broadcast network. we were talking about the grinding and what it would be like and i just didn't think i could survive if not having any kind of a break working these long hours and doing it for eight years i didn't think i had that in me and then he started describing cable to the start of something like being back in school and right now on hiatus from my show and that is why i am a good mood. if you had seen me two months ago i was a different person. i was exhausted, i had a headache, so that was it for me. >> i asked how many episodes had you done of "breaking bad," and it's close to 60, right, and then you are shutting down? we did 180 of desperate housewives and i was much thinner and i had more hair when we started.

it's incredible the amount of time and effort because you get two weeks off in may and that set and then you start plotting the next season. for me the thing is if you're doing is a proper diet may different than if you're doing a procedural but the intense plotting that goes into giving a soap opera, it's just the work load is overwhelming. and usually for people that watch my show you can kind of feel that another episode 14 stuff starts to not make sense i run out of a story at that point and then usually i try to get it together like episode 21 for the finale i'm like a que i know how to end of this. so that's one of the reasons i'm so impressed people can do things on cable because literally you look at some of the show's and when i say so i just mean continuing trauma, story lines that changeover every single episode coming to get to do actually deeper and

more sophisticated complicated work on cable because you have more time. people can pull it off on the networks that a show like desperate what every season was created equal and sometimes you go i think this will be completed in five episodes integrate your like okay that was wrong maybe next season will be better. when we started this year on devious we had production and i never had it that so that is one of the reasons i'm a fan of the key will universe because they allow the creators to have a vision from the beginning to the end and the potential is better. >> let's talk about the difference between the two because the perception on cable is that there is so much freedom and the standards and practices began you can say and do whatever you want. how real is that perception

cracks >> every episode is submitted to the people that tell us what is okay and what isn't. that is you can literally save shit and not fuck. i don't know what makes sense on that. >> you can't really say fuck here either. [laughter] just so you know. >> lynette rice have you seen that? >> there are some rules that we have to adhere by coming and we are constantly in battle. the rules are more relaxed but at the same time there are certain things we can't do that our stories -- there are different versions of the episodes that are better and those that are aired. >> heineman broadcast there's always a certain of bordering

like a fight to get this shot can i put this shower scene in. is that what is happening in cable and have you found yourself border urning? >> i'm lucky that i am so in the network broadcast standards that my experience with the show is they haven't given me a correction yet. i'm pretty aware of what i am allowed to do and also you get pretty good after a lifetime you can do provocative ideas, but you know, just we have a scene where a woman is undressing and so you see maybe a touch more cleavage than you'd find on the network. i tend to be a little conservative than some of how i approach it, so i think that literally desperate was turned down one of the reasons we handed the pilot to hbo and i heard back from one of the executives one of the reasons they turned it down as it wasn't pretty enough. there was no nudity and the

language was tama which means a was racy for ec but not so much for cable. it depends upon who you are as the creator and when you're doing. i would imagine something like "breaking bad" dealing with drugs as an issue, the very idea is involved in that is potentially more dangerous than some of the stuff i do which is personality character waste. did they stop you from a lot of drugs? >> we have to been given a lot of liberty. it comes down to language, nydia and to certain degree violence although we've certainly done things on breaking bad that he would get nowhere close to being able to do on the network. >> the only violence on desperate housewives was really behind the seats to the kerosenes. [laughter] >> with this liberty there is a rescue get yourself in trouble which is because you can do almost whatever you want you start thinking of the audience will love it if we have this

much sex or violence and you start to cross that line into gratuity which is when you don't want to do. you have to watch yourself because no one else is watching you. >> let's talk about the budget. there is also the perception that may be in cable you don't have quite as much money to play with as you what in broadcast. so if you want to stage a tornado or crash a plane, could you give it? >> i watched television completely differently from how i've watched it before i was making television. i felt really enjoy it anymore. i just think how did that cost to the game of thrones i'm like who was paying for that? it outrages me. and at the end of downton abbey there was the car within our was sticking out i thought that was too expensive but they added the car crash. you have to find ways to do it that are less expensive. i don't think that we ever have

to not do things but we have defined a way to do them that do not cost as much. >> they give you a set amount of money. so if you are going to do that to cost of this, you have to find the cost and sometimes you make the decision okay. i'm going to put my money into this episode which they will have a tornado or pick your natural disaster. and then these stories are going to take place in the same room for a few episodes you wonder why are they always in the bedroom? that's why. there's an earthquake in two episodes. [laughter] that is part of the job of the creator and writer of the show is just finding creative ways to spend money and the best way to do it. and it's easier to do, again going back if you have time. if you have time, you can do some really smart plotting and planning to where you do these things. so it's all possible. but like i said, i think it's a

little bit easier on cable to estimate and you do have the time if you are only giving 13 episodes this season or something like that, it's so much harder when you are doing network television because once you train them it doesn't stop and you can't take that time and say okay how do we overcome this problem packs and marc as a absolutely right. at the end of the day we have the right amount of money to make a show and we accepted that. when we come up with an obstacle , we do a bottle episode at some point or we just find some imaginative way to overcome. >> as a viewer is such a time because there is so much energy content on cable. do you have any fear that there's been to be so much the market is so saturated the

viewers are going to look for another diving competition show somewhere? like to much of a good thing? >> i don't think we have to worry about people leaving us for the diving show. [laughter] at the end of the day it was considered kind of racy but the interesting thing is was always about something, the frustrations of the modern woman who chose to be white or another. the idea was the strong part of it whether you saw marcia cross wearing a teddy in an episode that could be slightly provocative but it was the idea, that's what gave people their resonance so there will be shows that maybe try to spice it up with language or violence, nudity. at the end of the day it is what is the show's creator and what did the writers have to say that is the major selling point to it and as long as someone is doing initio hopefully with provocative ideas i think there

will always be room for people to see things they have observed about the society. i don't think that we run the risk of running out of those things to say. but, you know, nudity and swearing and violence are great but now they are so ubiquitous i think that the idea is the king and i think that is what will really determine who comes o your show and enough people relating to what you want to talk about. >> i have to ask about the walking dead. if there is one thing that show demonstrated that a cable show can get pretty huge ratings. is that putting some undue pressure on you with your shows? >> no, not at all. [laughter] >> yes. i think it is. even in relation to the last question how to get an audience when there are so many good shows out there and so many popular shows that i do worry about that a lot. you know, i watched when "the american" was on my watch at

butterfield and you'd see people either about to watch it or not and they would say to my time watching this and this and this. how many people can watch television all night long all night? the seem to be a fair number of people who can do that but there are just too many good shows and i don't know how you get enough of an audience and high enough ratings for enough good shows. i worry about it a lot. i don't know. >> marc? >> numbers are always at the back of your mind. the truth of the matter is the duty of cable is you don't need those huge numbers to be a success. as i say it comes from the future world where opening weekend means everything. and the beauty of what we do now, as long as you have interesting characters and you put them in a good compromising situation and label them with a lot of irony you will have an audience that will justify your being.

>> are you sure? >> positive. >> marc cherry, mark johnson, joe weisberg come thank you so much. [applause] ♪ >> ladies and gentlemen, as you head out i know we are nearing the end of the show and this is the last general session. i just want to come out and say i hope he would agree this has been an extraordinary few days. [applause] you know, on monday we made a promise. we told you we would give you a glimpse of the future and i think we have. you have seen in ultra high-speed broadband, new cable platforms connected to clouds that will provide a delightful new experiences for consumers coming to a home near you. we heard a challenge from the secretary of education with whom we hope to work to meet his

needs and we began to pay a debt by helping our veterans find new career opportunities as they hang up their uniform and join us in the civilian world coming and we have impacted the lives of many people who come as millennials in the part of the show. i'm very proud of what we have achieved, and on behalf of the national telecom association, the best in washington and the board of directors of the wonderful association, i want to thank you. it's been an honor and pleasure to put this on for you and i look forward to seeing you next year. thank you. travel safely. >> we are seeing in the trends that there's increasing government surveillance of us,

people come and there's increasing corporate surveillance and at the same time, people who are exposing this are being heavily prosecuted and i think that cannot be underscored enough. so just wanted to talk about that. and how people are being prosecuted is the government is using it this law called the computer fraud and abuse act three was on believably written in 1984 and which is ironic for all the reasons you can imagine and also if you think about it, it was written at a time before there were computers as there are today. oh-la-la is and incredibly broad and it's frightening really. almost anyone that touches a computer can be prosecuted so when you come to a facebook page, my space account and click on the terms of service

agreement that is 45 pages long and you didn't read and you do not obey those exact terms that again you probably have no idea what they are you were in violation of the computer fraud and abuse act and face five years in prison. if you need my space account for your dog, if you share and netflix password and look at your friend's account you are violating the computer fraud and abuse act and face five years for every time you've done that. any of us could probably be prosecuted under this act and we are not. who is prosecuted? we are seeing more and more the government is using it to prosecute whistleblowers, activists, hackers. it's being used as a political weapon against information activists. >> this discussion on computer hacking and prosecution of whistle-blowers is hosted by the group left forum.

the federal reserve this week announced new rules requiring banks to hold more money and reserve. the rules are part of an international agreement designed to prevent another financial crisis. chairman ben bernanke made the announcement on tuesday. >> i would like to begin by welcoming our guest to the federal reserve. today's meeting marks an important step in the board's efforts to enhance the resilience of the u.s. banking system and promote a broad financial stability. the final rule we are considering today put in place a comprehensive regulatory capital framework the board has been developing for some time in consultation with our domestic and international colleagues in central banks and regulatory agencies. this framework requires the banking organizations to hold

more high-quality capital, capital that will act as a financial cushion to of for the future losses while observing the incentives for the firms to take excessive risks to the strong capital requirements are essentials and we hope to have safe and sell to banks that can weather the economic and financial stress while continuing to meet the credit needs of our economy. the final will fulfil the commitment to implement the revised international regulatory capital framework known as basl iii it also incorporates the macroprovincial aspects that complement the broad financial stability agenda. today we will also be considering proposed technical changes to the market risk capital rule that became effective in january of this year to conform the final rule. we have with us today many of the staff who spent long hours working on the rulemakings and they should be commended for their conscientious efforts. i look forward to today's

discussion on this important initiative and i take no the fais chair and the governor signed are joining us by conference call. we will now turn to the governor who's played the key leadership role throughout this rulemaking process. >> thank you mr. chairman to the adoption of the capitol rules before us today would be a milestone in the efforts to make the financial system safer. while strong couple requirements alone cannot ensure the safety and soundness of the financial system the are central to the good financial regulation precisely because they are available to and absorbed all kinds of losses no matter how unanticipated. along with the stress testing and capital review measures we have already implemented and the additional tools for the large institutions along the way, the new rules will be an essential component of a set of mutually reinforcing capital requirements the rules will have several important consequences.

first, they will consolidate the progress that has been made by banks and regulators over the last four years in improving the quality and quantity of capital held by the banking organizations. adoption of the rules assures that as memories of the crisis fade, efforts to build and maintain higher capital levels will not be allowed to weigh in. second, they would read the shortcomings in our existing generally applicable risk weighted assets calculations that became apparent during the financial crisis. in so doing, they would also enhance the effectiveness of the collins amendment which we've strengthened in the final rule by making it applicable to the capital effort as well as minimal requirements to be deferred, adoption of the rules means that we will have met international expectations for u.s. implementation of the basel iii capital from work. this gives a firm position for which to press on expectations other countries implement basel

iii thereby promoting the global financial stability. in characterizing the rule as a milestone in the financial regulatory reform, i should note this marker has quite differently banking organizations of systemic importance on the one hand and the thousands of smaller banks on the other. for the vast majority of banks, the rules that we adopt today will mark the end of the major modifications we plan on the capitol rules. in fact as the governor will explain in a moment, most of the significant changes from the proposed rules that we issued last year that were made in the final rule are intended to reduce and simplify the number of the modifications from the current standards that will be applicable to smaller banks. with respect to the larger banking organizations, we have a number of capital related initiatives remaining. before turning to those initiatives i note work continues on the committee on simplifying and some of the more

complex positions and capital requirements applicable to the larger institutions. a particular interest is work on a standard list capital requirements from the market risk bill would provide a sound markup. as to what remains, beginning in the fall we will extend full stress testing requirements and capital plant refuse to the dozen or so banking organizations which greater than $50 billion in assets but have not been fully covered in the exercises we've undertaken since 2009 to read we also have in the various stages of development of rulemaking that will enhance the requirements for the eight banking organizations already identified as systemic importance. first we are close to completion of the notice of proposed rule making that list of cliche leverage ratio for the firm's about the basel iii required minimum. despite its innovativeness and taking account of off-balance sheet assets, the basel iii

seems to have been set too low to be an effective counterpart to the combination of the rest weighted capital measures that have been agreed internationally second, we should be ready to issue a notice of proposed rulemaking concerning the combined amount of equity and long-term debt they should maintain in order to facilitate orderly resolution in the appropriate circumstances. further, after the committee has completed the final month of a logical refinements to its framework for the capitol surcharges on banking organizations of the global system of importance we will issue a notice of proposed rulemaking to implement the framework in the united states. given the current state of the committee work we may be looking at such a notice late this year. fourth and finally the stuff is currently working on a recommendation for an advanced notice of proposed rulemaking to seek comment on possible

approaches to requiring additional measures the web directly address the risk related to short-term funding including a requirement large firms substantially dependent on such funding plans additional capital. once it is final, these measures would round out a capitol regime of complementary requirement that focus on different form of devotees and together compensate for the inevitable shortcomings in any single capital. this regime would conform to the mandate given to us by congress to apply to large banking organizations for exact regulatory and supervisory requirements that become progressively strict as the sestak importance of the firm increases. the capitol we consider today is a key element of this brought regime. in itself, as the foundation for the forward-looking requirements embedded in the stress testing and the base on which to add additional requirements such as

capital surcharges for the banks and global system of importance. with that i turn to the governor, the chairman of the subcommittee on smaller banks for her introductory comments. >> thank you. i will focus my remarks on the rule that is most pertinent to the community banks. i want to begin by emphasizing having adequate levels of all equity capital is just as crucial for smaller banks as it is to the largest institutions. the recent financial crisis demonstrated community banks can still be devastated by economic turbulence even when they get nothing to cause the problem. we are able to withstand the adverse economic conditions and continue to serve communities with those that started so with capital positions. as proposed last year the capitol rule would have achieved the objective of increasing the quantity and quality of capital and banks of all sizes but it also would have created substantial additional regulatory burden on community banks. in the final rule i believe that we have maintained the objective

of strengthening capital requirements but without the more onerous regulatory burden to read the board received my 2600 comment on the proposal with a majority of the comment letters coming from community banking organizations. in addition the federal reserve's all the input from community bankers in the person meetings. the stock held several a outreach sessions turned the country geared towards community bankers fielding hundreds of questions. i met personally with representatives from banking organizations of the various sizes with different legal structures and business models and several members of the board did the same. the outreach is critical to understanding the different elements would affect individual banking organizations. after hearing the concerns numerous changes have been made to the proposal to reduce its complexity and minimize the potential burden that would be placed on smaller and community banking organizations. while the staff would discuss the changes in the till i want to briefly comment on three changes in particular to the

first in light of the, or concerns about the burden of calculating the proposed risk rate for the banking organizations existing residential mortgage portfolios and the potential reduction in credit availability due to the interaction of the proposal with other mortgage related to rulemakings the final rule would maintain the current risk wait for the residential mortgage loans. second, the final rule would allow the non-advanced purchase in the banking organizations to make a onetime election to opt out of the requirement to include most elements of aoci on a regulatory capital. while the banks wouldn't be required on the regular capital the wouldn't be permitted to switch back and forth to take advantage of the unrealized gains and ignore the losses to referred community thinks subjected to the phase on the trust prefer security as part of the capitol. in recognition of community banking organizations limited access to the capitol markets

the final will would grandfather certain existent securities as permitted by the dodd-frank act. ultimately the relevant measure wasn't prepared to the proposal put evaluated against existing regulatory requirements. in this regard the final rule would strengthen the quality and quantity without the complexity or the capitol volatility for community banks. we have few of the changes from the current requirements. first the equity capital requirement would require all banks to hold more common stock retained earnings in the case under the current requirements. because most community bank's capital is primarily with common stock and maintain a common capital, this new standard is a validation of the community capital model rather than an additional burden with the requirement for the tier one capital would be increased from four to 6%. a trust preferred securities have become an element of the tier one capital for community

banks. if the grandfather instrument of the q1 capital standard zero is only a minimal burden on those community banks. what also create a capital conservation buffer that would work to limit the distributions as the capitol levels approached the minimums. in the comments the community banks stress their access to capital markets and result from those earnings. the couple buffer concept is appropriate for the community banks because it does not on its own require the bank to raise the capitol. rather it mandates the retention until the capitol is comfortably above above the minimums. it's used for calculating the ratios to have more stringent limits on the inclusion of mortgage servicing assets and the rest will so increase. this provision increases capital requirements for institutions with high concentrations of either of these types of assets but they proved less effective than expected for the and

absorbing losses. the rest would increase for loans past due as well as high volatility commercial real-estate loans. when emphasized the high risk hbrc loans is a small subset of the commercial real-estate loans to the tigris acquisition development of construction loans of with the result in large losses during the recent crisis and the savings and loan crisis. all of the commercial real-estate maintains their current risk weight. a continuing effort to improve communication with banks about regulatory changes the staff prepared a one-page summary designed specifically for community banks the describes the changes discussed today. i'm hopeful this law will allow the community bankers to zeroing in on the changes that affect them to i would like to thank the staff for their efforts in finalizing these new capital requirements. i am confident their work will contribute to a stronger and

more resilient banking industry that will benefit the overall economy. i will now turn it over to mike gibson. .. other areas of our reform program build on these stronger

capital standard and also reflect the principle of increased stringency. i will briefly mention three of these other areas. post-traumatic stress disorder testing an capital planning, the capital sure charge for sifis and resolution. the federal reserve trees testing an capital plan rules for employ stronger minimum capital ratios and stronger definition of capital in today's final rule as these changes come into effect. our supervisory post-traumatic stress disorder testing satisfies the increased principle of increased stringency. bank companies below $50 billion in assets are not covered by the supervisory post-traumatic stress disorder testing or capital rule while the largest bank holding companies are subject to tougher post-traumatic stress disorder test that includes a global shock to financial sectors. governor tarullo we're implementing to the basal committee to sifi capital surcharge, an amount ranges from 1 to 2 1/2% are common he can

quilt for global systemically global banking organizations the sifi surcharge will build pan the basal iii framework in the final rule. the sifi surcharge increases stringency only eight large u.s. bank holding companies are currently on the list of global systemically important banks. third, we made the largest bank holding companies subject to regulatory and supervisory measures that will make them more resolvable in the event of failure. these bank holing companies are beginning to submit resolution plans or living wills to the fdic an federal reserve which will improve their prospects for orderly resolution. in our supervision of these firms we designated resolvability as a expectation of our supervisory program. again all of our work on resolution meets the principle of increasing stringency because it only affects large bank holding companies. all elements of this reform program taken together are intended to increase the

