them like we are doing all the huge deficits, piling up debt after debt. >> i would be optimistic in the sense what congress did in august also a bit messy was a pretty good a down payment on the fiscal reform and the only -- the only did about a quarter of the problem. and as we had about three-quarters of the problem left to define and that is why the super committee is so important. >> if i could for a minute just to get into the derivatives area. one of the unfortunate side effects i believe of dodd-frank is to mandate that market participants could possibly stop doing their own credit analysis because clearing houses will take on all of the credit risk. instead of hundreds of analysts that we have today trying to analyze the credit risk, only a few clearinghouses of understand, with the monitoring

the credit risks. does this create any systemic risk or could it by concentrating so much credit risk and so few clearinghouses and are clearinghouses too big to fail? we would hope they would never fail and what the administration bailout clearing houses? we talked about this before but this is -- could be an important part. we hope we never got on this road. >> clearinghouses don't salt -- don't eliminate all risk and you are right the to centralize and concentrate risk for to be cleared but they provide a lot of offset and benefits and we think on balance the system would be more stable if you see the standards products moving to exchanges. we've had the experience with a market that was primarily bilateral and was a very messy and damaging experience because in the world where it is all bilateral all the risk is off

clearinghouse -- we felt and use all this firms did not know what their exposure is coming and the virtue of moving the stand forest clearing houses is it is to understand what your exposure is and how protected you are against that so we think on balance if you get the safeguards right the system is more stable with clearing. >> mr. secretary, my time is limited here. as the council felt about or discussed whether operations or other monetary policy actions could create systemic risk? >> that is an excellent question, and we do not, have not in the council talked about the implications of monetary policy judgments and partly just had a difference to protect the independence of the fed. but, data to servile but more carefully as you saw in the report, the council members did

make the sensible observation but one thing we want to make sure banks to is not just be careful managing their credit risk their interest rate over time, and we are in and extradite her with great where they are today, and it's very important that over time now the biggest risk we face right now but that they are careful to look at those risks, too. >> thank you. >> thank you very much mr. solti and mr. psychiatry. let me follow-up on one of the fossil insights that senator shall be raised in his opening statement and reiterated and that is part of the fsoc mission is to understand systemic risk to try to anticipate growing risks. what seems to me from my recollection that the operation most capable of doing it is the office of financial research. if you have a political

analytical organization that thinking carefully along with their colleagues and financial sectors you have a much better chance of doing this. i would urge you to try to get a nominee appear to do that soon. >> we've talked about this and i'm glad that you remind us of the importance of this office. you cannot effectively oversee a financial system without much better information than we had access to be for the crisis about where the risk is and where it shapes and one of the key roles of this office is to make sure there's better data available not just to the supervisors but the markets as a whole, so the market can make better judgments about where the risk is and of course that would happen until we have a confirmed director, but we expect to get the nomination to the senate relatively soon and we are of course not waiting. we are starting to build the

institution of people and we have seen extraordinary amounts of academic interest and support for this project so i'm really quite confident we are going to be given to taken advantage of a lot of the best talent in the country to build this. .. we are really sincere about the need to get good knowledge and good information and we will do it quickly and we will get it done. let me change directions just a bit and again it is another

comment that senator shelby made that one of those challenging aspects today is to try to regulate the derivatives marketplace. the declaring he talked about, definitions of swaps, exemptions in particular when you get into the area of synthetic derivatives. i'm still trying to get my hands around old-fashioned derivatives and there there is a whole nother world of synthetic and x. pine synthetic derivatives. if we cannot effectively sort of deploy these regulations in a timely way it seems to me the only stopgap for the uncertainty is increase capital levels and those that deal extensively with derivatives. is that the fsoc view too? certainly for your agencies have the ability to do that. >> that is right, but you know, we are very confident that we are going to be able to put in

place a regime for example that mandates marginal requirements in derivatives and that combined with the stronger capital offers and the move to central clearing with stronger safeguards in the clearinghouses, that mix of factors will leave us with a much more stable system then we had, not immune to any crisis that much more stable than we had. and we are trying to get that balance right. this is a terribly complicated task and we are slower than we had hoped to be that we are slower because we are trying to err on the side of getting it right and not to rush it. we want to make sure that we not just get the substance right that we have the sec, the cftc and the fed a line so we have a better chance of getting london, frankfurt, paris, zürich, singapore, hong kong aligns too. we can put ourselves in a

situation where stuff just moved to markets where it is more risk so we are slower than we hoped because we are trying to make sure we landed sensibly on a more level playing field. >> i concur. i think you have to be careful and delivery. this is very complicated but i think if it is, if you reach a point where you cannot pull together all of these very difficult aspects in an abundance of caution i think the only remedy is capital. >> use of capital and that is the way the system works. without margin, and collateral, you don't tell this much capital against it so it works that way and we have the basic safeguard built-in. >> one of the issues you raised in your testimony is your concern about your reliance on short-term funding by major financial institutions and with their money money market funds etc. particularly in the wake of the european crisis, which many

