because it happened in my district. and i said it's what he said. this came from loretta lynch. it's a lie because it happened in my district. >> coming up on c-span3, a discussion on monetary policy

and the u.s. economy. then house and senate members discussed legislation to assist with the treatment and prevention of opioid addiction. after that, the d.c. bar hosts a review of the recent supreme court term. and later, a look at how the media can improve education. next, a discussion on monetary policy, the economy, and the impact of the uk brexit vote on the global economy. federal reserve board member daniel tarullo spoke at an event hosted by "the wall street journal." this is just over an hour. good morning. thank you all for coming. and of course thank you, governor tarullo. a couple of quick programing notes. we're going to talk up here, the

three of us for about a half hour. then we're going to open it up to people in the audience and to the audience watching on livestream and via c-span. if you want to submit questions from afar via twitter, i'm jake schlesinger. i'm the journal finance regulation editor. this is jon hillenwrath. since we're "the wall street journal," we're going start from the right. so john, take it away. >> we're going to get right into it. let's start with the news. the british voted to leave the european union. there has been a fair amount of turbulence in financial markets. how do you assess how the global financial system has absorbed that shock and more specifically how the u.s. has absorbed it. >> jon, i think the global financial system was reasonably well prepared for the initial shock. even though the vote itself was

unexpected in many quarter, the bank of england had done an enormous amount of work overseeing the uk banks to make sure that they were in a very viable liquidity position. our banks had -- u.s. banks had run internal stress tests to try to predict the kinds of developments which they might encountered in the immediate aftermath of the vote. and there, as i think you saw notwithstanding flight to quality and the down push in equity markets, it was something that the financial system was better able to absorb than in some instances of turbulence in the past. but as people have said from the outset, that was just the initial reaction. and a i think we're all going to have to watch to see over the medium term how macroeconomic developments play out. the one thing that we can be

certain about is that is there a good bit of uncertainty as to what the future holds for the precise relationship of the uk to the european union in terms of the kind of exit agreements that they will negotiate. and when there is uncertainty, as everyone knows, there is an inhibiting effect upon investment decisions and maybe household decisions as well. how much of that turns out to be the case? well, we'll just have to see. and i know that central banks in the uk and in frankfurt are very much focused on developments and responding as appropriate to developments. in terms of the u.s., again, i think things to this point have gone about what we expected as sort of the medium scenario.

but, again, that was just the first chapter in developments. and we will be monitoring developments, the macroeconomic developments closely, as we would in any case. >> so we've heard a number of officials in the last few days talk about taking a wait and see attitude. this was just the first stage. how long is it going to take to really get your hands around the affects of that particular event? are we talking about weeks? are we talking about months? >> i don't think we know. but in some sense, jon, the impact of brexit as it -- as it transmits to the economy is just going to run in to the impact and effects of a lot of other developments as well. and so for us, it will be a matter, as it always is of surveying economic developments more broadly. the uncertainty point, you don't know how long that's going to last. indeed, we don't even know the

magnitude of the effect. i think we're pretty sure about the sign, which is that there will be some inhibiting effect, particularly in the uk and the eurozone on investment and household behavior. i think governor carney has indicated he thinks the risk to the economy in the uk have increased. but none of us really knows the magnitude of it. and i doubt that there will be a moment where people say, well, we don't have to -- brexit is done. it will probably be something that just attenuates over time. >> so let's talk about the u.s. and monetary policy, that and regulatory policy, the two things that a lot of people want to hear you discuss. the fed raised short-term interest rates in december. we've been talking all year about when you're going to do it again. and keep waiting. what are you going to need to

see in this economy and in the financial system for that matter to get to a point of comfort to raise interest rates again? >> well, let me first say, and i think this is important to say, when you use the second person, i'm taking that as a second person singular. when you say what do you need to say? i'm going to speak what i need to say. i think people understand it -- >> you don't speak for the federal -- >> i do not speak for the fed. only chair yellen speaks for the fed as a whole. but i think it's useful to give a little context here. i don't think of this as a normalization process. people sometimes write about it, talk about it. using the term normalize or normalization. and i don't believe that there is some target that the federal reserve should be moving towards. what the right level of interest rates is depends upon the manifold factors that are

affecting the economy in the short-term and over the longer term. so for me, it is a judgment as to how taking a prague hat tick look at things, how we can best pursue the dual aims of maximum employment and price stability. now in current circumstances, what does that mean? well, i think first it's worth focusing on the maximum employment goal. the statute, the federal reserve access would preserve maximum employment, not some abstracted concept of full employment. but maximum employment that is consistent with price stability. and i think as we've seen that even though, for nine or ten months now, some people have said we're at or close to full employment. and yet during that period, we've created eight or 900,000 jobs with the unemployment rate essentially stable, except for

last month when the participation rate brought it down. that tells me that there was more slack in the economy. that tells me that we have the opportunity to create more jobs, that is obviously good for those 800,000 or 900,000 americans. it's almost surely good for those who are more on the margins of the labor force. it's almost surely good for groups like african americans and hispanics who have traditionally had higher unemployment rates. so i looked at this as an opportunity for greater maximum employment in a context moving to the second point in which inflation is not at or stated target, not near our stated target, and hasn't been so in quite some time. this is not an economy that is running hot. this is not the late '70s. this is an economy that has been moving forward in a gradual recovery modestly above trend

for some time now. but as i said a moment ago, surely not running hot. and it's also an economy in which we probably are not actually providing as much stimulus as people may think. the neutral rate of interest has surely come down a good bit since the precrisis period. probably because of slower productivity, slower demographic growth, probably a bit because of the global environment. but for all those reasons, the neutral rate is lower, which means we're not as far away. and finally, i think as many people have observed, the risks we face present us with an asymmetric set of tools. were the economy to pick up more rapidly, which would be i think a welcome development we have the tools to respond appropriately. but were things to slow down, we

obviously would face a more limited set of tools. and so for all those reasons, i have for some time now, this is not a brexit-driven issue, for some time now, i have thought that it was the better course to wait to see more convincing evidence that inflation is moving towards and would remain around the 2% target. >> so you don't sound like an individual who is anywhere near being comfortable raising interest rates again. >> well, certainly to this point have not seen that kind of evidence. but i think, you know, for the audience's benefit, jon and i were talking before the session got started about correlations which may have prevailed for some period in the past, which maybe aren't prevailing anymore. various labor market correlations, things in markets and the like. and i think under those

circumstances, one needs first not to have some sense that is there a normal rate of interest to which we're moving, but also i think one has to have a sense of being sensitive to the things that do happen. and i hope that i will remain and expect to remain sensitive to indications that perhaps things have picked up, that things are picking up. and if i saw developments suggesting that inflation really was moving. >> core inflation has risen. we were talking about this earlier. >> yeah, it's risen modestly. it was off 1.2, which is well below where we need to be. >> yeah. >> but i would want to be more convinced that the underlying rate of inflation was around 2%, not simply that, the fact that oil prices are not declining anymore has taken some of the downward pressure off. >> it's moved from 1.2 to 1.6, 1.7. that's not convincing to you? that's not enough? >> it is a -- it's certainly a

sign as many expected that the removal of the downward pressure which the rather substantial drop in oil prices had would have the inflation, the core inflation rate coming up somewhat again. but it's not enough to this point to convince me that the rate is headed in a nontransitory way to around 2%. what that -- but that evidence may well be forthcoming. and that's why -- i know this is a bit of a cliche. but i think we should all mean it. that's why i don't -- i don't want to say -- i don't see it now. maybe in three monday. maybe in six months. i think you just have to be sensitive to what happens from meeting to meeting. >> so you said earlier you're not one of the normalization guys. you're not in that camp. you do, though, probably more than other fed governs have a sensitivity not just to the macroeconomic growth, but issues of financial instability. and there ra lot of people out there who say that the long-term period of near zero rates