resilience of the financial civil and insure that the banking sector can support strong and stable growth in the u.s. economy. let me now turn the meeting over to anna lee huko. >> thank you. the final rule best board today is the result of an extraordinary team effort across divisions here at the board awell as across federal banking agencies. it represents a major step in addressing the weakness in the capital regulatory framework highlighted by financial crisis. the final rule enhances the agency capital regulations to help insure banking organizations maintain strong capital positions that will enable them to continue lending to credit worthy borrowers in their communities even in times of financial post-traumatic stress disorder. this will in turn improve the overall resilliance of the u.s. banking civil. quantitative analysis by the basal committee found that stronger capital requirements would lower the probability of banking crises and their associated output losses while having only modest impact on gross domestic product and lending costs. moreover transition positions

would help mitigate these negative impacts. this morning i will highlight some of the main provisions of the final rule that will achieve this goal as well as key revisions made to the proposal in large part to addressed burdened concerns raised by community banks. my colleagues including connie. ben mack done now and will help answer questions about the details of the rule following my remarks. the final rule restructures the agency's current regulatory capital rules into a harmonized come helps sieve framework. the rule incorporates requirements consistent with basal iii capital standards established by the basal committee on banking supervision and with certain provisions of the dodd-frank act including minimal capital requirements for deposit holding institution companies and federal agencies remove references to credit ratings from the regulations. npr board considering today reflects refinements to alternative standards of creditworthiness to credit ratings contained in the final

rule. the agency's final rule applies to all banks, saves associations, bank holding companies not subject to the board's small bank holding company policy statement and certain savings and loan holding companies. savings and loan holding companies with substantial insurance activities raise significant concerns about the appropriateness of the proposed regulatory capital framework for their business model. in order to provide the board more time to consider issues raced by commentators, the final rule doesn't apply to savings and loan holding companies with more than 25% of total assets held in regulated insurance underwriting companies. in addition the final rule does knot provide to grandfather unitary savings and loan companies largely commercial companies until such time as the board promulgates the rule establishing intier med i can't think holding companies pursuant to section 626 of the dodd-frank act. it increases quantity and quality of financial capital for all banking organizations by

establishing among other standards a minimum common he can quilt tier one capital ratio, higher tier one capital ratio and stricter set of eligibility for capital regulatory instruments. most banking organizations already meet the higher capital standard and the rule will help preserve the benefits of banking organizations stronger capital accumulated since the financial crisis the final rule revises prompt corrective action framework for insured depository institutions to incorporate the revised capital standards. the final rule establishes limit stations on capital distributions and certain discretionary bonus payments if a banking organization does not hold sufficient amounts of common equity tier one capital in addition to the risk based capital requirements. this capital conservation buffer is designed to provide incentives for banking organization to conserve capital during benign economic periods so they are prepared to with stand severe post-traumatic stress disorder events and still remain above the minimum capital levels the final rule emphasizes common equity tier one capital because it is highest quality,

most less absorbing form of capital. final rule rye advises agency rules calculating risk-weighted assets introducing a standardized approach that addresses weaknesses identified over recent years and enhances risk sensitivity. it is important to note that certain provisions of the final rule only apply to international active banging organization with risk profile, level of sophistication. the final rule layers on a number of make crow features for these firms. for example they are subject to counter-cyclical capital buffer that allows regulators to increase the capital conservation buffer and lobs absorption capacity in the system in times of excessive credit growth. in addition these firms are subject to additional counterparty credit risk capital requirements and as well as additional leverage requirements that takes into account off-balance sheet exposures. moreover internationally active firms must calculate the risk based rash i don't understanderrized and approaches use more conservative ratios

when compliance with minimum capital requirements and capital conservation buffer. as noted the final rule establishes a robust and comprehensive capital requirement framework for banking organizations of all sizes. at the same time in response to public comment it reduces complexity and regulatory burden for non-internationally active banking organizations relative to the proposal. since the comment period closed at the end of october, staff has reviewed 2600 comment letters. most come menners supported a more robust capital standards many come menners expressed concern regarding burden imposed by proposal and number of smaller banking organization and saves and loan organizations with substantial insurance activities requested exemption from the proposals. governor duke highlighted most notable concerns raised by come menters, comprehensive income or aoci. proposed risk weights for residential mortgages. regulatory capital treatment of trust preferred securities that

currently count as tier one capital and time for compliance with requirements. under our current capital rules most components of aoci, for example, unrealized gains an losses on available sales for debt securities are not included in regulatory capital. the proposed rule would have required institutions to include most aoci components in their common he can equity tier one capital. many commenters asserted this aspect would cause considerable volatility in capital ratios with benchmarks in interest rates leading to difficulties particularly for small, banking organization in their capital planning and ability to hedge interest rate risk. recognizing the tool used by more larger complex banking organization for managing interest rate risk are not readily available for all banking organizations final rule addresses these concerns allowing non-internationally active banking organizations one time option to continue excluding most aoci components from regulatory capital.

most commenters raised concerns about the prosed treatment of residential mortgages. the proposal would have introduced a more granular risk weighting framework for residential mortgage by dividing exposures into two categories based on their underwriting and product charactertics and assigning risk weights on loan-to-value ratios. commenters indicated proposed treatment would inhibit lending to credit worthy borrowers and could jeopardize recovery after still fragile housing market. they highlighted concerns regarding compliance burden and asserted a the that the proposed risk weights were not appropriate for certain products. commenters noted potential cumulative burden on impact of mortgage industry when considering regulatory initiatives related to other aspects of dodd-frank act such as qualified mortgage, qualified and qualifying residential mortgage standard. in view of all of these comments the final rule contains the current treatment for residential mortgages. another significant change from the proposal is related to treatment of trust preferred

securities and other capital instruments that will no longer meet criteria for tier one capital under the final rule. he approval would have required all banking organizations to phase out such non-qualifying capital instruments from tier one capital over a transition period. many commenters encouraged agencies to grandfather non-qualifying capital instruments for banking organization with less than $15 billion in total assets asserting that their exclusion would unduly burden these banking organizations and potentially impair their lending capacity. in light of the smallest firms limited access to capital markets the final rule allows banking organizations with less than $15 billion in total assets to grandfather trust preferred security e securities and other non-qualifying capital instruments in tier one capital subject to limits consistent with our current rules. larger banking organizations would be subject to the proposed phaseout consistent with dodd-frank requirements. turning to the timing for banking organizations to come into compliance with final rules a number of smaller banking

organization and saves an loan holding companies requested more time to comply with requirements of final rule. in response the final rule requires large internationally active banking organization to comply with final rules including its transition provisions beginning in january 2014. other banking organizations including all savings and loan holding companies subject to the rule would have until january 2015 to begin compliance. this simply flies transition provisions for smaller banking organization an allows them more time to make the requisite system changes and if necessary retain earnings to meet the new regulatory capital threshold. staff june 2012 analysis of the proposal indicated overwhelming majority of banking organizations already had sufficient capital to comply with the proposed rule. our updated analysis for the final rule indicates that an even greater number of banking organizations would meet the new requirements if they were imposed without transitions today. more than 95% of bank holding

companies with assets under $10 billion, that meet our current regulatory capital requirement was meet this 4 1/2% minimum common equity tier one ratio and nearly 90% would meet the 7% common equity buffer level. the aggregate short fall for institutions not meeting the 7% buffer is about $2 billion. this short fall has decreased by 1 1/2 billion dollars since our analysis of the proposal which we attribute to increases in retained earnings as well as modifications from the proposal i've described. all larger bank holding companies that meet our current regulatory capital requirements meet the minimum common equity tier one ratio and almost 95% meet the minimum sized buffer with aggregate short fall of approximately $2.5 billion. in closing the final rule improves the quality, increases level of regulatory capital across banking organizations of all sizes and risk profiles. leading to a more stable and resilient banking system. the final rule meaningfully

addresses commenters concerns regarding implementation burden of proposal yet maintains progress towards the board's goal of more robust u.s. banking system this concludes my prepared remarks and my colleagues and i would be pleased to answer your questions. >> thank you very much. thank you for your presentation. thank you again for your hard work. for the board we technically have two votes. one is on the capital proposal. the second is on amendments to the market risk capital rule. what i propose is though we have a single round of questioning by the governors. followed by positions and the two votes. so let me begin with a question. one of the criticisms, one of the difficult issues related to basal iii, particularly the advanced approaches is the idea that banks in some sense calculate their own risk weights using internal models. some people called that the bank's grading their own exams. this is related also to the

issue of comparability across-countries, the question whether or not banks of differing countries are assigning approximately comparable risk weights to similar assets. can you comment on the protections, validations, what we do to insure that the risk weights being assigned by advanced approaches banks are in fact reasonable and how does this relate in particular also to our post-traumatic stress disorder testing an what we've learned from that process? >> so, regarding that, what we do for risk weights for the advanced approaches, the federal reserve system has implemented a basal coordination committee that is used to basically vet and compare and establish standards for exiting banks from parallel run. there is supervisory requirement that banks have to meet the standards and the basal ii or

advance approaches rule in order to exit parallel run and use their model capital requirements as part of their minimum capital requirements. to date no banking organization has received that approval to exit parallel run but we've taken a number of steps to make sure they're well on their way toward achieving that point. some of the exercises include having specialized teams of examiners that go around to advanced approaches organizations and are able to take a consistent approach across banks and understand what they're doing. what's the best practices are, what the outlyer practices are and use the supervisory process to help move them where they which we think they need to be. looking at bank evaluation models is very important component of the final rule and fed and occ issued guidance on model validation as using part of our examination in determination whether banks are getting ready to exit parallel run. there is in the united states,

as part of the a standardized floor for risk-weighted assets. so while there may be some variability, and there will be some variability in the model of risk-weighted assets by design banking organizations under our current rules and under the new final rule once they have exited parallel run would have to calculate two sets of risk based capital requirements. one using advanced approaches. one using the standardized approach and they are bound for both their minimum capital purposes and determining where they are in the capital conservation buffer based on the lower, the more conservative of those two measures. so that's provides some baseline level of comparability. >> so i would just add within the basal committee we've been spending a lot of time recently focusing on the point you make about comparability of risk-weighted assets across different banks or lack thereof. the basal committee published a paper that reported on a horizontal exercise done across

banks trading book capital models and there is a paper forge coming looking at banking book capital models for credit risk capital requirements and both of those papers found a lot of variability of risk-weighted asset calculations as well as other analyses by industry analysts. the basal committee is definitely focused on the issue you how to address concerns and as anna lee mentioned in, the u.s. we have a capital floor thanks to the collins amendment and we've also been putting banks through a very stringent model approval process. other countries have done different things. some countries have imposed floors in different areas or imposed higher risk weights on certain portfolios where they observed models giving results they don't have confidence in. so it has been a range of different approaches by different countries but definitely an issue we're paying a lot of attention to and working on. >> thanks very much. vice-chair young, can you hear us? >> thank you for.

i have just one question i want to ask. the proposed rule that we put out a year ago suggested raising the risk weights on both high loan-to-value ratio residential loans and also high volatility cre loans. as governor duke mentioned the final proposal kept the proposed higher weight on cre loans but abandoned the proposed higher weight on high ltv residential loans. my understanding is that community banks expressed concern about both proposals and i wonder if you would explain to me why, why it was decided to alter -- one area but, essentially leave it alone in another, the other? >> so with respect to high value real estate -- >> come to that, sorry.

didn't hear you, go ahead. >> with respect to high volume real estate loans as governor duke mentioned these are loans that have been associated with higher risk, both in the recent crisis and in past financial crises. and staff would recommend the higher risk weight to reflect that fact. however in response to comments we did make some changes to the definition of high volatile commercial real estate loans to clarify that they would only apply to the subset of act with with significance and development and construction loans -- acquisition. those loans are safer because they have a lot of borrower equity commitment and lower ltv, would actually not be subject to the higher risk weights. we suggested to clarify in that definition that agricultural loans would not be covered and that certain community development loans would not be covered in response to comments. we actually did make some changes there in response to comments that were particularly

targeting the concerns that were raised. with respect to residential mortgages we think there are some advantages to, to going with the current risk weights, at least for now. for several reasons, raised by commenters. one is, as mentioned before, a lot of commenters were concerned about the burden of calculating the ltv ratios as well as differentiating mortgages based on product categories and the, keeping the current treatment at this time would not place additional burdens on smaller banks in particular. the other, the other aspect of comments that commenters really focused on was that the proposed, the proposed risk weights could interact with other residential mortgage related regulations that are either coming into effect or that will be coming into effect

and exactly how that regulatory language will affect the mortgage market at this time may not be known and it would be prudent to wait and see how those regulations all affect each other and affect mortgage lines before adding additional regulation. so not changing the risk weights at this time will give the agencies and the board, including the board to give time for the board to see how all the regulations interact each other and affect mortgage lending prior to adjusting risk weights. that does mean there is less sensitivity as to compared to the proposal in assigning risk weights to mortgage but the agencies always have the opportunity in the future if they deem appropriate to change the risk weights. so those were the major reasons for the differences in approach. >> thank you very much. >> okay. i'll turn to governor duke.

>> thank you, mr. chairman. i actually have two best hawaii questions. the first one, i talked a lot about the comments from community banks and we heard from savings and loan companies, particularly things about the exemption for, we have an exemption for small bank holding companies but not an exemption for small slhcs. we heard a lot from insurance companies which is just a different model from the banking model. then there are a number of slhcs whose activities are predominantly nonfinancial in nature. could you talk just briefly about how we addressed comments from those institutions? >> so with respect to the smaller savings and loan holding companies, in the dodd-frank act there is a provision that provides exemption from consolidated capital requirements for small nonbank holdings companies. generally those with $500 million or less subject to the board's smaller company

holding statement. there is not a provision in the act for small savings and loans companies. so we don't feel we have a latitude to provide exemption for those terms. as anna lee mentioned in her remarks we are providing a temporary exemption from the rules for insurance savings and loan holding companies with parts of the comments they raised on the proposal was that the requirements are very bank centric. they don't take into account the business model particularly of the asset liability matching practices of insurance companies. they also raised concerns about for certain first that only prepare their financial statements according to statutory accounting principles an not gaap. there was a burden concern there they also raised concerns about the interactions of consolidated capital requirements that we had proposed and how that interacts with state regulatory, the regulatory requirement required bit state insurance regulator. so, we thought that it was prep rat to take a bit more time to look at what adjustments, if any, should be made to address

sort of specific insurance companies business model concerns. with respect to the commercial savings and loan holding companies, given the activities that they're primarily engaged in, we thought it would be worthwhile to wait until the, the board proposes some kind of regime for enter immediate holding companies, largely to allow that regime to come into play until we establish consolidated capital requirements for those firms so we don't have things moving out of lockstep with one another. so you would put into place the intermediate holding company framework first and apply the requirements after that. >> thank you. and then the second question, we talked a lot about the parts of the basal agreement that are included in this rule but could you tell me what are the main differences if any between what was agreed to in basal and the united states final rule and also how do we differ from the implementation in europe?

>> i'll take the first part of your question and turn to mike to address the second part. the primary difference in the u.s. implementation is that the basal accord uses credit ratings to risk weight certain exposures in the united states. we're not able to do that due to the dodd-frank act. so we have proposed and are asking to finalize alternative standard to creditworthiness that don't involve credit ratings in the final rule. there are a couple areas where the final rule is super equivalent or more stringent than basal ii that i would highlight, one is in the phaseout of non-qualifying capital instruments. again this has a statutory aspect. we're required to phase out certain instruments over a three-year period whereas the basal accord would allow much lengthier time period. we're doing as required by statute the shorter phaseout period. the third itemized highlight for tier one capital instruments the final rule requires they be gaap equity where as the accord is

more flexible and certain debt instruments could potentially qualify as tier one capital under the accord so we're a little tighter on that. >> so, with respect to basal iii rules in europe and other jurisdiction, with the u.s. now finalizing our basal iii rule, europe just finalized their final text within the last week or two, that will, nearly complete the basal iii implementation and in the rule-making sense across the major basal committee member countries because other jurisdictions as switzerland and japan already implemented their rules. both our and european basal iii rules will take effect for largest internationally active firms by january of 2014. we'll both be moving to get started with the phase-in periods of basal iii. there's a couple areas where the european final rules don't appear to be exactly in line with the basal standards. a couple that we heard about

from commenters are, treatment of credit risk on otc derivatives and treatment, risk weights on sovereign debt. the basal committee has a process now that involves regulatory capital, regulatory comparability assessment across-countries. so both the u.s. and european union will be going through that process now that our final rules are headed to be final. so we'll look forward to seeing what the basal committee review says both about our final rules and the european rules and some other countries i already mentioned already gone through this process. eventually every basal committee jurisdiction will be reviewed for the comparability of their rules against basal standard. >> thank you. >> governor tarullo. >> thank you, mr. chairman. i just want to follow up a moment on the vice-chair's question and april's answer to it, particularly with respect to the residential mortgages. as you explained the final rule is not making any change in current residential mortgage

risk weights but is this an area in which the combly men at thatry of our capital measures will make a difference? at least for post-traumatic stress disorder test banks, won't the adverse scenario and the portfolio-specific post-traumatic stress disorder testing that we require mean that in fact there will be a higher capital expectation with respect to higher risk mortgages for those 50 billion-dollar and above banks? >> yeah. the post-traumatic stress disorder testing of residential mortgage exposure is very risk sensitive and does, they gather a lot of data on the loan levels that will capture things like loan-to-value and other characterrics of the mortgages and it will be a risk sensitive calculation. so you're right, we're giving up a little risk sensitivity in the changes we're making to the final rule but at least for the large bank holding companies we retain a lot of risk sensitivity through the supervisory post-traumatic stress disorder testing. >> thank you. >> governor baskin?

