that there may be political support for specific industries and companies. and we know from recent experience that government is not good at picking winners and losers in the economy and fundamentally it's not the job of government to pick winners and losers in the economy. i'd like to learn more about your thoughts, then, on the financial services industry, one that i understand from press reports you have worked with. koergt "the wall street journal," shortly after you left the governor's office, you went to work for lehman brothers in what is described as the in-house investing arm of the company. is that correct? >> i was on the private -- the advisory council of p private equity arm of lehman brothers. >> thank you. and you were working for or with lehman brothers, then, when it collapsed? is that correct? >> i was a consultant, adviser to lehman brothers. >> okay. do you still work -- excuse me,

sir? >> not an employee. >> do you still work for -- and did you receive compensation for that engagement? >> yeah, sure. >> do you still work for lehman brothers merchant banking, which i understand was spun off? >> no. >> you do not. thank you. thousands of people lost their jobs when lehman brothers collapsed, and many people lost money. what was your job at lehman brothers, exactly? >> i was an adviser to lehman brothers, had dealt with -- basically spent most of my time dealing with their customer base, providing insights and things like the madness of washington, d.c. sharing my experiences with customers to try to add value in the relationship. so it was not related to internal functions of the company. it was related to client interface. >> if you could provide me specificity for the record it would be greatly appreciated.

do you think the government picked winners and losers during the financial bailouts? >> i think government oversight was lax, not the rules that were created afterwards but the oversight was lax, for sure. >> might i get some clarification on another small point? because of some reporting in "the guardian" newspaper in britain, for whom do you work now and do you have any relationship with barclays? >> i do. >> you do. what is your relationship? >> i'm a senior adviser to barclays capital. >> all right. the guardian newspaper in britain reported in 2010 that u.s. bankruptcy examiner concluded that grounds exist for legal claims against top lehman brothers bosses and auditor ernst & young for signing off misleading accounting statements in the run-up to the 2008 collapse. the newspaper said a 2,002 page

forensic report which i'm sure you're familiar with by antoine valucas -- >> does the gentlelady have a question about the subject at hand? >> -- revealed that barclays got certain equipment and assets to which it was not entitled. are you aware of any of these allegations and do you have a response to them? >> no, i'm not. >> the lucas report revealed that during lehman's final hours its chief executive officer, dick fold, sought to convince prime minister gordon brown to overrule britain's financial services authority when it refused to fast track -- >> does the gentlelady imply this segment had anything to do with that? >> mr. chairman, if you could allow me to finish here. according to "the guardian," and i quote, during the bank's final hours in 2008, fold tried desperately to strike a rescue deal with barclays but the fsa would not allow the british bank an exemption from seeking time-consuming shareholder

approval. the chancellor, alistair darling, appealed to the u.s. treasury secretary, henry pawlson, to contact the prime minister. and according to the latest report asked paulson to call prime minister gordon brown, but paulson said he could not do that. so fold asked paulson to call president bush. in a brainstorming session, he then suggested getting the president's brother, jeb bush, who was a lehman adviser, to get the white house to lean on downing street. governor bush, to your knowledge, did your boss, mr. fold, in fact, make such a suggestion? >> first of all, i was a consultant to lehman brothers as i stated. and no, he didn't ask me to do anything and i didn't do anything. >> i would simply say why don't you direct your questions to mr. fold. >> mr. chairman, it's very interesting how -- >> miss -- >> -- terse you were with my questioning this morning. >> well, you're not asking him questions about the hearing here. you're injecting innuendo, it

seems. >> it seems important for the american people to understand the witnesses that are before us and what their financial connections actually are. >> mr. agar. >> so i will bring it back to the hearing. i'll start off with actually testimony from the witnesses. mr. waxman or congressman, you made the comment with reference to the -- i guess the appearance of impropriety, let's call it that way, when you have consultants on the payroll for the companies on the one hand and they're also the ones that are involved with the decisionmaking of the -- of the salaries and what have you, the positions here. certainly there is an appearance of impropriety there. i guess in politics, you can start sometimes see the same things where you have people who are making donations to politicians or elected officials on the one hand and at the same time those very same politicians or elected officials are making decisions with respect to those donors. is that not the same situation there for us politicians? >> well, i think there's an appearance of unseemliness, and

