in this country and we are not going to start now. so again i want to thank everybody at fema here for the extraordinary work that you are doing. you show each and every day that you take your responsibilities seriously. you do your jobs with perfection was him and hopefully you are setting a good example for members of congress. they need to be doing the same thing. there is no reason why we can't move forward and make sure that we are taking care of america's business. thank you very much everybody. >> thank you everybody for coming. >> thank you.

>> host: the name of the book is "the end of big" how the internet makes david and goliath. the author is nicco mele and he joins us from boston. mr. mele before we get into the substance of your book if you could relate your personal experience to the book "the end of big". tesco i started my life as a computer programmer and ended up at the intersection of technology and politics in 2003. i joined howard dean's presidential primary campaign. i joined very early in late april of 2003 and was on the campaign from most exactly 12 months from the early days to the very bitter end.

my experience as a working for an insurgent candidate led me to think a lot about the role of technology and empowering insurgencies against the establishment. so it's really kind of where my folks started. in 2007 and early 2008 we watched the astonishing democratic primary where hillary clinton who was the party standard error, indeed she and bill clinton built the modern democratic party. she lost in the primaries to a manhood in in public life less than a decade. that was a dramatic moment of the insurgent challenging the establishment and winning. the last couple of cycles we have seen a similar dynamic in the republican party with tea party insurgents challenging successfully a number of sitting u.s. senators in their own

primaries as well as other establishment republican candidates. and so the book started with my interest in the role technology plays in empowering and surgeons and political campaigns against the establishment. increasingly as i looked across a range of other industries and verticals i saw a similar trend at work whether that be in the news, entertainment, higher education, armies and militaries in manufacturing, across-the-board it was clear that there were a couple of significant trends at work. >> host: mr. mele when you join the dean campaign did they have the sense of the power of the internet? >> guest: i think when i joined the dean campaign i mean they hired me. i was a totally technically guy. there was clearly some sense that this could be a competitive advantage, that there was a

tactical opportunity here that have not yet been tapped. you are really in many ways -- this was patterned after move on. by 2004 move on had been around for almost half a dozen years and move on had raised a lot of money on line for candidates but never before had a candidate themselves really fills a digital operation as aggressively as the dean campaign did. you know in 2000 bill bradley petitions the fcc to allow credit card contributions over the internet so there definitely was some hint of this providing a tactical advantage as far back as 2000 but it was the dean campaign really embraced it and just blew it wide open. >> host: you have a quote in "the end of big" and you say nobody shinkman d.c. take the internet seriously so it was

allowed to happen. by the time it in the -- anyone had noticed it had already one. >> one of the reasons -- i had worked in shinkman d.c. had a number of non-profits in the political space including common cause and one of the reasons i went to work for howard dean is that you're here was the only presidential candidate whose headquarters was not in washington d.c. raid inside of washington d.c. there was a prevailing establishment wisdom about how you went about running and winning on a national presidential campaign. the internet didn't figure into that. it wasn't part of the equation. the equation if i can summarize in shorthand is have a bunch of events to raise money and spend most of it on negative advertising on television. that was the model. joining the dean campaign where he didn't have a national list of major donors to tap, he

didn't have a established program. he needed as a candidate to find a tactical advantage and necessity is the mother of invention. that is in part what drove the dean campaign to the internet early, was we had to do something and this was available. i joined the campaign knowing that there was an opportunity here and i was not going to have on a front-runner or very establishment candidate campaign. >> host: nicco mele what is radical connectivity that you talk about? >> guest: one of the challenges of our digital age is we don't have the language to talk about it. if i start talking about the role of the internet in political campaigns that doesn't entirely capture what we are seeing. the role of mobile phones in the arab spring, it's a lot more than a phone. talking about it as a mobile phone doesn't capture what's going on.

one of the challenges i have been writing the book was we just don't even have the vocabulary to describe the kinds of changes that technology is bringing to our society society, tour institutions into the globe so when i was thinking about it a part of the argument i'm making the book what is really really different in what has really changed is the degree to which we are connected to each other all the time at practically zero cost and totally flat distributed network without any hierarchy or priority or credentialing. that is why i talk in the book about the impact of radical connectivity. it's just a radical kind of connectedness and speed and frequency and presence and immediacy and you can go almost anywhere to the globe and be connected today. there is a new device i just saw for 150 bucks that will do text messaging via satellite from the north pole.

you know the total presence and availability of everyone with a smartphone is astonishing and unprecedented in human history. >> host: you write in "the end of big" radical connectivity is altering the exercise of power faster than we can understand it and most of us feel lost in the dust kicked up by the pace of change. is radical connectivity unraveling society as we know it? >> guest: i don't think it's necessarily unraveling society. it's just creating a wholly different one. [laughter] dad is a challenge to many of our existing institutions. it's what i wrote the book, to look at the impact radical technet -- connectivity is having on our institutions. in 1975 if i asked you what a computer was you probably would have describe something that would fill a room. a supercomputer from the mid-70's cost 5 million bucks

and was really only available to the world's biggest universities , the world's biggest company's, the world's biggest governments especially the pentagon and department of defense. today you can walk into pretty much any strip mall in america and buy a smartphone that has equal or even greater computing power than a supercomputer. in just over 40 years we have taken something that was really only the world's largest institutions that was considered enormously powerful that was even a matter of national security and now you can buy it anywhere in america. and not just america but you can buy it anywhere in africa. the total ubiquity of this technology has led to an enormous diffusion of power from institutions to individuals and that creates enormous challenges for all of our institutions that

are built on assumptions about individual power and individual agency that involves hierarchy and authority and reviewing and credentialing today. if you are not happy about the way something works you can use social media and radical connectivity and just opt out in a variety of ways. i have two little boys, four and two and nearer home is the a park with a huge slide. you have to climb up three stories of stairs to get to the top of the slide. i love it because it exhausts the boys. climb up the stairs again. climb up the stairs again. hurricane irene destroyed the slides. the local town said it was going to take maybe 30 grand in two or three years to rebuild the slides. well you know two or three years is an attorney before a 4-year-old. so some parents started the pacom page and posted all around the park flyers stuck to the

treaty saying if every parent who comes to this park gives 50 or 100 bucks we will have 30 grand overnight. so that is the perfect -- and of course they raise money like that in three months later we have the slides. that's a good example of the institution of the local government who wasn't working for people so people use the technology to opt out of it and raise the money separately. in many ways that's very exciting but that's also very troubling in other ways. >> host: well has radical connectivity led to more civic engagement? >> guest: that is -- it's been a mixed bag. in many ways more americans are engaged in the political process than ever before. at the same time you are looking at many municipal elections single-digit turnout to elect their leaders. los angeles one of the biggest cities in the world had a ridiculously low turnout in their recent mayoral election.

and so i think that, i think we are living in a very fragile civic age where many of the old ways of doing things the institutions that the nation was built on, bears not necessarily doing a great job. they are very fragile in their own ways and that makes them susceptible to significant disruption when technology provides alternative ways of doing business. the whole story of obama's candidacy and away the tea party is using the internet to challenge the republican establishment candidate that's a pretty good example of the political parties being a shadow of their former selves and not having republican and democratic party not having the grassroots or the grassroots aperture should they used to and instead being primarily major donor fund-raising vehicles. that makes them easy to disrupt. if you can figure out a

different way to raise money can disrupt the party. >> host: you write with regard to politics that radical connectivity does mike it easier to raise money but it also paves the way for dangerous populism. what do you mean? >> guest: i think the founding fathers you know in designing our system of government and the process of our politics understood that there was this tension between the monarch and the mob and a purpose in many ways of our government was to navigate their intention to bring some sense of deliberation so that elites could not act with impunity but also so that the mob could not ignore smart and hard decisions. that is something that i think is in danger of getting lost. it's in danger of getting lost not just because of the technology and you can make a pretty compelling argument that our elites are going to the real

challenges facing many americans that their leaders are not tuned into, but technology also plays its part. technology flattened the hierarchies and makes it very challenging to have any significant expertise. i think that a court challenge of our digital age is credentialing experts and people people -- it's been well-documented trusted institution is at an all-time low. any institution whether that be politics journalism government higher education dr. doctors, you name it, trusted institution is at an all-time low and technology gives people lots of opportunities. and so it's in the absence of expertise that i worry a little