creates tremendous instabilities, wrecks financial market, distorts asset prices, makes price discovery difficult. how do you strike that balance, and what do you say to those critics? >> well, you know, i think, jake, you have to separate a positive observation from a normaltive recommendation. as a matter of fact, does a low rate interest environment that lasts for a long time create conditions that might pose risks to financial stability? stated that way, i think the answer is probably yes. whether it does or not in a particular instance, you have to watch. but you can see the logic of it. but that's a different matter from them saying as normative ly you should raise rates. in the first place, if markets do regard economic prospects as only modest to moderate going

forward, then raising short-term rates is almost surely going to flatten the yield curve, which generally speaking is not good for financial intermediation, and in some sense could actually exacerbate financial stability concerns. so as i say, i think the observation is a reasonable basis for paying more attention to financial stability issues. but it doesn't translate into therefore raise rates and all will be well. >> so you voted to support the fed's rate increase in december. were these financial stability issues at all on your mind when you voted to support them? >> i mean obviously as you correctly said a moment ago, because of the regulatory role i play, and financial stability board issues and all the rest, i'm regularly thinking about financial stability concerns. i didn't think then and don't

think now that that kind of phenomenon developments that are contemplated in jake's question are in a manner that causes me immediate concerns. that is i don't -- >> they're worried about bubbles right now. >> well, no, i'm not -- i mean, there are always going to be asset prices that may be above historic norms. i think everybody should be a little bit humble about thinking you can identify in each market where a price is sort of out of line and think that you can then dial it back. what we should probably be looking at is to see whether across a broad range of assets first prices are above probably significantly above historic norms. but secondly, when you're thinking about financial stability, you really do want to look at how the assets are being funded. because to the degree that there

is leverage, particularly short-term leverage, you've got greater risks. to the degree that there is, there may be money lost if assets prove not to have the value that the market currently assigns to them. but that is the way a market economy is supposed to function. >> so we want to move it into the regulatory arena. my colleague ryan tracy wrote a story about you recently. we put up a paragraph from that story which describes you as the most powerful man in banking. >> trying to sell newspapers here, jon. >> so my question for you, this is a judgment that not only exists in our reporting, but among a lot of people in the banking community. so my question for you, should a regulator in washington be the most powerful man in banking? >> well, now that's -- first off, i mean, as i was semi facetious, but semi serious in saying i think you guys kind of come up with these things to make the stories interesting.

to the degree that, you know, what we have all done, and this is not me. this is the united states government with the three banking regulators, the market regulators. certainly the congress in passing dodd/frank, all of my colleagues on the board, i think we all set ourselves to a fundamental reform of our financial regulatory system in the wake of the crisis. and perhaps by sheer longevity, since i've been here since early 2009, i'm -- you know, my name ends up in more things that have been done because i've been here during that period. i've been occupying this role. but this is not -- this is not a set of decisions that i made. this is a set of decisions that flows out of a collective judgment by the congress, the executive branch, the president who signed the bill, and our

regulators now that we needed to make a basic set of changes in how we regulated the financial system. >> so tell us -- so where does this go? and let me take this out of our words and put them into yours and help us understand where you see the ultimate goal of the end vision. in that story where we interviewed you, you said, and i quote, i think it likely that firms are going to have to change in some cases their size, in some cases their business model, in some cases their organization. i don't think you've seen all the adjustments that are going to be made at firms when we're doing stuff like that. and "like that" you were alluding to changes in the stress test that are coming there is going to be a further round of adjustments. what did you mean by all of that? >> well, oddly enough, just what i said. what you called it. firms have already made some adjustments. in some cases it's been reduction in the size of their balance sheet. in other cases, it's been a

shift in the composition of assets, moving from riskier to less riskier assets. and i think, jake, not just for regulatory reasons, but for market reasons, for business environment reasons, many financial institutions are still in the process of adapting to the regulatory business, financial environments which they face in the 20-teens as opposed to the first decade of the 21st century. so the adaptations will vary with the firm. but each firm needs to make a judgment and i believe is making a judgment as to how its business model should evolve given the regulatory requirements, particularly on capital and liquidity that have been put in place. and as you point out with respect to the stress test, the further changes that we're

likely to make over the course of the next year. so-so when you say what exactly did i mean, i don't mean -- we don't have anything specific in mind. and in a sense, that's the point. the point is we should put in place a set of regulatory requirements which are designed to make the firm safer and sounder and the financial system more stable. and then allow each firm to make its decisions on its business model working within those regulatory requirements. >> but i think -- help us figure out how far along in that adjustment process we are. if you kind of treat 2006-2007 as the starting point of one and sort of the end point of the utopian ideal of an american banking system as 10. are we at a 5? are we at an 8? how much more dramatic are the changes yet to come? >> well, i don't think i want to assign a number on a spectrum. but certainly we have come a

long way since 2005. >> how about baseball innings? you're a big baseball fan. what inning are we in? >> you know, the thing about baseball, jon, as you know, there is no clock. and the fifth inning can be the longest inning of the game. and six through nine, you know, six through nine you get that good set of relievers and the innings kind of go by like that. i think there have been a lot of changes, obviously, in how much capital has been built up in the system number one. number two, in the changes in funding structures. that the reduced dependence on shorter term wholesale funding has been something that is significant. on the capacities of the firms to understand and manage their risks, a point which should not be understated. so a lot has happened. i think that the adaptation by

firms to not just the regulatory requirements, but now the fact that they have built the capital and are shifting their liquidity profiles, i think that is something that they're probably continuing to do. and i believe in that interview what i was thinking specifically was that as we incorporate the surcharge, the capital surcharge into the post stress minimum requirement, therebyeverybody i effectively raising capital requirements for most of the eight firms. >> the c-car. we're talking about the stress test. >> the eight largest firms. >> the eight largest firms, systematically important. >> we established a no acronym rule. >> we should have a buzzer. >> those -- how can you be in washington without using

acronyms? you know what discussion you're in based on the acronyms. that's right. i suspect that those firms are continuing to make these kinds of decisions based on their seeing where the regulatory requirements are going to be. >> so just let me tell you one more time in a different form which is can you envision a scenario in which you think that those eight largest banks have met all the criteria you think are important, but remain largely the same in terms of their structure and size? >> i don't know. i don't know, jake. i think, you know, we're going to continue with the resolution plan process, which has occasioned changes in structure organization, liquidity practices of firms. we're going to make the changes in the stress test, which is as i say will some firms increase capital requirements. i think we're going to continue to pay attention to funding because when it comes right down to it, funding and the

runability of funding is core to financial stability, the potential for runs and panics throughout the economy. and through our annual comprehensive liquidity asse assessment exercises, we're going to be paying more attention there. so there will be more -- there will be more changes. and obviously, our aim is to get to a point where we can say that the financial system is relatively speaking stable, safer, sounder, certainly more stable, safer, sounder than it was a decade ago. >> you mentioned funding in requestedt liquidity. rules on liquidity. those are an experiment. those didn't exist before the crisis rules in terms of liquidity. talk about how those have worked and whether there is some flexibility or feeling. >> and also if we can define liquidity for people in the room

who aren't -- who aren't familiar not just with the acronyms, but some of the jargon. >> we'll do a little bit. why do you worry. so from our point of view as regulators, liquidity can mean a lot of things. it basically means the capacity -- the relative capacity to sell an asset at what you think is something close to its actual value. if you have a liquid market, that means you should be able to do it pretty quickly. so if you have 100 shares of apple stock, you should be able to do that pretty quickly because there are many people operating in the market, many buyers and sellers. if you own a home way out in an area where there are very few homes and very few people, buyers and sellers, that's that may take a good while for you to be able to sale at a price you think fairly reflects its value. so that's the basic concept of liquidity. why do we as regulators care about liquidity so much? well, there is this old, old