>> thank you, mr. chairman. i too would like to commend the bill's staff for intensive work on this final regulatory capital rule. i'd also like to thank the fdic and the occ for their efforts and participation in what has been a long and challenging process. i'm pleased to say that i, either interagency efforts culminated in a set of decisions which are now reflected in this final rule. this final rule appears to me to be an improvement over the proposed final rule and reflects many comments provided during the public comment period since the time the proposed rule was issued. . .

can be quickly eroded and rest is in perfect. a bank can quickly to defend into a failing mode before the capitol is eroded and before the capitol plans are triggered and the orderly liquidation is implicated, the supervisory safeguards play an early and a necessary role following the bank's descend into failure. such supervisory safeguards are meant to ensure that banks are able to identify and correct their own emerging risks through good government and appropriate risk management. capital requirements don't compensate for good governance and appropriate risk management. and as we know, the federal reserve and the provincial banking regulators don't regulate the entire financial

system. their regulatory capital rules do not apply to the entire financial system. this is all to say that strong levels of capital are necessary but are not sufficient as a feature of an overall regime of supervision. so my question to you this morning are all about how the final capital rules have been tailored to sit within the broad framework of the prudential supervision. an optimal framework of prudential supervision must have requirements that are first of all capable of being understood by the banks who have to comply with them, by the examiners who have to examine for them and by the public which ultimately must trust them. balanced against these features is the simultaneous need to not unduly constrain a bank's ability to engage in financial intermediation, particularly in communities that are distressed and credit starved or

communities with a weak competitive alternatives. so, my first question is it looks as if the complexity of the capitol rules have been reduced to the community banks as compared to what was proposed. so i would like to hear you explain whether it would be possible for banks to implement these rules without requiring them to engage in time-consuming expert research. >> so, yes. i think as the governor mentioned, we are engaging in several different means of out reached to help particularly the community banks understand the rules and what is changing for them. we are putting out today a one page guide that really fits the base for the standard community banks that don't engage in foreign transactions,

securitization, exposures. on one page what are the most important changes. i would anticipate going forward some other outreach documents like that the door a little more detailed and help the bank understand what is changing the. we are going to be proposing the regulatory reports for the capitol levels and that is what many banks use to walk through the steps and into the calculations and this will be coming out in public comment soon as well. and in addition we are going to be doing outreach to our examiners and the banking organizations again with the educational focus as well as standing ready for their questions. >> the have to be able to check the capitol calculations of the bank's and then the examiners have to figure out what lies beyond the ratio that resulted from that capital calculations and then determine what condition the bank may be in bye virtue of the ratio.

they might bear no resemblance to what appears to be occurring in the bank or they could be masking of emerging problems and the examiners are going to need to understand what the emerging problems might be. in short, examiners need to be doubled to synthesize the calculations into their determinations of safety and soundness and financial stability. for this reason they have to figure out how to pierce the complexity that is more suited to the economists and modelers. however much risk and capital ratio can add to the information that day yield will never be perfect and its precise examiners will still have to make decisions with the limited certainty about the outcomes. at the end of the day there will still be viruses that infect software and there will still be sloppy bank management practices.

so, my questions are obvious how do we ensure that the final capital framework preserves the ability for examiners to make these determinations? in particular as the final rule abandon the protocols for using the prompt corrective action? if not, what efforts were made to align the prompt corrective action designations with the capitol requirements and clarify the implications associated with the various thresholds need to be addressed. >> i will answer the question in two parts. first, the changes to the prompt corrective action framework have been made to align the frame work with the new minimum capital threshold's. the penalties of the bank moves through the categories that remain the same. of the threshold for what constitutes the capitalized verses adequately capitalized

and less than that banking organization has been raised so that triggers come earlier and there hasn't been a change to the ability to designate a bank on the less than capitalist supervisory evaluation. the factors are consistent with how the bank examiners think about capital and the way that it is rated for a supervisory purpose and the depository institution level. the regulatory capital ratios are one aspect but i would say that isn't even the most important aspect to determine if the bank actually meets the minimum then there are a series of other things examiners consider what is the risk profile of a collective basis for using additional information what are the quality trends and what kind of concentrations and other exposure does it have and how do those factors feature into its adequacy. for the larger bank holding

company banks will also have the additional tools and stress testing which provides another piece of the formation beyond the minimums what is the overall capital adequacy of the bank and how might that evolves over a stressful period. one thing i would also highlight is consistent with the current capital rules there is a provision that requires the bank to do its own analysis of how much capital does it need regardless of the regulatory ratio. what are its risks and how does it make sure that it has enough capital to continue as a financial intermediary. >> i want to turn to the public trust. the managers of some large financial institutions know how to hide the loss exposures that pass through the safety net by transacting an ever more complicated and opaque financial instrument. if a regulatory system tolerates the arbitraged from capital

requirements them such a system itself will encourage i would argue and underpricing risk. we learn from the financial crisis that this underpricing of risk more risk than they thought they could bargain for. it punished borrowers that were over leveraged and it hurt citizens that lost their jobs and their homes to the use of as regulators, we have a duty to see that the risks can be fully understood and fairly priced. i would like to see regulators across the entire financial system. they were to make more transparent the risks that they imposed not only on investors, creditors and counterparties but also pass through the public. so in this regard i note that the draft final rule includes qualitative and quantitative disclosure requirements for banking organizations with

$50 billion or more in total consolidated assets than those that are not subject to the advanced approaches on the disclosure requirements and then there are the advanced approach banks that are required to increase the amount of publicly available information about their banks. so, can you describe these disclosure requirements in a little more detail? >> sure. you mentioned the of qualitative and quantitative aspects and they go through the different categories of exposure. the credit and equity exposure securitization exposure, and they ask the banks to both describe the risk profile and characteristic as the policy for taking on the rest and managing the press. the disclosure requirements can be met in a number of different ways than the banking organizations are subject to a

pretty extensive regimes and the regulatory reports and the way that the disclosure regime is set up so that the bank can point to me and bring together all of the disclosures that it makes to meet various requirements and bring them together to the extent that they are relevant to meet the disclosure requirements and the rule, and then particularly some of the more qualitative things there would be new disclosure requirements for the banks to be explaining to the public profile itself. >> the largest organizations or where they are pressing because of the size of the institutions. we have been working internationally to improve the disclosure expectations of the company said the financial stability for the project called the enhanced disclosure task force that came up with recommendations on the disclosures that include things like tracking how the assets are

changing from one reporting per coach the next and getting some more granular break down about how the risk calculations are done across the different aspect glasses with in the company's. silbey urged the u.s. banking organization to look at the disclosure recommendations and there will be an international process of falling at to see how different banking organizations are improving their disclosures and anticipate that we ought to be able to assist in some of the momentum to have some meaningful improvements in the disclosure over the next couple of years. >> one final question the supervision also needs to preserve public lending particularly in our nation's most distressed and credit starved communities and in the communities where they are weak and competitive alternatives. we want to ensure there is not an unnecessary reduction in credit and economic activity among people and places that have historically had to do with

access to mainstream financial services. i know that you raised this as well the construction loans are given a heavy risk weight but that certain adc lending that is done in pursuit of community development is excluded. my question is what was the rationale for the exclusion? i am thinking that this is for the institutions that are community development financial institutions, that those institutions should be able to continue in that community development lending under the exclusion. is that the intent? >> the actual community development enough for the community development also get other preferential treatment over the regulations and the national banking act reads of the rationale was just to line

up regulatory treatment for them including the cabinet. >> thank you. governor. >> let me start by adding thanks to those that put so much care and effort into this completion. we have made a significant contribution strengthening the financial system. for the complexities of the world itself and the financial regulation more generally, it was a very simple idea at the heart that more capital and how your quality capital in particular is perhaps the single best tool we have for the tax payers in the economy from the shocks to the financial intermediaries. there are a lot of moving parts and a lot of us can think of specific things we might have done differently. but the very substantial increase in the common equity that entails for the banking system to a truly major step forward. again, thanks to all of you.

just one specific question, and it relates to something the governor has been loaded to which is the treatment of accumulated other comprehensive income or aoci to read the prior will remove the filter that prevents the gains and losses on the available for sale securities from flowing through the regulatory capital. you know, the removal of a filter would have resulted in these gains and losses hitting the rich get free katulis and now in the final rule allows a small or non-advanced approaches to opt out and retain the filter that is to say to keep it insulated from the gains and losses. i think i anderson and the logic behind the provision on the interest-rate risk banks face interest rate risk on both sides of their balance sheet and it

reduces the value of the securities holding the have on the asset side of the same time it increases the value of the stable deposit franchise on the liability side. so if you were to flow through the security gains and losses to capital but ignore changes in the value of the liabilities side you would arguably be painted and misleading picture and you would introduce what would be essentially volatility into the measures of regulatory capital. so that is as understand it them on to become motivation for the smaller banks in the capitol volatility would be burdensome. >> i think that makes sense and by understand the logic. the question is however if we leave this in place we are left with a situation there is no regulatory capital in place that attempt to capture the interest rate risk and as we've seen the last few weeks or a good

reminder of the fact they move around rather sharply. aside from the capitol regulation on the supervisory or on the stress testing site, do we have to use to reassure ourselves banks are not getting overly exposed to the interest rate risk >> you pointed out the accounting model we don't have a balance sheet therefore we don't calculate changes in the interest rate on the deposit side some of your active in your assessment. they are not capturing the interest rate is only partially correct in that we don't have a standardized way of doing it but our rules as far wreck as 15 years ago constantly that should be measured in the bank's

adequacy from the because of for some time we've had emphasis on that. but around 2010, because of the low-interest rate in the environment and being the financial regulatory agency we issued an interest-rate advisory to tell where the expectations were mainly how they should be adjusting and managing in the relatively low interest-rate environment with the understanding the rates would rise and we wanted the firms cannot be caught off guard. so we are outlining some of the basic expectations we had are not changes in interest rates and how they could affect the organization's capital, the income protection as well as the internal controls and corporate governance. that received were relatively well but as always there are questions that result in the guidance and so in 2012 we put out a series to address the principal concerns by the organizations in the area and

then we went into a bit more detail on the use of the internal models to the risk management, the appropriate methodologies one should consider the impact on capital as well as some of the basic things and the assumptions family the projection as well as the multiple income so from the overall standpoint what we are advising indy 500 instructed supervisory staff to do is continue the interest rate management but not come up with a clouded of adjustment as much. we are incorporated basic assumptions are that the way of stress testing scenario analysis plus or minus 300 basis points with the deutsch to your portfolio. we have a basis for which we can move forward on this and the

firms are integrated into the risk-management practices and it remains a task for the supervisors to the village and vigilant and follow-up with friends that implement appropriate changes to the strategies so we don't fall behind the idea that the interest rate management has been dormant or we were not given enough attention actually this is the head of the curve in anticipating that some of the guidance in my opinion does address some of the concerns that you are highlighting. >> thank you. >> governor? >> i start by joining others and complementing the staff bring this forward for a final consideration. i've witnessed the process of careful consideration and comments and lots of very thoughtful approach is to the whole project, and i would say the final product seems to be an

improved balance between improving and raising capital standards but in a way that avoids unnecessary. in particular seems to me this process of reviewing comment and reacting to public law has resulted in a better balance for smaller institutions that have less capital access and different business models and we have reflected their concerns in the final product. an area in which we have received a good deal of comment that have gone ahead as proposed is mortgage service assets and i guess i would ask one question which is for the mortgage servicing assets can you comment on the questions that we had in the comments and concerns expressed in our own analysis.

>> under the proposal and under the final rule we are maintaining that deductions of the assets on the capitol. i think the rationale behind it is basically similar to the current rule we have limitations how much assets can be included in capital and the intangible nature of the assets there is concern over the devotee for the bank to realize the value particularly in times of stress so we can preserve the proposal and we do still have strict limitations on the mortgage servicing assets in the final. the idea of is they will have a fair transition program to adjust to this. there are a handful of firms that have concentration that will likely have to adjust their business models of the overall plot is that there is difficulty in sort of realizing the value.

>> a que. thank you very much. what i would like to do now is ask for physicians. we have two issues. one is the capitol proposal and the other is the technical amendment to the risk capital rule. after we hear the positions we will take to vote to re-elect the start vice chair can you hear us? >> can you hear me? >> yes. >> thank you. >> i support the proposed final rule working with the capitol standards and also the notice of proposed rulemaking on the market rest. i want to join others in thanking the staff supervision for bringing this will begin to fruition putting in place the resolutions to implement basel

iii as a major accomplishment, and understand certainly the banks throughout the country are concerned about complexity and the potential impact on the cost and the availability of credit resulting from the proposed changes. i think the rules we are looking at today showed sensitivity concerns. most important degrees is the quantity and quality of capital that will be required of the banking organizations large and small and create the capitol country debate conservation buffer so they can have the distributions by the firms undergoing stress before capital levels declined. of course as the governor noted there does remain an agenda of work to ensure the safety,

fairness of the largest financial institutions. the crisis showed the need for the requirements to improve the safety and soundness with the financial system and they contribute importantly to the goal. the last several years banking organizations have told us the uncertainty about the rules of the road that would govern their businesses and i would hope that the publication would serve to limit this uncertainty. >> thank you. governor? >> i support the approval of both of the items on the agenda. the capitol requirement including the addition of the capitol equity requirement is an important element of the stable resilient financial system. the banks of purging the regular train minimums advanced approach

included in this rule or combined with our annual exercise and the additional requirements for systemically important institutions mandated by the dodd-frank act to create a multi dimensional approach to assess the capitol adequacy of the largest institutions. at the same time, as i discussed in my opening remarks i think the capitol rule will be workable for the capitol strength of the community banks without unnecessary operational complexities of volatility. the time we took to review the comments that we receive and assess the potential changes to the proposal would be responsive to the concerns raised resulted from the one that was proposed. now it is time to provide clarity so that they can proceed with their capital plans and business strategies. as i read through a lengthy federal register notice i realized it is all too easy to discount the hours of hard work that it took to reach the final

outcome. i want to again recognize the staff work that went in to achieving such a balanced result and i would also like to think the governor for his leadership on this effort since the first day that i worked through that door and joined the board he's been determined to create a strong capital regime with appropriate incentives and responsible risk-management and stirred the safeguards against bigotry arbitraged. getting to the point is required endless hours of lively discussion and negotiations on the international community with other regulators here in the u.s. within the board and i will admit the product of all of these negotiations is a strong balance capital rule that will promote resilience in the financial system for decades to come and it's a rule that i'm proud to support. thank you mr. chairman reed >> thank you mr. chairman. among the more productive hours that were spent in this i support both of the rules.

thank you. >> thank you. governor? >> thank you mr. chairman. i want to voice my support for both rules and i am pleased to have them move forward kid i want to commend the staff for their work in bringing this to fruition as well as the work of the governor on the bank supervision. thank you. >> governor? >> thank you mr. chairman. i support of the items could i want to add my thanks not only to the stuff that to the governor who's been a force of vision and implementation on all of this. so i just offer my support. thank you. >> i support both items. thank you. >> i support both items. i think these are very important step to making the banks safer to the higher-quality capital. yet i would like to thank you the staff for their hard work

and the governor as well, but like this really was a board effort. we had a lot of dissipation by board members and the various aspects of the rulemaking. i think it shows in the final product. this will represent an important international commitment we are fulfilling that will trigger international monitoring comparisons of the different regimes that will strengthen the globe and the financial system at the same time we have been responsive to domestic concerns including small banks and that is a delicate balance we had managed recently well. as was pointed out this was the beginning or the framework in which more would be done to strengthen our largest and most internationally active banks including looking at a leverage ratio, capital surcharges,

senior debt, liquidity, stress test, so many components that will work together to ensure stronger banks. i guess my final comment is that it's good to have rules in black-and-white but ultimately the implementation by the banks and the examiners and us here at the board will be critical. we need to make sure the risk models are safe and well developed in the safeguards to make sure that they are adequately captured in the risk. we need to develop further independent committee to assess risk as we are doing in the stress test and we need to strengthen our supervision and examination to adequately meet use of the free market and as the governor mentioned, the disclosures will be very important so the public can

understand what the capitol standards are and how the are applying to the individual institutions. i think we have learned from our stress testing that effective disclosure is a very important mechanism for improving the market discipline and increasing confidence in our banking system. i am pleased to support these measures. >> could i have a motion for passing the final when guidry capital proposal? >> thank you. i will take a voice vote. all in favor please say aye. are there any noes? thank you clavet i need a motion for the proposed risk capital rule. all in favor? aye. any opposed clacks they passed unanimously. i think the staff and the board for their work and

participation. the meeting is adjourned.

>> some congressional reaction to the unemployment numbers. >> the son did shine a little bit more benignly on them here. but i remember a number of them telling me that there was an even more cruel kind of racism.

they put a dagger behind the back as they described california. they were not allowed to live in the small towns, they were locked out. when you are on the land and you look at it is as if it snowed, no city sewers, they get out houses, no police from this area it was a no man's land.

>> did it make any difference to have direct popular election? we come down on the side yes it did make a difference that they began to act like house members which of course that is not something any senator wants to hear. there were scavenging for votes. they had to deal with the people as opposed to if you have a state legislature and let's say there were 26 members of the state senate, all you need is 14 votes and you can easily pay off in some cases 14 senators. steny hoyer is the second

ranking democrat in congress and spoke at the university of maryland at college of art of the increasing student loan rates. this is almost one hour. >> thank you for being here. the first thing i thought we would do -- i know you just introduced yourself, but -- hello there. the one with the money, right? >> sarah has been wonderful. she does a great job at the university. let me start by telling you -- some of you may know before your parents were born i was a student here at the university of maryland. it's probably true depending on how late your parents had you.

that is the good news. the good news may be hard to hear is that my first semester cost me $86 for 15 credit suisse frankly maryland college park -- i didn't start to concentrate until my second year here at maryland. sam heard the story. much better in high school i did than my first year of college but any event. if you had a c average to emigrated from maryland high school and for a maryland resident coming you got in, no questions asked.

it was just incredible. when i think of the cost of confronting college students in america and state colleges, you know, state colleges were theoretically open to all and very affordable. >> they were open to all and a very affordable. but they've gotten a lot more expensive. not just relative to 50 years go by and things get more expensive than the inflation etc. but more expensive relative to even when i went to school in real terms and it's important that we keep the college affordable. not for you or for you. it's important that we do so for america because you and you and

you will make a difference for america and we do not insure the best and the brightest can get into school and can afford school -- and yes i went into public service shortly after i was elected the state senate has no out of georgetown law school. i graduated from georgetown after i graduated from maryland, so it was a quick transition. very frankly, when i practiced law i didn't carry a great debt and georgetown was more expensive than maryland and i took out what was called the national defense education act. i can remember him being at hillcrest, it's about half an hour from here. it's my neighborhood where i lived. september of 1957i was listening to the radio and a 1949 dodge coupe.

the russians had launched a vehicle they call sputnik and it is circling the globe. america was shocked that we were not first in space. and dwight eisenhower, the republican of the united states said that is not acceptable. we need to make sure our young people can get in school and we adopted the defense education act because it was received to be part of our national security that we make sure young people can get in school. i went to law school because i was working at the cia as a file clerk while i was going to school so i went year for six years because i was only taking 11 or 12 credits a semester because i was going to school between eight and two and then going to work.

the debate that is going on in washington today about how we made college affordable and accessible to our best and brightest and make sure they don't graduate from school so that they can't go into public service and they can't take a job so they can't be teachers come somebody coming to school carrying a 75 me 85, 95,000-dollar debt load is thinking to themselves how can i earn enough money? we try to work on that by limiting the percentage of income when we payback. but we just had a debate and i wanted to talk to you about it. i wanted to talk to you particularly about your situation because although we talk a lot about this in the abstract, most of the policies that we adopt our discreet on

the individuals. the effect people personally. it's hard to think in those terms unless you say this is what it's going to have to mean p.s. i think that this would be in here to discuss this with me a little that. as you know we are having a debate in washington as to how we structure the various loans that we have with a week have interest rates or let them float or cap them at the time you take the loan but have the market base before that. they're all were different alternatives. obviously the consumers are of the lowest possible interest rates and that is a no-brainer. all of us are for the lowest possible interest rates which is why a lot of us refinance them of rebel last five years because we've got in the interest rates down. so i wanted to hear from you. the first thing we will do is start and just go around. i've already introduced sarah but why don't you start and we

will go right around the room. >> i'm the assistant vice president for financial aid at the university of maryland. >> [inaudible] graduate senior fellow communications. >> allyson tom plan -- tom win. >> where are you from? [inaudible] >> i'm from an apples maryland and i'm in government and politics. >> i'm from maryland and my name is andrew and i am a rising senior government politics major treatise been aware in maryland? >> severin maryland. >> ayman rising sophomore in government politics major. i'm from new jersey and i now live in beller maryland. >> my name is mark and i made seven year ph.d. student at the university of maryland.

