>> could the state in the federal litigation have waived the procedural default? >> your honor, i think the law is not exactly clear on that, but i know of no law that would say that the alabama attorney general has to press every single month jurisdiction that is at his or her disposal. he did not do so here and had good reason not to. that is in part because goldman says that this is out procedural default work. there are good reasons, grounded in the same equitable principles >> you agree with me earlier that abandonment is an exception to the adequate and independent state crowns. under your view of the case it was not necessarily controlling. >> your honor, if i suggest that the abandonment itself is an exception to the ai msg doctrine, let me correct my earlier answer.

my abandonment and sometimes allowing a court to determine a particular lawyer has become external the remaining members of the defense team here there is some argument that the not abandon their clients even if there were some argument upon the front is now clear that the actions. >> lawyers stop representing a client isn't there some

obligation to tell the client and the court that no longer representing you? these two people representing them never told the court and then never told maple. >> i think there is, but i don't think that means what happens here constitutes cause. if the record is clear mr. mason himself has alleged that they and arrange for this case to be handled, and the record makes clear that he was involved in this case in representing maples, even before the default occurred before -- well, even if

before they left. >> is it -- still unclear on one factual thing. did the state's attorneys know that the letters had come back? should they have known? >> your honor, the record is not clear on that point. i can represent to the courts of the state's attorney did not know of the letters that come back. >> do they check the pocket every so often to see what's happened? that is one problem with the position that mr. maples has taken regarding mr. but live here and the ability of these parties to obtain the permission from the court. in this case it is my understanding, not on the record, but it is on the record of visa before this court now that it is my understanding of the state had no idea that mr. maples attorneys -- his two

attorneys in new york have left the firm. >> the market this and the notice for federal habeas? it did not send it to the council. what made them send the -- send that notice directly to maples and not tither of sullivan and cromwell lawyers? >> information is none of the record. in light of the fact the state court proceedings were over the most critical thing for him to do something terminal their relationship?

>> said of the bats an accurate characterization. >> you would have to impede his knowledge to the clerk of court. find this falls on the part of the state. did he tell the clerk of court that he was only going to send it to maples? >> as far as i know, no. but the notion came back from the clerk long before the state's attorney sent a letter. but that is an important point. at the buttresses -- both with respect to the cliquish you and the abandonment issue. the relevant question is not what the assistant attorney of alabama thought happened. the relevant issues with the clerk knew, and that, of course, is governed by rollover seven of the rules governing. the relevant question is, had

maple's been abandoned? have these attorneys left him completely without counsel? the record definitively establishes that had not happened but because mr. bulla remained council in a much more meaningful way than my friend suggests. >> council, could you tell me -- i'm assuming you have practiced and your staff for a while. >> yes, your honor. >> how frequent is it in the alabama capital system the local council take the lead bring or even an active participation and the defense or actions of a capitol defendant? the emmy's i hear sisterly they did but mr. butler did commit this the admission of the volunteer attorneys. is that your experience? >> your honor, of course that

affirmation is not in the record we respectfully disagree as a factual matter with the factual assertions made by the med on that front. >> you have to send it back. i guess it would have to sit with the religious. what about a rule that says we are, in fact, attorneys to abandon the client and local attorney does, as a matter of practice in the stayed virtually do nothing except facilitate foreign representation and with the state had cause to believe, cause to believe that all that was true. then the state cannot assert this. that's all. >> york, revenge would not be appropriate on those grounds for a number of reasons. rule number seven of the rules governing admission of the i wrote to the alabama barmaid it emphatically to the the role of local council was not simply --

>> irrespective of what the rules were you would have to show that, in fact, and the stated is a practice suggests that the local council does not too much of anything except facilitate. a state of mind. in the state knows that. if he shows both of those things answers that the letter came back and shows this was abandonment or close their to then the state ought to know this individual has no idea and thinks somebody else doing it. that is enough to say this is not adequate state grants to promote black federal habeas. your argument against that is what? >> at least twofold. a simple matter. those factual assertions were not made below, so in order for the court to remand in that particular issue it would not be a revenge for evidenciary hearing.

>> there are certainly a lot of grief that seem to say that. >> cilia lot that says that tomorrow will problem mr. maples faces your is that he has the burden to make the requisite sexual allegations. >> are we correct that under the alabama rules when an attorney is represented by more than one attorney the notices of have to get all of them? >> as correct. >> it can only go to one. >> yes. >> so as far as local counsel new he was the only one to receive notice of this, right? >> that's correct. >> is it correct, or does the notice lists the people who have been served? the people listed on the notice that what the butler. >> yes, your honor. >> then he knew he was not the only one giving notice. he was available was supposed to get noticed. >> the line in this case cannot establish cause for any number

of reasons. the first is that they kelli be helped to establish causes it would have been reasonable for mr. bulla to assume that the line communicated to miss is that it was perfectly okay for him to do nothing into not take further action based on what is in that line. there are at least three reasons why that would not be reasonable reading of the line. first is that it does not communicate that there were the people listed. there will, and back to receive the order. all this says is that the order be sent. the second is that even if it would have been reasonable for mr. butler to assume that they would receive the order in this case, it would not have been reasonable for him to have done nothing given that will seven of the alabama rules made him jointly and separately responsible to the client and to the court in this case. >> against the problem is except

the rule, is the lawyer says that don't care enough going to do. if a lawyer comes in and says i understand this as a rule the court, do x, y, z, i don't care. it's the difference ridge when i don't care and abandonment. >> your honor, to make a couple of points in response to that. first, i understand the question posed, that is all about the abandonment, but whether the. >> actions can be blamed -- for the fault be blamed. >> we're not talking about a notice is you but the abandonment question. >> if there really is true the public has decided he was going to do nothing in this day and that the attorney then there

might be a viable argument that bolar had abandoned the client in some way. that is not a reasonable reading of the record in this case. >> if we afford these lawyers to abandon their client, will there be some sanctions imposed upon them by the bar? how often wonder. just as we find there's been inadequate assistance of counsel and a capital case, does anything happen to the council who have been inadequate in a capital case? >> i suppose it would depend on exactly what the allegations are >> have you ever heard of the think? >> i have not. [laughter] >> a breaches the rules are responsible or action, those against the alabama attorney and the new york. >> you said a few moments ago

the public did more than your friend suggested. >> of course we discussed in the brief the us cable fact the bulk of the rest things. >> act as a default, sure. >> his affidavit, filed in the state court proceedings, certainly does is a i was in this only to swear these people and our move for their admission and nothing else. >> when did he do more than that? >> on page 558 the petition is pending and he agreed to serve as local counsel. local council has a specified meeting under alabama law. >> you made a fairly serious suggestion that your friend did not adequately represent, and you still have not told me one thing he did more than move the admission from the out of town attorney. >> let me withdraw any suggestion that i am saying that

the other hand, in paris, done something that is clear on the record and my time is up. may have finished? >> sure. >> that he did not simply agree to move these people. he said he would be local council. >> they keep. >> we agree this is the case. the facts are extraordinary and shocking. our position that the extraordinary fax, established cause to excuse the default. respects' local council apart from the fact that the state to make it directly after the fall, maybe the other talent, 2006 alabama itself muted the local

requirements for program proceedings recognizing david could only create problems. with respect to abandonment and listed at times my counsel and friend enologist that it may establish an extendable event with respect to the client. of that so i think it's clear we are entitled to a remanding the statements of what is clear to the record in that a minimum the record is not clear on a number of things that the score would have to it into if it were going to consider adopting the state's position and mr. maples was not abandoned. in a prison cell. his attorneys of record did not tell them that they had left the firm. >> we don't have to adopt the state's position that he was not abandoned. we have to adopt your position that he was abandoned. >> we have a record of the attorneys pleading notify mr. maples, not notifying the court, and not waiting for the court's approval required by rolf 62 of the alabama rule of criminal procedure. ..

the external we are just asking the court to apply the same principles and recognize what is external 11 context cannot be not external. >> do you know how often an injury has been granted since

the experience in recent but how it has been granted by the courts? immigrant answer to that. i'm not aware of any flaws in the relief of such cases. i expect this would be extreme to read the affect your rl as extreme as -- >> how do we extended it to distinguish between abandonment and a botched transfer of responsibility and the law firm? >> we have counsel of record leaving without requiring telling the court. i think that is the abandonment pure and simple. beyond that the agency principles whether it is a breach of loyalty this is going to be a fact. you go into the fact of the we think it is a very high bar. the decision makes clear it is a high bar i think that this case passes the bar but it's something the courts will work out applying the agency's principals and the court decision recognizing that in this case it isn't going to create any new it is simply

going to extend logically the recognitions that the attorney abandonment is external to the client as it always has been under the age of the principles with respect to the constitutional violation of a state park is off for cause the court finds the state actions are external, and i think that the key where the justice recognized is you look to a person but is providing notice in this attrition the clerk and got the notice is back and left home it opened up the capitol case and did nothing no one decided to provide notice of the inmate to do nothing reasonable in message region for mr. maples isn't asking to be released from prison he is asking for an opportunity to present serious constitutional claims and ineffective of the systems counsel to the federal habeas court on the merits. the claims are as the state suggest that clearly will have a burden on it. simply allowed claims the

adjudicated on the merits of the court will go a long way to preserving of the legitimacy of the system of the justice and lowercase a man's life is at stake. >> thank you, counsel. the case is submitted. in another supreme court case from the term box verses es clu the justices will decide if the unions can take money for the non-members for political purposes the union imposed a special assessment of all state employees to form a political campaign. a state employee but not a member of the union the supreme court heard oral argument in this case. >> the argument in case 101121 box versus the service employees international union. mr. young? >> mr. chief justice and may i please the court? before addressing sciu movement

is important to remember the underlying facts of this case. for ten months in 2005 and in 2006 more than 36,000 nonmembers or nearly 40% of the employees represented by sciu employed by the state of california would contribute to the $12 million political fight back fund. without being provided the opportunity to challenge the amount of the fee and to object required by the first amendment adding insult to that injury the circuit said nonmembers could never say no to the contributing political expenditures for the propositions. they have no right to refuse the element of that political speech. this supports the decisions to serve in the political process a mass scale. as i understand you are saying

that it's impossible to move a claim for those images. is that a correct reading of your position? >> i'm not sure i would go that far, justice. i think that in this case the way she washy language used by sciu minute is this case on dollar for the class was inadequate because it failed to represent the importance of the judgment of the class. >> so that's a different point which is the notice was an adequate. when you say an adequate are you saying sort of not apologetic enough in other words not saying look you had a claim against us. we think that you're right it was a valid claim. here's your judgment and satisfaction of that claim. it didn't forthrightly say that

but do you think it could have forthrightly said that we would be living in a different article universe? >> not in this case, justice. turning to the adequacy of the financial disclosure that did not comply to the district court judgment either. if the only question were the distribution of the nominal damages then perhaps we would be living in the different article to the universe but this case is about the judgment of the district court that sciu was attempting to comply with the failed to do so in virtually all of its elements hell do they feel to comply ever them the question whether they were for for comment about the fact that there are satisfying claims? >> the district court has ordered or describe the type of notice that it anticipated. the district court specifically determined that sciu subsequent to thousand nine disclosure was

an adequate to cure the problem that is caused by the seizure of fees' starting in september september 2005, and that is on 73 of the petition appendix. the union in this case set the same financial disclosure in the notice that is sent to try to move the case. they sent it in 2006. the court had already said this is inadequate. this seems to me to end the inquiry. obviously the district court did not contemplate that the notice that was sent in june of 2006 satisfied the obligation of the judgment it hardly could have ordered a useless fact to go out. >> the reason that is important in terms of the contact of the notice of inadequacy is what?

