valedictorian. >> you are involved in some businesses. is there something you have not done that you want to try? >> if i were to quit everything i am doing, i would get such a joy out of coaching my son's football team. if i was going to go do something the rest of my life and with everything else, i would go college football somewhere. that is what i would do. .

the two especially somebody like that.

he normally has access to me. he is in nashville. he knows line booking agent. he knows my publicist. none of these are the people had the kind of access. keep 30 fax of stone and ran with an makori of me. that night, and all the orbital started coming in, he said he would not the door she was she had not gone with the story. i trust him down. he was there. it was a deal like this and he was right there. " we are almost out of time. before asking a last question, we have some business to to carol. it burst of, let me remind allah members of future speakers.

the president of the national baseball hall of fame with a special guest, brooks robinson will be sure. we also haven't, on may 15, the chairman and ceo of the exxon corp. and the church for a secretary. on may 28, we have mary tyler more, actress and spokesperson for leave the journal blood be association. the national press club also like to offer a special plan kitchen mr. keith for his formation of an autographed guitar for chitral annual national press club 05 k run, what an auction. this year's race will take place on september 12, 2009. please visit our web site for more permission. second, like to present our guest with the traditional npc

mug. >> we have one more question for you. some want an audience as to but the hardest thing is about being treaty. >> well, it would just be publicity that comes with the political stuff. it's pretty difficult to talk about your music women every single interview you do, if you're listening movie or an album, you hate to be disrespectful. i am not a disrespect for comment. you have to be disrespectful, but every interview starts off with some political every time and it is always have something to do with the military or something to do with the iraq war. that was the big one. it just gets difficult to go about your live when people so

that you should not have sang a song. i will take that sheet. i embrace it. i can't take it. i will never apologize for being patriotic, no matter what. [applause] we have a special request from the audience, which you please. shell out to the 340 and public affairs operations center in iraq and army reserve unit at a birmingham alabama on. there are moving the combined crust press. >> and one more request, somebody is asking you for couple bars of the red white and blues song. >> see what i mean, it always

ends up with the red white and blue som. >> no, i don't want to sing today. [inaudible] >> 0, she is batting her eyes. >> an assaad? gosh no song? i'd like to and you all for coming today. i'd like to think the national press club staff members and howard roffman for organizing today's launch and thank you to be npc library. the video archive is provided by the national press club's broadcast information center to. our events are available for free download on items as well

as on our website. non-members may purchase transcripts by calling. or you can e-mail us. for more information about the press club, please go to our web site. thank you, and we are adjourned. bu

>> up next, friends and colleagues discuss the work of judged song and sotomayor. bausch sonya-n -- sonia sotomayor. >> republican representatives both medical doctors on health care legislation currently making its way through congress and what to expect before the august recess. by typing that the holocaust is being driven by political purposes. bausch i believe that this is run-driven by political purposes. that is too bad. a political process is driving this. why cannot we can to a crystal ball and slayed is corn to go

this way or that way but i believe that the american people are smarter than they mean to be. >> how is he spent funded? >> private donations, public support. >> consumer funded? >> dhue were funded? >> pratter contributions? >> how is he spent funded? 30 years ago, america's cable companies created c-span as a public service, no government mandate, no government money.

>> on monday, the senate speaks with sauna sotomayor. but first, we spoke with three former clerks about her work ethic, personality and what it was like to work for the judge. >> with the due to begin, we thought we would take this opportunity on america and the courts to talk to some of the people that know her best and that is some of her former law

clerks. joining us are three of them. alisyn clark for her from 2000- 2001 when she sat on the second court of appeals. and julia mason clerked for the judge when she was on the district court in 1996. when did you first meet the judge? >> i met her when they happened ridiculously early in law school. i probably met her in '94-'95. i have stayed in touch with her ever since. >> when you apply for a clerkship, do you apply with a specific judge? >> yes. let julia, the process has changed over time, but when i applied, it was pretty early in

your law school career and people often applied to a number of judges who were of interest to them and you had an opportunity to interview with multiple judges. >> how many did you interview with? >> i interviewed with several judges. but she stood out to me as someone who was very different. during our conversation, not only did she lifted my resonate and really ask me some searching questions about my background and experiences and some of my riding, but she really try to figure out who i was as a person. that is very important to find someone she connected with. what's david, what about your experience? >> i had a similar experience for it is telling the first question that she always asks is

about you and your family and your background. she has done a lot of research and she wants to feel comfortable that you will be part of the team. it is a small environment, so you need for people as clerks who are going to be able to work well together so surely searches to find that mix. >> how long was the interview? >> it was about half an hour. you also interview with current clerks that can to just be there. the clerk's that you will be replacing will be interviewing you as well. >> you could see somebody with a stellar reza may who just walk on water academically, but if that person came in and was in any way rude to the staff of the courthouse or in chambers, thinking that the judge was

unaware, it did not matter who the person was. i think it is a fundamental part of who she is as a person. it is very important to her that all of her clerks to everyone with respect and be good people, fundamentally. it is about being a good person. >> what was it like to work for her? she is known throughout the courthouse for her personality. she takes every case seriously. she truly things about the fact that individual people are affected by her decisions and the fact that i clerked for her on the court of appeals, when the circuit makes a decision, it is creating a precedent. as she prepares for cases in a

way that is beyond what many judges do. she literally read every page of the records and she asks for more information and in order to be prepared like that, she works hard and her clerk's work hard. there was that aspect, but working for the judge means that if you were with her in a professional way, she would often say that they needed to do this. >> i completely agree with everything that allison said. we worked extremely hard, but the judge was always there with us. on complicated cases, we went through many iterations back and forth with her.

we searched to try to find out what the right answer to the case was. she tries to decide what the right outcome is. she cares all lot about her clerks. we have lunch with her every day. either within a new york were flying from around the country to come and visit her, it was really great. it was great to get to know her

as a person >> i had exactly the same experience. it is away on vacation with her. she demonstrated that work ethic and his -- she was always careful to ask how hard we were working. it really was like working like a part of a close family. i have to say that when i left, it was hard to leave because it was such a great environment. you work for her in the '90s.

it is not being a mentor for one year. she -- she was in touch with people about professional decisions. you really are part of our family. did you ever disagree with her on a decision? she had some minor disagreements on not unnecessarily the outcome, but the proper way to write the opinion. we had a lot of back-and-forth

discussion. i am -- even if she decided to go with the way that she wanted to go, i felt she was really going through the issues. i think she was encouraging of a healthy dialogue in chambers. she wants to hear your honest feedback. i had plenty of occasions where i would push in one direction. she is the judge. she will make the call. >> it is a known fact that she has diabetes. did that affect her work abilities anyway? >> i would say that it only affected her work abilities in a very positive way. she is very cautious about taking care of herself. when i was working for her, she

could do all of her work and make sure to fit in exercise and eating right and as clerks who are working so many hours, she pushed out on you, too. it is a positive thing. she uses that as an outlet to keep her focused and saying and to make sure. i think that her healthy meals at lunch, as we were talking about, she often has love with her clerks every day. i think that she gives the clerk's a sense of what it means to be balanced person that you

can work really hard and still be a good healthy person as the least healthy either, i received many comments about whether or not i needed those flies. >> what was her office like? >> the office has changed. at that time, she had moved over from the former courthouse and what i hear from the other clerks, it was a torturous process. the judge's amazing secretary -- her secretary, who was also a mother to us all, had her

office. it was one close-knit family. >> it continues. i shared an office, because we were not set up to have offices for different clerks, so i shared an office for another clerk and there were two other clerks. what we were a lively chambers and you could hear people yelling across various questions. >> did she encourage that type of back and forth? >> certainly. she wanted everybody to be involved in the important decisions we had, to talk through. the more ideas we had, i think she thought a better outcome we would have. >> in her chambers, did she keep a lot of personal items? what she did. she had a lot of pictures of her family, she had different awards she had gotten, awards, pictures from weddings. when i worked for her, each of us had our own offices, but everyone who clerked for her new the race.

