>> the -- all council members asked a lot of questions, but the ultimate vote, i believe, if i recall correctly, was unanimous in supporting the publication of the rule and guidance. >> so, the final rule was approved two months later. can you shed some light on specifically how comments were incorporated into the final rule? or were they not incorporated into the final rule? >> many comments were incorporated into the final rule throughout the process. the entire three-stage process enshrined in the rule, as a result of comments received over the course of the rule-making process. the very structure of the rule, in fact, is built around comments from industry. the comments drove other changes

to the rule and amendments to the rule since the desire that many firms had that it be given for advanced notice. that they were under consideration. that led to the stage three notification. that's an excellent example. there were other -- this was to the council. we elaborated on that. every serious comment that came in was addressed one way or another. >> was it incorporated? were they incorporated or thrown out? >> depending on the comment, i think the rules addressed every comment, certainly the preamble to the final rule described all significant comments and described whether that comment was adopted wholesale, in a way that was adjusted or deemed not relevant.

>> thank you. mr. gibson, the final rule that was issued in april, it was noted that the fed has authority to issue regulations for determining if a company is predominantly engaged in financial activities and has issued a proposed rule under this authority. so if i'm interpreting it correctly if i say the fsoc has moved forward with a final rule of saying nations before the fed determined the definition of financial activities who is engaging in them? has it done that? >> so we have a proposed rule which has not been made final yet on the definition of financial as it applies to the nonbank designation. >> right. if that is the case then when does the fed expect to finalize this rule? and shouldn't it have been done

before the final siffifsoc rule. >> i'm not asking you about legal requirement. it seems to me it is putting the cart before the horse and that is a pretty common occurrence these days. >> so i think the rule that defines what it means to be activities that are financial in nature will be relevant for companies where there is some uncertainty about whether they are financial enough. i think as we mentioned it's the cutoff is 85% financial. there are some companies out there that are kind of on the boundary and are not sure. i think for the companies that are -- there are a lot of companies that are clearly

financial and where the boundary is drawn is not going to affect whether their determined to be financial or not. thank you madam chair for calling this hearing. i have problems in the fact that the proposed regulations sweep insurance companies into the same area as bank holding companies. and what's unfortunate about the inability to have all the witnesses on one panel is the fact that if you take a look at the testimony of met life which will occur shortly when william testifies it's the fact that the asset to liability structures of banks are much different than from insurance companies. insurance companies are in for the long haul, very solid, fixed income, stable investments.

banks borrow money on the short term and then put it into long term and could put them in a position where they could have a risk taking place. would you agree upon that? >> yeah. >> okay. that being the case, if met life failed -- all the question asked is this. if met life failed would the failure of the company threaten the financial stability of the united states? we believe the answer is no. we cannot think of a single firm that would be brought down by its exposure to met life. would you agree with that statement? >> met life has been supervised by the federal reserve because it is a bank holding company. >> they are getting rid of their bank holding company. >> once they get rid of their bank holding company they will

no longer be supervised by the federal reserve. >> would they come under the ne regulations? >> met life is a nonbank financial company. i'm fairly certain that more than 85% were not assets in nature. >> right. >> so -- i don't think the council has done an analysis -- i know the council has not done an analysis. >> it is a pretty easy question. >> i don't know whether the council plans to designate met life or not. >> that's not your decision. >> it's not our decision. it's a bank holding company right now, so for the moment the council can't -- >> >> the reason i bring that out is the fact that if you take a

large company like met life and you treat them like a bank holding company are you gaining anything? is anybody safer? >> so the difference in the regulation and supervision that the federal reserve has been engaged in with met life and other large insurance companies that chose to become bank holding companies is that we are a consolidated bank holding company. >> they are shedding their bank holding company. they will be just insurance company. >> if you are talking about after they shed the bank holding company then it is up to the fsoc to decide if they should be regulated. >> what do you think? they propose no systemic risk. >> i will say it is up to the fsoc to make the judgment. >> that's the reason for this hearing is the drag net that we see taking place here. you are imposing standards and

creating standards and you don't know to whom it will apply. we show you -- when it is shown that a company like met life after it sheds its bank holding company would produce no systemic risk that it follows that they should not be regulated under the deregulation. >> if the council does decide to assess met life and it comes to the conclusion that met life does not pose a threat to financial stability then presumably -- >> three insurance companies got tarp funds aig got it -- even the insurance under illinois rules, that was walled off. those assets were walled off because of illinois liquidity requirements -- i'm sorry, reserve requirements. so what i'm suggesting to you is that i don't see the need to

drag the insurance companies into this particular rule when, in fact, they do not present a systemic risk in the terms of met life we cannot think of a single firm we brought down that has exposure to met life. you don't have to answer that question. thank you. mr. grim for five minutes. >> thank you madam chair. i thank the panelists for being here today. it is interesting, i'll tell you that. the last questions i think hit to the heart of why everyone is so confused. the amount of uncertainty has risen to an all-time high. and it's getting worse. the gentleman from north carolina asked before why we don't have more smaller banks.

