>> you can put those words into my mouth. there is an enormous difference between. laws which i might add had exactly the same failures as our anti-drug laws. they prosecuted supply and transport but not possession. to appeal to them and say that failed therefore any attempt to -- not so much prohibit but to interdict and discourage the use of drugs, to say because of that one individual specific failure in a culture different to our own we can never attempt ever again in the rest of the history of the human race to try

and prevent the spread of unpleasant damaging and dangerous drugs seems to me to be again illogical and not evidence based. >> one more question, heaven forbid i should put words in your mouth. there is another view which obviously i would assume you don't accept. namely but the drug traders, the arch criminals, anung worst kind of criminals who do their utmost to encourage people to use drugs. would they not be rather key on policy which governments pursue. but if it was different, if it was legalized. decriminalized, this is the argument -- i'm not suggesting is mine but if it was decriminalized the drug dealers would be rather upset. >> i don't believe so. alcohol and cigarettes are both legal, yet both are smuggled or

produced by gangs in this country. unless you made drugs free and gave them away there would be plenty given the fact a lot of the people who like to take drugs are by the nature of the lives they lead unable to afford them out of their own activity, the chances are there would always be an opportunity for criminal gangs. also, it is -- >> presumably fewer. >> no, i don't think so. there is no reason to dpos so. what might well be the case is that if you were to legalize ardecriminalize drugs entirely that you would increase rather than reduce it because of this precise problem. people who want to take drugs are often the kind who don't want to pay for them. the solution for this at the moment, the methadone program, involve instead of drug takers and abusers stealing to fund

their habit. government steals from the taxpayer and we're told this is an advance. if that's not organized crime i don't know what is. >> richard has a quick supplementary. >> the area of education, we talked a lot about -- i'd be interested to hear your views about alcohol and education. often alcohol is a drug that is easily accessible and often gives rise to the most obvious -- what do you feel education has with alcohol and drugs and the linkage there. >> i used to do the same amount of time on tobacco and alcohol. i had little time, very little time for anything like this. but i used to talk about about thol in the same way. and explain what it does to the brain and body and everything. one thing that used to amaze the children when i talked, i did

this in year nine which is 13 to 14, and a lot of them never told that alcohol can kill them. they can overdose and the respiration muscles are suppressed and they can actually die. so again, you give them all of the facts. the true scientific facts, you throw in a few social things and so on. i've just a i proch ed health education in the same way, in the same scientific factual way, speaking as equals. not patronizing, and just explaining exactly what will happen. that has a huge effect on children f. they know how alcohol or drugs is going to affect the body, then they are with you. >> a small point. i think one thing is dangerous is to link legal alcohol with illegal drugs. they should be dealt with separately.

the fact some drugs are illegal should be stressed, to confuse the legal and illegal drug is to an fuse the mind of the child. >> i think that the idea of legal sanctions have no impact is not true and the risk of removing those sanctions would definitely be a significant increase in use. as paul hays said to your committee at the moment no .6 of the population uses crack and heroin so means 99.4% do not. we know that totally a few percent use cannabis, 2% cocaine. the idea you would risk increasing use and therefore increasing the demand that would then impact on countries abroad to which we have a moral responsibility i find it extraorlando you would be fairly low use but damaging usage that you will be thinking of putting

the white flag up to use and risk it rising to levels like smoking. i find this a sort of strange way to think at all. i think with education for children on cannabis, the most important thing now is that we should be focusing on the domestic market, the pressing problem in our country to deal with. we have stopped protecting children, we know it causes psychosis. we don't know what's happening in gangs and what role psychosis is playing there. this is something i think should be a pressing concern of the committee. stuff i can deal with here at home. >> the committee is going to deal with all of these issues. this is a long detailed injury. the final question. >> thank you. if more people are convicted and sent to prison, one of the big

problems is the wide availability of drugs in prison which is sort of reported and rumored. now i understand the policy explain report in january that one of the problems was corrupt staff alleging around 1,000 corrupt members of staff were involved in this issue which is about seven prison officers per prison. do you think this is accurate? do you have evidence to support these claims? >> we also published our own paper about keeping drugs out of briss. there are a number of issues that could be addressed. one big one would be the consistent and comprehensive use of sniffer dogs. at the moment there are not that many teams of dogs, they are laid off. it can be used. there are so many in the system.