poke your heads in. she would be working away, and whether she wanted to ask people question or get their thoughts, she would sit in her chair, telling us to poke their heads in, and they would come in. it was very open and collegial, and the relationship she had with her secretary, who happened to be an old friend, really set the tone. we are a family in here, we do things together, work together professionally, eat lunch together, and do things togetherthat was the feeling throughout chambers. >> david moskowitz, what was your reaction when obama nominated her? >> i was extremely excited. it was an unbelievable experience that day.

i think all of the clerks were so excited but proud of the judge and she was so impressive in her speech at the white house that i think we were just on top of the world. >> have any of you talked to her since the nomination? >> not directly. she has been very busy, so i think we have all felt like imposing on her time at this point would be a bluff. i spoke to her very soon before the nomination. >> the week of her nomination, my co-clerk was married, and she officiated the wedding. this was right before meeting with senators. she took time out to come back to new york to officiate the wedding. i got to see her there very

briefly. >> i email heard a few times. -- i email her with her a few times. we have all been assigned to do things. we share information and articles and talk about the judge, is there anyway we can help. it has made all those reconnect a way that is very substantial. >> as soon as cometary started happening in the media by different groups, what is one criticism you felt was not fair? >> i thought that the whole opera or about the reach a decision -- uproar about the ricci decision, about the white

firefighters in connecticut -- i thought that all whole issue was -- you know, rush limbaugh throughout the words racist, reverse discrimination -- i thought that that was truly absurd. i am used to hearing of certain things in politics, but that was beyond the pale. >> i think the initial jeffrey rosen article before the nomination for the most part was a whisper campaign of her not being petsmart or a bully and it is just completely untrue, but something that it really takes a huge group of people to read but -- rebut -- and it was clearly intended to cheaper from being nominated. -- cheaper from being nominated. >> one thing that has not taken a lot of hold is questions about her temperament. we all talk about the way she

prepares for all arguments in a way that many judges do not. she is searching from the bench, she asks difficult questions and has very high standards for lawyers to answer the questions. she feels like she really needs to know the answer. i have never seen her bully in any way, though, and i think her colleagues have sat with her on the court have really responded to that and said that that is not at all who judge sotomayor is. >> in a letter by her law clerks to the senate leadership in terms of a nomination, one of the phrases used was that you said that the judge keeps an eye on the real-world impact of her decisions. why was that important for you? >> i think she brings a perspective that will be new to

the supreme court. she is not an ivory tower speaker and thinking about angels dancing on the head of a pin or something. she really understands the real- world impact of a lot and hal -- some of that comes from her experience as a lawyer. she has done every type of law there is to do, from criminal to civil to being a prosecutor to been a judge and so on. i think she knows at every level but affects all the different players in the system. because she is such a fundamentally egalitarian person, she really cares about making sure everyone gets a fair shake. >> david moskowitz, what is her relationship with other judges? >> very collegial. we would schedule watches with them -- lunches with them. she would organize events for

them. each quarter that would have a court meeting, she would schedule dinners or events. she tried to keep it collegial even through differences of opinion on the court. have >> i think that collegiality she had went to everyone in the courthouse. she is really famous in the courthouse for holiday parties. a lot of chambers to have small holiday parties and invite other judges, but she is different. not only did she invite all the judges from the court and district court and the magistrate, but she invited every single person in the courthouse. she knew the names of every cafeteria worker. to her, those people were as much a part and as important as her colleagues on the second

circuit, and that really goes to what kind of person she is, and how she views people in life. she is very humble. she never forgets where she came from. when you asked about the day of her nomination, i think her humble this really came out init is truly the kind of person she is. >> juliet, you have been out of law school longest. what is the benefit of all locklear trip? -- a law clerk ship? >> it is a great opportunity. you clerk for a judge before practicing law, so you are involved in the process of making a lot before you practice it. it gives you great insight into what judges really care about, how they focus on the various

issues in your briefing or trial, and it gives you an insight on my -- unlike any other. i'm currently a litigator. >> david moskowitz, you are just starting a law practice. what is it like? >> it is a very different experience than clerking, for sure. it is much more intense involvement in a few cases. when you clerk, you have 40 cases every citizen and every month he would have to go through more. it is a difference. i am litigation, as well. general litigation. >> the value is two fold. one is what you learn about how the system works and the persuasiveness. it is a rare opportunity to have a mentor.

she was truly a mentor in helping people figure out how to be happy as a lawyer. there are so many unhappy lawyers out there, and i think that she can't stand that. what i was getting ready to finish my clerkship, i had always had a strong interest in civil rights and disability. she not only would talk me through the department of justice or public interest work, but she would put me in touch with her friends and tell me to talk to them. she is a mentor for me. i am always touched. i talked to her, and she remembered exactly what i did. she is touched with clerks who are passionate about particular areas. she really influenced my

direction. >> we have been talking to three clerks for judge sotomayor as for hearings are due to begin july 13. thank you very much. >> judge sotomayor will begin on monday. i. review analysis key cases during her tenure on the federal bench, including over a decade on the second circuit court of appeals. >> we will on the firefighter case. give us a background and what was decided. >> a quick background of that decision or what led to that decision is that the city of new haven decided to administer a test to firefighters who want promotion to lieutenant or captain.

