he was a clear advocate of if it can be done in my state, i have medical facilities, i have usda base. that could serve as a model going forward with other states. so it was a push on our part. we didn't solely focus on the w hawaii, we focused on major metropolitan areas and other states across the country on a voluntary basis, but his

forsight and hfo foresight and his advocacy on this issue clearly helped people step up and move forward. >> thank you very much. mr. trimble? >> i would just add that previously ga has done work on this area. we looked at u.s. forces and how they were handling this issue in france and got some innovative ideas. we haven't done the cross-referencing per se but we have looked at how other countries have tackled these issues. >> i guess it would be understandable that if other states, other nations, rather, have these devices that have radioactive materials in them, whether they're mobile or stationary, and if other countries do not secure them

well, and those materials were obtained, they could be used for bad purposes in those countries or maybe anywhere. what do we have to reduce the likelihood that if another country did not have -- did not secure their radioactive materials well, what assurances do we have with the way we protect our own borders and our ports of entry that we'll be able to detect or intercept any of that material coming in? dr. guadia? >> thank you, senator, for that question. at dhs, we believe in a multi-faceted, layered approach to our security. so this begins well overseas. in my office, the domestic nuclear detection office, we work very closely with the international atomic energy agency so that we can promulgate best practices across the globe

of all 159 member states now have access to best practice guides on building national architectures, exercising training and awareness, and we are even beginning to teach some of the courses at the international law enforcement academy. so that is our first outreach. we also work with partner nations, certainly, to encourage them to have layered approaches within their nations. i guess as i go through my answer, you'll see me building layer after layer after layer so that we can make nuclear terrorism a harder and harder undertaking for the adversary. we use information such asm as manifest data to oversee our scanning efforts, and certainly partner with our partners so we can get the early intelligence warnings and access as necessary. at the border itself, we have

very robust capabilities almost 100% of our cargo is scanned at our seaports. 100% of vehicular traffic that comes across our ports of entry get similarly scanned. we have well-trained law enforcement officers in customs and border protection and united states coast guard. every boarding party in the united states coast guard carries detection equipment. all incoming general aviation flights are met by customs and border protection officers who have the right equipment and scan the incoming aircraft. these are just some of the examples i can think of. and, of course, with your continued support, we will continue to make the right investments and appropriately balanced capabilities to build strength after strength at our borders and with our international partners. >> well, to be honest, all of that is actually encouraging, so we're grateful for the work that's being done.

i'd like to say everything i do i know i can do better. sometimes i say the road to improvement is always under construction. just give us some examples of what we're doing better today than maybe what we were doing in the not too distant past, and maybe mention a couple areas where we can do better still. and this would be not just for you but for others as well. >> i'll start. one of the things we do better today is inform our efforts based on a more holistic look at the risk. my office is responsible for coordinating the global nuclear detection architecture and implementing its domestic component. so in these fiscally constrained days, we have to balance our resource to get the maximum bang for our buck. so we are now analyzing risk reform schemes, building better feeds from information so that our mobile, agile architecture

can be more responsive to a credible threat. so that's something we're doing better. i could not agree with you more, sir. no matter what we're doing, we can always do something better, a lot better. and with the adversary being adaptive, we have to continue to grow and stay ahead of their capabilities as well. you heard the administrator talk about exercising. elicit nuclear materials are not something sn officer sees on a day to day basis, so we must practice, we must keep up to speed, and we do that with our field exercises where we use uncommon sources to expose our officers to things they don't see on a normal basis. these are some of the activities. integrated exercising, i think, is something we can do better moving forward.

and our communications coordination function always can be better. >> anyone else? ms. harrington? >> so dr. gowadia mentioned the global nuclear detection architecture. there was a white house review of gnda last year, and within the context of that review, some very specific areas for the programs that we run at the department of energy were identified as necessary to fill certain gaps. for example, our second line of defense program works very carefully and closely with d. d.a.gess. we install radioactive detection devices in ports where there is a lot of outgoing cargo traffic to the united states. so we try to catch things before they are even headed to the

united states. and we're particularly interested in nuclear material, but radiological sources are also a big concern, and a large number do get caught through this system, identified, isolated and then handled appropriately. also internationally, since 2004, and we actually just celebrated the 10th anniversary of our global initiative, we've done enormous work internationally to both secure sources, identify disposition pathways, work with countries to develop best practices, work on an international code of conduct for the security of radiological sources. this is an extremely active area of programming for us, and one where we will continue to be extremely active. i think one of our biggest

accomplishments was first identifying and then retiring the radiological thermoelectric generators, rtgs used by russia to power lighthouses in very remote locations and so forth. these were massive sources, and one of them could have been used for many, many dirty bombs. so that was a huge accomplishment over multiple years. but we've had similar kinds of work going on across the globe for the last decade. >> senator, i would just add that one of the things we're doing better today that we weren't doing in the past has to do with our source security rulemaking that i mentioned earlier. there is six focus areas within that rulemaking that makes us a more effective rule, and that includes, as i think i had mentioned, background checks,

including fbi fingerprinting to help ensure that individuals are allowed and sources can do so unescorted, control personal access where significant sources are being stored, documenting security programs, in other words, a written security program that lays out how the licen licensees will safeguard these sources. coordinating with local law enforcement to have a plan in place in case there's theft or diversion, and coordinating and tracking radioactive source shipments such that if they become lost during shipment, there is a manner to be able to find them. >> good. >> if i could add one thing. >> sure. >> i think the international efforts we've discussed today in terms of protecting the country highlight in an indirect way the importance of the issues we bring up in our report. because as those pathways become

more and more difficult for anyone to navigate, the easiest path is domestic. why try to bring something in from overseas if you can just go to the local hospital or go to the warehouse to get the source. so this underscores the importance of making sure, then, our sea requirements for domestic, medical and industrial uses are robust. and the weaknesses we identified, the points i would highlight where we could do better, looking at the definition of core locations so that all vulnerable facilities are subject to the regulations, improving how we do background checks, doing better guidance on who should and should not be given such access, examining whether nrc should be playing a bigger role in that process, providing more specific guidance to companies and licensees who are not security professionals. these are security companies

doing a business. they might have some health and science background, but they're not security professional, so they need more help than what we're giving them right now. >> good. let's go back to the radiography cameras. one of the things i would ask is are they category 1 or category 2? >> they are category 2 and they have a source that needs to be replenished fairly often because of its half life. >> what would be fairly often? every year or two? >> about every three months. >> okay. that is fairly often. all right. are we aware of any effort to actually mount an attack using a dirty bomb in this country or another country? are we aware whether someone has actually attempted? much like in boston where we had the effort to, unfortunately, successful to use pressure cookers to hurt and kill and

maim a lot of people. we've seen use of substances in the air to poison, try to kill people in subways. so we have actual demonstrated uses of technology to hurt people. do we have any documentation about attacks either in this country or another country where this was actually tried, maybe failed, maybe aborted? >> i do not, sir. there is the general threat that we make every effort to safeguard against. i'm not sure if my colleagues are aware of any attempts to produce a dirty bomb using our sources. >> if you want to follow up with a classified briefing on the topic, we could go into that in more detail. >> okay. good enough. and i'm going to ask a follow-up

question, and if this is not appropriate to answer in this space, just say so. but people can go on the internet and learn all kinds of things, including how to build weapons, nuclear weapons, pressure cooker bombs. and i presume dirty bombs. given the access to that kind of information, why do you suppose no one has done it, at least to our knowledge, and certainly not been successful in doing it? and maybe it's because our security measures in this country is pretty good, doing better. maybe that's true in other countries. maybe it's not as easy as it sounds to do, and maybe people just decide it's too dangerous and they're going to hurt or

maim other people, they may find a way to do it that's less damaging to the perpetrator. although many of them don't seem to care whether they live or die. but why do you suppose we've not seen it attempted more? mr. trimble? >> i'll just jump in to start the conversation. i think the efforts of an nsa, dhs, nrc deserve credit for all they've done to try to secure these sources. i think where the conversation is going is, is there more that we could do, though? that's really where our report is coming from and premised on the idea that it really only takes one to make a really bad day. >> others, please? >> just quickly, i'd like to say that i believe some of the efforts that we've taken in putting together regulatory

