>> if we didn't fund the air force? >> yes, sir -- >> what if we didn't fund toilet tissue for the capital. >> that would have an impact. >> okay. thank you. so anything that we do would have an impact? >> i'm not sure it's material for this discussion, but, yes. >> you are absolutely right. you are absolutely right. now, let me two further. would it be -- do you know how many times the xm bank has been reaught rieszed? >> better than 16 times in its 80-year history. 16 times. would it be a surprise to you that most of them were unanimous votes? or overwhelmingly unanimous when they went to the floor and to

the senate? and that a significant number, i can't remember the exact number, was actually voice-voted out of the house. i think they call it consent in the lower house? what do they call it? consent? unanimous con sernt. >> you would be surprised at the number of unanimous consent. so i guess the point i'm perhaps making poorly is that what's different now. wha i'm saying, i think there are some things we can do. there are some tweak that is can be made.

i'm just wondering, what is it about this moment in history that we don't think we can look at a problem. and some of us think it's not that big a problem, and then make changes so that our businesses can compete for business abroad. i mean, i'm frustrated over the fact that it would seem to me that there are issues that need to be addressed. they can be fixed. has there been anything discussed here today that can't be dealt with if we sat down and worked? >> congressman, i'm a businessman for 20 dwreers in the private sector.

we are constantly looking for better ways to operate the bank. we need to do a better job in managing risks and also serving exporters. i was under president reagan and he signed a six-year extension. >> the jentle man's tigentleman expired. >> mr. hockburg, i want today ask you about the wall street journal story of june 23rd. is the internal investigation separate? >> let me just begin by saying,

frankly -- >> it's actually -- i just want to know -- >> i'm out raged by the number -- >> i've appreciated that. you've answered that question before. is the investigation of the xm bank separate from the office of inspector general. >> most of those investigations are transferred over to the inspector general when they reach a certain point. so they are under the jurisdiction of the inspector general at this point. >> at this point. no further investigation from your staff? >> they're turned over -- at this level of seriousness, they're turned over to the inspector general. >> so the status for the investigation would be closed there but opened at the oig? >> it's not closed. it's an open issue. >> but if you referred it to them, then you're done with the investigation, correct? >> we're awaiting to hear what the inspector general says. that may be with other actions.

>> so, as a result of this, have you consulted with the general council's office about these reported incidents of fraud, waste and abuse? >> let me just make one statement. august of these infractions, all of these individuals that you're referring to, were all referred to the inspector generally our employees. so these were all sent by our own employeeings who said i don't like what i see here. this doesn't look right. >> i'm asking about you. >> no, i'm not sure i understand the question. >> fantastic. have you consulted ethics office about these matters? >> this matter has been handled by our general council and the inspector general, as is proper. >> and the general counsel referred that over to the office of inspector general?

>>. >> they don't have to go through a prar channel. >> let me ask you a separate question. is there an office of ethics at the xm bank? >> office of ethics. i mean, yes, in the general counsel's office. >> other ethics offices actually report directly to the head of the operation. and other parts of government. would you support that? >> we have a chief risk officer that this committee asks that the inspector general recommended. the chief risk officer has reporting to him. >> i just asked a simple question. >> the chief risk officer reports to me.

j i asked about the ethics office. not about the risk office. >> well, ethics 1 part of that. >> i understand, but i'm talking about a direct report. >> i will move on because i understand you don't want to answer those questions i've been asking. so are you aware of any criminal investigation about the actions that were brought to light in the wall street journal report? >> these matters, i think, are better answered by the inspector general since they're an on going investigation. >> are you aware of a criminal investigation about these matters? >> i'm aware that the inspector general is conducting an investigation. >> are you aware that there's a criminal investigation about this matter? >> i'm aware. i still feel the question would be better answered. i don't want to mike a misstatement. >> i understand. in terms of meeting with the

office of inspector general, that's much easier to do. mr. chairman, you know, i'm just trying to get to the bottom of this. if i can ask you a question about the wall street journals's story, have you had any contact or dealing with them permly? >> oh, no, absolutely not. >> the chair now recognizes the jerntle man from florida, mr. murphy, for five minutes. >> thank you, mr. chairman. thank you all for appearing before us today. thank you for your steadfast promotion of american jobs and american manufacturing in our country. as a small business owner myself, i urns that one of the most important things those small business folks need is access to capital and financing. last year alone, export bank supported over 200,000 jobs, 90%

of which of those jobs supported small businesses. if the united states yun ral latly disarms the export financing world and allows xm to lapse, what kind of economic impact could it have on american manufacturing on our job creators, our exporters, selling goods that are stamped proudly, made in america, all around the world. and so many of this have relied on this export-import bank. >> on the first panel, we had steve woverign with just the threat of xm bank not become here in september has already awarded the impact of a $57 million con trakt that would support a lot of jobs. this would be more with a larger transaction. >> we heard small businesses at

the time of the shutdown were losing sales because of potentially not be there. it's 90% of our customers. frequently, they do not have another option. they frequently have very few options. lastly, many of the small businesses are part of the supply chain. they're part of the boeing supply chain, they're part of space x where the congressman is in her district. they don't make a hundred per credibility of what they do. >> one of the things i say frequently is it isn't this body's role to create jobs.

it's our job to create an environment that's conducive to job growth. you develop that environment through certainty. >> it's obviously hard to be precise. i'm thinking positive that we're going to reauthorize the bank and do it on time. but let's be clear. well over a million jobs over the last five years, just under 1.2 million, were supported by our exports. that's because we filled a gap the private sector could not fill. those are all at risk. why can't they get in the private sector? i'd rather the private sector do

everything. we're there when the private sector can't or won't. >> to that point, i'm in an alter nat universe here. it doesn't make any sense. maybe their export banks are going to help american manufacturers. >> as i said, there are 60 countries that all have an export bank. they all -- they all would gleefully take sales to the united states and support jobs 234 their communities. they're delighted to do that. they're looking forward to doing that. china does more than four times the amount of financing than we do.

>> so, if anything, some could argue we should be expanding. >> yes, i agree with that. >> you want to make sure we meet the competition. frankly, one way to get the competition's line is to meet them toe-to-toe, head-to-head and indicate we're not going to back down. >> it would be one thing if not another single countsel country world had an equivalent. but they do. in fact, they're bigger. >> thank you, mr. chairman. a stated goal of xm bank is to provide assistance to serve customer that is are unable to attain financing through the commercial markts. what policies and procedures

does the bank have in place to ensure it is limiting its assistance and not counting out opportunities for private capital markets. >> each application must report why. whether it's lack of financing, meeting the competition. that's where we step in. an example of that, you know, we did a lot of loans in the philippines. i have a list here, you know, in cameroon, over half the exports that went to cameroon, for kpamplt, we finance. why? it's very hard to get any bank to step forward.

in placings like western europe, we do very little. japan has a well-defined banking system. >> is xm doing enough to ensure that companies are going out into the private market and not finding capital before coming to the banks? >> i think that gets into the underwriting and analysis that's done there. we have work underway right now that's looking at that. i would point out that we had made some recommendations back in '07. this is just to clarify a point. although xm has been very cooperative, not all have yet been implemented.

