borrowers should have access to the market. and there are a number of things we're looking at in that regard. >> the chair now recognizes the gentleman from florida, mr. pozzi. >> thank you, mr. chairman. mr. secretary, in october of 2013 the online publication repealfactor.com, submitted a freedom of information request for documents concerning the intergovernmental agreements with the united kingdom, switzerland and canada. the department promptly acknowledged a request on october 24th, 2013 stated that expedited treatment has been approved. this is a letter from your

agency. however since then, there have been no responses from the department. despite repeated follow-up inquiries from the requester. on january 27th of this year, 15 months after the initial request, i sent you a letter asking for prompt action on the request, and to keep me informed on the response that would be forthcoming. despite additional inquiries, the only answer i received so far is, we're working on it. it's now been 20 months. almost two years since their simple initial request under the freedom of information act, and five months since my letter inquiring about the status of that request. is this the treasury standard for expedited treatment? >> congressman, in general, our performance on foia is better

than that. i'm not familiar with the specifics, i'm happy to look into it. >> you know, it's just hard to believe that there's some reason the department is -- >> i'll have to look into the matter and get back to you. >> stonewalling that one. another matter, i'd like to bring your attention. the fiscal year 2012 financial services appropriations bill included report language directly to the secretary of treasury, to submit a report to congress, regarding the potential risk to the u.s. financial markets and economy posed by financial terrorism in economic warfare. i subsequently met with treasury assistant fitz pain in august of 2012 and was told the treasury would work on that. the report language also included in fiscal year 13 and 14 appropriation bills, in july

of 2013, my staff sent nearly a half dozen e-mails to the appropriate treasury staffer for a status update. those e-mails went unanswered. finally, in fiscal year '15, that became public law. the actual bill language was included to the same effect. the secretary of the treasury, in consultation with the appropriate agencies, departments, bureaus and commissions that had expertise in terrorism and complex financial -- house of representatives in the senate, committees of financial service -- not later than 90 days after the date of enactment of this act on warfare and financial terrorism. congress has thought the issue was important enough that it has included language as far back as fiscal year 2012. the department isn't giving this matter the same attention. i was hoping you could provide us some information about your progress on the report. as the secretary provided this

report to the relevant committees in congress, given the department has had knowledge of this issue for over three years, i would have thought the department would have prepared to meet that 90 day threshold set by congress. when can we expect the report? >> i'll have to check on the report the area of economic warfare and terrorism, there's no agency in any government of the world that does a bit more effective job of treasury. i'm happy to defend the record we have here, we really are the global leaders making progress in this area. i think it's an area of great bipartisan consensus. >> just doing the report as the law requires would be a great way to boast or toast what you're doing, if you would just -- >> i will check on the report. i'm quite familiar with what we're doing. it takes a great deal of my attention and the world's attention. i just -- the report i'll have to check on. >> so will you have someone get

to me in the next week on these issues? about the foyeria request? we don't have to wait another two years for that one? and let me know the stats of this report within the next two weeks? would that be too much? >> we'll get back to you. >> i heard you say yes a little while ago to somebody on the other side, i was hoping we could get the word yes twice in three hours, can we expect that maybe in a week? >> i don't know the status of the issues are, we'll get back to you promptly. >> time of the gentleman has expired. the chair now recognizes gentleman from texas. mr. green, ranking member of our oversight investigative subcommittee. >> thank you, mr. chairman. i thank the ranking member, i thank the witness for appearing today. mr. secretary in your annual report you cite some concerns about cyber security. ironically yesterday the

subcommittee on oversight and investigations held a hearing on the cyber security styled, global perspective on cyber threats. one of the things that we took away, or i did, from this hearing is that there appears to be clear and convincing evidence that cyber threats and attacks pose a clear and present danger to our financial system. and i'm pleased to see that you have addressed this, and you need additional assistance pursuant to what i'm reading. you indicate that you would like for congress to provide the financial regulators with the authority to oversee third party vendors. and i believe i have some sense

of why, but i think that the record should reflect your thoughts on why this is so important. >> congressman, this issue of cyber security is it obviously a new issue, it's gone right to the top of the worry list, and priority list that we have. as i talk to ceo's, it's the top issue that many of them have. the challenges are many. it is hard to protect a system, it's hard to have individuals in the system. operate in a way that makes it as safe as possible. i think the financial sector is at the lead, and we have a lot of work to do in the financial sector. there's many other areas where the exposure is even greater and some of them overlap i mentioned earlier the connection between your utilities. if your power and phones are not there, it's difficult to run a financial institution. it's very much in the mind of

the regulators and the industry. the more tools we have to work together the more likely we are to be successful. a threat that shows up in one place. if you know about it, you can look for it, as opposed to being blindsided by it. we're making progress, we're -- there is much better sharing of information than there was. but i don't think we are where we need to go the passage of legislation to enable the greater sharing of information would be very helpful. >> i want to concur with you, the witnesses who appeared yesterday all indicated that you are at the top of the game, as it were. that you're doing better than most. >> i don't take much comfort in that, though. >> they didn't say there was

absolute security. and i understand this, my concerns have to do with the need for authority. what would you have us do immediately to give you this authority. it's in broad terms here, are there specifics you can call to our attention? >> the cyber security legislation that's pending would take down some of the barriers for sharing of information and collaboration in the private sector. getting that in place, would be quite helpful. we're doing things now on a voluntary basis where there's risks the firms have to balance, which would be very much at ease if the legislation were to pass. we have executive orders. that go as far as executive orders can. i would be happy to follow up with you on more specific issues in the financial space, that could be helpful. >> thank you. and finally, this -- you have indicated that you believe that you should be allowed to coordinate a national plan as it

were, to deal with these responses to cyber threats. and you'd like to coordinate this with law enforcement, homeland security, as well as regulators. how far along are we with this concept of your having this opportunity to coordinate a nation plan? >> well, we're obviously within the federal government, we collaborate quite a lot, dhs plays the lead on cyber security, i'll tell you, in the financial space we have a regular meeting by -- amongst the agencies that work most closely together. and we're looking at what we can do to be more prepared and obviously that gives us the ability to reach out and more effectively and develop a plan >> thank you for your service, and i yield back. >> time of the gentleman has expired. the chair now recognizes the gentleman from south carolina,

>> thank you. mr. lew in october you went to the senate finance committee and had a hearing concerning prioritization of payments, you told them at the time that the systems are automated to pay, because for 224 years, policy of congress has been to pay our bills. you went on to say it wouldn't be easy to pay some things and not others, in may of 2014, you gave this chairman a letter saying something slightly different, you said, if the debt limit were not raised and assuming treasury had sufficient cash on hand, the systems would be technologically capable of making principle and interest payments while the treasury was not making other payments, end quote. when did you come to learn that new york fed was technologically capable of making payments set forth in your letter to the chairman of may 2014? >> congressman, i don't remember the exact date. i can tell you the statement i made at the senate in october

sdwur the statement to this committee is consistent. what i said in october 2013 is that we make tens of millions ofthe statement to this committee is consistent. what i said in october 2013 is that we make tens of millions of payments and we don't have the capacity to pick and choose among all of them, i didn't address the question of, is it a technical capacity to pay principle and interest. i did indicate that we do have the technical capacity, it would be terrible thing to do, you would be defaulting on something else, a medicare payment or on a veteran's payment or something else. the only solution is to raise the debt limit and not put any president in the position where they have to make the decision do they pay one thing but not the other? >> that was a really good answer the first three times i asked it, i asked you that same question, sir, in may of 2014, and you told me you would have to check. when you came back in march of 2015, you told me you had

checked but you had forgotten it, and you didn't remember it on that day, but you would look into it again. i sent you a set of written questions and asked you the exact same question. i got two pages with no answer in it. i'm not going to ask you any more questions mr. lew. i feel like i've given you enough opportunities to answer that question. when did you know? it's an answer you should know. if you don't know, you should be able to go back and look it up. in fact one time you told me you did go back and look it up, and you knew it, but forgot it before you got here. mr. lynch asked you whether you thought your answers to this committee were disdainful. you said, no, you thought they were reverent. i kept waiting for the laughter after that. i've asked you some really serious questions, we've asked you some really serious questions. the other questions i asked you, not the first time, this is not

