system, it's bad for the firm, it's unfair in many ways. and it would be a great accomplishment to get rid of too big to fail. it's not something we advocate or support in any way. we were forced in a situation where we had to choose the least bad of a number of options. now, it's a good question. i think in the case of the, during the crisis we basically had to make judgments on a case-by-case basis and we're trying to be as conservative as possible. i think in the case certainly of aig there was not much doubt in our minds this was a case where action was necessary if at all possible. lehman brothers was in itself probably too big to fail. the sense that its failure had enormous negative impacts on global financial system, but there we were helpless because

it was essentially an insolvent firm. it didn't have enough collateral to borrow from the fed. we can't put capital into a firm that is insolvent. this was before the t.a.r.p. or anything else that provided capital the treasury could use so we had no legal way to do it. i think if we could have avoided that we would have done so. so it was somewhat ad hoc, although the two cases were intervene, bear stearns and in aig, i think the case was pretty clear given not only the firms themselves but also the context, the environment that was going on at the same time. interestingly, we've had to get much more into this issue since the crisis, because there are a number of different rules and regulations which actually require the fed and other regulatory agencies to make some determination about how

systemically critical a permit. for example, the new basel iii capital requirements require the largest no systemically critical from stuffy capital surcharge. they have to hold more capitals than firms that are not a systemically critical. as part of the process the international bank regulators work together to try to set up a set of criteria related to size, complexity, interconnectedness, derivatives, a whole bunch of criteria that help determine how much capital, extra capital they have to hold. likewise, the fed now when it approved the merger of two banks, it has to evaluate whether the merger creates a systemically more dangerous situation. so we have worked hard and we have put out criteria that describes some of the variety of criteria, including some numerical threshold that we look at, try to figure out if a

merger creates a systemically critical firm, which if it does we're not supposed to allow the merger to happen. so the signs of doing this is progressing. it's still in its infancy, but again in the crisis, our actual interventions were limited, welcome principal interventions were bear stearns and aig, along with other agencies. we also provide assistance to a couple other institutions, but nothing nearly to the extent of the aig situation involves. but we are looking very seriously at this and, indeed, now that the fed has become much more focused on financial stability, we have a whole division of people working on various metrics, various indicators, both to try to identify risks in the system and also to try to identify firms that need to be, you know, and particularly carefully supervised and maybe hold extra

capital because of the potential risks that they bring. >> thank you, mr. chairman. one vulnerability that you mention was the credit rating agencies were as i'm aaa ratings to -- [inaudible] incentives would be aligned with the buyers to seek out ratings that were more active because they would be taking on more risk. was there a systemic problem as far as how incentives were aligned within the credit rating systems that allow these faulty ratings to promulgate through the system? >> there were some problems, and to identify one of them which is that you would think somehow that instead of the seller of the security being one who hires and pays the credit rate or, you would think that it would be in the interests of the buyers who, after all, are the ones bearing the risk, to band together

somehow and pay the credit greater to give them the best opinions they can't about what the credit quality is in the secretive. unfortunately, that model doesn't seem to work. the very few examples of any that i know of, a free rider problem. basically if five investors get together and pay standard & poor's to rate a particular issuance, unless they can keep that completely secret, anybody else can find out what the rating was and then they can basically take advantage of that without having to pay, without having to be a part of the consortium that pay. there's a lot of ideas about how you can restructure the payment system to create better incentives for credit raiders. but it is a challenging problem because again, this obvious solution of having the investors pay only works if the investors

collectively can share the cost and some i keep that information from being spread among other investors. okay, 2:00. i will see on thursday to talk about the aftermath of the crisis. thank you. [applause] >> [inaudible conversations] former senators ted stevens was

convicted on ethics charges in 2008. the conviction was later thrown out because of prosecutorial misconduct. today, the senate judiciary committee holds a hearing on what was wrong in the justice department investigation. you can watch it live beginning at 10 a.m. eastern on c-span3. >> follow c-span's local content vehicles throughout the weekend as booktv and american history tv explore the history and literary culture of little rock, arkansas. saturday at noon eastern on book tv on c-span2, the little-known rights and killing of at least 20 african-american sharecroppers. >> you had calls going all up and down the mississippi delta and saying that blacks were now in revolt, and the next morning between 601,000 men, white men,