saying in financial regulatory circles that liquidity is most abundant when you don't need it. and it begins to disappear when you do. if you look at what happened in the run-up in the period to the financial crisis, what we saw then was because there had been the big asset price shock, meaning that investors, market actors didn't know how much, for example, mortgage-backed securities were actually worth because they didn't know how much the underlying mortgages were actually worth because there was so much concern about housing prices. under those circumstances, a lot of actors pulled back. they were not willing to do the buying of these things that they normally would be. when firms were holding assets that they held because they had borrowed money to buy them, and this money was short-term, that

is they had to reborrow every seven days, pardon me, or 30 days, or even every day, and you have an environment in which others are unwilling to lend the money because they don't know how much the collateral is worth, under those circumstances, firms were forced into fire sale, meaning that they couldn't borrow money anymore. they owed money. they had to pay it back. therefore they sold a lot of these assets. >> so the changes in the policy to fix that were? >> so the liquidity -- >> are they working? >> as jake noted, there were not quantitative liquidity requirements, pardon me, in the precrisis period. we have quantitative capital requirements, but only a kind of qualitative observation on liquidity. so what the liquidity coverage ratio and the net stable funding ratio, which are the two liquidity quantitative liquidity requirements that are coming

into place are doing is trying to make sure that the largest firms in the u.s., and these are requirements that apply only to the largest firms, do not get in that situation that i just described to you where they are reliant -- they have assets that are longer term or that are not so liquid. and they have liabilities that are shorter term. so it really is an effort to match the liquidity of assets and liabilities. and therefore, to minimize the impact of runs and minimize the impact of fire -- >> so have those work and are you willing to see them unfold adjust them in ways that -- >> i think that -- you know, the brexit exercise and some of the -- i think as firms went through that process, they were finding that the liquidity coverage ratio requirements -- >> that was good.

you caught yourself. >> move them into positions where they were in a better situation to handle stresses in markets. we have found in our review of the implementation -- i can now say lcr, because i've said the other thing three times. in the implementation of lcr that firms were able to and have been able to comply with it. so i think there the lcr is a 30-day requirement. i think there we feel as though this has been a positive contribution to the regulatory structure. are we totally confident that liquidity writ large both in and out of regulated institutions is something that's been -- that is in the best position? no. i think there is where actually a fair amount of work remains to be done. somewhat inside the regulated

financial institution, but particularly outside. >> but what we're seeing funds -- go ahead. >> we're seeing a number of funds freezing withdrawals in the uk. >> the real estate? yeah, the real estate fund. it's a little hard for me at a distance to tell how much that of is unusual because i was using in my example before individual pieces of real estate are relatively less liquid. but the issue that it raises is one that we have been addressing, we meaning in -- and i'm sure you've all seen chair white, mary jo white's and some of the things that the s.e.c. has done, is proposing to deal with the issue of redemptions and asset managers which might

pose a similar kind of risk because in order to get the funds to redeem the shares, the asset manage splar to engage in something like a fire sale. so it is a real issue that in this case something that the s.e.c. and financial stability oversight council, an interagency group formed -- >> we don't need to do that. >> before we turn it over to the audience, we want to briefly take it out of the policy and into the personal. talk a little bit about you. how much longer are you going to be in this job? will you be here a year from now? is it affected by who is president and who is the fed chair? >> jake, i'm doing the job that i was put in place to do. and there is a good bit that remains to be done. and that's -- i really don't have much more to say than that. >> just a related note, before we get to audience questions, the dodd/frank law, which you've been very involved in implementing requires that the fed include a vice chair, have a

vice chair for supervision in place. the white house has not nominated anyone for that position. is that okay? >> well, it certainly hasn't affected the way in which i've functioned. i mean, what that -- what the law basically does is to shift the discretion on designating who at the fed will sort of coordinate regulation from the fed chair as it's traditionally been to the president. it doesn't give that person any powers. >> requires that person to be accountable to congress. and through. >> always available and have testified a lot. >> all right. when we take questions from the audience, raise your hand. a couple of programing notes.

one question. jake and i reserve the right. but we will withhold the right to cut you off if we had any lectures or if questions go on for too long. we want it to be an inclusive conversation. well want to have as many people get in as possible. >> first one. and also a reminder that we are taking questions over twitter at #wsjfed. >> good morning. i'm aaron cadel from capstone here in washington, d.c. thank you for doing this. by bank of england governor mark carney where he reduced the cyclical from 50 basis points back to zero. effectively as sort of a means of spring lending in the uk and i guess sort of a tacit admission that there is not a lot further that can be with rates so low.

effectively kind of using regulatory policy to spur the economy in a period of when he acknowledged that rank. market risks are crystallizing. one can say that that's kind of the exact opposite time that you would want to reduce the counter cyclical buffer. >> sure. >> i want your decision. >> it's a very good question. and it's probably worth -- if you guys don't mind, giving a little context. so it's not acronyms, but i think people otherwise wouldn't understand. so the argument obviously as you know has been that there needs to be much more capital in financial systems than there was prior to the crisis because you needed resiliency. firms took big losses. they were unable to lend in no small part because their capital was so low. that's been the exercise both in the u.s., certainly in the uk, and more generally

internationally. so i think the questioner was saying, gee, if you want capitalized banks so that they're in a position to lend, why would you reduce their capital requirements? that seems to remove their capacity to do more lending because they hit up against the capital constraint. and that -- while that is the right way to think about sort of through the cycle, capital requirement, and it's a reason to get capital up, particularly in nonstress times, the counter cyclical capital buffer is a specific innovation that was put in place in the aftermath of the crisis. which permits the national authorities in the uk it's the bank of england to decide that in some environments where there is sort of frothiness in asset markets that they will increase the capital requirements in order to make sure that the bank

will be more resilient if things turn bad in that market. and at least at the margin, perhaps to disincentivize some of that additional lending. it was designed specifically to be reactive to the currently prevailing conditions as opposed to being through the cycle capital. and the bank of england has been among the first national authority -- national authorities to use it. and so they had already created a positive counter cyclical capital requirement. we in the united states do not. ours is at zero. so i think what the bank of england did yesterday was to say, look, we dialed up the counter cyclical capital buffer requirement when we're in a period in which things are going along okay, and we thought maybe there was a little bit too much activity in some asset markets. but now under the post brexit

circumstances, we think we're going to remove the requirement that had been put in place. so i think it's important to distinguish the use of the counter cyclical capital buffer from saying, oh, now we're going to reduce capital requirements. the -- you know, ryan tracy from the journal wrote a story today in which he quoted an academic as saying this is very interesting. it's kind of the first time it's been done trending down. now we'll see if it works. and i think everybody will be watching that. >> what is your expectation? do you think it's useful? >> it depends, jon. when banks are well capitalized already and they feel comfortable making the lending, then the reduction of the counter cyclical buffer could have a salutory effect if there is demand for the loans. if you're going to do it, this is the circumstance to do it. >> banks are well capitalized right now, it raises the

question of whether reducing some of the capital expectations and more broadly regulatory requirements that they're up against would help spur lending and economic growth. when you go up and testify on capitol hill, this is something you hear quite regularly that the regulatory burden is too great, and it's holding back lending and output. >> what i hear much of the time, and something with which i agree is that capital requirements for smaller institutions in the united states need to be simpler than they are. our small banks are very -- smaller banks are very well capitalized. we do have a set of capital requirements i think is more complicated than they need to be. for the -- i don't think that capital constraints is the reason why we don't have more lending. first off, lending has been increasing in the u.s. in recent years. it's been increasing modestly

more than gdp. i think that to the degree more lending is not taking place, it is still a demand story. it still the people not seeing reasons to have, to make investments in new productive capacity because they're not sure that the demand is there, which of course gets back to the overall macroeconomic picture. >> all right. let's take the gentleman in the front row here. >> i know the fed is not contemplating negative interest rates at the moment, but if the fed were to move to negative interest rates at some point in the future, how do you think about the effect on bank balance sheets, the lending in the economy and the health of the financial system? >> let me first begin by restating the premise that you had at the beginning of the question, we're not thinking about negative interest rates. i think chair yellen has made that very clear.