did mr. the test and discovered that the black and hispanic test takers did significantly more poorly, and the city was concerned, reasonably so. they would be sued under a provision about racial minorities, so they decided not to use the promotion process. white test takers that followed a lawsuit, saying that was not fair. and they agreed they did not have to use it under title 7, it was not required. >> what to the supreme court addressed in the decision? >> they were trying to figure out how to reconcile two

competing provisions for title seven to make sure that both were given proper effect. and what the majority ruled is that the firefighters were entitled to summary judgment on their claims, as they had been discriminated against. summary judgment against them gave them a chance to go to trial, and the justices ruled the plaintiffs won their case. the dissent's took a different beenthey also concluded that the circuit had applied the second standard in rejecting the firefighters. >> in terms of the supreme court overturned the decision of the second circuit, an opinion in up part written by justice

sotomayor, what does that say about that opinion in particular at the second circuit level? >> the opinion had no one's name sides to it. the judge, along with her colleagues, joined the opinion. i think the concern that many of us have had that puts us there is that the second circuit opinion failed to deal properly with a very substantial claim raised by the fire fighter. it was literally a one-paragraph opinion, six sentences, i think, about 130 words. they did not even really present the questions that the firefighters had opposed. so he said the case requires better treatment, and he decided the claims not only needed more. >> does this fit into a pattern in terms of her previous views

on discrimination? >> two points. it was just a short opinion. that is very typical when a court is affirming a district court. in their opinions, they say they agree with the reasoning of the district court. they did not bother to write it out, but made clear they work affirming a long and detailed opinion. i think that the rationale was not under developed. it was that she agreed with the district court, she and the other members of the panel. i think the decision is consistent with the way they will in a lot of places, which is that they want to overturn democratically-elected government. so new haven had decided to

discard the test. since we are not lawyers, i want to make clear she was not saying that it was a good idea as a matter of policy to get rid of the test or what she would have done if she was a decision maker. her point was that this violates title 7, and her conclusion, which was agreed with, was that the supreme court reversed that. but i think in there we see a pattern mercia's saying she will be hesitant to overturn decisions. >> what might this decision on the second circuit level and the court reversal said two senators who are looking at her in the hearing? what might they want to ask? >> they certainly should inquire as to what her thinking was in that case. there had not been a lot of case law on these provisions of title 7. it was a tough issue, which is why the supreme court took it.

they have every right to inquire about her thinking in that case, but i hope it look at the body of her discrimination opinions. she has had about 100 cases where people have come to her claiming discrimination, and i think that in these cases, her rulings have been extremely moderate. the majority of the time, she is not someone reaching out to find discrimination in every place, and i think that the vast majority of the time she is joined by other members of the panel and by republican appointees on the second circuit. >> i think the case triggers many concerns that people have about her commitment to impartiality. president obama talks about his so-called empathy standards, that he seems to want judges that will not hold their own biases in deciding cases, and when you look at this case again and how the panel handled it, you look at other statement that she has made about the role of judges, and you see this broader concern, an ugly flip

side of empathy, which might be antipathy towards certain litigants. >> she was involved in an abortion case with the center for reproductive law. what was the background? >> this was a challenge to the so-called mexico city policy, which and i can summarize accurately as requiring that foreign organizations receiving u.s. government funds not promote or practice abortion. the challenge was bought not by foreign organizations bought by domestic ones. and what judge sotomayor and her panel ruled was that that

exact same issue, the first amendment issue, had come before the second circuit 12 years previously, the press had discovered how the case should be decided, and it was a simple matter of application. >> so the case ended at the second circuit? >> yes. and this is a pattern in jurisprudence. >> if you look at this, they noticed that one consistent pattern in her jurisprudences that she follows precedents, a sign that she understands the role of a judge and is not looking to overstep the roll. and the case we have been discussing about the mexico city guide rule is a perfect example of that. she said president -- set a precedent. that is the case. >> that is always an issue. so looking at what might be on the docket or cases out there at the circuit level, are there areas of concern for groups on both sides, cases that might

come before the court that she might take up as a justice? >> what is interesting is that because she has great respect for precedent, i think that will guide her decisions in that area, as well. and you can see it guided by the fact that reverses way to a wall of a land. >> you talk to little bit about her empathy here. would you can occur about on the whole of her opinions? >> i would say that a circuit judge is held down more with

circuit precedent and supreme court precedent. the best window into how a justice will rule is not necessarily the court of appeals record, but i think a better windows provided by her statements about the role of judging, about the judicial activism. looking at justice ginsberg, aclu passed in the court, rather than the slice of time to was on the d.c. circuit. i think amanda is right. >> they have used this term, calling balls and strikes. in your point of view, as she called as an umpire of the law, balls and strikes? >> yes. what is interesting, looking at her opinions -- i have not read the mall, but some have -- is that i think she has a great awareness of the limits of her role.

i agree with that. but several changes someone at the supreme court. certainly the second president will not bind her in the future, but i think she is someone who will respect precedent, whether she personally agrees with better not. that has been hurt and yellow -- and no -- modus operandi. i think she respects her institutional role, and you see that with the decisions made by a democratically elected decisionmakers. >> she will also see precedent in terms of cases on the second amendment. in the case of maloney versus cuomo, she was dealing with the second amendment but it did not involve guns.

it involves some other weapon which i cannot pronounced. >> yes, and in that decision, the court faced a challenge is to the constitutionality of a new york law prohibiting one of these in your home. and the appellate decision had come down already. it was a case in which the supreme court said -- it changed a lot of people's understanding of the second amendment and found a new understanding which was that the second amendment gives individuals the right to keep a gun. so the recommendation was to make the new york law unconstitutional. the issue in that case is a technical legal point.

it is, as a second amendment right prohibiting gun ownership also prohibit state government from boring gun or weapon ownership? and that is a question the supreme court entered a long time ago, 1876, and says that they do not apply to the state. state governments are not bound or restricted by it. judge sotomayor said in the opinion and it overruled that the heller decision did not apply. >> that is a broader issue. was the second circuit right, was just a sotomayor in the opinion, and does it leave thorny issues ahead to settle on the whole issue of whether the second amendment applies to the state? >> those are good questions. as amanda indicated, the supreme court had ruled in the 19th century that the second amendment does not apply against the states, but back then they have also ruled that

the entire bill of rights did not apply against the states. you had an incorporation revolution that occurred from the 1930's on word of the 20th- century by which all of the provisions of the bill of rights were deemed to apply against states from the to process clause. so the question becomes, once heller recognizes that there is not -- there is an individual right of bearing arms against the government, does that right applies against the states? there are three courts of appeals addressing this issue so far. the seventh circuit ruled on similar grounds. the ninth circuit ruled that there are individual rights. so you have this conflict that the court is likely to take up. no reason to sit around and wait for more rulings. my guess is that that issue will be decided next term. >> what do you think they will interested in related to second

amendment law? what do they want to pin down? >> i am guessing that her answer to how the second amendment will apply 2 states is that most nominees said they cannot comment on a case likely to come before the court. so i think that she may not answer that question because it puts her in an awkward position if she does. as to her views on gun ownership, again, just look at her record. whenever she thinks about the second amendment, she recognizes that there is a supreme court precedent that heller, as a supreme court justice, will not be binding, but the doctrine is very decisive. it tells judges to follow past president of their own court, and i guess that if she has asked the question, she will say she will follow the law.

just as other justices have said about roe versus wade. >> i think given the obama and the standard it will be whether she disfavors fetch the rights of gun owners and will act on that bias. of just one comment on the question of application of precedent by the supreme court justice. no justice has ever exercised some wouldn't rule were you always respect every precedent. so i do not expect the judge, if she becomes a justice, would be the first to do that. i think that the senators would be interested in probing her judicial philosophy and particularly in whether the indulgence and bias that obama has invited plays a role. >> she used a term and the maloney case that the president makes its second law, this one from the 1800's.