pour into the county to begin shooting down blocks. >> on american history tv on c-span3, sunday at 5 p.m. former student bruce lindsey on integration and north little rock high school. >> they know what's going to happen but we don't know what's going to happen. we don't realize what's going to happen when we go up the steps, but they seem to. because the crowd is with us now. the momentum is behind us, and they're pushing us up the steps. >> these stories and others on c-span's local content vehicles in little rock this weekend on c-span2 and three. >> you're watching c-span2 with politics and public affairs. weekdays feature live coverage of u.s. senate. weeknights watch key public policy events, and to weaken the latest nonfiction authors and books on booktv. you can see past programs and get our schedules at our

website, and you can join in the conversation on social media sites. >> the u.s. general in charge of computer network defense is told a senate committee yesterday that they manage to pull off a successful attack against the computer security firm rsa. general keith alexander testified alongside the head of the u.s. strategic command. several senators asked about a recent conversation overheard between president obama and russian president medvedev on missile defense. during a nuclear security meeting in seoul, south korea, president obama reportedly said, this is my last election. and after my election, i have more flexibility. this committee hearing is two hours and 45 minutes.

>> good morning, everybody. today's hearing continues a series of posture hearings that. the armed services committee is conducting on our combatant commands within the context ofec the fiscal year 2013 budgetn our request and the president's new strategic guidance. today, we received testimony from the u.s. strategic commandc and the u.s. cybercommand, a sub unified command of the u.s. strategic command your let me first welcome general robertfied kehler, the commander of the u.s. strategic command, and

general keith alexander, the commander of u.s. cybercommandk, and thank t them both for their service to our nation..s. we also want to thank the fineth men and women who serve in these commands for the dedication and service to our nation, and ameno special thanks to their dsanlies. strategic command, or stratcom, manages nine missions across the department of defense. these missions range from satellite and space situationale awareness, missile defense, andn electronic warfare, to combating destruction.ss stratcom coordinates the activities of the u.s. cybercommand across the department of defense. unlike combatant commands which otyregionally focused, stratcom submissions are global. as noted in the presence its strategic guidance, stratcom commands nuclear forces that can under any circumstances confront an adversary with this prospect of unacceptable damage.

that capability needs to be preserved as we continue to thduce the size of the forces and modernize the infrastructure at the department of energy that supports thisce mission. the general kehler, here are some ot the issues that i hope you'll address this morning. first, are you satisfied -- are you satisfied with the direction that we're taking in our nuclear force posture and with the department of energy's role in maintaining our nuclearure and stockpile so that we canen continue to reduce its size without testing while ensuringt the stockpile remains safe and meet military requirements? stoe second, do you believe we're on? a sustainable path to protect our space assets anda reconstitute them if necessary given the congested andnd contested nature of space?hem

third, the department of defens is allocated a block of the electromagnetic spectrum that connects our space, cyber and electronic warfare assets to our forces.rum that stratcom is the lead combatant command for synchronizing spectrum operations. how concerned are you about the prospect of losing spectrum and what are you doing to preserve the departments access to it? fourth, with the cancellation of the operationally responsive space program, are you worried pr about our ability to field canco low-cost it rapidly deployablei satellites that can fill capability gaps between large national intelligence satellitee collection systems and thepabily departments airborne surveillance platforms?on systes fifth, what is your strategic vision for the combined use of space and cyber? these two domains are integrallr

linked but we have not seen a sp plan for integrating are capabilities to the operations let me now turn to cybercommand for a moment. there's much for us to examine in this increasingly importanta and complex, but still new, mission area. incr not only as it affects the department of defense, the government and the economy as a. whole. as general alexander has stated generahe relentless industrial espionage being waged against u.s. industry and government,int chiefly by china, constitute quote the largest transfer of wealth in history, closed quote. the committee needs to understand the dimensions of this technology, theft and its impact on national security and e osperity. th the armed service committee is focus for some time on the needn to develop comprehensive policies and frameworks toe

govern planning and operations in cyberspace. frameworks to govern planning and operations in cyberspace. what are the rules of engagement if we are attacked by another nation? what is the doctrine for operations and deterrence in war fighting strategies? the administration has made progress in these areas, is reflected in recent strategies and in the development of comprehensive legislation to improve cyber security but much more needs to be done. as a still developing subunified combat ant command, the committee needs to understand the current and planned relationships between cyber command and stratcom and the other combatant commands. the defense department is considering the establishment of component cyber commands at the combatant commands. weep need to know what command arrangements would apply to these potential components as