programs as well as other programs, that is certainly one of the drivers. we've made it very hard for people to get their hands on these things. >> doctor? >> senator, i would echo a lot of what you've said and we've heard today, but in a different setting, i think we can go into more specifics. >> ms. harrington? >> i support dr. gowadia's statement about taking this up in a different environment. >> fair enough. does the embassy have any mechanisms to immediately review any decisions made by licensees? in other words, if they grant access to a criminal, will they be made aware of this action and would they be able to take immediate action? >> we would be able to inspect it at our next scheduled

inspection activity. that's when we review the decision making by the licensee staff on trustworthiness and reliability. >> mr. trimble, do you want to react to that? >> my understanding is the guidelines of what's being reviewed is the various factors were considered, but the actual decision is left to the licensee. so there is still no prescription that if someone has convictions for certain things that they are not allowed to have access. >> does that sound satisfactory? should we be concerned about that? ladies? >> so i would respectfully defer to my regulatory colleagues and direct sartorius's position and advocate for his mission, because again, the more secure these sources are, the easier it becomes for the detection end of

things. >> do you think it would be helpful, again, mr. sartorius, to require that the licensee get a second opinion from the state or the trustworthiness of an individual? >> i don't think it would. and the reason, as a regulatory body, we expect our licensees to perform these activities. we give them good guidance that they can follow and so they'll repeat the right decisions. but i would say that it's not within our purview to be consultants. we review what the licensee has done and make a decision on whether they comply with our regulatio regulations. >> in any of your regulations, s does the nrc prohibit individuals previously convicted of making, for example, terroristic threats? >> they do not. >> okay. maybe one more question, and then we're going to start voting

in just a few minutes. thank you. this is for ms. harrington and captain sartorius. i understand that the global threat's initiative works with the regulatory commission, licensing, state requirements by providing voluntary security enhancements. let me just ask of you, administrator, harrington, how many security enhancements has the national nuclear security administration put into place on industrial and construction facilities, and a follow-up would be, what obstacles stand in your way from installing some sort of security grades from high-risk sources?

>> i don't know if these numbers break out strictly the industrial facilities, but according to our analysis, there are approximately 3,000 buildings in the united states containing high-risk radiological sources. of that number, we have already worked in 650 buildings, providing our security upgrade program, and we intend to complete another 45 in this fiscal year. so that is, i think, a reasonable accomplishment, but that only gets us up to 700 out of 3,000. we've also recovered -- >> what about the other 2,300? >> those are in out year plans, but with the budget environment as it is, we have had to extend the target date for completion

farther than we had originally thought would be possible. the other part of this is the disposition pathway for these sources. and that is often a challenge because you either have to find a secure storage facility for long-term storage or some other way to safely dispose of those sources. it is the licensee's responsibility to do that unless the source that they have has no clear disposition pathway in which case we can step in and assist. >> okay. ms. sartorius, if you have something to add, please do so briefly. otherwise, i'm going to bring this to a close right now. anything else on this point? >> not on this point.

i think my colleague has said it very carefully. these are enhancements and we believe that compliance with our regulations provide adequate protection for the public. senator, i do need to correct one statement i made earlier for the record, if i could do that very quickly. and that is not all category 1 sources are inspected on a yearly basis. the period of the inspection is based on the safety and robustness of the device. and some cat 1 sources are scheduled for periodic inspections at a greater period than one year. three years, four years, five years. >> thanks for that clarification. as we come to a close, let me just say our job in this committee is to do oversight. we have the responsibility of oversight for the department of homeland security. we also have a broad responsibility or oversight for the whole federal government.

and other committees have subcommittees that are responsible for investigations. some of them take it seriously, others do not, but it's hard for one committee such as this one to really exercise meritorious oversight over the entire federal government. we have like 15, 16 people, and as good as we are in our staffs, it's just a little bit too much for us to handle. but one of the things we can do from time to time is partner with the gio and ask them from time to time to look at particular issues, in this case, threats. and that's a question of how are we doing? what are we doing well? maybe what are others in other countries doing even better that we can learn from or even particular states? i hope and pray that the subject of today's hearing is something that will just always be a

subject for a hearing or for speculation and nobody is ever going to be hurt or inconvenienced in any way because of an attack of this nature. you never know. and what we can do is try to make sure that we're doing everything we can to hope for the best, prepare for the worst. and i'm encouraged today to hear that there is a fair amount of work going on to protect our people and to share that information with other nations so they can better protect their own folks. but i certainly don't want to hear one asomeone ask the quest why didn't someone do something about the threat of a dirty bomb? why didn't someone do something to protect against it? i want us to be able to say, we've worked hard in order to protect our people and our country from a threat of this nature. so as i said earlier, everything

i do, i know i can do better. i think that's true of all of us and that's true of every federal program, and so our goal is perfection. probably hard to reach, but it's a pretty good goal for us. so i conclude by saying how much we appreciate not just your being here, not just preparing for the hearing, not just by answering my questions, but also we appreciate the work you do for our country. thank you for your service to our nation. the hearing record will remain open for 15 days. that's until june 27 at 5:00 p.m. for the submission of statements and questions for the record, and again, our thanks to each of you. and with that -- and to our majority minority staff to help us prepare for this hearing. thank you, and with that this hearing is adjourned.

in about 30 minutes we'll be live on capitol hill for the confirmation hearing of housing secretary nominee julian castro, the mayor of san antonio. he'll be answering questions from members of the senate banking committee. later tonight on cspan-2, president obama delivering remarks for the funding center of the dnc in new york, focusing on the lgbt community. it comes as the president announced he plans to sign a federal order prohibiting

contracts from discriminating on gender gender. christine lagarde delivered the imf conference for the u.s. the conference is 30 minutes. well, thank you, and good morning to all of you. welcome to this press conference on the concluding statement of the article 4 on the u.s. i'm assuming that you have received a copy of the concluding statement beforehand. and what i will try to do is focus on the key messages that we have. just for the -- by way of background, it's been a while since we have not done a concluding statement when there is no domestic crisis, when there is no recession, and that has given us a chance to actually focus on long-term

growth trends as well as the structural reforms that we see as ways to support both growth and jobs. turning to growth and numbers, you will have noted that we have revised downward our growth forecast for 2014 down to 2%, and that is largely attributable to the poor result of q-1, which are largely, not entirely, but largely weather related. it's not the main message that we want to give on growth. we believe that this slowdown is temporary and better prospects lie ahead. and we are saying that on the basis of employment numbers, indices of industrial production that have shown gaining economic momentum. of course, there are risks to the outlook, and we have seen weakness in housing and business

investment that could continue to be a drag in the future. nonetheless, we believe that there will be growth in the coming quarters at about 3% or possibly higher than that. in 2015, we expect growth to hit its highest annual rate since 2005. now, we've also looked at the trend for growth going forward. and essentially based on the aging of population and productivity trends which have not kept up with earlier expectations, we have revised downward our projection for the long-term growth rates of the united states to around 2%. and that is clearly significantly lower than the 3% average that we have seen between 1948 and 2007. now, let's look now at the -- what we call the scars of

recession, which are still visible. the first one is the long-term unemployment which is too high with 3.4 million unemployed people and those who have been unemployed for over 27 weeks. labor force participation is also low, too low, as too many productive workers have simply stopped looking for work. third number, almost 50 million americans live below poverty line. so what are our policy recommendations in the face of that? they come in three key areas. one focuses on jobs growth and poverty reduction in the face of those numbers i have just mentioned. second area for policy recommendations is the macroeconomy policies, and third one deals with the financial

stability. so let's start with the key objectives, how to create more jobs, how to achieve stronger growth, how to alleviate poverty. and, you know, there is no single measure that is going to deal with all those issues and is going to be really an issue of putting all hands on deck in order to address all of them. we believe that for one, the u.s. should invest in its future. and as we emphasize in our statement, the priority is to invest in people and to invest in infrastructure, to encourage innovation and stimulate productivity and try to get people back in the labor force. but growth in and of itself will not be enough. and we also believe that additional measures should be taken to mitigate inequalities. you have heard me say that on a

global basis because it's a factor that applies pretty much across the world, and i'm going to now mention some of the measures that we believe will be helpful in the context of the u.s. market. we recommend targeted policies that help poor families make ends meet. first of all, we recommend an expansion of the earned income tax credit, the eitc. it's a program that works, that has been around for the last 40 years that is curren restricted to families with children. and we certainly recommend that it be expanded beyond the family circle. to complement the expansion of the eitc, we also argue for an increase in the minimum wage, which, in the u.s., relative to median wages, is among the lowest in advanced economies,