bit about what populism might lead us. >> host: nicco mele to contemporary populist howard dean pat buchanan both made splashes but both failed in the end. do you have a reason for that? >> guest: that's a good question. i mean i think part of that comes down to the dynamics of the american electorate about running caucuses in iowa and primaries in new hampshire to choose leaders which any sane person questions the wisdom of that. i also think that there is a significant and you'll probably get e-mails and tweets but i think the dynamics, the dynamics of our political process of the

presidential primary selection process both as part of the reason why those populist don't do well but i also think that americans have some sense of what they want now that they are leaders. the populism is a vehicle for anger at what a bad job the institutions are doing. that doesn't mean that americans necessarily want the populist but they have a great deal of frustration that's where the countries that. if you are under 40 in this country you know you probably make less money than your parents did at your age. you probably will be able to afford a home or at least not as nice a home is your parents bought your age. the quality of your education is the same and maybe a little worse but it's a lot more expensive. the quality of your health care is probably the same and maybe a little worse and also a lot more expensive. the prospects for your children are dim. you spend more time commuting

than any normal sane human being wants to. climate change is happening and the institutions of our time aren't doing anything. if you were born after 1980 you have very little reason to believe in and trust the institutions and the leaders of this country. i think that is the root of a lot of the frustration and anger we see in both parties. >> host: that said does technology and radical connectivity have a solution? >> guest: well i think it doesn't necessarily have an immediate solution. part of what i tried to do in my book is identified the nascent beginnings of tolling solutions and building real compelling alternatives to the current system using this technology. but the truth is it's all very nascent. it's all very early stage. there's not a lot of mature institutions that understand radical connectivity. wikipedia is probably one of the

most mature institutions out there that understands the power every individual carries around with commuting -- computing power and what that means for knowledge and expertise and even wikipedia isn't that old and is struggling to figure out what it means to be an institution. i think that is very telling about our time. at the close of the book i talk about -- i open the last chapter with barbara taught in's the guns of august talking about the funeral of king edward the seventh in 1910. in 1910 most of the countries in the world were run by monarchs are they work colonies run by monarchs and between 1910 and 1990 monarchy and colonies disappeared globally, could disappeared. that feels to us today of course they disappeared but if you are part of a royal family in 1910 that was not evident or clear

that monarchies were disappearing nor that they should disappear and yet in retrospect it looks totally clear and evident. i feel like we are living in a little bit at the same moment right now. all of our institutions look like they can and should persist but in fact i'm pretty unconvinced that any of them well. >> host: nicco mele you quote barbara tuck it in your book. on history's clock it was sunset and the son of the old world with setting in a dying blaze of splendor never to be seen again. when it comes to radical connectivity and new technology and economic organization what has been the effect and what effect do you see on economic organization? >> guest: well, more americans are self-employed than at any time since the civil war era. in 1828 the vast majority of americans were than 75% were

subsistence farmers or rammed her own small shops or work in small farms are small shops. by 1920 the trend is almost completely reversed and most americans are employed by a major corporation. the pendulum is swinging back the other direction now. we are not quite to the point where the majority of americans are self-employed or employed by small businesses but there has been an explosion of small businesses over the last decade and a half or so and the cook consultants and sole proprietors , small and being them sized businesses, the nature of the organization of work is changing fairly dramatically in this country. there is a chronicle of this and yet we are not sure how we navigate that. when i talked a moment ago about new institutions that might be emerging one interesting one on my radar was the freelance out of new york city that tries to

take -- to provide shared services for freelancers from health insurance all the way to retirement benefits options because we are increasingly a freelance economy. that has dramatic implications or are all of our systems built on assumptions about how work would happen and what the nature of work was. another trend i talk about in the book that is related is the rise of renting and on-demand fabrication. i for 3-d printer. i talk about how i printed sandals for my boys. the future of manufacturing over the next two decades is exciting and almost impossible to imagine where technology is taking this page us on this front. and yet it is arising. it gives us -- the future has arrived but it's just not evenly distributed. i think that is the challenge

for institutions and for governments and politics, for the other crucial institutions of our time is how to navigate the emerging future when it is so otherworldly in terms of the way people thought the world worked. >> host: nicco mele and "the end of big" you talk about national security in the military. how does the edward snowden situation with the nsa fit into your book? >> guest: i think edward snowden is a perfect example. here is a relatively low level employee who hadn't been on the job that long who uses a thumb drive to divert the entire national security apparatus of the united states. that is astonishing. that is a significant disruption and i think it raises two questions for me. one question i talk about in the book in the context of wikileaks is whether or not it's possible to keep secrets in the digital age.

a fundamental attribute of a file is that you can copy it without anyone else's permission , without any loss, go without any cost. files are copyable. that is part of the advantage and in that context it looks to me like it's really hard to keep digital secrets because you can't keep people from copying things. that just simply wasn't true in an analog and paper age. it was a lot easier to control information and to keep secrets. so i do believe the -- in the digital age i don't believe he can keep secrets. that has significant implications and raises a bunch of questions about are their secrets that we should keep in a democracy? maybe that is secrets like diplomacy requires sometimes some secrecy. certainly hard decision-making by leaders requires some secrecy the apparatus of the u.s. government was set up in many

ways to balance the need for secrecy in some situations with the need to hold power accountable so that it doesn't abuse that secrecy. part of what we are seeing in the edward snowden case is that our institutions, the balance of power is lost and the accountability is gone. the head of the nsa essentially lying to congress about the nsa's activities. the checks and balances and accountability for institutions seems to have evaporated here. it makes edward snowden feel like the only play to hold the institutions accountable is by disrupting it. i think those are the two issues raised. one the nature of secrets in the digital age and with the implicatiimplicati ons are for leadership and what the implications are for citizenship and the secret ballot and the second issue it raises is the

extent to which our institutions are completely unaccountable and that is what -- that frustration holding these big institutions accountable is what leads people to use technology to figure out how to disrupt them. >> host: so when you look at a big piece of legislation, let's take the affordable care act for example and radical connectivity and new technology, is the aca set up for a new world in your feel? >> well, it's a mixed bag. it has these health care exchanges which certainly would not have been possible in a pre- digital era. i struggle to imagine how the health care exchanges would work pre-internet. in many ways is looking at digital solutions to a vexing problem. in other ways i think it creates kind of more challenges to seek

alternative vehicles for their health care because of just the sheer complexity of it. >> host: nicco mele what is echoditto? >> guest: echoditto is my consulting firm. we have offices in boston and also in d.c.. we followed a group of folks who were on the tech team on the dean campaign and our work involves helping organizations navigate the digital world. both technical advice but also helping them think through the complications of radical connectivity on their work. >> host: in the subtitle of your book "the end of big" you have to work goliath. if you were to speak to the comcast or "washington post" organization to goliath's in our car world what would you tell them? >> guest: i would tell them they have to reimagine their

customers, their audience is having more power than they do. this is what is so hard for leaders of the big institutions to imagine. the people you are leaving are more powerful than you are. in the case of the "washington post" it's not the audience onto its the former audience. you need to figure out how to engage that audience, how to tap into their power, how to help use them to accomplish her goals and ends. certainly, the soap of pipa fight leicester where they there was this internet legislation and that look like it was going to pass and suddenly people broadly banned around the united states and got up in arms and overnight change the direction of that piece of legislation. your customers have a lot of power here to disrupt and shape

your direction and a few don't come to the thinking about their power and what they can do to disrupt and to create opportunity for your business and your organization, then you are going to face a lot of surprises in the next decade. >> host: what would be your message to congress? >> guest: my message to congress is not that dissimilar. i thank my primary message to congress is that we need some fundamental overhaul of how this government works. we vote on tuesday because sunday is church day in monday's market they and you ride your horse and buggy to town to vote on tuesday. that is just ludicrous. we have 435 seats in the house of representatives basically because that is how many seats fit in the building despite the fact the size of the average house district has quadrupled over the last 40 years.

the mechanisms of our government are due for a dramatic overhaul and congress will not be able to navigate out of the current cul-de-sac they have gotten themselves into unless they understand and embrace the changing nature of our society and of our world and reimagine what government might look like in the digital age. i firmly believe we are at a moment of opportunity here with radical connectivity unrivaled since the start of the country. you can see hints of that. the speaker's office has interesting digital tools in the white house has some like we the people but its nascent. it is small. it is not topping the incredible power and ingenuity of the american people. >> host: nicco mele is the author and "the end of big" is the title how the internet makes

david the new goliath. this is "the communicators" on c-span.