>> [inaudible] line from new jersey serving as a student body president. >> president i call her. >> i'm from [inaudible] my name is amy and i may rising senior in arabic to double major. >> i'm a second year graduate student in the medical anthropology department at st. mary's college maryland and i'm from baltimore. >> do you know [inaudible] >> yes i do. >> i'm from new jersey and i am rising senior artists treat major. >> i graduated a year ago with a degree in history and now i work for the criminal justice foundation. >> wonderful. i want to thank all of you. i know you spent some efforts trying to encourage people to participate and i appreciate your participating. what i would like to do -- he is

my policy director. he's worked on the hill for many years as a united states senator and was a director for 18 years. i am lucky to have him with me as a senator retired. the reason i introduced him to you and you to him is he is in charge of this issue so he is here to listen and to learn. why don't you come up to the table? am i communication director is here that went to st. mary's college. [inaudible] >> where is kirsten? >> i met her. and betsy is my district shop.

because it makes a difference in the the date and the consideration writing a bill like i said you are not necessarily thinking of, you know, a one of you, you are thinking what is this policy going to mean? it means something to somebody in some circumstances. we want to hear that. >> [inaudible] >> i didn't know that. how are you? come on up. have a seat. if we don't have any we will move one up. >> we have room here.

>> this a4a beano dr. grant by the way? and she makes sure that i do the right thing. okay. who wants to be first telling me what your situation is and challenges are and why it's important to you? as you know, we have a bill that squeezes in a year or maybe even two years the 3.4% on the subsidized loans, traffic wones for another year, which we did also last year as some of you probably know. there are other proposals once we pass them on the house which has a floating market volume and it continues to float even after you take it out. so on like a house loan that i take out and i have a fixed-rate mortgage, this wouldn't be fixed

rate. it would float based upon the market. so the problem with that is that you wouldn't know. the president has a market rate for the establishment of your great but then frozen from the time that you take it. there are some other nuances that that is the major one. i know you've been talking about this and i know this is important for your education and i know that i couldn't have completed georgetown without my loan. this is great to hurt you also, i think i borrowed $100,000. that was for two years. i think it was 500 a semester, but i was working so i could make some of the cost myself so i borrowed 501 year and 500 the next. i didn't borrow the first year so i ended up with the best 1i ever had and i paid it back in ten years if you can imagine that. i don't remember what i paid. it must have been minuscule though. again this is not so much for

you. i want to make that point and the people watching. it is for our country. it's so critical that you young people be given the best education that we can give you, bright minds developed to contribute to our country. so this is about investing, not just paying. who has a fault and a challenge? i know some of you do because i have read some of your resume is >> congressman, i have a question. i am currently a graduate student but i went to georgetown previously for my master's. while i was there i encountered the fact that graduates cannot or do not have access to subsidized loans. and i was wondering what is the reason behind that? if we are concerned about america's future and most degrees now stop you have to

excel in a field and i wonder why that isn't available to us as an option to the >> today bill gates isn't sure that that is correct zuckerberg is probably not either. we deal with a world of alternatives. there are x numbers of dollars available and the congress made a judgment that getting an undergraduate degree was the priority. if you have more resources you could subsidize more loans, but there was the priority. so i think that is essentially a shorthand answer. the short and the answer is it was the most efficient use of resources to ensure the undergraduate degree feeling that the graduate degree while loans are available they are not some allies on the theory that the graduates were going to make

more money as they go up the educational ladder everybody knows if you don't graduate from high school the chance of making a decent wage are very substantially reduced. if you graduate from high school you are going to do better for some community college you are going to do better as you point of and the chain. but that's the reason. there was this sense and let me tee off that. i believe because this is in the best interest of the country we ought not to get student loans as a deficit reducer. it ought to be neutral. that is to say at worst, we ought not lose any money or ought not to make any money at best. so it ought to be neutral. in other words, the reason for that is we ought not to be asking students to subsidize the

deficit none of which they incurred in my generation and other generations incurred those deficits and because we want to encourage you to go to school we make it as affordable as possible and reducing the deficit ought not be your responsibility it ought to be my generation's and your parents' generation to do so. that is one of the debate by the way but in the president wants it natural for the of the bill that is four or $5 billion in deficit reduction. >> if somebody wanted to reduce the deficit with student loans you would only be putting a bandage on the larger problem. i'm a graduate student but a lot of my students have gone out into the working poor old and i have more to the conference to pay more than rent and they can't buy a house for rent and live with their parents and can't buy new cars so really you are creating a generation of adults who can't put money into anything but their student loans so into long run your only hurting the economy.

they are freed up money that young adults today practically pay to put words their student debt. you have people that are able to put it towards a down payment on the house towards a new car and supporting local business. >> that is an excellent point we put our most capable people in debt in an economy that is 70% driven by consumer spending. we undermine not only their lives and their ability to purchase cars, necessities, have children, we diminish our ability to grow our economy. you're absolutely right. good point. some and you are putting undue restraint. you are not only billing one generation coming to are crippling several.

>> you are right. good point. i'm glad you made it. >> i am working now. i graduated a year ago. you mentioned it's important for me to have a degree. as you were saying, it definitely does make it more difficult to buy a car or a house. it is more than my rent. i live in d.c., and if i get and of every month as to how much i have to pay it would be so much more stressful and harder and i wouldn't be able to live where i live in now because i wouldn't know from month to month if i could afford it, so i think it's important that we got a fixed rate as we have in the past and its variable based on the conditions that are largely out of my control. >> i agree 100% and the president does, too. what rate do you use when you take it out?

but once you take it out, again, the mortgage is a fixed rate mortgage. i know what i'm going to pay from now until it's satisfied. and i have that confidence i have to set aside this much money every month to pay my mortgage. [inaudible] once again because back from their recess it seems they are so close they are splitting hairs right now and everybody is on the same page but they ran out of time for the recess. >> it will be retroactive because i don't think we will take something that isn't retroactive and we will resolve it between now and when we get out on august 2nd or 3rd. i think it's august 3rd. the first friday in august but i

think it will be retroactive. in other words, although everybody is setting the deadline june 30th, july 1st the rates are going to go up on the subsidized stafford that's true, but i feel we will roll it back because there is no intent. wherever you are, republican, democrat, but we do not address it as of july 1st. i can't imagine we wouldn't make it retroactive. >> yes, sir whacks ? >> [inaudible] and china lesson studies. you asked for a more personal opinion. you want to know how it affects us directly. i am happy to basically give you a background and you can pretty much sum up how it would affect me.

both of my parents are ill. i'm originally from new orleans louisiana. my father was diagnosed with multiple sclerosis. so financial aid and loans is pretty much what would put me through college. i am the youngest of 12. my parents have put six kids through college, and now i have to pretty much find a way to make it for myself, whether that be scholarships which e debate could typically out of high school and college, the transition just like you my grades in high school were much better than my grades in college, but i think i do pretty well. but malone's themselves, my parents are back and new orleans so once i graduate college in and hear, i will have to make do to try to find an apartment or a

car coming to have a job or to have enough money to have an apartment and access would be difficult having to pay back the student loans. so, i just want to give you that little tidbit of my life. >> do you have a student loan now? >> yes. >> have you had won every semester? >> yes. >> if you don't mind saying what approximately do you think at the end of your rising junior? so you have another two years to go, another four semesters what do you estimate your debt would be when you graduate? >> would be a around 3,000. >> a semester? >> yes, just to cover -- >> so six of them at year. you are talking about another 12 to eight >> yeah, pretty much.

$25,000. so, so you all can pretty much see how that would affect me when i graduate. many students lie to either st. i am going to gradua. i know a lot of students who would rather try to take an extra year or take sunglasses so they have enough time to be a will to produce enough to try to live at the sea -- c level. >> what are you studying? >> criminal justice. >> you said that. it's one of the affordable colleges that we have and it's affordable. affordable is in the eye of the beholder, and perhaps the wall

-- wallet. you have to be able to extend it even if it is a loan. $86 i made i think my first job like maybe $60 a week to put it in context. ..

to have the idea of interest rates fluctuating is a bit scary. my mother roles so seeking higher education so she has her own loan to payback herself so the idea of me having loans once i graduate and this upcoming year will be much -- i don't get grants any more. to have that idea in mind it feels like it will be a constant struggle for my mother and i once i graduate from college and it is a bit scary. i support the idea of fixed rates. >> one of the things i heard from both of you is this is a family decision and i have been in financial aid for 22 years and you see how culture has changed over time and even though it is called a student loan is actually basing your retain and on your family circumstances and the really

interesting concept of how student loans work today. >> it is a family issue, i am sure you know when you get a report you get something called expected family contribution and that is based upon -- death doesn't take into account bills or expenditures you may have outside of that. i definitely think you are absolutely right. >> in boston college, that is helping me. i love my two jobs and met some great people and learned the lot. and is a lot harder for me to be in school and graduate on time and also what changes i want my future whether i am in law school or pay a couple years of work and that depends on interest rates and how much i can take out in loans and i work a lot with chrysler's, spend

spring break in philadelphia teaching high school and talking about college, an urban city school, not a law graduate and go to college, talk about attending universities and the reason they don't attend is the cost, talk about financial aid and everything and increase loans talented seniors, juniors and other schools, increasing nationally so any school in the country would apply because they don't think they will get the aid or maybe they don't get enough and that is something if you talk about national defense, basically discouraging future generations from going to hire reggie kitchen which is bad for the country. >> that was my point. i agree with you. >> sam? not at present. >> it is important also to look at this conversation in the context of higher education. we are talking about the interest rates. maryland has done a bad job

keeping college affordable compared to many other states around the country. we are having a fight over interest rates, not even the actual crux of keeping college affordable and it is a permanent deal. they want to work on youth unemployment and keeping college affordable and those issues. cell i think is important for students to see a permanent deal. hopefully the one we are looking for but i don't think anybody wants to be at this table year from now or next year and the next year. >> sam is absolutely correct. unfortunately, we have been doing too many things on a temporary short term basis.

for instance what we compensate doctors for for medicare, on an annual basis. ought to be permanent. we have given research and development tax codes businesses for research and development to encourage them to develop new products and new ways of creating jobs and making money that are indeed credit is up every year. none of that and there are a lot of things, none of that lead to a confidence that you can be competent. i know what my payment will be two years from now. i can plan around that. you are absolutely right we need to do this on a permanent basis. frankly i think all parties -- i don't mean political parties but it is on a permanent basis for exactly the reasons you mention.

>> it is not a good solution to do it. because the okay, my interest rate will be 3.4% so i can figure, talk with my family this is what the deal is and guess what, they just kept it to 6.8 or some other percentage that i don't know if it will be this year or next year so you are absolutely right. >> it affects the decision to the family, i won't disagree, a have two degrees, really able to afford a dream school because of a full scholarship and my little brother who is 16, interested in engineering and doesn't know if he will do it, if he will go to school with engineering problems and programs like that. but it affects the way my family uses their income on a daily basis, it affects the way we

make our decisions and the way we go to that school every day, not that motivations do extremely well, the anxiety that a company's high school did was able to afford college, how far will i have to work to afford paying off my loans, much for young people in the country to bear. they should be worried about what of it is new but

it hire was $4,200 total. no way in the world like could get $1,800 so i went to work and went here because it was affordable and i went to work starting the first year eight-12 but then 3:30 to 12:00 at night because my family had zero money. my family gave me zero money for college not because they didn't want to but they didn't have any money. they would come up pretty well on the family contribution index but i never did that index because i could get that money. but this is not a new problem. just the magnitude of it has gone up so much that while my problem was relatively solveable because there was an affordable alternative, now that is not

necessarily the case. >> extremely competitive not only because of academics but affordability. students who otherwise would choose a school for affordability fight to get in. >> it is very tough competition. i couldn't have gotten in maryland. i have 2.85 graduated from my school, couldn't have gotten in. i graduated with high honors and was outstanding graduates so it didn't predict, i am empathetic to kids who didn't predict what i was going to do. but i couldn't have gotten into maryland today, no way. i would have gone maybe to another school may be the second year, it is easier to get in. no way i could have gotten in the first year with the standards that now exist where you have 3-6 or 3-7. don't know what you guys are on,

and you're as 80s were off the charts. who else? tell me what your thoughts are. you are the guys that are participating and look at this. right now i have grandchildren but they are not yet the way they are applying to college and children are already through college also my oldest daughter went to the university of richmond which we believe was far enough away that we wasn't visit on a regular basis the closing of if she got homesick she could get home which is what new criteria there, that was about $10,000 a year at that point and that was in the late 80s and we could see how it escalated from that. i am sure it is in the 40s now. >> like you said you could have gone to private university for more money but you chose to go to university of maryland

because it was an affordable alternative. >> i didn't say that. it was the only alternative. i could not afford the other alternative. it would have to be one of the best decision that was made for me. >> i am the oldest of four. my single mom put siblings' through college and when i was applying to schools it was pretty apparent, i would have loaned pretty much wherever i go, but she laid it out to me in the spreadsheet, how much my loans would be if i chose to go to each college or these types of colleges and i applied to all state schools because i knew i didn't want to have six figures of loans and the went to the university of maryland's partly because of tuitionnd the my decision and i was educated right off the bat to know how much i would have in loans and how much i would have to pay, some of my peers it was clear people i talk to didn't

really realize the decision they were making and got to go to their dream school which was fantastic but when they got out a graduated with six figures of loans and some were unemployed and they didn't necessarily know about the affordable alternatives such as going to community college or going to a public state school. i feel we have a culture of not really educating our youth as much and just telling them you can go wherever you want and having them be saddled with all this debt because they didn't know what they were signing up for. like sam said we are talking about interest rates but there's a larger problem as well. >> absolutely right. we are talking about a bigger problem. i serve on the board of trustees at st. mary's college. i was on the board of regents for some period of time until i become a majority -- st. mary's college, we pride ourselves

being an affordable quality institution but we are having a struggle to keep it affordable, to keep prices down, to keep quality up and prices down. it is up problem for the entire hire education system in america. and we are going to have to grapple with it. it is not just where the interest-rate the going to be next year. it is how we will make shore all of you can afford to get in next year or the year after. >> before coming to maryland i was an academic adviser at the university of columbia which is a very affordable institution. my nontraditional or first-generation students but even for those students when working with them and advising them among many other things they were very adverse to loans and whether they could attend through programs. is there any protocol in the

house to increase the amount of programs because programs even at an affordable institution, very affordable institutions they still couldn't manage to pay those extras like the fees, the books, the metro transit so i am wondering if these things go hand in hand because he can't necessarily just the reducing or keeping rates fixed for financial aid. we also have to look at pell grants as well. >> absolutely right. the good news that we have programs and their grants, the bad news is right now the debate in congress is about freezing dollars at 2008 levels. i don't know how many of your families think if they were making $2,008 they could afford to live in 2013, years later. some of them are probably doing

that but they find it tougher and tougher every year. most people are not living on the same income in 2008 and sweet 5 years later in 2013 having to keep up with inflation if nothing else. the debate we are having in washington is not about increasing pell grants but about cutting pell grants. in 2009-2010, increased pell grants. pell grants when they were adopted -- do your when they were adopted? save 30 years ago for the sake of argument. will place be essentially 70 to 72%, not replace but took care of. i was on a labor held education subcommittee for 23 years and it eroded over that period of time where it was less than 30% so

have of the value of dollars may have been incrementally little bigger we increased significantly in 2009-10, but it is now starting to wither away because this number we are marking to, how much money we decided is available to spend and invest in discretionary spending has been substantially reduced. the labor health education bill is projected to be decreased. n i h, centers for disease control, pell grants, other matters dealing with education and health care is scheduled to be decreased by almost 25% which will put it back at less than 2008 expenditures. what is happening is we spend

$54 billion and take $1 trillion as discretionary spending, discretionary spending is not so -- social security or medicare. and if you take from $1 trillion if you take $54 billion for the sake of argument defense is about half and a little more discretion and a little less, nondefense but let's say you take $54 billion this side of the ledger, nondefense and put it on the defense side that means you have $54 billion less which is that 10% cut, about half a trillion dollars in round terms. that makes an adverse impact on the ability to keep -- you don't have to decrease in terms of dollar amount but if you don't raise them at least by inflation you increase the value of the pell grant. you understand that.

you are absolutely right we need to increase the health grants that begin not for you but for the country. if we are going to compete in the global marketplace which we want to do it will be because we educate our young people to be the kind of growing economy we need to be to create the kinds of jobs we need to not only for all of you but for the millions of people who don't go to college but who have skills and wherewithal to work hard to the welder. do you know how much welder's can make in america? $82 an hour. a master welder. because if you are going to make things in america you need to put some together. there are all sorts of ways to do it and we have 3d printing. maybe it will all be done in one stream but you get my point. tell grants are something we should be increasing, not

decreasing because they are a way to give students who have a lot of ability but not much means into college so we can use their talents. yes? tom? >> go to you next. >> it is kind of interesting. >> cheryl sandberg says lean forward. >> i didn't mean it literally. you know who cheryl sandberg is, president of facebook, and she wrote a book about leaning in. >> i am a mi it waterhouse, an out-of-state students in maryland. >> from new jersey. >> the most densely tautly it-densely populated state. all across the east coast. what i think is interesting about affordability, you were

talking about how you were able to make $86, in a week and half's worth of pay and especially washington d.c. is such a big hub for internships. >> that was when i was working full time, 3:30 to 12, half of that was $40 a week and then take taxes out of that. at the time i paid that, 28 or $30 a week. >> i personally, the idea that washington runs on unpaid internships and students, this gap between socioeconomic classes, people afford unpaid internships and what washington d.c. is benefiting from is the way they get so much work done, creating further divides for students, i worked a job during the school year, i work usually

two jobs and then i am taking credit than doing internships. between intentions and a job marking 65 hours a week and only getting paid for half of that. i'm making a less than minimum wage where i am working and this is no way what i am paying for tuition every year. i have two youngsters. one goes to the university of delaware and was lucky enough that she is brilliant enough in this program in high school where she graduated with her associate's degree and high school degree and a high school diploma and because of that was able to graduate with less because she can do two years of regular college, but my parents were trying to encourage her to do all four years because different experiences or whatever but she can't afford it because of the loans she would have to take out for college. >> which leads to the broader

discussion, why four years? have you thought about it? four years the magic number, years, years the magic number? that is part of of larger discussion, what we talking about in terms of higher education? i went seven, nine years because i was part time for a long time and did terribly my first year but that is a lot of schooling so i was 26 by the time i got out, turned 27 shortly after i graduated. and the lot of countries have three years of higher education. and moslem medical school, years

of medical school, and a larger discussion of how long is enough, what do you need, how much did it cost, a lot of big issues we need to discuss and put your finger on it. i didn't know at the delaware program but it is a fantastic program. i don't think we have such a program now. that is what i meant. i said delaware but i know you came from new jersey but use it in delaware but we have to be thinking along those lines where there are clearly some people who can take a first year of college in their junior and/or senior year, because they are gifted and we ought to take advantage of that again to save them money but also to save us money and have them in the stream sooner. do you know who he is?