then the court returned and said nothing about the second amendment meaning beyond the fact that it does not prevent the prohibition of private, military organizations. so in terms of, if she is saying it is a wall, does that give an indication as to her temperament going into the court? wanting to than of pulled decisions from lower circuits? -- then i pulled the decisions from lower circuits? >> they said it was settled law. but it was not up to her and her other panel of judges to decide if the precedent had been overruled by other cases suggesting that it may be was no longer good law because it had not held squarely. this is something the supreme

court has previously had monished lower courts for. they are not supposed to overrule. they are not supposed to protect with the court will do -- predict what the court will do. i think that shows she is someone who respects the doctrine more than most judges. not every judge will follow every past precedents, and every so often you see a deviation. but she seems to address more than much -- most. >> i think this illustrates the question of following precedence not being able to guide. you have this precedent in the 19th century saying that the second amendment does not apply against the state's oscar -- the state's -- states. and then you have heller and or a corporation -- a corporation cases from the 1940's forward. it is not a mechanical way that they say this precedent governs here. i think that it shows she is not

going to say she will follow precedent and it will not dictate an answer. one minor point of what to highlight -- i know it is laid out. the press issue arguably did not involve the same question the who supreme court will address. it was arguably just looking at whether there was president -- privilege and community, not whether due process clause protected it. so that is an argument for distinguishing the case. >> the guiliani case. what is that about. >> it is fascinating.

they show -- the cases reveal a lot about the justice. it is about a new york police officer who anonymously sent racist, bigoted material out into the world from his home through the mail. and when the nypd discovered this, they fired him. and he brought a suit against the city, against the police department, giuliani, saying that his first amendment rights were violated because he should be free as a republican ploy to speak his mind, especially when he is doing so from his own home anonymously. the majority of the panel said, of import -- "no, you do not have a claim."

they mentioned a case where they said you have to weigh the value of the speech against to the needs of government or the department of government, like a police department, to operate and have effected employees. and they say having a bigoted cops is not a good thing, so they fired him and his rights do not come back. the judge dissented, and what is interesting about this is that there has been a lot of talk about her own background, her ethnic background, gender, influence and her in her decision. what concerns her is, it is she going to take her back and see everything through that lens and never have said that before people who do not look like her? in this case, she said, "i think this police officer, as repulses me by his speech, has a first amendment right." that speaks to her ability to see cases from a different perspective. >> what do you think?

>> i think that there was a difficult question for the panel members in applying this balancing test, a highly -- she was protected in the context that was ugly and vicious, so i think that is encouraging in and of itself. i simply look more broadly at the judge's first amendment cases and her record and have concerns about whether she has a broader defense. right away, with her strong endorsement of finance restrictions and limitations imposed on core political speech around election time -- maybe it will turn out that her policy views their differ from her legal views. but i see this case highlight it, putting it in an interesting light. there was a court of appeals nominee by president bush who had a somewhat similar ruling in a similar case.

he had joined the opinion of a court that upheld a ruling saying that an employee should not have been fired because of some ugly, racist act. and this man was vilified by the left as a judge. he was vilified as a racist. and now, the same folks who defended him are championing his opinion from her. there is an irony in how manipulable the arguments can be. but, look, i think their descent there is an encouraging sign. >> how does this bear with her

other first amendment cases? is this in line with decisions but or majority opinions she has been in on? >> i think she shows respect for the amendment, but what is more interesting is that there have been concerns, and i understand them, from folks who think that this judge will come into the court and see everything for her own background and gender, and maybe it means she will be over this a

pathetic in cases of discrimination claim by race. that is one concern. i think that is where it is really important. it shows that she does not really always see cases from blind perspectives. she has great empathy and sympathy for a man who even though she dislikes his views, she thought he has the right to express himself. >> i hope she does not have empathy and sympathy and that instead she acted on what she thought was the best reading of the precedent. i do not think that this case somehow invalidates president obama's end of the standard. i will point out that the court of appeals nominee so vilified, senator obama was going after him for joining a ruling in that case. >> you mentioned the ricci case, the first amendment. explain your answer further. >> i think that ed and other people had expressed concerns that she is too willing to overlook the concerns, the concerns of white firefighters who were extremely frustrated to have taken a test and have it thrown out and were concerned about her decision. they thought that she might not every case see in their perspective. and i think that is dead wrong. i agree completely -- the point that i was trying to make is that they are the first amendment to hurt -- to her, and she saw clearly that the first amendment protected them.

>> i do not think it disproves or dispels the concern about her impartiality, but i will acknowledge it. >> for most famously, she is known as the savior of baseball, for the 1999 -- 1995 injunction into the major league baseball dispute. . .

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>> so i don't think there is any sense that anyone thinks we should slow down. quite the opposite. with respect to the other options, the administration has considered a wide range of options with regard to consumer protect. the thought was the existing

system was broken and we needed a large change to create one agency whose sole job was to protect consumers across the consumer financial marketplace. consumers are aware of the way consumers have been neglected. our president has a strong view in that we need a new financial agency with the core mission that was strong and could achieve the goals that i think the chairman articulated so eloquently in the initial remarks. >> chairman lib leibowitleibow

>> as they represent resources and those therefore how would the fcc use those? >> when the administration is interacted we will work closely with the new agency, the period for transfer is between six and 24 months. depending on how quickly they will ramp up, we will continue to bring cases. i think that was always the notion. i do think that going forward we could use more resources. we talked about this before the hearing. i think that even after the agency is created, assuming it

is. it is useful for concurrent useful authority, so that if we are going after -- the bad guys don't always act in silos as mr. bard and you know. sometimes they're violating the do not call laws and violating reg c or reg e which would go over to the new agency. so i think it is important, going forward, that when there is ongoing consumer harm, that we're able to jump over the legislative fence to help consumers and not have to wait potentially 120 days. i think we're working through the issues and making progress between our staff and ourselves. >> the chair now recognizes you for five minutes. >> thank gentlemen of the panel.

mr. leibowitz though for being back here a number of times. probably will in the future. i think you are doing a bit of a dance. you stand to lose jurisdiction in the fcc. it seems to me that you are getting, at least under the proposal that you are getting more money and authority to do less. i want to know what your reaction to the statement is given the fact that the fcc has dual jurisdiction that is to ensure competition and consumer protection. >> let me start by saying i hope familiarity is not breeding contempt here. >> no. >> if you read through our testimony, you will see it is a complex matrix about what we support and what we don't. i think from our perspective, if you create this new agency and

you also give us more resources and authority, the perspective of consumers, they will be getting a better deal. because we will be able -- we will continue to have authority with respect to financial matters, and we're going to be able to concentrate and do more for consumers. we have talked about this -- >> if i may. you are losing jurisdiction. >> we are losing jurisdiction. >> how does that loss of jurisdiction deal with your two missions of ensuring competition and providing consumer protection? >> i would say on the competition side we wouldn't be losing that jurisdiction. on the consumer protection side, it would still help consumer. we don't feel losing personnel.