on the issue of what would happen were negative interest rates to come in to being whether or not because of central banks' own actions, our stress test this year actually tested for just that proposition. that is we hypothesized negative interest rates. and what we found was that by and large, the larger financial institutions in the united states are quite well-positioned to manage the challenges that come with negative interest rates. i think some of the -- i don't know who this was, but somebody had a quote in a paper from a banker saying we actually learned a little bit about how we need to function operationally. but in terms of the losses that would be absorbed, i think there we're seeing that of course there would be losses there would be some stress depending

on the circumstances. but that is something we've already tested for. and that's why we do different scenarios in the stress test every year. >> so as we get a mic over to our next questioner, i just want to remind our audience watching us on the journal or c-span that you can tweet out questions. and we're going to pick them up. and my colleagues at a table here will read them out. >> i think we'll go to them. >> we want to encourage the entire audience, the viewing audience. >> after this next question, we'll go to a couple of twitter question. >> we have some. >> yeah, we do. >> victoria with politico. the fed is working on a deal with bank ownership dealing with physical commodities. i was wondering if you could talk a little bit about what your latest thinking is on that, what the most important priorities are to deal with that and whether you think it's important to get rid of the grandfathering provision. >> the things that we can address through regulation really go to the relative risks associated with the possession

and trading of physical commodities. and that's -- that's the thing we'll be addressing. the answer is yes to the second part of your question which is there is a -- for those who don't know, the graham leech bliley act back in 1999 had an interestingly drawn provision which prospectively exempted institutions that were currently engaged in all forms of commodity activities that might at some point in the future become bank holding companies. and thereby has given a grandfathered right to a couple of firms to engage in a far broader range of commodities-related activities than other bank holding companies. and as i have stated before

publicly, i do think that's something that is anomalous in a regulatory system. and i think it would be better to phase that out. but we will have the capacity, for example, change capital requirements with respect to certain activities related to commodities. and that's the direction which we'll be head. >> sarah, why don't you tell what's we have from the twitter verse here. >> sure. we have a couple of questions from twitter. emily liner from third way asks if mr. tarullo can speak to hensarling with his leverage ratio proposal. >> sure. >> there have been proposals around to substitute for other capital requirements, a single leverage ratio requirement. and make sure everybody is on a single foundation here. you have capital requirements for banks can be based either on

just the dollar size of the balance sheet. so you take the amount of capital and divide it by the size of the balance sheet. that's called a leverage ratio. second way to do it is a risk weighted approach which takes the same number in the newsroumr but adjusts in the bank portfolio. the idea of the risk weighting is that obviously a portfolio can pose very different dangers if it's composed of a lot of lending to -- a lot of unsecured lending to people with no income stream as opposed to very safe lending that is done by another institution. the size of the balance sheet in dollar terms may look the same. but the riskiness is different. so we have different capital requirements. an idea has been to say well, if

you just have a higher leverage ratio, 10% i think is the current proposal, that should cover anything that is risky, and therefore you can just have a single capital requirement. i think the issue there i think is while you can take say 10% as a leverage ratio number and apply to it the current balance sheets of banks and say boy, 10% would be more than they have now under the various risk rating and stress test requirements that we have, if you actually -- there is a dynamic element to the situation here. because if you actually put that -- if that were the only requirement that were put in place, then banks would be incentivized to move towards much riskier assets because their capital requirements wouldn't change. it's just the dollar amount unadjusted.

and so under those circumstances, you would probably have very different portfolios. and i -- i at least, my own judgment is that 10% number would have to be substantially higher to have regulators comfortable that in fact there were not safety and soundness considerations. and with a substantially higher number one really wonders whether that's the most efficient way because the amount of capital required there may not be particularly efficiently deployed. and it's probably worth noting as a historical matter the reason why risk-weighted capital requirements came in as a regulatory device in the '80s was that leverage ratios had been used beforehand and banks gained the assets, they arbitraged their asset portfolios. that's why we have multiple capital measures. a leverage ratio is very important because it provides a kind of upper bound on the

number of assets which are safe in normal times, but maybe not in abnormal times. but the risk weighting actually focuses you on the actual riskiness of the portfolio. so my view has been you really need both. and you need both to be meaningful. >> actually a quick follow up on that. sort of the broader point what emily is referring to is a bill by jeb hensarling. and it gets to a bigger divide over regulation, which is there are a lot of people, certainly republicans, fellow regulators like neel kashkari who say that dodd/frank and its implementation has just created this incredible thicket of complexity. we buy the broad view, but, you know, you have thousands of pages of stress test, thousands of pages of living will proposals. and then it gets to jon's point of sort of regulator involved in a lot of the minutia of how a bank is run. their view is let's just keep it simpler. let's just have higher capital rates and let the banks decide how to adhere to it rather than

having to go to dan tarullo with all the little parts of their business plan. how do you respond to that sort of divide? >> well, i think i just did actually, jake. the -- to have a single set of requirement and to make people comfortable that that requirement would be enough to ensure against -- to ensure resiliency, i think it would have to be substantially higher than people are talking about. financial institutions that the largest financial institutions are even if they look like traditional lending institutions, they still are pretty complicated entities. and coming to grips with the different kind of risks that they have, i think is something that where i think, as i alluded to earlier, when it comes to smaller institutions and

certainly community banks any institution under $10 billion, i think we can and should have a substantially simpler institution. one that looks like basel one coordination. the smaller banks in the united states by and large very well capitalized but it costs them in proportional terms a lot more to have to invest even in their reporting of more complicated capital. >> before we get to the next question i want to ask you to bring it back to the economy and monetary policy for a second and then i want to quickly try to get back to the audience. the uk is now talking about cutting interest rates possibly at their august meeting, there's a lot of expectation in the

market now that the japanese, bank of japan might cut interest rates as early as this month. can the fed be raising rates at a time when other central banks, major central banks are in the process of cutting rates to respond to slow global growth and their own domestic economic problems? >> again, john, the question of whether we should be holding rates where they are, raising rates, lowering rates, all of that depends, obviously, this is axiomatic on the macro economic environment we faces, an environment that's affected by the actions of other central banks around the world, can have -- can certainly have an effect on, you know our inflationary situation. can be disinflationary if other -- if many other economies have lowered rates. but i don't think we ex-antisay that's the way it is going to be. >> is it a potential constraint given the effects that you talk

about? >> when we face constraints the constraints are what we observe in the economy. if the others have a palpable effect in such a way that it affects us, then in some sense it is a constraint but no more or less of constraint that addition to buy firms or not make a constraint. >> okay, so we had a question over here. >> richard manual from columbia. >> university? >> no, sorry. columbia thread neofunds. my question is the c-car process. i don't know how to deacronym that. >> de-stressing process. >> thank you.