he graduated college at 19, he is particularly gifted, president of you nbc, a math genius. >> governor o'malley is interested in programs like what amy's sister did. and at the university level, and we save the taxpayers money and we are talking about subsidizing everybody's education so we can have a better work force. i think we are looking at that here but making sure we are supported on the national level. >> this gets away from we accelerate people getting out of school who have a job, one of our principal objective is in

america is to create jobs, grow the economy faster. make it in america agenda that i talk a lot about which in the manufacturing field, if you grow manufacturing jobs, and we need to focus on that. we are not focusing on it as much as we ought to be but we ought to be doing that so when we get an accelerated education there is a place to use your talents. your sister to you say is brilliant and i am sure you are brilliant as well. she will have some place to use her brilliance and make things happen. somebody else had a hand up? what is our time frame? it is 4:30 so we got to wrap up. look, sam obviously is president of the s.g. a here and somebody

with an unpaid internships in my office and that is a really good point about these unpaid internships. it is a little like what volunteer army. get the connection there. from an economic standpoint we have an army that is not nearly as diverse as it used to be. when i came into the university of maryland rotc was mandatory, there were 4,000 male students in maryland. it was mandatory. part of the reason costs were the third digit kept costs down because the federal government participated because it was useful for the country. you make a very good point, we ought to look at that. involved with student loans, on

the ability to take an internship which is a very good credential and experience, sam will tell you although in turns as you pointed out critically important work, it may not, i was recently and in turn when i started working on capitol hill when i was a senior, i didn't do fancywork. wasn't writing great reports or great speeches but i was being exposed to something that was obviously very helpful to me through the years. if you can't afford to take a nonpaying internships and devote -- sam, what did you -- 10, 12? >> i was there for winter break. it worked out during the winter break full time but some people can't afford to do that. when you think about that, now, what is the option? paying in turns. what is the problem? cost. all the discussion in washington

is not about increasing but decreasing cost. we need a big deal, we need a big balanced deal along simpson-bowles, gang of 6, you name it, we need a big deal. it doesn't mean you have to agree with every point in either one of those recommendations but we need to get our country on a fiscally sustainable path with certainty so that you know from year to year what the tax rate is going to be, what our budget is going to be, this uncertainty is hurting the country. this is just one facet of that and not the big picture as sam said. i want to thank all of you for what you do every day with your peers, at maryland, and for what you are doing for your country in terms of making yourself more able to contribute and

participate in a productive way in the life of our country. i mean that very sincerely. i almost flunked out of maryland. if you open the book it makes a difference. you got to work at it. i didn't work very hard in high school. i was ok, but i didn't work very hard. i came here, i worked less. then it dawned on me in my second semester of what would have been my south pointe year, get your act together, you will be digging dixie's and we need ditch's doug, understand. i don't criticize people digging ditches but i didn't want to be a ditch digger so i got my act in gear. but you have your act in gear now. obviously outstanding students. so thank you very much for doing

that. sarah, i want to thank you. sarah has been here since time, she did a lot of work, she has been very helpful to our office and a lot of our students that we recommended but she is extraordinarily conscientious and focused on helping young people get a good education. thank you very much for all you do. i appreciate it and appreciate sam, your efforts helping us to get this group of extraordinary people together and we will take your comments, we have been writing notes at the end and we will enter those in to the debate. i am hopeful we will resolve this particular -- so insightful at saying it is a facet of a problem of higher education costs. that is the big problem. try health care, medicare and medicaid everybody says deal

with them. health care costs were contained they would be fine but they are not contained and government is 50% of the payer in health care costs. we need to deal with that. thank you all, best of luck to you. if we can help in any way give as a holler. okay, thanks a lot. [inaudible conversations] >> congress is on a break for the fourth of july. house members and senators return next week. house republicans are scheduled to meet behind closed doors on monday to develop a plan for immigration legislation. the senate is expected to take a student loan rates which doubled on july 1st. for the rest of the month a house and senate will likely

devote their time to the annual spending bills that fund the federal government. both chambers of commerce return for legislative work monday at 2:00, house floor coverage on c-span and the senate is live on c-span2. >> you are watching c-span2 with politics, public affairs, weekdays featuring live coverage of the u.s. senate, weeknights watch the public policy events and the latest nonfiction authors and books on booktv, you can see past programs and get our schedules that are web site and you can join in the conversation on social media sites. >> now look at protests in brazil, the demonstrations began over a hike in bus fare but quickly spread to include other issues including corruption and the cost of next year's world cup soccer tournament from the inter-american dialogue, this is an hour and 15 minutes.

>> i want to make this into a conversation so i asked each to keep it to 10 or 12 minutes and good luck. >> asked a brazilian to talk only 16 minutes. that will be a challenge. thank you for the invitation and the dialogue at the wilson center, a pleasure to be here. there are many angels to talk about with what is going on in brazil last three weeks in terms of protests in the streets. very hard to have a political reading of the long-term trends, what the impact really is, but instead of focusing on what we don't know let's try to focus on what we think we know, what are the causes, why now and why this

is happening, and there are definitely many variables that explain what is going on in brazil but one that we have been covering sometimes and it has become a very well-known argument, the rise of the middle class in a country like brazil but that applies not only to brazil but other emerging markets in latin america in general. when you had the first decade of this century of high economic growth, these countries, natural resource rich countries, you had a period of high growth because of chinese growth, commodities, these countries benefited from this in the case of brazil that is the case, the government, president of lula's government was successful in riding that wave which led to a rise of the middle class in 2010 for the first time in history brazil's

middle-class became the largest in the country, over 50 pittsburgh population which amounts to 1 hundred million people so what does this mean in terms of politics? a lot of people who started to analyze how the middle class behaves publicly, you have the same political behavior, of electoral behavior in brazil, when there were -- some of them in poverty. and a lot of analysts said they think they may behave differently and they couldn't know how. was the only a vote that these folks are happening? we see signs now that there is a shift in interest in the population led by this rising middle-class that they demand more, will leave that their agenda goes beyond just

employment, it goes beyond wages, it goes to more of a quality of life agenda so for a government that for years implemented successful cash transfer which were good and crucial for brazil, that is not the answer any more for more of the demanding middle-class, one thing is to have access to goods, cars, cellphones etc. which is one of the definitions of the middle class in brazil but other thing is to have access to goods that can do things meaning you can have a car but ride in streets with no potholes and have a cellphone where you can have a cellphone that actually works meeting the services that surround these goods become the real issues and these demand long-term planning from governments so if you compare what is going on in brazil which a lot of people do with what happened recently in

the middle east and the arab world and turkey and egypt there are many similarities, but you can also point out a few distinctions and the main one would be i would say with some exceptions i will say most of the middle east, were driven by -- against government oppression basically in a lot of these countries, brazil is not about repression but corruption and incompetence. by incompetents i don't mean only the federal government, and not only this federal government but years of this regard with these public services at local levels and federal levels. so the challenge for leaders in latin america and brazil, national leaders and local leaders is how to deliver more to the middle class in terms of services with less because we

are facing much more unfavorable economic environment globally so everyone expects the next five years in terms of economic growth not only in brazil but globally will be less favorable than the last ten years so the predicament is how to deliver more with less. that is basically a governance issue. for these leaders. and why now? beautiful story that gives you brought a trends of what is going on not only in brazil but emerging countries, what triggered it? one of the things that may explain -- don't know if it is the only one but in hindsight everything becomes very easy when you look at local elections last year in brazil with high turnover in municipalities, you saw glimpses of this rising importance of public services to

determine how people grow, but you add brazil, decided it was granted the right to host we to major international events, the world cup and olympic, the only country able to do that history was the u.s. with the '94 world cup and '96 olympics back-to-back. a lot of people in the streets now were in the streets back then celebrating this is a clear sign of brazil's rise but the cost of these events are becoming more visible. i don't think it is a coincidence that they gain more momentum when the warm up to the world cup was happening because the cost literally became visible with stadiums being built, the infrastructure that's around stadiums not being there, airports, roads, etc. so the promise the government made was these events would lead brazil

to improve its infrastructure and public service but the focus has been more on stadiums and i think in a lot of the population they do not have access to the stadiums because you have a radius of 5 kilometers that forbid people to get near the stadium in order to get in the stadium very expensive tickets so that became visible, the cost to host the events and they do expect these protests to die down over the course of several weeks, fragments and the political systems and a single issue that glues these protests together sustainably, i do believe the risk will be an environment going forward and the risk of these protests during the world cup is real, the world cup will happen three or four months before the election and we can get more

details on the discussion and what is the political impact of this? the polls coming out, for now they tell much more short-term story than the long-term story, you see a lot of volatility, ratings going down. and being transferred to position leaders, the number of undecided voters increasing which increases the chance of a dark horse candidate or someone outside political circles, but a lot of noise, a lot of political noise and a lot of volatility in the next two or three months probably but too soon to save her chances of reelection have diminished to the point that she won't be the candidate or will not run. the era of presidential popularity in brazil is very high, began in lula's second

term, eighty% approval ratings and that was unusual for brazilian history. now it is back to the norm. a supercycle of presidential authority and even where she is now she is very competitive, the former president had slightly above in terms of popularity and was reelected in the first round in ninety-eight as a reminder so it is easy to make long-term projections on this and thank you. >> i want to raise a question and answer it quickly. you said something that made me a bit pessimistic when you talk about corruption and incompetence. if it is incompetence, hal is brazil going to resolve this. it is really incompetents the got from their do they have the competence to get out of it?

>> i think they do. when you talk about incompetence you are not saying everything they have done is wrong. when you look at the deposit part of the story the last ten years, every social economic indicator in brazil has improved so there are signs of hope, there is intelligent life in brazil when it comes to government. >> i am happier now. >> good morning. i thank you for the invitation. i agree -- no controversy. two members, 85% of brazilians live in cities so brazil is far away, more urban, most european

countries and even more than the u.s. so although i grew up a bees' nest, most brazilians live in cities and there is a disconnection between the country where the gdp has been growing so much, there are so many recent successes in our cities. brazilian cities are stuck in a manageable country of the 80s. in some ways they're even worse now because more and more cars are on the very same streets, our housing projects, if you have seen the city of god, that brazilian movie, off housing project as far away from downtown areas, they are faster

and very different from the national picture so yes, the economy is not so bad. brazil has been improving a lot in the last decade but brazilian theories are very complicated. the very first time they are saying texas, some of them income taxes for the very first time. most of them going to college so that middle class is demanding more and more and the government does not pay to transfer. remember when i was living in china i was optimistic about brazil hosting the olympics. being in beijing, they have 40 miles of subway, in 2010 they have 160 miles of subway and 250 miles of subway.

also i am a skeptical journalist, i thought that is a great opportunity for brazil and i do think many brazilians now have this kind of frustration and disappointment. so we are exchanging a lot of money in the state and corruption meets the world cup so how many brazilians without having access to the numbers, without having access to the backgrounds, they think stadiums that cost almost $1 billion are somehow too expensive. the same construction companies which built those stadiums, the greatest fund-raisers for our political campaigns. so it is right or not simply, the brazilian middle-class think

that. may spend a lot of money and the legacy that i saw in beijing, somehow we are building white elephants everywhere. i am a little bit -- most brazilians are happy about finally going into the streets. from the brazilian government to the brazilian people, we were very condescending in the last decade. now we are great and our gdp is even higher than some european countries and the united kingdom and that moment finally has ended. we are not the united kingdom and we would love to have a structure in london and helped the system of the british so that condescending moment, put a lot of money in public advertising created this kind of bubble in the island and the federal government in brazil has

a budget of almost $1 billion a year in public advertising. it is about accountability. it is not really accountability but a kind of madness. this connection between fantasy island that we were seeing and the reality of overcrowded process and our subway systems that don't grow at all finally paid the price. to answer a question about it is good or bad, somehow the political class, they do think every country needs politicians, every country needs political parties, we are in a very bad moment. first of all, extremely popular building an image of a great

manager. she is not a politician she doesn't quite speak -- she is an amazing manager. and severely damaged right now. not only ten days to answer the protests and as the mayor of san paulo, but when she answered first she suggested a constitutional assembly. let's organize a referendum, and change the constitution, less than 24 hours >> turn mind because the congress have constitutional assembly, and it wasn't exactly what they wanted and so on and so on and so on. secondly she met the leaders of

the fair free bus campaign, the movement that started the protests. basically far left group that demands fair, free public transportation so a host of them in brazil, one of the leaders, 23-year-old girl left the meeting saying i am happy because the president host of us but totally unprepared to talk about transportation. she doesn't have an idea. and 23-year-old girl, it is terrible when someone leaves the presidential palace saying the president was totally unprepared and peculiarly two days before, it was suggested that public health, public transportation,

have any detail. the girl was right. let's not jump to early conclusions because there is a vacuum. they are not liking joined a miracle because the worker's body spent ten years and a half in trouble. the governor of san paulo and rio they're facing a lot of criticism because of the harsh police repression against the protests. in the country where the streets are complete the un safe and needed to hire, a little bit safe to see heavyhanded repression by the police is revolting. i saw brazilians who never took a bus in their life, going to

the streets to protest so i think failure of our police is up to the governor's will have to pay and not the president so somehow our political class has been cornered and very much afraid of what is going gone and there's always the danger when you are quartered or afraid, should go to uplift the answers. some of them are writing plays. when you need to raise the fare of the buses, the product of inflation and you cancel that raise because you are afraid of different things, someone is going to have to pay the price. and imagine if no one in brazil wants to raise the fares, uprising inflation, because oh i fear protesters in front of my building, what happened to you and so on.

so it is good you see a society finally after a kind -- some condescension, stop complaining and demanding and making folks work more but on the other hand it is too early to see if they are going to answer with rationale and populist answers. >> thank you very much. very interesting. how low -- >> i was in brazil part of the time and protests were happening, i saw even before the pope endorsed that yesterday, the pope is visiting brazil at the end of the month on the advice of brazilian cardinals. i think there is something and i will start and observation of

this, the detonator of this, multiple causes, and that nadir of civil rights. people in san paolo were annoyed with kids protesting in favor of rewrites and buses because it is already supercongested. you don't need to add more protests but when the police, in a highly incompetent way, started shooting at them, people that were against the kids going out, drawing the protest. this was a beautiful thing because it was about they had the rights. and confidently, and the signal

behind this, there were protests in brazil. the scale was minimum violence. and they take care of their own organized security when they saw the police couldn't handle it. there is the issue here who have analyzed this, talked about this many times, issues of equality and defining what they said, what brazil's said, middle-class including lower middle class, lots of people from the minimum wage in this region, but they

said the other day this is the belgian part of the concept of development in the 70s. and a small belgian in a major indian. this is middle-class, absolute the urban. it is people saying we like the place where we are going which is more prosperous country based on the middle class with more equity, more access to goods, art we sense that this period is over because the economic growth based on consumption which is the lula model, this is an exhausting but you know what? we are not going to go back. we want to go to that place in democracy. this is a highly democratic

event and don't tell them we cannot go there. there are debates that appear here that i find fascinating, the one under the stadium's is basically a debate on priorities in public spending. is the first time we have a debate on that in brazil, the positive part of it, the streets imposing on politicians, debate that. in the initial movement responses from politicians, and one congressman was found guilty 11 years ago and in brazil, don't know if you are white or well-to-do and guaranteed impunity. and 75% of the people and

there's a lady there, that were found were sentenced to jail terms involved the presidency, and they start immediately. off of the group 75%, people that identified themselves to the posters as sympathizers of the worker's party believe the marginal 74%, there is a change here, qualitative change that is very important, brazilian society telling people we are going to continue that half, more democracy, better outcomes, pay attention to real issues here, they are more complex than

reducing bus fares but it is clear the space has been open for that debate, the challenge is a challenge of leadership, political leaders understand the message and react accordingly. first movement from congress too confusing because of this proposal, and presented. my sense is this is not going to go very far. it will not take any effect regarding last year's election and most likely the congress and brazil has all the power it needs to have in order to reform elect durrell was and political system and then they can submit that to a popular referendum. that seems to be today the most probable direction. so many things, about quality,

wonderful issue, go to the new york times, there is one place where you can click on many signs we are seeing. translation comes to. there is one that relates. the cartel of of robot soccer. ..

so concerned about that and the sign said we apologize for the inconvenience while we improve the country. that is the spirit. it's very affirmative. now obviously the challenge is what politicians will do, how you are going to harness this very positive energy. there are obvious potentially the biggest winner in all of this and politician. she is seen as a person the challenge for her is to go from poetry to pearls in terms of

becoming transforming the wonderful ideas in something that is actionable by congress. they are a probable candidate. the minister of science and technology and actually both comes from brazil. they're all talking to each other all the time. they are in consultation all the time. the political system is starting to respond. congress has already approved and rejected some proposals that were on the table. there was something wallet

homosexuality is basically an illness that you have to cure that went out last week and was voted down and there was another one to reduce the investigative power of the public prosecutors in brazil. that was a vote there had been seven decisions already. there are dangers as i think you could have a populist coming. i think the only populist that could benefit which was not at the beginning in the first term when he was president i don't believe the president has been remarkably silenced about this. and personally i don't think it

would return if i don't think that's vital for the political and of the non-political reasons and therefore, we have a challenge now of capitalizing on this energy. talking to people on the position yesterday, mentioning one thing people should understand is that there is no -- there's a lot of major economic crisis in brazil and in the older performing, the economy isn't very aerodynamic. there is no political crisis and who ever bet against brazil getting all of this is a better country they made a mistake.