>> this is the clarke school for the deaf where they met for the first time. she was a teacher living in a dormitory here and he was an attendant of the boarding house on the property. now we are in graces bedroom in the clarke school dormitory in this room is where grace would see calvin across the courtyard of the next building. she would signify to calvin that the parlor room below them was available for them to meet him. in this room is where calvin and grace when they were according would meet up and be able to sit and talk and have time together. despite him being in his 30s and her in her 20s they still

have to abide by the rules of the school and needed to meet somewhere for they were supervised and chaperoned while they were on campus. the fcc is launching a new web site that will post detailed information on the market liquidity price quotes and cancellations. securities and exchange chair mary jo white announced the details last week. this is 20 minutes. [applause] >> thank you very much jim. i appreciate the kind introduction. you think your speech is long. settle in. i am truly honored to be here particularly at your 80th annual market structure conference which makes your conference even older than i am by about a decade and a half so

i thank you for that as well because the much older than the i am events are getting much fewer and farther between. as market professionals you obviously live the u.s. equity markets first-hand day in and day out. as an association you have used your voice to focus attention on the value of our equity markets. obviously an all-important engine for capitol formation job creation and economic growth. like you i believe that we must constantly strive to ensure that the u.s. equity markets continue to serve the interests of all investors. in fact the challenge which we duscher must come fully of age and address two days, not yesterday's markets. today i will speak about the path forward. the success or failure of capital formation and equity markets depends on two key

constituencies. without investors willing to accept a long-term ownership and public companies that could in markets cannot exist. this is equally equally true whether they participate in the markets directly or indirectly through institutional investors like mutual or pension funds. even in just investors will be greatly limited in their choices at the equity markets do not provide any effect if inefficient way for a broad range of public companies to access capital. companies of course directly raise capital in primaries but it is the secondary market that makes these offerings viable. without a robust secondary market company simply cannot attract the necessary interest from investors predicted secondary market that ensures investors will have an efficient means of liquidating their positions if and when it chooses to do so and a strong secondary market generates price discovery that helps efficiently allocate capital to the company's most

able to put the capital to good use. market structure plays an essential role in attracting investors and companies to the public equity markets. our market structure should inspire confidence to investors and companies that they will be treated fairly and that the system will work efficiently. without this confidence our market structure can act as a headwind that will impede capital formation. we are fortunate the u.s. equity markets currently operate from a position of extraordinary strength. the u.s. equity markets are rightly considered the envy of the world in terms of the companies they attract in the broad investor participation. but markets continue to evolve and there are signs that require our attention. the number of u.s. listed companies has declined to approximately 4900 from a high of more than 8000 in 1997 and will estimates of equity

participation reached a high of 65% of u.s. households in 2007 they have since declined each year despite the general rise inequity price levels. it's natural to ask whether the signs reflect problems in our present equity market structure particularly given the transformations in recent years as traders you are well aware that trading today is high-tech high-speed and widely dispersed among many different trading venues. extremely short-term strategies in high frequency trading firm to represent more than half of all trading volume. a steadily increasing percentage of trading occurs in dark venues which now appears to execute more than half of the orders of long-term investors. technology itself has been a transformative force enabling previously unimaginable methods for order generation and execution. although some of these developments are not attributable solely to

regulatory choices competition plays a powerful role. well before regulation market participants were trading in dark pools and trading with highly automated strategies. many jurisdictions around the world was different regulatory structures than ours are dealing with analogous issues related to exchange venues and automatic training. the sec must be in a position to fully understand all aspects of today's equity market structures and i emphasize before my first days as fcc chair that addressing market structure issues would be one of my top priorities. back in 2010 the sec took an important step and publish the market structure concept that initiated a comprehensive review of equity market structure. over the last year we have intensified this effort and i believe we should do more. to address the difficult challenge successfully often

starts with a focus on fundamentals. i am concerned that as the complexity of our market structure has grown so too has the complexity of diagnoses offered and solutions proffered. some of those efforts and ideas may very well bear out but like batters in a slump and i promise i won't talk about the yankees but like batters in a slump they will often turn to fundamental mechanics to improve their swings. i believe we too must focus on a few important fundamentals in our review of equity market structure. only this attention to these fundamentals can we get it right and address the issue smartly. so what are these fundamentals? the first is that technology matters and properly functioning markets demand it. operational integrity was essential when markets depend on the technology of pin and paper and it is critical we depend on sophisticated software.

the second fundamental as we should identify and test are some shins about market structure. in some cases these assumptions seem almost accidental. does despite our exclusive authority to differentiate between stocks with trading characteristics today's market structure has evolved to be one-size-fits-all. in other cases our assumptions seem driven by long-standing rocket practices statutes or regulations suggesting that because it has always been a certain way it must remain that way. the third fundamental is that decision should be based to the extent possible on empirical evidence. we recognize the course may be interpreted differently by different people with different assumptions perspectives protective sand interest of much of the current discussion seems rooted in an and at times self-interest rather than evidence. if we want to make good decisions about our markets

empirical evidence provides at the very least a starting point for a principled dialog about what if anything needs to be changed in our market structure. let me briefly elaborate on each of these fundamentals. one indisputable focus of our attention must be operational. the technology systems that drive today's markets and what will become their successors are here to stay. there are benefits that flow from technology. it's creating tremendous efficiency. we have seen significant improvements in access to capital to do the technological revolution in our market structure over the last 15 years systems can fail or operate in unexpected or unintended ways and the risk of that increases as technologtechnolog y becomes faster and more pervasive and more complex. we all recognize that some risk of failure is inherent in any

technology system. but that does not mean we should not always the striving for zero tolerance for errors interruptions. we must address these risks and i think jim said this by striking the right balance of the liability functionality and cost. over the last year and a half unfortunately the u.s. equity and options markets have experienced the span of event took on to question with the markets have achieved that right balance. these include systems failures and exchanges and problems with broker-dealers and recently the equity markets experience august august 22 the disruption and dissemination of consolidated market data which as we know lead to a trading hault on all in nasdaq stocks for several hours. we should not confuse these events is the byproduct of high frequency trading our activity in dark venues as some often do. these events involve relatively

basic albeit serious errors. many could have happened in a less complex market structure but the persistent recurrence of these events can undermine the confidence of investors and public companies in the integrity of the u.s. equity market structure as a whole. in 2010 the sec took an important step to address operational integrity and broker-dealers when they adopted the market access rule. the risk management controls it requires are important aspect of market integrity and orders are generated by log -- that when defective can flood the market and exhaust normal supplies of liquidity. that rule has been in place for three years at the continued occurrence of failures in order routing systems and controls clearly shows us there still work to be done in implementing effective controls with broker-dealers. industry must continue to work

on other protection such as kill switches at exchanges to address mistakes that slip through broker-dealers controls. broker-dealer's are part of our system. issues of operational integrity extend exchange's alternative training platforms and other systems. the sec and the industry are making progress in this area but there is still much to do. for our part this last march we proposed new regulation to bolster systems compliant and integrity and look forward to and ask for a meal and other participants a constructive and inclusive dialogue as we move forward. although we should move forward expeditiously with regulation to strike down of the nasdaq data process confirm that we cannot wait for nor solely rely on this proposed regulation to address especially the single points of failure where he disruption can have an impact across the entire

national market system. i met with executives on the exchanges in the last month and challenge them together to develop and implement the necessary steps to improve the resilience of the technology surrounding critical market structures and infrastructures. in short we expect to receive comprehensive action plans that address the standards necessary to establish highly resilient and robust systems for securities information processors. i also asked the sec staff to engage the clearing agencies that finra to conduct a mapping of other critical infrastructure systems and provide assessments of their robustness and resilience. in addition i asked the exchange at finra to prioritize their efforts on a number of initiatives to ensure that when problems do occur they are resolved promptly and in a way that maintains investor confidence. in all of these efforts we must