that should be obvious to everyone in the room, because smaller banks can't compete. they can't keep up with the administrative costs of all of the rules and regulations. i would purport to you that as we continue to add it on in the hopes of getting rid of systemic risk you are going to be left with only a few large institutions that can afford to keep up therefore making them systemically risky. maybe i have it backwards. i don't know. maybe i'm missing something. let's talk a little bit about asset managers. with regard to asset managers has the council considered the adverse effects? >> the council is in its proposed guidance describes how it is going to go about assessing whether or not a firm

poses a threat to financial stability in the united states. the consequences of being designated is that a firm will be required enhance prudential standards including capital requirement, liquidity. and a requirement for living also among others. >> is that a yes? >> the council is aware of what the consequences of designating an asset manager firm, yes. >> you have considered the adverse effects. >> i'm not sure i know what you mean by adverse effects. >> let me ask you this. have asset managers been involved in the study to date? >> engaging in analysis to the extent to which they are potential threats to asset stability.

the offer has begun the process of talking with people in the asset management industry and will continue to do so. the council and the member agencies are welcoming any comments -- >> is there a formal process for conducting the due diligence for asset managers? >> any asset manager firm or any entity that wants to meet with the council, staff about the designation process is welcome to contact any agency and we will try to set up meetings for that firm. >> what i'm concerned with is the fsoc evaluating asset manager. they are investing on behalf of clients. when a client changes an asset manager that doesn't mean the

portfolio is immediately liquidated. i hope the fsoc is looking at that and there would be adverse effects. i would hope they certainly consider that. following up before we heard a little bit about the transparency. i have been hearing and correct me if i'm wrong. i have been hearing that it is not a transparent process. i'm hearing that the fsoc is almost working in a black box so to speak. i want to know -- let's take an example to make it easy. when a nonbank entity is put into designated stage three it seems that there is no explanation why. can you elaborate on that? >> if any firm makes it to stage three that firm will be provided

a notification that it is in stage three that begins the process of having discussion with the firm. the firm has the opportunity to provide comments, arguments and data to the fsoc and member agencies about why it should or should not be designated. >> let me stop you there if i may. so a company may have to disclose this information that they have been put in stage three but all they have is a notification with no explanation. can you see how that is untenable for these companies? >> i think that that desire to create a stage three was put specifically at the request of companies in the comments that we have received on the various stages of developing the rule where they wanted an advanced notice of whether or not they were up for consideration. the composition of what is in the notice is to be determined. the council can't before

finishing the analysis provide a firm with all of the reasons it thinks the firm may or may not be designated. that would prejudge the outcome. >> the cart before the horse seems to be the theme for the day. i yield back. >> i thank the chair and the gentleman on the panel. fed has proposed a rule to define financial activity through the definitions and purpose of dodd/frank. it appears that a few additional lists of financial activities that are different from what dodd frank had intended and from those activities defined under the bank holding companies are now included. in other words, dodd frank clearly says that the fed has the authority to define the criteria for falling into this category but it doesn't give the fed the option to redefine terms that are already set forth in

dodd frank. so i guess my opening question is, why do you think the fed has this authority to go beyond what dodd frank is explicitly setting forth as far as defining of terms? >> i'm not aware of any ways that the proposed rule is going beyond or trying to redefine terms. i think that the proposed rule which has been reproposed is responding to comments we received in response to the first proposal that there were some suggested changes. and in order to incorporate those, we put out a second proposal. >> i know how this all came down with regard to dodd frank. normally during a thoughtful and deliberative piece of legislation i think the fed would be responsive to what that legislation is. i'm not sure whether we are talking about the same thing. i know there was concern by the industry, various industries

when there was talk about the fed being able to designate nonbank financial institutions. so there was specific amendment adopted into the law. what it said was engaged in financial activities as defined under existing law section 4 k of the bank holding act. now the fed has gone beyond that because here in dodd frank it describes predominantly engage in financial activities is described as section 102 a 6 to mean a company that derives 1 or 2% from activities financial in nature. in section 102 b further provides that the board of governors shall establish by regulation if a company is predominantly engaged in those sections as described in action a-6.

it seems as though it is laying out pretty clearly in the statute that financial activities are already defined as in a-6. so it makes sense that the list of activities for financial companies, bank holding companies would be to -- set a position that the fed is going beyond what is clearly set forth was part of the deliberation of congress in the amendment to try to make sure that it would be limited to this area. >> so we have the reproposal out for comment. the comment period ends on may 25th. part of the reproposal in april was a list of the activities that would be considered to be financial activities as of april because we were requested to be responsive of that to provide additional clarity on activities

that are financial in nature for the purpose of determining whether a company is predominantly financial enough. we are trying to be responsive for the request for more clarity. we are open to comments we we'll use those comments. >> is that list potentially or actually beyond what would be those lists of financial activities under the bank holding act as defined in the statute? >> i'm not aware that it is but i think the comments that come in will help us determine whether we got it right or not in the proposal. >> i'm watching my time here. so i think it was raised the fact that once a financial institution becomes designated there may be certain benefits to the institution as far as lending and alike. so there is an anticompetitive nature with regard to bank financial institutions visa vie

other nondesignated institutions. now you carry that one step further because if you designate nonbank firms such as insurance company that aspect of benefits for that designation would now go to their benefit. before you were trying to alleviate the anti-competitiveness for bank institutions. now we are spreading it to nonbank institutions as well. is that something that we really want to do? >> so the intent of what we are trying to do with enhanced prudential standards imposed on nonbank companies designated is to propose higher enhanced capital requirements, not easier. and we meet with a lot of nonbank companies. they are more worried about being designated than desiring to be designated. >> i see my time is up. i yield back.