we have already lost personnel, i would say. >> it does seem to me you are getting more money and authority to do less. >> we will do more. we really will. it is not a question, from our perspective that moving to the government and it will be a cure. our guys have worked hard. they have been commended for being high on effectiveness and quality of work. we will do more in the areas where -- while retaining back up authority. if the proposal goes, through, we will do more in the area of consumer protection. there will be plenty to do. >> welcome to the subcommittee. russia, during the height of communism, it was often talked about that there wasn't a lot on the self.

if you wanted sourdough, but you probably had to get a regular loaf of bread. tell he how you are -- tell me how you are not doing the same in the consumer market? >> i'm smiling, because you are describing a time i spent in poland. there was a time in poland, you could go to the store and nothing there and you could go hungry. >> tell me about the credit market. >> the new agency, is in no way pursuing that kind of commanding control model. no way pursuing price setting. no way saying you can't offer certain types of products --

>> i understand why we're looking at this because we're all experiencing this financial crisis. doesn't this end up providing consumers with less choice and driving up the cost of credit for consumers? >> with respect to that, it does not. it continues to provide for financial innovation. consumers can get access to whatever products and services providers want to offer. the basic approach is to provide disclosure there are mercantile and other forms. >> weren't there existing authorities that have and could and should deal with the current crisis that we're in? doesn't the added restrictions and regulations that you will put on the credit industry, will drive up the cost of credit to consumers? >> i think that the better judgment, sir,again, is that the

current system, we have, the status quo on protection is a dismal failure. we have evidence of that all around us. it is for banks, nonbanks, consumers, households. the systems failed. if you talk to community bankers in the community who had cocompete against unregulated providers who are sucked in for large amounts of tarp money. >> thank you, mr. chairman. >> mr. chairman, we recognize the chairman from illinois, vice chair and counsel. >> mr. bart, could you describe how we could have been in a better position today had this current program been in

existence had it started prior to the current problem. >> yes, we had an agency that could say to mortgage brokers you can't get paid more for offering riskier, higher priced, more confusing products than a basic product. we had a rule that said mortgage brokers you have a duty of care. you can't offer the mortgage that is the best deal for the broker, you have to offer what is the best deal for the consumer. if we had a deal that said mortgage brokers have to get in the game and need to be paid over time. securitization trust so you don't have a system where all the bad mortgages are made up-front and sold to the investors with nobody in the chain having responsibility, nobody having any of their own capital at risk. so we could have had fundamental

changes and fundamentally different situations. consumers are protected on the front end and financial systems all the way through. >> this is without change in legislation beyond the creation of this agency, that you would have the authorities, then under the bill, which i haven't read thoroughly yet, you would be able to have done all those things? >> yes. this agency would be granted the authority to do all the things i just described. >> did you want to comment on that? >> well, i just say that one of the things that is critical here is ata rule-making authority. and with the new proposal, they can do it for nonbanks and bank-rela bank-related mortgages. so in the omnibus, you give us ada rule-makings for nonbank nort gages. we will look at that and do a

good rowel. mr. rush, have eglation to expand us more. it is only within the context of nonbank issued financial instruments. so 20 years ago, we did a lot of matters related to credit cards. and all the credit cards are -- virtually every credit card is issued by a bank. we have no jurisdiction there. that is a critical advantage from the consumer's perspective. >> let me just say that while i absolutely, in theory, think that pulling it all together in one place is a good idea, you know, we have seen in the start-up, of the department of homeland security, lots of difficulties in making it pulling it all together and making it all happen. the creation of a director of national intelligence, there is -- it is certainly, in that case, many of us in the

intelligence committee see a large bureaucracy itself developi developing. you know have some problems with the coordination that was actually supposed to happen. how can we be assured that this will achieve its goal, achieve it in a timely way and not just be another bureaucracy? >> thank you very much. again, i think our view is that the authority to have you use the authority, that is inadequate, the basic system was a dismal failure. we need to take this action. the legislation has tight time lines for transition. the treasury has responsibility to make that transition happens effectively. you can some see me or secretary geithner. we're responsible for making sure. you can hold us accountable.

>> chair recognizes the mr. starn from florida. >> thank you, mr. chairman. we have had -- stearns from florida. >> in light of all the expertise, being a leading federal agency in the area. including financial products as well as identity theft. with that in mind would -- can you feel about this transfer? >> i guess a couple of points.

this committee on privacy-related issues. we will transfer over a lot of laws. we hope to keep a back stop authority that is concurrent. this is the beginning of the process. you know, i see a lot of agreements on a lot of things within this committee on ways to go forward. i think, the way we read the legislation is whether that of data security is -- the better reading of the proposed statute or the reading of the way it will go forward will impede issues like that. that is important. >> i think you will spill keep it? >> i think we will keep identity theft. >> financial privacy? >> i think that goes mostly over to the new agency. that is some extent to you. i think we keep the rule under graham vs. wily. under the transition period we

will keep doing this with back stop authority -- >> mr. barker, you're the true architect of the plan. what you are saying is some of this is still up for negotiation? >> yeah. the boundary issues, that you raised are the same that we got with the legislation at the end of last week. many of the boundary issues, in favor of retaining jurisdiction by the existing commission. i assume that is what this legislation moves forward that is what it is interested in. >> to add to that, the chairman is correct, it is data security issues, identity theft, red flag, all of that would stay at the ftc. the parallel authority for that at the bank agency. the front-end privacy notices that have to do with disclosure

would fit in with the new consumer financial protection agency. >> the consumer privacy, would that remain with the federal trade commission? >> with respect to the disclosu disclosure, that would be unified with the regime at the new agency. all the antitheft and other issues would remain at the fcc and the parallel authorities with respect to banking. >> but if you are thinking about core issues like spam, spywear or other groups, one of them is on the other side of the core new agency's fence, you are concerned about prospective

consumers. there is a variety of issues, including the issues we do, we will be keeping and retaining jurisdiction. >> well, i think you should realize that the federal trade commission, we are starting a new federal agency here. so i would think that as many as point out on this side, we are worried about the agency with the expertise. i think that the bill says the cost and development of the new agencies such sums as are necessary. is there any more information you can give on what the cost would be for this new federal agency? >> i don't at this time have a size estimate for the agency. something we're working on. we will work with the appropriate committees on and with omb, cbo on. we anticipate that the agency will be pulling in staff and

resources from the existing agency and additionally having new resources required. i will be happy to continue to work with you on that question. >> can you talk about the resources the agencies will need besides -- have you identified any of the resources? >> we have begun the process of identifying a number of individuals and the other resources the agency would need, but we're not at a place where you can give you even a reasonable estimate of that -- what additional measures beyond the transfer authorities would be required. it is something we are working quite hard on. >> i will close. mr. chairman, you might think as the subcommittee chair since a lot of the expertise for this is in the federal trade commission and might be in your jurisdiction here, i think you have a brand-new agency. don't know how much they're going to spend or how much

resources they need. also, they're going to be taking on areas of expertise that the federal trade commission has years on. i just wonder, if you as chairman, you might want to be careful and cautious about endorsing this new agency without more hearings on it and trying to get more stakeholders here, perhaps more than on the witness stand to perhaps get into the discussion here. i thank you, mr. chairman. >> let chair observes that there is a vote going on, on the floor. there are two votes. it is a desire to determine that we should delay this committee hearing for -- until after the others are concluded. i'm not sure what the witness -- what the witness' -- what their time commitments are.