well as the authorities and the missions that stratcom has delegated to cyber command and those that it plans to retain. general alexander has stated publicly that he believes he needs additional authorities to defend the networks information systems of the rest of the federal government and those of critical infrastructure. the committee needs clarity on exactly what authorities general alexander might be seeking and whether they go beyond what the administration has requested in its legislative proposal to congress. general alexander has also often stated that the department of defense does not in fact have a unified network but rather 15,000 separate networks or enclaves into which cyber command has little visibility. the committee needs to understand what can and should be done to correct what seemed to be an urgent and critical

problem. the department of defense has conducted a pilot program with a number of major companies in the defense industrial business or dib as it is called and multiple internet service providers like or isps like at&t and verizon. they provide signatures of known cyber penetration tools and methods directly to the dib companies or to the isps that provide the dib companies their communications services. the companies then use these signatures to detect and block intrusion attempts. carnegie mellon conducted an independent assessment of the dib pilot for dod and concluded that nsa provided few signatures that were not already known to the companies themselves and in many cases the dib companies by

themselves detected advanced threats with their own nonsignature-based detection methods that probably is not known to the nsa. and so we need to hear from general alexander on his view of those issues as well. we thank you both again for your service, for your being here this morning and we call on senator mccain. >> thank you, mr. chairman. let me thank our distinguished witnesses for joining us this morning and their many years of service to our nation. u.s. strategic command is in the midst of pivotal change has we proceed why the modernization of the nuclear weapons complex and nuclear try add and further imbred cyber defense and cyber attack and the core mission competencies of 21st century warfare. nuclear modernization i'm encominged even with the unpress didn'ted level of defense spending uncertainty, the department has maintained its

commitment of modernizing the try add of nuclear delivery vehicles. unfortunately the same cannot be said for the national nuclear strurt administration and proposal to abandon or delay key elements of their plan. modernization is universally recognized as essential to the future viability of the nuclear weapons complex and a prerequisite for future reductions. it's now been over a year since the treaty entered into force and we don't see any sign of the administration keeping those commitments. the core of the strategic

command mission is deterrence, however as frequency, sophistication and intensity of cyber related incidents continues to increase, it's apparent that this administration's cyber deterrent policies have failed to curb those malicious actions. the current deterrence framework, which is overly reliant on the development of defensive capabilities has been unsuccessful in dissuading cyber-related aggression. whether it's a nation state probing our military network, or criminal networks' theft of intellectual property, we must do more to prevent, respond to and deter cyber threats. the inevitability of a large scale cyber attack existential threat to our nation and does little to influence the

psychology of attackers who operate in a world with few if any negative consequentials for their actions. last july general cartwright, the former vice chairman of the joint chiefs of staff, criticized the administration's reactive strategy for operating in cyberspace saying, quote, if it's okay to attack me and i'm not going to do anything other than improve my defenses every time you attack me, it's very difficult to come up with a deterrent strategy. i look forward to hearing from our witnesses if they believe that a strategy overly focused on defense is sustainable and whether they agree more must be done to defer and dissuade those who look to hold u.s. interests at risk via cyberspace. the senate will soon begin debate on cyber security legislation. the central themes in that debate will focus on how to improve information sharing across the spectrum and whether a new governor bureaucracy will improve our cyber security. have i proposed legislation that first focusses on removing legal hurdles that hinder information

shari sharing. if a timely response is ef sense, how would another layer of bureaucratic red tape be helpful? while a secured act does not give new authorities to the national security or u.s. cyber command, few will deny that those institutions, not the department of homeland security, are most capable of guarding against cyber threats. unfortunately other legislative proposals favor prematurely adding more government bureaucracy rather than focusing on accomplishing the objective of protecting our cyber interests. general alexander, during an fbi sponsored symposium at fordham university, you stated that if a significant cyber attack against this country were being planned, there may not be much that either cyber command or nsa could legally do to discover and thwart such an attack in advance. you said, quote, in order to