that's why i think the system we have for funding campaigns is one that we have to definitely -- >> so we had -- >> i think there are distinctions between the two. >> i appreciate that. >> broader point. >> i appreciate that. so we have the same situation on financial matters as the gentlelady brought it up and the situation that's global where you have an individual who is now one of the largest bundlers for this administration on the one hand and on the other hand that is the same individual as being investigated or at least accompanies being investigated by that same -- very same administration. so there is at least an appearance of impropriety when someone donates to the administration and that administration is either investigating or maybe not doing a valid investigation there. >> we need to go beyond the appearance and look at the facts. >> right. >> for example, in the solyndra investigation -- >> i'm not on that, but thank you very much. what i km concerned about is your testimony when you make the accusations that republicans want to return to robber barons with no restrains on wall street and enriching themselves at the expense of everyone else.

i don't know how you can say that. furthermore, you go on to say that the problems of 2008 demonstrated by the collapse of wall street was because of the absence of cops on the beats. really? a.i.g. were regulated -- who were sitting inside lehman brothers on a daily basis and they failed to do their job. >> i would absolutely dispute that fact. >> there were regulators at lehman. >> they may be regulated for some things, but their financial practices were not being regulated or being watched. and i think governor bush was absolutely right when he said there was not government oversight. the s.e.c., it was shocking how poorly the s.e.c. did its job. >> exactly. and that's exactly my point here, is that you had regulators from the s.e.c. and the ots to the federal reserve, and each one of these institutions were regulators involved with

starting from bear stearns on out. the regulators had the authority. they had the information. they had the wherewithal to try to prevent the meltdown in '08 so we would not find ourselves in this situation today. but the regulators failed to do the job. so whereas your testimony likes to point the finger entirely at wall street and the free enterprise system and capitalism for failing and greed over there, i think we can equally point the finger back at the regulators who are sitting in these companies. they failed to do the job. >> the solution isn't to end regulation or to put in people who won't enforce the regulation. >> and i appreciate that. but as you can see from the -- both in this committee and financial services there's not a single republican who has ever said to end regulation. everyone simply said to reform it. but let's turn to another issue i know is dear to the governor's heart, and that is the area of education. that's also important to me, as well. so you have k through 12 education. and we know what has been able

to be done in various states as far as reforming it, which will provide for better educated students and a better economy going down. my question to you is this, though -- do the states have enough flexibility in this area in order to achieve what they need to achieve, or is this one other area where the federal government has intruded to such an extent that we are once again providing for an impediment or a barrier to free enterprise to be able to grow by allowing for a flourishing educational system in the states? >> well, historically, the federal government's role in education has been limited. it's grown in the last few years. the last decade it's grown, i would say. but it's not -- it's not similar to, say, health care, where the federal role is now significantly, both in regulation spending and the two major programs, significantly higher. but there should be flexibility. i think the objective ought to be a year's worth of knowledge in a year's time.

there ought to be effective measuring. and states ought to try to apply different approaches. in our case, we had an accountability system that was based on grading schools, 100% based on student learning, ending social promotion, school choice, you know, compensation for teachers that was different than just longevity of service driving it, digital learning being an element now of the florida strategy. and the results are there. just -- congressman waxman will probably appreciate this. low-income hispanic kids do better on average in the fourth grade reading test. even though we spend less than $7,000 per student. we had a focused strategic approach. washington is not equipped to provide that, and florida is different from california or different than other states. so we ought to be given more freedom to do things. i think the title i moneys is a place where there could be more compensation in the lower

performing schools. i think you could trust governors and state legislators and the communities in states to be able to come up with the best solutions. >> thank you. a vote's been called, so we have to move with dispatch. and last but not least, mr. mull vain. >> very quickly, mr. edwards. i want to ask on miscellaneous tariff benefits, getting international trade. ultimately, we should, you know, move to international trade agreements, get rid of all tariffs. you know, tariffs don't just