of their institutions depend as you point out, more so on short-term money and we learned a very painful lesson in 2008 and 2009. what is fsoc doing in terms of trying to deal with this issue and this might in the category as my colleague suggested, what is you know the biggest news approaching us? >> well, the very important issue. the fed and the principle supervisors have been very effective in getting banks to fund themselves much more conservatively so the reliance on short-term funding in the united states united states has fallen very dramatically and in the repo markets in the money market funds, there has been substantial shift towards a more conservative regime in that context, and what the fsoc has done is to ask the agencies to lay out a comprehensive plan for improving the basic resiliency of those markets and we get

regular updates on progress against that plan comment because these things matter to the system as a whole we are trying to make sure, and the fed and the sec is doing a great job. they're the ones in charge of this and they are being very good about making sure they're sharing their judgments with us in advance so we try to make sure we are looking at the overall interest of the system not just the particular parts of the system. >> mr. chairman i miss the rare circumstance where i am ready to yield, but my colleagues are all voting, so i don't need much more to keep asking questions so bear with me. the housing market is inextricably and inevitably linked to our progress as a nation economically. it is underperforming. frankly, my impression was that there was a sense a year or so ago that we would be turning the corner, but i think you know

there is another corner and until from my view, until we save the housing crisis and deal with the or closer issues we are not going to have the foundation. i mean that certainly was the perception on main street when you see your neighbor's heart -- house the grass hasn't been cut in two months and you know they have been foreclosed, that is a daily reminder that things are terrible. so, fsoc -- this is a systemic issue. you have got to provide the leadership and i can ask you, what are you doing both in terms of the programs that are in place now but the next steps because we haven't done enough. >> senator i agree with you that things are still terrible and this is going to take -- it is going to take years still and what you see now is two things. you see the router weakness in

the economy unemployment above 9%, ingram -- income growth lowers putting additional pressure on the housing slowing the pace making people more vulnerable to losing their homes but apart from that we still have this foreclosure process essentially broke in, servicing framework that is not doing a good enough job helping people stay in their home or transition to other forms of housing and we are doing as much as we can with the authority we have to help people caught up in this crisis still and you are right to say it is still terrible. i think the most important things we can do now apart from doing what we can to make the economy stronger is to help more people refinance and even people underwater, to help transition more of the anti-vacant properties that exist across the country and to rental housing meg in financing more available to those which we are working on too that we need to continue to make sure that as many people as we can have a chance to stay in

their home if they can afford to and we need to see banks and servicers and everybody do a much better job more aggressive job of reaching out to them and trying to make that possible. as you know i can't comment on the details of this but there is a very calm the gated effort to try to bring to birth a global settlement of the legal problems in the foreclosure process, and if that is done well, but sensibly that can make a big difference too. >> just speeches to comment secretary, your efforts by your colleagues have been intensive and extensive, but we don't have. >> but disappointing. >> and we don't have years and if the tools that you have in the toolbox you know will help us a bit to get this problem fixed in two or three years we have to get new tools and think beyond the traditional and we have got to do this.

i will rest my case there. since there are no colleagues on the republican side i'm going to ask senator bennett to chair the hearing and the questions and direct -- >> senator can i mention one thing? you are right to say if we need more authority we should have sported one of the pieces of the american jobs act as a proposal to provide substantial more resources into neighborhoods most affected by the foreclosure crisis. that is expensive but we can afford it and it is a good use of scarce resources. >> i concur. >> i must have been here longer than i thought mr. secretary. 30 years is what it takes to get into this chair. [laughter] >> congratulations. >> thank you very much. i am not leaving. lets you and i solve all the worlds problems. i apologize because i was voting and i may have missed the

discussion but on the economy, just stepping back for a second, the last estimates that i saw were that there were something like $2.3 trillion in cash sitting on the balance sheets of companies in the united states that is not being invested in the economy and not producing jobs and economy. i wonder if you could give us your thoughts on why that is? it seems to me that until that capital is deployed we are going to have a very hard time bringing this unemployment rate down and creating jobs. >> you are right that corporate balance sheets are very strong and people are sitting on a lot of cash deal, but i think the best measure, the best measure of how corporations feel about the outlook is to look at what they are spending, and in their early stages of this recovery if you look at what corporations and businesses across the country are doing in terms of software equipment and software they are spending at a rate roughly triple the growth of the