38%. so two key measures: expansion of the eitc coupled with an increase in the minimum wage. second set of recommendations that relate to fiscal and monetary policies. and clearly, they are there to lay the groundwork for growth and jobs that i have just mentioned. starting with fiscal policy, as we have said before, it remains critically important to adopt and implement a credible, medium-term fiscal plan to bring down debt and secure sustainability. now, we say that, we have said that, we will probably continue saying that because we recognize that it's quite difficult to achieve from a political point of view. however, we also acknowledge that there has been progress clearly demonstrated by last year's passage of the bipartisan

budget act. we also see room, provided that there is this median term fiscal plan, we see room for some targeted fiscal support today to help lay the foundation for higher growth tomorrow. and that includes spending on infrastructure, education, job training programs and child care subsidies. yet making room for these important policies requires also getting to grips with long-term drivers of rising debt. and this will need to involve controlling health care costs, reforming social security as well as improving the tax system which is too complex, has too many write-offs and loopholes and generates too little revenue. finally, i would highlight our recommendations on changes to the fiscal institutional framework, the goal of which is to try to avoid the recent

experience of debt ceiling brinkmanship and government shutdowns. that's for the fiscal policies. turning to monetary policy, we believe that a gradual path of interest rate normalization is the right approach. our forecast suggests that the economy will only hit full employment by the end of 2017 and inflationary pressures will stay muted. and here there is a bit of -- well, it's a caveat. it's also a bit of an inconsistency between the uncertainty around the outlook, which requires that the fed be nimble, and it certainly is, while at the same time, though, there seems to be a large amount of certainty in markets on where policy rates are going to go. in the face of that, we certainly believe that the fed should continue to deploy clear

communications which will be more important than ever. we've made some recommendations in the field of communication and we believe notably that possibly more frequent press conferences by the president of the fed -- sorry, by the chair of the fed -- might prove efficient in order to dispel this risk that i just alluded to between the uncertainty on the one hand and the certainty displayed by markets. and that brings me to my certain final area of policy recommendations which touches on the financial stability. the crisis might be fading, but financial stability risks certainly have not gone away. and, indeed, it seems pretty clear that they have gradually built up during the protracted period of exceptionally low interest rates. the current conjecture of very

low market volatility creates also the potential for an abrupt shift in financial markets. now, don't get me wrong. monetary accommodation has been the right thing to do in the wake of the crisis. the challenge now is to minimize the potential side effects, and here we believe that the u.s. needs to continue to pay close attention to what is happening outside the banking system in the so-called shadow banks and in other non-bank intermediaries. these activities often fall outside the standard nets of regulation and supervision and yet can still be the magnets for excessive risk taking. so what do we recommend? we recommend contentious oversight and a proactive approach. some of our specific recommendations include supervisory scrutiny on

underwriting standards, higher risk weights and tighter limits on large exposures to certain assets as well as stronger prudential norms by holding securitized loans by related entities. we also see scope for a larger federal role in insurance, supervision and regulation. while there have been progress in those areas, there needs to continue to be such progress. let us point out we're now working with the u.s. authorities are our next financial stability program. it's work that will require a bit of time and our team will work for the next 12 months so that when we see each other next year same time, you will have not only the concluding statement of article 4 but you will also have the report on the

financial stability assessment program. so in conclusion, we see prospects looking up for the u.s., but we also believe attention must be turned to the kinds of policies needed to lay the foundation for growth that would be sustainable, that will create jobs, and that will require investing in the long term and not be being short-sighted as to what is needed in a structural point of view in terms of investment but also in terms of fiscal approach. thank you very much, and i will take a few of your questions which i see already. >> thank you very much, madam lagarde. again, may we focus the questions on the u.s. today, and let's keep them short. start with the lady right in the middle. that's you. >> thank you, madam lagarde. my question is on the communication system of the federal reserve. you said that the chairwoman of

the fed should have more press conference. now they have about four times of the press conference after the fec annually, so what amount do you think is appropriate? and how would you evaluate the security system not only inside the united states? i know you want to focus on the united states, but how would you evaluate the federal reserve within the central banks in terms of macroeconomic policy? thank you. >> your question is twofold. on the first part of your question, you are saying essentially the fed today communicates four times a year and has those heavy duty press conferences. what is our recommendation? well, first of all, we would observe that the communication by the fed is pretty efficient and needs to continue to be efficient. given what i described as the

uncertainty versus certainty, in other words, uncertainty about the outlook, question about, you know, the texture of the labor market, questions about the participation rate, question about the longer term unemployment on the one hand, and the certainty that seems to be displayed by markets. we think that it's really important that the fed continues to do that. now, how can it do better as the economy evolves and as the cris crisis, you know, goes away and as monetary policy clearly will evolve? we make two recommendations, essentially. one is that there be more frequent press conferences, and that from four it could move gradually to maybe six. and, you know, that it be as

often as required given this discrepancy between the uncertainty and the certainty. and as this uncertainty becomes more explainable that the fed takes the opportunity to explain. the second thing that we recommend is a monetary policy report. now, that is often used by monetary institutions that adopt an inflation target monetary policy in various places. that is the case in some countries such as the u.k., australia, new zealand, and it could be considered. i'm not suggesting that it be implemented right away because the fed is clearly a longstanding institution with its particularities, and that has to be respected as well. but those are the two areas. the more frequent press conference being privileged over the other one. now, you asked me about the sort of intracentral banks'

communication. there i believe whether it's on the occasion of the bis meetings, on the occasion of some of the g-20 meetings, so on and so forth, central banks actually meet on a regular basis. they don't necessarily comment for you the scope, depths and frequency of their meetings, but they do meet. and i'm certainly reassured for having talked to many of those central bankers that that communication is increasing and improving because there is a wider recognition of the spillover effects and the potential spillbacks to the various territories where monetary policies are decided. >> gentleman to the right here. yes, sir. >> robert harding from the financial times. madam, the bank of the governor art carney recently warned that

the monetary of the u.k. need to rise? do you see similar risks in the u. u.s.? thank you. >> the market assessment is generally that once tapering will have been completed to the point where there will no longer be purchases, then tightening might, in short order, take place. we're not that certain about the short order. and our assessment, given particularly the forecast on unemployment and underemployment numbers and the hollow of uncertainty around those numbers, coupled with the fact that we believe that inflation will remain under target for a period of time, we don't see that short order to be march 2015, let's put it that way.

and i would observe also that the pickup in the u.s. economy is not as strong as it seems to be in the u.k. economy. so that's an additional factor. >> yes, lady right here. >> just to follow up on this question, so can you give us any more indication of when the imf thinks when the rates could be appropriately at zero? and what do you think the markets are not understanding in the fed communication? or is it the fed that's not communicating it right? >> i want to dispel the idea that we would be arguing that the fed is not communicating right. we believe that the fed is communicating rightly. and what we're saying is that it could consider to communicate more frequently as the economy picks up, as the markets move in

the direction they seem to be moving in order to really clarify the uncertainty surrounding unemployment numbers, inflation numbers, core inflation numbers and its forecast for growth. so it's not -- you know, we're not saying it's not communicating right, we're saying it is communicating right. but what we're saying is that as uncertainty fades away, hopefully, it will be even more important for the fed to continue to communicate rightly and we suggest maybe a bit more frequently in order to explain very clearly its monetary policy going forward. as to figuring out the tea leaves of the market reactions, i don't think that i could actually do that competently. >> my first question was -- >> we don't have a fixed date. we don't think that it would necessarily be in short order after the end of the tapering