what we've done at the last few years a sent more than 100 million, introducing methadone for treatment, there have been huge worries that that is adding to the currency. putting chrisners at risk. we should or maybe you would like to ask the question how would it have been. a hundred million pounds was spent plugging the coals, lack of sniffer dog, if the money had been spent to toughening all of those things it would have been interesting. to know what would have happened to the president since then. >> it's a measure of the moral and legal disarm amount of this country in the face of drug use. that in prisons, which above all should be under the control of the law governed.

>> you are absolutely right. the prisons are one of the areas that this committee will look at very, very carefully. and you are absolutely ride to raise it. you want to asked anything to his question? >> not really. a few burning points. >> very quickly. have i the home secretary hanging around outside and i don't want to keep her waiting. >> you can always write to us with these points but the main points if you could tell us. >> can i say a few about cannabis which are not understood. one is the strength. there's a lot of myths about the strength of it. the last proper home office potency study was in 2008. at that time skunk which is 80% of our cannabis market was

16.2%. cannabis in the 60s and 70s, 1%, 2%, you see frank says skunk is two to four times stronger than convas. wrong. the other you can hardly get it now, the other 20% is hash which is about 4% to 6%. with this huge strength, thc strength with skunk this is doing a lot more damage. the dutch have just banned any thc or 15% because they are now looking at skunk as a hard drug. we should be doing the same. >> that is extremely helpful. on the other points you wish to raise with us, if you could write to us. it will be extremely helpful. i'm afraid i'm going to have to call the session to a close because as i say we have other witnesses. but thank you very much for coming in, all three of you.

we may well write to you again and please feel free to write to fee if you think the committee is going off in the wrong direction. we're very keen to know this because we want to make sure this is a very thorough inquiry and will go on for several months. >> thank you for asking. order. we now switch and we have the home secretary. >> this week, live from london, the ceremony and pa gentry of the state opening of parliament. until recently parliament's

official opening was usually held toward the end of the year with changes to their election rule, it's now been moved to the spring. and wednesday queen elizabeth will outline the government's priorities for the upcoming year. live coverage starts at 5:30 a.m. eastern on c-span2. this is c-span3 with politics and public affairs programming and every weekend people and events telling the american story on american history tv, get our schedules and see past programs at our websites. join in the conversation on social media sites. >> congress gavels in at 2:00 p.m. eastern. after a week-long break. the house will consider a number of bills allowing the capital grounds to be used for several events. also a measure to clear the way for development of the washington, d.c. water front. the senate will consider a bill to keep student loan rates from doubling in july. also a couple of judicial

nominations. the house is live on our companion network c-span and the senate live on c-span2. and here on c-span 3 at 2:00 eastern the house budget committee as part of last year's debt ceiling agreement about $600 billion of pentagon spending cuts are slated to kick in next year. house republicans have introduced legislation to prevent the reductions. instead they would cut spending for food stamps, medicaid, the child tax credit and other social programs. congressman paul ryan of wisconsin chairs the budget committee and chris van hollen is the ranking democrat. they meet at too clock p.m. and you can see it live on c-span3. if you are looking for more information on members of the budget committee and others c-span's congressional directory is a guide to the 112th congress. you find each member of the house and senate including contact nfths, mams and committee assignments.