>> let me ask also in terms of numbers. most are claiming numbers to support their case based on different accounting methodologies. so the bank claims estimates of 1$1.6 million in revenues. yet, as you know, and has been cited here today, the cbo reported on may 22nd that if xm used the fair value accounting method, it would be budgeted as a $200 million cost each year. can you explain the large gap in numbers? and do you look at commercial experience and loss reserves in

capital? maybe a quick explanation. >> yes, congressman. when the government makes a loan or makes a loan guarantee, ooirt through xm bank or some other credit program, the ultimate budgetary effects are not known. last year, xm turned over some money to the federal government. that's true. we're trying to give you a sense of what will happen going forward under a certain program from a certain financial assistance. and those estimates are operating in a world of great uncertainty. what the fair value methodology does is to capture the estimate not only the expected level of default and recoveries. but the variation around.

>> what i'd be interested in is the framework that's employed in accounting the private sector creditors. >> right. so they take account of this market risk and put a price on it because the risk is costly. >> by you're opinion would be the $200 million cost to the parkss? >> we applied that methodology to the xm bank's protections of the size of the credit programs. they will run of the default rates and recovery rates and so on. taking the same set of cash flows to the president's budget and that we use our standard accounting, the same underlying cash flows, but applies the cost for market risk. then the xm bank programs are costly to the tune of $200 mill dwron a year. >> time of the gentleman is

expired. >> thank you. i. >> now, i think this. we've got to move the xm bank forward. it helps small businesses, it creates jobs. but i believe we can do this. as well as address the concerns. so i know that you know exactly what they are. but from what the testimony said this morning, the chairman of delta airlines and the head of the pilot's association, both

made this points. unless there is a level playing field in the exercise of one particular aspect of what you do, which is the financing of these wide-body air kraft, that puts our airline industry in the united states at a competitive disadvantage with foreign airlines who are able to get these wide-bodied aircraft flying these international route that is are very, very profitable. >> quite honestly, unless we do something to address this, and if the xm bank is being used in an unfair way to subsidize the airlines in india, and then they

turn around and they get subsidized by you. they're able to get those plans cheaper. so what i want to do and i mentioned the careman, is find a way that perhaps we can come up with some lack waj as we move forward with this within the 90 days that we have that can address that concern. it doesn't seem that this is mutually exclusive. can you help us with that and give me a little guidance on how we're able to move this forward, at the same time, addressing the concerns of delta airlines. >> i'll do my best. one, let me just -- i have to say, we don't subsidize. people pay us a fee. and, as a result, they're essentially paying from a guarantee so they can borrow

money: we're totally self funding. so there's not a subsidy coming from us to anybody else. two, in 2011, without congress angerering us, we raised the fees multi-leveling across the world, made it more expensionive to buy air kravt, in particular. today,foreign carriers all pay more than a comparable u.s. air carrier would pay. they're paying a premium they think they should pay an even bigger premium. that is one we just need to understand the facts. >> but delta airlines does not take any money from the bank? but these foreign countries do.

that is correct. the united states has the most financial liquid markets. so there is an advantage going to the foreign carriers. >> yeah, well, here's -- grant it. it's sort of like we're at a stalemate here. what we have to do is try to lean into one another and try to find out where we can dwif here. there's absolutely no way that we can move forward with the progression of the xm bank if you've got the salient cry from one of our most significant industries, worldwide. isn't there something that we can do? even if it means curtailing

certain routes that the competition can't take. >> for three years, we've been asking delta precisely what they would like. they have not given us a precise recommendation. >> hopefully, we'll get that recommendation in an amendment that we can address this to. >> thank you, mr. chairman. a lot has been talked about today with delta airlines. i was looking over something where delta has use d to make hundreds of aircraft. is that true? >> yes, to the best of my knowledge. >> so why would they be -- and to their credit, they are for reforms, but extending the reauthorization of the bank. what would be to the advantage

of delta to borrow the money from those countries and not use ours. the products? >> yes. the united states is not in the business of making what i call regional jets. the small, somewhat uncomfort uncomfortable, narrow jets. we don't make those. >> but it's the principle of the thing. >> correct. they avail thems of estimates. again, i used this this morning. another major factor was a bigger trade deficit than initialliest mated.

i did not su port reauthorization last time. we did not make the reforms necessary. i have a whole book of reforms now that we've been working on. something that we tend to in congress. and now we're in primary election season. so things are happening. we saw elections last fight and elections will be in next week. elections have consequences. when we forget who we work for. if i forget my district, back at home in tennessee, then, when i go two back there, the elections will have consequences. my district, number of jobs supported and i know the gentleman from south carolina had problems with numbers a few minutes ago. but a thousand jobs plus, in my district. 5,000 plus in my state. that's who i work for.

look, we want the country to grow and flourish. but at the same time, i'm looking at the debt clock. it's unbelievable. this is a program under the current guidelines that's not costing. it's actually returning money back. we need to reform it. i heard the former chairman talking about getting a letter to you guys and not getting a response in a timely fashion. my wife and little girl were going to be here today i was thinking, i've been parried 23 years, k4 is a long time.

i don't get everything i want at home, i'm sure not going to get everything i want up in here. that's just not going to happen. >> i hope you do better at home. >> my job is not -- i'm a farmer. i came to washington 3 1/2 years ago. and i promised my constituents that the folks of my district, because i received farm subsidies before i was selected. and i promised them that we needed a better way. we needed to reform the farm bill. this is just an example. we reformed the farm bill. did away with the farm subsidy program. my part is to do the best i can for my district and support an

investment that creates a thousand jobs in my district that. 's what this is about. hopefully, we can reform it and move it forward. >> the gentleman yields back. >> i hope that as you administer xm bank in the future, that you'll to kus on small businesses and focus on new produc products because we're trying to maintain a wage rate. now, a lot of this debate is between those who think we should focus on books on

libertarianism and the purity of that versus the practicality. the prablgt kcticality is germa three times as many exports as we do. obviously, germany is a somewhat smaller country. and while we have a declining manufacturing sector and a huge trade deficit, they have outstanding, manufacturing jobs and a huge trade surplus. so the practicality side leans toward us, also having an export credit agency.

so the question is on purity. i want to point out to this committee that xm bank has a little sister. it's called opec. it is also a u.s.-sponsored export credit authority. it comes under the jurisdiction of the foreign affairs committee. we reauthorized them under a bill written by my good friend, chairman royce of the foreign affairs committee. 106 republicans voted for that bill. if you are torn and think the xm bank is good practicality, if you're one of those 106 republican who is voted for the electrify africa act which had the opec reauthorization in it,

you've already lost you're ideological purity. so come with us and be prakt dal. as the jentle man from tennessee just pointed out, delta airlines has no purity nor, do i expect them. they bought canadian aircraft. >> that's the cbo estimate. >> yes. >> okay. >> do you have a different estimate? >> i don't make estimates for ten years. we simply made a projection, a budget proposal for 2015 and they took those out for ten years. >> okay. so we have to live under the benevolent tyranny of ceo.

we have to announce those clocks to the country. or we have to wait for the chairman of this company to join me in a pro-weathering bill. that would take a long, long wait. but it's argued that fair -- that fair value accounting, which is not the law. i've heard this all of the time. dynamic scoring. now it's fair value accounting. i want to make sure i understand this. fair value accounting would be for pizza hut.