hurt american consumers. tariffs hurt american businesses that use imported products. you know, you look at big corporations like general motors. i mean, they import an enormous amount of parts and other goods. so when we put tariffs on their production it hurts american businesses. so, i mean, you know, i'm not familiar with the particular, you know, bill that's in front of congress there, but, you know, tariffs are not a good idea in general. like taxes, they disport the economy. >> generally speaking, would these reductions on tariffs, on products that are available across the market, would you consider that to be corporate welfare? >> no, certainly not. you know, i'm proposing -- i'm proposing tax loopholes. i'm proposing -- i'm for getting rid of special deals on the tariff side. but i don't -- special deals for particular industries on tax and spending and tariffs are

distortionary, but it does strike me -- there's a difference between, you know, tax reductions and tariff reductions and spending. >> and ultimately, the primary beneficiary of these lower tariffs is the consumer. is that right? >> oh, absolutely. both consumers and american businesses that use those imported products. >> thank you, mr. edwards. i appreciate you being here. govern governor, i don't have any questions for you. i appreciate your time. mr. waxman, i've heard the auto bailouts mentioned several times. they were designed to somehow stave auto industry from bankruptcy. of course you knew that chrysler went bankrupt anyway, right? >> i knew that -- >> did chrysler go bankrupt in april of 2009? >> yes, they did. >> did gm go bankrupt in june of 2009? >> well, i don't know. i'll refer that to mr. ryan -- >> did gm go bankrupt after the auto bailout? >> i don't know. >> they did. i can assure you they did. it was the second largest bankruptcy in the history of the country. i'm surprised you didn't hear

about it. only one question. i'll ask the question, and i appreciate your answers. when -- when chrysler went bankrupt, it did so in an extraordinary bankruptcy proceeding that denied for the first time in a long time, if not ever, secured bondholders of the rights to which they were entitled. one of those secured bondholders was the indiana state teachers retirement fund. another was the indiana state police pension fund. together those two pension funds of public employees -- teachers and policemen -- lost several millions of dollars of their retirement money. and my question to you, in support of the auto bailout, what would you like to tell them? >> well, i'm not an expert in this area, but i know when the airline industry goes into bankruptcy they tell their workers you can't continue the pay that you've already negotiated from us. this is a way to break the unions and to take away benefits from them. people get hurt. and when businesses go bankrupt,

the stockholders get hurt, the bondholders get hurt, but in this country, the ceos all come out on top. >> mr. waxman, do you understand the difference between a secured bondholder and a stock holder? >> i do. >> so what would you like to tell the secured bond holders, who were entitled to certain protections under ordinary bankruptcy law, who didn't get them in this particular circumstance, and specifically i'm speaking of the retired teachers and retired policemen in the state of indiana. >> tell me what you would like to tell the unemployed autoworkers and the oil industries in the midwest that are dependent on them if we let the auto industry go down the tubes? >> i will ask you again, mr. waxman, do you understand the legal difference between a secured bondholder, an employee, a secured bondholder and a supplier, or a secured bondholder and an ordinary stock holder? >> i don't want anybody to get hurt. but the fact is that people do get hurt when we have a mismanagement of the economy so that we have banks taking huge risks with other people's money on securities that don't make

sense and then slice them and dice them and sell them abroad. and the whole bubble fell. and government should have been there to stop that from happening, and government wasn't there. >> and instead what government was there to do, mr. chairman, was to steal money from retired teachers and policemen in order to give it to you. with that, i yield back the balance of my time. >> thank you. all time is yielded. as you can tell, washington is as friendly and kind as it ever was before. hen lry waxman, congressman waxman, thanks for spending your morning with us. chris edwards, you've testified a number of times. i appreciate your insights. governor bush, it's not all this bad. when these microphones are turned off, some of us do kind of get along with one another. i want to thank you for your time out of your busy schedule for sharing this hearing with us. thank you very much. this hearing is adjourne