>> the reason that is important, mr. justice is that sciu is asserting the case has become moot because it has complied with the district court judgment. >> i thought your argument was that the different type of notice of more members electing to opt out of the demand of the refund of their assessments. >> that is certainly one of the possible consequences. that is speculative to some extent. but since the purpose of the notice is to provide the information necessary to object one of the purposes colin then we certainly anticipate that there would be more objectors were there to be in an adequate notice the complex to the district court judgment to the estimate is a special assessment requires a different kind of nervous and possibly different

kind of tin ore of regime would the case be moved? >> i'm sorry, but we are not dealing we've here is the kind of notice the typical at the year when the annual dues were collected we are dealing with a special assessment. it's a different kind of notice this constitutionally required in that context would this case the moot? >> no, it would not. obviously we still have the nominal damages question and the adequacy. >> my question is whether the different requirements, which presumably were not met here in the context of the special assessment. if there are different requirements in that context would that -- this case is a lot of controversy. >> so much as the field to provide them at least in this case provides a adequate respect for the underlining requirement.

>> mr. young, recognizes that the consequence of moot would be that the ninth circuit but the judgment is vacated that it would also recognize that means the district court judgment stays in place, so the judgment has worked out. no, justice ginsburg and this is why. the union would remain free to return to its old ways. the very type of reason that this court declined to find this grant the union has made much of a showing or much of a show more accurately, the fact that it's changed its internal policy

won't do this for 180 days but that can hardly be sufficient for this court to find some mootness in this case. the union made this wonderful land meaningful policy change on a six day notice. >> wasn't this -- this case is about the completed episode that is about a special assessment that is moreover? >> that is true, justice ginsburg but it's about the ticker jury relief in the district court which is virtually an injunctive in this case. it is also about the effect of that judgment for the future activities and how that will affect the way sciu operates. >> would certainly be so in this case, justice kennedy. the union set a very short time

relatively short time period given the length of time the case comes up on the courts as a rule. as committed as the injunction of the future terms or was it just an injunction that relates to the notice that is required in the case. >> just to be, i try something that is not as tantamount. it wasn't actually praised as an injunction, it was an affirmative act. >> isn't that important because usually where we have talked about capable repetition or about the same thing could happen again it is where an injunction has been before us rather than sued for damages after a past act. >> yes, just as i think that that has been the case. i -- in my research i could find a very few cases it wasn't clear to me that this case was addressing and joined relief. it didn't specifically discuss

the injury to the to entry in the lower court and hudson it self addressed the issue. if we talk about these cases in their strict sense, the union notices are all annual. by the fury if it becomes moot when the notices expire or potentially move when the notices expired the court would never address these issues because it would -- i can't imagine one of these cases ever getting up to this court in as little as a year, but this court in hudson i believe it was foot note 12 said that this court review policy of the act as they were defended in the district court and the policy and procedure and act here were defended in the district court and therefore cases like this should not become moot because

it is capable of repetition and would be feeding reviews by the mere limits of how long the policies and procedures are in effect. >> you make your argument in opposition? >> it seems to me that it's an implicit in our argument the main point in that argument is a paradigm case of a voluntary cessation of unlawful the activity until the serve was granted in this case until the merits brief was filed sciu was vigorously defending its practices. there remains free to impose that practice. >> that's something quite different than the cable returning because here we do have a discreet episode that's over and there was no question

that even though what was in 2005 it varied in 2005 and 2006 when the special assessment was in effect. that was all over, but you were continuing to litigate. it would become moot simply because the period was over. >> that's true, justice ginsburg. this argument was not raised until we were before this court. the union's argument that the case had somehow become moot and until it issued a notice to this mcvay said some because they gave you all of the release that you requested so there was nothing left to the case. speckle of the relief complied to the district court judgment as to the notice we believe that they have not and we believe that is clear because the very fact the court rejected the 2006

financial disclosure as adequate. >> maybe it's a good point to move to the merits. >> thank you mr. chief justice. >> can i ask you a question about the merits? are you attacking the normal system of basing assessments moving forward of the accounting and charge ability or you just attacking the special assistant? >> i appreciate question, justice. no, we are not attacking the normal kurson procedures. >> so articulate for me borrowing a phrase from one of my colleagues yesterday how do we write this opinion? win is the hudson notice required? what's presume for the sake of argument that the union had cost

overruns, labor salaries went up, printing costs went up, not for lobbying but generally there was a 10% increase in their expenses across-the-board because serious contract is for evolves and required. would you require effective notice in that circumstance? >> yes, justice sotomayor to really believe that a new hudson notice is required whenever there is a material alteration in the obligations that are imposed upon nonmembers. the value of this -- >> articulate that again. >> material increase in general terms and the obligation imposed upon the nonmembers. in in this case i don't think anyone would dispute the 25%.

>> material new assessment. we are talking about money here, right? >> yes, we are. >> without regard to the reason for the assessment? >> i think as a matter of principle i would have to say yes mr. chief justice. the nonmember, well i'm not sure it may simply be repeating justice sotomayor's question but if they say we have to raise the assessment 10% because as she said we estimated the printing cost for the union newsletter was going to be this and it turned out the reused it's going to be that. so we know we are going to have to get additional money for things that were indisputably chargeable why do we need special procedures in that case? >> it wouldn't be so much a special procedure as a new opportunity to object and challenge the amount, mr. chief justice. >> certainly one of the elements

when we recognize the course of the primary reason individual subject is political expenditures the discourse that very clearly that people can object for any reason, for no reason come a good reason, that reason, nobody can inquire as to why somebody would object and when the material increase in the obligation imposed upon the non-members they may choose to make an economic decision that heretofore they chose not to make. they may choose to minimize the non-of they are paying to the union at that time. >> its peculiar because in the circumstance with the extra assessment is all going to go to the chargeable activities. in fact that means economically speaking the following year the objector will be better off, not worse off because there is a higher percentage of the total fee that's being paid to the

chargeable activities so this special assessment to justice sotomayor were talking about is one that will benefit the objector if he keeps quiet and says nothing. so it's hard to imagine the frame of mind that would say i need the notice because now i might object whenas i wouldn't have before. >> justice, the reason for the notices these people may not trust the union. they may choose to challenge the amount. >> i see that point because i ask you are you going to pursue that further with me give you this example. now i think i see what your answer is. imagine a this year to. in year one, expenditures broke down so it was 70% chargeable at 40% not chargeable. normally under hudson and that means a net year two the object

is to 70%. in the middle of year two, surprisingly, something comes up something comes up. supply is to the union and they want to have a special assessment. and you are saying they just can't without going through this procedure all over again. >> that would be correct, justice breyer. >> we are not talking about the money that they collected. can they take the money that they collected under the first notice and instead of doing a special assessment in the middle of this campaign gets announced by the governor and can they vandiver to the chargeable amount that they have predicted and spend it on the non--

chargeable amount? or does that require a second hudson notice? >> i understand, justice sotomayor. i don't believe it would. >> so this is a peculiar rule that you have asked us to adopt. the rule is where there is a special assessment, and will make all of the objectors better off they have to have a special notice that they can object. but the rule is we are going to take money that we already collected from them and suspended for a totally political purpose. we don't give them a special notice and they don't have to object. that seems totally backward by the understand why you get there and my suspicion to confirm is that is the only administered system that you can think of. >> is it going to make them all? they don't know whether this new assessment is indeed going to be divided the way the original one

was not. they may want to challenge whether it is all going to be used for the accessible activities or not then you're telling me they might. >> at least the have to make an interest-free loan to the union until such time as they can challenge it. >> that's correct. >> it is perhaps unrealistic but they have 20 bishops and 14 most honest people in the united states and the fall absolutely guaranteed, and everybody agrees that this goes to the chargeable activity and where i was going with my question which you see i was, you were with me and combine the two. but i'm trying to point out and get your response is that you've been forced into this position to create a workable system. now why is that workable system one a better than the workable system we already have which is

all of this washes out in a fare matter the following year? that there is an inevitable lag that doesn't work perfectly but it is as good as any other and all we have to say is it is better than yours. why is yours better than that? >> i require the last time i was here they made an appearance then. they are i'm sure. assume we wouldn't need the hudson notice at all. if it is affirmed to all these things, right? you anticipate my next point, justice scalia. these are not bishops and with due respect to the litigation opponents in this case these are people with them on members don't trust. they do not wish to affiliate. and these are people that the members do not wish to support. >> the problem is in this system and going back to justice breyer's practicality they will get a chance to object it just

won't be at the moment that the special assessment, it will be the following year. so when the union gives its new notice, it's going to set forth the chargeable or non-chargeable amount audited, and it will say as it did as it's done in the briefs before us on the proposition 76 we are going to take 50% this chargeable. and the union members will come in and legal objection. those who want to, those who don't know what's happened and they agree to it. isn't that correct they do get a chance to object to the question. >> the problem is, justice sotomayor come understanding -- >> there's an answer to that they will get a chance. >> they will get a chance to object after they've paid the interest free. >> that's true. the first example that i gave

you is if something happens in the middle of the year and the union needs to divert the funds to challenge the election they can do it and you said that's okay and the members would have the chance to challenge that. but it would be within the normal system of ordinary jews. we -- and i believe that this court presumed any reasonably competent union management would have relatively stable expenditures over the years. stomach isn't the premise of hudson that you give them notice before you receive the notice before you have to cough up the money? and what's not proposed is if there's an additional assessment to cough up the money first and then leader straighten it out. >> the people who got the june 2005 notice were left in the dark and the union may have been in the dark as to this special assessment.

but once the union agreed to decide to impose the special assessment, the union is required by the principles to shed some light perhaps it is less productive, less accurate to say we intend to spend the money this we would win you have the assessment which is purely intended for politics and that's what the union said to create a political fight back fund. >> do they tell you what's going to happen next year that's what the hudson noticed will do this is the breakdown for the last year and as far as we can tell that is what it will be next year but things could change. what does the hudson noticed till you? >> it provides you with an opportunity with some assurance because of the requirement. >> am i right in my description of it? >> i think that would be a fair description. >> do they carry over one year to the next or do they have to refine your objection to the

expenditures? >> most unions, mr. chief justice, require an annual law objection. of course there would be nothing, we find nothing wrong with the annual challenge requirement to choose to challenge the figures because that event but the unions seem to require annual of objections, so you have to say again and again i don't want to pay for your politics. >> coming back to the special assessments i think in one of the briefs camano in one of the briefs they happen every four years. so in the normal cycle of the union activities in an election year they are going to divert whatever accessible money they have to their lobbying efforts, and the following year they will go back to normal for three years. you're not challenging that moral variation in the distribution of the money,

correct? >> correct, justice sotomayor and that may vary from union to union from state to state even as some of the justices. >> i guess the problem is i don't see how that did in your argument is any less alone than this special assessment where the object of members of the end of the year will get notice of what has happened that year, will have an opportunity to place their challenges and get them moved upon and as justice breyer said have a benefit because they are either going to pay more or pay less if the weather challenges are held or pay more if they are not. but i'm not quite sure how this is different here is to make we disagree with the unions

characterization's benefit but i see that my time is experience and i reserve the balance for the rebuttal. i will try to address the question more thoroughly when i stand up again. >> thank you, counsel. >> mr. chief justice may i please the court mr. ginsberg is absolutely correct that what we have suggested to the court is that the court of appeals decision be vacated with the consequences reinstating the district court judgment. why did you give up once the case was granted here? cost and it didn't consider that until the court came -- case came before the court to respect that's correct and the reason for that is when that even in this matter was new and the then union officers actions were being challenged, the instinct was we are going to defend the

case and as time went on there was no rethinking of the situation. when the case was granted here over our opposition to questions were really presented the officers of the union or not the ones that involved in the original case thought about the situation and came to the realization on the procedures that are at issue here. this was a local that had never done a mid year increase in the past. what was contemplated as a temporary increase turned into a primitive to the two permanent increase up to 1.5% of the celery after this increase ended. what is this local and what will the other locals to in the future when a special assessments are made? will they provide notice or will they go back to the old system?