an empty question mr. lew. we're not trying to make you look bad. we are interested in answering the questions because of the market turmoil always raises its head as we come up against the debt ceiling. in addition to the question i asked you about when you knew, i also asked you, i said in the event we reached the debt limit and exhaust extraordinary measures and congress does not raise the debt limit can the treasury department continue to make principal and interest payments on the debt? you've had, by the way, six months to answer these questions. i also would ask you, we commit, in the event we reach the debt limit and exhaust extraordinary measures, the treasury will continue to make principle and interest payments on the debt. you didn't answer that either. what are wreeto imply from your refusal for a year and a half to

these questions? >> well -- >> no, i let you go until you stopped. in fact i was even go to go until i had a minute and a half left. you had your chance, my turn. we are interested in asking these questions, because we are concerned about what happens in the markets. we would hope that the secretary of the treasury of the united states would be just as concerned. your name is on the money mr. lew. we have given you a chance to calm the markets. you've refused to do so. we've given you a chance to give this committee an answer, you refuse to do so. number one, you don't want us to know the information we ask for because it's harmful to you or the administration. and the other implication, is that the answers regarding payments, are not being given to us because you want the chaos. you think it's preferable to you and your administration, this administration to have the chaos, it will help you achieve politically what you want to achieve. i'm done asking mr. lew. when the chaos comes, it will not be on the shoulders of the people on this committee, it will be on you. you've had a chance to calm the

markets and refuse to do so. no, sir not on my time. >> the time of the gentleman has expired. the chair now recognizes the gentleman from minnesota, mr. ellison. >> i'd like to thank the chair and the ranking member for the time. and i'd actually like to thank you, mr. secretary for answering some of the written questions i'd give you. i know it's not easy doing that. you're busy doing a lot of things. you did give us some answers and they were answers that we can use, i want to extend my thanks and appreciation for that. as you know you're probably going to get a question from me about suomalia. i know you're shocked. what i'd like to ask you is, if you have any information on the bill that we passed last year into law. in was a bill we passed last year that was called the money improvement act. the goal of the bill was to improve oversight of

non-depository financial institutions, now that the law is in place, all well supervising the money services businesses. i just want to know what you know, and if you don't know anything, i understand, because i didn't tell you i was going to ask you that. if you do know, i would be happy to get a report. >> congressman, thank you. as we've discussed many times, this issue is a very important one. and we're concerned about the problems that families are having in making payments. we're working on the implementation of the legislation, and i'm happy to get back to you with a more detailed response on the status of the implementation. we're more broadly working on this issue of how to deal with remittances in somalia. as i think you know, we're involved with the world bank to develop solutions to the problem. and that really means building up some capacity in the somali

financial system. right now, there's not a real financial system to engage with. we have had meetings at a senior level in somalia, the political level at the central bank level. i know that our undersecretary will be traveling to your district to have some meetings on this issue. >> well, i appreciate that. and i just want to say again, i'm four square with the administration's effort to stop terrorist financing on a task force to help achieve that. on the other hand we can get so successful at that effort we close off all the money. that i think would be unfortunate. because it would serve the interests of el shabaab and terrorists over there, to see the collapsing of the somali economy. which depends on the remittances to the degree of 40%. i would like to talk with you more about the implementation of that program. i know that you all are doing

some technical assistance to somalia. i talk with political leaders there, and try to give them my best perspective on how they can improve their system. could you talk a little bit about the work that you all are doing on that technical assistance area? and what sort of message that you'd like them to receive in order to develop that solid banking system that i think they're going to need. >> there's not an easy answer to that question. it's hard to exaggerate how little they're starting with in terms of building a functioning financial system. terms of building a functioning and the tragedy is, that there are legitimate transactions like family remittances that should be able to go forward, it's very hard to know that the money isn't going to go into hands that will do real harm. trying to figure out how to build that system is why we're working with the world bank.

we can't go into somalia the way we go into some countries because of the security conditions. we have people coming out of somalia into other countries for training. it's not the most efficient way to do it. our people are great when they can go in and work with people side by side. we just can't do that in somalia. we're trying to do it offsite, to help them build the skills. it's going to take. it's a process, it's not something you can just hand over and have a functioning system. they're trying, we're going to work with them, and we have to be creative finding the ways to start that building process. >> i want to urge you on behalf of the people who live in minnesota and many other parts of this country. we're actually going to start a somali caucus because we have constituents who live in both districts and definitely want to see them -- see that country get stable and strong and not be a haven or an attractive nuisance

for bad people. we try to do our part, and we hope you will continue to push with that technical assistance. >> we will do so, and we will continue to work with you and try to find a solution to this. >> the time of the gentleman has expired. the chair recognizes the gentleman from tennessee, mr. fincher. >> thank you, mr. chairman, thank you for being here today. i'm going to go back to an issue you and i talked about a few months ago, liquidity. recent comments from larry somers, former treasury secretary under president clinton and later served as an adviser in the white house. he recently warned regulatory authorities have made a mistake, when they look at each institution and that said you'll be safer if you withdraw from the markets a bit. and forgot if all institutions withdraw from the markets a bit, the markets will be less liquid. the markets will be less safe and that will in the end hurt all the institutions. i think there is real issue there, frankly, a lot of the

effort that's going into macro prudential should be into making sure we have liquidity. what is your reaction to his comments about the role of the regulations, not just dodd frank, but layered capital and liquidity mandates? or having on fixed income markets? >> as i've said in response to several questions today, i think this issue requires our very serious attention, i think there are a number of factors that have been at work. it ranges from the point we're at in the economic cycle and the volatility that's natural at that point to the emergence of new market mechanisms that are different and present different risks to the volume of corporate bond issuance. i have also said that we have -- our eye on whether or not there are regulatory issues, it's one of the things we need to look at. so i'm not approaching this from the point of view that we know exactly what it is. frankly, i don't think anyone

knows exactly what the answer was. >> you think it would be a possibility that it could be over regulation. >> i think the factors i described i know are at work. the question of regulation is much more speculative. people have jumped prematurely to a conclusion about regulation, which would take our eye off of where the real risks lie. >> would you say we need more regulation. >> we have come a long way since the financial crisis. our system is safer and sounder, we have the ability for our institutions to with stand a bump in the road that they didn't have before. that doesn't mean we should ever stop. we have to keep looking forward. >> you think more is needed? >> i didn't say more or less, we can't say that -- you know, you can't take 50 years between looking at these questions, that didn't turn out so well. we need to keep our eye on the and we have to be open to the possibility that there are

multiple different factors at the core of the issue. on something like liquidity, it is a fundamental importance that we have a deep and liquid market here. you still have to separate out treasury markets from corporate markets to high risk markets. they're not all the same. liquidity issues aren't all the same. >> let me follow up sommer's comments have been echoed by everyone, many overseas regulators such as mark carney at the bank of england. we talked about you issuing a data driven analysis. and i think you have said it's going to be in a white paper coming out. >> hopefully -- our goal is to get it this summer, and we'll share it as soon as it's completed. >> it seems like we -- every time we have a hearing, we talk about the problems that we face, and more regulation. i know i'm going to differ with you, and i know you have -- >> it didn't sound -- >> i know, it sounds like you are inclined to be for more. >> we have to be open to less also.

i didn't say more. >> there you go that's good. >> get you over to more or less. >> it's what seems to be happening is the more liquid that's tied up in the markets, it's not the bigger institutions that pay the price here. it's the small guys. it's the guys back in states like tennessee and arkansas that end up paying the folks at the bottom, and we need to make sure that when something does happen, there is enough liquidity available to take care of these issues. thank you. and with that, i yield back the balance of my time. >> chair now recognizes the gentleman from colorado, mr. perlmutter. >> thanks, mr. chair, thank you, mr. secretary for staying cool under the withering cross-examination of my republican colleagues. i just really have a different view than the chairman, than mr. duffy as to what's going on in the economy. you may as well start with all the records being set by dow jones.