if you missed any of this hearing of the house budget committee, it is available on our website in the c-span video library. go to c-span.org. all this week in prime time we've been featuring some of american history tv's weekend programs here on c-span3. tonight, watch programs from our american artifacts series

starting at 8:00 eastern. visit three surviving civil war forts around our nation's capital as we examine civil war defenses of washington. at 8:30, explore the recently discovered quarters of clara barton's missing soldier's office. and learn about the transition from slavery to freedom as told through the gilmore cabin at james madison's montpelier home. that's at 9:30. at 10:00 p.m., tour the mansion of filan throe miss, real estate entrepreneur, patrick grass. from this year's national cable and telecommunications association convention, we'll bring you panels on the future of film and music distribution with the ceos of comcast, verizon wireless, and vivo. a discussion on cable news and the innovation of the industry and the 2012 presidential campaign with msnbc host chris matthews, cnn anchor john king, and univision's mary elena salinas. tomorrow beginning at 10:00 a.m. eastern on our companion network, c-span.

each sunday evening at 7:30 now through labor day weekend, american history tv features our series "the contenders." 14 key political figures who ran for president and lost but changed political history. this sunday, the great compromiser, henry clay. >> his famous comment, i would rather be right than be president, i think still speaks to us. it's a clarion call to people all across whatever we're doing, whether we're in politics or something else, it's to do the right thing. he also said, you know, that in a sense that politicians need to remember the country and sacrifice for the country. i think that is still something that we need to remember, as well. >> also this weekend, we'll feature the history of wichita as part of our visit to the largest city in kansas. american history tv this weekend on c-span3. sunday on "q&a" -- >> people see walter cronkite as the friendly man, which he was to everybody, but there is

another side of him that wanted to be the best. he was obsessed with ratings and beating huntley brinkley report every night. he is probably the competitor i've ever written about, and i've written about presidents and generals and cronkite's desire to be the best was very pronounced. >> best-selling author douglas brinkley on his new biography of long-time cbs news anchor walter cronkite, sunday at 8:00 eastern and pacific on c-span. former british prime minister tony blair defended his relationship with rupert murdoch this week before a british panel examining the relationships between politicians and the press. he told the panel that he had a working relationship with mr. murdoch during his time as prime minister, but added that they became personal friends after his time in office. later during the hearing a protester interrupted the proceedings, calling the former prime minister a war criminal. tony blair served as prime minister from 1997 to 2007.

this is about four hours. >> the witness today is the honorable tony blair. >> thank you very much indeed. >> i swear by all mighty god that the evidence i shall give will be the truth, the whole truth and nothing but the truth. >> your full name please, mr. blair. >> anthony charles lindon blair. >> you've kindly provided us with a witness statement. i haven't seen a signed copy but it doesn't matter. are you happy to confirm the truth of your statements to the inquiry? >> absolutely. >> i'll deal with some general matters first. before we do, mr. blair, thank you very much for providing the inquiry with the assistance that you have. you comment in your statement that you haven't received some papers from the cabinet office.

have you yet received them? are you satisfied you got what you require? >> yes, i'm satisfied i got what i require. this is mainly a list of meetings with various media people and we've got as full a picture as we can get. >> thank you very much. >> thank you. >> on the first page, mr. blair, dealing with general themes, we're working from the pagination which the inquiry has provided, 05572. you say in the second paragraph, disentangling what is inevitable from what is wrong is a profound challenge. now, we understand in that sentence the adjective inevitable, but could you elaborate on the "wrong," please. >> yes. in the relationship between senior media people and senior politicians, that relationship is inevitably going to involve a close interaction. and i think that has always been the case and is going to go on being the case.