also information on cabinet members, supreme court justices and the governors. you can get a copy for $12.95 plus shipping and handling. bloomberg news held a conference in washington on economic policy. one focused on discussion between congress and wall street. it included harvey pitt and ken feinberg who oversaw compensation of executives of companies bailed out by the government. this is 40 minutes. >> we have one more panel left save the best for last, and we very much appreciate everyone's participation and we're going to focus now again on wall street, washington, the future of banking, we have great guests and speakers here. my colleague megan hughes is

going to moderate this. she is a fellow correspondent at bloomberg television. ken feinberg, the managing partner of feinberg rosen, also the special master for the treasury department, you know his responsibilities as well for the 9/11 fund and also for bp so thanks to kenneth feinberg. harvey pitt, former chairman of the securities and exchange commission, the ceo here in washington, and we are also pleased to have jill summers a commissioner with the commodity futures trading commission leading the commission's investigation into mf global among other things. megan. >> thank you so much, peter. thanks for being here. so our panel is the future of banking. we have a diverse panel. we're going to hit on a lot of topics. i want to start out by getting all of your takes on that very question, what are banks going to look like five or ten years from now? we've got so many unknowns with dodd frank, so many rules yet to

be written. where do you see this going? jill, i'll start with you. >> so from the cftc's perspective, we have issued over 60 different proposals regarding title 7 implementation, we finalized over 30 of those rules. and you know, many of those rules are complex and complicated and they don't just affect banks. they affect a lot of companies that trade in commodities and energy and so from our perspective at the cftc this is much more comprehensive and the changes that will happen to the derivatives industry that we regulate certainly is much more broad than just banking. but for the banks that we do regulate and will become swap deal erls i think there are a lot of implications for the rules, there are a lot of changes, a lot of costs

associated with compliance for these rules. we issued the final definition of who is a swap dealer last week, so at least u.s. banks and those companies who trade in derivatives know from that definition whether they are or are not swap dealers and will have to register as such. >> there was some criticism that narrowed who was expected to be a swaps dealer. >> from the proposal it certainly narrowed it. i think we were much more true to the statutory intent. >> so big picture, are you saying that you think we'll be safer? do you think our financial institutions will be stronger? >> i think that's yet to be seen. >> okay. we'll move on to harvey. he has some strong opinions on this. >> i guess i would start by saying i think the major effect of dodd frank is to declare that now everyone is a bank, so it

doesn't matter what business you're in, you now are potentially all going to be banks. those that are banks are regulated as if they were banks, those that aren't can be declared the effective equivalent of banks, now we have safety and soundness instead of the risk factors that have built our economy for firms that aren't really engaged in true banking. i think the industry in five years is going to look very, very different from the way it looks now. i think there will be even more concentration than we've already had. i think dodd frank is pushing concentration. i think in addition, there will be heavier restraints on subsidiaries and affiliates of

banks, and banks getting into other activities. and about five years from now i'm sort of predicting that we'll see the evolution of investment banking boutiques, because effectively congress has eliminated all investment banking firms so that the only people who are now providing risk capital are venture capital and equity -- private equity funds. i think we'll start to see the re-entry of firms that are devoted solely to investment banking, and that may help our economy but the question is i think everything that's in dodd frank is pushing us in a direction that is going to hurt our economy over the next five years, and make all banks look as if they are very monolithic

and aren't supposed to be doing anything but commercial banking. >> ken, you want to weigh in. >> weigh in here? >> when it comes to bank or corporate compensation over the next five years, seven years, eight years it will be interesting to see just how much the government wants to interfere into private decision making concerning bank or corporate compensation. what you saw with the pay czar was sort of pop list retribution. you saw congress intervene directly when it came to composition decisions involving a very few people in a very limited number of companies that receive tarp assistance. now the real decisions will be made on compensation if the government stays involved not with treasury.