engage a full range of market participants including broker-dealers and investors. i look forward to seeing the results of these efforts and their implementation. we also need to rethink some of the assumptions that underlie today's market structure. they can find the flexibility that we believe is available to us as regulators and they do the same for you as market participants. it's important that we identify and test these assumptions because technology and trading practices constantly evolve and even the perfect trading model for the day as we know becomes obsolete. trading venues of all types should have the flexibility and the incentives to impeccably innovate to better meet the needs of the ultimate customers come to investors and public companies. the challenging assumption is the key part of a comprehensive review of market structure that started with the concept and i think it is the part that is

often emphasized in discussions of a holistic review of market structure. two other speakers tomorrow congressman scott garin and my colleague commissioner dan gallagher have highlighted this issue. i believe that one unspoken assumption about are listed equity market and i alluded to this a little bit earlier has been that it must be a one-size-fits-all structure. for the most part market rules and trading mechanisms are today the same regardless of wide variations in the size of public companies. sta has been a leading voice that fit the particular needs of small companies. similarly powered pfizer committee on small and merging company submitted a recommendation to us earlier this year with the goal of improving market structure for smaller companies. in 1975 congress gave the fcc the authority to press will it take the of the national market system including the authority to establish systems for stocks

with unique trading characteristics. this authority permits different types of stocks to be treated differently. we should now consider using the data that is currently available to us to inform these decisions and how we can develop empirical analytics to help us measure success or failure of whatever we do. as one step in this direction i instructed the sec staff to move forward on earlier efforts to work with the exchanges as they develop into possible present to the commission for its consideration a plan to implement a pilot program that would allow smaller companies to use wider pit sizes. another set of assumptions about our current market structure is related to the nature of exchange competition and the nature of the self regulatory model it self. equity exchange today operate fully electronic high-speed trading systems using a business model that was mostly developed

by network communication prior to mms. today's exchanges are yesterday's dcm's. the exchanges for example continue to exercise as you know self regulatory functions even as they operate for-profit entities. this model for exchanges has encountered challenges. as i noted earlier for example the exchanges no longer attract 1/2 of long-term investor orders. from time to time the exchanges have adopted trading models that use different fee structures or an attempt to focus on different priorities such as retail investor participation. these models have been met with mixed success which raises the question as to whether it has an opportunity to develop different trading models and preserve pricing transparency and are more attractive to investors.

this is true for all important aspects of our current market structure. the current nature of exchange competition in the self-regulatory model should be fully evaluated in light of the evolving market structure and trading practices. this evaluation should include current exchange rate of tory structure continues to meet the needs of investors and public companies as it provides efficient flexibility for exchanges to implement transparent trading models that can effectively compete for investor orders. does the current approach to self-regulation limit or support exchange trading models? this evaluation should also assess how trading venues can better balance their commercial incentives and regulatory responsibilities. for example is there an appropriate balance for exchange in key areas such as the maintenance of critical market infrastructure and our exchange venue subject to appropriate rivets requirements from the type of business they can do today?

>> secu's 2010 release asked somebody's questions and others about the performance mms market structure with generally and as commenters for data to support their responses. strikingly very little data was provided. this is a significant issue. we and you are best positioned to assess and develop any proposed changes to market structure whether they are initiated by us or through competition among participants if we have meaningful empirical evidence. data alone of course will not reconcile all of the widely differing and conflicting views on market structure for the right data can be used to test hypotheses identify and eliminate potential problems and narrow in focus the debate on the real issues. investors companies and markets often manned and deserve as much. for our part that we are

engaging in a wide-ranging effort to seek out better sources of data in order to assess today's complex markets. these sources include as you know mike is the market information and the dashed data analysis and that the sec began implementing a genuine and sec adopted large trader reporting rule which began last year to efficiently collect information on most of the trading activity of key market participants including high-frequency traders. in addition the sec adopted a consolidated audit trail rule which when implemented should significant enhance the ability of regulators to monitor the equity markets. in the meantime the sec is using finra's audit trail data to analyze trading particularly in the off exchange markets. we are also paying close attention to initiatives of foreign regulators dealing with market structure issues analogous to ours. our next immediate step is to

start making his empirical evidence which we are already using it extensively publicly available to help inform the broader market structure debate. all should have an opportunity to consider the issues for the benefit of the information we have and are using so today i'm pleased to formally announce a new initiative we are launching that is designed to promote fuller empirical understanding of the markets. sec staff has assembled resources and data on the sec's web site focusing exclusively on equity market structure. the new web site should be available as early as next week and will serve as a central location for us to public we share evolving data research and analysis. part of this initiative will be to disseminate data unrelated observations drawn from ibison address the nature and quality of the quiddity across the full range of u.s. liquid equities from a lifetime of quotes to the speed of the market to any church order cancellations. every day my disc collects

1 billion records to the microsecond. information comes from a consolidated tapes in proprietary tapes of each exchange and includes posted orders modifications and trade executions both on and off the change. typically only sophisticated market participants that have access to all of this data and fewer still have had the ability to process it. the web site will allow users to explore key markets based on active analyses of tens of aliens of midas records over the last year he not only are we making these analyses available, we are making them accessible. with the click of a mouse results will be available in clear easy-to-read charts and graphs. we expect this new tool to transform the debate structure i focusing it as never before on data, not anecdote.

to get an illustration the staff has developed a data series tracking the total volume of visible orders at all price levels into public exchanges and comparing his bling to the volume of shares traded. only a small exchanges are not canceled in trades but less expected as the cancellation rates for orders and exchange traded products can generally be five to 10 times larger than corporate stocks. such observations highlight how different types of equity products can vary in their effects on markets. staff is also using this data to compare the speed at which exchange orders are canceled as at which orders are executed. this is data that shows almost two-thirds of the orders rest for half a second or longer. though we can clearly see the quotes are sometimes canceled within a millisecond or faster the data shows the high-speed market is not dominated by such

cancellations. in fact over a quarter of all exchange-based trades and corporate stocks are executed against orders that address it for only a half a second or less. these findings not only provide empirical basis for measuring and tracking the speed of today's markets would also suggest short-lived quotes are generally accessible at least by some traders. the new web site will also feature staff research papers based on a friday of sources and staff reviews that identify and assemble information from expanding economic literature on the market structure topic. one paper using a order audit trail data provides key metrics describing the underlying nature of office trading by the 44 trading systems that traded equity securities. staff primary observation there is that trading looks similar in many respects to change --

exchanging pick another paper summarizes studies that address market fragmentation both visible and dark. additional research papers are already plan. so we are very excited about this initiative as you can tell and we look her in much forward to your feedback on it. let me just end by saying and summarizing gathering disseminating and analyzing datr complex marketplace and ensuring the integrity of market technology are the fundamental steps that are needed to address today's market structure concerns in a responsible manner. purchase a patient of market participants and the broader public is needed to advance these measures. in many cases a little homework may address a concern or identify a necessary action for the sec or the industry. in other seats measures may generate more questions and require additional analysis providing the building blocks for more complex initiatives.

ultimately we must be held to show investors and companies the concerns about the current u.s. equity market structure can be properly diagnosed and when needed properly addressed. this is a very high priority for me. i'm confident that this goal can be achieved in the u.s. equity markets will continue to work well for investors so they can both drive capital formation and participate in the benefits of economic growth. thank you very much for listening and have a great conference. [applause]

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>> the first monday of october which means its opening day for the supreme court. to veteran reporters here to talk about their agenda for this term. let me begin with jeff brazen of the wall street journal. the headline in your newspaper this morning that earpiece, campaign giving top high court docket following content to citizens united ruling. also to let affirmative action, public prayer, and abortion for this term. also with us at that table, adama the new york times. is peace on the front page of

the newspaper this morning, supreme court has deep pockets in its new term and precedents facing risk. adam, let me begin with you because in your pc right, the court's new term will feature an extraordinary series of cases on consequential constitutional issues including campaign contributions, abortion rights, from that action, a public prayer, and presidential power. are we headed for another news-making town from the court? >> a pretty good term, but the problem is the last two terms as spoiled us. there were so huge, voting rights, same-sex marriage, the health care law. a term in which the court has grappled with important and fundamental issues might get a little lost by comparison. by the standards not of the last two terms, but of history this is a very rich sturm. >> host: whitey say that? >> guest: the ordinary supreme court term can have one or two cases that really captures the public imagination. here we have half a dozen easily