we see whether they would have lost money if they had to pay as much to borrow money as the local pizzaria. the investors at pizza hut would be very surprised. do i have that right? >> that's not the way i would describe pizza hut's fair market accounting. >> pizza hut is bided. >> the time of the gentleman is expired. >> thank you, mr. chairman. we've heard a lot of talk today. the last 5 1/2 hours about reforms and making a better bank. you were here a year ago and, at that time, i asked you about the inspector general's report that said you had had some problems that were not routinely reporting the performance of your sub port folios relating to

the small business here in sub sahara africa. i find out you still haven't fix that had one. i also said that you had truck with defaulted transactions. even though there's an expectations and does not require due diligence or asset monitoring of their investigations. i find that from the ig's office this morning. there's a list of 78, 78 different things, various reports since 2010 have asked you to do. 78 things. they've asked that you've verified and done and fixed 33 of those 78. as to 36 of them, they say that you'reworking on it or they say they know for a fact you haven't started on them yet. there are nine of the 78 that

they say your responses are unresponsive and they don't even count you as trying to fix things. you are required by law in authorizing any loanover guarantee the board director shall take into account any serious or adverse affect. the availability of materials k4 are in short supply. we heard this morning you have done that one time in 2001 when it comes to helping boeing sell aircraft. and staff tells me now that you have conducted a grand total of 24 of those reports over the last 17,export u import transactions. one of which was the secretary of treasury shall initiate with

other exporting countries with development and nonmembers to deduce the ultimate goal with other forms of export facilities. you all have managed to set a meeting. they call it a reauthorization. i don't know if we call it a reform. it essentially says that you want more money. you want to change the way you count ross. you want to eliminate the need for producing stuff. and, and i wish the gentleman who was here from the previous panel, small businesses, that you want to be able to count towards your small business quo quota unless you're selling to one of the big guys, you don't

get to count under the president's reforms. i guess you participated in because it's under your signature. i look at all of that against a political envooirnt where this administration has shown that they really don't care about following et much. so it makes me wonder, everybody here says listen, it's great, let's pass some reforms. that would be wonderful. let's first see if the bank can inform itself. let's see if the bank can make the suggested reforms. let's be sure that this administration might be interested in enforcing a reform bill if we pass it. until then, i suggest to you

that the time is way, way too early for talking about reforms of this bank. >> the gentleman yields back. the chair now recognizes the gentleman from illinois. first, mr. chairman, i would ask for unanimous consent without my full be inserted on the record. >> thank you. >> this is an important discussion. and i know, as many of my colleagues, we just want to get information, we want to know the truth, we want to do the right thing. i think congress should take a hard look at the current structure of the export, import bank. but also, i hear from district businesses that tell me to be sure that the exports reach their customers.

what policies and procedures does the bank have in place to ensure that it is limiting its assistance to these customers and not crowding out opportunities for private capital markets. >> congressman, thank you for giving me a chance to talk about that a little bit. >> we work with a pry sat sector bank to arrange the loan. further more, every application needs to state why they're coming to us and why they can't do this in the private sector. that's a requirement for us. the term is called additionalty.

that's a good sign that banks are making more loans. >> next question to the inspector general, if i may. your office regularly engages with private sector stake holders to obtain input in the bank's operations. in your opinion, is the bank effectively limiting itself to markets and lenders not being observed? what steps could the bank better mitigate the risk.

>> another is an eca competition. lack of finance market. so, the requirement is any transaction that goes through the system has to have a declaration, to some extent, almost like a certification saying the reason why we come is because of x. now, whether or not that is verified is another story. we day did a report on the direct loan program and high lighted it sometimes in the loan documents. you will now, that's the extent of what we looked into. we haven't gotten any marketing strategies. we haven't got enough for it. but, as a focus on the direct loan stuff, we did for some of these questions.

i would just add, it is required in the loan application. everything they state is accurate and presented. so i would do an audit, periodically, but i have to take an assumption. that the corporate office is not committing fraud in doing so. so they have to state une kwif cably why they're coming to us. >> let me move on. >> given the bank's recent risk trends including the authority to extend credit,what additional procedures are you putting in place? >> i stated a year ago we added the position of a dheef risk officer.

they are two entirely separate reporting structures, both reporting to me. it's not only a credit risk, legal, i.t., hacking, the entire risk portfolio. >> my time is expired, i yield back. the committee will recess until approximately 4:45. the committee stands in recess. >> president obama made another appearance today at lake harriet ben shell in minnesota,talking about the economy. here's a portion including comments about congressional republicans.

>> if we do some base inc. things, if we make some basic changes, we can create more jobs and lift more incomes and strengtsen the middle class. that's what we should be doing. and i know it drives you nuts that washington isn't doing it. and it drives me nuts. you know, sometimes, i -- you know, i'm supposed to be, you know, politic about how i say things. but i'm finding, lately, that i just want to say what's on my mind.

[ applause ] so let me just be clear. i want you to think about this. so far, this year, republicans in congress have blocked or voted down every single serious idea to stremgten the middle class. now, you may think i'm exaggerating, but let me go through the lis. they've said no to raising the minimum wage. they said no to fair pay. some of them have denied that there's even a problem. despite the fact that women are getting paid 77 cents for every dollar that a man is made. they said no to three million american who is are out there every day looking for a new job. despite the fact that we know it would be good, not just for those families who are working hard, to try to get back on their feet, but, for the economy, as a whole. rather than invest in working families getting ahead, they actually voted to give another massive tax cult to the wealthiest americans. >> don't boo, by the way.

i want you to vote. but -- i mean, over and over again, they showed that they'll do anything to keep in place systems that really help folks at the top but don't help you. our obstruction is keeping a system that is rigged against families like ben's and rebeccas. i'm not saying these are all bad people. they're not. you know,i'm sitting there just talking to them about family. many of them acknowledge when i talk to them. yeah, i know, i wish we could do

something more, but they can't t but they can't be too friendly towards me. sometimes i get a sense that they just don't know what most folks are going through.

>> ladies and gentlemen, it is a great pleasure and honor to have

the secretary of the treasure, jack lou, with us today, to close our conference. please join me in welcoming him and expressing our appreciation for his support on making home affordabl is. >> thank you all for being here today. thanks to the staff that organizes support. i'm happen so happy to be able to discuss these important issues. this summit has been a great opportunity for those who care about housing and what it means to families, neighborhoods, and our economy. to come together and make our policies and programs more effective. more than 5 and a half years ago, a devastating housing crisis helped ignite the worst recession of our life times. by the time the president took office, the housing market was spiraling out of control. home values were plummeting, construction workers were losing

their jobs. the number of americans behind in their mortgages was at a record high and foreclosure were mounting. to stabilize the market, the president began moving right away to help distressed homeowners. that led to the creation of the making home affordable program. this innovative program has provided by relief to homeowners across the country, including more than a million homeowners who have been able to permanently modify their morts through happen and safe roughly $540 a month. this program is not only helping families keep their home, it's giving them peace of mind. i'd like to take a moment to congratulate the men and women who have made this program a lifeline for so many americans over the past five years. [ applause ] let me say on behalf of everyone here thank you for your hard work. a home is one of the most

important investments a family ever makes. earlier today i met with homeowners and housing councilors at the greater washington urban league and discussed with them how our programs are helping americans get back on their feet. and they were clear -- while our programs are, indeed, having a real impact, very important challenges remain. these homeowners, like many others, remain optimistic, but continue to worry about what the future will bring for themselves and their neighbors. the truth is, when you work hard, act responsibly, and play by the rules, you should not have to live in fear that you're going to lose your home. now, as we know, our initiatives have not been a silver bullet, but happen and our other programs can not be judged only on what they've done directly for homeowners. treasury'sing howing assistance programs have become a model for the housing sector setting a standard for the mortgage industry and how to restructure loans and help homeowners. in fact, more than five million have been helped by private lenders in who in many cases have used a similar framework to