it's up from 6500 at the end of george bush to 18,000. the s&p 500 from about 700 to 2100. the nasdaq is three times what it was. foreclosures are down, very low, there's been a tremendous improvement across pretty much all sectors, from manufacturing to hotels to whatever. so when they're talking about calming the markets and you're causing them to royal. i want to thank you for rebuilding the markets. from the recession that we were in at the end of george bush. i don't know if you have your report in front of you, but there are some very important graphs that i'd like you to take a look at, if you have your report in front of you. so let's take a look just as easy ones, starting with 4.1.4. that is just for -- under the obama administration, we see oil

imports drop jand oil production increase. we haven't seen in decades. do you see that one? >> i do. >> how about 4.1.6. civilian unemployment rate dropping like a rock? this is on page 20 of the report. after the 2007/2008 recession. you see that? >> yes. >> now let's talk about fsoc. if you would turn to page 62 and 63. i want to look at graphs 5.3.16 and 5.3.19. see those? >> yes. >> if you could tell us what graph 5.3.16 is? >> now, you're -- i read the words, i'm looking at some of these graphs. >> let me tell you what it is, and then you can expand on it if you like. at the -- as the recession took place, starting in 2008. 2007 and 2008, we saw loan loss reserves fall.

so banks couldn't withstand more and more losses. since fsoc was created in 2010, what do you see in terms of the loan loss reserves? they've almost tripled. >> we're seeing performing loans doing better, and the foreclosure issue settle in. >> now, let's look at the one that's really quite telling. that's 5.3.19. fdic insured failed institutions, you see that? >> yeah. >> my friend the chairman was talking about this recovery, and why isn't it bigger, other than the fact we have 13 million new jobs, we see pensions at all time highs. but under republican administrations, i think between 1980 and 1990, we had the reagan administration and the first george bush administration, look at the number of failed institutions. you see that. >> i do. >> it falls off to virtually zero under the clinton administration.

there were no bank failures, you see that? under the second george bush we see a tremendous spike in failed institutions, you see that? >> yes. >> so now it's fallen off precipitously. we're here to talk about the fsoc and about dodd frank and putting some structure into the market so we don't have a failed banking system. would you like to comment on that? >> i think that you have talked about the improvement of the economy in a compelling way. obviously the graphs illustrated but so does the number of people working every day. i think there's no doubt, but that the steps we've taken through wall street reform and fsoc have made our system safer. we also have economic recovery underway, which is why everything is also getting better. what i don't think we can do is kind of rest comfortably that there's no problem out there to worry about.

because what will happen is, we'll get to the down point of a business cycle, there will be stress in the system, and we owe it to the american people to make sure we're in a position when times get tough, that we don't go back to the 2007-2008 kind of situation. that's what we're doing. >> and i completely agree with you, that's why you need the loan loss reserves, so you can withstand a down turn. that's why we take into consideration these precautions. if i were -- >> that's why you need capital. >> if i were my republican friends, i would be grasping at this straw too. given the overall recovery of the economy. i want to thank you, and i want to thank the president for putting this economy back on track. and i yield back. >> the time of the gentleman has expired. the chair now recognizes the gentleman from florida, mr. ross. >> thank you, mr. chairman. pleasure to have you here again. i want to talk about the ultimate goal of fsoc. fsoc's goal is to reduce risk in the markets, is it not?

>> yes, it's to reduce, make sure we have financial stability always on our minds. and reduce the risk of -- >> and the elimination of risks too. i don't think that's the ultimate goal. without risk you have no return. let's talk about why i focused on stability. let's talk good stability. in gaining stability. we need to make sure our institutions have a proper road map. right now, we have a designation of a sifi that leads to an institution now trying to find out how they get out. i give you credit with what happened in february. with some of the transparency rules that you promulgated. and the opportunity every five years to get a decertification of being a sifi. my concern is, why don't we have in place a road map. a precautionary measure to prevent them from ever being designated as a sifi. >> the process is not one where we assume everyone could be a sifi. to go through, the firms that

present themselves because of their size, complexity and structure. >> true, but are we not focusing on more of a treatment for the cure instead of giving the prevention of the problem? >> i think the reality is, no two firms present themselves in an identical place. the way we go through the analysis looks at each firm and the risk that it presents. >> it should be done that way. in a proactive way, if these firms being looked at were given some guidance to prevent them from going over the cliff. we wouldn't have to have the designation. let me move into something quickly on asset managers. i think they're pretty important, and i have some concerns about them being declared sifi's. for example, in dodd frank it says that some of the criteria to include are leverage, the extent and nature of the off balance sheets, the exposure of the companies, the amount and type of liabilities of the company. let's talk about leverage. what is a leverage ratio that

you would consider to be worrisome, 30 to one? >> i don't want to give you a single number. >> so the smaller would be better? >> yeah. >> knowing that 5-1 may be a concern. >> it depends on what the investments are in. >> correct. >> it's a combination of leverage and risk. >> asset managers won't have a greater than one and a half to one risk. in fact, i think van guard is 1.04 to one risk. it's almost minuscule. it seems that that should be a consideration that would prevent them from being a sifi. >> we have made our focus for this last period of time looking at the activities that contain the most risk. because they -- >> but they don't really contain risk. they don't even have any collateral as such to put at risk. >> asset managers have different business models. some of them are leverage, some are not. >> but the leverage is minuscule.

let me go into this if i can. once you're a sifi you become jointly and separately liable for all sifis, is that right? if one fails then everybody bears the brunt of that? >> i'm not sure what you mean. >> the sifis themselves will bail out the sifis. >> i'm not sure what you're referring to. >> let me move on then to what the impact is if an asset manager were to be deemed a sifi. you of course realize the cost of compliance but asset managers deal in mutual funds, 401(k)s, investments that deal with people's retirements and pensions. there's a study out there by the american action forum that indicated that the capital requirements necessary if an asset manager was deemed a sifi could raise the cost as much as 25% that over the life of that program of the retirey could be

over 100 thousand dollars. will that not be taken into consideration when trying to determine whether they're a sifi or not? >> obviously those same retirees have an interest in making sure that they have access to their savings when they need them and -- >> but it could have a significant impact on the mom and pop -- >> i don't start out with the presumption that firms should or shouldn't be do you recognized. we have to complete the analysis of what risk factors we're looking at and if they warrant any kind of action. >> i agree with you. i think it would be a good preventative measure to do it in conjunction with the institution so they can prevent that risk from being taken and continue in a financially stable environment. >> my sense is that the asset manager industry is very much offering its views as we go through this process. >> very strongly, yes, sir. my time is up. i'll yield back. >> the chair now recognizes the gentleman from maryland, mr. delaney. >> thank you mr. chairman and thank you mr. secretary for being here. i want to associate myself with the comments that congressman ross just made because i have a

similar view on asset managers but i don't want to take the time on that. when i walked in i thought i heard my colleague asking you about the prioritization of debts. it seems like that's a misguided idea because the best credits in the world which obviously we should view the united states as certainly one of them never prioritize their debts. berkshire hathaway, exxon mobile, all their debts are treated the same where as weak credits are forced by the market to prioritize their debt so people know exactly what they have and when they get it paid. so it strikes me it would be a misguided idea to force the united states government into a position where it was somehow signaling to the world that we're a weak credit. very quickly if you don't mind. >> i couldn't agree more. i think that the reality is the technical question of could you

pay a principal and interest. misses the point which is that if you pick and choose what you pay you're going to default on something. >> and present very differently than the way we want the united states to present. >> even if you reach the conclusion that you had to do that because it would be disastrous not to, it's a terrible place to be because you're still in default. the only thing that solves the issue is that raise the debt limit. >> the second question is about the liquidity concept. when you think about the role of banks which have been very important to our economy for long period of time which is why the government has supported them which is why we also try to regulate them in ways that make sense, right now banks are not all that important when markets are good. there's a lot of other alternatives for liquidity, but

they're really, really important when markets are bad because there's no incentive for market-based participants to participate in markets when they're bad other than if they're kind of vulture investors trying to get really good deals. i worry that what happened with liquidity has put these banks in a position that if there were some kind of a crises they wouldn't be able to respond as well. i know there's a lot of reasons why this liquidity data is emerging, but it seems to me -- and this is coming from someone who is supportive of dodd frank. i think all of the things we did we obviously had to do. it seems to me the notion of having high liquidity standards for banks coupled with not looking at risk-weighted assets from a capital test and having this kind of overlay where you still risk weighed assets but you need a minimum amount of capital which puts a lot of capital against really low risk weight assets like treasuries, it seems to me those create very big incentives for banks not to be liquidity providers in a crises. do you agree with that assessment? >> i think the liquidity rules, the theory behind them, was you look at the overall exposure of the firm. they didn't make distinctions between different kinds of assets.