programs. that's what we assess. do you want to add to that, nigel? >> we make an assumption in our forecasts of the fed pretty much along the lines of the market, that the fed would lift off around mid-'15 and move very slowly after that. but as the managing director said, in our forecast we also have inflation well below target right through until 2017, and we also have a relatively high level of unemployment and a lot of slack left in the labor market. >> yes, sir. >> wall street journal. firstly, the most important question the u.s. is facing off against ghana today. who are you supporting in the world cup for that game and broader favoring for the larger tournament? secondly, what are the consequences to the u.s. and global economy if the fed moves in line with market expectations

instead of your prognosis or recommendation for a slower exit? especially in light of the financial risk you outlined. >> i would really guard against any prognostic concerning soccer or what i call football. i was delighted to see that the french team did as it did yesterday, and good luck to all teams. now, it's really difficult to speculate about what is likely to happen that we don't think will happen. but clearly, earlier than timely tightening could possibly, you know, have consequences on the u.s. economy in the first place and could possibly, you know,

constrain, restrict the recovery momentum that we have observed and would not be, you know, positive from an employment point of view. and second, could also have more severe consequences in terms of global economic outlook where the spillover to emerging markets would leave a mark on their respect active growth. so it's from that twofold perspectives that we would be looking at it. >> lady right here. >> thank you. i'm jenny liu with chinese news agency. in the report, the u.s. growth prospects have been lower substantially from 2.8 to 2%. to what extent will the lower down affect the rest of the

world in especially emerging markets like china? thank you. >> as i said, we have revised downward, probably conservatively, but essentiallye basis of this very low and unexpectedly low q-1. we haven't seen the final number, by the way, of q-1. given the weight in the annual growth number of any first quarter. but i think our key message is that this we see as very -- as temporary. and we see numbers going forward in quarter 2, 3, hopefully 4, as being a lot stronger. and trending around 3%. so here's -- there will be spillover to other markets to the extent that, you know, there are strong interconnections. but i wouldn't overemphasize them given the temporary nature

of this -- of this bad number in q-1. >> hello. afp. i have a question on the minimum wage. where do you see the adequate level of minimum wage? and don't you think that this increase is already doomed by events of the political gridlock in washington? thank you. >> well, what -- we believe that the -- the increase in the minimum wage would be helpful, particularly if coupled with an increase in the eitc. so it's the two together that we believe would be very helpful. when we look at the number where it is today, it's clearly within the three lowest relative to median wage in all of the oect

countries. that's 38% of all the median wage. given the other numbers that i've mentioned, the 50 million americans living below poverty levels and the number of unemployed people, we believe that an increase of that minimum wage would be helpful from a macroeconomic point of view. we're talking about significant numbers. you know, when you have 50 million people living below poverty level, many of whom are actually working people, not people who are just not doing anything. that's why we are recommending it. now, as to give you a number, is it 10.10? this is something that needs to be decided by the legislators, clearly. but i would also observe that there are states in which minimum levels have been raised to try to reduce those poverty levels. >> thank you.

gentleman in the front. >> good morning. euro news. the statement doesn't mention the ongoing unwillingness of the u.s. authorities to support and implement the imf reforms. have you given up hope on this? >> no way. no way. i would never give up. never give up. and, you know, i was -- i was a player in this organization except on the other side when the u.s. authorities campaigned actively for the reform. and i want to see it through. so i would certainly hope that the authorities both at the administration as well as the legislative level understand and appreciate how helpful and necessary it is to actually implement the reform. so that the imf can continue to play its role as prescribed by the articles. >> okay. looking for other questions.

sir. >> good morning. i have an international question. i don't have an american question. madam lagarde, according to the national times, the imf discussed a way of a bailout. according to the paper the imf is discussing changes to its rules that could require countries in difficulty to extend maturities on their sovereign debt as a condition. can you comment on this? >> well, it's -- you know, it's an ongoing effort that we have undertaken, and will continue to undertake in order to improve and fine tune the sovereign debt restructuring range of issues. you know, it's not just about reprofiling, extending maturity, having this intermediate tool in

the -- in the tool box. but looking at all other -- you know, a whole range of issues. and we will continue to do that. nothing is neither final nor approved, not ready yet for resolutions to be put to the board. and it's certainly an area where we need to reach out, talk to all the stakeholders and it's a dialogue that has been ongoing anyway. and where we need to participate and we need to provide the expertise that we have accumulated over the last 70 years, given changing circumstances. so it's -- you know, it's hard work. it's highly technical. and it needs to be well articulated and also based on informed views around the community from all -- from the

entire spectrum. >> i think we're into the last two questions. i see the gentleman here. andre, why don't you go first? >> thank you. i'm with the russian news agency. thank you for doing this. congratulations to all whose teams have won. best wishes to all the rest. i have sort of a follow-up to that. speaking of that, ukrainians are not paying their gas debts. it was expected. major shareholders of the imf pushed this through anyway. what is to be done about this? thank you. >> well, as you would expect me to say so, we don't intervene in commercial transactions between corporate entities. and, you know, both gasprom and natural gas are commercial

entities that entertain a commercial relationship. we certainly hope for the stability of that part of the world and for the stability of the supply of gas that the situation can be addressed promptly and satisfactorily between the commercial entities in the negotiation. strong hope. >> thank you. so this is the last question. >> associated press. madam director, in the downward revision for growth in 2014,ed role. what does that tell us about the stability and the resilience of the u.s. economy given that outsized impact? >> you know, i think it says two things. one is, we believe that this q-1

result was a temporary occurrence. with temporary outcomes. that will be mitigated by stronger growth going forward in q-2, q-3 and hopefully ongoing. however, as you will have noted, we have revised down our forecast for growth trend in the united states to 2%. so, you know, we -- we are facing this ageing population issue. we are facing this relatively low productivity issues, which is why we are recommending various long-term policy reforms to address ageing and productivity. but it tells us another thing. which is that extreme weather occurrences have a serious effect on the economy.

and, you know, extreme weather occurrences have repeated much more frequently in the last 20 years than they had in the previous century. and i think that's, you know, a valid reason to wonder about climate change. and how to deal with it. incidental incidentally, one of the tax recommendations that we put in this report deals with carbon tax. >> thank you very much, madam lagarde. and, okay. alejandro. >> maybe just to complement on the resilience of the u.s. economy, it is based when you look at the household balance sheets, they have strengthened significantly. corporate balance sheets have strengthened significantly. and the important reduction in the fiscal drag are the underpinnings of why we're expecting in the next three quarters for growth to pick up after -- after this. as the managing director said,

obviously for the medium term. our concerns are on the structural issues and the importanti issues of having the u.s. economy growing around 2% for the long term. >> thank you, alejandro. thanks to everyone here. thanks to you for coming. we are live on capitol hill on this tuesday morning where

housing and urban affairs secretary nominee julian castro is appearing before senate banking committee. the san antonio mayor was nominated by president obama to replace shaun donovan who's been tapped the white house budget drkt tor. they're also question laura wertheimer, nominee to be inspector general at the housing finance agency. again, this is live coverage on c-span 3.

i call this meeting to order. the nomination for julian castro.

and ms. laura wertheimer. as mayor of san antonio, mayor castro has been in the front lines of helping his community reach housing and economic development goals. in his tenure as mayor, he has focused on attracting well paying jobs in 21st century industries, raising the educational attainment and revitalizing the city's urban core. the department of housing and urban development is a critical partner in these efforts nationwide. may mayor castro will bring both direct experience with and appreciation of the important role that hud programs play for its families, communities and taxpayers to the role of hud secretary. ms. wertheimer is a partner in the securities department.