the one created by happen. our work has also triggered new industry norms such as requiring a single point of contact for the homeowner, restricting the pursuit of a foreclosure when working with a family on a modification, and letting unemployed homeowners delay their mortgage payments for at least six months. this kind of collaboration and collective action has transformed the way the mortgage industry assists struggling homeowners, spurred the development of new tools to aid communities, and helped reverse the worst housing downturn since the great depression. now, making home affordable has been just one component of the administration's comprehensive effort to heal the housing market. we've taken numerous other steps including streamlining fha's refinancing program to make it easier for homeowners to refinance their mortgages and creating harp which has helped more than three million people refinance their homes. and even as we focused on refinancing, we've made great strides to give states an communities that are suffering a boost by establishing the

hardest-hit fund. in april, i traveled to detroit and witnessed firsthand how the hardest hit fund the making a difference. for the first time under this program, workers were tearing down abandoned buildings to revitalize a community. the fact is, a foreclosed sign in front of a home can pull down the value of every home around it. and an abandoned building can cause a once-stable neighborhood to slip into a downward spiral on these blocks and in these neighborhoods the hardest hit fund is providing families with a second chance. still our work is not done. two weeks ago in his speech at the new york economic club, i highlighted the plight of the long-term unemployed. construction workers are disproportionately represented within the ranks of the long-term unemployed, largely due to the struggling housing market. middle-class families continue to have a difficult time finding affordable housing. and more than six million americans still owe more on their homes than their homes are worth. that's why we remain focused on providing relief to responsible

homeowners, rebuilding hard-hit communities and reforming our housing finance system. to that end, i'm announcing today that making home affordable will be extended for at least another year. [ applause ] >> we need to be there for homeowners who are facing foreclosure, those who are struggling with increasing interest rates on their modified mortgages, and those whose homes are caught underwater. at the same time, we need to develop new solutions for credit worthy families who want to buy a home but continue to get rejected by lenders. there's still millions of americans with good credit who cannot get a mortgage. fha and fhfa have recently announced meaningful steps to help improve lender confidence in making gse and fha-backed loans. but we have to do more to make sure our markets are effectively serving potential homeowners.

this includes fostering the development of a safe and sustainable private market for mortgage lending that can serve a alongside government supported options. the private label securities market has been dormant since the financial crisis. the fact is we need to attract more private capital to the housing market and that's why i've directed my teem bring investors together to so we can uncover new paths to increase private investment. as part of this effort we're posting question on our ebb site to help us understand we need to make sure families who don't want to buy a home or affordable renting housing. there's more we can do to support renters. today i can announce we're

taking an important step. under we reduce the interest rate for affordable multifamily buildings. under the mortgage risk sharing program which helps drive construction and rehabilitation of rental housing the administration has urged congress to permit ginnie mae to secure ties fha risk-sharing loans. but until congress takes action on new legislation i'm directing the federal financing bank to use its existing authority to finance these fha ensured mort zbajs. and right now we're working with the new york city housing development corporation to close the first project under this initiative this fall. with this project will help rehabilitate affordable renting housing in far rockaway, queens, that was damaged by superstorm sandy. while we remain committed to

helping secure affordable and sustainable housing for all americans, we can not act alone. congress needs to extend the mortgage forgiveness debt relief act so struggling families that have lost their homes to foreclosure or that have sold their home in a short sale in order to move into more affordable housing are not punished with a large tax bill. at the same time, it's time for congress to pass housing reform legislation. the work of the senate banking committee was an important milestone on the road to reform, but lawmakers need to keep moving forward. we know we can create a better system that provides responsible americans with mortgage credit while supporting affordable rentals for those who choose not to buy. we can create that system without putting taxpayers at undue risk. but we need congress to act. passing legislation is the only way we can achieve meaningful and sustainable housing finance reform. before i close, let me say that all of you are hear today because the on set of the crisis

found the financial industry unprepared to deal with millions of troubled homeowners. as many of you will recall, during the depths of the housing crisis homeowners were calling lenders looking for help and lenders did not know what to do with those calls. but because we have worked together we have been meeting the needs of distressed homeowners. as we look ahead, we must recognize that eventually treasuries direct involvement in the mortgage industry will end. that means we must think about how we can continue to reach barroers who need assistance. mha created standards that will be carried forward but we need to make sure our commitment to reaching families z whose are in trouble lives on. with that, let me thank you for coming here today for this summit. we now begin the next chapter of our work together and i look forward to continuing this conversation and achieving great things with all of you. i thank you for being here today and i think with my remarks i

close out this summit. so thank you all very much for being here [ applause ] tonight on c-span 3, national security analysts look at the future of the department of homeland security. irs commissioner john koskinen testifies about missing irs e-mails and treasury secretary jack lew announces measures aimed at promoting affordable housing. every four years the department of homeland security publishes the quadrennial homeland security review a document outlining the agency's goals. today the center for strategic and international studies hosted a discussion about the 2014 qhsr

which was recently released. this is two hours. good morning, everyone. i'm kathleen hicks, i run the international security program and our international security program includes the homeland security program. security is as one and i'm very pleased today to be able to introduce and then follow on in a conversation with assistant secretary alan cohn from the department of homeland security. alan's relatively new expanded title of responsibilities is for strategy, planning, analysis and risk so i'm not sure what's left out of there but there are other people at dhs so presumably he's

keeping other people employed beyond those areas. in addition to leading the qhsr, both the last one and this one, the first was the last one, he's also critically important for what comes after the qhsr and what hopefully we'll talk about that today in terms of linking strategy and the department's processes for executing strategy. alan and i have known each other quite a long time. we're follow travelers on quadrennial reviews. mine are the quadrennial defense reviews of the past but also we've worked together on interagency reform efforts both here at csis and through the project on national security reform. alan is a member of the career executive senior executive service and he had been since 2007 and of note he has also served plenty of volunteer time as a first responder. he responded to the 2005 hurricane season, september 11,

2001 attacks and the 1993 world trade center attacks. so with that let me turn the mic over to alan and let him provide us an overview of the qhsr and then we'll have some conversation. thanks very much. [ applause ] >> thank you so much, i appreciate that. thank you for coming today. it's a privilege to be here. as kat noted, we have worked together on many different issues and it's nice to be here to be able to talk to all of you in this environment and in this forum about the review that we released. so what i wanted to do was take the opportunity today to talk to all of you about the review itself, some of the findings, and also how it fits into the larger initiative on unity of effort within the department of homeland security that secretary

johnson initiated soon after he arrived at the department. so for those who don't know what the quadrennial homeland security review is, it is a mandated review that the department undertakes every four years and it really has two dual purposes. number someone to make recommendations regarding the strategy, long term priorities of the nation for homeland security. so looking out nationally across homeland security. second second is to articulate into gye dance on the programs, assets, capabilities, budget, policies and authorities of the department of homeland security. the department of homeland security has one part of the larger enterprise of federal and state, local, territorial and tribal private sector international partners of all types as well as individual ly -

individuals, families and communities that have a place in keeping the american homeland safe and secure the first qhsr we delivered to congress and that first qhsr really answered the question what is homeland security it establishes key concepts, laid out a vision and a set of goals and objectives for homeland security. some of the key things that were articulated in that first review were that, number one, homeland security has a forward-looking vision and mission and responsibility. it's not a question of sitting and waiting for the next bad thing to happen. it's ensuring a safe, secure, and resilient american homeland and doing that together partners and stakeholders of all types.