>> i won't belabor the term special assistant at the moment but i think there's a misunderstanding around that justice alito but this local has put on a procedure which frankly would satisfy the concerns for the future if the conduct was legitimately at issue here but it is not for two reasons. first when we state the court judgment be reinstated this is a judgment that was not appealed by the petition but defines the limits of what they can obtain from this case, whatever the court may decide, and that the decision gives whatever protection it gives against future conduct. it gives essentially none for a very good reason. this is the case that has been known to only by a onetime agent. there were no allegations of an ongoing practice or request for the injunctive relief. >> mr. collins as i understand the argument, there is a serious dispute against the adequacy of

the notice and it might be a dispute about whether it was clear enough that was satisfying claims or might be a dispute about whether it allowed the refund as easily enough but as mr. young is contesting whether there is a notice, played in the district court order as long as that is true, don't we have a support somebody has to answer the question about whether your notice comprises with the order, and if it is the case of the court has to answer that question, doesn't that depend on the questions presented here? >> no it doesn't, justice kagan and the court explained a number of cases beginning with u.s. bancorp it can be in the posture where in disposing of it they need to grant surgeon relief clarification of the status by orders the case is moot on the

merits such as the court cannot reach the marriage. that's what we have here. if there is a dispute and i will explain why a moment when there is and what if there is a dispute for a sample whether individual failed to get their refund because the notice was inadequate, that dispute is not affected by and requires no decision that the scourge. of the district court is reinstated in the question of whether we have fully provided the relief would be before the district court decision. >> this is not an incidental matter. there is a whole point of your friends argument with the hudson notice is they want people to understand what's happening with the union money and they say this notice didn't let people know that. and if the case is not moot and the provincial they will have a right to be heard on with the

notice should say. how many people not to be dropped out and how many don't and falling upon justice kagan's question that is an important part of the case with the notice is going to say and if we accept the view that it is moot that issue goes by the wayside. >> that is incorrect for two reasons. first of all, the district court required a certain kind of notice to be given. we'll stand in the district court judgment should be reinstated. it's a notice that we have given doesn't comport with what the district court judgment which isn't appealed by the petitioners require it will be provided by the district court. we are not contesting. they are looking at the force. >> i don't see how that works. >> the notice is only required by the district court if the case is not moot. if it is by the notice you sent

out, the district court doesn't have a case on the basis of which to order a different notice. >> i don't think that is correct. a case can be in this court and that is why i believe in the other cases the u.s. bancorp more recently explained and at first it seems paradoxical but it is not paradoxical. the case there can be remaning issues potentially in the district court such as whether the check that the plaintiff paid bounced or not that could be resolved by the district court but it means of least in the provincial movements there isn't the merits issue remaining for the court to be deciding and it's quite simple. the looking to give them out. it's what they got from the district court and was reversed we were saying give it back to

them, every nancy the judgment, whatever they want they will have. we believe we have already given them everything they want if we have not the district court will do that but let me explain the second part if i may which is that there is no legitimate issue year about whether the notice was adequate. mr. young stated quite incorrectly that the notice we have provided is the same as the notice the district court struck down. that is absolutely incorrect. the court said that the 2,005 notice issued before the increase obviously didn't give specific notice of the increase although the state could be increased. the district court specifically held 73 a that the 2006 notice which described the so-called fund and the increase in the purposes of it was completely adequate. and the notice the district

court one also has to realize the district court was requiring the union to refund the non-chargeable part of the activities in this increase. a certain kind of notice would be needed to justify how the union was computing what it was saying with the chargeable portion to refund but it's to provide a greater relief in the court order we have refunded every penny that anyone who requests had paid during the increase so there is no serious question that the notice that the union sent out which explains what the increase had been spent on with the informed individuals as to whether they now want to get back every penny as we've offered them but with a paid under the increase. >> i want you to move to the merits. it may be a good time to do that. >> turning to the merits --

>> i thought i heard, maybe i just didn't look at the union regulations is it limited to 180 days? that's what i heard your adversaries say. >> it has a provision that can't be revealed. i do want to make it clear our position on the movement is not dependent on the court determining the procedure will be in effect for others. >> can you tell me what the burden is on the union with the there is a special assessment? >> do you happen to know how frequently the unions imposed special assessment and what the incremental cost is to the union of getting such notice?

>> that requires a fairly extensive answer partly because. >> try to summarize it. >> i believe the word special assessment is being used with a meaning that doesn't correspond to what the union did. i can say this much. there has been only one other case in any federal court that i know enough and only in the district court and there is no other appellate court dealing with any kind of assessment, tiberi dues increase and how it affects hudson. so this is a long even in the real world. there are no challenges that have been made previously to any kind of assessment or increases. but unions use assessment in many different ways and let me contrast one way with what happens here and i think it will

show why there is no serious question here about the need for notice. some notice have structures with only certain kinds of activities and they contemplate a new kind of activity that they would not normally pay for out of jews or fees. they say often with a vote which was not required here there was no vote required or taken here in the union with members for what occurred in this instance but you may have a union that says we want to make the kind of expenditure that's really anticipated not what we normally do with our dues we are going to put it to a vote and if you approve it we will collect it and probably put it in a segregated fund separate from our treasury. that kind of an assessment. it's from what we have here because all that happened in this case was that the union

increased from 1% to 1.25% of salary, the regular membership dues and the fee is based on those shoes that were detected by employers and paid into the union's general treasury. >> is it incorrect this is for what was termed the political fight back fund? >> it was. some union communications described as having that purpose. the october 27th letter that was the most detailed explanation said that the two purposes to fight back at the bargaining table and fight back politically but what is the essential is it was never suggested were nor was it ever the case that this money would be in any way segregated and treated as a separate entity so to speak. so we have the reform problem here that the basic petitioners' base on the false the explosion on trying to take the unified

general treasury and treat it as if it were a distinct entity. >> maybe you will say that this is different from your case and the rule should be different in these cases. annual dues for the particular members of this union are one per cent of their salaries and say that amounts to or is a certain percentage of their salaries so that announced $500 of annual dues and say that in the prior year 90% of the money collected by the union is used for the chargeable purposes, 10% for the non-chargeable purposes. someone who objected would be able to get back $50. now, during the course of the year the union what he's a special assessment on what ever you want to call it, and for this percentage is on except the reverse. 90% is non-chargeable and 10% is

chargeable and now a member who potentially wants to object has $15 at stake and that situation why shouldn't there be separate notice in the incentives quite different. sprigg there could be a problem there if the assumption is then what the union really is beginning a kind of spending that is foreign to the way that it spent money in the past. what needs to be explained, justice alito, i don't think that one would guess from anything said today that we are talking about a period of time when the union's chargeable spending increase and the non-chargeable spending decreased. we are talking about a period of time when objecting the nonmembers to not getting paid their share of the chargeable expenditures meaning they do not

save 1 penny for any political activities. >> my hypothetical may be different from what happened here and maybe it is an unrealistic hypothetical and you can answer that, but if it were to occur should there not be the hudson noticed? >> i think not because again, it would be caught up in the subsequent year. >> what if the money is going to be used for an election campaign, what if it is going to weigh in in favor of one group in a candidate against another in favor of one legislative candidate against another and on those issues the non-members may have a very strong partisan and ideological objections so why should they not be given the notice at that time? and the opportunity not to give what would be at a minimum an

interest-free loan for the purpose of influencing the election campaign. >> do it depend, justice alito i think in your hypothetical one might be able to say it might be more fascinating but one might be able to say that what was occurring is something that could not be anticipated reasonably the person who got the notice. in this case however and this is crucial to this case notice in 2005 told every nonmember that of our 38 million-dollar budget, we spent 43.6% of it on non-chargeable the activities. and if you do not object, we will spend whatever amount out of the world roughly 40 million-dollar budget in the coming year for the various activities as we perceive including the mount initiatives as mentioned in the notice as one of the things to spend its money on. now -- >> this was a very special initiative. that is what the water pitchers of justice.

this wasn't a sort of run on the courts every two years every election cycle we spent something to read that is why it is a special assessment. >> i don't -- i wouldn't call it a special assessment if one uses that term as it is usually used to mean a very short term assessment apart from the general union functions for a new kind of function. >> knott short-term it's just november 7th but it's nothing new under the sun mr. chief justice and we can see that for example the record reflect the auditor for 2005 shows us that in addition to the money that was contributed to the dues increase and spending in imposing these propositions additional money approximately $2 million was spent on the same purposes from the increase dues. so that a ballot initiative is nothing new -- >> let me go back to justice sotomayor. i would like to see why she asked the question.

as late understand, the way that the works now is to begin from september, september. september wheat look back to your one. and we see what the percentages were. now we in the union calculates a budget for your number two. and we go and get approval or opt out from that basis. what i felt coming in here is the profit is going to be to have to have a new notice in the middle of the year for the special political assessment, you are going to discover that half the time you don't know if there is a special political assessment. it is an impossible weintraub and it is tough. you are making the argument that however you draw the line we are on the right side of it, not the wrong side. it's not a special assessment, wasn't -- okay. but there is a new argument that's come along having focused on that we can avoid the

administrative problem by saying all special assessment require a new notice whether they are for political purposes or not, hence the question i was trying to get and i was interested in your answer. if we go that rule which applies the problem of saying which is which, how does that affect the union, not necessarily yours but the unions in general, how often is a did you drop your budget from year to in september put it into effect and then you discover you need more money from people for any reason and therefore you change or you thought they were going to contribute. how often if you can give us an estimate and you are in a better position than i am. does it happen a lot, rarely, a little, what do you want to say? >> and if it happens a lot, how burdensome is it? >> i will get to that, justice sotomayor. i try to determine how

frequently it is. we've been able to determine there is no litigation over it. and i've been able to determine that so-called assessments take many different forms and they are crucial distinctions from funding the kind of charge that would not otherwise be funded for some short period of time to the opposite extreme that we have here and what i don't think would be called an assessment by anything i've read. the temporary increase which became permanent and would simply increase the total flow of dues and fees and to the general treasury and then went for the kind of activities that the union had always funded and in that regard -- >> could you please answer my question. the burden consisted of two things, justice. if the union has to give a new notice in a situation like this,

i've been trying to explain the spending that went on is not different from what one would have reasonably anticipated given the notice then we have litigation disputes about the need for the new notices for any number of things happen. one thing that happened here that is undisputed but hasn't been discussed is that collective bargaining costs were up six fold in 2005 over 2004 and they were up six fold in 2006. >> one reason, we are dealing with the situation where the union is compelling the nonunion members to give them money for the politically activities. we allowed as i understand and as i read it because you can't figure out what that is to read you wait until the end of the year. in other words it is a compromise for the administrative convenience. normally you wouldn't allow it at all. at least under the law would also allow people to take money.