to the position of inspector general, she brings her experience representing audit committees and evaluating procedures and compliance centers for financial institutions. it is essential that fhfa have an i.t. provi-- ig providing st oversight of the fhfa's relating to conservconservatorship of fae and freddie mac. ms. wertheimer will bring extensive experience to the position of inspector general to ensure that fhfa is fulfilling its mandates set forth by congress. i now turn to ranking member crapo for his opening statement. >> thank you, mr. chairman. before us today are two nominees

to two very important positions. mayor julian castro to be secretary of housing and urban development. and ms. laura wertheimer to be the inspector general of the federal housing finance agency. both positions will have strong impact on housing and housing finance in this country. and i look forward to learning what the nominees will bring to each of these issues. mayor castro, two of the critical issues that this committee has spent extensive time addressing in this congress are among those i want to bring to your attention today. the future of housing finance reform and the fiscal solvency of the federal housing administration. we need to know what your approach will be on both of these issues and whether you'll be advocating on behalf of them. within the -- excuse me. within the debate of housing finance reform, current hud secretary shaun donovan has worked very actively with this committee to develop and advocate for s-1217 which

recently passed this committee with a bipartisan majority. we must continue to move forward on housing finance reform, especially as we approach the sixth anniversary of fannie mae and freddie mac being put into conservativeship. the committee has also passed bipartisan legislation to address the current capital deficiencies in the fha's insurance fund. in this matter, it would be important to hear from mayor castro that he's 100% committed to getting the capital levels to their required levels, and as soon as possible. ms. wertheimer faces a different but equally challenging task if she's confirmed to b the inspector general of the fhfa. fannie mae and freddie mac represent $5 trillion in taxpayer exposure. the fhfa not only oversees those companies but is also responsible for regulating the federal home loan banks and the very different business models that they represent. further, due to the conservatorship of fannie mae

and freddie mac the director of fhfa simultaneously acts as regulator, executive and shareholder of those companies. all of this means that the fhfa inspector general has a very unique oversight responsibility as compared to an ig who is not operating under those circumstances. ms. wertheimer has the opportunity today to inform us as to how she will handle these exceptional challenges. i look forward to hearing from each of our nominees on these important issues and more. thank you, mr. chairman. >> thank you, senator crapo. there is an 11:00 floor vote scheduled for them. so it's allowed sufficient time for questions, senator crapo and i have agreed to limit opening statements to the chair and ranking member. all senators are welcome to submit an opening statement for the record. senator cornyn will now

introduce mayor castro. senator cornyn. >> thank you, mr. chairman and ranking member senator crapo and members of the committee. i don't often darken the door of the banking committee, but it's more pleasure to be here with you today to introduce a fellow san antonion and texas mayor julian castro. he's told me that he's glad to be here and looks forward to your questions. but he especially looks forward to being back in san antonio to help celebrate the victory of the san antonio spurs which is still -- that celebration is still going on and will for a long time. and i know he'll take the opportunity to introduce his wife, erica, and i understand his brother, joaquin castro, member of the united states congress, is en route. and i hope he will have an opportunity to do that. but my comments are that mayor castro has taken quite a road to get to where he is today. one that's uniquely texan, and i would say uniquely american. i know you'll hear more about

his biography, which is compelling. but i will point out that julian and his brother were raised by a single mom in san antonio's west side. both graduated from thomas jefferson high school. then he went to stanford and to harvard law school. quite an impressive accomplishment. when he returned to his hometown at age 26, he became the youngest member ever to serve -- to be elected to serve on the san antonio city council and then one of the youngest mayors in the country. i know many texans are reassured by mayor castro's example that the american dream is still very much alive. i know if confirmed, he'll have a lot of tough things to do. senator crapo mentioned some of those. as members of the committee know, hud faces a number of challenges. last year for the first time the federal housing administration received a 1.7 trillion -- excuse me.

billion dollar infusion of taxpayer cash to cover a shortfall in its insurance fund brought about by many of the loans they had backed that went south. hud also continues to struggle with its performance and oversight challenges as identified by the inspector general. and as we've seen with the recent scandal at the veterans administration, the american people need leaders who will hold folks accountable and restore transparency to government. and while the issue doesn't fall squarely within hud's jury dicti -- jurisdiction, i also look forward to hearing about the mayor's views on the future role of freddie and fannie which i believe senator crapo alludedsu. after meeting with mayor castro -- leading texatexas's sd largest city.

i want to thank you and the members of the committee for the opportunity to introduce the mayor and to address you today. thank you. >> thank you, senator cornyn. please feel free to excuse yourself at your convenience. i will now introduce ms. wertheimer. in in addition to being the partner in the securities department of wertheimer, cutler, tricken, hail and dohr, ms. wertheimer is a member of the firm's securities litigation and enforcement practice group. she has advised clients in securities law enforcement investigations, regulatory and criminal and public inquiries, and cross-border regulatory proceedings. from 1981 to 1983, she was a law clerk for judge spotswood robinson of the u.s. court of

appeals. she received a -- columbia university school of law. we will now swear in the nominees. please rise and raise your right hand. do you swear or affirm that the testimony that you are about to give is the truth, the whole truth and nothing but the truth, help god? do you agree to appear and testify before any dually constituted committee of the senate? please be seated. each of your written statements will be made part of the record. before you begin your statement, i invite each of you to introduce your family and friends in attendance. mayor castro, please proceed.

>> -- fortunate to be here today with my wife, erica, and i know that my brother, joaquin, is, i think, on his way. you'll have to forgive him. he was the second born twin. so sometimes he's late. i'm also very fortunate to be here with some of the hud staff that has helped with briefings and so forth. very appreciative of their work. thank you very much for having me. i look forward to the hearing. thank you, chairman johnson, ranking member crapo and members of the committee for welcoming me here today. i'm deeply honored to appear before you as president obama's nominee for secretary of housing and urban development. i want to thank president obama for his confidence in me. allow me also to thank senator cornyn. he's a dedicated public servant, a distinguished senator from

texas who also happens to hail from the great city of san antonio. and i'm incredibly grateful for his support and his generous introduction. and as i mentioned, i want to express my gratitude to my family and friends, especially to my wife erica and to my brother, joaquin. both of whom join me today. without their support, i simply wouldn't be here in front of you. finally, i want to commend this committee, which has a well earned reputation for working in a bipartisan fashion on behalf of the american people. it has been a pleasure to meet with you and your staff throughout this process. if confirmed, i look forward to our continued engagement to advance issues critical to our nation's future. mr. chairman, i appear before you today with more than just professional experience in dealing with housing and urban development. i also bring my own personal experience. i grew up on the west side of san antonio in a neighborhood of hardworking families and very modest means.

my father at two different times in his life lived in public housing. my mother worked for the san antonio housing authority. and i've seen with my own eyes how talented and driven americans who just want a fair shot are weighed down by the conditions in which they live. and this simply isn't right. all americans deserve the same opportunities that i had, and i've dedicated my career to giving back to the country that has given so much to me. as mayor, i made it my mission to help create a vibrant, economically prosperous urban core that expands housing opportunities for all san antonionians. in 2010 we launched the decade of downtown, an initiative to spark our older neighborhoods. this issue attract -- which will produce more than 2,400 housing units by the end of 2014. looking ahead, during my recent visits with committee members, many of you asked about my priorities. if i'm confirmed.

allow me to share two of them with you. first, i'm a strong believer in cross-agency collaboration. san antonio's east side is the only neighborhood in america to receive a promise neighborhoods grant, a choice neighborhoods brand, a byrne criminal justice program grant and promise zone designation. we accomplished this by getting beyond the silos and working across agencies to improve housinging, educational achievement and overall quality of life. this is the kind of collaborative approach i would like to enhance at hud. second, as a local elected official, i'm also keenly aware of the value of measuring results. in san antonio, we initiated a process of unprecedented public engagement and accountability called sa-2020. through a series of community meetings, residents spoke clearly about what kind of city they wanted to be in 2020. but we didn't just set a vision. we set precise knnumeric goals r achieving our vision.