i obviously think the treasuries in cash have a degree of safety that's different than almost any other asset in the world, but that's a different approach than saying everything is treated the same. >> would you support changes to the regulatory framework that actually eliminated deincentives for institutions to hold treasuries in cash so that they're actually in a position to do their job in a crisis? >> i don't think we have any evidence that they're not in a position to do their job. the treasury markets remain deep in liquid and as i've said a couple of times today, i don't think that what people looked at on october 15th in terms of movement on treasuries had to do with a lack of -- it wasn't the effect of any kind of regulatory environment. >> but the people running these institutions seem to think they have a disincentive to hold liquidity in cash. sometimes perception becomes reality. >> i've give you an example. i've heard a lot of them say as if it affects the treasury

market that volker has something to do with it. >> i'm talking about treasuries. >> i think you asked the right question, is it something in the leverage rules. >> it used to be no matter how many treasuries you had you didn't have to have capital against them. now you kind of do. so that in my mind, if i was running an institution that would make me have less of them. >> right. i think that it is very important for us to maintain the deep and liquid treasure markets. it is something that is part of what makes our dollar the world's reserve currency. it's part of our economic back bone. i don't see a weakness in the treasury market right now but i can assure you a day doesn't go by that i don't ask questions about it. >> xm bank, i've talked about ideas where institutions like xm are required to sell off some of their portfolio on a regular basis so there's better transparency as to how their assets are priced. do you support approaches like that? >> i'm not familiar with that. i'd be happy to look at it. i think the xm bank does

important work for leveling the playing field for u.s. exporters. it throws off -- >> and i agree with that position. i just think additional transparency around how they price their assets -- >> i just haven't looked at that. i would be happy to look at that. >> the time for the gentleman has expired. the chair wishes to alert members to accommodate the secretary's schedule. we anticipate clearing three more members in the queue. presently that would be mr. stivers, mr. pittenjure and mr. barr. depending on whether or not somebody else walked in. the gentleman from ohio is now recognized. >> thank you, mr. chairman, mr. secretary. you've already answered questions from mr. duffy and mr. ross and mr. fincher about liquidity. i want to ask a couple things about that. you said you don't think that's a problem and to you the world is rainbows and everything is liquidity. >> i don't think that's what i

said. >> you said there wasn't a problem with liquidity? >> i said we haven't seen problems in the treasury. i think there are issues about liquidity that require attention and i went through at some length the issues we need to pay attention to. >> great. let's talk a little bit about that. so you do believe that we need to give it a little attention. as your role of the chair of the fsoc have you directed the office of financial research to study this problem and how the policies that are completed and proposed might come together to cause a problem, or have you asked them anything at all? some of us would love to see them do a study. i wrote them a letter asking them to do a study and i'm just curious if you've asked them to do a study on liquidity. >> they are doing work in this area. they've obviously issued some analysis, and i know they have other work that is ongoing.

i think it's not just an ofr question but a question that we have to ask in domestic finance in treasury, securities and banking regulators have to ask. i think that there's a serious conversation in this area. what i've tried to make clear is that it would be a mistake to jump to conclusions about what the relationship between the safer, sounder world after financial reform and liquidity is. we have to be open to it but not assume that that's the whole explanation. >> i don't disagree with you which why i asked you if you had asked the ofr to do a study. you indicated there's some work going on. when can we expect to see a study? >> i would have to get back to you. >> please do because that's their job. their job -- it's called the office of financial research, so it seems to me that they are the most logical place to look at it. >> they've been doing a lot of analysis on october 15th, for example, to understand what

happened on that day, and they are very much in the space of helping to make it possible to look between the data that different regulators have and do the analysis. >> which is their job and i'm just asking you to have them do their job and make that available to us because as policy makers, we would love to see that. it may impact some of the policies we decide to make. as somebody who enforces those policies that are made by congress, obviously you have some ability to change the way you do your job, too. but we would love to see that information and the sooner we can see it, the sooner we can make an informed decision as opposed to maybe me assuming it is a problem and you assuming it's not. >> i couldn't agree more that we have to understand things before we act. >> please ask them to do a study that is detailed with regard to this because i think when you see what's going on between the

volker rule and the department of labor and what's going on in the private sector separately from regulation where a lot of people are simplifying their business model, getting out of risky businesses, those three things come together in a way that could really cause a liquidity crisis in the future. i just want to make sure we look toward it and try to anticipate it and head it off. so please, i would urge you to do that. the other question i've got real quickly is with regard to designating systemically important institutions. has anybody talked to you about that because i didn't hear whether anybody had talked to you about that today? >> there were quite a number of questions earlier. i'm not sure what question you had. >> do you think the $50 billion -- let's talk about banks for a second. the $50 billion level, many

folks, including the federal reserve have said that it's an inadequate and artificial number. how do you feel with that number in the law? >> i think that it's important that we use the flexibility we have to treat institutions of different sizes differently and we've tried to do that and we need to continue to ask is it being done as well as we can do it. i think it's a mistake to think that a $2 billion institutions is the same as a $50 billion institution or a $100 billion institutions. some of the suggestions i've heard about drawing the line say at $500 billion are very bad policy. that would take the next six largest institutions out of the heightened supervision. >> let me suggest an alternative approach. have you looked at non-bank assets, the assets that are not under the covered institution? i'd ask you to look at that because that's where the systemic risk is indicated. i know my time is gone. >> the time of the gentleman has expired. the chair recognizes the gentleman from north carolina. >> secretary, there's been some discussion today, a considerable

amount, regarding the debt. from what i understood you seem to be dismissive of this. do you see it as a threat? >> i spent most of my professional life trying to control spending so i don't dismiss it at all. i think we've made enormous progress. >> do you see it as a level of concern as much as iran in terms of national security and economic security? how would you place it? >> if we had stayed on the course we were on in 2008 i would say we've made progress -- >> with due respect, this is the question i'm asking, how do you view the threat? do you view it as important, as a concern that we have with iran and the security threat there? the economic threat that we have with the debt, is that as compelling to you? >> there are obviously different kinds of threats. we have made more progress on

our fiscal position than in terms of moving iran. >> you heard the statement from the admiral earlier and from peter orzach still today, the former budget writer for president obama, still talking about the direction of spending and the concerns of the debt. i was with irskin bowls over the weekend. i've known him 25 years. he made a statement regarding the spending levels and the debt and where that's headed. a lot of people see it as a major priority and a concern. what i'm asking you, do you see the same level of concern when you put your head on the pillow at night, does that keep you awake as much as al qaeda? >> congressman, we have made enormous progress -- >> that's not my question in all due respect. >> it's the reason why my answer is what my answer is. if you had asked me this question in 2009 i would have given you a different answer. >> that's why i'm asking you

today, is it a vital concern today? >> i don't think it's the most pressing concern today because we have controlled the rate of growth. >> $18 trillion is not a concern? >> we've stabilized the deficit and the growth of the debt. >> the trajectory of spending is going up. not leveling off. >> for the next ten years we have a stable deficit situation. >> october 2014, the deficit is projected to return to an upper path over the rest of the decade and beyond. sir, a lot of smart people disagree with you. a lot of smart people are concerned about the trajectory of spending and the imploding debt and the fiscal crisis that's going to put us in. what i'm asking you is, do you not share that concern? >> i'm telling you i do have a concern about our fiscal policy. we have to maintain a responsible fiscal policy. we also have to maintain growth and we have to -- >> do you think it's enough to talk about, to bring it -- >> we've done more than talk.