and what is more, that interaction will always involve a certain tension. the politicians want to get the best story they can across, the media like to hold the politicians to accounts and there is inevitable tension in that relationship. but i think if you look back over time, there's nothing wrong and it would be strange, frankly, if senior people in the media and senior people that are politicians didn't have that close interaction. i'd like to make it clear right at the outset, if i might, that in british journalism at its best is the best in the world, the finest in the world, it's emulated everywhere. so what i'm talking about is wrong is a relationship or an interaction that moves from being sensible and inevitable to being what i would say is unhealthy. as a result really of a

situation in which the power that is exercised by a certain part of the media and the use of newspapers particularly as instruments of political power then creates a situation in which that relationship is not merely sensible, but essential and where i think that relationship can be and sometimes is unhealthy, and that's what i mean by wrong. so inevitable is a close interaction between senior media people and politicians. i think what i found uncomfortable and unhealthy was when you were so acutely aware of the power that was exercised that you then got into a situation where, frankly, it became not merely sensible and important, but essential and crucial to have that interaction. >> so the attributes then of a healthy, appropriate relationship may be a degree of tension, may be a degree of professional distance, but if

that relationship becomes too close then it may become, to use your word, wrong. is that a fair summary? >> except that i find sometimes in reading about this, use the word cozy i think is not the correct relationship or description of the relationship at all. i think unhealthy is a better way of putting it because what it means is, is that if you're a political leader and you've got very powerful media groups and you fall out with one of those groups, the consequence is such that it really means that you then are effectively blocked from getting across your message. you then have all the things that i outlined in my statement that happens as a consequence of that. now, the nature of the relationship between the politicians and the media and that closeness you describe is really derived from that. so what in a sense happens is not necessarily that you become particularly close, but the relationship is one in which you

feel this pretty intense power and the need to try and deal with that. i'm just being open about that. and open about the fact, frankly, that i decided as a political leader, and this was a strategic decision, that i was going to manage that and not confront it. we can get on to whether that was right or wrong at a later stage, but that was the decision i took. >> right or wrong is an interesting question, but much more important, obviously later on we will get on to how it should be fixed, if it needs fixing. >> yes, and i've got ideas on that, although i think i'd like also, if i might at a later stage, to put something actually down in writing. but i found when i was going back and reading the evidence that you've received already, there were things that were occurring to me that shifted my view on certain things. so i'd like to do that in a more considered way.

but yes, look, i think as a result of what has happened, this is a debate that is now permissible and you have the potential to get a solution. so let's hope we can get one. but, you know, i'm just being open with you. that was my decision. you could have decided and at some point thought about it actually as to whether you took this on as a major strategic challenge of the government. i decided in the end against it. >> okay. now, you say, mr. blair, that you feel you can now speak with greater frankness, but you feel you couldn't feel with greater objectivity. >> i'm probably the worst person to say whether i'm being objective or not. i mean i hope so. look, i think -- i mean what i'm going to try and do is tell you what i think should be done in this situation. but there are obviously people who would strongly dispute my ability to be objective over it. >> now, in the fourth paragraph

on 05572 you say that your argument would be that the unhealthy nature of this relationship is not the product of an individual but of a culture. it's the draining of the poison from the culture that's the real challenge. that's on the first page, mr. blair. >> yeah. >> are we clear that you are locating the poison within the culture of the press? >> yeah, in this -- as i say, what i would say is in certain parts of the media where the line between use and commentary gets blurred, so those papers that take a particular view on a party, a policy or a person, then that is driven with an aggression and, frankly, a prejudice that means that you crossed the line, i think. now, that's what i think is the problem, and that's why if you like political leaders like myself have to be in a position where you're managing these

major forces within the media, because if you fail to manage it and you fall out with them, the consequences, as i will say a bit later, are harsh, let us say. >> is it now necessary, though, at least to recognize the part of current state of affairs is the development within our political culture over a degree of cynicism and some would say a disposition to be malyable with the truth, the consequences of which have been toxic? >> i would say our responsibility primarily is not having confronted this issue. now, i will give my reasons for that and my justification for it. i actually do not think that the way this particular part of the media behaves is a response to the way that government has behaved. and what i would say -- i would actually put that around the other way and say,or