gendered systematic and a systemic abuse. instead of reducing risk the market actually magnified risk. those were taken by ordinary families and large firms alike. there was a far too much debt and not nearly enough capital in the system. the growing economy bred complacency. we all know the result. the bursting of a debt-based mobil and the failure of several of the world's largest and into institutions, the sudden decline in available credit, the deterioration of the coming, the unprecedented intervention of the federal government to stabilize the markets and prevent a wider collapse, but most importantly the terrible pain in the lives of ordinary americans. there are retirees who have lost much of their lives savings and families devastated by job loss. small businesses forced to shut doors.

millions of americans have worked hard and behaved irresponsibly -- they have seen their life dreams eroded by the irresponsibility of others and by the failure of the government to provide adequate oversight. . . chairman dodd and chairman frank, along with rep baucus, they will be meeting with me throughout this process.

they met with me earlier this year to jump-start the discussion of reform. these reforms are also drawing on conversations with regulators, including those that i met with this morning, as well as consumer advocates, and the broader public. in these efforts, we seek a careful balance. i have always been a strong believer in the power of the free market. it has been in will remain the engine of america's process -- progress, a source of prosperity unrivaled in america's history. i believe that our role is not to disparage wealth, but to expand its reach. not to stifle the market, but unleashed its ability for creativity to make this nation

the envy of the world. that is our goal, restoring markets in which we reward hard work. in which honest and vigorous competition in the system is prized. those who game the system are thwarted. we seek to put in place rules that will allow the market to promote innovation while discouraging abuse. we are looking to create a framework that is free and fair without the fragility that normal business cycles bring. we want a system that works for businesses and consumers. there are those that will say we do not go far enough. that we should scrap the system and start over again. i think that would be a mistake. we have crafted reforms to pinpoint the structural

weaknesses that allowed for this crisis and prevent future crises. there are also those who say that we are going to far. the events of the past few years offer ample testimony for the need to make significant changes. the absence of a working regulatory regime over the system as a whole lead us to near catastrophe. we should not forget that. we do not want to stifle innovation. i am convinced that by setting out clear rules of the road and setting out transparency and fair dealing, we will promote a more vibrant market. this principle is at the heart of the changes we are composing. let me list them for you. first, a set of reforms that will require regulators to look not only at the safety and soundness of individual institutions, but also for the first time that the stability of the financial system as a whole.

one of the reasons that this crisis could take place was because while many agencies were responsible for overseeing individual firms, no one was responsible for protecting the whole system from the kinds of risks that tidies firms to one and other. -- tied these firms to one another. regulators were charged with seeing the trees, but not the forest. even those that proposed systemic risk or not regulated as strongly as others. they behaved like banks but chose to be regulated like insurance companies and investment firms, other companies that work under less scrutiny. as a result, there was no system in place that was prepared for this kind of outcome. more importantly, no one has been charged with preventing it. we were facing one of the largest crises in history and those responsible for oversight were caught off guard.

it is not -- it is time for that to change. i am proposing that the federal reserve be granted new authority and accountability for regulating bank holding companies and other large firms that pose a risk to the entire economy in the event of failure. we will raise the standard in which these firms are held. if you can pose a great risk, that means there is a responsibility. these firms will be required to meet stronger capital requirements so that they are more resilient and less likely to fail. even as we place this responsibility in the hands of the federal reserve so that the lines are clear, we will also create an oversight council to bring together regulators to coordinate and share information to identify gaps in information and tackle issues that do not fit neatly into an

organizational chart. we will bring everyone together to take a broader view to solve problems in oversight before they can become a crisis. as a part of this effort, we are proposing the creation of the resolution of 44 large and interconnected financial firms. so that we are not only putting in safeguards, but also a set of orderly procedures that will allow us to protect the economy if a firm like that goes under water. think about this, if a bank fails we have a process through the fdic that protects depositors and maintain[s] confidence in the banking system. this process was created during the great depression, when the failure of one bank led to the failure of many banks. it works. if we have no effective system in place to contain the failure of an aig, the largest and most interconnected financial firm

in our country -- that is why when this crisis began, crucial decisions about what would happen to some of these companies, employing tens of thousands of people with trillions of dollars in assets, to place an emergency meetings in the middle of the night. that is why we had to rely on taxpayer dollars. we should not be forced to choose to allow a company to fall into a rapid dissolution or supporting it with taxpayer money. that is an unacceptable choice, there is too much at stake. we are going to change it. second, we are proposing a new and powerful agency charged with just one job, looking out for ordinary consumers. this is essential. this crisis was not just a result of the decisions made by mit financial firms. it was also the result of