we promised the community that we would come back every year and report back on how we were doing. good or bad. with the help of the state demographer, we developed a public report card available for anyone to see on sa2020.org to give san antonions a realtime snapshot of how we're doing. similarly i would like hud to focus on outcomes, not only inputs. we shouldn't just track projects and dollars spent. we must measure those investments by the impact they make. secretary donovan has built a strong foundation for this, and in confirmed, i will work hard to make this the norm at hud. hud's role is one of the most critical in government because it directly impacts american families. from enforcing fair housing rights to revitalizing distressed areas, from assisting veterans and finding permanent housing to helping communities rebuild after a natural disaster hits, the department is making an impact in small towns, big cities, rural communities and tribal communities across the

country. the 21st century is shaping up to be the century of cities. and i believe there's a reason for that. in america's local communities, partnerships and pragmatism are the key drivers to success. that perspective has guided my efforts. if confirmed, i look forward to working with you to strengthen opportunity for americans through hud's efforts. once again, thank you chairman johnson, ranking member crapo, and members of the committee for your consideration of my nomination. it's an honor to appear before you, and i look forward to answering any questions. >> thank you. ms. wertheimer, please proceed. >> chairman johnson, ranking member crapo, members of the committee, thank you very much for the opportunity to appear before you today. i am honored to be president obama's nominee for inspector general of the federal housing finance agency. and before i begin, i'd like to

introduce my family, who has accompanied me here today. my husband, andy pinkus, our daughter, kate pinkus, my steadfast mother, sadel wertheimer. my in-laws walter and ann pinkus. with that, let me get to the meat of what i'd like to say in my statement. the fhfa plays a crucial role in our financial system as the safety and soundness regulator of fannie mae, freddie mac and the 12 regional federal home loan banks. to ensure they operate in a safe and sound measure and serve as a reliable source of liquidity and funding for housing finance. and as senator crapo mentioned, since september 2008, almost six years now, the agency has acted as conservator for fannie mae

and freddie mac, to protect and conserve the assets and property of those enterprises and protect the taxpayers' investment, which is currently $187.5 billion. currently, fannie mae and freddie mac guarantee more than $5 trillion in mortgages in this country. three out of every four. congressman dated strong independent oversight of agency programs and operations by the fhfa oig to safeguard taxpayer dollars. to carry out this oversight, the oig conducts and coordinates audits and evaluations of agency activities and investigations of the agency and its regulated entities. much of my professional career has focused on leading investigations into alleged wrong doing and counseling clients on improvements to

internal controls and processes to prevent and detect violations of law. i have deep experience running independent investigations for audit committees and committees of independent directors of public companies. these investigations have looked into a wide range of areas. financial statement reporting and disclosure errors. alleged accounting irregularities. misconduct by corporate officers and employees. possible improper payments to foreign government officials. whistle blower claims. and other significant issues identified by a host of stakeholders. in each of these investigations, we followed the facts wherever they led without fear or favor. we developed remedial measures tailored to the facts found. we monitored implementation of that remediation. a number of these investigations

led to dismissal or resignation of high level company employees and adoption of significant new policies and internal controls. if confirmed as fhfa inspector general, i will exercise my duties aggressively, independently and fearlessly. i have a deep appreciation of the critical importance of conducting rigorous, fair and thorough audits, evaluations and investigations. of communicating the results to stakeholders clearly. and holing individuals accountable for their actions. i pledge to be responsive to this committee and to congress as a whole, and to develop a good working relationship with the fhfa director. after more than 30 years in the private sector, i'm honored to have this opportunity for public service. my father was a first generation immigrant who came to this

country with his parents in 1938. they escaped with the clothes on their backs, and they spoke only german. my grandparents had to reinvent themselves in this strange new environment. my grandmother found work as a domestic house cleaner, and my grandfather was employed to scrub out cocoa barrels on the new york docks. together, they earned enough to rent an apartment in cue gardens, a community populated with german and austrian refugees. my father enrolled in new york city public schools, learned to speak unaccented english, and graduated as valedictorian of his high school class. america has given so much to me and to my family. i'm eager to give something back to america. thank you and the committee for your consideration of my nomination. i look forward to answering your questions. >> thank you for your testimony.

if any member has written questions for the record for the nominees, i ask you please submit them by noon this friday, june 20. i also ask that the nominees respond to the written questions quickly so that we can move the nominations forward. we will now begin asking questions of our witnesses. will the clerk please put five minutes on the clock for each member. mayor castro, in your opening statement, you mentioned some of your priorities if confirmed. would you priorities also include working to address the vast housing needs in indian country and engage in consultation with tribes? >> thank you very much for the question, chairman johnson. and i appreciate your -- your very strong advocacy for tribal communities. absolutely. i'm committed to ensuring that

we work closely with our tribal communities. i look forward to at hud being focused on that. i fully understand that in my experience as a big city mayor, however that as part of hud's mission, we don't just serve big cities or urban areas. we also serve rural communities, small towns and our tribal communities. i look forward, if i am confirmed, to working with -- with you and with your staff and other committee members as the nahazda reauthorization perhaps moves forward, and on issues related to our nation's tribal community. >> i have been handed a note that representative joaquin castro is here. mayor castro, a 2012 hud report

found that san antonio had not administered 2008 neighborhood civilization program grant in accordance with program rules. can you tell me what happened with that grant and how the city addressed this issue and what your involvement was as mayor? >> yes. thank you very much for the question, chairman johnson. the -- the hud ig did issue preliminary findings with respect to the neighborhood stabilization program in the city of san antonio. after consulting with city of san antonio staff, the city of san antonio staff provided backup documentation to clarify those preliminary findings. at the end of the day, about $125,000 was paid back with nonfederal funds. city of san antonio funds. as soon as the counsel and i learned about that issue, we were supportive of corrective measures that were put in place.

there was an nsp checklist, for instance, that was created. compliance was strengthened. personnel were removed who had had authority over that program. and i look forward if i am confirmed to ensuring that we're vigilant with our grantees with the nsp program and other programs as well. >> ms. wertheimer, we have discussed the steps you plan to take if confirmed to address potential conflicts of interest relating to your past work on behalf of clients as well as potential conflicts with respect to your husband's work. can you please describe these steps to the committee? >> absolutely. thank you, senator. when the president -- when i was advised that the president sought to nominate me, i

appreciated the need to get ahead of potential conflicts of interest. and so i spoke at length with the designated ethics officer of the federal housing finance agency and explained my strong interest in avoiding either actual or perceived conflicts of interest, or the -- or even the appearance of a conflict. so to that end, the designated ethics officer of the agency, in consultation with the office of government ethics, and i agreed that i would recuse myself entirely from any matter in which my law firm, willmer, cutler, pickering hail and dohr, appears before the agency or before the fhfa oig. so not just limited to oig matters. and that i would also recuse myself from matters in which my

husband's law firm, mayer, brown and plat, appeared before the fhfa or the fhfa oig so that there was no appearance issue with respect to my husband's law firm. in addition, i agreed to refrain or to recuse myself entirely from any matter in which clients of mine, with whom i had worked on matters, if they were represented by another law firm, for example. if they were to appear before the fhfa or fhfa oig, even on matters unrelated to matters i had advised them on, that i would recuse myself for a period of -- i believe it's two years. and, last, there were several items in our portfolio that because of potential appearance impro pryty issues we agreed to

invest within 60 days of my appointment, if that is to occur. >> senator crapo. >> thank you, mr. chairman. mayor castro, the fha insurance fund has been undercapitalized since 2009. at the end of fiscal year 2013, fha announced that it would need 1.7 billion from treasury to cover an increase in anticipated costs of loan guarantees. this marked the first time that the fha needed funds from treasury to cover an increase in expected future losses in its single family mortgage program. last year this committee moved legislation, the fha solvency act, with strong bipartisan support. to get the fha back on stable financial footing. if confirmed, will you commit to help us move this piece of legislation and to move the fha toward solvency. >> thank you very much. thank you very much for the question, ranking member crapo. and i want to commend you and the committee for, as you said, very strong bipartisan work on the fha solvency act.