the department of homeland security is just one piece of the larger national puzzle looking at responsibilities and authorities, competencies and effective actions of a wide variety. organizations and individuals. third was that homeland security is deeply rooted in american history. we think about homeland security, we think about the attacks of september 11. but the concept of homeland security is really about the government and civil responsibilities with new and emerging threats and challenges. and we think about things with civil defense, custom, border responsibilities, law enforcement. these are things that go back in many instances, decades if not all the way back to the founding of all republic and they are the foundations to keep the population safe and secure and resilient. we articulated in the first

review, and i want to talk a little bit more about how we furthered this in the second review that homeland security is essentially about managing risks to the nation that -- and every secretary from secretary ridge, sk tear chertoff, secretary napolitano and now secretary johnson have highlighted that we face a range of threats and hazards. that they pose different degrees of risk and that we need to look a managing that risk to a level that is accept to believe the nation that's our charge as homeland security. fifth, that domestic security is part of the overall national security establishment. this was something that president obama articulated in his first national security strategy and has been a theme and that you see echoed in quadrennial reviews. and the last thing to know was

the articulation of cyber security and national resilience, including all hazards, emergency management, as core homeland security mission missions all of these foundational elements and key concepts carry over to the second review and carry over to today's conception of homeland security. the purpose of the second is different. it's not to repeat the exercise but build upon these key concepts, these key principles and look deeper and more extensively at challenges first we described change the overall security environment that have occurred since the last review. that's looking extensively at the strategic environment trends and through the lens of risk trarks strategic national level

homeland security risk second is to update the goals and objectives that sit underneath the five homeland security missions. those five homeland security missions endure but, of course, changes over the last four years as well as changes that we can anticipate in the future advice us to update and renew that framework. third this review takes the opportunity to articulate strategic shifts necessary to n key specific areas to best address the changed security environment again, in doing that the review reflects a more focused, more collaborative departmental strategy planning and analytic effort so a moment, just a word on that. secretary johnson saw very quickly that enhancing

departmental unity of effort was going to be a key element of the success of our department and needed a key element of his time as the leader of the department initially, he outlined his priorities for how the department will manage its, how the department will build upon the successes we've had an capabilities and competencies and unique perspectives and authorities of each of our entities to build an organization that's truly greater than the system of its parts. so that unity of efforts initiative takes not only a more disciplined and focused look at the development of policy and strategy but also creates defined linkages in how we drive strategy and policy into execution on the investment side

with respect to joint requirements and capabilities, programs and budgets, major investments but also operations. how do we plan jointly for operations, how do we conduct our operations individually and jointly, ultimately all in the service of effectiveness, of results for the american people. so the quadrennial review provides some of that strategic guidance and the underpinning analysis, a set of clear risk-informed strategic priorities to inform the department's path over the next four years the process of conducting the quadrennial review will look familiar to anyone who's conducted a large scale review or if you've followed large scale reviews conducted across the international security space. but it basically had three phases, first was a prep tra pratory phase where we assessed

the environment, assessed rules, responsibilities, and authorities, and got guidance from our senior leadership. we then carried out studies, a set of study groups and meetings and discussions to evaluate decision analysis and make decisions and ultimately resulted in the document that hopefully all of you have had a chance to see, to download, to look through and we have fact sheets on the table as you exit the room that give you sum reis of the report itself and some of the key findings. so let's talk for a minute about that examination of the strategic environment because this is one of the things that was a priority for the second review. how can we assess the environment from the homeland security perspective and draw conclusions about drivers of change and strategically significant risk? we did a series of examinations of both current and emerging

risk, looking at trends, future uncertainties, systemic relationships as well as threat and a current picture of risk and we synthesized that into a set of risk insights. not just risk insights about today because, of course, looking at risk insights today tempts us to think too much about what has already happened. not enough about what may happen going forward. but to synthesize our current understanding of risk with our view of trends future uncertainties to understand what may the risk picture look like going forward. what might pose the most strategically significant risk? going forward and this resulted in our examination and articulation of the homeland security strategic environment that you see set forth in the report. there's also an important

nesting of quadrennial review, the five homeland security missions and the risk priorities in the overall national security priorities and imperatives of the u.s. government so if yo've red any of the national security strategies going back you see a repeated emphasis on national interest. security and resilience of the u.s. homeland, our economic prosperity, the living and advancement of our values here and abroad and a strong and secure international order. each of these interests is reflected in the activities and mugss of homeland security and each of the mission responsibilities of homeland security ultimately works to advance each of those interests. and that leads to the set of homeland security mission which is, again, were first established in the first quadrennial review and carry

over into this review. preventing terrorism and enhancing security is the cornerstone of homeland security. securing and managing our borders, administering our immigration laws, safeguarding and securing cyberspace and ensuring national preparedness and resilience swems maturing and strengthening the broader homeland security enterprise. these are enduring missions of homeland security. but this review recognizes that there needs to be a deeper look at strategic prior prior toization within the mission. and we're asked from time to time what is the prioritization of the missions but, again, the missions all serve those national interests. so how do we prioritize our activities and create priorities within those missions. and, again, the statements of every secretary going back to the first secretary of homeland security give us the direction on that. we need to look at strategic

national level homeland security risk to understand what those strategic priorities, those priorities over time need to be wham are there threats, the hazards, the challenges that face us as a nation within those mission responsibilities? what are the likelihood and consequences of each of those? and how do the trends and future urn certainties and the systemic causal relationships impact not only the threats and hazards and challenges themselves but the look like hood and the consequences with directionality do those trends, future uncertainties and systemic relationships suggest? . this is my favorite slide. what we've tried to do is to distill down the strategic environment into a set of six key drivers and six threats, hazards, and challenges that

pose the most strategically significant risk over the next four years. what are those drivers of change? much of this won't be a surprise. you can observe many of these things in the strategic environment now and you know there are emerging issues in each of these areas. first, the terrorist threat is evolving. we know that the terrorist threat that we faced on 9/11 is not the same terrorist threat that we face today. the world is changing and the environment in which those who wish to do the united states and its interests harm are changing and so homeland security needs to adjust and adapt to those changes. but there are other drivers of change that are important for consideration in the strategic environment. information and communications technolo technology. when 9/11 occurred there were no iphones. there were no ipads.

there were no -- the interconnectivity and the speed of the -- transfer of information were nowhere near what they are today and the pervasiveness of information and communications technology and the way that it interconnects all things in the world had advanced dramatically at the time of the first quadrennial review and had advanced dramatically again between that review and this and as we look forward into the environment we see more the interconnectedness of machine to machine. of a broader connectivity and automation. we see that change will continue to happen in that area in a rapid pace driving not only threats, hazards, and challenges but their likelihood, consequences, vulnerabilities. natural disasters, pandemics, and climate change.