decisions made by ordinary americans to open credit cards, home loans, taking on other financial obligations. we know that there were many who took out loans that they could not afford. there were also billions of americans who signed contracts that they did not always understand, offered by lenders that did not always tell the truth. even today, folks sign up for mortgages, student loans, and credit cards, facing a bewildering array of incomprehensible options. there is more fine print, more hidden terminology. this new agency of the chains that, building on credit-card reforms signed into law a few weeks ago, with the help of members of congress here today. this agency will have the power to set standards so that companies compete by offering innovative products that consumers ought -- actually want and understand. consumers will be provided

information that is simple, transparent, and accurate. they will be able to compare products and see what is best for you. the most unfair practices will be banned. ridiculous contracts with pages of fine print that no one can figure out, that will be a thing of the past. enforcement will be the rule, not the exception. for example, this agency will have the power to set new goals for home mortgage lending. the bad practices that led to the home mortgage crisis will be stamped out. mortgage brokers will be held the higher standards. exotic mortgages will no longer be the norm. home mortgages will be reasonable, clearly written, and concise. we will level the playing field so that banks are held [to] the same standards as those who offer similar services. banks will be competing to meet a higher bar on behalf of consumers. the mission of this new agency

must be reflected in the work that we do throughout the government. other agencies, like the federal trade commission, are charged with protecting consumers. we must be sure that those agencies have the resources and tools to stop unfair and deceptive practices as well. third, we are proposing a series of changes designed to promote free and fair market by proposing the closing of gaps in the system, including gaps that exist not just within, but between nations. we have seen structural deficiencies cause companies to shop for the regulator of their choice. hedge funds operating outside of the regulatory system altogether. we have seen the development of financial instruments, like many derivatives, that are so complex

that they defy efforts to assess their actual value. lenders have profited from systems filled with bars that will never repay, because the lender offloaded the loans and consequences to someone else. that is why as a part of the reform, we will dismantle the office of thrift supervision, closing loopholes that allowed companies to cherry pick loopholes. we will allow only one federal banking charter, regulated by federal supervisor. we will raise capital requirements for all depository institutions. advisers will be required to register with the fcc. we are proposing comprehensive regulation of credit default swaps that have threatened the entire system. we will require the originator of a loan to obtain an economic interest in the loan so that the lender and not just the holder of the security has an interest in ensuring that a loan is paid back. by setting common-sense rules, these financial instruments can play a constructive rather than destructive role.

we have seen, time and again, cycles of precipitous booms and busts. most severely in our recent crisis. these are not just numbers on a ledger. this is a child's chance to get an education. this is a family's ability to stay in their homes. this is the right of seniors to retire with security and respect. these are american dreams. we should not accept a system that puts them in danger. financial institutions have an obligation to put to themselves and the public risk management that comes carefully. i have a responsibility to be sure the financial system works as a whole. there has always been a tension

-- between those who placed faith in the marketplace and others that placed more trust in the government. that is not a bad thing. it gives rise to help the debates and creates the dynamism that makes it possible for us to adapt. we know that markets are not a force only for good or ill. in many ways, our financial system reflects us. in the aggregate of countless decisions, we see the potential for creativity and the potential for abuse. the capacity for innovation to make the economy stronger, and for innovations that exploit the weakness of the economy. we are called upon to put in place reforms that allow our best qualities to flourish while keeping those worst traits in check. we are called upon to recognize that the free market is the most powerful force for our prosperity. but it is not a free license to ignore the consequences of our actions.

this is a difficult time for our nation. from this we can once again pass those values and ideals that have allowed us to lead the global economy. that is how we will help more americans live their own dreams. that is why these reforms are so important. by look forward to working with leaders in congress and all of you to see these proposals but to work so that we can overcome this crisis and build a lasting foundation for prosperity. thank you very much, everybody. [applause] [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009]

>> this week, on "prime minister's questions," gordon brown talks about a proposed parliamentary changes. liberal democrats to criticize the will of government in the financial crisis. this is the last action for speaker michael martin. tonight, 9:00 eastern, on c- span. >> how is it sees man funded? >> through donations? >> from the federal government? >> grants? >> sponsors? >> they might get government funding. >> viewers? >> 30 years ago, america's cable company created c-span as a public service. a private business initiatives.

no government let -- no government mandates, no government money. >> eric holder, testifying before the senate judiciary committee on a number of issues. this oversight hearing is just over three hours. >> good morning. i was speaking with senator sessions just a couple of moments ago. like so many of us, he has to vote in another committee.