you wouldn't allow people to take money from people who don't want to spend it on political like to fees' so the union can spend on public a collectivities what we allow that in the course of the year because it is impossible as you go on to sort these out. i thought the argument on the other side is when you have a special assessment, an additional charge. there you don't have the administrative problems. you can tell this point to 5%. so you can't take that until you tell them to you want to object or are you fine with having this spent on political purposes? the reason mr. chief justice is it isn't that straightforward. it's quite simply that all of these questions about its special assessment we can figure out what it is and treated separately when one realizes the so-called special assessment is simply the dues increase because

if i were to try to imagine -- in the fall of 2005 to explain to the members how things look now compared to how they may have looked when the notice was given i would say the following come completely consistent with all of the facts of record in the case is revealed in the audits we determined we need more income. part of this is because we anticipate $3.7 million in the fight back expenses this year. another part is we expect more than three and a half million dollars of additional bargaining costs this year and we expect a lot of other changes in the cost this is a complete answer for the sphery. there is a constitutional violation that the union says we are going to view this increase

as paying for our additional political costs and it's going to free up hour general treasury for the bargaining. that is a violation. but if you say we are going to treat this increase as covering the new bargaining costs we told you about this going to free up the general treasury for the political cost. >> but i'm reading from the district court opinion it said this assessment would be used, and we are quoting from the union material for a broad range of political expenses including television, radio advertising, voter registration, voter education and get out the vote activities in the work sites in the communities across california and it further said, quote, the funding will not be used for the regular costs of the union such as the office of a race for the routine equipment. >> first as the appeals pointed out there were other statements that said the money would be used for those purposes but as pointed out even if you

specifically say this part of the dues income is going to be earmarked for this purpose its artificial when you were dealing with a general union treasury, not the segregated fund to give that support legal status and that is to satisfy my point to you mr. justice is nothing in the world would have changed here. >> suppose the proponents of the proposition 75 and 76 had come to the union and said would you please give us an interest-free loan for money because we want to use this money to persuade the electorate to enact these but don't worry because we are going to pay it back after the election when we have achieved the end. >> would the union provided the money because it is all going to come out.

>> i really can't answer that question. i don't know. >> i really doubt they would but what is the difference if you look at this from the perspective of a nonmember who doesn't want those initiatives to be defeated saying we are going to give you your money back, we are going to use your money to achieve a political end that you oppose but don't worry because we are going to give it back to you next year after we have achieved our political and how does that solve the problem? stomach that is in the situation. but the members were told in june of 2005 in the hudson notice that if you don't object we may spend millions of dollars on public collectivities including about what initiatives if a person didn't want to support that, then we need to object. but that happened. and this is what gets lost in the messaging about the increase. what actually happened in the real world in the period that followed is that compared to the

numbers in the 2004 hudson notice the union spend less on the matters and more on the chargeable letters in the only reason that there is a case here in the court is that the union, for whatever purpose, whatever it may yet been, instead of saying we are going to treat the increase as covering our increased bargaining cost thereby freeing up the money for politics we are instead going to describe this increase as being a attributable to the political cost and thereby free up money for bargaining but with the union is spending its money on is bargaining. >> it seems to me that this the court should consider whether or not the often requirement is preferable. >> we are talking in the first exchange he gave a very simple question.

90%, 10%, special assistant for 90 present political and the point was that you are taking someone's money contrary to that person's conscience and that is what the first amendment stands against and you simply wouldn't answer that question and then you say maybe it's fungible. it seems to me that you are avoiding the very, very critical question on the constitutional rights of these members. >> i wasn't meaning to avoid it. what i thought i said is if you are springing something on someone that's not anticipated in the notice that gave them their rights to object then there's a problem. my point is it's very simple. anyone reading the 2,005 hudson notice, if that person was asked if i don't object might the union spend 3.5 million next year on the initiatives i might not want to impose the answer would be yes.

the notice made it perfectly clear. >> what me ask you this as a way of background. in the collective bargaining negotiations, do the unions consider the -- one factor of the importance of ensuring that the government and employer has fiscal stability? >> that is generally considered, yes. isn't that ultimately a political judgment so that even collective bargaining involves a core political judgment? >> that is exactly what the court said, and the reason that the exclusivity of the agency fees are permitted in serving the important government purpose is that the government has concluded that its interest lies in having an exclusive spokesperson with whom it can negotiate so that it won't have an array of different relations. >> but you can see the collective bargaining there or critical and important political

significant political judgments that are being made by the union in the course of collective bargaining. >> absolutely and explicitly says that and then says that nevertheless the government -- we are talking about the regulatory scheme to promote the government interest for the labor relations the government needs to make arrangements and agreements in the terms of employment. it has a vital interest in having an exclusive representational arrangement where that can be accomplished and that the court held and it isn't challenged by the petitioners that justifies the degree that is inherent in the fact that as said all bargaining has political elements in it. specs before. you have four minutes remaining. >> thank you, mr. chief justice. >> i hope this won't use up much of your time but i have a pressing question to make sure

we are not spinning our wheels here. what if the union here had simply said all of this additional assessment will go to bargaining activities and then simply used its original assessment, the portion that had been anticipated to be used for burdening for political activities it could do that, couldn't it? it isn't committed to 80-20 or whatever the decision is because that is what is given out in the first notice but it could indeed use the anticipated portion for bargaining for public collectivities. it would be free to do so. >> why are we wasting our time? all the unions are going to do is say this is a general assessment for bargaining purposes and then use their general fund for the political fang. >> dimond members still have that right to justice. >> the date should do it the

following september. the attractive part of your argument from the beginning was that this is somehow a forced loan and understand the attractiveness of that, but it goes back to what justice breyer said from the beginning which is given as has been recognized that the money is fungible and then you can't really often predict what is going to happen in the future it will develop a system that gives money to the people back. >> and money is fungible to a degree of justice sotomayor, and i respect that argument but let's remember the facts as we have them here and the fact of this case it was a segregated fund. there's a separate line item in the union's notice. >> so you say that it will never happen again. whenever a again be called a segregated fund.

>> it will happen all the time i'm afraid. >> the problem if you win in this case, and then there is this other way of getting to the same result is that the other way of getting to the state with the same result will permissible is far less transparent and people won't understand it and it encourages a kind of sly nist it seems highly undesirable and the virtue of the present system is that it does require forced loans. that's true. but it does washout in the wash, and it ends up being fair to the objectors and it's hard to think of a better system that doesn't provide more administrative problems than the existing. >> thank you, justice breyer. i'm sorry for interrupting. understand that. for the ordinary that is why when justice asked me at the

beginning of the argument whether we are challenging the ordinary system i answered no because that system is perfectly adequate for ordinary union dues. >> the problem is they're being told by your adversary, and since we don't know i'm always afraid of writing off the decision in a vacuum that the union structure their business in a myriad number of ways that somehow have a very small do each year and a larger special assessment for special projects, and i assume there is an endless variety. you are proposing a rule that every single time an assessment of sight of the annual dues is imposed but the new notice can be given and you are suggesting, justice scalia all they have to say is we think it is going to be chargeable.

>> briefly, council the answer is what my friend is saying is that it doesn't have not often so the burden is minimal. the have other options than extracting this from the other members and i think the court. >> thank you. the case is submitted.

he argued that american policy towards japan in 1940 and 41 was rather provocative and perhaps in a juvenile way he said we are putting pence in a rattlesnake and eventually that they will strike back.

the nation's mayors are in washington for their annual winter meeting. the u.s. conference of mayors released a report today on economic conditions in the cities. several discussed the report's findings of this 40 minute news conference. >> [inaudible conversations]

>> thank you all for being here today. and as we begin our meeting here in washington, d.c., i'd like to bring your attention to the u.s. metro economy reports that i have here, and once again, it tells the story that we have told here in washington again and again and again, and that is the story that american cities are leading a fragile recovery, but it's time for washington to join in the effort. they need a wake-up call. it's time to end the politics of the block and pond as we enter this playoff season and start doing something to put people back to work.

today the release as i said our 2012 report and the findings couldn't be clearer. the metro areas are driving america's economy you know there's a lot of talk and there should be about the one per cent and the 99% of us who are struggling to make ends meet. but with this report what it chronicles is the 90% of the gdp that is generated in the nation's metropolitan areas. 85% of the jobs which are produced in our metro areas. we saw in 2011 we had a 1.3% job growth across the country. that is an anemic rate by anybody's standards. we were told at least in this report about we are expecting somewhere in the neighborhood of

82% job growth in the coming year. it doesn't have to be that way. virtually all of the job growth that's been generated in the country has been generated in cities like the ones represented by the mayors here today. in my own city as an example. without the federal partnership we were investing $4 billion, 40,000 jobs to modernize our airport to make it as the true gateway to asia. investing about $1.2 billion generating 20,000 jobs to deepen the harbor to expand the capacity of the port to be able to compete with panama. as you all know we passed the sales tax generating the $40 billion. we have a partnership with the federal government we can

generate 166,000 jobs in l.a. alone if the congress gets off its duff and does what it should do and pass the surface transportation bill we can generate millions of jobs in the united states of america. if they pass america fast-forward which now 120 have gotten behind we can use local investments like ours in l.a. and cities across the country to put people back to work now to accelerate in our case 40 years of investment in a ten year period of time or 30 years of investment in the period of time. we can't do that without the federal government. we saw last year we were here come all the fuss, and we called on congress to fix the deficit and the debt. many of us were democrats,

republicans, but we challenged our own party to address entitlements as part of the solution. we also challenged the other party depending on which one you come from to address the need to close the tax loopholes and strike a grand bargain around the idea that the tax isn't class warfare, tax fairness is something we have all believed in on both sides of the all. so these are the kinds of issues that are facing the nation's marriage and i like to quote my friend to the right, our vice president. he always says when someone approaches him on the street, nobody asks him about the deficit. they asked him for a job and that is what we are asking the congress to do as well. we are asking them to do their job. we saw last summer that they

failed to address either the deficit or the debt. they put us on the brink of default, then they put together a super committee which was supposed to have struck out a grand bargain finding a common ground to move away from the partisanship and strike a bargain that cuts or spending bill also makes the appropriate investment. we put forth a common sense jobs agenda which in many ways was a reflection of both democratic and republican views on what we need to do to put people back to work. so we are hoping that they will do a little better job than they did last year.

i've mentioned and i think we all agree that if he were to put a grade on last year you'd have to give them an f for failure. they didn't do much in the way of the job creation but they have an opportunity to read we all know that when you get an f on your midterm you can work hard to get that great up and we are hoping that is what they will do. so we are asking them to pass the transportation bill to extend it at least the payroll tax cut to make the kinds of investments in america fast forward and other things the will put people back to work with me as the vice president of this organization, the mayor of philadelphia, michael nutter is among the most articulate people on the issue of job creation and the nation's cities.