now, it is a moment of great promise for the country. i think people remain immobilized. the next big event is on july 11th, the union and brazil called for the day old protest strike. most people i talked to said there would be a flop. it will not succeed because the unions in brazil have become instrumental parties. the parties in brazil have zero political siege prestige. they are a part that no longer works and their only comparison i would meet in other countries is the people going out in the streets and blasdel use the same methods for mobilization which is self phones, social media, they did it beautifully. actually, they know when to pull

back when they saw the protest becoming violent because you don't know who comes out to the streets. it's very intelligent. it's not meant to be a protest, but the next major public event where i think a lot of those issues are coming off is when the pope visits at the end of the month especially after he endorsed the protest yesterday. and then we will see. i believe -- i wouldn't make positions about obviously the president is the president and chief may be in a position to run, but i think we are in a new political landscape in brazil but we do not yet understand. politicians in brazil from the government come from the position and in the media they are all perplexed. they don't know what animal is

this? we haven't seen this before. and they were all like that and i end with this phrase by the great politician who was a great fighter for the office in brazil who was a major a difficult situation that whoever claims to understand what is going on is completely misinformed. >> loan. let me say as the start and prepare your questions, what i hear is a pretty good analysis of what's wrong in brazil, that in fact the demonstrators themselves provide a good sort of statement of what is wrong and i also hear the first reactions by the political class hasn't been particularly in prison for responsive. but i haven't heard.

brazil is capable to respond there is a hope out there that it can. what kind of a corrupt political system and congress really reforms itself can you really redirect the moneys that are flowing in ways that have been politically determined, and there is the protester and others that have the patience needed. there is an expression of hope that's very traditional in brazil. but is there a sort of reason for optimism aside from, you know, we now know what's wrong the analysts knew that it was wrong before. now it's public but that is the sort of question that the

emerges whether this is good news or bad news or no news. but anyway, let me turn it over. at least the first 1i saw. maybe it was the red shirt. >> ibm hearing analyses of the changes in brazil and hearing that this is an urban middle class phenomenon. so i would like to ask about the city's that i have not heard about. what is happening about in the urban context and are there different issues? >> write down these questions because i am going to take down four or five. >> mine is an extension of the question to say if you were in

the cabinet advising her on what she should do what if you say here are some examples of pick another country that has gone through a process like this come here is what you ought to lay out? >> loan. my name is peter. i just have a direct question. what is the role of the u.s. with a foreign power in all of this? is there any relief? >> no. >> this gentleman over here. >> just came back from the beach. estimate the u.s. special business council. i am struck by the parallel and the diversion between brazil and russia towards a middle class society. i was in brazil in 1992 when he

was impeached and there was a great expectation this was a watershed moment in brazilian history and this would be to the renewal of the brazilidemocracyo coupdifferent today? are we go back to another cycle of disappointment -- >> loan. i am an independent consultant. loan for the excellent dloe -- thank you for the excellent dialogue. i remember the one comment by the president when she said there was the election of the pope and she said he is argentinian but god is brazilian to be it my question is you have expressed that this is a way of

a dialogue democracy having the voice heard and the responsibilities of related to other movements have would you compare it with the movement that is in place here in the united states and other countries. >> why don't we go in the same order. >> thank you. the first i don't know if it was mentioned but in the main capital thing several hundred cities, medium-sized cities actually had some sort of protest but 70 to 80% can be called a national event. i think that regarding the issues it began with what specific issue in public

transportation, but definitely other movements, many movements in the middle class, the youth etc. committee have seized the opportunity to make themselves heard, so we definitely have a lot of different very colorful movements defending their issues and i think that is a good thing and that is why we meant in the longer term we tend to have their own agendas. but it's definitely something that is in brazil's history. regarding the advice to the president, i think that the good and bad side of the movement that is going on is on the one hand it is antipolitical, so regardless of how the political class responds, it will not appease 100% because it is an antipolitical movement.

they have explained basically for the president i think now on it will be for the environment there will be a lot of -- more accountability and public scrutiny on what the government decides to do which is good for the checks and balances and in the duty of the political system is very resilient and eight at bat to the question regarding 1992 and the impeachment and many democracies when you look at how it evolves, it is usually two steps forward and one step back. but it is. you look here in the u.s. and the debate on privacy the we have today. not saying that the u.s. has failed in its civil rights but it does have challenges and i think that if the basic growing pains of being in the system and that is the main difference between brazil and russia so that is a good story but it does

have more challenging chapters. the u.s. foreign policy fully agrees. i just think the only role is to watch as brazil has learned from others and in occupied movement. there are some similarities they began with a movement driven by this issue against capitalism but there was no solution against capitalism, too much for that. they missed the boat and change the system. but again, the movement was important and something that needed to be addressed but then again after several months it died down and i think that in brazil that tends to be a little bit of the case. although i do expect a more political environment going forward which is good for the

democracy. it's a good you have a more competitive system and you don't have 80% approval ratings and just to be uncontested. at the end of the day given that it is a democracy with many challenges it is good that you have other candidates with a chance of governing. >> there's also other serious problems. i think that is the connection there. i think for the last five years in the global crisis the brazilian government has offered tax breaks to car makers in order to provide more jobs and to sell more cars. the of 7 million cars. no other city in the world has that many cars. not in l.a., tokyo -- said it is a gigantic number and that

affects the entire country for all our traffic jammed nowadays. so there is that policy and is the second policy is the flagship housing project that basically provides to the construction companies the same to the stadiums to read to design this is more serious for 5,000, 10,000 inhabitants, low incomes of people coming and because these areas the space is expensive they then build these housing projects very far from the city's interest. so brazil somehow has a problem but every big city in brazil, 20% of the population.

but when you make the transition from the housing project, you force the poor to live hours from where the jobs are. there is no transportation system that is sustainable if people are living so far from the downtown areas. so i do think the federal government has to of the main reasons of this process. there is something to change. they would address how to create. we are no longer in the 50's where cars would be like the future of the world and would be amazing if everybody lived in suburbs. it would be very bad to follow that pattern. i do think that there was a strong renovation in the

brazilian politics. we need remember the first space government in brazil is the military dictatorship that was led by the president who was a supporter of the military dictatorship. and he also was a supporter of the military dictatorship. so, after the fall for the very first time, the opposition to the military dictatorship is in the palace and both considered back then center-left. so there was a major chance to get i think that the corruption is in the right and the left. but they do think that there was a renovation. and i don't have any doubt that they are far better than the

government so what happened now, and i think this is clear the workers were in the social movement since the early 80's. so if you are a new young leaders, feminist, gay, you name it. you would be under the workers party. but after ten and a half years in power, the social movements were hibernating. they got good positions in government. they are not perfection. so i think what has happened in the last month is the beginning of the new social movements that don't see the workers party has their representative in the social movement arena or no longer represents a change.

that is one of the reasons they are so against the political parties because they don't see us in the best political party representing them. and unless they occupy i do think there is a major change between what has happened in brazil and occupy wall street and the brazilians are having answers. both in spain and the u.s. the kept their anger that they didn't have political answers. i think at least brazil was trying to address. >> i have given so many interviews, sometimes they are guests and sometimes people try to get the issues into this and say because of this movement, zero influence on this, some people have this very important issue but i hope they do not put

this to a vote in this route because they are not going to win to this of this is urban, this is what they were saying. the government -- 80% of all cars are bought on credit in brazil and supported by something which is a federal program. so, the city's, the hyper congestion of the cities is a product of those policies instead of financing public transportation, networks of public transportation. we decided to vote for the private cars. brazil is adding more commissions, greenhouse gases are giving up partly because we are using but also because that car policy is amazing. it started on this there is a

change that we are going to follow and reduce 38% of our emissions. we went back. because of the public policy done in a wrong way. they have a major dilemma. it has to go for education and health because we are in a tight fiscal situation. here again, priorities. you can do this but we have to the balance the budget and make decisions. we have probably too many public officials in certain areas, often not in others. we have the public policy and we do not have the people to do that and you have to deal with the pressure from congress and the counter pressure from the streets that will continue. this is continuing. people are not just going to go home. they discovered that they have

the capacities and this energy. let me just elaborate what i said. they are known and from any of their country but just to reiterate what was said to mike that this is democracy. we are not going to go back to anything. so forget about it, there is not. we are a space country, traditional democratic country. there is no doubt in brazil that we will have an election every four years. the result of those have to be representative, have to reflect what we believe we want. this is a nation that has been reenergize the by this. one thing on the period come out of the call of the crisis with the devastation to us because it

was the first elected leader after the fight and happening in 1984 when millions of brazilians went to the streets asking for the right to directly elect the president, actually the media was already here the completely missed the story. you mentioned something about the president, well actually, i think history will be very good to him. he was a very good president. after trying everything, and he had the political wisdom to call this a single but just around the economy which was the right thing to do and really sat brazil in some important elections. he was the guy that started opening up, but he was under the

president and brazil started to go towards more openings of the economy. so, i think that this is an issue i will just conclude on that. brazil will have to become a more open economy. we don't have an alternative to get actually, the well-to-do people in the middle class including the people before now can access one of the 60 or 70 flags to read these people have access to competitive products, lower prices etc.. the others don't. they have to pay very high costs. they don't have access to the more competitive world economy. therefore there are people in brazil formulating this opening up the brazilian economy which it has to be done carefully. but it's part of equity. the option in brazil for equity

is absolutely essential. if you don't understand that. we are going to grow with more equity. it has happened and the rallies i think are telling people -- the people are telling themselves there is no way back the good reverend martin luther king allows the i used the analogy we have seen the promised land which is more prosperity with equity and we like to and we are going to get there. that is the method coming out of the street. it is a challenge for the leaders, politicians, and i think there are politicians that we do not yet know. it's like the brazilian soccer team of last sunday. when you get the two cultures, and we have the capacity to allow new people i didn't know half of those kids come and to

allow them to have a plan, they do it. that analogy is very good for what is very timely. >> we are going to get to the next round. let me just put my question and. when we talk about the middle class coming you emphasize the middle class round. one is how you define the middle class and still a lot of people are very poor who are in the middle class and there's still a lot of poor people who are not even in the middle class technically. >> that sort of demands from a middle class perspective a new push meaning is and they're some trade-off between sort of

satisfying the milk continuing to deal with the issue that you raised at the end of the equity and poverty and what is the trade-off? is this going to end up sort of consolidating the middle class and shutting the door on the rest or is it going to produce a new wave? in other words, what is the social implication? >> i'm a retired for an officer, lived in brazil. >> i lived in brazil from 72 to 74 with the military government and a great allies. if you are old enough to remember that 1i love brazil. what the dynamics superpower. it's not local anymore.

they can bring peace to the world. what is the matter with them turning inward and violating along or international law by allowing a dictatorship under the fact hugo chavez against the rule for democracy, against the treaty of the space governments and bringing that character in and throwing partly out who started the thing. >> questions. >> in the back. then right in front of you. >> a month ago nobody predicted the protests. this event wasn't planned a month ago. today i hear a lot of people who didn't predict the protest telling me how it's going to go. they are going to go away. we are going to have a different

political environment next year. instead what are we missing? what is the event next month we don't predict right now, what is the best case scenario for brazil and is there a potential for mass protests and is there a really good positive outcome in the next year. >> i saw last week the kind of different ties to the story to abolish the 14th and 15th salary for the members of congress. so i was just wondering is that anything of significance or is that just sort of a quick method of damage control and will that affect their image of being sort of wasteful spenders? >> it happened before.

first of all, thank you. this is terrific. i want to ask about luella little bit. you said he's been remarkably silent and this must any possibility that he might sort of come back. why has he been remarkably silent? is that a good thing? if he weren't, what would he say and what could he say, what do you imagine him saying if he said i want to break my silence, tell me what i should say. give me a few words what would you advise and i just want to ask on the very remote chance we

could imagine the scenario if the government continues to have problems. >> okay. we will start with that one. the president made to steegmans so far since the beginning. it is essentially the same statement the president cardoza made which is listen to the streets and these are by people close to them that say listen to the streets and care for the public order. the was the missing part. the president made that mistake and this past monday there was a statement from an interview in ethiopia he was asked if he would return and he said no, i

will not. that's what he has to say right now etc. there are deeper issues here. the first is politically. the president is intelligent enough to know that i think he could win. it will not be a leak pete. the world economy is not at that stage and he was never elected on the first will not the president. he had to go to rounds against. he won his first attempt and then he beat on the second. the situation is interesting to measure. i think that he is still the most popular leader in brazil.

he had a serious deficit of cancer and he knows what he went through periods of the fact that he is not talking about this is that he knows there may be issues beyond his control that may not allow him to present himself and i think that he probably was to preserve the very good reputation but a lot of the legacy was going to be revisited as the go up. he's the most successful by any measure. i don't think that risking that is an issue. that's why i said i don't think he's kind to come back on that part. on the 14th and 15th salary i

think that started before. people were already understanding and those that are in brazil and most of the time there are some politicians in brazil that work and that are honest. but they are already getting the message on the 14th and 15th salary, then they have all kinds of health insurance, etc.. so i don't think that is very much -- one issue the court will have to decide what to do with the sentences of the people that are giving jail terms. i think the supreme court has a very difficult job because i don't think that reversing a lot of those things against the most prominent names is going to be acceptable to the people.

so you could have an organization that could have a reaction on that committee and the supreme court in brazil, which was because of a way of doing things and became a criminal court which is not what it is supposed to do. but it did that and now we have this issue. we have to, i think for instance people say what can happen? that can happen. if brazilians start to see the politicians condemning the crimes from serving terms, that will deal with pressure because people want to see concrete results, and i think people know how difficult it will be to respond to the education, health etc., but there are issues and things we can do immediately. i will finish with this. before you came to the united states or came to brazil you had

to fill out lots of forms to get into brazil until someone in the private sector, the movement asked them what do you do with that? they would say how do you measure that? you kunkel let so everything is entered into the computer? no, it's not. so they would say why do you have it? you know what they do? they abolish it. we could go to brazil and now we don't need that. there are so many measures that can be implemented that will satisfy people. it's those kind of things and obviously more complicated issues that will be addressed. and i have a very little about the will be addressed because politicians do not have the option of not addressing them.

>> a degette is a waste of money. it's all pretty big progress if we start addressing that and we have some power this morning our headline was the press then offered the house of representatives and brazil he took airforce jets to see the match on sunday between brazil and spain. it's great to use the airplane to go to a stadium. so i think that even after, some politicians do not get it. it is a love process by do think that politicians being cornered

and the force that should be accountable is a positive sign in brazil for so long we had the kind of nostalgia of the marquee so they should learn how to be a republican. the best case and the worst case it's too early. but even sar on folding. we don't have our crystal ball. if nothing happens, like the referendum doesn't happen, no change, no political reform whatsoever. the worst economic numbers that clearly they are coming and they are not so good. it is a worst-case scenario that is already happening. so, what -- i do think that happened in the political landscape in brazil is their

position was working with the idea the next big election was be 2018 and would really elected next year so let's prepare our candidates for the change. not only is it so sure about the reelection and maybe she will have to change her economic policy or a lot of things. she has for the ministry's. so maybe she can make a good ministry reform. she has lots of positions. but there is the position as well scared to confront. now at least the deutsch and for the possibility. it's very bad when a country, the political party in the power doesn't feel threatened at all on the position. it is a good situation when the

opposition and it's to show these things. on brazil and venezuela and now the controversy. he had all these problems and no affection. he was elected president, he wasn't a dictator and many countries including the u.s. supported the dictatorship. i think is unfair to say that brazil supports chavez when the biggest mistake that they could do regarding venezuela is breaking ties with chavez. if brazil wants to have a leadership role in the

neighborhood, it really needs to keep all of the dialogue channels working. and if there is some criticism to do, you can do it in the background, not in public. i do not think that would help out all what brazil is building. brazil isn't the obvious leader in the region for the neighbors and until very recently, all of us including brazil we were so messy that we didn't have time or attention to care about our neighbors, so we are building that leadership. many of our neighbors are not that happy. yesterday brazil was amassed. now they are the leaders. some of the most counterproductive policies and the u.s. has very good examples

when you tried to build a democracy it doesn't always work. >> it's better to have chavez of course we would have a very good relationship in venezuela from to date until the world ends. we are going to have good relations and to the neighbors and that is the brazilian way of doing things. we have no interest in doing -- their son another thing. the $67 billion of the brazillian countries and venezuela every year and as long as venezuela can sell oil to countries like the united states and produce the dollars, the brazillian companies would be happy to serve them separate those things and i totally agree that it's important to not isolate -- at chollet this policy didn't start -- some of

those were critical of some things and some missed opportunity to call on the censorship of the press, etc., but the policy has been the same come started actually before command the president was the first to affirm back what stay close, stay with us here because i think it can always be a good influence. >> just to keep you on the issue i agree with what was said, and i think the two reasons -- first of all they face other problems that are deeper, and i do see that happening with the global trade negotiations that are emerging and the increased challenge to basically reform or just basically the demise of the block but there are two reasons that explains why brazil and venezuela entered. you can have a more noble excuse that engages in order to isolate

and business as usual. and i think that those two excuses were used in 1972 when kissinger went to china to deal with a communist dictatorship. so depending on what choice, it does make sense. if it were not for that kind of pragmatism, the policy would be waiting for a visit from beijing until now and they change the world now. and i think that china still be in a dictatorship but it is a much less authoritarian country because of the visit i agree and i think it has ties with the answer of what is going to happen because there are many knowns and unknowns and what we can say is definitely now

there's a possibility of being heard there is the risk of more turbulence and the next 12 months and the candidates of shifting in the polls etc. would increase. we see a lot of different scenarios here and the possible coalitions we couldn't even think before possible. there were many different scenarios that were good in one way or another. regarding the silence, there was a famous leader he had a saying that when you don't know what to do, do nothing. nobody's asking him to say anything so it's hard for the political class to have an answer said he isn't a leader right now or an actual governor so he is in the position to say

of course. in part the your questioning his legacy. this is the end of a chapter that became much more visible. i believe that it began, but they benefited from the last and more favorable chapters in the story. and now basically we are questioning if the story was positive or good or bad and we think essentially it is good because we are not talking about -- if we look at brazil last 34 years first there were questions about democracy. talking about question democracy in brazil's of this is a political imperative. everybody plays by the rule of the game. the economy -- brazil is of only a the champion and soccer but in hyperinflation during the 20th century. so, we have the rules of the game when it comes to the management although there are some dark clouds and the horizon we are not talking about the policies. one advantage of having argentina nearby is --

[laughter] >> finally come on the social side, we can question the programs that there is a social imperative. so there are some dark clouds on the horizon but when you look at the politics in the economy and the social advances, it's definitely gone forward and it's definitely then, you know, an improvement. the problem now in the short term even before these protests happened, there was a deteriorating credibility of the government among the investors because of the heavy hand of the government and the economy. now that the predicament is the investors are asking for more fiscal austerity and the streets are asking for more public spending. that is a very fine line here through some antigestures. a lot of what was repackaged

come a lot of it doesn't have a whole lot of sense. some of the answers in the political class are giving good answers in terms of fighting corruption but others are questionable because to end on the two points for example having the public finance campaigns in brazil they are asking for more public spending and public services. you are thinking of getting more money to give to the political parties for them to campaign. the movement is somewhat antipolitical and they question the political parties. saying that you were going to implement the system that strengthens the parties there are some answers that are contradictory but i still think under that no it's good they aren't that bad what is going on. >> thank you.