economy as a whole, so even though they have a lot of cash, they are investing in things that will make us stronger in the future. what businesses say is -- >> just on that point, lot of that investment you are talking about is investments in i.t. and other things that are actually making people more productive. the companies are more productive. it may not be creating jobs because as they become more productive they figure out how to do what they are doing with fewer people and we still have to figure out what we are going to do. >> that's true although just to temper the darkness a bit, it is a very tough economy still but if you look at private-sector job growth and jobs recovery, it is faster than the last two recovery so again, if you look at how corporations are behaving, there are basely cautious because growth is slower and they are more worried about risk out there but they are investing and you see in the

private investment numbers and the export numbers other signs of underlying resilience and strength here which are important and we want to foster those things. i do think that it would need good for congress to put in place some permanent reforms to the tax system that would give corporations more certainty, better incentives for investing in the united states and we are hoping that the supercommittee can start to lay the foundations for corporate tax reform that would make a more compelling economically for corporations to put that money in the united states and for foreign companies to invest more here at home too because ultimately if we are going to -- we are going to be stronger as a country if we meet more of a huge demand outside of the united states. >> let's talk about that for a second. when i was home last week "the new york times" had a front-page story that said, one afternoon, that the house was going to pass a four-day extension to the

continuing resolution and we would come back and pass what the times called a the more ambitious seven-week extension of the continuing resolution. i thought i was raising -- reading the onion, not "the new york times." you mentioned in your testimony at the outset they damage that had been done by the debate this summer over the debt ceiling. you can't prove it but my sense talking to people is that it was a real confidence destroyer. and i am wondering if that context, and just by the way at the moment when we needed that the least, that is what we managed to deliver and i wonder if you could talk a little bit in that context about the importance of what the supercommittee is doing and more broadly how important it is to get to a more comprehensive approach to deal with this fiscal problem than the charge we gave the committee which is an objective that both the senator from tennessee and i care a lot about. >> well, i agree with everything

you said. the u.s. economy in general and most times is much stronger than washington and it can withstand prolonged periods in washington doing nothing. we are not one of those moments now because the things that are burdening the economy and making growth weaker are things that only congress can solve and the basic sense that you see across the country that the political institutions of this country are not up to the challenges we face and unable to solve problems is absolutely weighing on confidence. there is really no doubt about it, and they think to help that you have to show you can do some things. passing these trade agreements would be good. passing some tax incentives, and vestments to help strengthen growth would be good but as you said, sort of lay out a longer-term framework for fiscal sustainability with entitlement reform and tax reform would be very good for confidence. if you know as long as it a designed sensibly and phased out over time that would be good for

confidence at a time when the world is watching us and you know the world needs the u.s. to be stronger and we can't be stronger without the political system in washington. on the economy that is the congress demonstrating they can solve some problems. >> thank you mr. secretary. mr. chairman i will turn it back over to you. >> senator corker. >> thank you mr. chairman and mr. secretary thank you for being here. i may -- i know you made a comment about consumer protection and i agree with you that those things outside the normal financial system you know will not be regulated in the way that the bill attempts to regulate them without somebody being put into this position. i know that you on the other hand have come from a world where the new york fed and other places where you really focused on checks and balances and those kinds of things, and i would just say to you and with good spirit that i think with a

treasury secretary weighing in and just causing there to be some appropriate checks and balances put in place in his position, you don't even have to make a comment on it, think things would sail through and we have reached out to the penetration and other places and i actually think there is a lot of sympathy towards that. it has become a political issue and i understand that by the way but i would just say that there is an easy way of resolving this that would institutionalize the department instead of making it a personality phase and i think there are a lot of folks even on your side of the aisle that wouldn't think that would be such a bad idea but let me move on to the fsoc. >> me say quickly -- go. >> i really didn't want you to. >> we did propose initially in the bill a different set of checks and balances than what congress adopted and it is very quickly -- importantly of checks and balances but i know that you disagree but i believe that the bill has very strong protections in place, good checks and balances, checks and balances that don't exist for other parts

of the system and that is why i think we have a good framer. >> checks and balances i think we have talked about in no way dissipate the ability of this organization to function in a sound manner. you and i spent a lot of time last march on this and i appreciated. maybe two marches ago, can't remember, but the fsoc, just give me a sense of this is your first annual meeting and i know congress has all kinds of formal annual things that in many cases mean nothing. is this organization actually functioning in a way where there is a real discussion, not just at the staff level but among folks like you and bernanke and others about real systemic risk-taking place in a real fluid manner? >> i think it does. i think the other test of this council though, that is one important test. one of the test of the counselors does it help engender closer cooperation and