i am committed to helping to ensure that if i am confirmed, that the fha is on a good track and to support legislative efforts to that effect. it's my understanding that in the independent ak chair has said, at least for fiscal year 2015, the fha is on a stronger track. that it will not need another draw. but i -- if i am confirmed at hud, i look forward to working with you and to the committee to support legislative efforts as well. >> thank you very much. and that is good news to hear. will you assure us that the fha will not do anything to reduce its incoming capital before it has met its statutory obligations? >> thank you for the question. of course, i'm hesitant to commit to things specifically, not having been at hud and seen all of the details. however, i will say that i share with you a commitment to

ensuring that the fha has a positive capital reserve ratio, that it is on the right track, and that it does not need another mandatory appropriation. >> well, i thank you for your attention to that. second, to change issues quickly, as we did when we met privately, i want to discuss with you the housing finance reform legislation that this committee has put forward. secretary donovan has worked very closely with this committee in helping to develop this legislation and negotiating and advocating for its passage. if confirmed will you commit to helping the committee move this important piece of legislation so we can get our financial housing market back on track for long-term stability? >> senator, you and chairman johnson, committee members, are to be commended for the work that you have done on this issue. and i share your goals in ensuring that we have a housing finance system that both protects the taxpayers in a stronger way than we have had in

place and also balances access to credit for folks of modest means who are credit worthy. and so i look forward, if i am confirmed, to being an active participant as the committee and as the senate continues to work on this issue, this legislation. absolutely. >> thank you. do you believe there are any negative consequences to our inaction on reforming fannie and freddie and resolving the conservatorship? and, if so, what are they? >> well, i do believe that -- that the status quo is not in the best interest of americans. i believe that -- that if we can resolve thesish she issues thatw the committee is still very much discussing, even though this has made it out of committee, that it would be preferable for the taxpayers not to be in the position of first loss. and that the current conservatorship of fannie and freddie is not sustainable for

the long term. i know that there's litigation already that has arisen, for instance, out of this. and so there have been some negative consequences. i will say, finally, i know it's a balancing act. that there are concerns in terms of access to credit. and having represented san antonio and seeing these issues on the ground level, i can understand those concerns. and if i am confirmed, i would look forward to being an active participant in trying to come to a resolution on that. >> thank you. ms. wertheimer, i'm about out of time. so i'm going to have to submit most of my questions to you and some additional ones to mayor castro in writing after the hearing. but one quick question to you that i do want to ask is, another unique situation for the fhfa ig is the fact that the treasury department is a party to a preferred stock purchase agreement which set the conservativeship terms for funding and repayment for fannie

and freddie. how do you envision the fhfa ig interacting with treasury or the treasury ig to ensure adequate oversight, given this unique situation? >> senator crapo, my -- the predecessor in this position, mr. lennic, devoted significant effort to developing collaborative working relationships with igs in other agencie agencies, including the treasury department. and the igs through cross-agency work, worked extremely effectively in oversight responsibilities where there was shared oversight. and i would envision continuing the -- that cross-agency collaboration with igs in treasury as well as with igs in other agencies and with the u.s. attorneys across the country. that's the way we're going to get this job done. because there's cross-agency responsibility for enforcement of the laws.

>> thank you. >> senator reid. >> thank you very much, mr. chairman. welcome, mayor castro and ms. wertheimer. mayor, can you share or elaborate on your envision of housing and urban development, particularly based on your experience as mayor of san antonio? >> thank you for that question, senator reid. well, as a local elected official, of course, my viewpoint on this was -- was from the other end, working at the ground level. and what i've found absolutely essential to ensuring that folks have good opportunity by what hud does is to work across agencies. that's what we did in san antonio. very early on in my tenure, we got together our housing authority with our transit agency, one of our urban course school districts, one of our universities, the united way, to figure out how we could make better use of resources. and understanding from being at that local level that housing is an important component of

overall quality of life and providing opportunity, but it's not the only component. when we tackle these issues in a more wholistic way along with education, along with transit, i believe it has a bigger impact. and i'll be looking for opportunities to do that. secondly, one of my significant takeaways from my experience in san antonio as it relates to housing is that we need to -- we need to measure the outcomes. we set a goal early on, for instance, in san antonio of trying to create 5,000 housing units in our downtown by the year 2020. later we increased that to 7,500. it's been my professional experience that when you set a goal and when you're measuring results, you're much more likely to stay on track to try and achieve that. and then finally, i see out there the urgency for more affordable housing opportunities in our urban community in san antonio, but throughout the

nation. and i would work very hard if i am confirmed to do what we can to create those opportunities. >> thank you, mayor. shifting to another issue that's going to be vitally important, and that is the administration committed to end veterans homelessness by 2015. and we're close in some parts of the country. rhode island is -- we think we have 97, approximately 97 homeless veterans at this time. we want it to be zero. but can you tell us, what are you plans to help states, particularly to reach this goal of no veterans homelessness? >> and i commend you for the work you and members of the committee have done. this i think is a real bright spot for your work, for the administration's work and for the work of secretary donovan. and a very laudable goal. to effectively eliminate veterans homelessness by the end of 2015. one of the primary ways that we have supported that -- that hud has supported that is through

the vash program, vouchers, in close collaboration with the v.a., to help ensure that homeless veterans have the opportunity to get housing in local communities. and if i am confirmed, i look forward to bringing a ton of energy to be supportive of that and to meet that goal. i know how important this is that we make right by our veterans. and hud, if i'm confirmed, will be a key, key driver of that. >> well, thank you very much, mayor. ms. wertheimer, you have an incredible record. and your career has been distinguished by a great intelligence, great integrity. and i was impressed with your response to senator johnson, the chairman's, question about maintaining the appearance as well as the reality of independence. and all i wanted to say is that's going to be a continuous effort on your part. because as you pointed out so

sus singtly, many times you'll have firms that you've worked with on the other side of the table, clients on the other side of the table. but i just want to, again, emphasize the notion of not just the reality, because i have no doubt you're going to be scrupulous in your conduct, but the perception that, you know, that there are conflicts. and let me just reinforce that point again, if i may. >> thank you, senator. i agree with you. i think an independent ig is only as credible as the -- not only the actual independence, but the perceived independence. so it's critical to me that this office, if i am confirmed, maintain both actual and avoid any appearance of -- of lack of independence. >> thank you very much. thank you, mr. chairman. >> senator shelby. >> thank you, mr. chairman.

mayor castro, for years i believe the problems of the fha have been well known by this committee and probably a lot of other people. during the housing boom, the fha unwisely, i believe, guaranteed a lot of risky mortgages with low down payments to borrowers. they weren't the only ones, now. these mortgages have resulted in billions of dollars of losses to the taxpayer. in the interest of stable and -- you know, fortified housing market, could you speak to your perspective, if you have one yet, on the reserve ratio of the mutual mortgage insurance fund, what it should be? and what about the minimum down payment levels? do you have a perspective on that? >> thank you very much for the question, senator. i want to commend you for your work over the years on this issue. of course, the health of the fha has been subject, i know, of

tremendous scrutiny and debate. i believe that -- that be there can be action taken to ensure that the fha stays on a positive track. my understanding, my preliminary understanding, is that it is on a much more positive track now than it had been. of course, the reverse mortgage program and also some -- some loans from the 2007 to 2009 time period were problematic. as you've mentioned and other committee mentions have mentioned this was an unprecedented event for it to need a mandatory appropriation. so i believe that as we move forward that -- that there is reason to believe, to have more confidence in the fha. i'm also aware, on the other hand, that the credit quality of borrowers for the fha is stronger than it ever has been. with the fico score of just under 700.

and so my perspective, whether it relates to the requirements for down payments or other measures, is that we achieve this balance to stay within the mission of the fha, the historic mission to ensure that first time home buyers, that folks of modest means who -- who are credit worthy, that they have the opportunity to reach the american dream of homeownership. but at the same time that we have policies in place that ensure that what happened a couple years ago does not happen again. >> i want to get into the section 8 area. in the fiscal year 2014, which we're in now, funding for the section 8 programs totalled nearly $29.1 billion. of the $45.47 billion in outlays for the department of housing and urban development. i believe that's about 64%. that is a heavy outlay. could you talk about what, if

any, plans that you would -- have you thought about as policy to try to rein in spending for this program? we know this is an important program for a lot of people. but i also serve on appropriations committee. we have to deal with real numbers, too. >> well, thank you very much for that question. i'm fully aware that, as you say, the section 8 program does consume tremendous amount of hud's overall budget and that rents rise every year. and so we face that continuing challenge. i look forward to -- to delving into more of the details to look at what ways we can achieve some efficiencies and hopefully streamline. i know that under secretary donovan's leader sh eleadership looked at ways that it can be more nimble and achieve cost savings. and if i am confirmed, senator, i would look forward to visiting with you about this issue. >> in the years leading up to

the financial crisis, fha's mortgage insurance market share went from less than 5% to more than 30% in 2008. that were the boom years. and continues to hover -- and i believe levels around 20%. are they -- what do you think of -- have you thought about the area of spending in the private mortgage insurance sector and, ultimately, moving toward a fully private sector mortgage insurance market? or is that too far out for you? >> thank you for the question, senator. well, i believe that -- that the fha does have an important role to play. of course, it played a countercyclical role during this downturn. as you mentioned, what we've seen is that as the housing market has gotten stronger and we see more private capital in the market, we've seen that market share go down. and so i believe that there is a strong role for the fha.