we know that these drivers have great impact on the strategic environment. we can see from events over the last few years the increasing not only severity of natural disasters but the unpredictability of their consequences. as our world becomes more interconnected as disasters happen in different and unpredictable ways and as they cause cascading impacts through our communities, through our societies, through our infrastructure. if you look at the homeland security strategic risk environment, the risk of pandemic stands out, even among those other risks that we see. and we'll talk about that in a moment. but a key driver of concern about threat and challenge and vulnerability until the strategic environment. interdependent and aging critical infrastructure systems and networks. when 9/11 occurred we thought

the primary threat to our infrastructure was kinetic, it was individuals wishing to do us harm, to bring harm to infrastructure through kinetic means. we now know that infrastructure is just as vulnerable to weather, to cyber intrusion and to its own age and consequence vulnerability. and so both the interdependence and the age of our systems and networks provide questions and challenges for us going forward. they also provide opportunities as that infrastructure is updated and replaced. it gives us the opportunity to build in more resilience, more security, more forward-looking emphasis on the way that we construct and any about our infrastructure base. the volume of people and goods transiting through our -- the flows that come in and out of the united states.

if you look at the speed and the volume of flows coming in lawfully through our ports and our borders, that's increased at a dramatic pace and is only going to continue to increase. so we need to be postured in a way that we can keep up with effectively with that flow of people and goods which is so critical to our economic well-being. at the same time increase flow of people and goods on the lawful side can mean increased flow of people and goods on the unlawful side. as transnational criminal organizations and others seek to exploit lawful pathways and to create their own unlawful pathways for the introduction of dangerous or illegal goods and items. finally budget drivers. fiscal environment, the overall national fiscal environment puts

pressure on all elements of the homeland securitier be prize. not only the federal government, state governments, local governments, territorial and tribal governments, most parts of the private sector, many of our international partners and most individuals, families, and communities all feel the pressure of the current fiscal environment. so how do we effectively ensure the security and resilience of our nation and environment. so those six key drivers that that we've talk about which represent any city, usa, and the key trends and statistics that you see on the slide drive us to a set of strategically significant threats, hazards, and challenges so what are those? first the terrorist threat as we talked about is evolving and remains significant as attack planning and operations become more decentralized. the united states and its stress

particularly in the transportation sector remain per sis tent targets. second, growing cyber threats are significantly increasing risk to critical infrastructure and to the greater u.s. economy. third biological concerns as a whole, including bioterrorism but pandemics, foreign animal diseases and other agricultural concerns on dur as top homeland security risks because of potentially likelihood and their potential impact. nuclear terrorism through the introduction and use of an improvised explosive device while unlikely remains an enduring risk because of its potential consequences. transnational criminal organizations are increasing in strength and capability, driving risk in counterfeit goods, human trafficking, illicit drugs and other illegal flows of people and goods finally natural hazards are becoming more costly to address with increasingly variable consequences driven by

trends such as climate changed and aging infrastructure so that allows us to discern a said of strategically significant risks over the threats and hazards that pose the most strategically significant risk over the next four years. some of the guiding principals that we articulate in this second review. first, again, the cornerstone of homeland security is preventing terrorism but homeland security must be multithreat and all hazard. we talked about in the first review how all hazards emergency management was a fundamental element of homeland security. in this this review we recognize what a reality that everybody who operates in this environment knows is that homeland security is multithreat as well. second something equally apparent on its face to everyone

who operates in this area, homeland security supports economic security through ensuring the safe, efficient movement of people and goods through lawful means across our borders in service of our economic well-being and health as a nation. homeland security and economic security are intertwined. homeland security requires a networked community. we talk about the homeland security enterprise, this review emphasizes we must strive to network that enterprise together to share information share best practices, to build kpas city to that we can all work together towards common ends. fourth, that homeland security relies on upon the use of market-driven solutions in unnovation. we must recognize the market nature of some of the threats and hazards and challenges that we face. and recognize the vast potential

of market solutions and partnership across public and private sectors in addressing the threats, hazards and challenges. fifth, and though it should need know re-emphasis, we do so here, homeland security upholds civil rights and civil liberties. thinking about the national interests that have been articulated in successive national security strategies our homeland security activities serve all those interests including our values here and abroad. and sixth, again, homeland security is national risk management and so this review makes the effort to evaluate the strategic environment, articulate those threats, hazards, and challenges that pose the most strategically significant risk, and articulate strategies, either new or shifts or re-emphasis of things already done to address those most strategically significant threats, hazards and challenges.

with apologies for the eye chart, this is, again, the mission framework for homeland security. the five missions that we've discussed and their subelements and maturing and strengthening the homeland security enterprise. again, this review re-emphasize this is mission framework and structure updates the goals and objectives underneath to reflect changes over the last four years and changes that we foresee going forward. so what did we look at in this review as a result? there were five studies linked to findings in the strategic environment and to guidance from leadership. and then we recount and re-emphasize with the approaches that we are already taking to other pressing challenges, hazards, across the homeland security environment within this

review. so this review talks about how we will secure against the evolving terrorism threat. how we will safeguard and secure cyberspace. it articulates the homeland security strategy for encountering biological threats and hazards, building on all of the work that has been done before but recognizing not only the enduring nature of this risk but the increasing nature of this risk. the review articulates a risk segmentation approach to securing and managing flows of people and goods. what does that mean? it means that the different types of threats and challenges that come -- that face the country through the flow of people and goods are different. that just the volume and speed of lawful goods is different than the profit motivated acts of transnational criminal organizations, is different than the ideologically motivated or naturally occurring challenges that can come through the flows of goods and people entering and exiting our country. and finally the review examined

and articulates a basic way of thinking about executing our missions through public/private partnerships. again, building on all of the work that's been done not only over the last four years but since the inception of the department on public/private partnership? a number of different venues. based on the strategic environment, our mission responsibilities, the review also discusses and re-emphasizes the approaches that we are taking to countering nuclear terrorism using an improvised explosive device, our approaches to managing the challenges and opportunities of immigration. and our approaches to national preparedness and our whole community approach. okay, so what does the review say about each of these things? with respect to the terrorism threat, again, the nature of the terrorist threats to the united states has changed dramatically

since the september 11, 2001, attacks. just since 2009 in the publication and the conduct of the first quadrennial review we've seen the rise of al qaeda affiliates such as al qaeda in the arabian peninsula which has made repeated efforts to export terrorism to our nation. and that is one challenge, the external challenge coming into our homeland. but we also know that we face the threat of domestic-based lone offenders and those who are inspired by extremist ideologies to radicalize to violence and commit acts of terrorist violence against americans and the nation. and so this second quadrennial review outlines an approach to focus on countering violent extremism and help to prevent complex mass casualty attacks, building, again, on the straties and po -- strategies and policies articulated by the president and the department in this area. the approach to counterterrorism

and its shifting and evolving approach to preventing terrorist attacks prioritizes identifying, investigating and interdicting threats as soon as possible, including providing support to international partners to increase their border management customs integrity and law enforcement capabilities and capacities and to use information received in advance that to screen dangerous goods and people abroad based on risk waiting for -- rather than waiting for arrival in the united states. these are concepts that have been instantiated in our approach to terrorism over successive administrations. we re-emphasized these areas and articulate new and evolving ways to use these types of approaches to counter the terrorist threat as we see it today and as we see it evolving in the future. safeguarding and securing cyberspace. each and everyday the united states faces a myriad of threats

in cyberspace. from the theft of u.s. international property through cyber intrusions to denial of service attacks against public facing web sites and attempted intrusions of u.s. critical infrastructure. to address these threats, we've identified four strategic priorities. strengthen the security and resilience of critical infrastructure by leveraging the work being done pursuant to executive orders 13636 on improving cyber security critical infrastructure and presidential policy directive 21 on critical infrastructure security and resilience. each of which build on previous efforts, u.s. government and national efforts to strengthen, safeguard, and secure cyberspace. securing the federal civilian government information technology enterprise by helping federal civilian agencies manage cyber networks, advancing law enforcement incident response and reporting capabilities,