integration into the design of the rules so we don't have this hugely congregated network of different rules over what are essentially the same type of activity because that is a more -- enormously burdensome to the economy and complicates life for everybody makes it harder to manage risks of one of the things we are trying to do is not just make sure there is much more integration thinking about future risk but that the row writing process is done in a way that leads to better outcomes across the system. >> you know there is a line of discussion about the jobs bills right now and they think much of it from my perspective is sort of a distasteful political exercise. to me, you know, as you look at and you talk with most employers, the thing they are concerned most about is the structural long-term and would you not agree that you know maybe there are some things that could be done short-term. i don't want to take away from your side of the island anyway, but isn't the best thing we could possibly do here for our

country and the world economy is to go ahead and tackle some of the long-term structural issues that we have like tax reform and like entitlement reform, like going ahead and putting in place a long-term highway bill? those kinds of things that would give confidence to the economy that we here in washington have the ability to actually take on the bigger issues? >> i agree with you, you should do that but it is not enough. get to point out the thing in the long run we are all -- if congress does not act on these tax provisions are on the investments in infrastructure things than what happens in the american economy, what happens is that every american who has a job will see their taxes go up by $1000 on average next year. that is without action on the jobs act. without action, business will see taxes go up, so as many on your side argued last december when we were facing the expiration of the bush tax cuts,

there were things we have to do in the short-term to make sure the economy is is not weakened by the inaction of congress. and you are right that is not enough and we should be doing the long-term things too but you can just to the long-term things if you want to make sure the economy comes out of this more strongly. >> we actually tried to vote on the president's jobs bill yesterday and we were tonight that ability. >> you will have another chance. >> thank you. let me ask you, some of the proposals around housing -- there've been lots of things and i know that is one of the areas the fsoc addressed recently, there has been discussions about a massive refiled free file where instead of having appraisals and all of that take lace people that are actually current in paying their mortgages, not those that are delinquent, would be able to go ahead and refinance from 6.5 to four and i wonder if mr. chairman and would like to ask one more question of that is okay. >> right now as you know, she

said mortgage rates are very low, as low as 4% and lower in some cases but you are not saying as much refinancing taking advantage of that as you might for a whole range of reasons. and the director of the fhfa, ed demarco, is examining a set of proposals that would make it much easier for people to refinance and take advantage of lower rates including people who at the moment have loans that are worth less than their outstanding mortgage obligations. we are very supportive of those reforms. we think that would make a big difference. they are like a tax cut, like a larger tax cut on average than the tax cuts before congress, but, we need to see them move to make it easier for it to happen and they seem to me moving in that direction and we are hopeful we are going to see layouts in -- he will be able to lay out some clarity to the broader markets to homeowners in the next few weeks. >> we had a major, one of the

major hedge funds in our office last night, and we were seeking guidance on how to work through the gses and you know there are all kinds of models out there and i think all of us you know agree with your opening comment that we need to move away from as much government involvement and maybe to almost none, but we certainly need to do it in a way that doesn't float our economy and we need to be thoughtful about it. but in the conversation we began talking about the european crisis, and he asked me this question. he said, what would happen if that contagion spreads here and it affects numbers of banks? would you all use the resolution mechanism? and i said, no. the resolution mechanism is basically for one situation, not for systemic issues. i want to talk to you more private about this whole issue and our office is working on an

enhanced bankruptcy code which i think you actually support. i'm not sure about that. but are we worried right now that we are getting to a point and i know you have to keep a stiff upper lip on those issues but on the european crisis that is unfolding and just our exposure to it, 17 different countries, very difficult for them to act in unison, are we beginning to think about should that contagion come here, how we might respond since the mechanisms we have in place are not adequate? >> of course, but the best thing we can do is to get the europeans to move and to do things to make growth stronger here. those are the best protections we can have the dodd-frank did leave in place very substantial and important protections of that you know of course we hope never to use again but they exist for a purpose.

>> thank you mr. chairman -- mr. secretary. >> senator kirk. >> thank you secretary. i think the committee has a hearing on iran next week, is that right mr. chairman? in fact my colleague david cone is going to testify. >> you got a letter from 92 senators saying collapse of central begged of iran anyone's back a sickly saying call you back. >> i think stay tuned. >> yeah, stay tuned, correct. that is music to my ears so i just want to lay down the marker for next week if you could work with david. i want to focus on the subject du jour today which is the euro contagion and according to the crs our exposure -- 1.5 billion in direct loans to the government, 7.3 billion in direct loans to the economy 34,000,000,002 other exposure so about $42 billion in exposure by u.s. banks.