it is so robust. you've done such a great job stressing these organizations and forcing them to how much capital they should hold against them. why aren't they able to pay out in excess the minimum at the end of the stress period and is there a point at which that decision goes entirely back on to them and they can pay out all of their excess capital. >> in terms of dividends to shareholders and buybacks. >> thank you for the compliment about stress testing but want to quantify it. we don't test for all risks. it is why we changed the scenario on a year to year basis, why we've done so this year and next year again. it is one thing to -- i really do mean this, stress tests aren't a pantcia. second, firms are free to submit the capital plan making the proposals for distributions as they see fit. and, if a firm feels that it is

in a strong capital position, that it has a very good capital planning process, that it can adapt if unforeseen developments occur then they can submit that plan and our supervisors will evaluate it. there's not a prohibition in the regulation. the regulation requires that the firms be in a comfortable post stress minimum position relative to minimum capital requirements. you have seen some -- you have always seen some variation in

what different forms are doing because they do have business -- different business models, different capacities, they knew what their regulations were going to be so there's nothing that prohibits people from putting in a capital plan, but it does have to be both a quantitatively and qualitatively good capital plan, signed capital plan. and i think most firms have continued to think that a continued build in capital while making increased distributions is the right path for them for both regulatory and business reasons. >> we're going to take this person. >> joshua hoffman, if there is resistance to his bank regulation agenda as over reach. >> i'm going to speak for myself

here. throughout predodd frank, during dodd frank, post dodd frank, they are discussing what are the right set of policies to confront, too big to fail and an area that i think needs more attention to people in funding and run ability issues in and out of the regulated sector so i think it is good to have discussions that might produce some ideas that haven't been produced or developed before. those of us who are policy makers through all these discussions though need to continue to do the work we've been charged with doing. in our case has been increasing capital, stress testing, pursuing the resolution plans

and dealing with liquidity issues. so people in the room talk academics talk, public policy organizations talk. that's a healthy thing in the economy to have more discussion debate and if concrete things emerge that worth congress looking at or regulators looking at from any process is a good thing. those charged with policy have to go on and do our jobs as best we can during the discussions which will probably continue indefinitely. >> a question right here. we have time for one more after this? no? we're getting -- maybe we'll have one more. i would like to get someone from the back if at all possible. >> go ahead. >> okay. that's you. >> carter mcdowell with sifma.

taking a look at the cumulative impact of the changes that have taken place and the boswell committee is considering a similar effort. i'm wondering if the united states shouldn't be thinking about something similar to look at how these rules interact with each other and seems like it should be part of the on going process particularly in a way that allows for the public to comment and be involved in that. >> should there be a review? >> i haven't heard anything since about what's happened. you know, i assume if they have something to say about that they will. look, we are looking at i can't remember if it was jake or john

who asked earlier about the liquidity regulations, i wouldn't call them experimental but i would say they are new, so we are doing an assessment of that and people obviously open to people doing their own analyses. banks tell us all the time what their analyses are. i think it's this notion that you can somehow put together a very big model in effect that plugs in every regulation and looks at cumulative effect i think that's probably not realistic for a number of reasons, it is going to be enormously assumption driven, is it's going to assume static behavior when they go into effect? that's never been the regulation, markets are always

adaptive. number two, just trying to model all the interactions again i think would require -- >> aren't you doing something like that with stress tests? >> no, with stress tests you're basically saying here is a portfolio, let us assume this kind of scenario. we know we are making assumptions to some degree. that's why we vary the scenario from year to year but it is not trying to model the effect of ever regulation, adaptive behavior and everything else, it is looking at losses in response to a particular scenario. so getting back to the question -- an then the other thing which is so important when people talk about cost benefit. the assumptions about the benefit are incredibly important. if you just change somewhat your assumption about the

probableability crisis, reach assumption of what the cost of what a financial crisis would be. those assumptions can dwarf any of the perceived effects associated with a particular regulation. do you -- here is a good example. do you assume that the cost of the financial crisis is the difference between the financial crisis in a country that had a financial crisis? and gdp growth and a country that didn't? or do you think wait a second financial crisis in one country had a depressing effect on another which is not adequate which would take off a couple of gdp points for everybody.

so i think it is giving a grand unrealistic number, what is not unrealistic is to take a look at how regulations are being implements, and it is realistic but still a challenge because so much has changed in addition to regulations but to try to trace through what kind of impact those regulations are having both to see whether they are achieving what they are supposed to achieve in terms of safety and soundness but secondly to see whether they are doing it in a manner that is most cost effective or at least relatively cost effective and that is something that we're trying to do with respect to liquidity. >> thank you. do we have time for one more question?

>> okay, indicate larson from the consumers bank association. we have talked a lot about the aftermath of the financial crisis but i wanted to see as we sit here today what do you see is the biggest threat or risk to our financial system today? >> well, so in terms of yawn the financial system at large, again, we have made a lot of progress number one. number two, a healthy financial system is closely tied to the continued health and growth of the economy as a whole. and, so i have thought that the best thing we can do for bankers and particularly consumer bankers to be honest is to produce jobs which spending is

greater which in turn pulling forth investment by firms that see more demand on the horizon. and so i think that's -- the growing macroeconomy is something that will necessarily be a great benefit to bankers, when it comes to risks to the financial system, i don't think there's a single risk out there. in fact what we spend our time doing with the multiple scenarios and the like is trying to build up the general resilience of the system precisely because we cannot be confident we can predict exactly where the risk comes from. >> thank you. i know there are a lot of questions out there. but that's all we have time today. thank you all for coming and for a lively conversation. before we conclude two conventions, we have implication of the brexit vote.

july 19 we have online wsj events where john and now henderson, will discuss the third quarter out look. for information please stop by the registration table. and governor tarullo has to leave. >> we also have an events with mervin king. >> governor tarullo has to go but john and i can stick around and please have more coffee and baked goods and thank you for coming. c-span's washington journal live every day with news and policy issues that impact you. thursday morning texas republican congressman will join us to discuss the fbi investigation into hillary

clinton's e-mail practices while secretary of state and the fbi director's decision not to recommend prosecution. then congresswoman karen bass will also talk about the fbi's recommendation of no criminal charges against hillary clinton as well as the 2016 presidential campaign. plus representative bass will discuss possible house votes on gus violence. the police shooting of alton sterling and president obama's announcement to slow the pace of troop withdrawal. be sure to watch c-span's washington journal at 7:00 a.m. eastern thursday morning. join the discussion. isaac arns dor of has been following these events for politico and joining us on the phone. >> thank you. >> let me begin with the testimony tomorrow by the fbi director before the house oversight committee. what questions should he expect? >> probably along the lines of the questions in senator

johnson's letter from yesterday asking for more details about the investigation and the conclusion what is the difference between careless which is how he characterized her conduct and gross negligence which would be the legal standard for bringing charges. >> let me share with our audience that you wrote at politico.com. the house reaction calling the decision by the fbi director in his words surprising and confusing. adding he thinks secretary clinton did violate the law. can you elaborate on that? >> well, i think a lot of people were surprised by if you listen to the first 15 minutes of director comey's speech you got a different impression from the last three minutes. i spoke with a lot of former

prosecutors who actually sort of anticipated based on how negative he was being in describing the evidence that that was going to lead to not recommending charges because if you were going to indict someone you wouldn't want to be that prejudicial. the intention as they saw it was to be as transparent as possible, not pull any punches, not shy away from anything and also not have anyone out there wondering what was the evidence and talking about they tried to cover stuff up. just put it all out there but then make clear the legal hurdle. if you're going to bring criminal charges can you prove criminal intent beyond a reasonable doubt and to show the difference between the conduct he described and that actual legal standard. >> the attorney general said she would follow the decision by the career prosecutor, so it's highly unlikely that the justice department would seek any

charges against the former secretary of state, the presumptive democratic nominee. do house republicans have any course of action? >> well, they are going to bring director comey over tomorrow and can certainly have more hearings or criminal investigation. they also want to create more opportunities to say things like he said yesterday to get him on tape disparaging her judgment and conduct. that feeds right into attack ads. >> and the political equation was my other question. the headline today in the newspaper reaction to the fbi, the rules are different for the clintons. talk about that for a moment. that seems to be the republican and trump messaging on this that e clintons are above the law