thank you. 9. >> i recognize mr. duffy for five minutes. >> i want to thank the gentleman for the testimony this morning. at this time this panel is dismissed. i want to recognize the second panel. bring up the second panel. tomorrow night florida senator marco rubio is the keynote speaker at a south carolina republican party fund-raiser. other speakers include south carolina governor nikki haley and lindsey graham and jim demint. you can watch it live tomorrow at 8:00 eastern on c-span. >> when people are saying to him don't take the vice presidency. right now you are the most --

you are a powerful majority leader. don't take the vice presidency. you won't have any power. johnson says power is where power goes. meaning i can make power. nothing in his life previously makes that seem like he's most -- because that's exactly what he had done. all his life. sunday night, the conclusion on the passage of power. volume four in the years of lyndon johnson, his multivolume biography. sunday night on c-span's q&a. i work a lot now especially on sort of the build of our new site with this younger generation of digital knave ills. from their point of view they believe old data. anything that doesn't have link to the source driving them

crazy. actually being inaccurate with your sourcing is much harder online than in print. you can go check that link right away. and i think the internet community keeps you a lot more honest. >> our coverage of a panel on journalism and digital media was the most watched event in the past week at the c-span video library with over 20,000 views. watch it online anytime. you can catch portions to e-mail and blog post. next a hearing on the hiv drug market. the focus was on a bill by bernie sanders which would lower drug costs and increase action ses. it would try to have a $3 million a year prize fund.

this is about an hour and a half. >> i would like to thank all of you very, very much for being here. in my view the issue we are discussing today is of monumental importance and while it may be controversial within the halls of the united states copping, you have the feeling that the more the american people understand this concept, the more support there will be. i don't expect the legislation to be passed today. we have billions of dollars of opposition out there from drug companies and other sources. but i believe from the bottom of my heart this issue is so important. that discussion has to begin and that's what we're doing today. the ideas people may be hearing

on c-span may sound radical n. a few years they're not. i think what we're talking about is commonsensical and it's in the best interests of the people of our country and people throughout the world. i want to thank all of you for being here. i start my approach to health care from a very basic premise. that health care is a right not a privilege. poverty should not be a death sentence not in the united states of america or any place else. to a significant degree that is the case. today some 45,000 americans die each year because they don't get to a doctor when they shoot and

many others are suffering. now, to me, one of the great moral issues of our day is that there are people suffering and in some cases dying because they are not able to afford a medicine that can be purchased for pennies for treatment. in other words, it is one thing, and i think we can all understand this. if somebody has an illness that is unable to be treated. we don't know how to treat it? that is a tragedy. it is a needless tragedy when somebody dies because they can't pay a few pennies for a new drug that is out there that can cure them and ease their suffering. that's what we're talking about today. the analogy would be if somebody were in the middle of a swimming pool and drowning and somebody turned their backs and said oim into the going to jump in the

pool and save that child. the united states has the highest prices in the world for prescription drugs. according to the canadian review bird's annual survey. average prices in 2009 were 85% higher in the u.s. han in canada and approximately 150 percent higher in switzerland and fra e france. price differences are far greater. some of it i'll be talking about in a minute. the simple fact is that the prices of patented medicines are significant to access the health for millions of uninshaurd and underinsured americans, let alone people in the developing world and people die because of that. now this is an enormously important issue.

and it says that our health care system is a system which allows significant numbers of people to die and suffer because they can't afford medicine. according to the kaiser family foundation and the harvard school of public health, 40% reported one of three cost related concerns in their family. 16% say it is a serious problem to pay for prescription drugs. 29% say they have not filled a prescription in the last two years because of the cost and 23% say they have cut pills in half or skipped doses to make a medication last longer. i remember talking to a physician who works in a working class town in my state and she said, i write out the prescription but 40% don't bother to fill them. what sense does that make when

people are unable to fill and pay for a prescription? it makes no sense. they get sicker and end up in the hospital. stop and think for a moment what these numbers really mean. while we now take it for granted one of the great advances of the 20th century was the advent of modern medicine's capability of treating a wide range of debilitating and fatal illnesses. all of that research and development doesn't mean a thing if somebody cannot afford to purchase that drug. the concept today is relevant, of course, to all kinds of diseases. we've introduced legislation based on the prize model for all kinds of diseases. but today the legislation that we are discussing deals strictly