we've reduced -- >> sir, with all due respect, the man that you report to, has he ever brought it up at inauguration, at the state of the union? he came here to the capitol this report to has he ever brought it up in inauguration? has he ever brought it up in the state of the union? he came to the capitol this week to talk about tpa. has he ever talked to members of congress about -- >> congressman -- >> did you advise him to address this debt concern? >> congressman, we have reduced the deficit 10% to under 3%. that speaks to what we're doing and what we've done. >> a lot of smart people who perceive you and your job and have serious concerns about it. let me go to another issue. 34 countries, as you know, committed to the 40

recommendations, going after terrorism financing. what capabilities do we have of going after those countries that are not in compliance? we have turkey, qatar. clearly they are complacent with terrorism financing. what role can you play as enforcer in that it is not an enforcer. they merely have the standards. and yet clearly we see the infractions by those who in some measure would like turkey as a member of nato. >> fataf brought high standards together to control bad practices and bad activity. we are very much engaged on a bilateral basis with a country we see doing things or not doing things they need to know. >> have you called out turkey on the matter? >> i have talked with counterparts in turkey about

what they need to do. >> have you called out qatar? >> i've talked to people in most of the world about this issue. and when we talk, they actually respond and they move. so it's not an easy process where you can just kind of turn a switch and have everybody doing everything they need to do. we're engaged deeply at a high level around the world. >> thank you for your service. >> gentleman yields back. the last questioner gentleman from kentucky mr. barr. he is now recognized. >> mr. secretary, thank you for your patience and staying with us here. since we've talked a lot today about market liquidity let me bookend our discussion. the center for financial stability has found market liquidity at 26%. we talked to almost any banker investor or hedge fund manager. one topic is likely to dominate the conversation.

it is the lack of liquidity in the markets and what this might mean for the world economy and their businesses. market veterans say they have never experienced conditions like it. banks have become so reluctant to make markets it has become hard to accept large trades in government bond markets without moving prices. so i want to address my question to your skepticism that regulation has played a part in this liquidity issue. have you heard from bankers many of your former colleagues on wall street and bankers that i've heard from as well, that they are less likely to engage in market-making activities as a result of volker and other regulatory issues. >> i have heard some say, some supported by fact and some of which are not. >> as secretary and treasurer you have -- >> i have talked to people. >> and they have given you that

feedback? >> yes. >> what leads you to doubt their sepb sincerity. >> people not doubting anybody's sincerity. they are moving blocks of bonds without any movement in price. i think, you know, that has something to do with market structure you have different players in the market now. it may mean to maintain liquidity you have to do multiple transactions. >> i understand. >> it's different from not being able to transact. >> i understand. but would you acknowledge that impacts liquidity? >> there are different kinds of market making going on. there's a lot of market making going on. and you can't roll back the clock. the fact that you have emergence of electronic trading and high frequency trading, a lot of activity is taking place that

isn't the traditional broker/dealer model. >> $350 billion of senior secured commercial industry loans provide financing for very dynamic job producing companies, many of which are actually in my own district. when you acknowledge the volcker rule has forced banks to take losses in aa and aaa paper? >> obviously the volcker rule is still taking effect. >> already being forced to divest aa and aa coo paper. >> banks are going to not have to have primary investments they had in the past. it means they will have to sell some assets. >> sir do you know how many aaa or aa notes have defaulted?

the answer is zero. you've got to acknowledge that that has a destabilizing impact on the financial stability of these institutions. >> i think you also have to acknowledge that the exposure to risk on pry pry tear investments -- >> what risk is there with aaa or aa clo notes that never defaulted over 20 years and performed well during the financial crisis? >> the objective of the volcker rule was to reduce the level of risk exposure by getting them out of pry pry tear investments. they will be better off when that's implemented. >> you don't dispute the fact that volcker forces papers to divest. >> it is a pretty tight rule. >> let me conclude just real conclude with one other point.

that is community banks. community banks in my district. bankers tell me dodd/frank and avalanche compliance costs and red tape has really impacted their bottom line. the numbers have shrunk from 7,700 to only 6,300. meanwhile, there is consolidation in the big industry. mean what time sifi banks are larger. too big to fail is a bigger problem now because we don't have diversity and we don't have as much competition in the system. can you respond to that financial stability issue? >> look, i think the consolidation was going on before wall street reform was enacted. and i'm not sure that consolidation is leading to the sifis taking over. it's mostly smaller banks combining. it's an issue we have a real shared interest in making sure they have access to community banks. >> i'm looking at industry consolidation as a problem

because it is exacerbating too big to fail. thank you. yield back. >> although there are other members in the cue, they will not be recognized today. thanks to secretary lou for his testimony. all members will have five legislative days to submit questions for the witness to the chair which will be forwarded for his response. mr. secretary we would ask that your office respond as promptly as you are able. and i mean this most respectively and sincerely. we ask that treasury would crease the response dump at midnight before your experiences. thats a sincere request to you sir. without objection, all members will have five legislative days to submit extraneous materials to include for the record this. meeting stands adjourned.

congress returns tomorrow from its fourth of july break. this week the house plans to continue and to finish up work on a bill to fund the material environment, epa and other related agencies. also, bill making changes to no child left behind. among them allowing states to set their own accountability standards. the u.s. senate is also back

tomorrow work withing on a separate proposal to deal with no child left behind. they have a confirmation vote scheduled for later in the day for federal circuit court judge. see the house live on c-span, senate live on c-span2. >> at the pentagon early, france's defense minister said the militant group isis is no longer a terrorist group but rather has become a terrorist army. that briefing is next on c-span3. australian prime minister tony abbott talks about his country. and journalist alexei venedi can ktov. when congress is in session c-span3 brings you more of the best access to congress with live coverage of hearings, news conferences and key public

affairs events. every weekend, it's american history tv. traveling to historic sites, discussions with authors and historians and eyewitness accounts of events that define the nation. c-span3, coverage of congress, and american history tv. >> defense secretary carter and france's defense minister held a joint news conference. they spoke about combatting isis in the middle east and on going u.s. support for french efforts in african against al qaeda affiliates and other terrorist organizations. >> good morning. good morning, everyone. i hope you all had a good fourth of july weekend.

and it's a pleasure for me to welcome my friend my colleague, my admired colleague minister of defense le drian here to the pentagon. france, oss may know is america's oldest ally. i had a french girlfriend once. used to be able to. highly motivated. let me start again. and thank my good friend, my

colleague, my admired colleague, the minister of defense of france, le drian here to the pentagon. france is america's oldest ally. today our partnership is the strongest it's ever been. i first want to thank the minister for spending our independence day in new york city. he was aboard the sailing ship, a replica of the frigot made famous in 1780 by its voyage across the atlantic when it carried the marquee to lafayette, the legendary general and friend of the american revolution. in a ceremony aboard the ship on saturday, the minister commemorated the 70th anniversary of our shared victory in world war ii, another

example of u.s./french security cooperation. by awarding france's highest recognition, the region of honor to american world war ii veterans. minister, thank you forssell berating america's birthday with us. thank you for honoring our veterans. and thank you for reaffirming our centuries long alliance. we just finished a discussion on ongoing operations and opportunities to strengthen yet further our security cooperation. one area we discussed was isil. a campaign we agreed requires a sustained and long-term effort. earlier this year france deployed its aircraft carrier charles dugall to the golf to

support counter-isil strikes, integrating seamlessly with u.s. forces. the french air force being the first to join us in striking isil targets in iraq continues to play a critical role there. these are some of the reasons france continues to be one of our stroefpbgt allies when it comes to challenges in the middle east. we also discussed france's persistent leadership in africa. french operations are preventing spillover of terrorism, trafficking, extremism. boca more ram and other extremists in areas like niger and chad. and the u.s. military will continue to support france in these efforts with our lift and areal refueling capabilities.

also, given new security challenges to europe's south and to its east we agreed u.s. french cooperation is and must remain an anchor for security. following the initial acts of aggression by russia in ukraine france helped to assure our allies along the eastern borders. we will continue to work together. i committed the united states to providing an important capabilities to nato's very high readiness joint task force vytf, which france volunteered to lead in the future. now, i've been working on transatlantic security for a long time, both in and inside and outside of europe. i believe minister le drian

would agree this is the best it has been ever. and we are committed to strength epping it still. we are reminding me celebrating america's independence or committing our shared victory the partnership between france and the united states has long been instrumentalto building peace and prosperity for people here and around the world. we must ensure it will always be. i'll now welcome the minister's comments before we take questions. thank you. >> translator: thank you, my dear friend. i'm particularly happy to stand today in washington, d.c. after the celebration of july fourth for which as you recall i was in new york with the passage of

hermoine, which is a sign of the permanence of our common history. both the sailing and the legion of honor to 23 veterans who celebrated in the landing in france in 1944. this common history which is of course old now but also has the quality and the actuality since you mentioned it yourself our relationship has never been that tight for a long, long time. and i can confirm it. i thank you again for your warm welcome and for the quality of the exchanges we have had. we have already met in the past but it's the first time that we meet face to face since you have arrived in the pentagon as secretary of defense. we have mentioned our bilateral