but it is very important that you return, i will say, within 15 minutes after the last vote in the subcommittee when we convene. the subcommittee. is that all right with you? >> yes, mr. chairman. >> all right. [inaudible chatter in the room]

reconvene. the chair recognizes the fact there might be members of the subcommittee who did not have an opportunity to ask questions of our witnesses and before we recess. i am very cognizant of the witness's time and would take this time to go into a second round of questioning and there are members to come in who have not asked questions in the first round then the chair will call

on their questioning to seven minutes. so, with that the chair recognizes himself for five minutes, for two minutes of additional questioning. >> in describing the proposed regulatory reform of the department of the treasury stated clearly that, and i quote, the ftc should retain while dealing with the financial market, and of quote. despite this assurance the proposed language appears to weaken ftc authority in this area. the ftc would retain their authority to enforce against unfair and deceptive acts and practices using the ftc act. however, the ftc couldn't add any statutory claims such as the

truth in lending act or the equal credit opportunity act to a complaint referring the case and we to 120 days for the agency to decide if it wants to take the case. the chairman of leibowitz, let me ask you how would this impact ftc ability to pursue financial fraud? the ftc pursue one part of the case while another is under consideration and cfpa or would you expect it would simply not bother with additional claims? what ftc cases be weakened if they only rely on ftc act claims >> i think, mr. chairman, that's

a great question and keeping in mind we are at the beginning of the legislative process, not near the end of the legislative process. those are questions i think this committee will want to think through as the legislation proceeds forward. last week we brought a bunch of cases which we called operation shortchanged, and it was about -- it was about scams hitting people and economic distress. and a lot of those were basically fraud claims under the ftc act. but one of them involved the the electronic funds transfer act and i think it is reg e. reg e would go to the new agency, and so, this what sort of invoked to parts of your questions or two components to your question one of which is what we have to wait 120 days to bring this case while there is

ongoing harm? and then the second issue is really what is the nature of our backup authority, and i want to say mr. barr and i have been working with our staffs very productively. i worked on the hill for 13 years and never wrote a piece of legislation for my boss that didn't change as it went forward. so i think these are precisely the questions that we worry about at the ftc. we want to make sure and i know mr. barr does, too, that as effective as it can be for the consumers that all of us represent, and -- and so it think it's important to focus on this. >> it seems the ftc more than consumers would benefit more if the ftc didn't have to solely rely on the so-called backdrop

of authority. do you agree with that? >> i will turn the microphone over to mr. barr and a second but from our perspective is the back drop authority is deceived, and we have backup authority involving the ftc and the cftc which we used rarely only when needed, but here, sort of a couple of points. one is as the transition is happening, if this legislation is created, you want, you know -- certainly even after a very good lawyers are transferred and attorneys and jurisdiction, you know, it's going to take a while for this agency as mr. barr knows better than anyone, and i believe they're going to want us involved using backup authority probably more earlier than later. we understand they will be -- they will have primary jurisdiction here, but i feel it's very important that the

backup authority be robust so that we can sort of help out, and also so that we have these cases that involve malefactors that don't fit into the older new silos that we can effectively go forward and stop ongoing part involving consumers. ..

i will turn that over to mr. barb but i do know one person i know who is on detail is a fabulous attorney and really cares about consumer protection and also-- >> what you turn it over to mr. barr. thank you. >> mr. barr what he begin with that last question and then you can respond to the other question. >> i would be happy to address the broader point. we have on our staff a terrific attorney from the ftc who is, run detail and is going to be a permanent employee at the treasury department working on consumer issues. with respect to the broader sets of questions, i would just say

first and foremost, the chairman and i are happy to work closely together and are committed to working closely together on these sensitive issues. on financial fraud, it is clear from the president's proposal that would not in any way diminish the ftc's ability to take on financial fraud cases as is indicated in the white paper and in the legislation. the ftc would retain its authority and its duty to bring financial fraud cases without delay. with respect to coordination, there are many issues the agencies will want to coordinate on. p1 hundred and 20 day measure is not like the existing authorities the ftc uses where it is the primary entities doing enforcement. this isn't a proposal that kicks

in if the ftc is doing its work and finds a problem, it can let the new agency know, the consumer agency know about it. it does not the way as the ftc does today, wait until it is does today, wait until it is gone through its investigationã

recognized. >> thanks mr. chairman and welcome back. mr. lieberman-- leibowitz, excuse me. uncertainty is one of the key factors behind the perpetuation of our current economic crisis and granting a new and unknown regulatory agency with this broad scope of power plays is a dangerous, could place the dangerous level of uncertainty into the financial markets. do you think that might be better to have an experienced regulator such as the ftc with a long entrusted history of working with business at the helm with these new powers? >> as you know i am very fond of the federal trade commission, as you are. i would say this. as you know i testified here a few months ago that we thought we could do the consumer protection mission involving

predatory financial instruments. the proposal that has been developed though is one that is broader than that. it has, it has bank examiner components. it has, it has compliance compliance so those are not things that record compensated. you know, again we are an independent agency and so, when you willed into whatever you tell us we are going to do, and beyond that, i just want to come back to my initial point which is based on what we have seen in this marketplace and the restrictions we have operated under, i do think that with these issues worked through it and i believe they will be, i do think that having a, that having this new agency in the ftc both going after on fairness,

deception, fraud, it is considerably preferable to the status quo. >> we agree on that. i think the issue is how you go about it. let's say though that meeting with the bankers in my district back home, they are afraid of this and i think that is the uncertainty question it is a legitimate question. and if it does bring the specter of increased regulatory management over the industry, not that something has to be done in order to get, to state the correct mistakes of the last year, but what is it going to do to the industry's willingness to get out there and unfreeze liquidity like we are all wanting them to? >> if i could just add to german leibowitz's comment on that. i think the keener factory is this agency would have all the supervisory and example-- authority and not just with respect to banks but also with

respect to non-bank competitors and those banks so i understand that many banks are worried about the scope of the new consumer financial protection agency and i appreciate those concerns. i think the additional upside for them is that they are non-bank competitors will have the same high standard that they need to meet, the same level playing field, the same consistent rules so community bank and credit unions as some have to worry. >> that tells me you are just broadening the uncertainty to include the entire financial markets. >> no, i think what we are able to do sir. >> it seems the uncertainty is being broadened, that this not answer the question about the uncertainty and that the banks are afraid of this kind of legislation. >> i think what we are able to do is create a high consistence, clear standard. we are able to reduce regulatory burden in many cases. for example including-- and

don't help consumers. we need a single uniform, simple standard for disclosure. >> i suggest that you need to convince the banks because they are the ones that are expressing the real concern. if i may mr. barr i do have a second question and that is president obama has stated a streamlined system will provide better oversight and less costly, will be less costly for regulated institutions but the preemption statutes in the bill create a floor rather than a ceiling for state regulation. does not mean we are looking at 51 different versions of this thing by giving the preemption statutes to the state and how does that-- does not not conflict with president obama's statement that we are looking at a streamlined system? >> as you know the states have long played an important role in consumer protection. i think one of the up sides of living in our country is we have independent states.