close coordination with our partners across the law enforcement incident response and reporting community and strengthening the broader cyber ecosystem by collaborating with communities domestically and abroad, standardizing information sharing practices and developing a skilled work force. with respect to biological threats and hazards, as we noted, again, the strategic environment assessment, the assessment of strategically significant risk continues to point us towards biological threats and hazards. not just bioterrorism, but emerging infectious disease, foreign animal disease, agricultural concerns. a top risk that we currently face and a risk that's only growing over time. so how can we best build on the work that's been done to date, the lessons that have been learned and implemented from previous events, previous

exercises? our approach is to stop incidents involving priority biological threats and hazards before they escalate to overwhelm state, local, tribal and territorial partners while ensuring those that those partners have the capability and capacity necessary to respond to mid-range biological incidents. so what does that mean? prevent those biological incidents from occurring where possible, improve risk-informed decision making, identify logical events early. improve confidence to act, not just within our department, not just within the federal government, but across the whole homeland security enterprise. respond and recover effectivefully biological incidents and maintain vital services and functions during and after biological incidents. maintain our ability to continue to function not only as a society or infrastructure or

critical services should an event of this type occur. with respect to managing flows of people and goods, again, the movement of people and goods around the world has expanded dramatically in recent years. as the volume of global trade and travel increases, the potential for illegal transport of people and goods across our borders also increases. the department of homeland security and our partners continue to secure and manage flows of people and goods to ensure economic prosperity and minimize risk. it's based on an in-depth look of the flows of people and goods. we see three distinct but interrelated types of flows; each of which requires a different risk-based approach by dhs on our partners. different but inherently interrelated. first the legal flows of people and goods. how do we stay ahead of increasing flows and increasing volumes, increasing demands. not only safeguard but expedite

the flow of the lawful -- the lawful flow of people and goods into and out of the united states. second, market or profit-driven illicit flows of people or goods. transnational criminal organizations and others engage in wide scale activities to bring illicit goods into the united states and republap prof for those activities. they do this for profit so how can we tailor our approaches to best approach those activities which are different than lawful challenges and different than ideologically driven challenges. then third, terrorism and other non-market concerns. ideologically driven threats and challenges or naturally occurring threats and challenges. how do we ensure that these neither disrupt lawful flows of people or goods nor exploit them for ill purposes. segmenting people and goods this way permits more focused

strategies and more efficient allocation of resources. strengthening the execution of our missions through public/private partnerships of you from probably familiar with the national infrastructure protection plan and our overarching framework of cooperation and coordination with our private sector partners through now the 16 critical infrastructure sectors and the network of sector-specific agencies across the federal government and sector coordinating councils made up of our private sector partners across industries. this is a very strong and important set of public/private partnerships for homeland security but it's not the only set. whether it's the coast guard and port relationships with shippers, state and local law enforcement, our partnerships across the movement of people and goods across the u.s. government with the private sector and other partners.

there are many examples of government relationships and agreements with private sector partners to enhance security and safety and ensure national resilience. although each of these partners emerge from specific challenges, there are important commonalties, models, lessons learned and best practices that can be applied to a range of other homeland security challenges. and so the qhsr provides a structured way of thinking about partnerships that focuses on a couple of key things. first of all what is the partnership aimed to do? what are the interests at play? what are the public interests in what are the private interests? how do they align? where are the shared outcomes? what are we together trying to do? whether that's on a day-to-day basis, whether that's in the event of a contingency or crisis or whether that's meant to be a

relationship that can span through both. that we use on a day to day basis and ask scale up to work effectively in crisis. finally thinking about shares outcomes, aligned interests. who are the models, the archety archetypes, the ways we might structure private/public partnerships to do things? obviously information sharing sits at the heart of public/private partnership. but there are other models that go beyond information sharing and in the review and a companion document soon to be release wed talk about the different models and archetypes, the ways of thinking about interests and outcomes and aligning them under common archetypes and models. we do this as a tool to think about public private

partnerships most effectively to reach our common ends. in addition to these areas, we also emphasize, again, our continuing approaches, our renewed emphasis on countering terrorism cruising an improvised explosive device -- improvises nuclear device, on advancing rational, common sense comprehensive immigration reform and advancing national preparedness and resilience. under the mechanisms of the national preparedness system, the post-katrina emergency management reform act, the presidential preparedness directive 8, all of which set up a comprehensive national preparedness system for prevention, protection, mitigation, response, and recovery. a key element of the -- this quadrennial review and every quadrennial review is engagement

with stakeholders. we sought to strengthen the engagement with the homeland security committee in informing the studies and conclusions of the review. we conducted a review with three sets of key and critical partners. first we sought to use this exercise as an effort to bring greater unit within the department of homeland security. . . that's only the starting point. we looked all across our federal partners speaking with congress, with entities within the executive office of the president, including the national security council staff

and other essential offices within the executive office of the president and, of course, our key and critical partners across the federal interagency. whether that's the departments of defense and justice, state, health and human services and a wide array of others in discussing and arriving at the conclusions for how we address homeland security threats and challenges. and then beyond that homeland security communities of interest. again, we wanted to deepen our engagement with those communities, those people in the communities of practice, those people on the front lines of conducting homeland security activities day after day to engage and receive their input and advance. we did that primarily through two online venues a platform for

submitting ideas called ideal scale. and through all of that not only that enabled us to gain greater input from the broader homeland security enterprise but it allowed us to ask targeted questions to gain input and provide the opportunity to comment, agree and disagree, add new ideas. through that engagement we had over 2,000 unique registrants on the idea scale and community of practice sites. we had submitted over 200 -- nearly 250 new ideas, again, over 2,500 comments and over 11,000 votes on different targeted questions, issues, comments, and other issues raised on the site. that input, analysis, questions, ideas, and comments tracked, brought back into our studies and incorporated into the analysis that led to the final decision making.

so where do we go from here? again, a strategic review an important thing. . a strategic review allows an organization and its partners to examine its principles, mission and goals to look at the strategic environment, to engage together in a discussion, sometimes difficult, about priorities about approaches and a way to communicate that to the broader community as a whole. in particular to our homeland security communities of interest. but it's only as good as the execution that follows it. again, secretary johnson through his unity of effort initiative has laid out a number of different ways in which the department will be taking steps and is already taking steps to improve our ability to sur stray strategic environment, to set policy to define strategy and

then to take policy and strategy and drive it into execution, in the way we do investment. again, the examination of capabilities and requirements through a close examination of our programs and budgets and the ways and manner in which we invest and make our major investments and also in the ways that we operate. the ways that we communicate and coordinate with our partners and the ways that we plan for operations both individually and together and the way that we execute our operations. because ultimately homeland security is an operational activity. it is about the execution of activities to keep our nations safe, secure, and resilient and so this quadrennial review forms an essential element and an underpinning element of the secretary's unity of effort activities. so in conclusion, let me just say thank you for an opportunity to walk you through what we've

done in this review, to talk to you a bit about the findings that we've reached and to open to you the opportunity for dialogue and discussion. i know that we will have a discussion about questions and then you will hear from an outstanding panel of individuals who have a long history in this area and we'll have deep insights for you on the findings of the review and other thoughts about homeland security. so with that let me conclude my remark remarks [ applause ] >> thank you very much, alan, as you said i neglected to mention at the beginning that we do have a fantastic panel following so we'll try to get you out on time. i know you have to leave here right around 10:00.