to greece. the crs memo highlights italy about $36 billion in direct loans from the u.s. banks, $230 billion in direct or in other exposure, about $256 billion total to an italian problem for u.s. banks. crs added that the exposure in greece, ireland, italy portugal and spain with other exposures as a 641 billion-dollar problem and yesterday we saw this with problems at morgan stanley. can you talk about the morgan stanley problem and whether we are seeing a potential lehman brothers situation with regard to a major u.s. financial institutions and euro contagion? >> absolutely not but i would say the following. as i said in my testimony to direct exposure of the u.s. financial system to the countries under the most pressure in europe is very modest. europe as a whole though is a big deal, and our firms and this

is true across the largest institutions in the united states, again, are in a much longer position. if you look at their capital levels, levels of leverage, how they are funded, much stronger position to withstand the pressures we are seeing there, but of course you know we want europe to move and we want to make sure that they moved more move more aggressively to address this. europe is big enough to matter, but i would just caution you, those numbers -- you know it is very hard to look at the direct exposure you can see and capture how these things unfold, but the overall picture is very limited direct exposure, a lot more capital in the system, and much financial in the united states. we are very fortunate because we move so aggressively in the beginning and that is going to serve as well.

>> i would just note here that bis laid its data, your point is exactly well taken. shows it shows our direct exposure for example significantly less than u.k., germany and france but if you add our direct other exposure, we are actually far more exposed than the u.k. and as exposed as germany. >> no, don't think that is right because that doesn't capture the full balance. the simple way to say it is europe is -- and now the countries under the most pressure and when europe is weaker growth will be weaker and it will matter for us but it is very important to recognize this. this is a complicated crisis for them. there is no doubt and it is politically difficult, but this is not, the cost of resolving this are not large relative to the resources of europe. and they have committed at the highest levels of europe, to hold this system together to make sure they protect their

broader banking system and make sure they can support the governments under the most pressure as they are doing now and they recognize they can do more to make that credible. and, and we have an interest in doing that. >> we do. i want to turn to one other thing which is i read the report, the fsoc report where this hearing is concerning and while they didn't identify upfront state and municipal debt as a systemic risk, they did have at least they had a section about it and the enabling environment that i represent the state of illinois that is now in the throes of a classic debt spiral where the governor increase taxes by 66% on individuals and 46% on corporations. >> from a low level is my recollection. >> unfortunately now he is hired midwest competitors, and so we now see that for example, unpaid tolls in the state of illinois have grown tenfold in 10 years now totaling over eight lien

dollars with a steadily deteriorating credit rating, and increasing margin that the state has to pay. i am worried that systemically the fsoc is not, maybe it is too politically correct and we have a democratic administration so we can't talk about state debt. you know we want to grow the size of the government so if we talk about state governments that have overgrown and are in debt spirals, and my worry is this. have you contemplated a state defaulting, because the state of illinois is now -- all the classic symptoms or there. >> senator let me say a few things about your question your right to say the states are under enormous pressure across the country and although some of those pressures are easing as growth recovery continues, it is going to take years for them to

get themselves into a better position. the people at fsoc are sensible people and they look at everything and they know that debt matters and they look at all the basic fiscal challenges we face going forward. you said one thing that i just want to correct. the proposals the president has laid out for the role of government and the size of governing the economy would reduce the level of government spending relative to the economy very substantially of congress were to hold to those proposals over a ten-year period of time. that is true across government. the only exception to that is where, because americans are aging, more americans become eligible for health care and social security and those basic benefits which congress sets, not us, those grow with aging, with eligibility and with the rising cost of health care but if you look outside those basic and if it's congress sets under the president's plan even with the investments you want to make an education in education and infrastructure and other things

like that -- >> creditors don't look outside. creditors don't look outside. creditor simply asked the question do you need to borrow more money next year? >> and again if congress were to come i know we are not holding our breath but if you were to enact the president's proposals, our deficit would fall very dramatically over the next three to five years in our debt burden would start to fall. we agree with that. >> you switch to federal and i want to focus on state. i'm very worried as i think the fsoc should say that states pose a systemic risk to the system. i think that fsoc should then -- >> i don't think they do but we will look at them and pay attention to them as we always do and look at the implications senator as we always do. and we are not under waiting, under pushing any of the steps we face out there. >> we don't want political

correctness to say that we don't want to issue financial guidelines that would cause states to reduce their payroll. again if they are borrowing too much in representing and representing a systemic -- >> if you look at the members of this council and you look at them and you spend time with them, there is no risk of political correctness with these members, but i take your question and of course we'll be careful. >> thank you mr. chair. >> thank you very much mr. chair and welcome mr. secretary. i want to follow up on a question senator kirk was asking about europe and a little more of a point on derivatives themselves. we had members of the bond rating council or on trading companies that met with us a couple of weeks ago, and they said basically they had no idea