>> they have not had preemptive status in this situation before. >> that have not been able to apply state laws in some context to national banks, but they certainly have been very active in the consumer area across lots of different products and services in the past. >> do you think it leads to 51 different versions of this? >> i think we are much more likely to see a high standard of the national level. i think it is very rare if you set a good high standard, you'll find it very rare for states to go off on their own way but sometimes states are right. sometimes states protect consumers in innovative ways in our view is we shouldn't block the state's ability to do with the state's bank when their judgment is right. >> thank you mr. chairman. >> chair thanks the witnesses and i want to thank you for-- the chairman recognizes dr. gingrey for seven minutes

for the purposes of questioning. >> mr. chairman, thank you for your generosity of time. i am sorry i missed the first round and i appreciate your letting me answer questions. i did want to ask secretary barr, in your testimony you indicated that we need only one agency charged with protecting consumers from financial products and services. as one of the principal architects of the administration plan in the proposed consumer financial protection agency you lay out a very broad and sweeping change that will fundamentally change a number of government entities, of course including the ftc. however, while this is still in the early stages there are some concerns held by members, including me, that an overly broad new regulatory agency will have the same effective hitting a nail with a sledgehammer. these efforts under the guise of uniformity i feel there may be some different standard set for industries with them as proposed

agency. for example, i have heard that some suggestions that small banks should be exempt from some or all the rules written by the proposed agency. in the draft legislation contains exempted authority based on asset size. is it the administration's plan to apply different consumer protections the pentagon with direct customer transaction with a small or large bank and furthermore, if you intend to carve out small institutions, what other types a rules would they be exempted from and what is the policy reason for carving out these institutions? >> thank you very much for that set of questions. i do think that our proposal does involve sweeping change. sleeping change that in our judgment is essential to protect consumers. our old system is fundamentally broken and we do need fundamental reform. with respect to smaller

institutions, we don't expect to see, and would not expect the small banks and big banks would have different rules of disclosure but you may see differences in say, dissemination or supervision there would be in the big institutions as we do today on site. there are examiners on-site you around. you would want that for small banks and you may see differences like that but not differences in the basic standards affecting consumers to be uniform across the board. so, if you walk into a bank or walk into a credit union or walk into a big bank or go tear independent mortgage broker or you go to an independent mortgage companies get the same simple mortgage disclosure so consumers can understand what they are getting. >> chairman leibowitz, as you outlined in your testimony, there will be a number of changes to the ftc as a result of the consumer financial protection agency if that

becomes law. many responsibilities will be pulled from the current jurisdiction of the ftc and be given to this new agency. with all of these proposed changes, what then will be the role of the ftc and this new landscape and how much of that new role will be duplicative of this proposed agency? you guys have been doing a good job. you know, we are appreciative of that. >> and we appreciate and are heartened by what you said about our agency. i think we do a good job. could commissioners who are also committed. you know, we will still have all of their competition authority, our antitrust authority. we will continue to do all of the other things we do whether it is fraud, or privacy outside of the financial context, or you

know, advertising and marketing practices and then we will continue to stay involved here. i think especially during the transition period and hopefully beyond, with concurrent jurisdiction. look, there are as we know in this room and as you guys know better than anybody else, there are lot of bad actors out there who are trying to rip off the american consumers so by growing the federal ability to go after these malefactors, you know, that can only help the playing field. what we do with the ftc and we do it really well, but it is a sort of triage, right? we look at different cases, potential cases and as we are going to an investigation and see which one can we best leverage. which ones are the greatest harm to the greatest number of people? which are the ones that might make better, a change that case law for example and we are always making decisions based on

sort of the lack of resources that we have. we just try to do the best job we can. >> let me reclaim my time for just a second because i want to ask you one other question. we don't disagree with the need for oversight, but it seems to me in this current financial crisis we are in and all of these bad loans and toxic assets and all of that, that the oversight got really heavy after the horse had already left the barn, so that is kind of a concerned and as always, the concern that the oversight becomes too much so restrictive after the fact that these institutions particularly for small banks and lending institutions can't function, and i certainly see this across my district in privately held banks, smaller banks that-- the oversight should have been steady and consistent and it

always should be but yet, when some catastrophe occurs because somebody was not minding the store, then all of a sudden the oversight comes down on these institutions to the point that all of a sudden they go out of business and it hurts the local community. but, let me just ask you in the little bit of time i have got left. you mentioned to us with the ftc would be able to continue to do. what percentage of what you currently do is that? does that represent 50% of your current responsibilities, 25%? are you losing more than 50% of what you currently are charged? >> i think it would be more like-- if i think in terms of resources, i will get back to you with, i will get back to what their response but i would say it is more like, it is more

like five to 10% of what we do and of course that has been an area as you know that we have been concentrating on more and more because it is very important to american consumers, many of whom are suffering, almost all of them suffering from-- >> i would appreciate it. i think it is important we know that in mr. chairman thank you for your patience and generosity and i thank the witnesses. >> again the chair thanks the witnesses for the use of their time and you were very generous to us in your time, and we want you to know that you have contributed significantly to this process and we are better off because you testified today and helped us move along on this new proposal, and so we will be in touch with you in the future, and the chair wants you to know that we will-- we give members

72 hours to ask questions in writing and that he will respond to them within a reasonable amount of >> the chair welcomes the second panel to the desk and to this hearing. the chair apologizes for the inconvenience that he might have had to endure while we were on the floor voting, and the chair is very respectful and appreciative of the fact that you have come from far and wide

to be here to testify. i want to introduce our witnesses and i will begin on my left. mrs. gail gillibrand is a senior attorney in manager for the financial services campaign for the consumers union. seated next to her is mr. stephen calkins, "esquire." he is associate vice president for academic personnel and professor of law at wayne state university. next to him is mr. prentis cox who is an associate clinical professor of law at the university of minnesota, and seated next to mr. cox is ms. rachel barkow and ms. barkow is a professor of law ed kunar--

new york university school of law and last but not least, the gentleman with the smiling face next to her is the minister chris stinebert. mr. stinebert is the president and ceo of american financial services association. we again want to thank you and welcome you to this committee hearing. it is in the practice of this committee that we swear in witnesses so will you please rise and raise your right hand. to you solemnly swear to tell the truth, the whole truth and nothing but the truth? let the record reflect that all of the witnesses responded in the affirmative. now is my privilege to allow you and to recognize you for five minutes for an opening statement, so ms. hillenbrand we will start with you. turn your microphone on and put it close to you please.