that they don't face the same accountability that others would face. it's not what director comey said yesterday. he talked about comparing this case to all the similar cases that happened before and the absence of an aggravating factor in this case like there were in the other ones where there were charges, but that's the way that the republicans want voters to see this as the system being rigged and unfair and the clintons getting away with things that they shouldn't. >> isaac arnsdorf is following all this. thank you for being with us. i appreciate it. >> thank you. fbi director james comey testifies on capitol hill thursday on his recommendation that hillary clinton not be prosecuted for her use of a private e-mail server. director comey will appear before the house oversight and government reform committee live

at 10:00 a.m. eastern here on c-span 3. our road to the white house coverage continues live with the democratic party platform committee in orlando. friday july 8th at 3:00 p.m. eastern and continuing saturday july 9th at 9:00 a.m. eastern. members will vote on the democratic party platform for this year's elections. live coverage on c-span. the c-span radio app and c-span.org. on "american history tv" on c-span 3, saturday afternoon at 1:50 eastern -- >> memoirs you have to be wary of because not only just bound to be self-serving to a degree, but most of these people did not want to disclose too much. in some cases, they may actually dissemble and try to mislead

people. >> historians talk about the techniques used by the cia to gather intelligence dating back to the cold war and how that has changed since the 9/11 terrorist attacks. at 6:00 an examination of race relations in memphis. >> many whites thought this is it. it's finally happening. a full scale black uprising and they panicked. mobs of white men armed with pistols and clubs formed spontaneously downtown, marched to the scene of the shootout and began shooting, beating every black person they could find. >> the 1866 riot that resulted in the master of dozens of african-americans. also the role of federal u.s. colored troops stationed near the city. j just before 9:00 walter isaacson offers innovation and passion for science as an example of what he calls

america's national character. >> his view was that small businesses and start ups would be the backbone of a new economy. and indeed one of the things that his group did was made a set of rules for how to be a good entrepreneur and innovator. >> and sunday morning on road to the white house rewind -- >> and in the music of our children, we are told to everything there is a season and a time to every purpose under heaven. and for america the time has come at last. >> you know that every politician's promise has a price. the tax pay tor pays the bill. the american people are not going to be taken in by any steam where government gives money with one hand and then takes it away with the other.

>> the republican and democratic national conventions with richard nixon accepting the gop nomination for a second term and senator george mcgovern accepting the democratic nomination. for our complete schedule, go to c-span.org. house senate conference committee met to consider the comprehensive addiction and ror ri act. a senate bill aimed at addressing ode yoed abuse. this is just o over two and a half hours. opioe

good morning, everybody. so i call this meeting of the house on s-524 the comprehensive addiction and recovery act of

2016 to order. at the outset i'd like to make a few procedural announcements as well as a few requests of my fellow. we have allowed two minutes for each member to make an opening statement. 16 amendments were filed. more than we anticipated when we scheduled the meeting last week. votes are expected in the house and senate between 2:00 and 3:00 this afternoon and in order to be respectful of everyone's time and in order to move through the amendments that have been filed, i'm going to strongly urge my fellow confer rees to offer their statement for the record rather than use their two minutes of statement time today. if you decide you need to spike, i would ask you try to use one minute of your time so we can move to the consideration of amendments. this room is aptly name the john dingell room. later on this afternoon there's a a celebration in support of

his birthday. so we'd like to be done knowing there's another event to use this room for. in the spirit of moving things forward. i would welcome all of you to the conference on s-524. i look forward to deliberations today and i will submit my opening statement for the record. >> mr. chairman? >> i would recognize the gentleman from tennessee. >> when would it be appropriate to name a chairman of the conference? >> right now. >> mr. chairman i nominate the chairman as chairman of the conference. >> gentleman from vermont seconds there. is there objection? if not, i am named as chairman of the conference. thank you. so i would now recognize senator grassley for two minutes.

i have urged folks to not use their time. mr. leahy is recognized. >> thank you, mr. chairman. i'll put my full statement on the record. but i did want to hear because i have never seen anything like this in my own state, the opioid addiction from my years as a parent and grandparent, the yeeshz years as a prosecutor, i have never seen this. i have held hearingings, had conversations across kitchen tables, i have heard how this have destroyed lives. we're desperate for help. that's why we're here because, mr. chairman, all of you represent communities just like we have in vermont. there's not a state or a

district that isn't facing this. we're in this together. i think if we stick together, we can do something about it. the comprehensive addiction and recovery act through the senate. prior the knee jerk reaction was punitive on addiction. we showed as you combat addiction as you would any other disease. prevention, treatment, recovery. i think that i worry in the draft conference report that we have programs administered by the attorney general and have stripped out these strategies that are best practices evidence shows that. it replaces a structure of the kara legislation with a block grant that would place important

programs in jeopardy. we also need real funding. any one of us if. we go home and have honest conversations at home, we are going to find people who have families that have been torn apart by addiction, suicides that could have been avoided, families destroyed and they are looking for us to do something. thank you, mr. chairman. >> gentleman's time has expired. any members wish to make an opening statement. the gentleman from new jersey. >> thank you, mr. chairman. i'll try to summarize. the opioid abuse has taken a tremendous toll on families and communities around the country. while there are important provisions in this conference agreement that will dress this epidemic, we can and should not approve any report that does not

provide funding. house and senate democratic confer rees put forward that we all support so there's no excuse for us failing to make the federal investments necessary to begin to turn the tide in this public health crisis. they will large ly remain that f we do not provide the federal funding necessary to help states and local communities respond to the crisis. those on the front lines have been clear about the urgent need for immediate funding. the governors association and 182ed advocacy groups have writn to us to include federal funding in this package and we should listen to them and add the fund i ing. there there are two policies included that i believe are critically important to our response. we need an all hands on deck approach to this crisis and that's why i support the provision allowing nurse practitioners to treat

individuals with opiate abuse disorders. the report clarifies that a doctor or patient may request that a prescription such as an opioid be filled. this could ruse the amount dispensed unnecessarily, reduce the number of unused pills in circulation and reduce the risk of misuse and overdose. so again, mr. chairman, i believe this conference report substantively is a good conference report, but without the funding, i cannot agree to support it at this time. i would urge we include funding. >> the gentleman's time is expired. the gentleman from iowa, mr. grassley. >> you have heard the annual figure of about 40,000 people dieing from this overdose every year, so that's 129 americans a day dying from drug overdose.

129 of our sons and daughters, brothers and sisters, parents, spouses, co-workers, friends and neighbors, lost to addiction every 24 hours. it's a human tragedy that touches communities of all shapes and sizes across the united states. despite the awful toll of this epidemic, i have been inspired by how many fellow citizens have turned their personal tragedies into stories of hope for others. i have heard these stories across my state of iowa, the judiciary heard them during a hearing i convened on this crisis in january. now congress has an opportunity to do our part and pass this landmark bill kara. it's a comprehensive u approach authorizing almost $900 million over five years for prevention, education, treatment, recovery and law enforcement. i was proud to lead the bill through the committee and manage

its near unanimous approval by the full senate. i'm pleased that the bill now also includes the kingpin designation improvement act, which i introduced with senator amy klobuchar of minnesota and after all of our hard work kara now represents the collective effort of both democrats and republicans from both the house and senate. the time for us to act is now. let's not let another 129 americans lose their lives without approving the conference report this very day. as over 100 advocacy organizations have urged us to do. let's move kara one step closer to becoming law. >> the chair recognizes the majority leader of the house mr. mccarthy from california for an opening statement. >> thank you, mr. chairman. before i begin, i want to thank you for your work on this issue and many others and not giving

up. i appreciate that. mr. chairman, the opioid crisis continues in our country. families are suffering. communities as we know are being torn apart. those addicted are deprived of their freedom of will. now we have a chance to e reverse this and give the people new hope. government can't end addiction. but it can support community efforts to stop opioid abuse and help those in recovery. the house bill has targeted the root causes and results of the ep didemic. the drug trade, prips abuse, health care, prevention and recovery. but we aren't just creating new programs with the hope that more money attached to some new washington acronym will solve our problems. this legislation uses the power of data to determine if the programs we are fupding to fight

opioid addiction actually works. that's the purpose of the open act, which i sponsored with minority whips. it gives researchers and citizens the opportunity to see exactly what their government is doing and use that information to respond to the opioid epidemic. i want to thank the chairman of the committees and for their bipartisan work to get to where we are today. but today is not where we should end. we have to finish this. and the sooner the better. i look forward to working to get this bill signed loo law. >> the chair recognizes mr. a x alexander. >> the epidemic is killing more tennesseans than car accidents or gunshots do. more than 1,000 tennesseans die from an opioid abuse every year.