>> good morning and thank you so much. the president makes the case of why we can't wait and to continue with the president said, given the rating the president has given the congress, they're going to need a lot of extra credit projects to demonstrate to the american public why they should even have the jobs that they have. they have jobs. millions of americans do not have a job. i haven't heard talk of the american jobs act in months. what happened? it really begs the question what is the congress doing each and every day while they supposedly work for the american people while millions of american people are out of work. we need investments in infrastructure, in our schools and bridges and roads we need more cops on the street and we need to make sure the work force development and training programs and community development block grant programs these have demonstrated year after year after year. they were on the ground and the

cities. the president has laid out the case. 80 plus% of americans live in the city, 80% of the jobs in the metro areas 90% of the gdp of the united states of america in cities and metro areas all across the country. this is about jobs, jobs and more jobs. we need to put people back to work. that's what we do every year in our cities and sometimes without federal support we are making this happen. but the federal support really does make a difference. it makes a difference filling out the international airport while we try to expand the airport to serve more and more passengers and bring tourism and hospitality to philadelphia. makes a difference when we are revitalizing literally the city called the largest city in north america with a tiger grant. ..

we need a real discussion, a real discussion about where we are going in the future. now we can use this metro economy in los angeles baltimore burnsville and may send some in many other cities and of course philadelphia all across the united states of america. lastly billions of dollars of capital sitting still on the sidelines. president obama and the congress save the banking industry yet they sit on stockpiles of money

that could be invested in fixing our border systems, our highways. every possible piece of infrastructure in the united states of america needs investment and the federal government unlike any city here has no capital budget. how can you possibly run a government and not know where you are going to make investments five, 10, 15 years down the line? that is not good governance. that's just running around in circles and making the lives of met many millions of americans busy so we have to get things done as mayors all across this country. i wish that congress had the same work ethic ethic that mayors do in the united states of america. thank you. [applause] >> from mesa, arizona, a mayor representing the conference, the

second vice president a man who has stood with us in calling on the congress to do its job, mayor scott smith. >> thank you mr. president. i think a common theme you are hearing here is that cities matter. this is where the action is and if he felt a certain frustration with mayors, it's because when this financial crisis began through the last three to four years, you have seen cities respond. you have seen cities meet the crisis, deal with it and continue to do the best we can to provide services to our citizens at a high level and there's a reason for that. we don't get the luxury of kicking things down the street. we can't punt so there is a frustration when we see other levels of government who talk a lot but don't do a lot. we want action. we want smart investments. we don't want to waste money. we understand fiscal responsibility. we understand the federal government's challenges but we also understand when you make smart investments and when you

invest in infrastructure that has long-term returns. but when you invest in programs like cdbg that has direct returns with great jobs that create economic activity, you can do certain things and we.those out in our jobs program that we presented a well ago. things as simple as for example the visa issues that can bring literally thousands and thousands of tourists to our shores and create instant jobs and create instant economic activity. there are things that can be done that aren't being done. cities matter. we are here with realistic expectations. we know this is an election year like this nation has not seen in a long time. we'll continue to shout from the rooftops if we have to that cities matter. we are here, we want to be partners in this economic rebound this is -- because this is where the action is. we think we have a lot to offer.

our message will be heard and we will keep yelling it as long as we have to because we think this is good for the future not only for our cities and metro areas in the future of our country, we are assets that need to be maximized. we are ready and willing to work with the federal government to create jobs and do things that are right and that is the message, we matter and we care. thank you. >> with that we would be more than happy to answer any questions. as you can see there are a number of mayors who are here. some of them are also in meetings. as i understand that this is the highest attended meeting in a very long time. and the reason is clear. we all recognize that we have to come together to speak on behalf of the nation's cities and as america's cities go as you see in this report, so goes the

nation. any questions? >> you are told this morning to do something about immigration reform so i'm wondering what the conference plan is for this year and besides this conference would bring millions of people -- and the fact that you are facing high unemployment. >> it's an interesting i had an opportunity to speak to a group of reporters at the "christian science monitor" earlier today and i was saying that the mayors, and they are both democratic and republican mayors here, were not nearly as partisan. our debates are never as polarized. we are much more practical and focused on problem-solving. as an example, over the last number of years, this conference on a unanimous basis, has come

out in support of comprehensive immigration reform. the immigration system is broken. everybody acknowledges that. on the left and on the right and yet this congress has failed to do anything about it and you are absolutely right. yes, we should secure our borders. we should make sure that people pay their taxes and are law-abiding. they should get at the end of the line but it the end, we should provide a pathway for citizenship and bring in those people, the dreamers alone, the young kids who are raised here who were brought here by their parents. they alone will generate more than a trillion dollars to the u.s. economy. if you are talking about the 12 million people who are here, if you brought them out of the dark and into the light, they will add trillions to the u.s. economy so it is a jobs issue.

unfortunately, we can't get the congress to do their job on any of these issues. >> i was wondering if you could address the report. >> pardon? i was wondering if you could address the report while there's good news about recovering jobs that there's a section here that talks about some cities. >> there are 340 cities still trying to recover from the recession. about 80 of our metro areas need another five years to dig themselves out of the hole. about 25 have recovered the jobs that they lost at the beginning of the recession but for the vast majority of us, we have still got a long way to go and every mayor here is investing local dollars to put people back to work. bad as you heard vice president nutter mentioned, you know,

things like workforce development used to be bipartisan issues. you know, every president since eisenhower has supported the national highway system, supported transportation funding, and these were issues, the federal aviation, the faa, these were things that historically weren't mired in partisan politics and today you can't get support for virtually any of these investments. again as i said earlier at breakfast, not all spending is equal. the fact is we do have to cut our deficit. many of us, particularly the men right here to my right tonight, have talked about simpson-bowles as a template for addressing the deficit and the debt, looking at you know making smart cuts that make sense at a time when the deficit is as high as it is, but you can't cut your way out of

this crisis. you have got to make investments too and you have got to make investments in infrastructure. you have got to make instruction -- investments in police and fire. you have to make investments in our schools. you have got to make investments that produce dividends at the end of the rainbow and unfortunately, you have you know, a congress that is, as i said, punting and kicking, screaming a lot and not doing enough to move the ball across the goal line. >> when you came to this conference, you had much the same message but then a year later the community development block grant has been cut in the president is talking about more paid to calm. do you have any reasonable expectation that washington will do anything except deliver more problems? >> we all agree and i think you

agree that they deserve it s for failure, but as i said, we are at the midterm level. they still can improve on their grade, and they can do that by passing a number of the things that we just mentioned. we are duty bound, everyone of us. there is not one of us that comes to washington d.c. to take in the sights. we are here to do work. we are here to fight for our city. we are here to fight for america. it would need political malpractice for us to stay at home and not demand that the congress do their job. i agree with you, i think we all agree that it's an uphill fight because the failure for them to do even the most minimal things that in the past have had bipartisan support is pretty glaring and pretty clear. we are duty bound to continue to

push the message. the fact that so many of you are here i think is a reflection that cities matter as was mentioned, and that the congress needs to do its job. yes. mr. smith? the one thing and we did accomplish some. the original proposals were much more drastic up above 60% cuts in they ended up around 17% so we did do a lot in one quick thing. you made a comment about what congress could do for us. we are not here to ask congress to do something for us. we want them to do things with us. i think that is the important thing. and for the american people. cities are economic drivers and we are frustrated that cities, what we have to offer is not being recognized and we are not working with us to maximize the great potential that we have in american cities. that is incredibly frustrating for mayors.

>> what would you say to republican leaders in congress about cutting, the drastic cuts of the programs? >> i would agree with our president. there are smart cuts in their cuts. smart cuts are cuts of the inefficiencies, a programs that don't create benefits. cuts are when you cut the meat out of programs that provide the kind of dividends and returns that create economic growth. look at where you are cutting. we recognize you have to be more financial frugal and prudent. we have done that. everyone on the stand is made drastic changes in the way the outbreak their cities. we have had to look at how we can get the greatest return. we have had to look at how we can invest into a shrinking capital base to get the maximum return. that kind of discussion never happens in washington. it's just let's cut. as a republican that is what i want to see.

that to me is appear republican principle. let's make government more efficient. let's make government veteran more connected with people. that kind of discussion doesn't seem to be happening. >> back to the gentleman. could we have a little quiet in the back police? you asked a question. this is a basic business and economic principles. you don't have to be warren buffett to figure this out. even jimmy buffett can figure this out. if you had a product that was delivering 90% of your outcome -- outflow would you invest more in that product line or would you cut that product line? i think if you're in business to invest in that product line because that is where the bulk of your return is coming from and that is who we are. we are that 90% of the country delivering jobs and making america strong. all we need is a more friendly federal government. we are not asking for a handout.

we are asking for hand in partnership and respect for what we do for living each and every day. that is what this is about. >> you mentioned that -- [inaudible] >> i will let the staff more intimately, conversant with the details. i shared with you the broadbrush, the 90% of economic output, the 85% of jobs that are created. the 80 cities that won't improve, won't get to where they were when this started. can you hold it up back there?

have you got another meeting? why don't you go to it. you know, the 80 cities won't recover the jobs that were lost for another five years and i think the mayors who have spoken have been fairly clear. this is a partnership. you know as an example, they should have passed the surface transportation bill in september. actually they could have instead of extending it over each year they could have passed it a couple of years ago but they can pass the surface transportation bill the boxer inhofe bill. bill. that is billions of jobs. if they just passed america fast-forward alone that is another million jobs in the next few years. a million here, million there and now we are talking about real money -- you heard before. so the fact is that from our

vantage point, we want to see more than just cuts. we want to see investments that pay dividends at the end of the rainbow. when you fix the bridge, that connects to major ports or two major cities, you are meeting people and goods. you are not just creating the construction jobs, you are improving the infrastructure to grow the economy and that is what we have seen, the congress can't seem to distinguish between as he says, as mayor smith says, the good cuts and the cuts and not investing in infrastructure, not investing in police and fire not investing in cbg which has a three to one ratio of return is not good cuts.

>> there are jobs in our country. we mayors know this. the problem and the challenge we have is that we need, as you have heard, a partner in congress that will look at workforce investment. we work very closely with our workforce investment boards and their businesses. because what we need and what the challenge is in our country today is to get our people equipped for the 21st century jobs and yet, we need a partner in congress and my hope is that congressman kline who is my congressman, who is the chairman of education and labor, will partner with us as we bring to him a vision for our country's workforce investment, because that will help with all of the jobs, not just create jobs but putting people back to work by

equipping them and educating them so that they can have the jobs that are available today in our own metropolitan area of minneapolis and st. paul ended my city as well. there are about 30,000 jobs available but we do not have the people with the skills to fill those jobs. you can look all across america and there are jobs. we just need congress to stand with us, partner with us and help put people back to work by educating them and equipping them for new jobs. >> you no the former president of this organization, a republican, scott smith, a republican, both supporting as do the to the rest of the mayors here workforce development. the u.s. chamber of commerce, the afl-cio virtually the entire

business community understands how important it is for us to train people for the jobs of the new economy for the jobs where there is growth and yet, this is another cut and another failure for congress to engage in. we will have one last speaker and we will do a couple of spanish points. don's wallach, newly reelected to his district. seven, my god, eight years. [laughter] >> it let me thank mayor villaraigosa for his logical explanation of the problems that we face and in my opinion the logical solutions, but what we haven't talked about i think is important and i want to tell a little story here about a congressman from the midwest who stood up, this was in the last year and told people in his

district, a few hundred people there, the problem in washington today is that there are too many people trying to help keep the ship from sinking and when the partisan politics reaches the point where they are actually not acting i would say, not acting in the best interest of all of us, we are all in the ship together. it points out the real problem here and i think it's one thing that hasn't been said, the logical thought process that most people use certainly in our city. if i had a councilman who stood up and said i'm trying to bring the city down and make their unemployment go higher so that i can run for mayor or something, people would be outrage. they wouldn't care about politics. my own particular city is mostly democrats. they wouldn't care. it could be a democrat and they would still be critical of him or her. it's outrageous that we have this period of period of time where congress believes that they can do things and not act

and therefore make things worse and that will bring down the president and their party will take over. in my opinion it's the single most significant problem that we face and that is to get congress not to do something that is not logical but to do something that makes sense based on what all of the comments of other mayors have made whether it is infrastructure or reinvestment in the workforce, all of those things, we all know from common sense that is what we need to do. at the politics and its extreme partisan politics and i would hope that message goes throughout the country that people are fed up with that kind of thinking. let's move the country forward and if you have a better idea and you win the election let's come back afterwards and work together. i know that is too high-minded, i know that is too old fashion but i'm an older guy and i remember when richard nixon propose things that helped our country by helping city's neighborhood i need your -- neighborhood and all of the

programs we had, was not viewed as someone said this earlier, these issues were not viewed as republican or democrat. they were america's problems and we work together to fix them. if that is too naïve or too whatever then i apologize but that is what i believe the vast majority of american citizens want. working together across the aisle and we don't have time to let our competitors across the ocean go ahead of us further and further by investing in education, investing in work towards development, investing in infrastructure while we sit here and play partisan politics. that is the message today that hasn't been talked about but it is a key one and i would hope the more this information gets out of the public that this is really the strategy that they demand from their congresspeopl, republicans or democrats. go work together and find solutions. >> you know if we could have people in the back, excuse me. can we clear them out?