of who's writing and who was holding and what american exposure is, and that they weren't sure if any one of the firms did was for a group that specializes in understanding the exposure on bonds, took us right back to americans experience with the insurance group what they were riding in what was being held where. >> these were rating agencies you referred to? >> yes, rating agencies. >> as you have seen they don't have perfect foresight in these directions. >> in studying these issues -- go. >> i would offer the following judgment and you know we are all careful and cautious about things we cannot know what we want to be conservative about these things but i think the federal reserve and the primary supervisors overseeing our system has a pretty good feel of the overall exposure not just directly, but through derivatives and hedging but have

a pretty good sense about how good those hedges are. now, there is an inherent uncertainty on these things and of course it ultimately depends on how effective europe act in this context, but i think we are in a better position than they are. rating agencies, and they think that, and i think we -- they are reasonably encouraged by what they see. >> i think it would be helpful if we could get the fed to give us their vision of that transparent world out there so that we could share the same sense of confidence about not being as linked as we might fear to the european troubles. i wanted to turn to the housing system and i appreciate your support for national servicing standards, which i think are hugely needed, and as you were answering, as i came in here i believe, that you support the strategy the president mentioned

in his job speech of having a strong effort to reduce the interest rate on loans to put more money into folks pockets. but we haven't seen details of the president's plan, and it strikes me as strange a bit that on something so important in terms of the huge tsunami of foreclosures we are facing that we still don't have details as far as the speech and will we see those details soon and can we create a program that will affect enough americans to make a difference, not only in terms of those families but in terms of our national economy? >> i think we can make a big difference and you are going to see from the fhfa director i think in the next couple of weeks very detailed proposals. this is their authority and it is not within my power the president's power. they are an independent agency established by congress but they will read layouts proposals next week and i think they will make a difference. we have been very careful not

to, not to estimate the number of americans that can be reached by this because as you have seen, we dramatically overestimated at the beginning of this, all our housing programs all of the people that would be eligible so my sense based on what he is told us it is going to make him it is meaningful enough to make a difference. >> is there any sense to using seconds for the balance that is under water so we can create loans that would re-enter the marketplace? >> that is one of the issues that they are looking at trying to fix because that is one of the things that stands in the way of allowing more people to take advantage of low rates but i can't tell you today. i don't know yet. to what extent they feel they have a fix for that. >> it is one way up rather than one possibility is certainly taking, refinance the whole thing and that is easier and simpler. >> yeah, but looking at the whole range of things you will

see more details and a couple of weeks. >> i look or two that and finally in terms of rules related to implementing the volcker rule, certainly the goal is to say commercial banks are in the business of making loans to businesses and families and that is extremely important. we want to be hedge fund, but not mix the two to the detriment or the increase of systemic risk. there is some concern out there and in regards to whether the rules will have substantial loopholes. is this something that you are engaged in and can i sleep well knowing we will have a clear distinction? >> i think you can. and, i should say i think you are aware there has been a very substantial change across that industry, moving away from dedicated internal hedge funds, not to use the pejorative, in anticipation of the rule that you are going to city agencies i

think this week and next lay out detailed proposals. those will go out for comment. everybody will have a chance to look at where the balance is. they are going to ask questions. so we will have a chance at that point to make sure we get the balance right but i'm very confident this is going to meet the objectives of the legislation. >> i think that the plans on compensation for market-making trades is very helpful because it creates a huge distinction between one business and the other. thank you very much. >> thank you. >> there are a couple of other members who tell us they are coming back and in the meantime, the claim has been made that fsoc to set aside this cfpb rule is a pretty high threshold. would you please explain the appropriateness of the standard?

>> well, that is one of the checks and balances that exist in the line as i said that combined with the others make it a strong set of checks and balances. i know some numbers appear would like to alter them, but that specific provision allows the council to in effect block or overrule a judgment by the bureau if it isn't consistent with safety and soundness. i think that is the basic standard, and that is quite unique safeguard check and balance, strong check and balance but it is not the only one. as i discussed earlier, i think the balance is pretty strong. >> last year, the fcc adopted new rules to strengthen money market funds and last october the presidents working group recommended several possible reforms to reduce the potential systemic risk of money market funds.

do you win the fsoc members agreed that further reforms are needed to make money market funds more resilient and less susceptible to runs? what risks are we currently facing? >> the chairman of the sec agrees with that, that more reforms are necessary and i think the broad sense of the council and i share that, that she is right. she examining a range of ideas. some of those have a lot of opposition and concern. some of them more support. they are working through those, but my sense is that although we have more work to do, we have made quite a lot of progress. and we want to build on that progress and do so carefully and i think the chairwoman of the sec is supportive of the careful balance to look at further reforms to make funds more resilient.