stop a cyber attack, you have to see it in realtime and you have to have those authorities. those are the conditions we put on the table. now, how and what the congress chooses, that will be a policy decision. in a fight where the threat can materialize in mill i seconds and quick action is essential, i look forward to better understanding what authorities you believe are needed to protect the united states interest both at home and abroad. the department of defense is requesting nearly $3.4 billion for cybersecurity in fiscal 2013 and almost 17.5 billion over the future years' defense program. the cyber budget is one of the only areas of growth in the dod budget because of broad agreement that addressing the cyber threat must be among our highest priorities. ive thank the witnesses for appearing before the committee today and look forward to their

testimony. >> thank you very much. senator kaymer -- i mean general kaler. excuse me. >> thank you, mr. chairman. if it's okay with you, i'd like to have my statement admitted to the record. >> it will be part of the record. >> sir, senator mccain and distinguished members of the committee, thanks for this tonight to present my views on the united states strategic commands missions and priorities. very pleased to be here today with general keith alexander, cyber commandes commander and of course as both of you have pointed out, cyber is a critical component of our global capabilities. without question, mr. chairman, we continue to face a very challenging global security environment marked by constant change, enormous complexity and profound uncertainty. change and surprise have characterized the year that have passed since my last appearance before this committee. over that time, the men and women of strategic command have participated in support of operations in libya and japan,

have supported the withdrawal of u.s. combat forces from iraq and have observed the arab spring, the bold operation that killed osama bin laden, the death of kim jong il and the succession of kim jong un, the passage of the budget control act and the adoption of new defense strategic guidance. through this extraordinary period of challenge and change, stratcom's focus has remained constant, to deter, detect and prevent attacks on the united states, our allies and partners and to be prepared to employ force as needed. our priorities are clear, deter, attack, partner with the other commands to win today, respond to the new challenges in space, build cyberspace capability and capacity and prepare for uncertainty. transcending all of these priorities is the threat of n e

nuclear materials or wednesdayons in twednesdaapons the hands of extremistextremist. conflict will likely be increasingly hybrid in nature, encompassing, land, sea and hybrid space, cross geographic boundaries, involve multiple participants. i think it's important to note the same space and cyberspace tools that connect us together just last month the department of defense released new strategic guidance to address challenges. it describes the way ahead for the entire d.o.d. but i believe many portions are especially relevant to stratcom and are broad assigned responsibilities. for example, global presence,

succeeding in current conflicts, deterring and defeating aggression, including those seeking to deny our power projection, countering weapons of mass destruction, effectively operating in cyberspace, space, and all other domains and maintaining a safe, secure, effective nuclear deterrent are all important areas in the new strategy where stratcom's global reach and strategic focus play a vital role. these are important responsibilities, there are real risks involved in the scenarios we find ourselves in today. it's my job to prepare for those events and to advocate for the sustainment and modernization efforts we need to meet the challenges. in that regard, the fiscal year 2013 budget request is pivotal for our future. we're working hard to improve our planning and better integrate our efforts to counter weapons of mass destruction, proceed with our nuclear delivery, command and control systems, mod vearnize the complx

that cares for them, improve resilience of our space cape ibilties and enhance our situational awareness of the congested, competitive and contested domain. we need to improve the protection and resilience of cybernetworks, increase cape ability and capacity and work across the inner agency to increase protection of our critical infrastructure. enhance our isr cape babilities. we need to get better at electronic warfare, we need to practice how to operate in a degraded space and cyberspace environment. we need to improve our understanding of our adversaries, we need to review our plans and improve our decision processes and command relations, all subjects the two of you touched on in our opening comments. in short the new national security reality calls for a new strategic approach that promotes agile, decentralized action from

a fully integrated and int interdependent and resilient joint force. these are tough challenges but the men and women of stratcom view challenges as opportunities, partner with other commands to forge a bet, smarter, faster joint force. we remain committed to work with this in committee, the services, other agencies and our international partners to provide the flexible, agile and reliable strategic deterrence and mission assurance capabilities that our nation and friends need in this increasingly uncertain world. mr. chairman, it's an honor and privilege to lead america's fine evidence men and women. they are our greatest advantage. i'm enormously proud of their bravery and sacrifice, and i pledge to stand with them and for them to ensure we retain the best force the world has ever seen. in that, i join with the secretary of defense and the chairman of the joint chiefs of staff and other senior leaders, my colleagues, other combatant commanders in thanking you for the support you and this committee have provided them in the past, present, and on