once he arrives, we will yield to him, but as he said, he has no objection to us going ahead. i welcome the attorney general back to the committee. i enjoy welcoming him as attorney general and not as the nominee for attorney general. i want to commend you, mr. attorney general, and your team, for your hard work and commitment to the task, a vital task in this country to restore the department of justice back to being the department of justice. we all talk on both sides of the aisle about the political manipulation that occurred previously in the department of justice. particularly in its law enforcement civil-rights

function. it struck a devastating blow to the credibility of law enforcement, undermining face in eller -- in our system of democracy. you have been given the job of restoring that trust. i can -- thank you for your commitment and to be aggressive prosecution of financial fraud, the recovery act that was signed into law by the president a few weeks ago, backed by virtually everybody on this committee. we recognize the need to include federal assistance to state law-enforcement in the economic recovery act, getting resources to states, cities, and the towns, keeping the community safe. it is my hope that the justice

department will work in this committee on such important issues, keeping members of the press from being forced to reveal their sources, passing hate crimes on legislation, and cracking down on health care fraud. a wide range of issues, ranging from comprehensive reform -- i have made no bones of the fact that i have been troubled by the continuation of the practice of asserting the state secrets privilege, in an attempt to shut down lawsuits. i believe that accountability is important. for those alleging wrongdoing by the government, access to procedures is important.

rather than shutting down cases without true judicial review. i hope that you work with me and others to find an acceptable solution. been issued of great courage, safely and effectively closing the facility in guantanamo bay. ending the disgraceful time in our country's history, helping to restore our commitment to the rule of law and reputation to the rest of the world. i believe strongly in safety and security, bringing our enemies the justice. consistent with our laws and values. we have strayed from that

approach. we have tortured people. we have sent people to other countries to be tortured. changing the policy demands torture, shelling guantanamo facilities down. i think it we could restore our image around the world. recent debate has focused on keeping all guantanamo detainees out of the united states. political rhetoric has drowned out reason and reality. the criminal justice system handles dangerous criminals. it does so safely and effectively.

we are the most powerful nation on earth, we have tried very dangerous people in our courts, holding very dangerous people in our jails and prisons. we tried terrorists of all stripes. think of timothy mcveigh. as senator gramm, on this committee, said recently, "the idea that we cannot find a place to house 250 detainee's within the united states is not rational. we have spent billions of dollars on these facilities. we can do that. prolonged detention, military commissions, both of which are

being discussed. i expect that the attorney general, president obama, will face the commitment to value and the dedication to security that you have shown so far. i trust that you will work with us define the rights illusions -- to find the right solutions to these problems. last week's tragic events at the holocaust museum, together with other recent incidents made all too clear that the violence motivated by hatred brains a serious problem. across the political spectrum, we have once again introduced a

bill to take important steps against hate based violence. it is crafted so that only those who engage in rural violence would be prosecuted. i know you have supported this. i know that the president has. you have taken steps towards insuring a much improved freedom of information act. we have worked on this for years and i hope that the direction will continue. i have thrown out a whole lot of things. i was waiting for senator sessions to come back, he is here, i will post by statement to the record. senator sessions? >> thank you, mr. chairman. i appreciate the opportunity to

discuss the details of his confirmation hearings for judge sotomayor. attorney general holder, i am glad you're here today, as we discussed this department of justice role in protecting the rule of law and protecting national security. it must be free from ideological excess. i have supported your nomination to be attorney general. i did so because i believe that your previous experience within the department would serve to elevate the department and the commission about politics and policy.

clinoril of law about political and other considerations -- putting the rule of law both political and other considerations. you told lindsay gramm that you agree with him, "every person who commits the going to war against america or any of a peaceful nation should be held off of the battlefield as long as they are dangerous. i do not think of the actions we have seen so far are consistent with that commitment. since your confirmation you have done a number of things that think he pledged not to do. time and again i find myself reading about political parties that have overruled cabrilla department attorneys to further an agenda on left-wing activity. one such instance came when he

rejected the legal counsel of the office on the conclusion that the recent legislation on the district of columbia voting was unconstitutional, as it appears plainly to be. during your hearing you emphasized that your view of opinions would not be a political process. when the office of legal counsel has prepared an opinion for you, i would expect you to listen to that opinion and follow, or explaining precisely why did not. instead you move around them and found a second opinion from the solicitor general's office. an office that was required to defend whatever was passed, asking them for their legal

abies. pressure from the left to override a common-sense when you allowed opinions be released regarding interrogation, even a high-profile members of the intelligence community warned you that it was unwise to do so. michael mukasey, a former federal judge who has tried terrorism cases, and michael hayden, put a joint of bed in "the wall street journal stating that the release of the memos was on necessary as a legal matter, and i think of their correct their, and on sound as a matter of policy. they predicted that the effect of these memos would be to invite the kind of institutional timidity and fear of discrimination that we can intelligence gathering in the past and that we