you know, i think don, you used a metaphor that is particularly appropriate. all over the news we have seen the controversy, the shame associated with with the captain who jumped ship before all of his passengers were free and clear. the congress has jumped ship, just like that captain. [applause] the economy is sinking as we speak. and they are sitting on a lifeboat, refusing to throw out a life preserver to the american people and that is why we are here today. >> the u.s. conference of mayors winter meeting, the director of the consumer financial protection bureau, richard cordray, talked about what his agency is doing about predatory

lending and mortgage financing. following mr. cordray's remarks we will hear more about the u.s. conference of mayors economic report. this is an hour and 20 minutes. [applause] >> thank you, thank you mayor coleman for having me here today, special thanks to you in particular long-time friend. weaver actually, he came to the conclusion we were trying to puzzle over how long we have been in public service and maybe it is telling we were having trouble remembering. i'm especially pleased to be here speaking with you and i prepared remarks and i understand we will open it up for questions. i'm especially pleased because my aunt aunt ruth says michael indicated are in state and local government. the challenges you face on a daily basis are the same challenges i have faced in ohio.

and jim rokakis who the mayor mentioned and i were colleagues in the face the issues of foreclosure, of vacant properties, tax illiquid seasoned alike over the years. difficult challenges. as mayors, you see every day have consumer financial markets can affect cities, neighborhoods and families. i'm here today because i want to kickoff what i hope will be a very long and conversation among us. my job is the consumer financial protection bureau is to make sure consumer financial markets work for americans. he will benefit tremendous glee from the insights you share with us from the frontlines. we are determined to contribute to your communities in return. we need to do this work together. went on as his businesses prosper, so do your communities and when your communities prospers america's economy is driven by our economy. everyday you see your constituents using financial

products with the goal of achieving prosperity through hard work and sound decisions. mortgages allow families to invest in a home. student loans make it possible to finance and education but it's the past two years that it revealed all to clearly these products also are the best potential to wreak havoc on the wider economy. in ohio the treasury at the state and local levels. in that capacity i sought debt devastate people's lives. person gets very sick, spouse loses a job, a parent get swindled by a scam. sometimes the responsibility for a spiraling debt resides with the individual. sometimes arrest with the financial service provider that ensnares the customer and complex products they do not understand. individual financial problems, as you know best, can quickly become community problems. we saw this most darkly with the mortgage crisis. the foreclosure epidemic turned

vibrant neighborhoods into desolate ghost towns. i saw that first-hand in parts of ohio. as you know better than anyone vacant properties become not only eyesores but also magnets for drugs and crime. these properties often become a dead loss and they need to be raised. neighbors watch their property values decline and parents worry about their children's safety. the entire community is harmed. it always seems to be the case that city spare cities where the bottom-line cost of the problems created by others. predatory lending can solve the foundations of stable communities but the damage can take years and years to repair. when i was working at the state and local level is frustrated by many consumer problems that transcended boundaries and could not be fully addressed within the scope of our jurisdiction. stories i heard we we are both appalling and heartwrenching and in an economy where budgets are tightening, the resources available for consumer protection are simply not enough. back to his exasperating for me. you feel like david fighting

goliath with a few rocks and not even a slang. the good news is you have an eager partner in the new consumer bureau. we know we cannot always be everywhere we want to be. by joining forces with you we hope to develop an early alert system so the same scam is not trending unnoticed in several cities at the same time. i know how valuable your insight is and i know how vulnerable our communities are when it is ignore. and the surreal estate flipping scams exploding on a mass-scale and could not get the attention of federal officials we knew we were in serious trouble. one of the notable features of the new consumer euro as we have the authority to regulate and supervise these practices that is too often proliferated among non-bank on agile providers including mortgage lenders, mortgage servicers, mortgage brokers and payday lenders. you know better than anyone who the predatory lenders are in your communities and we want to work with each identified them. we want to be a partner in

promoting responsible behavior by financial institutions and consumers alike. too often important credit products such as mortgages, student loans, credit cards and other are -- impenetrable jargon. at your life is threatened by such financial trends and you have taken action. we commend you for the sexes as -- awarded hundreds of thousands of dollars to cities across the nation so far to fund and operate financial education programs and other programs. including the summer jobs program that was mentioned. every community needs these types of programs and we would like to hear your feedback on what works well and what does not. we want to be a resource to you by producing financial education materials you can share with their constituents. with launch a program entitled know before you owe. this effort seeks to clarify the important choices of pitfalls that americans face when they are buying a house, making

decisions about college are choosing a credit card. another way we can be a resource for arkham goosed her consumer something. we are taking them with about mortgages and credit cards with more products could help. be contacted financial institutions on behalf of consumers if they have a complaint and the institutions are expected to result in close all but the most confiscated complaints within 60 days. but we cannot help unless people bring their complaints to us so please, urge your constituents to use their services at consumer finance.gov. also on her web site we have been soliciting stories about people's experiences in the financial services of all kinds. already we have heard thousands of stories from across the country, likely the same kinds of stories you hear and see every day. i as families face with leaving their home because of a fraudulent mortgage agreement. a single mother takes out a payday loan that were sister to declare bankruptcy. maybe you have found ways to tackle these problems and so we

want to hear from you. and as we hear from you we will work to share of these solutions and approaches with others. together we can build a national financial system that actually works for responsible consumers. a marketplace in which they do not have to worry about scores of financial products that are actually designed to scam and exploit them. every step we take closer to the system will have a positive impact on committees and by helping on his businesses and consumers make the most of their opportunities. is with you as an act of partner we can improve people's financial lives. by working everyday to protect consumers will we will do our part to help -- and an economy and a stronger country. thank you and i am happy -- questions and answers. >> from the mayors, thank you rick cordray. we are appreciative of those comments and will allow the rest of this time, this period for

questions from the members of the council. and say your name. >> i am from davenport iowa. the question i have for you. [inaudible] secondly, shame on this generation, and the people who are our age who've allowed students to go into huge amounts of debt. it's outrageous. the greatest generation a few years before paid people to go to college on the g.i. bill yet bill yet we have allowed young people to secure hundreds of thousands of dollars and it's not unusual. i think the crisis facing this country will cause us not to grow.

something could be created to help alleviate the debt. you are right forget it least one third of outstanding student load that require students to be able to pay back a third by volunteering their time time and a nonprofit charitable organization and then allow the remaining third to be paid off over a long period of time at a reasonable and just rate. just aggress this crisis of student loan debt and how outrageous it is for us to allow this to happen in the wealthiest country in the world. we are the only one that forces kids to go into debt just to get an education. thank you sir. >> thank you for the question. this is an area of immediate concern for us at the bureau. as you mentioned the amount of student loan debt in this country has spiraled especially in the last decade. i believe that it has approached the level of exceeding the total credit card debt in the country. i believe we are around a

trillion dollars at this point and it is a concern. part of that is being driven obviously by rising costs of tuition both the public and private colleges around the country, and that is something that is going to have to be addressed by actors at both the state and national level and by universities themselves. but for the euro among our concerns are we think that we have seen and we have heard stories that frequently young people and their families do not understand the choices that they're making they are making and the alternatives available for them for trying to finance and education. we find that people often do not exhaust the available federal loans before moving to private student loans which have numerous different features that are less advantageous to the young person or the family whoever's financing their education. we believe that working with the department of education which we

have party begun to do, we can simplify and clarify these choices, point out the prominent things that people need to do. what are the actual specific terms of the lung? what is the interest rate? how will that be affected and what will repayment terms be down the road? we have already got a shopping she'd put together with the department of education that is an attempt to be again to simplify this market for people. but the driver here in particular is the underlying cost of an education and the importance of an education for young people having an opportunity in this country. it has been one of the reasons why we have been a leading nation in this world, the leading nation in this world for some time and we do so well with our higher institutions and they are successful so we have a mobile society. if we shut ourselves off from that, we are damaging our future. it is something that some of the things you describe in terms of forgiving loans and/or forgiving loans on terms of service by

young people or things are things that congress would need to look at. that i think there is a spotlight, community members are spotlighting this and i think it will get additional attention. you are pushing that and i think it's important to make sure people do not a great. >> mr. director, the consumer financial protection bureau, consumers are our constituents. they live in our cities, so we are grateful for what you are doing but it's a broad assignment, consumer protection because a lot of issues that impact our consumers. what are your top three focal points as you -- the bureau. >> we do have i would say three top priorities. the first is something we have begun to work on for a number of months which is our know before you owe project which is to try

to clarify for people what has often become an imprinted with -- and penetrable complex market for mortgages, for credit cards, for student loans, for bank deposit products. people don't know what choices they are making. they are clear on what terms they are accepting and we are going to continue to work to simplify that. that is very important project for us. the second project for us is having a tractor in place means we can embark on it is, you have markets, say the mortgage market which was so broken leading up to the financial crisis in which you had been competing against non-bank providers and some of the institutions they be regulated and closely supervised and are subject to certain laws. others may not be regulated at all and are subject to no laws at all. and we saw that again in the mortgage market most of all. you had mortgage brokers, often financed by investors offering

loans that responsible institutions, community banks and credit unions would not offer because they knew they were not going to succeed any of those loans would be made and the fallout would be felt in our communities. for a as we now have the ability to regulate tanks anon thanks to supervise and examined them and put them on a level with one another. that is very important. you cannot have the market work if you're regulating only part of it. the bad practices will drive up the out the good in the mortgage market was the classic example of that and it led to the meltdown of the entire system so that is the second priority but the third thing is we have to enforce the law. we have to make sure everyone understands the rules of the road and it will be applied evenly to all institutions big and small, bank in non-bank and that means that we will be in the marketplace is to stand on the side of consumers to protect them against fraud and to see they are treated fairly in the marketplace. as you say that is a big agenda and a lot of work for us to do

but it will make a real difference for people. >> good morning. welcome aboard. i'm from the city of timber pines florida and the florida everglades and we are having, we have quite a few seniors although our median age is only 40, quite a few condominiums and we see a lot of fraud with seniors. the average -- technology ipads look so good that they look like a wonderfully company. my question to you is, what can we do to solidify encryption to make sure that there isn't fraud, but to help our consumers, approximately 160,000 people in every day people come to me. how do we solidify encryption in technology? >> so when i was attorney general in particular we saw and

attempted to address lots of scams and frauds against individuals many of them targeted against seniors. seniors are often uniquely vulnerable. maybe they are feeling a little bit and maybe they are isolated from their families. sometimes they are too trusting and unfamiliar at times with some of the details of how the internet and cyberspace work. things can be made to look pretty legitimate and that realm when they are completely bogus and intended only to exploit you. we are going to be working with state and local officials across the country because that is such a large problem. is not something that can be dealt with by a single federal agency in washington d.c.. the attorneys general are often the front lines in dealing with these kinds of cyberand what is called cybercrime, not just scams and frauds which often makes it seem a little less than it really is.