let's give them a share. [applause] congressional reaction to the unemployment numbers.

it would be in the top five oil producers in the nation. to put this in a little more context, 75% of all of the oil production in california is done in the current county and over 50% of the natural gas that is produced in california is right here in kern county. when you are in this county, we'll along with agriculture, they are the two largest industries that we have, and it

really turns the economy. congress is on a break for the fourth of july. house members and senators return next week. house republicans are scheduled

the alliance for health reform this week posted a discussion on mental health care in the u.s.. a panel health policy analysts discuss the intent of the president's health care law and congressional legislation dealing with mental health. this is almost two hours. >> let's try to get started. my name is ed howard. i am with the alliance for health reform, and on behalf of

the senator rockefeller, the board of directors, i want to welcome you to this program that will take a close look at how america deals with one of the most serious and least discussed health conditions, and that is mental illness. less than a month ago, president obama convened a mental health senate and the goal was to emphasize the need for the broad more open national conversation on the topic and the need for plugging the holes in the current system. i would like to think that today's program is going to play a small part in advancing that dialogue. let me make a few points before we turn to the people here that really understand the nuances of the complicated topic. first, there are millions and millions of americans who experience a mental health

disorder every year and a big share of the have severe conditions. second, in categories, though both ordinary and more serious problems, a huge proportion get no services whatsoever. third, in contrast to the case with physical health services, the government at several levels funds most mental health services in this country. fourth, the affordable care act is going to have a major effect on how mental health services are delivered and paid for beginning in earnest next january. and you are going to hear much more detail on that later. last as a sort of foot node, though it is an important aspect of the discussion, we are not today focusing a great deal of attention on the relationship of mental illness to the shooting tragedies in connecticut and

colorado. now we are pleased to have as our founding partner today and sponsoring this briefing the robert wood johnson foundation. they get the care they need for over 40 years now. and we expect to have with us in just a few minutes andy hyman who directs the foundations coverage team and who came to the foundation as a matter of fact from the national association of state program directors, so he knows a little bit about that topic and we look forward to hearing from him when he gets here. a few logistical items before we get to the program and in your packet there is a lot of background information on the topic including the power point presentation of the speakers today. a biographical information about them that you should read because they won't get the information is that they deserve from the moderator.

if you are watching on c-span or watching the webcast on our website and you have access to computer as well, you can find the powerpoint and you can find other background material on our web site at allhealth.org along with digital copies of other material that didn't make it into your printed packet. in a few days, you are going to be able to view a transcript of today's discussion on the alliance website. at the appropriate time we hope that you will fill out the green question cards and try to stump the panel or go to one of the microphones and as your question. there is a blue evaluation form in the packets the we would appreciate if you would fill out before you leave so we can

improve these programs and tailor them more to your needs and desires. pipe i would like to turn if i can for the moment to the robert wood johnson mental health expert andy hyman. >> thank you. i would like to begin of course by thinking and his colleague zach thompson for pulling this together and of course the panel for sharing their expertise helping us gain a perspective on this important issue and the challenges facing the mental health field. i looked around the room and it's really gratifying to see so many people who are responsible for the remarkable progress that we have made in advancing policies aimed at helping those with mental illness and their

families. .. >> if this is the case how can it be that so many of our friends, neighbors, and loved ones live in some he died in the shadows? it's an important thing for us to ponder. not too long ago i worked in the mental health field and it seemed that so much of our focus was on promoting the great

promise of recovery for people with mental illness in articulating the vision of hope for families who were struggling, navigating the mental health system. but even after the triumph of president bush's new freedom commission on mental health which was released, the recommendations were released 10 years ago this month, get some of seemed that we were still lost in the wilderness. but today we are seeing steady progress on a number of levels due to innovation spearheaded by advocates and researchers, providers, policymakers, people who would otherwise be homeless, languish in institutions, jails, in prisons are indeed writing and leading and communities, receiving services and demonstrating the true meaning of recovery. i'm proud that i can point to the johnson foundation and my colleagues there who have supported some of this important work. for example, with other funding

partners we have helped to develop permanent supportive housing, and financing thousands of housing units. my colleagues have developed project ago, an innovative model being tested integrate mental health and primary care for patients with chronic conditions. in recent recently my colleagues have released findings regarding a program that shows that we can identify individuals at risk of mental illness, very early, and refer them to appropriate services when they experienced, before the experience most debilitating symptoms. and alongside these and countless other breakthroughs there are remarkable advances in policy that many of you in this room, members of the panel help to achieve, namely the passage of parity and the enactment of course of the affordable care act. these laws will help expand

access and reduce the financial barriers that stand in the way of millions of people getting services they desperately need. but although these are extraordinary developments, we know that barriers still remain. even if the promise of the affordable care act and parity are fully achieved. perhaps we still far to go before we bring mental illness out of the shadows. how far as part of what we want to explore today. so with that i would like to thank you for joining this discussion, and turn it over to ted. >> well, thank you. good afternoon, and it's wonderful to be today as part of this terrific panel to speak about and often whispered up parts of our nation's health care system, the provision of services and support for persons with mental illness. i've been asked today to start this battle by briefing -- presenting a mission about mental health, how many people

have a mental balance, who gets heard and, unfortunately, doesn't. trends in the financing and service systems. since i work with state mental-health system i'll have some overall health mental information or primary focus on the mental health safety net system run by state mental health authorities. first of all, we know that mental health services do with the persons with mental illness do recover and the concept of recovery and person centered treatment is a basic tenet of the public mental health system. unfortunately, were also know that too few people get the mental health services they need and often persons goyears with untreated mental illness before they get the help they need. mental illness affects virtually every family in america. one out of every five persons in america has mental illness, but only one-third of them, one out of three, receives the service during the course of a year. the substance abuse and mental health service administration and the federal government,

samhsa, has estimated it 1.5 million adults or 5% of the population has a series mental illness, schizophrenia, bipolar depression, major depressive disorders, and we're doing a better job of reaching them, about 60% people with a sears mentos receive services but that still means 40% of americans with a series mental illness receive no services each year. the cost to mental illness to americans are quite high. a recent study estimated the total direct treatment expenditures for mental health were over $147 billion in 2000. there was an additional 24-point, $24 billion or so this abuse treatment. collectively mental health and substance abuse spending represented -- the statement health system which i'll talk about one in detail spends about $37 billion providing services to persons primarily with series

persistent mental illness in children with serious emotional disturbances. and that system as ed described as largely funded by state general revenue funds and medicaid, private insurance is currently only paying about 1% of that 37 billion the public mental health system. in addition to the direct treatment costs there are major indirect cost of mental illness. dr. kessler and colleagues at harvard in a study estimated that series mental illness cost the u.s. an estimated $193.2 billion per year in lost earnings because often people with series mental illness are unable to work. other costs of mental illness, over 30,000 suicides per year. more than twice as many as homicide occur in a year. in addition to almost 750,000 suicides against each year and every suicide and suicide attempt leaves a lasting impact and cost on the families and friends of the person who attends it. in addition, persons of public mental health system die prematurely. a study that we conducted with

the center over 10 years ago analyze death rates among consumers in the public mental health system. we found consumers in state mental health system experience up to 25 years of premature life block usually due to physical health concerns. that leads to the next point that will come across most of the panel today, people with mental illness have high levels of health ailments. they have diabetes, heart disease, obesity, smoking, a whole slew of physical health issues that are often not well addressed. they use emergency rooms at very high rates. their overall health care costs are very high. my fellow panelists, linda rosenberg, at the national council security center funded jointly by samhsa and health services research administration that's working to address the integration and coordination of physical health with mental health. and several state and local committees around integrating health and mental health will be discussed by some of my fellow

panelists today. in addition we know persons in the public system have high level of unemployment. only 18% of adults served by state systems are competitively employed. as result, we know that that means they don't generally have private insurance which comes from working. we do know that services like supported employment can help people with major mental, get and maintain employment but unemployment and underemployment among persons with mental illness is a very serious issue. are also problems with homelessness, although one egg we are successful at is when people get into the public system we are very good about getting the in house off the streets using some of the models like the johnson model of permanent housing. the cost to jail and criminal justice systems are a stress to come. one question, why don't people get services? samhsa in the survey asked people why don't you get served, and the number one reason, 50.1% of respondents said because it costs too much but it could not afford care.

but there were a couple other significant issues. their insurance wouldn't cover all the care they needed where the insurance would cover it all. those are issues we think will be greatly benefited by both mental health parity act that is take effect and the affordable care act may bring coverage to many people and help them afford care. the statement on health agency exists in every state. states have responsible, responsible to provide inpatient and committee-based treatment to persons with mental illness. every state operates psychiatric inpatient beds, usually in a state hospital. but most of their services are now in the community and they are responsible for planning and implementing comprehensive systems, monitoring quality and outcomes. lastly, state senate primary public safety world where they provide services to people that towards the mess dangers to themselves or others due to the mental illness. most states are part of a public mental health system that's part of a larger health human service

agency. i'll skip over a few of these slides in order to get through but this will be in your packet. one of the questions that we get is why our state so fundamentally involved in the mental health safety net? why is this a governments responsible to? states have had primary responsibility dating back to before there was a united states government. since we're celebrating the fourth of july this week i thought it was interesting that the colony of virginia in 1773 established the first state mental health facility. in williamsburg. and actually several signers of the declaration of independence were on the board of the eastern state hospital. by the 1950s every state that don't have a hospital but there were 550,000 people in state hospitals every day. today, we are down to fewer than 40,000 people, and 96% of the 7 million consumers served by state systems each year are served in the community. as i said there are 7 million people, 2.2% of vibration are

served by state systems. 96% in the committee. state hospitals are certain between two and 3%. more people get surgeon general hospital psychiatric unit and in private hospitals and state hospitals today. people served by state systems, 62% are white, minority are served at higher rates. african-americans, native americans, native hawaiians, multi-race. also teenage are served at a much higher utilization rate than other groups. one area that we'r we are not reaching out and serving our elderly. as i said before, largely the system, adults are not employed, only 18% are competitive employed and that means medicaid is very important providing coverage. 63% of our consumers have medicaid paying for some or all of the care. the 37% with no medicaid are largely been funded by medicaid. now, this leads to a question, with the affordable care act how will that help?

our colleagues at the samhsa have done some really helpful work analyzing the data in making estimates of both the state and national level about how may people will gain benefits. so medicaid revised and expanded benefits for people up to 133% of poverty and there has been almost 1 million adults with serious mental illness will be eligible for expanded coverage animals 4 million adults for any medicaid, with any mental illness. for subsidized insurance, or the exchange almost another 900,000 people will be eligible for insurance through the exchanges compete with series meticulous. and over 4 million adults with any mental balance will be eligible for coverage through an exchange. that has great potential to address that people couldn't get coverage because they couldn't afford it. states spend about $37 billion a year on mental health it looks like we've had impressive growth but if we control or inflation and population growth, we are really right when we were 30 years ago.

the recent budget cuts that states had to make lead to significant cuts in mental health systems, about a billion dollars old you overuse closing a member state hospital beds. it has led to a big shift in the systems i want to hit this slide because 30 years ago, two-thirds of the money was going to state hospital. today, 73% of the money goes to community services. 25% for state hospitals. that means we're still spending $10 billion on state hospitals and expensive to do for the two to 3% of people that really need that level of services. people in hospitals are more forensic than sex offenders but i'll skip over that as well. the states organizing and fund their services through primarily community programs. they found about 15,500 different community providers, many of the members of the national council. their private not-for-profit groups like the one dr. wilson works with. they increase the fund is a

combination of fee-for-service and managed care using various medicaid options and waivers. medicaid has become the important funding source for the public system. states received $18 billion for the state mental health community, 50% of state funds in the committee are from medicaid. overall, 42% because state hospitals don't get state medicaid. we often hear that from advocates that in states are pulling out of general revenue fund. this chart shows states really aren't. that general revenue has gone up to almost $15 billion but medicaid has grown so much faster and that's why it's become a larger share of the funding. finally, what's going to be the impact of the aca, affordable care act on mental health assistance? what we're hearing is it really depends on what the governor and the legislatur legislature is d. you all are very much aware that not all states are supporting expansion of medicaid or setting up state-based health exchanges.

this shows a couple weeks ago 26 states were supporting medicaid expansion, but not all states even with the government is supporting it has the legislature adopted the. there are only 15 state setting up the state based insurance exchange. in the state setting up insurance exchanges, the medal the third district working with her insurance commissioners and with the exchange on what are the essential health benefits, their tiny consumers to the navigator's help consumers pick and select among insurance plans. they are working with providers. but in states where the governor is saying stay away from exchanges, the mental health agency is not as able to do as much work with them. similarly working with expanded medicaid, the state expanding medicaid, mental health agencies are partnering with medicaid on what are the benefits getting consumers enrolled as soon as that rolls out. looking at what's on his medicaid will cover. the focus of want to talk is a couple of exciting new elements that mental health is looking at the one on mental health to better coordinate with primary care under the affordable care

act. health homes can medicaid health homes and this is something that both red and blue states are pursuing. we've got a number of states and dr. wilson will talk about the very exciting first year evidence about how effective they are. states like rhode island, new york, missouri already inhibiting health homes but also some states that are not expanding medicaid, oklahoma, ohio, idaho, missouri are also doing health homes to coordinate mental health and physical health services and getting exciting results. similarly on the medicare fund, accountable care organization or another area mental health is working with. and, finally, seen a set number of other demonstration programs to eligible programs for people of mental health and substance, and medicare that states are looking at using to try and bridge the gap in mental health services and better record in mental health and substance, mental health and primary care services. services. with that of a turned over to john o'brien who will tell us all the great things cms is

doing. >> if i can first of all get him, a slight advantage. but let me just say those who don't know john, he's a senior policy advisor for the disabled and elderly health programs group at the centers for medicare and medicaid services. has a great background in providing expertise to state and local human services entities, and medicaid programs and mental health programs, and the senior leadership of samhsa. easily directed several robert wood foundation project to promote the human services. he's very well qualified to be part of our panel and we're looking forward to hearing from him. john. >> thank you, ed. good afternoon. thank you to the robert wood johnson foundation and to the alliance for health reform for inviting us here today. we would like to do all a bit of our story about what we are

doing. both as it relates to mental health and substance abuse services but also as that interfaces with the affordable care act. so, let's talk a little bit about medicaid and behavioral health, as ted have pointed out we are one of, we are the largest payer for mental health services in the united states. i think the samhsa report that i saw had, the commercial planes coming in a healthy second but we still continue to be the first. obviously with some of what will occur beginning january 1 we believe that the percent of mental health services at medicaid will underwrite will increase. a couple of things that are worth noting on this slide, and that is that we buy at the amount of mental health services and substance abuse services.

that exists in a variety of our authorities. i welcome to the whole laundry list of those authorities but there are a number of flexibilities, ashley there's a fair amount of flexibility is that they have when they think about covering mental health and substance abuse services and come 2014 though states choosing to expand as well as those states that are developing marketplaces will, in fact, have even more flexibilities around the coverage for mental health and substance abuse. i really want to stress that, which is why we hear partner to talk about mental health services, that you can't really not talk about mental health services without on the substance abuse disorder services. and as we began to grow past 2014 winter is that there will probably be a syndicate number of individuals, mostly single a dolt in states that were not covered by medicaid for the last 20 years that will have coverage, and will have to pay

particular attention to what services we create for those populations. so when we talk about the affordable care act, a lot of our focus has been around eligibility. we treat the eligibility like a three-legged stool. the important parts of the three-legged stool --'s to our employer coverage and, obviously, that's important because, and he places employer coverage is shaping what coverage is looking like for mental health and substance abuse services. we often talk about the medicaid expansion and i'll talk about that, especially for those states they're choosing to move forward with the medicaid expansion. and then last but not least, the third leg is the marketplace. so i'm going to say this but it sends shivers up my spine that others in 90 days october 1, when i remember october 1, 2013, seems so long ago, it's here.

i like to buy another if we could but we can't. but the fact remains that the eligibility provisions in the ability for people to enroll, both in the marketplaces and in those states that are going to offer the medicaid expansion will begin october 1. we are certainly looking forward to that. we believe that states have spent a lot of time and energy over the last several years getting their systems ready. we're working hard with states to make sure that they have the tools that they need to be able to get people enrolled. and we know that our friends at -- also doing the same as it relates to the marketplace. this graphic gives you a sense of what coverage is going to look like for a significant amount of americans. as you can see on the adult side you've got the marketplaces for those individuals that are 133%-400% of the federal poverty level.

you've got the medicaid adults for the states are going to expand. for 133% and below. and then on the children's side we can't forget children but without the ability to build and clinton as part of the marketplace. and, of course, we saw the regular medicaid program and the childress health insurance program that are covering those children. and in some instances those families. now the good news is i think as of today we actually awarded about $32 million in grants for enrollment purposes for the children's health insurance program. we are in the process of also working with and/or a warning and working with entities that are going to be getting navigator programs. we are working closely with our federal partners, whether that the samhsa, hrsa, the administration on kennedy living, and our provider partners to be able to get the word out. around enrollment.

because we feel like the more people know about enrollment and enrollment options, that work with these individuals, i think the better those individuals that will begin in the expansion by bush and the market was don't know what their options are. ted also mentioned as did ed obit about mental health parity. about six months ago we put out a state health officials letter that outlined what the interface was between the mental health parity and addiction equity act and the various authorities within medicaid. suffice it to say it's complicated. i think people were welcome that informational bulletin number but they still have some additional questions. just to be clear, mhpaea does apply to the insurance chosen by the it applies to medicaid managed organizations and it also applies to section 1937 which we affectionally called

the alternative benefit plans but those are the plans that actually exist today. they are created under the dr eight and they have been enhanced under the affordable care act and this'l and this woe primary vehicle that a lot of expansion population, gain, though states moving into the expansion our push will be covered. medicaid does not apply to state plan services, and tries we might as nowhere to be to be able to reach those state plan services. so i thought it would be helpful just to understand some of the goals for mental health and substance abuse services that sinister medicaid services has identified. we have been doing a lot of doing a lot of work as relates to mental-health and substance-abuse services but felt like it was time to be probably a little more organized and more focused on a number of these goals, and they are pretty simple goals. very similar probably to some of our partners goals. the first one is making sure

that we identify mental health and substance-abuse conditions early so that we can intervene earlier, and we have spent at least the last two years, special on the children's site, working with a small workgroup of both federal partners and private citizens around the early screening and diagnosis and treatment program looking at behavioral health screen,, mental-health and subs abuse screens for children and adolescents. and about three months ago we released an informational bulletin which identified not only what we had recommended as screens for those conditions but also toolkits that states and, frankly, even practitioners could be using to be able to refer people once they identify summer that my government health or substance abuse conditions, and we work really closely with the american academy of pediatrics as well as the american academy of family practitioners to be able to develop that.