and i know the audience has some questions i want to raise a few myself. the first is from your perspective having done the first qhsr in 2010 and now this one in 2014 what do you think has really changed the most or evolved and matured inside the department of homeland security or across the broader homeland security sector that really affected the way in which this review is put together or its implications? >> that's an excellent question and i think this second review reflect asthma which you aring in a number of ways. number one that the homeland security enterprise as a whole has a greater understanding of itself and the threats and hazards and challenges it faces. so as we conducted analysis and evaluation of trends, threat, risk, we were not only able to draw on our expertise across the department and the federal government but reports and

studies, data and analysis collected across the homeland security enterprise and that only strengthened our ability to look at ourselves and ask these difficult questions. second is the ability of our department. to wrestle with these questions ourselves. this review reflects an enhanced stability of our department to grabble with these issues together. and to look at shared and joint approaches. and you can see the way we can grapple with these issues. obviously as we talked about with the strategic environment, the environment has changed. the threats and hazards and challenges have evolved and so we need to be in constant dialogue with each other about not only what is changing but how we change our approaches with respect to those.

>> and i did want to get very directly to the next question which is about the changes and the threat environment, some of which you walked through. one is the increased emphasis and reframing on the bio threat and i'm interested in how that's evolved, if you think the threat has evolved or just the thinking about how the threat has evolved and more generally given the rapid evolution of the threat environment and the changing nature of how the risks lay out, how -- how challenging do you think that is to have a risk framework tied to an annual budget process but with a rapidly changing environment that's something the entire national security community is grappling with. and if you have lessons learned from the work that you all have done on risk management, it would be great to hear. >> well, i think that using a risk lens and conducting national risk assessment is absolutely essential to thinking about homeland security.

again, homeland security is an exercise in national risk management. it's an exercise we all engage in and it's a thought process that we all go through. conducting that strategic national level risk assessment is one element of that. and we're aided in that by lessons learned from some of our international partners who have been conducting these types of assessments and finding very similar results. in particular finding similar things about the risk of pandemic disease and biological challenges. we're also aided by the growing network and ability of localities and states and regions to conduct threat and hazard identification risk assessment processes on their own with assistance and support through fema as apartment of the department of homeland security.

so states conducting their own threats can be married into that strategic look. now risk 1 the only way that we prioritize our action s actions help us identify strategic national risks. but those aren't the only types of priorities we need to grapple with. there are closer in challenges, emergent issues. but a risk approach allows us to set strategic priorities and to look to reach them over time. now specifically with respect to biological challenges, i do think that the challenges posed by biological threats and hazards as a whole are things that are known by the community. at different times since the inception of the department we've grappled with challenges posed both by bioterrorism event s particularly the malicious use

of anthrax but also with a series of different nationally occurring events that had the potential to cause human panic. sars, different varieties of influenza. we took the opportunity to look from both a risk perspective and strategy perspective at those challenges at a whole because we understand that while the motivations and causes may be different, in many ways not only the ways that we would detect or otherwise know that such an event was occurring and the steps that we would take to address it as a nation are largely the same. and so the quadrennial review gives us the opportunity to do things not only to be able to identify such a risk but to lay out a strategy that we can seek to implement over time as part of a larger set of priorities to address that risk and not have to wait for an event to occur for us to have to -- for us to

take action to address the risk. >> okay, thank you. in the interest of time because we are running short what i'm going to do is have a couple people ask questions, we'll collect those for alan, he can answer them i ask you make it a question because we are short on time and give your name and affiliation and we have folks with microphones. raise your hands if you have questions. >> good morning, ladies and gentlemen. how would looking at that -- how are you working with international republican brand with the government, private sectors and the communities because when it comes to transfer how do we mack this a

prior to of homeland security? >> other questions? one right here. >> thank you,. in your assessment of the threats would you tell us how percent this rises. the state actors and the non-state actors and also have you been able to utilize all our networks, including congress, the department of state, department of defense, all that together to share information and to mitigate the fact to prevent it. prevention is important. and have you seen the relationship between our foreign policy threat inside the country? >> and i have one back here.

>> you made mention of our aging infrastructure. just in case another huge earthquake would happen, especially the pacific side of the country like california all the way up to alaska and because our infrastructure are aging, just how resistant are our infrastructures on that side of the country just in case a strong magnitude earthquake would happen. thank you. >> so the three questions are essentially how well are you partnering internationally to execute the missions at dhs and also in your outreach for stakeholders on the qhsr. the threats of state versus nonstate, the relative threats and also how well are your sharing information on mitigating threats across the interagency and infrastructure? >> those are an excellent set of questions. on our international partners, this was something that was recognized early on and that

each of our secretaries has emphasized together with our other partners across the federal government is that -- and at the state and local level as well. engagement with our international partners 1 critical to addressing these threats and hazards. >> we have a wide range of relationships with entities across the globe as well as relationships with non-governmental organizations and civic organizations aimed at at dressing this wide range of of threats and hazards and challenges so international engagement is extremely important to fulfilling homeland security mission responsibilities and reaching the ends that we really wish to reach. in terms of the percentage of state actors versus non-state actors in our threats, i think it varies across the strategic

environment. there may be state actors, non-state actors, transnational criminalal ogss, organized criminal organizations, natural phenomena. it's difficult to put a percentage on those things. what's most important to recognize is that threats and hazards and challenges emanate from all of those different sources and this can fluctuate over time based on trends and uncertainties and other types of drivers and so it illustrates and highlights the importance of looking across the strategic environment as we think about the range of threats and hazards and challenges. to build on international partners and all of our partners information sharing underpins almost everything we do. information sharing enables vast

networks of partners within our department, across the federal interagency within state, local, territorial and tribal governments, non-governmental organizations, the private sector to act on their own and in concert with each other and other partners no organization, where b it a non-governmental organization, a private sector entity can take on these challenges alone. so we all must work in concert with each other and the sharing of information underpins all of that. the last point and i think it's a good one and one that we highlight in the report on the review itself is that the aging nature of our infrastructure does cause concern i think nationally about its resilience and it's why when the president issued presidential policy directive 21 we evolved our

national approach about critical infrastructure protection, to think about critical infrastructure security and resilience and not only resilience against human cause challenges but resilience across the range of challenges. you mentioned earthquakes, other types of naturally occurring events, other types of vulnerabilities and the vulnerabilities that come just simply from its age. to think about how we drive in security and resilience to our infrastructure as one of the key ways that we will achieve the tune of risk managements that we are trying to achieve and achieve our homeland security goals. >> if i can induj you on one more quick round of questions then we'll wrap up. >> as you know, during the cold war the public didn't have much

of a role in deterrence but you mentioned before about the looming threats of new kinds of technologies or synthetic belong and individual actors acting alone, possibly sometime in the future deploying and making weapons of mass destruction. have you looked at how to engage the public? what is the public's role, pleural? and it would have been international because the u.s. has nothing perfect. it's not enough. so not just nation state but what's the public's role. >> just remember to give your name and affiliation. >> i'm jerry glenn. >> john hurley, i teach at catholic university. in all of the presentations i didn't see any indication at all about religion and certainly