>> host: do you agree? >> guest: i agree, but a lot of it remains to be seen how far the justices want to go. these are cases that can be decided narrowly or more broadly. this is a court that has not shied away from broad decisions when it feels necessary. >> host: a lot of focus has been paid to what -- you give top billing in the wall street journal. what will they be hearing when it comes to this case? >> guest: this case is being heard on tuesday at it involves a cap on at great contributions that political donors can make. right now under the federal campaign finance team individuals can give a limited amount to each candidate or political committee, but there is also an aggregate capital about $120,000 that they can give to all candidates and committees combined. the case specifically challenge is whether that cab is constitutional or whether it is a limit of the donors free-speech rights, especially if you have more than 120 or $30,000 to give to political

forces you favor, your rights are being violated if you cannot give that much. that is the argument. >> host: who brought this case before the court? >> guest: an alabama businessman who says, listen, i want to give not only to 17 candidates and max out on each of those guys at the $2,600 per election cycle base limit, but i want to give to the 18th and 19th and 20th and understand why there is an overall aggregate cap on what i can give if i will abide by the basic limits candidate by candid it's. >> host: who is arguing the other side? >> guest: the federal government to says these caps are an important way to avoid corruption and people using interlocking committees and so on to circumvent campaign finance limits. you can think about it as a sequel to the citizens united case which looked at one side of the campaign finance system. it said corporations, unions, individuals can spend independently as much as they want, and coordinated with the

candid it's as much as they want. now we're looking at the other basic level of campaign finance regulation, how much can you give directly to the candidate and party. this could be the beginning of the unraveling of that second leg of the campaign finance system. >> host: so, jess bravin, who are you watching on the court? which justices fifth? which one or two or three will play a pivotal role in this decision? >> guest: the key justice to look at is the chief justice, john roberts. because the chief justice has generally favored more incremental steps toward constitutional goals that he believes are important. he has in general preferred to avoid very controversial, sweeping decisions, but not all members of the court agreed. in this case involving contribution limits, three members of the court have said that there should not be any limits on contributions. they cannot believe that limits

on political contributions are constitutional. we don't know exactly where the chief justice of the other relatively new justice samuel alito's stance, but it is possible they may wish to avoid shaking up the system the way that the citizens united decision did in 2010. >> host: why do you say that? why would they avoid that? >> guest: mccourt's in general are conservative institutions. in general they don't like to make shattering pronouncements. because as an institution they're supposed to reflect solemnity, steadiness, security. they're supposed to embody the stability in society. there are lots and lots of decisions that change. it makes what they do look more political and less judicial. and so for the public acceptance of what they do, the fact that many people rely on these decisions, the courts tend not to want to shake things up so

much the way that an elected official might want to campaigning on a particular issue. >> host: "wall street journal" editorial this morning, restore free political speech. john roberts faces another constitutional watershed is what they say encouraging him to get rid of these limits on donations saying that assuming before liberals go the other way, that makes chief justice roberts -- the left is already warning him in the media much as they did successfully last year in advance of the salvaging of obamacare. they will announce a ruling they don't like as activist. it would merely restore the central role of the first amendment protecting free political speech. thanks to the historic blunder of buckley political partisanship is more heavily regulated today than video games and pornography. that is not what the founders intended. the chief justice prefers to be an incremental cost, but now is the time to advance a core constitutional principle. from the boston journal editorial.

>> guest: the journal will never forgive john roberts for his vote in the health care case. there was a deep disappointment to the political right, and they are hoping he takes a bolder step in the campaign finance area. as jess bravin was saying, the impulses are to be an incremental us. he is sympathetic to the project of deregulating campaign finance but he is only 58 years old and he is willing to play along game and take a step-by-step and has shown that in the past where he is making a minor step, criticizing the ride. one of his moves judicial minimalism. so this dynamic of the right wanting someone whom they considered there guide, faster and bigger, you see it over and

over. >> host: so, what place before the court? what are the options? >> well, the way to roll merrily in this case assuming that the chief justice agrees with the general direction of removing these kinds of limits on political spending is to say the cap, the aggregate cap of the $130,000 or so is unconstitutional because it does not serve any purpose beyond the purpose served by what they call base level limits, the limits to individual committees and candidates. remove the cap but leave intact the individual amounts saying that the anti-corruption goal of government, the only goal that the court has recognized as constitutional and limiting political expenditures or rather political contributions, that would serve that purpose. the way to go more broadly is to remove the limits on contributions altogether because the buckley case that you

referenced a moment ago, that case from 1976 distinguished between campaign expenditures which could not be constitutionally limited. several justices don't believe that that distinction makes sense. one retired justice says it does not make sense, and both expenditures and contributions. the three justices on the court now who hold that you think that neither can constitutionally be limited. a big decision. >> host: i think they're ready one of the papers mitch mcconnell is lawyer will be arguing as part of this case. why? >> guest: he asked for time. the court does not often the sometimes gives divided argument and let's another party take part of the case. i suspect it is because he has been a central figure. his name is on one of the important decisions, and in some respects to another branch of government to hear his perspective. >> host: moving on to another

case, an nlrb versus canning. what is this case about? >> guest: the president recess appointment power. ordinarily the senate has to confirm high government officials nominated by the president, but the constitution says that when the senate is in recess the president can make an appointment without such senate approval. and the question in the case is what happens if the senate is on a short break. is that good enough? and the lower court looking at that question decided to leapfrog that little question and ask what the recess in the constitution means that all and can to the conclusion that the only recess that counts is the recess between sessions of congress. and the court upholds that interpretation of the recess appointment, it would dramatically limit a power that presidents of all parties and for a long time have used fairly routinely. >> host: how did this case could before the court? >> guest: a stalemate between

the senate republicans who were blocking the confirmation of the majority of members of the national labor relations board. this is a board that makes decisions, the national labor relations act, which will never unions and organizers and employers. and the court had previously held that it cannot act unless it has a quorum which is three members. the board only had to confirm to members. in effect, it could not do anything and was essentially neutralized. the president being frustrated by this recess appointed a majority of the members of the panel, the nlrb, started making decisions. an employer who lost the case filed suit and said, it cannot make decisions because those members are not legitimately in office. as adams said, they won at the lower court. >> host: how did it get to the court? is it unprecedented that a cut to the court as quickly as it did? >> guest: not really. it went through the normal procedures.

an appeal from the national labor relations board like many other administrative agencies. it does not go to trial court. and then the government appealed that decision to the supreme court. the court took it. other courts have reached different conclusions on the same questions. adams said what is at stake is a century or more a practice in washington by both parties. really the main authority that the government has operated on has been opinions from the department of justice rather than the courts. the corps will explain. in some ways you can look at it as a question of the definite article verses the indefinite article. what does the word the recess of the constitution mean in contrast to a recess. >> host: we will wait and see. that is to of the cases that court watchers like yourselves are going to be viewing. the new york times, your piece inside the paper, the new

supreme court, the number of major precedents that may be overruled or reversed. how many cases is the court going to be taking up in this new term? how many will get media attention? >> the court generally decides 70 or 75 cases per year. of those i would say eight or ten really focused public attention. and so far they have not decided all of the cases. there may be 50 on the docket. but of those there are, you know, already six or seven pretty big ones. >> host: your opinion what we talk about next. >> guest: tuesday tomorrow we will have the case with started talking about, the campaign finance case. one week later we will have another crack at affirmative action. last year's accord essentially ducked the question of whether the constitution allows public

universities to take categories. now we kind of flipped the question. the question now is whether michigan voters some in 2006 amended the constitution to say they don't want such racial preferences. want to ban such racial preference whether they are entitled to. not with the constitution permits it but in a sense whether the constitution affirmative-action groups to work contending that this measure in a sense is almost -- affirmative action itself is almost not the direct question.