>> in the afsoc and your report, you you note that the u.s. is making a global effort to develop minimum standards on swaps. could you provide an update on the progress of coordination for swap roles that reduce systemic risk and u.s. competitiveness? >> absolutely. we have three decades of experience with local capital standards. we are trying to make those better. no president, no previous attempt to make sure we have in place, and rules on margin around the world for derivatives so what we have proposed is a major international effort to establish those reformed day day special international task force that is led i the federal reserve i believe or led jointly by the federal reserve, that brings together central banks, bank supervisors together to try

to design a a counter framework that will match what we are doing in the united states. we are at the early stage of that process but my sense from talking to the european officials and u.k. officials that there is broad support for that and they sure are interested in making sure there is a level playing field in that area. >> senator shelby do you have additional questions? >> thank you mr. chairman. i do have a few. first of all mr. secretary i want to try to answer -- you made a pitch for the nominee former attorney general to be confirmed. 44 of us has sent a letter which you are very familiar with, to the president. if i could finish. we haven't heard one word about that, asking for some modifications to this. it is not the nominee are going think the nominee as far as i know is probably well-qualified,

a very honorable and very smart man, but we are waiting for that dollar and hope we hear from you but short of that, i think the nominees are not going anywhere. i want you to answer that. go ahead, sir. >> i understand your position and we received that message and you have been very clear about it and you had a pretty powerful show of strength. but i would ask you to reconsider because they think -- >> we would hope you would reconsider, you and the president, changing three modest things in the dodd-frank bill and if you do i'm sure we will have a good piece of legislation, at least a better piece, and we will go from there but short of that, i don't believe that we are moving that nomination. >> i am always optimistic but i do think the three things -- >> don't get optimistic on that. >> the three things you suggested senator in combination i think would be a significant weakening of the bureau. >> we don't think so. we think it would strengthen the

bureau. but we have a difference of opinion. i have a few questions. [inaudible] >> absolutely and that is why we plan on coming around. secretary geithner, the bank of england as well as some prominent academic economists have said that basel iii capital standards, they believe are insufficient to prevent another crisis. agree with them or do you have second thoughts? >> i do not. >> i thought the basel iii to strengthen the capital standards was positive. >> the framework we call basel iii is a dramatic increase in the basic conservativism of the capital regime in the united states and around the world come a substantial increase in capital relative to what was required before the crisis combined with the liquidity provision in place too creates

better protections. now just one quick qualification. we have proposed that the largest institutions hold, and this was required by the legislation, hold an additional buffer of capital and our judgment is the combination of those two things, as long as you face a man and you want to face them in carefully over time. >> but not too much time. not 25 years and now. >> you don't want to wait too long, but you don't want people building capital too much too quickly or having to sell access to quickly when the cover he is -- >> but they have to get on the right road. >> and they are in u.s. firms are very far along to meeting those standards. >> do you have confidence in the european banks? that the regulators will comply with basel iii as well as the letter? >> we are going to do everything we can to make sure we do -- make they do and as they said we have the time to try to make

sure we are confident that is going to happen because these rules only start to -- over the next several years so we are working hard to make sure we have better protections in place. >> mr. secretary do you know of any financial institution, you have been around a while -- that has been adequately, in other words and i won't say adequately, well capitalized and have liquidity? >> that is a very interesting question. i think that in a really systemic financial crisis, just to think back to the experience of this country in 2008 for example, certainly it was the case in the great depression and other examples, you can have a situation when even very well capitalized financial institutions are subject to acute pressure and in some sense that is the best way of thinking of your definition of what the systemic crisis. >> but if they have liquidity, doesn't that help? >> it does help, but you know

this is an interesting conversation, but you can't -- it is not sensible to try to force the system to hold capital reserves that would cover and a foreseeable risk or shock. >> well that makes no sense. >> exactly. and a systemic fun and surprises the strong will be affected by the crisis you see more broadly. but that is no comment on the present. we are, as they said classic measures in a strong relative position. >> this week, earlier this week, bank of america, i guess our largest bank in deposits, now supercharge a monthly fee to consumers. i guess for credit cards. when asked about the fee, the president stated as i understand

it, the banks to not have a right to get a certain amount. how much mr. secretary, how much profit should the government allow a bank to make and does the president's comments mean that this administration supports government mandated price controls on financial products? i mean, is that taken out of context what he said or is that just rhetoric? >> the president does not believe that we get to determine how profitable individual financial institutions are or companies across the country. that is not the system we believe in. >> the market should determine a lot of that shouldn't? >> it should have course do what we do believe as is you want to have consumer protection where consumers have the ability to understand what they are being charged for financial services and what they are being charged to borrow an part of what we are trying to do is encourage much more transparency and clarity so consumers are less vulnerable to being taken advantage of. >> so the consumer can make the decision and not a bureaucrat,