cooperation, which is excellent. france and the united states are acting together on many theaters. and on the front lines, in the levant where france participating in the coalition led by the united states. the deployment of the french aircraft carrier in the spring for this coalition as you mentioned yourself was testimony of this french commitment. we are also fully committed and reassurance measured for our allies in central and eastern europe. both with air force navy, and land forces. the multiplication of crisis and tension will impose on us to get closer and closer. we mentioned libya and our support to the mediation of mr. leon. we have mentioned the support to

the tunisian deposit. we have also mentioned the cooperation of training for drones, for instance. or the perspective of the strengthening of our spacial cooperation in summary. consider that partnership our mutual trust is essential if you want to face the security challenges of our time, according to the tradition of the alliance between our two countries. it is very close and very frank at the same time. thank you, again. >> we would like to call first on the associated press. >> mr. secretary, considering the recent uptick in strikes in iraq and syria, i wonder if you could tell us a little bit about whether or not the united states is looking to increase in any way either the funding or activity against the islamic

state and whether you think -- whether or not you asked the minister during your meeting if france would indeed help start helping with air strikes or other support in syria? for the minister mr. minister i was wondering if you could address the latest news with greece rejecting the bailout and whether or not you think that that will have any impact on national security in europe and on nato and whether this may require any additional support from the united states for france in&any of its counterterrorism. >> well, thank you. well, we are doing more in syria from the air. i think you saw some of that in recent days. and the opportunity to do that effectively is provided in the case of the last few days by the effective action on the ground of kurdish forces which gives

us the opportunity to support them tactically. and that's what we were doing over the weekend north of raka which is conducting air strikes that limit isil's freedom of movement and ability to counter those capable kurdish forces. it's very important that's the manner in which effective and lasting defeat of isil will occur. when they're effective local forces on the ground that we can support and enable so that they can take territory hold territory and make sure good governance comes in behind it. so we are looking for those opportunities and trying to create those opportunities in syria. but it's the success on the ground of the kurds that explains the uptick the last few

days. >> translator: france is fighting with the coalition since the very beginning. we have declared a will in this coalition. this has been recalled earlier. we participate fully within the coalition. to the strikes against isil. our mission is in iraq. and we are pursuing our action permanently, regularly in iraq. i must say that what needs to be noted is that the size of the strikes, the repetition, the

permanent allows us to block isis. this action will be very long. because also we need to train the troops that will need later on to ensure the permanence. that's what we are doing, the united states and us. both in iraq and in kurdistan. but also in syria. as soon as it is going to be implemented so that the articulation between the action on the ground of territorial forces and the permanence of our strikes will give us a result which will not be immediate but will happen eventually. and i really believe in the determination and persistence. so that isil can never act

without being punished. and your question was about greece, the talks ongoing in europe. it will be a very bad analysis to think that a vote in greece is against nato. it was never mentioned on either side. greek authorities are a deceit of the atlantic alliance. we met in brussels. it is not a vote against the alliance for the west. they have refused financial proposals that have been given to them. discussions are to restart. it is not a vote to get out europe. it is a political affirmations and there will be new discussions.

>> a question for both ministers. [speaking foreign language] . >> translator: the situation in nigeria is sometimes tragic when we learn what's going on and the events succeed each other and massacres, slaughters of children and women. sometimes nigeria, sometimes elsewhere in chad.

and this situation is one of the first security problems that we have. we talked about it. what is the situation? if you remember in may 2014 there was a summit in paris which gathered heads of states of of concerned countries. not only nigeria. there's chad niger, cameroon. the president of the republic went to cameroon. and what i've noticed is that the countries in the region have decided to implement their own security was the mixed multinational force to which we are bringing support both through intelligence. we have created a center for that. since the beginning of the year. i went there on january 1st and opened up, if you want, the

intelligence unit which is a unit for leaders and the secretary of intelligence when we are present with our british friends. and then there's the implementation of the unit of the staff for the multinational force, which is going to be deployed now for the strategic part and the tactical part. and the president has decided to go much further than before. so we have this mixed multinational force and our support both in intelligence and logistics. i think that africans now are taking charge of their own security with our support. and this should allow us to attack to respond to boko haram and reach aggressively a

situation where we can eliminate boko haram. this is what we are tending to all of us actually. >> well, i think it's a sign of our closeness that i don't have a lot to add to that. to what the minister said. the governments of the region are responding to boko haram. and we are supporting them. we do that together. the french have been leaders in that part of africa in a very admirable way. we support them, as well as supporting the governments in the region directly. and finally the minister mentioned intelligence and the sharing of other information. that's something yet again we discussed. this morning. even as i said our cooperation overall with france and the security sector has never been stronger, that's true of the

sharing of military information and intelligence information. and we took some actions this morning to increase that yet further. the minister mentioned remotely piloted aircraft as one example of that in his statement. so that was one of the things we discussed today. and it's applicable to africa. but i just want to commend the french on what they've been doing there. we have been pleased to support them and admiring their leadership. >> cnn. >> mr. secretary i knowed to take you back to raka with some specificity. the strikes that you spoke about. what specific impacts do you assess now they have had on the isis leadership in and around raka? did you get any high-value

targets? the kurds of course are 30 kilometers outside the city but yet you were able to strike targets in populated areas. what specific impact did you have? and on the other on baghdadi, since you can't put troops and the french as well don't put troops on the ground in syria, as you edge closer what's the message for baghdadi? is this now clearly a kill mission because you can't have any realistic hope of capturing them? >> well, it's a -- the opportunities that we were pursuing in the last few days the specific tactical opportunities were not individuals, per se. they were the freedom of movement, of isil and its ability to counter the advances of the ypg. we are doing that in the way we have been doing it all along,

namely, with local forces nominating targets. we validate those targets including validating that there won't be damage to innocent civilians associated with strike. and then we take the strike. with respect to leadership they were not the seupblg of the areas north of raqa. we will continue to take action against isil leaders whenever we have the opportunity to do so and taking into account our restraint when it comes to anything that could include damage to civilians. >> on baghdadi, what is your assessment now since you don't put troops on the ground in syria. is baghdadi now a kill rather than capture mission? >> well, we're a able to target

individuals currently. we have do. and if we had an opportunity to go after baghdadi, if it presented itself and we look for that opportunity, we would certainly take it. >> but you still don't put troops on the ground in syria. >> we target isil from the air every single day in syria. tactical targets, including leadership targets. we have been doing that for months and months now. . >> >> translator: there are more details than what your counterpart said. tell us the reasons why france

might not be committed overseer ya. is it the difference between you and your american counterpart? i'm not going to make any comments about the strikes that the u. s. air force made. mr. carter just explained it to you. and i'm not going to make any comments on that. as to our choice and our presence it has been explained many times. there's a sharing of tasks. it's the will of france to intervene in the coalition. and we do it in a very large way and very regular way. to block what i call myself the terrorist army that isil has become. it is no longer a terrorist group. it has become a terrorist army. which both has the capacity to act as a classical army. they demonstrated it.

but also to have operations in urban areas, which they also demonstrated in terroristic operations. they can do all three at the same time. and the repetition of interventions and strikes in iraq allowed us to stabilize the situation. not to win but stabilize the situation. the coalition has intervened at a time where we thought isil was about to seize baghdad. it is not the case. it will not be the case. it's a long-term job. and mr. carter repeated it. there should be sufficiently trained forces on the ground with the support air support of the coalition in order to retake the territories lost to isil. we are in this logic. >> thank you. >> everybody. >> thank you. look forward to seeing you this afternoon, many of you.