the way they have framed it really is how michigan voters have taken steps to disable minorities from the same type of opportunity to lobby for admissions preferences that other groups have. for instance, alumni can argue for preferences for their children and get to the board of regents and ask for that. other sorts of groups are allowed to seek preferences from the region. so are the admissions office or legislature. minorities have to amend the state constitution in order to seek preferences and admission. there argument is that minorities are being kicked out of the political process, the restructuring as opposed to the constitution requires that preference be given. >> host: what we just laid out for our viewers, three of the major cases that the corps will take up. next month they will consider the rules for religious invocations before the legislative bodies such as

prayer's for town board meetings. in december the court will examine the proof needed to show discrimination under the fair housing act and awaiting scheduling is oklahoma legislation restricting use of the so-called abortion pill. so those are some of the cases. we would get your thoughts, comments, and questions beginning now. warren in minneapolis, republican caller. go ahead. >> caller: hello. unfortunately my question was in regards to the current cases that you just talked about, potentially an upcoming case that could come into effect. it was abandoned verses the n.c.a.a. and the n.c.a.a. said that they would actually fight this all the way to the supreme court. and the gentleman, he may be more familiar with that case. whether are not, how split up it

can get, stuff like that. you know, they can use their rights. i believe a gaming company, electronic arts, they just paid 40 million to buy out. and they are going forward. they will fight it all the way to the supreme court. >> host: do you know anything about it? >> guest: we will fight it all the way to the supreme court. in that statement does not carry a lot of weight with the justices or the press. the case we're talking about is an interesting case about the so-called right of publicity. video game manufacturers, using the likenesses of actual college athletes and video games without paying them. a significant first amendment issue, but the courts of appeals and philadelphia and san francisco ruled against the video game companies. at least one of the cases just

settled. >> host: on twitter, public prayers consistent with the separation of the state and church? >> that is at the heart of this dispute. it comes from upstate new york, and it has to do with these prayers' that began, the town board meeting. there are some contradictions within our constitutional tradition. one has to do with prayers. the first edition says the congress shall make the law respecting the establishment of religion. thomas jefferson used the phrase wall of separation. yes, the kind of congress up until today had begun their meetings with prayer's brought by a minister, rabbi, or other religious figure. the question is how much prayer is too much? how much becomes a constitutional problem when it

is seen by the courts to be advocating one religion over all others were denigrating other religions or excluding people. these are the concepts that the court looks at when they decide what level of prayer is acceptable. so this case does not challenge the concept of having prayer altogether before a public official meeting. it would be extraordinary if the court were to so find that they cannot have these prayers. they certainly would it expect it is acceptable. the question is whether the rules that this town used in selecting the people beat this constitutional standard. there is some indication that the supreme court will feel that the town was okay. the lower court found that they favored christianity, applied to stricter level of review to the way that the town's elected. we will have to see the argument

>> host: and the name of the case, it is expected to come up next month. democratic caller. hi. >> caller: hello. i wanted to comment on the unlimited amount of money that private parties can donate to political parties. i believe that the real problem is that quite often these political parties are not associated with the ad but really are. and they lie in these deaths. they have no controls because if the candidate that is being lied about comes back and defends himself then the problem is you

give validity to the ad. more -- and the -- so they do not defend themselves. you have unlimited money going in to allied. >> host: okay. adam liptak of the new york times. >> guest: the basic theory of the first amendment as a pretext political speech. what the supreme court said in psittacine united is that at least when the spending is coordinated with the candidate it is okay for people and corporations and unions to say what they like. but the caller is quite correct that that could lead to a real mess and it's the candidate under attack for a choice about whether to respond and dignify the charge. that kind of rough-and-tumble is nothing new in the american political system. in the early part of the republic it was pamphlets and

not tv ads, but they were very rough. >> host: one argument is if you do away with limits from wealthy donors that that actually helps challengers and hurts incumbents. the whole point behind fine gold mccain legislation was to help the incumbent in congress keep a hold of their seat. all this is in the hands of representatives in gerrymandered districts. >> guest: that is very nice. one powerful critique of all campaign finance regulation is that the people who put it in place are the people whom it may protect. so that incumbent protection may be an underlying goal of all kinds of campaign finance regulation. with the first amendment does, it wants to be skeptical of the government saying you can speak into cannot. there is a line of thinking that is quite consistent. >> host: bill in colorado. independent,. >> caller: yes.

the case in greece, one of the things about that was the suit was brought about because somebody felt that only christianity was -- the christian prayer was being used rather than other ones. that is not what i call for. what i call for was i had also heard that this case on the campaign contributions, they also wanted to be able to just dump money into the politicians coffers, not just on limited. but they don't want to be able -- they don't want to declare who is giving the money. they want to read just put it in the bank anonymously. >> host: all right. it. >> guest: there are people who are critics of the whole campaign finance system that is gone on since watergate you want the privilege and argue that exposing the identities of donors in fringes their first amendment rights because they might be more reluctant to give

money if they were able to see who they were giving it to. that is not an issue in this case. the issue has to do with limits on contributions, particularly the aggregate cap on contributions. we saw in citizens united that the case began with a fairly narrow question and the supreme court found that it needed to reach a much more broad question involving corporate political spending in order to resolve it. there is always a chance the court could choose to seek real argument or do things to expand the scope of it. right now i would say that the aggregate cap or the constitutionality of constitution limits is probably enough for the justices played at the moment. >> host: jody. >> caller: yes, good morning. >> host: go ahead. >> caller: i have three quick questions.

>> host: okay. >> caller: i am assuming both of you have read the constitution. the first thing i am confused about is the supreme court under obama's -- under the obama law. they had to rewrite the tax code in order to make it the law. correct? >> they have said that the chief justice said that the key provision was two readings and he would read as constitutional. >> based on what? >> this bending clause. >> okay. it could become a tax. >> that it was authorized under the tax and cut. >> caller: my next question, i thought only the house of representatives could make taxes, not the supreme court. that is why i am confused.

>> guest: that is exactly what the chief justice said. the house and senate have passed a law that did impose this kind of structure. >> host: did you get your questions answered? >> caller: that was the one. you're talking about individual contributions. you just read this morning mayor bloomberg is going to give corey walker a million dollars. is he legally allowed to do that? >> guest: he can spend money independently to support booker. he may give -- i guessed the truth is he is a state candid it, so it depends on state law. then he can give $2,600 per election cycle. >> host: an independent ad campaign.

>> guest: that is a question that often gets lost. some people don't think it is an important decision. so long as you spin independently uncoordinated you can say what you like. if you want to give money directly to the candidate there are limits. >> guest: would not affect mayor blumberg's ability spend his own money but corporations. if he had that money he could have done it before citizens united as well. >> host: alex, independent caller. >> caller: good morning. i am calling from washington. the rights and the rules, there needs to be -- the position of the supreme court, every party, i think the supreme court should

change. the initial. republican or democrat. and so the obama should do his job. i am afraid that obama is not doing his job exactly as he should. >> host: we will leave that. move on to teaneck, republican caller. >> caller: good morning. did you purposefully omitted the part of the constitution that states the free exercise era shall be left to the citizens of practice of religion? >> host: who are you referring to? >> caller: the gentleman. >> guest: the free exercise clause does not really come into play because we're talking about a government meeting. there is nothing in the practice

of the town of new york that interferes with anyone's exercise of religion, going to church, doing anything like that the only question is whether the town government and self when response is a prayer, what limits it faces when it invites people to come in and pray and provides a forum. there is really -- sometimes these clauses overlap. the free exercise of religion at all people are guaranteed along with the bar on the establishment. this is a question of is the state going to far toward the establishment. it is not infringing anybody's power or right to go and pray or worship as he or she sees fit. >> host: we are talking with jess bravin and adam liptak. to veteran reporters of the supreme court. it is the opening day for the 2013-2014 term.

the public has been lining up outside the court to get inside with limited seating inside the court. our reporters are going up there as well to hear opening day. what happens? >> guest: nothing special. the court gets down to business. here a couple of cases coming age discrimination, securities fraud that are, like most of the cases, relatively technical and retain. >> host: and then what happens? the continue to work until when? >> guest: typically it is the last day in june when they will issue usually their biggest cases. >> host: how does the court's term unfolds? >> guest: they hear arguments through the month of april. if there are people coming to visit washington so far the court has deemed itself or been deemed to be in the social part of government. they are open and the argument is typically three days a week two weeks a month through april.

then they essentially disappeared from public view for couple of months until the last batch of opinions come out in june. then they take a recess between july until they come back. >> host: a lot of focus on justice kennedy, calling him the man to watch. his core will it be this term? >> guest: justice kennedy is in the majority more often. particularly he is the guy to watch. sixteen cases last year that divided in a classic way. he swung right ten times, left in times, and that is difficult. he is really the key in many but not all cases. the other two to watch, the chief justice who holds the key in some cases. and also to an extent justice alito who when he replaced justice o'connor in 2006 took on a moderate position and move the court to the right.