and if i am confirmed, i'll look forward to visiting with you and the committee as we set that. >> ms. wertheimer, my time is running short. it's out, i guess. but i'd like to ask you one or two questions. what's your view of the level of independence needed between the ig and the director of the fhfa and its senior staff? and how important is it for the inspector general, which you have been nominated for, to not only have adequate resources, you've got to have those, but also unfettered access to all of fhfa's records and data? >> we'll take this question, and then we'll do senator menendez. >> go ahead. you can answer. >> thank you, senator. i think independence is at the core of the ig mission. the -- and i have deep experience leading independent

investigations. i value the importance of a working relationship with the fhfa director, to report to him on what has been found in a collegeial matter. but it is not a collaborative relationship. because the ig reports not only to the director, but to congress. and, therefore, in terms of reporting, what the ig has found, either in its evaluations or its audits or its investigations, will be communicated respectfully, but there will not be a collaboration on the reporting -- on how to formulate a report. with respect to access, access is at the core of how the ig can fulfill its mission. if there isn't unfettered access to the materials, the output will not be worth anything. >> senator menendez.

>> thank you, mr. chairman. mayor castro, i must tell you, there aren't too many castros i like. but i do like you and the congressman. so look forward to working with you asyou. >> as the subcommittee chair on housing. you know, as you and i had an opportunity to discuss, new jersey faced the worst natural disaster in its history, and thousands of lives were affected and many are still affected. if confirmed, you'd have an important role overseeing approximately $15 billion in community development bloc grant disaster relief funding appropriated by the sandy emergency relief act, which i fought to pass. i'm glad to see we deviated from an original attempt to spend $2 billion of that money on the national resilience competitions to 1 billion and new jersey will be eligible for that competition, which originally we

were told we were not, so we are moving in the right direction, but there's a lot still to be done. many people are hurting in our state and in the region. so i would like to invite you to join me on a tour of new jersey to see both the work that's been done, but more importantly, see the work that's not been done as left still to achieve a full recovery and rebuild stronger. could i get your commitment as you move upon confirmation to visit with us in new jersey, especially as the national resiliency competition is going to take place, to inform you of what challenges we have? >> thank you very much for that question, senator menendez. i enjoyed our visit yesterday and want to commend you for your could strong and effective advocacy for folks impacted by superstorm sandy. of course, i would appreciate

the opportunity to understand these views better by visiting new jersey. >> now, the state has some well-publicized issues with administering cdbj grants, particularly with contractors and the approval process. as hud awaits new jersey's amended planned for the third funding, would you commit to work with me and the state to ensure proper contract procedures are put into place and the housing application process is as efficient as possible. all these funds could nothing if it doesn't make its way to affect the people. >> i agree. as a local official this has been my concern ensuring wherever resources come from, whether local, state or federal, that the rubber hits the road and the lives meant to be impacted positively are impacted. if confirmed, i certainly will work with you to ensure we do our best job on our, that hud does its best job on its end to

ensure success. >> you know, the subcommittee held a hearing on section 8 rental assistance voucher reform. and its initial priority for affordable housing advocates, public housing authorities, housing developers, according to the national low income housing coalition in my state of new jersey alone, we have a shortfall more than 200,000 units affordable and available for most vulnerable, extremely low-income households. nationally the shortfall is greater than 7 million. so voucher reform, while some elements of this have been done by the congress, there is so much work left to be done. do you consider section 8 voucher reform legislation to be a priority? and will you work with us to help move the remaining elements of reform? >> i appreciate the question. i certainly do understand the

importance of looking at reform and as was mentioned earlier, the significance of this as a line item in hud's budget. of course i look forward to getting more up to speed on all the details of what's being proposed, however, if i am confirmed, i will work with you and members of the subcommittee and this committee to do what we can. >> i appreciate that. for me, it may be a line item, but this is about millions of people's lives. >> certainly. >> i may see it different than some of my colleagues at the end of the day. from whence i came from and who i represent, i don't look simply at line items, i look at the lives affected. i hope when you become hud secretary you are going to look at the lives affected, not simply the line items. >> of course, senator. i certainly will. i have done that throughout my time in public service. as a local official have been primarily concerned with how the residents of my community are impacted by the actions we take

in public service. so i recognize that overall we want people to have good housing opportunities, and if i am confirmed, look forward to working with you on that. >> i'm sure you will. i sometimes need to be the counterveiling force here. >> senator corker. >> thank you, mr. chairman. thank both of you for your willingness to serve in this capacity. i'm going to help get you back on schedule here. be very brief. to the mayor, i know that as a former mayor there's no job that is more gratifying personally than being mayor of a city. as we change jobs sometimes we have impact in different ways that maybe are not quite as up close and personal. this certainly is a very important role. part of what you'll be doing and you discussed this with members as you answered questions, you will be part of what happens with freddie and fannie.

people seek your guidance. we had a conversation about this. i'm going to ask most my questions in writing to move along with this hearing. it's my understanding that you do believe that the dupolistic nature of the way things are today with two enterprises basically being it, relative to the secondary market, that you believe that that has no place in the american society, and you would work with us to end that type of arrangement. i know that you were a little vague on support of the bill and you should be at this point. relative to that one point, it's my understanding you agree with that 100%. >> thank you for the question and visit we had. i do believe there are alternatives with this conservatorship. i agree with you on that point. i know as with any legislation that the devil is in the details and finding that common ground, if i am confirmed, i look

forward to being an active participant in that. >> to both of you, we will have qfrs. mr. mayor, subject to those coming in appropriately, i look forward to supporting new this nomination. i thank you both for your willing to serve. mr. chairman, i turn over the rest of my time and hopefully get some points for this. thank you. >> senator brown. >> points from senator tester for that. >> thank you for joining us. mayor castro, nice to see you. two local concerns i want to raise just not as a question, but to thank you for the discussion we had, and what hud has been doing and what i assume from our conversation we will continue. one involves city gospel mission in cincinnati, religiously affiliated men's home.

and a way to meet hud's fair housing expectation. we are close but not there yet. they serve an absolute critical need for homeless men in cincinnati without restricting access to service and employment. i appreciate the work you've done there and thanks for your interest in moving that along. second was the issue of streamlining multifamily operations. i understand 50 offices will be consolidated into just 12 as of 2016 there will no longer be multifamily operations in many states including ohio, the seventh biggest state in the country. i support efforts to make hud more efficient. i share the concerns of ohio's community leaders so eliminating on the ground supervision could lower the quality of multifamily residences and reduced compliance. secretary donovan was highly engaged. we had perhaps three maybe four conversations about it, my staff and his staff worked on it.

since the plan was announced, your predecessor committed to ensure the transition does not negatively impact millions of families and employees who are affected by these local multifamily offices. taking care of the service they provide and the workers that are employed there, and i appreciate your commitment on that. let me ask one question. a year ago hud proposed updates on a rural to ensure recipients of hud funds are living up to their commitment to affirmatively for their fair housing goals. nine months after comments were received, hud still hasn't released proposed data tools included for public feedback, nor has it finalized the much-needed changes it proposed last july. just tell me, if you would tell the committee, what steps you'll take to make sure state and local recipients of hud funds engage in meaningful discussions about providing equal housing opportunities for people in our country.

>> thank you very much for the question, senator brown and for the visit we had the other day. i, of course, had not been part of the rule-making process before now. however, with regard to affirmatively furthering housing, i do believe it's important that there be that kind of guidance and comments from local authorities. i know that the san antonio housing authority, for instance, provided comments and so what i can commit to right now, whether it's this issue or another rule on the table is that we will diligently proceed and take in the comments and consider them and more generally, that i consider this something of importance for our local housing authorities. >> thank you. thank you, mr. chairman. >> thank you. staff tells me we'll