everybody understands that was a rather unique unprecedented intervention. you're not going to see that. the question is what will the federal reserve say? what are the sec rules say about compensation? what about say on pay. very interesting a few weeks ago with citi group in terms of shareholder revolt. it remains to be seen, but i think you're riding against a tide which is historical. compensation is a private decision made by private companies based on market forces. i tend to be a little bit skeptical in good times just how much government will have to say about this area of compensation. >> we'll get -- we'll certainly be getting back to that. i have a lot of questions for you. it's fascinating. but i want to pivot that mf global that's obviously a story

that is still unfolding as we're talking about risk and the future and what changes need to be made. you're in charge of that for the cftc. give us a brief status update and what have you learned in this investigation in the past six months. >> so i look at our investigation having two different parts. we have a law enforcement investigation and we have an accounting information. and we're assisting the trustee in his efforts to retrieve money back into the estate that customers accounts. i think what i have learned over the past six months and what i couldn't to learn about bankruptcy law and the sometimes lack of understanding from retail customers who trade in the futures markets. mf global had over 38,000 commodity customer accounts and many of those customers may have

correctly understood the risks that their accounts were -- or their money may have been subject to with regard to their trading activity. but they had no idea that there were other risks associated with trading such as the customer se gre gaited account not being whole at the end of the day. >> but were regulators aware? >> no. what i can say about that is the regulations that were in place at the time require most fcms to file monthly seg regraduation reports. but mf global was filing daily reports. >> this was on the ground in chicago, the weekend before the bankruptcy. >> right.

>> so the data showing that they were in compliance was there. the nblt r numbers ended up being incorrect. i think that we now need to look at all of the regulations surrounding segregation and surrounding how fcms are regulated by their dsros, by their designated self-regulatory organizations. how they surveil the exposures. they're looking at not only second regags numbers and what an fcmos each customer at the end of every day and they're looking at capital and the cftc's also looking at their

risk exposure and how much capital they have on hand. there are several enhancements that have been put forward. the cftc will follow up to the amendments. >> how long this will take? >> i think that the sros intend to have those enhancements in place very heartily. it's probably going to be summer before we actually even propose any of the amendments to our rules. so hopefully this year, i can't predict. >> and do either of you want to weigh in? do you think it's realistic that we can prevent something like mf global from happening? is that a realistic goal? >> i don't think it's realistic. i don't think you can prevent it. i think what you can do is create enough checks and balances in the system to deter a lot of what we're seeing.

i grew up in brooklyn, new york, we used to have a word for what we're seeing at mf global. we called it fraud. people who commit fraud lie, steal, check, what have you. there's only so much you can do with regulations. they have to build in other processes that create an interarm effect that in the interim people will get caught if they do the long thing. one of the concerns that i think mf global points out if you've got a wonderful regulatory agency in the cftc and they have about 600 employees. shooting at a herd of buffalo with a pea shooter there is

absolutely that no way that the cftc or the sec can help police the markets when they are deprived of critical resources or given the authority to help constrict resources out of the private sector. that's a big that i think what has to come out of mf global. >> joel, i'm curious for you to weigh in on that. a lot of republicans in congress are trying to strip funding from injure agency while you're being saddled with more and more duties, responsibilities, rules. what's your feeling on the resource issue? >> i don't disagree with what harvey said. you can't deprive an agency of resources while we are being asked to impment, almost 100 new rules and have an enormous new responsibility for the otc swaps market. but we also should keep in mind that just four years ago when i came to the cftc, we had about

450 employees and now we have almost 750. the agency has grown quite rapidly. >> those duties haven't even kicked in yet. we have grown more than the agency has grown percentage wise in the history of the agency over the last four years. >> i think it's appropriate. i do think it's appropriate that we have 700 employees. i'm not sure if i think it's appropriate for us to have 1400 employees, which is where the plan was going. >> i don't know if we have the resources to deal with all of this data coming in.

the data -- right, the data being there is clearly not in and of itself. our conversation mentioned a roach motel. >> the problem with the government is data checks in, but it never checks out. one of the best analogy is a wonderful movie called unindiana jones and the raiders of the lost ark. if you remember the ark was sent in a box to gsa. it looked like four million other boxes all the same. nobody would be able to find the lost ark anymore because it looked like everything else in the government. i think there are limits and the answer isn't messily to have more government personnel, it is to give government more capacity throug