>> host: a lot of people are saying it will be alito's court. >> guest: that is because justice alito was the first appointment in many years to significantly change the ideological lineup of the court. o'connor on many issues including affirmative action, public prayer, abortion rights, someone who tended to split the difference and saw herself involved in the kind of work of coming up with solutions. she had a very different, where she would call pragmatic cal grow kind of approach. justice alito comes out of a somewhat different judicial tradition. he grew up as a lawyer in the reagan ministration, has a fairly clear definite conservative philosophical approaches to legal questions. so on many of these matters, campaign finance cases, those have shifted and probably will

shift again if justice alito believes the court erred in its past approach. >> host: this begs the question when you talk about the court make up, what is the chance that we will see another retirement at the end of the stern? >> with a long this time the most likely retiree was thought to be the court's oldest justice who is 80, but she has given no few interviews in which she has said that she likes the job, is going strong, enjoys her position as a senior member of the court's liberal wing. all of the indications are that she may hang on into the next term. she told the "washington post" and a nice profile over the weekend that she believes the next president will be a democrat, suggesting there is no strategic reason for her to step down now. >> host: we're showing our viewers the cover of the "washington post" magazine. his decision.

i just want to read a little bit to give you some color from these justices and their time off as they begin their new turn today. bob barnes writes ginsberg is doing what she always does, on a respite. she is indulging the others. she considers the finest opera company in the world. her children and grandchildren, she spent the weekend santa fe. when she returns she hopes to resolve what happened. there are tours of the countryside, the ip access to the works of georgia o'keeffe, dinners prepared by her daughter that last until 230 in the morning. that is what struck me. showing no signs of slowing down. >> guest: she has always been a night owl, but she has a lot of energy and is smart as a whip again, if you take her at her

word, she may not be going anywhere. if you take justice ginsburg out of the equation it is not clear that anyone else will go voluntarily. >> guest: for people concerned about the federal budget deficit , they could be considered as volunteering their work because they have served long enough to retire at full salary. saving the cost of hiring another justice. >> host: explain that. >> guest: if you're a federal judge you can retire at full salary. so by continuing to work as opposed to retire she is collecting full salary. but the united states is not forced to hire any justice to replace her. she's working for free. commented several times that he is essentially a volunteer. for people who want to save taxpayer dollars, they should hope that kingbird and the rest

of them keep working for free as long as possible. >> host: that brings up the government shut down. >> guest: they are in business they announced in the short term they think they have the funds to continue or they deem themselves essential. the probably comes a time when the judicial system starts to show the effects of the shutdown >> host: back to the calls. republican caller. thank you for waiting. >> caller: yes. my question is, does the president of the united states have the constitutional right to change or alter an existing law without the house of representatives and the senate passing the comparable legislation? >> host: are you following that? >> guest: can you be more specific? >> caller: the health care law, extending the employer mandate. >> guest: a la the statutes give discretion to the executive branches of the agencies because

congress cannot anticipate all the things that will happen when regulating air pollution or designing the air-traffic control system or what have you. many statutes differ to executive branch agencies the rulemaking and administrative functions. no one considers that to be changing. >> host: could the affordable care act provisions comeback this term? >> guest: very likely to be another affordable care act challenge, but a different one than we have been thinking about now to the question about whether employers have to provide coverage to their employees because insurance coverage plan and there are lower courts that have split on the question. it is in a way is equal to citizens united because the question is whether secular for-profit organizations have free exercise of religion rights as people have free-speech rights. in that case of former solicitor general of the united states said the other day, 99-

99-100 percent chance of arriving. that case has elements of all kinds of great things. the affordable care act, citizens united, religion, sex, a journalist would dream. >> host: florida, democratic call. >> caller: hello. i just wanted to ask because it really baffles my mind that everyone is fighting over this affordable care act. we have the coke brothers and all these special interest groups giving billions of dollars to senators and all to go fight for the pharmaceutical and -- you know, why can't they put a cap on that? i mean, if i had a billion dollars to donate and wanted to open something, i would. you know what i mean? i wouldn't, but i could.

>> host: all right. >> guest: when we talk about spending for political campaigns , the first amendment says congress shall make no law abridging the freedom of speech. indeed political speech, campaigning, supposed to be a core part of the first amendment. americans can talk as much as they want. the question comes down to not whether speech can be limited of whether money and expenditures are speech which is where the court has had a very strong divide. some members of the court really contest the idea that money equals speech. they say money is property. other members of the court and apparently the majority's days believe that money really is essentially speech because you cannot talk of no one can hear you, and it takes money to buy advertisements or by megaphone or to print handbills to all of those things cost money. restricting money effectively restrict speech. that is one of the conceptual

the fines. >> host: they will hear arguments on tuesday. >> guest: the question really goes to the question of this next case. the distinction is hard for a lot of people, but it is one thing to say you can spend your own money and coordinated with the candid answer would you like. it is another thing for the brothers to give a billion dollars to a senator. the question in this new case is whether that limit of direct contributions from individuals to candidates is constitutional. >> host: the court will hear those arguments on tuesday. thank you both for setting up this conversation for our viewers. >> now more on the new supreme court term with former clerk for justice briar and scalia. this is 45 minutes. >> our cameras outside the supreme court this morning as it begins its new term for the

2013-2014 year. the new york times saying the court has a deep pocket with reversals possible inside that building where the work is taking place, preparing for this new term. it is incumbent upon the clerks, the law clerks of the supreme court to do that job. two former clerks with us. a partner at goodwin procter and former clerk. thank you both. we appreciate your time. let me begin with you. what does a law clerk to? >> whenever the justice needs. the justices use law clerks in different ways. all individual bosses, small chambers, it's like having an enterprise with just a few employees. a law clerk job is to be useful to the justice. some use the. >> for a lot of research,

sifting through complicated cases with a lot of facts and transcripts. justice briar likes to tell the world that he has had his law clerks read every case ever written about a particular subject. used to use law clerks for very short memos. to do the first draft of opinions. as he set himself, he rewrites them heavily. >> host: did you experience that firsthand? >> guest: absolutely. >> host: what have the law clerks done? >> one of the principal roles is to do whatever is necessary. he has described himself, the clerks will have written bench memos. and these are memos to the

justice that take a shot at analyzing the case given the best perspective after having done research, reading all of the briefs and digging a little deeper to give the justice a sense of where the key pivot point lies. sometimes it will be the case that the justice has come with some preliminary thoughts. here are a few things i am interested in. and so the clerk will spend a special time in preparing those issues. it will essentially be this written memorandum. and then there is a dialogue between the justice and the clerks before the argument. essentially using the. >> as a sounding board before argument. so those are some of the steps that go into. >> host: so as far as the cases picture this new term, how many did a lot. >> have to sift through?