the goal is to increase services for persons with serious or chronic condition. head doc holliday about our home health initiative and i'll hold off on that because i think paul would probably give you a much better description and kind of an in vivo of others working in one state. but the affordable care act off -- also gives additional tools or enhanced some of tools that we had to build a think about services, especially services for mental health and substance abuse services. and that included both the health home provisions as well as changes to the 1959 program. it also allowed states to be able to enhance their efforts to our bouncing incentive programs to shift what they were spending more committed services away from institutional services. we are also trying, again through whether that be our

state medicare director letters, or bulletins, getting information about what could coverage is. i think two months ago, in may, we began the first and our coverage around mental health and substance abuse conditions focusing on children with significant mental health conditions. and highlighted both our program that congress had funded through a demonstration, as well as our partners, samhsa's programs, the children's mental health initiative. if you haven't seen that, bulletins on our website that is terrific findings that we have from both the demonstration and we plan again to roll out these informational bulletins, some of which are touching on some of what ted covered earlier and anti-covered earlier around these conditions. the third goal is an important goal, a logical and that's improving health outcomes but we know that people with

significant conditions do not have good health outcomes and we would like to have them had the same outcomes as people that don't necessarily have those conditions. we know that's a stretch but that's our goal. last but not least, the two goals are better everybody of evidence-based practices to enhance recovery and resiliency and to reduce the barriers to social inclusion. and we've been working very closely with our state partners in terms of how they would like to be a will to cover evidence-based practices answering the questions but what some of the evidence-based practices are. and again through informational bulletins and it was to be able to message what we hear, what we are told is good practice. and then last but not least, we've got the fifth goal of really trying to test new ideas,

new practices before they get the widespread dissemination. we do that to our 1115 program but we also do it through our innovation center at cms, and happy to say that the next round of the innovation center grants have a pretty significant focus on mental health and substance abuse, and also have a pretty significant focus on medicaid. so that's what we're up to. we are looking forward to the next three, six, 12 months as we begin to get past january 1, 2014. >> great. thank you, john. and good luck. [laughter] next up is linda rosenberg who is ceo of the national council for behavioral health. linda is a certified social worker. she's a family therapist, psychiatric rehabilitation practitioners, more than 30 years of experience in mental health policy and services.

the national council under her leadership has grown its membership to over 2000 organizations, all of them committed to the integration of health care and behavioral care. she and the council our advocacy forces to be reckoned with in this field and we're very pleased to have you with us. >> thank you. i'm delighted to be here. you know, and the beginning of the about talk about having mental-health, out of the shadows and john went on to include addictions. and i think it's events like this that help that happen. so i want to thank both robert wood johnson and the alliance for this opportunity. it's great to see so many of my colleagues in the audience have worked so hard over the years to make some of these very wonderful policy changes happen. but it's also terrific to see lots of young people who are the next generation and who will bring it to the next level. and really be out of the

shadows. i'm going to take you back for a few minutes in 1963, when president john f. kennedy passed the last piece of legislation he signed before his assassination, the community mental health act. that is 50 years ago this coming october. i mention it because it really goes on with some of the data that had presented, which was his transition from this period of state hospitals which was supposed to solve the ills of people with serious mental illness, to an era of the above committee-based services. and you can see some of the services listed on my slide. jfk was part of his new frontier. again, bringing mental illness and developmental disability to the time out of the shadows. and it was an in route to the warehousing and often remote areas in the states of people with mental illnesses.

which were, in these warehouses were really at best neglectful, and at worst abuses. i began my career in the \70{l1}s{l0}\'70{l1}s{l0} in a new york state hospital, and i can tell you that the conditions were even at that time quite appalling. so we spent a lot of energy, and certainly the federal government began by spending some money on creating these community-based mental health centers. starting about 20 years ago i would estimate, although somewhat on this panel may know better than me, and medicaid came into play in a big way. and a lot of the services that had been funded directly with federal and state dollars were now funded by medicaid. and that was a big change. the services that developed and our member organizations and other obsessions that deliver mental health and addiction

services have an are airy speciy that they developed over these 50 years, really working with people who intersect both social and political vulnerability. and those are really skills that are very much in demand now. so the success we've had and what this slide shows you is the success of treatment for mental illnesses, particularly as it compares to trigger for other chronic illnesses. you know, i think too often we are willing, those of us who work in the mental health and addiction fields to some of the defensive about not achieving outcomes. well, outcomes are mixed for most illnesses. and particularly difficult for chronic disorders. and what i think this slide points out that we've had a tremendous, tremendous degree of success and have developed the skills in terms of care, coordination for complex operations.

i think the other thing, and again, had to mention this in some of his data is that the services, whether it's housing, whether it's vocational support or educational support or medication are you kind of treatment really are cost effective. and, in fact, there is a very nice little book by richard frank called better but not will that talks about when you adjust for inflation spending on mental health services for people with serious mental illnesses, really remains flat. and hasn't escalate the way it has for the rest of health care. and, in fact, states and not-for-profit service have been good stewards of the public dollar. i think we have though now 50 years later we are really next to the next generation. it's no longer the building of a silent community service system

for people with certain mental illness. now it's about how do we bring those services, how do we bring those people who have those needs into the general health care fields. and we have a lot of hurdles that we need to work on. and one of them is that americans really don't know about mental illness. when i was a little girl, many years ago, cancer was whispered about. it was actually called the big c. at the time. and we made tremendous strides around that. we are just beginning i think that journey around them to illness and addiction. the other thing is all these services we've developed are unavailable for people once they are chronically ill. and designated as safely mentally ill and they're actually our pathways in every state to achieve that designation. say go on ssi or you go on ssd, you get medicaid to you get the services available to you. for most people but not all of

course as with all illnesses they work but you're already been facing a life of disability. and what we have not been able to do, and what i think we will be working on very vigilante is something that andy again and mentioned which is a robert wood johnson work which is threats accounted. and into being at that point to prevent lifelong disability to keep people in school and at work. the other thing is substance abuse as john said must be put on the table. when you compare that 600,000 people have died of aids since 1980, but 3.3 million have died of addiction, i think we're facing a public health crisis of those who need treatment for addiction, only 10% get it. and when you look at where most people have not been designated

seriously mental ill get their mental health services, it's in primary care and what the research shows is is usually medication, not managed very well and with very little attention to support or the continuity. so we have these opportunities. we have this insurance reform, people being covered until the age of 26. insurance companies who have to deliver mental health and addiction services just as a do while other services. and we have these really reforms of both a delivery system and the payment structures. and that's all about inverting the triangle, getting people out of institutions, dealing with and coordinating chronic conditions and taking health care dollars under new population days and integrated budget arrangement. that's what health homes are. that's what accountable care organizations are. is putting together services for people under one roof, in a sealed led by hospital.

health homes due to the work of i think the national council, and most importantly our members, now or sure that health homes can also be available for people with serious mental and addiction who you've heard from others die prematurely. i think this is just a map of the states have moved towards health homes and again called -- karl is going to talk but for sheer expense that mr. has said were, in fact, they have been able to save money and improve care and even in the first year. but there are general forces at play. health care doesn't exist in a vacuum, and the forces at play have to do with all willingness or experimentation. i think some of these models that were all thinking of going to be very successful are really in some ways experimental we'll have to watch unintended consequences and be ready to make other refinements. the other thing is we're in a world where bigger is the rule.

for airlines control all flights. 75% of doctors today are employees. a radical change. think about wal-mart. think about home depot. and then think about health care and think about acos and health homes and all of the new structures really that are necessary to do what needs to be done. that's going to have an effect on how we deliver services in local communities. and the other thing is the liberation of information. there's a great piece in this week's new york magazine by frank rich, a culture critic, talking about how young people really are not very excited about this breach of their private information or about government listening in to the phone calls. they think about privacy very differently than we do. and i think we have to think about that as we plan services and talk about the future. for specialty mental health that

delivers services now for people with serious mental illnesses, there are some real issues and barriers. one is small businesses with small margins. they lack human capital. there is a workforce crisis in health care general. generally it is even more acute for behavior health we are not-for-profit cannot compete for salaries that hospitals and other big players can do. i think the parity in the safety net is something that we at the national council think is final and i told the organizers that us going to take a few minutes at the end to plug some legislation since we know people on the hill of course are here, and there's the excellence of mental health act. senator stabenow introduced that. senator lounge is a cosponsor is also introduced in house. and that would create capacity. because we're talking about

taking mental health out of the shadows. when you take it out of the shadows which is what is begin to happen, you need to have treatment capacity. mental health and addictions need to be treated like the rest of health care industry kinetic, and this bill does that. the other thing we have, and we support as a mental health bill that mark begich and representative barber in the house introduced. and both of these bills have wide wide bipartisan support. this is really mental health designed to help answer and teach americans about mental illness and addictions and what to do in a crisis. and next we will have another bill that's going to be introduced by senator whitehouse of rhode island in the senate, ma and in the house, congressman murphy. and eventually to bring h. i t. to behavioral health. we cannot participate and use our skills adequately if we are not part of health information

exchanges come if we don't have the wherewithal not only for electronic health records but for the handheld technology is going to bring treatment to people around this country. and, finally, we have a hill day coming up, secular 16th-17t 16th-17th. and i will invite you all to her policy institute on the 16th and we will see some of you in your congressional offices on the 17th. thank you. >> thanks very much, linda. i should say that the views expected by the panels about legislation are not necessarily those of the robert wood johnson foundation on the alliance for health reform come except in the case of legislation cosponsored by senator rockefeller and senator blunt. spent good. terrific. >> by the way, i would bring this in not noting that for those of you who are part of the twitterverse, that if you want to let people know what's going

on, it's hashtag mental health, is that right? okay. and speaking of letting people know what you think and what you want to talk about, you know have the chance to get involved in this conversation. there are microphones at either side -- i'm sorry. we do not have the opportunity to get, be part of this conversation. in fact, our panelists have actually referred to our final panelists several times. carl wilson is a clinical psychologist whose a community psychologist. he was the first president and ceo of kreider health center in missouri. which he led for 33 years, retiring just last year. this safety net community health and mental health center serves for missouri counties. it's a model for the country. he has taught at washington

university in st. louis for 37 years in both psychology and in social work. he's been in the leadership of both missouri and a national mental health organizations. is now consulting in missouri on how best to integrate behavioral and physical health care. and we are very pleased can despite my lapse of memory, to have you with us know this afternoon, dr. wilson. >> thank you so much. i would like to start by just saying a few things about this community. i think it's been referred to before that we've got over 1500 safety net behavioral health go organizations in the united states. there's a lot of variability between them but we all have an essential goal and mission in terms of our most vulnerable citizens. crider health center is the safety nihcm mental health center has been doing that for 34 years in missouri and for counties around st. louis. seven years ago given a lot of

the data that has been described and with some leadership from wonderful individuals like dr. joe parks in our state, and we came to realization that we need to also provide primary health care services and integrate the service. the national council in working with samhsa and other parts of the federal government has done an awful lot around the country in order to promote that. so we became -- six years ago, and just to cover just a few things that we do, we do more than just what state can afford to support us in. and that includes primary prevention. we are anti-bullying in the schools and resiliency promotion, problem solving skills. 51,000 kids go through those courses in our 21 school districts. we also have been able to take

advantage of some of the leadership from the federal government in terms of some demonstration grants, and missouri got, we are part of the first system of care grants. this has helped us working with school and home-based interventions to keep kids in school and out of trouble. and safely at home. but we also, you heard a lot about adults and the evolution now in the development of better alternatives, committee base, more active approach that help people thrive in the 20. we do a lot of that. we do a lot of housing because housing is essential in all of that. we also do an awful lot of work using the house model in terms of employment oriented work. but what we found is we would help people to get a life by the time their 50 in the community and get back in a strong social networks. and then at some point, then they were dying because they

were smoking three times the rate of the general population because they were of these, because the consequences of untreated diabetes. so we felt like we needed to take some responsibility for that. so now we have three general clinics that include primary health care psychiatry and mental health, pediatrics, dentistry, access to gynecology. with 18,000 people, adults and kids every year going through those communist, receiving those direct services. and so we have confronted, we have been confronted with some general issues that we have needed to address as a center come as a stay, and as a national level. of those is that people with limited income generally don't access preventive care as often as they should. they overuse emergency and specialty care.

this is compensated by mental illness. significant lower rates of primary health care in this population, significantly lower rates of routine testing. one of the things that i think is not talked about is very poor dental care. that impacts overall health care profoundly. and little integration of primary care in psychiatry, which is beginning to change. but one very important federal study that is largely known for the comparison of psychotropic medications, the study with adults who were challenge with schizophrenia, also found that a small minority of individuals were receiving care to have high cholesterol or high blood sugar, blood pressure. and somewhere around the third who have diabetes were receiving no treatment at all. this is a death sentence, which sorely goes along way to explain some of those outcomes that

we've been seeing in terms of the mortality, morbidity of people with serious medicos to some basic principles its fiscal health care is a core service for people with a series meant it does. and behavior health care systems have a basic responsibility to provide access to health care. both for disease management but also for wellness and recovery. you can't lose that wellness and recovery focus. and at the management and integration medical care for people with serious mental illness should be part of our basic mission. missouri, because i'll showed a slide earlier that help us to persuade our state on why we should be the first out of the block. was able to achieve this has under the affordable care act of astonishing health care homes and we had two flavors. one is the primary care in health care home, largely for

people with chronic conditions. and then the community mental health care center. i will refer to that as a behavioral health care home. the committee health centers and our ability to specialist mental health centers in missouri have all become behavioral health care homes. we have a number of functions that i won't go through in detail. you've got the slides but in essence we take whole person approaches. and was beautiful industry is that we found we were able to health centers that have not been able to have primary care within their walls. to be able to coordinate care, work with community doctors and achieve good outcomes. so across the spectrum of different types of centers with different assets i think we have been able to achieve the kind of outcomes that we need. the way that we have done this

is that we have taken out existing services, so the people health home is a program not separate. the centers have been no successful of integrating it into their over all day-to-day functions of the center. the difficulty with -- with that is we get funded for a minority of the people that were serving in terms of behavioral health care home but in essence we have to transom our entire systems in impacting our overall population. in terms of coordinating care. but this includes the addition of additional new scare managers, having a position consultant who helps to go over treatment plans to make sure we don't have duplicative care and make sure that we fill in the gaps and people getting the services that they need. there's a strong need and base where we have to have good information technology. and gave her health has lagged in this. as i think linda has mentioned,

this is one of the critical areas in terms of overcoming in order to be able to achieve the behavioral health care homes status and also be able to better integrate care and impact the health of, the overall health of the population. now in missouri all of the people, the 17,000 individuals across the state are receiving the behavioral health care home services are getting, having metabolic screens on a routine basis, which means that we're looking at their hemoglobin a-1 c. looking at blood pressure, cholesterol counts. we are looking at their waist size, you know, and we're beginning to integrate that into their overall planning. data analytics is critical. this can only be done really successfully, or it is being done because we have individuals have all of their health care paid for by one source, by

medicaid. and so we are able to see if people are picking up their medications, if there are other physicians who are duplicating medications, whether we've got you know, whether we have problems in that arena, which is a lot more frequent than most people would realize. we have and are scare managers and physicians, consultants who were on a routine basis who are looking at that. and then we are utilizing the extensive expense we have in terms of developing networks, the point of the spear are the individuals many of them specialists and school-based mental health specialists and energy support specialist, clinical case manager to returning those individuals into kennedy health and wellness coaches. so first in disease management, then in getting, moving towards our wellness which includes issues of lifestyle changes.

so we're using strength-based approaches. we are promoting the creation of new healthy behaviors and learning related skills. and promoting self managed whole health and resiliency. this slide is actually one that was key in missouri being able to persuade our medicaid office in the governor's office and the legislature that we should become, that the health care home should exist. the red line is the two years prior to individuals receiving services through our safety net services, and you can see the dramatic rise. this goes back, you know come we need to find system for we can make people eligible for care two years earlier. but because people have to be eligible for disability services, many times they have

to deteriorate to this point in order to be able to receive services. the blue line demonstrates, this is when treatment began, and you can see a real rise, the jump in the overall costs extra costs are going up very rapidly but then they come down rapidly after just a few months. and we not only bend the cost curve, we reversed back to almost what it was two years prior to treatment beginning. so this is a for your slide, and it demonstrates the cost savings that we can have through could manage, care management. there's some reference to the reports from missouri in terms of what our outcomes have been. we have managed to cost savings even after the overall cost of the behavioral health care home. but we have some real challenges. one, i think has been mentioned is that the hip health care organizations are behind the

curve on a large entrance of h. i t. part of that was we didn't have good products but when we started out six years ago at the carter health center in terms of electronic medical records, we couldn't find one that would do the whole job in terms of primary care and dental screening and the health care. i think products are developing more now. the cost of those products is skyhigh for the marginal, not-for-profit community and mental health centers around the country. we need some help and that's really where, and we are left out of the earlier h-net -- h.i.t. enhancements that the federal government provided. a number of us have been able to take advantage on the medical services side and we can get our psychiatrists covered but we have many other individuals that we need to invest capital, and the capital for most organizations is not there.

and health information exchanges are advancing rapidly. many times without even health being ethically a partner in those exchanges. we need to catch up. there are funding issues obviously in terms of sustainable funding for prevention early intervention. limits of funding sources for the uninsured, we talked about the size of the funny. were able to make these changes in missouri because we could show that a single funding source was in medicaid that we were saving money. we saved money for the schools, for the present systems when we can work with drug courts and we cut down on recidivism. we are not getting paid for that. and so that's a major problem. we have workforce recruitment issues. a lot of that is within state in terms of restrictions that we have on who can do what, in terms of state statutes that

protect her facial organizations. we need to expand within teams, what peters can do i and get pad for. we need to establish in order to show our outcomes went to be able to benchmark them and we have to all agree on what those outcomes are across the country between states. we need to work on our culture changes that we had decades to work on in terms of developing the recovery to crafted develop this wellness model within a matter of just a few years. and just in terms of some basic principles, we had to remain close to the people that were working with. even as these clinics become more and more important, it's real important with these target populations to go where they are to schools, to homes. and wellness and recovery need to be integrated. these community health centers are uniquely positioned to optimize the outcomes of the tipping spear in the system of care. and so we are working towards a

comprehensive person centered system of care and its possible, it's inside the we do have to deal with these barriers in order to make sure that we just don't have islands of best practices. rather that this is around the country. one of those issues is, developed what is our role, the role of community behavioral health centers and behavioral health homes within those accountable care organizations? i think the answer to that will be critical. so thank you very much. specter that. thank you very much. karl. i apologize for getting the panelists that most of the other panelists seem to have been pointing to. as i was saying when i was so carefully and correctly interrupted, you can now join this conversation. they are cream question cards

that you can fill out and hold up. someone will bring them forward. the ou are microphones that's cn go to to ask a question in person. if you do that i would ask you both to identify yourself and your institutional affiliation if you have one, and to keep your question as brief as you can so that we can get to as many of the questions we can. ..