right? >> that's exactly right. now there things government officials have to do though. it is our responsibility to do, but the basic strategy we have adopted and the president has supported the cfpb is designed to establish puts overwhelming burden on better transparency and disclosure as a way to make sure consumers have the better chance to protect themselves. >> but you are basically saying this administration is not in anyway coming after any type of wage -- of any type? >> no, or yes. >> okay, thank you. mr. secretary, the council's annual report as we have been talking about all morning, efforts to coordinate dodd-frank implementation goes across a number of agencies as you well know. the cftc and the sec have consistently, a lot of people believe, fail to harmonize some of the substance and the timeframe with the dodd-frank

rules. what has the council been involved in this, are they making it a success here, and improving the coordination of the sec and the cftc? i think that is important. they are drinking out of the same cup so the state. >> congress did leave in place this complicated set of independent agencies with independent stature requirements. basic approaches approach has been to say that as you meet those requirements, we would like you to do so in a way that is as closely aligned as the law permits. where the law permits you to be aligned, you should be aligned because if you are not, all you are going to do is leave a complicated system with big distortions and opportunities for arbitrage gaps and that batters for us here but it also makes it harder for us to get the world to come to a more level playing field. if we are at different places is hard to get the world to come to a sense of a place.

>> thank you mr. chairman. >> thank you mr. chairman, thank you mr. secretary. i wanted to focus my questions on the housing finance agencies and market and the need to ring reform there, including a return of the private capital in the private market into that now very government dominated sector. my concern for a while including all through the dodd-frank discussion is that was put on the side with the promised that we will get to that, we will get to that next year. well it is now next year and i don't particularly see us getting to it. now i do know the fsoc report includes the statement that the member agencies need to strengthen the system quote which includes developing a framework for the return of private capital to the system,

quote. what does that mean exactly and what is the timetable for concrete action? >> i just want to start with one observation which is that the congress did enact a fundamental change to the basic framework of oversight of the gses in the home loan bank system and september of 08. ahead of dodd-frank. but you are right, but with that foundation which didn't solve all of our problems, dodd-frank did not go further and layout this fundamental challenge of fixing the system and that is still ahead of us. so what are we trying to do? we want to set up a framework where private capital, private investors, the private system plays the more dominant role in housing finance once again and that we gradually phased down the governments role to a more limited, more targeted more sensible role. for that to happen, we need to have a clear set of rules in

place across the securitization markets, clarity on the amount of capital if you are a private institution and we need to gradually wind down the exceptional measures come exceptional expansion of fannie and freddie and the fha's rule that happen in a crisis as private capital withdrew. as we lay out a set of options, proposals objectives last february, we are in the process of designing legislative proposals to present to congress. academic experts help us to do that. i don't know what is going to be possible in this environment in the next six months to get that process moving. and as we said, laying out to the congress a proposal for how to get us to a better place in your right to point out and i say this all the time that we are only at the early stages in

trying to put in place a better housing finance system. >> so that work will include a concrete legislative proposal? >> we haven't quite decided. we haven't decided yet but we are going to propose something to you so that you have something you can consider. >> and what is the timetable for all of that? >> haven't decided. as you know we are kind of busy but we have a team of people who have been working on this all summer and they are making a lot of progress, and we are getting closer. >> there were elements of dodd-frank which in my opinion bush that sector in the wrong direction, further protecting or a bandaging the gses. will that be directly addressed? the exemptions for the gses, certain standards and requirements of dodd-frank? >> i don't think those stand in

the way of us proposing substantial reforms, but we will look at them. >> and the risk provision, the exemption? >> again, when i referred generally to the set of rules on securitization that is what i was referring to and those were trying to, starting to define. there've been a lot of comments and we are taking a look at those rules but we needed those said in a sensible place and then we need to change the basic economics of the gses and to those things together in overtime that will pull private capital back in. >> there has been some suggestion and i've read there is a specific working group on this topic. is that specifically defined and who is a part of that? >> i don't open call it a specific working group but we have a team of talented people, the treasury and the fed, sorry, treasury and hud. we consult with the fed and work closely with the fhfa a., the overseer freddie and fannie and there's a team of talented people in the white house who

are involved in those discussions. >> and is that formal or informal team includes folks from outside the administration? >> that team doesn't because it is just people, well include some of the independent agencies like fhfa in the fed. >> they don't need is a team eyes like that but we have been very active and looking to academic experts, people in the real estate market, the housing community, the banking system, the financial system to make sure we are taking advantage of all the other ideas out there. >> okay, thank you mr. chairman. >> thank you again secretary geithner for being here today. the financial stability of oversight council is important to the overall stability of this country's financial economy. your work and the work of all the members of the council is greatly appreciated. thanks again to my colleagues and their panelist for being here today.

this hearing is adjourned. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

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