>> defense secretary ashton carter and general martin dempsey testify in the morning about u.s. strategy for combatting the militant group isis. watch live coverage from the senate armed services committee 9:30 eastern on c-span. and unaccompanied immigrant children who cross the u.s./mexico bothered. live coverage from the senate

homeland security committee also starts at 9:30 eastern. up next, australian prime minister tony abbott talks about his country's security, while taking questions from members of parliament. courtesy of apac australia's public affairs channel. >> good day and welcome to qt rap. this is the most recent sitting of the australian parliament. officials paid people smugglers wads of cash on the open seas to turn around boat loads of asylum seekers back to indonesia. two ruled out the reports, said they never happened. when the prime minister was

asked, he wouldn't say either way. the matter coming to a head in parliament. >> my question is to the prime minister. i refer to the attorney general's statement today about whether cash payments have been made to people smugglers. attorney general said, well, i don't believe that has occurred. so the question is academic. prime minister if the foreign minister can deny payments were made, if immigration minister can deny payments were made, and if your attorney general can deny payments were made why can't you deny the payments were made? >> i call upon the prime minister. >> madam speaker, be very consistent position of this government has been not to comment on -- the consistent position of this government has been not to to comment on the operational details. >> there will be silence. >> what has been done. madam speaker, there is a fundamental difference between this government and members

opposite. one obvious difference is that this government has stopped the votes where members opposite styled the votes. that's one opposite difference. but very important in this context is that this government does not feel the need to broadcast our intentions -- madam speaker, this is a government which does not feel the need to be noted itself in public if the only beneficiaries are our enemies. if the only beneficiaries are people who would do us harm. madam speaker madam speaker, remember the only thing that really counts is that this government has stopped the votes. and we have done so in a way which is consistent with our position as a decent and humane country because the most decent and humane thing you can do is stop the votes. which is exactly what we have done. and madam speaker members

opposite are very interested in what they claim may have been payments to people smugglers. madam speaker they put it in the pockets of people smugglers. 50,000 illegal arrivals under members opposite at $10,000 a throw. a half a billion dollars is the fear. that is the extent to which members opposite have enriched the people smugglers of indonesia and elsewhere thanks to members opposite. and members of our region, half a billion dollars thanks to members opposite. madam speaker, we have taken the money out of the pockets of the people smugglers by denying their business model, by stopping their evil trade, and by saving the lives that were otherwise being put at risk by

the policies of members opposite. madam speaker, i am very happy to answer any number of questions from members opposite about border protection policies. i am very, very happy to answer any number of questions on this subject because it allows me yet another opportunity to assure the people of australia that their borders are safe under this government. if members opposite were to get back in government, the first thing which would happen is the people smugglers would be back. >> i call the opposition. >> thanks, madam speaker. my question is to the prime minister. by failing to deny reports that criminal people smugglers could be paid 30000 u.s. dollars if they make it to an australian vessel, isn't the government providing a cash incentive for these dangerous voyages to take

place? >> no we're not. no we're not madam speaker. >> silence on both sides. >> no we're not madam speaker. again, i contrast what this government has done with what members opposite did when they were in government. and we have stopped the votes. members opposite stirred up the votes. on members opposite, there were almost 1,000 votes. there were more than 50,000 illegals arrivals by both. more than 1,000 deaths at sea. and more than $11 billion in border protection. and madam speaker and members opposite, at $10,000 per person, some half a billion dollars found its way into the pockets of the people smugglers. madam speaker there are a lot of unemployed people smugglers in indonesia thanks to this government. a lot of people were put into

business. a lot of people were put into business by members opposite. madam speaker, i am very, very happy, i am very very happy to contrast this government's record when it comes to border protection with the record of members opposite. and madam speaker, members op on sit created rivers of gold in the pockets of the people smugglers of indonesia. and i want the australia people to know it is all under this government. and i have concluded the answer, madam speaker. >> australia and china agreed to an historic free trade deal late last year. but pen wasn't put to paper until just recently. and that is when the details of this agreement finally came to light. foreign minister was asked about those details in question time >> thank you, madam speaker. my question is to the minute officer of foreign a affairs representing the minister who trade in investment. will the minister update the

house on the economy-wide benefits of the landmark china/australia free trade agreement. >> i call on the minister of foreign affairs representing trade investment. >> thank you, madam speaker. i thank the member for his question. i acknowledge the fact that he is a real champion for list electorate. china is already our largest trading partner. our largest merchandise training partner. our largest source of overseas students. our second largest source of overseas. our total trade was $160 billion in 2013-2014. this trade agreement that was signed yesterday will provide even more opportunities for businesses in therein and throughout australia.

last year, for example about two billion of australian manufactured goods was sold into china but faced tariffs of 47%. once a free trade agreement is fully implemented 99.9% of manufactured goods from australia to china will enter duty free. this is an amazing outcome. likewise, we have energy and resources exports they will also over time end duty free. for the first time, china has guaranteed an open door for australian businesses to build wholly owned and operated by australia restaurants and hotels in china. this is a huge boom for our tourism industry. there is a similar opportunity for aged care facilities and hospitals in certain locations. so in tourism hospitality health services, all areas where australian businesses excel they can take their schools to

china and the benefits will be felt back here. the free trade agreement will also benefit australian companies already doing business in china, including areas such as architecture, logistics, manufacturing, banking. in fact, last year i chaired an investment and trade roundtable in one of china's fastest growing cities. and australian businesses were all present. some of them have been there for some time. they all see greater opportunities to grow their businesses under the free trade agreement. likewise opportunities back at home in agricultureal products prices of food, as the minute officer of agriculture has told us, when australian wine makers are well renowned, they can compete with the rest of the world. between 14% and 20%. they will be eliminated over time. huge opportunities in australia. the signing of the chapter as it

is called is a major step with closer relationships with china. our relationship with china has never been stronger, deeper or more diversified. i'm confident the chapter will be the catalyst for future gain between our two countries. >> how to deal with national security issues has been a big challenge for the abbott government. its most recent legislation looks at strip deul nationals of their citizenship if they have committed terrorist offenses here in australia or partnered with terrorists. >> my question is for the prime minister. can the prime minister confirm to the house that on the 23rd of april, in answer to your question about terrorists he said the following words. and then if people seek to return to australia, we want them arrested prosecuted and jailed for a very long time. and this is where close

cooperation between australia and turkish authorities will help because we will identify them better. we will get more information about then. and that will help us to ensure they can't do any damage back in australia. >> i call on the prime minister. >> that's right, madam speaker. if they are not natural citizens, we want to keep them out. when they are deul citizens, we want to keep them out. madam speaker absolutely crystal clear. if you are just an australian citizen and you are a terrorist and you come back to australia, if you are a dual citizen and you leave australia to fight for a terrorist army, we never want you back. if you're a dual citizen and you leave australian to fight for a terrorist army you've committed the modern form of trees on.

we will strip you of our citizenship because we never ever want you back. madam speaker, we have a very, very clear position on this. we have had a very clear position for some time now. we will strip citizenship from terrorists who were dual nationals. and i repeat, madam speaker, first of all this position was this was dog whistling. then there was the position that they would support it in principle. today, madam speaker, when asked what the attorney general would do with these terrorists fighting in the middle east so someone who is fighting in raqa, syria, attorney general, will get you get them back here? will you get them back here? not dual nationals, mate. not for dual nationals. >> there will be silence.

i will not have this wall of noise. there will be silence. the prime minister has the call. >> madam speaker, they are getting very excited here because they are feeling very, very anxious about the divisions and the splits in their own ranks over national security issues. madam speaker the leader of the opposition can tell us where they stand. when it comes to stripping the citizenship from terrorists who are dual nationals, is it something they support in principal, which is what he said a week ago. or have they jumped all of that

and now say welcome back we want you back here in australia which is what the attorney general said this morning. >> thank you madam speaker. my question is to the prime minister. last month, when asked if the power to strip citizenship from dual nationals will be exercised at our minister's discretion, the prime minister said, and i quote, that is correct. what made the prime minister change his mind on his citizenship proposal between then and now? >> i call on the prime minister. >> madam speaker, as i've said all along on this matter, the government's position is to strip citizenship from terrorists who are dual nationals. that was the announcement. that was the announcement by myself and the minister for immigration and border protection. that has been the constant position of this government.

and madam speaker we have always been determined to do this. we have always been determined to do this in the best possible way. we have always been determined to do this without prior judicial process. and that's exactly what we have done. and that's exactly what will be done by the legislation that is introduced into the parliament tomorrow. madam speaker i want to say how well the minister for immigration and border protection has worked with his colleagues. particularly with the attorney general -- >> there will be silence. >> they entirely realizes the objective of this government. madam speaker, our objective is to keep our country safe. our objective is to strip the citizenship from terrorists who are dual nationals. our objective, madam speaker is

to ensure that if you are a terrorist, you are never going to be loose on the streets of our country. that's what this government will do. and i do look forward to the support of the labor party in making this come about. >> something long sell pwraeultedpwraeult celebrated is universal access to education. a government green paper presented an option for wealthier parents to pay for their children's education. the opposition takes up the question. >> my question is to the prime minister. did the prime minister's own department circulate the federation green paper that provides an option that would see the australian government walk away from any responsibility for funding public schools? >> i call on the prime minister. >> madam speaker the department

of prime minister and cabinet has certainly been engaged in very constructive discussions with a whole range of state officials on a whole range of issues about a whole range of subjects as part of the federation reform paper. but madam speaker, as for the matters that were in the paper this morning, let me say this. the australian government does not and will not support a main test for public education full stop. end of story. if the state wants to charge wealthy parents fees for public schools, that's a matter for them. charging wealthy patients for their children to attend schools is not this government's policy. let me repeat that, madam speaker. charging wealthy parents for children to attend public schools is not this government's policy. it is not not now. it won't ever be.