>> thank you chairman rash, ranking member radanovich and members of the committee. consumers union is the nonprofit "consumer reports" but the mission is to test and empower consumers and that is the role of which i appear before you today. my written testimony was joined by consumer organizations. consumer groups want and consumers in the u.s. need a strong consumer financial protection agency, a robust federal trade commission and a strong role for states and consumer protection and financial services. we believe those goals are entirely consistent with one another. mickle is a better financial services marketplace and better government and financial services oversight. we have to face it, the current system doesn't work. it is not delivering products or encouraging products that are understandable to the consumers to use them or meet the reasonable expectations created in the sales process for guns did we have got to banking,

multiple regulators even when those providers are competing directly for the same consumer. we have long delays for regulatory action and we don't have much of open public enforcement except by the ftc. and finally we have abusive features and products that are squeezing their way through the holes in the existing law and the existing regulatory scheme. i believe the job of government is to serve the people. we are not here to talk about government. we are here to talk about better government and financial services oversight. spreading to their system is not designed to the job. it is spread out over six more agencies with the hodgepodge of rules and statues. and how much enforcement a provider receives depends in part on his regulator is. that is not a system designed to match the realities of today's market. we want to give the federal government a new job in the financial-services marketplace and that is to promote a fare as

well as inefficient financial services market. to watch for the market to prevent harms is the start to develop a guy come from the great state of california with the option arm in some of the other products that have gone terribly sideways were pioneered and you can only wonder some one have been watching those markets more closely with a that would have spread around the country. the mandate of the cfpa is to promote transparency, simplicity , fairness with accountability and access. notice i say promote. it is a different job for much the federal government has set before but this cfpa we have the opportunity for an agency that has an obligation to get information, to learn about the market, to watch that market and to make a conscious decision about what needs to be regulated and what doesn't in which regulatory tools to use and to apply those tools evenly no matter who is providing a product. with the cfpa we could get one agency to watch over the market,

fest directing responses, one agency that is responsible to you and to me when things go wrong and one place for your constituents to go instead of the alphabet soup they have no figuring out who to complain to and who to get relief from. the cfpa model is one federal rule maker but multiple enforcers and that brings me to the incredibly important continuing role of the ftc. i would like to disclose i was once a summer law intern at the ftc. long grecco then could be possibly-- the ftc keeps its and enforcement authority, keeps that section 5 authority with a simple, regardless of the topic, with a simple consultation that can be had at the staff level. it keeps its authority with respect to all the statute it now has what that referral process and i think it is important to know that is a referrer and wade process but they are not waiting for a yes

or no. what this cfpa does not take on the case the ftc thinks these to be broddick and still bring that case. we have made a recommendation in the testimony that the statute should allow the cfpa to waive that notice or to shorten it by individual case, by type or category of kasem by agency, so that they can work these things out where there is common, the telemarketer case for the. we also are recommending to you that the ftc be given the authority to be a secondary regulator with respect to enforcing the cfpa rules, not in writing them but in forcing them. the ftc does this jurisdiction to write an unfair deceptive practices rules in financial services but that does not been a world they have been able to use widely in the last couple of decades since the credit practices went into effect in the 80s. they keep all of them enforcement and of course it will be made stronger with the

aiding and abetting enforcement. we believe this is the only way to put competing products under the same set of rules. i am conscious of your time and they do want to say that i think it is very important what the ftc does right now in the recession. it is very important what the ftc will continue to do after the transfer of authority and the cases where there is overlapping enforcement and will be extremely important what the ftc does with its additional authority. there are a lot of things the nafisi can do wright to help consumers who are suffering from the recession including cleaning the problem with reporting airs, the market is beginning to do under the authority you gave it, the market modification foreclosured debt collection. all of those things will remain extremely pardon. i would be happy to take questions. thank you. >> thank you very much. you are recognized for five minutes.

>> will you pull the mic closer tea please? >> is the alright? it is not on. >> push the button. a special thanks for the technological advice here. chairman rush, ranking member radanovich, members of the subcommittee thank you for inviting me here to testify about this import matter. the proposed legislation what effect sweeping changes in the federal trade commission. the keyç to the bill is in the definitions and they are written extremely broadly. applying those definitions and working your way through the bill, you find that the bill would transfer out of a federal trade commission much of the work that the federal trade commission now does, giving those responsibilities to the new agency and giving it the exclusive authority to prescribe rules and issue guidance with respect to much of what the bureau of consumer protection does. if you take the ftc's most

recent annual report for 2009, and turned to consumer protection and start reading what they have been doing, sub-prime credit, mortgage servicing, foreclosure rescue, a mortgage advertising, debt collection, payday lending, operation clean sweep, operation telephony, the marketing case, payment systems, nationwide connections case, global marketing case and so on and so forth, prepaid phone cards, on matter after matter after matter of what they have been doing, i read the bill as saying that all of that would be transferred to the new agency. in short we would have major change. indeed, if you read the bill carefully he would find even some of the antitrust responsibility of the commission would be transferred. i assume that is a mistake but that is how it is currently written. now, why have this sweeping

changes and let the federal trade commission does? it might make sense that the federal trade commission was a bad agency that was doing that work but is he will have spoken so eloquently this morning, the federal trade commission is a good agency that has been doing good work. it has unique bipartisan structure. it compliance consumer protection in competition to bring the best from both perspective to bear on problems and it has been doing important work for consumers including in the world of credit for a very, very long time. transferring responsibility from the federal trade commission to another agency obviously create some pretty significant risks and my recommendation to you is to proceed with great caution to weigh those risks, to decide whether they are really worth running and certainly if they are to work very hard to try to minimize those risks because the bill as written would make major changes and you need to be very

careful to make sure that all of this makes sense. thanks very much and i'm happy to answer questions when the time comes. >> thank you. mr. cox, you are recognized for five minutes. >> thank you mr. chairman and ranking member radanovich. abuses of consumer finance products were a disaster for millions of consumers before anyone recognize them because we had a financial crisis. a disaster. a previous testimony about someone committing suicide, i have sat with people whose families have committed suicide after i work with them. millions of people experience this. our federal regulatory system did not respond to this. it was dominant-- dominatedzv by the needs of the lenders and sellers and not by what was happening on the ground. it is often said that no one could have seen this. the people who were working with

the victims of sub-prime lending and were talking to people who reflected the experience of those people as well as the others who were subject to the abuses of consumer product finances absolutely knew what was going on in we were screaming at the top of our lungs and no one was listening. it was predictable and it was preventable. the consumer finance protection agency offers the first open generations. certainly in my adult lifetime working on these issues. for an agency with sufficient power and focus on consumer protection issues, to seriously address these problems, it gets it right in terms of its model. it sets of the unified rule maki process. it is not about whether the ftc was good or bad. it is about the fragmentation of authority and a lack of perspective in a unified rulemaking. it gets it right in setting a floor and allowing innovation where innovation should occur which is in the state regulatorç

system. and a couple that with an open enforcement system. it allows the enforcement of those clear, unified rules to occur in multiple places and their two reasons you want that. the first is that you compare the proper enforcementç agency, public enforcement agency with the problem at hand. if you have got a problem that just occurred in indiana, the indiana attorney general is the right place to do it. it certainly won't get taken care of if you allow the federal agency. it the indiana attorney general-- secondly, the agencies like the ftc and state attorney generals often will bring violations of rules and-- ancillary which was what chairman lieberowitz was saying, because things don't come up in neat silos so unopened public enforcement model which is what this bill has by allowing the federal trade commission and other federal agencies to