people reaching into other people's pockets and stealing from them. so we also are going to be working with u.s. attorneys and federal prosecutors but also state and local das and prosecutors to address these issues. we are working on some projects at the bureau that we will be unveiling over the next few months including continued work with the task force that we have on mortgage fraud, but also mortgage fraud scams, home rescue scams, the foreclosure assistance scams that have been so prominent. basically anytime any program in our society would lead to money for individuals there were scams that will grow up around it. as the example we are a new bureau to protect consumers. we are already seemed some scame and using it to try to get a people's personal financial information and the like. the internet i found as an

attorney general cybercrime was the leading challenge for us. is difficult in terms of trying to locate the source of the crime. it's very mobile. people feel very bold on the internet to do things and is something we have to get a handle on but it's not easy and it's going to take a lot of people working together. >> director again thank you for being here with us this morning. let me give you a quick picture of what happens in city hall. so i have a resident of my city who shows up and brings all of their records. they are so angry at their well-known national lender, who is issuing them a short-term loan, short term being five years, to pay off some debt.

so, they have made regular payments for a number of years. they have got an 8% loan which seemed a little high and they suggested this plan is opposed to a second mortgage on their house. they had a family emergency and were out and they missed a loan payment by two days. the lending institution, a national level lender, kicked the interest rate up to 27.9%. and wouldn't allow them to rina koshy eight. they said that is the terms. you missed a payment and you were late on a payment and that is it. how do we as mayors when we hear that sort of egregious action almost take place in the lending world, that it's not just internet people trying to scam these people. this is a major lender. how do we protect those people from that kind of a lending

program that would allow that to happen to the average american? >> so this is a problem that i have been grappling with for i guess six or seven years now, and what we have seen is that the servicing of mortgages was a kind of forgotten backwater and in the middle of the last decade, when the real estate market was hot all it consisted of was receiving the checks and making sure you allocate them to the proper place. not so hard, not very expensive to do but what happened when the real estate market began to go south was that became a much harder business to bn and frankly the people in that business performed at a rather poor level and it continues. many of them have been recognizing the need now to staff up. there've been legal actions that continue and discussions around

settling the robo-signing scandal which is one indicator of rosa regularities in that market. we at the bureau now going forward have full authority to use three types of tools in addressing the mortgage servicing problems of the kind that you describe. the first is that we will be writing regulations that congress has required of us to try to clean up some of the problems in the mortgage market, both clarifying the terms so for example the example you raised in particular is someone who had the kind of mortgage that had terms varied in the fine print. it look like an 8% mortgage on its face but anything goes wrong can trigger almost like a credit card jacking up of the adjuster you to what is clearly an unsustainable level. we hear a lot of those stories from the same types of people that are bringing their documents to you especially now that we have opened our consumer

complaint line to mortgage complaints. we will be regulating the ability to repay as important its iteration in issuing a mortgage. one would have correctly thought you would need to regulate such a thing and you would think the markets would reflect that vendors want to know about the ability to repay a loan, but that is so skewed some of the incentives became here. we will be regulating fee appraisals many of which were bogus. there are already new regulations in place against premiums steering people into highest in -- hira just rates and a qualified for. people don't often know the difference at the closing table. they just assume the deal that is offered in the only deal available so regulating is one thing. supervising these mortgage servicers and supervising them closely, meaning the ability to almost, compared it with the mayor to an audit, to go in and examine their books and ask whatever questions, get the information we need to no, what they are doing it to fix problems with them. many of them can be fixed short of having to file a lawsuit

although we also have the ability to enforce and we need to file lawsuits in order to enforce the law we laws we certainly will do that, and that is an important part of our toolbox. but, in the meantime i would say one of the new things about the euro is we are individuals in a situation. we are taking their complaints and working with institutions to get those complaints resolved. that has been a nightmare. i know jim and i could tell you stories over the years and you will hear them too. people get into this trouble and that no one is somehow available to ever help them. and they call and when they do they send the paperwork. it gets lost and as i said the performance in this realm has been abysmal over the years and we are dead set on trying to make that improve. i think it is starting to improve but we have a long way to go. >> william, mayor?

>> bill from durham north carolina. i was glad to see your appointment and i'd like to priority priorities that you have laid out, but i guess my question is, given the resistance to your appointment, do you have the tools and the regulations at hand to carry those things out that you were talking about? do you have to go back to congress to get rings done? >> we do have a robust set of tools. we couldn't exercise all of those tools until we had a tractor so there was that period of time which was unfortunate because we got off to a delayed start but we are off the mark now and going full speed. i am not concerned about the prior controversy because i think that when you get to talking to people in public life both sides of the aisle at all levels of government, they are all representing the same people that we are looking to serve and they hear the same stories we do about people losing their homes, people drowning in debt and we

all know that more needs to be done to try to address these issues. so my view is that as we do our work, which we now can do and i don't think we need any more tools from congress at the moment. overtime we will see how that is. we will win people over if we can do our work well so it is on us and i'm happy with that, happy to take that responsibility although it's a significant challenge. >> thanks. >> good morning. howard fishman mayor of her most of these -- her most of beach california. to better provide transparency to consumers you mentioned as an example the consumer web site that you started up and you also mentioned the hotline. how will you require banks, credit cards and others to provide their customers this information to better protect the consumer? >> when you say this

information, i assume you are talking about information about the products? >> promoting what you are trying to do which is to protect consumers against fraud. there are ways in which you need to educate the public and obviously this is new and you are putting out issue mentioned above site in you mention the hotline. are you going to require like tanks and credit cards and other lenders to put this information out as part of the information so this information can be available? >> we have not contemplated trying to require financial institutions to advertise. i feel like that is our responsibility although one of the reasons why it's important for me to be here and to go out and speak congressionally about the bureau is so that networks like the u.s. conference of mayors and the 20 who goes back to the municipalities all over the country and you run those municipalities and you're in charge of trying to address these problems that you will direct the people and help create the awareness. we all know, it is a challenge

when you're in government and you think you have good things that you are trying to do that will help people, help people to become aware of that. so we will accept all help from that. whether we would and dade that bank somehow provide information to their customers, i don't know that, i don't know that is the best approach but we will think about that. i think a lot of institutions will advertise these changes to people and understand this is the way to channel some of their customers frustrations into a useful avenue. but i guess that is the kind of think we will sort of see if all as we go along. >> thank you mr. chairman. directorate is good to see you. i am from massachusetts and i bring you greetings from your friend elizabeth warren headset to say hello. but may pick up onto complaints

that i hear a lot from your colleagues in des moines from constituents. one is that everyone has seen the advertisement on tv where they call a customer and someone says his name is peggy. these call centers that clearly go overseas, it encountered them myself, trying to help someone going through foreclosure and somebody in india. i'm wondering if there is anything that can be done by way of regulations to bring those jobs home from the call centers but also to make them more responsive to consumer complaints. i know you are looking into the whole robo-signing and issues and i think there's a lot there but i have people ask why and i'm a member of the bar myself in massachusetts, why they represent the lender and not the borrower and if you want to have

the lawyer represent you as a borrower you have to pay another lawyer to do it are going to go a lot of financial education we are trying to achieve doesn't happen at the closing table because of that situation and i think there is an inbred conflict that might be another area of concern you might want to address. i also will come your appointment and am very glad and i thank chairman coleman for his leadership of this council. very much appreciate it mr. mayor, thank you. >> so you raised a couple of different concerns. in terms of businesses that outsource their call centers to other countries, you know, that is not an issue for regulation by the consumer euro. i understand there is attention being given by the administration and on the hill to try to in source jobs back from overseas because you actually can find parts of this country where it is just as

cheap to hire locally as it is 2 cents upping overseas and you have more control. a lot of businesses are beginning to see that. is a matter of persuading people to make a business case. out call centers i will note are located in new mexico and iowa, so we are local and that is important to us in the way we do our work. as to -- >> director we have a great spot in massachusetts. >> you wouldn't be a good mayor if you are pushing all the time, right? the other part of your question about financial education and lawyers who represent borrower's, part of the purpose of the sparrow is to stand on the side of the consumer to make sure that they are protected against fraud and to see they are treated fairly in the marketplace but i also firmly believe, and i will make the case constantly that one may protect consumers we are also

supporting responsible businesses who are happy to compete in the market as long as the playing field is level and everybody is held to the same rules and the better businesses will thrive in that environment. and i firmly believe that. i have seen it over the years and lots of different ways when your competitor is violating the law, getting an advantage often a cost advantage over you and getting away with it because people are not enforcing the law. that is not good for business and not good for the consumer and not good for markets. >> thank you. we will take one more question. patrick. >> thank you mr. chairman. frank rohde up a good point and i just wonder if and how you could address this. it is two things with the example he used on his constituent coming in and being told that there was an escalation clause based on a late payment date. so you know we in the legal field will soon know that as --

those things are buried in these agreements and so i guess one question i have god is, how can we deal with things that are of obvious interest to a borrower that are part of an agreement, like what happens in the case of a late payment. and the second thing in interpreting that is what i would almost refer to as we really mean it clause. in other words, if you are late we are going to estimate it so there is an emphasis because i think most of us would assume if you are today's late you can cure that default some way or another other than going to 27%. so you know the freedom to contract obviously is something that is protected but at the same time you know when we talk about the legal side of the, the lender side rather than the bar were side your agency is going to try to help.

when it is on the borrower side it's on the consumer side so i guess could you address the issue of the permanency of provisions on a borrowing agreement that need to be highlighted and then somehow and i don't know how this would be done, but they really mean it clause in terms of you are late we mean we are going to default you and raise your interest rate >> first of all i think consumers need to be aware that anything that appears in the fine print you had better assume that they really mean it. it is in there for a reason, and if it is in there, then it he comes, just legal bearing and people can't afford to ignore the fine print. on the other hand it is not realistic to expect that the average consumer wades the role that fine print and understands everything that is in there so part of our know before you owe project, and it's a difficult

project in some ways is to boil out of all of that dense often legalese, what are the important terms that the consumer needs to understand it needs to appreciate? and highlight those so that they stand out. ..