last month the headline in a knoxville newspaper said opioid crisis hard for officials to get a handle on. the way to fight this epidemic is not to wage a battle from washington but to support those waging the battle on the front lines. county by county, doctors office by doctors office. what we are doing today should afford substantial help. supporting education, prevings and treatment, providing grants to expand access to life-saving opioid reversal medication, providing grants to states to carry out a comprehensive response. this legislation is about program reform. this comprehensive addiction and recovery act passed the senate 94-1. it passed 400-5. we should finish its work today. 184 different advocacy groups signed a letter yesterday saying they supported the conference report. it is bipartisan. it includes the work of many members.

money helps. money helps. over the last two years, congress has increased funding for opioids by serve time seven times. 766% if we include the recommendations of what the senate appropriations committee has recommended this year and not yet heard from the house. this is the regular order. when we fixed no child left behind, we didn't appropriate dollars. when we passed the defense bill, we don't spend dollars. we do that on the spending track and both tracks have been working well. there are important discussions going on about funding. i'm glad to be a part of this committee. it's important we get a result today. >> gentleman yields back. chair would recognize the gentle lady from washington state, senator patty murray. >> i want to start by sharing something a constituent of mine whouz daughter died of an ep

yoid abuse. it can happen to anyone. it is everywhere. she is right. no one is immune to this disease. the number of heroin deaths nearly quadrupled from 2000 to 2013. this epidemic is hurting children, parents, grandparent, friends and neighbors all across our country. so i'm glad we were able to reach bipartisan agreement on many policies we are debating today. but just changing policies alone will not be enough. we all know without more funding to expand access to medication, assisted treatment, states simply won't have the resources they need to put people on the path to recovery and save lives. i'm very concerned that if we pass a bill that changed our nation's policies that completely ignores the funding

to put these policies into practice the funding might never come. for too many families, there's no later. there is no next time. this is the opioid bill and people across the country are running out of time. that's why i'm introducing an amendment that lays out a clear plan for investing desperately needed resources in reventing and treating opioid addiction so families and communities get the relief they are calling for. i hope all of our colleagues will join me in supporting it, especially since so many of us on both sides of the aisle agreed heading into conference that new invest mements in prevention, treatment and recovery aren't necessary. we have an opportunity and the clear responsibility to take life-saving action on this issue today. we have a choice between preventing more of the deaths we have all heard too much about and allowing the status quo to

continue. for mothers like penny and many others suffering as a result of opioid addiction across the country, let's make the right choice today. >> gentle lady yields back. the chair recognizes the congressman from new mexico. >> thank you, mr. chairman. 2014, 47,000 people died from drug overdose. it accounted for 28,000 deaths. an increase of 200% since 2000. my home state of new mexico has been hard hit by this crisis. in 2014 alone 547 people lost their lives. they missed their daughter's softball game, 547 people who aren't able to help their son with their math homework or kiss their spouse good night. 547 brothers and sisters, parents and friends that we lost too soon. i know the members of this conference committee are committed to helping our

communities because this crisis touches everyone. every member of this committee represents someone who has suffered. many of our constituents have experienced this tragedy firsthand. these are our friends, loved ones, our neighbors. but if we want to address this crisis in a meaningful way n a way that will save lives, we need to do more. we need to make real investments and provide funding for this package. take legislation i introduced. it passed with bipartisan support and i'm encouraged its inclusion will help mothers get the care they need to put families on their right path. for this effort to make a difference, we must provide funding. continuing the status quo will not make it work. if we're going to combat this epidemic and help people, we must provide more resources,

more funding. the work we're doing today is so important. no single solution will solve this crisis, but we have the opportunity to invest in the tools needed to combat this crisis and save lives. i thank my colleagues for their efforts to address this epidemic, but we need to do more and i hope we can come together today to do what is right. with that, thank you very much. i yield back. >> the gentleman from utah mr. hatch for an opening state. >> i'm glad to see the senate and house are coming together to tackle this issue. i'm pleased to serve as a confer ree. this is an epidemic that is devastating families and communities across the country. my own home state of utah has been particularly hard hit.

a very serious of bipartisan votes in both chamber, we are poised to take action that the american people want and deserve. i was pleased to vote for the bill when it was reported o out of the judiciary committee and when it passed by 94-1 on the senate floor. i commend the senator who worked for years along senator whitehouse and i commend him for their leadership on kara. recognize the senator as she's long been a true champion of this issue as well. speaking as the chairman of the finance committee, i'm pleased this agreement provides medicare with an important tool in the fight against opioid abuse. the agreement allows medicare part d prescription drug plans to work with beneficiaries to identify one physician to describe and one pharmacy to fill all the opioid prescriptions.

this is a a common sense step that will improve patient care and reduce abuse. it also makes it more likely that beneficiaries with a problem get the help that they need. i commend the senator who worked with senator brown for his leadership on this issue as well as senator brown. the agreement also increases access o to medication assisted treatment and proud of our past work and appreciate the improvement made by this agreement. i put the rest of my remarks in the record. >> i appreciate that. the chair recognizes the chairman of the house committee for an opening statement. >> thank you, mr. chairman. i'm pleased to be here today and i commend my colleagues on their hard work on this report. over the past several weeks, staff worked diligently to produce the conference report in front of us today, which represents a comprehensive response to the opioid epidemic plaguing our nation. in particular i'm pleased that the report preserves the justice

department opioid grant program, the comprehensive opioid abuse reduction act sponsored by my colleague and friend and confer ree. i believe this program will do a great deal to stem the opioid abuse by offering states and localities the resources needed to fight opioid addiction and the flexibility to use the grant dollars to address their unique needs. importantly, the comprehensive doj grant program is authorized at $103 million annually over five years and is fully offset in accordance with the cut go protocol. i'm also thankful to the chairman and colleagues at the house appropriations committee who worked closely with us in this effort. this year the house appropria appropriators have included $103 million in funding from anti-opioid activities in the

appropriations bill which aligns with the authorization amount in hr-5046. the conference report includes the provisions of the other bills in the jurisdiction of the house judiciary committee including hr-5048 the good sa marry tan assessment act, the open act and hr-4985, the kingpin designation improvement act. along with the other provisions in the report, these bills take real steps to address the opioid epidemic and provide real relief to a real problem affecting real americans. members of this body should be proud of these accomplishments. i support the conference report and urge my colleagues to do the same. >> gentleman yields back. the chair recognizes from oregon. >> thank you, chairman. opioid addiction is ripping through many american communities like wild fire.

in my view, you cannot fight an infer no with a prevention package that's no more than a a thimble full of water. there have to be financial resources that reflect the magnitude of the problem. resources that prevent opioid addiction from escalating in the first place. resources that strengthen enforcement to ensure bad actors don't rip off the system. resources that get better access to treatment for our people. it would be legislative malpractice for congress to do only half the job while the crisis continues to rage across america. action needs to be taken today to lock in real funds to deal with this epidemic. i'm sorry to say the measure being considered now falls short. the conference does have an

opportunity and that is to come together in a bipartisan fashion and i note that chairman upton's comments there's been an awful lot of bipartisan work done in this committee over the years and it's my hope that we can work together in a bipartisan way to improve this bill today and lock in the real funding we need so we have enforcement, treatment and prevention. thank you, mr. chairman. >> gentleman yields back. the chair would recognize for an opening statement. >> thank you, mr. chairman. i'm glad we're gathered here now to make some progress with respect to this epidemic of the opioid and heroin addiction and crisis across the country and bring together the efforts of both chambers.