madam speaker, i entirely endorse the statement earlier today by the minister of education. >> my question is to the prime minister. and i refer to the prime minister's previous answer. given the prime minister has said that if the states impose a schools tax that is a matter for them, what action has the government determined to take should any state or territory impose a school's tax? >> that is stretching a long way towards hypothetical but i will give the prime minister the call. >> madam speaker, i repeat, it is not the commonwealth's policy. it is not the commonwealth's policy. and what the states and territories do in respect in public schools is entirely a matter for them.

but madam speaker. >> silence on my left. >> opposite are always trying to rise yet another scare campaign. there are some libel leaders who -- >> member rankin. >> i notice that the south australian government is prepared to have a serious talk about tax reform. but madam speaker that is why the government is prepared to have a serious talk about energy reform, including nuclear energy in this country. and madam speaker the south australian premier said and i quote when asked about this today, it's only a discussion paper. but he went on to say this is the south australian paper we have been asking them to canvass the broader range of options.

it is a good thing. so madam speaker, madam speaker, we are perfectly happy to see a broad debate about the future of reform in this country. but i do have to say, madam speaker, the actual running of public schools is entirely a manner for the states and territories. it is entirely for the states and territories. madam speaker, i hear members opposite cat calling. i can inform members opposite that in the next four years there will be a 28% increase a 28% increase in commonwealth funding for public schools. so i say to members opposite you can run all the scare campaigns you like, but in the end people want to know where you stand. and madam speaker they are starting to get some answers.

what members opposite stand for is taxing super for putting up your rent and bringing back the people smugglers. >> the day the government presented national security legislation to parliament, the prime minister went down the road to asio, the most prominent and biggest spy agency to meet with some of the officers there. they brought cameras, which was a problem when some of the maps on the table were claimed to be classified, in full view of the cameras. the opposition pounced. >> thank you madam speaker. my question is to the prime minister. i refer to the visit by the prime minister, the attorney general, the minute officer of justice to asio headquarters with television cameras in tow. prime minister whose idea was this and what security protocols were put in place for the prime minister's photo opportunity?

>> i call upon the prime minister. >> madam speaker this is a curious question from the leader of the opposition. it's a very curious question from the leader of the opposition because, madam speaker -- >> there will be silence on my left. >> my ministers and i went to asio headquarters yesterday to receive a briefing from the director of asio. and the suggestion coming from members opposite is that -- >> i will not put up with that barrage of noise. it is a serious question you've asked. now listen to the answer. the prime minister has the call. >> and the -- >> and that includes the member from mcmahon. >> and the suggestion from members opposite is that asio in some way conducted this briefing unprofessionally. members opposite are impugning

the professionalism of asio. madam speaker the idea that this briefing would have been unprofessional the idea that there would have been -- >> the prime minister -- the members are point of order. >> thank you for the call, madame speaker. >> my question is to the prime minister. yesterday when asked for copies of maps on display at the prime minister's media event replied we are unable to provide documents. they are for official use only. this morning described as carefully and unclassified. what contacted the prime minister, his office ministers or their offices have after the initial response? >> i call the prime minister.

>> madame speaker, i simply repeat what i've said before that it's entirely appropriate that ministers should seek a briefing on the day -- introduced into the parliament. madame speaker, again i wonder why members opposite should have taken it upon themselves to impugn the professionalism. the idea that officers included -- >> member is warned. >> somehow expose classified documents to the world is just wrong. officers are highly committed professionals and absolutely know their craft. the idea that they would permit classified documents to be somehow exposed to the world is

just wrong. i say to members opposite i would have thought that you would have had more respect for the people running our national security. >> there will be silence on both sides. >> thank you madame speaker. i can assure the house that -- >> the member will resume -- one more time and you leave under 94 a. that is an absolute abuse of stand your orders and will not be tolerated. the prime minister has the call. >> madame speaker the shadow attorney general the man who thinks that terrorists should be brought back to australia the shadow attorney general -- >> member resume your seat. >> prime minister has the floor. >> madame speaker, who does the

shadow attorney general think produced the maps in question? does the shadow attorney general think that somehow i rolled up a few maps and took them into asia? madame speaker the maps in question are produced -- >> the member will leave under 94 a. >> and is absolutely crystal clear for repeated statements including by the director general they were unclassified maps. madame speaker let's have no more of this childishness from members opposite who are imputing the professionalism. >> and that's where we leave. thanks for joining us. the long winter break is upon us. we'll see you when parliament

resumes. on the next washington journal a discussion on the hurdles that are keeping third party presidential candidates from running competitive campaigns. our guest james glassman and how it changes to overtime pay announced by the white house effect employees in hiring. elizabeth molito and christine owens of national employment law project join us. washington journal live every porn morning at 7:00 a.m. eastern. you can tell us what you think by phone and on facebook and twitter. like many of us first families take vacation time and like presidents and first ladies a good read can be the perfect companion for your summer journeys. what better book than one that peers inside the personal life

of every first lady in american history. first ladies, presidential historians on the lives of 45 iconic american women inspiring stories of fascinating women who survived the scrutiny of the white house. a great summer time read available from public affairs as a hard cover or e book through your favorite book store or online book seller. next the conversation with russian journalist. he talks about the ukraine/russia conflict, press freedom in russia and the legacy of russia's president from the carnegie endowment for international peace this is an hour and 15 minutes. >> very generously a few words of introduction. he is a truly standout figure in russian media and political

landscape. he is one of the most insightful commentators about what is going on in russia and internationally and based on his extended career the station is observing the 25th anniversary so we are in the middle of a jubilee period and looking forward. what is interesting is he was born in 1955 and spent about 20 years teaching. i think about where his students are today. it's a very different career path. in many ways i think people in the russian studies field were still his students. i start my day and drive to work every day and when i go home i listen and it creates a filter and a source of information. in this environment i will turn things over in terms of our discussion now. the filters are getting very confusing. i think we are in a period of incredible unpredictability and uncertainty of what is happening inside russia and

internationally. do you when you look at that level of uncertainty and unpredictability have a few facts that you keep reminding yourself of. the one i keep reminding myself of is we are in a war-like atmosphere. does it feel that way to you? >> translator: good afternoon and thank you for inviting me here. indeed if we are going to talk about the environment it [ inaudible ] prewar situation when the war began everything became clear and predictable. this how in the vision of my president and our leaders we have confrontation. the war in ukraine between russia and the united states of

america. ukraine is a territory where the clash took place. still there is no direct clash between the citizens of russia and citizens of u.s. and i hope it will never happen but the perception is that our enemy in russia is the united states because not ukraine, not france, not england. that's why for me this is the territory of big predictability. currently the united states according to the poll is enemy number one for russia. i believe 78 or 79% of russians consider the united states the enemy. a few years ago it was about 50%. and this is a very sharp increase. our mentality is very

militarized regarding the u.s. we can see in the news reports every american politician a person who speaks on behalf of the united states any sanctions and any challenge any is seen as a challenge any statement of any journalist is perceived as a challenge. that's why everything is quite clear. >> you spent a lot of time one-on-one or in small groups with president putin. one of the striking stories i remember hearing about is when he explained the difference between an enemy and a traitor. he said you're an ma'am.

can you explain what he meant by that? >> translator: yes. it was the year 2000 and president putin was only just elected. he came to -- i was just a journalist. he came from a city. he met the widows of the perished sailors if you remember this russian nuclear submarine which sunk. he was very nervous. he was talking very tough to us journalists working with the president. later he toured the state and spent about 2 1/2 hours talking about media and about what was going to happen. it was a philosophical