>> and and knows a local customers it is a repeat business tried to keep you've as a customer for the years and generations. of america has changed in many respects from that. they have the economies of scale and can compete effectively but it is difficult to run those large institutions to provide customer service. one way or another, these businesses need to focus on providing value to their customers not just a matter of price or fees but also to the matter of serving their needs in they have problems. that has not been done

effectively it is it deniable the. >> thank you very much mr. cordray great response to questions in i think this is much needed in america and i really mean it. [laughter] we will hear more about your progress we will invite you back at a future point* a great interest of what you're doing your consumers our constituents and we care greatly about your progress and to be successful because the first phone call historical a has not been to this bureau but the mayor's office in we have always been put deposition what do do about it?

now we have someone to turn to. i will bring the director out here for a couple of minutes of the great mayor from des moines iowa frank county will take over. [applause] >> in the effort to look at a huge agenda to keep things moving along i do see the head of the regional economics i a jests global insight to provide our traditional economy of today and let me ask a summary finally added metro economies to this council now that we're in our 11th year to issue this report is so jim, i saw you back here?

i will put off the final results of the iowa caucuses until he is finished. [laughter] it is a pleasure to be here again we release the report with the mayor today but it was a rough 2011 the u.s. economic recovery almost stalled out last summer due to the crisis of confidence of political leadership loopholes sides of the atlantic. but the year and is strong and the risks remained a largely political and carrying enough momentum into 2012 to generate economic growth and job great day's gains across all over the u.s.. but the growth will be moderate. the economy faces headwinds from public debt in slower growth overseas and abroad. the combination of excess

housing supply fiscal policy will hold the through 2012 reinspect 1.7 new million jobs that will really be enough to dent the unemployment rate that will remain above 8% once you factor in the growth in still represents less than half of 40% cumulative lee of aa point* 8 million jobs that is less than half of the jobs lost in this report we demonstrate that i don't have to remind do it accounts 86 presented in guber 90% and we call gross

metropolitan project in we emphasize the importance of household day government across the nation to reduce their debt burden and retrench the export sector which would be counted on nez a key driver going forward. and in the metro we find they generate 80% x four from the u.s. and will play a pivotal will in the process moving forward. this is also documented in the report. the main development of the metro area has the ability to generate this activity to drive exports essential for the nation. thank you. >> the full report is stood in front of the wall. we will take dead couple of

quick questions please keep them to the point* and concise there is a lot to do this morning. >> can you talk about the changing nature of the jobs? >> not precisely the same but we do see growth in higher levels them business service jobs so it is not only the low-paying jobs so that is important to know. >> family realize outsourcing and do we have

any ada how many real jobs are coming back from overseas or is it all anecdotal? >> it is the size relative that it is small but the important as it is not how many jobs are coming back but the flow is stopped in the numbers going overseas. >> as china becomes more expensive than the corporation's realize there other factors to consider. >> any other questions? >> just a quick thought. >> what would you do to create jobs in your community? >> i would emphasize the importance of thinking of what a mayor can do but

emphasize the importance of the infrastructure as a relates to business activity in household consumer activity to make the metro an attractive place to live. >> thank you so much for giving us a quick update and let's move on. we will gatt robert klein and robert stevens if you gentlemen would move forward, we will set up for the next portion of our presentation. i would like the gentlemen to suggest we had over 1,000 pairs signed on to the climate protection agreement. it seems at this time we ought to discuss a little bit about a sustainable cities and communities and the work that needs to be done in some of those areas.

there are 40 cities around the country that have applied and received regional sustainability planning grants there's a lot of work going on. i hope that staff would follow up with mayors across the country to share best practices of what we're doing in our cities locally to create a green economy and transition into the 21st century and what the jobs look like to make our city sustainable probably to throw that out to all the view in i am hopeful staff will follow-up and despite june we should have some good ideas to share on that front. having said that, i would like to now move to jim klein and mr. rokakis if you remember the baltimore meeting in june, we indicated we would work on a model piece of legislation to address how we move to

abandon property through the system quicker to less than a tremendous negative impact of the properties in the neighborhoods around the country. gentlemen? in very short order. >> 33 years of public life city and county officials than nature conservation organization to adopt the urban mission initially designed to stand up when they -- land banks in ohio and michigan and our cause i public entities to take and the distressed tax foreclosed properties but we have 13 in place in june in ohio. wherever we go we set these up in every urban county we're overwhelmed by the problem of they can

properties and possibly the greatest public servant i have known, as pointed out, we know what they do. they destroy a billion and crime and a magnet san take away from many people the single most valuable asset, their homes. there more vacant properties in ohio and michigan then there were post katrina of louisiana and in cleveland unless the house is on the market almost 1,000 days then sells at about 10% below the value i could go on and on with the depressing statistics. the answer is not only demolition but where that is critical for there is little money to do with the issue. the money is basically gone and because of cuts at the state level we're looking for a federal solution.

the treasury department met with members of congress to copy the model to help issued $22 billion worth of bonds to build new schools and making a request to the treasury department to do demolition and ohio that requires local participation to go to the attorney general to ask them to set aside to help fund this fund to make it possible and there's a program on "60 minutes" before merrill streep but it was done very nice call there goes the neighborhood it is clear if we don't raise money for demolition there goes another neighborhood in another neighborhood. they have a fighting chance but not as long as there are

thousands of fake and properties waiting to be demolished bridges not a demolition only issue of we have the largest preservation firm and the country trying to do other issues of that is okay? >> thank you. listening to the director over here the more gauged industry received most of of comments provide data service or a lender was nitrous in the properties that are out there. what we do, property preservation company to perform 1 million property inspections per month on a nationwide basis we are there and we're the ones with the loan is in default

we try to make contact. also to follow-up, like the director, we're out their boots on the ground to see the actual devastation that the vacant properties have around the country. i will tell you from our point* to view seeing what is happening, the greatest cause is the time it takes for our property wants it is vacant and abandon to prior to foreclosure to get up and move out. that property will set their in the foreclosure process for two years and means it is sitting there, it is vacant, it will take two years to go to foreclosure to take possession and do what it needs to do. the only consumer that is really hurt is the next-door

neighbor. all the things you heard about the property deteriorating it is because they're sitting there for years. in ohio it will take two years for the property wants it is filed until it is complete at a matter how much we maintain it will be vandalized comedy teary teary, used by drugs and prostitution we see it on a ground firsthand for crowd that is the most prevalent problem for our think the chairman rokakis has introduced a bill but do accelerate the properties that are baked and and abandoned. where however long it takes the property that is fake and doesn't do anything for the city or the neighbors was the mortgage company.

they're collateral interested series day by day in there's nothing they can do because the foreclosure process takes a while. so this bill will address the issue. the communities around the country every community brings it down to a level of code enforcement. they're sitting here months and years. we have properties we have seen in the foreclosure process three years it is vague and. the mortgage company cannot do anything because they have not taken possession. it is a catch-22 who maintains the properties? we do the best we can but it will be vandalized. it is the largest cause we could see of communities and the blight to that we see

there are other exceptions but the vast majority is because they sit over there for months and years without anybody having legal position on the property per car was strongly urge the mayor's but this is the state level issue that that needs to be addressed somehow and the bill being introduced in the ohio senate is a model example of what can be done when you shorten the process quote-unquote they can't and abandoned properties. it is not kicking anybody out of their home but they're already gone. get the property into responsible hands so they can do what needs to be done to reactivate the property and get it back into use. demolition is another factor that we see on the ground deteriorating neighborhoods but having said that, a demolition alone will not do

it. demolish and we have. those in need to be demolished others have to be rehab. you have to do both if you do one and not the other day to be put into affordable housing he will not accomplish anything. focus on the rehab at the same time. thank you. >> before we pass it again as quickly asked is anybody have any questions specifically about the vacant or abandoned properties? >> beverages asked to think about the maintenance of the properties what they are in limbo. if you live next door there weeds grow up and we cannot even go on to the land is sometimes to take care of this of this is an issue that needs to be addressed as well. >> i think it is a fallacy

every mortgage deed servicer could take action to take kids-- protect its collateral interest fannie ready require a mortgage servicer the says they could take action to maintain their property. we do millions every single month and have been doing it 20 years. we're not successful 100% for you are right some have fallen through the? but you do have a right to take action but it is limited. very limited with the mortgage-backed servicer can do. is a catch-22 we're not doing enough for every single property run the country. >> are any of the legal think tanks thinking on the issue of private property? what we have all the time is laws restricting us to take

property for many, many years. the laws are not on the city side but the owners' side in it is hurting their property values of everybody else. the fundamental issue of property rights we need to have some of the legal geniuses work on because i can do to aire at -- entire block and value on purpose they flip the start as a legal clock running it is the american way to treat your neighbor but because of this preoccupation with people's private property rights, we allow entire neighborhoods to be paralyzed. i like for people who were a lot smarter than me to start working on ways to take property from those who are purposely gaming this system to the expense of all the others to work hard and play by the rules but it is wrong

and somebody has to figure out a way around with our love affair with private property. it is not private property but it is a bit -- to mannesmann everybody else is. who do we turn to to change sell-off? >> and not an attorney so that is out of my realm. but we are seeing what the communities are doing to take action. >> [inaudible] >> i will pass the book i cannot answer that. >> let's quickly move on. mr. stevens is critical regulatory issues around the mortgage financing. >> as the mayor said its i did just leave the obama

administration and and the question is good for secretary donovan who is coming here today. there is too new challenges facing the housing market all of what you do with on a day-to-day basis servicing errors, the family is in trouble, homes under water with negative equity, excess inventory, all of those things are front and center. the other side is the future of housing finance. how to make sure they could borrow money going forward? this comes down to a couple of rules that i widow offer as a resource in you can contact me directly as the provision under the dodd/frank legislation in. this provision is part of qualified mortgage and without explaining if serbia

want to say it goes into effect as it is access could be severely restricted. the proposed rules today proposed by six regulators working together puts the down payment loans/value restrictions who could be qualified in your community. the down a restriction restriction, which there is a package in your packet that we could talk about further but it talks about who was impacted is literally a direct attack at first-time homebuyers, african-american s, latinos, demographically across the country and impacts firefighters, schoolteachers come in middle income americans who you need to work in your cities that are restricted simply because of the down payment standard. one thing they you should know, i know rihanna's

schedule but to make this concise, you should be aware that dodd/frank did not ask fair anywhere in the legislation for the regulators to identify a the loan to value minimum downpayment or the dead in the time ratio the regulators put dead-end above in beyond dodd/frank. having involved it was intentional to leave these out because first time homebuyers may not have high levels of inherited wealth of large amounts of residual and come to save up that 20 percent down payment if you cannot recruit the schoolteachers because they cannot buy a home because they are restricted by access because of a qualified residential mortgage that affects the vibrancy of your city that you are responsible for. the like a lot of things with the residential

mortgage talk about one occupied fully documented and fully amortizing mortgages to eliminate the excluding mortgages that have destroyed your communities of option of arm, subprime, extended terms than those are eliminated. it is healthy but to put the down payment barrier in place will have a direct impact. i am joined the national urban league and the center for responsible lending and others the we have joined together and later today i will be with congressman frank with this document with their logos to review with him. this will only stop by your active involvement to notify your regulators to make clear we support these protections but we are concerned about access for

the workers of our communities two effort by e.f., going forward. that is the overview. i leave out my offer if you want to reach out personally >> good morning. i am from cerrito is california. thank you for your comments. as a real estate practitioner myself i see it firsthand in terms of the difficulties of obtaining home mortgages. although we understand the need for oversight and also some safeguards, nevertheless as you mentioned it is truly limited at this point*. i believe the pendulum swung too far to the point* now the lender's are limiting to

be the ability of people trying to take home ownership into their personal standard rate now. but also there has to be away to make it more balanced where access is available and the safeguard is sam plays. so how is it you can advocate on behalf of the consumers and a mortgage applicants in order to go forward? at the rate we are going, they are so limited with finding available are making it available to the average borrower. said is a cycle that we are not getting the inventory supply a limited or making use of the really good market place right now. thank you. >> lo not add mu