in a roundtable discussion in annapolis in my district in the state of maryland. we brought together in that forum a diverse advocates, first responders, hospital personnel, law enforcement, all of the people who professionally now are affected by and are trying to respond to this crisis of opioid and heroin addiction across the country. a crisis obviously that's touching just about every community in our country. and much of the discussion, as you would imagine, as much of the components of the legislation that we're looking at today was addressing public awareness, education breaking down, the silos that exist among

all the different parts of the community that can mount an effective response to this crisis. but in addition, of course, there was a discussion of trying to bring resources to bare to make a real difference. and in particular the treatment providers who are at the table and part of that discussion making a point that they need more resources. so in addition to the things that are achieved through the legislation that we're going to be looking at today bringing more resources to bare so the response can be what the american people i think expect it to be. i think are prepared to put resources behind is a critical part of the conversation. i hope that we can bring more resources behind this effort. with that, i yield back. >> the chair recognizes the gentleman from new jersey for an opening statement. >> thank you, mr. chairman. i ask that my remarks be made

part of the written record and i yield back one minute 55 seconds. >> thank you, sir. the chair would recognize the gentleman from texas. opening statement. >> thank you, mr. chairman. the united states is experiencing an opioid abuse epidemic. 25% of patients who are prescribed opioids for long-term pain subsequently battle addiction. as many as 2 million americans abuse or depend on prescription opioids. tens of thousands of americans die each year from opioid overdoses. these deaths are preventable, yet have aqua drquadrupled sinc. the house and senate have approved versions of the addiction and recovery act. i'm a co-sponsor of the house bill. today congress moves closer to combatting opioid addiction. the bipartisan conference report ensures that the necessary resources are in place to

prevent or respond to opioid abuse. i thank my colleagues here today and the authors of the house and senate legislation for their efforts and i urge adoption of the conference report and yield back. >> gentleman yields back. the chair recognizes the gentleman from texas for an opening statement. >> prescription drug and heroin addiction crisis has ravaged so many families and neighbors and communities at every corner of the kocountry. 12 minutes an american dies from a drug overdose. it's a grave reality and must face it head on. i believe these programs have the potential to help expand access to treatment and prescribing practices to faci facilitate understanding of disease and educate policymakers and the public. however, resources to address this crisis head on and meaningfully impact those will

accomplish little. i join my colleagues in including funding for the opioid epidemic as we stated in our recent letter. the scope and urgency will justify this being considered emergency spending and yet we're willing to put budget savings on the table demonstrating there's no excuse for inaction when it comes to funding for treatment and prevention of. i want ta thank my colleagues and i yield back the balance of my time. >> thank you, sir. next is mr. guthrie from kentucky is recognized. >> thank you, mr. chairman. i'll submit my remarks for the record. on june 30th in kentucky i attended a forum on opioids. we talked about statistics of people who had passed away. we had a mother there whose child was an honor student in high school, played soccer, tore acl and went to a physician and

got a prescription and became addicted to opioids which led to heroin. in the two years the family went through, including relocate iin just to get out of the neighboring state where this happened, her daughter went home to visit a friend and came back and found her dead after she thought she was clean. these are the stories throughout the country. in honor of her and her daughter, i urge that we move this legislation forward and will submit the rest of my remarks for the record. >> the chair recognizes the congressman from tennessee. >> thank you, mr. chair and members of the committee. i applaud the bill is because this congress and governments throughout this country have wrongly sent a message to young people that marijuana is more

dangerous than heroin. that's the message we send by having marijuana as schedule one. marijuana is more dangerous than heroin. young people see that and think government lies to them about drugs. they try marijuana and they find out that it's not harmful and it doesn't ruin their lives. not that they should be doing it when they are under 21. not that they should necessarily be doing it later, but in d.c. and many states you can do it legally and people do it and aren't killing themselves and causing committee crime because they do it, but this congress and governments throughout this land have told young people we are old foegys, we don't know what we're talking about. we think marijuana is more dangerous than heroin. so they think it's okay to do heroin and they die. we need to be straight and honest and marijuana should not be schedule one. it shouldn't be scheduled, but a minimum it should be schedule two as this drug and this particular bill. schedule one for marijuana is

wrong. it is an alternative painkiller that could do good for people who would not go to prescription drugs and maybe kill themselves. let's get straight and let's make our laws realistic and not have people think it's old foegys that don't know what they are doing. i yield back the balance of my time. >> the chair would recognize the gentle lady from california for an opening statement. >> thank you, mr. chair. decades ago i was a drug abuse counsellor helping people detox off heroin. it's alarming to see that today opiate and heroin abuse is once again on the rise. it is, in fact, at epidemic levels in every community throughout our country including my state of california, which

according to the cdc saw 4,521 drug overdose deaths in 2014 alone. recently in my district in pasadena, i met ryan hampton, who like 4 in 5 new heroin users began by using prescription drugs. he was once an ambitious white house intern succeeding in it college, but then he broke his knee while hiking and was put on prescription opiates for pain. ryan, like so many other young people, became dependent on prescription drugs and started running out of his prescriptions too fast. he was then labeled a drug seeker and discharged from medical care. without any other option, he turned to heroin. the heroin addiction was quick and within months he was homeless and living on the addiction was quick and within months he was a homeless man on the streets. there was a lifelong waiting list for accessing publicly available treatment options.

thankfully, one of his family members was able to send him to a self paying treatment program. most are not that lucky. he told me if he had to wait for the 30 days to access care, he would have been the tragic over dose statistics that we are talking about today. passing a comprehensive policy with the necessary funding is critical. i cannot support this without a funding commitment from congress. we cannot deliver the promises of this bill without it. so lets increase prevention programs and access to treatments and recovery. lets fund these program ss so tt we can save lives. >> thank you mr. chairman. >> as state legislature in 2009, i began to work to prevent the

destruction of prescription drug addictions. now, i received calls everyday in my office from families of drug addicts or heroine addicts. i am pleased to come together today more than 120 americans today from drug addiction. by the time we conclude this meeting another 12 american lives will be loss. the policies and proposals for this bill are important but it will help. without adequate funding we are not doing our job. it is easy to stand up and cheer for good policies, to tell our constituents and the service providers and tell the heroine addiction counselors that we are with them and helping them. our state are in crisis and providers are in crisis without the funding. to do that, we need to do our

jobs and that's providing them the resources to do their jobs and save lives. >> i hope we can continue to work together and support these important policies and give resources so that the folks on the streets in the clinics, in our communities or law enforcement can do their jobs and help these families. with that, i yield back. >> mr. conner from louisiana state. >> thank you, ladies and gentlemen, this calls for an immediate attention. in michigan, for example, there were 1745 drug over dose incidents in 2014. more than half of the over dose deaths were caused by opiates

and heroines. each day, 78 americans died for an over dose. now, we have better ways of adjusting issues of addictions and we know that incarceration is not the answer. we know there is effective ways to give addicts treatments and quickly provided them with needed services. we know also that evidence based treatments of alternatives incarceration worked. title two of this bill of this approach in the grand program is reported by the judiciary committee and passed by the house. the approaches that provides separate programs for many of

these worthy purposes, regardless of which approach this conference committee adopts, we must do more than simply authorize funding. we must provide dollars and urgently needed by those fighting this crisis. i ask consent into the record of leonard, the police chief participating in the police assisted, recovery initiative sent to us that we provide $1.1 billion in increase funding to adjust this issue. >> thank you. >> that will be the true measure of success of this legislative effort and i