are they essentially the gatekeepers to these cases? >> the justices are the gatekeepers. they have set criteria. a lot clark's job is to do a first cut at the many petitions which are requests for the supreme court to review a lower-court decision. and there are thousands. >> host: how many thousands? >> guest: i believe over 8,000. of those more than half are underpaid. they are prepared and less formal fashion often by people who either cannot afford a lawyer or have had lawyers appointed for them and are -- their run the gamut. some of them i just as meritorious as in the paid fancy petition, and some of them are

difficult to understand, handwritten and, perhaps, need a little extra to get extra assisting. >> host: in the case of a petition and one that is difficult to understand, what does the law clerk to? >> guest: the law clerks role is especially important because the arguments are not as refined and distilled as they might otherwise be if you hire repeat players. and so a lot clerk job is to delve into those papers and see if they're is a potential issue that might warrant the supreme court review and to lay that out in the petition. one of the main criteria in determining whether the supreme court should take the case is whether there is a conflict. they feel is their role to step in and clarify the law. one of the principal jobs, often

these potential -- petitions will try to look at the cases and see if they're is a conflict that would warrant the supreme court intervention. >> host: has that happened before? a lawyer liz petition made its way to the court? >> guest: i believe there were at least two. i argued one. on the opposite side of one of those cases. a person filed his own petition. the supreme court granted that case. it does happen. >> guest: one job of the law clerk is to make sure that even if the issues are not presented in as sophisticated away as a supreme court practice might do, if it is the kind of question that the court should be taking up, that is brought to the justices' attention. as i think the case mentioned

makes clear, the court has ways of making sure that once a case is taken up it gets the full benefit of an adversarial presentation. the court appointed a friend-of-the-court, a distinguished alumnus of the solicitor general's office to argue the case. so the court had topnotch advocacy on both sides. a case that started pros say. >> guest: one of the interesting things about the process and the role of the. >> is this is one of the few times with a pledge to not necessarily working individually for their particular justice better working for at least eight of the nine justices. the court collectively, these clerks write a memo about these cases that are distributed to eight of the nine justices. historically one has sent out of the circle and has his or her quirks screen the cases, all

8,000 cases on their own and report directly to the justice which in paris said -- ensures a second pair of eyes. this is a different function where you are pinpointing your argument. here eight of the nine justices. you are trying to provide an objective analysis of whether it meets those criteria that we talked about. >> host: the first day of the supreme court, the role of the law clerks. to better understand that we want to show you a compilation of current and former justices talking about their role. >> something different is going on here than what goes on in the capitol building with the white house commend you need to appreciate how important it is for our system of government. >> this is the highest court in a land. the framers created it after

studying the great lawgivers in history. >> the government concedes the construction of documents. >> these cases are very close. you don't sit here to make a long and to decide who want to win. we decide who wins under the law that the people have adopted. >> you will be surprised by the high level of collegiality. >> we want to hear these cases, we will hear it. we are here to decide things. a job is to decide. >> we cannot have a decision of discourse. >> you have to do your best to get it right. >> why is it that we have an elegant, astonishingly beautiful composing impressive structure? it is to remind us that we have important functions and to remind the public of the

importance and the centrality of the law. >> it always throws me, amazes me command gives me faith in our country to know how much people trust the court. >> i think the danger is that sometimes you come into a building like this and think it is all about you. that is something that i don't think works well with this job. >> host: from the 2010 supreme court documentary, a look inside the court and comments from current and former justices as we mark the opening day of the supreme court, this new term. with us, to former law clerks to tell us about the job at the court. let me begin with you. the current and former justices. >> i'm sorry. >> host: what did you hear from the current and former justices in that little bit?

>> guest: it shows that they take the job incredibly seriously. this is not -- the court is often portrayed as someone of a partisan institution. if you read the tone of the opinion, it sometimes seems as if it becomes personal. i don't think that is how they approach the job. trying to get these incredibly difficult issues, the ones that make it to the supreme court. doing their best to get it right. i think that is kind of the take away from that peace. as much as it may seem personal or partisan, these are the best efforts to get to the right answer on exceedingly difficult issues. >> host: endured. it only takes four of us. four of us want to hear the case, we will hear it. one not five? >> guest: the shortest version is at the early stage in the

case, that is a safety valve. they may decide later that the lower court got something wrong. but the fact that four justices think this is an important enough issue to here, that should be enough. it should not be that a majority of the court has made up its mind because this is a preliminary decision. >> host: dan is up first. >> caller: thank you for allowing another state to participate. what i wanted to ask, i think the justice will be considering the desperate impact theory. that is a case where the obama administration has been overly aggressive in trying to use it to -- statistical analysis to see whether major companies, vendors, mortgage lenders and banks and insurers are treating

all racial groups fairly and not even considering credit histories. if there are x number of people in the world all should have the similar outcomes. i don't know if these lot. >> could speak to what they think will happen, whether the court as lanes so far to the left that they will uphold these attacks on major companies. >> host: let me go back to you. following the cases before the court and this new term. >> guest: the case that he is referring to involves the fair housing act. as the caller said, the question here is whether you can't establish that someone has violated the fair housing act. not on the intent to treat people from different racial groups differently, but based on the impact of a practice on different racial groups. disparate impact is something

that is well established in employment discrimination law, but whether that theory can be applied to other statutes is something that the court has struggled with in the past. >> host: all right. >> guest: one other issue, whether real divide this issue, a couple of terms ago. the government made a fairly aggressive efforts to settle that case. the parties eventually ended up settling that case. it went away. this issue has come back before the court. so i think there is a report in the newspaper that the parties are making some effort to settle this case. so i think it remains to be seen whether this case is around for the court to decide this issue which is clearly interested in deciding. it's taken this up two times. this is an issue that the court does want to weigh in on.

>> host: talking about the two former law clerks of the supreme court about the job as well as this new term. you want to weigh in quickly? >> guest: on the fair housing case it is also question about the balance of power between the legislative and executive branches because in this case the obama administration has gone through the process of putting out the rule this is that they are right and asking the court to defer to their judgment. >> host: if you have questions or comments you can dial in now. independence. jeff is up next. independent,. >> caller: good morning. my question is rather than committing a crime or getting caught in some unethical scandal , is there anything, anyway of supreme court judges

being removed? thank you. >> guest: the bar will be pretty high. it would, of course, have to be impeachment proceedings in order to remove a sitting supreme court justice. it would have to be something that rises to that level that the caller alluded to. >> guest: the constitution sets out a clear but not specific standard. good behavior and ultimately it is whenever the house decides that it is. but since the impeachment of justice samuel chase this has not been a big issue. >> host: the folks that work for the justices to allow law clerks. go ahead. >> guest: i misunderstood the question. >> host: know, there were talking about the justices. our law clerks tired?

>> guest: even so, the process is a little bit of a mystery. it is a fairly competitive process. and so there are not very many slots and a lot of the year law students. some justices employee a screening committee to take the first crack at sorting through. there are some basic cut offs. whether the person has had a prior clerkship. there is a group of judges who are known. it bears come to trust the

selection process. and then there is a personal fit. the justices interview a certain number of candidates wednesday narrowly. and at that point probably all of these candidates are quite qualified. a comfort level that they have with the law clerk. >> host: is a political? >> guest: i don't think i would describe it as political. if you look at the justices, they often tend to hire from judges who may have similar judicial philosophy's as they do but i think you can probably point to just about every justice were they hired someone who you might say comes from a different pedigree and you might otherwise expect. i know this happened in the scully etch chambers. justice briar has hired from both sides are at least what some would characterize. often there is correlation, but

it is not absolute. >> host: how long is the job of a law clerk at the supreme court? >> guest: one year, and it is over before you know what. the law clerks who are beginning to see the court returned, i imagine the accord sets for seven to wait time frames. a frantic sprint at the end to get the opinions edited and site checked and finished and released to the public before the justices break for the summer at the end of june. once that happens you are -- it's over. i can tell you that it really did seem to go by amazingly quickly. >> host: a typical day. >> guest: during this time when the court is hearing arguments it might well start very early. in addition to helping your justice get ready for the cases that he or she will be hearing on the bench you have this

constant flow of petitions coming and that you as a law clerk are assigned to write memos about. that does not stop no matter how busy you are. and once this sitting and there will also be the question of opinions to help your justice draft. so preparing for the next sitting, working on opinions by in dealing with that constant flow of the things that keeps you going. and then there are emergencies. the justices are asked to step in and granted a stay. there are some very late nights, not just the law clerks, but the justices wait for a last-minute filing and their colleagues. >> host: the supreme court by the numbers according to the court itself. 2013 budget, $71 million, the total number of employees, for under the 85 law clerks make up 39 of those employees. 150 for the police.

east justice, by the way, gets four clerks. the three retired justices each gate one clerk. .. >> it was his fear of the supreme court that you see so